Col your comment that Imugene (IMU - ASX) is a speculative biotech stock may well lie at the heart of shareholders perceived discontent with their Chairman Paul Hopper, and his CEO and MD Leslie Chong. Given the extensive capital raises performed by the company in recent years, together with the accompanying dilution of shares, many would assume that by mid 2024 Imugene would be well passed the small to mid cap speculative biotech tag. Particularly when one takes into account the shares and remuneration paid to acquire Imugene’s novel immunotherapies. Is it simply the fact that as you state, “When the share price is in decline the knives come out?” I’m not so sure. Perhaps there is more than a declining share price we should consider, if we are to present an unbiased and balanced view of the current proceedings.
According to the UK Corporate Governance Code, the recommended tenure limit for the chair is 9 years, for after 9 years they are no longer considered independent. In many instances, this acts as a ‘de facto’ ceiling on tenure. iod.com goes on to note that directors who serve for an excessive period of time leave themselves open to accusations, from investors and other stakeholders, of losing their independence and becoming too close to company management.
Tenure limits can be a great tool for companies to appoint younger directors, with fresh perspectives and from diverse backgrounds, who bring a different approach. It can also be useful for getting rid of those who have outlived their usefulness or don’t contribute much. A regular dose of fresh blood on the board helps prevent the concentration of power within a cosy club. New perspectives and a healthy exchange of views is a key aspect of an effectively functioning board.
I think it’s only natural when a stock price experiences a lengthy and protracted decline the company management, in particular the Chairman face closer scrutiny from shareholders. Paul Hopper has been Chairman of Imugene (IMU-ASX) for a considerable time now and as I proposed prior to last years AGM his ongoing representation at the top does need to be questioned. Why? Because at present many shareholders are unclear as to the specific direction Imugene is heading in. From where I sit it is the Chair’s job to lay out a road map for future capital growth, and deliver upon it. Should he be replaced? Is change what is needed to provide stimulus to an otherwise dwindling share price? That is for the company shareholders to ultimately decide.
Hopper has consistently suggested he has confidence and faith in the team at Imugene. He has pointed to fluctuations in global biotech markets as a reason for IMU’s noted underperform recent years. Yet when it comes to corporate direction, strategy and commercial decisions investors are in the main unaware of the pathway forward for Imugene, as he has failed to convey this to shareholders at large.
It would appear Imugene is attempting to collate and amass enough data to seek FDA approval for one if not a number of their products. From what Hoppers CEO and MD Leslie Chong has made us aware the company is open to various exchanges with Big Pharma, who are apparently interested in one or some of their products. Is the interest associated with specific domiciles, with a view to marketing Imugene products as a manufacturer and supplier, or as a partner? Is Imugene discussing the sale of a portion of their product pipeline, or in out licensing their products? How successful have Monil Shah and Hopper been in pursuing these perceived affiliations? Are Imugene keen on developing their existing oncolytic and ancillary therapies through to Phase 2 clinical trials themselves, or in conjunction with a third party?
The issue is that without the answers to these questions investors are faced with the prospect of either further capital raises, potential dilution and a share price devaluation,or to the contrary immeasurable upside, in the event of incoming partnership(s), asset sales or out licensing deals. Without clear guidance from the Chair during the development cycle Imugene shareholders are noticeably reticent to assume a position, as the future remains unknown. Is the company going to seek a NASDAQ listing, or is this simply shareholder speak?
All stocks are subject to market influences and there are undoubtedly times where there is a need to hold your cards close to your chest when it comes to corporate decision making. But without an ally, corporate partnership, Big Pharma backer or marketing strategy in place it must be noted the overall success of Imugene today rests firmly on the shoulders of clinical trial results. Therefore unless management provide investors with regular feedback on how these trials are progressing, in the absence of communication from the Chair, the share price is set to underperform. So why is it unreasonable to assume people are sure to start pointing the finger at the Chair. In short it isn’t.
No-one is begrudging Paul Hopper the shares he has within Imugene, nor the salary afforded him to date. Nor IMO should they. He was instrumental in the introduction of novel, potentially game changing therapies to the company, together with their founders. But alas, he has been paid and remunerated for these initiatives. The issue becomes what value he and his board, including his business representatives and financial personnel, offer the company moving forward. Australians on the whole find it difficult to embrace change, but in hindsight it is often for the best. Often those within long term positions become too close to existing executives, many of whom they have been responsible for appointing. As such they become too subjective and fail to view the credibility and performance of these said executives from an analytical perspective. Have the business executives appointed by Paul Hopper delivered? I’ll let you be the judge of that. Were Imugene's novel technologies to prove efficacious and worthy of FDA Approval the remuneration afforded to Hopper and his team could well have been worthwhile. Yet that may not necessarily negate the need for change at the board and executive level moving forward.
Without doubt some of the corporate decisions taken, particularly when it comes to IMU capital raises conducted at a discount to the prevailing share price of the day, have been less than exemplary. Let’s take Imugene’s recent decision to offload the manufacturing facility so recently acquired during the Azer Cel acquisition from Precision. Was it in the company's corporate strategy to proceed with such a sale having acquired Azer Cel? Or merely an afterthought? Either way had imugene spelt out that such a commercial directive was on the cards at the time of the recent capital raise, many of those holding back from investing in the raise may have made a different decision at the time. Likewise years earlier when the capital raise was supposedly utilised, among other things, to expand the company's B cell platform with additional clinical trials gazetted for Her Vaxx and PD1 Vaxx. Was it clear to investors at the time there were significant limitations in the recruitment of HER 2 patients to the Her Vaxx Phase 2 combination trial with Keytruda, or was it an oversight? Would investors have made a different decision at the time of the capital raise had such information been fully canvassed? One may argue the 2021 capital raise was to fund all five of the company's programs at the time, that said the ongoing development of Her Vaxx and PD1 Vaxx were integral to the company's marketing material surrounding the raise. Three years later and the Her Vaxx Keytruda combination is dawdling, with PD1 Vaxx only just getting out of the gates.
Look its easy to be critical in hindsight. On a positive note Imugene have progressed their CF33 Vaxinia Trial at a rapid clip, and have an FDA fast track designation under their belt to show for it. Their subsequent FDA IND for Oncarlytics is to be commended. Whilst from a shareholder perspective there are still many more shots on goal, with the recent Azer Cel acquisition adding yet another string to the now lengthy Imugene bow. But please understand executive decisions, or lack of them, must be held to account if the company is to continue to grow and prosper, and in doing so return sound capital growth to all those participating.
WMHB
DYOR Seek investment advice as and when required Opinions only
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