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Diamond Equity Research Initiates Coverage on Arovella Therapeutics Limited(ASX: ALA)

·5-min read

NEW YORK, Jan. 23, 2022 (GLOBE NEWSWIRE) -- Diamond Equity Research, a leading equity research firm with a focus on small capitalization public companies has initiated coverage of Arovella Therapeutics Limited (ASX: ALA). The in-depth 23-page initiation report includes detailed information on Arovella Therapeutics Limited's business model, services, industry, valuation, management, and risks.

The full research report is available here. Highlights from the report include:

Large Market Opportunity

  • Evolving from OroMist® platform to cancer-treating immunotherapies - In the past one-year Arovella Therapeutics has added two novel cancer immunotherapies, indicating its move to a high growth market opportunity. Additionally, the approval of ZolpiMist® is likely to minimize the company’s cash burn rate. We believe that the company will focus on its high-value immunotherapy pipeline while continuing to advance its existing OroMist® platform pipeline. The management’s strategy to enter the lucrative market for immunotherapies indicates its expectation of prudent use of investors’ capital for the expansive opportunity and high-value cancer immunotherapy market.

  • Targeting highly expressed antigens for various blood cancers and solid tumors - The two licensed CAR immunotherapies aim to target highly expressed CD1d, CD19, and DKK1 antigens. In addition, the company’s use of CAR-iNKT therapies allows dual targeting leading to more effective immunotherapy than approved CAR-T therapies. The company’s lead immunotherapy CAR19-iNKT allows dual targeting of CD1d and CD19 thus drastically improving anti-tumor effects. The preclinical trial results to date, albeit early stage, indicated CD19 targeting CAR-iNKT cells may prove effective against lymphoma in the brain.

  • Minimal competition in CAR-iNKT immunotherapies - The global CAR-T immunotherapy pipeline is flooded with hundreds of clinical trials for various overlapping cancer indications. This is not the case with CAR-iNKT therapies, aside from four companies including Arovella, there are only to our knowledge a few academic trials underway in this segment. Out of these four companies, only one (Athenex Inc.) has reached phase 1 trials, while the other two companies’ CAR-iNKT pipelines are in the preclinical and target discovery phases. The CAR-iNKT therapies landscape is currently in a nascent stage with potential advantages over CAR-T and CAR-NK therapies, thus providing Arovella an opportunity to create a potentially attractive niche and develop a competitive edge over other cancer immunotherapy companies.

Valuation

  • Valuation Outlook - We have valued the company incorporating the two CAR-iNKT therapies and the potential cash flows from its lead drug candidate ZolpiMist®. Arovella’s initial indication for its immunotherapy include Non-Hodgkin’s Lymphoma (NHL) and Multiple Myeloma (MM) with a plan to expand to various solid tumor as well, indicating a huge market opportunity with unmet needs. Even though the market opportunity in terms of the patient population for ZolpiMist® is huge, the availability of low-cost and less effective generic oral drug poses a major competitive hurdle for the company. We have assumed a 5% probability of success for its immunotherapy pipeline and 70% to 95% for its ZolpiMist® drug across different geographies. Based on our assumptions, we have valued Arovella Therapeutics at A$0.11 per share, contingent on successful execution by the company. We view ALA as a suitable investment for institutional and high-risk-tolerant retail investors given the unique high risk-reward opportunity.

Arovella Therapeutics, Limited

Arovella Therapeutics Limited (ASX: ALA) is an Australia-based, ASX-listed biotechnology company that initially focused on reformulating existing drugs for oro-mucosal administration. Formerly, it was known as SUDA Pharmaceuticals and re-branded to Arovella Therapeutics after its acquisition of the iNKT cell therapy platform for cancer treatment. The company’s current areas of focus include oncology and medical conditions that affect the central nervous system. The company is targeting certain disease areas and developing therapies that help people to live longer and healthier lives.

For more information, visit https://www.arovella.com/

About Diamond Equity Research

Diamond Equity Research is a leading equity research and corporate access firm focused on small capitalization companies. Diamond Equity Research is an approved sell-side provider on major institutional investor platforms including Factset, Morningstar, and Thomson One.

For more information, visit https://www.diamondequityresearch.com.

Disclosures:

Diamond Equity Research LLC is being compensated by Arovella Therapeutics Limited for producing research materials regarding Arovella Therapeutics Limited and its securities, which is meant to subsidize the high cost of creating the report and monitoring the security, however the views in the report reflect that of Diamond Equity Research. All payments are received upfront and are billed for an annual or semi-annual research engagement. As of 01/24/2022 the issuer had paid us $33,000 for our company sponsored research services, which commenced 11/11/2021 and is billed annually. Diamond Equity Research LLC may be compensated for non-research related services, including presenting at Diamond Equity Research investment conferences, press releases and other additional services. The non-research related service cost is dependent on the company, but usually do not exceed $5,000. The issuer has paid us for non-research related services as of 01/24/22 consisting of $2,500 for an investment conference. Issuers are not required to engage us for these additional services. Additional fees may have accrued since then. Although Diamond Equity Research company sponsored reports are based on publicly available information and although no investment recommendations are made within our company sponsored research reports, given the small capitalization nature of the companies we cover we have adopted an internal trading procedure around the public companies by whom we are engaged, with investors able to find such policy on our website public disclosures page. This report and press release do not consider individual circumstances and does not take into consideration individual investor preferences. Statements within this report may constitute forward-looking statements, these statements involve many risk factors and general uncertainties around the business, industry, and macroeconomic environment. Investors need to be aware of the high degree of risk in small capitalization equities including the complete loss of their investment. Investors can find various risk factors in the initiation report and in the financial filings for Arovella Therapeutics Ltd.

Contact:

Diamond Equity Research
research@diamondequityresearch.com


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