The war against neurological disease, such as Huntington's, Parkinson's and Alzheimer's, has been fought and largely lost for decades.
However, in late 2023 there was a major medical breakthrough after the FDA approved two Alzheimer's drugs (Biogen's Leqembi and Eli Lilly’s Kisunla), both of which slow a patient's cognitive decline, but require regular brain scans to monitor possible side-effects.
Nonetheless, these early first-generation successes have triggered a surge of new neurological research, reflecting the enormous unmet need whereby tens of millions die annually worldwide. Indeed, stage 3 clinical studies are being conducted in 2025 on next-generation therapeutics (eg Roche's Brain Shuttle technology and Bristol Myers' Cobenfy) - many of which also require detailed MRIs in order to assess a drug’s safety, efficacy and longitudinal performance, as well as to assist in patient trial selection.
Enter IXICO (mrkcap £10.2m at 11p) . It is one of the world’s leaders in the highly specialised assessment of brain scans, helping BioPharma and Contract Research Organisations develop new drugs right from the test-tube, through to commercial launch and post marketing surveillance.
What's more, today the company said that it has secured a new Phase 2 Huntington's Disease trial worth >£0.5m over the next 2.5 years. Marvellous news, and another key customer endorsement of IXI's cutting edge science.
CEO Bram Goorden commenting: "We are delighted to announce our involvement in this Phase 2 clinical trial, which aims to address the urgent need for effective treatments for Huntington's disease. This contract further demonstrates IXICO's expertise in supporting neurodegenerative disease trials, reinforcing our role as a trusted partner for sponsors. Through this work we are proud to continue our support of the Huntington's Disease community, in collaboration with our sponsor, working towards a breakthrough in this challenging field."
Elsewhere, given the H2'24 momentum and >75% FY'25 revenue cover, I suspect there might even be a chance of future upgrades as the year progresses. House broker Cavendish is forecasting Sept FY'25 sales and EBITDA to come in at £6.0m (£5.8m LY) and -£1.4m (£-1.7m) respectively, ending the period with £3m of net cash. In contrast, on a pure run-rate basis, if one simplistically doubled the H2'24 numbers, then FY'25 revenues and EBITDA would be £6.6m and -£0.8m.
Meaning at 11p, the stock trades on a modest 1.2x EV/sales, which looks far too cheap compared to sector peers and the 2023 takeovers of Instem (clinical trial software) and Medica (radiology services) on multiples of 3.0x-3.5x EV/sales. Cavendish has a 24p/share price target.
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