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Date : 15/10/2020

AdAlta Limited



Market Cap : $34.32 Million


52 Week Range : $0.04 - $0.185

Share Price : $0.13

A firm with good progress and enough cash runway to take it through to its next milestone. A "Buy" from us.

Company Analysis

AdAlta Limited (ASX: 1AD), the biotechnology company currently in its clinical stage for its i-body platform is trying to develop protein therapeutics. An i-body is a human protein that has small molecules and antibodies – that give it stability and a high affinity to treat specific illness. This unique structure of combining small molecules with antibodies is what gives AdAlta a competitive advantage over other pharmaceutical companies. The i-body also has customisable features that can increase the time the drug can stay in the body during treatment – giving it a half-life.

This technology is being developed by AdAlta for both internal and external use case scenarios. The internal pipeline focuses on treating fibrotic and inflammatory diseases and cancer. While the external pipeline is being pitched to partners to leverage the technology for wider applications.

Fibrotic diseases being the primary focus, AdAlta first developed the AD-114 drug. This initial i-body has been further developed into a FcFusion molecule and is now called AD-214 – which is the firm’s lead candidate. The latest version is said to have a much wider application for fibrotic diseases. Essentially, AD-214 combines two AD-114 i-body molecules that bind with CXCR4, and also increase the half-life capabilities of the drug. This creates a next generation drug that has improved therapeutic and commercialisation potential.

There are numerous fibrotic diseases. AD-214’s initial focus is the treatment of idiopathic pulmonary fibrosis (IPF) – a type of fibrosis that affects the lung. The drug also has other areas of applications in its current state – such as fibrosis in the eye, liver, skin, and kidney. IPF is a lethal disease and current treatments that are available only reduce the progression of the disease. AD-214’s efficacy and half-life will look to bring a better chance for the patients. In the treatment of IPF, AD-214 has shown that it can target only the tissue that is subject to the disease and a greater efficiency compared to the existing drugs that are used to treat IPF.

Another area the firm seems to be concentrating on is the macular degeneration of the eye – which is one of the leading causes for loss of vision. AdAlta has been working with the University of Melbourne, La Trobe University, and The Centre for Eye Research Australia to test AD-214 against a mouse model for this disease. A pre-clinical development is expected.

The company has a stellar board and management team with scientific experience. In March 2020, 1AD outlined its strategy to develop multiple i-body enabled products – an internal pipeline product, and an external pipeline product via co-development programs.

Source: AdAlta Limited

The Internal product, AD-214 received approvals to commence Phase 1 Clinical Trials, and the first voluntary participants received AD-214 on the 19th of July 2020. The results for this Phase 1A of the test is expected in early 2021. Following which, the parts B and C can commence. The end point of this trial is to administer the safety and tolerability of AD-214 in volunteers, patients with Interstitial Lung Disease, and patients with Idiopathic Pulmonary Fibrosis.

This is a huge milestone for 1AD that it has been working towards since a long time. However, there is still a long way to go until we can be sure if the drug would pass FDA and TGA approvals.

AdAlta’s external product is being co-developed with GE Healthcare to discover i-bodies specific to an enzyme. GEHC has paid for the initial development and it is looking to take over pre-clinical and clinical developments for use as molecular imaging agents for cancer if it is successful.

Company Updates


GE Healthcare exercised an option to extend the collaboration agreement that will see it move into Stage 4. The i-body used in Stage 3 will be progressed to a pre-clinical development process. The announcement also added that the research fees will be paid in 6 monthly instalments from November 2020 onwards.

As a consequence of non-renounceable rights issue offer, AdAlta had to adjust the exercise price of their option contracts. The total reduction has struck off $46,594 from the capital that could have been raised if all the options are exercised.

AdAlta has had a pretty good September quarter. The clinic has seen a small but important progress. The phase 1 of the trial consists of health volunteers. These volunteers have received 4 doses of AD-214 out of the planned 7 dose levels the firm plans to complete. No adverse events have been observed that may result in stopping the dose levels. The firm has confirmed on track developments for drug administration to patients in the part B of the phase 1 program.

AdAlta’s financial position has been strengthened in the quarter as well. The firm completed an $8.12 million Placement and Entitlement Offer that saw interest from existing shareholders to the extent of 69%. The firm’s cash position has been increased to $10.3 million. R&D tax incentive refund is expected to arrive in the next quarter.

Operating cash flow coming into the firm is believed to be close to $250,000 from research fees and grants, while the outflows stood at $1.3 million – an increase from the previous quarter.

The stock price has seen volatility as is the case with bio-pharma firms in its clinical stage. Investor sentiments usually play a key role in trading volumes as speculation surrounding the clinical stages sway mood and momentum. However, the stock has performed well over the last 3 months – a 44% gain, and 219% gain over the past 6 months.


The firm is currently operating a 3-part Phase 1 design for the clinical trial.

Source: AdAlta Limited

IPF is a $3 billion market and currently has limited options for treatment. AdAlta’s drug if it is successful can potentially become the standard mode of treatment. The market size estimates for 2025 shows the USA accounting for roughly US$2.2 billion dollars, followed by Europe with US$666m, and Japan with about US$211m.

Over 300,000 people suffer from IPF and 40,000 die every year. The median survival period after diagnosis is just about 3.8 years, with 50% of the patients dying within 2 to 3 years of diagnosis. The potential for the drug is huge if it is successful and meets the FDA standards.

As we mentioned earlier, IPF is not the only treatment that AdAlta is looking at. The i-body has already shown early signs of diverse applications and the total addressable market gets larger. The contract extension with GE Healthcare sort of validates the platform. Commercialisation revenue is expected to kick in from November 2020. It’s fair to say that both the internal and external pipelines have seen valid progress during the recent quarter.

The firm is currently losing money. However, that is the nature of a firm that is in its early development and research stage. While the money losing theme may continue to remain for the next couple years, the firm will get stronger and as milestones are reached in its product development roadmap.

In the short-term, AdAlta has enough cash in the bank for its obligations. The firm has also demonstrated that it can successfully raise funds when needed.


AdAlta has progressed well in the most recent quarter. The firm has enough cash to take it through to its next milestone. However, the stock does come with an element of risk related to the product development. For investors willing to take on that risk and looking to invest for the long-term, we issue a “Buy” recommendation.

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