Share consolidation magic? 'It's all in the vibe.' Pic via Getty Images
Health & Biotech
Health Check is renowned business and biotech journo Tim Boreham’s daily wrap covering morning movers and shakers of note in the ASX Healthcare sector, Monday through Thursday.
While share consolidations do nothing fundamentally to boost the worth of a company, ‘penny dreadful’ valuations are embarrassing and may detract from investor confidence.
Dare we say – it’s all in the vibe.
In the life sciences space, Invion (ASX:IVX) and Wellnex Life (ASX:WNX) are the latest to deploy the well-used tactic.
The developer of photodynamic cancer treatments, Invion next month is seeking shareholder consent to reduce its circa 6.76 billion shares on issue to a more respectable 67.6 million (one share for every hundred held).
“Our share price is the sum of a penny,” laments Invion executive chair Thian Chew.
A supplier of consumer health brands in the beauty and food sectors, Wellnex has reduced its shares on issue by 50 to one, with its share base reduced from 1.4 billion to around 28 million.
Of course, the ultimate fate for these companies depends on what’s under the bonnet.
Invion is about to launch a phase 1-2 trial for non-melanoma skin cancer, aptly in sun-bathed Queensland.
The company has begun screening the first patients for the adaptive trial, which means the requite numbers can be as low as 18 or as high as 174 depending on the dosing regimen.
With a background in finance including at Goldman Sachs, Chew also knows there are sound reasons for Invion’s share malaise.
One of them is that many shareholders are such only because Invion back-door listed via a company with unrelated activities.
“They are legacy shareholders who don’t know what we do,” Chew says.
“We need to get a shareholder base that is more interested in what we are doing.”
In a “transformation period” Wellnex reported revenue for the 2023-24 year of $16.9 million, down 39% and bolstered by $11.3 million in the second half from last year’s acquisition of the topical pain relief brand Pain Away.
The company’s normalised underlying loss reduced 31% to $4.5 million, but with the second half recording a $600,000 profit (thanks to Pain Away).
Unusually, Wellnex plans to migrate to the London Stock Exchange, so investors won’t have much more time to ponder their new-found share ‘wealth’.
Invion’s yet to be reconstructed shares were steady at 0.2 cents this morning, while the consolidated Wellnex shares were unchanged at 90 cents.
Your columnist is used to the mind-boggling estimates of the cost to society of treating a certain disease, invariably trotted out by a commissioned research house.
But the American Heart Association really raises the bar, estimating that cardiovascular diseases will cost the US economy US$1 trillion annually by 2035.
We blame the dire US budget deficit – US$35 trillion but who’s really counting – for desensitising us to such hitherto inconceivable sums.
Anyway, Artrya (ASX:AYA) cites the ginormous figure in an update this morning on the progress of its Salix device, which uses algos and AI to detect hidden but deadly plaque on coronary computer tomography angiogram (CCTA) images.
The company contends the current detection methods are ineffective, while more than half of invasive procedures turn out to be unnecessary.
With the device already approved in 34 countries including here, Artyra is confident of US Food & Drug Administration (FDA) approval in early 2025, despite the agency knocking back the company’s application in June last year.
“We probably didn’t engage with the FDA in the way we should have … we were winging it,” Artrya chief Mathew Regan admits.
This time it’s different, with all the Ts crosses and the Is dotted and the agency’s feedback very much heeded.
Management’s total US addressable market estimate falls well short of the ‘T’ word but still is inticing: a US$4.18 billion-a-year based on 4.4 million CCTA scans annually.
Artrya shares were steady at 39 cents.
Coming back to share valuations, should Island Pharmaceuticals (ASX:ILA) be worth at least 63% more?
Pitt Street Research notes that the Biotech Bear Market (their capitals) of 2022-23 was especially unkind to companies “perceived either not to be advancing or with milestones too far away”.
Island evidently was one of them, but things are changing as the company girds for a phase 2 study of its repurposed compound ISLA-101, to tackle the global scourge of dengue fever.
Transmitted by mosquitoes, dengue fever is endemic in 100 countries and affects more than 400 million people annually.
The prophylactic trial, dubbed Protect, will be the most comprehensive study of ISLA-101 in mosquito diseases. Investors won’t have to wait long, with interim results due pre-Christmas and full results in 2025.
In its company-sponsored note, Pitt Street says that being a repurposed drug, ISLA-101 poses less risk than other pharma companies because of its substantive history of safety data.
Repurposed drugs are also cheaper and quicker to get to the clinic.
Pitt Street values Island shares at 31 cents to 41 cents, a 63% to 115% increment on Monday’s close of 19 cents. The stock has already more than doubled over the past year.
“A failure of the trial is a key risk facing the stock,” Pitt Street opines (somewhat redundantly).
Island shares fell 5% to 18 cents.
At Stockhead we tell it like it is. While Island Pharmaceuticals is a Stockhead advertiser at the time of writing, the company did not sponsor this article.
Health & Biotech
Health & Biotech
Health & Biotech
