Revenue increased 40% to A$1.4 million in FY17, up from A ...€¦ · Company’s program for...
Transcript of Revenue increased 40% to A$1.4 million in FY17, up from A ...€¦ · Company’s program for...
Immuron Limited (NASDAQ: IMRN) (ASX: IMC)
October 20, 2017 Recent Price: $5.25 Price Target: $17.00
Market Data Fiscal Year June 30 Industry Healthcare
Market Cap $17.3M Shares Outstanding 3.3M ADs Avg. Daily Vol. (3 mos.) 8,036 As of October 20, 2017
Income Snapshot
TTM Revenue A$1.4M Net Loss (A$6.7M)
Balance Sheet Snapshot
MRQ Cash $3.9M Debt $0.2M
Revenue increased 40% to A$1.4 million in FY17, up from A$1.0 million
in FY16; listed on NASDAQ in June 2017; reported positive interim
NASH phase II results in July 2017
Revenue increased 40% to A$1.4 million in FY17, up from A$1.0 million in
FY16. IMRN currently generates revenue from Travelan, an all-natural over-the-
counter (OTC) product for the prevention of traveler’s diarrhea (TD). Travelan
reduces the risk of TD, along with the symptoms of minor gastrointestinal disorders.
IMRN reported record monthly sales of Travelan in May 2017 in the US. The growth
in sales was driven by a partnership with Passport Health, as well as direct to
wholesale distribution and the company’s education program at over 3,000
pharmacies, which was further boosted by point-of-sale advertising and better shelf
positioning. Travelan is currently licensed in the US, Australia, and Canada.
Listed on NASDAQ: In June 2017, the Company successfully completed its Initial
Public Offering on NASDAQ. IMRN raised $6.1 million and placed 610,000
American depository shares (ADS) and 701,500 warrants. The listing is a significant
milestone as the Company not only secured additional funding to move its clinical
portfolio forward, but also gained international exposure.
Positive interim NASH phase II results; top line results expected by 4Q17. In July
2017, the Company reported the interim phase II results for IMM-124E, the
Company’s program for Non-Alcoholic Fatty Liver (NASH) disease. The report
confirmed that there were no safety concerns or adverse events for IMM-124E. The
Company reported a significant reduction in liver enzymes (ALT & AST) compared
to placebo in a dose related response, proof of concept for a biological effect
demonstrating decrease in liver injury.
Immuron’s IMM-124E is in three Phase II clinical trials
NASH • Multi-center, double-blinded, placebo controlled trial; 24
sites running in US, Australia and Israel
• Recruited 134 patients with biopsy proven NASH
• Positive Interim results
• Topline results expected by 4Q17
ASH • NIH funded; Sponsored by University of Virginia
• Expected enrollment: 66 patients
• Topline results in 2019
Pediatric
NAFLD
• NIH funded; sponsored by Emory University
• Expected enrollment: 40 patients
• Top lime results in 4Q18
NASH is considered a multi-factorial disease, meaning that it will likely require
multiple drugs for effective treatment. We believe that strong phase II results could
position IMRN for either an acquisition or a large license/royalty agreement.
Additionally, IMM-124E’s strong safety profile and likely lack of drug-to-drug
interaction with other NASH therapies could position it as an initial/backbone therapy
for NASH. Ultimately, IMM-124E is designed to block and reduce bacteria growth
without negatively impacting essential microbiota.
Significantly undervalued compared to similar companies that have NASH therapies in Phase II clinical
trials. NASH therapies are estimated at a $40 billion global market by 2025 and significant valuations have
been awarded to companies in phase II clinical trials for NASH. Intercept Pharmaceuticals had positive phase
II results for its NASH therapy, leading to an increase in market cap from $1.5 billion to $6.6 billion. Immuron’s
phase II study is on track to report similar results for its NASH therapy. Also, Enanta Pharmaceuticals (market
cap: $906 million) is currently in phase I clinical development for the treatment of NASH. We believe that a
successful trial in NASH would lead to a significant gain in stock price for IMRN. The following peer chart
shows the market caps of similar companies that have NASH therapies in phase 2 (Intercept Pharmaceuticals
is in Phase 3)
Company Name Ticker Price Close (USD)
Market Cap (USD)
Intercept Pharmaceuticals Inc ICPT $66.85 $1677.9M Enanta Pharmaceuticals Inc ENTA $48.16 $919.3M Madrigal Pharmaceuticals Inc MDGL $45.01 $562.4M Conatus Pharmaceuticals Inc CNAT $5.06 $151.4M Galmed Pharmaceuticals Ltd GLMD $7.52 $95.0M Zafgen Inc ZFGN $3.69 $101.4M
Median $357.2M Average $584.6M
Immuron Ltd IMRN $5.25 $17.3M
Source: ThomsonReuters, as of October 20, 2017
Multi-million-dollar M&A activity is taking place in NASH. Similar companies operating in NASH space are
being bought at high-multiples. Based on industry transactions in 2016 and early 2017, big pharma has demonstrated
a high level of interest in acquiring companies such as IMRN that operating in NASH space. Industry The following
table shows a list of relevant NASH transactions since 2015.
IMRN’s IMM-529 program has the potential to be the top therapy for Clostridium Difficile infection (CDI). A
potential blockbuster for the Company, pre-clinical data in mice showed remarkable efficacy. IMM-529 is a
combination of three vaccines that neutralize Toxin B, the spores and the bacteria, all while preserving the
microbiome, which is key to controlling the recurrence of CDI. CDI kills 30,000 people each year in the U.S. and is
an increasing problem worldwide
The Company has received approval from Israeli Minister of Health and Hadassah Medical center to enroll patients
in 2H17. The first 60 patients are scheduled for a phase I/II randomized, double-blind, placebo-clinical study designed
to evaluate the safety and efficacy of IMM-529. Top-line results are expected in 4Q18. The following peer chart
shows market caps for companies that have CDI therapies.
Company Name Ticker Price Close
(USD) Market Cap
(USD)
Seres Therapeutics Inc MCRB 9.98 $404.3M
Assembly Biosciences Inc ASMB 31.24 $542.4M
Synthetic Biologics Inc SYN 0.92 $117.8M
Summit Therapeutics PLC SUMM 2.41 $169.14M
Median $287.1M
Average $308.6M
Immuron Ltd IMRN $5.25 $17.3M
Source: ThomsonReuters, as of October 20, 2017
Based on NPV analysis of the Company’s Travelan product, along with its phase II clinical trials (IMM-
124E) in NASH, ASH and Pediatric NAFLD, and its phase I/II clinical trial (IMM-529) in CDI, we are
valuing the company at $17.00. We believe that positive NASH phase II results will lead to a significant
increase in valuation. Additionally, successful results could lead to a potential licensing deal with a big pharma
company. Also, the strong M&A activity in NASH space indicate high interest from big pharma, and the
transaction sizes have been quite large.
Travelan 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Total Travelan & Protectyn Revenue 1,100,000 1,210,000 1,391,500 1,669,800 2,087,250 2,713,425 2,984,768 3,283,244 3,611,569 3,972,726
COGS 350,900 385,990 443,889 532,666 665,833 865,583 952,141 1,047,355 1,152,090 1,267,299
Direct Selling Costs (S&M, Freight) 462,000 508,200 584,430 701,316 876,645 1,139,639 1,253,602 1,378,963 1,516,859 1,668,545
Travelan & Protectyn Profit 287,100 315,810 363,182 435,818 544,772 708,204 779,024 856,927 942,619 1,036,881
Discount Rate 20%NPV A$2.1M
NASH 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Global Market Size 5,312,602,711 6,954,728,209 9,104,434,698 11,918,615,464 15,602,659,503 20,425,441,556 26,738,945,541 35,003,953,608 45,823,675,668 59,987,773,817
Penetration Rate 0% 0% 0% 0% 0.00% 1.70% 1.96% 2.25% 2.59% 2.97%
Total Sales 0 0 0 0 0 347,232,506 522,746,385 786,976,387 1,184,765,406 1,783,622,853
License Fee 300,000,000
Royalty Rate 0% 0% 0% 0% 0% 8% 8% 8% 9% 9%
Royalty Revenue 0 0 0 0 0 27,778,601 41,819,711 62,958,111 106,628,887 160,526,057
Discount Rate 15%
NPV $267.5M
Prob of Success 10% A$26.7M
ASH 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Global Market Size 531,260,271 695,472,821 910,443,470 1,191,861,546 1,560,265,950 2,042,544,156 2,673,894,554 3,500,395,361 4,582,367,567 5,998,777,382
Penetration Rate 0% 0% 0% 0% 0% 3% 7% 10% 16% 16%
Total Sales 0 0 0 0 0 61,276,325 187,172,619 350,039,536 733,178,811 959,804,381
Royalty Rate 0% 0% 0% 0% 0% 8% 8% 8% 9% 9%
Royalty Revenue 0 0 0 0 0 4,902,106 14,973,810 28,003,163 65,986,093 86,382,394
Discount Rate 15%
NPV $57.0M
Prob of Success 10% A$5.7M
C. difficle 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Global Market Size 553,147,650 640,544,979 741,751,085 858,947,757 994,661,502 1,151,818,020 1,333,805,267 1,500,000,000 1,650,000,000 1,815,000,000
Penetration Rate 0% 0% 0% 0% 0% 0% 0% 10% 30% 30%
Total Sales 0 0 0 0 0 0 0 150,000,000 495,000,000 544,500,000
License Fee 200,000,000
Royalty Rate 0% 0% 0% 0% 0% 0% 0% 8% 9% 9%
Royalty Revenue 0 0 0 0 0 0 0 12,000,000 44,550,000 49,005,000
Discount Rate 15%
NPV $90.3M
Prob of Success 20% A$18.1M
Combined NPV A$52.6M
Net Debt A$0.2M
Total Cash A$3.9M
Shares Outstanding 3.3M
Price Per Share A$17.06
Company Overview
Immuron Ltd is an Australian biopharmaceutical company focused on immunotherapy using bovine-derived
antibody products for humans. Immuron has a unique and versatile technology platform that is capable of generating
a wide range of products, all with a high safety profile. The versatility of Immuron's platform technology enables the
development of medicines that target a large range of unmet medical needs, including infectious diseases and
immune mediated disorders. The versatility of the technology enables Immuron to commercialize its platform
derived products through a range of regulatory pathways, including prescription (Rx), medical foods, over-the-
counter (OTC) medicines, and dietary supplements. The Company had received clearance from the FDA to
commence a Phase II clinical trial for its NASH product (IMM-124E), a potential blockbuster, which is expected to
be completed by the end of 2017. Additionally, Immuron has one marketed product (Travelan, for the prevention of
travelers' diarrhea) and a pipeline of products at various stages of clinical and earlier development.
Risks
There is no guarantee that the Company’s Phase II trials for NASH and ASH will show statistically significant
efficacy. There is no guarantee that the Company will achieve its primary endpoint in its current clinical trials. However,
the Company has shown very promising efficacy data in previous trials for IMM-124E.
IMRN’s future capital needs are uncertain. IMRN is currently in human clinical trials for IMM-124E, along with human
clinical trials for C difficile. While near-term capital needs are fairly certain, longer-term capital needs are uncertain, and
will be driven by such factors as clinical trial results, potential partnering with other pharma or biotech companies, profits
earned from retail product lines such as Travelan and Protectyn (and potentially other products), and initiating clinical
trials in new diseases. Depending on how multiple factors occur, the Company may only need to raise additional minimal
capital or more significant amounts of capital.
Revenues will ultimately depend heavily on reimbursements from Medicare and other third-party insurance
companies. Sales of IMRN’s pharmaceuticals will rely heavily on third-party reimbursement, which is not certain.
However, reimbursement momentum should be helped by the need for therapies to treat diseases such as NASH, which
are already being treated using off-label pharmaceuticals. Additionally, the high safety profile and natural origin of the
Company’s therapies means that IMRN can also generate revenue through areas such as dietary supplements and functional
foods, which carry lower regulatory requirements and don’t require insurance company reimbursement approval.
Management
Jerry Kanellos, Chief Executive officer
Dr Jerry Kanellos has over twenty years’ experience in the pharmaceutical and biotechnology industry, and has held
leadership roles in business development, project management, intellectual property portfolio management research and
development and senior management, and holds a PhD in medicine from the University of Melbourne.
His former roles include; Chief Executive Office, Avipep Pty Ltd, Global Program Director - Research and Development,
CSL Limited, Vice President- Manufacturing, STB Lifesaving Technologies;, Chief Operating Officer TransBio Limited
and Director Biotherapeutics, General Dynamics Information Technology.
Dr Kanellos worked for five years as a consultant to the biotech industry and has provided development and
commercialization strategies for various bodies including academic institutes, private and publicly listed companies and
government departments. He has also been involved in the establishment and management of several startup biotechnology
companies. During his ten years tenure in research and development at CSL Limited, Dr Kanellos gained considerable
experience in the drug development process, formulation development through to pharmaceutical scale up and cGMP
manufacture successfully leading the Chemistry Manufacturing and Controls (CMC) programs for the approval,
manufacture and launch of several products
Dan Peres, Medical Director
Dr Peres has served in various clinical and medical managerial roles in pharmaceutical and medical device companies such
as Exalenz Bioscience, CarboFix Orthopedics Ltd, NMB Medical Applications Ltd, ByPass Makafim Ltd, IOPtima Ltd
and NovoNordisk Israel. In addition, Dr Peres has been responsible for operational, marketing and business development
activities throughout his career in the life sciences industry. Dr Peres began his career as a physician and medical director
in various roles in the Israel army.
Dr Peres’ expertise lies with medical strategy, research and development, and the management of clinical studies and other
laboratory processors. He has extensive knowledge of the leading International Centers for Liver Disease and established
relationships with key Opinion leaders, including those currently participating in Immuron’s NASH and ASH trials. Dr
Peres has been a certified physician since 2002 when he graduated from the Sackler School of Medicine at Tel-Aviv
University
Peter Vaughan, Joint-Company Secretary & Chief Financial Officer (CFO)
Peter Vaughan is a Chartered Accountant who has worked in the listed company environment across a range of industries
for more than 13 years. He has served on, and provided accounting, administration, compliance and general management
services to, a number of private, not-for-profit and public company boards of directors and related committees. Peter is
currently completing his Senior Executive MBA from Melbourne University
Immuron Limited (NASDA: IMRN): Price History
Additional Information Legal: Francis Abourizk Lightowelrs & Carter Ledyard and Milburn LLP Auditor: William Buck & Marcum LLP Share Registry: Security Transfer Registrars Pty Ltd & Bank of New York.
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Company Contact Info: Immuron, Ltd. Level 3, 62 Lygon Street, Carlton South, Victoria, 3053, Australia www.immuron.com/ [email protected] Investor Contact Info: RedChip Companies, Inc. 1017 Maitland Center Commons Blvd. Maitland, FL 32751 (407) 644-4256 www.redchip.com