IMV gets price target cut from Raymond James

New clinical results from biopharm company IMV (IMV Stock Quote, Chart, News TSX:IMV) signal a less straightforward path to commercialization than previously assumed, according to Raymond James analyst David Novak, who reviewed the results in an update to clients on Wednesday.

Dartmouth, Nova Scotia-based IMV is a clinical-stage biopharmaceutical company whose lead candidate is DPX-Survivac currently in a Phase 2 study for patients with advanced recurrent ovarian cancer.

Shares dropped sharply on Tuesday with a data update from IMV’s DeCidE1 Phase 2 study featuring 22 patients with advanced recurrent ovarian cancer with 19 patients evaluable for efficacy as of February 24. Among the findings were that 15 patients (79 per cent) achieved disease control defined as Stable Disease or Partial Response on target lesions, with tumour shrinkage of target lesions observed in ten patients (53 per cent), while durable clinical benefits lasting more than six months were so far observed in seven patients (37 per cent).

IMV president and CEO Frederic Ors called the results a pivotal milestone for the company and a breakthrough for targeted T cell immunotherapies.

“These results demonstrate for the first time activity in a solid tumour which is among the hardest to treat” said Ors in a press release. “We were pleased to achieve the primary objectives of our DeCidE1 study, showing DPX-Survivac was active, durable and well-tolerated in advanced ovarian cancer. With these results in hand, we plan to engage with
the US Food and Drug Administration (FDA) on the design of a potential pivotal trial in ovarian cancer that might support an accelerated pathway.”

Novak was less rosy about the results, saying that they likely indicate a longer path to market and are associated with a higher risk than he had originally estimated.

“In our view, the results presented by IMV this morning continue to demonstrate single agent activity with DPX-Survivac, however, we believe the level of activity has fallen short of both our and market expectation. In our view the level of clinical activity demonstrated is borderline approvable, however there is risk to a further regression in response as the company rolls forward to a larger cohort in a potential pivotal trial,” Novak wrote.

Consequentially, the analyst is maintaining his “Outperform 2” rating but dropping his target to $4.50 per share, which at press time represented a projected 12-month return of negative 5.9 per cent. Novak is forecasting EPS for 2019 of negative $0.50 per share and EPS for 2020 of negative $0.58 per share.

IMV last reported its financials on November 8, 2019, where its fiscal third quarter featured a net loss of $7.9 million for the period ended September 30, 2019, with cash and cash equivalents at quarter’s end of $21.4 million and working capital of $21.2 million. The $7.9-million loss was $1.9-million larger than a year prior, with management saying that the increase was mainly due to greater R&D expenses. At the quarter’s end, management believed that its cash resources along with additional potential cash of $2.3 million would be sufficient to fund operations for the next 12 months.