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Immuno-oncology Pure Play 'Ideally Positioned to Capture Value'
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Maxim Group analyst Jason McCarthy explained why investors should focus on this emerging technology and one developer that is well-positioned to capture value in the space.

In a Feb. 1, 2018, research report, Jason McCarthy, an analyst with Maxim Group, noted that LAG-3 could likely be the next checkpoint to emerge for immuno-oncology therapeutic use in combination with the PD1s and PD-L1s, and as such, Immutep Ltd. (IMMP:NASDAQ) is a company to watch.

LAG-3 has big pharma's attention. "Since 2013, the number of clinical trials targeting LAG-3 has grown from one to 21 in 2017," McCarthy indicated. For one, Bristol-Myers Squibb, with an extensive checkpoint pipeline, "has prioritized its LAG-3 (rilatlimab) for full development (nine ongoing clinical programs)."

LAG-3, or lymphocyte-activation gene-3, is a protein "shown to be able to properly condition dendritic cells (and monocytes) to undergo maturation and step up the stimulation of antigen targeting T cells," wrote McCarthy, and, importantly, can do it without causing inflammation.

Immutep has four LAG-3 assets and partnerships with both Novartis and GlaxoSmithKline, from which it will receive single-digit royalties. Three of Immutep's LAG-3 candidates—IMP701, IMP731 and IMP321—are in six ongoing clinical trials. Additional data from those, including the studies being done with its two partners, should be released over this year and next.

The LAG-3 clinical trials underway include the following:

1. IMP701 is being evaluated alone and in combination with Novartis' PD1 checkpoint, PDR001, in patients with advanced malignancies. The trial, which began in 2015, now contains 515 enrollees. Its expected completion date is April 2019.

Another study employing this combination, IMP701 plus PDR001, is slated to start imminently in 160 patients with advanced hematological malignancies and solid tumors.

2. IMP731 is in a Phase 1 clinical trial in partnership with GlaxoSmithKline to evaluate Immutep's LAG-3 in healthy individuals vaccinated with the Bacillus Calmette-Guérin, primarily used for tuberculosis, and patients with plaque psoriasis. The study should finish in March.

3. IMP321, Immutep's lead candidate that "could launch in 2020," McCarthy projected, is being evaluated in an ongoing investigator-sponsored trial in advanced solid tumors. A separate study, a Phase 1 evaluation of IMP321 and Keytruda in melanoma patients, showed tumor reductions in 58%, or 7 out of 12, patients. More data are expected this year.

Immutep is developing IMP321 as an immune adjuvant or stimulator for metastatic breast cancer and metastatic melanoma. "When used at low doses, it can be used as a T-cell adjuvant for cancer vaccines," explained McCarthy. "At higher doses, IMP321 can be combined with cancer chemotherapy to ramp up the immune response by driving dendritic cells and monocytes to increase tumor antigen presentation."

China partner EOC Pharma, a private company, recently delivered a milestone payment of $1 million ($1M) to Immutep for IMP321. "An investigational new drug application was filed in China in December 2017," added McCarthy.

Including that amount, Immutep has an estimated $12M on its balance sheet, McCarthy said, "and with a quarterly burn rate of $3–$3.5M, has runway into H2/18."

About this LAG-3 pure play firm, McCarthy concluded, "With a great big pharma partner in Novartis, we see Immutep ideally positioned to capture value in what we see as the next evolution of checkpoint inhibitors."

Maxim has a Buy rating and a $7 per share target price on Immutep, whose stock is currently trading at around $1.79 per share.

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Additional Disclosures

Disclosures from Maxim Group, Immutep Ltd., Feb. 1, 2018

I, Jason McCarthy, Ph.D., attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.

I, Jason Kolbert, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.

The research analyst(s) primarily responsible for the preparation of this research report have received compensation based upon various factors, including the firm's total revenues, a portion of which is generated by investment banking activities.

Maxim Group makes a market in Immutep Limited.

Maxim Group managed/co-managed/acted as placement agent for an offering of the securities for Immutep Limited in the past 12 months.

Maxim Group received compensation for investment banking services from Immutep Limited in the past 12 months.

Maxim Group expects to receive or intends to seek compensation for investment banking services from Immutep Limited in the next 3 months.

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