Immune therapy vaccine developer IMV (TSX, NASDAQ:IMV) just released its second quarter financials, yet Echelon Wealth Partners analyst Douglas Loe says the results are mostly inconsequential to his investment thesis, which is focused on the company’s near-term clinical trials, expected to generate interim data during IMV’s Q3/18.
In a client update on Wednesday, the analyst reiterated his “Speculative Buy” rating and $12.25 target price, along with his Top Pick status for IMV.
Halifax-based IMV (formerly Immunovaccine) announced this week its three- and six-month results for the period ended June 30, 2018, reporting cash of $25.1 million and working capital of $24.0 million, compared to $14.9 million and $13.6 million, respectively, as of December 31, 2017.
Company CEO Frederic Ors says over the next four quarters, he hopes to deliver on preliminary and topline data for its two phase 2 trials featuring their flagship anti-cancer immune therapy DPX-Survivac.
“During the second quarter of 2018, we attained milestones advancing IMV’s ability to deliver novel immuno-oncology therapeutics,” said Ors in a press release. “We listed our common shares on Nasdaq and adopted a new company name. In addition, we reported clinical data for the first time at the 2018 American Society for Clinical Oncology (ASCO) meeting. These data highlighted the strong efficacy signals of DPX-Survivac and provided a clinical demonstration of the ability of DPX-Survivac to trigger the production of T cells that can infiltrate tumors and induce tumor regression in hard-to-treat cancers.”
Loe says that IMV’s Q2 results show that the company is well-cashed up to complete its clinical trials for DPX-Survivac.
“As a company with clinical-stage drug developer status, we are more focused on balance sheet metrics on assessing liquidity risk downstream,” he says. “With FQ218 cash of $25.1 million and long-term debt of $7.0 million at quarter end, implied net cash of $18.1 million should generate sufficient net cash runway of approximately six quarters for the firm’s clinical trial initiatives (on the call, management estimated trial costs of $3.0 million – $3.5 million per quarter).”
“For now, we are maintaining our Speculative Buy rating and $12.25 price target (and Top Pick status, of course) on IMV, with our valuation still based on NPV and multiples of our F2022 adjusted EBITDA/fd EPS forecasts ($94.3M/$1.59, respectively),” he writes. “Our EV calculation incorporates consolidation-adjusted fd S/O of $46.7 million and FQ218 cash of $25.1 million and debt of $7.0 million, respectively.”
The analyst’s $12.25 target represented a projected return of 93.8 per cent at the time of publication.