Comprehensive update reports

AdAlta (ASX: 1AD) - Smaller, smarter antibody-like drugs

Report released: Friday 6 July 2018
Analyst: Stuart Roberts, stuart@ndfresearch.com, +61 447 247 909

Monoclonal antibodies are a workhorse of modern medicine with global sales of >$US90bn pa. But they are expensive to make, and their molecule size makes them too big for use against many important drug targets. They also require heavy dosing, and this must be delivered by intravenous infusion. AdAlta is developing an antibody-like drug called the i-body with the same target specificity and affinity as a monoclonal antibody, but about 90% smaller. It will also more likely be cheaper to make, easier to administer and capable of addressing difficult-to-treat diseases such as fibrosis. AdAlta had originally intended for the first clinical product from its platform to be AD-114, initially for the treatment of Idiopathic Pulmonary Fibrosis. In 2018 it has replaced this programme with AD-214, an Fc-Fusion protein with much longer half-life and enhanced activity. We think the switch demonstrates the ability of the i-body platform to yield first class drug candidates. We see considerable upside for AdAlta given the high valuation that validated antibody and antibody-like platforms tend to trade for, the early focus on fibrosis and the demonstrated ability to hit targets that have proved extremely difficult to drug with antibodies, such as GPCRs. We value AdAlta at 36 cents per share base case and 81 cents optimistic case. Our target price of 60 cents per share sits around the midpoint of our DCF range.

Click here for our Comprehensive Update Report. This note replaces an earlier initiation note of 13 September 2016.

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