Immutep Limited (IMM-AU): Targeting the LAG-3 immune checkpoint

Free to access research and investor meetings in a post-MiFID2 world.

This research report is intended for use only by persons who qualify as professional investors or eligible counterparties (institutional investors) in the applicable jurisdiction, and not by any private individuals or other persons who qualify as retail clients.

Immutep Limited (IMM-AU): Targeting the LAG-3 immune checkpoint
Recommendation: OUTPERFORM
Target Price: AUD 0.078
Current Price: AUD 0.036 (COB on 10^th July 2018)

KEY TAKEAWAY

We initiate coverage on Immutep with an OUTPERFORM recommendation and a target price ("TP") of A$0.078 per share. Immutep develops therapeutics targeting the Lymphocyte Activation Gene-3 ("LAG-3") immune checkpoint ("IC") involved in T cell regulation. IC inhibitors ("ICIs") targeting CTLA-4 and PD-1 / L1 have revolutionised cancer care owing to their ability to elicit durable responses in advanced cancers. The current focus is on combination therapy to increase response rates. Immutep's lead asset eftilagimod alpha (IMP321, "efti") has shown encouraging efficacy in metastatic melanoma and metastatic breast cancer ("mBC"). We forecast launch in 2020E for mBC based on an ongoing Phase IIb trial expected to read out in 2019E and estimate $2.4bn in peak sales across indications, with Immutep expected to sign a licensing deal.

I-O has revolutionised cancer care, but most patients do not benefit

Immuno-oncology focuses on activating the immune system to fight cancer. ICIs have shown the greatest clinical results, as reflected in responses of up to 10 years in 20% - 50% of patients across advanced tumours. This has led to their rapid adoption since the launch of Yervoy (ipilimumab) in 2011, with total ICI sales reaching $10.5bn in 2017. The race is on to find novel mechanisms of action for combination therapy to augment response rates without increasing toxicity.

Leader in LAG-3, potentially the third pillar in checkpoint immunotherapy

LAG-3 is an IC that has been shown to have both stimulatory and inhibitory roles, making it suitable for therapeutic applications in cancer and autoimmune diseases. The search for the third pillar in the ICI toolbox has led to increased activity in the LAG-3 space. Immutep has the broadest LAG-3 targeted pipeline across the biopharma industry and is the only company exploring the stimulatory activity of this checkpoint pathway (most companies focus on inhibitory mAbs).

Eftilagimod alpha activates antigen-presenting cells to fight cancer

Efti is a LAG-3Ig fusion protein that drives dendritic cell maturation and activation by binding to MHC class II. It is being developed for combination therapy with chemotherapy or Keytruda (pembrolizumab) in solid tumours. The Phase IIb AIPAC trial in mBC of efti + paclitaxel is expected to read out in 2019E, and a Phase II basket trial in metastatic lung and head & neck cancers exploring efti + pembro starts in Q4/2019E. The latter is based on encouraging proof-of-concept data from a Phase I trial in advanced melanoma (TACTI-mel).

SoTP valuation suggests share price largely justified by efti in mBC alone

Our TP for Immutep is based on a sum-of-the-parts valuation that includes NPVs for efti in metastatic breast, lung and head & neck cancer - together accounting for >90% of our fair value, net cash at YE/2018E, and research deals with Novartis and GSK for earlier-stage assets.

Kind regards,

Brigitte de Lima, PhD, CFA | 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 | healthcareresearch@goetzpartners.com / brigitte.delima@goetzpartners.com

www.goetzpartnerssecurities.com

Registered in England No. 04684144.

Managing Directors: Dr Stephan Goetz, Martin Brunninger and Ulrich Kinzel.

Click here to see our privacy policy.

GPSL has a formal client relationship with Vicore Pharma Holding AB.

GPSL publishes and distributes "Investment" Research and "Corporate Sponsored" Research. Our Corporate Sponsored Research and investor meetings (e.g. NDRs, 1 to 1 meetings) are free to access and attend and is not classified as an inducement in a post-MiFID2 world, this is because the issuer is paying GPSL. GPSL does not offer any execution or market making services. This is a marketing communication as defined by the Financial Conduct Authority ("FCA"). The information herein is considered to be an acceptable minor non-monetary benefit as defined under FCA COBS 2.3A19(5).

In accordance with the General Data Protection Regulation ("GDPR") - if you would like to be removed / unsubscribed from our CRM (also please note that you are free to contact GPSL at any time in the future to have your e-mail subscription amended), please e-mail:
researchproduction@goetzpartners.com

About GPSL: goetzpartners securities Limited is a member of the goetzpartners group, and a leading pan European investment bank and research company. We bring together a wide range of expertise, insights and innovations to advance the interests of our clients around the world. The fast-changing environment brings challenges for businesses and investors. Research innovation, digital transformation and disruptive business ideas reshuffle the corporate world at a relentless pace. Our sector knowledge and our global footprint bring together corporate intelligence and a deep understanding of the industry with a wide network of top decision makers. These collective insights help our clients to stay at the leading edge of change.

This research report is intended for use only by persons who qualify as professional investors or eligible counterparties (institutional investors) in the applicable jurisdiction, and not by any private individuals or other persons who qualify as retail clients.

This e-mail (including any attachments) from goetzpartners securities Limited ("GPSL") is confidential and may contain information which is proprietary, privileged or otherwise legally protected against unauthorised use or disclosure. If you receive this e-mail in error or are not the intended recipient of this e-mail, please delete and destroy all copies in your possession, notify the sender that you have received this e-mail, and note that any review or dissemination of, or the taking of any action in reliance on this e-mail is expressly prohibited. GPSL shall not be liable for the improper or incomplete transmission of the information contained in this e-mail nor for any delay in its receipt or damage to your system. GPSL does not guarantee that the integrity of this e-mail has been maintained nor that this e-mail is free of viruses, interceptions or interference and makes no warranties in relation to these matters. This is not an offer or a solicitation to buy or sell securities or investment products, or an official confirmation. GPSL record electronic and phone communications in accordance with FCA and MiFID2 regulations, they will be monitored for regulatory and training purposes. GPSL is authorised and regulated by the Financial Conduct Authority of the United Kingdom (Firm Reference Number: 225563).

Click on the following link for the GPSL MiFID2 Investor Guidance Notice

GPSL Equity Research publications are available on the following aggregators and via news distribution circuits (For Institutional Use Only): AlphaSense, Bloomberg (GOET), Capital IQ, EQS, FACTSET, Research Tree, RNS Reach and Thomson Reuters.

If you cannot click on the above hyperlink please copy the below link and paste it into your browser for the full pdf version of the equity research report:

https://gp.bluematrix.com/sellside/EmailDocViewer?encrypt=2dfe4838-dfbb-4973-8cee-4af9675462a4&mime=pdf&co=gp&id=paul.dunne@goetzpartners.com&source=libraryView

Free to access research and investor meetings in a post-MiFID2 world.

This research report is intended for use only by persons who qualify as professional investors or eligible counterparties (institutional investors) in the applicable jurisdiction, and not by any private individuals or other persons who qualify as retail clients.