Shares of Avalon GloboCare (NASDAQ: ALBT) have been trending higher. Since December 12th, ALBT stock is over 40% higher, with shares trading today at roughly $0.45 on Friday. News from Avalon last Wednesday provided a solid reason for the bullish sentiment, showing that ALBT's intention of becoming a more prominent company is happening faster than many expected. And the better news from an investor's perspective, a fresh capital infusion can expedite that mission. (* percentage change calculated from period 12/12/22 – 12/16/22, 11:10am EST, Yahoo! Finance $0.32 - $0.45)
Last Wednesday, ALBT announced completing a private placement of its Series A preferred stock with its Chairman, Daniel Lu. The gross proceeds of the offering were $4.0 million and added to the previously announced PPM of $5 million of Series A preferred stock. The total of the two will be used to pay a portion of the purchase price for ALBT's announced acquisition of Laboratory Services MSO, LLC. , in terms that are very shareholder friendly. In fact, those terms may be the reason why the bullish momentum hasn't subsided. And it shouldn't.
A Premium Deal With Lock-up Protections
Currently trading at $0.45, terms of the placement have ALBT's Series A preferred stock convertible into shares of ALBT common stock at a price per share equal to the greater of $1.00 or 90% of the closing price of ALBT common stock on the day before conversion. That's not the only thing keeping the lid off the shares. Holders of the Series A preferred stock are also restricted from selling the shares of common stock issuable upon conversion for nine months and are further limited to selling no more than 10% of their shares of common stock in any calendar month. That's still not all attracting positive attention to ALBT and the deal.
The newly issued preferred stock, convertible at a minimum of $1.00 per share, includes no warrants, and leak-out provisions further protect the deal's integrity. Even better, combining the newly raised $4.0 million with its previously raised $5.0 million on similar terms positions ALBT to expedite closing its signed and definitive acquisition agreement to acquire a 60% interest in Laboratory Services MSO, LLC, a premier reference laboratory headquartered in Costa Mesa, California. Another $6.0 million is expected to be raised under similar terms and restrictions to fund the remaining purchase price and close the transaction. For ALBT and its investors, closing the deal will be excellent news, especially under the terms provided.
Foremost, Laboratory Services can be transformative to ALBT by adding significant revenue and positive cash flow that is expected to be immediately accretive to earnings. But more than a financial win, 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 within the next 30 days, likely adding fuel to the already bullish momentum.
Other recent updates contribute to that likelihood.
Video Link: https://www.youtube.com/embed/rDadlsbAmJk
Accretive Acquisition, Partnerships, Clinical Progress
In fact, several updates, including those related to clinical ambitions, its accretive acquisition, and the restructuring of its management and board to better reflect its focus on laboratory services and biotherapeutics in the United States markets, all contribute to a near and long-term commitment to increasing shareholder value. While a predominantly China-based company only a few months ago, ALBT now only maintains a small office in Shanghai, China, with all other business operations in the People's Republic of China ceased.
But while stopping in China, ALBT is enhancing its ambitions and performance domestically. The closing of the Laboratory Services deal will add appreciably to that intent by bringing together two rapidly growing medical sector companies that can pool resources to focus on a broader set of revenue-generating opportunities, accelerate the growth of each, and extend the competitive distance in their respective markets. The better news is that ALBT is proving it has the resources available to maintain an aggressive growth pace.
They have cash, access to more, are advancing compelling science, are acquiring new assets, and leveraging, in the right way, their NASDAQ listing to attract institutional investment. All of those intrinsics combine to make clinical-stage, vertically integrated Avalon a leading CellTech bio-developer. And by advancing innovative and transformative immune effector cell therapy, exosome technology, and other cell-therapy-related companion diagnostics, that leadership role can become more established. They do more.
Avalon GloboCare also provides strategic advisory and outsourcing services to fuel clients' growth, assisting in project development designed to enhance competitiveness in targeted healthcare and CellTech industry markets. Further, 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 player in cellular immunotherapy (including CAR-T/NK), exosome technology (ACTEX™), and regenerative therapeutics.
That status enables ALBT to advance its scientific and clinical programs more quickly, particularly those focused on immuno-oncology and cellular medicines that meet unmet medical needs. Best of all, by utilizing innovative technologies that could transform cellular therapy and regenerative medicine, ALBT appears ideally positioned to turn ambition into revenues sooner than later.
Revenue Drivers In Play, Partnerships Assist
That isn't an overzealous assumption, considering ALBT's focus on treating underserved and unmet conditions. Those focuses tend to open doors to fast-track and Orphan designations that can accelerate the pace of trials and expedite approval considerations. The better news, ALBT isn't taking on its ambitious programs alone. They are fueled and assisted by partnerships with world-renowned research centers and universities to develop and strengthen the potential of its cutting-edge, proprietary, and innovative research focused on bio-process development, the advancement of clinical programs, and product commercialization.
One of its partnerships 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 it intends to do more than bring effective treatments to markets; they are working to develop these powerful cancer treatments with a rapid bio-manufacturing time (1-2 days instead of weeks). The end result: getting life-saving therapeutics through the review and approval processes and reaching patients faster than ever imagined.
Avalon GloboCare is also part of 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.
Progress is definitely 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 expects this novel SLET platform will accelerate the development of its mRNA-based Flash-CAR™ and other cellular therapy programs.
Fueling that speculation is data showing 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, it's important to note that ALBT also focuses on the possibilities brought about by using artificial intelligence to produce new medicine.
Embracing Artificial Intelligence Contributions To Medicine
Earlier this year, Avalon GloboCare announced a new study applying artificial intelligence (AI) enhanced protein design "QTY Code" technology, a novel treatment method the company believes could accelerate the development of therapeutic monoclonal antibodies to treat cancer. Notably, ALBT's approach isn't more of the same.
In fact, ALBT describes its AI-empowered approach to drug development as 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 could be a vital 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.
The peer-reviewed 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 important in cancer. That discovery is valuable to the entire cancer drug development space since these proteins are difficult to study and poorly understood. But what is understood, and why the discovery can be a significant and contributing factor to drug development, is that these transport proteins, especially those that regulate glucose, play a vital role in cancer growth. Thus, tapping into how they work can accelerate researchers' understanding of these proteins and the development of antibodies against them to treat cancer.
Thus, with everything in play and most immediately accretive, current valuations may expose a valuation disconnect. Indeed, company insiders believe it will add value to justify the case.
No Shortage Of Optimism At ALBT
David Jin, M.D., Ph.D., President and Chief Executive Officer of Avalon, is decidedly bullish on his imminent acquisition and the synergies from it, saying, "This is a transformative acquisition for Avalon as it brings significant revenue and positive cash flow and is expected to be highly accretive to earnings while adding strong clinical synergies to the existing Avalon portfolio. Laboratory Services has an impressive growth history and is an established leader within the highly fragmented lab testing and services market. Laboratory Services' diagnostic business is highly synergistic with our existing precision companion diagnostic business and cellular technology platforms."
Those synergies alluded to are expected to facilitate ALBT and Laboratory Services to grow quickly by leveraging combined infrastructures, resources, and cutting-edge diagnostic and immune-therapy platforms. From an investor's perspective, those abilities and strengths could help position ALBT as one of the most valuable contributors to the rapidly growing diagnostics industry. With part of the $25 million revenue contribution from Laboratory Services adding to the proposition, capitalizing on opportunities and maximizing them may indeed be part of the plan.
Thus, often the case, pricing disconnects present investment opportunities. And despite its bullish move, at roughly $0.45, the upside potential is still appreciable and well-supported with real-time asset appreciation. In fact, with an announcement imminent about the closing of a transformative deal, the upside bias is more than expected; it's probable. Catalysts have a way of contributing in that way.
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