Imugene (IMU - ASX) - The tipping point, by WMHB
In the past week I wrote an article entitled “Imugene IMU - ASX) A Marketing Analysis,” in which I discussed price targets for Imugene (see https://hotcopper.com.au/threads/why-imu-is-a-multi-multi-bagger.5431324/page-329#post-71482530">https://hotcopper.com.au/threads/why-imu-is-a-multi-multi-bagger.5431324/page-329#post-71482530</a>). Then earlier in the week I penned a post outlining some reasons why IMO Imugene had underperformed entitled “Imugene, smoke, mirrors, or on the cusp of greatness?” see https://hotcopper.com.au/threads/why-imu-is-a-multi-multi-bagger.5431324/page-330#post-71515231">https://hotcopper.com.au/threads/why-imu-is-a-multi-multi-bagger.5431324/page-330#post-71515231</a> . The article concluded by suggesting that in fact none of the factors resultant in underperformance detracted from the stocks fundamentals, which remained strong, particularly when one considered Imugene’s flagship candidate Vaxinia, may well be on the cusp of greatness.
So I guess in light of the aforementioned posts its only fair I make some predictions on potential share price outcomes for Imugene, in light of the past few years. Whilst the past is often a poor indicator of the future we can learn from it. In Imugene’s past the stock ran hard at a time when proof of concept was delivered to their B cell platform of immunotherapies, following the success of firstly their initial vaccine, Her Vaxx, in a Phase 2 gastric cancer trial. At the time Her Vaxx was deemed not only safe and non toxic, but efficacious, through the extension of patient lives well over and above the standard of care (i.e., chemotherapy). The success of their second B cell therapy PD1 Vaxx, which shot the lights out in a Phase 1 clinical trial designed to establish safety for the drug, effectively set the cat among the pigeons. The drug was deemed not only safe, but resulted in both a complete and partial responses in late stage lung cancer patients, at relatively low doses. All of a sudden in a WTF type moment heads started to turn and imagine what may happen when PD1 Vaxx was dosed at its optimal biological dose rate.
Thereafter Her Vaxx started to be compared to Roche’s blockbuster, the HER 2 expressing fighter Herceptin. Around the same time Imugene Chairman Paul Hopper went on record in an interview stating most biotech drugs were sold toward the completion of their Phase 2 trials. As combinations trials for Her Vaxx began being planned with none other than Merck, Merck Germany and Pfizer, speculation mounted as to which one of these Big Pharma’s may acquire the Her Vaxx license, and for what price. At the time, based on Herceptin’s previous sales figures, the sum of a few billion US dollars appeared well within the realms of possibility. IMU’s stock price acted accordingly. Then a pending supply agreement for PD1 Vaxx with Big Pharma Roche Therapeutics only served to add fuel to the fire, with Imugene (IMU - ASX) reaching a high in late 2021 of 62 cents.
Retrospectively speaking I can understand why Imugene pushed hard. At the time it was risk on in the biotech space, inflation was still under control and regulators in the US were crying out for safe drugs to be produced at prices cancer patients could afford. It was game on for large funds in search of the “next best thing” in the oncology field. The supply chain effects of COVID 19 were dissipating, and investors looked toward growth assets in search of a brighter tomorrow. Yet in the end it wasn’t meant to be, at least for Imugene that is. Just as many other pre revenue Biotech stocks floundered in the ensuing years, so too did Imugene. As the years unfolded and time unraveled with them, Imugene failed to secure a commercial agreement for either if not all of their B cell candidates, the bottom fell out of the biotech market, and the rest is history.
Putting things in perspective when it came to Imugene there was no catalyst in place to draw investors in. They began to realise clinical trials take time, and that maybe there were better places to invest their dollars on the ASX. You didn’t have to be Einstein to realise lithium plays such as Liontown Resources (LTR - ASX), a stock admitted to the ASX 200 around the time Imugene (IMU - ASX) was, or more recently the biotech play Neuren (NEU - ASX), were capable of returning capital to risk takers in much faster time than Imugene was ever going to. Back then Imugene’s Vaxinia was only contemplating a Phase 1 clinical trial, their newly acquired Oncarlytics platform had not even received an FDA IND for one, and when it came to Her Vaxx, well Merck had put simply decided to not proceed with their Phase 2 combination with the B cell candidate. So it went without saying Imugene was going to take some time to line all its ducks in a row before things moved north again, when it came to the share price that is.
All the time however the company’s science continued to move ahead. Fundamentally speaking announcement after announcement signalled progression in each of their three pipeline platforms, in particle Oncarlytics, which exemplified “significant tumour killing” in pre clinical studies. Then despite setbacks experienced during COVID Vaxinia got off the ground with the long anticipated Phase 1 (MAST) Trial into patients with solid tumours, both in the US and later Australia. Low and behold in spite of Vaxinia founder Professor Yuman Fongs sleepless nights at the commencement of the OV trial, himself having made calls on the hour to trial supervisors at the time, Vaxinia was deemed safe when administered to humans. “Hallelujah," thought Fong to himself, with his sentiment resounding throughout the hearts and minds of many Imugene long term holders. Things were staring to turn around. The share price continued to head south, but scientifically speaking Imugene was kicking some serious goals. Making headway as it were. Then out of the blue company management decided to go out on a limb and acquire at great expense their own allogeneic therapy, and a manufacturing plant to boot. Having witnessed the success of Oncarlytics when trialled with CAR T’s and allogeneic therapies they thought rather than license these assets, why not just buy one.
The market was rather hesitant at first. Azer Cel was successful in initial clinical trials, and presented Imugene with a prospective path to achieve revenue. But the drug was still only tested in blood cancers, a competitive market segment with many product approvals and success stories already in place. Enter newly appointed Imugene medical personnel who started to outline Azer Cel’s effectiveness in treating relapse patients, a section of the cancer population that was of growing concern to oncologists, and once again heads starting turning. Could Azer Cel not only possess the potential to derive revenue for Imugene in the near term, but much larger revenue streams than were initially forecast, given its ability to treat relapse patents in blood cancer indications (i.e., lymphoma)? When Imugene CEO and Managing Director Leslie Chong began intimating Azer Cel may be the first FDA Approved allogeneic therapy, tongues started wagging amongst the IMU long term holder community, and with good reason. It appeared as if Imugene was now on a winner, as promising discussions with the FDA pertaining to Azer Cel added to the momentum.
Then to round it all out in early November Imugene received what many had long been waiting for, positive news from their flagship candidate Vaxinia, with over 75 percent of patients expressing some form of immune response, having been infected with Professor Fong’s virus, albeit at relatively low doses. The world awaited the news of 9 patients who were yet to be assessed, following on from the initial 25 patient results announced to the market at the time. Yet the FDA didn’t choose to wait before deliberating. In early December they granted Imugene a Fast Track designation in the bile duct cancer indication, including Priority Review status. It was confirmed one patient with bile duct cancer in the Vaxinia (MAST) Trial had obtained a complete response for over 300 days, since being administered Vaxinia. Bile duct cancer, a sinister disease with little or no prospect of survival when in the late stages of existence, was almost impossible to cure elsewhere given the treatments arms available. Stock volumes started to increase, as did the IMU share price, with investors starting to think maybe they didn’t have as much time as they thought, to invest elsewhere and hang around waiting for things to happen over at IMU headquarters. Then just this week US markets continued to rebound, as crude oil fell further and inflation fears moderated, paving the way for the prospect of interest rate cuts in 2024. Dividend yields started looking more attractive to fund managers than treasury yields, and money continued to flow into equities, as opposed to fixed interest markets.
Where to now for Imugene (IMU - ASX), you may well ask, given the turmoil of recent years? In the coming months Vaxinia’s fate may well be known. That doesn’t appear to be a good time for investors to remain invested elsewhere, nor sitting on the sidelines when it comes to Imugene. Initial Vaxinia clinical trial results point to an overwhelming majority of stabilise disease notifications from late stage cancer patients with metastasised solid tumours. Yuman Fongs protestation that, “Once Vaxinia infects a solid tumour, it explodes the tumour, and works in killing the cancerous cells within the patient,” (or words to that effect), are starting to ring true. Perhaps his comment on late night KPLC TV in the US around this time last year where he suggested “One day in combination with many other cancer drugs Vaxinia could one day become human therapy,” was closer to becoming a reality, as opposed to an apparition.
Maybe the market is soon to wake up to fact Imugene’s Vaxinia is the real deal. That as opposed to swimming in the shallow end with countless other cancer therapies, within the blood cancer market, finally a drug has arrived to treat solid tumours. A virus with the potential to tackle “any cancer”. The overwhelming majority of patient’s diagnosed with cancer, those suffering with solid tumours, may well be on the treatment radar. If so, and my own gut feel is anything to go by, we may finally have reached the tipping point when it comes to IMU - ASX. As Malcolm Gladwell noted “Look at the world around you.It may seem like an immovable, implacable place.It is not, With the slightest push — in just the right place — it can be tipped.” Imugene may just be in the right place at the right time. Let’s wait and see. Oh, but best not wait too long, if history is anything to go by there may only be one Vaxinia.
DYOR Seek investment advice as and when required Opinions Only
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