$0.490
Opened: 12-Jun-2024
Shares Held at Open: 1,150,000
Options Held at Open: 575,000
What does IIQ do?
Inoviq (ASX:IIQ) is a biotech company that is developing and commercialising an exosome technology platform for breast cancer, ovarian cancer and neurodegenerative disease (Alzheimer’s) diagnostics as well as a solid tumour (breast cancer) therapy.
What is the macro theme?
Exosomes present as one of the next major frontiers in the life sciences - as they play a key role in intercellular communication. The breast cancer diagnostic market is large as of 2024
We think IIQ has a good head start on potential competition as one of only a handful of companies with an advanced exosome technology platform.
Our Big Bet for IIQ
“IIQ re-rates to a +$500M market cap on commercialisation of its breast cancer test, its ovarian cancer test, neurodegenerative disease test and/or its solid tumour (breast cancer) therapy.”
NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is a lot of work to be done, many risks involved - just some of which we list in our IIQ Investment Memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true.
Why did we invest in IIQ?
Going after big markets with potential breakthrough technology
IIQ is developing a technology that will detect cancer and possibly neuro diseases like Alzheimer’s. These are big markets and its platform technology could capture the interest of Big Pharma if it is able to prove that it works in a clinical setting.
Strong board - the team from success story Polynovo
IIQ has three directors who are all with or previously with Polynovo, one of the great ASX biotech success stories of the last decade. Polynovo re-rated from ~4c to ~$4 in the space of 4 years and it remains capped at ~$1.7BN at the time of this memo.
Merchant Funds Management are the biggest shareholder
Merchant is IIQ’s biggest shareholder holding ~14% of the company. Merchant has had a lot of success investing in Biotechs including - Race Oncology which went up ~2,900% (low to high) and the IIQ’s board other company Polynovo, up ~10,025% at its highest point.
Platform technology to deliver multiple “shots on goal”
IIQ is somewhat different to a lot of biotechs out there in that its exosome technology platform doesn’t limit it to a binary outcome on a single clinical trial, if one catalyst doesn’t work out, there are more to look forward to.
Tight cap structure
With just ~106M shares on issue and Merchant holding ~14% and Chairman David Williams holding ~5% there aren’t many shares floating around. This generally means that with fewer shares in the market, it’s more likely to re-rate on major news.
IIQ’s breast cancer test is more accurate than leading test
A recent clinical validation study of IIQ’s breast cancer test showed that it detected 19% more breast cancers than the leading test (CA15-3 test by $332BN Roche) with an impressive 81% sensitivity and 93% specificity across a range of breast cancers.
Early stage moonshot to treat solid tumours
IIQ is also advancing a solid tumour therapy which has been shown to kill 75% of breast cancer cells in 72hrs in an in vitro (test tube) study. There is a huge unmet need for treatments in the solid tumour space where, so far, cell therapies haven’t been developed.
Expansion of tests to include ovarian cancer and neurodegenerative diseases (Alzheimer’s)
IIQ is looking to apply its exosome platform technology to ovarian cancer, and more recently has been working on neurodegenerative diseases such as Alzheimer’s. A blood test for the early detection of Alzheimer’s would be a major scientific advancement.
Large commercial opportunities from underlying technology
IIQ has an exosome isolation product which is already being sold to research groups. IIQ also has commercial agreements with Promega and a European biotech to bring IIQ’s exosome platform technology to market. Because IIQ’s exosome technologies can be applied to diagnosing and potentially treating many different diseases, we expect to see more partnerships where IIQ licences their exosome tech.
What do we expect IIQ to deliver?
Objective #1: Commercialise breast cancer test (diagnostics)
We want to see IIQ commercialise its breast cancer test (which has been shown to be more accurate than the ~$332BN capped Roche’s test) through the following additional milestones.
Milestones
Laboratory partner to bring to market SubB2M breast cancer test to market
Real world data to support clinical adoption
Partnership with major testing provider to commercialise at scale
Objective #2: Advance ovarian cancer tests (diagnostics)
IIQ has two ovarian cancer tests it is working on “EXO-OC” which is part of the company’s exosome work stream and a more advanced test called neuCA125 which is part of the SubB2M workstream and more similar to the breast cancer test above. The SubB2M ocarian cancer test is closer to market.
Milestones
EXO-OC test biomarker validation data
Commence EXO-OC test clinical validation for ovarian cancer screening
Laboratory partner to bring to market SubB2M ovarian cancer test to market
SubB2M ovarian cancer clinical validation study data
Objective #3: Advance neurodegenerative disease test (Alzheimer’s)
IIQ is working on a blood test for neurodegenerative diseases such as Alzheimer’s - a product call NEURO-NET.
Milestones
NEURO-NET validation data (Alzheimer’s test)
Start exosome diagnostic development for Alzheimer’s Disease
Objective #4: Advance solid tumour (breast cancer) therapy
This is the big blue sky opportunity for us. In 2025 we want to see IIQ progress its solid tumour (breast cancer) therapy to an in vivo (mice) study where we hope the effectiveness of the treatment can replicate the remarkable results from the test tube.
Milestones
Commence in vivo (mice) study
Report in vivo (mice) study results
Objective #5: Large commercial agreement for Exo-NET (Research tools)
This is the product and associated services that are already in-market. IIQ has signed a marketing agreement with major biotech product manufacturer and distributor Promega as well as ResearchDx a US contract diagnostics organisation to get the research tools into the hands of customers. The exosome industry is growing quickly and we want IIQ to sign material agreements.
Milestones
Material agreement #1
Material agreement #2
What could go wrong?
Competition risk
IIQ is not alone in the exosome diagnostics and therapeutics market. There are other companies such as the $336BN capped Thermo Fisher Scientific that have larger balance sheets and also provide exosome services and conduct exosome research.
Existing competitors or new entrants could make it harder for IIQ to gain commercial traction or may create superior products.
Technology risk
Exosomes are still an emerging field of scientific research and there may be undiscovered drawbacks to exosomal products - in particular as they apply to therapeutics.
For example, IIQ’s preclinical research on exosome therapies may not yield the desired results or may not be deemed acceptable in the eyes of a regulatory body.
Early stage biotech risk
This mainly applies to the solid tumour (breast cancer) therapy, which is currently in the preclinical phase of its development - noting that clinical validation for the diagnostic arm of IIQ’s business can still go wrong.
There are some standard risks that are associated with early stage biotechs, although the treatment appears effective in a test tube, this might not translate to humans. Key risks:
Funding risk
Small caps often need to raise cash to fund their growth. Whilst IIQ is generating revenue now, it is still making a loss - i.e. it spends more cash than it brings in.
If IIQ is unable to develop a self-sustaining business model with positive operating cash flow, this could force IIQ to raise capital in the future, potentially at a discount to market prices to secure funds.
Market risk
There is always the possibility that broader market sentiment gets worse and shares as a whole trade lower, taking IIQ’s share price with it.
Alternatively, there could be further sector specific pain ahead. For example, the biotech sector sells down.
What is our investment plan?
Our Investment Plan for IIQ is to hold on to a majority of our position to see the company execute on its business strategy over the next two to three years.
If the company’s share price materially re-rates in the medium term due to a trial or commercialisation breakthrough, a macro triggering event or any other unknown reason, we may look to sell up to ~20% of our holding. See our general hold policy for more details.
Disclosure: Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 1,150,000 IIQ shares and 575,000 IIQ options at the time of publishing this Investment Memo. The Company has been engaged by IIQ to share our commentary on the progress of our Investment in IIQ over time. Some shares and options may be subject to shareholder approval.
IIQ: Exosomes successfully weaponised - cancer cells located and killed in proof of concept study
Dec 16, 2024
Dec 16, 2024 |
10 min
Today Inoviq (ASX: IIQ) confirmed it has successfully completed stage 1 of its development program for an exosome therapeutic for breast cancer. IIQ was able to engineer cells to continuously produce exosomes that specifically target and kill breast cancer cells.
IIQ announces extremely accurate cancer screening test - 94%
Dec 5, 2024
Dec 5, 2024 |
19 min
This week our biotech Investment Inoviq (ASX: IIQ) demonstrated SIGNIFICANTLY BETTER accuracy than any other ovarian cancer screening test in the market.
A “fingerprint” for the early detection of Parkinson’s? IIQ builds on previous Alzheimer’s validation
Aug 20, 2024
Aug 20, 2024 |
11 min
“Biomarkers” are these fingerprints - naturally occurring molecules, genes, or other characteristics by which diseases can be objectively identified. This new scientific frontier of early detection is looking more within reach for diseases like Parkinson’s and Alzheimer’s after today’s announcement from our biotech Investment, Inoviq (ASX: IIQ).
News in the queue for IIQ - upcoming share price catalysts…
Jul 31, 2024
Jul 31, 2024 |
22 min
Our Biotech Investments have been the shining lights in our Portfolio over the last 12 months. Given this form, in June we took a pretty big swing at the INOVIQ (ASX:IIQ) placement and added IIQ to our biotech Portfolio.
Our New Investment is Inoviq (ASX: IIQ)
Jun 12, 2024
Jun 12, 2024 |
23 min
Our new Investment Inoviq (ASX: IIQ) is at the forefront of a new frontier in biotechnology.
Reflections on 2024: Markets, Moves, and Milestones
Dec 22, 2024
Dec 22, 2024 |
12 min
Well, that’s pretty much it for the year. Another bearish year for the small end of the ASX. But at least the market managed to string together a few bright patches this year. Most notably during October and November.
What Newsflow is left for this Year?
Dec 7, 2024
Dec 7, 2024 |
19 min
In the business world, the christmas break is often treated as an “artificial deadline” to get deals done and finish projects. Three weeks ago we said we are watching 16 companies that had guided the market to expect material news before christmas… Usually only a handful of companies that guide news actually deliver it on time.
A Quiet, but Green Week in the ASX
Nov 30, 2024
Nov 30, 2024 |
18 min
It was another quiet-ish week across much of the small cap markets. The smaller end of the market where we operate appears to be in a holding pattern of sorts.
Market Optimism Peaks Ahead of the Holidays
Nov 16, 2024
Nov 16, 2024 |
11 min
The world is still digesting what exactly the US election result will mean for the next four years. The weeks after an election is often a “honeymoon phase”.
Major Announcements Driving Volatility in Small Caps
Oct 12, 2024
Oct 12, 2024 |
15 min
The mood is good in small cap land. Cautious… but good. It was another positive week, with plenty of green across the board.
