Immuron Limited
(ASX: IMC, OTCQB: IMROY)

RESEARCH REPORT
November 17, 2015

Market Data

Fiscal Year June
Industry Biotech
Market Cap A$30.0M
Price/Earning (ttm) N/A
Price/Book (mrq) 9.0x
Price/Sales (ttm) 26.7x
Insider Ownership 30.8%
Shares Outstanding 75.0M
Equity Float 51.9M
Avg. Volume (3 mo.) 24,424
As of January 12, 2016

Income Statement Snapshot

Revenue (LFY) A$1.1M
Net Loss (LFY) (A$3.4M)

Balance Sheet Snapshot

Cash (LFY) A$3.1M
Debt (LFY) A$0.0M
Strong preclinical results in the prevention, treatment, and prevention of recurrence in C. difficile

Preclinical proof-of-concept study shows 80% efficacy for the prevention and treatment of Clostridium difficile (C. difficile), and 77.8% prevention of recurrence in C. difficile. IMC recently reported outstanding results in preclinical studies for IMM-529 for C. difficile. The studies showed 80% efficacy for the prevention and treatment of C. difficile, and 77.8% prevention of infection recurrence in C. difficile in mice. Combination therapy of IMM-529 and vancomycin (the standard of care antibiotic treatment) reduced disease recurrence and mortality to 22.2%. The control group, which treated mice with only vancomycin, had mortality of 88.9%.

Human clinical trials are expected to combine IMM-529 with the antibiotic standard of care. The results also indicate that IMM-529 may be effective in treating C. difficile for either prevention, treatment, or relapse of C. difficile. This potentially allows Immuron to serve the entire population of C. difficile users, thus maximizing the potential revenue from the therapy.

IMM-529’s unique mechanism of action allows it to treat C. difficile at the source. As a polyclonal antibody, IMM-529 generates highly specific antibodies for the three main sources of C. difficile: Toxin B, the highly infectious spores, and the vegetative cells in the gut. Toxin B is known to be the main target to treat C. difficile, but the spores and vegetative cells are thought to be the main cause for recurrences in C. difficile.

Another feature of IMM-529 is that it attacks C. difficile at the source. This allows IMM-529 to bind to toxin B at the source, in the small intestine, while also binding to spores and vegetative cells.

Additionally, Immuron’s therapy has been shown to rebalance the gut microbiota. This is crucial, as antibiotics have been shown to disrupt the gut microbiota (antibiotics are the current standard of care for C. difficile). Advances in technology have shown researchers that antibiotics can decrease the diversity of bacteria in the gut, along with sometimes decreasing the amount of good bacteria in the gut and increasing the amount of bad bacteria in the gut. Studies have shown that post-antibiotic recovery of the gut microbiota is only partial, and can persist for many years. This effect has been shown in studies for metronidazole, which is usually prescribed as a first-line measure for mild to moderate C. difficile infection. This imbalance in the gut microbiome may cause C. difficile recurrence. IMM-529’s ability to rebalance the gut microbiota and reintroduce good bacteria can be crucial in overall treatment, recurrence prevention, and long-term recovery.

From a mechanism of action standpoint, we see a number of advantages of IMM-529 when compared to Merck’s recently approved drug for C. difficile, bezlotoxumab. Bezlotoxumab is a monoclonal antibody which neutralizes toxin B that has entered the blood stream. IMM-529 is a polyclonal antibody that targets toxin B, plus spores and vegetative cells. Also, IMM-529 targets toxin B in the human gut, which is the specific site of C. difficile infection, while bezlotoxumab targets toxin B in the blood stream, after it passes through the gut and colon. These advantages are promising, although it remains to be seen if these advantages will translate into improved results in humans.

Low cost and safety of IMM-529 provide advantages. IMM-529’s low cost, safety, and all-natural dairy composition provide a potential advantage compared to other treatments. These characteristics provide a low cost treatment, which is crucial in the current environment of rising healthcare costs, along with providing the potential of consistent, long-lasting treatment. This is different from more expensive therapies that are only administered in a single dose.

Strong support from key opinion leaders in C. difficile. The lead researcher in the preclinical studies of IMM-529 is Associate Professor Dena Lyras. Professor Lyras is a world-renowned C. difficile expert, and was the first researcher to report on the significance of toxin B, as opposed to toxin A, in the pathology of C. difficile. This finding was reported in a 2009 paper which was published in highly respected scientific journal Nature. Her backing provides strong support for the potential of IMM-529.

Approximately 500,000 people get C. difficile in the U.S. alone; this patient population represents a significant potential revenue opportunity. In addition to the 500,000 people that get C. difficile annually, approximately 20%, or about 100,000 people, experience recurring C. difficile. The overall economic burden from C. difficile is estimated at $10 billion worldwide. According to GlobalData, the market for treating C. difficile infections is expected to grow from $356.3 million in 2014 to over $1.5 billion by 2024. This growth is expected to be driven by new CDI-specific antibiotics and new non-antibiotic approaches for treating C. difficile.

Raising target price from A$1.70 to A$1.85. This target price increase is due to the addition of C. difficile to our valuation model. Companies with lead compounds in C. difficile have received significant valuations, including Seres Therapeutics ($1.2 billion) and Synthetic Biologics ($145.3 million). Both companies are in phase II trials for C. difficile. We anticipate the Company initiating a human clinical trial in C. difficile over the near-term.

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Auditor: William Buck
Legal Counsel: K&L Gates LLP
Transfer Agent: Security Transfer Registrars Pty Ltd.

Company Information

Company Website

Company Contact Info:
Immuron Ltd
Level 1, 18 Kavanagh Street, Southbank
Victoria 3006, Australia
Investor Contact Info:
RedChip Companies, Inc.
1017 Maitland Center Commons Blvd.
Maitland, FL 32751
(407) 644-4256
www.redchip.com

 Disclosure

 

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