5 pharma & biotech stocks on the move in November

December 11, 2023 09:59

Independent Investment Research

There was some significant news flow in November 2023 which saw the shares of a number of pharma and biotech companies rally strongly. The share price of three companies in the coverage universe increased by more than 100% with the share prices of 9 companies increasing by 50%+. The below takes a look at some of the significant movers.

(1) LBT Innovations Limited (ASX: LBT)

LBT was the best performer in the coverage universe in November with the share price rising 225.0%, bouncing off lows earlier in the month.

During November, the Company completed an Entitlement Offer, raising a total of $3.58 million, with $1.0 million raised from shareholders and $2.55 million raised from the Underwriter. The raise fell short of the $4.5 million cap. The Entitlement Offer resulted in the issue of 716 million new shares and one free attaching option for every share issued. Half of the 716 million options issued have an exercise price of $0.005 expiring in 10 months and half have an exercise price of $0.008 expiring 2 years from the issue date.

The Entitlement Offer was part of a broader financial restructure with the Company repaying $1.38 million of debt in full and restructuring the loan from the South Australian Government. The $1.74 million loan was scheduled to be repaid in quarterly instalments by May 2025. The Company negotiated interest only payment terms with all principal repayments deferred to 2026.

Proceeds from the Entitlement Offer and the cashflow retained from the restructure of the loan will be allocated to funding growth initiatives including the commercialisation strategy for the APAS PharmaQC product line.

LBT has developed an Automated Plate Assessment System (APAS). The APAS technology automates culture-plate screening and interpretation, seeking to address the bottlenecks in microbiology labs. The technology streamlines the plate triaging stage of the microbiology workflow, delivering plate results three times faster than a scientist. The task of reading culture-plates is currently a time consuming manual task. With up to 85% of plates read being negative, APAS technology seeks to improve resource efficiency as well as improve the accuracy of the reads.

The Company is seeking to address two markets with its APAS technology: (1) Clinical Market (APAS Clinical)- infection diseases testing used by hospitals and private laboratories; and (2) Pharma Quality Control Market (APAS PharmaQC)- sterility monitoring in aseptic manufacturing.

(1) Clinical Market - LBT has a distribution partnership with Thermo Fisher Scientific for the distribution of APAS Independence in the US and Europe. The addressable market is 2,500 labs across the US and Europe with an addressable market size of $1.1 billion, according to the Company. Sales have been slower than anticipated in the Clinical Market, however in the Annual Report, LBT stated that Thermo Fisher Scientific had built a pipeline of opportunities with 20-30 advanced sales opportunities.

(2) Pharma Quality Control Market - The Pharma Quality Control Market represents an addressable market of $2.8 billion. LBT has partnered with AstraZeneca for the development of the APAS PharmaQC product with AstraZeneca contributing $1.1 million to the product development. As part of the development program an APAS Independence instrument was placed at an AstraZeneca manufacturing site in the UK, with the product demonstrating 100% sensitivity for growth detection on 1,515 monitoring plates. The development project is expected to be complete in early 2024 with the Company seeking to formally launch the product in the market in 2H’FY24, with meaningful sales expected to occur from FY25 onwards.

The Company is focused on delivering improved sales in the Clinical Market as well as finalising the product development for use in the Pharma Quality Control Market. The recent capital injection will assist with achieving these goals.

(2) Imugene Limited (ASX: IMU)

Imugene’s share price bucked the down trend with the share price increasing 155.8% in November. The share price ranged from $0.041 to $0.15 during the month.

The share price increase was driven by the announcement that the Phase 1 MAST (Metastatic Advanced Solid Tumours) trial evaluating the safety and efficacy of VAXINIA in advanced cancer patients has cleared cohort 4 of the intravenous arm of the monotherapy dose escalation study, as well as cohort 2 of the combination study in which VAXINIA is administered with the checkpoint inhibitor drug pembrolizumab (Keytruda).

At 31 October 2023, 34 patients had been dosed with VAXINIA during the dose escalation phase, including 16 patients dosed intratumorally and 18 patients intravenously as either monotherapy or in combination with pembrolizumab. 25 patients were evaluable with 1 Complete Response, 1 Partial Response, 16 patients with Stable Disease and 8 patients with Progressive Disease. There have been no dose limiting toxicity events.

The Complete Response came from a patient with bile duct cancer who previously had three cycles of chemotherapy with no response and has been off treatment for over 200 days.

Later in the month, the Company announced that on the back of the data from the MAST trial, VAXINIA had received Fast Track designation for Bile Duct Cancer by the FDA. The Fast Track designation provides eligibility for accelerated approval and priority review. The Company intends to use the designation to advance the clinical program on an accelerated timeline.

During the month, the Company also announced that the first patient was dosed in the Phase 1b Azer-cel clinical trial. Following the Phase 1b study there is the potential to commence a Phase 2 registrational study in the next 12-18 months. Imugene acquired Azer-cel in August 2023 with the Phase 1 trial treating patients with Diffuse Large B Cell Lymphoms (DLBCL) who relapsed after autologous CAR-T therapy.

The Company completed a capital raising during the September quarter, injecting $50.6 million to the balance sheet with the Company having $163.4 million cash at 30 September 2023. The Company has a number of clinical programs in progress with $22 million net cash outflow in the September quarter. Based on this run rate the capital will cover the clinical programs for 7 quarters.

(3) 4DMedical Limited (ASX: 4DX)

4DMedical shares jumped on the news that the US Centers for Medicare and Medicade Services (CMS) approved a US$299 (average rate) reimbursement benefit for XV LVAS scans, effective from 1 January 2024.

The addition to the CMS is a significant milestone for the Company with the inclusion expected to increase the uptake of the technology across the CMS network which extends to more than 65 million people. Following the CMS reimbursement, 4DMedical announced Outpatient pratices in Detroit and Memphis signed agreements to perform commercial XV LVAS scans commencing 1 January 2024. The agreements highlight the benefits for uptake with CMS reimbursement in the US market.

The Company also announced it had received FDA clearance for CT LVAS, which expands accessibility of functional lung imaging for patients. CT LVAS provides an almost identical report to 4DMedical’s XV LVAS, but uses widely available Computed Tomography (CT) imaging infrastructure, instead of x-ray equipment. FDA clearance follows the rollout of CT LVAS in Australia, with the US having the second highest number of CT scanners per million people, Australia with the highest.

Further significant news during the month was the Company signed an MOU with Koninklijke Phillips N.V (Phillips) for the commercialisation expansion of the XV technology. Phillips is a global healthcare company and a partner of the US Veterans Health Administration’s (VA), with 50% of VA clinics using Phillips imaging systems. The initial focus of the partnership will be to offer 4D lung imaging as a critical screening solution for Veterans exposed to burn pits. Subsequently, the parties intend to expand access to both software and hardware solutions, including to other US based federal agencies. and commercial operations in North America. The parties will also consider markets outside of North America for expansion.

4DMedical went into a trading halt on 7 December 2023 with the Australian Financial Review reporting that the Company was seeking to raise $30-$40 million at $0.79 per share, a 17.7% discount to the close prior to the trading halt. The proceeds reportedly will be used for the acquisition of a medical imaging software company in the US.

(4) IDT Australia Limited (ASX: IDT)

IDT’s share price increased 83.3% in November. The share price rallied 16% on 1 November after the Company announced quarterly sales growth across the three business pillars.

Unaudited Revenue increased 300% on the pcp to $3 million in the 1Q’FY24. The Company stated that the sales pipeline continues to grow with the Company submitting $11.3 million in proposals in 1Q’FY24.

The September quarter revenue marked the 5th consecutive quarter of revenue growth by the Company and represented the highest quarterly revenue in nearly two years. The Specialty Orals segment is the largest revenue contributor, with unaudited revenue of $1.4 million in 1Q’FY24, up 200% on the pcp.

IDT has undergone significant change in recent times with leadership changes and a refreshment of the Board as the Company seeks to grow the business and become profitable. At the AGM in November, the Company stated that the outlook for FY24 is positive with stronger results expected with the Advance Therapies segment expected to be a key growth driver for the Company in coming quarters.

The Company announced it had won three new contracts worth $6.9 million in October and November, which is up from the $1.2 million in contracts secured in the September quarter. Two of the three contracts were for Advanced Therapies.

(5) PYC Therapeutics Limited (ASX: PYC)

PYC shares rallied 64.9% in November with the positive momentum continuing in early December. During the month the Company announced it had developed a new drug candidate for the treatment of Polycystic Kidney Disease (PKD), PYC-003.

PKD affects 1 in every 1,000 people globally according to the MAYO Clinic with the disease affecting more than 5 million people worldwide. There are currently no drugs available that address the underlying cause of the disease and approximately 50% of PKD patients will progress to end-stage renal failure by the age of 60. PKD is characterised by the formation of multiple fluid filled cysts throughout the kidney and, to a lesser extent, other organs. Progression of the cyst frequency and volume over time ultimately leads to destruction of the internal architecture and function of the kidney.

Results from a study conducted in 3D patient derived models, using tissue collected directly from the kidney’s of PKD patients, demonstrated a reduction in cyst size and frequency following treatment with PYC-003. As a result of this study, the Company plans to accelerate PYC-003 into human trials. The Company has made an IND application to the FDA with the Company seeking to commence human trials in 2H’2024. Given the unmet need, the Company is confident it will receive Fast Track and Orphan Drug Designations.