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Morning Rounds: Immunomedics Inc. (IMMU) outlook after CRL


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If you recall, I recently posted an article, found here, which among many had Immunomedics Inc. (IMMU) as a potential biotech play for the month of January.

Below is what I wrote in my post:

Immunomedics, Inc. (IMMU) – PDUFA for IMMU-132 in TNBC

Date: 01/18/2019

Event: PDUFA for IMMU-132 in TNBC

IMMU-132 would IMMU’s first drug approved for treatment of third line triple negative breast cancer (3L TNBC). Investors have questioned the necessity of AdCom and the ongoing discussions with the FDA regarding “outstanding issues”. However, we believe that is mostly noise. The strength of the data speaks for itself. The limited options currently available for this indication and the company’s breakthrough therapy designation provide positive reasons as though why the drug will most likely be approved. Furthermore, the investors can expect an early off-label use of this drug for second-line therapy as well.

Furthermore, the approval of the drug certainly makes IMMU an attractive candidate for as an M&A target in 2019. Options markets have priced the move in response to the FDA decisions to be about +/- 30% in the month of January.

Clearly, I highlighted what to expect from the company and the risks associated. Additionally, I highlighted the price action expected from the news.

After reading about the drug itself, it is clear that Sacituzumab govitecan (IMMU-132), which is an anti-Trop-2 antibody-drug conjugate, is indeed a promising novel therapy for various epithelial cancers, including mTNBC, which carries a particularly poor prognosis. The drug targets Trop-2, sacituzumab govitecan allows for efficient delivery of the cytotoxic agent SN-38 to tumor cells. Thus, the drug is not the issue.

However, prior to the PDUFA date, there were concerns regarding the outstanding manufacturing issues. The confidence in the tone of the management was misleading and quite frankly frustrating. Unfortunately, the company received a Complete Response Letter (CRL) secondary to outstanding Chemistry, Manufacturing, and Control (CMC) matters.  The management has stated that these issues in the CRL are both manufacturing and procedural/administrative items – they understandably could not elaborate on the details of such matters. They did mention that they believe that the issues outlines are addressable.

What do we know about the CRL?

  1. IMMU did not disclose whether the issues in the CRL are similar the 13 highlighted previously in form 483 issued by the FDA issued last August. What we’ve learned is that those items were related to procedural and administrative deficiencies rather than the actual manufacturing of the product.
  2. The company has stated that they believe that they will most likely push for Class I. Hard to believe. It will be dependent on if IMMU will have to provide the FDA with a new batch of the drug for re-inspection process which could take 3-6 months.
  3. Government shutdown did not affect the dialogue between the company and the FDA.

The question remains, whether IMMU will be filing for Class I or II resubmission for which each starts with a 60 or 180-day review period, respectively. With regards to the resubmission, it would be fair to assume that IMMU will most likely require a Class II resubmission which then suggests that IMMU-132 will potentially launch in second half of 2020 or first half of 2021. This process may be accelerated in an event that the company is allowed Class I resubmission and will not need a new batch of the drug.

At this time, it would be safe to assume that the Clinical Trials will be unaffected, as hinted by management and the success of the drug thus far. The main area of concern is whether IMMU will have enough cash to satisfy FDA’s concerns. The company’s expenses will be reduced as they will not need to a new sales force as of yet. But, there will be additional expenses attributed to the administrative costs associated with resolving the CRL issues.

One can estimate that IMMU will potentially have enough funding for operations until 2020 YE. You can expect the company to raise capital ranging between $100-150 million by then.

With regards to upcoming catalysts: initiation of the ER+/HER2 breast cancer trial in the 1st half of 2019, 3rd Q 2019 earnings report and potential timing updates on refiling of IMMU. The topline data for SGEN’s enfortumab vedotin in metastatic urothelial cancer in the 1st half of 2019.

 

Price Target for IMMU, Risks, and Valuation:

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Author avatar

Dr. Tiam Feridooni

Written by: Dr. Tiam Feridooni MD, PhD, BSc Dr. Feridooni, graduated from Dalhousie Medical School in May, 2018. Prior to enrolling in medical school, he completed his Bachelor of Science with Honours in 2010 in Biochemistry. He then obtained his PhD at Dalhousie University in Pharmacology in 2014, with a focus around regenerative medicine and stem cell transplantation. Dr. Feridooni has been published numerous high impact journals and has also co-authored a few books.

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