Arovella Therapeutics — Q3 trading update confirms pipeline progression

Arovella Therapeutics (ASX: ALA)

Last close As at 04/11/2024

0.03

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Research: Healthcare

Arovella Therapeutics — Q3 trading update confirms pipeline progression

Arovella’s Q322 trading update confirms the progress of its development pipeline, with an emphasis on its lead asset, ALA-101. With the selection of a contract manufacturing organisation (CMO; production of the plasmid and lentiviral vector for ALA-101 began in January 2022) and signed service agreement with Q-Gen Cell Therapeutics (to manufacture CAR-iNKT cells), the company is progressing towards clinical development. Separately, Arovella secured a US patent for the oral spray formulation of anagrelide, which is under development and should expand the market opportunity for the drug and supplement its existing patents in Europe, Japan and Australia. At the end of Q322, cash stood at A$8.1m, benefiting from funding activity during the quarter.

Soo Romanoff

Written by

Soo Romanoff

Managing Director - Head of Content, Healthcare

Healthcare

Arovella Therapeutics

Q3 trading update confirms pipeline progression

Quarterly activity report

Pharma & biotech

4 May 2022

Price

A$0.04

Market cap

A$25m

A$1.42/US$

Cash and cash equivalents (A$m) at 31 March 2022

8.1

Shares in issue

658.8m

Free float

86%

Code

ALA

Primary exchange

ASX

Secondary exchange

N/A

Share price performance

Business description

Arovella Therapeutics has historically been a drug delivery company focusing on developing oromucosal spray versions of established medicines. It has ex-North America rights to ZolpiMist, the spray version of Ambien for insomnia. It recently acquired a CAR-iNKT programme for haematological malignancies and a DKK1 antibody that has potential in multiple myeloma and solid tumours.

Analysts

Soo Romanoff

+44 (0)20 3077 5700

Nidhi Singh

+91 828 754 8220

Arovella Therapeutics is a research client of Edison Investment Research Limited

Arovella’s Q322 trading update confirms the progress of its development pipeline, with an emphasis on its lead asset, ALA-101. With the selection of a contract manufacturing organisation (CMO; production of the plasmid and lentiviral vector for ALA-101 began in January 2022) and signed service agreement with Q-Gen Cell Therapeutics (to manufacture CAR-iNKT cells), the company is progressing towards clinical development. Separately, Arovella secured a US patent for the oral spray formulation of anagrelide, which is under development and should expand the market opportunity for the drug and supplement its existing patents in Europe, Japan and Australia. At the end of Q322, cash stood at A$8.1m, benefiting from funding activity during the quarter.

Year end

Revenue (A$m)

PBT*
(A$m)

EPS*
(A$)

DPS
(A$)

P/E
(x)

Yield
(%)

06/20

0.5

(3.6)

(0.03)

0.0

N/A

N/A

06/21

0.3

(3.4)

(0.01)

0.0

N/A

N/A

06/22e

0.4

(7.5)

(0.01)

0.0

N/A

N/A

06/23e

2.4

(5.8)

(0.01)

0.0

N/A

N/A

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

In the first four months of 2022, management made progress in transitioning its lead asset ALA-101 (CAR19-iNKT) to the clinic. Following the selection of a CMO (to produce the required plasmid and lentiviral for the manufacture of the iNKT cells) in January 2022, the company announced that it had signed a service agreement with Q-Gen (cell therapy manufacturer) to complete the second step in the process, to manufacture iNKT cells (April 2022). Arovella intends to convert the current service agreement with Q-Gen into a Master Manufacturing Services Agreement, which should support the extension of the manufacturing contract to later stages of clinical trials.

In another development, Arovella announced that the US Patent and Trademark Office (USPTO) intends to grant a US patent for its oral spray formulation of anagrelide (part of its legacy OroMist platform), which is mainly used in cancer treatment. The patent will offer protection until 2035 and adds to the existing patents already obtained in Europe, Japan and Australia. Anagrelide is targeted at reducing platelet counts in metastatic solid tumour cancers (increased platelet count has been implicated in decreasing progression-free survival in several solid tumours). With Arovella moving its strategic focus to immunoncology, the company will seek to further develop anagrelide through co-development partnerships (research or out-licensing).

On the financial side, Arovella ended the quarter with a cash balance of A$8.1m. It raised gross proceeds of A$6.6m through two rounds of institutional financing in February 2022 (including directors’ contribution) and a share purchase plan (see our previous report for more details). The funds will be mainly utilised in manufacturing CAR19-iNKT cell components, preclinical studies for DKK1-CAR-iNKT and for operating purposes.

General disclaimer and copyright

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Frankfurt +49 (0)69 78 8076 960

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Germany

London +44 (0)20 3077 5700

280 High Holborn

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United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

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Sydney +61 (0)2 8249 8342

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This report has been commissioned by Arovella Therapeutics and prepared and issued by Edison, in consideration of a fee payable by Arovella Therapeutics. Edison Investment Research standard fees are £60,000 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

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Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

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Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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