FDA Approvals, Vaxinia and valuations
I sometimes think when people assess the valuation of Imugene (IMU - ASX) they should make comparisons with biotech stocks on the NASDAQ Composite Index in the US. As followers of my posts are aware I have long been advocating Imugene pursue the NASDAQ listing pathway. Those throwing the baby out with the bath water as IMU’s share price continues to languish on the ASX might like to consider what happens if Imugene is successful in achieving a fast track FDA approval for their flagship drug Vaxinia, as is their goal. Whilst Imugene are busy collating data on the current Vaxinia Trial, I would envisage we may not have to wait too long for this approval outcome to eventuate. As late as yesterday afternoon Imugene CEO and Managing Director Leslie Chong in a vote of confidence for the oncolytic viral therapy Vaxinia stated on “2GB’s Bulls and Bears” program her company was continuing to see positive signs in the viruses attack on solid tumours.
As outlined in previous posts the solid tumour market Vaxinia is targeting is worth 100’s of billion of dollars in sales revenue each year, for those in a position to sell drugs into this huge unmet need. Though despite initial and ongoing clinical trial success in administering safe immunotherapies to patients in these cancer indications, Imugene’s market capitalisation is only close to half a billion dollars US. Conversely stocks listed on the NASDAQ, such as Krystal Biotech, or indeed Reata Therapeutics, whom I have discussed previously, are worth close to if not six times this figure. Yet when we take a deeper dive into both these NASDAQ biotechs we quickly see their own growth potential pales into insignificance in contrast to Imugene. For both Krystal Biotech and Reata Therapeutics have a considerably smaller population in which to sell their drugs, when compared to Imugene’s Vaxinia. But that said Krystal and Reata have taken off markedly this year in the wake of FDA approvals to treat patients, despite the small size of market participants in need of their drugs.
Source Yahoo Finance
As recently as May 19 this year the U.S. Food and Drug Administration approved Krystal Biotech Inc's (KRYS.O) first-of-its kind topical gene therapy for patients with a genetic skin disorder, sending its shares up 7% in afternoon trading. Patients with the rare dystrophic epidermolysis bullosa disorder suffer from open wounds, causing skin infections and are at an increased risk of vision loss, scarring and skin cancer. Most patients rarely survive beyond 30 years of age.
About 9,000 to 10,000 people suffer from dystrophic epidermolysis bullosa globally, including a U.S. population of about 3,000 patients, according to Krystal Biotech. The FDA approval is supported by data from an early-to-mid-stage study, and a late-stage study of 31 patients which showed Vyjuvek completely healed wounds in about 65% of the participants, compared with just 21.6% of the patients on placebo. See https://www.reuters.com/business/healthcare-pharmaceuticals/us-fda-approves-krystal-biotechs-skin-disorder-gene-therapy-2023-05-19/ for more
Source " Google.com
Likewise Reata Pharmaceuticals, whose shares jumped 175% earlier this year. For those unaware the biotech company got great news from the FDA on an important treatment with huge implications for Reata's long-term business strategy. Reata announced earlier this year the FDA had approved its Friedreich's ataxia treatment, Skyclarys, for adults and adolescents 16 and older. FDA granted a rare paediatric disease priority review voucher in making Skyclarys the first therapy specifically indicated for treatment of the disease.
Keep in mind Friedreich's ataxia is an inherited neurodegenerative disorder that primarily gets diagnosed during adolescence. It affects about 5,000 diagnosed patients in the U.S., and estimates put the size of the market to treat the disease at roughly $3 billion annually. It should be noted The FDA's approval means Reata will effectively have an initial monopoly in that market, and the biotech company expects to make Skyclarys available to patients by the second quarter of 2023. It goes without saying that without the 3.58 USD market cap that Reata is about to earn the first substantial revenue its business has ever generated. See https://www.********/investing/2023/03/01/investors-just-hit-jackpot-2-nasdaq-biotech-stocks/ for more
Even locally Neuren Pharmaceuticals received FDA Approval in March this year for their Dayblue drug to treat patients with Rett’s Syndrome, a condition suffered by about 1 in 10,000 girls, or approximately 350,000 people worldwide. The stock listed as NEU on the ASX shot to a market capitalisation close to 2 and a half times that of aImugene (IMU -ASX) on the approval to sell in the US, despite the relatively small number of patients diagnosed with Retts. For those often concerned about companies with little or no revenue it’s worth noting the price to earnings ratio for NEU is 9410.95 as at today, so clearly not having much revenue in recent years is of little of no interest to investors who are happy to look at whats ahead, as opposed to what came before.
Source : copyright link
Vaxinia is targeting up to ten solid tumours in its current trial. Solid tumors represent approximatively 90% of adult human cancers. They can develop in many parts of the human body, including the breast, lung, prostate, colon, melanoma, bladder, and kidney. The solid tumour market is forecast to grow at a CAGR of 11.9 percent per annum to reach a total of $532.42 Billion USD by 2032. It shall be interesting to see how the IMU share price reacts if Vaxinia is granted an FDA approval to treat solid tumours. I’m confident it the pattern seen by Krystal, Reata and Neuren (see above) shall hold true. Only keep in mind Imugene is has a potential customer base many times more than these three biotechs have in their sights.
Cancers and the estimated percentage of new cases. Source American Cancer Society: Cancer Facts and Figures 2018.
As witnessed this time last week with the FDA Approval to commence their all important onCARlytics tria,l Imugene have the team in place to secure FDA approvals in real time. As lab technicians analyse biomarkers from the current Vaxinia Trial, Team Imugene are sure to be busily preparing for such an FDA approval for Vaxinia. If as anticipated in the coming weeks the current patient cohorts are cleared in the Vaxinia MAST Trial, Imugene are set to be one step closer to achieving their goal of treating solid tumour patients with their virus. They are set to be one step closer to ascertaining the optimal biological dose for the drug. Whether Imugene is listed on the ASX or indeed the NASDAQ as these results and a potential FDA Approval for Vaxinia come to hand, it may make little difference to the overall valuation of Imugene, given the quantum of potential patients queueing up for the drug. If oncologists are pressuring their patients to participate in taking the virus now in the clinic, wait until if and when Vaxinia is available for sale in the US.
DYOR Seek investment advice as and when required Opinions only
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