Every investor has a different risk appetite. Some investors play it safe and buy low risk, defensive ASX stocks. Others are willing to risk a little for stronger potential returns. And a handful will seek the huge potential returns on offer from the speculative side of the market.
If you're in the latter category, then it could be worth checking out the speculative ASX stock in this article.
That's because the team at Bell Potter believes that it has the potential to almost double in value from current levels.
Which speculative ASX stock?
The company in question is Immutep Ltd (ASX: IMM). It is a $520 million, clinical-stage biotechnology company developing novel Lymphocyte Activation Gene-3 (LAG-3) immunotherapy for cancer and autoimmune disease.
Immutep's eftilagimod alfa (efti) product is its proprietary soluble LAG-3 protein and MHC Class II agonist that stimulates both innate and adaptive immunity for the treatment of cancer.
Management notes that as a first-in-class antigen presenting cell (APC) activator, efti binds to MHC (major histocompatibility complex) Class II molecules on APC leading to activation and proliferation of CD8+ cytotoxic T cells, CD4+ helper T cells, dendritic cells, NK cells, and monocytes.
It also upregulates the expression of key biological molecules like IFN-ƴ and CXCL10 that further boost the immune system's ability to fight cancer.
What is the broker saying?
Bell Potter highlights that the speculative ASX stock is on the cusp of becoming a phase three company with a significant market opportunity. It notes:
At the end of CY24, IMM will transition into a Phase 3 company targeting one of the most lucrative oncology indications, first-line (1L) non-small cell lung cancer (NSCLC).
IMM will target all patients regardless of PD-L1 expression and test the regimen of Efti + pembrolizumab + chemo in ~750 patients. This is a positive choice in our view as it broadens the TAM to ~70k US patients diagnosed annually (or ~US$11b) and aims to improve upon the best standard of care currently available to patients, thereby speeding up Phase 3 recruitment and real-world adoption. Recruitment will start end-CY24/early-CY25.
The broker was also pleased to see that Immutep has successfully raised $100 million from investors recently. It believes this "improved balance sheet provides ~2.5 years of runway to end-CY26 (post Phase 3 futility analysis) and clears any perceived funding overhang in the near-term ahead of key readouts in HNSCC and beyond."
Big potential returns
Bell Potter has responded to the above by reaffirming its speculative buy rating and 80 cents price target on the ASX stock.
Based on its current share price of 41%, this implies potential upside of 95% for investors over the next 12 months. It concludes:
With longer-term value being driven by the 1L NSCLC Phase 3, short-term attention now shifts to the imminent release of Phase 2b data by 30th June in head & neck cancer, where Efti + Keytruda is being evaluated head-to-head against Keytruda.
We maintain our BUY (speculative) recommendation and $0.80/share valuation. We remain positive ahead of the significant Ph2b readout due in the next ~2 weeks.
