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Expert Financial Analysis and Reporting

ImmunoCellular Therapeutics: Is There an Investment Case to be Made? (IMUC, $0.57)

Investment Background

The purpose of this report is to get investors re-engaged with ImmunoCellular Therapeutics (IMUC). On December 11, 2013 the Company announced that ICT-107 did not reach the primary endpoint of median overall survival in a randomized phase 2 trial of 124 patients with newly diagnosed glioblastoma multiforme (ndGBM). The stock plummeted from $2.72 on the day before the announcement to $1.10 the day after and has drifted steadily lower to the recent price of $0.57.

Investors have either forgotten about ImmunoCellular or have written it off. And yet, its lead product ICT-107 produced very encouraging results in its phase 1/2 trials. In the subsequent phase 2 trial which was seen by many as a failure, the primary endpoint of median overall survival was not reached. However, there was a trend in favor of ICT-107 and the results were statistically significant on the secondary endpoint of progression free survival. It also provided a roadmap for identifying specific sub-groups of ndGBM patients that appear to benefit most from therapy and will be the types of patients enrolled in phase 3 trials.

The results of the phase 2 trial in a prospectively defined population of HLA-A2 patients were quite encouraging. If these results can be replicated in an upcoming phase 3 trial, ICT-107 has an extremely high probability of approval. By my estimates, the ndGBM population that is HLA- A2 positive is about 25% (management thinks this is low) of the 12,000 ndGMB patients diagnosed each year in the US; this is 3,000 patients. I am estimating that the price per course of therapy could be $100,000 resulting in a US addressable market of $300 million. Comparable estimates for Europe and the remainder of the world are $300 million and $100 million bringing the worldwide addressable market opportunity to $700 million.

I wrote a detailed report on September 2, 2014 when the stock was at $1.02 explaining why I thought that a phase 3 trial for ICT-107 in newly diagnosed glioblastoma was warranted and that there was a good chance for success. Please refer to that report for background. I have not been recommending the stock since the December 2013 plunge because I was waiting for the Company to announce its decision on the design and timing of a phase 3 trial. I warned that the Company was in a stretched financial condition and would be forced to do an equity offering under duress. I also pointed out that the readout of topline results in a phase 3 trial would likely be out in 2017 or 2018. Because of this, I thought there was no reason to be aggressive on the stock until they completed an equity offering, which they have now done. I think it is now time to buy the stock if you understand and can accept the considerable risks that I will shortly detail.

With the recently completed equity financing, ImmunoCellular has the financial resources to begin, but not finish, the critically important phase 3 trial of ICT-107 in ndGBM. The Company discussed possible phase 3 trial designs, costs and timelines in its November 14, 2014 conference call. I expect that it will give more precise guidance on its plans for phase 3 at the time of the 4Q, 2014 conference call On March 9th. I will no doubt have to refine the information in this report at that time, but the purpose of this report is to get investors engaged in the company now and before the call.

Investment Conclusion

I see IMUC as an asymmetric investment opportunity. For those who are not familiar with this style of investing that I use with emerging biotechnology companies, please refer to this discussion on my website. Those who have followed my work know that I sometimes shoot for “ten baggers” and this is what I am doing with IMUC. I will accept great risk and uncertainty when I feel that that I can come up with upside scenarios that justify the risk. In the case on ImmunoCellular, plausible scenarios discussed in this report suggest that the upside for the stock could be $2.00 to $4.00 by 4Q, 2017 if the fundamentals unfold favorably and in a way that I think has a reasonable chance of happening. I see the downside as $0.00. To me, this is like an option that does not expire over this period and by the way, a $0.00 downside is not uncommon for emerging biotechnology stocks.

I readily admit that there are a lot of uncertainties and negatives which I will list shortly. I also want to emphasize that if you are unwilling to accept the risk of losing all of your money in attempt to perhaps increase it five to six fold in four years, you should not buy this stock. If you do invest, I would urge you to make the amount something that if you lose it all will not affect your quality or life or state of mind. I am publishing this note on March 3, 2015. Per my policy of investing in a new idea at least 48 hours after publishing a new buy, I will buy this stock on March 5.

Investment Perspective on Immuno-Oncology

ImmunoCellular has long suffered from the general investor uncertainty or disdain with immuno-oncology in general and cancer vaccines in particular. However, the view on immuno-oncology has changed significantly over the last year as enthusiasm for checkpoint modulators and CAR-T products is extremely high as is discussed in my report Immuno-Oncology Promises to be the Next “Big Thing” In Biotechnology. I am perplexed that investors can be so excited about checkpoint modulators and CAR-T cells and cautious or indifferent about cancer vaccines. This is probably due to a string of failures with early cancer vaccine approaches. However, we have more recently seen encouraging data from a number of cancer vaccines approaches such as Northwest Biotherapeutics’ DCVax-L and DCVax Direct, ImmunoCellular’s ICT-107, Amgen’s talimogene laherparepvec or T-Vec and Celldex’s rindopepimut to name a few.

T-Vec achieved its primary endpoint of median progression free survival in its phase 3 trial in metastatic melanoma. It missed the secondary endpoint of median overall survival although there was a numerical trend in favor of T-Vec. It will be the subject of an FDA advisory committee meeting on April 25, 2015. The phase 2 results for rindopepimut that were the basis for the FDA granting it breakthrough status were discussed at length in my November 16, 2014 report. This designation expedites the regulatory review of the product.

The MHRA and Paul Ehrlich Institute, the UK and English equivalents of the FDA, have both designated DCVax-L for early access programs. This means that it can be broadly prescribed for gliomas prior to completion of the phase 3 trial. The phase 3 trial involves only ndGBM patients; gliomas are a much broader category that encompasses all cancers that originate in the brain, but not those that metastasize to the brain. I consider this an even stronger regulatory validation than the breakthrough designation from the FDA for rindopepimut.

I think that there is the potential for cancer vaccines to create the same medical and investor enthusiasm as checkpoint modulators and CAR-T cells. While I do not have clinical data to support it, my hypothesis is that dendritic call cancer vaccines are potentially the best of the immuno-oncology approaches. The dendritic cell is the most important antigen presenting cell that in humans orchestrates both the T-cell and B-cell components of the adaptive immune system and also some elements of the innate immune system. The checkpoint modulator and CAR-T cell approaches enhance just the activity of T-cells. I consider Northwest Biotherapeutics and ImmunoCellular to be two leaders in dendritic cell cancer vaccines.

How Good Were the Phase 2 Results of ICT-107?

The phase 2 trial produced some highly encouraging results if one looks only at the HLA-2 groups which will be the basis for the phase 3 trials. Later in this report, I will discuss these patient groups in more detail. There were 38 patients (24 on ICT plus SOC) in the HLA-A2 unmethylated group and 31 patients (17 on ICT-107 plus SOC) in the HLA-A2 methylated group. Recognizing that these are small patient groups from which to draw conclusions, I nevertheless find some very encouraging data.

  • The median overall survival improvement in the per protocol HLA-A2 unmethylated group of 4.0 months is quite impressive. Because of the small size of the group, this was not statistically significant. Key opinion leaders generally feel that an improvement of 4.0 to 5.0 months in an aggressive cancer like GBM is a significant advance.
  • Median progression free survival improvement for the HLA-A2 methylated per protocol group was a highly impressive improvement of 15.6 months which was statistically significant at p=0.004. Median overall survival for the control group was 23.9 months and median overall survival for the control group has not been reached. Progression free survival is extremely important in GBM. As the cancer progresses, it begins to infringe on other areas of the brain and causes serious side effects. Delaying progression by this magnitude is extremely impressive.

If these results are replicated in a phase 3 trial, I have a high degree of certainty that ICT-107 would be approved.

Looking At a Long List of Risks and Uncertainties

There are significant risk factors to consider if you are thinking about investing in this stock which I will try to go through in the following paragraphs. I do not pretend to know the outcome for all of these issues; I am not the Delphi Oracle.

Competition from Cancer Vaccines of Northwest Biotherapeutics, Celldex and Prophage

There are two cancer vaccine products that are further along in clinical trials in ndGBM. Northwest Biotherapeutics could report topline results in a 348 patient trial of DCVax-L in 1H, 2016 and Celldex could report topline results for rindopepimut in the 374 patient phase 3 ACT IV trial in 1H, 2016. As previously mentioned, phase 3 results for ICT-107 may be available in 4Q, 2017 over a year and one-half later. The range of outcomes in the DCVax-L and rindopepimut phase 3 trials could significantly affect thinking on ICT-107 in difficult to predict positive or negative ways.

ICT-107 and rindopepimut are targeting sub-groups of the ndGBM population while DCVax-L is aimed at almost all patients of this group. ICT-107 is aimed at HLA-A2 patients which I estimate to be 25% of the ndGBM population and rindopepimut is appropriate for 30% of the ndGBM population who express the EGFRvIII mutation. DCVax-L is being studied in a broader range of patients including those addressed specifically by ICT-107 and rindopepimut.

Both DCVax-L and ICT-107 use similar technologies that load autologous (come from the patient’s own body) dendritic cells with cancer antigens. ICT-107 uses six pre-selected antigens that are synthetic mimics of antigens frequently expressed in ndGBM. DCVax-L loads the dendritic cells with what it hopes to be the full range of cancer antigens found in the tumor. This is done by lysing tumor material obtained in the surgical resection and exposing dendritic cells to those antigens. So which approach is best? Intuitively, I think that the DCVax-L approach is better. However, there is no data to support this. Both DCVax-L and ICT-107 produced very strong signals of efficacy in phase 1/2 trials; in fact they were about the same and as previously mentioned the phase 2 results for ICT-107 were encouraging.

Rindopepimut uses an entirely different approach. There is no data to suggest that it is better or worse than either DCVax-L or ICT-107 in its intended population of ndGBM with EGFRvIII mutations. Rindopepimut contains the peptide that mimics EGFRvIII that is linked to a carrier protein called keyhole limpet hemocyanin, or KLH. Keyhole limpet hemocyanin is used extensively in immunotherapy as a carrier protein to stimulate a response from the immune system. The peptide/ KLH linkage is administered as an injection along with the adjuvant GM-CSF.

There is also a fourth vaccine in development from Agenus. This is a heat shock protein vaccine that has some similarities to DCVax-L and ICT-107. It is ready for phase 3 but Agenus has announced that it is putting all of its resources into checkpoint modulators and may only go into phase 3 with a partner. Management is mulling this over. Here is some comparative data on results from early trials of these vaccines.

Clinical Trial Data For Cancer Vaccines for Newly Diagnosed Glioblastoma

Drug Patients Treated Median Overall Survival for Drug (months) Median Overall Survival for Standard of Care (months) Difference in Median Overall Survival (months)




















Standard of care





There is a very hot debate on how meaningful the numbers in the above table are because of the small number of patients and none of these trials were randomized.


I believe that investors have not come to grips with the complexities of manufacturing autologous living cell therapies like those of ImmunoCellular, Northwest Biotherapeutics, Kite and Juno. The process starts with taking living cells from the body, manipulating them outside of the body and then re-injecting them. This is not like making an inorganic molecule like aspirin or creating some protein like a monoclonal antibody in a bacteria, yeast or mammalian cell and then extracting it.

Manufacturing is usually taken for granted by investors and I almost never hear questions at conferences about manufacturing. However, with autologous living cell therapies, this is crucial because the manufacturing process is the product. There is the potential that changing the process can lead to a very different cell than those that may have been made before. This is not to mention that the cells extracted from a patient to begin the process can vary widely from patient to patient.

It is the manufacturing issue that I worry most about with ImmunoCellular. Management has suggested that this is not so complex, but I am not reassured. IMUC used two different manufacturing processes in phase 2 so that they must use a third process in the clinical trials. There may be complexities with trying to establish that the ICT-107 manufacturing process that will be used to produce the product in phase 3 trials and eventually for commercialization is comparable to the processes that produced the phase 2 results. I fear that there could be regulatory issues that arise that could produce problems. Kite and Juno face this same problem.

Strained Balance Sheet

By my estimates, if the Company begins a phase 3 trial in mid-2015, it only has enough cash to last until 2Q, 2016. I further estimate that it will need to raise an additional $44 million to get to the point at which topline results for the phase 3 trial will be available. With a current market capitalization of $67 million, this indicates that a significant number of new shares must be issued. Later in this report, I go through a reasonable worst case and best case scenario on how many shares might be outstanding in late 2017 when topline results from the phase 3 trial are known.

The two scenarios involve a complicated and torturous analysis of current shares, warrants and options outstanding which comprise fully diluted share count and how they might increase in the future as a result of financings. In both cases I assume that the money is all raised as equity at the current share price of $0.57. I estimate the current fully diluted share count as 117 million and by 4Q, 2017, in my reasonable worst case estimate the fully diluted share count could be 253 million.

There are a host of in-between scenarios which include raising money through venture debt or partnering. There is also the probability that the price at which equity is raised is higher or lower than $0.57. And of course, there is the risk that market conditions may not allow the Company to raise this amount of money. I told you there are a lot of uncertainties.

Valuation and Price Target

Setting price targets is very difficult even for large companies. Their stock prices are greatly influenced by the current level of sales and earnings and expectations for future growth. However, as Yogi Berra said “projections are very hard, especially about the future.” And then there are many unconstrained variables which can have great influences on stock prices that fall in the geopolitical realm like the war in the Ukraine and Iran’s attempt to develop a nuclear weapon and economic uncertainties such as Greek debt, Chinese monetary policy and Federal reserve interest rate policy and on and on and on. Stocks have commodity characteristics so that there price is set by a broad range of ever shifting perceptions.

Sometimes perceptions can be totally out of line with the potential for a stock and this is especially true for emerging biotechnology companies where there are enormous uncertainties about the potential for products in development to be successfully developed. My basic approach to setting a price target has two components. I look at what peer biotechnology companies are selling for although there seems never to be a true peer company. I then try to gauge how a company might be perceived and valued if it is successful in its product development efforts which for ImmunoCellular is ICT-107

Looking very narrowly at some companies involved in cancer vaccines, the difference in valuations is striking. In the cancer vaccine space, Celldex has a market valuation of about $2.6 billion, Northwest Biotherapeutics $662 million, Agenus $355 million and ImmunoCellular $67 million. Of course, part of the value of Celldex lays in its second drug in development glembatumumab and a broad range of phase 1 monoclonal antibody products. Northwest also has a highly promising second dendritic cell vaccine in development with DCVax Direct. Agenus has changed its focus to checkpoint modulators.

Stretching the definition of a peer company t0 those in immuno-oncology, I note that The CAR-T cell companies, Juno and Kite which have respective market valuations of $3.6 billion and $2.9 billion respectively. It is interesting to note that the spectacular results seen in phase 1 and 2 trials in aggressive leukemias and lymphomas for products of Kite and Juno resulted from trials done at academic centers and the National Cancer Institute. Neither company has yet completed a clinical trial. Indeed they will begin phase 2 trials this year that they hope will replicate results seen at the academic centers and NCI. I would note that the results seen in phase 1/2 for ICT-107 in aggressive ndGBM were also pretty spectacular. I scratch my head that Juno and Kite are valued 40 times more highly.

I try in this report to look at what the market value of IMUC might be in 4Q, 2017; this is the time at which we will probably know if the phase 3 trial is successful. If so, ICT-107 would be primed to enter a worldwide addressable market of $700 million. We don’t know exactly how DCVax-L and rindopepimut will compete in this market. Perhaps they will obviate the need for ICT-107 or perhaps both will fail and ICT-107 will have the market to itself. I would note that Kite, Juno and the large pharma company Novartis are also developing their lead products for pretty much the same cancers so competition is not unique to cancer vaccines.

Based on experience of many years, I suspect that if ICT-107, DCVax-L and rindopepimut are all successful in clinical trials that they will each find a niche in NDGBM and commercial success. I think that if investors see ICT-107 as a $100 million to $200 million product they might assign a market value of $500 million to $1 billion in 4Q, 2017.

To translate this potential market value into a target price per share, we have to estimate the number of shares that will be outstanding in 4Q, 2017. As previously explained I estimate this in my most reasonable worst case scenario to be 253 million shares. Based on my estimate that success with the phase 3 trial of ICT-107 could lead to a $500 million to $1 billion market valuation, my target price range is $1.97 to $3.95 in 4Q, 2017. Of course, this all assumes that current market valuations of emerging biotechnology stocks remain at roughly the same levels four years into the future and we know this is unlikely.

While I am focusing on 4Q, 2017 to set a price target, I think that there is a good possibility that the perceptions could begin to change in the near term to the benefit of the stock price. I think that other investors could, like me, be impressed when made aware of the phase 2 results in HLA-A2 patients. I think that management of IMUC has been very quiet until they have finalized the phase 3 trial design (I think this will be announced on March 9th) and got the financing needed to start the trial. The CEO of the Company, Andrew Gengoes, has established a record for credibility and as he now begins to tell IMUC’s story, there could be a positive reaction in the stock price.

Financial Position Following the Equity Raise

The Company completed an equity offering on February 12, 2015 that gives them the resources to begin a phase 3 trial. They sold 26.7 million shares priced at $0.60 which raised net proceeds of $15.0 million. In connection with the offering they issued 18.7 million warrants exercisable at $0.66 with a five year term. If the warrants are exercised they will bring in an additional $12.2 million. I estimate that IMUC had $21 million of cash at the end of 2015. This immediate cash infusion of $15 million would bring the pro forma 2014 year end cash position to $36 million and if the warrants are eventually exercised it would be $48 million.

This deal brings the total number of shares outstanding to 79.4 million. In addition, there are 9.5 million options outstanding and the 18.7 million warrants issued with the deal bring the fully diluted share count to about 108 million shares. There are also 4.7 million warrants exercisable at $1.41 that expire in January 2017 and 4.5 million warrants that expire in October 2017. I am including these in my fully diluted share count even though they are so far out of the money that they would probably not be included under generally accepted accounting principles. This results in my fully diluted share count estimate of 117 million shares. At the current price of $0.57, the market capitalization is $67 million based on my estimated fully diluted share count of 117 million shares.

Thoughts about the Design of Phase 3 Trial

Based on data from its 124 patient phase 2 trial, ImmunoCellular has a very good insight into patient selection for the phase 3 trial. The construct of ICT-107 allows it only to be used in patients who are HLA-A1 or HLA-A2 positive. HLA or human leukocyte antigens are proteins located on the surface of white blood cells and other tissues in the body that allow the body’s immune system to recognize tissue as self of non-self. Patients with HLA-A1 or HLA-A2 typing recognize ICT-107 as self and do not launch an immune response while other HLA subtypes do.

Another important factor relates to how patients respond to the chemotherapy agent temozolomide, which in conjunction with radiation is currently the standard of care (SOC) for recently resected glioblastoma patients. IMUC in its phase 3 trial will be seeking to demonstrate that ICT-107 added to SOC will meaningfully improve median overall survival versus SOC used alone.

Temozolomide is an alkylating agent that kills cancer cells by damaging their DNA. Patient responsiveness to temozolomide can differ significantly based on the status of the MGMT gene. If the MGMT gene is activated through methylation of its promoter region, it can give rise to an enzyme that repairs the damage done to cancer cells by temozolomide. In glioblastoma patients in which MGMT is methylated, the gene is turned off and patients have better response to temozolomide and better survival prospects. Patients with unmethylated MGMT have a worse response to temozolomide and worse survival prospects. Consequently, phase 3 trials must be designed to account for MGMT status.

Based on results in the phase 2 trial, IMUC has concluded that the treatment benefit of ICT-107 is greater in HLA-A2 than HLA-A1 patients so that the phase 3 trial will enroll only HLA-A2 patients. They will also design the phase 3 to account for MGMT status. There are two basic strategies that they could follow. One is to have two phase 3 studies: one would enroll patients with methylated MGMT status and the other would enroll patients with unmethylated MGMT. The second possibility would be to have one phase 3 trial that would enroll methylated MGMT and unmethylated MGMT patients and stratify (statistically account for) results for the two groups. The company indicated in its S-1 filing of December 12, 2014 that their preliminary strategy was to conduct a single phase 3 trial.

Having only one phase 3 trial is supported by phase 2 data that shows that the treatment effect in both MGMT groups appears to be about the same as the unmethylated MGMT group has a hazard ratio of 0.652 and the methylated MGMT group has a hazard ration of 0.631. Of course, survival is much longer in the methylated MGMT group; the ICT-107 patients have not reached median overall survival in this sub-group as only 35% of patients in the ICT-107 group have died.

Based on conversations with the FDA, IMUC reported on its November 14, 2014 conference call that it had concluded that the FDA would accept a successful outcome based on either the one phase 3 or the two phase 3 trial designs. It will accept the phase 2 trial as support for a BLA filing. At that time, the EMA had not provided comparable feedback and IMUC was waiting for its input as they will want to harmonize the phase 3 trial across the two continents. As previously noted, in the recent S-1 document, ImmunoCellular said that its preliminary decision will probably be to go with one phase 3 trial.

The Company estimates that it would have to enroll about 400 patients if the single phase 3 plan is followed and estimates that this would take 18 to 24 months. If this trial were to start in mid-2015, enrollment would be concluded in late 2016 or mid-2017. There would then be some time for the study to reach the specified number of events in the trial, lock the data base and analyze the data. As a guess this might take nine months so that topline results might be available in 4Q, 2017; this was the time from when phase 2 enrollment ended until topline results were reported. IMUC roughly estimates that the cost per each patient enrolled will be on the order of $100,000 to $120,000 so that the total cost of the trial would be $40 to 48 million.

The two phase 3 trial plan would enroll about 700 patients and take 24 months or more to complete. This would indicate that topline results might be available in 2Q, 2018 and that the cost of the trial would be $70 to $85 million.

Size of Patient Population for ICT-107

The enrollment criteria for the phase 2 trial called for patients being HLA-A1 or HLA-A2 positive. The Company screened 278 patients in order to enroll 124 patients. The Company has not detailed why patients were rejected for the trial but I think the overwhelming majority was for HLA status. To be conservative, let’s assume that 44% of the GBM population (124 of 278) is HLA-2 or HLA-A1 positive. The Company thinks it is 50% or more.

In the phase 2 trial there were 38 patients who were HLA-A2 positive with unmethylated MGMT of whom 24 were on ICT plus SOC and 14 were on SOC. There were 31 patients who were HLA-2 positive with methylated MGMT of whom 17 were on ICT plus SOC and 14 were on control. This indicates that 56% of patients in the trial were HLA-A2 positive. This suggests that in the broad GBM population, 25% of patients (44% x 56%) would be potentially benefitted by ICT-107. Management thinks the percentage is higher. In any event, this patient population is about the same as rindopepimut which Celldex estimates addresses 30% of the GBM population that has the EGFRvIII mutation.

Most estimates place the annual number of newly diagnosed glioblastoma patients at about 12,000. This suggests that the target market for ICT-107 would be about 3,000 patients per year. I estimate that it could be priced at about $100,000 per course of therapy so this indicates an annual addressable market of about $300 million in the US, a similar $300 million in Europe and perhaps $100 million in the rest of the world resulting a worldwide addressable market of $700 million.

Looking at the Burn Rate Through 4Q, 2017 When Topline Results from Phase 3 May Be Available

The intrinsic burn rate for the company has been about $2.5 million per quarter in the recent period in which there has been no ongoing trial of ICT-107. Let’s assume that this remains at $2.5 million over the course of the ICT-107 phase 3 trial. Given the promise of the pipeline, this could increase if funds are available, but for the time being I will assume that it remains at $2.5 million. In order to estimate the quarterly burn rate going forward through the period at which topline results are available let’s assume that

  • The single phase 3 trial option is chosen as seems likely based on company statements.
  • The trial starts in mid-2015 and enrollment concluded in 21 months (the mid-point of the guidance range) or 1Q, 2017
  • The trial is drive by events or the number of deaths so that it is difficult to estimate when this will occur and how long it will take to lock the data base and release topline results. Phase 2 enrollment completed on September 5, 2013 and topline results were released on December 12, 2013. I am using this as a proxy and estimate that topline results for the phase 3 trial will be released six months after completion of enrollment. This would be in 3Q, 2017
  • The cost of the trial is $40 million per management guidance and evenly spread over each quarter from 3Q, 2015 to 1Q, 2017. This would be $5.7 million per quarter. This is a questionable assumption as enrollment and costs will escalate as the trial progresses. In the early stages, it will be less than $5.7 million and in the later stages more. Also, some of the costs will be incurred after enrollment completes.

With these assumptions the burn rate in 1Q and 2Q 2015 would be $2.5 million. For the period 3Q, 2015 to 1Q, 2017 as the trial is underway; the burn rate per quarter would be about $8.2 million per quarter. Then for the last three quarters of 2017, it would be $2.5 million per quarter. This would be the cash required to get to the release of topline results in 4Q, 2017. These are very rough “ballpark” estimates.

Under the above assumptions, the company would burn through current cash position of $36 million by 2Q, 2016. Clearly, it does not have enough cash on hand to complete the phase 3 program under the one phase 3 trial plan, which is the most optimistic from cash expenditure and time perspective.

To get to the point at which topline results might be released in 4Q, 2017, I think that the total cash burn would be about $70 million. Assuming that the Company wouldn’t run its cash balance to zero and would like to have $10 million of cash at that time, it will need to come up with $44 million of cash.

If the warrants from the February 12, 2015 deal are exercised, this would bring in about $12 million. If the warrants (exercisable at $1.41) from the January 2012 deal and warrants (exercisable at $2.15) from the October 2012 deal are exercised this would bring in $16 million, but this seems unlikely given the exercise prices. If all of the 9.5 million options are exercised at their average exercise price of $1.33, this would bring in $13 million. Based on this reasoning, if all outstanding warrants and options are exercised, it would bring in $41 million of cash, which is almost enough to cover the amount of cash needed to get to topline results for the phase 3 trial in 4Q, 2017.

Is There a Positive Investment Case Given That the Company Is Inadequately Financed?

At a market capitalization of $67 million, the stock seems significantly underpriced for a Company entering into a phase 3 with a reasonable chance of success even with the financing overhang. There seems to be such a disconnect in the market when recently “IPO’d” oncology companies such as Kite and Juno carry market capitalizations of $2.7 billion and $4.1 billion. Granted, CAR-T therapy has produced extremely exciting phase 1 results, but neither of these companies has done a phase 2 trial for their lead drug.

I think that investors are unduly concerned that IMUC will have to do additional financings and there seems to be a kneejerk reaction that any financing is bad which is nonsense. I think that an investment case can be made for IMUC in the case that it has to raise all of this $44 million that I estimate is needed to get to phase 3 topline results in 4Q, 2017 through equity issuance.

Let me try to put together a pretty negative scenario in which the stock price remains unchanged at $0.57 per share from now until 4Q, 2017. Let’s assume that the Company has to issue shares at a 10% discount to this price or $0.52 cents per share. To raise $44 million of cash, the Company would have to issue 85 million shares. Let’s further assume that it has to issue 0.7 warrants for every share issued (as in the February 12 deal) or 60 million warrants.

Under the situation that I laid out the fully diluted share count in 4Q, 2017 would be about 253 million shares. This essentially only excludes the 4.7 million warrants from the January 2012 deals and the 4.5 million shares from the October 2012 deal. It includes 9 million options and 79 million warrants. The market capitalization in 4Q, 2017 assuming a share price of $0.57 would be $143 million.

I think that success in the phase 3 trial would lead to a market capitalization of $500 million to $1 billion based on comparison to how peer companies with these credentials are currently priced. This would result in a share price of $1.97 to $3.95 in 4Q, 2017. This suggests that even with the need for substantial additional financing, the stock has significant upside if the phase 3 trial is successful.

If the price of the stock somehow rises to the point that all current warrants and options are exercised in a timely fashion and bring in $41 million of cash, there might be no need for further fund raising and the share count in 4Q, 2017 would be 117 million shares. Again assuming that the market capitalization increases to $500 million to $1 billion if the phase 3 trial is successful, the per share price in 4Q, 2017 under these assumptions would be $4.27 to $8.55.

The two above examples lay out a reasonable best case and worst case scenario for bringing in the cash necessary to complete the phase 3 trial and produce topline results. However, there are a large number of in-between scenarios that would result from raising cash through other financing vehicles. And of course, the stock price at which new shares are issued is likely to change.

During the November 14 conference call, the Company cited some other possibilities for coming up with the needed cash. They mentioned venture debt financing and a corporate partnership as possible sources of cash. They might prefer to do a partnership but this would take time and they don’t want to postpone the phase 3 program to try to do a partnership. I am not a strong proponent of partnering because of the sharp reduction in economics incurred by the licensing company. I would frankly prefer that IMUC raise the capital on its own as per my prior example.

Results from Phase 2 Trial

In the phase 2 trial, ICT-107 treated patients had a numerical advantage in overall survival (OS) of two months more than placebo patients in the intent-to-treat (ITT) population but that the difference in survival between ICT-107 and placebo treated patients (the primary efficacy endpoint of the trial), did not reach statistical significance (p-value = 0.58; Hazard Ratio = 0.87). For Progression-Free Survival (PFS), an important secondary efficacy endpoint, they reported that ICT-107 treated patients had a two-month advantage in median PFS compared with placebo patients in the ITT population. This difference in PFS between ICT-107 and placebo treated patients reached statistical significance (p-value = 0.014; Hazard Ratio = 0.56).

In the November 2014 update, IMUC reported that a total of 88 events (patient deaths) had been recorded from the 124 randomized patients. There were 25 active and 11 control patients alive for a total of 36 patients available for additional follow-up. They summarized the results as follows:

Median PFS in the intent-to-treat (ITT) population (all phase II patients) was 11.4 months for the ICT-107 treated group and 10.1 months for the control group, representing a statistically significant benefit in the ICT-107 treated group (age stratified HR = 0.640 [0.423-0.968], p = 0.033).


Median PFS for the HLA-A2 methylated MGMT per-protocol (PP) population was 24.1 months for the ICT-107 treated group and 8.5 months for control, representing a statistically significant 15.6-month PFS benefit for the ICT-107 treated group (age stratified HR = 0.257 [0.095-0.697], p = 0.004).


Median OS for the HLA-A2 methylated MGMT PP population was 23.9 months for the control group, and the median has not yet been reached for the ICT-107 treated group. At the time of the analysis, 65% of ICT-107 patients and 50% of the control patients were alive (age stratified HR = 0.631 [0.212-1.880], p = 0.404), suggesting the potential for long-term survival with ICT-107 treatment.


Median PFS for the HLA-A2 unmethylated MGMT PP population was 10.5 months for the ICT-107 treated group and 6.0 months for the control group, representing a 4.5-month median PFS benefit for the ICT-107 treated group (age stratified HR = 0.720 [0.351-1.474], p = 0.364).


Median OS for the HLA-A2 unmethylated MGMT PP population, was 15.8 months for ICT-107 patients, and 11.8 months for the control group, representing a 4-month median OS benefit for the ICT-107 treated group (age stratified HR = 0.652 [0.320-1.325], p = 0.233).

Looking only at the HLA-2 groups which are those who will be included in the phase 3 trial the data are quite encouraging. However, I must point out that there were only 38 patients (24 on ICT plus SOC) in the HLA-A2 unmethylated group and 31 patients (17 0n ICT plus SOC) in the HLA-A2 methylated group. These are uncomfortably small patient groups from which to draw conclusions. Here are my key takeaways:

  • The median overall survival improvement in the per protocol HLA-A2 unmethylated group of 4.0 months is quite impressive. Because of the small size of the group, this was not statistically significant. Key opinion leaders generally feel that an improvement of 4.0 to 5.0 months in an aggressive cancer like GBM is a significant advance.
  • Median progression free survival improvement for the HLA-A2 methylated per protocol group was a highly impressive improvement of 15.6 months which was statistically significant at p=0.004. Median overall survival for the control group was 23.9 months and median overall survival for the control group has not been reached.

If these results were replicated in a phase 3 trial, I have a high degree of certainty that ICT-107 would be approved.

There is an Interesting Pipeline

There are two other dendritic cell vaccines that will be in clinical trials in 2014. ICT-121 targets the cancer stem cell antigen CD-123. It uses the same dendritic cells as ICT-107 but is loaded with this antigen rather than the six that are used in ICT-107. An investigator sponsored trial is enrolling 20 patients with recurrent glioblastoma and indicates that data will be collected in 4Q, 2015. There will be four induction vaccinations and then a series of maintenance vaccinations depending on progression. The primary endpoint of the trial is safety but they will also track median overall survival and progression free survival. It will enroll only HLA-A2 patients.

ICT-140 is a seven antigen vaccine for ovarian cancer that uses the same dendritic cell as ICT-107 and ICT-121. A phase 2 trial is pending but not yet recruiting. The plan is to enroll 40 patients on ICT-140 and 20 on SOC, which in this group of ovarian cancer patients is watchful waiting. The primary endpoint of the trial is safety but they will also track median overall survival and progression free survival. Patients selected for this trial are difficult to treat ovarian cancer patients who have gone through numerous treatments with a focus on patients with a high probability of recurrence. These include patients who have has large tumors resected and/or have residual tumor, likely to recur. They will only enroll HLA A2 patients in this trial.

In 2014, IMUC announced that it had in-licensed technology from the laboratory of David Baltimore at California Institute of Technology. This technology is in the pre-clinical phase so there is no human data. However, the concept is intriguing. It involves the ex-vivo manipulation of hematopoietic stem cells taken from the patient to create antigen specific killer T-cells that attack the cancer. This is of course the approach of CAR-T and TCR cell therapies being developed among others by Kite and Juno. This technology has the theoretical promise of being a better approach.

A limitation of the CAR-T and TCR approaches is that they tend to induce short lived responses. The IMUC technology diverges from that of Kite and Juno which takes mature T-cells from humans that have already gone through a number of differentiations. These T-cells are then manipulated ex-vivo in a process in which they go through more differentiations. They are then re-injected into the body and once again have to go through differentiations. Because, there is a limitation on the number of differentiations that a T-cell can go through, they have a shorter lifetime of circulating in the body. The technology licensed by IMUC is different in that it isolates the stem cell and then transfers in the genes necessary to express an antigen receptor in daughter cells. This could result in a much longer life of the T-cells. They have seen potent and prolonged responses in animal studies.








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  1. Hi Larry,

    I too was amazed by how well the HLA-A2 group did in the ICT-107 trial. I’m particularly interested in the following:

    “Median OS for the HLA-A2 methylated MGMT PP population was 23.9 months for the control group, and the median HAS NOT YET BEEN REACHED for the ICT-107 treated group.”

    Two thoughts.

    1. Concerning competition from Rindopepimut: The three small phase II unblinded trials previously conducted were amazingly consistent in obtaining 21 month Overall Survival. However EGFR GBM patients treated with standard of care historically reach 19 months overall survival. That’s only a two month improvement. Unless something changes drastically in their phase III trial, FDA approval of Rindopepimut for newly diagnosed GBM therapy seems unlikely.

    2. Concerning competition from DCVax-Direct: Unbeknownst to most everyone, UCLA’s neurology department already conducted a PHASE II trial with DCVax-Direct. The indication is still unknown, but the results proved the method of action. One can only assume more specific published results, and perhaps a formal DCVax-Direct trial on GBM might potentially start after the Current L trial fully enrolls. If so, I would forsee this as IMUC’s greatest competition in the HLA-A2 subgroup — particularly because GBM only has moderate genetic mutation variability compared with other cancers like lung and melanoma — and thus it would seem DCVax-Direct will provide significant efficacy.

    Granted, and as you are aware, most data from Direct is anecdotal thus far; nonetheless, investors should watch for results in that phase I DCVax-Direct trial and be alert for any further forthcoming information from UCLA’s neurology Department on their recently conducted DCVax-Direct phase II trial. That combined data could change everything.

  2. Celldex is developing DDX-301 which is an antibody that is injected into a tumor and is said to increase the number of dendritic cells. This is the only other approach that I am aware of that has the same biological hypothesis as DCVax-Direct. 301 is in phase 1 and will have data later this year.

  3. So many analysis on seeking alpha believing Rindopepimut phase 2 results is a slam dunk with the FDA. Maybe it is or maybe it’s not. I think the biggest difference with IMUC and Celldex is how well Celldex designed it’s phase 2 trial compared to IMUC. IMUC’s had way too patients not showing all 6 antigens in their phase 2 trial. The poor management for the phase 2 trial is enough for me to not want to invest in them now or the near future. I agree with the above comment that Direct will be what changes the battlefield of dendritic cell therapy.

  4. I am in the slam dunk camp. There is a lot of worry that PFS will slip above the magic 0.05 number in the final analysis and of course this is the primary endpoint; overall survival is the secondary endpoint. I think that OS trumps PFS. Moreover, the use of Avastin affects images from MRI and CT making it difficult to assess the progression of GBM so that the PFS results in the ReACT trial are questionable. I take FDA’s action of designating rindopepimut as breakthrough therapy suggests that they feel this way also. I look for marketing to begin in 2H, 2016. Remember that no drug has ever shown a susvival benefit in rGBM. Also, rindopepimut has a bebign side effect profile so giving it to rGBM patients won’t affect quality of life negatively. This is why I am a slam dunker.

  5. Thanks Larry for reminding me that IMUC is a good contrarian target.
    But I will wait for the topline data of DC-L before any action. My gut feeling is that DC-L could replicate its two previous P1 trials.

    My another concern is that IMUC may underpower its P3 trial again. Compared to CLDX P3 which employs OS as primary endpoint with 700 pts, IMUC P3 will probably need those long-tail survivors to reach statistical significance which is not only dangerous but also time-consuming.

    Though I do not own 1 share of CLDX, I have the impression that EGFRvIII patients fall into the classical GBM subgroup which has arguably the worst prognosis. That is my reason why CLDX’s seemingly lukewarm previous trail data yield such good results in rGBM pts and its forthcoming P3 on ND-GBM will show 6 month survival advantage.

    So it was a little surprised for me to see flipper’s remark “However EGFR GBM patients treated with standard of care historically reach 19 months overall survival.” I guess I will try to dig some data about that. Off the top of my brain, I think tumors presenting EGFR antigens are bad for prognosis as tumors use this antigen to self fuel their growth.

  6. In its phase trial in ndGBM, CLDX cited overall survival in a matched group of patients with the EGFRvIII mutation as having 16.0 months overall, see the above table. This is the only data I have seen. Like you, I thought this sub-group had more aggressive disease.

    In regard to the ACT IV trial, I just met with Tibor Keler, CLDX’s Chief Scientific Officer at a conference and had the opportunity to speak with him for about 15 minutes. Let me relay some notes from the meeting. I intend to write these notes up and when I do so it is my practice to have the Company review them for factual accuracy. It is amazing how many mistakes I make in taking notes and I don’t trust myself until the Company reviews them for factual accuracy. That said, here are the notes that I took.

    Celldex screened 4800 patients to find 745 with the EGFRvIII mutation. Of these 375 met the criteria for minimal residual disease as determined by imaging that makes them eligible for the final analysis of the trial. I am confused by this as says that 700 pateints were enrolled. If my notes are correct the final analysis would be on 375. I’ll get back when I clarify this.

    They did not exclude rapid progressors and pseudoprogressors from the trial. I find this surprising as Roche did this in its two phase 3 trials of Avastin in ndGBM and of course NWBO did this. Since about 20% of presenting patients are pseudos or rapids, this could meaningfully affect the final analysis. I want to double check this with the Company. I may have misunderstood and it could be that in going from 745 to 375 patients that they did make this exclusion. If they did not, it is a flaw in the trial.

    As we see in the IMUC phase 2 results,methylation status is a big deal. I asked CLDX if they has stratified the trial for methlation status and they had not. I asked what other things they had stratified for and he did not immediately come up with any. The DCVax-L trial does stratify for mehtylation status as will the IMUC phase 3. I think this is a mistake on the part of CLDX if the they are unlucky on methylation status in the randomization process.

    Thanks for the insights. I think that there are many occcasions when subscribers have important insights that add much value to the reports that I publish. Analysis should be like a glacier. It is always slowly grinding forward trying to find the truth.

  7. I know Celldex placed 16.0 MONTHS in the PR table as the average OS for EGFR expressed Newly Diagnosed GBM. However, when I first studied this, I located a well researched article that suggested the OS for EGFR variants when treated with the stupps protocol is actually 19 MONTHS.



    Here is the suggested reason.

    “Major results were as follows: 1) the presence of EGFRvIII in GBM tumors correlates with longer OS. The association of EGFRvIII/Ki67 of 20% or less, of EGFRvIII/normal PTEN, and of EGFRvIII/methylated MGMT identified subgroups of GBM patients with better prognosis; 2) EGFRvIII expression is reduced in GBM recurring after adjuvant radiotherapy and TMZ; and 3) EGFRvIII-positive GBM neurosphere cells are less resistant to TMZ than their EGFRvIII-negative counterparts.”

    Also see Table 2: EGFR Positive: 19 MONTHS OVERALL SURVIVAL.

    If correct, that would only translate to approximately a 2 month advantage for Rindopepimut in newly diagnosed Glioblastoma Mutiforme. In three small phase II trials, Rindopeipimut consistently demonstrated approximately 21 months overall survival in EGFR expressed tumors.

    If Celldex’s 700 patient phase III trial only shows a 2 month OS advantage over control in patients with EGFR variance, I’m not certain whether it is powered to show significance.

    On the Recurrent phase II REACT study. It demonstrated 3.2 months increased median overall survival in a phase II trial (control = 8.8 months and Rindo = 12months). I know you are far more experienced and typically more knowledgeable than myself on what constitutes a “slam dunk,” but I’d be somewhat reluctant to go that far.

    (2014: Avastin (The control used in the phase II recurrent Rindopepimut trial) may no longer be recommend for Recurrent GBM. September 22, 2014. It received approval in 2009, but it looks like it might be pulled.

    In February Avastin failed its phase 3 trial regarding newly diagnosed GBM, even though it succeeded in its phase II trial. )

  8. Interesting and surprising. Thank you for the comment.

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