Immunocore Holdings plc (IMCR) stock intrinsic value fair value estimate & owner earnings analysis

Immunocore is a UK-based biotechnology company whose revenue comes almost entirely from one medicine, KIMMTRAK, the first approved treatment for metastatic uveal melanoma (a cancer of the eye). KIMMTRAK is approved in 39 countries and launched in 30. In 2025 it generated $400.0 million of sales, up 29%: $257.0 million in the United States (up 13%), $131.4 million in Europe (up 79%, including a $6.0 million release of prior-period reserves) and $11.6 million elsewhere. Sales in the first half of 2026 were $222.6 million, up 16% from $191.8 million a year earlier. The difficulty is that the company spends nearly everything KIMMTRAK earns on a large research programme. In 2025 it spent $274.9 million on research (up 24%) and $165.4 million on selling and administration, and reported an operating loss of $45.4 million. Three late-stage trials are running (brenetafusp in first-line advanced cutaneous melanoma, and KIMMTRAK itself in advanced cutaneous melanoma and in adjuvant uveal melanoma), and a first autoimmune candidate had its clinical trial application submitted in December 2025. In the first half of 2026 the company earned an operating profit of $4.3 million, but the second quarter slipped back to a $3.0 million operating loss as research spending rose. How we measured earnings. We measure what the business earns for its owners: cash from operations, less the swings in receivables, payables and accruals, less share-based pay (a real cost), less the capital spending needed just to stand still. On that basis owner earnings per share were about -$4.03 in 2021 (the year before launch), -$1.27 in 2022, -$0.92 in 2023, -$1.22 in 2024 and -$0.83 in 2025 (about -$41.7 million). The reported cash flow in 2024 was flattered by a $71.5 million rise in accrued expenses, which we removed as a timing effect. Because this history describes a company still building out its launch, we did not use its median as the starting level. Instead we built each case from the current economics: sales of about $445 million a year (twice the first-half 2026 figure, with both quarters of 2026 above $100 million), research of about $270 million (the first-half 2026 pace) and selling and administration of about $163 million. That points to owner earnings of only a few million dollars a year today, roughly break-even to slightly positive, which is a large improvement on 2025 but not yet a proven level. What we credited and what we left out. KIMMTRAK is protected by composition-of-matter patents that, including the US patent term extension, run to 2035 in the United States, with European protection to the second quarter of 2035 in most countries where patents were obtained. We value the business for the years to 2034 and assign nothing after that, because we cannot point to anything that replaces KIMMTRAK's earnings once protection ends. We give no value to the pipeline (brenetafusp, the autoimmune and HIV programmes and the new KIMMTRAK indications): none has yet reached approval, so we cannot evidence any earnings from them, yet we still charge the money being spent on them. Sales growth is credited only where something is already in hand: nine countries in which KIMMTRAK is approved but not yet launched, and the momentum visible in the 2026 reported quarters. Base case, $5.90 per share. Sales rise to about $445 million in 2026, then 8% in 2027, 5% in 2028 and 3% in 2029 (about $520 million), and are then flat to 2034. This is slower than the 16% now being delivered. Research stays at $270 million and selling costs rise 3% a year. Owner earnings peak near $62 million in 2029 (about $1.19 per share) and drift down to about $37 million by 2034 as costs creep up on flat sales, and nothing is assumed after 2035. Because owner earnings for 2025 were negative, a year-on-year growth rate is not meaningful; for reference, first-half 2026 sales growth was 16% and we assume 8% for 2027. Bull case, $10.60 per share. Sales keep growing as the launch continues (12% in 2027, 8% in 2028 and 5% in 2029, to about $571 million) while research is held at about $270 million, near the first-half 2026 pace (research spending was up 8% on the first half of 2025). Owner earnings reach about $107 million in 2029 (about $2.06 per share). The same 2035 cut-off applies. Bear case, -$1.40 per share. Sales stall at about $445 million: US growth was already down to 13% in 2025, and Europe's 2025 figure was helped by the reserve release. Research is held at $270 million but selling and administration keep rising 3% a year, so owner earnings turn negative from 2028 and reach about -$34 million a year by 2034. Here the operations consume more cash than they generate, and the case is worth less than nothing on this basis. The company's risk factors also warn that KIMMTRAK revenue could be significantly reduced by existing and future legislation, a risk we could not size from the filing and so did not include. What the figures leave out. In line with our approach, the values count the interest earned on the company's cash but do not add the cash itself, and they do not deduct the $402.5 million of 2.50% convertible notes due 1 February 2030. At 31 December 2025 the company held $467.7 million in cash and $396.4 million in marketable securities, so roughly $460 million (about $9 per share) more than the notes; a reader should weigh that separately, since a company that keeps spending will draw it down. Note also that the company recorded a $14.7 million tax charge in 2025 because it no longer expects US profits in the short term. What would make this wrong: a cut in research spending or faster KIMMTRAK growth would raise the values materially, while an early US price cut, new competition or heavier trial spending would lower them. The margin-of-safety price of $2.40 reflects a business that depends on a single product, has a negative downside case and is highly sensitive to spending decisions, so it carries a large margin of safety.