Immunic, Inc. (NASDAQ:IMUX) Q1 2024 Earnings Call Transcript

Immunic, Inc. (NASDAQ:IMUX) Q1 2024 Earnings Call Transcript May 8, 2024

Immunic, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Jessica Breu: Good morning, and welcome to Immunic First Quarter 2024 Earnings Call. My name is Jessica Breu, Vice President, Investor Relations and Communications here at Immunic. I will also be the moderator today. Speaking on the call are Dr. Daniel Vitt, our Chief Executive Officer and President; as well as Glenn Whaley, our Chief Financial Officer. Please note that all participants will be in listen-only mode, and this event is being recorded. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Before we begin, I would like to remind you that this presentation may contain forward-looking statements. Such statements can be identified by words such as may, will, expect, anticipate, estimate or words with a similar meaning, and such statements involve a number of risks and uncertainties that could cause Immunic’s actual results to differ materially from those discussed here.

Please note that these forward-looking statements reflect Immunic’s opinions only as of the date of this presentation, and it undertakes no obligation to revise or publicly release the result of any revision to these forward-looking statements in light of new information or future events. Please refer to Immunic’s SEC filings for a more detailed description of the risk factors that may affect Immunic’s results and these forward-looking statements. I would now like to turn the call over to our CEO and President, Dr. Daniel Vitt, to begin the presentation. Daniel?

Daniel Vitt: Yes. Thank you, Jessica. I would also like to welcome everybody on today’s earnings call. Earlier this morning, we announced our financial results for the first quarter ended March 31, 2024, in our press release. During the call today, we will walk through our first quarter 2024 achievements and subsequent highlights, financial and operating results as well as our clinical development programs, including anticipated upcoming milestones. As Jessica noted, after the presentation, you will have the opportunity to ask questions. Let’s start with a review of our first quarter 2024 and subsequent highlights. With our early January announcement of the completion of the three-tranche private placement of up to $240 million, we are well capitalized into the third quarter of 2024.

This nicely covers the readout of our Phase 2 CALLIPER trial of our potentially groundbreaking lead assays vidofludimus calcium in progressive multiple sclerosis, which is anticipated in April 2025. The round led by BVF Partners included participation from a Group of top-tier new and existing investors, including Avidity Partners, Janus Henderson Investors, Soleus Capital, RTW Investments and Adage Capital Partners As a reminder, we received a total of $80 million in the first-tranche, which closed on January 8, 2024. The second-tranche is a purchase of $80 million, which is conditioned on the announcement of the Phase 2 top line data for the CALLIPER trial. The third $80 million tranche is to occur no later than three years after the second-tranche.

All in all, this financing completed in a difficult capital market environment and with such a strong group of investors affirms the enormous potential inherent in our clinical programs. In February, Dr. Bob Fox from Cleveland Clinic, who is the coordinating investigator of our ENSURE and CALLIPER programs presented extremely positive data from an interim analysis of our Phase 2 CALLIPER trial of Vidofludimus Calcium at the ECTRIM Form 2024. From the interim analysis, we saw a clear separation of vidofludimus calcium from placebo in serum neurofilament light chain levels across all PMS patients as well as all subtypes. We believe that this dataset provide biomarker evidence that vidofludimus calcium’s activity extends beyond the previously observed anti-inflammatory impacts further reinforcing its neuroprotective potential.

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Q&A Session

This strong cycle also points to a more likely positive outcome for all — for the overall CALLIPER trial as well as clinically relevant key secondary end points like prevention of disability worsening. Also at the ACTRIMS Forum 2024, Dr. Alexandra Hermann, Manager of Translation Pharmacology at Immunic presented a poster on our previous Phase 2 CALVID-1 trial. Because of vidofludimus calcium’s broad-spectrum antiviral activity and potential ability to prevent the reactivation of the Epstein-Barr virus, it may also contribute to the reduction of fatigue in MS patients. While fatigue is one of the most dominant symptoms among MS patients greatly influencing the quality of life and ability to participate in social activities it remains largely unsolved from the clinical perspective.

Our clinical trial in COVID-19 patients showed an initial signal that patients treated with vidofludimus calcium exhibited the post-COVID symptom of fatigue less frequently than the patients in the placebo arm. Recent third-party data in post-COVID patients identified EBV reactivation as a potential cause for fatigue in this patient group. Our goal is to confirm the ability of vidofludimus calcium to influence fatigue and EBV reactivation in our ongoing Phase 3 ENSURE trials in relapsing multiple sclerosis patients as this could result in yet another key differentiating feature for this medication candidate. In March, we had the opportunity to further extend the visibility of our program with the presentation of data at both the Annual Meeting of the Society for Virology and Frontiers in Medicinal Chemistry highlighting vidofludimus calcium’s potent activation of a neuroprotective transcription factor Nurr1 as well as its potent broad-spectrum antiviral activity in vitro.

As a reminder, last year we confirmed in preclinical testing that vidofludimus calcium acts as a potent Nurr1 activator in addition to its known mode of action as inhibitor of DHODH. We believe that the activation of Nurr1 could be responsible for the drug’s postulated neuroprotective effects and may contribute to the reduction of confirmed disability worsening events in MS patients as previously reported from our Phase 2 EMPhASIS trial in patients with relapsing MS. Also in March we received Notice of Allowance from the US Patent and Trademark Office for a patent covering the composition-of-matter of a specific polymorph of vidofludimus calcium and related method of production of the material. This patent provides another layer of proprietary intellectual property protection around our lead asset.

Importantly, we currently have eight patent families protecting vidofludimus calcium. We remain deeply committed to protecting the technology behind this Phase 3 asset which has been made that much stronger by the addition of this US patent directed to the use of vidofludimus calcium in multiple sclerosis. As a result, our extensive patent portfolio is expected to provide protection into at least 2041 in the United States and 2039 internationally unless extended further. Just last month, we hosted a Multiple Sclerosis R&D Day, highlighting the latest developments in the MS landscape as well as our highly encouraging preclinical and clinical data supporting the neuroprotective potential and reduce disability worsening associated with vidofludimus calcium, which present important distinctions compared with currently available MS therapies.

We also shared our strong belief that vidofludimus calcium could elevate today’s standard of care by providing a holistic solution for the full spectrum of MS patients given that it is designed to selectively manage all the three components of smoldering MS with its neuroprotective, anti-inflammatory and antiviral effects. Thank you to everyone who was able to join us for this event in-person or who were able to listen to the recording. That concludes our summary of the first quarter of 2024 and most recent finds. I am very pleased with the scientific and clinical achievements, we have made across our programs. As it relates to vidofludimus calcium, we continue to advance both our Phase II CALLIPER trial in patients with progressive MS and our two Phase III ENSURE trials in relapsing multiple sclerosis.

Based on the strong clinical evidence to date, we continue partnering discussions with both global and regional pharmaceutical companies. There is also a lot going on with our IMU-856 program, which could become a game changer for the treatment of a broad range of gastrointestinal orders. I will provide more detail on this existing program later in this call. I would now like to turn the call over to Glenn to provide financial overview. Glenn?

Glenn Whaley: Thank you, Daniel. I will now review the financial and operating results for the first quarter ended March 31, 2024. Let me start with a review of our cash position. We ended the first quarter of 2024 with $97.3 million in cash and cash equivalents. As Daniel noted, with these funds, we expect to be able to fund our operations in the third quarter of 2025. Regarding the operating results. R&D expenses were $18.7 million for the three months ended March 31, 2024, as compared to $22.9 million for the three months ended March 31, 2023. The decrease was mainly driven by reductions in clinical development costs. This was partially offset by an increase in personnel costs. G&A expenses were $5.1 million for the three months ended March 31, 2024, as compared to $4.2 million for the same period ended March 31, 2023.

The slight increase was primarily related to personnel expenses. Interest income was $1.2 million for the three months ended March 31, 2024, as compared to $0.8 million for the same period ended March 31, 2023. This increase was due to higher interest rates. We also reported a change in the fair value of the tranche rights for the three months ended March 31, 2024. The charge of $4.8 million was a non-cash charge related to the change of the value of the tranche rights associated with the future tranches 2 and 3 of our January 2024 financing. These tranches were initially classified as a liability upon the closing of tranche 1 on January 2024, but were reclassified to equity on March 4, 2024, when shareholders approved an increase in the company’s authorized shares from 130 million to 500 million shares of common stock.

Therefore, the Tranche 2 and Tranche 3 rights needed to be revalued to fair value as of March 4, 2024, upon the reclassification to equity. Other income was negative $2.1 million for the three months ended March 31, 2024, as compared to $1.2 million for the same period ended March 31, 2023. The decrease was primarily attributable to a $1.7 million expense related to the portion of costs from the January 2024 financing related to the tranche rights that were established at the time of the closing of Tranche 1 as well as the timing of recognizing the German Federal Ministry of Finance Grant. The net loss for the three months ended March 31, 2024, was approximately $29.6 million or $0.30 per basic and diluted share based on approximately 97.3 million weighted average common shares outstanding compared to a net loss of approximately $2.3 million or $0.58 per basic and diluted share based on approximately 43.7 million weighted average common share was outstanding for the same period ended March 31, 2023.

With that, I will turn the call back over to Daniel for a review of our development pipeline and upcoming milestones. Daniel?

Daniel Vitt: Thank you, Glenn. I would now like to provide an update on our clinical development programs and anticipated upcoming milestones. We very much look forward to reporting top line data from our Phase 2 category trial in progress FMS in April 2025. This readout could be a transforming value inflection point for Immunic. Additionally, we expect to report the internal futility analysis of oral Phase 3 in Surrogate this year and to read out the first of our identical twin Phase 3 ensure trials in relapsing MS in the second quarter of 2026, with the readout of the second insurer expected in the second half of 2026. It is repeating based on the strong clinical evidence observed thus far, the media fulsunrrivled safety and tolerability profile observed in multiple clinical trials.

We believe that the design of our Phase 3 insure program will provide a straightforward path to potential regulatory approval in lapse. On top of this, if the top line caliber data continues to show a neuroprotective effect in PMS patients, we may be able — the possessions calcium as the first oral treatment for nonrelapse in secondary progressive MS as well, the progressive MS subtypes with the highest unmet medical need. We also expect that the BRAC potential first-in-class ability to activate one will meaningfully benefit the ongoing clinical trials in MS. As we have noted before, is approved, we believe that Videos calcium has the potential to be a unique treatment option targeted to the complex pathophysiology of MS based on its combined neuroprotective anti-inflammatory and antiviral items.

Turning to our second program, IMU-856 and orally available and systemically acting first-in-class no molecule modulator of 856, we are very excited about this program and believe that its innovative mode of action is uniquely suited to treat a broad range of serious gastrointestinal disorders by targeting physiological intestinal pita regeneration, achieving catwalk healing with the absence of broadening suppression. As a reminder, data from our Phase 1b clinical proof of concept trial of IMU-856 in patients with celiac disease during periods of gluten-free diet and gluten challenge, demonstrated meaningful improvements over placebo in four key dimensions of clinical outcomes in celiac disease. Protection of gut architecture, protection of patients regarding celiac disease symptoms, enhancement of nutrient absorption, and also a strong biomarker response.

We believe this data provides initial clinical proof-of-concept for a potentially new oral therapy approach to a multitude of gastrointestinal disorders through the physiological regeneration of blood-barrier function, utilizing a new innovative targeted mechanism, while avoiding the immunosuppression seen in many gastrointestinal indications today. As previously reported, we have begun preparing our Phase 2 clinical testing of IMU-856. Based on the potential paradigm shift in potential for the treatment of GI diseases in addition to celiac disease, we are also exploring multiple additional clinical applications where the renewal of the gut wall is important, including, for example, inflammatory bowel disease for short bowel syndrome. This brings us to the end of our formal presentation, Jessica, please open the call for the Q&A session.

A – Jessica Breu: Yes. Thank you, Glenn and Daniel for walking us through the first quarter and subsequent highlights as well as our clinical development pipeline and upcoming value inflection points. We will now begin the question-and-answer session. [Operator Instructions] Our first guest today is Matt Kaplan from Ladenburg Thalmann. Matt, please unit yourself and go ahead.

Matt Kaplan: Hi, good morning guys and congrats on the progress. A few questions on the vidofludimus program. I guess, how was the impact on the NfL that you observed in the CALLIPER study interim analysis? How is that received at the ACTRIMS meeting when you presented that?

Daniel Vitt: Yes. Thank you, Matt. I’m happy to share some feedback here. Generally, I would say what we have seen here is very much appreciated from experts, broadly, I would say, because I think so far, we are not aware of any other comparable data with such a strong reduction on NfL reduction. And so we take that as a positive feedback here from all the conferences we attended.

Matt Kaplan: Okay, that’s helpful. And then in terms of the interim futility analysis for the ENSURE program, what are the potential readouts from this analysis that you’re expecting to announce in later this year?

Daniel Vitt: Yes. Good that you asked because this is really — since this is really a Phase 3 program, we will really get any data. We will get just a response to the questions to the — from the committee and the Safety and Monitoring Committee basically on either to go ahead as planned or to suggest some sample size adjustment. That’s why we can read out there. So, we will not see any medical results or any biomarkers from that futility analysis. Really more reconfirming our estimates when we started the study. And since this trial is an event-driven trial, it’s important to have an eye on. Then we have enough events based on our statistical assumptions we made initially.

Matt Kaplan: Okay. That’s very helpful. Thank you.

Jessica Breu: Thank you, Matt. The next one in the queue here is Yasmeen Rahimi with Piper Sandler. Yas, please unmute yourself and go ahead.

Jun-Goo Kwak: Hey good morning team. This is Jun-Goo on for Yas. Thanks for taking the question. The first question we had was if you could comment any visibility on a blinded basis to defend rates across ENSURE trials? If you do, are these event rates in line with expectations? And secondly, have you had the chance to meet with the agency in regards to 856. Could you provide any color where you are in terms of Phase II prep and study design?

Daniel Vitt: Thank you for the questions. Let me first start with were the ongoing studies, no, we don’t have the current event rates on disability worsening. So far, so I can’t comment on that now. What I can tell is so far, the study is on track. And we may have an eye on that maybe coming closer to the futility analysis time also to have some blinded data updates we can share with the public. Regarding 856, further planned and ready to interactions, we are working on those. We are planning for a meeting with the US regulators. We are preparing several Phase II studies so indications, as I said in the presentation. So it’s, of course, given the very good proof of content selective, that’s the number one indication we’re looking at.

But I mentioned also that also looking on the preclinical data, we think this drug makes a lot of sense beyond sedative disease and other indications. And the team here is actively working on a couple of different concepts. And we will look how — what is the best way to develop it further and also to get the appropriate funding for all of the ideas we have with that wonderful molecule.

Jun-Goo Kwak: Thank you, so much.

Jessica Breu: [Operator Instructions] The next one here is Mayank Mamtani with B. Riley. Mayank, please unmute yourself and go ahead.

Mayank Mamtani: Good morning team. Thanks for taking my questions and congrats on the updates. Just quickly on the Phase II CALLIPER study, could you talk to the functional endpoints being evaluated there? And which ones do you think in we attributed to vidofludimus dual nerve and DHODH mechanism based on what you’ve seen in the prior Phase II? And then secondly, remind us of the brain volume changes kinetics noted relative to NFL with maybe other studies that are out there of, say, B-cell-depleting agents. And then I have a quick follow-up.

Daniel Vitt: Good morning, Mayank and thank you for the questions. So CALLIPER study is an important study and since this is really limited to non-relapsing patients, we think that the mentioned functional analysis makes a lot of sense here and that the data — the set of patients here can really give good answers to all of — a lot of these questions. So the first thing, of course, is that the classical established EDSS scores [indiscernible] and change in confirm disability worsening is the key secondary endpoint of the study, I think the most important medical secondary endpoint. On top of this, and this was also seen from other studies in other companies, that functional readouts play a more important role, and they’re not completely covered in EDSS.