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Immupharma Plc

Analyst Q&A with The Life Sciences Division: ImmuPharma (LON:IMM)

ImmuPharma plc (LON:IMM) is the topic of conversation when The Life Sciences Division’s Executive Director Navid Malik caught up with DirectorsTalk for an exclusive interview.

Q1: Navid, firstly can you give a quick description of The Life Sciences Division and its interest in ImmuPharma?

A1: The Life Sciences Division is an FCA regulated investment bank, we’ve been around about 3 years. We basically work in the life sciences space, both with public and private companies and we act as financial advisor and a broker to a number of those companies. One of the areas that we focus on particularly is producing equity research which we send out to institutional clients.

My relationship with ImmuPharma as an analyst goes back many many years, I’ve covered the company a number of times in different houses as a house analyst within equity research. We’ve followed the story really through particularly Lupuzor, their main drug, from phase II all the through to the result we had a year ago when they covered the phase III trial.

We actually initiated coverage formally with The Life Sciences Division back 20th May and now cover them as an analyst again.

Q2: You’ve published a new research note on the company and its lead drug Lupuzor, following the detailed initiation note you published back in May. Can you give us a summary of this new note to our listeners?

A2: We set the scene and the background for the company with full financials in our initiation note that we published in May. The updated note that we published yesterday was really a 7-page research note which effectively was positioning the story of Lupuzor around an update that AstraZeneca gave about a week ago on the phase III trial that they’ve conducted in lupus.

So, we were positioning what the impact would be on Lupuzor and IMM from that trial result which, by the way, we see as a positive for both Lupuzor and for IMM.

Q3: What are the key points that you feel are important in the longer term potential of the company’s Lupuzor drug and its positioning within the lupus landscape?

A3: We feel that the lupus space is a complex disease driven by a number of actors, so to speak, in the immune therapy area so a number of different pathways are active in lupus. Therefore, pharmaceutical companies have pursued all kinds of different targets and approaches to try and address the disease. It’s a big disease with 1.5 million patients that have an addressable market we feel for Lupuzor and IMM.

That particular disease is complex and there are patients who respond and then they go back and they don’t respond anymore to certain drugs and clinical trials have been generally failures. What we found with Lupuzor’s mechanism of action is that we always felt it was the right approach, it wasn’t an approach that involved being too harsh on the immune system but it was more on the modulation of the pathway that specifically linked lupus as a disease.

What we liked about IMM’s approach was that the safety profile of the drug was clean but when they read out their phase III trial results for Lupuzor last year, a particular group of patients in Europe, who had a more severe form of the disease, showed an excellent response that was statistically significant with a good safety profile.

That, for us, was a very strong signal that the potential was there for the drug to succeed in the second phase III trial if it was conducted in that target group. Now, that target group was about 70% of lupus patients so it was a very large patient population with a very clear way to go forward in addressing that disease with this target subgroup to show a positive effect.

If the company was able to show that, which we believe it’s possible, then Lupuzor could reach the market and that would be a huge value inflection pint, not only for IMM and its shareholders but also for lupus patients globally.

Q4: Is it your view that we may be at a turning point in bringing further lupus drugs to market?

A4: Yes, like everything else, if you can continue to see clinical trials failing then you’re less convinced and less certain that a company can be successful in the field.

We have had one drug approved in 60 years which is a drug called Benlysta, it’s an antibody developed by AstraZeneca at Human Genome Sciences and what we found was a success following that trial which was read out back in 2010 interestingly.

Since then, we have had failures and I think what was interesting was AstraZeneca’s proven to some degree that you can actually hit an ed point, you can be successful in getting a clinical trial to be successful in phase III in the lupus space. Because of that, it’s given us more momentum and more confidence that actually, what we’re seeing in Lupuzor and what IMM are doing is going to be better appreciated by the market because now we’re in a posture of not so much negative news all the time but actually seeing a way forward.

The way forward with IMM has always been clear cut for us, following analysis that we did on their phase III trial last year but now I think the market will be more appreciative of the big opportunity that exists in the lupus space.

There may be several companies that make it to market but IMM’s approach could have the greatest success in our view.

Q5 : So, are there parallels to be drawn with other diseases, cancer for example, that have successfully delivered drugs to the market after many years of failure?

A5: Absolutely, actuallyproof to that is I’ve covered the oncology space for 15 years or so, perhaps even longer, but 12 years ago I was advocating the area of immune therapy as being the future in how cancer could be treated.

Immune therapy is, if you go back 15-20 years, were a complete failure in the immunotherapy space for cancer because the pathways that we’re being targeted were wrong some of the platform technologies didn’t work.

We then had this inflection point in melanoma about 5 years ago, with a drug called YERVOY by Bristol-Myers Squibb which was a classic what they call a ‘checkpoint inhibitor’. That, following the barren landscape of failure was a true success and since then, we’ve had a huge number of companies with immune therapies in cancer go on to become successful particularly Merck and Bristol-Myers Squibb, but many others. We’ve seen that space expand significantly and we’ve seen some staggering good data in some cancers that are benefitting from the use of checkpoint inhibitors for patients.

The same pathway, the same story could be told about lupus.

I feel strongly that this success that AstraZeneca has had and the success that IMM have had with identifying this group of patients who really respond to treatment with Lupuzor is a strong way to move to forward, to bring these drugs to market. Particularly Lupuzor, with its ability to be a differentiated product with a pathway, the mechanism of action that’s completely unique, with many benefits surrounding how you dose the patient, the safety profile and ultimately how effective it is in the patients that are given the drug in the first place.

All those factors combined for me gives me a confidence that the field is moving forward again, there’s going to be more success and IMM could benefit from all those factors.

Q6: In closing, what key milestones would you now expect ImmuPharma to achieve over the next period, to reach your target of 76p?

A5: So, the target of 76p is predicated on mainly Lupuzor, going through successfully either on a partnering programme or other mechanisms to fund the phase III. The start of the phase III trial would be a second inflection point following potentially a licencing deal or funding opportunity to fund that drug to market.

So, those two factors alone I think would generate a lot of interest in the company plus I think the momentum will build as more success is seen in the space as companies start to get more interested in lupus as a disease, which has again been a challenge for the market. All those factors combined should start to see, with AstraZeneca’s success, IMM retrace back to where it started from.

The share price about 15 or so months before the phase III trials was announced was around £1.50 level. I think we can get back to that level, we’ve discounted our target price by about 50% so we are very bullish on stock and we do believe that the drug has the ability to be successful in time.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.