Innate Pharma: Worth A Deeper Look (NASDAQ:IPHA)

Topline Summary

Innate Pharma (NASDAQ:IPHA) is a European biotech (XPAR:IPH) specializing in the development of immunotherapeutics for a variety of different cancer types. Their most advanced projects deal with engaging and activating natural killer [NK] cells, which are important surveyors of the body for foreign antigens. There are too many opportunities here to ignore at this valuation, since they have 2 big pharma backers and a lot of important ongoing studies. I think this one’s worth a deep look.

Pipeline Overview

Lacutamab

The first project I’ll discuss here is lacutamab, a monoclonal antibody targeting KIR3DL2, a receptor first identified on NK cells but that was later shown to regulate certain diseases, including cutaneous T cell lymphoma [CTCL]. CTCL is a heme malignancy that appears as skin tumors, with no current ability to cure the disease outside of a risky allogeneic stem cell transplant.

Lacutamab is being evaluated in a phase 2 trial enrolling patients with different forms of previously treated CTCL, including the aggressive manifestation called Sézary Syndrome. At ASH 2023, the company highlighted the clinical activity in these patients who had heavy prior treatment exposure. The objective response rate with lacutamab was 37.5% (21 out of 56 patients), with median progression-free survival of 8.0 months.

These results follow an FDA hold placed on the phase 2 trial due to a patient death suspected to be related to lacutamab therapy. This was lifted in early January as the FDA deemed it to be related to disease progression and not treatment.

The phase 2 study has completed its enrollment as of Q2 2023, including 170 patients with different forms of CTCL. Final data on the other cohort of patients is anticipated in the near future, per their latest guidance.

IPHA has also initiated a phase 1/2 trial to assess the safety and efficacy of lacutamab in patients with peripheral T cell lymphoma. Preliminary findings from this study showed no major safety signals in the first 10 patients who received the drug. No efficacy findings have been disclosed to date.

Monalizumab

Another monoclonal antibody in development by IPHA is monalizumab, designed to target NKG2A, a known checkpoint of NK cells implicated in cancer cell immune evasion.

Monalizumab is being developed in partnership with AstraZeneca (AZN), and the first main shot on goal for this agent is non-small cell lung cancer, specifically unresectable, stage III disease.

As a reminder, the current standard of care for patients with unresectable disease is “definitive” chemoradiation therapy, followed by consolidation with AstraZeneca’s PD-L1 antibody durvalumab. PACIFIC-9 is a randomized, placebo-controlled, phase 3 trial assessing the benefit of adding on monalizumab to durvalumab consolidation.

This study is designed to confirm the results observed from the phase 2 COAST trial, which showed a signal of improved response rates when adding monalizumab to durvalumab consolidation. Patients receiving this combination had a response rate of 35.5%, compared with 17.9% observed with durvalumab alone. However, it is worth noting that this 17.9% was lower than what was first observed with durvalumab in the PACIFIC trial back in 2017 (28.4%). We have to be very cautious in making cross-trial comparisons, but you should be aware that the patients in the COAST trial seem to do worse with durvalumab alone than what might be expected based on the data.

The estimated primary completion date for PACIFIC-9 is May 2026, with an estimated enrollment of nearly 1000 patients.

Another frontier for monalizumab is as part of the nascent pool of neoadjuvant immunotherapies. NeoCOAST is a platform trial combining various agents with durvalumab prior to surgery for early-stage non-small cell lung cancer, and interim findings showed higher rates of “major pathologic response,” which is when over 90% of the cells analyzed from the tumor specimen are found to be nonviable.

Other pipeline projects

IPHA has a number of other ongoing pipeline products in development, which I will not dwell on for the sake of length. Probably the most interesting of these is IPH5201, an anti-CD39 antibody (also being developed in collaboration with AstraZeneca) that recently had a phase 2 trial called MATISSE being enrollment. This will be a study worth watching for signs of improved efficacy in the neoadjuvant setting for non-small cell lung cancer.

They also have an ongoing partnership with Sanofi (SNY) to develop trifunctional molecules designed to engage antigens and NK cells, which demonstrated encouraging efficacy signals in a presentation at last year’s ASH meeting.

Financial Overview

Per their most recent financial filing, IPHA held €121.9 million in cash and equivalents. They had 36.5 million in revenues, down from 44.3 million in the same quarter of the prior year, mostly related to recognition of revenue from collaborations with Sanofi and AstraZeneca.

IPHA guided that they expect funds to be sufficient for operations into the second half of 2025.

Strengths and Risks

There’s a lot to bite off when it comes to IPHA. They have interesting efficacy signals, a clinical trial hold lifted, and a variety of different indications being explored. Couple that with multiple partnerships totaling over 1.5 billion euro, and you have a nearly complete picture of a developmental biotech in full swing.

I would definitely be cautious, however, in terms of overinterpreting these clinical data to date. For example, as I mentioned earlier, the COAST trial data for monalizumab plus durvalumab look good at their face, but the durvalumab alone in that study didn’t match up with the study that led to durvalumab approval in that setting.

Of course, PACIFIC itself was notoriously not matched up to real-world experience, where a lot of patients are sicker or are not followed as closely, so a drift away from the pivotal trial is always a possibility. However, what this does not definitively show is clear benefit from add-on monalizumab, and if PACIFIC-9 ends up being a bust, I won’t be surprised.

If you look at the efficacy findings we’ve discussed across the board, you come to similar conclusions. They look good. They do not look like shoo-ins. And as we get more and more experience with NK cell engaging therapies, the more and more underwhelmed the clinical oncology community is getting (elotuzumab ring a bell?).

That said, IPHA does maintain a favorable cash position, and with the backing they have, they are well positioned to capitalize on favorable results. The main risks at this time are actually GETTING those favorable results.

It is also worth pointing out, and not for the first time on Seeking Alpha, that the volume of the stock trading in the US is quite low, which could make it difficult to exit a position you’re in or build a sizable position in the first place.

Bottom-Line Summary

As mentioned by Avisol Capital Partners, IPHA is not a stock that gets a lot of attention, particularly relative to its European counterpart. To me, this represents a possible opportunity. Here’s a company headed deep into phase 3 trials with potential to move the needle in multiple indications. And they’re only valued at around $200 million. “No hype” would be an understatement. If they’re able to capitalize on even one of their programs, then this valuation is very likely to be a bottom for the stock. Therefore, I feel IPHA is worthy of a tentative “buy” recommendation, keeping in mind the risks I mentioned, as well as the potential for the market to continue to not respect this company.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.