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Immunomedics Inc (NASDAQ:IMMU) Just Validated Our Bullish Thesis

Back in August, we published this piece on Immunomedics Inc (NASDAQ:IMMU). At the time, the company was ranging between $7-$8.5 a share and we suggested that, at that price, the company had the potential to return a pretty decent run on an exposure.

IMMU Intraday Chart

IMMU Intraday Chart

A couple of weeks later, the company was trading for $13 a piece. However, shortly after that run, a short-side attack hit press and Immunomedics took a real hit to its market capitalization. During the subsequent couple of months, the company slipped back down to the $9 mark. In response to the above mentioned short piece, we published this article, titled “Here’s Why The Immunomedics Short Attack Is Nonsense”.

We basically outlined the fact that the majority of the arguments used to support a bear thesis on the stock were invalid and that, as a result, any dip brought about by the weakened sentiment might be an opportunity to pick up some cheap shares ahead of what we saw as an inevitable recovery.

We also pointed to some trial data, set to hit press before the end of the year, as a potential catalyst that could get the revaluation underway.

This week, that trial data has hit press.

From the $9 a share recorded at close of play on Tuesday, Immunomedics currently trades for $11.20 – a 25% run in a session or two worth of trading.

The stock remains off the $13 highs, however, and we think there’s a relatively clean run to these levels and beyond.

Here’s why.

The recent run, as mentioned, comes on the back of some trial data reported on Wednesday. Specifically, the data in question derives from a phase II trial that was set up to investigate a drug called sacituzumab govitecan as a potential treatment for metastatic triple-negative breast cancer (mTNBC).

The trial involved 110 patients in total, all of which received the active drug as a third line therapy. When you get to a third line of therapy, the standard of care treatments for the cancer in question have essentially all but failed and, especially as is the case in a cancer like mTNBC, the response rates to third line are generally very low.

Which is why Immunomedics is running into the end of this week.

As per the data, a blinded, independent review by an adjudication team of radiologists (subsequent to the trial’s completion) determined an ORR of 31%, including six complete responses (CRs) and 28 partial responses (PRs). Further, the independent centrally-reviewed (ICR) median DOR was 9.1 months.

Right now, SOC therapies serve up a very limited benefit of 10-15% ORR and about 2-3 months’ progression-free survival. That this drug regiment was able to essentially treble the ORR and PFS numbers is incredible.

Further, there were no major safety issues associated with dosing. Sure, the drug brought with it the odd adverse event and some undesirable side effects but this is third line cancer therapy. These are tough patients that have had to endure a lot to-date and that have very few options left.

The FDA is well aware of this, of course, and that’s why it’s almost always willing to accept a slightly harsher tolerability profile for a cancer drug (especially one targeting late-stage patients in an indication for which few or no other treatment options exist) than might otherwise be the case for a drug in a different indication.

So why do we think this one’s going to continue to appreciate?

Well, the company intends to submit a BLA to the FDA during the first quarter of next year so the acceptance of this for review is a major catalyst. It’s also fast track, so we’re probably going to see a decision on the application hit press towards the end of summer next year.

Keep in mind that we may see an equity raise ahead of any drug approval and that this will likely bring with it a bit of dilution. It’s far from prohibitive to an exposure at current prices, however, and for the shorter term operator, it’s not even really a consideration.

Check out our previous coverage of this one here.

We will be updating our subscribers as soon as we know more. For the latest on IMMU, sign up below!

Image courtesy of Steve Davis via Flickr

Disclosure: We have no position in IMMU and have not been compensated for this article.

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Immunomedics Inc (NASDAQ:IMMU) Just Validated Our Bullish Thesis
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