Azer Cel, a dark horse in the race to the finishWith all the...

Azer Cel, a dark horse in the race to the finish

With all the talk surrounding Vaxinia and more recently Oncarlytics, Imugene’s recently acquired Azer Cel technology appears to be flying under the radar. Yet if nothing else their November 10 announcement highlights the fact the drug is far from a sideshow. As noted at the time by Dr Paul Woodard, Imugene’s Chief Medical Officer, “Patients with DLBCL who have relapsed after autologous CART therapy have limited therapeutic options and are an unmet medical need. New and effective therapies are needed for these patients.” Having performed so well in initial clinical trials Azer Cel is well positioned to meet this huge unmet need. In earlier trials Azer-cel achieved an 83% overall response rate, a 61% complete response rate with 55% durable response greater than or equal to six months in this difficult to treat auto CAR T relapse setting.

Azer Cel the acquisition

In 2023 Imugene acquired Azer cel, an allogenic therapy from Precision Biosciences. Precision received upfront funding of $21m from Imugene, comprising both cash and equity, in return for Imugene obtaining worldwide rights to azer-cel for cancer treatment. They also stood to receive an $8m near-term payment in cash and equity once Phase Ib dosing was successfully completed in the CAR T relapsed LBCL patient group. In addition to these payments Precision will potentially earn $198m in extra milestone payments, along with double-digit royalties based on net sales for azer-cel. Whilst we must take into consideration the fact Precision may also receive up to $145m in milestone payments and tiered royalties on net sales for each additional research programme chosen by Imugene. Were Azer Cel to be trialled with Imugene’s CF33 and Oncarlytics therapies, such a payment may be triggered.

Azer Cel - A hypothetical example of monetisation

As noted by me previously Dr Bradley Glover of Imugene regards the drug as "a remarkable asset,” with room for expansion. Azer-Cel, is seen by Imugene as a potential First-in Class Allogeneic CAR T product candidate for CD19+ CAR T relapsed patients. The drug is currently in clinical trials to treat diffuse large B-cell lymphoma (DLBCL), an aggressive type of non-Hodgkin lymphoma (NHL) that develops from the B-cells in the lymphatic system, which are responsible for producing antibodies typically to fight infectious disease. It is being trialled to treat blood cancers, just as Kite and Juno’s Car T therapies were before they were acquired by Gilead Sciences and Celgene, for $11.9 billion and $9 billion USD dollars respectively.

Hypothetically speaking if Azer-cel was to obtain a registrational trial from the FDA later this year it may be in a position to treat say 1,000 patients at maybe $250,000 each, and in doing so accumulate revenue for Imugene of somewhere in the vicinity of $250 million USD per annum. As outlined by me earlier that may add approximately one billion dollars to the Imugene bottom line for their outlay. Keep in mind if Azer Cel were to hypothetically retail for $250,000 USD, that would be less than half the price of existing CAR T therapies. Experts estimate that CAR T-cell therapy can cost between $500,000 and $1,000,000.

“CAR [T-cell therapy] is the most expensive Medicare diagnosis-related drug,” says Brian Koffman, MD, founder of the Chronic Lymphocytic Leukemia Society. Although new medicines are now available to people with the condition, costs haven’t come down.

Azer Cel - accessing healthy donors to deliver solutions without side effects

As successful as CAR T therapy has been for Kite, Novartis, BMS and the like, autologous CAR T’s have their limitations. Imugene through their identification and development of an allogeneic therapy, in Azer Cel, may have happened upon a therapy which proves not only superior in its treatment of relapse patients, but in the general cancer patient population as well. With the ability to harness cells from random donors as it were, if not healthy donors, as opposed to otherwise compromised individuals, Azer Cel promises to deliver a much needed solution to the complex web of deleterious ramifications if not limitations associated with existing CAR T therapies.

Azer Cel - Diving blue sky with the potential to treat solid tumours

Once again it’s worth noting the big carrot is being able to mix the Azer-cel allogenic therapy with Imugene’s Oncarlytics platform in the pursuit of solid tumours, a market ten times as big as the blood cancer market. As noted by Imugene in November beyond using azer-cel in blood cancers, in the future it will also be combined with Imugene’s own onCARlytics for treatment of patients with solid tumours, opening a potentially large market for azer-cel in the 90% of oncology beyond blood cancers. Multiply Kite’s $11.9 billion by 10, or Juno’s $9 billion by 10, and that’s a pretty decent pay check for Imugene’s azer-cel Car T allogenic therapy down the track, if all the dots continue to line up for Imugene.

Imugene poised to start manufacturing Azer Cel

There is risk involved with every transaction. Imugene’s acquisition of Azer cel is no exception. The costs payable to Precision, as outlined above, are large. Whilst the question could be asked, if Azer cel was so good, why did Precision sell it?

At the time Precision announced the reason behind the sale was to strategically extend their expected cash operating runway to greater than two years and in doing so pivot toward an exclusive focus on in vivo gene editing,” according to Michael Amoroso, Chief Executive Officer at Precision BioSciences. From the outside looking in it would appear Imugene’s development of their CF33 Oncarlytics arm, which in turn could be married to Azer Cel down the track, offered Imugene greater leverage than it did Precision. By receiving up front payments and ongoing royalties from Imugene were they to advance the drug, Precision no doubt stands to gain, so it wasn’t as if they were giving away Azer cel altogether.

Imugene’s acquisition of Azer cel comes with a manufacturing facility and staff. Therefore if successful in their short Phase 1b trial, Imugene is in a position to start producing Azer Cel. As announced in September 2023, Imugene received positive feedback from the FDA on the azer-cel manufacturing process to be used in the registrational (to-market) clinical trial, and potentially for manufacturing of the commercial drug product. Imugene’s manufacturing facility is a state-of-the-art GMP (Good Manufacturing Process) site where the proprietary next generation azer-cel process has evolved into a potential first- in-class cell therapy drug.

Given recent FDA scrutiny of existing autologous CAR T therapies, one could conclude Azer Cel has much to offer the exisiting blood cancer market, in particular those relapsing from autologous CAR T treatments, as outlined above. If so Imugene stands to gain immeasurably from the procurement of what could be a first in class allogeneic therapy, even if the gazetted combination with CF33 Oncarlytics fails to come to fruition. The Diffuse Large B-cell Lymphoma Therapeutics Market size was valued at USD 4,107.50 million in 2021 and is estimated to reach at a compound annual growth rate (CAGR) of 7.50% over the forecast period (2024-2031). In and of itself that market is worth a pretty penny for successful cancer therapies. If, (as suggested in my hypothetical example above,) Imugene were to capture approximately 5% of this market, Azer Cel would add close to one billion dollars to Imugene’s market capitalisation. Keep in mind thats not far away from 20 cents a share, for one drug alone. When one considers these figures, in light of Azer Cel’s already successful results, IMU looks like a good buy for those with an appetite for risk. Forgetting about the blue sky potential from combining Azer Cel with CF33 and Oncarlytics, or for that matter CF33/Vaxinia and Oncarlytics themselves, 20 cents alone is still close to twice the current value of Imugene’s current share price overall. Oh and thats assuming Her Vaxx and PD1 Vaxx are never sold, if you follow my thread.

Azer Cel without doubt offers Imugene much in the way of opportunity later in 2024. The opportunity to earn income whilst at the same time control the manufacturing process, makes the drug a valuable commodity. A product undoubtedly sought after by existing Big Pharma’s currently constrained by regulatory authorities when it comes to their own CAR T therapies. If as anticipated Imugene does obtain FDA Approval for Azer Cel, the company all of a sudden moves from small biotech status, or emerging market fodder, to a revenue producing healthcare company with which large cap funds and institutions can now engage. As a dividend producing stock Imugene transitions overnight from a speculative buy, to an equity choice, for healthcare analysts around the globe.

Once again don’t take my article as advice, a recommendation or indeed precise information, for its is simply one persons opinion. It’s a competitive marketplace and there are thousands of small biotechs striving daily to improve upon the existing cancer therapies in place. There are literally thousands in the race to the finish line. Obviously you can do your own research and reach your own conclusions, based on your own situation.

As always I see this forum as a worthwhile platform to continue the discussion surrounding what I believe to be a valuable resource, but am well aware of the fact many others may see it as a poor proposition, if not a worthless one. For those who disregard Imugene’s medical advancements to date, I say well done, you like the market have failed to value what I perceive to be highly valuable assets, and in doing so have been successful in avoiding what has been a hugely underperforming stock in recent years. One of the highest ranking shorted stocks on the ASX if the truth be known. That said as a former investment manager I was trained to recommend equities as five to seven year investments, and on that score IMU has performed okay.

Though if you don’t have that time frame, or alternatively don’t like Imugene for whatever reason, having avoided them to date, I would ask you revisit Imugene’s Azer Cel and where it sits in the current oncology marketplace, even if only to add IMU to your watch list as a result. The drugs acquisition led to a difficult capital raise, but that is now well behind us. The remainder of 2024 brings with it the completion of Azer Cel’s Phase 1b study and the potential to start a registrational study later this year, to become the first approved allogeneic CAR T cell therapy for cancer.

DYOR Seek investment as and when required Opinions only