IMNM - Immunome: Why It Has Doubled Over The Last Month

2024-01-18 15:30:11 ET

Summary

• Immunome has experienced a meteoric rise in market capitalization without any pipeline drugs reaching clinical trials.
• The company's pipeline includes IM-1021, an antibody-drug conjugate targeting ROR1, and IM-4320, a monoclonal antibody targeting IL-38.
• IMNM's financial overview shows a cash runway of approximately 5 years, but the long wait time for clinical trials poses a significant risk.

Topline Summary

Immunome, Inc. ( IMNM ) is a developmental biopharma developing agents to exploit novel targets in cancer medicine. Their rise since early 2023 has been meteoric, driven by partnerships and merger news. Today, they sit at a near-half-billion in market capitalization without a single pipeline drug having reached clinical trials, or even having filed an IND to begin one. To me, the long wait time to human studies, let alone results, make this a clear candidate for "overvalued" status, and at this time, I would strongly encourage taking some profit off the table and holding off on developing positions until they have something more tangible.

Pipeline Overview

To be clear, IMNM cannot be said to have much of a pipeline at this time, considering the company has not yet entered clinical trials, and the guidance from their company presentation suggests that they will file INDs for 3 drugs in the first quarter of 2025 . Let's discuss these:

IM-1021

The first named project we know about is an antibody-drug conjugate targeting ROR1 called IM-1021. This agent was just acquired through a licensing agreement with Zentalis Pharmaceuticals ( ZNTL ) in January 2024. ROR1 is a prominent receptor in the Wnt signaling pathway that is known to be overexpressed in various cancers. No drugs have been developed to date that can exploit this target.

We have not yet seen publications highlighting the potential benefit of IM-1021. Not even ZNTL has published or presented findings. So we'll have to wait a little while longer before the march begins.

IM-4320

The second preclinical pipeline candidate they highlight is IM-4320 (IMM20320), a monoclonal antibody that targets IL-38. This molecule is a cytokine that is thought to reduce the immune response to cancer cells , so inhibiting it with an antibody should yield some kind of antitumor activity.

IMNM has previously presented preclinical findings for this agent, highlighting myeloid cell activation in mouse models of cancer. A more recent publication highlighted the high frequency of IL-38 overexpression in patients with lung, head, neck, and cervical cancers, as well as activity against mouse tumor models of breast cancer and melanoma.

Undisclosed radioligand therapy

The final pipeline candidate currently billed as "in IND-enabling studies" does not yet have a name, and it is a radioligand-doped molecule targeting fibroblast activating protein ((FAP)), which is overexpressed in a variety of solid tumor types. Other than the radioligand (Lutetium-177, similar to approved therapies like Lutathera and Pluvicto), we don't know anything else about this agent at this time.

Financial Overview

Per their first quarterly filing after completing their merger with Morphimmune, IMNM held $91.4 million in total current assets, including $90.6 million in cash and equivalents. Their operating expenses were $8.2 million while recognizing $3.6 million in collaboration revenue. This collaboration revenue comes from an ongoing agreement with AbbVie ( ABBV ) to discover novel therapies for cancer treatment.

After interest income, the net loss for the quarter was $4.3 million, giving IMNM a cash runway of approximately 5 years at these levels. Of course, this assumes that collaboration revenue and operating costs remain the same, the latter being a near certain unlikelihood.

It is worth noting that the filing did not take into account the $125 million private placement conducted as part of the merger with Morphimmune, providing further cash to support the ongoing development of their agents.

Strengths and Risks

If you know me by now, you know that I view long lead times to market as a massive risk. And IMNM's pipeline is completely filled with drug candidates that I would basically leave as irrelevant for other companies since the chances of moving from pre-IND into successful clinical trials are so low.

IMNM is certainly confident, and they certainly have the funds to move something into the clinic, and they've got the backing and pedigree of pharma to ward off ramping costs.

So, answering this article's title: Why has IMNM risen so much over the past year? Absolutely, the market derives a lot of confidence from management with a track record of success, and with the Morphimmune merger, they now have the co-Founder and former CEO of Seagen , themselves one of the pioneers of antibody-drug conjugate therapy.

Not to discount the importance of good management, but my experience has taught me that you can't trust the backing of a single person, no matter how qualified. He is not able to make or break these trials, although he would most certainly be able to drive a winner into the market...if and when they have a candidate make it through clinical trials.

So, here, we have a company trading at more than double its current cash holdings (taking into account the extra $125 million from the private placement) and with no clear indication as to what's going to move into the clinic (frankly, no guarantee that any of them will).

Bottom Line Summary

The hyped valuation that IMNM is building up is unreal for a company not even in clinical trials yet. Of course, antibody-drug conjugates are all the rage as we make new gains seemingly every month, and that justifies a lot of excitement for new targets and new, hopefully better approaches. With true catalysts such a long way off, the downside risk from this $600+ million company is massive, in my opinion. I don't think the near-term prospects justify a buy at these levels, and if I were a lucky holder at any time in 2023, I would definitely be looking to take some or all of those gains off the table before the reality of bringing a drug into trials, let alone to market, sets in.

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