Watching paint dry, by WMHBI guess you could say sitting around...

Watching paint dry, by WMHB

I guess you could say sitting around and watching as Imugene runs through their existing clinical trials is a bit like watching paint dry. A slow and tedious process as they often are, clinical trials are more often than not designed to fail, given the high bar set by not only the FDA and Big Pharma, but by the trial designers themselves. Axel Hoos, formerly of Imugene and prior to that GSK, was renowned for instigating such complex if not meaningful trials. Unfortunately many such trials are on late stage cancer patients who have failed previously on all lines of therapy administered to them. Therefore to accomplish meaningful outcomes in such trials is extremely difficult, when one takes into consideration the low levels of immunity participants present to the trial with.

That said Imugene is working their way through the at times extraneous parameters set by the FDA toward their goal of providing meaningful data in the field of cancer treatment. To date their immunotherapies have proven both safe and low in toxicity, whilst at the same time exhibiting efficacy both in B cell and oncolytic virus vaccines, where complete responses have resulted in a number of patients now. In other words some of the patients who presented with late stage cancer, I.e., lung and bile duct cancer, are now free of their disease after some years now.

So how does Imugene move from a small biotech in the race for FDA Approval into a larger successful biotech with multiple therapies for sale throughout the territories within which they have patents?

The first step is to obtain FDA Approvals for their product(s). The majority of drugs these days are obtaining approval through the FDA’s Fast Track Approval route, which exists for drugs capable of meeting a huge unmet need within a specific cancer indication, ie., pancreatic cancer. To this end Imugene is moving at a rapid clip. They are currently trialling across several indications, many of which have a poor prognosis when it comes to life expectancy. Taking a closer look at the indications currently being treated by Imugene’s immunotherapies in clinical trial across Asia, Europe and America we find blood cancers (DLBCL), breast cancer (TNBC) lung cancer (NSCLC), gastric, gastroesophagel, colorectoral (CRC), melanoma, head and neck cancer, hepatocellular, pancreatic, glioblastoma (GBM0 and bile duct cancer all in play. With such a broad array of therapies and indeed cancer indications being treated as a result, their CEO and Managing Director Leslie Chong is often heard saying the small biotech “has many shots on goal”.

The second step, aside fro obtaining FDA approval for your products, which is no mean feat I might add, is to prove your treatment is superior to the existing standard of care or prevailing treatment at the time of approval. If so registrars, medical regulators, and in turn pharmaceutical companies can start to sell and make money from the procurement of your drug by the public at large. Given there is fast approaching 2 million people worldwide being diagnosed with cancer each year, the oncology market can often be quite lucrative, particularly in indications where the number of patients diagnosed is large. As an example Diamond Equity Research explores drug sales in the HER 2 space in which Imugene’s Her Vaxx vaccine is seeking to compete.

As we glean from the table above presented in support of their 49 cent price target for Imugene (IMU - ASX), existing product sales in this market sector earn any where from over half a billion Australia dollars annually, to over ten billion Australian dollars, depending on their market penetration. The price tag for these therapies can often be found above the $200,000 Australian dollar mark, and that is per patient. Hence the dollars on offer for those successful in obtaining FDA Approval, and thereafter realising ongoing sales, is immense.

The third step in morphing into a large lucrative biotech is to ensure you have enough cash to go the distance, as it were. Imugene themselves have approximately enough cash to proceed with their existing clinical trials for somewhere between one to two years now, with close to one hundred and forty million Australian dollars on hand. Whilst they have a manufacturing facility in their armoury, they are in no position to afford the huge costs associated with manufacturing, and more importantly marketing their drugs. It goes without saying they are a drug developer, not wholesaler, or retailer. They simply do not have the marketing distribution channels nor sales force in place to assume such a role. Therefore they are resigned to the fact that if they are to transcend into the larger biotech many are wishing them to, they must either out license, sell part of their product(s), or commence joint ventures with larger more financial partners. With this in mind the company has employed financial personnel to strategically position their immunotherapies in the market place, with a view to divining a commercial arrangement that is mutually beneficial to both parties. Given such an outcome is needed to progress their exiting drugs from bench to beachside, the fact no such agreements have been realised thus far continues to weigh heavily on the prevailing company share price.

There are many other ingredients required to facilitate the aforementioned three steps from small biotech status to the large player many investors are betting on, when it comes to Imnugene (IMU - ASX). Experienced personnel, market timing, competitor moves and regulatory changes all play their role in determining which if any small players make it to higher ground in the biotech arena. Yet perhaps of equal importance is the science itself, and whether is innovative if not ground breaking enough to stand the test of time, and in doing so make a meaningful difference for those most in need. Up until now it would appear most if not all of Imugene’s treatment arms are capable of reaching such a pinnacle. However as of yet their efficacy is yet to be proven on such a scale required to fulfil step one in the transition from small to large player, as outlined above. Hence it’s back to sitting, waiting and watching as each of their clinical trials goes through the motions. Maybe I’ll go outside and watch the grass grow today, it may be a bit faster than sitting inside watching the paint dry. It may be even a bit quicker than waiting for Imugene to release the results of their existing clinical trials. But then again that isn’t entirely their fault. To succeed in the field of oncology your drugs need not only to prove efficacious in the treatment of an unmet need, and thereafter superior to the existing standard of care, they require peer review. In other words they must pass muster when it comes to the reputed scientific minds within their field. And that to takes time. Man, I’m going to be sitting here all day…

DYOR Seek investment advice as and when required Opinions only