ImmunoCellular Therapeutics Ltd. – once a promising public biotech company working on cancer therapies – abruptly terminated its operations late last year. Three weeks ago, the Westlake Village company announced an agreement to sell its drug portfolio to an unnamed private biotech for $1 million – a pittance compared to its $20 million market capitalization just 18 months earlier. The company’s downfall involved research concepts that didn’t work, charges of securities fraud and multiple high-level resignations. Research hypothesis ImmunoCellular was the brainchild of brain surgeon, Dr. John Yu, with technology from the Cedars-Sinai Medical Center in Los Angeles, where he still practices. The company’s research focused on using stem cells to generate T-cells to target solid tumors. Brain and ovarian cancer were the primary targets. “It was interesting technology at the time, because they had the promise and the potential of stem cell therapy,” said Ahmed Enany, chief executive of the Southern California Biomedical Council in Los Angeles. “They had an interesting hypothesis that they were pursuing to target a difficult cancer, brain cancer. Once you get it, the survival rate is between seven and eight months, up to 24 months, depending on whether you’re getting treatment or not.” Research ground to a halt, however, when the company voluntarily delisted its shares from the New York Stock Exchange and terminated operations in October 2018. Dr. Anthony Gringeri, chief executive, resigned effective Oct 15, with David Fractor, chief financial officer and Dr. Steven Swanson, senior vice president of research, leaving the same day. “The board of directors has concluded that the company faces significant obstacles to its continued operations which cannot be overcome, and has no other alternative than pursuing the delisting and deregistration course and curtailing operations,” said a statement from the company. So, what caused the nosedive? As a research company, ImmunoCellular never produced revenue and depended on investment money to sustain its research. In 2013, the company faced a crisis when an experimental vaccine for brain cancer failed in Phase II clinical trials. And in 2017, it suspended the Phase III trial of drug ICT-107 because it couldn’t “secure sufficient additional financial resources to complete the” research, according to a company statement at the time. ImmunoCellular’s approach aimed to get past the blood-brain barrier, Enany said, to deliver T-cells without overwhelming the body with toxins. “ImmunoCellular found that sometimes it did not work, or there were other instances of toxicity,” Enany said. “There were problems when they went through their clinical trials.” The company also faced competing technologies from nearby Atara Biotherapeutics in Westlake Village and Amgen Inc. in Thousand Oaks. They were developing what are now known as CAR-T cells, which stands for chimeric antigen receptor T-cells, and bispecific t-cell engagers, or BiTES, for immunotherapy. “The CAR-T cells are another mechanism for using the body as a factory to produce the T-cells so you don’t need to do that additional chemotherapy, and you don’t need to infuse the patient with the treatment more than once,” explained Enany. Stock fraud Filings from the Securities and Exchange Commission also point to fraudulent securities promotion strategies from September 2011 to August 2012, led by then-chief executive Manish Singh, who led the company from 2008 to 2012. According to an SEC filing from April 2017, Singh commissioned more than 50 internet publications to promote ImmunoCellular’s stock to investors. Singh hired Lidingo Holdings, a stock promotion firm, to pay writers and publish bullish articles on investment sites such as Seeking Alpha and Benzinga. He directed the promotion firm to use writers who did not disclose in their articles that ImmunoCellular was indirectly compensating them for the stories, the SEC said. The biotech company paid Lidingo more than $230,000 for one year. Twenty-seven individuals and entities, including ImmunoCellular, were charged with stock promotion schemes in April 2017. Investors were left with the impression that such bullish articles were unbiased, while writers were being secretly compensated for “touting company stocks,” the release said. More than 250 articles appeared, the SEC alleges. Of those charged, 17 agreed to settlements, including penalties ranging from $2,200 to nearly $3 million. SEC litigation continues for 10 others. ImmunoCellular was among those to settle with the SEC. No financial penalties were imposed, due to company promises of reform and its auditor expressing doubts about the company’s ability to continue financially, according to the filing. Singh was required to pay disgorgement of $1.75 million, prejudgment interest of more than $150,000, and a civil monetary penalty of $1 million for his involvement in stock-touting schemes. “Of course, this ended up with shareholders suing,” Enany explained. “This becomes destructive, and in some cases, you’re wasting resources in the process. Investors get discredited, and although your science has promise, given the company’s performance, they are not inclined to put any more money into it.” Candidate drugs The Business Journal tried to speak with a former ImmunoCellular executive or board member, but Jane Green, public relations representative for ImmunoCellular at JMG Communications, said in an email that the company is not providing additional information beyond public announcements. The Business Journal also reached out to Yu’s office at Cedars Sinai and did not receive a response. The company no longer has a presence at 30721 Russell Ranch Road, the headquarters address on its last SEC filings. Looking ahead, the unnamed biotech company buyer will own all of ImmunoCellular’s remaining clinical and pre-clinical assets, including its candidate drugs. The $1 million price is split into two payments, with $500,000 paid on the day of closing, May 8. The other $500,000 is dependent upon discussions between the purchaser and the Food and Drug Administration about the viability of ImmunoCellular’s drugs to treat brain cancer. Discussions could go up to the beginning of September, according to a statement from the company.
