Why IMU is a multi multi bagger, page-20011

Thank you to everyone for their feedback, and continuing the discussion

Reality, fallibility, or both?

In March this year The French pharma giant Sanofi, who Imugene director Dr Jakob Dupont works with, paid $25 per share to acquire Provention — a 273% premium over the closing stock price at the time. In 2018 MSD, which is the trade name for Merck outside of the US, bid $1.75 cash per share for Viralytics, a staggering a 160 per cent premium to the average stock price over the past month. Viralytics was a company founded by the current Imugene Chairman Paul Hopper. At the time Hopper noted the board was backing the deal "subject to there being no superior proposal and an independent expert concluding that the scheme is in the best interest of the company's shareholders”. Shareholders, of which he was one, accepted the offer at the time and the stock was sold to Merck.

The table above highlights the premiums accepted by biotech shareholders similar to Hopper, in recent years. I like many on these threads believe Imugene is worth multiples of its trading price today. But like those who work with Imugene, Dupont and Hopper, we find that in reality deals are accepted at far less than what you and I may desire. Why? Because in essence everyone believes their share is worth far more than they paid for it. Yet come the final hour people accept the cash on offer, as exemplified by the M&A statistics, time and time again. Biotechs do attract a premium when taken over, but to assume the average is close to a 300% premium to the closing price, would be misleading. In reality it’s closer to 150%. Unlike maybe you, and definitely I, some have their price target for Imugene in 2024 as 15 cents, as opposed to a dollar, or indeed dollars as I forecast in the future. Take Hoppers preferred broker Bell Potter as a prime example. They have a price target on IMU at 15 cents in 2024. Do you honestly believe they would counsel their investors against accepting 30 cents for the stock in the event of a takeover, that being twice their price target of 15 cents?

This analysis may appear unrealistic, unbelievable and even rather melancholic for those of you who like me, would like to see Imugene reach its full potential. Yet in the real world there is rarely a silver lining in business. Hedge fund owners such as George Soros didn’t get rich appealing to the hearts and minds of retail shareholders. At its founding, Soros’s Quantum Fund had $12 million in assets under management, and as of 2011 it had $25 billion, the majority of his overall net worth. How? By relying on his philosophy of reflexivity, centred upon the belief people are fallible. The principle of fallibility says, essentially, that financial markets are driven by people, and people are fallible in their ability to understand reality.

Who knows where the boat ends when it comes to Imugene. Hopper, the company’s leading shareholder may be happy, along with retail holders, to back a bid at a few times the prevailing SP, (perhaps with the backing of his erstwhile broker Bell Potter), as he did with Viralytics. Time shall tell I guess. I for one am hoping it doesn’t come to that, and that in the interim Vaxinia’s endpoints display what many of us are dreaming of, a treatment arm capable of suppressing solid tumours within cancer patients the world over. Did I mention PD1 Vaxx? If only hedge funds and Big Pharma possessed such rose coloured glasses. But then it wouldn’t be business would it.

DYOR Seek investment advice as and when required Opinions only