Immutep Limited (IMM-AU): 2019 a decisive year rich in news flow

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Published to the market and investors on 5^th February 2019 @ 7.49am (GMT).

Immutep Limited (IMM-AU): 2019 a decisive year rich in news flow
Recommendation: OUTPERFORM
Target Price: AUD $ 0.078
Current Price: AUD $ 0.030 (CoB on 4^th February 2019#)

KEY TAKEAWAY

In a January investor update, Immutep confirmed that all clinical programs are progressing as expected with final or interim readouts from all studies to come in 2019E. The key catalyst is Phase IIb data from the AIPAC trial for lead asset eftilagimod alpha ("efti") in combination with chemotherapy (paclitaxel) in metastatic breast cancer ("mBC"), for which data is expected in H2/2019E. Efti accounts for >90% of our sum of the parts derived target price ("TP") of A$0.078 per share, with the mBC indication alone contributing 70%. Hence, we see significant upside on the back of positive AIPAC data. We have taken the opportunity to update our models following a recent fundraise which extends the cash runway to at least mid-2020E. We reiterate our OUTPERFORM recommendation and AUD0.078 target price.

Efti Phase IIb AIPAC trial in mBC on track for PFS read-out in H2/2019E

Efti's most advanced programme is the Phase IIb AIPAC trial in HR-positive, HER2-negative mBC. As of mid-January, 179 patients (80% of the total number of 226) had already been recruited and the PFS read-out, expected in H2/2019E, will be based on 152 events. A positive outcome could form the basis of a conditional approval and an attractive licensing deal with a large pharma partner as reflected in our model. We forecast launch in 2020E and peak sales of c.$820m in mBC alone, of which we would expect Immutep to receive 15% - 21% in royalties in addition to up to $1bn in potential milestones.

TACTI-002 in head & neck and lung cancers to start in H2/2019E

Beyond mBC, efti is undergoing further trials which aim to show the compound's potential in combination with Merck & Co.'s leading PD-1 inhibitor Keytruda (pembrolizumab). Interim data from the ongoing Phase I TACTI-mel study of efti in combination with Keytruda in 24 patients showed a highly promising overall response rate ("ORR") of 61% in patients with unresectable / metastatic melanoma. Importantly, it is the first trial to show proof-of-concept ("PoC") for the combination with Keytruda. Final data is expected later in 2019E. A phase II trial, TACTI-002, in up to 110 patients with advanced lung (1st and 2nd line) or head & neck (2nd line) cancer is expected to begin soon, with first data expected in H2/2019E. The latter two indications account for c.24% of our valuation.

Pipeline assets partnered with GSK and Novartis continue to progress

Key updates on early-stage pipeline assets include: (1) Ongoing preparations for regulatory submission of the Phase I INSIGHT-004 trial, testing efti plus Merck KGaA / Pfizer's anti PD-L1 avelumab (under a clinical trial collaboration and supply agreement), with patient recruitment expected to begin in H1/2019E; (2) following the completion of a Phase I study in psoriasis, GSK will commence PoC studies in ulcerative colitis for GSK2831, a derivative of IMP731, with results expected in 2020E; (3) Novartis expects to start a 5th trial evaluating a IMP701 / chemotherapy / small molecule combo for the treatment of triple negative breast cancer.

Kind regards,

Brigitte de Lima | Analyst

goetzpartners Healthcare Research Team | Research Team

goetzpartners securities Limited

The Stanley Building, 7 Pancras Square, London, N1C 4AG, England, UK.

T +44 (0) 203 859 7725 | brigitte.delima@goetzpartners.com / healthcareresearch@goetzpartners.com

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