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Investment Memo:

Inoviq (ASX:IIQ)


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.

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.


not done Laboratory partner to bring to market SubB2M breast cancer test to market

not done Real world data to support clinical adoption

not done 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.


not done EXO-OC test biomarker validation data

not done Commence EXO-OC test clinical validation for ovarian cancer screening

not done Laboratory partner to bring to market SubB2M ovarian cancer test to market

not done 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.


not done NEURO-NET validation data (Alzheimer’s test)

not done 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.


not done Commence in vivo (mice) study

not done 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.


not done Material agreement #1

not done 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:

  • The treatment is ineffective
  • The treatment is not considered safe for human use
  • Patient recruitment is delayed
  • Ethics approval is delayed

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.

Our Investment Summary

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