Arovella Therapeutics Ltd (ASX:ALA)’s decision to focus exclusively on its invariant Natural Killer T (iNKT) cell platform and cease research and development (R&D) operations on its legacy OroMist platform is a sensible move, Edison Investment Research Ltd said.
This will allow Arovella to focus its resources and efforts on progressing its immunoncology franchise following the in-licensing of its iNKT portfolio last year.
Arovella’s decision may have been bolstered by the recently-announced collaboration with Imugene, which could potentially expand the platform’s utility into the multi-fold solid tumour space, it added.
Edison will revisit its valuation and estimates for the company given Arovella’s disclosure that the business realignment will entail a one-time expense of $300,000 in the 2023 financial year but result in annual savings of $1.5 million thereafter.
The following is an extract from Edison’s research update:
The iNKT technology is a cell therapy platform using immune cells for primarily treating blood cancers (leukemia and lymphoma).
In September, Arovella signed a collaboration agreement with Imugene to investigate if the applicability of its lead iNKT asset, ALA-101 can be expanded to solid tumours using Imugene’s onCARlytics platform.
As a reminder, ALA-101 contains a chimeric antigen receptor and is being development as an ‘off-the-shelf’ treatment for blood cancers, which allows dual targeting of CD1d and CD19 expressed on the surface of cancer cells.
Imugene’s oncolytic viral therapy, CF33-CD19, works by infecting solid tumour cancer cells and stimulating them to express CD19 on their surface.
We therefore see potential in this combination treatment which, if successful, could expand ALA101’s utility into the broader solid tumour space (solid tumours make up almost 90% of all diagnosed cancers). Data readout from pre-clinical studies is expected in H1 CY23.
As part of the business realignment, Arovella has decided to suspend all development activities for OroMist (its proprietary oromucosal drug delivery platform) and suspend operations at its Perth-based R&D facility.
Arovella is also reviewing its contractual arrangements for ZolpiMist (treatment of short-term insomnia), which was recently launched in Australia by distribution partner STADA Australia.
Arovella recorded an operating cash burn of $1.8 million in Q123, which is expected to reduce with the closure of the R&D facility. The period-end cash balance was $4.3 million.