Imugene Limited (ASX:IMU, OTC:IUGNF), a clinical-stage immuno-oncology company developing a range of novel immunotherapies, has received a Buy rating from Roth Capital Partners as well as an updated share price target of A$0.62, up from A$0.43.
The research report and ratings follow the company’s solid tumour partnership with Eureka Therapeutics.
IMU has partnered with Eureka Therapeutics to combine its onCARlytics oncology work with Eureka's Artemis anti-CD19 T cell therapy in an effort to determine their efficacy against solid tumours.
The collaboration is currently preclinical, but the broader Artemis platform has been tested in early-stage clinical trials and the City of Hope Comprehensive Cancer Center’s scientists have combined CAR-T therapy with an oncolytic virus to eliminate solid tumours in a mouse model.
Roth has increased its price target to A$0.62 from A$0.43, mostly given its view of the strong science that supports IMU's choice of internal programs to prioritise and choice of technologies with which to partner.
The following is an edited excerpt of ROTH Capital Partners’ Equity Research Report on Imugene Limited (ASX:IMU, OTC:IUGNF).
Treatment strategy
The two companies will target solid tumours by combining their highly complementary oncology therapies, given the lack of success thus far with cellular therapy in solid tumours versus liquid tumours.
IMU's onCARlytics oncolytic virus specifically targets and infects tumour cells and by so doing forces the expression of CD19 on the surface of tumour cells, thereby allowing Eureka's anti-CD19 Artemis autologous T cell therapy to recognize CD19 and kill the cell.
This strategy intends to overcome the relative absence of useful tumour targets expressed on solid tumour cells versus liquid tumour cells.
There remains further preclinical in vitro and in vivo work to be done, after which Roth expects clinical trials to be conducted, most likely in the US and Australia.
The companies are not being specific about which solid tumour types they initially intend to target, but on a recent conference call they mentioned liver, lung and gastric cancer. The broader Artemis platform has already been in early-stage clinical trials, but the Artemis anti-CD19 program, in particular, has not.
Cytokine Release Syndrome
In addition to potentially rendering solid tumours susceptible to T cell therapy, the combination treatment approach may also substantially reduce cytokine release syndrome (CRS), a dangerous and sometimes fatal side effect of T cell therapy.
More specifically, the Artemis T cell therapy platform couples T cell activation with cell-intrinsic regulation mechanisms, as it does not directly couple intracellular signalling domains to co-stimulatory domains, thereby potentially allowing for a safer and more effective product versus other CAR T therapies.
These safer outcomes are achieved via reduction of CRS and other life-threatening cytokine-related safety issues that have been observed with other CAR T technology.
IMU clinical progress
Other recent developments have demonstrated IMU's clinical progress with two of its other products.
A Phase 1 triple-negative breast cancer patient was recently dosed with CHECKvacc, IMU's oncolytic virus that also carries a gene for an anti-PD-L1 antibody, thereby providing more than one anticancer mechanism in a single treatment.
ROTH also notes that the Phase 1 PD1-Vaxx immunotherapy monotherapy trial is showing early signs of immune responses in NSCLC patients, as indicated by detection of polyclonal antibodies to PD-1.
IMU will select one of the three Phase 1 doses to test in combination with standard of care therapy, which may include a PD-L1 inhibitor or other immunotherapy agent, in NSCLC patients that either progressed on, or did not respond to, prior therapy.
Risks
- Clinical risk. Imugene’s clinical staged products could fail to deliver statistically significant results in late-stage clinical trials, substantially reducing the value of Imugene’s product candidates and therefore Roth’s target price.
- Regulatory risk. Even if successful in the clinic, Imugene’s products could fail to be approved by domestic and/or foreign regulatory bodies, which would reduce Imugene’s value and therefore Roth’s target price.
- Financing risk. Imugene will need additional capital to fund its operations, and such financing may not occur, or it could be substantially dilutive to existing investors.
- Competitive risk. For any future approved Imugene products, they may not be well adopted in a competitive marketplace, which would adversely affect Imugene’s value and therefore our target price.
- High stock price volatility. This issue is common among small-cap biotechnology companies with relatively low trading volumes.
Valuation
ROTH Capital Partners says:
“Our 12-month price target of A$0.62 is based on a DCF analysis using a 15% discount rate that is applied to all cash flows and the terminal value, which is based on a 5x multiple of our projected FY2031 operating income of about AUD1.48 billion.
“We arrive at this valuation by projecting future revenue from CHECKvacc in TNBC, HER-Vaxx in advanced HER2+ gastric cancer and PD1-Vaxx in NSCLC. Commercial success outside these financially modelled programs would serve as potential upside to our valuation.
“Factors that could impede shares of Imugene from achieving our price target include any of its three modelled immuno-oncology products failing to succeed clinically.
“Also, the FDA and foreign regulatory authorities could fail to approve Imugene's products even if their respective pivotal clinical trials succeed, in the event the agency views the results as not clinically meaningful.
“Loss of key management personnel could also impede achieving our Imugene price target, as could the significant delay of clinical progress from, for example, lasting COVID-19 headwinds.”
About Imugene Limited (ASX:IMU, OTC:IUGNF)
Imugene Limited is a clinical-stage immuno-oncology company developing a range of novel immunotherapies that seek to activate the immune system of cancer patients to treat and eradicate tumours.
The company’s platform technologies seek to harness the body’s immune system against tumours, potentially achieving a similar or greater effect than synthetically manufactured monoclonal antibody and other immunotherapies.
Its product pipeline includes multiple immunotherapy B-cell vaccine candidates and oncolytic virotherapy (CF33) aimed at treating a variety of cancers in combination with standard of care drugs and emerging immunotherapies.