Every investor is looking for capital gains in a stock, but those at the more speculative end of the market simply have to take more risk. In many of those cases the investors are trusting the “story” more than the financial numbers, which may not have started to flow. It can be a dangerous area in which to take big bets, but it can also be quite a rewarding place to take a flutter on an interesting story, using funds you can afford to lose. With all of those caveats given, here are two situations that I think are worth taking a look at.
- INOVIQ (IIQ, 47 cents)
Market capitalisation: $52 million
12-month total return: –18.3%
Three-year total return: –25.4% a year
Analysts’ consensus valuation: n/a
Melbourne-based biotechnology company INOVIQ is developing and commercialising diagnostics and therapeutics using exosomes, (also known as extra-cellular vesicles, or EVs), which all cells produce. Found in various body fluids, exosomes are an essential component of cell-to-cell signalling: they are small particles that deliver therapeutic ‘cargoes’ of biomolecular material – such as protein and nucleic acids – to other cells to reduce inflammation and promote regeneration.
INOVIQ has successfully commercialised its EXO-NET exosome capture technology in clinical-stage diagnostics for earlier detection and monitoring of ovarian and breast cancers, signing a deal last April with US-based Promega, a leading global provider of tools and technical support to the life sciences industry, that gives Promega the right to market, sell and distribute the EXO-NET technology for an initial three years. By capturing exosomes using EXO-NET, their molecular information can be used to identify changes in the cell’s function and the early onset of diseases, including cancer. This deal with a global industry-leading partner has validated INOVIQ’s technology offering and strengthened its position within the exosome field.
In August, INOVIQ announced that it had strengthened the case for its NEURO-NET technology. The company had already demonstrated that NEURO-NET could successfully isolate brain-derived exosomes from blood and identify a distinct protein fingerprint that indicated Alzheimer’s disease; the fresh information showed that NEURO-NET could also isolate exosomes from the blood of Parkinson’s disease patients, revealing a unique protein profile that contrasts with healthy individuals. The company said initial studies showed that NEURO-NET enhances the detection of known neuro-degenerative disease biomarkers by five to eight times compared to direct blood measurement, potentially allowing for earlier detection of Parkinson’s disease. INOVIQ also has the hTERT test, used in urine cytology to test for bladder cancer.
The neurological work adds to the cancer diagnostic pipeline, but while the validation of INOVIQ’s technology in earlier diagnosis than traditional methods, in a range of diseases, is very welcome news for shareholders, what’s even more exciting is the move to therapeutics in solid tumours.
Last month, INOVIQ announced that it was ‘weaponising’ exosomes to treat breast cancer. It said it had successfully completed stage 1 of its development program for an exosome therapeutic for breast cancer: the company was able – in a ‘proof-of- concept’ (POC) study in the lab – to engineer cells to produce exosomes that specifically target and kill breast cancer cells.
In the lab study, natural killer (NK) cells – a part of the immune system that provide rapid responses to virus-infected cells, stressed cells, tumour cells, and other pathogens based on signals from several activating and inhibitory receptors – were engineered to continuously produce exosomes that specifically target and kill breast cancer cells. Using a chimeric antigen receptor (CAR) on the surface of the exosomes, a receptor that recognises and binds to a protein that is over-expressed by breast cancer cells, enabled the killing activity of the CAR-NK-exosomes to be directly delivered to breast cancer cells, both increasing therapeutic efficacy and reducing off-target effects (that is, to non-cancer cells).
It was very promising news, but it was still ‘in vitro,’ meaning, ‘in the test tube.’ INOVIQ said it expected more valuable lab data to come in the first half of 2025, before moving on to mice models in the second half of 2025, progress in which would eventually lead to human trials.
The diagnostic side of things could certainly lead to a profitable business, but with a therapeutic, INOVIQ would move into the much larger and higher-value therapeutics market. INOVIQ is right at the forefront of a global space that is attracting a lot of interest, and the stock is well worth considering. Shareholders almost qualify for the description ‘long-suffering’ – IIQ traded near $4 just four years ago – but for a new buyer, the ‘buy’ case looks very good.
- Peninsula Energy (PEN, $1. 535)
Market capitalisation: $4.9 billion
12-month total return: –28.4%
Three-year total return: –26.1% a year
Analysts’ consensus valuation: $4.12 (Stock Doctor/Refinitiv, four analysts); $4.81 (FN Arena, one analyst)
Peninsula Energy is re-starting the mothballed Lance uranium project in the US state of Wyoming, which is one of the largest uranium projects in the US, with a quoted resource of 58 million pounds of uranium oxide. The definitive feasibility study (DFS), which dates from August 2022, estimated a 14-year mine life for the wholly-owned project, which is slated to open in two stages: Stage 1 is projected to produce 800,000 pounds a year, while Stage 2 will lift that rate to 2 million pounds a year. Stage 2 is expected to kick-off about 20 months after Stage 1.
Originally built in 2015, but mothballed in 2019 because of low uranium prices, operations re-started at Lance in mid-December. Peninsula is targeting the first production of dry yellowcake (uranium oxide concentrate) in March.
It is an in-situ recovery (ISR) project, which is seen as the most cost-effective and environmentally acceptable method of uranium. It is a low-Ph, but more importantly, low-cost method, in which the uranium-bearing minerals are recovered from the orebody, dissolved, and the solution is then pumped to the surface where the minerals can be recovered, thus generating no tailings or waste rock. But the geology of the deposit has to suit the method for it to work well. Lance is the only US project authorised to use this method.
The uranium-containing solution is pumped to the treatment plant where uranium is recovered using resin/polymer ion exchange (IX), and clean water reinjected. Since production recommenced in December, about 1,100 pounds of uranium has been captured in the plant ion exchange system and held as in-process inventory until the Phase 2 plant area is fully commissioned, which is expected by March.
Ramping-up of production at Lance has proved slower and more costly than anticipated. Peninsula originally projected that Lance would produce 700,000 to 900,000 pounds of uranium oxide in its ramp-up year of 2025, but delays in getting some of the equipment set up have seen that figure lowered to 600,000 pounds. Further out, though, the company’s guidance remains unchanged: in calendar-year 2026, production is projected at 1.1 million pounds to 1.3 million pounds, rising to 1.5 million pounds to 1.7 million pounds in 2027. Eventually, the aim is to produce up to 2 million pounds a year.
Peninsula has posted an all-in-sustaining cost (AISC) – a figure that incorporates not only the “cash cost” of production but all the costs that allow production to be sustained; effectively, it is break-even – of US$46.42 a pound, against which it estimates an average realised price of US$67.07 a pound, giving life-of-mine operating cashflow of US$258 million. The project is expected to achieve sustainable monthly positive cash flow in the third quarter of 2025.
Peninsula has ten years of sales contracts in place with major utilities in both the US and Europe. These contracts total 6 million pounds of yellowcake over Lance’s ten-year initial mine-life, about one-third of its life-of-mine inventory of 14.8 million pounds – meaning there is plenty of upside to rising ‘spot’ prices. There is plenty of room to expand the resource , with a proposal in with the State of Wyoming to expand the authorised mine permit area to include the highly prospective Kendrick Project area at Lance – it is not a part of the resource at present. Later on, the Barber and Dagger (a new high-grade satellite deposit introduced in 2023) projects could also play a big role in extending the Lance project life. All up, Peninsula has an exploration target of 104 million pounds–163 million pounds of uranium oxide, based on a combination of past exploration results and proposed exploration programs.
Peninsula says it will be well-placed to become a key supplier of uranium and play an important role in a clean energy future, and analysts seem to agree. This stock could be poised for significant capital gain.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regard to your circumstances.
