Surgeon Dan's deep dive on MLS Bio

Good morning, Armchair Army,

Welcome to today's edition of The Armchair Analyst, a 5-minute daily update on the ASX life-sciences sector.

Happy Friday!

Today I’m handing over the reins to a good friend of the newsletter, Surgeon Dan.

Big congrats by the way…

He just started a new position as CMO of MLS Bio.

MLS Bio is a private Australian biotech startup developing a first-in-class small-molecule CD151 inhibitor targeting cancer metastasis in prostate cancer.

(Interestingly, the compound computation was structurally developed using AI)

As we do every Friday on Armchair Analyst, we like to highlight some private and unlisted healthcare companies.

So take it away, Surgeon Dan.

But first…

Memphasys (ASX: MEM) secures a €416,200 (~A$674,000) three-year agreement with INVIDO for exclusive distribution of its sperm separation device in the Czech Republic, Slovakia, and Kazakhstan. (MEM)

🪑 I’ve been impressed with MEM’s ability to close these deals ever since the CE Mark came through.

The FDA held a hearing on testosterone therapy for women yesterday, calling for more research into female-specific products. (Reuters) 

🪑Very positive outcome for ASX-listed Acrux (ASX: ACR, held).

ACR has revived the development of its own female testosterone product and is currently looking for a partner to help finance the Phase 3 clinical trial.

Americold has launched a sale of its Asia-Pacific and European cold storage operations, with the Australian and New Zealand business expected to fetch at least $1 billion. (AFR)

🪑 Interesting valuation peer comp for ASX-listed Cryosite (ASX: CTE).

My favourite stock commentator Kneppy just published a deep dive on CTE.

London-based Ori Biotech secures US$120 million for commercial cell therapy manufacturing. (Contract Pharma)

🪑 AdAlta (ASX: 1AD) pointed out today in an announcement that Ori Biotech is its cell therapy manufacturing partner of choice.

Cambium Bio (ASX: CMB) secures ~A$11M from institutional investors. (CMB)

🪑Capped at $13 million, this raise is dilutive (but it went mainly to existing shareholders). This should be enough to finance the Phase 3 clinical trial.

Super tight share register on this one.

I wrote about the stock two weeks ago as part of my Biotech 165 Challenge: Sight for Sore Eyes: The Cambium Bio Story (CMB)  

CurveBeam AI (ASX: CVB) raises A$1.75M through an oversubscribed SPP at $0.018 per share. (CVB)

🪑 Well in the money, those SPP shares!

I’m catching up with the CVB team next week to get the full story.

Feature: Australis Scientific - an Australian medical device for incontinence selling into China. (AFR)

NSW has unveiled plans for a $150 million fund to co-invest alongside universities in research commercialisation. (Startup Daily)

🪑 I do like this.

If elected, the Victorian liberals will abolish Breakthrough Victoria, the state-owned VC fund. (AFR)

🪑 I don’t like this.

Sydney-based Medow Health AI has raised $3.5 million to roll out an AI-powered front desk for specialist clinics that handles calls, bookings and patient messages. (AFR)

G’Day Armchair Army,

Surgeon Dan here, got some wild news.

I’m putting down my scalpel and swapping it for a suit!

Not really…

But I have taken on a new role as Chief Medical Officer at MLS Bio, and I wanted to share my rationale so you understand the why.

We (surgeons) are very good at removing prostate cancer.

I've spent close to a decade in urology in Perth.

I've been in theatre for the operation itself and involved in managing patients on either side of the surgery. 

The prostate lifted out clean, margins clear, home in a day or two with his cancer in a specimen pot. 

But sometimes the patients come back… because the cancer does too.

Three weeks ago, this happened to my father-in-law.

Two years after surgery, everything had gone the way you would want. 

Clean operation. PSA where it belonged. We had exhaled and moved on. 

Then the PSA began to rise. 

A PSMA PET scan followed.

And there it was… one spot. 

Oligometastatic.

Translation = the disease has moved, but it hasn't gone everywhere… yet.

The important word is moved.

Nothing had been left behind during his operation. 

But a cancer cell HAD escaped, survived and showed up two years later somewhere else in the body.

Surgery cannot solve that, AND there is no drug for it either. 

We shrink tumours, we starve them, we poison them, we irradiate them. 

But there is not a single approved medicine anywhere in the world whose actual job is to stop a cancer cell from moving.

Then I came across MLS Bio, an Australian biotech tackling exactly that problem.

It’s still in the early stages.

Preclinical.

BUT, as a clinician, I wanted the opportunity to ensure that promising science is rigorously developed and given every chance to reach its full clinical potential. 

So, I joined them as the Chief Medical Officer.

But I also put my own money into the company too.

So I’m in it for the long haul.

Most cancer drugs try to kill the cancer cell. 

Chemo, radiation, the targeted agents, hormones… different mechanisms, same basic ambition. 

Find the cell → Kill the cell.

MLS Bio's platform and lead compound, MLS-269, isn't built around killing anything. 

It's built around a protein called CD151. 

CD151 is basically an organiser on the cell surface.

It helps control how cells attach to their surroundings, move, and communicate by organising proteins called integrins.

Integrins = the proteins cells use to grip onto their surroundings.

They are anchors on the cell surface.

Following so far?

When cancer grows and spreads, those anchors become very important.

A cancer cell needs to detach, move through surrounding tissue, and establish itself somewhere new.

CD151 helps instruct the machinery that allows it to do that.

So rather than trying to destroy the cancer cell directly…

MLS-269 tries to disrupt the system that helps it move and spread.

It’s like removing the manager from a construction site.

The workers are still there.

The tools are still there.

But suddenly, nobody is coordinating where everyone goes or what they should be doing.

So the construction site is largely ineffective, with all of the workers on a coffee break.

Professor Albert Frauman's group at Melbourne University has been investigating CDI51 biology in prostate Cancer for two decades.

Their published work found that men whose prostate tumours had high CD151 levels did measurably worse.

AND that knocking CD151 down in prostate cancer cells made them markedly less mobile.

CD151 belongs to a family of proteins that has never produced a marketed medicine.

Not for prostate cancer. Not for any cancer. Not for anything.

That makes MLS Bio's lead compound, MLS-269, “first-in-class” or “best-in-class”.

No one else is doing it!

It is attempting to launch a new class…a whole new therapeutic category.

This is the opportunity AND the risk.

Validating a genuinely new mechanism can establish an entirely new therapeutic category and create strategic value across indications, combinations, and subsequent generations of compounds.

Statins weren't just a better cholesterol pill… 

They created cardiovascular prevention as we know it.

The GLP-1s weren't just a diabetes treatment…

They've redrawn two entire markets and made a fortune doing it.

Large pharma pays absurd money for first-in-class assets, because second- and third-place entrants are only worth anything if the first proved the biology.

But novel biology comes with novel risk. 

First-in-class drugs are the hardest to develop. 

There's no roadmap. 

No competitor's failed trial to learn from. 

No regulatory precedent for what an approvable endpoint looks like. 

Another pharma company has previously tried to hit CD151 with an antibody and didn't get it over the line.

Will that approach be translated successfully into humans? 

Nobody knows yet.

(That’s what clinical trials are for)

A key reason I was enthusiastic about coming on board was the strength of its intellectual property (IP).

Not just a single drug, but MLS holds key global patents over a class of small-molecule therapeutics, allowing it to develop into a defensible platform spanning multi-organ oncology and even infectious diseases.

So.

MLS Bio has…

Global IP, credible preclinical evidence, a commercially meaningful problem, and a development team that can systematically reduce the remaining risk.

That is what interested me.

In science, people matter, particularly the smart ones.

For early-stage companies, that means the Scientific Advisory Board.

Or SAB.

The advisory board includes clinicians and investigators who are experts in the field.

Their role is to review the scientific program and highlight the strengths and weaknesses in the company's assumptions.

A rigorous and highly credentialed SAB is critical to any early-stage biotech company.

(Particularly a pre-clinical company that has yet to begin in-human trials)

When evaluating a SAB, I look for advisors who are independent AND have specific credentials in the field.

Just a couple of names…

One of the world’s leading prostate cancer clinicians.

He helped to discover Abiraterone, a prostate cancer drug that allowed many men with advanced disease to delay chemotherapy.

Charles led the pivotal trial that proved it worked. He is now Medical Director of the PCCTC.

He's on our board.

At Duke University, he helped develop a prostate cancer treatment through to FDA approval.

He then led the trial that moved it into earlier-stage disease and showed it could help men live longer.

He’s on our board too.

MLS put its program in front of its SAB and asked:

What is wrong here? How can we improve? Is this worth taking through to the clinic?

They saw merit in the approach and recognised the potential unmet need for a medication differentiated from other hormonal therapies.

But there was also feedback.

Work for the company to do BEFORE taking it to the clinic.

(That’s my job now to manage all of that)

From an investment perspective, it’s important to challenge the scientific rigour of early-stage companies BEFORE committing years of development and capital.

That is what good biotech development looks like.

Professor Albert Frauman founded the platform therapy, and his lab has worked to better understand this mechanism of action for nearly twenty years.

He’ll be working with me every step of the way.

For most of my professional life, I have looked at prostate cancer from two vantage points.

As a doctor, I have seen what the disease does to men and to their families.

As an investor, I have looked at healthcare companies from a distance and asked whether the science, management, capital structure and commercial opportunity justified taking risk.

This is the first time I've been on the other side.

Close enough to see genuinely groundbreaking science being done, and in a position to help move it forward.

Then, three weeks ago, it became personal.

I was sitting across from my father-in-law at dinner when he told me that the cancer had come back.

That doesn't make MLS-269 more likely to succeed, and it certainly doesn't remove my obligation as CMO to interrogate this program as critically as possible.

The data will be the data. If the science fails, it fails.

But it does reinforce why. 

Because the problem is worth solving.

For me, my family, my patients, and for a market this significant.

I have taken the role, put my name to the program, and invested my own capital alongside it. 

And it has reinforced something I already believed as an investor:

The greatest value inflection in biotechnology often occurs while uncertainty is still high.

Still…

The company now has to turn a unique body of science into a development-grade program that can survive increasingly sophisticated scrutiny.

That is the part of biotechnology investing I find most exciting.

Because if there is one thing investors should demand from emerging biotechnology companies, it is not certainty.

It is evidence, disciplined execution and transparency.

MLS Bio remains an unlisted, pre-clinical pharmaceutical company. 

The risks are substantial… but the opportunity is extraordinary; the science is clever, and so is the team.

That is why I am here; that’s why I have invested.

I wanted to be on the inside, helping to prove or disprove it.

I look forward to keeping the Armchair Army updated on MLS Bio's rapid progress over the next 12 months.

If you would like to discuss MLS Bio, or its science, with me, I’m very happy to connect directly at [email protected]

For broader corporate discussions, I encourage you to connect with Penelope Lane, Managing Director and CEO of MLS Bio. [email protected]

Thanks Surgeon Dan!

Good luck with the new venture.

See you all next week,

The Armchair Analyst

What is an armchair pick?

An Armchair Pick is an invite-only spot I reserve for my highest-conviction investment ideas.

It's a paid arrangement, but to align myself, I only take my fee in shares - half escrowed for 6 months, half for 12.

It is general commentary only, not personal financial advice or a recommendation to buy, sell, or hold. Always see the disclosure at the top of the article and do your own research.