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I am compensated for research coverage, which denotes a clear bias in my investment opinion. I believe that my research is objective, weighing both the risks and rewards of an investment opportunity. However, my end goal is to highlight firms that I believe are innovative and offer compelling investment propositions. This leads me to Immunocellular Therapeuctics (IMUC).

Overview

Immunocellular Therapeuctics is a biopharmaceutical company that develops immunotherapies for the treatment of cancer. Unlike most other cancer companies, IMUC focuses on targeting not only tumor cells but also cancer stem cells (CSCs), which are responsible for tumor growth and recurrence. The company’s lead product, ICT-107, is a dendritic cell vaccine that targets multiple tumor-associated proteins to treat glioblastoma multiforme (GBM), a very aggressive brain cancer with limited treatment options. Results from a Phase I study with ICT-107 in newly diagnosed GBM patients were extremely promising. ICT-107 more than doubled the survival times of patients compared to current standard of care. The company recently launched a Phase II, multicenter study with ICT-107 for patients newly diagnosed with GBM. In addition to ICT-107, IMUC’s pipeline includes ICT-121, a vaccine for recurrent GBM, and ICT-140, an ovarian cancer vaccine.

Management has over 50 years of combined clinical development experience in cancer immunotherapy. The company has been highly capital efficient and recently raised $8 million in February, which should provide enough cash to last until the end of 2012. Management also anticipates listing IMUC stock on the NYSE AmEx shortly, allowing institutional funds to purchase shares in the company. Compared to similar companies, IMUC is trading at a very reasonable valuation. While investing in early-stage biopharmaceutical companies is not without significant risk, the significant upside potential for IMUC shares is definitely worth considering.

About the Company

IMUC was founded in 2006 with technology discovered at Cedars-Sinai Medical Center in Los Angeles. The company focuses on developing cancer immunotherapies, an emerging class of drugs that activates patients’ own immune systems to attack tumors. Last year, the FDA approved the first-ever cancer immunotherapy, Dendreon’s (DNDN) Provenge, to treat prostate cancer. More recently, the FDA approved another immunotherapy, Yervoy, from Bristol-Myers Squibb (BMY) for melanoma.

Unlike other cancer companies, IMUC is developing therapies that specifically target cancer stem cells (CSCs) in addition to normal cancer cells. CSCs make up a small proportion of cells in a tumor mass but drive tumor growth. CSCs are also more resistant to radiation and chemotherapy than normal cancer cells and thus, responsible for recurrence often observed in many cancers.

Cancer Vaccines

IMUC’s lead product, ICT-107, is a cancer vaccine for glioblastoma multiforme (GBM). GBM is the most common and fatal form of primary brain cancer. Unfortunately, treatment options for patients newly diagnosed with GBM are limited. The current standard of care is surgery followed by radiation and chemotherapy (i.e. temozolomide). As a result of few treatment choices, prognosis is poor as the cancer eventually recurs. The median survival time for GBM patients is only 14.6 months, and the two-year survival rate is 26.5%.

ICT-107 is a dendritic cell vaccine similar to DNDN’s Provenge. The vaccine utilizes patients’ own dendritic cells to initiate an immune response that attacks the tumor. Unlike most cancer therapies, however, ICT-107 targets several tumor-associated proteins on cancer cells. So in addition to normal cancer cells, CSCs are targeted, possibly delaying disease progression and relapse.

Phase I study results with ICT-107 in GBM patients were very promising. In 16 newly diagnosed GBM patients, the median survival time will be greater than 30 months and two-year survival rate was 80%, a significant improvement to current standard of care. Almost 40% of patients in the trial remain free of disease more than two years after treatment, and 11 of the 16 patients continue to survive. There were no serious side effects, although some minor adverse events were fatigue, skin rash and pruritis.

The company recently initiated a Phase II, twenty-center, randomized, double blind, placebo-controlled study with ICT-107 in patients with newly diagnosed GBM. Management anticipates enrolling as many as 200 patients within the next year. The Phase II study should be completed by the end of 2013, but interim results might be available as early as the end of 2012.

In addition to ICT-107, IMUC has a number of preclinical products in its pipeline. The company’s dendritic cell technology can be used as a platform to treat other types of cancers. For example, several of the tumor-associated proteins targeted by ICT-107 are also highly expressed on ovarian cancer cells. The company is rapidly developing ICT-140, a dendritic cell vaccine for ovarian cancer that uses some of the same tumor-associated proteins in ICT-107. Management expects ICT-140 to be ready for clinical trials early next year. IMUC is also developing a peptide-based vaccine, ICT-121, that does not require the use of dendritic cells. Management anticipates initiating a Phase I trial for ICT-121 in patients with recurrent GBM by next year as well.

Management

Prior to joining the company, CEO Manish Singh was a director at California Technology Ventures (CTV) where he co-led investments in several early-stage life science companies, including SurgRx, Angioscore and Vivant. He also acted as interim CEO for Aliva Biopharmaceuticals. Before CTV, Dr. Singh spent over a decade at companies including Genetic Therapy, Chiron Corporation and Cell Genesys in a variety of research and business operating positions. He has a PhD in biochemical engineering from the University of Maryland and an MBA from the UCLA Anderson School of Management.

Chairman and CSO, John Yu, is one of the company’s founders. He started his training at Harvard Medical School and then his neurosurgery residency at Massachusetts General Hospital. Dr. Yu was also a neuroscience fellow in the neuroimmunology unit at the National Institutes of Mental Health. He is currently a faculty member in the neurosurgery department at Cedars-Sinai Medical Center, where he practices medicine and conducts clinical research on CSCs. Dr. Yu has published his research in a number of journals, including The Lancet, Cancer Research, Cancer Gene Therapy, Journal of Neuroimmunology, Journal of Neurological Science, and Journal of Neurosurgery.

James Bender is the VP of Clinical Development. He has over 20 years of experience in developing cancer immunotherapies, spanning companies such as IDM Pharmaceuticals, Nexell Therapeutics and Baxter Healthcare. Dr. Bender has over 75 scientific publications and is an inventor on 11 U.S. patents. He received a PhD in immunology at the University of New Mexico and an MPH in laboratory management from the University of Michigan.

Financial Analysis

Since its inception, the company’s management has been extremely capital efficient. Last year, the company spent less than $5 million on operating expenses, while the stock price increased about three-fold during the same time period. Management has been able to push the company’s products through clinical trials while taking on no debt. In February, IMUC raised an additional $8 million to strengthen its balance sheet and ensure enough cash to complete clinical trials.

Although still relatively early in development, IMUC shares are trading at a very reasonable valuation compared to other cancer immunotherapy companies. Oncothyreon (ONTY), which has a cancer vaccine in Phase III clinical trials for non-small cell lung cancer, has a market cap of almost $400 million. As mentioned previously, DNDN has a prostate cancer vaccine on the market, and DNDN’s market cap is over $6 billion. Once the company lists its shares on the NYSE AmEx, institutional investors will be able to buy shares of the stock. If IMUC’s Phase II results are positive, there is a significant amount of upside to its share price.

Upcoming Catalysts
  • Listing of IMUC stock on NYSE AmEx
  • Initiation of ICT-140 and ICT-121clinical trials for ovarian cancer and recurrent GBM, respectively
  • Positive interim and final results from Phase II study of ICT-107
Risks
  • Enrollment for Phase II study does not progress as anticipated, delaying results
  • Clinical trials do not show clinical improvement over standard of care
  • Management fails to raise additional capital to complete clinical trials
  • IMUC is unable to find a strategic partner to support commercialization
Source: Immunocellular Therapeutics: An Interesting Biotech

Additional disclosure: Additional disclosure: I receive compensation for providing research coverage. In July, JSDC Inc., a boutique advisory firm, retained my service on behalf of its client, Immunocellular Therapeutics. We agreed to provide coverage for one sponsored article on the topic. The views expressed are purely our own.