Good morning ,

Welcome to today’s edition of the Pulse Check, a 5-minute daily update on the ASX life-sciences sector.

Under the Microscope

Sometimes there is a stock that I like, that has a risk I don’t want to take on.

Once that risk is cleared, then I consider the stock “investible”... even if it costs me more for the shares.

I have been tracking Invion (ASX:IVX | MC: $8.2M) for 12 months now, and when I was first introduced to the company there was an inherent risk that prevented me from making an investment.

That risk was: What does the company actually own?

Yesterday, that question was answered with IVX signing a global licensing agreement for its cancer killing technology. (IVX)

IVX’s product works by giving a patient a drug that binds to the cancer, then after shining a UV light the cancer is destroyed.

(at least that’s the the theory behind the technology)

The stock was up as high as 39% on the news, and I did buy some shares yesterday.

To understand the significance of signing a global licence and why this news was so important for me, we have to go back to the beginning.

What’s the story?

In 2017 “The Cho Group” (the owner of the licence) moved to become the major shareholder of IVX.

Then a deal was signed between IVX and The Cho Group that was essentially an R&D services agreement. 

Cho Group agrees to fund clinical studies done by IVX and in exchange IVX secures exclusive distribution for the technology in Australia / NZ.

This worked for a while. 

IVX earned revenues and developed the product in some key indications (skin cancer and anal cancer in particular).

To try and build value into the company, in 2021 IVX sought to ‘buy into’ more jurisdictions - not just Australia and New Zealand.

(and these deals weren’t cheap)

$7.25M for APAC excluding China, Japan, Korea, Hong Kong.

Then in 2023, $2.5M for US, Hong Kong & Canada for infectious diseases (not cancer).

Then finally in 2023, $900K for Korea.

The trouble with these deals was that IVX was never able to get the full global licence for the cancer indications it was chasing. 

Yes, it was being reimbursed by The Cho Group for all of the R&D costs BUT, it wasn’t building or developing its own assets.

In 2024 something in the relationship changed - The Cho Group defaulted on a ~$4M payment to the company.

Now this was IVX’s chance - it had leverage over The Cho Group to cut a deal.

(This was around the first time that I had looked at IVX as a potential investment).

As part of my due diligence I spoke to some of the people involved, in particular the ex-board member from The Hudson Institute.

His comments were that “the science is very solid… but the licensing was a big challenge”.

So, my investment strategy for IVX was to wait until it had a global licence, and buy shares when it does.

… even if it costs me more money.

So what is my take on the deal?

I like that IVX was able to secure the global licence without regional caveats or exemptions.

Even though IVX didn’t get all of the cancer indications, the important ones were there.

Because IVX’s product uses light, I think of the important indications using The Lion King principle: "everything the light touches…”.

Skin cancer, anal cancers, lung cancer, etc… 

These were important indications for me, and I’m glad to see them as part of this deal.

The 10% net sales royalty attached to the deal as well as the 20% payment on any acquisition does cap some of the upside for IVX if it were to commercialise its product.

(but that’s a problem for way down the track)

While IVX didn’t get a full clean licensing deal (with all cancer indications included) the main indications that I wanted to see were there.

Now IVX has the opportunity to develop the drug with the commercial rights to sell it around the world.

Something it didn’t have before.

Nice work to Thian and the IVX team for getting it done.

The Armchair Analyst.

Did someone forward this email to you?

The Daily Check-up

Argenica Therapeutics (ASX:AGN | MC: $28M) moved one step closer to its Investigational New Drug application with the FDA. It completed a milestone study that showed no interference between its drug and an existing drug used for stroke care. (AGN)

Independent Data Safety and Monitoring Review Board reports no episodes of kidney transplant rejection or other safety concerns in Cynata Therapeutics (ASX:CYP | MC: $59M) Phase 1/2 kidney transplant trial. (CYP)

ImpediMed (ASX:IPD | MC: $72M) wins reimbursement from four additional US insurers for its bioimpedance spectroscopy product. (IPD)

🪑 Click here if you want to see what the SOZO product that IPD sells actually looks like: SOZO

Neurizon Therapeutics (ASX:NUZ | MC $56M) completes three GMP batches of its tablets for ALS treatment. (NUZ) 

🪑 Completing manufacturing milestones is an important part of the drug development process and allows NUZ to move towards its clinical trial for ALS in Q1 next year.

Mayne Pharma (ASX:MYX | MC $272M) announces a notice to terminate its Scheme Implementation Deed with Cosette Pharmaceuticals, ending the 12-month saga that Australian Treasurer Jim Chalmers kiboshed last month. (MYX)

Avecho (ASX:AVE | MC: $29M) secures US and European patents for its CBD soft-gel formula. (AVE)

Pro Medicus (ASX:PME | $27B) responds to allegations of a cyber security breach. (PME)

🪑 : 🍿

Island Pharmaceuticals (ASX:ILA | MC: $130M) submits FDA responses to some further questions around the use of the Animal Rule for its treatment of a deadly disease. FDA feedback expected January 2nd. (ILA)

Newly appointed Center for Drug Evaluation and Research (CDER) director Richard Pazdur has resigned weeks after starting the role. (Biospace)

Cash Injection

HITIQ (ASX:HIQ | MC: $11.7M) raises $925K at 2.2 cents with a 1 for 2 option. (HIQ)

Regis Healthcare (ASX:REG | MC: $2.4B) sells two aged care homes to Ozcare for ~$25M. (REG)

Australian body scanning start-up Bodd secures $15M at a $110M valuation. (AFR)

Triana Biomedicines, a molecular glue startup, secures $120M in a Series B funding. (Endpoints)

See you tomorrow.

The Armchair Analyst

Jason Segal