Immutep : Maxim Group - Unlocking the Synergistic Benefits of Efti (LAG-3), the Next Checkpoint - Transferring Coverage with a Buy Rating and $8 PT

								EQUITY RESEARCH
								ASSUMPTION OF COVERAGE
		Biotechnology			Immutep Limited	Buy
IMMP - NASDAQ			July 16, 2021	Unlocking the Synergistic Benefits of Efti (LAG-3), the Next
Closing Price 7/15/21			$3.53	Checkpoint - Transferring Coverage with a Buy Rating and
Rating:					Buy	$8 PT
12-Month Target Price:				$8.00	Summary
52-Week Range:			$1.22 - $7.95
Market Cap (M):				264.1	•	Maxim Group is transferring primary coverage of Immutep Limited to Naureen
Shares O/S (M):				74.8		Quibria with a Buy rating and $8 PT.
Float:					NA
				•	Immutep has a pipeline of LAG-3 assets. While its lead candidate, eftilagimod
Avg. Daily Volume (000):			697.4
Debt (M):					$6.2		(efti), is wholly-owned, Immutep also has two large pharma partnerships for
Dividend:					$0.00		separate antibodies: GSK'781 with GlaxoSmithKline (GSK - NR) and LAG525
Dividend Yield:					0.0%		with Novartis (NVS - NR).
Risk Profile:					Speculative	•	Competitor data validating. At ASCO, Bristol (BMY - NR) reported significant
Fiscal Year End:				June
								benefit in progression free survival with modest toxicity with its LAG-3/PD-1
		Total Expenses ('000)			combination in 1L melanoma over monotherapy, from the RELATIVITY study.
				In our view, the positive results from a late-stage clinical trial validate LAG-3
H1	2020A	2021E	2022E		as a checkpoint target.
9,572	9,707A	9,650	•	What's the value of a LAG-3? We've seen a lot of activity around another
H2	7,715	9,439	10,454
FY	17,287	19,146	20,104		checkpoint (TIGIT), with most recently a licensing deal by	Bristol for
	Agenus' (AGEN - NR) pre-clinical asset, for $200M upfront/up to $1.36B in
								milestones. Thus far, TIGIT has shown to work only in PD-L1 high expressors.
	IMMP							The question is, with Bristol's recent LAG-3 (relatlimab) data and Immutep's
6	Price (USD)		Source: Factset	Volume (MM) 300		efti data starting to unfold (which has also shown signals in PD-L1 low
						250		expressors), will we start to see more partnering activity around LAG-3?
5						•	Strong balance sheet. Immutep announced an equity financing in June that
						200
4							should occur via two tranches. If both tranches materialize as expected,
							Immutep will be in the strongest cash position it has ever been with ~$80M+
						150
							(~A$100M+) with runway to CY4Q23. Broadly, we believe positive LAG-3 data
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						100		should also continue to drive valuation higher.
2						50	Details
1						0		The next immune checkpoint: LAG-3. As immunotherapy (IO) continues to be
	Sep-20	Nov-20	Jan-21	Mar-21	May-21	Jul-21
		widely adopted across tumor types (especially checkpoint inhibitors such as PD-
		Price	Volume
					(L)1s), combinatorial strategies continue to be actively investigated to build beyond
Immutep is listed on the ASX (IMM) and with ADR's traded		single agent (and in some cases PD-1/CTLA-4) activity. In our view, the LAG-3
	(lymphocytic-activation gene 3) checkpoint is emerging as the next potential IO pillar,
on NASDAQ (IMMP). 1 ADR= 10 shares of common stock.
	beyond PD-1/CTLA-4. Like PD-1,LAG-3 is expressed on effector T cells and Tregs,
								on activated B cells and NK cells and functions as an inhibitory receptor to negatively
								modulate T-cells and immune response. While LAG-3 is distinct from PD-1, its
								blockade can also prevent T-cell exhaustion through a pathway complementary to
								PD-1; and as such, can act synergistically with PD-1 inhibition to restore T cell
								effector function. The PD-1:PD-L1 axis is a well-validated target that is expected to
								cross $25 billion in annual sales by 2022. Bristol's recent positive data of its LAG-3
								(relatlimab) in combination with anti-PD1, nivo, in a late-stage trial in 1L melanoma
								(described further below) has reignited interest in and lends validity to LAG-3 as a
								target. More data from Immutep's ongoing studies with its lead LAG-3 targeted drug
								candidate, efti, are expected over 2H21/2022. As has been the case for the PD-
								(L)1s, there is likely to be room for multiple players in the LAG-3 space.

	Compelling valuation. We arrive at our $8 PT by employing a blended methodology
	that consists of free cash flow, discounted EPS, and sum-of-the-parts (SOTP)
	models. We forecast risk-adjusted sales for efti in metastatic breast cancer in 2025
	(EU, US) and in 2027 (China), in non-small-cell lung cancer in 2025 (EU, US), and
	in head and neck in 2024 (EU, US). We assume royalty revenues for LAG525 in
Naureen Quibria, Ph.D.	2025 (EU, US) and for GSK'781 in 2027 (EU, US). We use a 30% discount rate and
[phone]	attribute equal weighting to our FCF, discounted EPS and SOTP models to derive a
[e-mail]	12-month price target of $8. (continued on page 2)

SEE PAGES 7 - 8 FOR IMPORTANT DISCLOSURES AND DISCLAIMERS

Immutep Limited (IMMP)

Finances. On 7/13, the company reported a 4Q FY2021 cash balance of ~$45.1M USD (~A$60.6M), which includes A$13.7M from the first tranche of an equity financing announced on 6/21 and A$605k from the exercise of US warrants over American Depository Shares. The equity offering totaling ~$45M USD (A$60M) is expected to occur via a two-tranche placement of new ordinary shares at A$0.52/new share: 1) New shares ($13.7 million) issued within the company's available placement capacity of 15,848,340; and 2) 88,970,717 new shares ($46.3 million), conditional on Immutep's shareholder approval at the company's general meeting on July 26. If the second tranche is approved (which is expected) and another A$5M is raised under the SPP (Share Purchase Plan), post-raise Immutep should have ~$80+M US (~A$100+M), which should provide runway into CY4Q23.

RELATIVY-047study is a positive readthrough for efti. When Bristol reported topline data from its Phase 2/3 RELATIVITY study (N=520) on March 25, announcing that the trial had met its primary endpoint of progression free survival (PFS), Immutep shares rose ~40% (vs. XBI +2.9%). After that, at this year's ASCO, Bristol released more granular data from the study. RELATIVITY is evaluating fixed dose relatlimab (anti-lag 3) in combination with anti-PD-1 antibody, nivolumab (nivo), in 1L advanced melanoma patients. The trial design is also stratified by both PD-L1 and LAG-3 expression. Overall, the combination of relatlimab + nivo demonstrated a significant PFS (progression-free benefit) benefit over nivo monotherapy: 10.12 months vs. 4.63 months. (HR=0.75). Importantly, there were no significant safety signals (SAEs Grade 3/4 of 18.9% observed with combo vs. 9.7% with monotherapy). On efficacy, 1-year PFS of relatlimab/nivo (47.7%) was numerically lower to cross trial to CheckMate-067 comparison of nivo/ipi (50%). On safety, the combo demonstrated a significantly better safety profile cross trial (18.9% vs. 59%, respectively). That said, overall survival (OS) data is still needed for confirmation of benefit. Even so, we believe the positive combination data showing superior efficacy to monotherapy treatment broadly: (1) validates LAG-3 as a checkpoint target, (2) represents a third checkpoint inhibitor (following nivo/ipi) to show benefit in a late-stage study, underscoring the synergy of an anti-PD-1/LAG-3 combo, (3) demonstrates that such a combination may offer a more tolerable regimen to nivo/ip, and/or (4) could offer an additional treatment combination option.

TACTI-002 at ASCO

At this year's ASCO, Immutep presented updated data from its ongoing Phase 2 TACTI-002 trial evaluating efti with pembrolizumab in 1L non- small cell lung cancer (NSCLC) and 2L head and neck squamous cell carcinoma (HNSCC). The compelling data overall from prior updates led to an expansion of the Merck (MRK - NR) collaboration, into a program in 1L HNSCC (TACTI-003) and an expansion of the 1L NSCLC arm (addition of 74 more patients). In addition, the safety profile remains modest.

Exhibit 1. Durable responses observed in 1L NSCLC. In NSCLC patients, efti + pembro achieved an overall response rate (ORR) of 41.7% (CR 5.6%, PR 36.1%, SD 27.8%). In a prior update, the ORR was 36.1%, thus demonstrating durability in response as well as some deepening of response. Although the patient numbers are still small, the data suggests not only superior activity to pembro alone but indicates that efti/pembro has activity in low-PD-L1 expressors. Given this initial activity (even in low PD-L1 expressors), the data suggests that the combination could potentially be employed in an "all-comer" setting. Further, if these responses continue to be durable, an efti/pembro combination with its benign safety profile could also be an ideal regimen for "less fit" patients who cannot undergo chemo/pembro treatment.

Maxim Group LLC

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Immutep Limited (IMMP)

Study	TACTI-002	KEYNOTE-042	KEYNOTE-189	KEYNOTE-407
Efti+Pembro	Pembro (mono)	Pembro + chemo	Pembro + chemo
Line of therapy	1L	1L	1L	1L
Study Phase	Phase 2	Phase 3	Phase 3	Phase 3
No. of Patients	N=36	n=637	n=410	n=278
Overall Response Rate (ORR)		(PD-L1 TPS ≥1% pts)
ITT	41.7%	27.0%	47.6%	57.9%
PD-L1 TPS ≥ 50%	53.8%	39%	62.1%	60.3%
PD-L1 TPS ≥ 1%	44%	27%	49.2%	49.5%
PD-L1 TPS < 50%	31.6%	N/A	N/A	N/A
Evaluable	48.4%	N/A	N/A	N/A
mPFS (months)	8.2	5.4	9	6.4
PD-L1 TPS≥ 50%	11.8	7.1	11.1	8.0
PD-L1 TPS ≥ 1%	N/A	5.4	9.2	7.2
mOS (months)	N/A	16.7	22	15.9
PD-L1 TPS≥ 50%	N/A	20	N/A	N/A
PD-L1 TPS ≥ 1%	N/A	16.7	21.8	14

Source: Company reports, Maxim Group research.

Exhibit 2. Favorable response rates demonstrated in 2L HNSCC. Although the numbers are small, overall response rates with an efti + pembro combination was ~2x what has been observed with pembro monotherapy (based on a cross trial comparison with KEYNOTE -040 study). And while the ORR is slightly lower than prior updates (~36% in Oct.2020, ~31% in January), the response rates suggest a competitive profile thus far, in our view.

		SOC	SOC
Study	TACTI-002	KEYNOTE-040	CheckMate-141
Efti+Pembro	Pembro (mono)	Nivolumab (mono)
Line of therapy	2L	2L	2L
Study Phase	Phase 2	Phase 3	Phase 3
No. of Patients	37	n=247	n=240
Overall Response Rate (ORR)
ITT	29.7% (N=37)	14.6% (n=247)	13%
PD-L1 CPS ≥ 1	45.8% (N=24)	17.3% (n=196)
Evaluable	35.5% (N=31)	-
mPFS (months)	2.1	2.1	2.0
PD-L1 CPS ≥ 1	2.2	4.1
mOS (months)	12.6	8.4	7.5
PD-L1 CPS ≥ 1	12.6	8.7

CPS≡ combined positive score of PD-L1 expression

Source: Company reports, Maxim Group research.

Maxim Group LLC

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Immutep Limited (IMMP)

Exhibit 3. LAG-3competitive landscape. We highlight below select LAG-3s in development.

Drug candidate	Company	Stage	Indications
Relatlimab	Bristol Myers Squibb	Phase 3	melanoma, HCC, NSCLC, CRC,
gastric/GEJ
LAG525 (LAG525)	Novartis	Phase 2/3	advanced solid and heme, TNBC,
melanoma
Favezelimab (MK-4280)	Merck	Phase 1/2	heme malignancies, solid tumors,
RCC, NSCLC, CRC
Fianlimab (REGN3767)	Regeneron	Phase 2	advanced cancers, melanoms,
breast cancer
FS118 (bispecific)	F-Star	Phase 2	advanced H&N, PD-L1 positive, PD-
1 resistent
Tebotelimab (MGD013,	Macrogenics	Phase 2	solid tumors, melanoma, HER2+
bispecific)	gastric/GEJ, HCC, DLBCL
Efti	Immutep	Phase 2	breast cancer, H&N, NSCLC

Source: Maxim Group research.

Exhibit 4. Immutep's pipeline of LAG-3assets. Immutep is the only company exploring the utility of LAG-3 as both an immune stimulator and an immune suppressor. Immutep has four LAG-3 related products (three of which are in the clinic) undergoing development both in immuno- oncology and autoimmune disease. The company's lead product candidate is eftilagimod alpha (efti), a soluble LAG-3 fusion protein (LAG-3Ig) that is a first-in-class antigen presenting cell (APC) activator that is being explored in cancer. Immutep is also developing an agonist of LAG-3 (IMP761) for autoimmune disease. Additional LAG-3 products (not shown), including antibodies for immune response modulation, are being developed by Immutep's large pharmaceutical partners (GSK'781 by GlaxoSmithKline and LAG525 by Novartis).

Source: Company reports.

Eftilagimod pipeline advancing

AIPAC Study. Phase 2b in HR+/HER2- metastatic breast cancer (mBC). Final overall survival (OS) data is expected in 2H21.

TACTI-003study (new). Phase 2b study collaboration with Merck evaluating efti with pembrolizumab in 1L head and neck squamous cell carcinoma (HNSCC). The trial is expected to initiate 3Q21.

TACTI-002 (KEYNOTE-798). Phase 2 study collaboration with Merck evaluating efti/pembro combination in 1L non-small cell lung cancer (NSCLC; Part A), 2L NSCLC PDX-refractory (Part B), and 2L HNSCC (Part C). Further updates from the ongoing study are expected in YE21/1H22.

INSIGHT. Investigator sponsored Phase 1 trial testing different combination treatments with efti.

INSIGHT-004 (new). Immutep signed a collaboration and supply agreement with Merck KGaA to evaluate efti in combination with Merck KGaA's and GlaxoSmithKline's bintrafusp alfa (bifunctional protein that blocks TGF-β trap and PD-L1) in a study of 12 patients. The trial is expected to initiate by YE21.

Maxim Group LLC

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Immutep Limited (IMMP)

INSIGHT-003 (new). In this arm, efti will be evaluated as a triple combination (efti + chemo + anti=PD-1) in solid tumors. The trial (N=20) is expected to initiate in 3Q21 with interim results anticipated in 2022.

EAT COVID. Investigator-sponsored Phase 2 study at the University Hospital Pilsen in the Czech Republic is testing efti in up to 110 hospitalized patients with COVID-19.

Exhibit 5. Projections for Immutep's worldwide revenues. We currently do not assume any partnerships for efti, apart from its regional partnership with EOC Pharma for China. We assume launches for efti in mBC in 2025 (EU, US) and in 2027 (China), in NSCLC in 2025 (EU, US) and HNSCC in 2024 (EU, US). We assume royalty revenues for LAG525 beginning in 2025 (EU, US) in triple negative breast cancer and for GSK'781 in 2027 (EU, US) for psoriasis (since GSK'781 was recently discontinued in ulcerative colitis).

Immutep Revenue Forecasts ('000)	2024E	2025E	2026E	2027E	2028E	2029E	2030E	2031E
Europe
Efti in mBC	$0	$40,519	$125,228	$146,211	$177,208	$200,815	$206,880	$242,191
Efti in NSCLC	$0	$7,069	$80,770	$117,994	$147,555	$195,442	$413,130	$734,440
Efti in HNSCC	$40,245	$69,101	$99,663	$132,008	$151,106	$163,452	$272,629	$446,076
GSK'781 in psoriasis (5% royalty)	$0	$0	$0	$1,578	$3,794	$5,025	$7,478	$8,889
LAG525 in mTNBC (5% royalty)	$0	$777	$1,143	$1,649	$2,184	$2,749	$3,347	$3,979
United States
Efti in mBC	$0	$39,223	$121,223	$141,535	$171,540	$194,392	$200,263	$234,444
Efti in NSCLC	$0	$8,399	$83,377	$145,535	$192,004	$285,524	$490,835	$872,580
Efti in HNSCC	$29,113	$49,986	$72,094	$95,492	$109,307	$118,238	$197,214	$322,682
GSK'781 in psoriasis	$0	$0	$0	$2,811	$4,551	$6,394	$7,465	$11,310
LAG525 in mTNBC	$0	$738	$1,064	$1,409	$1,775	$2,161	$2,568	$2,999
China
Efti in mBC (7% royalty)	$0	$0	$0	$1,033	$1,916	$2,412	$3,389	$6,284

Source: Maxim Group estimates

Maxim Group LLC

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