Tuesday 20 August 2013

Biotech Buzz Post No. 1 - IMMU

We live in a society exquisitely dependent on science and technology, in which hardly anyone knows anything about science and technology - Carl Sagan (1934-1996), American astronomer

Immunomedics - the Next Big Thing in ADCs

Greetings from Sydney, Australia. Australian Biotechnology Buzz is a new Blog where I'd like to explore the people, companies and issues that make up the Life Sciences landscape. My interest is global, but I am particularly interested in what's going on in Australia. I've been an interested observer of biotech since 2002, first with Southern Cross Equities, where I was an equity analyst covering the sector, then at Bell Potter Securities, which bought Southern Cross Equities in 2008 and completed its earn-out of the business in 2011. I left Bell Potter in June 2013 and started this blog so I could keep actively following this industry that I love.

In today's inaugural entry I'm looking at Immunomedics, Nasdaq code IMMU, an antibody company from the Garden State bedroom community of Morris Plains. I've been fascinated by antibodies for years, ever since that fateful day in February 2002 when Southern Cross Equities asked me to write up Peptech (creator of one of the first anti-TNF antibodies) and thereby turned me into a biotech junkie. That was over a decade ago, and antibodies have come a long way since then. The two big antibody developments in recent years have been bi-specific antibodies that can hit more than one target at once, and antibody-drug conjugates (ADCs) that can use the exquisite specificity of antibodies to deliver drugs directly to targets of interest. The big winner in that space has been Seattle Genetics (Nasdaq: SGEN), now capped at more than US$5bn. Immunomedics, however, at a mere US$43 0m, wants to be a contender as well, with the company announcing on 12 August that  it was moving into Phase II with some ADC cancer programmes focused on solid tumours.

It's been a good year for Immunomedics. The stock was around US$2.50 back in May and now it's around US$5.00. The excitement relates mainly to an antibody called epratuzumab, which targets CD22 on B cells. The Belgian drug major UCB has taken epratuzumab to Phase III for lupus, a drug market set for strong growth thanks mainly to GSK's Benlysta, which in 2011 became the first new lupus drug in fifty years. Meanwhile for its own account Immunomedics showed on 14 August that epratuzumab combined with Roche's spectacularly success Rituxan antibody could being about solid progression-free survival numbers for follicular lymphoma in Phase II clinical work. Throw in other studies that Immunomedics has performed, both clinical and pre-clinical,  and it looks like epratuzumab has the kind of versatility we've seen with Rituxan, which had estimated global sales in 2012 of US$6.9bn.

So Wall Street already has a reason to watch this stock carefully for an old-fashioned unconjugated cancer antibody story. However the fact that the company's ADC technology is progressing suggests that this story has further to go in turns of attracting investor attention.

Is there an Australian angle to this story? If you go to the web site for the ASX-listed cancer antibody developer Patrys you can find some research there suggesting that the cancer antibody field has plenty of room for other companies to create serious shareholder value. Worth doing some homework on.

Stuart Roberts, Australian Life Sciences consultant, with global focus
Nisi Dominus Frustra
+61 (0)447 247 909
sroberts2164@gmail.com
Twitter @Biotech_buzz

About Stuart Roberts. I started as an analyst at the Sydney-based stockbroking firm Southern Cross Equities in April 2001, focused on the Life Sciences sector from February 2002. Southern Cross Equities was acquired by Bell Financial Group in 2008 and I continued at Bell Potter Securities until June 2013. Over the twelve years to 2013 I built a reputation as one of Australia's leading biotech analysts. I am currently consulting to the Australian biotech industry. Before joining Southern Cross Equities I wrote for The Intelligent Investor, probably the most readable investment publication in Australia. I have a Masters Degree in Finance from Finsia. My hobbies are jazz, cinema, US politics and reading patent applications filed by biotechnology and medical device companies.

Disclaimer. This is commentary, not investment research. If you buy the stock of any biotech company in Australia, the US or wherever you need to do your own homework, and I mean, do your own homework. I'm not responsible if you lose money.











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