Immutep : Goetzpartners securities Research - Potential standard of care in lung and other cancers

IMMUTEP LIMITED

Biotechnology

4 April 2023 22:40 BST

COMPANY NOTE

Immutep Limited (IMM-AU)

Potential standard of care in lung and other cancers

KEY TAKEAWAY

Final TACTI-002 Phase II data of efti with pembrolizumab in 2nd line non-small cell lung cancer ("NSCLC") presented at ESMO 2023 further demonstrates the potential of efti as standard of care ("SoC"). While, as highlighted by the recent failure of Merck's anti-TiGIT vibostolimab, few drugs to date appear to have safe and meaningful synergy with PD-1/PD-L1 immune checkpoint inhibitors ("ICIs"), efti continues to generate positive combination data. This includes not only NSCLC, but also head and neck cancer ("HNSCC"). Data indicates that not only might efti provide a safer longer acting substitute for chemotherapy in ICI combinations, but also potential for synergy with chemo itself. While data from the INSIGHT-003 trial already indicates an efti-pembrolizumab-chemotherapy may be well tolerated, Phase 2 data in metastatic breast cancer indicates potential benefits of combination with chemo alone. With an impending phase III trial expected to follow on from TACTI-002, we believe efti to be on course to reach market for NSCLC by 2025E and reach a peak sales of almost $6.5bn from NSCLC alone. Given this potential and observing comparable companies in the immuno-oncology space, we believe Immutep to be significantly undervalued. With a phase II / III in metastatic breast cancer ("mBC") confirmed and plans for expansion of TACTI-002 to phase III in NSCLC, we reiterate our OUTPERFORM recommendation with our sum of the parts ("SoTP") valuation of Immutep's share price increasing to A $2.88 per share.

Efti extends efficacy without compromising safety: ICI combination with chemotherapy offers a unique synergy yet to be demonstrated by other late-stagedrugs yet, however its harsh tolerability is a concern for poorly patients, thus monotherapy often suffices for some patients with high PD-L1to avoid chemotherapy regimens. TACTI-002(Part A) data

of efti with pembrolizumab compared to pembrolizumab monotherapy in 1st line NSCLC shows an increased duration of response for both PD-L1 low (TPS 1-49%) and negative (TPS <1%) patients which are classically treated with ICI + chemotherapy combination. Efti therefore demonstrates a tolerable, prolonged response which likely can replace the current SoC.

Efti's tolerability allows it to access the most difficult-to-treat population: Patients with negative PD-L1expression are notoriously difficult to target with existing approved

therapies. Recent data from the TACTI-002 (Part B) phase IIB trial in 2nd NSCLC at ELCC 2023 show efti with pembro can revert resistance to PD-1 /PD-L1 therapy with 83.3% of patients showing tumour shrinkage or tumour growth deceleration in a majority PD- L1 low- and negative-expressing cohort.

Efti-pembro-chemo triple therapy extends treatable population: Given efti does little to exacerbate tolerability and building from synergy shown in the efti + chemotherapy AIPAC trial in mBC, the INSIGHT-003trial in NSCLC shows efti-pembrolizumab-chemotherapy is a tolerable triple therapy that shows conceptual synergy and promising early data, with a response rate of 72.7% and disease control rate of 90.9%, potentially further extending the current pembro-chemoSoC to expand the treatable patient population.

NTSC opportunity in excess of $6bn: The bulk of Merck's $20.9bn pembro revenues come from NSCLC. With increased penetration from the substitution for chemo and triple therapy, we estimate that global peak revenues in NSCLC could reach $6.5bn.

Immutep is still significantly undervalued: With a phase III-ready candidate with tangible potential to partner ICIs in a future SoC combination, Immutep has thus far gone under the radar of investors. Similar companies in the immuno-oncology space that have recently been acquired have fetched premium valuations; given the continued success of efti from multiple trials, we expect Immutep's valuation to rise significantly. Given the variation of trial collaborators in the established ICI space (MSD, Pfizer, Merck KGaA), it is clear big pharma are aware of Immutep's programmes, an acquisition may occur.

OUTPERFORM

Target Price AUD2.880

Current Price AUD0.240

FINANCIAL SUMMARY

Net Cash/Debt (M):

20.00

MARKET DATA

Current Price:	AUD0.240
Target Price:	AUD2.880
52 Week Range:	AUD0.435 - AUD0.230
Total Enterprise Value:	161
Market Cap (M):	211
Shares Out (M):	879.3
Float (M):	838.6
Average Daily Volume:	746,509

EQUITY

RESEARCH

DR. CHRIS REDHEAD Research Analyst T [phone]

[e-mail]

ALEXANDRA WALSH Junior Equity Research Analyst T [phone]

[e-mail]

PRICE PERFORMANCE

Immutep Limited

0.5
0.45
0.4
0.35
0.3
0.25
0.2
04/22	07/22	10/22	01/23	04/23

IMM-AU

Source: Factset

This is a marketing communication. For professional investors and institutional use only. The information herein is considered to be an acceptable minor non-monetary benefit as defined under FCA COBS 2.3A19(5).GPSL is authorised and regulated by the Financial Conduct Authority (FRN 225563). GPSL does and seeks to do business with companies / issuers covered in its research reports. As a result, investors should beaware that GPSL may have a conflict of interest that could affect the objectivity of this research report. Investors should consider this research report as only a single factor in making their investment decision. GPSL has a formal client relationship with Immutep Limited.

Please see analyst certifications, important disclosure information, and information regarding the status of analysts on pages 15-17 of this research report.

Contents

COMPANY OVERVIEW	1
INVESTMENT THESIS	2
News flow	3
UNIQUE IMMUNE ACTIVATOR FOR COMBINATION	4
EFTI COMBINATION SET TO TRANSFORM NSCLC THERAPY	5
The current status of NSCLC treatment	5
Efi demonstrates superior benefits to current SoC	5
The efti-pembro-chemo triple threat	6
NSCLC therapeutics development pipeline	6
Influx of PD-1/PD-L1 copycats	6
NSCLC vaccines; a novel approach	6
New targets for NSCLC	7
Dual targeting with bispecific antibodies	7
Immutep's Efti well placed to take significant share of NSCLC market	7
FINANCIAL FORECASTS	8
Product sales	8
Sum of the parts (SoTP) valuation	8
Immutep is significantly under valued compared to peers	8
Immutep against sector comparables	8
LIST OF FIGURES	13

This is a marketing communication. For professional investors and institutional use only. The information herein is considered to be an acceptable minor non-monetary benefit as defined under FCA COBS 2.3A19(5).GPSL is authorised and regulated by the Financial Conduct Authority (FRN 225563). GPSL does and seeks to do business with companies / issuers covered in its research reports. As a result, investors should beaware that GPSL may have a conflict of interest that could affect the objectivity of this research report. Investors should consider this research report as only a single factor in making their investment decision. GPSL has a formal client relationship with Immutep Limited.

Please see analyst certifications, important disclosure information, and information regarding the status of analysts on pages 15-17 of this research report.

Page 1

Company overview

Listed on the ASX ("IMM") and with ADR's traded on NASDAQ ("IMMP"), Immutep is uniquely focused on the development of cancer and immunotherapies utilising LAG-3 ("Lymphocyte Activation Gene-3"). With its HQ in Sydney, Australia and operations in Germany, France and the USA, Immutep has established a pipeline of in-house and large-pharma-out-licensed programmes which utilise LAG-3's dual role as both an activator and inhibitor of the adaptive / innate immune system (FIGURE 1).

The company's lead in-house programme is a first-in-class soluble LAG-3 fusion protein, eftilagimod alpha ("efti" or "IMP321"), that exploits the protein's ability to stimulate the immune response through the activation of antigen presenting cells ("APCs").

Recent data presented at SITC 2022 from Part A of the Two ACTive Immunotherapies-002(TACTI-002) Phase II trial in 1st line non-small cell lung cancer ("NSCLC") has shown that combination of efti with pembrolizumab ("pembro"), a PD-1 inhibitor, elicits an overall response rate ("ORR") of 40.4% that is approximately double the 21.3% ORR of pembro alone across the all-comerPD-L1 patient population. This includes ORRs of 44.7% and 31.3% with efti + pembro as compared to ORRs of 16.8% and 10.7% with pembro alone in the difficult-to-treatPD-L1 low (TPS 1% - 49%) and PD-L1 negative (TPS <1%) expressing patients, respectively. Data from the ELCC 2023 from Part B of TACTI-002 in 2nd line NSCLC also shows efti combination with pembro reverts previous resistance to PD-1 /PD-L1 therapy with 83.3% patients showing either tumour shrinkage or tumour growth deceleration. Given the patients' resistance to previous PD-1 /PD-L1 therapy, it is extremely promising to see an ORR of 8.3%, with a disease control rate ("DCR") of 33% and 6-month progression free survival ("PFS") of 25%. Further preliminary data from Part C of the TACTI-002 trial evaluating the chemotherapy-free combination of efti + pembro in 2nd line head and neck cancer ("HNSCC") has shown an ORR (29.7%) that is double that of anti-PD-1 monotherapy (14.6%), with more data expected this year. Additionally, initial positive efficacy and safety data from the first-in-human triple combination of efti+pembro+chemo therapy in the INSIGHT-003 trial in 1st line NSCLC was presented at SITC 2022. The INSIGHT-003 trial recently expanded its trial cohort to 50 (from 20), and more data is expected this year following promising early signals.

As a first-in-class soluble LAG-3 protein targeting MHC Class II ligands on antigen-presenting cells ("APC"), efti is also uniquely positioned to improve clinical outcomes from SoC chemotherapy. Its activation of APCs (e.g., dendritic cells, monocytes) triggers a broad immune response that includes significant increases in cytotoxic CD8+ T cells armed with chemo-induced tumour antigens to target cancer. This synergy was demonstrated in combination with paclitaxel in metastatic breast cancer ("mBC") in a Phase IIb trial that showed encouraging efficacy and safety, including a +2.9-month median overall survival ("mOS") improvement, statistically significant mOS improvements between 4.2 to 19.6 months across three pre-specified subgroups, a statistically significant increase in cytotoxic CD8 T cells that correlated with improved OS, a higher 46% ORR (vs 38% for chemo alone), and a superior Quality of Life preservation. On the strength of these results, Immutep recently launched AIPAC-003 (Active Immunotherapy, Eftilagimod Alpha, and PAClitaxel), an integrated Phase II / III trial in mBC that incorporates feedback from the US Food and Drug Administration ("FDA") and European Medicines Agency ("EMA") and will help inform a Biologics License Application ("BLA") and support a Marketing Authorisation Application ("MAA").

With FDA Fast Track Designation for efti in combination with pembro for 1st line NSCLC, Immutep is planning a late-stage NSCLC trial based on the strong Phase II data from TACTI-002 (Part A). Efti also has FDA Fast Track Designation in 1st line HNSCC that is being studied in combination with pembrolizumab in the randomised TACTI-003 trial, which is expected to reach full enrolment in mid-2023E and have a top-line readout this year.

Led by experienced CEO Marc Voigt, Immutep has a strong cash position of A$68.38m. Now financed to the end of FY2024E, the company is in a position to progress the late-stage clinical development of efti. This includes the ongoing randomised / controlled TACTI-003 Phase IIb trial in 1st line HNSCC, the recent initiation of the Phase II / III AIPAC-003 trial in mBC, and the future initiation of a registrational Phase II / III trial in 1st line NSCLC. The company will use clinical data from trials to assess partnering options during the course of the next 12 - 18 months.

This is a marketing communication. For professional investors and institutional use only. The information herein is considered to be an acceptable minor non-monetary benefit as defined under FCA COBS 2.3A19(5).GPSL is authorised and regulated by the Financial Conduct Authority (FRN 225563). GPSL does and seeks to do business with companies / issuers covered in its research reports. As a result, investors should beaware that GPSL may have a conflict of interest that could affect the objectivity of this research report. Investors should consider this research report as only a single factor in making their investment decision. GPSL has a formal client relationship with Immutep Limited.

Please see analyst certifications, important disclosure information, and information regarding the status of analysts on pages 15-17 of this research report.

Page 2

FIGURE 1: Pipeline

Source: Company data

Investment thesis

Substantial in expansion of NSCLC treatment responsive population

FIGURE 2: Efti revenue forecasts

Source: goetzpartners Research estimates.

Warning Note: Forecasts are not a reliable indicator of future results or performance. The return may increase or decrease as a result of currency fluctuations.

Efti is one of the only proprietary drugs to safely demonstrate robust synergy with PD-1 /PD-L1 immune checkpoint inhibitors ("ICIs"). As highlighted by Merck's recent anti-TIGITvibostolimab-pembro disappoinment, effective combination of proprietary drugs with PD-1 /PD-L1 has been notoriously difficult. In contrast, efti has demonstrated efficacy in combination with ICIs across a broad range of cancers, as well as with chemotherapy. Data presented at ASCO and SITC confirms the synergy between efti and PD-1 /PD-L1 ICIs in 1st line NSCLC and efti was recently awarded Fast Track designation by the FDA in this indication. With pembro biosimilars set to arrive in 2028E and the largest portion of the $20.9bn pembro sales coming from NSCLC, there is already a substantial value in a drug capable of safely strengthening and extending ICI efficacy in NSCLC. With strong TACTI-002 Phase II data and FDA fast track designation for efti+pembro in HNSCC and NSCLC, the recent initiation of a pivotal Phase II / III in combination with chemotherapy in mBC, and plans for a Phase II / III NSCLC trial in H2/2023E, our peak revenue estimates for efti approach $8bn.

Immutep continues to generate powerful data for efti in a range of solid cancers, including NSCLC, HNSCC and mBC. It has shown to be effective, well tolerated, and has apparent synergy with both existing PD-1 /PD-L1 ICIs and conventional therapies such as chemo. No approved drug has demonstrated acting in synergy with ICIs in NSCLC bar chemo, meaning an efti combination treatment could offer a chemo-free and effective alternative for patients without the chemo-asssociated toxicities. Notably, the use of doublet chemo with pembro has led to a large decline in Duration of Response ("DoR") as compared to pembro monotherapy. This phenomenon is not seen with efti + pembro, which conversely has actually led to an increase in DoR as compared to pembro monotherapy as shown in the TACTI-002 trial. This differentiated DoR could also spur additional attention to this powerful chemo-free combination. Our peak sales for efti in NSCLC alone total >$6.4bn alone and are over $7.9bn for all indications curently in development (FIGURE 2).

With >A$68m in cash Immutep is well-placed to progress efti into late-stage clinical development. Immutep will prioritise the Phase II / III trial in NSCLC for efti combined with pembro, but will also push forward with a Phase II / III in mBC. The TACTI-002 Phase II trial data was an all-comer trial with no PD-L1pre-selection, yet the data obtained with the chemo-free efti + pembro combination still competes with data that dictates the current standard of care (anti-PD-(L)1 + chemotherapy). Immutep is exploring the opportunity to further broaden NSCLC patients' potential to respond to treatment using a triple combination of efti+pembro+chemo in the the INSIGHT-003 Phase I trial.

The increasing volume of data supporting efti's synergy with PD-1 /PD-L1 ICIs is making the company an attractive partner for licensing and co-develoment programmes. Immutep looks increasingly valuable

This is a marketing communication. For professional investors and institutional use only. The information herein is considered to be an acceptable minor non-monetary benefit as defined under FCA COBS 2.3A19(5).GPSL is authorised and regulated by the Financial Conduct Authority (FRN 225563). GPSL does and seeks to do business with companies / issuers covered in its research reports. As a result, investors should beaware that GPSL may have a conflict of interest that could affect the objectivity of this research report. Investors should consider this research report as only a single factor in making their investment decision. GPSL has a formal client relationship with Immutep Limited.

Please see analyst certifications, important disclosure information, and information regarding the status of analysts on pages 15-17 of this research report.

Page 3

Upcoming key trials to reveal efti as a potential blockbuster drug

and is an attractive potential acquisition target. MSD's Q4/2022 revenue highlighted pembro as their top selling product, generating $20.9bn last year. Several key patents for pembro will expire over the coming years and without a combination product such as efti, will fail to maintain a proprietry edge. While MSD already has a clear interest in efti with its participation in the TACTI-002 / 003 studies, Merck KGaA and Pfizer have also indicated interest with the announcement of clinical collaboration combining avelumab with efti for the treatment of metastatic urothelial cancer. This jointly-fundedINSIGHT-005 trial follows the encouraging data from INSIGHT-004 in which the addition of efti to an anti-PD-L1 therapy, avelumab, led to deep, durable responses in PD-L1 low / negative expressing patients with advanced cancers that are typically insensitive to ICI therapy.

Immutep's share price fell 40% over the course of 2022 as a result of the market's flight from risk. With a stream of positive news flow, the shares are now a significant investment opportunity for investors, in our view. Given the recent NSCLC data and with PD-1 /PD-L1 biosimilars on the horizon, along with the pending final data in the randomised 1st line HNSCC TACTI-003 trial this year, we believe that Immutep will become an increasingly attractive acquisition target for large pharma. On the basis of our revenue, our SoTP ("Sum of the Parts") valuation indicates a valuation of A$2.5bn or A$2.88 per share. While this is clearly not reflected in the current market valuation, financed till end of 2024E, Immutep is well placed to ride out current market turbulence and potentially assess an efti licence.

News flow

We anticipate positive newsflow throughout 2023E (FIGURE 3), as further data becomes available across several indications including 1st line NSCLC, 2nd line HNSCC, 2nd line PD-X refractory NSCLC, mBC, and 1st line HNSCC. We expect Immutep to extend TACTI-002 Part A in 1st line NSCLC into a Phase II / III in NSCLC, and also expect more data from INSIGHT-003 triple therapy. In March 2023, Immutep announced the initiation of a Phase II / III AIPAC-003 trial in mBC. We can expect to hear announcements of investigator-led trials from various ICI's in combination with efti over the next year as companies look to Immutep to strengthening their portfolios.

FIGURE 3: Expected news flow for Immutep in 2023E

Source: Company data

This is a marketing communication. For professional investors and institutional use only. The information herein is considered to be an acceptable minor non-monetary benefit as defined under FCA COBS 2.3A19(5).GPSL is authorised and regulated by the Financial Conduct Authority (FRN 225563). GPSL does and seeks to do business with companies / issuers covered in its research reports. As a result, investors should beaware that GPSL may have a conflict of interest that could affect the objectivity of this research report. Investors should consider this research report as only a single factor in making their investment decision. GPSL has a formal client relationship with Immutep Limited.

Please see analyst certifications, important disclosure information, and information regarding the status of analysts on pages 15-17 of this research report.