September 6, 2012
Immunovative Quietly Poised to Emerge as Leader in Cancer Vaccines
It has long been said that “timing is everything,” but in the case of biotechnology investing, the mantra could not be truer. There are many different biotech investing styles. Some traders go after companies with Phase III drug candidates such as Gilead Sciences (NASDAQ: GILD), a company with late-stage drugs that many investors believe will garner FDA approval. Apropos, on Tuesday, Gilead did get regulatory approval for its Stribild, a cocktail of four drugs in one pill for HIV patients starting therapy for the first time. Shares did little to appreciate in value, however, as the investment community already had the approval baked-in to the price per share. Another strategy involves investors accumulating a position in earlier stage companies that carry large upside potential because of specific targets. Robust amounts of data are being collected on the body’s ability to ward-off disease on its own with the proper stimulus. This has long investors performing due diligence on companies like Immunovative Inc. (OTCQB: IMUN), a biotech advancing the immunotherapy sector, and peers Immunocellular Therapeutics (NYSE MKT: IMUC) and ImmunoGen, Inc. (NASDAQ: IMGN).
Immunotherapy has been around for years as a promising anti-cancer treatment, but really started gaining acceptance in the oncology community at large in April 2010 with the FDA approval of Dendreon’s (NASDAQ: DNDN) sipuleucel-T (Provenge) as the first cancer vaccine for use in some men with metastatic prostate cancer.
Still to date, the FDA has only approved a handful of immunotherapies to protect against cancer. In addition to Provenge, the regulatory agency has approved one vaccine to combat the hepatitis B virus (which can cause liver cancer) and a few vaccines to fight human papillomavirus 16 and 18 (which cause the vast majority of cervical cancer cases). This limited number of approvals creates a level playing field for drug makers of all sizes and gives a particular appeal to small companies as acquisition targets as they deliver promising data.
An upstart that’s hard to overlook is Immunovative with its AlloStim and AlloVax products. Bone marrow and stem cell treatment procedures have been shown to be curative for many types of advanced cancers. In order to be effective, though, immune cells from a matched donor (i.e. a sibling) are typically mandatory in order to utilize this treatment procedure. Finding a matched donor can be extremely prohibitive because only one in three patients is able to find one. In today’s current effective treatments, lower doses of chemotherapy are used to weaken the immune system so that transplanted immune cells can be infused to kill cancerous tumors. While the transplants can eradicate the cancer, they are often accompanied by a potentially lethal collateral effect called Graft versus Host Disease (GvHD). Simply explained, with GvHD, the transplanted immune system not only attacks the tumor, but also the organs of the host.
Immunovative’s AlloStim treatment is designed to illicit the same tumor-destroying effect without the potential of GvHD toxicity. Importantly, AlloStim also eliminates the need for any preliminary chemotherapy to weaken the immune response and the requirement of a matched donor as AlloStim cells are produced from the blood of any donor. With AlloStim, precursor cells are pulled from the donor blood and mixed with special micro-particles which activate and provoke the host’s immune cells, “tricking” them into believing that the body is under attack upon infusion of the cultured cells into the host. This unleashes the full power of the host’s own immune system (not the infused immune cells) to attack the foreign invaders (the AlloStim cells); subsequently destroying all foreign matter, including the cancer cells.
AlloVax is similar in nature, except that it is designed to destroy blood cancers like leukemia, lymphoma and multiple myeloma. AlloVax uses AlloStim as an adjunct to “train” the immune system to recognize cancers to keep the patient in remission. In short, a sample of the cancer is taken before chemotherapy begins. While chemotherapy is administered to put the patient into remission, the blood is processed to remove chaperone proteins (proteins that hide inside the cancer that are associated with the protein antigens unique to the specific cancer). AlloVax purifies the antigens from the cancer cells. The treated chaperone proteins are then mixed with the AlloStim cells and then injected into the patient’s skin. Dendritic immune cells then travel to the injection site and engulf the proteins and cancer antigens, with the now-exposed antigens being recognized as foreign to the host’s body. This “teaches” the immune system to recognize the antigens, which leads to destruction of the cells without any additional therapy should the tumors resurface. The company believes that AlloVax has application in solid tumors as well and plans to conduct trials to verify this belief.
The share price of Immunovative has been held down because after successful Phase I clinical trials in California pitting AlloStim against colorectal and breast cancer, the FDA put a clinical hold on AlloStim research because of concerns over contamination (i.e. quality control and quality assurance). The hold has been in place since 2010. In a recent conversation with Immunovative senior management, we were told that –although absolutely no guarantees can be made about how the FDA will proceed – the company has been meeting regularly with the regulatory agency and has addressed their concerns.
Perhaps investors are getting a sense that the resumption of clinical trials for this potent therapy is drawing near as the share price has steadily risen since May from around a dime to more than 30 cents before consolidating above 20 cents presently.
Dr. Axel Hoos, the Vice President of Oncology Research and Development at Glaxo Smith Kline Pharmaceuticals (NYSE: GSK) and Co-Chairman at the Cancer Immunotherapy Consortium, believes “that immunotherapy will become one of the key treatment modalities in the coming years” and that immunotherapy will become a “foundation therapy for cancer treatment.” With that type of potential, savvy investors are looking closely for developmental firms with strong pipelines that can experience non-linear growth in the mid-term.
Immunovative has cash in hand via a recently completed $6.45 million private placement financing. Their products are undergoing testing overseas and if the FDA unlocks the shackles in the States on AlloStim, the company could be in the beginning of its growth curve and put itself in a prime position amongst larger peers.
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