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    IMM   AU000000IMM6

IMMUTEP LIMITED

(IMM)
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Immutep : Maxim Group - Unlocking the Synergistic Benefits of Efti (LAG-3), the Next Checkpoint - Transferring Coverage with a Buy Rating and $8 PT

07/16/2021 | 08:10am EDT

EQUITY RESEARCH

ASSUMPTION OF COVERAGE

Biotechnology

Immutep Limited

Buy

IMMP - NASDAQ

July 16, 2021

Unlocking the Synergistic Benefits of Efti (LAG-3), the Next

Closing Price 7/15/21

$3.53

Checkpoint - Transferring Coverage with a Buy Rating and

Rating:

Buy

$8 PT

12-Month Target Price:

$8.00

Summary

52-Week Range:

$1.22 - $7.95

Market Cap (M):

264.1

Maxim Group is transferring primary coverage of Immutep Limited to Naureen

Shares O/S (M):

74.8

Quibria with a Buy rating and $8 PT.

Float:

NA

Immutep has a pipeline of LAG-3 assets. While its lead candidate, eftilagimod

Avg. Daily Volume (000):

697.4

Debt (M):

$6.2

(efti), is wholly-owned, Immutep also has two large pharma partnerships for

Dividend:

$0.00

separate antibodies: GSK'781 with GlaxoSmithKline (GSK - NR) and LAG525

Dividend Yield:

0.0%

with Novartis (NVS - NR).

Risk Profile:

Speculative

Competitor data validating. At ASCO, Bristol (BMY - NR) reported significant

Fiscal Year End:

June

benefit in progression free survival with modest toxicity with its LAG-3/PD-1

Total Expenses ('000)

combination in 1L melanoma over monotherapy, from the RELATIVITY study.

In our view, the positive results from a late-stage clinical trial validate LAG-3

H1

2020A

2021E

2022E

as a checkpoint target.

9,572

9,707A

9,650

What's the value of a LAG-3? We've seen a lot of activity around another

H2

7,715

9,439

10,454

FY

17,287

19,146

20,104

checkpoint (TIGIT), with most recently a licensing deal by

Bristol for

Agenus' (AGEN - NR) pre-clinical asset, for $200M upfront/up to $1.36B in

milestones. Thus far, TIGIT has shown to work only in PD-L1 high expressors.

IMMP

The question is, with Bristol's recent LAG-3 (relatlimab) data and Immutep's

6

Price (USD)

Source: Factset

Volume (MM) 300

efti data starting to unfold (which has also shown signals in PD-L1 low

250

expressors), will we start to see more partnering activity around LAG-3?

5

Strong balance sheet. Immutep announced an equity financing in June that

200

4

should occur via two tranches. If both tranches materialize as expected,

Immutep will be in the strongest cash position it has ever been with ~$80M+

150

(~A$100M+) with runway to CY4Q23. Broadly, we believe positive LAG-3 data

3

100

should also continue to drive valuation higher.

2

50

Details

1

0

The next immune checkpoint: LAG-3. As immunotherapy (IO) continues to be

Sep-20

Nov-20

Jan-21

Mar-21

May-21

Jul-21

widely adopted across tumor types (especially checkpoint inhibitors such as PD-

Price

Volume

(L)1s), combinatorial strategies continue to be actively investigated to build beyond

Immutep is listed on the ASX (IMM) and with ADR's traded

single agent (and in some cases PD-1/CTLA-4) activity. In our view, the LAG-3

(lymphocytic-activation gene 3) checkpoint is emerging as the next potential IO pillar,

on NASDAQ (IMMP). 1 ADR= 10 shares of common stock.

beyond PD-1/CTLA-4. Like PD-1,LAG-3 is expressed on effector T cells and Tregs,

on activated B cells and NK cells and functions as an inhibitory receptor to negatively

modulate T-cells and immune response. While LAG-3 is distinct from PD-1, its

blockade can also prevent T-cell exhaustion through a pathway complementary to

PD-1; and as such, can act synergistically with PD-1 inhibition to restore T cell

effector function. The PD-1:PD-L1 axis is a well-validated target that is expected to

cross $25 billion in annual sales by 2022. Bristol's recent positive data of its LAG-3

(relatlimab) in combination with anti-PD1, nivo, in a late-stage trial in 1L melanoma

(described further below) has reignited interest in and lends validity to LAG-3 as a

target. More data from Immutep's ongoing studies with its lead LAG-3 targeted drug

candidate, efti, are expected over 2H21/2022. As has been the case for the PD-

(L)1s, there is likely to be room for multiple players in the LAG-3 space.

Compelling valuation. We arrive at our $8 PT by employing a blended methodology

that consists of free cash flow, discounted EPS, and sum-of-the-parts (SOTP)

models. We forecast risk-adjusted sales for efti in metastatic breast cancer in 2025

(EU, US) and in 2027 (China), in non-small-cell lung cancer in 2025 (EU, US), and

in head and neck in 2024 (EU, US). We assume royalty revenues for LAG525 in

Naureen Quibria, Ph.D.

2025 (EU, US) and for GSK'781 in 2027 (EU, US). We use a 30% discount rate and

(212) 895-3620

attribute equal weighting to our FCF, discounted EPS and SOTP models to derive a

nquibria@maximgrp.com

12-month price target of $8. (continued on page 2)

SEE PAGES 7 - 8 FOR IMPORTANT DISCLOSURES AND DISCLAIMERS

Immutep Limited (IMMP)

Finances. On 7/13, the company reported a 4Q FY2021 cash balance of ~$45.1M USD (~A$60.6M), which includes A$13.7M from the first tranche of an equity financing announced on 6/21 and A$605k from the exercise of US warrants over American Depository Shares. The equity offering totaling ~$45M USD (A$60M) is expected to occur via a two-tranche placement of new ordinary shares at A$0.52/new share: 1) New shares ($13.7 million) issued within the company's available placement capacity of 15,848,340; and 2) 88,970,717 new shares ($46.3 million), conditional on Immutep's shareholder approval at the company's general meeting on July 26. If the second tranche is approved (which is expected) and another A$5M is raised under the SPP (Share Purchase Plan), post-raise Immutep should have ~$80+M US (~A$100+M), which should provide runway into CY4Q23.

RELATIVY-047study is a positive readthrough for efti. When Bristol reported topline data from its Phase 2/3 RELATIVITY study (N=520) on March 25, announcing that the trial had met its primary endpoint of progression free survival (PFS), Immutep shares rose ~40% (vs. XBI +2.9%). After that, at this year's ASCO, Bristol released more granular data from the study. RELATIVITY is evaluating fixed dose relatlimab (anti-lag 3) in combination with anti-PD-1 antibody, nivolumab (nivo), in 1L advanced melanoma patients. The trial design is also stratified by both PD-L1 and LAG-3 expression. Overall, the combination of relatlimab + nivo demonstrated a significant PFS (progression-free benefit) benefit over nivo monotherapy: 10.12 months vs. 4.63 months. (HR=0.75). Importantly, there were no significant safety signals (SAEs Grade 3/4 of 18.9% observed with combo vs. 9.7% with monotherapy). On efficacy, 1-year PFS of relatlimab/nivo (47.7%) was numerically lower to cross trial to CheckMate-067 comparison of nivo/ipi (50%). On safety, the combo demonstrated a significantly better safety profile cross trial (18.9% vs. 59%, respectively). That said, overall survival (OS) data is still needed for confirmation of benefit. Even so, we believe the positive combination data showing superior efficacy to monotherapy treatment broadly: (1) validates LAG-3 as a checkpoint target, (2) represents a third checkpoint inhibitor (following nivo/ipi) to show benefit in a late-stage study, underscoring the synergy of an anti-PD-1/LAG-3 combo, (3) demonstrates that such a combination may offer a more tolerable regimen to nivo/ip, and/or (4) could offer an additional treatment combination option.

TACTI-002 at ASCO

At this year's ASCO, Immutep presented updated data from its ongoing Phase 2 TACTI-002 trial evaluating efti with pembrolizumab in 1L non- small cell lung cancer (NSCLC) and 2L head and neck squamous cell carcinoma (HNSCC). The compelling data overall from prior updates led to an expansion of the Merck (MRK - NR) collaboration, into a program in 1L HNSCC (TACTI-003) and an expansion of the 1L NSCLC arm (addition of 74 more patients). In addition, the safety profile remains modest.

Exhibit 1. Durable responses observed in 1L NSCLC. In NSCLC patients, efti + pembro achieved an overall response rate (ORR) of 41.7% (CR 5.6%, PR 36.1%, SD 27.8%). In a prior update, the ORR was 36.1%, thus demonstrating durability in response as well as some deepening of response. Although the patient numbers are still small, the data suggests not only superior activity to pembro alone but indicates that efti/pembro has activity in low-PD-L1 expressors. Given this initial activity (even in low PD-L1 expressors), the data suggests that the combination could potentially be employed in an "all-comer" setting. Further, if these responses continue to be durable, an efti/pembro combination with its benign safety profile could also be an ideal regimen for "less fit" patients who cannot undergo chemo/pembro treatment.

Maxim Group LLC

2

Immutep Limited (IMMP)

Study

TACTI-002

KEYNOTE-042

KEYNOTE-189

KEYNOTE-407

Efti+Pembro

Pembro (mono)

Pembro + chemo

Pembro + chemo

Line of therapy

1L

1L

1L

1L

Study Phase

Phase 2

Phase 3

Phase 3

Phase 3

No. of Patients

N=36

n=637

n=410

n=278

Overall Response Rate (ORR)

(PD-L1 TPS ≥1% pts)

ITT

41.7%

27.0%

47.6%

57.9%

PD-L1 TPS ≥ 50%

53.8%

39%

62.1%

60.3%

PD-L1 TPS ≥ 1%

44%

27%

49.2%

49.5%

PD-L1 TPS < 50%

31.6%

N/A

N/A

N/A

Evaluable

48.4%

N/A

N/A

N/A

mPFS (months)

8.2

5.4

9

6.4

PD-L1 TPS≥ 50%

11.8

7.1

11.1

8.0

PD-L1 TPS ≥ 1%

N/A

5.4

9.2

7.2

mOS (months)

N/A

16.7

22

15.9

PD-L1 TPS≥ 50%

N/A

20

N/A

N/A

PD-L1 TPS ≥ 1%

N/A

16.7

21.8

14

Source: Company reports, Maxim Group research.

Exhibit 2. Favorable response rates demonstrated in 2L HNSCC. Although the numbers are small, overall response rates with an efti + pembro combination was ~2x what has been observed with pembro monotherapy (based on a cross trial comparison with KEYNOTE -040 study). And while the ORR is slightly lower than prior updates (~36% in Oct.2020, ~31% in January), the response rates suggest a competitive profile thus far, in our view.

SOC

SOC

Study

TACTI-002

KEYNOTE-040

CheckMate-141

Efti+Pembro

Pembro (mono)

Nivolumab (mono)

Line of therapy

2L

2L

2L

Study Phase

Phase 2

Phase 3

Phase 3

No. of Patients

37

n=247

n=240

Overall Response Rate (ORR)

ITT

29.7% (N=37)

14.6% (n=247)

13%

PD-L1 CPS ≥ 1

45.8% (N=24)

17.3% (n=196)

Evaluable

35.5% (N=31)

-

mPFS (months)

2.1

2.1

2.0

PD-L1 CPS ≥ 1

2.2

4.1

mOS (months)

12.6

8.4

7.5

PD-L1 CPS ≥ 1

12.6

8.7

CPS combined positive score of PD-L1 expression

Source: Company reports, Maxim Group research.

Maxim Group LLC

3

Immutep Limited (IMMP)

Exhibit 3. LAG-3competitive landscape. We highlight below select LAG-3s in development.

Drug candidate

Company

Stage

Indications

Relatlimab

Bristol Myers Squibb

Phase 3

melanoma, HCC, NSCLC, CRC,

gastric/GEJ

LAG525 (LAG525)

Novartis

Phase 2/3

advanced solid and heme, TNBC,

melanoma

Favezelimab (MK-4280)

Merck

Phase 1/2

heme malignancies, solid tumors,

RCC, NSCLC, CRC

Fianlimab (REGN3767)

Regeneron

Phase 2

advanced cancers, melanoms,

breast cancer

FS118 (bispecific)

F-Star

Phase 2

advanced H&N, PD-L1 positive, PD-

1 resistent

Tebotelimab (MGD013,

Macrogenics

Phase 2

solid tumors, melanoma, HER2+

bispecific)

gastric/GEJ, HCC, DLBCL

Efti

Immutep

Phase 2

breast cancer, H&N, NSCLC

Source: Maxim Group research.

Exhibit 4. Immutep's pipeline of LAG-3assets. Immutep is the only company exploring the utility of LAG-3 as both an immune stimulator and an immune suppressor. Immutep has four LAG-3 related products (three of which are in the clinic) undergoing development both in immuno- oncology and autoimmune disease. The company's lead product candidate is eftilagimod alpha (efti), a soluble LAG-3 fusion protein (LAG-3Ig) that is a first-in-class antigen presenting cell (APC) activator that is being explored in cancer. Immutep is also developing an agonist of LAG-3 (IMP761) for autoimmune disease. Additional LAG-3 products (not shown), including antibodies for immune response modulation, are being developed by Immutep's large pharmaceutical partners (GSK'781 by GlaxoSmithKline and LAG525 by Novartis).

Source: Company reports.

Eftilagimod pipeline advancing

AIPAC Study. Phase 2b in HR+/HER2- metastatic breast cancer (mBC). Final overall survival (OS) data is expected in 2H21.

TACTI-003study (new). Phase 2b study collaboration with Merck evaluating efti with pembrolizumab in 1L head and neck squamous cell carcinoma (HNSCC). The trial is expected to initiate 3Q21.

TACTI-002 (KEYNOTE-798). Phase 2 study collaboration with Merck evaluating efti/pembro combination in 1L non-small cell lung cancer (NSCLC; Part A), 2L NSCLC PDX-refractory (Part B), and 2L HNSCC (Part C). Further updates from the ongoing study are expected in YE21/1H22.

INSIGHT. Investigator sponsored Phase 1 trial testing different combination treatments with efti.

INSIGHT-004 (new). Immutep signed a collaboration and supply agreement with Merck KGaA to evaluate efti in combination with Merck KGaA's and GlaxoSmithKline's bintrafusp alfa (bifunctional protein that blocks TGF-β trap and PD-L1) in a study of 12 patients. The trial is expected to initiate by YE21.

Maxim Group LLC

4

Immutep Limited (IMMP)

INSIGHT-003 (new). In this arm, efti will be evaluated as a triple combination (efti + chemo + anti=PD-1) in solid tumors. The trial (N=20) is expected to initiate in 3Q21 with interim results anticipated in 2022.

EAT COVID. Investigator-sponsored Phase 2 study at the University Hospital Pilsen in the Czech Republic is testing efti in up to 110 hospitalized patients with COVID-19.

Exhibit 5. Projections for Immutep's worldwide revenues. We currently do not assume any partnerships for efti, apart from its regional partnership with EOC Pharma for China. We assume launches for efti in mBC in 2025 (EU, US) and in 2027 (China), in NSCLC in 2025 (EU, US) and HNSCC in 2024 (EU, US). We assume royalty revenues for LAG525 beginning in 2025 (EU, US) in triple negative breast cancer and for GSK'781 in 2027 (EU, US) for psoriasis (since GSK'781 was recently discontinued in ulcerative colitis).

Immutep Revenue Forecasts ('000)

2024E

2025E

2026E

2027E

2028E

2029E

2030E

2031E

Europe

Efti in mBC

$0

$40,519

$125,228

$146,211

$177,208

$200,815

$206,880

$242,191

Efti in NSCLC

$0

$7,069

$80,770

$117,994

$147,555

$195,442

$413,130

$734,440

Efti in HNSCC

$40,245

$69,101

$99,663

$132,008

$151,106

$163,452

$272,629

$446,076

GSK'781 in psoriasis (5% royalty)

$0

$0

$0

$1,578

$3,794

$5,025

$7,478

$8,889

LAG525 in mTNBC (5% royalty)

$0

$777

$1,143

$1,649

$2,184

$2,749

$3,347

$3,979

United States

Efti in mBC

$0

$39,223

$121,223

$141,535

$171,540

$194,392

$200,263

$234,444

Efti in NSCLC

$0

$8,399

$83,377

$145,535

$192,004

$285,524

$490,835

$872,580

Efti in HNSCC

$29,113

$49,986

$72,094

$95,492

$109,307

$118,238

$197,214

$322,682

GSK'781 in psoriasis

$0

$0

$0

$2,811

$4,551

$6,394

$7,465

$11,310

LAG525 in mTNBC

$0

$738

$1,064

$1,409

$1,775

$2,161

$2,568

$2,999

China

Efti in mBC (7% royalty)

$0

$0

$0

$1,033

$1,916

$2,412

$3,389

$6,284

Source: Maxim Group estimates

Maxim Group LLC

5

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Immutep Ltd. published this content on 16 July 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 July 2021 12:09:27 UTC.


ę Publicnow 2021
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Financials
Sales 2022 8,86 M 6,42 M 6,42 M
Net income 2022 -31,3 M -22,7 M -22,7 M
Net Debt 2022 6,40 M 4,64 M 4,64 M
P/E ratio 2022 -11,1x
Yield 2022 -
Capitalization 421 M 304 M 305 M
EV / Sales 2022 48,3x
EV / Sales 2023 11,6x
Nbr of Employees -
Free-Float 85,2%
Chart IMMUTEP LIMITED
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Immutep Limited Technical Analysis Chart | IMM | AU000000IMM6 | MarketScreener
Technical analysis trends IMMUTEP LIMITED
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TrendsNeutralNeutralBullish
Income Statement Evolution
Consensus
Sell
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Mean consensus BUY
Number of Analysts 3
Last Close Price 0,50 AUD
Average target price 1,18 AUD
Spread / Average Target 137%
EPS Revisions
Managers and Directors
Marc Voigt Chief Executive Officer, CFO & Executive Director
David Fang Finance Director & Assistant Secretary
Russell John Howard Non-Executive Chairman
FrÚdÚric Triebel Chief Scientific & Medical Officer
Deanne Miller COO, Co-Secretary & General Counsel
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