Immunovant revises strategy for key autoimmune drugs

Immunovant is redirecting its focus towards a promising experimental treatment for autoimmune diseases, shifting resources from its previous lead asset, batoclimab. The company announced plans to extend the clinical trial of batoclimab in chronic inflammatory demyelinating polyneuropathy (CIDP) and utilize the extended research period to advance the development of IMVT-1402, which boasts unique attributes not found in other drugs of its class.

Both batoclimab and IMVT-1402 are FcRn inhibitors. These drugs function by preventing the recirculation of immunoglobulin G (IgG) into the bloodstream. The existing class includes approved drugs like Argenx’s Vyvgart and a competitor from UCB.

However, Immunovant’s decision has delayed the timelines for research updates, leading to a cautious investor response. The company's stock dropped by more than 7% in early trading on Thursday. The extended CIDP trial will now take an additional two quarters, and the completion of a study of batoclimab in myasthenia gravis will also be later than initially expected.

Despite these setbacks, analysts consider the company's strategic shift to be prudent in the long run. Stifel analyst Alex Thompson emphasized that IMVT-1402 is the primary value driver for Immunovant. The company anticipates initiating up to five registrational trials for IMVT-1402 by the end of March 2025.

The pharmaceutical landscape Immunovant is entering is notably competitive and challenging, with various approaches being pursued concurrently. For instance, Biohaven recently disclosed results for a different type of IgG-degrading drug, which failed to meet analyst expectations, resulting in a stock sell-off. However, Biohaven’s stock regained some ground early on Thursday. Similarly, Roche, a Swiss pharmaceutical giant, faced a setback with a drug perceived as a potential competitor to FcRn inhibitors, though its development continues.

Immunovant's IMVT-1402 has shown encouraging early research results. Another FcRn inhibitor, nipocalimab, developed by Johnson & Johnson, also demonstrated positive outcomes, according to a February investor update.

Immunovant is one of the portfolio companies of Roivant, a biotech firm that operates a unique business model by housing drug programs within individual startups. Roivant has strategically divested some of its holdings, including the recent $7.1 billion sale of Telavant to Roche. However, Roivant indicated in August that decisions regarding other parts of its portfolio might be deferred until critical data from Immunovant becomes available.

In summary, Immunovant’s strategic pivot towards IMVT-1402 signifies a tactical decision to focus on a compound that could provide significant long-term benefits, despite short-term delays and investor skepticism. The competitive landscape further underscores the importance of IMVT-1402’s development, as other pharmaceutical companies also navigate the complexities of advancing innovative treatments in the autoimmune disease sector.