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Oncimmune Holdings Plc

Oncimmune Holdings PLC A highly productive year

Oncimmune Holdings plc (LON:ONC), a leading early cancer detection company developing and commercialising its proprietary EarlyCDT® platform technology, today provided an update on the business at the end of its first full financial yearpost its IPO.

In addition, the Company announces the signing of two further distribution agreements for its EarlyCDT®-Lung test kit in Taiwan and Hong Kong.

Geoffrey Hamilton-Fairley, CEO of Oncimmune, commented: “It has been a highly productive year and one in which we have made significant progress in delivering on the growth strategy laid out at the time of our IPO. Our recent CE Mark for the EarlyCDT®-Lung kit and signing of first distribution agreements in Asia highlight the potential for further expansion into world markets.With progress also made in the US and in the development of our pipeline we look forward with confidence to delivering value in the medium and long term.”

Business Update

Having just completed our first full year end since IPO, the Company can confirm that it has been a successful start to the commercialisation plans outlined at the IPO. Our strategy remains to significantly improve the outcomes of cancer patients through early detection of the disease and enhance treatment pathways. Detecting early stage disease has two key benefits: better survival for the patients; and significantly lower cost of treatment as most of these early stage patients do not need expensive chemotherapy.

We intend to develop, and make commercially available and widely accessible, accurate early cancer detection tests for multiple cancer types. Our three year commercialisation plan has to date focussed on the recruitment of new senior staff to lead our activities in Asia, UK and Europe and in the US for Reimbursement and Sales, which we have now successfully completed. Our R&D plan proceeds at speed and with the EarlyCDT®-Lung test CE marked kit, a key element in delivering our global commercialisation plan has become a reality. The Company can now start to execute on its portfolio revenue proposition with multiple products, generating revenues in different regions and with different partners. In addition, we have an emerging companion diagnostics business and a second generation of the platform, the autoantibody “fingerprint”, that will bring new levels of performance and lead to a pan-cancer test.

EarlyCDT®-Lung

In the US, we proceed with our previously outlined process of supporting our distributors to test the efficiency of our marketing approach and ensure that our partners deliver high quality and long-term sales. We appointed a new sales director at the end of last year and she has worked diligently testing a number of approaches to ensure an optimal sales and marketing cycle where a physician re-orders the EarlyCDT®-Lung test without the need (and expense) of a repeat sales visit. The investment programme related to this – initially scheduled to be started by the end of the first quarter – was deferred until we were confident that our approach was gaining traction, and in light of this and the Company’s general prudent approach to expenditure and cash management, the Company’s year end cash balance is stronger than expected at £5 million. However, we are now starting to generate sufficient proof that this can be achieved and thus we expect to start to invest in sales support / marketing with confidence of commensurate revenue growth going forward. We remain, however, unashamedly cautious as positioning of the test is key to long-term success.

We are, in addition, in discussions with a number of pulmonology distributors with focus on the second use of the EarlyCDT®-Lung test, namely risk stratification of CT identified nodules. 96% of CT identified nodules are not cancer, so finding the correct ones to follow up is a large unmet need which our test can address effectively.

Outside of the US, we are moving ahead well. Our Asian business has started to deliver with two contracts announced in April for Israel and Korea which provide meaningful minimum payment guarantees of over £5m in aggregate over the next five years. We have since signed two further agreements which we are announcing today with Acecgt, for Hong Kong, and with Invision Biotech for Taiwan. These two agreements are for three years and include aggregate minimum payments of approximately £0.6m over that period.

We expect to sign more distribution contracts in Asia and Europe during the upcoming months, with a number of these arrangements also likely to include guaranteed minimum payments that would add to our confidence in our chosen distributors and enhance revenue visibility/predictability.

R&D and Trials

Our R&D programme continues to progress. We have laid the foundations for the commercial panel for the EarlyCDT®-Liver test, which is targeted to be complete in the second half of 2017, with EarlyCDT®-Ovarian thereafter.

The NHS Lung Cancer Screening Trial made a further interim report at the World Conference for Lung Cancer last December in Vienna. They announced results similar to those previously reported on the test performance, as we expected, and perhaps most notably that over 75% of the patients being diagnosed have early stage cancers (stage 1 & 2) as opposed to the vast majority in normal practice presenting with late stage cancer – which is generally incurable. Now fully recruited with 12,210 patients, this is the largest randomised control trial using biomarkers ever conducted in lung cancer. The final study results, including the control arm, will be published after all patients have had two years of follow up CT scans and these are expected in 2019.

Personalised Medicine & Companion Diagnostics

In companion diagnostics, we are running a number of studies alongside drug development programs and we expect to be able to announce results from these in the next 12 months that we expect will support development of this area as a separate business unit.

Finally, in the second half of 2017 we expect to announce results relating to the second generation of tests from our autoantibody platform where patients can be their own control and thus testing is significantly more accurate. We believe this second generation of test will complement the global vision of some major companies currently investing heavily in developing personalised medicine platforms and services.

In conclusion, one year in to our post IPO commercialisation plan, the board is increasingly confident that the Company is well placed to execute that plan and deliver value in the medium and long term.

Zeus Capital comments:

Oncimmune is a pioneering UK-based biotechnology company with a blood testing platform for the early detection of cancer and a recently CE-Marked blood test kit for the early detection of lung cancer, EarlyCDT®-Lung. Oncimmune announced this morning that it has signed two new distribution agreements in Asia and provided a further update on business progress following its first full year as an AIM-listed company. The new distribution agreements are for Hong Kong (with Acegt) and Taiwan (with Invision Biotech), will last 3 years, and include aggregate minimum sales of £0.6m in total. In the general business update, the company has outlined the progress it has made during the year since its IPO including building its global commercialisation team and the continuing progress in product and platform development (lung, liver and ovarian test panels, CE-marking different test formats including the kit for lung, progressing clinical evaluations, companion diagnostics, and personalised medicine ‘fingerprinting’). Cash resources at May 31st of £5m (we had forecast £3.8m), show prudent management of expenditure despite Oncimmune’s efficient execution of its operational plans. Our risk-adjusted NPV remains 170p.

New Asian distribution agreements: Taiwan has a population of approximately 23.5 million people and Hong Kong has almost 7.5 million. Approximately 15-18% of the adult population in Taiwan are cigarette smokers while this figure is closer to 10% in Hong Kong. In both countries the majority of these smokers are male (over 80%). Oncimmune’s EarlyCDT®-Lung blood test will now be available to over 80 million people in Asian markets (including Hong Kong, Taiwan, and South Korea).
It is worth noting that under these distribution agreements, none of the distributors is authorised to sell EarlyCDT®-Lung tests into mainland China, clearly a substantial target market given the size of the population and the high rate of tobacco smoking among adults (~30%).

Commercial Operations: With the completion of recruitment of senior commercial personnel for global markets (USA, Europe and Asia), the company is well placed to deliver on its strategy in multiple markets. This is evidenced both by the signing of multiple new distribution agreements across the USA, and more recently in Asia and the Middle East. We expect the company to continue to establish more distribution agreements in Asia, particularly in view of the CE-Marking of its EarlyCDT®-Lung cancer detection test in kit format. Sales in the USA of the existing laboratory format of the test are expected to be invigorated through new investment following successful testing of different approaches to ensure an optimal sales and marketing cycle i.e. physician reordering of tests without requiring frequent and expensive repeat sales visits. Furthermore, the company is closer to exploiting the ‘low-hanging fruit’ of specialist pulmonology sales wherein its EarlyCDT®-Lung test is used in risk stratification of CT-identified lung nodules, over 95% of which are not cancerous.

Product and Platform Development: For EarlyCDT®-Lung the NHS Lung Cancer Screening trial in over 12,200 subjects has delivered excellent interim results to date with the notable identification of a higher proportion of early-stage lung cancers (75%) compared to experience of cancers diagnosed in routine clinical practice. The value of identification of lung cancer at an early stage is significant, both for the improved survival and quality of life of patients and also for the reduction of expensive treatment costs for healthcare payers. Additionally, the company has made solid progress with its other early detection blood test for liver cancer (completion anticipated in H2 2017) with the test for ovarian cancer following thereafter.
Additional applications of the core technology (i.e. detecting blood-borne autoantibodies to panels of cancer-associated antigens) are also being pursued. So-called ‘companion diagnostics’ are undergoing evaluation in parallel with certain drug development programmes where results could be reported within the next 12 months. The development of personalised medicine applications of the technology is being assessed by monitoring autoantibody levels over time (i.e. where a patient’s autoantibodies are followed over years to identify with the greatest precision the earliest stages of cancer development). The company expects to announce results in this programme in H2 2017.

Comment: Oncimmune Holdings Plc has ended its first full year as an AIM-listed company in a strong position based on a healthy cash balance and the successful execution of its strategic operational plans. With the numerous highlights throughout the year mentioned above, we expect Oncimmune to continue to drive its plans forward in FY2018 and show good evidence of progress across multiple products and markets.

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