Broker sees substantial upside in Immuron with catalysts imminent

By Trevor Hoey. Published at Oct 25, 2017, in ASX Biotechs

Immuron (ASX:IMC and NASDAQ:IMRN) is developing next-generation therapeutics derived from bovine colostrum, the so-called ‘first milk’ that is produced immediately after calving with the purpose of providing crucial elements of immune system protection to the newborn calf.

Acknowledging colostrum is such a rich source of immunomodulatory molecules, particularly polyclonal antibodies, which can have specific therapeutic properties, Raghuram Selvaraju, an analyst with New York-based research house, HC Wainwright & Co has initiated coverage of Immuron (ASX:IMC and NASDAQ:IMRN) with a buy recommendation and a share price target of US$15, a premium of 185 per cent to its current NASDAQ price of US$5.27.

It should be noted here that broker projections and price targets are only estimates and may not be met and share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.

Selvaraju recognises the company’s prospects, particularly given the size of its target markets.

IMC has two clinical-stage candidates, one of which is IMM-124E, which is being aimed at liver diseases including non-alcoholic steatohepatitis (NASH) and non-alcoholic fatty liver disease (NAFLD).

The other key component of its portfolio is IMM-529, which is targeting Clostridium difficile-related infections (CDI), a hospital-acquired or non-socomial infection associated with multi-drug resistance.

IMC’s early-stage preclinical pipeline also comprises programs targeting central nervous system (CNS) diseases and neuropsychiatric conditions such as autism spectrum disorder (ASD) and other infections, including those caused by pathogens like Campylobacter and Shigella.

IMM-124E a possible company maker

While Selvaraju views the market opportunities for both IMM-124E and IMM-529 as substantial, he noted the former is by far the larger of the two markets with NASH alone projected to reach over US$25 billion annually by 2026 with a compound annual growth rate (CAGR) averaging 45 per cent over the next 10 years.

The analyst believes that peak sales could exceed US$1.8 billion, which conceivably would only be achievable with the assistance of a partner. However, he noted that IMC could self-commercialise IMM-529, a development that could deliver sales of US$180 million in a 2033 timeframe.

In terms of share price traction there are some interesting developments on the horizon. Selvaraju highlighted the fact that IMC is slated to report final topline data from the proof of concept Phase 2 NASH trial of IMM-124E within the coming weeks.

Given the company’s sub-$15 million enterprise value he believes the market currently gives IMC no credit for the program, suggesting even a hint of effectiveness in the trial could provide a substantial boost to the stock.

The following is a list of other catalysts compiled by Selvaraju that could provide share price momentum through to the second half of 2018, with the analyst having flagged the level of importance attributed to each event.

Immuron therapeutics

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