Hot on the heels of a strong Q2 – next generation, immunodiagnostics firm Oncimmune said today that it had landed 2 more important #ImmunoINSIGHTS deals.
Including a:1) Master service agreement & related work with a major Biopharma to provide autoantibody biomarker services. On top a 2nd contract is expected to be signed shortly. Both of which should be invoiced by May y/e & lead to follow-on studies.
2) Collaboration agreement with 'The European Organisation for Research & Treatment of Cancer' to evaluate autoantibody profiles collected in the ongoing phase 3 Keytruda (re Merck) trial to treat surgically resected, high-risk melanoma patients.
Elsewhere ONC is also in the final stages of agreeing 2 further collaborations with world-leading US-based academic institutes. Which similarly would extend the use of ImmunoINSIGHTS into new CAR-T & CAR-NK cell immunotherapies.
So from an investor perspective - is this momentum sustainable & why is it happening now?
Well there are several factors at play.Not least due to the pandemic, healthcare has witnessed a secular re-acceleration of ‘drug discovery’, that should help propel the industry into a ‘golden age of innovation’. Here these new advances require the world’s best R&D (eg from the likes of Oncimmune) in order to rapidly bring them to market.
Equally the £9m fund raise in Mar’21, enabled Oncimmune to ramp up commercial activities (eg US) & processing capacity (in Dortmund).Meaning that together, ONC has reached an inflexion point. Whereby client demand continues to build, alongside much higher & faster sample processing.
A perfect recipe given the estimated 80%+ gross margins generated by ImmunoINSIGHTS.In terms of the numbers, Singer Capital Markets are forecasting FY22 adjusted EBITDA of £2.2m (vs -£3.4m LY) on sales of £12.1m (£3.7m LY).
Climbing to £15.5m & £4.1m respectively 12 months later, reflecting the group's favourable operating leverage & IP rich science. Plus in the event of a takeover, I estimate the stock would attract a 4x ‘R&D investment’ multiple (vs 4x Grail & Thrive >5x).
Which based on c. £70m spent already on the biobank/tech platform, might generate a theoretical £280m valuation, or circa 400p/share vs 160p today.CEO Adam M Hill adding “These contracts today and earlier this month underpin the commercial momentum we are currently experiencing.
We look forward to building on this in the coming months”.
Time to be patient.