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$IMDZ - Immune Design

IMDZ – Immune Design Corp

Overview:

Immune Design is a clinical-stage immunotherapy company focused on developing treatments to enable the body’s own immune system to fight diseases.  Their focus lies on the oncology sector, having engineered technologies to activate the immune system’s natural ability to create tumor-specific cytotoxic T Cells to fight cancer.  Their belief is that their two main drug candidates will address what other therapies are currently lacking while having the potential to treat a broad patient population through either individual therapies or in conjunction with other mechanisms of action.  Although their main focus is the immuno-oncology, they believe that their candidates also have potential to serve in therapeutic realms such as infectious and allergic diseases as they have a few different collaboration and partnerships underway leveraging their GLAAS platforms. 

Immune Design’s management team, board of directors, and scientific advisory board boast a diverse group of individuals who don’t lack experience in the industry.  The CEO, Carlos Paya, has served as Vice President at Eli Lilly, President of Elan Corporation, and was also a professor of Medicine, Immunology, and Pathology at the Mayo Clinic in Rochester, Minnesota.  The company also has an extensive list of Doctors and PhD researchers backing the company’s advisory board and management team. 

Pipeline:

The company currently has 6 different products in their pipeline ranging from Preclinical to Phase II.  Still in the early stages of development, the company is actively seeking growth and partnerships to solidify their financial and developmental future.  Each of their GLAAS products, 3 of them, have partnerships lined up for the development and licensing of the candidates.  These partnerships include Sanofi, MedImmune, and Sanofi Pasteur.   To match their product collaborations, they are also working in conjunction with Merck and Genetech in clinical collaborations to evaluate the safety and efficacy of their immuno-oncology products.

Their immuno-oncology pipeline also has 3 candidates targeting different forms of cancer.  Their entire pipeline is as follows:

PIPELINE 

Specific Drug:

While the company has several different products filling their pipeline, we are concerned with CMB305.  Immune Design has entered into a clinical trial collaboration with Genetech, a member of Roche, to better evaluate the safety and efficacy of CMB305 cancer immunotherapy when combined with the investigational cancer immunotherapy atezolizumab in patients with soft tissue sarcoma. 

CMB305 is a prime-boost product designed to target tumors that express the NY-ESO-1 tumor antigen, specifically soft tissue sarcoma.  NY-ES0-1 is expressed in a large number of solid and liquid state tumors in varying degrees.  CMB305 is comprised of two parts, a “prime” and a “boost”, which are designed to work synergistically to induce anti-tumor cytotoxic T lymphocyte (CTL) response targeting the NY-ES0-1-expressing tumors.  It is also hypothesized that CMB305 will also generate memory CTLs, providing for long-term immune response systems while enhancing other immune anti-tumor mechanisms along the way. 

Currently, CMB305 is in different stages of clinical development, which include monotherapy Phase I as well as a fully-enrolled Phase II trial comprised of individuals with two subtypes of soft tissue sarcoma (synovial sarcoma or myxoid/round-cell liposarcoma).  This combination study is utilizing either CMB305 with Genetech’s cancer immunotherapy TECENTRIQ, or atezolizumab alone.

Last year, the company reported positive clinical and biomarker data for CMB305 as a monotherapy.  In 25 soft tissue sarcoma (STS) patients with recurrent disease treated with CMB305, median overall survival (mOS) had still not yet been reached, with an overall survival rate at 12 and 18 months of 83% and 76%, respectively. These data compare favorably to mOS for approved second line and later sarcoma agents, which is only 12.4-13.5 months, as well as a published mOS of 11.7 months for synovial sarcoma patients specifically; the largest patient population enrolled in this trial. A disease control rate of 64% was observed, including durable tumor growth arrest in patients who had evidence of disease progression at study entry. Also, CMB305 was well tolerated, and generated a strong and broad anti-NY-ESO-1 immune response in >50% of the patients, including evidence of antigen spreading – the induction of an immune response against other tumor antigens not targeted by CMB305. In addition, the presented data showing a statistically-significant association of an induced response and clinical benefit in a pooled set of patients treated with CMB305 or LV305. The immune biomarkers studied, including novel bio-markers derived from public TCRS may guide regulatory strategy via the selection of patients more likely to have survival benefit on CMB305 therapy benchmarks. 

Immune Design has received Orphan Drug Designation in soft tissue sarcoma for both components of CMB305 in the EU and US, and depending upon further trial results soft tissue sarcoma will be the first indication in which CMB305 will be filed for regulatory approval.  There is a significant unmet need in this market, and the company holds the stance that the potential benefit of CMB305 to patients will be higher safety for patients and improved survival rates.

Current and Forecasted Market:

Synovial sarcoma is a cancer in the joints with a five-year and ten-year survival for people with Grade 3 tumors or metastatic disease of less than 25% and 15%, respectively, and Myxoid round cell liposarcoma is a malignant tumor that most often occurs in the deep-seated soft tissues of the extremities. Currently marketed treatments have high toxicity, with up to 37% of patients experiencing Grade 3/4 Adverse Events.

Soft tissue sarcoma is rapidly growing, expected to reach a global CAGR of over 8% over the next 6 years.  With over 50 different types of soft tissue sarcoma, it is a rare and diverse group of cancers that can develop from nearly any tissue.  There are approximately 13,000 individuals who suffer from soft tissue sarcoma each year, and with a high incidence rate and increased awareness about the condition, the market is expected to continue to expand. 

The current soft tissue sarcoma market size is valued around $700 million as of 2017, and with an expected CAGR of more than 8%, In 2017, 12,715 new diagnosis and 5,070 deaths due to STS were reported in the U.S. Bone sarcomas accounted for 3,373 new cases and 1,649 deaths in 2017. The lifetime risk of developing a sarcoma is 0.4%. Approximately 45.0% of bone sarcomas and 21.0% of STS are diagnosed in people in the age group of 0-35 years.  Currently, chemotherapy and targeted therapy are the only approved treatments for sarcoma.  Several immuno-oncology agents are also under investigation, with Immune Design leading the forefront to fill this unmet market need.

 

Competition:

The largest market competition are companies such as GlaxoSmithKline, Eli Lilly, Pfizer, Bristol-Myers Squibb, F. Hoffmann-La Roche, Johnson & Johnson, Teva Pharmaceutical Industries, and Celgene and others.  However, not all of these companies are focusing on developments in immuno-oncology and developing long term body resistance to tumors.   There is a large market for immuno-oncology that is unmet and waiting to be filled.  Novartis holds roughly 30% of the market share for sarcoma treatment, which Immune Design seeks to start to take if the product becomes approved. 

Financials:

MDZ reported loss of 29 cents per share in second-quarter 2018, narrower than the Zacks Consensus Estimate of a loss of 30 cents and the year-ago loss of 54 cents.

Immune Design’s shares have lost 8.9% year to date compared with the industry’s decline of 1.2%.  However their revenues are up this quarter YOY to $0.76 million mainly due to the collaboration with Sanofi for G103 and product sales to collaboration partners.  R&D expenses are increasing as they are moving along their extensive pipeline through the clinical phases.   

Biggest note on their finances, Immune Design expects cash on hand to be enough to fund operations through the second half of 2020.  Due to their strategic partnerships and financing, the company is able to limit diluting investors or taking on greater debt.  The company has enough cash and cash equivalents, $73 million, to finance all operations for more than a year, which is a very rare occurrence in these small cap biotech companies.

Review:

 My concerns, the low rate of success that oncology drug candidates have with the FDA.  Cancer is a tough market.  Data shows that cancer drugs have the lowest success rate of making it from Phase I to FDA approval, a mere 3.4%.  Although, cancer trials that used biomarkers had higher success rates, though, and the overall oncology drug approval rate for 2015 was 8.3%, which was due to the booming immuno-oncology field.  So, although oncology drugs lag, immuno-oncology pulls does not.  The past few years, especially under the Trump administration, drug approval rates have been higher than ever in recent history. 

For this product, Phase II studies patients and provides researchers with additional safety data to refine research questions and develop further methodologies to study the candidate and efficacy.  They utilize this data to formulate Phase III protocols.  Will not really reveal any benefits of the drug or therapeutic effects, rather simply show the safety of the product with some minor data.

As stated earlier, the company believes that CMB305 to patients will be higher safety for patients and improved survival rates.  Along with Orphan Designation and the need to get effective drugs approved in the Oncology market, I believe the FDA will try to push a product such as this through. I have no fear of dilution due to the cash on hand to hold them for another two years.

Looking at their chart, the stock price has held a $3.30 support zone for the past year, consistently bouncing off of these low levels producing 10% plus gains and even going as far up as $5.00 just a few months ago.  The volatility of this stock is fairly high, and I would personally use this to my advantage.  They diluted with a $80 million offering in October 2017 causing a massive drop in share price.  I doubt the company will seek to ruin their shareholder base further any time soon.  I feel a purchase at under $3.40 is a great move and holding for $4.00 minimum.

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