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RESEARCH: Invion, Helping Cancer To See The Light

FYI | May 23 2019

Invion is a player in PhotoDynamic Therapy

By Pitt Street Research

Invion Limited ((IVX)), which was formerly focused on the development of new drugs for respiratory disorders, in late 2017 changed direction with the acquisition of rights to a new Photodynamic Therapy (PDT) for the treatment of cancer.

PDT, in which light-sensitive drugs are used to kill cancer cells, has been worked on by companies and academic groups for many years, but the approach has yet to mainstream as a cancer therapy.

We argue that that is about to change, thanks to the recent European approval of a PDT called Tookad, initially indicated for localised prostate cancer.

Invion’s competing product, called IVX-P02 (previously Photosoft or NGPDT), has generated some interesting case studies and early clinical data, and the company will now proceed to conduct larger studies aimed at registration in Australia and New Zealand, possibly by 2021.

Lowered funding risk 

The initial indication for IVX-P02 will be non-melanoma skin cancer, but there is potential in many other cancers including prostate, ovarian and lung cancers.

Funding for the clinical work is being provided on a non-dilutionary basis through an R&D services agreement between Invion and Photosoft’s original developer, the Guangzhou-based Cho Group, which (with associates) owns 66% of Invion. This provides significant upside for Invion’s shareholders from Photosoft.

Investment case: A fast path to market

Invion expects to initiate Phase 1 studies in basal cell carcinoma and in mesothelioma in the third quarter of 2019. This puts the company on a path to be filing for its first Australian or New Zealand registration in 2021 for non-melanoma skin cancer and for mesothelioma possibly in 2023.

Valuation range of $0.031–$0.098 per share

We value Invion at 3.1 cents per share base case and 9.8 cents optimistic case using a probability weighted DCF approach. Since listing investors have tended to afford Invion a generous market capitalisation

Invion stock has come back from the highs of 2018, but has potential to at least maintain the current share price and potentially re-rate again as the clinical development of IVX-P02 further de-risks this product.

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