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Last close As at 09/06/2023
-0.03
▲ −0.01 (−25.00%)
Market capitalisation
AUD26m
Research: Healthcare
Arovella has released its activity report for Q123, the key highlight of which was the company’s decision to focus exclusively on its invariant Natural Killer T (iNKT) cell platform and cease R&D operations on its legacy OroMist platform (of which Zolpimist is the flagship asset). We consider this move as sensible as it allows Arovella to focus its resources and efforts to progress its immunoncology franchise following the in-licensing of its iNKT portfolio in mid-2021. We also believe that the decision has been bolstered by the recently announced collaboration agreement with Imugene (which could potentially expand the platform’s utility into solid tumours, a space multi-fold the size of the current haematological focus). The restructuring will entail a one-time expense of A$300k in FY23 but management anticipates annual cost savings of A$1.5m thereafter. In light of the announcement, we will revisit our valuation and publish revised estimates for Arovella in due course.
Arovella Therapeutics |
Strategic refocus on iNKT platform |
Q123 trading update |
Pharma and biotech |
3 November 2022 |
Share price performance
Business description
Analysts
Arovella Therapeutics is a research client of Edison Investment Research Limited |
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Arovella has released its activity report for Q123, the key highlight of which was the company’s decision to focus exclusively on its invariant Natural Killer T (iNKT) cell platform and cease R&D operations on its legacy OroMist platform (of which Zolpimist is the flagship asset). We consider this move as sensible as it allows Arovella to focus its resources and efforts to progress its immunoncology franchise following the in-licensing of its iNKT portfolio in mid-2021. We also believe that the decision has been bolstered by the recently announced collaboration agreement with Imugene (which could potentially expand the platform’s utility into solid tumours, a space multi-fold the size of the current haematological focus). The restructuring will entail a one-time expense of A$300k in FY23 but management anticipates annual cost savings of A$1.5m thereafter. In light of the announcement, we will revisit our valuation and publish revised estimates for Arovella in due course.
Year end |
Revenue |
PBT* |
EPS* |
DPS |
P/E |
Yield |
06/21 |
0.3 |
(3.4) |
(1.15) |
0.0 |
N/A |
N/A |
06/22 |
0.3 |
(7.4) |
(1.42) |
0.0 |
N/A |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.
The iNKT technology is a cell therapy platform using immune cells for primarily treating blood cancers (leukemia and lymphoma). In September, Arovella signed a collaboration agreement with Imugene to investigate if the applicability of its lead iNKT asset, ALA-101 can be expanded to solid tumours using Imugene’s onCARlytics platform. As a reminder, ALA-101 contains a chimeric antigen receptor and is being development as an ‘off-the-shelf’ treatment for blood cancers, which allows dual targeting of CD1d and CD19 expressed on the surface of cancer cells. Imugene’s oncolytic viral therapy, CF33-CD19, works by infecting solid tumour cancer cells and stimulating them to express CD19 on their surface. We therefore see potential in this combination treatment which, if successful, could expand ALA-101’s utility into the broader solid tumour space (solid tumours make up almost 90% of all diagnosed cancers). Data readout from preclinical studies is expected in H1 CY23.
As part of the business realignment, Arovella has decided to suspend all development activities for OroMist (its proprietary oromucosal drug delivery platform) and suspend operations at its Perth-based R&D facility. The closure would entail $300k in a one-time restructuring expense in FY23 but will help the company realise $1.5m in annual cost savings thereafter. Arovella is also reviewing its contractual arrangements for ZolpiMist (treatment of short-term insomnia), which was recently launched in Australia by distribution partner STADA Australia.
Arovella recorded an operating cash burn of A$1.8m in Q123, which is expected to reduce with the closure of the R&D facility. The period-end cash balance was A$4.3m. In light of the aforementioned developments, we have put our estimates on hold and we will revisit our valuation of the company.
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Research: Industrials
Mytilineos has reported record-high quarterly results for the fourth consecutive quarter. Net profit after minorities increased by 283% to €146m, versus Q321 (€38m). It was encouraging to see a strong performance across all four divisions, with record quarterly results in Renewables & Storage Development (RSD), Sustainable Engineering Solutions (SES) and Power & Gas (P&G). RSD benefited from a strong pipeline of solar parks under construction coming to fruition; we expect this to continue in Q4. An influx of higher-margin gas projects helped drive earnings growth in SES. We upgrade our forecasts in this division. The continued strength in P&G is a testament to Mytilineos’s integrated model, its ability to source gas at competitive prices and the high efficiency and flexibility of its power generation portfolio. We also upgrade our forecasts in this division. Our per share valuation increases to €28.0 (from €27.0 previously).
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