Immatics N.V.: An Intriguing Developmental Concern (NASDAQ:IMTX)

Shares of European T-Cell receptor therapy concern Immatics N.V. (NASDAQ:IMTX) have traded predominantly below their initial trade on the NASDAQ in 2020 due to a dearth of clinical data. That drought will end in 2024 with readouts anticipated on all four clinical candidates, as well as the expected initiation of a pivotal trial for IMA203 in the treatment of second-line melanoma. With a market cap of $1.08 billion, ~60% of which is cash, and collaborations with Bristol Myers Squibb (BMY) totaling $4.2 billion in potential milestones, this developmental concern merited a deeper dive. An analysis follows below.

Immatics N.V. is an Amsterdam, Netherlands headquartered, Tubingen, Germany domiciled clinical-stage biotechnology concern focused on the development of T-cell receptor (TCR) therapies for the treatment of solid tumors. The company is advancing four clinical programs and has inked several collaborations for its technology, most notably with Bristol Myers Squibb. Immatics was formed in 2000 and went public in 2020 when it merged into special purpose acquisition company Ayra Sciences Acquisition Corporation, with its first trade transacted at $15.75 per share. Its stock currently trades at just over $10.00 a share, translating to an approximate market cap of just north of $1 billion.

Approach

Unlike chimeric antigen receptor T-cell (CAR-T) therapies that bind to naturally occurring antigens on the surface of cancer cells, TCR therapeutics equip activated T cells with specific receptors that target their complementary cancer antigens. Whereas CAR-T therapies are limited to ~25% of the proteome, TCRs can (in theory) target the entire proteome.

Immatics has developed three types of immunotherapy candidates: TCR-engineered autologous adoptive cell therapies (ACTengine), which are T-cells derived from the patients, genetically modified, and expanded in a process that takes approximately two weeks, and then reintroduced to the patient in a one-and-done administration; TCR-engineered allogenic ACTs (ACTallo), which are off-the-shelf donor-derived gamma delta T cells – essentially a donor version of ACTengine – and T cell engaging receptors (TCERs), which are off-the-shelf antibody-like bispecifics that are designed for multiple administrations in an outpatient setting. ACTengine therapies lend themselves to enhanced personalization, meaning they pursue targets with stringent tumor selectivity and a low number of copies per cell, whereas TCERs require broader tumor expression and a high number of copies per cell.

Pipeline

From these approaches, Immatics has created four clinical candidates.

IMA203 and IMA203CD8. Most of the positive buzz surrounding the company concerns IMA203, an ACTengine therapy that leverages CD8 T cells to target a specific human leukocyte antigen (HLA) known as A*02:01 that presents PRAME, a prevalent peptide receptor in solid tumors. PRAME is homogeneously expressed at a high copy number per tumor cell, making it potentially a better target for Immatics’ TCERs – more on that below.

In an ongoing Phase 1a/b study, IMA203 demonstrated an objective response rate (ORR) of 62% in 13 melanoma patients with a median of four prior lines of therapy. No median duration of response (mDOR) was yet reached at a median follow-up (mFU) of 14.4 months as of a September 30, 2023 cutoff date.

A second-generation version of IMA203, IMA203CD8, leverages both CD8 and CD4 T cells. It comprised Cohort C of the Phase 1b portion and has performed more or less in line with its predecessor in 12 patients encompassing multiple solid tumor types. Whereas IMA203 achieved an ORR of 50% and had not reached a mDOR at a mFU of 10.8 months in 18 patients at the recommended Phase 2 dose, IMA203CD8 demonstrated an ORR of 58% and had not reached a mDOR at a mFU of 4.8 months. The studies are ongoing, with updates from both therapies expected in 2H24. Immatics anticipates initiating a pivotal Phase 2/3 trial for IMA203 in second line or later setting for melanoma patients in 2024, representing an annual domestic patient population of ~3,300.

IMA401. In addition to its ACTengine therapies, the company is trying to demonstrate proof-of-concept for its TCER approach with two clinical programs. Like their ACTengine brethren, both of them are targeting the HLA-A*02:01 presented peptides. In the case of IMA401, the peptides in question are MAGEA4 and MAGEA8. Through its mass spectrometry-based target discovery platform XPRESIDENT, Immatics discovered that MAGEA4/8 is presented at more than a five times greater frequency per tumor cell than the commonly targeted MAGEA4 peptide and is highly prevalent in solid tumor types. IMA401 is undergoing Phase 1 evaluation with first data expected in 2H24.

IMA402. Although IMA203 and IMA203CD8 are pursuing a PRAME derived peptide, the company is hopeful that bispecific IMA402 may be better suited for the job. Although requiring higher peptide copies per cell, IMA402 induces killing of tumor cells with PRAME copies as low as 50 per cell. It is being assessed in a Phase 1/2 study with initial data anticipated in 1H24.

Collaborations

The company’s approaches have attracted five collaboration partners; however, three of them – Amgen (AMGN), Genmab (GMAB), and GSK (GSK) – have terminated. The Genmab cancellation occurred on March 14, 2024 after Immatics received $54 million upfront to leverage its platform to develop three bispecific programs.

That said, the most significant ongoing partnership is with Bristol Myers, with which Immatics has three programs, including IMA401. For IMA401, Immatics received $150 million upfront and is eligible for development, regulatory, and commercial milestone payments of $770 million, in addition to low-double digit royalties. Immatics can opt into co-funding the U.S. development in exchange for enhanced royalties and/or co-promotion rights domestically.

Signed in 2021, IMA401 was the second agreement, after entering into the original one with Celgene in 2019. That deal encompassed three TCR-T targets and an upfront payment of $75 million, with each one eligible for milestones totaling $505 million and royalties.

The most recent Bristol Myers agreement was consummated in 2022 and entailed two ACTallo candidates with $60 million upfront and milestone eligibility up to $700 million for each program, as well as royalties.

The company also inked a deal with Moderna (MRNA) to develop TCER products and cancer vaccines in September 2023. Moderna will lead the clinical development and commercialization efforts. In exchange, Immatics received $120 million upfront and is eligible for development, regulatory, and commercial milestone payments in excess of $1.7 billion on TCER programs, as well as royalties in the mid-single-digits to low-double digits on both TCER and vaccines.

Balance Sheet & Analyst Commentary

Despite all the upfront cash from its collaborations, Immatics conducted a secondary offering in January 2024, raising net proceeds of $188.4 million at $11 per share. Added to the $470.6 million in reserves it held at YE23, the company will have adequate funding for several years, even as it ramps up its clinical efforts – likely further buttressed by milestone payments.

The Street’s admiration for the Immatics is unanimous, featuring six buy ratings and a mean price objective of $19. They do expect it to earn milestones of ~$130 million through FY25.

Verdict

Shares of IMTX have traded in a range predominantly below where they made their public debut ($5.75 to $17.25) as little clinical data on its collaborations has been produced since it went public. That will change in 2H24, with multiple data catalysts forthcoming.

Having three deals inked with Bristol Myers totaling $4.2 billion in potential milestones and a market cap hovering around $1 billion with over $600 million in cash, it stands to reason that if Immatics can demonstrate proof-of-concept across two or three of its approaches, it will no longer be a publicly traded concern, but rather the property of the $110 billion big pharma behemoth. In the meantime, there is muted downside given the number of early programs in the clinic, the size of its preclinical collaborations currently underway, and the company’s balance sheet that reflects ~$6 per share in cash. The risk/reward profile appears asymmetrical to the upside. That said, the company’s pipeline is too early stage to be considered for a significant stake.

As such, investment in Immatics is recommended only to aggressive, longer-term investors with high risk tolerance. IMTX does have options against the equity. Liquidity is just decent, but that is how I took an initial ‘watch item‘ position in this intriguing developmental via covered call orders. This will be a name we will look back on in the future as development advances.