Why IMU is a multi multi bagger, page-22379

Imugene (IMU ASX), institutional ownership, and the lack thereof. by WMHB

The success versus failure rate of small biotech stocks coupled with the lack of big name funds on the IMU - ASX register have continued to weigh heavily on the Imugene share price and subsequent volumes of the stock traded in 2023/4. Self managed funds and everyday punters whilst aware of Imugene and its potential, are reticent to step up, when it could be said the majority of Aussie biotechs are perceived as failures, rather than winners. Some would suggest the Australian public and local investment community would much rather bet on a mining stock coming good, or a bank paying a dividend, than backing a small to medium Aussie biotech. Added to which the lack of international institutions on the IMU register is no doubt contributing to a lack of local market participation, when it comes to fund manager allocation. Local fund managers are often accused of acting like sheep in what could perceived as a “herd mentality" approach, only entering a small to medium cap Aussie stock when larger overseas funds have entered the fray. This is often due to the fact large US funds and institutions with teams of analysts are believed to have done their due diligence and made their investment decisions following close scrutiny of the biotechs worth.

What can be done to rearrange the share register’s deck chairs on ship IMU as it were? Well, not much to be honest. With a lack of investment partners, capital injection and strategic alliances in place all Imugene can hope for is better than anticipated clinical trial results. For whatever reason the company has been unable to entice one, two of three large international funds onto the IMU share register for the long haul. Those who have dipped their toe in the water when it come to IMU, have long since moved on. Blackrock, State Street and others have all taken hold of IMU in a big way from time to time, though comparatively speaking their holdings have either decreased or indeed failed to multiply over time. Whether it is a lack of information being provided by the team at Imugene, a perceived lack of direction by the company or a “wait and see” approach driving large funds is uncertain, but what is known is the small to medium biotech has not garnered ongoing patronage from these large funds. fintel.io tells us that Imugene Limited (AU:IMU) has 25 institutional owners and shareholders that have filed 13D/G or 13F forms with the Securities Exchange Commission (SEC). These institutions hold a total of 262,668,154 shares. This figure represents close to 3% of the shares on offer at Imugene with the total combined representing less than the holdings acquired by Imugene’s two leading individual shareholders Paul Hopper (5.7%) and the Mann Family (3.98%). Of the leading institutional shareholders on the IMU register Vanguard holds the largest share.

Other biotech competitors in the same class as Imugene such as Replimune (US REPL) have much large institutional ownership. fintel.io tells us that Replimune has close to four times the institutional ownership of Imugene. The website notes that when it comes to the Replimune Group, Inc. (US:REPL) 340 institutional owners and shareholders that have filed 13D/G or 13F forms with the Securities Exchange Commission (SEC). These institutions hold a total of 70,453,369 shares or close to 13% ownership of the stock. Largest shareholders include Baker Bros. Advisors Lp, Price T Rowe Associates Inc /md/, State Street Corp, Fcpm Iii Services B.v., BlackRock Inc., Morgan Stanley, XBI - SPDR(R) S&P(R) Biotech ETF, Redmile Group, LLC, Omega Fund Management, LLC, and Vanguard Group Inc . Its worth noting that of the 340 owners 338 are long on the stock, with only 2 short. As we are now aware much of Imugene’s decline in recent years has been at the hands of local funds shorting of the Aussie biotech Imugene. Thankfully today of the 25 institutional present on the IMU register fintel.io tells us all are long at the moment.

Last week Replimune announced a change at the top with Sushil Patel taking the reins. Patel has more than 20 years of experience in the biotech industry including pre- and post-launch commercialization strategy and execution in both the U.S. and global markets. He has been involved in more than eight product launches in various roles of increasing responsibility across marketing, sales, and franchise management. Prior to joining Replimune, Dr. Patel served as franchise head for lung, skin and rare cancers at Genentech. Upon entering the CEO role Patel said, “Replimune is preparing to bring its first oncolytic immunotherapy to patients, and I am incredibly proud to be able to lead the Company through this next phase of growth as we transition to a commercial stage company.” It could be said that from a distance Replimune’s oncolytic viral platform is not too dissimilar to that of Imugene’s CF33 suite of products. Replimune’s website notes their RPx platform is based on a potent HSV-1 backbone intended to maximise immunogenic cell death and the induction of a systemic anti-tumor immune response. The RPx platform is designed to have a unique dual local and systemic activity consisting of direct selective virus-mediated killing of the tumor resulting in the release of tumor derived antigens and altering of the tumor microenvironment to ignite a strong and durable systemic response.

Its a pity for followers of Imugene (IMU ASX) their finance and marketing team have been unable to convert large US institutions to the share register, and as a result it could be said much disquiet simmers among a few shareholders who have expressed their concern at the lack of traction attained through a host of investor non deal roadshows and presentations by the company. Some choose to throw stones at Imugene CEO Leslie Chong for her supposed lack of media skills, whilst others choose to focus on the lack of US investment following director Kim Drapkin’s appointment to the board. Close to a year ago at the time of her appointment Imugene announced "Kim's extensive knowledge of the US mid-cap biotechnology ecosystem, and the drivers of company success, will be instrumental in supporting our ongoing efforts to expand our investor footprint and further accelerate our clinical development programs in a financially disciplined manner." Aside from the Drapkin’s appointment it would be fair to say Imugene’s Chief Business Officer Monil Shah’s appointment has been less than successful when it comes to drawing support from leading US Institutions. With close to only 3% leading fund participation on the IMU share register, to the naked eye his appointment could be viewed by some as a screaming failure, when compared to other stocks in Imugene’s oncolytic viral market segment, such as Replimune (see above). There continues to be no presence on the IMU register of leading biotech players such as Baker Brothers or Price T Rowe and associates. Vanguard is actually a leading investor in Price T Rowe and associates, however the relationship there has failed to engender support from the latter fund manager in Imugene (IMU ASX).

But it could be argued the lack of large institutional ownership in Imugene (IMU ASX) is commensurate with the fact that not too many large US institutions are interested in small to medium biotechs down under, irrespective of what they have on offer, or how they are performing. fintel.io again tells us that another Aussie biotech Neuren Pharmaceuticals (NEU ASX) has a similar institutional holding to that of Imugene (IMU ASX), at 3.82%. Only 30 institutional owners and shareholders have filed 13D/G or 13F forms with the Securities Exchange Commission (SEC) for ownership of Neuren, despite the local company’s overwhelming success in 2023/4. Like Imugene many local investors hold high hopes for Neuren and the new product(s) they are planning on bringing to market. Yet the same level of enthusiasm is clearly not held by leading US institutions. Or is this statistic simply symptomatic of the fact leading US institutions and biotech players are enamoured with the Australian market (ASX) in general, when it comes to small to medium biotech stocks? This could well be the situation could it not? I note that another small to medium Aussie biotech Clarity Pharmaceuticals Ltd (CU6 ASX) currently trading at $2.78 AUD has a price target of over $3.40 on it from biotech analysts. Yet despite this promising outlook from analysts, and local support from brokers such as Wilsons and Bell Potter, the stock, like Imugene and Neuren, has failed to catch the eye of institutional investors from overseas. Indeed fintel.io tells us 0 institutional owners and shareholders that have filed 13D/G or 13F forms with the Securities Exchange Commission (SEC) to participate in Clarity Pharmaceuticals. That’s right, zero.

Investors shall no doubt be hoping Imugene’s clinical trial results from their leading oncolytic virus candidate Vaxinia bring with them some support from leading US Institutions. The volume of IMU stock traded on the local bourse has been less than outstanding in recent months, with the stock languishing in the doldrums at a value close to 20% of its all time highs. Many shareholders have been pushing for Imugene (IMU ASX) to list on the US Nasdaq bourse, where Replimune and other oncolytic viral candidates are listed. This may or may not have been a wise decision. Replimune themselves have shed over half the value they were listed at a year ago, in spite of their large US institutional support, with a market cap not too far away from that of Imugene at $472 million USD. However it could be argued that with PD1 Vaxx, Oncarlytics and more recently Azer Cel on the Imugene books, the Aussie biotech has much more to offer US investors than Replimune (REPL) does. Having combined Mercks PD1 enforcer Keytruda with their leading candidate Vaxinia in 2023, some pundits including myself see no reason why Imugene's own PD1 Vaxx could not be combined with Vaxinia in due course, adding immeasurably to the stocks value in years to come.

Look its all food for thought isn’t it. Who or who doesn’t hold Imugene (IMU ASX) may prove irrelevant to the stocks ultimate value, if clinical trials are to go the way of Imugene. Just as whatever bourse the stock is listed on may prove irrelevant. Whilst behind the scenes personnel including Drapkin and Shah may be heralded as heroes, were Imugene to announce a licensing agreement or partnership deal with a leading US player. The truth is none of us are acutely aware of what lies ahead for Imugene (IMU ASX), other than change. Is the change awaiting the small Aussie biotech to be for the better, or to bring much of the same? We may well know the answer in a week from now, following the company’s presentation at the AACR Annual Meeting in San Diego.

DYOR Seek investment advice as and when required Opinions only