Imugene Ltd (ASX:IMU, OTC:IUGNF) has received a ‘buy valuation’ from Roth Capital Partners with a share price target of 71 cents per share as it advances its immune-oncology pipeline.
The analyst’s 12-month price target is based on a discounted cash flow (DCF) analysis using a 15% discount rate that is applied to all cash flows and the terminal value.
Notably, this is based on a 6x multiple of projected FY2031 operating income of about A$1.47 billion.
Roth arrived at this valuation by projecting future revenue from Imugene’s novel immunotherapies in the pipeline including CHECKvacc in TNBC, HER-Vaxx in advanced HER2+ gastric cancer and PD1-Vaxx in NSCLC.
The following are excerpts from Roth Capital Partners coverage of Imugene:
IMU: First Phase 1 advanced solid tumour patient dosed with CF33-hNIS VAXINIA
IMU dosed the first Phase 1 patient in its CF33-hNIS VAXINIA trial, which is enrolling patients with advanced solid tumours. CF33-hNIS-VAXINIA will either be injected intratumorally or intravenously, to determine if direct tumour injection is necessary.
Once the lowest CF33-hNIS-VAXINIA doses are shown to be safe, a portion of the future patients will receive the therapy in combination with pembrolizumab.
About 10 trial sites will enroll around 100 patients, and the trial should require about 24 months to complete.
- IMU and City of Hope dosed the first Phase 1 patient in its CF33-hNIS VAXINIA trial, which is enrolling patients with advanced solid tumours. Preclinically, the therapy was shown to shrink colon, lung, breast, ovarian and pancreatic cancer tumours in in vitro and in vivo models. CF33-hNISVAXINIA most likely exerts its effect by stimulating the immune system to both kill cancer cells and be more responsive to co-administered immunotherapies such as checkpoint inhibitors. Checkpoint inhibitors are highly effective in a minority of patients, and adding an oncolytic virus has the potential to render immunologically cold tumours hot by producing large amounts of foreign viral material at the tumour site due to CF33- hNIS-VAXINIA's ability to selectively replicate in tumour cells. Oncolytic virus therapy can even increase the level of PD-L1 in tumours, thereby increasing the effectiveness of anti-PD-L1 therapy.
- The U.S. and Australian multi-centre Phase 1 trial will first administer a low dose of oncolytic virus metastatic or advanced solid tumour patients who are rel/ref to at least two prior lines of standard of care treatment. CF33-hNISVAXINIA will either be injected intratumorally or intravenously, to determine if direct tumour injection is necessary. Once the lowest CF33-hNIS-VAXINIA doses are shown to be safe, a portion of the future patients will receive the therapy in combination with pembrolizumab. We expect about 100 patients to be enrolled at about 10 trial sites, and we anticipate the trial to require about 24 months to complete.
Valuation
Our 12-month price target of AU$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 AUD1.47 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.
Risks
- Clinical risk: Imugene’s clinical staged products could fail to deliver statistically significant results in latestage clinical trials, substantially reducing the value of Imugene’s product candidates and therefore our 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 our 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.