Why IMU is a multi multi bagger, page-4588

I thought it was time to assume the subjective, as opposed to objective stance with this post. As many of you are aware I tend to analyse Imugene from an objective perspective or viewpoint. Yet today forgive me for my subjectiveness, for more than ever to be true to the thread, I need to explain to both new and long term holders alike, why IMU is a multi multi bagger. I know I’ve been saying to family, friends and former investment clients since early 2020 this is the opportunity of a lifetime. Yet now more than ever I feel it would be remiss of me not to state that today on November 21, 2021, Imugene (IMU) is a better buy than ever.

Last night Tesla TSLA(NASDAQ), the company known for making electric motor vehicles was trading at $1,123 USD. Even Apple AAPL(NASDAQ), the Nasdaq heavyweight, has decided to make a play into the market Tesla resides in, that of electric cars. This decade is witnessing the change from petrol driven motor vehicles to electric driven cars. Yes it could be classified as a “paradigm shift” in the automotive industry. Prices of electric cars are slowly coming down, as is the cost of batteries. It’s not taking as long to charge your car using batteries, and an increase in battery densities is making electricity suitable to a wider range of vehicles. And now the share market is finally waking up as well. Enrique Dans, when writing for forbes.com back in October 2018 noted “pretty much everything has been said about Tesla”: “It was said to be selling vehicles at a loss and would never be able to make them under the right conditions and fast enough”. Or “That its founder was crazy and would lead the company to ruin”. While one industry veteran called on car collectors to buy the Model S, Be“fore the company goes belly up.” But then in the last quarter of 2018, Tesla not only made tons of money, boosting its share price and giving the NASDAQ one of its best day in months, it fulfilled its production and distribution objectives, showing every sign of staying in the black, at least until it had to pay interest on loans in the first quarter of 2019. Keep in mind Tesla started on its journey in 2003, it had taken 15 years to make a profit.

Fast forward three years and in January 2021 RBC analyst Joseph Spak, a long time bear and one of Wall Street's last holdouts on Tesla despite last year's 750% surge, nearly doubled his price target for the stock to $700 a share while boosting his near-term forecast for deliveries following last year's record tally of 499,550 units. Spak said Tesla's share price gains can allow it to 'easily' raise capital for future growth, "whereas traditional OEMs need to generate significant cash from existing operations to fund their transition to electrification.” Morgan Stanley analyst Adam Jonas, in fact, pegged his own target at $810 per share, the highest on Wall Street, as he dubbed Elon Musk's clean-energy carmaker the industry's "chosen one" thanks to its "people, its technology, business model and access to capital".

So how is this relevant to cancer treatment, and if at all Imugene IMU(ASX)? Well one could well argue Imugene has the people, technology and access to capital required to change the way we view the treatment of both liquid and solid tumours in the coming decade. Celularity, CELU(NASDAQ) who are teaming up with Imugene certainly believe they do. Of their upcoming partnership with Imugene’s wonder drug CF33 CD19 Andrew Pecora, MD, president of Celularity said recently, “If you can get ubiquitous expression of an antigen across an entire tumor architecture, you might be able to transform how we think about curing solid tumors. I can’t underestimate how big a deal this could be if it truly works. This could be game changing. This could be the approach that enables us to go after solid tumors the way we’ve done liquid tumors.” A statement made all the more relevant when one considers the global solid tumor cancer treatment market was valued at US$ 121.3 Bn in 2018 and is expected to reach US$ 424.6 Bn by 2027, expanding at a CAGR of 15.0% from 2019 to 2027.

Whilst there is no prizes for guessing that like Tesla, Imugene has had it’s fair share of detractors. Like the aforementioned Tesla analyst Spak in the US, in Australia Shane Fitzgerald from Monash Investors and Emanuel Datt from Datt Capital in mid July told the AFR and their investors to sell IMU, as it was too “early stage for them”. IMU was then trading at 33 cents, or close to half its price earlier this week of 62 cents on the ASX. (Needless to say we won’t be subscribing to their investment newsletter, or the AFR for that matter. I think I’ll stick to the Wall Street Journal for my Biotech analysis.) And like Tesla back in the early 2000’s, Imugene is not anticipated to derive revenue for some time to come. Though Imugene CEO and Managing Director Leslie Chong does state that if we follow the science, we may not have to wait too long for the money to flow.

Early stage detractors and even Imugene shareholders had a bit of a wake up call themselves earlier this week when Chong announced a collaboration with market heavyweights, Merck Germany MRK(ETR) and Pfizer PFE(NYSE), to combine Imugene’s Her Vaxx B cell immunotherapy drug with their drug BAVENCIO® (Avelumab). She noted at the time that if the combination trials in Q1 and Q2 of 2022 are successful then the combination drug could move quickly into a registrational trial, and that her big pharma partners “may well just take it over” and buy it. And why wouldn’t they? Back in 2019 the Wall Street Journal noted despite its success developing cancer drugs, Pfizer had struggled with an important class of treatments called immunotherapies, which unleash a patient’s own immune system on tumors. At the time they noted “Pfizer’s main immunotherapy, Bavencio (Avemulab), developed with Merck KGaA and approved last year to treat two different relatively rare cancers, had failed four late-stage studies for other tumors. Pfizer said at the time “it planned to take advantage of the class by pairing its drugs with those from other companies.” True to form, in pairing with Imugenes Her Vaxx, some three years later, due to Her Vaxx’s low toxicity and excellent safety profile, Pfizer no doubt plans on creating a combination drug that can add to the anticipated peak sales figure attributed to Avemulab, that being $4BN USD. What if the combination drug reduces side effects, extends life even further and creates a larger market share than was originally expected by the big pharma pairing? What if peak sales of neo Herizon (the combination drug) are expected to reach $6bn USD, or even $8bn USD, with the addition of Her Vaxx? What is the drug worth to them then?

These figures aren’t pie in the sky figures by the way. Her Vaxx brings with a patent in Japan and initial success in prolonging the lives of gastric cancer patients in a Phase 2 trial, as well as potentially lower treatment costs than Avemulab. The gastric cancer market for which the combination drug is being trialled is huge in Japan, South Korea, Asia and beyond, with over 1,000,000 people diagnosed with the dreaded illness each year alone worldwide. Whilst Pfizer has a track record in selling cancer dugs. Again according to the Wall Street Journal in 2019 their top-selling oncology drug, named Ibrance, treats breast cancer, and rang up nearly $3 billion in sales during the first nine months of 2018. Notwithstanding the fact the Her Vaxx combination partner Avelumab was shown to be extremely successful in early stage and Phase 3 trials, (despite the aforementioned late stage failures). In fact in 2016 Avelumab induced sustained tumor responses in some patients with rare skin cancer.

Back then in a phase II trial, 32% of patients with metastatic Merkel cell carcinoma when treated with Avemulab experienced partial or complete shrinkage of their tumors. Among patients whose tumors shrank, more than 90% sustained this response for at least 6 months. Then earlier this year in January 2021 the European Commission approved BAVENCIO Avemulab for first-line maintenance treatment of locally advanced or metastic urothelial carcinoma. The European Commission took into consideration the fact that BAVENCIO maintenance treatment significantly extended median overall survival versus the standard of care in the Phase III JAVELIN Bladder 100 study. This was the first and only immunotherapy treatment to demonstrate a significant overall survival benefit in the first-line setting in a Phase III trial. Keep in mind BAVENCIO first-line maintenance therapy is recommended for use by the ESMO Bladder Cancer Guidelines.

Today the Bavencio Avemulab intravenous solution sells for approximately $1,787.00for a total of 10 millilitres. This highlights the expense of immunotherapy treatment. Similar to the initial high early costs associated with electric motor vehicles, the cost of the immunotherapy treatment needs to come down, in order to assume the mantle of standard of care, from that of the existing treatment, chemotherapy. Leonard B. Saltz, MD, Chief of Gastrointestinal Oncology at Memorial Sloan Kettering Cancer Center, NY, back in 2016 stated that he wanted checkpoint inhibitors to be available to his patients, but he questioned how society will pay for them. Offering his perspective on value during a plenary session presentation at ASCO 2015, Dr Saltz estimated at the time that the widespread use of immunotherapy agents could cost the United States $174 billion annually. “A median progression-free survival of 11.4 months for combination immunotherapy is truly remarkable, for a disease that 5 years ago was thought virtually untreatable,” Dr Saltz remarked. “As a clinician, I want these drugs and others like them to be available for my patients. As one who worries about how we will make them available and minimize disparities, I have a major problem, and that is that these drugs cost too much.”

How much? “Approximately 4000 times the cost of gold,” according to Dr Saltz. Back then prices from the first quarter of 2015 showed the average per-mg wholesale prices to be $28.78 for nivolumab, $51.79 for pembrolizumab (the other anti–PD-1 agent), and $157.46 for ipilimumab.

Imugene investors need wait less than a year to find out whether the future drug sales of the combination trial drug, to be called neoHerizon, is going to produce rivers of gold. If trial patients with HER-2 positive gastric cancer obtain positive results from the combination trial of the drug, long term sales of the combination drug would be expected to reap solid long term profits for the three participating parties. Each of whom realise the cancer treatment market is growing exponentially at increasing Calendar Annual Growth Rates (CAGR’s). If successful Merck Germany and Pfizer’s collective decision to effectively lend Avemulab to Imugene for the duration of the trial, at an estimated cost of $4 million dollars, could be a small price to pay for a much bigger pay day shortly down the track. And like their recent acquistion of biotech Trillium Therapetics TRIL(TSE), it gives Pfizer (and Merck), a closer look at the way Imugene does business.

But the aforementioned collaborations between Imugene, Celularity, Merck Germany and Pfizer are just some of the combination trials on Leslie Chong’s horizon. There are eight to ten new Imugene trials gazetted for 2022. Even if 10 or at best 20% are successful Imugene (IMU) is destined to trade at multiples much higher than it is today. As a consequence Leslie Chong appears outwardly comfortable in heading up Imugene and taking her babies (as she refers to her drugs) forward. And she has every reason to be. Total Shareholder Return (TSR) has been positive in 2021 with the company being able to raise capital at a significant discount to the current share price. More importantly she is liaising with winners each and every day. Winners of the calibre of Bob Harari (Celularity) and Yuman Fong (City of Hope), both of whom work tirelessly to achieve the high goals they set themselves in their plight to develop effective cancer treatments. Having fought through the pain barrier associated with running a team on all sides of the globe during COVID, Leslie Chong is now clearly focused on the task at hand, delivering worthwhile medicine to cancer patients in need worldwide. And one senses her corporate promiscuity is adding significant value to the company through the creation of a multi dimensional pipeline of products with a plethora of partners across multiple cancer lines. This in itself is mind blowing for IMU investors who as of last financial year were anticipating only one or two potential license fees for their company’s drugs. Now they are faced with the prospect of numerous revenue streams from drug sales as either stand alone or combination treatments. They are fast becoming aware of the inherent benefits in having multiple partners. This strategy to them makes good corporate sense. They as shareholders can visualise sitting back in the future assuming the position of landlord, collecting their annual license fees in the form of dividends, from the company’s much in demand immunotherapy drugs.

The confidence, inner strength and sense of purpose that drives the Imugene CEO and Managing Director Leslie Chong is not without obstacles and indeed complications. Many investors fail to understand that an investment in the biotech sector requires patience. As the Imugene Chairman Paul Hopper himself notes, “it’s patient capital.” Furthermore to remain determined and primarily focused on the need to deliver life changing drugs to this huge “unmet need”, for those facing life threatening illnesses, you must at times put the blinkers on, enter the tunnel, silence all the background noise, believe in your own ability and push ahead. And in doing so maintain the fortitude, resilience, stamina and tenacity that fuels your inner drive. With the end goal in sight, and a burning desire to reach there as fast as is humanly possible, you are not always going to see eye to eye with those on your Board, or your team for that matter. And no one shareholder should expect you to. Let’s not for one moment forget how difficult it has been for Leslie Chong and her team at Imugene. The initial Phase 1 and Phase 2 trials of their drugs have been performed with late stage patients who have failed on other treatment programs, coming to the Imugene trials as something of a last resort. Attempting to stimulate and trigger the immune system in a patient who is at the end of the road in terms of health, morale and spirit is at times a bewildering task for even the strongest of individuals. Therefore you can imagine Leslie Chong’s exuberance and sense of relief in announcing this week the forthcoming combination neoHerizon trial with Merck Germany and Pfizer was to be conducted on “early stage patients”. Wow, now she finally can see how her babies perform with patients in their early stages of diagnosis, as opposed to waiting until they are on their death bed as it were, to stimulate their immune system.

Analysts took some time to wake up to the Tesla story, yet it may not take them too long to get a grip of the Imugene story. This week the Merck Pfizer combination with Imugene’s Her Vaxx is starting to feature on leading news feeds including Yahoo and nasdaq.com Further to which the City of Hope’s announcement yesterday that they have commenced an in human trial for Imugene’s wonder drug, the oncolyctic virus CF33, has begun circulating throughout the US. Many in the US today would not know the difference between CF33 and ULP. But sooner rather than later Imugene’s potential superstar rocket fueled drug is going to land front and centre on their TV screens, if any signs of efficacy are noted by the trials principal investigator Dr Yuan Yuan. The US has 330 million people, Australia only 25 million. Doing the math Imugene’s IMU(ASX) entry into the ASX 300, or even ASX 200 fades into insignificanace in comparison, once US investors take hold. To put it bluntly the Australian market is a mere minnow in a much larger pool of investors in search of the next Tesla. Now the “cats out of the bag”, within a heartbeat savvy US biotech investors are going to quickly ascertain that Imugene’s intellectual property (IP) was purchased at “Next to Knicks” in the form of shares as opposed to cash. For as I have noted in previous posts if Imugene (IMU) were to have purchased the Intellectual property acquired from the City Of Hope and Ohio State Universities at market value, it would have a net present value of much more than my estimated NPV of $1.50 AUD per share on its books. US investors shall soon come to the understanding that with the proposed Big Pharma combination trials, forthcoming PD1 results, future CF33 announcements, Oncarlytics collaborations and the US itself coming online (as discussed), my price target of $2.24 for Imugene (IMU) in the 2022 is eminently achievable. In fact it may well be closer in their line of sight than the price targets Bell Potter and Roth Capital frequently set for this upwardly mobile biotech.

Perhaps Leslie Chong can indeed finally take heart from the words of Tesla founder Elon Musk, who said “If you get up in the morning and think the future is going to be better, it is a bright day. For when something is important enough, you do it even if the odds are not in your favour.” Like Musk, the odds are starting to turn in favour of Leslie Chong and her Imugene babies. They are growing up much faster than many thought possible, and before long their Prom night shall be superceded by multiple weddings and much celebration. A hundred, or as Musk has lived long enough to realise, a thousand times over.

From an investment perspective I am not in any way insinuating Imugene is the next Tesla. The Global Car & Automobile Manufacturing industry in which Tesla resides is $2.7 trillion USD dollars in size in 2021. But the parallels are there to be made. When experienced biotech players such as Andrew Pecora and Bob Harari,(Celularity), Saul Priceman and Yuman Fong (City of Hope), or Dr. Cheng Liu, President and CEO of Eureka Therapeutics, (all pictured above) start using phrases such as “front page news”, “game changing”, “ground breaking” and “paradigm shift”, one has to sit up and take notice. No one is expecting all of Imugene’s trials to be successful. That’s not statistically rational. Even Bradman made ducks. But the science is starting to stack up. Just as the climate change nahsayers are starting to dwindle in numbers, many of the Car T and Oncarlytic science heavyweights are starting to sing from the same hymn sheet. Though the reason I suggested IMU(ASX) was due for a massive re-rate had little to with science, and more to do with their share register. Contrary to the belief of some so called analysts, who earlier in 2021 “raised eyebrows” at the IMU market cap and referred somewhat spuriously to IMU stock as confetti, given the number of shares they had on issue, “Guess what?” Just like prime residential land on the East and West Coast of the US, they aren’t making any more of them any time in the near future. “No Ma’am”, came Leslie Chong’s reply when quizzed earlier this week as to whether IMU was due for another capital raise. And last time I checked many long term holders of IMU simply aren’t selling. Take a look at the Top 20 for starters. I’m confident Jack Mann of Mann Beef isn’t selling till the COWS COME HOME. And take it from me that’s a long time when you consider he lives in Far North QLD. Paul Hopper, the IMU Chairman has already rewighted his portfolio. And as for Leslie Chong, well if you think she’s selling, then think again. Besides she’s far too busy to be watching re-runs of “Mutiny on the Bounty”over Christmas. Remember that call she made late one Sunday to tell a long term IMU holder “We have a trial opening soon for your friend who was diagnosed earlier in the year”. Just too good. Then there’s the leading IMU multi baggers on the register who realise when the stock hits the ASX 200 it’s going to be much cheaper to take out a margin loan against IMU stock to free up their capital, than to sell and trigger a capital gain. Yes it’s merely the day traders on the register who are going to be bumping and grinding a to the eb and flow of trial results and announcements. Though even many of them are going to have to bump and grind to fewer and fewer tracks. For when the US investment kicks in, bringing with it millionaires, perhaps billionaires, and the savvy biotech investors spoken of earlier in this post, IMU(ASX) stock is going to look and taste a lot more like confiture, than confetti. When large hedge funds such as Baker Brothers in the US dust off and activate that file that has been sitting in their bottom drawer “awaiting data”, watch out. IMU shares are going to be as scarce as an invite to their forthcoming Christmas party. After all, “Who wants to kill the goose that’s about to lay the golden egg?”

Julian and Felix Baker have built a 17bn USD biotech fund
and made billions for their US investors

Remember it’s not all about timing, it’s more about time in the market. And it’s not simply about how much skin you have in the game, it’s all about being in the game. And they don’t care how much you know, until they know how much you care. And IMU cares about patients, rest assured. At least for as long as Leslie Chong has her hands behind the wheel. She may not be driving an electric motor vehicle, but it’s a pretty powerful one all the same. Don’t miss out on the opportunity of a lifetime to join her on the journey. It may well be less than 15 years in the making.

Do your own research, and seek investment advice where necessary