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Biotech / Medical : Immunomedics (IMMU) - moderated
IMMU 16.93+0.1%9:34 AM EDT

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From: drtom12341/20/2018 6:02:53 AM
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I've been thinking about the valuation of the company. Based on current outstanding shares, we are at a 2.6 billion market cap, and fully diluted, 3.05 billion. This includes what is probably at this point almost 400 million in cash, so the valuation of 132 is somewhere between 2.2, and 2.75 billion. I think these figures are not unreasonable for a company that is expected to be submitting an oncology AA NDA in the next 2 1/2 months, and I think the company market cap probably takes that into account. However, there are a variety of events I expect to see over the next 9 months that I am not convinced are priced in, and, outside the expected AA of 132, I think we could see some further improvement in share price. In no particular order, these include the following: 1)worldwide expansion, including a deal for Asian rights and explanation of the plan for European approval. I would expect both of these within the next 6 months 2)BTD for 132 in at least urothelial, and possibly also mBC. The data on urothelial is self-explanatory, and I would expect BTD sooner rather than later there, but the recent revelation of mBC was a bit of a shock, and could add significantly to the valuation of 132. I would expect BTD in urothelial within the next 3 months, and mBC(if the so far mystery data supports it) within 6 months 3)plans for molecules outside of 132, including 130, 140, and (I hope), the T cell re-director. Admittedly, these should not be major additions in valuation, but I think they all have some potential place in the company armamentarium. Deals could be made for these as well, although sales of some of the older molecules, including vmab, emab, and mmab seem more likely to me. Either way, more cash in the pot for the ADC programs. I would expect clarification on these matters within the next 6 months. 4)deals for combination studies in 1st or 2nd line treatment. This is the big one, where we could really get the so-called "silly" valuation of the company, because first line treatment in some combination of mBC, TNBC, and urothelial would easily be multiple billions of dollars in sales. Previous figures have been as high as 7 billion a year. In addition, the company has stated they are looking also at head and neck cancer, as well as ovarian cancer. Don't forget about SCLC and NSCLC, both of which appear ripe for combination therapy studies. I would expect announcements about early stage combination trials within the next 3 months, with results by late 2019.

This is just off the top of my head. I am sure experienced operators such as Pehl, Delaney, Malik, and most of the Board(excluding he who must not be named and Markison) have other irons in the fire that I haven't considered. That's why I believe that the share price could easily double by the end of 2018, and, assuming combination studies are as good as I expect, "silly" valuation by mid-2020 or early 2021. Of course, it's possible we could be bought out by then; big pharma is likely to be repatriating quite a bit of cash this year, and the need for new drugs is well documented, but again, I would expect any selling price by the Board and management would be, well, "silly".
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