IMV has an 87 per cent upside, Echelon Wealth says

Douglas Loe of Echelon Wealth Partners feels that data from immune therapy developer IMV’s (TSX, NASDAQ:IMV) ovarian cancer drug trial was greeted by more negative sentiment than it deserved over the past month. The analyst remains bullish on IMV, maintaining his “Speculative Buy” rating and Top Pick status in a client update on Monday.

On June 3, Halifax-based IMV (formerly Immunovaccine) announced new data on its DPX-Survivac clinical study at the 2018 meeting of the American Society for Clinical Oncology (ASCO), with the data evaluating the safety and efficacy of the anti-cancer T cell response drug.

“We are especially pleased to be able to demonstrate, for the first time, a clear correlation between partial regressions and T cell infiltration in the tumours,” said CEO Frederic Ors in a press release. “Ovarian cancer represents one of the highest unmet medical needs in today’s cancer treatment landscape, and we are committed to advancing this program as quickly and safely as possible.”

Loe says IMV’s FQ2/18 price performance was on pace to be stronger than it turned out to be (up 7.6 per cent), which he attributes to misdirected caution over the ASCO results.

“Capital markets perceived IMV’s update at ASCO a bit more skeptically than we did,” says Loe, “but we stand by our view that new insights into DPX-Survivac mechanism of action (likely through facilitating T-cell tumour infiltration, perhaps with simultaneous inhibition of the PD1/PD-L1 pathway helping this along) justified a more positive rather than a more cautious position on DPX-Survivac’s medical prospects.”

“With specific relevance to FQ318 returns, we are focused on how DPX-Survivac will perform when combined with Keytruda in the aforementioned ovarian cancer and B-cell lymphoma studies, and we would see positive tumour response data if so generated as being highly validating for how DPX- Survivac’s T-cell mediated antitumour activity could be enhanced by supplementally impacting tumour immunology through PD1/PD-L1 inhibition,” the analyst says.

Moreover, Loe remains positive about IMV’s main DepoVax lipid-based water-free antigen delivery technology, saying that the company’s DepoVax formulations have not generated a negative data point during his coverage history of IMV.

The analyst sees IMV generating an EBITDA loss of $7.4 million on revenue of $5 million in 2018 and an EBITDA loss of $4.6 million on a topline of $10 million in 2019. Loe’s $12.25 target price for IMV represents a projected return of 87.3 per cent at the time of publication.