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Published to the market and investors on 23^rd April 2019 @ 6.45am (BST).

Immutep Limited (IMM-AU): Unlocking the value of LAG-3 in autoimmunity
Recommendation: OUTPERFORM
Target Price: AUD$ 0.078
Current Price: AUD$ 0.030 (CoB on 18^th April 2019)

KEY TAKEAWAY

The biopharma industry is racing to develop combination therapies with approved immune checkpoint ("IC") inhibitors targeting mainly PD-1 / L1 to augment response rates. These include agents targeting other ICs such as LAG-3, TIM-3 and TIGIT. Discovered by Immutep's CSO / CMO in 1990, LAG-3 has been gaining increasing attention in the last few years, with c.50 trials involving >10,400 patients ongoing. Immutep has the broadest LAG-3 targeting pipeline, which includes four molecules with different mechanisms of action, and to our knowledge is the only company (with partner GSK) to have LAG-3 targeted molecules for autoimmune disease. In this note, we review the industry's overall LAG-3 pipeline and provide a detailed analysis of Immutep's autoimmune assets, which are not yet adequately reflected in our valuation. Hence, we see room for upside to our target price ("TP") of A$0.078, which largely reflects the value of Immutep's oncology assets. Reiterate OUTPERFORM.

Clinical trials for LAG-3 targeted compounds expanding fast

An analysis of clinicaltrials.gov reveals that there are approx. 50 ongoing or recently completed clinical trials involving LAG-3 targeted assets, up from one in 2013. 2018 was a particularly busy year with 24 trial starts. All trials except one target cancers, predominantly skin, lung, colorectal, gastric and breast, as well as lymphomas. Most trials test combination therapies, mainly with PD-1 / L1 inhibitors, but also chemotherapy. BMS is by far the most active company: its anti-LAG-3 mAb relatlimab is undergoing around 24 trials involving >5,300 patients, of which a few are expected to read out this year. Immutep's pipeline includes four LAG-3 targeting assets, all with different mechanisms of action. Two compounds are in clinical development for solid tumours (eftilagimod alpha / IMP321, LAG525 / IMP701) and two focus on autoimmune diseases (GSK2831781 [based on Immutep's IMP731], IMP761).

Tackling the root cause of autoimmune disease

To our knowledge, GSK2831781 and IMP761 are the only LAG-3 targeted product candidates in development for autoimmune diseases. Both assets aim to silence autoreactive T cells, therefore acting on the root cause of autoimmune disease and upstream of current therapies, which block inflammatory molecules to provide symptomatic relief. GSK2831781, partnered with GSK since 2011, has successfully completed a Phase I / Ib trial in healthy volunteers and patients with plaque psoriasis. It is due to enter a Phase II trial in ulcerative colitis ("UC") this year, with GSK recently confirming that proof of concept data is expected in H2/2020E. Unencumbered asset IMP761 should start first-in-human studies in H2/2020E (cell line development for GMP manufacturing is ongoing) following encouraging in vivo studies recently presented at the European Crohn's and Colitis Organisation ("ECCO") meeting.

Autoimmune assets not yet reflected in our valuation

Our valuation for Immutep consists almost entirely of risk-adjusted net present values ("rNPVs") for the cancer assets plus net cash, including negligible value for GSK2831781 and IMP761. Hence, there could be upside to our TP in the coming year as we get more visibility on the continued development of these assets. We remind investors that the key catalyst for Immutep is Phase IIb data for lead asset eftilagimod alpha from the event-driven AIPAC trial in metastatic breast cancer ("mBC"), now expected in Q4/2019E. A positive outcome would increase our fair value to A$0.110.

Kind regards,

Brigitte de Lima | Analyst

goetzpartners Healthcare Research Team | Research Team

goetzpartners securities Limited

The Stanley Building, 7 Pancras Square, London, N1C 4AG, England, UK.

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