Last close As at 19/10/2026
AUD0.50
▲ −0.25 (−33.33%)
Market capitalisation
AUD240m
Research: Healthcare
Starpharma has increased its interest in Petalion Therapeutics to 66%, from 22.5%, taking control of its fibroblast activation protein (FAP) targeted oncology programme. It will contribute up to A$5m for the next research phase, including A$3m in cash and up to A$2m in R&D services. Medicxi retains 30%, a board seat and a strategic role, in order to preserve continuity and its respective capabilities in drug development. We view the move favourably, with Starpharma gaining a larger share of any future value and the opportunity to direct development and partnering within its internal oncology strategy. Although, we note that this comes with greater funding and execution responsibility while Petalion remains at an earlier development stage. Candidate selection and a clinical development plan will represent the next key tests of the investment case.
| Year end | Revenue (AUDm) | PBT (AUDm) | EPS (AUD) | DPS (AUD) | P/E (x) | Yield (%) |
|---|---|---|---|---|---|---|
| 6/25 | 4.9 | (9.1) | (0.02) | 0.00 | N/A | N/A |
| 6/26 | 12.1 | (5.2) | (0.01) | 0.00 | N/A | N/A |
| 6/27e | 6.3 | (14.4) | (0.03) | 0.00 | N/A | N/A |
| 6/28e | 15.0 | (9.5) | (0.02) | 0.00 | N/A | N/A |
Petalion was created in 2024 with Medicxi to develop a cancer therapy using Starpharma’s dendrimer enhanced product (DEP) technology. Under the original arrangement, Starpharma licenced specific intellectual property in exchange for a 22.5% stake and provided research services, while Medicxi supported the venture’s development. Starpharma will appoint two directors, with CEO Cheryl Maley as chair, while Medicxi retains one seat and Petalion advisers hold the remaining 4% equity. Importantly, this gives Starpharma the ability to set priorities directly, while preserving access to Medicxi’s oncology development expertise.
Petalion’s programme targets FAP, a protein found in the tissue surrounding many solid tumours, with limited expression in healthy tissues. The proposed drug conjugate combines FAP targeting with DEP delivery. The breadth of FAP expression creates potential across several cancer types, although suitable tumour penetration, retention and drug delivery remain to be established. The next phase will optimise the construct and seek a lead candidate. With any sort of activity data yet to be disclosed, we await further details on what could make it a clearly differentiated candidate before confirming our view on the breadth of its potential applications.
The A$3m cash contribution will be drawn from the recent capital raise’s allocation for new research pipeline opportunities. Management has communicated that the allocation retains enough funding to progress other early stage targeted oncology assets. The revised ownership model is not uncommon for Medicxi portfolio companies, where ownership and financing can evolve over an assets development cycle. Petalion now joins the internally led DEP HER2-Lu radiotherapeutic and collaborations with Genentech and Radiopharm Theranostics, as an incremental application of DEP. We see greater potential upside from successful development, balanced by the risk of funding a programme before candidate selection. A compelling lead candidate and a credible route to the clinic or a partner would strengthen the investment case, in our view.
For a more detailed discussion, we direct readers to our recent initiation note.
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Research: Investment Companies
JPMorgan European Discovery Trust (JEDT) had a change of managers at the beginning of March 2024, which has been beneficial for the trust’s performance. As JEDT’s name suggests, managers Jon Ingram, Jack Featherby and Jules Bloch screen the large European small-cap universe of around 1,500 names, looking for ‘hidden gems’, which they believe are the relatively small number of exceptional companies that generate a disproportionate share of long-term market gains. With their superior growth rate, European small-cap stocks have outpaced the performance of all the major equity markets over the long term. However, despite this achievement, they trade on relatively attractive valuations. The managers believe that market volatility following the start of the US-Iran conflict is creating opportunities for long-term investors to identify companies whose share prices appear oversold and are not reflecting strong underlying business fundamentals.