Immunic, Inc. (NASDAQ:IMUX) Q4 2022 Earnings Call Transcript

Immunic, Inc. (NASDAQ:IMUX) Q4 2022 Earnings Call Transcript February 23, 2023

Jessica Breu: Good morning and welcome to Immunic’s Fourth Quarter and Year End 2022 Earnings Call. My name is Jessica Breu, Head of Investor Relations and Communications at Immunic. I will also be the moderator on today’s call. Speaking on the call are Dr. Daniel Vitt, our Chief Executive Officer and President; as well as Glenn Whaley, our Chief Financial Officer. . 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 the 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 presentation over to our CEO and President, Dr. Daniel Vitt, to begin the presentation. Daniel?

Daniel Vitt: Thank you, Jessica. I also would like to welcome everybody to Immunic’s year end 2022 earnings call. Earlier this morning, we announced our financial sales for the fourth quarter and year ended December 31, 2022 and highlighted recent activities as well as upcoming milestones related to our clinical development pathway. During today’s call, we will talk through our fourth quarter 2022 and subsequent highlights, year end financial and operating results as well as 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 fourth quarter 2022 and subsequent highlights. In October, we have bolstered our balance sheet with the closing of a $60 million pipe financing, which extended our runway through several value inflection points into the fourth quarter of 2024.

Also in October, we conducted a preplanned interim analysis of our Phase Ib clinical trial of IMU-935 in patients with moderate to severe psoriasis. Unfortunately, the group level mean data did not show a benefit of the 2 active doses tested compared to placebo, which both disappointed and surprised us. Although the active arms performed in line with OCRA expectations, the trial experienced a greater decrease than expected in the placebo arm. The administration of IMU-935 and placebo were well received and well tolerated and no new safety signals were observed. Given these were only the first 2 dose levels of IMU-935 tested in psoriasis patients and also based on drugs very favorable to pharmacokinetic safety and tolerability profile to-date, we have the flexibility to explore different parameters in future clinical testing, including higher dosing and longer treatment periods.

We plan to provide further updates and guidance on potential next steps for this program towards the end of this quarter. Switching to vidofludimus calcium program in multiple sclerosis. Throughout the year we continued the development of our lead asset vidofludimus calcium in our ongoing MS program. In November we hosted a virtual MS R&D webcast, which featured 3 excellent renowned key opinion leaders; Dr. Fred Lublin from Icahn School of Medicine at Mount Sinai Hospital, Dr. Larry Steinman from Stanford University School of Medicine as well as Dr. Heinz Wiendl from the University of Munster in Germany. The experts discussed recent scientific findings and the effect on the MS treatment landscape. Additionally, Immunic provided an update on the scientific preclinical and clinical progress of vidofludimus calcium in multiple sclerosis.

Photo by Towfiqu barbhuiya on Unsplash

In conjunction with the MS R&D webcast, we reported new data from the blinded and open-label extension part of our Phase II EMPhASIS trial of vidofludimus calcium in relapsing remitting MS. The data was highly encouraging showing that long-term treatment with vidofludimus calcium was associated with a low rate of confirmed disability worsening over time, which compares favorable to historical trial data for currently available MS medications. Overall, this data nicely underlines vidofludimus calcium’s neuroprotective potential in addition to its already established anti-inflammatory and antiviral effects. In February of this year we held a celiac disease R&D webcast, including 2 renowned experts to discuss the dynamics of this multifactorial complex autoimmune disease; Dr. Joseph Murray from the Mayo Clinic in Rochester, Dr. Michael Schumann from the Charite at Berlin as well as Immunic’s management team focused on the characteristics of celiac disease, immune stimulation and its connection to clinical symptoms, the role of the epithelial barrier and the pathogenesis of the disease as well as current and potential treatment options.

We also touched on the preclincal and clinical development status, the status of IMU-856. There remains a continued unmet medical need for new effective therapeutics for this disease and we are excited about the potential of IMU-856. As referred to a moment ago, in November of last year we reported the promising new data from the blinded and open label extension parts of our Phase II EMPhASIS trial of vidofludimus calcium in relapsing remitting MS. This data is being presented today at the prestigious ACTRIMS Forum 2023 by Dr. Bob Fox from Cleveland Clinic, who is also the coordinating investigator of our ENSURE and CALLIPER programs. I would like to point out again that the data was favorable compared to historical data for current MS treatments and showed that long-term treatment with vidofludimus calcium was associated with a low rate of confirmed disability progressing over time.

That concludes our summary for the fourth quarter of 2022 and recent subsequent highlights. 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 year ended December 31, 2022. Let me start with the cash overview. As Daniel mentioned, after raising $60 million during the fourth quarter, we ended the year with $116.4 million in cash and investments, which we expect will be sufficient to fund operations into the fourth quarter of 2024. Regarding the operating results. Research and development expenses were $71.3 million for the 12 months ended December 31, 2022 as compared to $61.1 million for the 12 months ended December 31, 2021. The increase was mainly driven by external development costs related to the ongoing clinical trials of vidofludimus calcium, IMU-935 and IMU-856 and was partially offset by a decrease in external development costs related to the Phase II clinical trials of vidofludimus calcium in ulcerative colitis, relapsing remitting MS and COVID-19.

General and administrative expenses were $15.3 million for the 12 months ended December 31, 2022 as compared to $13.3 million for the same period ended December 31, 2021. This increase was mainly driven by personnel expense, of which $0.6 million was related to noncash stock compensation. We recorded a noncash goodwill impairment charge of $33 million in the fourth quarter of 2022, which represents a full write-down of our previous goodwill balance. The impairment resulted from the announcement of interim group level data of the Phase Ib clinical trial of IMU-935 in psoriasis on October 20, 2022. Other expense was negative $0.9 million for the 12 months ended December 31, 2022 as compared to negative $1.3 million for the same period ended December 31, 2021.

The decrease in expense was primarily attributable to increases in interest income and R&D tax incentives for clinical trials in Australia, which was partially offset by a decrease in grants. Net loss for the 12 months ended December 31, 2022 was approximately $120.4 million or $3.78 per basic and diluted share based on approximately 31.8 million weighted average common shares outstanding compared to a net loss of approximately $92.9 million or $3.93 per basic and diluted share based on approximately 23.7 million weighted average common shares outstanding for the same period ended December 31, 2021. With that, I’ll turn the call back over to Daniel for an outlook on our upcoming clinical milestones. Daniel?

Daniel Vitt: Thank you, Glenn. I would now like to provide an update on our anticipated upcoming data readouts. Our Phase II CALLIPER trial in progressive MS and our Phase III ENSURE trials in relapsing MS continue to enroll patients. Our current expectation is to report data from the interim biomarker analysis of the CALLIPER trial in the second half of 2023 and to read out top line data at the end of 2024. For the ENSURE program, we added new guidance that we expect to report data from the interim analysis in late 2024 and, as previously announced, to read out the first of the ENSURE trial end of 2025. As we have noted previously, based on the strong clinical activity observed so far in vidofludimus calcium’s placebo-like safety and tolerability profile, we believe that the design of the ENSURE program gives us a direct path towards potential regulatory approval in relapsing MS.

The CALLIPER trial adds additional potential in progressive MS to our MS program beyond RMS. Vidofludimus calcium could represent a unique treatment option targeted to the complex pathophysiology of MS differentiated by its combined anti-inflammatory, antiviral and potential neuroprotective effects. As already mentioned earlier, we plan to provide an update on potential next steps of IMU-935 development in psoriasis towards the end of this quarter. Of note, IMU-935 recently received the proposed international nonproprietary name izumerogant from the World Health Organization. Our next clinical milestone will be mid this year when we plan to report top line data from the double-blind randomized placebo-controlled Part C of our Phase I clinical trial of IMU-856 in celiac disease patients.

Part C is designed to assess safety and tolerability of IMU-856 during 28 days of treatment with 80 and 160 milligrams of IMU-856 or placebo once daily during periods of gluten-free diet and gluten challenge. Secondary objectives include pharmacokinetics as well as acute and chronic disease markers, including those evaluating acute response on the biomarker IL-2 and gastrointestinal architecture and celiac disease symptoms. IMU-856 is an orally available and systemically acting small molecule modulator form preclinically to regulate and test the intestinal barrier function and regenerate bowel epithelium. It appears to influence the tightened regulated network of genes and proteins associated with intestinal epithelial cell interaction and adhesion restoring intestinal barrier function while maintaining immunocompetency.

These characteristics indicate that IMU-856 could represent an entirely new and innovative approach for the treatment of a number of gastrointestinal diseases including celiac disease IBD or IBSD with all the serious consequences associated with immunosuppressive therapies. This brings us to the end of our formal presentation. Jessica, please open the call for a Q&A session.

A – Jessica Breu: Thank you, Daniel and Glenn, for walking us through the fourth quarter 2022 and subsequent highlights as well as upcoming value inflection points. . Our first question today comes from Yasmeen Rahimi at Piper Sandler.

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Q&A Session

Yasmeen Rahimi: Few questions for you. Team, we’re very excited to look at the full data of 935 as you’re going to be reporting at year end — not year end, end of this quarter. Could you maybe help us understand again like why has it taken quite a bit of time to really gather the data and how fulsome is that data really going to be for us so that we can actually step and decide what the opportunity is? And when you say next steps, that kind of makes us think that there is a next step involved and that the data or the analysis looks encouraging. So if you could provide some color around there. And then I have also some questions on ENSURE.

Daniel Vitt: Sure. And I know that that’s an important question and maybe start with the time for data analysis. This is still ongoing. It’s a big package of biomarkers; we are looking at collecting tissue, samples and so forth. And remember what we reported was group-level unblinded data so this was really much before database log and so forth. So these things take time and sorry for that, but it’s the nature of what we’re doing here. Regarding expectations of that, I think we want to really deliver a rationale for decision-making and make a proper decision at that time point and I hope that we have things in the right way together at the end of the quarter to give the right guidance on that end. And as you know, we always try to be very mindful of the designs behind it, the data and then based on that, make smart decisions to go forward.

Yasmeen Rahimi: And maybe a clarification question for you, Daniel. Given that you guys have been very thoughtful around really analyzing the data in the most comprehensive manner and figuring also next steps, does that — can we conclude that you’re seeing very encouraging signals that move forward or is that not proper? That’s one. And then the second question I had is a lot of investors will be looking very eagerly into the interim analysis of ENSURE in late 2024. Are you starting to see sort of the event rate, the progression of disease as you expected so that like on a confidence level basis like how confident are we that that data is going to fall into late 2024 and does not slip into 2025?

Daniel Vitt: So first of all, once again on 935 I think I know that everybody wants to learn more about and I would like everybody to be patient until the end of the quarter to give the update there. It’s just a thorough job to decide what should we do and it has a couple of implications. For example if we continue the trial, what is the right design for that? What would be the right design for that? As I said in the presentation, duration of treatment is 1 thing one should look on dose strengths and so forth. So there are a lot of things to really take into account for decision-making here. On the timing of the interim of ENSURE, I think we are pretty confident we can deliver an interim analysis end of ’24. But of course I don’t see data coming off from this ongoing trial. So this is really just, we said in the past, is an eventual readout. But what we know so far, we should be able to have interim data available around end of ’24 as we said in the call.

Jessica Breu: Our next guest is Thomas Smith from SVB Securities.

Unidentified Analyst: This is on for Tom Smith. Congrats on the progress during the quarter. We have a few questions. The first one with the initial Phase I celiac data of IMU-856 expected in mid-’23. What are your expectations on the data and when do you plan to review the MOA of IMU-856? And we have a follow-up.

Daniel Vitt: Good question. So expectations, I think we had this R&D day call everybody on this line here had a chance to listen to that so far. Even it’s available as a recording on the home page by the way. We think that in that design, we’re treating for 4 weeks and half of the time without gluten challenge and then we follow in the second half of the trial for another 14 days with a gluten challenge. And I think the most robust expected readout would be to look whether to what extent we can block the IL-2 sequence after starting the gluten challenge and this is typically done 4 hours after starting the gluten challenge. You measure then the CR based IL-2 levels. And if we are able to restore barrier function and block basically the settling of gluten and the derivatives of gluten to the immune system, then we should see a reduced amount of IL-2.

So that’s the first thing. Yes, there was a second question, MOA. As you know, we have been very quiet on that and just to make sure we have little bit of — we maintain our advantage over potential competitors on the knowledge of the target and how it works. But we plan to disclose the target during this year, but of course we would like to do that in the context of a scientific presentation or conference so that it has the right surrounding of a scientific environment. So likely after the release of the data not too long after that we will come out with the target and maybe more details on the mode of action. Despite we have I think shown some aspects of the mode of action for example gene regulation affecting globin proteins, and the tier assay system where we have shown that the drug is able to restore barrier function in quite importantly moments.

Unidentified Analyst: Got it. That makes sense. And then with the interim data from the CALLIPER in PMS expected in second half, like what would that asset look like in your perspective and what data gives you the most confidence in the potential of vidofludimus calcium in this indication?

Daniel Vitt: Yes. Thank you for that question. It’s important to know what are we reading out. I think the focus of this readout is clearly on biomarkers. We will have a couple of those. And as you know, progressive MS is something where not a lot of things worked so far. It’s a huge unmet need. So seeing a difference between placebo and the different subsets of PMS in this trial would be a success from my point of view. This is not an interim analysis which is prop for any statistical readout. It’s really just looking do we see a signal here. And there’s a typical more important question is it medically meaningful segment we see there. But the focus is clearly here on the biomarkers. To remind you the primary endpoint of the trial will be change in brain atrophy between placebo and active and that is then expected to be read out at the end of ’24.

So all of these pieces I think are important to at the end judge to what extent the potential of vidofludimus goes beyond the RMS Phase III program, which we’re running in parallel.

Jessica Breu: The next one is Matt Kaplan from Ladenburg Thalmann.

Matthew Kaplan: Just some follow-ups on your kind of near-term clinical milestones. Just first was 935 as you analyze that data there from the psoriasis cohort, what are your expectations in terms of looking at the drug’s impact on IL-17 and reductions there that would get you excited about moving the drug forward?

Daniel Vitt: I think it’s not only IL-17, it’s also looking on overall biomarkers impact on relations we are looking at. The other thing what I would like to see is kind of like a difference between the groups to guide us forward and to be able to conclude some ideas on potential dosing and so forth going forward. So that would be my expectation. But that’s all I can tell right now I think, I can’t dig into more details on the ongoing work here. Sorry for that.

Matthew Kaplan: No, perfect. That’s helpful. And then in terms of just a follow-up on the ENSURE interim analysis. What are the potential outcomes of the interim? Is this a futility analysis or what type of analysis will go on there?

Daniel Vitt: Yes, that is not pursuing a futility analysis. It’s more looking on what do we see when we reached half of the events and giving us the ability to do sample size adjustment in that timepoint. So that’s the pre-designed plan here. So it will not be handled as a termination reading or something like that. It’s really looking at…

Matthew Kaplan: It’s more of a powering or sizing analysis. Okay. Now I think some of the other questions have been covered already. But thanks and congrats on the progress.

Jessica Breu: . The next one is Andreas Argyrides from Wedbush.

Andreas Argyrides: They’ve actually more or less all been asked at this point, but maybe a quick follow-up on just 935. Do you see any potential to dose higher in the Phase I or extended treatment period? And are there going to be any changes to the patient population that could be implemented in terms of modifying exclusion including criteria?

Daniel Vitt: Yes, all of those are things on the team. So when we started this trial, for the first 2 dose strengths we were limited on the dosing for 28 days because of the preclinical package. We meanwhile completed the 3-month safety package and are in principle able to follow on the treatment to 12 weeks, which is something which we would consider doing. Once again it’s not decided, but it’s some of the options on the table. Second thing is dosing higher of course. That is something we can do, which we have the ability to increase doses. And on the other primates, of course that’s an important exercise here to understand what was the reason for the high placebo activity we have seen. And that of course is something we need to look on the patient characteristic and baseline, what is different there and where are potential risks on getting a bias or a wrong placebo activity.

And that’s something we are looking on every stone and flipping every stone that we have here. And that also is part of the reason why the team needs to spend some time on really carefully evaluating all of these things.

Andreas Argyrides: Okay. Great. Congrats on all the progress.

Jessica Breu: And we have one more person in the queue, which is Mayank Mamtani from B. Riley.

William Wood: This is William Wood on from Mayank Mamtani today. Really nice to see the continued great work here. Congrats on everything. I’ve got a couple of questions, more follow-ups on what others have asked. For the interim look for CALLIPER, you stated that you’ll be providing some biomarker data. I believe you mentioned NFL and GFAP before, we’ll probably also get safety. Maybe if you could just provide a little extra color on what we might be expecting? Is it just going to be those 2 biomarkers? Are we going to get any functional data? And then also just to verify, will these same biomarkers be provided also in the top line full data set sort of to give us an idea of mid and then end of term progression?

Daniel Vitt: Yes, I think you’re absolutely right so these are the 2 major markets we’re looking at. NFL, you may remember that from the Phase II, we had very promising activity there. And also some newer biomarkers have been added to the package, for example GFAP and others. And of course I think in this trial we may look on some functional readouts that will not be an advanced set of data at that timepoint. I think the interim is done — will be done when 50% of the patients have reached 24-week treatment. So this is early in the treatment and therefore, we think that biomarkers are the best suitable readout for such an interim analysis. And it’s really just to check do we see a difference here between the active and the placebo patients.

And just to remind you, we have the 2 different kinds of placebos, we have primary and secondary progressive patients in this trial. And that’s of course also an information we want to extract from the trial, whether for example is 1 subgroup benefiting substantially better than the other, which may give us the opportunity at the completion of the trial to consider and to maybe enrich more patients from the 1 or the other kind.

William Wood: And then will we actually get the same datas, the same biomarkers, et cetera, at the end of the trial also?

Daniel Vitt: Yes, sure. I forgot to mention it. Yes, of course this is an important part of the story to also look on the evolving biomarkers over time and changes there and that may be a very interesting readout on all of the different parameters over time, right?

William Wood: Excellent. And then just sort of taking that a step further following this, you had just mentioned that there might be some wiggle room for some adjustments based on BMS, SBMS. Do you have any plans to meet with the FDA on how they may receive the biomarkers and then to potentially adjust for both ENSURE or CALLIPER if needed? I’m just trying to understand the path forward following this interim readout.

Daniel Vitt: No, this is more for internal decision I think. There is no plan right now to talk with the FDA on the interim analysis, but of course it will influence our strategy going forward and the discussions we will then have with the complete data set later. So that’s more than the formal way of looking on this. For us it’s really important to understand the science and that’s why we’re doing these things as interim readouts. And I think we are all excited to see what’s coming out there because it’s a totally underserved area and not so many things worked so far so it’s not a low hanging fruit here.

William Wood: Makes sense. And then 1 last one, if I may. You’ve mentioned that the interim readout is currently a little to be determined, it’s going to be based on our event driven, primary area is the enrollment. Could you just give us any details on how enrollment is proceeding for ENSURE, but also for CALLIPER? Maybe commenting on if anything has been slowing it down or even speeding it up?

Daniel Vitt: Yes. I think as you know, in the past we really never gave guidance on enrollment status because if you start that race, then it’s something we have every week other questions on that. So we stick to our current guidance on the readouts. So that means we are somehow satisfied with what we see on recruitment in both trials and as soon as we figure out that expectations are changing, we need to give an update on that of course and we will do that. Excellent. Thank you so much. That it. Congratulations again.

Jessica Breu: This concludes our question-and-answer session. I would like to turn the conference back over to Daniel for any closing remarks.

Daniel Vitt: Thanks, Jessica, and thank you to today’s attendees for your insightful questions. To summarize, we very much look forward to reporting clinical data from our vidofludimus calcium and IMU-856 programs this year. Data from the Part C portion of our Phase I clinical trial of IMU-856 in celiac disease patients is expected to be available midyear. Moreover, we expect to report data from the interim analysis of our Phase II CALLIPER trial of vidofludimus calcium in progressive MS in the second half of this year. We remain well funded with $116.4 million on our balance sheet providing us runway through multiple clinical milestones into the fourth quarter of 2024. With that, I would like to close today’s call. Again thank you very much for joining and we are very happy to answer any additional questions one-on-one.

Jessica Breu: Thank you for joining Immunic’s year end 2022 earnings call. The webcast has now concluded. You may now disconnect.