Why IMU is a multi multi bagger, page-3738

Immunotherapy and the worldwide race to the finish

Theres a race going on worldwide to source cost effective immunotherapy cancer drugs.

Immuno-oncology (IO) continues to feature strongly in oncology dealmaking, being involved in 49% of drug licensing transactions and representing 66% of the total disclosed deal value. Of the 21 recent oncology drug licensing deals larger than $1 billion in value, 15 were for Immuno Oncology related assets. As an example in 2020

AstraZeneca topped the drug licensing list with its partnership with Daiichi Sankyo, paying $1 billion upfront with a total potential value of $6 billion to license the anti-TROP2 ADC datopotamab deruxtecan, following the pair’s successful development and commercialisation of the anti-HER2 ADC trastuzumab deruxtecan in 2019.

For those unaware, the TROP2-directed antibody-drug conjugate datopotamab deruxtecan (Dato-Dxd) demonstrated promising antitumor efficacy against previously treated non-small cell lung cancer (NSCLC), according to updated results of the phase 1 TROPION-PanTumor01 study presented at the 2020 World Conference on Lung Cancer in Singapore. Dato-Dxd “demonstrated encouraging antitumor activity and a manageable safety profile in heavily pretreated NSCLC patients,” concluded Alexander Spira, MD, who presented the findings.

So the potential of $6 Billion dollars for the licensing of an immunotherapy drug is the carrot currently on offer for drugs such as Imugene’s Professor Kaumaya designed PD1 VAXX, currently illiciting immune responses in non- small cell lung cancer patients in Australia and the US.

Wait a minute did I just say illiciting immune responses?

That’s right. On Friday the IMU Board announced to the ASX that the clinical results indicate their PD1 Vaxx is continuing to show early signs of immune responses in patients, with the development of antibodies to the drug target, PD1. This is an unbelievable result for a Phase 1 Clinical trial in which dosage levels, safety and efficacy were the desired outcomes.

Back to the immunotherapy race. And why is it occurring worldwide?

Well there are two major selling cancer drugs, Keytruda and Opdiva, owned by Big Pharma’s Merck and Bristol Myers respectively, earning a ton of money. Wall Street analysts surveyed by Bloomberg recently expect Keytruda sales alone to total more than $17 billion this year, and almost $26 billion in 2025. But the patients on the street aren’t happy with taking Keytruda or Opdiva. The side are rife and a quick check of Google’s reviews on drugs.com suggest well over 50% about of those on Keytruda are reticent to offer the drug a good rating. Like another leading cancer drug Herceptin, bought by Roche from Genentech in 2009 for 46.8 Billion USD, side effects are common place in existing cancer medication. As an example taking Herceptin can cause side effects, some of them severe. The most common potential side effects of taking Herceptin are headaces, diarrhea, nausea, chills, fever, heart problems, infection, insomnia, cough and rashes. Further to which Herceptin may cause serious heart problems. Other symptoms to watch for include swelling of the ankles or legs, shortness of breath, cough, or weight gain of more than 2.3 kilos in less than 24 hours.

Now putting this in perspective here in Australia we have been hard put selling the AstraZeneca vaccine for COVID19, a virus that kills you, because one in thousands of patients may experience blood clotting. Therefore how difficult is it for Merck, Bristol Myers and Roche to sell their latest suite of drugs? Let alone get further regulatory approvals for them. And keep in mind many of the patients they are targeting are already on chemotherapy.

China enters the race

Despite the challenges of the COVID-19 pandemic, 2020 was a landmark year for investment in biotech and pharma (Nat. Rev. Drug Disc.20, 93–94; 2021). Once again, oncology played a large part in dealmaking (Biopharma Dealmakers B23–25, December 2020) with $133 billion total disclosed deal value. A coming wave of Chinese cancer drugs could provide patients with cheaper alternatives to some celebrated and costly therapies, but gaining traction will mean going up against some of the global pharmaceutical industry’s most lucrative and well-protected franchises.

Chinese cancer treatments with checkpoint inhibitors that free the immune system to attack tumors in a similar way to Keytruda and Opdiva have been developed in the East.

One early Chinese PD-1 entrant is likely to be Junshi’s toripalimab for nasopharyngeal cancer. A late-stage trial found that combining the drug with chemotherapy outperformed the standard treatment alone, according to research released at the American Society of Clinical Oncology’s annual meeting. Patients who got the Junshi drug in combination were with chemotherapy were less likely to see their cancers worsen. The researchers also noted a 40% lower risk of death among patients who got the Junshi drug with chemotherapy. Similarly the Hong Kong Innovent Bioligics developed cancer treatment sintilimab is entering the race. In May 2021, the U.S. FDA accepted for review the Biologics License Application (BLA) for sintilimab in combination with pemetrexed and platinum chemotherapy for the first-line treatment of nonsquamous non-small cell lung cancer.

Innovent Bioligics rose 8.84% to $66.50 HKD on Friday following their presentation to the ESMO conference in Paris, taking their market cap to $96.99 BN HKD or $17.15 BN AUD, (i.e., close to seven times greater than the current market cap of Imugene).

On the downside these Chinese drugs are only approved for one or two cancer types, whereas Keytruda and Opdiva have US FDA Approval for the treatment of multiple cancer types. And given the current political climate between the US and China, Chinese drugs are not as palitable to US consumers or politicians as Western drugs. Hence the desire for Chinese drugmakers to partner in combination with Western manufacturers, as Innovent has recently done in partnering with the NYSE Eli Lilly, to take on the Western markets. "We are thrilled to expand on our successful China TYVYT collaboration with Lilly to now include markets outside of China”, said Michael Yu, Ph.D., Founder, Chairman and CEO of Innovent.

Yet on the upside many of these Eastern developed cancer drugs are cheaper to produce and much less expensive than their Western counterparts. And this in most important given the climate in the USA at present where the public is sick and tired of forking out thousands and thousands of dollars for cancer medication and treatments. As an example patients on Keytruda in many instances can expect to pay close to $175,000 USD per annum to remain on the drug. “For a lot of people in the U.S. -- literally these drugs bankrupt them,” said Brad Loncar, a biotech investor and Chief Executive Officer of Loncar Investments. Finding a solution to the cost of these drugs is now paramount in the US, as Loncar notes, “These drugs are so huge that tens of billions of dollars could be at stake here. So much money could be saved for the health-care system.” The high cost has frustrated U.S. health official as well, with Richard Pazdur, director of the U.S. Food and Drug Administration’s Oncology Center of Excellence, going as far as encouraging Chinese companies to undercut U.S. developed checkpoint inhibitors on price during a medical meeting in 2019.

Imugene and the perfect storm

A "perfect storm" is not normally good news for anybody but it could be for Imugene, as IMU could be subject to the storms force”. Imugene produces cost effective immunotherapy drugs which exhibit nil if any side effects, proving both safe and efficacious in Phase 1 and 2 trials. Therefore they could be huge beneficiaries of the perfect storm currently in play in the worldwide cancer treatment market. Let’s recap:

1. Immunotherapy - is fast being recognised as the SOC in cancer treatment
2. Chinese drug companies - are competitively priced yet finding it difficult to enter the US market
3. US law makers - are screaming to an end to cost prohibitive cancer treatment
4. Leading drugs - Keytruda, Opdiva and Herceptin - are falling short on consumer expectations due to side effects and poor customer reviews, despite large revenue, and
5. New drugs (including Chinese participants) - not able licensed or in many instances capable of countering a multiple cancer lines

Imugene’s B cell platform does have the ability to counter multiple cancer lines. The PD1 Vaxx developer Professor Kaumaya stated when partnering with Imugene “this collaborative research with Imugene has closely paralleled my personal work over the past two decades, and together we form a strong team driving multiple combination immunotherapy drugs through the clinic targeting lung, breast, gastric and other cancer targets. This collaborative venture with Imugene supports the rapid development to achieving a potential cure for several important cancer targets.”

Cancer cells grow in an uncontrolled fashion. And aside from PD1 vaccines HER 2 cancer drugs, such as Imugene’s HER Vaxx, work on the surface of the cancer cell by blocking the chemical signals that can stimulate this uncontrolled growth. Imugene’s HER-Vaxx is a B-cell peptide cancer immunotherapy designed to treat tumours that over-express the HER-2 receptor, such as gastric, breast, ovarian, lung and pancreatic cancers. On Friday at the ESMO Conference in Paris Imugene illustrated that a reduction in tumor size in patients that received their Her-VAXX + chemotherapy is increased compared to patients that received chemotherapy alone. This observation confirms the ORR results and supports the OS results of the study. In addition, tumor response is correlated with the amount of antibody development. Patients with AB levels above 1050ng/ml received a tumor reduction of >50% compared to those patients with AB levels below 1050%.

So yes, the Imugene B cell strategy is working in those receiveing their treatment. Further to which it could be argued life has been prologed by more than any other Her 2 expressing drugs currently on the market, when one considers Her VAXX trial results in November 2020. These results illustrated a reduced risk of death of 58.2 per cent in the HER-Vaxx plus chemotherapy group compared to the group undergoing chemotherapy alone.

Is it any wonder large volumes of Imugene’s ASX stock have been traded in recent weeks following the inclusion of leading fund managers Blackrock and Vanguard (to name a few) to their share register? And now IMU is included on the ASX 300 the volumes are set to follow. I for one believe the locally managed and industry super funds have yet to even commence their acquisition of IMU. Fridays close looked more about a large offshore institutional investor following BlackRock and Vanguard into the malaise than it did local funds re weighting and rebalancing their portfolios. I’m confident given local lockdowns our health care and stock analysts would be still working through the necessary paper work and red tape associated with their funds due diligence process, to have even commenced buying IMU. That’s more likely to occur in the coming weeks.

Combination Therapies, Imugene and the perfect storm

Cancer drugs are most effective when given in combination. The rationale for combination therapy is to use drugs that work by different mechanisms, thereby decreasing the likelihood that resistant cancer cells will develop. When drugs with different effects are combined, each drug can be used at its optimal dose, without intolerable side effects.

Sometimes combination drug therapy is used not to cure but to reduce symptoms and prolong life. Combination drug therapy can be useful for people with advanced cancers that are not suitable for radiation therapy or surgical treatment (for example, people with non–small cell lung cancer, esophageal cancer, or bladder cancer that cannot be completely removed by surgery).

The worlds leading drugmakers are under increasing pressure from regulators and shareholders alike to combine their existing drugs with less toxic drugs, such as those being trialled by Imugene, in which increased levels of safety have been experienced by those participating in current Imugene trials. As many of you would be aware the Independent Review Committee overseeing Imugene’s HER Vaxx Pahes 2 trial cut the trial short in reducing the number of patients to 36, saying it would be unethical to continue taking into consideration HER Vaxx’s safety outcomes over that of the SOC, chemotherapy alone.

With this in mind Lesley Chong and her teams recent decision to enter Phase 3 HER Vaxx trials (both registrational and investigational), in combination with other leading drug makers can be viewed as a prudent one, from both a medical and financial perspective. Partnering with drugs already approved and existent in US could alleviate the side effects experienced by many cancer sufferers there and offer them more cost effective solutions in treating cancer. Whilst from a financial and shareholder perspective these combination trials could eventually lead to a much bigger return than the $6 Billion USD carrot on offer in deals such as that entered into in the aforementioned AstraZeneca Daiichi Sankyo deal. Were Imugene’s B cell platform to prove successful in combining with leading drug makers worldwide the sky is the limit when it comes to ongoing royalties in the form of licensing deals and dividends for IMU shareholders.

I can just see medical practitioners worldwide saying “Do you want HER Vaxx with that?” In much the same way as the Yanks say “Do you want fries with that?” On the way through the checkout. Who would refuse? Its a cheap price to pay for the added benefit of not having to experience debilitating side effects when you arrive back home.

Biden, the Democrats, US Tax Policy and the perfect storm

US Analyst Jim Cramer said tax uncertainty is one of the reasons why the September 17 stock market selloff has legs at least till the middle of next week. "That's why I think you don't just go and buy ahead of it. Merck (MRK) - Get Merck & Co., Inc. (MRK) Report goes down everyday, Bristol [Myers Squibb] (BMY) - Get Bristol-Myers Squibb Company Report has been down 11 out of 12 days. These are all [related to] the tax code," he added.

Reps. Kathleen Rice, Scott Peters, and Kurt Schrader on Wednesday opposed language in the House Energy and Commerce Committee that would give the federal government a greater role in negotiating drug prices. Another key House panel endorsed the drug pricing plan later Wednesday evening, but leadership may not yet have the votes to pass it as part of a larger bill.

It’s another bump in the road for leadership that underscores the challenge facing the Biden White House and the Democrats' narrow majority.

"Polling consistently shows immense bipartisan support for Democrats’ drug price negotiation legislation, including overwhelming majorities of Republicans and independents who are fed up with Big Pharma charging Americans so much more than they charge for the same medicines overseas. Delivering lower drug costs is a top priority of the American people and will remain a cornerstone of the Build Back Better Act as work continues between the House, Senate and White House on the final bill," Henry Connolly, a spokesman for House Speaker Nancy Pelosi, said in a statement to ABC News.

Is Biden’s tax policy and tax reform going to be successful?

The answer is still up in the air, particularly if many ex Trump Republicans have any say in it. Former CNBC anchor and now Fox Analyst Maria Bartiroma is already talking about the mobility of money, and about how that if successful money is going to leave high taxing states in the US, and flow to lower taxing states, or even offshore. This could be a red flag to many seeking these so called “much needed” tax and drug reforms.

Yet either way Imugene’s B cell platform is coming up trumps (i.e., with no reference to the Don). One can envisage their upcoming PD1 and HER Vaxx OS results swimming abreast of the perfect storm’s waves, and no doubt keenly analysed by those in the investment community currently suffering from a severe case of FOMO. This is one storm I definitely wouldn’t want to be wearing shorts in…

Do your own research. Investment can bring with it heavy losses. Seek professional advice as and when required. These are my personal opinions, and in no way constitute investment advice, or part thereof.