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Invion Ltd High Multiples in FY19 Results

Stuart Lucy

Stuart Lucy is an Investment Specialist at the Australian Stock Report, and has gained exposure to funds management and investment banking throughout his career. He draws on this experience to provide macroeconomic commentary and actionable investment insights to clients. Stuart is responsible for writing reports, is involved in delivering Macrovue webinars and provides general advice to our members on portfolio construction. Stuart currently holds RG146 General and Securities qualifications.

Invion Ltd (ASX: IVX) is an Australian biotech company that is currently developing cancer treatments based on Photodynamic Therapy (PDT). They own exclusive licencing and distribution rights to Photo soft technology from the Cho Group. Additionally, they are working collaboratively with researchers from the Hudson Institute of Medical Research, helping support product development.

Invion - Report
Invion has a potentially revolutionary cancer treatment, but the share price seems to signal most investors think it’s too good to be true (Credit: Invion)

How does PDT work?

PDT was traditionally used for skin cancer treatment. Invion and other biotech companies, such as Tookad, have attempted to broaden the use cases for this technology to include prostate, lung, and ovarian cancer. This therapy consists of administering a drug called a ‘photosensitising agent’ that is preferentially taken up by cancer cells. The drug is designed to produce activated oxygen molecules that are toxic to nearby cancer cells when the patient is exposed to light beams at the right wavelength. Since the drug indicates a promising alternative to chemotherapy, it ultimately represents a huge breakthrough in medical research. This is what is making investors excited about the product.

FY19 Financial Results

Invion is an $88m company with a current revenue run rate of $7.6m p.a., putting them on 11.6x EV/ Revenue. Since the company is being priced on the chance of commercialising a new product, the high multiples should not, in isolation, rule the company out from consideration as an investment.


One of the most common limitations preventing biotech companies succeeding is securing adequate funding. Invion's has the advantage of being funded by Cho Group, reducing the risk of a heavily dilutive capital raise. Like any other early-stage biotech company, Invion has a risk of not being able to commercialise their product and thus never being profitable, so investors should adjust their position sizes accordingly. However, if this PDT technology works on other types of cancer, Invion will have a major role in revolutionising cancer treatment. Who would have thought cancer could be cured by simply applying PDT and beaming light on it? This would be a dream come true if successful, so it's definitely a company to keep on the watchlist.




This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

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ASR has no position in any of the stocks mentioned.

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