A COVID-19 vaccine? Canada’s IMV might have the technology

There’s no change in analyst Douglas Loe’s valuation or development timelines for clinical-stage biotech name IMV (IMV Stock Quote, Chart, News TSX:IMV) after the company announced it has begun development of a COVID-19 vaccine, but the Echelon Wealth analyst endorsed the move nonetheless, saying that response data from IMV’s oncology programs should be coming before the end of the year.

Dartmouth, Nova Scotia’s IMV, which has lead candidates DPX-Survivac and DPX-RSV, both based on the company’s main Depovax (DPX) lipid-based water-free antigen delivery technology, on Wednesday announced that it is advancing the clinical development of a DPX-based vaccine candidate against COVID-19. The work will come in collaboration with lead investigators from a number of public institutions such as the Canadian Centre for Vaccinology at Dalhousie University, the Izaak Walton Killam Health Center, the Nova Scotia Health Authority and the Canadian Immunization Research Network (CIRN).

“We appreciate the urgent need to find solutions to the growing pandemic,” said IMV’s CEO Frederic Ors in the press release. “Across our many clinical studies, we have observed DPX technology to elicit a robust immune response with a sustained effect, including in sensitive populations. We believe this technology offers a meaningful solution as a potential vaccine, especially in older adults and those with pre-existing conditions who are most at risk to this virus and generally more difficult to vaccinate effectively.”

Shares of IMV were up sharply on another down day in the markets on Wednesday as investors reacted to IMV’s press release. In his update, Loe said that while the company provided no details on how advanced it was on its coronavirus formulation development, he nonetheless thinks IMV could likely identify a plausible formulation to advance into preclinical animal testing within the next quarter or two.

“We are clearly not surprised that a vaccine formulation developer would identify coronavirus antigen formulation as a logical initiative to incorporate into its preclinical pipeline, as many of its vaccine development peers have already, but it is clearly early days for this program,” said Loe.

“And so on a fundamental level, our IMV valuation continues to be driven primarily by the firm’s clinical oncology programs with flagship survivin-based DepoVax formulation DPX-Survivac, for which well-advanced Phase II trials in ovarian cancer (the DeCiDE1 trial), in diffuse large B-cell lymphoma (the SPiReL trial), and in selected solid tumours (the Basket trial) are all ongoing and expected to provide new interim tumour response/immunological response data before end-of-year,” he wrote.

Loe also noted IMV’s recent initiation of an up-to-US$30 million at-the-market equity offering with a US-based dealer.

The analyst said that since it was clear that the company needed new capital within the next couple of quarters, the ATM financing will “moderately reduce” financial risk to the firm’s overall DPX development programs.

With the update, Loe reiterated his “Speculative Buy” rating and $9.00 target price, which as of publication date represented a projected 12-month return of 210 per cent.