Earnings Call Transcript - IMNN Q3 2022

Operator, Operator

Good morning. My name is Marliese, and I will be your operator today. At this time, I would like to welcome you to Imunon's Third Quarter 2022 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. Following the speakers' prepared remarks, there will be a question-and-answer session. I would now like to turn the call over to Kim Golodetz, Investor Relations representative. Please go ahead.

Kim Golodetz, Investor Relations

Thank you, and good morning, everyone. This is Kim Golodetz with LHA. Welcome to Imunon's Third Quarter 2022 Financial Results and Business Update Conference Call. As noted by the operator, prepared remarks will be followed by a question-and-answer session. During today's call, management will be making forward-looking statements regarding Imunon's expectations and projections about future events. In general, forward-looking statements can be identified by terminologies such as, expects, anticipates, believes or other similar expressions. These statements are based on current expectations and are subject to a number of risks and uncertainties, including those set forth in the company's periodic filings with the Securities and Exchange Commission. No forward-looking statements can be guaranteed, and actual results may differ materially from such statements. In particular, there is significant uncertainty about the duration and impact of the COVID-19 pandemic. This means results could change at any time and the anticipated impact of COVID-19 on Imunon's operations, financial results, and outlook is the best estimate based on the information for today's discussion. I also caution that the content of this conference call is accurate only as of the date of the live broadcast, November 14, 2022. Imunon undertakes no obligation to revise or update comments made during this call, except as required by law. With that said, I would like to turn the call over to Dr. Corinne Le Goff, President and Chief Executive Officer. Corinne?

Corinne Le Goff, CEO

Thank you, Kim, and good morning, everyone. Joining me today is Jeffrey Church, our Chief Financial Officer. In addition, Dr. Khursheed Anwer, our Chief Scientific Officer; and Dr. Nicholas Borys, our Chief Medical Officer, will be available during the Q&A session to answer your questions regarding our development programs with PLACCINE or prophylactic vaccine modality and GEN-1, our IL-12 immunotherapy for the treatment of advanced ovarian cancer. Today, I am going to spend most of my time speaking about PLACCINE, as our recent progress in developing this modality has been extraordinarily robust. PLACCINE is one of Imunon’s DNA-based platform technologies that relies on DNA delivery with novel synthetic delivery systems that are independent of viral vectors or devices. DNA vectors encompass molecular elements that are designed to improve the immune response by targeting multiple antigens of the pathogen or multiple variants of the same antigen. Imunon has produced a family of DNA vaccine vectors expressing one or more SARS-CoV-2 surface antigens, and we have demonstrated expression of the uncoated genes. This promising vaccine approach has applicability in infectious diseases and also in oncology. We have been conducting preclinical proof-of-concept studies on a DNA vaccine candidate targeting the SARS-CoV-2 virus in order to validate our modality. To date, we are delighted with the results, which bode well for our ability to broaden applications to other pathogens. But before I dive into the data, I want to start by telling you why I am excited about the potential of our DNA-based vaccine modality. First, the market opportunity is very large. Vaccines are the most powerful and cost-effective way to protect the health of billions of people around the world. Before COVID, the global market for preventive vaccines was about $35 billion, roughly shared between four key players: Sanofi, Merck, GSK, and Pfizer. The market grew to $61 billion in 2021 and is expected to reach $125 billion in 2028, and new viruses are being discovered all the time. In fact, over the past 40 years, 18 new pathogenic viruses have been discovered for an average of two new viruses per year. When it comes to the development of vaccines, if you consider all the viruses known to mankind from 100 years ago, commercial vaccines have been approved for only 4% of them. So clearly, there is a large addressable market, providing significant room for new technologies. And that brings me to my second point. I believe that DNA has the potential to be an entirely new class of vaccines. In particular, our PLACCINE modality has the potential to represent a viable alternative to current commercial vaccines. Current vaccine technologies, such as attenuated virus, protein subunit, mRNA, and viral DNA vector vaccines have shortcomings that we aim to address. There are five important attributes that regulators and governments around the world want to see in the next generation of prophylactic vaccines, and we are addressing each with our technology. The first one is durability of protection. DNA antigen expression is more durable and longer-lasting than mRNA and induces a robust immunological response. Two, breadth of protection: our multivalent vector increases the breadth of immune response and allows for combination vaccines. Three, transmission advantage: DNA has a greater capability to induce T cell activity against infected cells. We have the option in our vector for co-expression of immune modifiers to further strengthen the immune response and decrease the risk of viral shedding. Four, safety and convenience: our systemic delivery systems present no risk of genotoxicity; there is no virus involved or risk of cytotoxicity. There also is no device needed, which improves treatment compliance and makes it very convenient to handle immunization campaigns with suitability for potential pandemic control. And five, flexible manufacturing: we are developing a truly versatile platform, enabling rapid response to changing pathogens, with much better stability and shelf life than mRNA, at workable refrigerated temperatures versus deep-freeze temperatures, which simplifies handling and distribution. The data we have generated to date is extremely encouraging. In proof-of-concept mouse immunogenicity studies, we have demonstrated robust IgG neutralizing antibody and T cell responses with our PLACCINE vaccines. The data also demonstrated the ability of our PLACCINE vaccines to protect SARS-CoV-2 mouse model in a live viral challenge. In the study, mice were vaccinated with a PLACCINE vaccine expressing the SARS-CoV-2 spike antigen from the D614G variant, the Delta variant, or a combination vaccine expressing both variants. All these vaccines were found to be safe and elicited IgG responses and inhibited the viral load by 90% to 95%. The key exciting finding is that our bivalent vaccine was equally effective against both variants of the SARS-CoV-2 virus we tested. The murine model data also suggests that our approach provides not only flexibility but also the potential for efficacy that is at least comparable to benchmark mRNA commercial vaccines, with durability of protection expected to exceed six months. These encouraging results from the mouse study form the basis of a non-human primate challenge study; the partial results from this ongoing study were reported last month. In the study, we are examining a single plasmid DNA vector containing the SARS-CoV-2 spike antigen from the D614G variant that is formulated with a systemic DNA delivery system and administered by intramuscular injection. We've vaccinated Cynomolgus monkeys with either the PLACCINE vaccine or a commercial mRNA vaccine 3 times over 84 days. Analysis of blood samples for IgG and neutralizing antibodies showed evidence of immunogenicity both in the PLACCINE and mRNA vaccinated subjects. In a head-to-head comparison, the protection efficiency as measured by viral clearance following challenge with the SARS-CoV-2 virus was equivalent between PLACCINE and a commercial mRNA vaccine. We look forward to the completion of this study and the final report by the end of this year. Additionally, in an ongoing stability study, the physicochemical properties and immunogenicity of the PLACCINE vaccine did not change during storage at 4 degrees Celsius for up to six months. It is a clear advantage over our mRNA vaccines with respect to transport and flexibility. So what is next for PLACCINE? Given the highly encouraging data to date and the potential for key commercial advantages of our existing vaccines, we have moved to broaden and strengthen the platform, and we entered into an agreement with Acuitas Therapeutics to evaluate our PLACCINE nucleic acid constructs formulated with their proprietary lipid nanoparticle delivery system, or LNP. Acuitas is known for its LNP systems for mRNA vaccines and has worked with Pfizer-BioNTech on their commercial vaccine. Our work with Acuitas will focus on various LNP formulations for gene expression and immunogenicity in murine models. The combination of our technologies will expand our delivery portfolio, thereby enabling us to pursue a broad spectrum of formulation capabilities and delivery modalities with greater potential to improve currently available vaccines against a multitude of pathogens and also to develop novel cancer vaccines. Now that our proof-of-concept studies using SARS-CoV-2 have yielded highly promising results, we are considering an option to develop a multivalent PLACCINE DNA vaccine as a SARS-CoV-2 booster vaccine and expanding the PLACCINE vaccine to other pathogens. With respect to developing a SARS-CoV-2 booster vaccine and selecting the next pathogen for development, last week, we held a discussion with the Biomedical Advanced Research and Development Authority (BARDA), the division of HSS responsible for strategic preparedness and response. Our discussion with BARDA focused on the characteristics of PLACCINE for developing the vaccines of the future. Our presentation was very well received, with a clear indication that Imunon has made real progress making plasmid vaccines more effective. They were impressed with our ability to make DNA technology a potential strong contender in further vaccine development. While our near-term plan is to request a pre-IND meeting for a COVID booster based on the next variant of interest, we also plan to find a second IND for another pathogen. We are looking for BARDA’s input on the vaccines of the future and hope to receive some non-dilutive funding from them to apply to our development programs. I have used the term vaccines of the future, and that is exactly what our vision is: to be the provider of safe and effective vaccines of the future that are superior to current vaccines in durability and breadth of protection, stability at workable temperatures, speed in the manufacturing process that allows for a quick response to changing pathogens, and better compliance for mass immunization without the need for a device or virus. Now let's turn to our clinical oncology program, which utilizes GEN-1 developed from our TheraPlas modality. As you know, GEN-1 is a DNA plasmid that is administered into the abdomen of patients to induce cells to manufacture the potent natural immunomodulating agent Interleukin 12, or IL-12. Our clinical studies have established that GEN-1 produces IL-12 and is favorably impacting the tumor microenvironment. These data were published in the Journal of Cancer Clinical Research in 2021 and are the basis of the OVATION 2 study. The OVATION 2 study is designed to determine how safe and active GEN-1 is in patients with advanced ovarian cancer who will be undergoing neoadjuvant chemotherapy or NACT, which is designed to shrink the tumors as much as possible for optimal surgical removal. Following surgery, another three cycles are administered to address any remaining tumor. In the OVATION 2 study, GEN-1 is added to standard NACT to boost the natural immune response to the cancer. OVATION 2 is a randomized Phase II study that compares patients treated with standard neoadjuvant chemotherapy against patients receiving standard NACT plus GEN-1. The results of this study will help us determine the course of registration for GEN-1 in ovarian cancer. As previously announced, 110 patients from more than 20 centers in the U.S. and Canada have been enrolled in this study. It is important to note that since the OVATION 2 study was initiated several years ago, a new class of drugs called PARP inhibitors have been approved that benefit ovarian cancer patients who have a significant gene mutation called BRCA-positive or HRD. When we focus on the BRCA-negative patients who have not received the PARP inhibitors, we can see that GEN-1 is providing a progression-free survival benefit. This data is interim and is not statistically significant, but it serves as a foundation for interest in continuing evaluating the BRCA-negative population and initiating combination studies with other therapies, such as AVASTIN or checkpoint inhibitors. The interim data has been reviewed by our independent data and safety monitoring board and experts in the field of ovarian cancer. They agree that the safety of GEN-1 is acceptable and that the data supports the continuation of our clinical studies and exploration of combination regimens. We expect topline data from the OVATION 2 study in mid-2024. This timing, however, depends on how quickly patients progress in their disease. As previously announced, we are working in partnership with the Break Through Cancer foundation with MD Anderson and three major key centers to initiate a combination study of GEN-1 with AVASTIN in patients who are newly diagnosed with advanced ovarian cancer. The preclinical data supporting this combination is very exciting and is being prepared for submission at an upcoming cancer conference in 2023. We hope to enroll our first patient in the first half of 2023. We are also preparing a Phase I/II study with GEN-1 in combination with checkpoint inhibitors, as the results of exciting preclinical data should be published in the coming months. The FDA has accepted this protocol; however, in consideration of the need to conserve capital, we might delay the start of this study. So as I have just described, we have a thoughtful and thorough plan for GEN-1 for the treatment of advanced ovarian cancer. Before I turn the call over to Jeff Church for his review of our very strong financial position, I want to emphasize that our long-term vision is to create a new category of medicines based on our plasmid DNA technology across a broad array of human diseases. We are starting in immuno-oncology and infectious diseases, and we will continue to invest to fully characterize the platform and to advance the technological frontier of plasmid DNA. Now I will turn the call over to Jeff.

Jeffrey Church, CFO

Thank you, Corinne. Details of Imunon's third quarter 2022 financial results are included in the press release we issued this morning and in our Form 10-Q, which we filed today before the market opened. Imunon ended the third quarter of 2022 with $43.4 million in cash, investments, restricted cash, and accrued interest receivable, along with future planned sales of the company's state of New Jersey net operating losses. We believe we have sufficient capital resources to fund our operations into early 2025 at our current spending rate. Over the past four years and without any dilution to our shareholders, we have raised over $16 million from NOL sales, and we have a further $3.5 million of unused NOLs available for sale over the 2022 to 2024 time period. We are in a strong position with respect to liquidity to support operations through several important value-creating milestones. Let me now turn to our third quarter and year-to-date financial results. For the quarter ended September 30, 2022, Imunon reported a net loss of $6.1 million, or $0.87 per share. This compares with a net loss of $5.4 million, or $0.94 per share, for the third quarter of 2021. Operating expenses were $6.3 million for the third quarter of 2022, which is up $1.1 million, or 21%, from the third quarter last year. Breaking this down by line item: Research and development expenses were up $2.4 million, down slightly from the $2.5 million a year ago. Research and development costs associated with the development of the plasmid DNA vaccine platform as well as the GEN-1 OVATION 2 study increased to $1.5 million for the current quarter, up slightly from the $1.3 million a year ago. Costs associated with the OPTIMA Phase III study were $0.1 million in the current quarter, which represented expenses associated with closing out this discontinued study. Other clinical CMC and regulatory costs were $0.8 million in the third quarter of this year compared with $1 million for the comparable period in 2021. General and administrative expenses were $3.9 million for the third quarter of 2022 compared to $2.7 million in the third quarter of 2021. This $1.2 million increase was primarily attributable to higher legal costs to defend various lawsuits filed after the announcement of the OPTIMA Phase III study results in 2020 and higher compensation expenses resulting from the CEO succession plan announced in July 2022. Offsetting these higher G&A expenses were lower non-cash stock compensation expenses. We had non-operating income of $26,000 in the third quarter. This compared to non-operating expense of $300,000 a year ago. This improvement largely was attributable to lower interest expense under our loan facility with Silicon Valley Bank and higher income from invested capital in the current quarter. On a year-to-date basis, net cash used for operating activities was $18.1 million, which compares to $11.4 million in the same period of 2021. This increase was primarily due to the one-time payment of $4.5 million in interest expense related to the sale and subsequent redemption of $30 million of Series A and B redeemable preferred stock in the first quarter of 2022 and another $100,000 in costs related to the special meeting of shareholders held in February 2022. The special meeting of shareholders was necessary to ensure that the company had an adequate number of authorized shares to continue funding our R&D initiatives. Excluding these one-time expenditures, cash used in operations was $13.5 million in the first nine months of 2022, which is in line with our projections. Cash provided by financing activities of $6.3 million from the first nine months of 2022 resulted from a registered direct offering in April 2022 that was priced at the market with new warrants. We also received net proceeds of $1.4 million from the sale of NOLs in February 2022. Our projected cash utilization for the balance of 2022 is approximately $5 million for the fourth quarter of 2022. I would now turn the call back to Corinne.

Corinne Le Goff, CEO

Thanks, Jeff. In closing, I want to mention that since I joined Imunon back in the summer, I have been highly impressed by the commitment of our talented scientists, clinicians, and staff to bring a new class of medicine to patients and the medical community. In doing so, we will also create great value for our shareholders. So with that overview of our business and our recent financial results, we are ready to open the call to your questions. Operator?

Operator, Operator

Thank you very much. We will now begin the question-and-answer session. Thank you. And our first question comes from Emily Bodnar from H.C. Wainwright. Please go ahead, Emily.

Emily Bodnar, Analyst

Hi, good morning, and thanks for taking my question. I have a couple. So I want to talk about the COVID program, and you kind of mentioned your plans to evaluate the vaccine and the new booster. So can you just discuss if you need to show proof-of-concept in one of the established variants first prior to doing a clinical study for a booster program? And are you kind of looking to evaluate an Omicron variant similar to the Pfizer and the Moderna vaccine boosters – or are you kind of waiting to see some new variant approaches? And are you still planning to seek a partner for this program? Or are you kind of at this point looking to evaluate it yourself?

Corinne Le Goff, CEO

Thank you, Emily, for these questions. As I mentioned, we now believe we have a modality that is strong enough to start thinking about an IND for a COVID booster, which seems obviously logical because most of the world population has either been vaccinated or had the infection – so that's our focus and potentially another IND for another pathogen. Now what we want to do, obviously, is have a pre-IND meeting with the FDA, and that will drive how we go about developing this booster strategy. So your point about needing to show proof-of-concept for established variants is correct, and we will be having discussions with the FDA about the kind of variants they want to look at and what could be of interest moving forward. So that will be part of the discussions we're going to have with them. Khursheed, you might want to add a few things.

Khursheed Anwer, CSO

Yes. No exactly, Corinne. As you know, the new variants are emerging; they are the BQ.1, BQ1.1, and XBB on the horizon. So clearly, we will be getting some feedback from the FDA on what makes the most sense in terms of combination. We do have preclinical studies ongoing with the Omicron combination with Delta, specifically with BA.1. But as Corinne said, we need feedback from the FDA on that. Our research is ready to plug in any variant that would be of interest to move forward as a booster.

Emily Bodnar, Analyst

Got it. Okay. And are you still seeking a partner for the COVID program? Or do you think you would move forward yourselves?

Corinne Le Goff, CEO

Yes. We definitely would like to seek partnerships in the future for development, simply because, as you know, developing a vaccine clinically takes resources and requires many patients. We now feel that we have enough data from our PLACCINE modality so that we can seek partnerships. As I mentioned, our NHP study is still ongoing, so we'll have the final results by the end of the year.

Emily Bodnar, Analyst

Okay. And maybe a last question. Could you just discuss the Acuitas agreement a bit more and how you're planning to utilize their LNP delivery system? Would you utilize that in your COVID program, or are you kind of looking to do that more on the cancer side? Thanks.

Corinne Le Goff, CEO

Khursheed, if you want to comment on this one?

Khursheed Anwer, CSO

Sure. Yes. So Emily, as we have said earlier, we have very impressive data with the current formulation that we have with SARS-CoV-2. On the basis of these encouraging data, we're considering expanding our platform and possibly exploring different routes of delivery. So that's why we want to expand our portfolio and not leave any stone unturned. LNP, as you know, there’s a commercial vaccine. So right now, this is more of a platform enrichment approach to see what we can do with LNP with plasmid DNA. But currently, our formulation is proposed to go forward for SARS-CoV-2 as we know today. But clearly, LNP will give us a little bit more breadth and further potential for either delivery or different pathogens to have that under our belt. It's mostly a platform expansion.

Emily Bodnar, Analyst

Perfect. Got it. Thanks so much.

Operator, Operator

And we have a question now from James Molloy from Alliance Global Partners. Jim, please go ahead.

James Molloy, Analyst

Hey guys. Thanks for taking my questions. I had a question on the Acuitas Therapeutics agreement side; are there any monetary considerations that go back and forth between them or any sort of hard and fast lockups on the deal?

Corinne Le Goff, CEO

Khursheed, do you want to comment on that?

Khursheed Anwer, CSO

Yes, sure. Of course. So right now, Jim, the agreement with them is more exploratory. We will be looking at their technology for fit with plasmid DNA. As you know, there is a lot more information on LNP and mRNA-based systems. So at this stage, it is more about assessing if that’s valuable for us in an exploratory model. If there's attractive data, then we can discuss other terms such as monetary considerations, but right now, it's very much to see how that works well with plasmid DNA as well. It's very exploratory at this stage.

James Molloy, Analyst

Understood. Thank you. And could you characterize how the partnership environment looks for the PLACCINE DNA? And perhaps the landscape a little bit regarding the closest competitor, if anyone, to you guys in the DNA space, and who's the most interested or potentially could be the most interested? Or will it be a deal for you guys to sign up as a partner for PLACCINE going forward if things progress as you hope they will?

Corinne Le Goff, CEO

Jim, that's a very good question. I think I can convey the discussions we had with BARDA the other day last week because I believe that we have made a lot of progress in the name of DNA. They were quite impressed with our results regarding the delivery of gene expression. That opens the door to a completely new class of medicines, starting with prophylactic vaccines, for sure, as we showed them. That was the purpose of our conversation with them: to demonstrate the potential of plasmid DNA in the face of new pathogens. Yes, there is tremendous interest from BARDA and from other players in looking at new technologies that will address the changing world of pathogens going forward.

Khursheed Anwer, CSO

Yes. If I may add, so the current DNA landscape is device-based, and for vaccines, of course, prophylactic vaccines can't be effectively administered with devices that have poor compliance. There is one approved device-based vaccine in India, and there are viral vectors used to deliver DNA vaccines, which have their own complications. Our approach is devoid of any devices or viral vectors, making it potentially safer and significantly more compliant. So we hope to get more traction in terms of partnership where there's a greater need for safer and better compliant delivery of DNA vaccines.

James Molloy, Analyst

Absolutely. I couldn't agree more. Thank you for taking the questions.

Operator, Operator

And we now have a question from David Bautz from Zacks Small-Cap Research. David, please go ahead.

David Bautz, Analyst

Hey, good morning everyone. I have a couple of questions on PLACCINE. How did the antibody and T cell responses compare between the PLACCINE vaccinated animals and the mRNA vaccinated animals? And I'm also curious if you have any data on how long animals immunized with PLACCINE were still making antigen. Basically, I'm trying to see how long the vaccine stays active following immunization. Thanks.

Khursheed Anwer, CSO

Yes. Very important questions. So we have done a side-by-side comparison with the commercial mRNA vaccine, both in rodents and non-human primates in preclinical studies. In rodents, we have seen very comparable IgG levels and T cell responses. The benefit we have seen is with our bivalent vaccine; we have seen effective vaccination against both variants. However, with the commercial vaccine, the IgG levels of neutralizing antibodies are not as effective against the mutated variant because those vaccines were designed for the wild-type virus. In terms of clearance, similar clearance has been observed, as Corinne mentioned in the remarks that it is 95% to 99% clearance. We did a head-to-head comparison in NHP with commercial mRNA, where clearance was very comparable. Regarding durability, we've initiated a durability study where we're evaluating neutralizing antibody responses following PLACCINE. We're testing two single-antigen vectors and one bivalent vector, and we are now at eight months, with no significant drop in neutralizing antibodies observed at this duration. Ongoing studies will provide data beyond that. The stability study also shows favorable results: it remains stable at four degrees Celsius, which is an advantage over mRNA vaccines.

David Bautz, Analyst

Okay. Great. And a quick question on the OVATION 2 study. What updates, if any, should we expect between now and the release of the data on the primary outcome?

Corinne Le Goff, CEO

Thank you, David. I will ask Dr. Borys to comment. As you know, it's a one-to-one randomized open trial, so we have some data cuts that we can discuss when the time is right and when the data is mature enough.

Nicholas Borys, CMO

Yes. Thank you for that question on the OVATION 2. As Corinne announced today, we had an interim analysis of our data. We're at about mid-point in terms of our data collection, with approximately 50% of our primary endpoint collected. And as Corinne mentioned, we are observing good activity, which provides us with confidence to move forward in the studies that she indicated. Looking ahead, we expect final data approximately around the middle of 2024. We will be doing data cuts in the meantime, but we have not made an announcement yet on when our next data cut will occur; we will share that as soon as it has been established.

David Bautz, Analyst

Okay. Thanks for taking my questions.

Corinne Le Goff, CEO

Thank you, David.

Operator, Operator

Thank you. And this concludes our question-and-answer session. I would like to turn the conference back over to Corinne Le Goff for any closing remarks.

Corinne Le Goff, CEO

Thank you all for your time this morning. I trust we conveyed our excitement about the potential for our platform technologies. We look forward to keeping you informed of our progress. Please note that we will be participating in ELIA's Global Virtual Conference on November 30 and December 1. Please contact AGP if you would like a one-on-one meeting, and we hope to see some of you in San Francisco as we prepare to hold one-on-one meetings concurrent with the JPMorgan Healthcare Conference during the second week of January. Please contact our IR firm, LHA, to schedule a meeting. We will speak with you again when we report our 2022 fourth quarter financial results in March. Have a very nice rest of the day. Thank you.

Operator, Operator

And the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.