Despite weak markets, Avalon GloboCare (NASDAQ: ALBT) stock has been able to defend its valuation. Except for a late-day blip on Tuesday, ALBT shares have been consolidating at the $3.40 level, which from current prices and ALBT having enough accretive ammo to reclaim consolidation levels, puts an 11% gain in investors' crosshairs.
Of course, long-term investors expect and want more, and with a series of partnerships, successful financing completed, and a recap to shares leaving only about 3.22 million outstanding, ALBT may be better positioned than ever to deliver gains appreciably higher than the $3.40 near-term target.
In fact, from an investor's perspective, all signs point to a busy 2023. And with substantial shares owned by insiders, it's reassuring to know that insider interests are clearly aligned with common shareholders. While that doesn't eliminate all risk, it does mitigate it to the extent that decisions made by management will likely be made with creating sustainable shareholder value in mind.
So far, management has been able to prove that intent, and over the past few quarters, has strengthened its IP portfolio, enhanced research partnerships with leading institutions, and is prepared to close a transformative acquisition that will add millions in revenues and put the company on a path toward bottom-line EPS. If so, and momentum is directed that way, ALBT shares could earn a valuation multiple more in line with industry peers. More simply, as the company continues to execute its plans, including closing its planned acquisition, share prices should continue to trend higher.
Video Link: https://www.youtube.com/embed/rDadlsbAmJk
Creating Value From A Mission In Progress
Partnerships could lead the way. One is with the University of Pittsburgh Medical Center (UPMC) to develop new cancer immunotherapy approaches and streamline manufacturing processes. The collaborative study could have far-reaching effects, noting that they are working to create powerful cancer treatments with a rapid bio-manufacturing time (1-2 days instead of weeks). It's a potentially transformative development technology breakthrough that could expedite life-saving therapeutics through the review and approval processes and, more importantly, to patients. There's more.
Avalon is also advancing a research partnership with the University of Natural Resources and Life Sciences (BOKU) in Vienna, Austria. The goal is to co-develop a novel, cell-free, in-silico system that would expand Avalon's ability to design and produce novel cell membrane proteins, including receptors found on the surface of immune and cancer cells that function in cell signaling. Expected end results could also provide ALBT with an efficient tool to screen and optimize potential therapeutic targets.
On that front, progress toward reaching that goal is being made, noting a co-developed and jointly filed patent with BOKU on a novel S-layer coated emulsome technology (SLET) platform for next-generation, targeted drug delivery and cellular immunotherapy applications. Avalon noted expectations from this novel SLET platform to accelerate the development of its mRNA-based Flash-CAR™ and other cellular therapy programs. They have good reasons to be optimistic.
Data shows that targeted delivery of mRNA into immune effector cells using SLET can open pathways to a new generation of cancer immunotherapy and applications, including targeted drug delivery and therapeutics, vaccine development, in vitro diagnostics, and cellular medicines. Those initiatives utilize traditional research methods. However, when appraising ALBT, investors should also focus on the possibilities brought about by ALBT researching how artificial intelligence can be applied to produce new medicine.
Artificial Intelligence Applied To Medicine
Updates about its enhanced protein design "QTY Code" technology show things are progressing quickly on that front. The value driver here is that ALBT's approach isn't more of the same. Instead, ALBT's AI-empowered approach to drug development is appreciably different from others and is proving that point by identifying a new method for quickly predicting the design of so-called "water-loving" or hydrophilic variant structures of the 14 glucose transport membrane proteins in cells.
That newly patented technology could be a valuable contributor to drug development because it allows researchers to study specific glucose membrane transport proteins more easily in water. Results are impressive, evidenced by their publication on June 27th, 2022, in QRB Discovery, a peer-reviewed research journal of biological function, structure, and mechanism. That analysis highlighted that the QTY code demonstrated a novel method for quickly predicting the structures of water-soluble versions of glucose transporter proteins, which are essential in understanding cancer.
The better news for patients, ALBT, and investors is that the discovery is valuable to cancer drug development since these proteins are historically challenging to study and poorly understood. However, ALBT's technology could change that dynamic by providing a way to learn about these transport proteins, especially those that regulate glucose and play a role in cancer growth. Thus, understanding how they work can accelerate researchers' understanding of these proteins and the development of antibodies against them to treat cancer. In other words, ALBT could be able to monetize its asset.
Opportunities To Monetize Robust IP
That scenario could play sooner than later, especially after the USPTO issued a patent that protects claims covering the composition of matter and methodology for multiple novel QTY-code modified cytokine and chemokine protein receptor molecules. The technology, jointly filed with Dr. Shuguang Zhang of the Massachusetts Institute of Technology, is considered a breakthrough technology that can turn difficult-to-work-with water-insoluble transmembrane receptor proteins into water-soluble proteins.
That's a potentially significant accelerant to drug development processes, noting that its value can be leveraged by virtually any clinical-stage pharmaceutical company since it significantly enhances the solubility of designer peptides and proteins and expands the repertoire of selected therapeutic targets against cancer and other diseases. While impressive technology, it isn't the only value driver.
ALBT has jointly filed and expects to leverage value from at least 16 other patent applications. In addition, the company can benefit from co-inventions with key strategic partners, including a top-5 U.S. university, a leading education and research center in Europe, and a premier multi-national developer of cellular therapies in oncology. Thus, while the newest patent can enhance ALBT's position as a leader in immuno-oncology and cellular medicines, it's certainly not a lone contributor.
In fact, as just a single part of an impressive IP portfolio, valuing the potential on a sum-of-the-parts basis may be the best model. And in ALBT's case, considering they have a well-fortified arsenal of IP firepower, the ability to capitalize on the combined IP strength may be the justification for considerably higher valuations.
A Clinical Breakthrough For Fusion Gene Map Technologies
They recently strengthened that proposition. ALBT announced that it has deployed a breakthrough fusion gene map technology to develop companion diagnostic kits and devices to enhance the personalized clinical management of leukemia patients. Specifically, in collaboration with the Lu Daopei Institute of Hematology, a fusion gene map database from over 1,000 patients with leukemia was established, with the results previously published in the Blood Cancer Journal.
Notably, these fusion genes are important genetic abnormalities in leukemia. Using advanced gene sequencing technology called "Whole Transcriptome Sequencing," multiple previously unknown fusion genes were identified that could potentially establish novel diagnostic and therapeutic targets. Avalon is applying the bioinformatics from the fusion gene map to accelerate the development and commercialization of companion diagnostic kits and devices to enhance personalized clinical management of leukemia patients. ALBT's first diagnostic prototype is expected to enter the clinical study and regulatory filing stage during Q3 of 2023.
Furthermore, because the fusion gene map technology provides an unprecedented opportunity to identify and validate fusion gene products as potential novel therapeutic targets, interest from the over 20 ongoing clinical studies to treat forms of leukemia, including those by Pfizer (NYSE: PFE) and Johnson & Johnson (NYSE: JNJ), could strengthen. Interest from big pharma would be in addition to ALBT seizing its opportunities to expand its R&D pipeline and intellectual property portfolio.
For those looking for a near-term catalyst, ALBT has one in play.
Accretive Acquisition Will Add Millions In Revenues
Avalon is near closing its acquisition of Laboratory Services, a transformative deal that will add significant revenue and positive cash flow, making the asset immediately accretive to earnings. But more than providing a financial boost, the acquisition adds clinical synergies to the Avalon portfolio, allowing them to leverage both companies' strengths to accelerate growth and expand market interests and share. Those liking to trade ahead of catalysts, ALBT expects to close the transaction this quarter, which puts a catalyst in the near-term crosshairs.
Further revenue contributions can be expected from Avalon GloboCare providing strategic advisory and outsourcing services to fuel clients' growth by assisting in project development to enhance competitiveness in targeted healthcare and CellTech markets. In addition, by leveraging its subsidiary structure that integrates unique verticals from innovative R&D to automated bioproduction and accelerated clinical development, Avalon has also established itself as a leading and respected contributor to cellular immunotherapy (including CAR-T/NK), exosome technology (ACTEX™), and regenerative therapeutics studies. Having that ability enables ALBT to advance its scientific and clinical programs more quickly, particularly those focused on immuno-oncology and cellular medicines that address unmet medical needs.
Thus, by utilizing innovative technologies that could transform cellular therapy and regenerative medicine, ALBT has positioned itself to monetize its assets faster in ways many may not have expected. And considering ALBT's focus on treating underserved and unmet conditions, expediting pathways to new revenue streams isn't an overzealous expectation. Focusing there can open doors to fast-track and Orphan designations that can accelerate the pace of trials and expedite approval considerations.
A Bullish Case Is Justified
In total, the bullish value proposition for ALBT is justified. And remember, with ample cash on hand and having access to more, ALBT is already on the track to advance compelling science and, as planned, acquire additional accretive assets. Moreover, as a NASDAQ-listed company, as programs mature, ALBT could be well-positioned and able to attract institutional investment.
That's likely part of the strategic plan. And, while there is a lot on ALBT's agenda, with ALBT taking advantage of its opportunities synergistically, they can do more than establish and strengthen leadership roles; it allows them to maximize the potential from value drivers in play to help ALBT grow bigger faster.
So, weakness in ALBT stock may be better viewed as an opportunity instead of a deterrent. After all, small-cap biotechs are often the hardest hit when risk leaves markets. But savvy investors know that risk-off is often a short-lived phenomenon, and when bullish sentiment returns, the stocks that were beaten down without merit are the ones most likely to rally in high gear. That could be the case for ALBT.
Frankly, by advancing innovative and transformative immune effector cell therapy, exosome technology, and other cell-therapy-related companion diagnostics, that proposition is more than likely; it's probable. In fact, with a portfolio of intrinsics that combine to make vertically integrated Avalon a leading CellTech bio-developer, higher throughout 2023 may be the path of least resistance.
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