I found this article from March last year ago when IMU had a market cap of just $30m. Today IMU is worth almost $100m and I thought you'd all like to read about the real prospect of where our company is heading. Enjoy!
Could this ASX Cancer Therapy Junior Attract a Billion Dollar Big Pharma Deal?
Last year David Bowie sadly joined the ranks of the likes of Steve Jobs, Yul Brynner and Dr Seuss – standouts in their various fields, who succumbed to cancer.
It’s always shocking when celebrities die, but when it comes to cancer, the figures among everyday people are every bit as concerning as the big names whose battles make it into the spotlight. Current predictions are that one in every two Australians will be diagnosed with cancer by age 85… that will account for about 3 out of every 10 people who will pass away in this country alone. And beyond Australia? WHO reported 14.1 million new cases of cancer worldwide in 2012. Cancer is clearly a terrible group of diseases that kills too many lives.
Luckily there are many aspiring biotech companies out there who are working hard to find solutions. Owing to the size of the prize, these companies are operating in multiple, vast, multi-billion dollar markets, with Big Pharma companies constantly shopping around in an effort to scoop up effective solutions and commercialise them.
There is one particular field of cancer treatment that is one the most promising going around – it’s called immunotherapy.
Immunotherapy is the treatment of cancer with substances or drugs that stimulate the patient’s own immune response. This type of treatment helps patients’ immune systems recognise cancer cells and create antibodies to attack them.
This field has seen substantial, multi-billion dollar deals being made, as Big Pharma companies jockey for position in an effort to bring to market an effective cancer treatment – that could be profitable for years to come.
It has been touted as ‘a breakthrough’ treatment set to ‘revolutionise’ the oncological industry… no wonder Big Pharma is piling in.
One $30M capped ASX stock is at the forefront of the field, and is developing cancer immunotherapy drugs based on antibodies.
Before we go to far, we should note that this company is an early stage biotech play and a speculative stock. Investors should seek professional financial advice if considering this stock for their portfolio. Today’s company is attempting to develop and commercialise a cancer treatment drug, HER-Vaxx that could be first in class, cost effective and has a unique difference.
The company is soon set to recruit patients for its Phase 1b/2 trial over the coming months. These patients suffer from one of the most prevalent cancers facing the world today, gastric cancer. Gastric cancer is the second leading cause of cancer death in the world and little evolution has been made in its treatment thus far.
Immunotherapy and in particular the work this ASX stock is doing, could change this substantially. Through immunotherapy treatments, world leaders in cancer research are asking whether we are, at last, on the brink of turning the cancer story around.
20% of the top 10 Big Pharma deals in 2015 were in the antibody space. This is exactly the same space this $30 million capped ASX stock is working in.
Given it’s at a similar stage to where there have been multi-billion dollar deals such as BMS paying $1.7 billion for the then small cap Five Prime, and Sanofi paying over $1.6 billion for Regeneron’s cancer therapies (both at earlier stages of development (Phase 1) than where this ASX stock is positioned); there is every chance this stock could be the next to receive some big offers, at many multiples of this company’s current market cap.
This ASX stock has a tight share register, and features an impressive management team with a successful track record in drug development and all the right credentials.
CEO, Leslie Chong, was the previous clinical program lead at Genentech Inc. – the company which sells Herceptin ® – a similar and complementary drug their lead product to what this company is developing…
On the board as non-executive director is Dr Axel Hoos, the current VP Oncology R&D at the $83 billion capped pharmaceutical giant GlaxoSmithKline.
He was also the previous clinical lead at Bristol-Myers Squibb, for Yervoy, the first immuno-therapy checkpoint inhibitor to receive FDA approval. This is another example of a large pharmaceutical company developing and signing major deals to acquire the license for other immuno-oncology therapies.
Even with that pedigree, Dr Hoos only board position worldwide is with this $30 million capped ASX stock… we can only imagine that he must be very interested in what this company is working on.
With its highly credentialed team assembled, this ASX stock is attempting to attract the eye of Big Pharma, playing in a field where the average total deal size is $514.6 million.
That’s many times over this stock’s current market cap, and demonstrates the potential value uplift if successful.
In the meantime though, 2017 promises to be very busy for this stock, with plenty of newsflow related to its Phase 1b/2 clinical trials – starting with patient enrolments, followed by early patient data… all of which will be keeping investors on their toes.
Imugene Limited (ASX: IMU) is developing cancer immunotherapy drugs based on antibodies… one of the key defences of the human immune system.
For a quick explanation of what IMU does, straight from the company itself, here’s CEO Leslie Chong and Chief Scientific Officer Ursula Wiedermann talking to Canary Networks:
The Next Biotech is all about bringing small cap biotech stocks out into the spotlight, and alerting our readers to high potential growth stories, such as IMU.
By way of example, we first covered Noxopharm (ASX: NOX) back in August 2016 , and last wrote about it in October 2016 – the share price has never looked back, with the stock up as high as 390% since out first article:
The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.
Can IMU do something similar over the coming months as it heads toward its Clinical 1b/2 trials? We are certainly hoping so…
IMU has two compelling antibody programs, which could open up a raft of commercial opportunities, especially given the size and nature of recent deals in the space.
Those antibody programs are as follows:
These two technologies build on the multiple levels of a person’s immune system, through the identification of cancer targets for a variety of cancer indications.
B-cell antibodies have a number of advantages including safety, efficacy, durability, usability and cost.
So should a small cap company such as IMU be able to demonstrate the potential to commercialise a drug that is cost-effective, has high efficacy, is safe and usable, it would be well on its way to attracting the attention of Big Pharma.
Before any Big Pharma deal comes to light, it’s worth nothing that IMU has a few heavy hitters in the space backing it already. One of its key backers is Kerr Neilson’s Platinum Asset Management, an Australian fund manager that usually looks abroad for its investment opportunities. Not on this occasion for IMU…
Platinum Asset Management has taken a stake nearing 10% (as of Dec 2016), having been impressed with IMU’s board and management – a promising sign for the company at this stage of its life.
Here’s a look at some recent valuation and licensing deals to give you an indication of how lucrative this space can be for companies like IMU:
Given IMU is currently on the cusp of a Phase 1b trial, it could certainly be in a licensing window if it can generate enough newsflow and interest.
The field of study is certainly already newsworthy.
Immunotherapy is said to be the most promising area of immune oncology today.
So a promising-looking play in this field could go from promising to profitable very quickly, particularly if it has the right treatments in trial to attract the attention of Big Pharma.
Here’s a graph comparing IMU and its peers in terms of market cap right now:
As you can see, compared to its peers this appears undervalued. However its valuation has been steadily climbing since November last year.
Once its range of immunotherapy solutions catch the right attention, it could quickly ascend the valuation ladder.
However, at the same time, this is a speculative investment – and like all speculative investments, there is no guarantee that IMU will increase in value. Investors should thus take a cautious approach to any investment decision made with regard to this stock.
IMU’s goal would be to attract Big Pharma in the way that Five Prime and Regeneron did.
Those companies’ molecules were in-licensed or partnered by BMS and Sanofi for $1.7 billion and $1.6 billion respectively.
In fact, as we mentioned above, 20% of the top Big Pharma deals in 2015 were in the antibody space, which augurs well for IMU given the assets it is attempting to commercialise.
So if IMU were to make a deal, it could look something like this:
Note, how Sanofi made an upfront payment to Regeneron for $640 million. These are the kinds of numbers we are talking about, and what IMU is hoping for.
IMU Price at posting:
3.4¢ Sentiment: Buy Disclosure: Held
So if IMU were to make a deal, it could look something like this:
(20min delay)