Why IMU is a multi multi bagger, page-11729

Is Imugene the next Seagen?

The more one analyses the recent M&A developments involving Merck, Pfizer and Seagen, the more similarities appear between Seagen Inc. (SGEN) NASDAQ, the takeover target, and Imugene (IMU-ASX). Seagen is definitely a few years ahead of Imugene, having started their development of research into antibodies in 1999, and then commencing their first clinical trial in 2006. However one could argue the science being developed by Imugene with respect to antibody research commenced around the same time. The initial manifestations of Imugene’s Her Vaxx, CF33, Vaxinia and even PD1 Vaxx began decades ago, at the hands of Professors Wiedermann, Fong and Kaumaya respectively. Unlike Imugene Seagen’s four leading drug candidates have commenced deriving revenue for the US based Seagen. This revenue is fast approaching $2 bn USD in 2023. But it is worth noting much of this revenue stems from Seagen’s recent FDA approvals, through the use of the FDA Fast Track Approval Process, which did not exist when they first started seeking FDA approvals for their drugs. For those unaware the fast track approval process can enable pharmaceutical companies to reach commercialisation status for their drugs as it were, prior in some instances, to the completion of Phase 3 clinical trials. This system is now available to Imugene, who are currently developing and trialling four immunotherapy drugs that to date have been deemed safe and tolerable by Independent Monitoring Committees in Phase 1 and Phase 2 trials.

Imugene focuses on immunotherapies that create B cell stimulation in order to suppress cancer, in addition to the development of oncolytic viruses that target, hunt and destroy solid tumours within cancer patients. Whereas Seagen focus heavily on the development of Anti Drug Conjugates (ADC’s), to treat cancer. But before we take a closer look at ADC’s, it may prove worthwhile taking a closer look at Seagen’s early days and the development of their pipeline to date.

Photo courtesy of business wire @businesswire.com

Seagen discovery

“In it for patients”, is Seagen’s war cry. On their website at www.seagen.com they champion the experiences of their patients, as I have long wished Imugene did. Let’s look at Julie G living with breast cancer and being treated on Seagen medicine. Julie notes :

“If I could look back to the woman who was scared out of her mind, I would tell her there’s going to be a whole medical community that is going to support you. Don’t be afraid.

My perception of metastatic breast cancer has definitely changed. I really feel like there is hope for the future.”

On their same website at www.seagen.com Seagen state their vision is to improve the lives of people with cancer through innovative targeted therapies. Their mission they say is to discover, develop, and commercialise transformative cancer medicines to make a meaningful difference in people’s lives

Seagen background and timeline

In 1999 Seagen's research into anti-CD30 antibodies began. Then in 2006 their first clinical trial patient was dosed with brentuximab vedotin (ADCETRIS). In 2007 Seagen and Agensys (acquired by Astellas) entered into a collaboration, resulting in the co-development of enfortumab vedotin, an investigational ADC that targets Nectin-4.

Then in 2009 Seagen and Takeda agreed to globally co-develop and commercialise brentuximab vedotin (ADCETRIS). In 2011 ADCETRIS® (brentuximab vedotin received accelerated approval in the U.S targeting lymphoma. Then in 2012 ADCETRIS was approved in the European Union. And in 2015 Seagen expanded access to ADC technology via collaborations with global biotechnology and pharmaceutical industry leaders.

When assessing the Seagen timeline we discover that in 2017 ADCETRIS (brentuximab vedotin) received approval for an additional indication in the U.S. for the Disease Area of Lymphoma. Then in 2018 ADCETRIS (brentuximab vedotin) is approved in the U.S. for 2 additional indications again in the Disease Area of Lymphoma. The next year in 2019 Seagen acquired Cascadian Therapeutics, including the late-stage investigational agent tucatinib. In the same year their drug PADCEV® (enfortumab vedotin-ejfv) received accelerated approval in the U.S. in the disease area of Urothelial Cancer. By this stage in 2019 ADCETRIS was established as a foundation of care and approved in more than 70 countries. Whilst in 2020 TUKYSA® (tucatinib,) was approved in the U.S. and other countries -- their third approved and first wholly-owned medicine, in this instance for Breast Cancer.

Finally in 2020 Seattle Genetics, Inc. changed its name to Seagen Inc. to reflect the transformation of the company from its Seattle roots into a global operation.

Later that year 2021 TIVDAK® (tisotumab vedotin-tftv) receives accelerated approval in the U.S. – Seagen’s fourth approved medicine, this time in the treatment of Cervical Cancer.

(Nb. Visit seagen.com for more details)

Seagen success stories

In December last year Seagen announced results from their Phase 2 Clinical Trial of ADCETRIS® (brentuximab vedotin) with Novel Immunotherapy Combination in Patients with Advanced- and Early-Stage Classical Hodgkin Lymphoma. The results demonstrated a complete response (CR) rate of 88% and an overall response rate (ORR) of 93% in patients with advanced-stage disease, and a CR rate of 92% and an ORR of 95% in patients with early-stage disease, their disease being Hodgkins lymphoma.

Seagen and ADC’s

As noted above in 2007 Seagen began their journey into experimenting with ADC’S. Antibody-drug conjugates or ADCs are a class of biopharmaceutical drugs designed as a targeted therapy for treating cancer

ADC’s like Imugene’s staple and leading oncolytic virus candidates, CF33 and Vaxinia, have become Seagen's leading cancer treatment program. Unlike conventional chemotherapy treatments, which can damage healthy cells, antibody drug conjugates (ADCs) are targeted medicines that deliver chemotherapy agents to cancer cells. In short ADCs deliver the chemotherapy via a linker attached to a monoclonal antibody that binds to a specific target expressed on cancer cells. Let’s find out a little bit more about ADC’s by watching this short video.

What’s the Seagen latest from a commercial perspective?

On Friday last gengennews.com reportedA Pfizer-Seagen deal could be valued at above $30 billion, the WSJ reported, based on Seagen’s market capitalisation, which as of Thursday stood at $33.224 billion. That could push an eventual purchase price to above $40 billion, according to Berenberg Capital Markets.

Seagen now

A quick scan of Seagen’s current commercial position leads us to the conclusion Seagen currently markets four drugs that generated a combined $1.707 billion in net product sales last year, up 23% from $1.386 billion in 2021. By 2030, Berens has estimated, Seagen’s four marketed drugs will rack up a combined $8 billion-plus in revenues: Adcetris will more than double in sales to $2.2 billion, Pacdev will balloon nearly 10-fold to $4.1 billion, Tukysa to $1.6 billion, and Tivdak to $560 million.

Shares of Seagen Inc. SGEN rallied 26.1% in three months TO jUNE 30,2022 against the industry’s decrease of 10.9%. Chart courtesy of Zachs Investment Research

Seagen in 2030

genengnews.com notes in their article of Friday March 3 that the biggest potential FTC stumbling block to a takeover would likely be Pfizer’s urothelial cancer drug Bavencio® (avelumab). At $271 million Bavencios’s alliance revenues (since it was co-developed with Merck KGaA), represent a 2% piece of Pfizer’s $12.132 billion in 2022 oncology revenues. Clearly having a stake in the development of Bavencio could be of concern for Pfizer when seeking regulatory approval for the Seagen takeover. Could the same have been said of Merck had they continued to develop Her Vaxx with Imugene? Is that why Merck pulled out of their commercial arrangement with Imugene to develop and trial Her Vaxx together? Conversely is that why the forthcoming Phase 2 trial combining Pfizer and Merck Germany’s Bavencio with Imugene’s her Vaxx appears to be stalling? The plot thickens does it not? We may never know.

(Nb. For more information visit genengnews.com )

Photo courtesy of Imugene.com

Imugene

An Imugene discovery session is possibly not required for those who have read my previous articles, suffice to say Imugene, like Seagen, has four leading drug candidates. Her Vaxx, PD1 Vaxx, CF33 and Vaxinia are all progressing through various stages of Phase 1 and Phase 2 trials. Imugene’s leading candidate, Vaxinia, developed by the world renowned surgeon Professor Yuman Fong, on Friday commenced a combination trial with Merck’s Keytruda. At the same time Vaxinia proceeded to stage three in its City Of Hope based trial treating solid tumor (MAST) patients intramurally (IT) and intravenously (IV), in the monotherapy arm of the trial. The Vaxinia Trial is recruiting up to 100 patients throughout the US and Australia and according to those involved has displayed positive signs to date. Froam all accounts Professor Yuman Fong is set to update Imugene investors on Vaxinia’s progression in his upcoming tour down under in a few weeks from now. If the Vaxinia Trial continues to prove safe and tolerable in humans, whilst at the same time display ongoing signs of efficacy, there is sure to be a push by Imugene in conjunction with oncologists and health authorities in the US to seek fast track approval for the drug, as Seagen did with their cancer drug TIDVAK, in 2021. Likewise Imugene may well push for fast track approval for their leading B cell candidate Her Vaxx, following on from the outstanding OSR results in the drugs initial Phase 2 Trial, should these results continue in the drugs existing combination trial with Merck’s Keytruda. Achieving fast track approval for Vaxinia and Her Vaxx could indeed fast track Imugene toward commercialisation and revenue status as early as 2025/26. Whilst in my opinion if Vaxinia is successful in treating solid tumour patients Imugene stands to obtain earnings far in excess of the $2bn USD being earned by Seagen in 2023 and potentially far greater than Seagen’s forecast earnings in 2030 of $8bn USD, given the quantum size of the lucrative solid tumour market, the holy grail of cancer treatment as it were. For those who divine blue sky in their investments, or should I say see things with a glass half full, a $40bn USD takeover bid for Imugene down the track by Merck or Pfizer, (i.e.,the price they may have to pay to acquire Seagen), would bring Imugene’s stock price in at around $9.21 AUD by my calculations, as IMU has approximately 6.421 bn shares currently on issue.

But either way Imugene may never reach such lofty heights without the intervention of a partnership agreement with a Big Pharma such as Merck or Pfizer. In fact aside form their agreement with ABL to manufacture CF33 and Vaxinia, Imugene are sure to require the services of a Merck, Pfizer or indeed Roche, to take their drugs to market. In my opinion the favoured arrangement for many Imugene long term holders would be a partnership deal similar to that of Genentec’s deal with Roche, back in the early 2000’s, wherein Roche acquired an initial stake in Genentec, prior to later acquiring the company once their products were commercialised and developed. Ultimately in 2009 Roche acquired Genentec for $47bn USD, in a deal not too far from home for Imugene’s Managing Director and CEO Leslie Chong. Leslie was previously a Senior Clinical Program Lead at Genentech, a member of the Roche family, in their head office in San Francisco. And as Leslie alluded in this interview on Friday with Andrew of Proactive Investors, when speaking of merger and acquisitions “things can happen” (see herein).

In the Proactive interview Leslie discusses the PD1 Vaxx US Patent and the significance of this market for the future of Imugene. Many pundits I liaise with hail Professor Kaumaya’s PD1 vaccine as a replacement for Merck’s Keytruda, given its exceptional results in a recent and ongoing Phase 1 trial with lung cancer patients in Melbourne Australia. From where I sit Imugene now needs to focus more heavily on these market dynamics and on where they are positioned in the commercial landscape, in order to provide investors and the market with a roadmap forward. Rather than sitting and waiting for a potential partnership announcement it would be a strong lead if as the current Seagen CEO David Epstein has done, Imugene held a financial roadshow, with perhaps their CFO Mike Tonroe, their head of business Monil Shah, and the Chair Paul Hopper. Epstein comes from a venture capital background and is no stranger to doing deals with biotech firms. His goal since joining Seagen has been to work on building a world leading oncology company, through acquisitions, partnerships and licensing agreements. Epstein is not waiting for Merck and Pfizer to come knocking, he’s driving his own bus toward Seagen's commercial future success. In my example of an Imugene financial roadshow potential markets for Her Vaxx, PD1 Vaxx, CF33, Vaxinia and Oncarlytics could all be on the agenda. The cost to commercialise and the potential partners for these drugs could be discussed (i.e., Car T producers). Existing and comparable drugs, their patent expiry dates and the prospect for Imugene’s vaccines and viruses to fill a future void in the market could all be extrapolated.

Seagen CEO David Epstein Photo Courtesy of Geek Wire

According to bnnbloomberg.ca David Epstein of Seagen has gone to the market stating “Our size and our development and commercial skills could make us very attractive partners.” Now Imugene have the runs on the board from a scientific perspective, why not as Epstein is doing grab the bull by the horns and drive the company home from a commercial perspective? I have no doubt that were Imugene to engage in a NASDAQ IPO with the assistance of say a JP Morgan they could raise enough money to take their first four drugs through to commercialisation. They have the medical personnel they on the ground, in addition to a strategic partnership with the manufacturer ABL. If a small band of Aussie investors increased IMU - ASX’s value by close to ten fold in the years following Imugene’s acquisition of CF33, who knows where the US and Global market could take it? I think if the broader investment community cottoned onto what Professor Fong has created and now delivered with his wonder virus the stock would go off like a fire cracker in the States. Let’s face it, few people know about it. Yes Professor Fong has been interviewed about his remarkable virus Vaxinia on US TV, but at the same time there has been no mention of Imugene.

The questions remain, Can Yuman Fong’s oncolytic viruses and Imugene’s Oncarlytics platform surpass Seagen’s ADC platform as one of the leading candidates for cancer treatment in years to come? How do Imugene’s oncolytic viruses stack up against Seagen’s Anti Drug Conjugates? Can Imugene’s leading drugs continue on their merry way toward a fast track FDA approval, as Seagen has done before them? Why has Imugene’s Leslie Chong incepted a $161m war chest? Why has Imugene recruited a host of leading players in the field of oncology, including Dr Jakob Dupont? Is it to engender a Genentech/ Roche partnership style deal with the likes of Merck, Pfizer or Roche, as opposed to an outright takeover of Imugene? Does Imugene wish to entice Big Pharma into believing they can manage their own affairs very well thank you, as Seagen has done? Is Imugene like Seattle Genetics (now Seagen) planning a NASDAQ listing to potentially fly solo toward commercialisation if required? Is that why Mike Tonroe, their recently appointed CFO with NASDAQ listing experience was handed the position of Imugene Company Secretary during the week? Where does Professor Yuman Fong stand with respect to these potential developments? What thunder could Leslie Chong be afraid of stealing from Professor Fong? Is Imugene Chairman Paul Hopper reigniting discussions with Merck, following on from his 2018 sale of Viralytics (VLA - ASX) to them? Is Rob Davies of Merck still interested in Seagen, or does he have his sites set on Imugene’s pipeline? Have the science stars aligned for Davies in the event of Mercks Keytruda/ Imugene combination trials? Is Imugene the next Seagen? In answering many if not all of these questions the financial team at IMU may go a long way toward raising the current share price up and over the .71 price targets placed on the stock by healthcare analyts such as Roth Capital, for the market is simply waiting for guidance before making the long road north.

Things are definitely hotting up in the Imugene stable. We may not even have to wait until the Easter Carnival to find some winners in the Vaxinia Stakes. Did Merck scratch Cavatak from last years Spring Carnival to have a bet on CF33 in this years Autumn Carnival? Our trainer Yuman may give us a much needed appraise of all the form together with our odds in the following week. Between now and then, best of luck to all LTH’s of IMU. And best of luck to Seagen's Rocket Man David Epstein and all Seagen holders for that matter. It must be terrible being the subject of a $40bn USD takeover bid. I think I might just play Elton John’s Rocket Man in sympathy for them…

Enjoy what remains of your Sunday

WMHB

DYOR - Seek investment advice as and when required - Opinions only