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Imugene has a high likelihood of clinical success: Roth Capital Partners

Imugene's oncolytic viruses are designed to infect, replicate in, and kill cancer cells, leaving healthy cells essentially unharmed.

Imugene Ltd - Imugene has a high likelihood of clinical success: Roth Capital Partners
Roth Capital has a 12-month price target of 13 cents for Imugene

Imugene Limited (ASX:IMU) (OTCMKTS:IUGNF) is a clinical-stage immuno-oncology company engaged in discovering, developing, and ultimately commercialising novel oncolytic viruses and B cell immunotherapies for unmet needs.

The company’s unique platform intends to redirect a patient’s immune system to kill their own tumours.

Imugene’s therapeutic candidates are oncolytic viruses that directly kill cancer cells (VAXinia), oncolytic viruses that also supply the gene for a potent immunotherapy (CHECKvacc), and B cell immunotherapies that either supply antigens to generate direct antitumor polyclonal antibodies (HER-Vaxx) or polyclonal antibodies for checkpoint inhibition (PD1-Vaxx).

California-based investment bank Roth Capital Partners has initiated coverage of Imugene with a Buy rating and a 12-month price target of 13 cents (current share price: 5.4 cents).

The following is an extract from Roth Capital’s research report:

Imugene is a clinical stage immuno-oncology company developing several novel immunotherapies that either directly lyse tumor cells or activate the immune system to produce cancer fighting polyclonal antibodies. Imugene's Phase 1 ready oncolytic virus candidates (VAXinia and CHECKvacc), and leading B cell immunotherapy candidates (Phase 2 HER-Vaxx and Phase 1 PD1-Vaxx) are aimed at treating multiple solid tumor types, most likely in combination with approved drugs. We look forward to several clinical efficacy releases starting in calendar 2H21.

  • We are initiating coverage of Imugene with a Buy rating and a 12-month price target of AUD0.13, which is based on a DCF analysis using a 35% 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 AUD1.6 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, products that we project will generate about AUD1.7 billion in global royalty revenue to Imugene in FY2031. We believe that Imugene has prudently selected areas of unmet need, and therefore ultimately market demand, with a high likelihood of clinical success.
  • Imugene's oncolytic viruses are designed to infect, replicate in, and kill cancer cells, leaving healthy cells essentially unharmed, having undergone accelerated evolution in vitro until their cancer cell killing was sufficiently optimized, and they have proven effective at killing a broad range of tumor cell lines, including all members of the NCI-60 cell line panel. The viruses are highly potent, potentially allowing for far lower dosing than other clinical stage oncolytic viruses, and therefore more favorable safety and lower COGS. CHECKvacc differs from VAXinia in that CHECKvacc includes the inserted transgene for an anti-PD-L1 mAb. Many competitors are combining viral therapies with checkpoint inhibitors to increase the immunogenicity of immunologically cold tumors, the goal being to increase the percentage of patients currently benefiting from durable responses to this blockbuster class of drugs. We see four pillars of differentiation with these viruses: potency once inside a cancer cell, strong cancer cell tropism, the potential for intravenous use, and durable patent life.
  • Active immunization with B cell immunotherapy has the potential to offer patients a safer, lower cost, more conveniently dosed, and potentially more effective treatment modality than the passive immunity gained from infusion of specific mAbs against disease antigens. We believe that eliciting production of polyclonal antibodies that are 100% self can circumvent certain toxicities observed after intravenous infusion of hundreds of milligrams of a given mAb. We believe that if a tumor can respond to passive immunity directed against a single epitope, then it should respond to active immunity against several epitopes.

Quick facts: Imugene Ltd

Price: 0.11 AUD

ASX:IMU
Market: ASX
Market Cap: $505.39 m
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