Immuron (ASX : IMC) is one of those Long Tail companies that has become such an entrenched part of the fantasy and delusion of ASX biotech that it would be hardly worth a mention, were it not for recent events.
At some stage I will write a longer piece as to why IMC’s technology is a superb but fundamentally flawed idea, but the basic synopsis is as follows. IMC uses bovine vaccination and colostrum collection (that’s the particularly rich mother’s milk that is immediately expressed when calves are born, to confer passive immunity) to produce a milk-based product that contains large amounts of antibodies against whatever the cow was vaccinated against. When those antibodies are “consumed” by us, that vaccination effect is theoretically transferred to us. Pretty simple concept really – and a very real biological concept. For example, when babies take mother’s milk, all kinds of immunity is passed on (antibodies, immune cells, different sorts of signaling proteins, etc.).
The fundamental flaw with IMC’s technology is that for most of the very serious diseases that it wants to protect us against using this approach, we probably need IgG-type antibodies to direct our immune system. Most of the immunity that is able to be conferred through the consumption of a colostrum product are IgA or “mucosal” antibodies that are designed by nature to be able to survive in the harsh conditions of our stomach/digestive tract (IgGs generally don’t survive oral administration unless heroic formulation/drug delivery used). Therefore although it is possible to confer a limited immunity to certain pathogens in this way, most applications of this technology that IMC has in mind have a very minuscule probability of success. Moreover, IMC processes its colostrum into a powder form that is turned into a tablet. That’s a pretty high processing bar for packaging an antibody drug, for oral consumption no less.
My summary take on this company’s biotechnology is cool idea (but then I am a sucker for agricultural biotechnology), could work in certain instances (the C. difficile partnership with Monash has me curious), unlikely to work in most instances … and mostly just a gimmick. IMC is a company that also has a generally poor reputation for corporate governance, something that I think is reasonably reflected in its director/executive turnover the past few years. Frankly, if I may be honest, I also take (as a default position) a skeptical view of any company that Roger Aston is involved with because I can’t point to a single enterprise in his portfolio that I would personally put my money into.
Of course, others would argue that I am missing out on great opportunities with Regeneus, Cynata and Immuron. Hmmmm. I guess we will just have to agree to disagree.
The company has had a fair amount of leadership turn-over and a leadership structure that is “unusual” to say the least. For such a small company, a “VP of Innovation” (Dan Peres) was sort of an unique appointment, especially if the goal of the company is to seriously push forth on an OTC consumer product and simultaneously run a serious and “big boy” Phase II study in NASH. I must confess my curiosity was already piqued when on the 2nd of July, the company gave a progress update on the NASH recruitment where the glowing soundbite was provided by the “VP of Innovation” and not the CEO. A clinical trial that is possibly running behind schedule (recruiting slowly) is not a minor issue, and certainly a matter that is worthy of a little communication gravitas from the CEO of the company. Perhaps then in perspective, recent events are not so strange.
Back in April, the company announced the appointment of Dr. Leearne Hinch as CEO. I have never met or spoken to Dr. Hinch but by all accounts from several respected colleagues, she is a solid citizen. Dr. Hinch has a good track record of working with growth-stage companies, and her combination of human and veterinary medicine background would seem to be an unusually good fit for what Immuron is doing. A mere 3 months after joining Immuron, Dr. Hinch has resigned from a company that has had, as I have said, a fair amount of leadership turnover.
If Immuron really does have a technology proposition that is investment-worthy, then it seems to me that other than the customary CEO responsibilities, there would have been two major focus areas for Dr. Hinch. The first would have been to build an OTC franchise for the Travalan diarrhea product. That doesn’t immediately seem like a strong fit for Dr. Hinch’s background, but driving a consumer healthcare product is also mostly about building a distribution network and investing heavily in marketing. Indeed, if leading a global consumer healthcare marketing program was Dr. Hinch’s main objective, then the company is woefully undercapitalised to perform that task anyhow (and with sales from the most recent annual report suggestive of ~$1m, that’s a pretty big market yet to be created). In any event, I don’t believe that a company that wants to develop a sophisticated pipeline of products sends the CEO out as S&M fodder – you hire people for that.
Perhaps less “VP of Innovation” (spin?) and maybe more a VP of Sales and Marketing?
Just an idea…
The second major area of responsibility that Dr. Hinch would have had, would have been the NASH program. It is my opinion, based on her experience and qualifications, that this would have been a responsibility well within her capabilities. As I have previously commented, NASH is a increasingly important therapeutic arena with a lot of momentum at present. None of IMC’s other clinical programs really, frankly, excite me. IMM124-E, if it works, is going to be the place where the company would want to focus its (very limited) financial and leadership resources. If IMM124-E works, notwithstanding that the NASH space is extremely congested at the moment, it could be a very disruptive product strategy and, if it works, isn’t the kind of game-changing program that a CEO walks away from after just 3 months.
My personal opinion is that there is no real evidence that IMM124-E works. Not even the early clinical data was all that compelling or robust, it was just merely interesting. This is a company that pushed forward on hyperimmune colostrum product for diarrhea when it probably doesn’t perform better than “ordinary” colostrum, and it has a bit of a patchy clinical development track record (Travelan for Hep C, are you serious?). Don’t get me wrong, the idea behind the company is truly beautiful but the science is fundamentally flawed and there is no place anymore for ASX-listed biotech companies that trade on a mere “good idea” because the average punter with an eTrade account can understand the principle of passive immunity. However when a CEO resigns after 3 months in the job, a decision that must have been incredibility difficult given that it could be perceived by some (but not me) as suggestive of personal shortfalls, this is a true warning sign.
My speculation is this. Dr. Hinch found out that cow antibodies aren’t going to protect us from NASH. Just the same way as unlimited MSC stem cells from a single donor isn’t a panacea, or blitzing a patient’s melanoma and injecting it back into them doesn’t cure cancer.
Get my drift?
In fact the only thing that Dr. Hinch might be criticised for, is a lack of due diligence when considering the job. But given that there aren’t a whole of biotech/biopharma CEO positions open in Australia at any given moment, she can probably be forgiven for that too.