A research note by Pitt Street Research on Immuron Ltd (NASDAQ:IMRN, ASX:IMC), an Australian biotech developing and commercialising assets to treat gastrointestinal disorders, says the company is "trading at a substantial discount" to its valuation of A$0.25-0.34 per share.
Immuron, which is currently trading at around A$0.11, has two flagship commercial products, Travelan and Protectyn, and three clinical-stage assets, IMM-529, IMM-124E and CampETEC.
PItt Street noted that FY24 had been a successful year for the company, both in respect of its commercial and clinical assets.
New record sales
During the full financial year to June 30, Immuron had record sales as it commercialised Travelan as a dietary supplement in the USA.
Globally, sales reached $4.9 million over the year, up 174% on the prior period. Of this, $3.7 million of FY24 sales came from Australia, which was up 223%, and $1.1 million was from America, up 74%. Global fourth-quarter sales came in at $1.3 million, up 253% on a year earlier.
Immuron expects sales growth to continue into FY25 on the back of increased brand investment and distribution planned for the 12 months ahead.
Continuing clinical endeavours
Immuron is now pursuing regulatory approval for IMM-124E as a preventative supplement for travellers’ diarrhoea. It is expected to enter Phase 3 trials in 2025 following successful interim Phase 2 results. Those results led the company to meet with the FDA for a Phase 3 trial.
Pitt Street says investors should also expect progress with IMM-529 in FY25 and FY26, as the company has filed a preIND (investigational new drug) application with the FDA.
Valuation range of A$0.25-0.34
PIt Street Research has maintained its valuation of Immuron as first outlined in its initiation report, of A$0.25 per share in a base case scenario and A$0.34 per share in an optimistic (bull) case scenario.
There are several upcoming catalysts including ever-growing Travelan sales, the full dataset from the IMM124E trial and initiation of Phase 3. Advancing IMM-529 and CampETEC in the clinic are opportunities too.
Key reasons to consider investing
Pitt Street Research outlines six key reasons for investors to take a look at Immuron:
Immuron offers stability and growth potential
Immuron presents a unique opportunity given its mix of commercialised products alongside multiple clinical-stage assets. Notably, the existing compound in Travelan, IMM-124E, is undergoing a clinical trial in the US to obtain approval for preventing traveller’s diarrhoea (it is approved as a general dietary supplement in the US), despite already having this approval in Australia and Canada.
This strategic move could significantly enhance Travelan's market presence in the US.
Record-breaking sales growth
Travelan's sales have consistently grown, reaching nearly A$5 million globally in FY24.
This growth represents a 174% year-on-year increase in global sales and a 223% rise in Australia.
Strategic partnerships and distribution channels
Immuron boasts formidable partnerships, including collaborations with the US Department of Defense, leading to two ongoing clinical trials. Its distribution network spans over 3,500 pharmacies in Australia, the US’s largest travel health clinic network, Passport Health and major online platforms like Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT).com.
Substantial market potential
The US market for Travelan is estimated at US$83 million, with an additional US$50 million potential in the EU. Independent data from Lumanity projects IMM-124E and IMM-529 could each achieve approximately US$100 million in annual US sales.
Strong financial position
With more than A$15 million in the bank as of 1HY24, Immuron has effectively funded its clinical projects through grants, including the US military-funded IMM-124E trials.
Undervalued stock with growth prospects
Currently valued at A$0.25-$0.34 per share, the group views Immuron as being poised for revaluation as it progresses its clinical programs and expands Travelan sales.
Advancing IMM-124E to Phase 3 within the next 12 months could elevate Immuron among ASX biotechs with Phase III assets, further enhancing its market position.