IMV has a massive upside, Echelon Wealth says

Echelon Wealth Partners analyst Douglas Loe said there’s no change to his investment thesis on clinical stage biotech name IMV (IMV Stock Quote, Chart, News TSX:IMV) after the company’s latest quarterly results.

In an update to clients on Tuesday, Loe maintained his “Speculative Buy” rating and $9.00 price target which at press time represented a projected 12-month return of 263 per cent.

Dartmouth, Nova Scotia’s IMV has an antigen delivery technology focused on oncology and infectious disease, with lead candidates DPX-Survivac and DPX-RSV advancing in clinical testing. IMV released its fourth quarter and full year 2019 financials on Monday, showing total revenue of $568,000 versus a net loss of $27.4 million or $0.55 per share.

Management said the company had multiple encouraging readouts from clinical and transitional studies of DPX-Survivac over 2019.

“Taken together, these data not only provide important validation of our platform’s novel mechanism and survivin as a target antigen, but also demonstrate its ability to elicit sustained clinical activity in both solid and hematologic tumours,” said CEO Frederic Ors in a press release.

IMV announced on March 18, 2020, its plans to develop a DPX-based vaccine candidate for COVID-19 in collaboration with experts in the field, while on Monday the company announced it had initiated discussions with Health Canada in preparation for a Clinical Trial Application, with a meeting scheduled for the week of April 20 and with the goal of launching a clinical study in the summer.

In his update, Loe said it’s early days for a COVID-19 program and there are many other companies now establishing such programs —Loe pointed to one by global pharma giant Johnson & Johnson and by mRNA therapy developer Moderna— but he nonetheless endorsed the initiative based on DPX’s shown ability to support responses to viral antigens.

“We are positive about how DPX could perform as an epitope delivery platform for SARS-CoV-2 antigens, but IMV is certainly not the only vaccine developer with SARS-CoV-2 formulation activities in process, as was recently summarized in a review published just this week in the New England Journal of Medicine,” Loe said.

On the Q4, Loe said the results have minimal impact on his investment thesis other than to say that IMV’s R&D spending (at $19.0 million for the year) was in line with his estimate and that the company will likely need new funding sources going forward. The analyst tracked IMV’s cash balance at $14.1 million by the end of the fourth quarter, enough to get it through the first half of 2020 “but no further,” he said.

The need has been partially met with a recently announced at-the-market share issuance, Loe contended.

Looking ahead, Loe said that most of IMV’s ongoing Phase II trials are currently on pace to generate interim data before the year’s end, while pending programs other than the one targeting COVID-19 are unlikely to start soon.

For 2022, the analyst is calling for total revenue and EBITDA of $5.0 million and negative $15.5 million, respectively.