Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.
Is there a cure for cancer? A question that instantly makes the scientific world wonder. However, creating a viable solution to cancer is difficult to prove. Because biotechnological and medical companies need proven data to illustrate how their vaccine/drug eradicates cancer.
Today we are discussing whether Imugene Ltd has investment potential. Imugene is an Australian biotechnological company that specialises in developing a range of Immuno oncology therapies. What is this area of medicine about? Immuno oncology therapy is where your body activities your immune system to target and eradicate cancer cells/tumours.
Imugene’s product pipeline includes CF33, PD1-Vaxx, B-Vaxx, and HER-Vaxxx.
CF33 is a type of an oncolytic virus. CF33 is genetically modified to replicate throughout the body, search only for and eradicate cancer cells.
Cancer cells can hide from your immune system through PDL1. PDL1 signals to the immune system not to break down cancer. PD1 Vaxx producers PD1 Vaxx antibodies in your immune system, which disallow cancer cells from telling your body not to attack.
HER2 B-cell Vaccines
Imugene focuses on preventing breast and gastric Cancer through HER-Vaxx and B-Vaxx.
HER-Vaxx produces antibodies in the patient’s immune system that eliminate cancer cells. Part 1 of the process involves the transition of the patient’s B cells into HER-Vaxx antibodies. Part 2 of the process involves the HER-Vaxx antibodies attaching to HER2 receptors. HER2 receptors encourage the spread of cancer. However, once the HER-Vaxx antibody attaches, the cancer cell cannot spread and is eventually broken down.
Key Price sensitive movements
IMU surged by 200% from 0.02 cents – 0.06 cents 6th – 18th November. IMU’s stock increased due to an accumulation of key ASX announcements.
Key stock movement 1: Phase 1b HER-Vaxx trial data produces positive results – 8th July
Imugene announced that their HER-Vaxx vaccine produced gastric Cancer-fighting antibodies and positive response rates in three patients. Moreover, one patient receiving optimal dosage saw an 80% reduction in Tumour size. The HER-Vaxx data was presented at the European Society of Medical Oncology (ESMO) World Congress. In turn, the early data success proved of interest to the international oncology community. Instantly gaining traction from investors.
Key Stock movement 2: Imugene presents further comprehensive data on HER-Vaxx Phase 1b Study to ESMO – 1st October
Imugene showed to ESMO that HER-Vaxx resulted in a 100% objective response rate in three patients. Moreover, 5 out of 11 patients experienced tumour reduction because of effective HER2 antibodies. In turn, Imugene created a positive international presence. Which illustrated to the investment community the effectiveness and thus market opportunity of HER-Vaxx.
HER/B Vaxx & PD1 Vaxx
Key Stock Movement 1: Imugenes presents data on how PD1-Vaxx combined with HER/B-Vaxx successfully fights cancer growth – 1st October
Imugene presented to ESMO how, when combining the IMU’s HER2 Vaccines with PD1 Vaccines reduced cancer growth. Also, the vaccine combination was safe and did not exhibit toxicity. Thus, demonstrating how a combination of the vaccines is more effective than applying them in isolation. Consequently, the presentation boosted Imugenes profile in the medical community and clinical value to investors.
Key stock movement 1: Imugene acquires promising oncolytic virus CF33 – 15th July
Imugene announced its acquisition of both Vaxina Ltd and exclusive licenses to oncolytic virus technology CF33. The City of Hope, a world-renowned US independent research and treatment centre for cancer, developed CF33.
Key stock movement 2: Update of preliminary Clinical Development plan for CF33
CF33 has two different constructs. First is an armed construct, CheckVacc, with an immune checkpoint inhibitor. Whereas Vaxinia is an unarmed construct. Moreover, pre-clinical studies of CF33 conducted by Professor Fong have shown encouraging results in triple-negative breast cancer.
Fundamental financial negatives
Imugene holds significant upside potential in the biotechnological/pharmaceutical market. However, here at YIG, we like to provide young investors with a balanced perspective. So, let us examine the financial risks (negatives) of IMU.
Despite the positive stock movements above, there are areas of financial concern.
First is IMU’s increase in operational expenses from 5.78 million (June 2018) to 12.39 million (June 2019). Consequently, negative cash flow has increased as a result of the climb in operating expenses. Negative Cash flow has increased by 75.3% in the past year, sitting at -7.91 million (June 2019). The sharp increase in negative cash flow has shortened the time frame at which Imugene would run out of money.
Furthermore, despite the 124% increase in revenue (June 2018-2019), IMU is still unprofitable. Moreover, revenue is expected to decline to 3.28 million throughout the first half of 2020. The lack of profitability should instantly send alarm bells inside the smart investor.
Where to from now for investors
IMU is spending cash to further the development of all their vaccines. The clinical data for 2019 is promising. Moreover, HER-Vaxx (Phase 2 clinical trials), PD1 Vaxx (Phase 1 trials) and CF33 CheckVaxx (Phase 1 trials) are all set for 2020. Meaning that investors should not be discouraged by the negative cash flow if the 2020 trials produce successful results. Also, insiders are buying more shares than selling. Indicating a positive projection of IMU’s growth.
Furthermore, IMU received a 4.13 million R&D tax refund from the Australian government. In addition to the $564,173 US department defence grant. In turn, allowing IMU to support their clinical and commercial milestones.
Lastly, Imugene’s vaccine range is a result of over 12 years of research from the Medical University of Vienna. Further adding credibility to their vaccines, which could radically eliminate breast and gastric Cancer.
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The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Patrick McLoughlin, Associate of YIG