We all have bad days. Immunovant, Inc. (NASDAQ:IMVT) had its latest bad day on September 23 after a clinical-trial setback, sending the shares lower.
The company reported that its Phase 2b proof-of-concept trial of IMVT-1402 in cutaneous lupus erythematosus (CLE) failed to achieve the primary endpoint. The study failed to show a statistically significant difference versus placebo in the percent change from baseline in the CLASI-A score at Week 12. That prompted the company to discontinue development of IMVT-1402 in CLE.
The disappointment obviously stings.
IMVT-1402 is designed to reduce pathogenic IgG antibodies through FcRn inhibition. The CLE result therefore raises questions about how consistently IgG reduction will translate into clinical benefit across different autoimmune diseases.
But a Stumble Is Not a Fall
First and foremost, the CLE results were not entirely negative. Immunovant reported positive numerical trends across multiple endpoints, and patients with deeper IgG reductions were more likely to achieve improved clinical responses. IMVT-1402 also maintained a favorable safety and tolerability profile.
Of course, that does not compensate for missing the primary endpoint. But it supports biological target engagement, although target engagement alone does not establish clinical efficacy.
And that brings us to other IMVT-1402 programs.
CLE was only one of six announced indications for IMVT-1402. So there are five programs still on course.
Immunovant, Inc. is developing IMVT-1402 for Graves’ disease, difficult-to-treat rheumatoid arthritis, myasthenia gravis, chronic inflammatory demyelinating polyneuropathy (CIDP), and Sjogren’s disease. The timelines for those programs have not changed because of the disappointing CLE trial results. Topline data from potentially registrational trials in Graves’ disease and myasthenia gravis are expected in 2027, followed by CIDP and Sjogren’s disease in 2028.
There is also some encouraging evidence outside CLE. In the open-label portion of the difficult-to-treat rheumatoid arthritis study, IMVT-1402 was found to produce ACR20, ACR50, and ACR70 response rates of 72.7%, 54.5%, and 35.8%, respectively, at Week 16.
These were not controlled Phase 3 results that would be considered as proof of efficacy. But they provide additional clinical evidence worth monitoring.
Immunovant’s cash and cash equivalents stood at $797.8 million at the end of June. The management said that under the current operating plan, that cash position provides sufficient runway to a potential commercial launch of IMVT-1402 in Graves’ disease.
Hedge Funds Add Exposure
The number of hedge funds backing Immunovant, Inc. has steadily increased, jumping to 38 funds in Q2 from 35 in Q1 and 33 in Q4. Recent additions include D E Shaw, which opened a position of 1.24 million shares. The short interest stands at 7.8%, down from 8.4% in the previous reading. The nearly 16 million shorted shares have 14.1 days to cover.
There’s no doubt that the CLE failure weakens the IMVT-1402 thesis and increases clinical uncertainty. But the company still has five other programs and substantial cash to fund development.
READ NEXT: Netflix (NFLX)’s YouTube Problem Is Becoming Harder to Dismiss and Palo Alto Networks (PANW): Can Platformization Keep Driving Growth?.
Hedge Fund Resource Center