IMV has a 49 per cent upside, Mackie Research says

Biotech company IMV (IMV Stock Quote, Chart TSX:IMV) got a target reduction Friday from Mackie Research Capital’s André Uddin, who reminds that the company has a number of clinical catalysts upcoming in 2019.

Halifax-based IMV announced its fourth quarter and 2018 year end financials on Thursday, generating revenues of $0.1 million in its Q4 compared to $0.2 million a year ago (and versus Uddin’s estimate of $0.0 million). Its Q4 net loss was $7.7 million or negative $0.17 per share, which was weaker than Uddin’s estimate of negative $4.0 million or negative $0.09 per share.

Uddin chalks up the greater loss to higher R&D expenses while saying that financials at this point are less important than clinical progress. IMV has vaccine programs including two cancer vaccines and three infectious disease vaccines, with the company currently testing DPX-Survivac as a standalone therapy for advanced ovarian cancer in an open-label Phase II trial along with another Phase II trial in combination with Merck’s anti-PD-1 drug Keytruda.

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“We believe IMV is approaching an inflection point with several key clinical catalysts expected in 2019 for its lead candidate DPX-Survivac,” says Uddin in a client update. “Potential positive clinical results plus breakthrough designation should add significant value and facilitate a licensing deal for DPX-Survivac – which we have assumed in 2020.”

Uddin’s valuation is based on applying a 25x P/E multiple to his 2022 fully diluted EPS estimate of $1.62 and discounted back by 50 per cent. The analyst is maintaining his “Speculative Buy” rating but has trimmed his target price from $10.40 to $7.95 due to increases in his estimates for operating expenses along with equity dilution caused by IMV’s $26.7 million financing round, closed this month. The $7.95 target represents a projected 12-month return of 49 per cent at the time of publication.