AdAlta Faces Financing Hurdles Despite Progress on Immunotherapy Strategy
AdAlta Limited has made significant progress in its 'East to West' cellular immunotherapy strategy by executing three CAR-T term sheets and completing technical due diligence, while implementing cost-cutting measures and seeking new capital amid a tough financing environment.
- Three CAR-T term sheets executed with technical due diligence substantially completed
- Internal discovery R&D activities ceased to reduce operating costs
- Heads of Agreement with SYNthesis BioVentures for seed funding pending completion
- AD-214 antifibrotic drug development continues via third-party partnerships
- Cash balance at $0.83 million with ongoing capital raise efforts
Strategic Focus on Cellular Immunotherapy
AdAlta Limited (ASX:1AD) has reaffirmed its strategic pivot towards its "East to West" cellular immunotherapy platform as the core growth driver for the company. This approach prioritizes the development and licensing of novel CAR-T therapies targeting solid cancers, marking a clear departure from internal discovery research. The company executed three term sheets in February 2025, securing exclusive negotiation and due diligence rights for three differentiated CAR-T assets, with technical diligence substantially completed, including on-site inspections in China.
These developments underscore AdAlta's commitment to advancing its pipeline through partnerships and out-licensing, rather than solely internal development. The company aims to finalise definitive agreements in the June quarter, contingent on securing necessary financing.
Cost Management and R&D Streamlining
In response to a challenging global financing environment, AdAlta ceased its internal i-body discovery R&D activities in February 2025, freeing up approximately A$0.7-0.85 million annually in operating costs. This strategic move allows the company to focus resources on its cellular immunotherapy assets and other initiatives. The cessation also led to a 45% reduction in direct employees and the exit from its La Trobe University laboratory lease.
Additional cost-saving measures include the suspension of board fees, the CEO deferring salary until a strategic transaction is completed, and the planned cessation of remaining staff employment by the end of May 2025, with expertise retained via consulting contracts. These steps reflect a disciplined approach to cash preservation amid ongoing capital constraints.
Financing Efforts and Capital Position
AdAlta signed a Heads of Agreement with SYNthesis BioVentures (SYNBV) for an initial $0.5 million investment in its "East to West" subsidiary, AdCella Pty Ltd, with potential to increase to $2 million in seed funding. However, closing conditions for this investment have not yet been met, and the company continues to engage with SYNBV and other potential investors to secure funding.
The company’s cash balance stood at $0.83 million at the end of the March quarter, down from $1.63 million the previous quarter, with net operating cash outflows of approximately $1.2 million. AdAlta has engaged advisors to evaluate a capital raise, signalling proactive steps to bolster its financial runway. The company also secured a non-dilutive R&D Tax Incentive advance loan facility of $424,600 with Radium Capital, repayable upon receipt of its FY25 RDTI rebate.
Progress on Lead and Adjacent Assets
While the company focuses on cellular immunotherapy, it continues to explore third-party partnerships for its lead antifibrotic molecule, AD-214, targeting fibrotic diseases such as idiopathic pulmonary fibrosis and kidney fibrosis. Interest remains strong, particularly in kidney fibrosis applications, with the company seeking partners to finance Phase II clinical trials and development of a subcutaneous formulation.
Additionally, AdAlta received its first enquiry to partner WD-34, its first-in-class anti-malarial i-body discovered in collaboration with La Trobe University. These assets will be advanced externally, consistent with the company’s strategy to leverage partnerships and reduce internal R&D expenditure.
Looking Ahead
AdAlta’s near-term objective is to execute at least one in-licensing transaction for AdCella in the June 2025 quarter, subject to securing initial financing. However, the company remains cautious about forecasting transaction closures due to competitive and practical uncertainties. The board is prioritizing strategic options for existing assets while managing cash carefully to extend operational viability.
CEO Dr Tim Oldham acknowledged the dual nature of the quarter as both positive and challenging, highlighting the company’s progress in technical diligence alongside the difficulties posed by volatile global financial markets. The company’s disciplined cost management and ongoing capital raising efforts will be critical to sustaining momentum.
Bottom Line?
AdAlta’s strategic refocus and cost discipline position it for potential licensing milestones, but financing remains the pivotal hurdle ahead.
Questions in the middle?
- When will the SYNthesis BioVentures investment close, and what are the remaining conditions?
- How soon can AdAlta secure capital to finalise licensing agreements for its CAR-T assets?
- What impact will the cessation of internal R&D have on the company’s long-term innovation pipeline?
