On Monday, H.C. Wainwright maintained a Neutral rating and a $1.00 price target on shares of Lyell Immunopharma (NASDAQ: LYEL). The firm's stance comes in the wake of Lyell's recent business developments, including the acquisition of ImmPACT Biosciences and the strategic discontinuation of several of its legacy pipeline programs.
Last week, Lyell announced its definitive agreement to acquire ImmPACT Biosciences. The deal includes a $30 million upfront cash payment and the issuance of 37.5 million shares of Lyell's common stock. Additionally, Lyell is committed to issuing 12.5 million more shares upon achieving a specified clinical milestone. The company will also pay low single-digit royalties on U.S. sales.
The acquisition provides Lyell with access to IMPT-314, a dual-targeting CD19 x CD20 CAR-T cell therapy product candidate. This therapy is currently in development for patients with third-line large B-cell lymphoma (3L LBCL) who have not previously been treated with CAR-T therapies. Lyell plans to present data from a multi-center Phase 1/2 trial of IMPT-314 at a major medical meeting in the fourth quarter of 2024, with a pivotal study expected to commence in 2025.
Preliminary results from a single-center Phase 1 study of IMPT-314 have shown an overall response rate (ORR) of 92% with 77% complete responses (CRs), a median progression-free survival (mPFS) of 50 months, and median overall survival (mOS) not yet reached. These results suggest that IMPT-314 could potentially offer best-in-class efficacy if these outcomes are sustained.
Despite the promising data, H.C. Wainwright remains cautious, citing the highly competitive nature of the CD19-targeted CAR-T space. The market, which includes established therapies such as Yescarta, Kymriah, and Breyanzi, currently sees less than $3 billion in aggregated annual sales. The firm indicates that further updates from Lyell are necessary before adopting a more positive outlook on the company's prospects.
In other recent news, Lyell Immunopharma has definitively acquired ImmPACT Bio USA, enhancing its clinical-stage portfolio of cancer-targeting cell therapies. This acquisition introduces ImmPACT's IMPT-314, a dual-targeting CAR T-cell therapy, into Lyell's pipeline, currently under trial for large B-cell lymphoma. The transaction is expected to close in the fourth quarter of 2024.
The deal includes an upfront payment of $30 million in cash and 37.5 million shares of Lyell common stock, with additional considerations involving 12.5 million shares of Lyell stock upon achieving a clinical milestone and future royalties on net sales in the United States. Lyell's strategic refocus will now concentrate on advancing IMPT-314 and LYL119, discontinuing development of some early-stage programs.
Data from an ongoing Phase 1-2 trial of IMPT-314 is slated for presentation at a major medical conference this year, with a pivotal trial commencement anticipated in 2025. This acquisition is subject to customary closing conditions, including expiration of the Hart-Scott-Rodino antitrust waiting period. Goldman Sachs & Co LLC and Skadden, Arps, Slate, Meagher & Flom LLP are advising Lyell on this transaction.
InvestingPro Insights
Recent InvestingPro data offers additional context to Lyell Immunopharma's current financial position and market performance. With a market capitalization of $237.31 million, Lyell is trading at a price-to-book ratio of 0.42, suggesting the stock may be undervalued relative to its book value. This could be particularly relevant given the company's recent acquisition and strategic pipeline changes.
InvestingPro Tips highlight that Lyell holds more cash than debt on its balance sheet, which may provide financial flexibility for its acquisition strategy and ongoing clinical development. However, the company is also quickly burning through cash, a common characteristic of biotech firms in the development stage. This cash burn rate will be crucial to monitor as Lyell integrates ImmPACT Biosciences and advances IMPT-314 through clinical trials.
The stock's recent performance aligns with H.C. Wainwright's cautious stance, as InvestingPro data shows Lyell's shares have taken a significant hit, with a 43.48% decline over the past three months and a 57.28% drop over six months. This downward trend underscores the market's current skepticism, possibly reflecting the competitive challenges in the CAR-T space mentioned by analysts.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Lyell Immunopharma, providing deeper insights into the company's financial health and market position.
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