ImmunoCellular Therapeutics' Immune Modifying Approach To Cancer Is Worth Watching


Failure of regulatory processes within the immune system are often studied in the context of hyperactive immune function as occurs in autoimmune diseases and allergies. However, regulatory processes in the immune system must strike a delicate balance. In addition to inhibiting hyperactivity, inappropriate suppression of immune function must also be prevented. In my mind, the lack of an immune response to cancer appears to be an important example of regulatory failure, resulting in inappropriate immune quiescence.

When it functions properly, the immune system will mount a response to a substance that it recognizes as dangerous. The response is initiated by cells of the innate immune system, the body's first line of defense, which may then interface with a more specific, powerful branch of the immune system to produce specific and long lasting protection against the harmful substance. Cancer cells traditionally evade detection by the immune system because the body's defenses recognize most tumor cells as harmless and similar to an organism's normal cells, rather than dangerous invaders like bacteria or viruses. If the immune system could only be re-educated to mount a response to a tumor, then it could be trained to eradicate cancers without the bystander damage associated with many current treatments.

Training a patient's immune system to respond to a tumor is precisely the goal of ImmunoCellular Therapeutics, Ltd. (NYSEMKT:IMUC). The company uses cells from a patient's own innate immune system, called dendritic cells, to alert the immune system to the dangerous nature of a tumor. After harvesting, these dendritic cells are stimulated to induce uptake of multiple tumor associated markers. These marker loaded dendritic cells can then be re-introduced to the same patient and will evoke an immune response specific to both the normal tumor cells as well as cancer stem cells (CSCs), which are often responsible for tumor recurrence following standard treatments. I personally feel this type of treatment is a novel approach with great therapeutic potential against a number of cancers. It turns out, available data from clinical trials sponsored by IMUC supports my sentiment.

Clinical Data

IMUC has six candidates in the early stages of clinical trials, three of which are immune modifying therapies. Its lead therapeutic candidate, ICT-107, is a dendritic cell based immunotherapy that is designed to prevent the progression of glioblastoma multiforme (GBM), the most common and lethal variety of brain cancer. ICT-107 is administered intradermally following surgery, Temodar treatment, and radiation therapy. IMUC is conducting a Phase II, multicenter, randomized, double blind trial testing the efficacy of ICT-107 in newly diagnosed GBM patients. The primary endpoint is overall survival, and secondary endpoints include progression free survival (NYSE:PFS) and safety. The market for GBM therapeutics is large, and sales of front-line therapy for GBM, Temodar, have hovered around $1 billion for the last three years. Interim results from the trial were encouraging, prompting a recommendation to continue the study to completion by a data monitoring committee. The company anticipates completing the Phase II trial by the end of 2013 and investors should be eagerly awaiting those results.

Data from an earlier Phase I study point to strong efficacy for ITC-107. This trial was a single-arm study, and so historical data are used for efficacy comparisons. Notably, patients receiving ICT-107 had a greater than two-fold increase in progression free survival with median overall survival of 38.4 months compared to historical values of only 14.6 months in patients receiving placebo. These results are very promising considering that Temodar alone increased overall survival by only 2.5 months in pivotal trials.

Financial Standing

Because the company's therapeutic pipeline is in earlier stages of clinical trials, there is, of course, substantial risk involved in investing. Cash shortages followed by dilutive rounds of financing, challenges from competitors in the marketplace, and the possibility of failure to gain regulatory approval should all be expected. Although the company's cash position of $24.1 million is strong when compared to its burn rate of $3.1M per quarter, later clinical trials will result in large increases to expenses and a need for additional cash. Without an approved product and revenue stream, these trials will most likely be funded through the sale of additional shares of common stock and warrants consistent with the company's past financing activities. Of course, these activities are to be expected with any development stage biotech company. Importantly, based upon the lack of debt, and the cash that is held, IMUC has sufficient liquidity to fund current operations for at least 12 months, well past the Q4 report of Phase II study results.

Given the positive interim results and the relatively solid financial position for a development stage company in the biotech sector, an investment in IMUC may be worth considering to capitalize on the upcoming Phase II data and the high sales potential in the GBM market. Furthermore, it may be worth evaluating a long-term position in IMUC as dendritic cell based anti-cancer therapeutics offer a promising, novel means of treating multiple malignancies. Although there is competition in this space from companies like Dendreon (NASDAQ:DNDN), IMUC's platform appears to have a higher probability of success. As previously covered in another article on Seeking Alpha, IMUC's platform trains the immune system to recognize any antigens, whereas DNDN's only immunizes against a single target. Furthermore, IMUC's process is simple and involves in vitro maturation of dendritic cells to create a prep of nearly 90% purity. In contrast, DNDN's more complex process delivers purities of only around 10%. Based upon these and other advantages, IMUC's immune modifying anti-cancer therapeutic strategy has a higher likelihood of efficacy and should come out on top.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.