Here's Why The OXIS International, Inc. (OTCMKTS:OXIS) TriKE Deal Is An Opportunity

OXIS International, Inc. (OTCMKTS:OXIS) just signed an agreement with the University of Minnesota that will see the two partner up on a new type of cancer therapy called TriKE. The company hasn’t picked up any strength on the announcement, and as we head into the US open on Tuesday, is a few points down on Monday's highs. We believe the implications of this collaboration could translate to some upside in OXIS going forward, and that markets have missed an opportunity – perhaps because of the uncertainty surrounding the tech that underlies the partnership. Here’s a look at the tech in question, and why it could serve as an upside catalyst.As mentioned, it's called TriKE, and it's a new(ish) type of cancer immunotherapy. We say newish because the concept behind it is already pretty well established. TriKE comes from the phrase Trispecific Killer Engager, which is an upgraded version of something called a Bispecific Killer Engager, or BiKE.Oxis' current lead candidate is OXS-1550, and it's a bispecific antibody platform (note, not BiKE) currently under investigation in leukemia patients. It's made up of anti-CD19 and anti-CD22 antibodies, as well as a diphtheria toxin. We don’t really need to go in to too much detail about these antibodies, just that they correspond with (and bind to) CD19 and CD22 receptors, which are expressed in abundance by leukemia cells, but not other blood cells (at least not usually). The drug travels to the leukemia cells, binds to them and delivers the diphtheria to the cell. This kills the cancer cell. The beauty of this method is that the drug doesn’t bind to cells that done express CD19 and CD22 receptors, so it can be administered in a much higher dose than standard cancer treatments without becoming overly toxic.Anyway, TrIKE is a technology that can enhance this treatment further. Basically, while the drug does as is described above, the TriKE tech addition means it also binds the cancer cells to what are called NK cells – a type of white blood cell that absorbs and destroys pathogen cells. So it's selective, it delivers a toxic dose of diphtheria to the cell, and with the addition of the TrIKE tech, it also recruits NK cells to destroy the cancer cells being targeted.Now, as yet, there's no proof that the TrIKE tech can combine with OXS-1550 (this is speculative on our part) but that the company is working with UoM on the technology suggests that this is their end-goal.If it is, there are so many near term catalysts. Biotech is news driven at this end of the market, but there are often inefficiencies caused by misinterpretation of the key info.In light of this, and with an eye to taking advantage of these inefficiencies, here’s what we are looking out for as upside drivers:

• The successful combining of he TriKE tech with the OXS-155 bispecific treatment
• Some level of clinical advance (likely the first one we'll get here is an IND approved by the FDA, which will open the door to clinical trials)
• Clinical trial initiation
• This is a big one. The company is going to be dosing at pretty high levels to demonstrate the low toxicity afforded by this type of formulation. It will almost certainly do this as part of a phase I tolerability study. We want to see high dose – low toxicity.

A quick note on dilution. The company had essentially nothing in the way of cash on hand ($30K at March 31), before a dilutive May 18 bridge financing:

"The bridge financing consisting of sixteen convertible separate investors in the total aggregate face amount of $1,223,238.00. Each debenture accrues interest at the rate of 10% per annum. The debentures are convertible into common shares of the Company at the rate of $0.40 per share. Each debenture recipient receives warrants for the purchase of common shares of the Company at the exercise price of $0.45 per share."

This is not going to fund the development process of any of its drugs through to commercialization, so further raises of this type will almost certainly come near term. Dilution is a small cap investors biggest enemy. The hope is that the new tech, and the ongoing trials, will add enough value to mitigate the dilution, and that's the thesis that underpins a position at this stage.One to watch.For OXIS updates on the reaching of the above milestones subscribe to our newsletter below!Disclosure: We have no position in OXIS and have not been compensated for this article.