Metavone Launches IPO to Treat and Prevent Dementia Disease
It is estimated that over 350,000 Australians live with dementia, which makes it one of the greatest causes of disability.
Drug discovery and development company Metavone Limited seeks to raise $5 million to fund development and research of its “Isoflavone” technology.
Dementia is a neurodegenerative disease resulting in a marked decline in cognitive ability. It is estimated that over 350,000 Australians live with dementia, which makes it one of the greatest causes of disability. On a global scale nearly 50 million people are affected by dementia, Alzheimer’s disease or Parkinson. There are a number of registered drugs for use in treatment, but they only treat the symptoms and not the cause of dementia.
Metavone is focused on the development of therapeutic treatment for dementia and hormone-related cancer and owns intellectual property rights to two patent families. The company has identified two potential avenues for the treatment of dementia diseases. However, as dementia related products are characterised by high frequency of clinical failures, can Metavone buck the trend?
Metavone is currently in the pre-clinical testing stage for its technology and the critical value driver will be to demonstrate the value of the patents through progression and completion of phase 1 trials. So far pre-clinical testing of the isoflavone compounds have demonstrated the suitability of some of these compounds as therapeutic treatment but the company has yet to demonstrate the commercial appeal and safety of its drug technology. Management aims to diversify the risk by targeting more than just one disorder. There is also an early revenue opportunity through an over-the-counter prevention product.
However, IPO investors should note that there has been a high frequency of failures in the dementia industry and there is no guarantee that the technology can be commercialised. Furthermore, the company is reliant on external capital to fund development and research and will likely have to raise further capital which could dilute existing shareholders.
Metavone is listing at an undemanding valuation and evidence of a small degree of success could drive the share price higher, whilst the potential for M&A activity offers additional potential for upside. Due to a lack of comparable products in the market, the sector is characterised by limited investable securities, which should nurture interest towards the stock. The float is highly speculative due to the stage of the business but the IPO appears well structured.
ASX Code: MTV
Shares on Offer: 25m
Listing Price: $0.20
Market Capitalisation: 10.5m
Listing Date: October 28
Author: Simon Herrmann
Oct 05, 2016
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.