Industrial Alliance launches coverage of IMV with a “Buy” rating

Biopharm company IMV (IMV Stock Quote, Chart, News TSX:IMV) is a high risk, high reward stock you should be looking at, says Industrial Alliance Securities analyst Chelsea Stellick, who on Tuesday launched coverage of IMV with a “Buy” rating and $10.00 target price.

Dartmouth, Nova Scotia-based drug developer IMV is a clinical-stage biopharmaceutical company developing a novel class of immunotherapies based on its proprietary drug delivery platform DepoVax.

The company’s lead drug candidate is DPX-Survivac, which targets Survivin, an over-expressed protein in over 20 cancer types including lead indications ovarian cancer and Diffuse large B-cell lymphoma (DLBCL).

The stock took off last week on news that Health Canada had approved Phase 1 trials for a DepoVax-formulated immune therapy program targeting SARS-CoV-2, the strain of the coronavirus which causes COVID-19. IMV had been trading around the $4.00 mark before and after the market pullback this February and March but spiked to as high as $9.25 last Tuesday.

In her coverage initiation, Stellick said the market opportunities for IMV’s DPX platform are many and she calls IMV’s proprietary technology a unique addition to cancer treatment in terms of improved clinical outcomes and cost-competitive solutions.

“The DPX technology is a delivery platform for drugs based on a new mechanism of action (MOA) that was discovered by the Company. The MOA programs cells in vivo to force an active uptake of immune cells to deliver active ingredients to the lymph nodes. IMV focuses on unmet medical needs by applying its technology in hard-to-treat cancers for a faster clinical pathway to market,” Stellick wrote.

“There are a number of market opportunities for IMV for diverse targets and indications, including COVID-19. The Company’s lead drug candidate DPX-SurvivacTM targets Survivin, an overexpressed protein in over 20 cancer types, by producing a flow of T cells that target against Survivin expressed on cancer cells,” she said.

And while Stellick described the COVID-19 application of DPX as a compelling endeavour, it’s the platform’s application to ovarian cancer and DLBCL which are more encouraging and amount to the primary investment proposition.

As far as potential catalysts go, the rest of 2020 should feature the initiation of Phase 1 trials for DPX-COVID-19, Phase 2 clinical results from IMV’s Basket trial in collaboration with Merck evaluating DPX-Survivac and Merck’s Keytruda against five solid tumour types —bladder, liver, ovarian, non-small cell lung cancers and MSI-High— as well as Phase 2 clinical results from IMV’s combination trial for DLBCL.

Moreover, Stellick says all three potential catalysts are expected to be material movers for the stock.

The analyst used a sum-of-the-parts approach to valuing IMV, taking into consideration the company’s ovarian cancer and DLBCL clinical programs and using an average of EV/EBITDA and discounted cash flow valuations to capture the long-term growth potential of IMV’s assets.

As of publication date, Stellick’s $10.00 target represented a projected 12-month return of 25.9 per cent.