ImmunoCellular Therapeutics Ltd (NYSEMKT:IMUC) Looks Cheap On Beaten Down Sentiment

ImmunoCellular Therapeutics Ltd (NYSEMKT:IMUC) has not had a great 2017. The company is down close to 40% year to date and trades at a more than 70% discount to its January highs. The surfacing of stock manipulation claims that hit press in April, and which resulted in the company becoming the subject of a whole raft of lawsuits, has weighed heavily on retail sentiment, and the release of its latest financials and business update (or perhaps more accurately, lack thereof) has compounded this weight to contribute to the downside momentum.The question now is, what is on the cards going forward?In order to answer, we've got to look at the latest update and what it means for the company's development efforts. So, on May 15, 2017, ImmunoCellular reported its first quarter 2017 numbers and – alongside the release – gave us an update as to the progress of its phase 3 study of ICT107.For those not familiar with this asset, it is an immunotherapy candidate currently under investigation as a potential treatment for glioblastoma multiforme (GBM), the most common form of brain cancer. Management altered the protocol for the trial earlier this year, which resulted in the nullification of a Special Protocol Assessment (SPA) and, despite the company suggesting otherwise, is likely going to impact time to trial end. That's not overly important, however. It's a slow burning trial anyway (not expected to finish before 2021) and a slight delay, if it occurs, isn't going to impact valuation too much, and certainly won't affect outcome. If the drug works, it works. The protocol change is rooted in recruitment, not assessment outcomes.If the drug works, it works. The protocol change is rooted in recruitment, not assessment outcomes.So if that isn't important, what is? Well, in a word, cash. At the end of the first quarter, ImmunoCellular the company had $5.3 million cash on hand. It's spending between $6 million and $7 million every quarter and needs to secure a source of capital soon. As per the latest release, however, management is struggling to do this. Here's a statement from the recent report:

…it has become clear that ImmunoCellular's ability to access sufficient additional financial resources needed to complete the trial and continue its ongoing operations are limited."

While the company tries to figure out where it can get cash from, or more importantly if it can get cash, the above-mentioned program is essentially on hold. If it is unable to secure the funds necessary to close out the trial, ImmunoCellular needs a partner, or, alternatively, will have to unload the asset to an entity that can afford to carry it through to commercialization.In this latter instance, the focus will shift to what management calls its Stem-to-T-Cell research programs, which are preclinical and – as such – would render ImmunoCellular a pre-clinic company if the focus shift happens. This is why the company is down right now – markets are adjusting based on this potential.So how does this play into a thesis on the stock? Well, there is a chance here for a turnaround play. Even if the company pivots towards its Stem-to-T-Cell efforts, and becomes a preclinical entity, its current $4 million market capitalization looks cheap. Add to this the potential for a capital injection on the back of either a partnership or an asset sale of the program as a whole, and there's considerable potential for a run up in share price as and when any development is announced. Said announcement is set to hit press 30 days after last week's release, meaning we've got a potential upside catalyst on the cards no later than three weeks from now.Sure, this isn't a position that the majority of ImmunoCellular's shareholders wanted to find themselves in. The company's development program looks promising, and if it could carry the drug through the commercialization itself, there's room for a substantial upside reevaluation on FDA green light. That's not looking like it's going to happen now though and expectations need adjusting. Even with these adjusted expectations, however, current cap seems under-representative of potential.We will be updating our subscribers as soon as we know more. For the latest updates on IMUC, sign up below!Disclosure: We have no position in IMUC and have not been compensated for this article.