ImmunoCellular Therapeutics Ltd (NYSEMKT:IMUC): Patience Will Reap Rewards On This One

ImmunoCellular Therapeutics Ltd (NYSEMKT:IMUC) continues to decline, and we are looking at every percentage point dip as an opportunity to get in for a deeper discount. Fundamentally, there have been no real changes in the company's operations – there is a pending reverse split which we will take a look at shortly – and the selloff seems to be purely sentiment driven. The company now trades for $.10 per share, down from highs of nearly $4 a share just a few years ago, and between now and then, while capital structure has suffered somewhat, ImmunoCellular's lead asset has performed well.We think that as a longer-term holding, for a biotech investor looking at exposure to brain cancer, this is the asset to hold.Here is our take on what's happening, and what we expect moving forward.ImmunoCellular is a junior biotech with an oncology focus, and is one of the lead junior developers of what are called immuno oncology treatments, with the above-mentioned specialty focus – brain cancer. Specifically, an aggressive form of brain cancer called glioblastoma multiforme (GBM).Readers who have been with us for a while will likely be familiar with Northwest Biotherapeutics, Inc (NASDAQ:NWBO) – an equally downtrodden junior (although perhaps for different reasons) that is also developing a GBM immuno oncology therapy. Technically, Northwest is ahead of ImmunoCellular in the development process, having had its phase 3 trial run for longer than the latter, but again, as our readers will already be aware, being ahead in the way that Northwest is ahead doesn't really count for much right now. Anyway, that's a digression. Let's look at ImmunoCellular specifically.Its lead candidate is called ICT 107, and the company has designed it to activate a patient’s immune system to target six different tumor-associated antigens. On activation, these antigens attract an immune response, and the cells that comprise the immune system travel to, and attack, the cancer cells associated with the disease.The drug performed well in phase 2 trials, and is currently undergoing investigation as part of a global phase 3. With these sorts of trials, the setup and protocol is massively important, and we like the look of ImmunoCellular's. The company is going after a primary endpoint of overall survival, relegating progression free survival to a secondary billing, and is pitting its candidate against a standard of care control. There is no crossover to active drug at any point for the control arm, and we think this is a key difference that sets ImmunoCellular's trial apart from that of the above-mentioned Northwest.So, here is the downside.The trial is set to complete randomization at some point during the end of 2017, and beyond that, patients could be monitored for up to 46 months post first dosing. At the low end, it's going to be mid 2020 before we get any substantial data. There's a futility analysis at 30% of events (estimated to be at around two years into the trial) and an efficacy interim to look forward to at 67% of events (around 2 1/2 years) but that's all. For a company with a solid source of income, this wouldn't be a problem. For ImmunoCellular, however, which generates no revenues and has limited cash on hand, it is going to mean that shareholders bear the brunt of this cost in the form of dilution. Cash is going to have to be raised, and this brings us nicely to the reverse split. Shareholders will complain, but the bottom line is this, ImmunoCellular needs to have access to capital as and when needed to carry out the ongoing trial. At its current price, it's going to be very difficult for the company to raise anywhere near enough to fund enrollment, never mind completion. An RS will ease this difficulty somewhat. Yes, it is weighing on sentiment, but it's something the shareholders are going to have the accept if they want to see ICT 107 through to completion.And for those that do, there's a massive potential upside. ICT 107 is a very promising candidate, and there's a good chance it will demonstrate efficacy in this difficult to treat cancer.It is just going to take some time.Subscribe below and we will keep you updated as to the progress of this trial going forward!Disclosure: We have no position in IMUC or NWBO and have not been compensated for this article.