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Investment Overview
Immatics (NASDAQ:IMTX), based in Tuebingen, Germany, achieved its Nasdaq listing in 2020, via a business combination with Arya Sciences Acquisition Corp, a special purpose acquisition company (SPAC) sponsored by Perceptive Advisors. According to Harvard Business Review:
A SPAC is a publicly traded corporation with a two-year life span formed with the sole purpose of effecting a merger, or “combination,” with a privately held business to enable it to go public. SPACs raise money largely from public-equity investors and have the potential to derisk and shorten the IPO process for their target companies, often offering them better terms than a traditional IPO would.
SPAC’s trade at a value of $10 per share until a merger is completed, and often, the newly merged company finds its share price slipping substantially post listing, however, despite some significant volatility, Immatics stock currently trades just >$10, and has achieved highs of $13 per share.
Immatic’s primary focus is on T-cells – as per the company’s 2023 annual report / 10K submission:
We are a clinical-stage biotechnology company dedicated to the development of T cell receptor- (“TCR”) based immunotherapies for the treatment of patients with solid tumors with unmet medical need.
By utilizing TCR-based therapeutics, we are able to direct T cells to intracellular cancer targets that are not accessible through classical antibody-based or CAR-T therapies.
We are developing our targeted immunotherapy product candidates through two distinct treatment modalities: TCR-engineered autologous (“ACTengine”) or allogeneic (“ACTallo”) Adoptive Cell Therapies (“ACT”) and antibody-like Bispecifics, also called T Cell Engaging Receptors (“TCER”).
Each modality is designed with distinct attributes and mechanisms of action to produce the desired therapeutic effect for the targeted cancer patient populations.
Autologous cell therapy is when a patient’s own cells are extracted from their body, engineered ex-vivo – i.e. in a lab – using techniques designed to help them better detect and fight cancerous cells – and then reinfused back into the patient. Allogeneic cell therapy follows the same principles, except donor cells are used instead of a patients own cells.
Both approaches are unfortunately harsh on patients, who must undergo preconditioning regimes prior to cell extraction – or in order to receive donor cells – with a risk that their immune system will reject the engineered cells, leading to potentially fatal complications such as cytokine release syndrome (“CRS”), when the immune system overreacts to a perceived threat – or graft vs host disease (“GvHD”) – when donor cells are rejected by the immune system.
Several CAR-T cell therapies have been approved to treat hematological cancers, but no allogeneic therapies to date. The therapy can be very effective, leading to high levels of responses, and often complete responses, although commonly, the treatments are not durable, and patients may relapse.
Immatics – Pipeline & Partnerships
As we can see below, Immatics has advanced two of its autologous TCR-engineered candidates into clinical studies, and also two of its bispecific T-cell engagers, which do not require painful preconditioning regimes. According to the company:
These novel biologics are engineered to allow any T cell in the body to become activated and attack the tumor, regardless of the T cells’ intrinsic specificity.
Three of the four clinical candidates target a peptide called PRAME, which stands for “preferentially expressed antigen in melanoma”, and which Immatics says “is expressed at high prevalence across a large range of solid cancers”.
Immatics pipeline (investor presentation)
As shown above, Immatics has three development partners of significance. The first is Bristol Myers Squibb (BMY), a company which has secured commercial approval for two chimeric antigen receptor T-cell (“CAR-T”) therapies, Abecma and Breyanzi, both indicated for hematological cancers, and generating $600m and $975m of revenues in 2023.
The agreement was originally signed with Celgene – who developed both CAR-Therapies through the clinical trial process, before being acquired by BMY in a ~$74bn deal in 2019.
So far, BMY has advanced one TCR-T program collaboratively with Immatics, targeting solid tumor cancers, and has made a $15m upfront payment, and pledged up to $490m of development and commercial milestone payments, as well as tiered royalties on net sales, if commercialised.
BMY / Immatics are also advancing an allogeneic cell therapy program, with BMY paying $60m upfront, and pledging up to $700m plus royalties on commercial sales, per program advanced, plus a TCR bispecific candidate, IMA401, with BMY paying $150m upfront, with $770m of milestones plus royalties on the table, depending on the success of the program.
The next partner of note is Moderna – according to its latest 10K submission the two companies are working together on:
- (i) a collaboration to discover and develop mRNA-based TCER therapeutics against targets of interest to Moderna (the “TCER Program”); (ii) the validation, generation and application of data useful for the research and development of cancer vaccines (the “Database/Vaccine Program”); and (iii) a combination therapy clinical trial with respect to IMA203 and a Moderna mRNA-based cancer vaccine (the “Clinical Combo Program”).
Moderna has paid Immatics $120m upfront, and pledged up to $1.7bn in milestone payments based on how programs progress. Moderna’s approach is quite groundbreaking, creating personalised “vaccines” for patients based on the specific characteristics of their tumors.
Messenger-RNA is used to teach the patient’s immune system to recognise specific proteins and antibodies and attack them, helping to eliminate the tumor. Moderna’s work with Pharma giant Merck (MRK) and its >$25bn per annum selling drug keytruda has shown good efficacy in treating melanoma, and has reached the pivotal study stage.
Immatics’ third partner is Editas – according to Immatics:
In June 2022, we and Editas entered into a strategic collaboration and licensing agreement to combine our gamma delta T cell adoptive cell therapies with Editas’ CRISPR gene editing technology.
Under the terms of the agreement, Editas Medicine received an undisclosed upfront cash payment and is eligible to receive additional milestone payments based on development, regulatory, and commercial milestones. In addition, we will pay royalties on future net sales on any products that may result from this collaboration.
Strategic Priorities For 2024 – Catalysts To Note – IMA203 Pivotal Study Initiation
Immatic’s priority, as stated in its 10K submission is to:
Advance IMA203 to FDA approval and commercialization. We plan to commence a registration-enabling randomized Phase 2/3 trial for ACTengine IMA203 GEN1 in second-line or later (2L+) melanoma in 2024.
For IMA203CD8 GEN2, in addition to treating melanoma patients, we have also started to expand our clinical footprint outside of melanoma to address a broader patient population, including those with ovarian and uterine cancer, NSCLC and triple-negative breast cancer.
As mentioned, PRAME has high expression in multiple solid tumors, and “fulfills all properties of an ideal target for TCR-based therapies”, according to a recent Immatics presentation. Therefore, both of the above strategies make sense – secure a first approval in melanoma, and then pursue label expansions into more solid tumor cancers with high PRAME expression, such as uterine / ovarian, non-small cell lung cancer, and triple negative breast cancer – these are some of the largest cancer markets.
The “patient flow” for treatment with IMA203 or IMA203CD8 is depicted by Immatics as follows:
Immatics patient flow (investor presentation)
Immatics selected melanoma is its first target for approval based on Phase 1a study results as shown below:
Immatics P1A study results (investor presentation)
As we can see, an objective response rate (“ORR”) of 62%, or 8/13 patients was achieved in melanoma, and a confirmed ORR of 50%, which is higher than the all-comer rate for other solid tumor indications – hence the decision to move into a pivotal study in melanoma.
On some levels, the safety data also appeared encouraging, with only one patient experiencing a Grade 3 or worse case of CRS – a grade 3 event is defined as “severe or medically significant but not immediately life-threatening”, according to the National Cancer Institute (“NCI”).
Across all patients and dose levels, however, 98% of patients experienced Grade 3 or worse blood and lymphatic system disorders – although management says that this was expected, due to preconditioning / lymphodepletion associated with cell extraction. The minimum and maximum duration of response (“DoR”) in melanoma patients was 2.2 months, and >14.7 months.
In its 2023 earning press release, Immatics outlines its plans for a pivotal study as follows:
Immatics intends to assess IMA203 GEN1 targeting PRAME in HLA-A*02:01-positive cutaneous melanoma patients versus a control arm. This single trial will be designed to support accelerated approval based on an interim readout and full approval based on overall survival.
The high prevalence of PRAME (≥95%) in cutaneous melanoma may enable the company to enroll patients without PRAME pre-testing. This would enhance trial operations and could remove the need to develop a companion diagnostic in this indication.
The full trial design is currently being developed and is subject to further alignment with the FDA as part of the ongoing discussions. The Phase 2/3 trial is planned to start in 2024.
Regarding IMA203CD8, a “next-generation version of IMA203, in which “IMA203 engineered T cells are co-transduced with a CD8αß co-receptor”, Phase 1 studies in multiple tumor types have established a confirmed ORR of 56% (five of nine patients), across various tumor types, however the safety profile is more troubling, with 11 of 12 patients experiencing >grade 3 CRS, and one patient death occurring.
Management is still testing different dose levels, but the fact that durable, >12 month responses have been observed in patients suggests the program is worth persevering with, so long as the tolerability can be managed.
Strategic Priorities For 2024 – TCER Proof-of-Concept
While we wait for the allogeneic drug candidates to move from preclinical to clinical studies, arguably the most exciting news Immatics plans to share this year will come from its T-cell engager programs. Management says it is seeking to
deliver clinical proof-of-concept for its novel TCER® platform as quickly as possible and plans to provide first clinical data for IMA401 (MAGEA4/8) and IMA402 (PRAME) in 2H 2024.
IMA401 targets MAGEA4 and MAGEA8, proteins that are “expressed in multiple solid cancers including lung cancer, head and neck cancer, melanoma, ovarian cancer, sarcoma and others”, Immatics says, and describes the mechanism of action (“MoA”) as follows:
Our half-life extended TCER molecules are next-generation, antibody-like “off-the-shelf” biologics that leverage the body’s immune system by redirecting and activating T cells towards cancer cells expressing a specific tumor target.
These drugs are administered via weekly infusions with no lymphodepletion required, so the administration regime is preferable for patients, however at this stage it is difficult to determine what performance in a clinical setting will look like. The only company to have successfully achieved approval for a bispecific T-cell engager is Immunocore (IMCR).
Immunocore’s Kimmtrak was approved to treat uveal melanoma (a form of eye cancer) in 2022, after a study of 252 patients showed that 73% of those using Kimmtrak were still alive at twelve months, versus 59% of those patients given other drugs. Priced at ~$400k per annum, Kimmtrak earned $239m of revenues in 2023.
The approval of Kimmtrak shows that this MoA can work, but the fact that only a single drug in this class has been approved also illustrates the difficulty of developing such drugs, and the scale of the task facing Immatics. Get it right, however, and Immatics can clearly win big, as it has both a proprietary drug, and a Big Pharma partnered drug in clinical studies, so theoretically, it could secure hundreds of millions of dollars in milestone payments, which would help to support a commercial launch for its wholly owned assets.
Immatics has promised data from 25 patients treated with IMA401 in the second half of 2024, which is an exciting catalyst for any biotech investor to monitor, and the BMY partnered, PRAME targeting IMA402 will share Phase 1 data from 15 patients also in the 2H24. Immatics says in relation to IMA402 that it has:
recently engaged with a CDMO for the manufacturing of clinical IMA402 batches for its use within a potential registration-enabling trial. Patient recruitment and dose escalation continue to scale.
Concluding Thoughts – Risky But Rewarding Opportunity To Gain Access To Under The Radar Cancer Therapies
Currently, Big Pharma is intent on buying up companies that are developing antibody drug conjugates (“ADCs”) and Radiopharmaceuticals, with the likes of Pfizer (PFE), Merck (MRK), and AbbVie (ABBV) investing >$70bn alone in M&A deals – but the progress being made with cell therapies and bispecifics should not be underestimated, or ignored, in my view.
Iovance Biotherapeutics winning approval for its tumor-infiltrating-lymphocyte (“TIL”) cell therapy in melanoma has shown that there is life outside of the CAR-T cell therapy space, and that cell therapies can successfully address solid tumor cancers. Iovance’s share price has risen from ~$3, to >$17 per share upon approval of amtagvi, and at current price of $11.5, the company is valued at $3.3bn.
Immatics may feel relatively expensive with a share price of $10 at the time of writing, and market cap valuation of $1bn, however the key thing to note is that this is the same price at which the company listed, showing that it has held onto its value for a sustained period – since January 2020, in fact.
The lowest that Immatics stock has sunk is $6, in April last year, yet the rewards on offer for winning approval for its ex-vivo cell therapy in melanoma are self-evident – a tripling of the current share price would not be out of the question if any one of its programs presents data that surpasses the bar for approval, or for “standard of care” status.
The company made a loss of ~$103m last year, but actually made a profit in 2022, thanks to revenue from collaboration agreements of ~$185m. This figure fell to $57m last year, but it could rise again, and Immatics boasts a cash position of ~$480m, so it is no danger of running out of funding runway.
Clearly, the accelerated approval of IMA203 is far from guaranteed, despite some encouraging results – durability and safety will be the key data to watch out for in any pivotal study – plus IMA203CD8 needs to overcome concerns around safety.
These obstacles are not insurmountable, however, and near-term, we have two critical data readouts in play, for the two TCER programs IMA401 and IMA402. I would rate chances of success not necessarily higher than 60/40, but there are other programs to fall back on, and an exciting opportunity to blaze a trail in allogeneic cell therapy – which has many obvious advantages over autologous – when these partnered programs enter the clinic.
As such, my review of Immatics suggests that the rewards on offer outweigh the risks, and therefore, for a risk-on biotech investor looking beyond the approaches that are currently trending and attracting Big Pharma M&A – ADC and radiopharmaceuticlas – Immatics may prove an advantageous investment.
The risks and difficulties of developing drugs in this field must be properly acknowledged and understood – you can never be sure of a return on investment – but given the markets Immatics is targeting, you can be sure that success has the power to dramatically increase the company valuation, by two or three times, potentially, in a matter of months.
