Imugene, smoke, mirrors, or on the cusp of greatness?
On the weekend my post provided a market analysis of IMU-ASX. Some friends have since made the comment, if the stock is as good as you say it is, if you reckon it could or should be worth a dollar, why is it swimming below 10 cents? I guess if I was to be honest there are a number of valid reasons why the stock is down 95% year on year, at a time when many if not the majority of stocks the world over have had a sound 2023.
Firstly if I was to be honest I don’t think Imugene’s announcements and communication are as succinct and at times encouraging as they should be. They definitely are not as detailed as they ought to be (the recent first patient dosed in the Oncarlytics Trial as a prime example). Let’s take another biotech with which I am proud to say I have some friends invested in, Neuren (NEU). On announcing further sound clinical trial results today Neuren CEO Jon Pilcher used such terminology as far exceeded expectations, and groundbreaking trial to reach the captive audience waiting on each and every ASX announcement with bated breath. To the contrary if that was an Imugene announcement I can imagine a one liner with “we are excited the trial has progressed through the next cohort stage and are encouraged by promising early signs”…or words to that effect. Having read both synopsis which stock would you envisage the average punter, (who does about 15 minutes research before investing), is going to invest in?
Secondly Imugene is heavily reliant on the CF33 Vaxinia arm of their pipeline. Whilst things are coming to a head with Vaxinia, the clinical trial results are not yet in. Early signs are pointing toward success, but as of yet the lay punter is still sitting on the sidelines, as are institutions. Then on the other side of the spectrum CF33’s CHECKVACC trial into TNBC patients in the US has been slow to deliver any meaningful results. Todays Imugene newsletter did little to push prospective investors further toward their cheque books, as the chart displaying the said CF33 Vaxinia Trial left more on the table than it took from it. Reading between the lines the average investor is still unclear as to how many patients have actually been dosed with Vaxinia. Is it 3 or 6 in each cohort? Have 15 people been dosed in one arm, or double that figure? How many people have been dosed, and how many are actually gazetted to be dosed? There are on-going results expected prior to Christmas on a supposed 34 patients treated with Vaxinia, but in terms of actual patient numbers dosed with Vaxinia, where does that leave us?
Thirdly the reason much of Imugene’s potential is dependant on CF33/Vaxinia’s success, is that without it the overwhelming majority of their pipeline is predominantly restricted to blood cancer treatment. Azer cel, Oncarlytics and their B cell treatment arms have demonstrated safety and efficacy in treating blood borne cancers, but without the addition of CF33/Vaxinia, they are as of yet unknown quantitates when it comes to fighting solid tumours in cancer patients when administered on their own (i.e., as a mono-therapy). At the same time one must note the blood cancer market is an extremely competitive space, with many leading players already exhibiting brilliant results within that market segment.
Fourthly I suppose from an analytical perspective, investors need a reason to pull the trigger. They are searching for reason to invest, for a catalyst as it were. Neuren’s catalyst came with not simply results, but with outside buyers taking not just an interest, but a position in the stock. No such fair has graced the doors of Imugene Headquarters in 2023. Nor has it looked like occurring, if the rhetoric from Imugene’s management is anything to go by. It’s simply business as usual, a deal shall happen if it happens, more and more trialling, analysing and combining company vaccines and viruses, to work toward better patient outcomes for cancer patients.
Fifthly in spite on having embarked on the major investment decision to acquire an expensive third party drug in Azer Cel, the investment community either didn’t understand it, or simply didn’t buy into it. Another missed opportunity in the minds of IMU followers, who were keen to see some meat put on the bones surrounding potential revenue streams, partnership opportunities and product earnings.
Finally IMO these factors may go some way to explaining away another year of exceptional IMU SP under performance, at a time when large numbers of stocks have out shone in 2023. As outlined in earlier posts both the S&P and the majority of stocks do tend to outperform when all appears doomed, in years when inflation is falling, as it has been in 2023, irrespective of where interest rates sit (see above). But to those friends who have no doubt laughed behind my back during the stocks relentless downfall, I would suggest that none of these factors are worthy of a departure from the stock. Imugene’s fundamentals remain stronger than ever. Their working relationship with the all important FDA continues to strengthen. Their flagship candidate Vaxinia, is from all accounts on the cusp of greatness. If and I say if, the forthcoming results reaffirm what investors awoke to in early November, then look out. If once again investors learn that over three quarters of late stage solid tumour patients have experienced positive outcomes since being dosed with Vaxinia, you’d think it was game, set and match when it came to pulling the trigger on what would at that stage be a sure thing.
Bring in Oncarlytics, open the door on Azer Cel, its next level if these next Vaxinia results are on the up and up.
DYOR Seek investment advice as and when required Opinions Only
