Imugene Ltd (ASX:IMU, OTC:IUGNF) has received a valuation of A$2.98 billion or A$0.48 per share in initial coverage by Diamond Equity Research.
The analyst believes that the company has strong fundamentals given the soundness of science exhibited through optimistic early-stage clinical results, a large total addressable
market and a management team with extensive experience in cancer therapies.
With its five pipeline candidates, Imugene is targeting multiple solid tumour types with low survival rates and a lack of efficacious and safe treatment options.
The company's shares are currently trading at A$0.19 with a market cap of A$1.2 billion.
Following are the excerpts from Diamond Equity’s initiation report:
Diversified Pipeline with Multiple Candidates in Clinical Trials - In the past few years, the company has licensed multiple technologies, creating a diversified pipeline of five therapeutic products, four of which are in clinical trials. HER-Vaxx and PD-1 Vaxx have demonstrated robust safety and efficacy in the early stages of clinical trials.
The ability of these underlying cancer vaccines to elicit active immunisation at lower cost and dosage, and potentially deliver improved efficacy creates a more effective treatment modality than certain passive forms of immunotherapies such as monoclonal antibodies (mAbs).
The company’s oncolytic virus CF33, designed to infect, kill and replicate, has also shown effective cancer-killing phenomenon in a range of cancer cell lines.
Both CHECKvacc (CF33-hNIS-antiPD- L1) and VAXINIA (CF33-hNIS) are currently being evaluated in phase 1 clinical trials.
Leveraging the transgene delivery potential of OV, the company’s fifth clinical candidate has the potential to supplement CD19-directed CAR-T therapy’s ability to treat solid tumours.
Imugene has adopted a basket approach, creating a diversified pipeline of multiple promising drug candidates, each of which has its own compelling medical and market case.
Niche Therapeutic Candidates with Long Patent Life - Instead of focusing on the much more crowded space of immunotherapies such as mAbs, Immune Checkpoint Inhibitors, and CAR-T cell therapy, Imugene is targeting the niche therapeutics segment of cancer vaccines and oncolytic virus therapy that tend to exert lower side effects in cancer patients than other systemic therapies.
Additionally, all of its five pipeline candidates have long patent lives, with expiry for its lead candidate HER-Vaxx in 2036 and for others starting in 2037.
Large Total Addressable Market - With its five pipeline candidates, Imugene is targeting multiple solid tumour types with low survival rates and a lack of efficacious and safe treatment options.
The targeted solid tumour types (HER2+ gastric cancer, NSCLC, TNBC, among others) represent an addressable market of over half a million patients globally and a multi-billion-dollar market.
Valuation - Imugene is well-capitalised with a cash reserve amounting to approximately A$175 million as of June 30, 2022, inclusive of recent institutional placement.
The company’s sound financial position reduces the financing and dilution risk over the short to medium term.
We believe the company has strong fundamentals given the soundness of science exhibited through optimistic early-stage clinical results, a large total addressable market, and a management team with extensive experience in cancer therapies.
Our valuation methodology is based on risk-adjusted DCF using a discount rate of 10.7%.
We have forecasted revenue for four therapies currently in clinical trials and applied a probability of success factor based on their progress through the clinical trial.
Our valuation methodology yielded a value of A$2.98 billion or A$0.48 per share, contingent on successful execution by the company.