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Biotech Stock On The Radar: Immunomedics' Long Wait For Redemption

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Biotech Stock On The Radar: Immunomedics' Long Wait For Redemption

Immunomedics, Inc. (NASDAQ: IMMU) is a biopharma company focusing on the development of antibody-drug conjugates, or ADCs.

The Morris Plains, New Jersey-based company was founded in 1982 and has yet to market a commercial product. 

Its investigational therapies include ADCs that are designed to deliver a specific payload of chemotherapeutic agents directly to a tumor, and in the process reduce toxicities that are usually associated with the conventional administration of these agents.

The Pipeline

Immunomedics' lead compound is sacituzumab govitecan, or IMMU-132, which is being evaluated as a monotherapy and in combination for multiple solid tumor types.

Failed First Attempt

Sacituzumab is in the most advanced stage of clinical development for treating patients with metastatic triple negative breast cancer, or mTNBC.

On July 18, 2018, the FDA accepted the BLA for the regulatory review of sacituzumab govitecan as a treatment option for mTNBC in the third-line setting and above, fixing the PDUFA action date at Jan. 18, 2019.

The breakthrough the company waited 37 long years for was not to be, as the FDA handed down a Complete Response Letter one day before the decision date. 

The CRL pertained to chemistry, manufacturing and control issues, and the regulatory agency did not require any additional clinical or preclinical data, according to the company. 

In the wake of the FDA snub, Immunomedics CEO and President Michael Pehl resigned in February of this year. The company also announced a slew of other management changes in its fourth-quarter earnings report, released in late February.

In April, Chief Medical Officer Rob Iannone announced his resignation.

In early February, Immunomedics disclosed an FDA establishment inspection report about a data integrity breach that occurred in February 2018, the scope of which included manipulation of bioburden samples, misrepresentation of an integrity test procedure in the batch record and backdating of batch records, including the dates of analytical results.

The findings were based on a pre-approval inspection conducted by the FDA at the company's Morris Plains facility that occurred Aug. 6-14, 2018.  

The FDA said it would complete a re-inspection of the facility as part of its regulatory review. 

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Source: Immunomedics

Immunomedics faced another setback in late September when it presented at ESMO 2019 with interim data from Cohort 1 of the Phase 2 TROPHY-U-01 trial that is evaluating sacituzumab in third line plus advanced unresectable/metastatic UC.

The efficacy data presented was inferior to enfortumab vedotin, or EV-103, which is being co-developed by Seattle Genetics, Inc. (NASDAQ: SGEN) and ASTELLAS PHARMA/ADR (OTC: ALPMY).

Analysts said there is room for both candidates. 

"Both drugs will play important roles in this landscape," Piper Jaffray analyst Joseph Catanzaro said in a note reviewing the ESMO presentation.

The Rest Of The Pipeline

Labetuzumab govitecan, or IMMU-130, involves the anti-CEACAM5 antibody labetuzumab conjugated to SN-38 and is being studied for colorectal cancer.

A third ADC is a SN-38 conjugated form of IMMU-114, a humanized antibody against an immune response target, HLA-DR. It is being evaluated for hematologic cancers.

Collaborations, Partnerships

The company has ongoing collaborations with AstraZeneca plc (NYSE: AZN) to investigate sacituzumab in combination with the latter's checkpoint inhibitors in earlier lines of therapy for mTNBC, advanced UC and metastatic non-small cell lung cancer, or mNSCLC.

Immunomedics is also working with Clovis Oncology Inc (NASDAQ: CLVS) on using the latter's PARP inhibitor rucaparib in mTNBC, advanced UC and ovarian cancer.

The company is collaborating on a new Phase 1b/2 study sponsored by Massachusetts General Hospital that is evaluating sacituzumab in combination with Pfizer Inc. (NYSE: PFE)'s PARP inhibitor talazoparib in patients with mTNBC previously treated with no more than one prior therapeutic regimen for metastatic disease.

The biopharma also has a collaboration agreement with Johnson & Johnson (NYSE: JNJ)'s Janssen unit for the promotion of the recently approved Balversa. The drug is intended to treat adult patients with locally advanced or metastatic urothelial carcinoma that has a type of susceptible genetic alteration known as FGFR3 or FGFR2, and that has progressed during or following prior platinum-containing chemotherapy.

Immunomedics struck an exclusive license agreement with C-Bridge Capital-backed Everest Medicines II Limited to develop, register and commercialize sacituzumab govitecan in Greater China, South Korea and certain Southeast Asian countries.

For the outlicensing, the company received an upfront payment of $65 million, with an additional $60 million due on FDA approval and up to $710 million in development and sales milestone payments.

See also: The Week Ahead In Biotech: Earnings Trickle In, While Glaxo, Melinta, Foamix And Eton Await FDA Verdict

Market Potential

Immunomedics sees the third-line setting in mTNBC as a lucrative opportunity, with 8,000 patients in the U.S. and about 14,000 patients in the EU5 and Japan.

Second-line HR+/HER2- metastatic breast cancer patients number about 24,000 to 26,000 in the U.S., the company said.

About 19,000-22,000 second-line metastatic NSCLC patients are in the U.S., while the second-line setting for advanced ulcerative colitis presents another 13,000 to 15,000 patients.

Upcoming Catalysts

  • BLA re-filing for sacituzumab govitecan in 3L+ mTNBC: late November or early December.
  • Completion of enrollment of patients in the TROPHY U-01 study in UC: end-of-year 2019.
  • Top-line data readout from the ASCENT study evaluating sacituzumab govitecan in the third-line setting of mTNBC: mid-2020.

Financials

Immunomedics reported revenue of $2.16 million and a loss of $273.84 million for the fiscal year ended June 30, 2018.

With the company opting to change its fiscal year to align with the calendar year beginning in 2019, as part of a transition report, it reported no revenue and a loss of $157.67 million for the six months ended Dec. 31, 2018.

For the three months ended June 30, 2019, the company did not report any revenue, versus $386,000 in revenue the same period last year. That figure was comprised of $250,000 in license fees and other revenue and $136,000 in R&D revenue. 

The loss for the quarter narrowed from 68 cents per share to 40 cents per share, with the year-ago results weighed down by interest expenses of $58.86 million.

As of June 30, 2019, the company had cash and cash equivalents as well as marketable securities of $432.65 million compared to $497.80 million as of Dec. 31, 2018.

Stock Take

Immunomedics shares have gained about 8% year-to-date.

H.C. Wainwright analyst Raghuram Selvaraju has a Buy rating on Immunomedics with a $26 price target. The valuation was reached using a discounted cash flow-based assessment.

Selvaraju estimates a risk-adjusted enterprise value of $4.9 billion to IMMU-132 across all indications.

Piper Jaffray has an Overweight rating and $20 price target, and B Riley FBR has a Buy rating and $28 price target.

Related Link: Biotech Stock On The Radar: Assessing Mirati's Oncology Franchise With An Eye On Multiple Readouts

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