Late last weel week we've initiated coverage on Invitrocue, a Singapore-based company whose Onco-PDO technology is enabling personalised treatment solutions for cancer patients at low cost. 

Invitrocue was founded in 2012 to commercialise two technologies for 3D cell culture, HepatoCue and 3D CelluSponge. These technologies are used to develop in vitro liver models to improve toxicology testing. Invitrocue also offers a clinical service called Onco-PDO, a tool for selecting the right drugs from an in vitro model of a patient’s tumour. Invitrocue is leveraging on its expertise and know-how in 3D cell culture to grow patient-derived cancer cells in its scaffolds and other platforms to test them against a range of cancer therapies. With Onco-PDO, the way is open for low-cost personalised cancer medicine, where the market opportunity lies in the billions. We value Invitrocue at 7.3 cents base case and 24.4 cents per share optimistic case. Our target price of 16 cents per share sits at the midpoint of our valuation range. We see Invitrocue being re-rated by further data showing the power of Onco-PDO, and the commencement of clinical studies to validate Onco-PDO ahead of regulatory approval.

You can download a copy of NDF Research's initiation report by clicking here or visiting ndfresearch.com. We commend the report to you. Note - the usual disclaimers apply - click here.

NDF Research has initiated coverage on Actinogen, which is in Phase 2 with a new agent for the treatment of Alzheimer's disease called Xanamem. 

20 years ago, a diagnosis of cancer was often considered a death sentence; today the majority of patients survive for more than five years through significant advances in diagnosis and treatment. 25 years ago, the first treatment for Alzheimer’s disease was brought to market; yet today the prognosis for Alzheimer’s disease has changed very little. The few drugs that are available provide only marginal benefit and the need for new effective therapies has never been more urgent. In the US alone, there are over 5 million Alzheimer’s sufferers, and in Australia, it’s the leading cause of death for women and second only to cardiovascular disease for men.  These current grim statistics are due in large part to the few approved treatments providing only symptomatic relief, and that there has not been a new FDA-approved Alzheimer’s treatment since 2003. Age is the biggest risk factor for Alzheimer’s and the aging population is resulting in more and more of our loved ones being diagnosed with the disease each year. The challenge is to develop new treatments that result in a shift in Alzheimer’s disease prognosis comparable to the substantial progress seen with cancer. The company that successfully brings a drug to market will have access to a global market in the tens of billions of dollars and the potential to create the next Alzheimer’s blockbuster.

Actinogen Medical aspires to be part of that shift.  The company’s unique focus is on the development of Xanamem, a drug that targets cortisol (rather than amyloid plaques). This target has strong published scientific support indicating a promising chance of success.  Actinogen’s Phase 2 trial of Xanamem, entitled XanADu, is expected to complete in 2019. On this basis, we value the company at 10 cents per share base case and 26 cents per share optimistic case. Our target price of 18 cents per share sits at the midpoint of our valuation range. We see Actinogen being re-rated by the progress of the XanADu trial, particularly with an interim analysis due in May/June 2018 prior to the full results in the second quarter of 2019.

You can download a copy of NDF Research's initiation report by clicking here or visiting ndfresearch.com. Note - the usual disclaimers apply - click here.

This morning NDF Research initiated coverage on Orthocell, an emerging player in the multi-billion-dollar field of regenerative medicine. 

Orthocell's unique foundation products (Ortho-ATI® for tendon repair and Ortho-ACI® for cartilage repair) provide early commercial opportunities with large addressable markets.  But, the big payday may occur this financial year with European approval (CE Mark) achieved for CelGro® and US approval to follow. CelGro® is the company’s collagen scaffold that facilitates rapid tissue regrowth across a range of indications.  We regard CelGro® as a potential breakthrough product due to its mechanical strength, natural collagen structure and versatility.  CelGro® could also enjoy rapid initial revenue in dental and orthopaedic markets - potentially accelerated by commercial partnerships with large healthcare companies.  CelGro®’s potential market is well in excess of US$2bn. Orthocell has further related and ground-breaking opportunities including its ‘Cell Factory’ project to harness stem cell growth factors.  Our target price for the company is A$1.75 per share (midpoint of base case: A$0.89 and optimistic case: A$2.63).
 
You can download a copy of NDF Research's initiation report by clicking here or visiting ndfresearch.com. Note - the usual disclaimers apply - click here.

Just over eighteen months ago, in July 2016, I published an article headlined 'The Coming Boom in Life Sciences, Down Under' in which I suggested that Australia was on the way to a boom for its biotech and medical device sector. I argued that all the elements of that coming Boom were gradually falling into place. Comparing the present day with the investment climate of Australia in the-mid-to-late 1960s, I then gave the opinion that what was needed to kick off the Boom was Australian biotech's 'Kambalda Moment'. What I was referring to was the April 1966 nickel discovery at Kambalda in Western Australia that eventually resulted in the fabled Poseidon Boom three years later. I encourage you to check out my July 2016 article in the light of what I am arguing here - that Australian biotech has just had its Kambalda Moment in the second half of February 2018, and, if I'm right, the Boom is now set to pick up a significant head of steam. The Moment I'm describing is actually two events that happened last week. Firstly, the announcement on Wednesday 21 February that Merck & Co. will acquire the Sydney-based oncolytic virus developer Viralytics for US$394m, and secondly, the announcement the following day that the Melbourne-based regenerative medicine company Mesoblast had successfully achieved the primary endpoint in its Phase 3 study of remestemcel-L in Graft-versus-Host Disease. The fact that we had two 'sit up and take notice' events at the same time makes me particularly bullish about the prospects of the Australian Life Sciences sector. You can check out my latest thinking in today's article, which I've headlined 'It's 2018. Is this the start of the Australian Life Science Boom?'. Enjoy. It's even got a quote from the Bible.

Want a sure-fire way to make money in biotech and medical device stocks? There is none. There are, however, certain things you can do to maximise your chances of success. I have been arguing lately that one of the better ways to do that is by buying stock in companies where the CEO is a woman.
At NDF Research we recently analysed the global Life Sciences sector and found that only around 7.5% of CEOs in the sector were women. The sector in Australia and New Zealand does better, with a 13% female CEO rate, however that's still too low, in my opinion, because there are plenty of talented women working in the space that could be good CEOs if they got the tap on the shoulder.

Don't get me wrong. Stuart Roberts of NDF Research has not suddenly become a card-carrying feminist demanding CEO quotas for women. I've simply noticed that, since there are relatively few women in leadership in the Life Sciences sector, the women who do get to the top in their companies tend to be smarter and work harder than their male counterparts - because they know that gender equality isn't something you can take for granted, even in a more 'progressive' sector like Life Sciences. That provides investors with an opportunity. Buy a Life Sciences company with a female CEO and you're more likely to make money in the long run.

You can check out my thinking on gender inequality in the Life Sciences as an opportunity for investors at ndfresearch.com, where last month I published an article headlined Australia's growing support for women in Life Sciences. Its another good reason to look at this exciting industry where fortunes will be made in the years ahead as small cap companies mature into large caps and from there into blue chips.

I also urge you to check out the Life Sciences companies that are run by women such as Dimerix, AdAlta and Phylogica, all of which we cover at NDF Research.
​
Finally, here's an interview I recently performed for Health Invest TV with one of those talented female CEOs, Kathy Harrison of Dimerix, at the recent JP Morgan Life Sciences Week in San Francisco. See if you don't agree with me that Dimerix has a great story to tell - bit.ly/2mHDQow.

Today we've initiated coverage on Patrys (ASX: PAB), a Melbourne-based company that may have one of the world's first cell-penetrating antibodies for the treatment of cancer.

To understand the Patrys opportunity, you need to do two things at once.  Think micro: recognising that Patrys has a world-first, cell-penetrating anti-DNA antibody.  At the same time, think macro: recognising that its ground-breaking drug will play into a US$84bn antibody market.  Taken together, these ingredients have the feel of blockbuster potential.  The story started when Patrys in-licensed a ground-breaking antibody from Yale University in 2016.  One way that cancer cells stay alive is by self-repairing their DNA when it breaks – and Yale’s Deoxymab 3E10 prevents this.  Importantly, Patrys has now upgraded this antibody for human use.  And, on the basis of its pre-clinical work, it recently announced that its version (PAT-DX1) may have application for a broad range of cancers: glioblastoma, colon cancer, triple negative breast cancer; and possibly, melanoma and other cancers as well.  This product will enter the clinic in 2019.  Back in 2014, AstraZeneca gained FDA approval for Lynparza, the first of the revolutionary PARP inhibitor drugs for the treatment of cancer. For reasons explored further in this note, Patrys’ product could be superior since it can prevent double-strand as well as single-strand cancer DNA repair.  In addition, it can be synergistic with PARP inhibitors, and conjugated to other drugs of interest.  This antibody is Patrys’ current priority – but the company still retains (for possible future attention) the IP from its original work on creating a new class of monoclonal antibody drug.  We value Patrys at 7.3 cents per share base case and 18.3 cents optimistic case.  Our target price of 13 cents per share sits at the midpoint of our valuation range.  We see Patrys being re-rated by the progress into the clinic of PAT-DX1 and continued commercial success for the PARP inhibitors.

You can download a copy of NDF Research's initiation report on Patrys by clicking here or visiting ndfresearch.com. We commend the report to you. Note - the usual disclaimers apply - click here.

This week we've initiated coverage on SUDA (ASX: SUD), a Perth-based a drug delivery company focused on oral spray formulations of existing drugs.

Imagine these five things.  First, a small pharmaceutical company with a unique platform for reformulating billion-dollar drugs for oral delivery.  Second, that such delivery is not only safer but also much faster-acting.  Third, that the target markets are large, including patients suffering migraine, anxiety, erectile dysfunction, nausea and malaria.  Fourth, that a reformulated approval potentially involves months (not years) and costs a few (not hundreds of) millions.  Fifth, that the small pharma already has its first licensing deal with a top-20 global pharma, as well as two other recent deals.  Well, the small pharma is SUDA.  We value it at 9 cents per share base case and 25 cents per share optimistic case using a probability-weighted DCF approach. Our target price of 17 cents per share sits at around the mid-point of valuation range.

You can download a copy of NDF Research's initiation report on SUDA by clicking here or visiting ndfresearch.com. We commend the report to you. Note - the usual disclaimers apply - click here.

Next week is an important milestone in my life. NDF Research (ndfresearch.com), which was founded on Friday 27 May 2016 to provide commissioned equity research focused on ASX-listed Life Science companies, will be a year old. Looking back over the last 12 months I have a lot to be thankful for, particularly the support and encouragement of great people I had yet to meet on that fateful day. Thank you to all of you who have contributed in some way to making it happen, or just passed on a kind word. Starting NDF Research was not something I did easily or lightly. The biotech and medical devices game may be a risky one, particularly in Australia and New Zealand, and requires a high risk appetite on the part of its participants, but I had never personally had the confidence to put out the shingle until last year, when I was past the age when I figured most entrepreneurs do their first start.

Partly what gave me the courage was the story of what I regard as the greatest startup in history, which took place in what is now the Startup Nation - the State of Israel - a long time ago. The startup I'm thinking of was, in effect, a spin out from the local building and fishing industry, and happened when a Great Man approached a couple of guys who had no experience in the field proposed for the new venture. The Great Man, aged about 30, said, simply, 'Follow Me'. That was a calling I have heeded myself, albeit imperfectly. We sometimes call the founder of the world's greatest startup the Great Physician, so I guess you could say His work was the forerunner of today's biotech and medical device industry.

Startups are perilous things. When the second-greatest startup in history was kicked off in Philadelphia in more recent years, the press release announcing it concluded with these these ominous words: 'We mutually pledge to each other our lives, our fortunes, and our sacred honour'. The 56 co-founders of that start - it attracted venture capital from 13 different jurisdictions, hence the high early headcount - knew that if they didn't get enough market share with their new venture it would not only fail but they would not be allowed to start another one. Their average age at the time was 44, which is comforting to this 46-year old entrepreneur. Thank heavens they succeeded.

Startups also tend to look a little messy at the beginning before they gain some traction. The third greatest startup in history was mostly staffed at the beginning by unskilled convicted criminals, many of whom had mental health issues and many of whom unfortunately died on the job. The venture had to rely almost exclusively on meagre government grants to survive. Indeed, it didn't take off until its main business changed from government services to agriculture a couple of decades after the start, but today people will move thousands and thousands of miles just to join this company. I was born into it. It's called Australia, and NDF Research, which I hope will go down in history as another great startup, is a recent spin-out company.

I will be in New Zealand all next week helping to build the Life Sciences sector of that great neighbour of Australia's. However the week after next, on around Monday 29 May, I intend to have a celebratory lunch for NDF's first birthday. If you'll be in downtown Sydney that day, just message me and I'll let you know the venue.
​
Stuart Roberts,
Founder and Senior Analyst,
NDF Research.

Nisi Dominus Frustra.

Today we've published our evaluation report on Phylogica (ASX: PYC), a Perth-based biotechnology company focused on peptide drug development.

Peptides are potentially very valuable as the basis for future world-leading drugs, and Phylogica has a powerful discovery engine with its Phylomer platform.  Most importantly, having discovered how peptide drugs can be delivered intra-cellularly, the company is able to address hitherto ‘undruggable’ targets.  This should in turn open the way for a pipeline of potential blockbuster drugs.  The company has already signed collaboration agreements with AstraZeneca, Roche, Pfizer and J&J.  In due course, each of these can yield substantial milestone payments (one such already received).  In addition to the outsourced projects, the company also has its own three, highly-prospective, in-house programmes focused on cancer targets. Our report has been commissioned by Phylogica to provide a third-party valuation of the company. We value Phylogica at 5.2 cents per share base case and 14.2 cents per share optimistic case. We regard 10 cents per share as a reasonable mid-range valuation for Phylogica.

You can download a copy of NDF Research's evaluation report in Phylogica by clicking here. I commend the report to you. Note - the usual disclaimers apply - click here.

Yesterday we initiated coverage on Optisan Imaging (ASX: OIL), a Melbourne-based company which has historically been an important player in the field of surgical microscopes and which is now being resurrected after around nine years in the wilderness. We think it is a phoenix rising from the ashes.

Optiscan is a Phase III company currently capitalised at only ~A$36m. Later this year Optiscan's partner, Carl Zeiss Meditec AG, the German manufacturer of optical systems, is expected to gain FDA approval for a new rigid endomicroscope that was developed by Optiscan and on which the two companies have been collaborating since around 2007. As we explain in our report, we believe the forthcoming Zeiss product has the potential to become a new gold standard for brain tumour surgery by making current practice obsolete. We suggest the market has yet to fully discover the late-stage nature of the Optiscan story.

Optiscan is a world-leader in the field of live micro-imaging, where powerful microscopes are used to image internal organs at the cellular level in real time for surgery and during diagnostic procedures such as endoscopy. In the 1990s the company introduced one of the first fibre optic confocal microscopy devices, while its Pentax ISC-1000, FDA approved in late 2004, was the world’s first flexible endomicroscope. The commercialisation of this landmark instrument stalled in 2007 and 2008 due to a combination of factors - Pentax was taken over by Hoya not long before the Global Financial Crisis, which led to cancellation of all Pentax-originated research and development, leading in turn to the discontinuation of the Pentax ISC-1000. A decade later, Optiscan finally appears to be recovering from the Pentax setback.

Last year a new leadership team took office at Optiscan, focused on gaining commercial outcomes from the historic A$100m that has been invested in the company since the 1990s. Their recovery plan has focused to date on helping Zeiss deliver the new endomicroscope product. We see that product as well as the new Optiscan pipeline helping to re-rate Optiscan stock. We value Optiscan at 11 cents per share base case and 25 cents per share optimistic case. Our 17-cent target price sits at around the midpoint of our valuation range.

You can download a copy of NDF Research's first report on Optiscan by clicking here. I commend the report to you. Note - the usual disclaimers apply - click here.

Here's this afternoon's Livewire Markets posting - visit www.livewiremarkets.com. Livewire is Australia’s source of financial intelligence.

Days like today make me wish I was back in stockbroking because Sirtex's 'Trading Update' has created the kind of contrarian play I love. Thanks to slower SIR-Spheres sales, Sirtex's constant currency EBITDA in 1H17 will fall 9-16%. As I write Sirtex stock is down 41%, making people think the world's just ended for this company. I argue, by contrast, that nothing serious has gone wrong. Yes, you heard me right. Sirtex has cited increased competition for patients, a new drug approval for salvage metastatic colorectal cancer, and tighter reimbursement. None of these should really worry Sirtex management because once SIR-Spheres are used for more than salvage therapy, Sirtex's growth profile will be assured. We know from numerous small studies that the product works in liver cancer. That's started to be borne out in the larger studies Sirtex has designed to move SIR-Spheres from 'last line' to first line', which is where the big money is. We at NDF Research don't cover Sirtex (yet), but I suggest investors taking a medium-term view may find a lot to be encouraged about.

​Note - the usual disclaimers apply - click here.