ImmunoCellular Update Adds Clarity And Further Validates Investment Thesis

By Dee Kotak, M.D.

At the beginning of February, we discussed ImmunoCellular Therapeutics' (NYSEMKT:IMUC) and Northwest Biotherapeutics' (NASDAQ:NWBO) developmental immunotherapies for Gliobastoma Multiforme (GBM), the most aggressive form of brain cancer. We specifically expressed interest in IMUC, which since then has risen 35% and is poised to follow through this year with greater visibility and interest in the segment, illustrated already by increased volume and price action in the last month. On Wednesday, the company held its Q4/YE 2012 conference call, led by its recently hired CEO Andrew Gengos, which provided some reassurance that Gengos has settled in and has a good understanding of the science and the company.

Furthermore, management provided greater insight into the expected interim analysis from the ongoing Phase IIb ICT-107 trial, the overall survival and read-out assumptions that the Phase II trial is based on, the development plan for the GBM vaccine, and some discussion of longer-term company strategy. Based on earlier trial data (albeit from a small patient population), a relatively low threshold for clinical success, and a valuation that remains cheap considering its prospective long-term capabilities, IMUC is an interesting prospect for 2013. We believe the company is positioned for success in the ongoing Phase IIb, with top-line data expected by the end of this year. Below are some highlights and takeaways from Wednesday's conference call.

The Phase IIb Trial

ImmunoCellular, when discussing the ongoing trial, still use the term "enrolled" instead of "screened," giving the impression that 278 patients have been randomized in the trial, as opposed to 278 being screened and 124 patients being randomized. This is important, because although two-thirds of the patients are randomized to the treatment arm, the trial is smaller and hence less statistically powered than may appear at first blush. The major factor determining the difference between the number of patients screened and enrolled is HLA-A1 or HLA-A2 status, but even allowing for other reasons for non-randomization, IMUC's figure of 50-75% of patients being eligible for ICT-107 based on HLA status still seems at odds with the existing numbers.

ImmunoCellular provided more details on the model for predicting the upcoming event-driven interim analysis. CSO Dr. John Yu stated that the number of patients randomized in the Phase II increased in a linear fashion, and that anticipation of the 32 events (half the total trial number of 64) came from a prior, pivotal GBM program where the outcome of patients was modeled with 80% power to show a nine-month survival benefit in the treatment arm vs. placebo. The overall survival for the historical control group from the original Temozolamide (Temodar) study, which defined the current standard of care in GBM, was 15 months (bear in mind, the Phase I study of ICT-107, n=16, demonstrated a 35-month survival).

But this is not the figure used in the Immunocellular model. The ICT-107 Phase II patients have to have complete or near complete resection of tumor. When looking back at the same patient population (complete or near complete resection) from the Temozolamide study, survival was 18.8 months. Dr. Yu stated that the Phase II study and expected event-driven analyses are based on this 18.8 month survival in the control arm and the additional nine months in the treatment arm. The previous Phase I ICT-107 trial demonstrated a 16-month overall survival benefit in the treatment arm compared to the control (fully or near complete resection of tumor). The Immunocellular assumptions are eminently reasonable and have built in a degree of conservatism.

Immunocellular was expecting the first interim, for safety and futility, to occur in Q1, but is now expecting to hear from the Data Monitoring Committee in Q2. Given that it will take several weeks for the DMC to review the data and inform the company after the 32nd event, little can be inferred from the change in expectations. If we hear nothing by the end of Q2, and we know that recruitment was linear, then an inference of efficacy can be made with greater -- but not absolute -- certainty. It is important to note that ImmunoCellular will remain blinded throughout the study.

Near-Term Developments

ImmunoCellular has enough cash to reach near-term milestones, and the company's cash burn rate, according to management, will not change even as the Phase II continues and the company begins two new trials by the second half of the year. With top-line data expected by the end of 2013, a cash position of $26 million in December 2012, and a quarterly burn rate of just over $3 million, ImmunoCellular is unlikely to raise capital ahead of the Phase II data (although it may be prudent depending on share price -- Celsion (NASDAQ:CLSN) dropped the ball in this department).

In the second half of 2013, an open-label Phase IIa trial involving ICT-140 -- a seven-antigen dendritic cell vaccine targeting ovarian tumor and cancer stem cell antigens -- will commence in the U.S. The company will initiate a Phase I study of ICT-121, which targets a single antigen, CD-133 on cancer stem cells, enrolling 20 patients with recurrent glioblastoma. That trial, according to the company, will start in Q2.

Preparing for Success

ImmunoCellular have brought a second manufacturing site online for ICT-107 to advance the ability to meet the needs of further clinical testing and commercial manufacturing. Gengos stated that the ImmunoCellular strategy over the next three to five years is to build an independent oncology company and to potentially go it alone in the U.S. for ICT-107. The language has changed from previously talking about the need for a Phase III trial, to meeting the FDA post-Phase II with the data. There is a real possibility that the data will be good enough to support accelerated approval, or at the very least, compassionate use.

ImmunoCellular is making background moves with "a commercialization readiness assessment" as well as to identify "the gaps that we have between our position today and what we would need to fill in order to both conduct a Phase III trial as well as to commercialize ICT-107." We anticipate that between now and the end of the year, ImmunoCellular's share price, barring any unforeseen complications, will climb from the mid-$2s to the $6-8 range ahead of the top-line data and as more investors get acquainted with IMUC and ICT-107's potential. This would still represent a market capitalization of under $500 million, with the possibility of an easy double on impressive Phase II data.

Disclosure: I am long IMUC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: PropThink is a team of editors, analysts, and writers. This article was written by Dee Kotak, MD. We did not receive compensation for this article, and we have no business relationship with any company whose stock is mentioned in this article. Use of PropThink’s research is at your own risk. You should do your own research and due diligence before making any investment decision with respect to securities covered herein.You should assume that as of the publication date of any report or letter, PropThink, LLC and persons or entities with whom it has relation ships (collectively referred to as "PropThink") has a position in all stocks (and/or options of the stock) covered herein that is consistent with the position set forth in our research report. Following publication of any report or letter, PropThink intends to continue transacting in the securities covered herein, and we may be long, short, or neutral at any time hereafter regardless of our initial recommendation. To the best of our knowledge and belief, all information contained herein is accurate and reliable, and has been obtained from public sources we believe to be accurate and reliable, and not from company insiders or persons who have a relationship with company insiders. Our full disclaimer is available at