Earnings Call Transcript - IMNN Q1 2023

Operator, Operator

Good morning, and welcome to the Imunon First Quarter 2023 Financial Results Conference Call. Please note, this event is being recorded. I would now like to turn the conference over to Kim Golodetz. Please go ahead.

Kim Golodetz, Investor Relations

Thank you, and good morning, everyone. This is Kim Golodetz with LHA. Welcome to Imunon's 2023 First Quarter Financial Results and Business Update Conference Call. 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 words 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. I also caution that the content of this conference call is accurate only as of the date of the live broadcast, May 11, 2023. 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, Imunon's President and Chief Executive Officer. Corinne?

Corinne Goff, President and 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, will be available during the Q&A session at the end of our prepared remarks. Today, I will provide an update on our development programs with our prophylactic vaccine modality and with IMNN-001, which was previously known as GEN-1, our interleukin 12 immunotherapy for the treatment of advanced ovarian cancer. During our last conference call in March, I reminded investors of our key strategies in some detail. I'll do so again briefly today because I believe it is important for investors to understand where we are going as a company and our vision for the future. Then I'll provide an update on our various programs. Imunon is tightly focused on harnessing the power of the immune system by developing novel DNA-based approaches in immuno-oncology and infectious disease. We believe that nonviral DNA will be a key driver of the future of global medicines. I say that because nonviral DNA has the potential to help create an unprecedented abundance and diversity of medicines that are currently beyond the reach of recombinant and protein technology. Our platform does not require a device or a virus for facilitating DNA delivery. In addition, our medicines can be easily redosed, manufacturing is straightforward and scalable and the administration to patients does not require painful electroporation. Our strategy is designed to deliver on the full scope of the nonviral DNA opportunity over the long term, reaching patients with DNA medicines requires us to make several clear choices, including how much capital we devote to platform and modality development, drug development and infrastructure, which programs we advance and how, whether we advance programs alone or with strategic collaborators and which capabilities we build internally and which do we outsource. To navigate these choices, we established four strategic principles that guide our approach to creating value for patients and investors. First is our focus on immuno-oncology as an asset development opportunity. Our strategy is to pursue indications characterized by a high disease burden and substantial unmet medical need, where an immunological approach can improve both the risk of progression and survival compared with the current standard of care. IMNN-001 is an example of one such asset. It is our first plasmid system developed from our TheraPlas modality for the expression of proteins and cytokines. 001 expresses IL-12. IL-12, as you know, is a cytokine that potentially stimulates both natural killer cells in the innate immune system and CBA T-cells in the adaptive immune system. The NC2 expression of IL-12 activates sugar suppressing immune response with a good safety profile. 001 is currently in a Phase II study in advanced ovarian cancer. This program is a clear example of how Imunon is pushing the boundaries of innovation in a difficult-to-treat tumor type. We are now developing the second modality for the development of personalized neoantigen cancer vaccines. This new modality is based on antigen selection and optimization, along with the option to include a potent immune modifier on a single nucleic acid sector. It represents a promising strategy to induce specific and long-lasting immune response against tumor antigens. It is also a logical extension of our prophylactic vaccine modality. We just started a program in the melanoma model in mice, and we will keep you updated on our progress. Developing our planned prophylactic vaccines modality as an out-licensing and partnership opportunity is the second prong to our business strategy. As I described last quarter, the need for new vaccine technologies is urgent with fewer than 5% of pathogens having a commercially available vaccine. We discover new pathogens and viruses every day. More than 80 pathogenic viruses were actually discovered since 1980. So clearly, the market for vaccines is enormous. Even before COVID, the global market for prophylactic vaccines was about $35 billion, and it's expected to reach $125 billion in 2028. The reason we are so excited about the TheraPlas modality is because it has several characteristics that may address the shortcomings of current vaccine technologies. For example, it is engineered to be easily modified to create vaccines against a multitude of infectious diseases with benefits that include durability of protection, transmission advantage, safety and convenience, flexible manufacturing and stability at standard refrigerated temperatures. These attributes are also acknowledged by various global health authorities. The efficiency of a plug-and-play strategy is extremely valuable against emerging pathogens. Our objective is to establish the safety and efficacy of our platform in a Phase I human study and then seek to out-license this powerful technology and/or to establish non-dilutive partnerships to develop vaccines for pathogens of interest. We've had productive conversations, and we will continue to have conversations with various government agencies to ensure we are pursuing the most urgent and important pathogens. We are delighted with the reaction we have received from these agencies regarding our progress in making DNA vaccines more effective and more appealing. Our third strategic principle focuses on the vertical integration of the core elements of our business. Our goal here is to attract the interest of corporate partners while minimizing dependence on vendors so that we can control costs, timelines, and quality. Our range of capabilities is impressive. For example, our scientists can select any protein from the human or pathogen proteome to be engineered. We have R&D laboratory testing capability to support product and method development. We have GMP QC laboratory to test raw materials, finished products and to conduct our stability studies. Our labs also have the capacity and expertise to conduct testing and to run experiments in a variety of animal disease models. We have developed in-house pilot scale manufacturing capabilities for DNA plasmids and nanoparticle facilitating systems. The next step in our vertical integration strategy is to build upon our pilot scale capabilities to produce Phase 1 GMP materials to allow Imunon to control all aspects of product design, testing and manufacturing meaning a complete bench-to-bedside capability. In addition, owing to our strategic investment in Transonic Technologies, we are now able to construct vaccines against novel variants in just weeks using a comprehensive array of CRISPR RNA and gene expression tools and services. Our vertical integration strategy has allowed us to reduce costs and timelines by more than 75%, while creating a reliable, high-quality, and predictable supply chain. Lastly, our fourth pillar, which is the bedrock of our long-term business model, concerns strategic collaborations. Joining forces with partners is a great way to expand our capabilities, accelerate the development of our programs and obtain non-dilutive funding to execute our strategy. All these internal capabilities will allow us to control both the cost and development timelines in support of our goal to attract corporate partners. To that end, we have formed several important collaborations in recent months. In January, we signed our first collaborative research agreement with the Wistar Institute to develop new vaccine formulations for infectious diseases using our TheraPlas modality. Wistar is a global leader in biomedical research, and our agreement is with their vaccine and immunotherapy center. This builds upon our collaboration with the biotechnology company, Acuitas Therapeutics, which is focused on developing delivery systems for nucleic acid vaccines and therapeutics based on lipid nanoparticles, an agreement we entered into in November 2022. We also formed an alliance with the Breakthrough Cancer Foundation that allows us to obtain non-dilutive funding to initiate new innovative clinical programs in niche indications like ovarian cancer. We expect the first patient to be enrolled in a few weeks in a 50-patient Phase I/II study with IMNN-001 in combination with bevacizumab, otherwise known as Avastin in advanced ovarian cancer. First, at the University of Texas and the Anderson Cancer Center. Later, we expect additional participation at the Sidney Kimmel Comprehensive Cancer Center at Johns Hopkins and at Memorial Sloan Kettering Cancer Center. The Core Institute for Integrative Cancer Research at MIT, Massachusetts Institute of Technology will provide artificial intelligence services throughout the trial, including biomarker and genomic analysis, which is expected to expand the company's knowledge of the treatment paradigm. The Breakthrough Cancer Foundation is partially funding the study. We were delighted that our work was presented at several important conferences during the first quarter. We presented very promising preclinical data for our TheraPlas modality at the Vaccine Technology Conference mid-2023. Dr. Khursheed Anwer, our Chief Scientific Officer, reviewed the company's work in advancing our TheraPlas modality and the promising preclinical data generated to date. Among the topics presented was the ability of this multivalent technology to achieve broad spectrum immunity from a single DNA plasmid with a robust delivery system. This ability is independent of virus, device, or lipid nanoparticle formulations. The preclinical data presented checked the box on many desirable features that would characterize the next-generation vaccines. Our vaccine demonstrated robust immunogenicity and protection in preclinical models, comparable protection activity to a commercial mRNA vaccine in a booster dose comparison, and durable cellular and humoral responses detectable for more than 12 months. I want to point out that such a robust similar response extending beyond a year is an important advantage. We have also demonstrated that our vaccine creates memory cells that provide an additional layer of protective immunity and contributes to protection against severe disease. Lastly, our TheraPlas modality has important distinguishing advantages for commercial vaccines, including a shelf life at 4 degrees for greater than nine months and the ability for simple, rapid, and scalable manufacturing. Based on this compelling data in March, we applied for a pre-IND consultation with the U.S. FDA to receive guidance on our proposed program for our TheraPlas booster vaccine. We expect to submit an IND application in the fourth quarter of this year. Again, our objective is to establish the safety and efficacy of our platform in a Phase I human study and then seek to license this powerful technology to pharmaceutical companies for the utilization of our platform and/or to establish non-dilutive partnerships to develop vaccines for pathogens of interest. Subsequent to the end of the first quarter in April, Dr. Jean Boyer, Imunon's Vice President of Preclinical Research presented a poster at the prestigious American Association for Cancer Research, AACR Conference. Dr. Boyer reported that IMNN-001 demonstrated stimulation of the immune response in the IDA ovarian tumor model. Of the three dosing regimens tested, the once every 2-week regimen demonstrated comparability to the weekly regimen while showing superiority to the once every 3-week regimen, particularly with respect to tumor burden. Thus, exploring once every 2-week doses of 001 in human studies is warranted. It is an important step in developing the least cumbersome and best cancer treatment regimens to improve patient acceptability and compliance. Before I turn the call over to Jeff Church for his financial review, I want to outline several value-creating milestones we expect over the next 6 to 18 months. Building upon our compelling interim results with our Phase I/II OVATION 2 study in Stage III/IV ovarian cancer, which reached full enrollment of 110 patients last year, we expect to report an additional set of substantial interim data in the second half of 2023. Then we expect to report top-line results by mid-2024. As a reminder, interim data for this study reported a year ago, indicated improvement in surgical resection rates and CRS III chemotherapy response scores compared to the control arm. Also in the second half of this year, we expect to file the IND for our TheraPlas 2 vaccine and announce proof-of-concept vaccine data for our new programs. Moving to the first half of 2024, we'll be sharing first results for our TheraPlas 2 study and interim results for the combination study of 001 and bevacizumab. Now I'll turn the call over to Jeff.

Jeffrey W. Church, CFO

Thank you, Corinne. Details of Imunon's first quarter 2023 financial results were 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 first quarter of 2023 with $37.3 million in cash and investments. Cash provided by financing activities of $2.5 billion during the quarter was from equity sales under our at-the-market equity facility. We also received net proceeds of $1.6 million during the quarter from the sale of our 2021 New Jersey net operating losses, which leaves us with about $1.9 million remaining of these NOLs to sell later this year. Including these future planned NOL sales, the company believes it has sufficient capital to fund its operation into 2025, which will take us through several important value-creating milestones. The comments I delivered about the public equity markets during our fourth quarter conference call in late March are still relevant. Over the past few years, we have been opportunistic with respect to raising cash, and this leaves us in a much better position than many other development-stage biotechs. That said, our long-term growth plans do include raising funds from both equity and non-dilutive sources of capital, including the collaborations and partnerships Corinne mentioned earlier in this call. We continue to monitor the public equity markets with the hope that markets will begin to improve shortly. During the first quarter of 2023, we used $4.1 million in cash to fund operations, down from $8 million in the first quarter of last year. This decrease was primarily due to the one-time payment in the prior year quarter of $4.5 million in interest and operating expenses resulting from the sale and subsequent redemption of $30 million of convertible redeemable preferred stock. Let me now turn to our financial results. For the first quarter of 2023, Imunon reported a net loss of $5.6 million or $0.68 per share. This compares with a net loss for the first quarter of 2022 of $10.5 million or $1.82 per share. Operating expenses were $5.7 million in the first quarter of 2023, which is down 5% from $6 million in the first quarter of 2022. Breaking expenses down by line item, research and development expenses were $2.6 million in the first quarter of 2023, a decrease of $0.5 million from $3.1 million from the prior year's first quarter. More specifically, R&D costs associated with the development of the TheraPlas DNA vaccine technology platform as well as the OVATION-2 study decreased slightly to $1.7 million compared to $1.9 million in the year ago. Other clinical and regulatory costs were $0.3 million compared to $0.8 million in the prior year. CMC or manufacturing costs increased to $0.7 million from $0.3 million a year ago due to higher costs related to the development of in-house pilot manufacturing capabilities for DNA plasmids and nanoparticle delivery systems. General and administrative expenses were $3.1 million in the first quarter of 2023, compared to $2.9 million in the comparable prior year period. This increase is primarily attributed to a lower noncash stock compensation expense, offset by higher professional fees, including legal fees to defend various lawsuits filed after the announcement in July 2022 of the OPTIMA Phase III study results, higher compensation expenses related to the CEO succession plan that we announced last July and higher overall staffing costs. Other non-operating income was $93,000 in the first quarter of this year, which compared to other non-operating expenses of $4.6 million in the prior year period. In the first quarter of 2022, the company incurred one-time charges amounting to $4.5 million, which I had mentioned related to the preferred stock offering. In addition, the company incurred higher interest expense on its loan facility with Silicon Valley Bank in the first quarter due to rising interest rates. This facility has since been assumed by First Citizens Bank under the same terms as the previous loan facility. On April 21, 2023, the company elected to repay this loan to First Citizens Bank for a total payment of $6.4 million, which included principal, interest, prepayment fees and end-of-term payments. The $6 million collateral account, which we had classified on our balance sheet as restricted cash was released and utilized to pay off the loan. Interest income from the company's short-term investments increased by $0.3 million in the first quarter of 2023 compared with the prior year due to higher returns on our short-term investments. As I indicated last quarter, we continue to expect operating expenses for the year to be approximately $20 million to $22 million for the full year with the majority of expenses related to the development of our next-generation vaccine platform. I will now turn the call back over to Corinne.

Corinne Goff, President and CEO

Thanks, Jeff. We have been using the phrase 'vaccine of the future' to describe our work, 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, rapid manufacturing to respond to evolving pathogens, and better compliance for mass immunization with no need for a device or a virus vector. I am delighted with our progress in support of this vision, which calls for the creation of a new category of medicines based on our nonviral 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. We will leave large clinical trials to partners with the resources to conduct them, and we will view each program with an eye toward a licensing transaction. In doing so, we will also expect to create considerable 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

Our first question is from Emily Bodnar with H.C. Wainwright.

Emily Bodnar, Analyst

I'm curious if the pre-IND meeting with the FDA was scheduled? Or has that already occurred? And then maybe if you could just comment on how you think about the market opportunity for a seasonal COVID booster now that people aren't really getting vaccines as much. So curious how you think about long-term use of the COVID vaccine. And then it sounds like based on your commentary, you could potentially initiate a Phase I study in early 2024. Is that timeline unreasonable?

Corinne Goff, President and CEO

Thank you, Emily, for your question. So regarding the pre-IND meeting, as I mentioned, we submitted our pre-IND package in March. We do not necessarily expect a meeting; we expect definitely feedback from the FDA that will come this month, I believe, in May. As you know, the FDA does not grant many pre-IND meetings anymore. So that's the expectation. If everything is on schedule, then to go to your last question, yes, we would be in a position of filing an IND at the other end of the year, potentially starting the Phase I even this year, if possible, or early next year. That's our plan. You are asking also about the market opportunity for the seasonal booster. So yes, there is a great demand from regulators, which has been expressed by the FDA early this year. You might remember that the FDA had a VPAC meeting in January where they specifically requested that moving forward, the COVID boosters be seasonal, so only once a year, not a boost every 4 to 6 months. The process they propose is that in June, they would select the strain to be put into manufacturing for the vaccines, with the boosters being available for the fall and winter season. In that context, there is obviously a market for a COVID booster that is more durable than the current commercial vaccines. You can imagine that specifically in certain patient populations, namely the elderly or those who are immunocompromised, a COVID vaccine will be necessary. I also want to point out that the fact we are looking at developing a vaccine that would demonstrate good cellular immunity would be a plus for this population.

Operator, Operator

The next question is from James Molloy with Alliance Global Partners.

James Molloy, Analyst

My question is about the fourth quarter. Is the guidance a bit lower than what was projected earlier? Is the IND filing for the fourth quarter of this year still on track, or has it been delayed slightly from what we expected?

Corinne Goff, President and CEO

Yes, it is in flux. It is.

James Molloy, Analyst

Then when we're looking at the top-line data coming out mid-next year, how do you help us handicap what the data, good data or bad data, would you anticipate seeing coming up next year?

Corinne Goff, President and CEO

So regarding the top-line data for our OVATION 2 program, we'll see the results that we get. As you might remember, Jim, we showed early cut data back in September. So again, it was very mature data because we only had 50% of the events, right, an event being a patient progressing. But what we showed at that point in time is that we actually showed good signals in terms of surgical resection rates and CRS 3 which is encouraging. However, based on those early data, you cannot conclude anything really. So we have another cut of data this year when we reach about 75% of the events. That's what we are planning to do, which should give us another indication there as well.

James Molloy, Analyst

Then you mentioned partnerships, how would you characterize the partnership environment currently?

Corinne Goff, President and CEO

The partnership environment, I can't characterize the environment of partnerships. I can only reflect on the interest that we get regarding our technology. We've had the opportunity to present our data to BARDA, for instance, back in November. Subsequent to this meeting, we had further conversations with the agencies, even as recently as this week, and I can tell you that there is interest in this technology for the development of the next generation of vaccines. As I mentioned during the call, there are several features that are of interest in developing the future vaccine. So we see interest for sure. The collaborative work that we have ongoing with the Wistar Institute is very productive. So we are quite pleased with the partnerships that we currently have in place.

Operator, Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Dr. Le Goff for any closing remarks.

Corinne Goff, President and CEO

Thank you. 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. Have a very nice afternoon. Thank you.

Operator, Operator

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