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Last edited 5 years ago
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#Next Stop Oblivion?
stale
Last edited 5 years ago

It is hard to see the silver lining here...

Start with the positives: at the end of the quarter they will have just over $10 million cash in the bank. They got a $4.3 million R&D refund in 2018, so maybe assume another similar amount in 2019. Assuming the $2.95 million expected outflow in the last 4C remains static over coming quarters then another similar R&D refund should give them runway to the first quarter of 2020 (maybe even the second quarter).

But you shouldn't assign a value to cash in a pre-revenue company...it's like trying to value the petrol sitting in your car on a long journey; you know you are going to run out sometime and the petrol can't be put to any other use.

Taking a new medical procedure/technology to market is massively expensive and in retrospect I think Oncosil have been trying to do it on the cheap. Not enough trials, not enough patients, not enough data. The problem is I am not sure the cash runway of 12 months is enough time to put this to rights. Further, following this massive hit to the market cap I am not sure they will have the capacity to raise enough funds to make the difference.

I have watched many companies with amazing technology and 'potential' go to oblivion when the petrol in the tank runs out before they reach their destination. Just because it may have the potential to save lives does not make Oncosil 'special' in this regard.

It's possible they may be successful, but yesterday success was possible without risk of massive dilution. Therefore the potential ultimate return was higher for the risk I was taking on. Today I still see big risks but less potential return.

I will be closing my position tomorrow.

#Brexit Risk
stale
Last edited 5 years ago

Was interested in whether Brexit would create a headache for Oncosil as they are using the British Standards Institute (BSI) as the pathway to the CE Certificate. In short; there is lots of risk around this.

On 29 January 2019 the BSI provided this update to the market relating to the implications of Brexit on medical device access to the EU for products certifified by a UK notified body:

We specifically asked the Competent Authorities for the EC policy on migration and validity of CE certificates from a UK notified body post 29 March 2019, if Article 50 is enacted and applied on this date without an agreed transition deal.

The Competent Authorities advise:

a) As of 30 March 2019, the UK will become a third country and the CE certificates will lose their validity.

Interesting stuff right!! Importantly for OSL BSI noted the following in regards to products that are in "work in progress" stage:

For projects in pre-certification recommendation or pre-certification decision making stage (Panel) we will migrate the existing certificate to the Netherlands NB before the end of March. We will move work in progress (WIP) to the NL NB to finish and issue an amended certificate from NB 2797. This action will alleviate the need to complete this work in BSI UK NB and subsequently complete the migration by 29 March.

So it appears that the immediate risk to Oncosil is avoided, but wow, something like this has the potential to break a company at this stage of their life cycle. I am surprised that Oncosil didn't release any information to the market around this. Maybe they didn't want to spook anyone unnecessarily...I wonder whether this is the reason for the pull back in share price and whether this represents an opportunity to buy??

Further information on this for anyone who wants to do a little more homework can be found here: https://www.bsigroup.com/en-GB/medical-devices/news-centre/enews/2019-news/urgent-brexit-implications-for-market-access---60-days-out-from-29-march-2019/