Imugene Ltd (ASX:IMU, OTC:IUGNF)’s recent clinical activities – including brokering partnerships and securing patents – along with a well-funded cash position, have prompted Roth Capital Partners to place a 'buy' recommendation on the clinical-stage oncology company.
The company started the year with A$118.4 million, enough to fund operations for almost four years, and an “enviable cash runway”. It has also accomplished a great deal in the clinical space over the eight months to the first half of this financial year.
Price target maintained
“Our 12-month price target of A$0.71 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 6x multiple of our projected FY2031 operating income of about A$1.47 billion,” said the Roth Capital Partners report.
“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."
Partnership with Eureka Therapeutics
IMU has partnered with Eureka Therapeutics to combine its onCARlytics oncolytic virus with Eureka's Artemis anti-CD19 T cell therapy in an effort to treat solid tumours.
Thus far, cellular therapy has had limited success in treating solid tumours compared to blood-borne cancers, and the preclinical collaboration will combine the two companies’ complementary oncology therapies to progress a therapy to tackle solid tumours.
IMU's onCARlytics oncolytic virus specifically targets and infects tumour cells, forcing expression of CD19 on the surface of tumour cells and allowing Eureka's anti-CD19 Artemis autologous T cell therapy to recognise CD19 and kill the cell.
Agreement with Merck and Pfizer
IMU signed a clinical trial supply agreement with Merck KGaA and Pfizer to evaluate IMU's B cell immunotherapy HER-Vaxx in combination with anti-PD-L1 immune checkpoint inhibitor BAVENCIO and standard chemotherapy in HER2+ gastric or gastroesophageal junction adenocarcinomas.
Merck KGaA and Pfizer will supply free BAVENCIO to IMU and could potentially take a greater interest in HER-Vaxx if the trial results demonstrate a clear HER-Vaxx benefit.
FDA clearance for new drugs
The FDA has cleared two of the company’s investigational new drugs (INDs) for clinical trials.
The first candidate to be put through its paces in a Phase 1 trial is oncolytic virotherapy candidate VAXINIA, given intratumorally or intravenously as monotherapy or combined with pembrolizumab in adult metastatic or advanced solid tumours.
In addition, a Phase 2 trial will investigate immunotherapy candidate HER-Vaxx in combination with chemotherapy or pembrolizumab in metastatic HER2/neu over-expressing gastric or gastroesophageal junction (GEJ) adenocarcinoma that has progressed after trastuzumab treatment.
The results of these trials will be an important marker of success for the company.
Dose escalation trials
IMU successfully completed a Phase 1a monotherapy dose escalation trial evaluating PD1-Vaxx, establishing initial clinical proof-of-concept.
The trial evaluated PD1-Vaxx doses of 10, 50, and 100µg in non-small cell lung cancer (NSCLC) patients who had progressed on at least one ICI, and the highest dose will be selected for Phase 1b.
Cohort Review Committee review of the results led to the committee's recommendation for IMU to proceed to Phase 1b to evaluate combination therapy with PD1-Vaxx and Tecentriq in treatment naïve and treatment experienced NSCLC.
Clinical supply agreement with Roche
Also in January of this year, IMU established a new clinical trial supply agreement with Roche (RHHBYNC) to evaluate IMU's PD1-Vaxx in NSCLC in combination with anti-PD-L1 monoclonal antibody Tecentriq in an open label, multi-centre, dose escalation/expansion Phase 1b trial.
“We believe that it is advantageous to treat with a therapy, like PD1-Vaxx, that itself has a highly favourable safety profile and elicits the production of relatively safe, endogenous polyclonal antibodies, in addition to a monoclonal antibody therapy like Tecentriq,” the report said.
“The safety inherent in IMU's use of antigens as therapeutics can be seen in the selection of the highest doses for further evaluation.
“Antibodies to PD-1 were detected in response to PD1- Vaxx therapy, and although not much in the way of clinical efficacy specifics was released, one patient has been followed for more than 12 months during which their tumour burden became undetectable, and this patient was further characterised as a CR during IMU's recent Science Series presentation.”
Patents granted
IMU also had success in securing two patents, European and Japanese, for HER-Vaxx and oncolytic virotherapy CF33 respectively.
The patents cover their respective method of composition and method of use, to the year 2036 for HER-Vaxx in Europe, and to 2037 for CF33 in Japan.
Risk factors
Roth Capital Partners outlined factors that could impede shares of Imugene from achieving its price target, including 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,” the report went on to say.
“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.”