Thursday, March 22, 2012

OncoSec Medical (ONCO) Struggles To Pierce Market

I first became aware of OncoSec Medical (ONCO) about a year ago when it was struggling to make an indentation (a pun on its tech) in the medical device market.  I noticed this month that it's now being touted in a free mail teaser from Trinity Investment Research.  Feel free to peruse my many posts mentioning that outfit and how it touts low-priced stocks that later go nowhere.  You should know that shops like Trinity make their money from companies that pay for publicity.  The first page of Trinity's pump letter shouts that this $0.75 stock deserves a $59 buyout bid.  Let's look at facts to see if that wish holds up.

I've learned one very important thing from being an early stage investor in a medical device company (not OncoSec) that is succeeding in business.  The CEO of a medical device company must be an executive who has deep experience in the sector, preferably in product development and marketing.  Serial entrepreneurship really helps.  The CEO of OncoSec is someone who has been a law clerk and intern analyst.  His previous responsibilities have been in harmonizing merged companies rather than building companies from the ground up.    His most recent leadership experience was with Inovio Pharmaceuticals (INO), a penny stock that has lost money for years.  It's notable that OncoSec's chairman was a VP at the venture capital firm where OncoSec's CEO had been an intern.  The chairman seems to have brought him over from Inovio in March 2011, where the OncoSec chairman is also Inovio's chairman.  Are these two guys related?  Anyway, the chief business officer and director of clinical operations have relevant experience.

OncoSec's core technology is an electroporation application.  The basic tech has been around since the 1970s and a competing product is available from Bio-Rad.  I don't see how OncoSec's application is so radically different from solutions offered by Inovio for DNA treatment or MaxCyte for cell lines.  OncoSec has applied to protect its IP but at this stage the technology is protected primarily by its status as a trade secret.  I also wonder about the history of this company, which until March 2011 (the time the new leadership team came over from Inovio) was known as Netventory Solutions.

The company is still losing money but that's to be expected for something still in its developmental stage.  I just don't see how anyone can claim OncoSec deserves a $59/share buyout while it has no revenue and still awaits IP protection for a commonly used technology.

Full disclosure:  No position in ONCO (or other companies mentioned) at this time.