Following last week’s ASX trading halt request, I have been waiting for the announcement regarding Imugene’s (ASX : IMU) financing. The news came at market open this morning, specifically that the company had placed $3m through the “usual suspects”. Combined with the end-year disclosure, this means the company has about $5m in the bank +/- 10% with a tax credit due at some stage next year. I note that even a teeny company like this manages to pull off a $500k tax incentive (in reference to a prior post on tax credits).
Personally, I am pretty disappointed by this fundraising. $3m bucks doesn’t really move the needle. This company, if it is to be successful, needs $25-$30m to really do a proper job and evaluate the potential of the technology. The company is also currently CEO-less, which means that it is going to be tough for Paul Hopper to bring in new talent at this level of capitalisation. The appointment of ex-Genentech scientist Leslie Chong (terrific lady) is a positive move for the company, but it is still very light-on in human capital in terms of execution. As much as I like and respect Paul, he isn’t going to be rolling his sleeves up to run a drug development program, and neither is Axel Hoos, who has a full-time job at GSK.
When I first started looking at this company I was immensely skeptical, for two reasons. Firstly, peptide vaccines haven’t had, on the whole, a particularly stellar track record. Secondly, it’s not abundantly clear that there is a strong market opportunity for a new Her-2 targeting drug in the oncology space, either for breast or gastric cancer. In order for Imugene’s technology to really have a shot at displacing any of Herceptin’s market dominance (or the Roche Her-2 franchise more generally), it needs to do the kind of monster clinical trials that Roche did for Kadcyla and, frankly, the result of the triple-arm MARIANNE study that was announced last year illustrates just how treacherously difficult and expensive this can be. There is no doubt that given the results of combo pertuzumab/trastuzumab trial (the CLEOPATRA study) in Her-2 positive metastatic breast cancer, if the Imugene technology works, it will be worth comparing the polyclonal response to existing Her-2 combo monocolonal antibody therapeutics.
But that certainly isn’t going to happen with $3m.
As for Imugene’s stated goal of an orphan drug approval from the FDA, I say “who cares”? For some very rare genetic condition it might be a big deal but there are already so many existing gastric cancer orphan programs. Orphan designation is mostly just going to be a waste of effort and result in nothing more than a lot of hot air. In fact, I would argue that shooting for clinical data to (robustly) support an orphan indication is only going to add cost through a patient selection strategy that probably isn’t going to result in a payoff for the company anytime in the near future. It’s just hype for HotCopper punters, little more than high-quality manufactured news flow.
I have spent a lot of time looking at this technology, reading Ursula Weidermann’s papers and spent a couple of pleasant hours talking to Axel Hoos a few weeks back (very sharp guy). The pre-clinical data is interesting and it may have a shot at working in patients. Previous peptide vaccines were mostly T-cell vaccines, not B-cell vaccines, and so the approach is rational and novel. But a moderate polyclonal response in patients wont mean a therapeutic slam-dunk and it may well be that the best clinical trial to do is a combination of Herceptin plus HER-Vaxx, compared with a control arm of Herceptin (whether for breast cancer or gastric cancer). There is some evidence that a polyclonal response in addition to Herceptin gives a more durable response in pre-clinical models. It would also mean that the company would still be offering the “standard of care” therapy, meaning a better shot at some decent patient recruitment (and a generally more ethical trial design).
But again, $3m? Aint going to happen. Let’s also not forget that the HER-Vaxx construct is actually pretty complex and is costly to make (and the adjuvant strategy for the construct still needs a bit of a re-think in my opinion).
Paul Hopper is bright guy with a keen nose for an opportunity. Some of his opportunities, like Viralytics, are a bit “long in the tooth” but may yet still have their day (the VLA data is very nice). Others, like Polynoma I simply just don’t understand (currently running a huge Phase III study no less). But Imugene would have been a nice one to see properly funded, a bit of effort to put the story out there and at least $15-20m to build the foundation of a proper biotech company. Notwithstanding the current market volatility, I don’t see any reason why this couldn’t have been done. But instead, we have another underwhelming ASX financing that isn’t going to move the needle on the company.
It’s a shame, because it’s an interesting story. Unfortunately today’s financing announcement is basically nothing more than a dilution to existing shareholders with no associated value inflection.