IMMP - Immutep: Upcoming Signals For 2024 (Maintain Buy)

2024-01-03 17:04:38 ET

Summary

• Immutep Limited's lead molecule, eftilagimod, has shown signals of activity in lung cancer and has the potential to be a chemotherapy-free regimen with manageable toxicity.
• The company has received regulatory feedback on the design of a registrational trial for eftilagimod, indicating progress in its development.
• Immutep has a fairly strong financial position with $110 million AUD in cash and equivalents, providing them with several quarters of operational runway.

Topline Summary and Update

When I first covered Immutep Limited ( IMMP ) back in September, I noted that they had an interesting pipeline with a demonstrated ability to achieve some level of cost tightening. Their lead LAG3-targeted molecule eftilagimod has shown signals of activity, and I continue to support a potential buy. Recent news has further elucidated a little more about this compound in lung cancer, and upcoming catalysts (specifically the opening of a big, registrational trial) may provide more momentum for would-be investors. Just take care, since there is definitely a lot of downside risk, as well.

Why No Change in Rating?

IMMP's story has continued to evolve, with nothing particularly negative bringing down my sentiment. We still don't know definitively if eftilagimod is going to move the needle, so I can't (and almost never do) offer an even stronger buy recommendation, since there are too many things that can go wrong to make this all but guaranteed. Similarly, the last several months have not seen a lot of upward drive in the share price, suggesting the market is not yet paying attention to the potential of this company and forcing it into overpriced territory.

Therefore, I maintain that this is worth considering as a small position in your portfolio.

Pipeline Updates

Eftilagimod

IMMP's sole project remains eftilagimod, the anti-LAG-3 molecule designed to deactivate LAG-3, an emergent immune checkpoint that already has a role in the management of melanoma . IMMP hopes to differentiate eftilagimod from relatlimab and other monoclonal antibodies via the activation of MHC class II, intended to activate a wider range of immune cells to greater antitumor effect.

In the last article , I profiled the range of ongoing clinical trials being conducted by IMMP. Here's a brief overview of those trials I discussed:

• TACTI-003 - first-line head and neck cancer, 38.5% response rate when added to pembrolizumab for PD-L1-positive patients
• TACTI-002 - 33% response rate in high PD-L1 expressing, refractory NSCLC when adding eftilagimod to pembrolizumab (update at ESMO 2023 presented below)
• AIPAC - Eftilagimod plus paclitaxel in metastatic, HR-positive breast cancer showing some signal of activity, leading them to initiate the AIPAC-003 study in first-line metastatic breast cancer, which recently finished its safety lead-in .

Please feel free to peruse that last article for more details and my thoughts on these studies.

Perhaps the most important data update came out of ESMO 2023, with the presentation of updated findings from TACTI-002. Median overall survival in the 114 patients in the intention-to-treat population (of whom around 3/4 had PD-L1 expression under 50%) was 20.2 months, with patients who had any level of PD-L1 expression having median overall survival of 35.5 months. Similarly, response rates and duration of response appeared promising in the group of patients with at least 1% PD-L1 expression.

Set against benchmarks in the field, eftilagimod plus pembrolizumab looks pretty favorable. Pembrolizumab plus chemotherapy in KEYNOTE-189 yielded overall survival of 22 months. The eftilagimod-pembro combination offers the potential for a chemotherapy-free regimen with manageable toxicity that performs as well or better than the KEYNOTE-189 regimens (which are currently the standard of care). This is an exciting signal, and one well worth continuing to explore.

Another ESMO study, INSIGHT-003 , showed another interesting signal of activity in patients with NSCLC using the combination of eftilagimod, pembrolizumab, and doublet chemotherapy (essentially adding on eftilagimod to the KEYNOTE-189 regimen), with a 71.4% response rate and a median overall survival not yet reached at the time of follow-up.

IMMP has since announced that they've received regulatory feedback from the German authorities on the design of a registrational trial, TACTI-004, based on these findings.

Financial Overview

Per their latest financial filing , IMMP held $110 million AUD in cash and equivalents. Their net negative cash flow was $12.9 million for the period. Recall that they completed an equity raise back in June, which helped shore up their balance sheet. Also notable is the increase quarter over quarter in net negative cash flow, up from $8.4 million in the prior filing. That's still down from the $14.2 million in the quarter before that.

These expenditures give IMMP between 8 and 9 quarters of operational runway, down from the estimated 10 to 15 I wrote about in my last article. This could carry them well through 2024 and deep into 2025 before cash becomes a serious concern again.

Strengths and Risks

IMMP has had some encouraging catalysts over the last several months. I would emphasize, though, that caution is warranted when interpreting the results of these kinds of updates. The TACTI-002 were not randomized, and even with more patients than before it's still not powered to give anything other than a signal. TACTI-004 will be a critical confirmatory trial, but one that I will not be surprised to see fail. A lot of promising, hotly anticipated phase 2 findings do not pan out in phase 3.

I still find it somewhat concerning that PD-L1 expression seems to be a driver of greater efficacy in the studies we've seen so far. If eftilagimod is providing substantial benefit, then conventional wisdom would dictate that it be able to do it on its own, or at least the marker for anti-PD-1 activity shouldn't really matter that much.

Eftilagimod could be working in a highly unusual, PD-L1-dependent way. That's a possibility. Another possibility is that eftilagimod isn't adding anything at all, and the phase 2 results we've seen in these patients represent an outlier that won't pan out in phase 3.

Money is also a significant potential issue with IMMP, as their belt tightening did not go quite as far as what I saw in my last article. They have a good bit of line to work with for now, but you can bet that any big news event is going to be coupled to an equity raise if they don't find some kind of partner with deep pockets to help pay for the research.

Bottom-Line Summary

The market has not a lot of respect for IMMP, pinning a $273 million USD market cap to a company with seemingly favorable results. This isn't quite as beaten down as you see with some clinical-stage biotechs, but I think there's potential for significant gains here. They're on the cusp of initiating a big pivotal trial, and they've got data that justify its study. I remain a tentative buy, noting the risks associated with going from phase 2 to phase 3, as well as the risks of significant dilutionary equity raises before they're able to hit another critical readout.

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