IMV still has a 50 per cent upside, Echelon Capital says

Echelon Capital Markets analyst Douglas Loe is staying bullish on Canadian clinical-stage biopharmaceutical company IMV (IMV Stock Quote, Chart, News TSX:IMV), saying new funding helps to de-risk the timelines to receiving data on the company’s COVID-19 program.

In a healthcare and biotechnology update to clients Wednesday, Loe maintained his “Speculative Buy”
rating and $10.50 per share target price, which at the time of publication represented a projected 12-month return of 51 per cent.

Halifax-based IMV, which is focused initially on oncology and infectious diseases with its lead candidates DPX-Survivac and DPX-RSV based on the company’s Depovax antigen delivery technology, announced on Wednesday that the Canadian National Research Council and its affiliated granting agencies are funding the development of its DepoVax-based four peptide antigen formulation targeting the coronavirus variant SARS-CoV-2, the strain of the coronavirus that causes COVID-19. IMV is receiving $4.75 million to support the rapid scale-up of DPX-COVID-19 manufacturing process and its evaluation in a Phase 1 trial.

“Vaccination is our best hope for ending the current pandemic. Based on our preclinical results and rapid development, we believe that both our vaccine and manufacturing approaches have the potential to be transformational for COVID-19, and we appreciate the governments’ support and confidence in our progress,” said IMV’s CEO Frederic Ors in a press release.

On the event, Loe said IMV already had sufficient cash to fund a Phase 1 trial with DPX-COVID-19 but the new capital “clearly mitigates” IMV’s financial risk relating to its pipeline of activities with Depovax.

“IMV exited FQ120 with $7.4 million in cash, but when considering $25.1 million in gross proceeds from an equity offering consummated in May/20 and $1.7 million in supplemental capital from an at-the-market equity facility put in place back in late FQ120, we previously calculated that IMV’s pro forma cash was at or near $34.2 million,” Loe wrote.

“New DPX-COVID-19-targeted capital partially offsets FQ220 operating cash burn to a substantial degree (FQ120 cash loss was ($7.0 million), including working capital surplus) and so we estimate that IMV’s current pro forma cash is in the $29 million -$31 million range. Cash at that level provides sufficient capital in our view to fund the aforementioned Phase I DPX-COVID-19 trial, as well as all ongoing Phase II cancer studies focused on the firm’s still-flagship survivin peptide-based DepoVax formulation DPX-Survivac,” he wrote.

Loe said clinical milestones related to DPX-COVID-19 are likely to be more relevant to shifts in IMV’s share price over coming months.

“We have abundant evidence of DepoVax’s ability to support antigen-specific immune responses, including to viral antigens, and of the SARS-CoV-2 spike glycoprotein to engender such responses in various constructs that have based vaccine configuration on this protein. Accordingly, we believe that Phase I risk for DPX-COVID-19 is low and could support further share price augmentation once IMV concludes patient follow-up and reports response data later in FQ420,” Loe wrote.