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goldsachstrader
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14 Year Equities Trader. Short & Long Term Trader
  • IMMUNOMEDICS....Where Is It Headed? 0 comments
    Jan 27, 2014 7:59 AM | about stocks: IMMU

    So what do you value a small biotech with 2 product candidates in phase 3 studies. Epratuzumab is a drug discovered by Immunomedics (NASDAQ:IMMU) and licensed out to UCB Pharm for Systemic Lupus Erythematosus(SLE). UCB is running/paying for two phase 3 trials each with 400+ patients which is costing $100+ million. Final results are due in the 1st quarter of 2015. Many individual investors saw a few years ago that HGSI received approval for a minor form of lupus and the stock climbed from the 3's to a high in the 30's. The drug did not sell as well as planned, and HGSI was bought out by Glaxo in the teens. Second product candidate is Clivatuzumab, for pancreatic cancer patients who have received two prior therapies. Pancreatic cancer is one of the most lethal cancers there is. Most individuals don't make it past 6 months. Immunomedics(IMMU) is running the Clivatuzumab phase 3 trial alone. Management believes that Clivatuzumab can extend lives by several months on patients. Living with pancreatic cancer and surviving past nine months would be a extremely important finding in the world of pancreatic cancer therapies.

    Immunomedics has 2 other very interesting product candidates. Antibody Drug Conjugates (ADC's--IMMU 132, IMMU 130). ADC's have been one of the newest and hottest sectors of the biotech industry. Both Antibody Drug Conjugates are in phase 2 trials. Sgen/Cldx also have ADC's and might be facing competition down the road from IMMU.

    Now lets be honest and say that most small biotechs fizzle and are left for dead. My interest in IMMU is that it has a very small market capitalization ($450 mill/83 million shares) for a company that might have a few positive outcomes over the next year. The company has an annualized burn rate of approximately $20-25 million year with no debt on its balance sheet. 2014 burn rate should be higher since it will be running the Clivatuzumab phase 3 trial alone. Immunomedics has stated that they are looking for a licensing partner for their Antibody Drug Conjugates (ADC's) program. If either of the 2 ADC's gets a licensing pact with a major pharma then IMMU could take off.

    The company has a short position of approximately 10 million shares or 12% of float. The short have been leaning on this company betting that management will be doing a equities financing. They maybe correct in their assumption since the company has been known to do financing at unwarranted times. However, if a licensing agreement is reached or a positive phase 3 result is issued i would not want to be short side. If the UCB/IMMU epratuzumab trial shows results like the past phase 2b trial, i might assume that the FDA gives it the go ahead. Epratuzumab is going after severe lupus with less steroids usage. Clivatuzumab is a longer shot in my opinion because it is going after pancreatic cancers overall survival rate. The ADC program is one of the near term catalysts.

    Price target is $15.

    Disclosure: I am long IMMU.

    Themes: UCB, SGEN, CLDX, GSK Stocks: IMMU
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