IGMS - IGM Biosciences: A New Approach To Antibodies But Not A Value Right Now

2024-01-05 05:50:19 ET

Summary

• IGM Biosciences is developing antibodies that are different from most monoclonal antibodies currently in use.
• They have two main pipeline projects focused on cancer and rheumatologic disease.
• The company is facing financial challenges but has extended their cash reserves and is prioritizing pipeline projects to control costs.

Top-Line Summary

IGM Biosciences (IGMS) is a developmental stage biotech focused on bringing a different isotype of antibody to patients with cancer and rheumatologic diseases. This offers a large upside, since these kinds of antibodies have potentially key differentiators that make them better than the kind we've been using for decades now. However, I think more caution is warranted than not due to the high valuation and early-stage data.

Pipeline Overview

IGMS has 2 main pipeline projects that are in clinical study tackling cancer and rheumatologic disease. There are other projects underway, but for the sake of brevity I want to focus on the compounds in clinical trials. However, the main conceit for IGMS is that they are developing antibodies that are different from most monoclonal antibodies in use today. The technical term for an antibody is "immunoglobulin," and there are numerous isotypes, denoted with a capital letter.

So most of the time when we're talking about therapeutic antibodies, these are immunoglobulin G (IgG) molecules designed to target some specific antigen. IGMS, as you could guess by their name, is working on immunoglobulin M for their platform. IgM can bind up to 10 of its targets at one time, compared with 2 for IgG, which theoretically improves the "avidity" of the antibody. The company hopes that exploiting IgM in this way can improve targeting of less highly expressed antigens.

Historically , the size of the IgM molecules has been a major blockade in terms of studying their structure and developing a manufacturing process that can generate clinically useful amount of the antibodies. IGMS hopes to have these issues addressed as they investigate IgM for therapeutic benefit.

Aplitabart

This antibody targets a protein called death receptor 5 (DR5), an important player in programmed cell death. There is evidence that blocking this molecule can stimulate cell death independent of p53 inactivation , which is a common event in initiation of cancer. One cell line of interest that expresses DR5 is colorectal cancer, where chemotherapy and radiation resistance (presumably driven at least in part through p53 inactivation) is a critical challenge. Moreover, in preclinical studies, aplitabart was shown to synergize with chemotherapy agents in various cancer cell lines.

Therefore, IGMS is assessing aplitabart in colorectal cancer as a first priority. Per their most recent guidance , it is now a main priority for the company. They are enrolling patients in a randomized clinical trial to receive either aplitabart alone or aplitabart in combination with FOLFIRI plus bevacizumab (a standard chemo-based regimen) in the second-line setting for patients with metastatic colorectal cancer.

IGMS also has an ongoing phase 1 study assessing the safety and efficacy of combined aplitabart plus FOLFIRI (with or without bevacizumab) in patients with heavily pretreated CRC. I was unable to find a formal presentation or publication of their work in this study, but their latest update via press release included 51 patients showing no major safety concerns. Of 24 patients in the third-line setting with the longest follow-up, median PFS was 5.6 months.

It is a grim observation that this would be a pretty strong result in the third-line setting. That's the PFS we saw with TAS-102/bevacizumab in the SUNLIGHT trial that led to approval of that combination last year, for example. Though it is worth noting that SUNLIGHT was a much larger study and also showed an overall survival benefit. So take the cross-trial comparison very lightly.

Imvotamab

The second main pipeline project is imvotamab, an IgM bispecific T-cell engager targeting both CD20 and CD3. CD20 is a marker of B cells and an important target in the management of diseases like rheumatoid arthritis and B-cell malignancies. CD3 is a marker of activated T cells. The idea here is to bind both targets and bring them close together to encourage an anti-CD20 immune response.

You may recognize that these are the exact targets of Amgen's blinatumomab , which has had a lot of success in patients with B-cell acute lymphoblastic leukemia, so there is a bit of a pedigree with this approach.

IGMS is currently conducting 2 phase 1b trials in systemic lupus erythematosus [SLE] and severe rheumatoid arthritis. They also have clearance to begin a trial in patients with idiopathic inflammatory myopathies. No data from these studies has been divulged. There was a trial ongoing to assess imvotamab in patients with non-Hodgkin's lymphoma, but they have since halted all heme oncology projects as part of their strategic realignment to save on costs.

Financial Overview

Per their latest quarterly filing , IGMS held $398.4 million in total current assets, including $174.8 million in cash and equivalents and $212.2 million in marketable securities. Their net loss for the quarter was $61.7 million.

This would create a pretty significant time crunch despite the company's rather deep coffers, but their recently announced pipeline prioritization is designed to bring costs more under control as they continue to advance multiple pipeline projects. They are halting several clinical programs, and reducing work force by 22%.

We don't know exactly how this is going to impact on their financials, but IGMS guides that the current cash reserves should carry them into the second quarter of 2026, versus running out of funds in early 2025 if you used the last quarter's figures as a guide.

Strengths and Risks

Prior to December, I would have put the cash concerns for IGMS as an imminent risk. But their reprioritization has bought a lot of time on that front. Likely, Q2 2026 is an optimistic runway without any additional money being brought in, but it definitely is extended now.

Still, a company that's in phase 1 is going to have a long road to hoe to make any progress. And keep in mind that they're targeting one of the tougher cancers in the lexicon: colorectal. Companies have been trying and trying for decades to apply big, fundamental shifts in cancer care to underwhelming effect. The current state of third-line mCRC is a good example, where researchers celebrate improvement in PFS of just a few months as an important advance. It's hard to be really confident about any specific approach being successful in that space.

And the anti-CD20 program, if successful, will have to wrangle with competition from approved, much cheaper anti-CD20 approaches (specifically rituximab, which has biosimilar approvals). So imvotamab needs to not just work. It needs to be shown to work better than an established therapy with the same target. This raises the bar even more.

That's a lot of risk. A big strength (in my book) is the wild card of taking a perpendicular approach with the IgM antibodies. The theory could pan out and give us access to a whole new field of antibody-based treatment, where IgG antibodies have not quite been the miracle cure-all we hoped for when they first entered the market in the late 90s. We could be looking at the birth of something completely different, and that will always make me pause and temper my pessimism.

Bottom-Line Summary

IGMS presents a challenging scenario for an investment thesis. On one hand, they have an interesting, unique platform that they're building out, one that could be an important transformation for the use of antibodies. However, they are still in such early days, valued at more than their total current assets. At a $500 million market cap, there is for sure plenty of ceiling, but the downside risk starts to get a little high for me to make a buy recommendation. And the main therapeutic areas they're targeting are either beset by stiff competition (rheumatology) or are such challenging disease areas (colorectal cancer) that failure on some front is highly likely.

I'm rooting for them, and I will continue watching, but I believe that from these current levels, IGMS has a long, long journey, and they're more likely to trail down than up from this point. This makes them a soft "sell" recommendation, meaning I would definitely not buy, and if you're sitting on profits from a prior investment, it would be a good time to take at least some of that off the table.

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