ImmunoCellular And Cancer Treatment's Next Frontier

There is a new frontier in the fight against cancer, and it is an exciting time for biotech firms as they wend their way through the clinical trial process in the hopes of finding a cure for cancer. It is widely acknowledged that the most powerful mechanism for fighting disease and illness is our own biologically activated immune system. Our immune system does a commendable job of fighting disease and it is the first and best line of defense before advanced medicines are used on those illnesses that breach these defenses. Harnessing this immune system to fight off disease is called immunotherapy and it is thought to be perhaps the best chance in treating various forms of cancer.

The logic makes sense: Instead of poisoning our body with toxins in chemotherapy perhaps we could use this most potent of all defense mechanisms in the fight against cancer. Market participants are hopeful that this evolutionary leap might be at hand. Avastin, developed and marketed by Roche Holdings (OTCQX:RHHBY), is the most commercially successful treatment and its use is widespread in various forms of breast, colon and lung cancer. Rituximab, (sold under the trade names Rituxan and MabThera) and developed and marketed by Biogen Idec (NASDAQ:BIIB) has also garnered success in the treatment of many forms of leukemia and lymphoma.

The commercial efficacy of immunotherapy has been proven with these and a number of other drugs, but research is already under way for a second generation of medicines that go a step further by generating an effective yet localized immune response against stem cells that are truly the best place to attack cancer.

Of all the public biotech companies focusing on immunotherapy, ImmunoCellular Therapeutics (NYSEMKT:IMUC) is the only company focusing on targeting these cancer stem cells (CSCs). Its drug has had success in preliminary trials and by aggressively attacking CSCs, it is hopeful that it can create a generational leap in how cancers are treated. In a recent interview, John S. Yu M.D., chairman and chief scientific officer of ImmunoCellular Therapeutics, discussed the approach:

Normal stem cells in order to be able to withstand all the toxins that we face in life, and still be able to regenerate the cells and neurons that we need to retain our memory, have the ability to withstand radiation like that from the atmosphere, and withstand toxins like chemotherapies with genes that allow them to be resistant to these drugs. Well, the cancer stem cells are resistant to all of these types of therapies including radiation, and chemotherapy, and so whereas the daughter cells can die off, the root of these cancers remained and then will cause a recurrence of the tumor. So the idea is to really target the cancer stem cells so the tumor no longer has the ability to re-grow after treatment.

Getting to the root cause of cancer by attacking stem cells sounds pragmatic and straightforward, but it isn't or it would have been achieved much sooner. CSCs share some of the same properties as normal stem cells making them difficult to identify and to target. IMUC's trick is to use the immune system in ways it can differentiate between these two cell types - recognizing CSCs but ignoring normal stem cells.

Clinical trials of ImmunoCellular Therapeutics have done well with its prospective cancer fighting drug ICT-107. The most aggressive brain cancer, gliobastoma, that this drug is designed to fight has shown an 80% chance of survival after two years and 55% after three years in a phase I trial. Compare this to survival rates for standard care at 26.5% for two years and 16% for three years and you have demonstrable proof that this vaccine shows promise.

The company has also compared this phase I trial with another tumor lysate based trial done at the same time in similar patient population to mitigate patient selection bias which tends to skew data in small trials. ICT-107 had a median OS of 38.4 months and median PFS of 16.9 months compared to 9.3 months and 20.2 months respectively for the tumor lysate vaccine.

The basic premise of utility of targeting CSCs is that more patients would continue to be disease-free once you remove roots of these tumors. 6/16 patients in this phase I trial continue to be disease free between 3-5 years at this point. 38% disease free at 3 years compares superbly with 6% disease free expected based on historical data for glioblastoma.

Phase II studies for ICT-107 are currently under way and company is planning to treat 102 patients and expects to enroll 160-200 patients to get to this number. Based on the last announcement in January, 2012, 115 patient were already enrolled and company expects to complete enrollment by Q2, 2012 and interim results should be ready by the end of Q4, 2012 - Q1 2013.

For ImmunoCellular, a further validation of its version in this controlled phase II trial would be a great step forward as disease free data like one seen in Phase I trial with 38% patients completely disease free over 3 years, is likely to create a potential early approval of this product.

The company has two additional preclinical programs targeting CSCs in ovarian cancer and other solid tumors. Company has guided it would be entering in clinical programs in both of these indications later this year making a solid pipeline with a large technology platform which could be used in multiple indications.

Recent IPO of Verastem (NASDAQ:VSTM), which also is fighting CSCs using modalities other than immunotherapy, has given a shot in the arm to this novel field. VSTM originated from some of the most prestigious scientists at MIT and is leveraging years of research in their laboratory. However, the company is still in preclinical stage with its lead product towards breast cancer 1-2 years away from a phase I clinical trial. With a market capitalization of $230 million, clearly investors were not deterred by its earlier stage and are likely to continue to hold shares over a long term until clinical data matures in a few years.

With a market capitalization of only $60 million, IMUC seems to be undervalued for the opportunity it presents in treating and preventing cancers. A successful phase II trial could potentially value IMUC in line with recent acquisition of MITI for $1.1 Billion by Amgen (NASDAQ:AMGN) which is currently in a phase II study. With its recent financing of $10.4 million behind and a cash reserve of over $16 million, the company is well financed for completing its trial next year without additional (and expensive) dilution.

Immunotherapy is making a leap from the first generation antibodies and cancer vaccines such as Dendreon's (NASDAQ:DNDN) Provenge to the next generation of cancer stem cell targeting vaccines and antibodies, and IMUC seems to be leading that charge as we move to the next frontier in our fight against cancer.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.