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Ishan Majumdar
Ishan Majumdar
Articles (105)  | Author's Website |

Immunomedics: A Solid Cancer Research Play

The company has a strong pipeline of antibody-drug conjugates

Immunomedics (NASDAQ:IMMU) has been in the news for a recent change of CEO. The company’s President and CEO Harout Semerjian stepped down and was replaced by Dr. Behzad Aghazadeh.

The company has also been making some fantastic progress on antibody-drug conjugates (ADCs), particularly Trodelvy, which was used to treat its first commerical in the past few weeks. The drug is expected to drive revenues for Immunomedics in 2020.

The company has some promising collaborations with giants such as AstraZeneca (NYSE:AZN) and Roche (OTCQX:RHHBY). It has also raised funds recently to fund its research for the coming quarters.

In my opinion, all of these factors could make the company an attractive buy for investors. The anticipated revenues from Trodelvy could also make the company a potential acquisition target for giants like Pfizer Inc (NYSE:PFE) , Merck & Co Inc (NYSE:MRK) and Eli Lilly and Co (NYSE:LLY).

Company overview

Immunomedics is a clinical-stage biopharmaceutical company focused on the development of monoclonal antibody-based products meant for cancer treatment. It has been working towards developing new technologies that help create humanized antibodies meant to be used with radioactive isotopes, chemotherapeutics, cytokines or toxins or possibly in naked form for cancer treatments.

The company has a number of promising candidates in its pipeline and a wide portfolio of investigational products, including ADCs that are designed to deliver a payload of a chemotherapeutic directly to the cancer cells while managing the overall toxic effects that are found with conventional administration of these chemotherapy agents. Its pipeline includes products targeting solid tumors and hematologic malignancies.

Over and above this, Immunomedics is marketing specific diagnostic imaging agents to detect bone infections.

The company is headquartered in Morris Plains, New Jersey but also caters to the European, Canadian and Australian markets. As of the writing of this article, Immunomedics has a base of around 336 employees.

Pipeline

Immunomedics’ portfolio of investigational products includes ADCs meant for cancer treatment. These ADCs deliver a specific payload of a chemotherapeutic directly to the cancer cells while reducing overall toxicity that is ordinarily associated with conventional administration of these chemotherapeutic agents. Its advanced ADCs are sacituzumab govitecan and labetuzumab govitecan, which are in advanced trials for a wide variety of solid tumors. The management is currently focused on commercializing sacituzumab govitecan as a third-line therapy for patients with metastatic triple-negative breast cancer (mTNBC) in the U.S.

Other pipeline drugs in various development stages include ADCs such as labetuzumab govitecan (catering to colorectal cancer and other solid cancers) and IMMU-140 (a potential treatment of hematologic malignancies).

The company has a partnership agreement with the Samsung BioLogics to manufacture hRS7, an Immunomedics proprietary humanized antibody, as well as a collaboration and license agreement with pH Pharma for the development and commercialization of multiple antibody-drug conjugates in oncology.

Trodelvy upside

Trodelvy, one of the core products of Immunomedics, is a prescription medicine used to treat adults with breast cancer. Trodelvy is known to cater to breast cancer that is estrogen and progesterone hormone receptor (HR) negative and human epidermal growth factor receptor 2 (HER2) negative (aka triple-negative breast cancer). Trodelvy is basically a Trop-2 directed ADC indicated for the treatment of adult patients with mTNBC who have received at least two prior therapies for metastatic disease.

The drug has received approval from the U.S. Food & Drugs Authority (FDA) and has already been made available to people with mTNBC upon FDA approval. In fact, the company has already shipped Trodelvy to its specialty distributors and had its first patient treated with the commercial product about a week after FDA approval.

The company also received a funding boost in terms of a $60 million contractual milestone payment from its Chinese partner, Everest Medicines. Everest Medicines announced the approval of Trodelvy by the Chinese regulatory authorities to initiate a pivotal Phase 3 study for mTNBC in China, which is expected to be carried out over the coming months.

Immunomedics also has a clinical collaboration with Dana-Farber Cancer Institute to conduct two Phase 2 studies. These are meant to evaluate the safety and efficacy of combining Trodelvy with pembrolizumab, Merck’s anti-programmed cell death protein 1 antibody, in patients with mTNBC. 

Key takeaways

Immunomedics’ price has nearly tripled in the past 12 months after the approvals and the signs of potential revenue.

For the most recent quarter-end, the management reported $540.6 million in cash, cash equivalents and marketable securities. Thus, even if the company does not end up getting acquired by a giant or generating revenue in the near term, I think it continues to have a bright future ahead with more than sufficient funds for its research over the next few quarters.

Disclosure: No positions.

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About the author:

Ishan Majumdar
I am a qualified Chartered Accountant with a Masters in Management (Grande Ecole) from HEC Paris. I run a proprietary boutique financial advisory firm called Baptista Research (www.baptistaresearch.com) specializing in M&A, corporate advisory, equity research and valuation of listed companies.

I have nearly a decade of experience spread across investment banks, financial advisory firms, investment funds and other corporates in many different geographies, such as France, Spain, India and others. I was a part of the LBO Financing team at BNP Paribas where I worked on deals with a combined enterprise value of over $1 billion. I have also worked in mergers and acquisitions with Credit Agricole CIB and corporate strategy with Groupe Danone SA. Over the years, I have developed a strong specialization in corporate valuations, strategy and financial analysis.

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