Why IMU is a multi multi bagger, page-25059

2024/25 Imugene shareholders and the year ahead


With the new financial year approaching I guess most eyes turn to such exciting topics as revenue, funding and finance. In the biotech space for those in a pre revenue state ongoing funds are paramount, as company CFO’s endeavour to stay abreast of clinical trials which are both expensive and ongoing. Previously Imugene has sought to continue with multiple clinical trials across a number of geographical locations through the raising of capital on the open market. In other words issuing shares through a broker organised capital raise, where both institutions and individuals, or retail holders as they are known, subscribe for additional shares and options in the company.

As funds at Imugene now approach the 100 million dollar mark, the number of clinical trials afoot may give rise to a further funding round in 24/25. How should the Board at Imugene approach such a challenge? Well, clearly from where I sit a further capital raise would be detrimental to the existing shareholders of IMU. Previous capital raises have taken place at a significant discount to the share price of the day, have resulted in a huge amount of additional shares and options and therefore a large amount of dilution. Given the negative sentiment surrounding existing management, the Chairman and an undercurrent of over promising and under delivering, I hardly think yet another capital raise is a viable funding option.

So where do Imugene head this financial year to ensure their existing trials reach fruition and meet their primary endpoints?

The approach taken by many biotechs is to out license drugs for which they anticipate receiving revenue for in the future to a Big Pharma or partner. The out licensing is in return for an upfront payment and then royalty payments as time goes by, when the drugs in question starts being administerd to and paid for by patients and their health funds down the track. The out licensing biotech company is often responsible for ensuring the drug meets the necessary endpoints in its clinical trial development and is ultimately approved by the FDA or regulatory authority in question (e’g., the TGA). Whilst the acquirer or licensing partner is responsible for the ongoing funding, manufacturing and the ultimate marketing of the drug.

The good news from an income perspective, as found when we visualise the recent Roth Capital report (see above,) is that Imugene have some drugs which they are in a position to forecast future revenue for, based on current market conditions and pricing. Despite the discounted future cash flows applied by Roth Capital in reaching their revenue forecasts, this income is substantial, in particular for Imugene’s PD1 Vaxx. PD1 Vaxx is a PD1 Immunotherapy competing in the same market space as current blockbusters Opdivo and Keytruda, with scope to treat lung cancer and a myriad of other leading cancer killers. Patented throughout the world by Imugene, PD1 Vaxx has the capacity to reach a large number of patients world wide in years to come, at a time when patents for drugs such as Opdivo and Keytruda shall have long expired.

Based on the assumptions referred to in the Roth Capital Report at peak sales of approx 920 million p.a., PD1 Vaxx could be worth in the vicinity or $4bn AUD. Therefore an upfront payment in the 100’s of millions of dollars and ongoing royalties which may equate to billions of dollars are not out of the question. Whilst PD1 Vaxx may be combined with Her Vaxx and sold as a collective item, it may be more advantageous to strike a deal for these B cell vaccines as opposed to say Vaxinia, Oncarlytics or even Azer Cel. For the latter drugs are more likely to be combined in the near term by Imugene and are therefore somewhat harder to split up and sell as a “one off” item, without hindering future revenue plans for the group.

At present Imugene is choosing to reach or strike such a deal from within. A few years ago now they appointed Monil Shah as Chief Business Officer to perform the task, and have paid him accordingly. Current CEO and Managing Director Leslie Chong has suggested he and his team have stringent KPI’s which must be met to maintain their ongoing remuneration packages, and as shareholders have not been notified otherwise I am assuming they have met these KPI’s and must be close to finalising an agreement to ether out license or sell one of the company’s drugs. Such an outcome would undoubtedly be great news for IMU holders who have been holding on for a number of years now since the finalisation of Phase 1 and 2 trials for the company's B cell Platform. Being in a position to avert yet another capital raise, and all that comes with it, would be a monumental outcome for all long standing IMU holders, who have witnessed a huge erosion in their capital base I recent years. Let’s hope management have pulled the right reign as they have suggested they have in appointing Shah, and a deal is struck early this financial year.

The other targets to hit this financial year which could bring capital appreciation to IMU holders are all or any of the following:

1. A peer reviewed analysis for Vaxinia. Professor Yuman Fong stated well over a year ago now when in Sydney the drug was being peer reviewed, it would be good if shareholders were presented with the findings of such an analysis
2. Notification the enrolment in the Bile Duct expansion for Vaxinia has been filled. CEO and Managing Director Chong noted the company's attendance and involvement in world Cholangio Day some time ago now. One would think given the initial results in this indication they have by now recruited enough patients to commence the trial expansion forthwith
3. The announcement of a further fast track designation for Vaxinia in another cancer indication. With the excellent results last October in the gastro intestinal patients participating within the ongoing Vaxinia (MAST) Trial such an outcome is not out of the question
4. Notification of the date for a readout in the ongoing Azer Cel Trial Ph1b DLBCL Trial should bring with it the expectation of a Registrational Trial for the drug and the potential to factor in future revenue forecasts for that Imugene drug as well, in addition to those outlined above, and
5. Initial results for the company's Oncarlytics ph1 Solid Tumour Trial must present the opportunity for investors to gain from what promises to be a game changing therapy designed to “mark and kill” solid tumours within cancer patients. If the combination trial with Amgen’s Blincyto produces anything like the significant tumour killing observed pre clinically, then IMU may well be due for the long overdue re rate many have been counting on.

As with any biotech there are many variables to deal with. Imugene has to overcome the hurdle of not only limited funding this financial year. Relatively low clinical trial patient numbers coupled with the advanced stage of those presenting to the trials, are further obstacles which must be overcome if they are to reach their existing goals. Given the large salaries and bonuses, including option packages management afforded themselves late last year, they must feel they are in a position to deliver on these said goals. Its now simply a matter of sitting back and hoping they can deliver, when it comes to the IMU holders still left standing in 2024/25.

DYOR Seek investment advice as and when required Opinions only