FYI | Jul 01 2020
This story features IMAGION BIOSYSTEMS LIMITED. For more info SHARE ANALYSIS: IBX
Pitt Street Research sees a re-rating on the cards for Imagion Biosystems, which has secured strong financing through multiple avenues
By Pitt Street Research
An innovative medical device company
Imagion Biosystems ((IBX)) is an Australian medical device company whose MagSense diagnostic imaging technology, currently in early-stage development, can potentially improve on PET and MRI imaging modalities.
Imagion is currently in preclinical development, with the first human pilot studies of the technology targeted for 2020. The FDA granted MagSense a Breakthrough Device designation in July 2019.
Imagion to commence Phase I clinic study in late FY20
Imagion intends to undertake a first-in-human study of the MagSense technology initially in HER2-positive breast cancer in Q4 FY20, to be followed later in prostate cancer and ovarian cancer.
With HER2-positive breast cancer, the goal will be to establish a non-invasive method of detection of cancer in the lymph nodes, compared with the conventional biopsy of the sentinel lymph nodes.
Imagion intends to sell MagSense on a ‘printer and ink’ model, where a low sales price for the SQUID equipment (US$0.5m at a 50% gross margin) is matched by a higher selling price for the nanoparticles (US$1,500 per test at an 80% gross margin).
We estimate Imagion can potentially look to make its commercial launch in 2022 or 2023.
Imagion signs deal with Siemens Healthineers
In May 2020, Imagion signed a collaboration agreement with a leading medical technology firm Siemens Healthineers to explore the use of Imagion’s MagSense nanoparticles as an MRI contrast agent for patients with HER2 metastatic breast cancer.
The deal will also pave the path for Imagion to further explore MRI as a commercialisation strategy.
Funding raised through multiple avenues
In April 2020, Imagion raised $2.5m through a renounceable rights issue, exceeding its initial goal of $2m.
Furthermore, Imagion generated funds through sale of nanoparticles formulation to other medical equipment manufacturers ($0.56m) and R&D tax incentives worth $4.2m.
This was further supported by an improvement in cash flow generation on account of prudent fiscal management in 2019.
Imagion is undervalued based on our numbers
We value Imagion at 12 cents base case and 26 cents optimistic case on a risk-weighted DCF basis.
We see Imagion being re-rated closer to our valuation range on the back of improved sentiment towards MagSense as a Breakthrough Device, as the company takes the device to clinic.
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