Daily Brief Australia: Liontown Resources, Actinogen Medical, Armour Energy, Incannex Healthcare , Paradigm Biopharmaceuticals and more

• On the 28 March, lithium play Liontown Resources (LTR AU) rejected Albemarle Corp (ALB US)‘s third proposal of $2.50/share, citing the revised terms as opportunistic.
• Since, that date, it’s been “crickets.” Preliminary due diligence was not provided to Albemarle. Liontown responded to media speculation today saying it has received no new takeover proposals. 
• Yet behind the scenes, an interested party has been building a stake, paying up to $2.75/share, 1.5% above the last close.

Actinogen’s Q323 update reiterated the company’s focus on advancing its lead asset Xanamem. Patient recruitment in the Phase IIa XanaCIDD study in cognitive impairment (CI) associated with major depressive disorder (MDD) is ongoing, and the company plans to start the Phase IIb portion of the XanaMIA study in Q2 CY23 in the company’s lead indication, Alzheimer’s disease (AD). This study portion is designed to assess Xanamem in a population of patients with mild CI and/or mild AD, who at baseline will have been confirmed as biomarker-positive for progressive AD. We continue to see the results from the XanaCIDD study (expected in late CY23 or early CY24) as the next major clinical data milestone and a potential share price catalyst. We expect the company’s A$12.3m cash balance at 31 March to fund operations into Q4 CY23.

• Armour Energy Limited (ASX:AJQ) is a junior energy producer and explorer with assets across northern, southern and eastern Australia.
• The company is set to pursue a growth strategy with particular focus on production optimisation at Kincora to be delivered over the next 24-30 months.
• The success case should be readily apparent by end-2023. 

Incannex has released its Q323 cash flow report, providing key operational highlights. Clinical developments during the quarter included a positive interim review of its Phase II Psi-GAD trial (assessing psilocybin for generalized anxiety disorder (GAD)), initiation of the Phase II trial of IHL-675A (for treatment of rheumatoid arthritis (RA)), and continued progression of the BA/BE study for its lead asset IHL-42X (for obstructive sleep apnea). In a new development, Incannex announced the commercial launch of psychedelic-assisted psychotherapy clinics for treatment-resistant depression (TRD) and post-traumatic stress disorder (PTSD), with plans to scale across Australia. Though we have low visibility on the prospects of the clinics currently, if they materialize, they may support the company’s cash inflows in the medium term. With a cash balance of A$37.1m at end-March 2023 and at the current quarterly burn rate (A$4.3m), management has guided that operations are funded into CY25.

Paradigm has shared its March 2023 quarterly update. In Q323, net cash outflow from operating activities was A$10.3m (A$28.1m for the first nine months of FY23). R&D costs amounted to A$9.0m, attributed to ongoing recruitment and analytical activities for the PARA_OA_008 Phase II clinical trial assessing injectable pentosan polysulfate (iPPS, or Zilosul) as a potentially disease-modifying treatment for knee osteoarthritis (kOA), site operations for Phase II studies in mucopolysaccharidosis (MPS I and MPS VI), and ongoing NDA-enabling non-clinical studies. This expenditure is comparable to the prior quarter (A$13.2m), and we anticipate an increase in burn rate in the near-term to support the company’s active pipeline. With a cash position of A$73.2m at end-Q323 and at the current quarterly burn rate, management estimates that operations remain funded into CY24.