It’s interesting how when stocks fall everyone comes out of the woodwork and says “I told you so”. Just for the record I am not ashamed to say I have bought Imugene at prices as high 60.5 cents. If that was the strike price I may well do so again tomorrow, for Imugene’s fundamentals continue to improve. The foundations have been laid, the first storey is now up and they are moving on to the penthouse. Although my average in the stock is sound, that is only by virtue of the fact I invested initially some years ago, and more recently have had sufficient funds to top up. By investing over the longer term, and dollar cost averaging when prices are relatively low, as they are now, one derives long term benefit from their equity investments. I have always stated an investment in equities is a three to five year investment, if not a seven year one, depending on your investment and risk profile. Given this investment rationale I would be comfortable if my average in IMU were 32 today, or even 52, as clearly I am investing over the longer term with this holding. As an investor in Imugene I believe in Professor Yuman Fong, Saul Priceman MD, Professor Kaumaya, Professor Ursula Wiedermann and the innovation, IP and research they bring to the table. Am I suggesting I shall always get it right? No. Am I suggesting you follow me? No. Having performed the necessary research on Imugene it is purely up to you to make a calculated decision when considering IMU - ASX, depending upon your own investment profile, risk appetite, capital and income needs.
So for those seeking to hold the blow torch to my protestations pertaining to IMU, I would suggest you are in many ways putting the cart before the horse. All shall be revealed in the fullness of time. What has become now apparently clear for those who care to listen, Imugene’s trials are now approaching their sweet spot. Her Vaxx is currently being trialled at its optimum dosage rate, CF33 is about to progress past cohort 3 into the latter stages of its TNBC trial at higher dosage rates, whilst at the same time Vaxinia is soon (ceteris paribus) to commence its much anticipated combination trial with Mercks Keytruda. What does this mean for you the investor? It means Imugene’s immunotherapy vaccines are now able to perform at their optimum level. Having jumped through the stringent hoops and restrictions imposed on them by the FDA and medical regulatory authorities, we can now see them maximise results for patients at their optimal dosage rates. As an example Her Vaxx, shown on Friday to have extended life by 5.7 months over the standard of care (i.e., chemotherapy), is now to be trialled on gastric cancer patients at twice the rate of the level administered in the previous trial. This, the optimal dosage rate for Her Vaxx, provides participants with the potential to extend their lives even further, as the increased dose engages with their immune system, hopefully delivering even more of the antibodies necessary for them to fight off cancer. Likewise the trials currently take place for the Yuman Fong City of Hope developed oncolytic viruses CF33 and Vaxinia, where patients are being administered with higher and higher dosage rates of the drugs as their trials progress from patient cohort to patient cohort.
Photo Courtesy of Imugene
People ask why Imugene is trading at prices lower today than this time last year if the fundamentals are improving, particularly if the research stacks up so impressively? Why have lithium stocks, miners, retailers and banks performed better than Imugene? Whilst I am not a trader looking for short term gains year on year, I would note that markets are volatile due to macroeconomic forces, liquidity factors and the cyclical movements present within equity markets. Pushing and pulling between income and growth stocks is a common occurrence with moves toward value stocks, (i.e., away from growth stocks) taking place in times when interest rates are on the rise. When the market looks ahead and visualises a potential plateau in interest rate rises, and with it a stabilisation in earning forecasts, risk appetites are replenished and growth then more speculative stocks come back into vogue. At the current stage in the equity cycle investors are hovering between whether to make the decision to invest in income or value stocks, or a combination of the two (i.e., hybrid stocks), or whether to invest in growth stocks. Imugene is purely a growth play, and when risk appetites are at a premium, biotech stocks such as Imugene tend to outperform, provided their fundamentals are strong. Cash in the bank is one of the primary concerns for potential investors looking toward an investment in a biotech stock, and once that box is ticked, other company details are considered. The estimated worth of their product pipeline is assessed, taking into consideration preclinical trial results and the existing clinical trials taking place. Obviously the prospective market size, product runway and existing product patents are all factored into the equation. Does the company under consideration have experienced and qualified staff capable of taking the IP through to fulfilment? Is the product base diversified, or dependant on one form of IP or indeed a single product? Has there been any independent research conducted on the biotech stock in question? Are there any stock broker recommendations for the stock?
Having written and researched Imugene for some time now I do believe the stock ticks many of the boxes necessary when considering an investment in a pure growth play, if your investment profile and risk appetite lends itself to such speculation. Independent research houses including Roth Capital and Diamond Equity Research have annualised priced targets for IMU at prices much higher than the prices it is trading at today. The majority of brokers reviewed have strong buys on the stock. Whilst the recent influx of cash onto Imugene’s balance sheet ticks all the boxes when it comes to affording forthcoming product development. The company is by no means a “one trick pony” having diversified and developed their product portfolio extensively in recent years. It’s now simply a matter of time in the saddle, as investors await ongoing trial data, in particular the pending results for CF33 and Vaxinia (Cohorts 3), due out in the current quarter. Professor Yuman Fong has recently noted his drugs are “behaving as they should”. Imugene CEO and Managing Director Leslie Chong has stated words to the effect of “We have seen robust efficacy in animal trials, now we are beginning to see them in human trials”. With the existing combination trial between the aforementioned Her Vaxx and Mercks blockbuster Keytruda drug anticipated to produce patient results mid year, even more results are on the horizon. Are all these results going to be positive? Who knows? But if past performance is anything to go by, chances are the Imugene train is set to keep rolling on, further and further through phase one and two clinical trials toward either a sale, license deal or partnership. In the event of any one of these outcomes the IMU share price is set to be much higher than the 60.5 cents I outlaid a little over a year ago. The potential market size for Imugene's drugs, their ability to combine with other treatment arms (i.e., CAR T drugs), and their safety and low toxicity profiles are attractive to a large number of Big Pharma companies. Fridays announcement was further affirmation Imugene’s B cell platform is working. Her Vaxx is shaping up to be every bit as strong as Herceptin was for Roche. Clearly Professor Fongs oncolytic viruses have the potential to provide enormous benefit to cancer sufferers, now they are proving to be safe within humans. If and when this product potential becomes a reality the pendulum shall start to swing toward an uptick in the IMU share price. Someone asked me what my timeframe for these incremental gains is. I still say Q1 2023. Announcements pertaining to the trials outlined above are in my opinion set to be the trigger. Macroeconomic conditions, equity cycles and liquidity factors are all relevant, though the overwhelming driver of the IMU share price is now efficacy results. With the next efficacy results estimated to be due out in Q1, 2023.
Chart Courtesy of Fidelity.com.au
According to Investopedia “Research shows that long-term buy-and-hold tends to outperform, where market timing remains very difficult. Much of the market’s greatest returns or declines are concentrated in a short time frame”. Time in the market is therefore the key. Those begrudging my opinions on Imugene are often active investors, looking to shuffle their assets around in search of maximum short term gains and an overall increase in returns. Whilst I empathise with them, I am taking more of a passive approach toward Imugene, continuing to hold as opposed to trade. Had these protagonists invested in IMU three, five or even seven years ago would they be in front? Yes. Were they to invest tomorrow utilising this rationale would they be in front in 2026, 2028 or 2030? Quite possibly. If not probably. By how much? How can we predict? Once again it’s about understanding your own financial situation, setting investment goals, knowing what risk you are comfortable in assuming and not over extending in any one particular investment. Having done so it’s then about doing your own research, seeking investment advice as and where necessary, and understanding that although everyone is entitled to an opinion, they are purely opinions, which may be worthwhile, or may turn out to be unproductive. Unfortunately many on these threads are counterproductive, as they shoot from the hip without reason or substance. But it must be remembered that not everyone is an IMU bull. Not everyone is investing for the longer term. Not everyone sees the benefit of Professor Fong, Kaumaya and Wiederman's innovations. And therein we have the nature of stock volatility. Some people are buyers, and others are sellers. Some are acquiring, others liquidating, depending on their time in the investment cycle. Is Imugene at the beginning of the cycle? Well, that depends on your own investment time frame, does it not? Trying to impose your own time frame onto others is fruitless.
I am looking forward to the week ahead. I for one was buoyed if not excited by Imugene's announcements on Friday last. This year a family friend was diagnosed with cancer. They were dead five weeks later. What their children, family and friends would have given for 5.7 months of life. What if they could have lived for even longer, with the assistance of Imugene’s drugs? Sometimes in all the hype surrounding share price movements and day to day events we lose sight of what it is the team at Imugene are striving to achieve. They are working to save lives. To cure people of a dreaded disease known as cancer. I wish them all the best.
Enjoy your weekend
WMHB
DYOR - Seek investment advice as and when required - Opinions Only
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