The French Cancer Immunotherapy Stock Investors Don't Know, But Really Should

I often hear investors complain about the difficulty finding undiscovered and undervalued biotech stocks. With the year we've just had, many companies with compelling drugs in development also have valuations bid up, but hidden gems remain to be discovered in 2014.

At the top of my list is Innate Pharmaceuticals, a Marseille, France-based developer of immunotherapies with a lead cancer drug in a phase II study and partnered with Bristol-Myers Squibb (BMY). A second Innate pipeline drug is partnered with Novo Nordisk (NVO). Innate recently completed a financing which gave it cash sufficient to last until 2017.

Innate has a lot going for it, and with a market cap of under $400 million, is still relatively inexpensive. [The stock trades primarily under the ticker "IPH" on the Paris stock exchange and secondarily as "IPHYF" on the OTC bulletin boards.]

Innate's discovery platform creates antibodies that target the innate, as opposed to the adaptive, immune system. These antibodies can be developed as therapies to treat cancer and inflammatory-related diseases, but Innate, for now, is focusing on cancer.

The company's lead drug is lirilumab. For the science geeks out there, lirilumab is an anti-KIR monoclonal antibody and a first-in-class NK cell modulator. For everyone else, lirimulab blocks KIR -- one of the many checkpoints, or brakes, which meters the body's immune system so that it attacks the bad stuff like diseased cells but leaves healthy cells alone.

Unfortunately, cancer cells use these checkpoints or brakes to evade detection by the immune system and grow. Lirilumab is a "checkpoint inhibitor," meaning it overcomes the evasion mechanism of cancer cells, thereby allowing the immune system to do its job.

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