Nova Scotia-based vaccine formulation developer Immunovaccine (Immunovaccine Stock Quote, Chart, News: TSX:IMV) is undervalued strictly for its lead product that targets respiratory syncytial lung infection, says Echelon Wealth Partners analyst Doug Loe.
In a research report to clients today, Loe initiated coverage of Immunovaccine with a “Buy” rating and a one-year price target of $2.25, implying a return of 204 per cent at the time of publication.
Loe says Depovax, a lipid-based water-free antigen delivery technology, is a potential company builder. He notes that Depovax is already well validated clinically, and points to one Phase 1 ovarian cancer study which revealed that 87 per cent of evaluable patients experienced acute T cell-mediated response to survivin and of those patients, sustainable T cell mediated activity was demonstrated longer term with repeated administration of DPX-Survivac.
“Our valuation is entirely based on DepoVax and its utility in developing immune therapies targeting infectious disease and oncology markets, led of course by DPX-RSV and DPXSurvivac as stated and our revenue/EBITDA forecasts are primarily driven by these two Phase I-stage formulations in addition to partnership capital that we separately infuse into our projections (cumulatively $90M in partnership milestone payments out to F2025, beginning in F2017, with clear upside to this modest figure based on comparison to recent immune therapy development alliances we have reviewed),” says the analyst. “For all DPX formulations to which we ascribe value, we assume future commercial partnerships will be required, and we conservatively assume that DPX-RSV/DPXSurvivac partnerships could be consummated during Phase II/III testing and thus could credibly garner net royalty rates on gross sales of 20-30%, the midpoint of which we will assume for both vaccines.”
Loe believes investors will have to wait a while for Immunovaccine to generate meaningful revenue, but when it does he is forecasting strong growth. He thinks the company’s topline will climb from $5-million in fiscal 2017 to $10-million in fiscal 2018, then expects its to flatline until fiscal 2021, a year he sees a sharp rise that will rise to $359.5-million by fiscal 2025.
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