Although just as importantly for me, yesterday put to bed this argument or indeed furphy sounded by uneducated commentators and analysts that biotech company’s such as Imugene should only accrue a decent market capitalisation when they are indeed accruing revenue. That clinical trials alone do not maketh a strong valuation. For yesterday Imugene’s recent combination partner Pfizer agreed to pay a 100% premium for late stage biotech developer Arena, at the ripe ole’ market price of $6.7 bn USD. For those slow at arithmetic that’s more than three times the current market Cap of Imugene. Pfizer, said the deal “complements its capabilities in inflammation and immunology and will contribute to growth through 2025 and beyond.” In a statement surrounding the announcement Louise Chen, an analyst for Cantor Fitzgerald, in a note to investors.
“We think this deal makes strategic sense,” she said.
With Chief Executive Officer Albert Bourla at the helm, Pfizer has shifted away from mega-deals and focused on external investments in mid- and late-stage drug candidates.
Intresting is it not, the drug giant will pay $100 a share in an all-cash transaction for San Diego-based Arena and its assets in gastroenterology, dermatology and cardiology, according to a statement Monday. That’s about double Arena’s Friday closing price.
But back to Imugene and their announcement of yesterday. Let’s take a look at the Her Vaxx approval and what it means for Her 2 drug rivals such as Herceptin.
Her Vaxx and Herceptin
In yesterdays announcemnet to the ASX Imugene stated they had obtained US FDA approval for their drug Phase 2 Her Vaxx to commence in patient trials in the US. Their trial entitled Next Herizon is an open-label, signal generating, phase 2 study of HER-Vaxx in combination with chemotherapy or pembrolizumab in patients with metastatic HER2/neu overexpressing gastric or gastroesophageal junction (GEJ) adenocarcinomas who have previously received trastuzumab and progressed on this treatment’.
VIDEO
@supercendol to draw a comparison with Herceptin, the drug manufactured by Imugene CEO Leslie Chong’s former employer Roche. Herceptin, like Imugene’s Her Vaxx is designed to target HER2 receptors, which may keep the cancer from growing. Herceptin is the drug Imugene are said to be targeting in their FDA approved Next Herizon trial to begin shortly.
@supercendol notes :
“I found a reliable article showing Herceptin+chemo & Chemotherapy (cisplatin):
https://www.nice.org.uk/guidance/ta208/chapter/3-the-manufacturers-submission
If you jump to Section 3.7, the response rate is shown there. Comparing with our results, & adding data from @MoneyMozart (thanks MM) we get:
Her-vaxx + chemo = 50% response rate
Herceptin + chemo = 47.3% response rate
Chemo alone = 34.5 % response rate
Herceptin alone = 15.3 % response rate
So our results (note this is only Ph1b) today showed that Her Vaxx+chemo works as good as Herceptin+chemo & better than the gold standard chemo alone. Plus we have more safety & tolerability and less side effects compared to Herceptin & chemo. Considering Her-vaxx treatment is significantly cheaper than Herceptin this should be a win for us.
Well, maybe the market needs time to digest the results & experts to interpret them. To put some perspective on the Pfizer Arena deal and that of the Her Vaxx Herceptin correspondence, consensus calls for Arena’s S1P1 drug Etrasimod to have sales of $735 million in 2025, while it’s also being explored in other immuno-inflammatory conditions. See the chart herein, Herceptin had annual sales growth way back in 2011 of $727 million USD. That’s actually sales growth, not annual sales.
Herceptin - Historical Chart displaying Sales and Growth 1 2011
,944
727
13.94%
2 2012
$6,282
338
5.69%
3 2013
$6,559
277
4.41%
4 2014
$6,862
303
4.62%
5 2015
$6,798
-64
-0.93%
6 2019
$6,080
N/a
N/a
As noted Imugene’s Next Herizon Phase 2 trial is to be conducted in combination with chemotherapy or pembrolizumab. To guage the potential market size of Keytruda (pembrolizumab) one need only look at the 2020 sales for the drug found herein. It is interesting to note that cancer related treatments make are a large contributor to annual drug sales worldwide.
Top Selling drugs in 2020
Drug name
Made by
2020 Sales
Used to treat
1 Humira (adalimumab)
AbbVie
$19,832,000,000
rheumatoid and psoriatic arthritis, ankylosing spondylitis, Crohn’s disease, ulcerative colitis
2 Keytruda (pembrolizumab)
Merck
$14,380,000,000
various cancers
3 Eliquis (apixaban)
Bristol Myers Squibb and Pfizer
$14,117,000,000
blood clots
4 Revlimid (lenalidomide)
Bristol Myers Squibb
$12,106,000,000
myelodysplastic syndrome, multiple myeloma, and mantle cell lymphoma
5 Eylea (aflibercept)
Regeneron Pharmaceuticals , Bayer
$10,722,220,000
age-related macular degeneration, macular edema and diabetic retinopathy
6 Imbruvica (ibrutinib)
Pharmacyclics (AbbVie Janssen (Johnson & Johnson)
$9,442,000,000
chronic lymphocytic leukemia/small lymphocytic lymphoma with 17p deletion, Waldenström’s macroglobulinemia
It goes without saying that with their Keytruda patent coming to a close in 2028 that by combining with Her Vaxx and accessing Her Vaxx patents (i.e., in Japan and beyond) Merck can extend their patent runway by up to a decade out to 2038. For those quick at arithmetic that’s a lot of extra revenue for the big pharmaceutical Merck looking to fill a future void in their cashflow. Oh and by the way aside from the Viralytics acquistion this now represents the third time Imugene Chairman Paul Hopper has bumped into a Merck on the dance floor. Could this be an omen?
Paul Hopper and his institutional share sale
Unfortunately assets such as property and shares are relatively illiquid, until they’re sold that is. You can’t rip a brick out of the wall and go down to the shop and ask for a carton of milk, it simply doesn’t work that way. And human beings, even the Chairman of company’s require some golden ointment from time to time to survive, keep their head above water and maintain sanity around the household. And eight years at Imugene is a long time between drinks for the Hopper family.
As such no one could begrudge Imugene’s leading shareholder Hopper for needing to bring home some bacon for his family, but what is of more market interest is the name of the institution who acquired his shares. Recent shareholder movements show leading fund managers Blackrock and Vanguard continuing to increase their holdings in Imugene. I would be more than interested to know if their name is on the 75 million share crossing. Either way I do guess it all becomes somewhat irrevelevant in the broader scheme of things. There is bound to be many more large institutions, ETF’s and fund managers on the books before the ASX200 rebalance runs its race later this week. By the looks of it someone in the US has already started overnight.
PD1 Vaxx - Her Vaxx OSR Results and Imugene’s B cell platform
With the CF33 oncolytic virus blockbusters taking front and centre stage in the US, particularly now with the inclusion of a trial for Vaxinia, it’s easy to forget that Imugene’s B cell platform is fast growing momentum. Not only are the Phase 1 trials results due out for PD1 Vaxx in the coming week, the Overall Survival Data for the companys’s Her 2 drug Her Vaxx are due to be released in the ensuing months. The Her Vaxx results to date must indeed be nothing short of outstanding. Excellent safety and toxicity data aside Imugene now have three big pharmaceutical companies, in Merck Germany, Pfizer and Merck ready and willing to step up to the plate and put thier name on the Her Vaxx drug. And companies of that ilk do not take such decisions lightly. This is not just positive affirmation for Her Vaxx, but a resounding tick of approval for Imugene’s B cell platform on the whole. As Leslie Chong herself alluded to in the aformentioned video, the future looks bright for Imugene in 2022 and beyond.
And if the Arena acquisition is anything to go by my price target for IMU in 2022 of $2.24 per share is looking well within Pfizers reach. Wall Street has been watching Pfizer closely to see where it would use its growing cash spurred by its coronavirus vaccine. And like the Arena drug it is acquiring, Etrasimod, if Pfizers combination trials with Her Vaxx show any signs of efficacy in 2022, this could position Pfizer, or indeed Merck, to approach regulators for the drug’s approval later next year, and bring it to market in 2023, or at the latest 2024. That could well place Imugene in the arena of many other big pharmas looking to increase shareholder revenue from 2025 and beyond.
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