People who value Imugene (IMU-ASX) at less than $1bn USD may be...

People who value Imugene (IMU-ASX) at less than $1bn USD may be unaware of the fact that for some time there has been big money in immunotherapy, and in particular pre revenue therapies, such as CAR T’s. Incidentally CAR T is a market segment Imugene has recently come into competition with, through their acquisition of an allogeneic therapy product known as Azer Cel.

CAR T. Therapy, awash with big money

Looking to history in the CAR T market we find that in December 2015 Kite Pharma announced the U.S. Food and Drug Administration (FDA) had granted Breakthrough Therapy Designation status to the company's lead product candidate, KTE-C19, for the treatment of patients with refractory diffuse large B cell lymphoma (DLBCL), primary mediastinal B cell lymphoma (PMBCL), and transformed follicular lymphoma (TFL). The drug was ultimately to be marketed under the name Yescarta. In March 2017, Kite announced results from a clinical trial of CAR-T cells in around a hundred people with advanced Non-Hodgkin lymphoma.Then in mid 2017 Gilead paid close to $12 billion USD for the cell therapy specialist Kite, with Gilead’s former management team emphasising a long-term vision in which CAR-T cell therapies would become a “cornerstone” of cancer care. While that could still come to pass — as the work of numerous biotechs invested in the space would suggest — Gilead’s $1.6 billion in write downs over the past two years show getting there isn’t as easy as investors probably would like. Last year Gilead released a diminished outlook for Kite assets in indolent non-Hodgkin lymphoma, a slower growing subtype of the blood cancer. It should be noted that Kite’s assets consisted of autologous CAR T’s, a class of immunotherapies coming under recent scrutiny by the FDA. At the same time it is worth noting that following the sale of Kite to Gilead, Kite's founders and its CMO struck a deal in February 2018 with Pfizer to develop CAR-T therapeutics, leading to the creation of Allogene Therapeutics. The notion behind Allogene was to create a 'next generation CAR-T' which was not tailored to a single individual, as YESCARTA was, but rather could be used in multiple patients, an allogeneic CAR-T, similar to Imugene’s Azer Cel therapy.

CAR T retail prices

CAR T’s have always had a high price tag attached to them, when it comes to retail prices. Gilead initially set the US price for Yescarta at $373,000. They then increased the price by more than $50,000 to $424,000. In a similar vein to Yescarta, in August 2017 Swiss pharmaceuticals group Novartis said it would charge $475,000 a patient for its new CAR T therapy Kymriah, putting it among the most expensive drugs of all time. Bruno Strigini, chief executive of oncology at Novartis, said: “We carefully considered the appropriate price and looked at many factors, including the medical and clinical value.” The pricing assessment came shortly after the treatment was approved by the US Food and Drug Administration, which gave Novartis a green light to use the medicine in children and young adults with a type of leukaemia. Chimeric antigen receptor therapy or Car-T, has shown great promise in clinical trials, with the ability to send tumours into remission in blood cancer patients with just weeks to live. But the therapy is not only expensive, but complex, with a process that involves extracting a patient’s blood cells in hospital, transporting the plasma — normally by air — to a laboratory, and re-engineering them before they are returned.

Gilead acquires Kite Pharma and Celgene takes over Juno Therapeutics

A year later in June 2018 following on from Gilead Sciences acquisition of Kite Pharma for USD $11.9 Billion Fiercepharma.com reported Celgene had taken over Juno Therapeutics for USD $9 Billion. When one considers that in November 2023 Imugene reported their allogeneic therapy Azer-cel had achieved an 83% overall response rate, with a 61% complete response rate and a 55% durable response greater than or equal to six months in this difficult to treat auto CAR T relapse setting, I asked myself, What is that Azer-cel worth? I note Imugene has received positive news from the FDA surrounding a manufacturing plant they leased to produce Azer Cel. Big Pharma is spending huge amounts of money for the same purpose. In June 2023 Bristol Myers Squibb’s $30 US Billion dollar CAR-T vision was boosted by an FDA approval for their manufacturing plant, a 244,000 square-foot manufacturing plant in Devens, bringing a third CAR-T facility online for Bristol Myers Squibb.

Photo Courtesy of businesswire.com
Bristol-Myers Squibb has completed a major expansion at its Devens, MA, biologics facility

Pre revenue Immunotherapy drugs command large sums of money, come sale time

Back in October 2020 Gilead Sciences, Inc. (Nasdaq: GILD) announced they would acquire Immunomedics (Nasdaq: IMMU) for $88.00 per share in cash. The transaction valued Immunomedics at approximately USD $21 billion. A standout for Gilead was news that in the Immunomedics Phase 3 ASCENT study for their leading candidate Trodelvy, the trial was halted early due to efficacy based on the unanimous recommendation of the independent Data Safety Monitoring Committee. This was due to the fact Trodelvy significantly improved progression-free survival (PFS) and overall survival (OS) in previously treated patients with advanced mTNBC. Luckily for Gilead Sciences following the acquisition of Immunomedics they announced in September 2022 promising early data from their global, open-label, Phase 2 EVOKE-02 study evaluating Trodelvy® (sacituzumab govitecan-hziy) in combination with Merck’s anti-PD-1 therapy KEYTRUDA® (pembrolizumab) in patients with previously untreated advanced or metastatic non-small cell lung cancer (NSCLC).

Conversely as recently as three days ago the company’s Phase 3 EVOKE-1 trial showed that Trodelvy didn't significantly extend the lives of patients with previously treated metastatic non-small cell lung cancer (NSCLC) when pitted against the chemotherapy docetaxel. With that, the trial failed to meet its primary endpoint, Gilead said.

Just as Imugene has a firm footing in the competitive CAR T space with Azer Cel, like Gilead’s Trodelvy they are currently trialling a drug known as PD1 Vaxx in the lung cancer market. PD1 Vaxx exemplified strong results in its Phase 1 trial and results are currently pending for the B cell vaccines Phase 1b study, evaluating lung cancer patients in combination with the Roche therapeutics owned Tercentriq.

Imugene - Why is pre revenue value not reflected in the IMU share price?

When we assess the sales of Kite Pharma or Immunomedics and their pre revenue drugs such as Yescarta or Trodelvy, for tens of billions of USD (see above), we begin to ask ourselves why these values are in no way reflected in the current IMU share price. Are investors simply waiting for endpoints to be met in the company’s current clinical trials? Is it more about the ASX not feeling engaged by pre revenue stocks? Is it because many early stage therapy companies are valued at around the ten to twenty-million dollar mark, and $1 billion seems a little on the high side? Or does it have something to do with the way Imugene’s management present the company to the market? Or simply because Imugene is a relatively small immunotherapy company in contrast to the large Big Pharma companies trialling their drugs, such as Gilead or Merck?

In answer perhaps its a combination of all these factors. The fact Imugene’s trials to date have been on late stage cancer patients who have failed on all previous treatment arms has not assisted their plight, given the high bar they have had to jump over to start with. That said all trials have proven safe with signs of efficacy being present throughout. Her Vaxx extended patient life, PD1 Vaxx produced a complete and partial responses at relatively low dose rates. Their Oncarlytics arm produced significant tumour killing when combined with various CAR T and Allogeneic therapy partners. Whilst their oncolytic therapies in CF33 and more recently Vaxinia continue to elicit positive immune responses in solid tumour patients both here and in the US. Therefore in spite of the need to treat extremely sick cancer patients, Imugene’s immunotherapies have shown signs they are comparable with leading immunotherapies. To the naked eye Imugene possesses much stronger foundations than a ten to twenty-million dollar cancer research company would possibly have.

Imugene, the ASX and the absence of ongoing patient dosed numbers

The problem with the ASX may be the markets need for data, data and more data to keep investors enthused, or at the very least in the loop. Whilst known for producing data, Imugene is not renowned for displaying it. At the recent JP Morgan Conference investors were searching for additional data on the Vaxinia Trial. In early November having announced patient progression in the trial from their 42 day scans, many investors I spoke with were anxiously awaiting 84 day scan data from the Vaxinia participants, to ascertain whether there were instances of pseudo progression or indeed improvement in patient conditions. Likewise there was some talk around the Oncarlytics Trial, where investors were aware of one patient being dosed for ovarian cancer. There was an expectation patient data from the Oncarlytics trial would be presented at JP Morgan. In short the market would like to see the number of patients dosed in each Imugene trial, to allay any fears or suspicions surrounding the data. At present the number of patients dosed is not known in their current Her Vaxx combination trial with Keytruda, their PD1 Vaxx trial with Tercentriq, their Oncarlytics Trial with Blincyto and their CF33 Trial at the City of Hope Trial in Los Angeles. Many suggest surely it wouldn’t take too much time for Leslie Chong’s assistant Bonnie Nixon to collate patient dosed numbers in their ongoing trials, to keep the market abreast of ongoing clinical trial developments.

Mining companies on the ASX are known for continually releasing drilling results, with banks being equally transparent when it comes to releasing performance results each quarter. To the contrary ASX investors are wary of companies who fail to release ongoing data in a uniform manner. Ad hoc results and the absence of consistent patient dosed data has no doubt hurt Imugene’s position in a market searching for data, data, data. How did the patients fair on their 84 day scan in the Vaxinia Trial? How many patients have been dosed in the Oncarlytics Trial? Ongoing patient data on a frequent basis could go a long way toward achieving and maintaining investor interest in the stock. The market is definitely data driven. In 2021 when Imugene released ongoing data frequently on PD1 Vaxx patients in their Phase 1 Trial, the share price reacted positively. Then again when OSR results were released in June 2022 for their leading B cell candidate Her Vaxx, the IMU share price appreciated accordingly. The November 6,2023 announcement outlining patient reaction to the Vaxinia virus provided another impetus to IMU’s fledgling share price.

Imugene and the JP Morgan Conference

With the recent fall by close to 30 percent in the IMU share price following on from the JP Morgan conference, from 13 to 10 cents during last week, some may well ask what went wrong. Was it simply the absence of ongoing data in the Vaxinia and Oncarlytics trials, or the fact the presenter, Imugene’s Leslie Chong, is the CEO who presided over the company’s fall from 62 to 4 cents. Are the public simply not listening to her anymore? Or did the company need to bring in their big guns, Professor Yuman Fong and the newly appointed Dr Paul Woodard, to sing from the company hymn sheet? Some investors I have spoken with are asking where is Yuman Fong. His flagship drug Vaxinia is in the throes of significant data development and the market has not seen hide nor hair of him for close to 12 months. In early 2023 CEO Chong said she did not want to steal Fong’s thunder. Clearly that was a misstatement as he has been nowhere to be seen come results time. Surely he could have given the lift Imugene so badly needed during the recent JP Morgan Conference.

Likewise with PD1 Vaxx’s Founder, Professor Pravin Kaumaya, where a discussion or interview with him about PD1 Vaxx’s current trial with Tercentriq would not go astray. Particularly in light of Trodelvy’s recent miss in the lung cancer space. Or even an appearance from Imugene’s Chairman Paul Hopper would perhaps have assisted during the stocks 2022/3 fall from grace. Hopper has been extremely successful in procuring innovative novel immunotherapies from acclaimed overseas universities, but when it come to marketing or representing his brand and company he has been found wanting. As an example a discussion or interview honing in on the CAR T market and recent developments in that space together with justification of the company’s Azer Cel acquisition, would IMO be advantageous for the SP.

Imugene and Big Pharma

As a relatively small biotech, flying solo adrift from Big Pharma means Leslie Chong does need to be somewhat more thrifty when it comes to clinical and company development. Imugene’s Trial numbers are often restricted with the breadth of oncology participants limited in contrast to the larger Big Pharma trials mentioned at the commencement of this article. Whilst it is worth noting the development of their existing trials certainly does not hit the headlines on Fiercepharma, Endpoints or the WSJ, as it perhaps would if they were attached to a Big Pharma name tag. But irrespective of their trial size, media exposure, presentation style or current valuation, it would appear PD1 Vaxx, Vaxinia, Oncarlytics and Azer Cel are going to make a splash when their endpoints are eventually met. Leslie Chong has undisputed experience in conducting clinical trials, whilst the team she has assembled would be the envy of many second or third tier biotech stocks. Further to which the science acquired by Paul Hopper is undoubtedly set to be the envy of many Big Pharma’s, should the initial data amassed by Imugene be replicated and reinforced as we move forward.

Surely stronger IMU valuations should inevitably follow, when one considers the dollars on offer in this lucrative and growing strand of therapy. If Kite, Juno or indeed Immunomedic's are anything to go by Imugene is set to secure massive dollars for some if not all of their novel and innovative immunotherapies. I for one shall be glad for each of Imugene’s product founders. They have created progressive medicine that offers safe, cost effective and potentially efficacious solutions to cancer patients most in need.

DYOR Seek investment advice as and when required Opinions Only