ImmunoCellular Shares Near Lows Offer A Speculative Oncology Play

With its balance sheet shored up after a recent stock offering, shares trading just off of their 52-week lows, and interim Phase IIb data expected in early 2013, shares of ImmunoCellular Therapeutics (NYSEMKT:IMUC) are poised to climb higher into next year. ImmunoCellular develops the cancer immunotherapy ICT-107 for the treatment of brain cancer, or glioblastoma multiforme, one of the most common and aggressive brain tumors in humans. IMUC is evaluating ICT-107 in an ongoing 278-patient Phase IIb trial and expects to report interim data early next year, pending an event-driven safety analysis, followed by final data later in 2013. Since completing a $19.3M secondary offering in October, the company sits on roughly $26M in cash with a historical burn rate of less than $5M quarterly. The company is well-capitalized to continue development through two upcoming value-driving events (ICT-107 interim and final data) and is coming off of a recent down-trend.

Investors are paying close attention to the upcoming results for ICT-107, as the previous Phase I trial (n=16) demonstrated positive findings, albeit in a single-arm study. While difficult to gauge a treatment without a comparator arm, ImmunoCellular touts ICT-107's overall survival of 50% after four years, and 38% of patients remained progression free for 48-66 months. The company compares this to a historic mean overall survival of 12.1% after four years and a progression free survival of 5.6 % after 48 months with standard of care. The vaccine demonstrated a median OS of 38.4 months, and a PFS of 16.9 months. The results are compelling, but for a small trial, are not entirely indicative. The much larger ongoing Phase IIb study will be highly determinant of ICT-107's clinical benefit, as the trial is double-blinded, placebo-controlled, and conducted across a number of sites in the U.S. We find the protocol in the trial, the large patient population, and ImmunoCellular's "b" labeling suggestive that the company may even try to take ICT-107 to the FDA without a Phase III trial; it's certainly not unprecedented for a cancer compound. Of course, the interim checkup is primarily a safety evaluation, but should the immunotherapy demonstrate tolerability, we expect a positive reaction from the stock.

On Monday, ImmunoCellular brought on Andrew Gengos as CEO and President. Gengos formerly served as CEO of Neuraltus Pharmaceuticals, but more notably, was employed by Amgen as VP of Strategy and Corporate Development prior. IMUC also expects to submit an Investigational New Drug application for the preclinical dendritic cell vaccine ICT-140 (ovarian cancer) by the end of the year, and plans to initiate a Phase I study of ICT-121 as a treatment for recurrent glioblastoma in the same time frame. ImunnoCellular also has a number of preclinical monoclonal antibodies in development as potential cancer treatments. Considering the stock's recent sell-off, IMUC makes for a cheaper play on a promising, although unproven, cancer vaccine. Financial risks have been removed from the stock for the near future, and the company has a series of minor catalysts moving into early 2013. Long-term potential, of course, hinges on Phase IIb data. If the company can reproduce the results of its Phase I study, IMUC could easily surpass its highs from mid-2012.

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