Immutep’s Phase 3 trial for Efti has gotten the chop and shares plunge >90%! What now for investors?

After nearly a week in suspense, Immutep (ASX:IMM) confirmed news about Efti that its investors did not want to hear, and arguably feared more and more as the week with trading suspended went on. Namely, its most advanced clinical trial for Efti is all over red rover!

While it is not the end of the company, shares certainly responded like it was, falling >90%. One could argue this was overdone considering there are other clinical programs. But it is a big blow considering how long it worked to reach this point and it is uncertain how investors can be confident in other programs because they are similar.

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The Immutep story recapped!

Immutep is the poster child for the fact that clinical trials take a lot of time and money. The foundations began being laid in 2001 when the company was founded. And LAG-3’s history goes back to 1990. LAG-3 is the lymphocyte activation gene 3, a protein that regulates immune responses. And the company’s drug Efti, short for Eftilagimod Alfa, activates this gene.

Efti is  combined with Merck’s Keytruda cancer treatment and coupled with chemotherapy. Keytruda is a blockbuster drug if ever there was one, selling over US$30bn a year. However, it has severe side-effects that can lead to patients discontinuing the treatment which has led to other companies seeing if treatments combined with it can reduce the side effects and improve efficacy.

And investors were hopeful about the drug. It was being trialled with multiple indications but head and neck cancer patients (specifically those with low or no PD-L1) was the most promising. Phase 2b results showed an outperformance of 31% ORR (Objective Response Rates) vs 18.5% for Ketruda alone. Follow-up results, showed a 17.6-month median Overall Survival vs 7.9-11.3 months compared to current standards of care.

Immutep boasted that it had a market of US$24bn for Efti against NSCLC now and a US$48bn market by 2031. It had partnerships and collaborations with several major pharma companies and institutions as well as an A$129.3m cash balance. It has given the commercial rights to efti to EOC in China as well as to Dr Reddy’s in all countries outside China, Europe, Japan and North America. But the trial with was most advanced against will not be continuing.

The Phase 3 trial of Efti against NSCLC is being discontinued. That’s bad news, but there’s also some good news (but investors overlooked it)

Immutep announced that one of the clinical studies evaluating its lead immunotherapy eftilagimod alfa (efti) in lung cancer has been discontinued. When we say ‘lead’ we mean it was the most advanced, being the only one in Phase 3.  The decision to discontinue was made after review of interim clinical data – the Independent Data Monitoring Committee made a formal recommendation that it be discontinued for futility.

The company stated that the discontinuation does not affect its other late-stage development programs for efti such as other TACTI trials – TACTI-002 and TACTI-003 for head and neck cancers as well as INSIGHT-003 for lung cancer. While CEO Marc Voigt did not shy away from being ‘very disappointed and surprised’, he told investors its cash runway could now last well beyond Q2 2027. So that’s the good news, but the bad news is that it may take longer to reach the market, way longer. And of course, investors have right to be sceptical that other trials will be successful. After all, these target similar indications.

Conclusion

Being such a large company targeting multiple indications and having over $100m cash, it will not collapse over this and it isn’t even fair to say ‘Back to Square One’, at least in the sense of starting from scratch.

But this is a setback and investors have the right to worry about how much longer it’ll take to get to market and if other Phase 3 trials launched will meet a different ending. Will they even make it past the futility stage? Time will tell.

The 90% share price plunge suggests investors have their doubts.