A recent news item caught my eye. Last week GSK expanded their June 2014 partnership agreement with Adaptimmune. They will now help Adaptimmune to develop their lead candidate - a T-Cell immunotherapy for a rare soft tissue cancer (synovial sarcoma).
The article reads:
"Adaptimmune will be responsible for carrying out the trials, which will be funded by GSK as well as share the costs of the combination studies."
GSK R&D SVP Oncology Dr Axel Hoos said: "At GSK we're progressing a pipeline of immuno-oncology therapies to stimulate anti-tumour immunity in patients. As we highlighted to investors at our R&D event last year, this Adaptimmune collaboration is a key element of that pipeline and is part of a comprehensive programme for cell and gene therapy.
"With this expanded collaboration, we have the opportunity to accelerate the lead programme in synovial sarcoma toward pivotal trials and also to investigate several other tumour types and combine the T-cell therapy with immune-modulating therapies such as checkpoint inhibitors."
That's an interesting comment from Axel, who plays a key role in IMU as a member of the IMU Board - his only membership of a Biotech board. (He is on the Board of the Sabin Institute - a not for profit organisation in the USA. In fact he was recently voted in as Chairman of that Board - a mark of his high profile and credibility).
Also interesting is the fact that the deal is worth up to $500m for Adaptimmune - just for their lead candidate therapy, which targets a very rare cancer. On top of that, they will get sales milestones and royalties on sales, of around 9 - 10%, if it gets to market. Here is the quote:
"The expanded agreement gives potential development milestones to Adaptimmune solely in relation to the NY-ESO programme of around $500m, if GSK exercises its option and successfully develops NY-ESO in more than one indication and more than one Human Leukocyte Antigen (HLA) type.
Additionally, Adaptimmune will receive tiered sales milestones and, as previously disclosed, mid-single to low double digit royalties on worldwide net sales."
Also - the development costs will be funded by GSK: "Adaptimmune will be responsible for carrying out the trials, which will be funded by GSK as well as share the costs of the combination studies."
So what price IMU's Her-Vaxx? If GSK inked a deal like this with Imugene, what is it potentially worth?
I think the Adaptimmune deal tells us that $500m plus a share of royalties would be the starting point. Maybe the article does the Adaptimmune therapy an injustice - and maybe it has potential expansion for use in other cancers, but their current target is definitely a low incidence disease.
By contrast, Her-Vaxx has already shown promising results in Breast Cancer and the upcoming trials target one of the most common cancers of all - gastric cancer.
With the strength of the science behind Her-Vaxx, and the potential to target huge volume markets, I would expect a deal for Her-Vaxx to be worth far more than the Adaptimmune deal. And that's without consideration of the Mimotope research.
IMU is an independent company and they don't have to do a deal with GSK just because Dr Hoos is on their Board. I'm sure he would declare any conflict of interest when discussions of this type arise - I mean, it would be obvious to all, in any case. But GSK would have to be interested, and I bet other members of big pharma will be watching too. Roche, for example, given Leslie Chong's background with Genentech.
The $500m deal with Adaptimmune is really just marker of the lower limits of what should be achievable, if and when IMU decides they need more financial muscle to develop/expedite Her-Vaxx.
Right now it looks like they can fund the Phase 1b and (maybe) the Phase 2 trial themselves, without needed extra capital - and they are now proceeding. My assessment is that are holding off on a deal till they have at least the Phase 1b results, and maybe even the Phase 2.
To get beyond Phase 2 I feel they definitely need help from a senior partner. However positive Phase 1b and Phase 2 trial results would massively boost the value of their research, and the value of a deal. It looks like they are holding out till then - which means they must have a high level of confidence in the science. Leslie Chong came on Board with IMU from Genentech/Roche, so she is clearly convinced too.
I'm thinking the potential deal could dwarf $500m.
So when I see IMU at a cent a share, or 1.1 cents, or 1.2 cents - my reaction is just to buy more. It might take a while for a deal to emerge, but I'm very happy to buy now and wait for later. (And yes, I'm only using funds I can afford to lose. Biotech investment is never a "safe bet." DYOR etc etc.)
Best wishes to all
Dave
IMU Price at posting:
1.0¢ Sentiment: Buy Disclosure: Held
(20min delay)