Invion Limited operates as a clinical-stage life sciences company developing Photosoft™ technology for cancer treatment through Photodynamic Therapy (PDT). The company has achieved significant clinical validation with positive Phase II prostate cancer results showing 40% response rates, providing crucial evidence of the technology's therapeutic potential across multiple cancer indications.

However, Invion faces severe financial challenges following the complete disruption of revenue from RMW Cho Group, previously its sole income source. With zero revenue in H1 FY2025 compared to $2.23M in the prior period, and cash reserves of only $736K against annual burn of $3.2M, the company confronts an existential funding crisis requiring immediate capital raising.

The investment thesis centers on the company's ability to navigate three critical challenges: restoring revenue through RMWCG negotiations, demonstrating efficacy in the ongoing Phase I/II NMSC trial, and securing adequate funding without excessive dilution. Strategic partnerships with Hanlim Pharma and Dr.inB provide pipeline expansion opportunities without proportional cost increases, but success remains contingent on clinical validation and partnership resolution.

Invion Limited (ASX: IVX) is an Australian clinical-stage life sciences company headquartered in Melbourne, focused on developing Photosoft™ technology for treating cancers, atherosclerosis, and infectious diseases. The company holds exclusive licensing rights to this next-generation Photodynamic Therapy (PDT) across various territories including Australia, New Zealand, and parts of Asia Pacific for cancer indications, with additional rights for atherosclerosis and infectious diseases in the US and Canada.

PDT represents a less invasive alternative to surgery, using non-toxic photosensitizers and light to selectively kill cancer cells while promoting anti-cancer immune responses with minimal side effects. Invion's business model has historically centered on an R&D services agreement with RMW Cho Group (RMWCG), which funded clinical trials and development activities. However, this relationship has been disrupted, resulting in zero revenue recognition in the most recent reporting period.

Invion operates primarily through clinical partnerships and licensing arrangements, with current active trials including a Phase I/II non-melanoma skin cancer study and completed Phase II prostate cancer research showing promising 40% response rates.

Invion's H1 FY2025 results reveal the severe impact of the RMWCG payment disruption, with revenue collapsing to zero from $2.23 million in the prior corresponding period. This complete absence of income has driven net losses to $1.87 million, representing a 162.2% increase despite management's efforts to reduce operating expenses. Research and development costs decreased by 64.7% to $558,498, reflecting the company's focus on conserving cash while maintaining critical clinical activities.

The balance sheet shows continued deterioration with cash reserves declining to $736,447 from $1.94 million in the prior year, despite $1.7 million raised through share issuances to Lind Partners during the period. Operating cash outflows increased by 30.6% to $1.62 million, creating an annualized burn rate of approximately $3.2 million against limited cash reserves.

Despite financial challenges, the company achieved important clinical milestones including positive Phase II prostate cancer trial results and commencement of the Phase I/II NMSC trial with first patient dosing in early 2025. These developments provide crucial technology validation but require additional funding to reach meaningful commercial inflection points.

Our financial forecasts assume partial revenue restoration beginning in H2 FY2025 with $500K from potential RMWCG resolution, gradually increasing to $3.5M by H2 FY2029 as successful clinical validation enables expanded licensing opportunities. This represents a conservative approach to management's more optimistic timeline expectations, incorporating 12-18 months for meaningful partnership progress rather than the suggested current financial year resolution.

EBITDA margins are projected to improve from deeply negative levels to approximately 50% by H2 FY2029, reflecting the operational leverage inherent in a successful licensing business model where incremental revenue carries minimal associated costs. The company is forecast to achieve EBITDA breakeven in H1 FY2027 and positive free cash flow in H2 FY2027, approximately 18 months after operational breakeven.

The forecasts incorporate significant uncertainty regarding both revenue restoration timing and funding adequacy, with success contingent on resolving the RMWCG relationship and generating compelling NMSC trial data. Capital expenditure remains minimal given the asset-light intellectual property-focused business model, while depreciation primarily reflects systematic amortization of Photosoft™ licenses over their 20-year useful life.

Our DCF analysis employs a WACC of 23.7%, reflecting Invion's high-risk profile as a clinical-stage biotechnology company with zero current revenue. This elevated discount rate incorporates a risk-free rate of 4.2%, equity risk premium of 6.0%, levered beta of 1.7, size premium of 5.0%, and company-specific premium of 5.0% capturing funding uncertainty and clinical development risk.

The base case valuation of $0.14 per share reflects balanced assumptions about clinical success probability, RMWCG resolution timing, and funding requirements. The significant divergence between bull case ($0.25) and bear case ($0.03) values demonstrates the binary outcome risk inherent in clinical-stage biotechnology investments, with the bear case representing a distressed scenario where technology fails commercial validation.

Terminal value calculations employ a conservative 2.5% long-term growth rate applied to normalized terminal free cash flow of $10-15 million, yielding terminal value of $47-71 million. With current share price of $0.20, our analysis suggests the market is pricing in relatively optimistic assumptions about clinical outcomes and partnership resolutions.

The convergence of funding, clinical, and partnership risks creates a particularly challenging environment for Invion. The timing misalignment between cash depletion and clinical readouts may force capital raising before demonstrating compelling efficacy data, potentially resulting in unfavorable terms. Management's optimistic communications about cash adequacy and partnership resolution timelines warrant investor skepticism given the severity of underlying challenges.