Arovella Therapeutics Ltd (ASX:ALA) has been valued at $0.11 per share in the first bout of coverage from investment company Diamond Equity Research.
The firm came to its valuation in the wake of the biotech’s expansion from an oro-mucosal administration platform into cancer-treating immunotherapies.
Currently, Arovella’s two licensed CAR immunotherapies are targeting highly expressed antigens in various blood cancers and solid tumours, while its dual CAR-iNKT approach creates a more effective treatment candidate.
While there’s a lot of competition in the CAR-T therapy space, Diamond Equity says Arovella’s iNKT approach clears the runway and gives it a chance to create a potentially attractive niche, developing a competitive edge over other cancer immunotherapy companies along the way.
Valuation outlook
In a coverage initiation report on Monday, Diamond Equity had this to say about Arovella’s valuation:
“We have valued the company incorporating the two CAR-iNKT therapies and the potential cash flows from its lead drug candidate ZolpiMist®.
“Arovella’s initial indication for its immunotherapy includes non-Hodgkin’s lymphoma and multiple myeloma with a plan to expand to various solid tumours as well, indicating a huge market opportunity with unmet needs.
“Even though the market opportunity in terms of the patient population for ZolpiMist® is huge, the availability of low-cost and less effective generic oral drug poses a major competitive hurdle for the company.
“We have assumed a 5% probability of success for its immunotherapy pipeline and 70% to 95% for its ZolpiMist® drug across different geographies.
“Based on our assumptions, we have valued Arovella Therapeutics at A$0.11 per share, contingent on successful execution by the company.
“We view ALA as a suitable investment for institutional and high risk-tolerant retail investors given the unique high risk-reward opportunity.”
About Arovella
Arovella Therapeutics is an Australia-based, ASX-listed biotechnology company that initially focused on reformulating existing drugs for oro-mucosal administration.
Formerly, it was known as SUDA Pharmaceuticals and re-branded to Arovella Therapeutics after acquiring the iNKT cell therapy platform for cancer treatment.
The company’s current areas of focus include oncology and medical conditions that affect the central nervous system.
The company is targeting certain disease areas and developing therapies that help people to live longer and healthier lives.
The company’s therapeutic pipeline is divided into the cell therapy and OroMist® segment where historically it has been a drug delivery company focusing on the development of oro-mucosal spray versions of established medicines.
OroMist®
Under Arovella’s OroMist® platform, ZolpiMist® is a key candidate ready for commercialisation, which is an oral spray version of the drug called Ambien or Stilnox used for the treatment of short-term insomnia.
Other products under OroMist® ’s platform include Sumatriptan, for treating migraines, Anagrelide, which is being developed for the indications such as solid tumours and thrombocytosis, and pharma-grade cannabis, which is being developed for treating medical conditions like drug-resistant epilepsy (DRE), melanoma and motion sickness.
Immuno-oncology
Arovella’s invariant Natural Killer T (iNKT) cell therapy platform is at the forefront of immuno-oncology drug development.
Under the cell therapy pipeline, the company’s two candidates ALA101(CAR19-iNKT) and ALA-104(DKK1-CAR-iNKT) are in the preclinical stage targeting CD19, CD1d, and DKK1 expressing cancers.
This is an emergent immuno-oncological therapy that has evolved in recent years which uses and augments the body’s own immune system to more effectively penetrate and destroy cancerous cells.
The global immuno-oncology market is rapidly emerging — it was valued at US$37.95 billion in 2020 and is projected to grow at a CAGR of 14.9% to reach a market value of US$100 billion by 2027.