The IMU ship - steering us home, by WMHB
Biotech investing is not for the faint hearted. Companies go from boom to bust and back again as FDA approvals, cashflow concerns and macroeconomics seek to run their ships aground on an annual basis. Strong management, a solid product offering and a clear commercial direction are all required to steer their ship to shore, amidst the often murky waters below. Imugene (IMU -ASX) is no stranger to these choppy seas, with many aboard wondering from time to time whether theIR skipper even owns a commercial compass, let alone knows how to use one. Though in spite of this sense of commercial confusion, scientifically it would appear the IMU ship remains intact and set to reach her destination at some time this decade. Who remains on board at that juncture is a question for another day.
Unfortunately there was lots of negative sentiment around this week in the IMU galley's as the company’s capital raise (CR) sprung upon them rather suddenly, manifested into the disaster everyone predicted it would be. With the company management either going along with or assisting in the construction of a poorly designed CR structure, shareholders can be forgiven for feeling let down. With prospective shares in the company’s new offering being offered at two year lows you’d think shareholders would jump at the opportunity to hop on board. Though the strange combinations and permutations utilised to determine the buy in price have left many as confused as they are with the company commercial direction. On the face of it the share purchase plan offered at either the placement price or a 2.5 per cent discount to the five-day volume weighted average price before the SPP’s close — whichever happens to be lower, appears relatively straightforward. However with the share price plummeting in recent days many have been left pondering firstly how to calculate the subscription price, and secondly if its even worth it. Some investors have left the ring insinuating its probably better, if not easier to simply buy on market, and forego the promise of options at 11.6 cents years down the track.
So how did Imugene find itself in this debacle, amidst a share price in free fall and a reliance on poorly designed capital raises with bewildered, disoriented and at times demented shareholders. In essence it could be the result of the company’s failure to provide a clear path forward from a business and commercial perspective. A recent interview four days ago with IMU CEO and MD Leslie Chong and Proactive Investors did little to allay Imugene shareholders lack of certainty when at 3.24 minutes in she was asked what the company strategy and corporate goal was. Chong replied Theultimate corporate goal would be to either get acquired, to partner with Big Pharma for development and out license each of their technologies separately, or to develop and now commercialise their own assets. In other words there is no clear strategy for investors to hang their hats on. In the one instance Chairman Hopper is stating the company has no plans to take their products to market, in the next breath the company CEO is suggesting the corporate goal is to possibly develop and commercialise their own assets. In late 2022 following an interview with IMU Chairman Hopper wherein he stated biotechs looked to sell their products at the end of phase 2 clinical trials, investors were of the opinion the company’s most advanced drug Her Vaxx, would be sold as it neared completion of its Phase 2 trials. The CEO Leslie Chong did little to hose down those expectations in stating the company’s dance cards were full with potential big Pharma suitors. Alas soon after the company announced not one but two further Phase 2 combination trials for Her Vaxx, with the prospect of a sale all but thrown out the window. The share price began to dump, with many retail investors throwing the baby out with the bath water, failing to believe anything either Hopper or Chong had to say thereafter.
The recent CR could be viewed as an attempt to deliver shareholders and the broader market what they have been searching for from Imugene, that being revenue. In acquiring a unique allogenic therapy known as Azer Cel, from the US Precision Biosciences, the opportunity to enter a registration trial for the drug, and commence patient sales could occur in the next few years. Azer Cel, whilst being complimentary to Imugene’s oncolytic viruses and oncarlytics treatments, has proven successful as a stand alone drug, in treating cancer patients with lymphoma and non Hodgkins lymphoma. But the pathway forward toward the proposed azer cel revenue is muddied, as with all things commercial when it comes to Imugene. Forming part of the deal is the acquisition and eventual leasing of a manufacturing facility with 50 qualified staff. Yet the costings accompanying this procurement, and the forecast revenue from Azer Cel is unclear. Prospective subscribers in the CR to fund these purchases are left in the dark on many key aspects of the deal, as there is no definitive answers to many of their monetary concerns. Concise data by way of an information memorandum outlining and explaining in Plain English the “nuts and bolts” of theses transactions would have come in handy. As so often happens when Imugene and their advisors Bell Potter team up together there is no extended appraise of market potential, size, competition and forecast revenue associated with the deal.
So within all the perplexities surrounding the VWAP, strike price and subscription details for the current CR, and the apparent disorientation regarding Imugene’s corporate goals, what do investors have to place in their certainty baskets, in the hope of things to come? What is set to steer their ship to shore?
IMO there are some strong points for those still alive on the Imugene ship.
These are:
- Irrespective of the lack of clarity pertaining to all things commercial and indeed financial when it comes to Imugene, company Chairman Paul Hopper has obtained some brilliant technology for the group. The company B cell technologies have been shown to be both safe and life extending for seriously ill late stage cancer patients. Whilst their oncolytic viruses, in particular Vaxinia, has immense potential, with Founder Yuman Fong seeking to meet a huge unmet oncology need, that being curing solid tumour cancer patients.
- CEO and MD Leslie Chong in the past Ms. Chong held the position of Head-Clinical Operation at Exelixis, Inc., Member-Clinical Operation Department at GSK Plc and Member-Clinical Operation Department at Pharmaceutical Product Development LLC. Her clinical skills have proven invaluable to Imugene in both designing and implementing clinical trials that have been successful in obtaining FDA IND’s and clinical trial approvals. In fact as it stands Imugene currently has more clinical trials either accepted or in place for new drugs than any other Australian biotech. Chongs clinical trial expertise and vision has enabled her to lure several other professionals to her team at Imugene in their collective quest to cure cancer
- As an addition to the Ursula Weidermann designed Her vaxx Imugene decided to take on several of Professor Pravin Kaumaya’s B cell technologies, in particular his PD1 Vaxx. Pd1 Vaxx has since produced outstanding results in clinical trials designed to cure small none cell lung cancer patients. In fact the drugs Phase 1 clinical trial resulted in several partial responses and one complete response to the treatment, with several late stage lung cancer patients realising disease stabilisation. Given the massive death toll associated with lung cancer, particularly throughout Asia, this could prove to be a huge money spinner for Imugene down the line
- In late 2022 imugene announced their unique oncarlytics technology had led to significant tumour killing in cancer patients, with an FDA in human trial being granted to Imugene as a consequence, and finally
- Imugene’s flagship drug Vaxinia has illustrated “positive signs” in its current MAST Trial into solid tumour patients both here and in the US. Product developer Professor Yuman Fong has stated that once his oncolytic virus is successful in reaching and infection a patients solid tumour, it kills it. This is music to the ears of many as solid tumours contribute to up to 90% of all cancer diagnoses worldwide.
In conclusion the waters are definitely choppy in and around the Imugene ship at present. The lighthouse further out is only affording existing and prospective shareholders with glimpses of what lies ahead for a boat that has been losing water for some time now. Though as an ever hopeful onlooker I myself remain buoyed by the company science and what it promises to deliver for those in need. Cancer is a desperate scourge on modern societies, proving both costly and difficult to maintain. With no veritable cure for cancer in sight its at least comforting to know Professors Kaumaya and Fong are guiding the way through uncharted waters, given their cumulative experience in the field of cancer research. And though at times the company captain Leslie Chong may have contributed to water loss, through her acceptance of poorly timed and designed capital raises, at least the boat has enough funds to make it to shore. The only problem is her passengers are yet to ascertain when that date may be. Though I guess that’s the situation for many companies traversing through the inclement weather and turbulent waters that make up the Stockmarket ocean.
Best of luck to all passengers and have a good weekend WMHB
DYOR Seek investment advice as and when required Opinions only
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