I’d been meaning to go back and check out what’s happening over at the clinical stage immuno-oncology small cap Imugene (ASX:IMU), it’s been on my to do list ever since some consequential late breaking news at the end of a sombre September continues to make zero impact on life, the universe or anyone.

Run by MD Leslie Chong, Imugene – for the uninitiated – has been developing a portfolio of innovative new treatments for that spectacular global growth market called cancer.

Imugene’s main medicinal trick lies within a let’s-kill-cancer field which is more of a melange of the traditional, less invasive but concurrently madly cutting edge field of treating catalysts which can supercharge the immune system of cancer patients to identify and eradicate cancerous tumours.

Chong has been gunning for that outcome for about 25 years gathering oncology and knowledge especially Phase 1-3 of clinical stage drug development, including leadership roles in two marketed oncology products.

Leslie was also the Senior Clinical Program Lead at Genentech Inc, one of the world’s more successful biotech giants, with a leading oncology franchise, featuring previous best-selling hits like the breast cancer drug Herceptin.


The end of September, the start of cell therapy

On the 28th of last month, IMU notified the ASX that the biotech kingmakers at the US Food and Drug Administration (FDA) had transferred an investigational new drug (IND) application for (it’s a mouthful) allogeneic CD19 CAR T Azer-cel (azercabtagene zapreleucel) from the NASDAQ-listed Precision Biosciences Inc to Imugene.

The official FDA handover follows Imugene’s acquisition of a global license for the drug, confirmed back in August as part of IMU’s exclusive deal with Precision Inc.

Leslie says the transfer of the IND application allows IMU to kick-off a clinical study next year for patients with third and fourth line diffuse large B cell lymphoma and other blood cancer indications.

Imugene has licensed Precision’s cell therapy CAR T drug Azer-cel for use in the treatment of certain blood cancers. Azer-cel has ‘demonstrated clinically meaningful activity with an acceptable safety profile’, including promising results in DLBCL patients who relapsed following CAR T.

IMU also plans to combine the drug with its existing onCAR19 therapies to treat solid cancerous tumours.

Diffuse Large B Cell lymphoma (DLBCL) is a group of blood cancers which changes certain blood cells in the body called B-cell lymphocytes (B-cells). It usually starts when B-cells in your lymph nodes (glands) and lymphatic system become cancerous. These are usually all part of the body’s immune system which fight infection and disease.

And there’s a lot of them, and there’s a lot of people with them. In fact there’s more than 80 different sub-types of lymphoma and combined they are the sixth most common cancer across all age groups in Australia.

IMU: The unnoticed milestone

“We are actively progressing an ongoing multi-centre Phase 1b study of Azer-cel as we prepare for the start of a potential Phase 2 registrational study at the earliest opportunity,” Leslie told Stockhead. “And we expect the US government’s online clinical trials database will soon be updated to reflect Imugene being the sponsor.”

In August, Chong led the move to acquire a worldwide exclusive licence for Precision Biosciences’ off-the-shelf cell therapy – Azer-cel –  which Chong says is a treatment specifically designed to inject healthy, “supercharged” cells into a patient, before setting them loose to try and track down and kill cancer.

“Azer-cel has the potential to be the first CD19 directed allogeneic cell therapy and having the FDA support on the manufacturing process that can be used for the pivotal trial is an extremely important milestone for Imugene as it improves the overall robustness and scalability of the product,” Chong syas.

“The latest cohort data is… exceptionally promising.”

While management says it had shored up its $35 million placement through strong interest and support from Australian and international investors, including specialist biotech institutional investors, it’s also set about a share purchase plan (SPP) aimed at raising about a further $30 million.

Confidence at the top

How confident is Chong in the move? Well, she recently snapped up a further quarter of a million worth of IMU stock, (paying around $0.079 a pop), boosting the MD’s holding by 3.8%.

Azer-cel already comes with an extensive data package with more than 84 patients treated with safety, compelling efficacy and durability – 41% complete responses in non-Hodgkin Lymphoma (NHL) & 61% complete responses in CAR T relapse patients.

The US market alone sees circa 30,000 diagnoses every year and survival rates are poor, creating a US$2.5b market potential, encouraging FDA guidance and feedback on manufacturing.

Leslie says Azer-cel is highly complementary to Imugene’s existing onCARlytics platform, enabling Imugene to progress its own combination solution in solid tumour indications.

In acquiring the asset from Precision Biosciences, Imugene also acquired a fully GMP compliant manufacturing facility in Durham, North Carolina as well as the highly specialised workforce based out of the facility.

As part of the transaction, Imugene paid $31.3m up front for the asset ($19.4m of which is deferred and can be in cash or equity).

As development of the asset progresses toward commercialisation, Imugene would pay further milestone and royalty payments at industry standard rates.

With Azer-cel added, Imugene now has a portfolio of four unique platforms to maximise its opportunities in a range of cancer types.

“Azer-cel, with its proven safety and efficacy profile, holds immense potential in the treatment of blood cancers. Additionally, there is the opportunity to combine Azer-cel with our existing onCAR19 therapy for the treatment of solid tumours. This marks an important step in our mission to combat a broader spectrum of cancers,” Chong says.

Financially, these are the best and worst of times, she added.

“Our balance sheet is one of the strongest in the local industry with ~$186 million in the bank, but at the same time our share price has been slammed and is now at its lowest point in several years.

“This is despite Imugene being in good shape with a diversified technology portfolio, five FDA INDs (the global gold standard for running human clinical trials) for Imugene and another with City of Hope, five clinical trials recruiting across the US and Australia, one soon to begin, and another investigator sponsored trial with City of Hope, as well as a highly qualified senior management team.

“There are few ASX biotechs with such strength and depth,” she adds.

On the share price front, the average 12-month price target for IMU has been revised to 0.05 cents share, an increase of 5.8% from prior estimate of 0.47 cents at the start of August, according to an average of analyst targets.

The latest targets range from a low of 0.21 to a high of 0.75/share. The average price target represents an increase of 652.17% from the latest reported closing price of 0.07/share.


Bell Potter: IMU Speculative Buy (Price Target 0.10c)

“Assuming the results of the upcoming phase 1b for Azer-cel meets expectation, we expect the asset would be worth multiples of the recent acquisition price,” Bell Potter’s John Hester said in a recent note.

Azer-cel has demonstrated clinically meaningful activity with an acceptable safety profile, including promising results in DLBCL patients who relapsed following CAR T.

“The major short term catalyst is the readout from the phase 1 MAST study investigating CF33 in the treatment of solid tumours both as monotherapy and in various combinations with pembrolizumab.”

“At EV of just $176m with 9 clinical trials under way and well funded balance sheet, IMU appears deep value. The company is well funded with at least 2 years cash runway on hand inclusive of all requirements for disbursements to Precision Bioscience.”

While recent share price falls leads Bell Potter to halve its target for Imugene to 10c, but the Speculative Buy rating is maintained given positives relating to its developmental allogeneic CD19 CAR-T Azer-cel.

However, an in-license transaction for Azer-cel may require up to US$29m/$46m in cash within 12-15 months.

While Imugene holds the option to settle all but the US$8m upfront component in scrip, the broker feels this is the least preferable option particularly at the current market price. Just under 20% of around 60,000 patients affected by diffuse Large B Cell Lymphoma (DLBCL) are potential candidates for Azer-cel, Bell Potter suggests.