I have enjoyed reading the posts on this topic from IMU shareholders who are entitled to express opinions on the forthcoming AGM Proxy vote. I thought I’d throw my hat in the ring by bringing an analytical and balanced perspective to the debate before expressing my own opinions deeper into this post.
IMU at the crossroads
Much has been written of late on IMU threads regarding the forthcoming AGM and company proposals. Likewise there has been considerable discussion surrounding the upcoming poster presentations pertaining to Imugene’s Oncarlytics platform. Added to which Yuman Fong’s 33rd oncolytic viral vaccine is due to announce results in the near term. Putting all these events together one could rightfully come to the conclusion Imugene (IMU ASX) is at the crossroads. It would be fair to say the majority of shareholders are waiting for the company personnel to deliver on the expectations they have created in the previous two years regarding the company’s said science.
Mum and Dad Investors
Good social workers suggest we “Start where the patient or person is at”. Assuming this mantra and correlating it to the average IMU shareholder it would be fair to say many are a little disappointed with the company’s performance over the ensuing 12 months. Hypothetically speaking assuming Mum and Dad investor invested $10,000 at an average IMU share price during this period of say .36 cents, they would now have only $5,000 in their account, were they to liquidate these funds if in the event of a family emergency or other extenuating circumstances. That said upon hearing all the IMU management rhetoric pertaining to the company’s anticipated clinical trial results, they would have no doubt held firm in the belief of better days ahead. However when the company's flagship CF33 oncolytic virus continued on and on up to a year in without any evidence of efficacy, or for that matter any significant sign of success, (i.e., outside of dosage advancements), I am confident ther patience would have been tested and their hopes somewhat dashed. When the Her Vaxx vaccine’s Phase 2 trials passed without so much as a whimper ( i.e., that being the date at which Chairman Hopper noted the majority of licensing and/or partnership deals are done), their spirits would have no doubt been quashed a little further. Keep in mind when it comes to Her Vaxx the word quashed may perhaps even be an understatement, for they then had to digest the news Merck’s supply agreement in the Her Vaxx/Keytruda combination trial had been cancelled (i.e., supposedly by Merck). Cancelled that is without adequate explanation from IMU management. And wasn’t the Her Vaxx trial in combination with Merck Germany and Pfizer’s Bavencio commencing in the first half of 2022? Yes Her Vaxx delivered some outstanding OSR results in 2022, yet Mum and Dad received nowhere near the golden goose egg Paul Hopper had eluded to in earlier IMU newsletters. To be honest they ended up with less than half a chook for their hard earned. Not too happy Jan, as one of my fellow HC posters noted.
U.S. Sector Performance - 13th October 2022 - Simply Wall St
During the past 12 months leading markets are down less than 10%. Indeed the US healthcare sector is down less than 5% (i.e., see the US market performance for the to 12 months to October 13, 2022 above). Whilst during the same period Imugene has haemorrhaged to be worth close to a quarter of its value from this time a year ago. As a consequence Mum and Dad investor have decided to increase their investment knowledge and read the shareholder bible as presented by Investopedia (see https://www.investopedia.com/terms/s/shareholder-value.asp) wherein it is stated that :
A company’s shareholder value depends on strategic decisions made by its board of directors and senior management, including the ability to make wise investments and generate a healthy return on invested capital. If this value is created, particularly over the long term, the share price increases and the company can pay larger cash dividends to shareholders. Mergers, in particular, tend to cause a heavy increase in shareholder value.
Having read this Mum and Dad are pretty unimpressed with there own situation, in which they have realised a serious decline in their monetary value at the behest of the Imugene company directors, to whom they have entrusted their savings. They are indeed suspicious of recent decisions by the IMU board to raise even more capital and dilute their shareholding even further, without an adequate explanation from the said IMU board of directors. Then to put fuel on the fire the IMU board has written to them asking for them to approve a raft of management pay rises at the Company’s Annual General Meeting on November 17 this year. And by the way love “They want us to approve more bloody capital raises in the future if they so desire”, Dad yells to Mum, as she turns the meat patties in the kitchen, whilst watching reruns of ‘“Who wants to be a millionaire” on her small telly.
Satire aside I hardly think many shareholders are going to be filled with joy at the current state of play when it comes to their investment in IMU. The company is definitely at the crossroads. The notion of “Follow the science” put forward by the company CEO has run its race as far as the majority are concerned. For many shareholders it’s high time Chong, Hopper et al., stood up and lay their cards on the table with respect to commercial strategy, current negotiations and pending trial announcements. And by pending trial announcements I don’t mean if’s and maybe’s. I mean This is to be announced as of this date and so on (e.g., All things being equal a Cohort 1 and 2 update in the CF33 TNBC trial results is to be announced by December 1, 2022).
WMHB, IMU and remuneration
From my perspective I am an IMU Bull as you are well aware. I am confident IMU is soon to deliver in spades on their existing trial data, not to mention their plans to partner with one, two or even more players in 2023 and beyond. In my opinion Yuman Fong and CF33 are about to make front page headlines worldwide, and Professor Kaumaya is to remembered as one of the greatest medical innovators of our time. For me Imugene’s PD1 Vaxx supply agreement with Roche’s Tercentriq is only the beginning.
Though from a management perspective the way I see it Imugene’s previous clinical trials are their won worst enemy. As an example we have only seen the aforementioned Her Vaxx perform at a dosage rate of 50mg, as opposed to the proposed 100mg rate forecast to be administered in the company’s New Herizon combination trial with Merck’s Keytruda. How can the company’s most advanced vaccine (i.e, in years) be expected to perform miracles when it is running on E10 as opposed to Super? Is that Leslie Chong’s fault? Hardly. Further to which the FDA does impose restrictions on what can and can’t be said during Phase 1 trials such as the CF33 and Vaxxinia trials being conducted by Imugene in the US. Is that and Leslie Chongs failure to convey CF33 information to Mum and Dad investor her fault? Hardly. Should she be punished and therein afforded close to half the remuneration of her industry peers in 2023 as a result of this apparent lack of communication? I think not. She should however as the CEO report and speak with clarity about commercial affairs and business in general, in addition to the science, research and development the company is conducting.
And what for Chairman Paul Hopper whilst on the topic of remuneration? Well far be it from me to argue with the guy who founded the company, secured the amazing IP and holds the keys to the castle. With one caveat that is. I would like to see him play a more active role in the media and rather than speak generically about the Biotech industry, focus more specifically on Imugene, their progress and future commercial plans.
WMHB, IMU and capital raises
Then to the AGM agenda and in particular capital raises. I call bullshit on all these capital raises at a discount to the share price to unknown investors with unknown agendas and unannounced escrow periods (i.e, if there even are any) at significant dilution to us the shareholders at great expense payable to the Bell Potters of the world. Not to mention the unexplained reasons for the capital raising in the first place. I’d prefer to apply a 1.5% figure (i.e., percentage of capital raised without shareholder approval) as opposed to a 15% figure, in order for transparency to rule at the end of the day. Rather than spending $5 million dollars or thereabouts on a capital raise and raising net $75 million net, I’d rather Imugene spend the money on consultancy fees and reach a commercial deal for one of their vaccines similar to the deal their recently announced partner ABL completed in January 2022. Back then biospace.com revealed that under the deal terms, Sanofi would pay ABL $75 million upfront, with ABL being eligible to receive as much as $985 million down the line as development, regulatory, and commercialisation milestones are met. The South Korean company (ABL) could also receive royalties from net sales from products that spring out of this deal. How good would that be for Imugene if such a commercial deal was struck? The milestone payments would underpin their market cap of $1bn AUD and provide a financial foundation to not only support the underlying share price, but provide a commercial base from which they could spring board further. As it is the only good I can see in the recent raise is that an extra $75 mill in the bank account may ward off a potential takeover from a US hedge fund eager to cash in on the low IMU share price coupled with a relatively low Aussie dollar. How someone hasn’t come knocking astounds me. Then again given even we as shareholders don’t even know what the company is up to from a commercial perspective, why should we expect an unknown third party participant in the US to comprehend and understand what IMU has in their pipe?
Wake me up, when November begins
I can still here my son playing Green Day’s “Wake me up when September ends” on a trip back from Celito Beach on the Mid North Coast of NSW. I’ve been contemplating changing the lyric to “Wake me up, when November begins.” For when it comes to Imugene there’s so much to look forward to, it’s definitely not time to get caught up in the recent lack of communication and shortcomings from a commercial perspective at management level. Let’s revel in the prospects of the drug we know to be CF33. Let’s rejoice in what the IMU team have achieved in broadening their clinical pipeline during 2022 , Let’s await with eager abandon the results of trials, the release of poster presentations and a return to Christmas turkey, as opposed to beef and jerky.
DYOR Opinions Only Seek investment advice as and where necessary
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