RESEARCH: Innovative Medical Device Company, Imagion Biosystems

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Imagion Biosystems: Breakthrough Device

By Pitt Street Research

An innovative medical device company  
Imagion Biosystems ((IBX)) is an Australian medical device company whose MagSense diagnostic imaging technology, currently in early stage development, can potentially improve on PET and MRI imaging modalities.

Imagion is currently in preclinical development with the first human pilot studies of the technology intended for 2020. The FDA granted MagSense a Breakthrough Device designation in July 2019.

Imagion goes to the clinic next year
Imagion intends to undertake a first-in-human study of the MagSense technology initially in HER2-positive breast cancer to be followed later in prostate cancer and ovarian cancer.

With HER2-positive breast cancer the goal will be to establish a non-invasive method of detection of cancer in the lymph nodes compared to conventional biopsy of the sentinel lymph nodes.

Another beneficiary of the personalised medicine trend
Pitt Street Research believes that the mid-2018 acquisition by Roche of Foundation Medicine, which valued that company at US$5.3bn, was a landmark transaction from the perspective of Imagion shareholders.

The 2018 acquisition of Sirtex Medical by the Chinese company CDH for $1.9bn, and the current market capitalisation on ASX of Telix Pharmaceuticals are also possible comparisons since in each case these companies combined a radiotracer with treatment.

Obviously, Imagion is going after detection first, but the company has the same long-term promise of being able to be used for treatment as Sirtex and Telix.

Potential first sales from 2023
Imagion intends to sell MagSense on a ‘printer and ink’ model where a low sales price for the SQUID equipment (US$0.5m at a 50% gross margin) is matched with a relatively higher selling price for the nanoparticles (US$1,500 per test for an 80% gross margin).

Pitt Street Research argues that, potentially, Imagion can look to make its commercial launch in 2022 or 2023.

Imagion is undervalued on our numbers
We value Imagion at 12 cents base case and 26 cents optimistic case on a risk weighted DCF basis. We see Imagion being re-rated towards our valuation range on the back of improved sentiment towards MagSense as a Breakthrough Device, as the company takes the device into the clinic.

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