Earnings Call Transcript - IMNN Q2 2023

Operator, Operator

Good morning. My name is Alan, and I will be your operator today. I would like to welcome you to Imunon's Second Quarter 2023 Financial Results Conference Call. I will now turn the call over to Kim Golodetz. Please go ahead.

Kim Golodetz, Corporate Representative

Thank you and good morning everyone. This is Kim Golodetz with LHA. Welcome to Imunon's 2023 second 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 expect, anticipate, believe, 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, August 10, 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 Le Goff, President and CEO

Thank you, Kim. And good morning, everyone. Today, joining me is Jeffrey Church, our Chief Financial Officer. In addition, Dr. Khursheed Anwer, our Chief Science Officer, will be available during the Q&A session at the end of our prepared remarks. As I have discussed during previous calls, Imunon's growth and development is dependent on four pillars. The one I'd like to spend most of our time on today is the development of our PlaCCine prophylactic vaccines modality as an out-licensing and partnership opportunity. PlaCCine is our proprietary mono-or multi-cistronic non-viral and synthetic DNA technology for the expression of pathogen antigens. It is currently being evaluated in preclinical studies for the development of next-generation vaccines. We have made exceptional progress advancing this technology as a Prophylactic Vaccines modality with important features, both as a commercial product platform and as a potential solution to addressing the next pathogens of interest. I will review some of our most recent preclinical data with PlaCCine, which suggests this asset has been derisked and is performing as we anticipated. During the quarter, Dr. Anwer presented results from preclinical studies in a PlaCCine COVID-19 vaccine at the Vaccine Technology Summit Conference and the 2023 Virus and Cells Gordon Research Conference in Barcelona that demonstrated characteristics that address the limitations of current commercial vaccines by offering enhanced breadth of protection to emerging variants, persistence and robust cellular immunity, as well as stability at workable temperatures. Importantly, humoral immune responses specific to the SARS-CoV-2 spike antigen were persistent over a 14-month post-vaccination period, while the T-cell responses from PlaCCine COVID-19 vaccines after 14 months were higher than a commercial mRNA vaccine. In another mouse study, the humoral response to a single dose of a commercial mRNA vaccine plateaued within 14 days after vaccination, while the response continued to increase over time with a PlaCCine vaccine, demonstrating improved durability. We believe that our DNA Tested Vaccine will provide greater protection against reinfection, hospitalization, or death. More recently, we have shown that PlaCCine is stable for at least 12 months at refrigerated temperatures, and for at least one month at room temperature. I can't emphasize enough how important these attributes are to a commercial vaccine product, especially as many new pathogens may arise in geographies where there are challenges with refrigeration, storage, and distribution networks. In addition, our ability to rapidly switch out antigens and load multiple antigens into the same vaccine should be instrumental in addressing the spread of disease. Beyond the development of a next-generation COVID-19 booster vaccine which I will come back to in a minute, we at Imunon are interested in developing the PlaCCine modality across many pathogens of interest, like viral threats including arenaviruses, where a data-based approach may be beneficial. Today, the U.S. and global public health policy and commercial vaccine manufacturers continue to play catch-up with the reoccurrence of infectious disease spread and new emerging pathogens. Hemorrhagic fevers posed by viruses like Lassa, Marburg, or Ebola are prime examples and are among the most serious threats to public health, both in the endemic regions of West Africa and worldwide due to high mobility and mortality rates. These viruses cause lethal hemorrhagic fevers in several cases and are classified at risk such that they need to be handled in biosafety level 4 facilities. There are also potential biodefense threats that could be used as biological weapons against civilians. So, let's now turn to IMNN-001, our first Sanofi vaccine designed as the next-generation COVID-19 booster. All the preclinical studies in mice and NHPs have supported the development of the pre-IND application that we submitted earlier this year to the FDA. We have just received the written response from the FDA. I am pleased to tell you that the FDA provided encouraging feedback on our data and clinical development plan, which gives us comfort that we are well on track to submit an IND in the first quarter of 2024 and enter the clinic soon thereafter. The IND will be for a proposed Phase I/II program, which is designed to provide proof of principle in humans. The FDA also confirmed that the plug-and-play strategy for our platform was acceptable. This confirms the flexibility and versatility of our modality, which allows for the rapid production and deployment of any vaccine by simply changing the antigen coding cassette. IMNN-101 is a Moderna COVID-19 vaccine candidate of the Omicron XBB1.5 variant as per FDA recommendations. You remember that the FDA VRBPAC, the Vaccines and Related Biological Products Advisory Committee, met on June 15 this year to discuss and make recommendations for SARS-CoV-2 strains for updated COVID-19 vaccine use in the United States beginning in the fall of 2023. For the plug-and-play model using the Plasmid DNA backbone, it has shown excellent results, not only in COVID-19 strength, but our early work also suggests PlaCCine could be useful in monkeypox, also known as Mpox. Initial data appear to confirm the validity of PlaCCine as a platform with broad applicability. Mice immunized at 0 and 14 days with an Mpox vaccine initiated three separate hematological responses associated with the virus. We also have generated immunological responses against influenza and arenaviruses in preclinical work. Last quarter, I mentioned that we are developing two more modalities as a logical expansion of our prophylactic vaccine modality. FixPlas concerns the application of our DNA technology to produce universal cancer vaccines, also called tumor-associated antigen cancer vaccines. We have initiated preclinical work to develop a Trp2 and another tumor-associated antigen cancer vaccine in melanoma, which we call IMNN-201. 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 factor. This represents a promising strategy to induce a specific and long-lasting immune response against tumor antigens. We have completed our initial proof of concept study, working in animal models to determine potential cost-selecting benefits, including multivalent trip II or bivalent trip II NY-ESO-1 vaccines. We are very pleased with the results as the fixed class vaccination, followed by a tumor challenge, delayed tumor growth and improved survival. Now the therapeutic studies evaluating the strategic benefits of our vaccines, consisting of a tumor challenge followed by the vaccination, are ongoing and will be completed in the second half of the year. We are also in early discovery of our fourth modality, IndiPlas, for personalized neo-antigen cancer vaccines. I'd like now to touch on IMNN-001, our DNA-based immunotherapy for the localized treatment of advanced ovarian cancer currently in Phase II development. Recall that last September, we reached full enrollment of 110 patients, and we expect to report an additional set of interim, more mature data in the second half of 2023. Enrollment for our study with Break Through Cancer is now open at MD Anderson, and the Break Through Cancer Foundation is working to add more sites. This study, as you remember, is looking at IMNN-001 in combination with AVASTIN. As part of our strategy to reduce reliance on outsourced manufacturers, in June we unveiled our new CGMP clinical materials production facility on the Hudfeild Alabama Campus of the HudsonAlpha Institute of Biotechnology. The facility will support R&D efficiencies and lower development costs for infectious disease and cancer vaccines and non-viral data-based immuno-oncology therapies. This new capability complements our existing CGMP quality control facility for testing clinical products at the Hudfeild site. We have designed and built our own manufacturing capabilities to produce GMP-grade plasmid DNA and DNA facilitating agents to support Phase I/II studies with our PLACCINE infectious disease modality and our IndiPlas and FixPlas cancer vaccine modalities. The PLACCINE DNA and DNA activating agents are key components of the final vaccine formulation, with JMP fill-and-finish carried out at a CDMO partner site. Our scientists can now select any protein from the human or pathogen proteomes to be engineered. Our existing labs also have the ability to conduct testing and run experiments in a variety of animal disease models. These internal capabilities will allow us to control both the cost and the process. I will turn the call over to Jeff Church now, who will discuss our financial results. Then I'll come back and provide a review of upcoming milestones and activities. Jeff.

Jeffrey Church, CFO

Thank you, Corinne. Details of Imunon's second quarter 2023 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 second quarter with $24.1 million in cash, investments, and accrued interest receivable. Our cash or net cash usage for operating activities was $6.8 million in the second quarter of 2023, up from $5.4 million from the prior year period. The increase was primarily due to the cash settlement in April 2023 along with related legal costs for arbitration with a former contract manufacturer for ThermoDox. Cash used by financing activities of $6.2 million during the second quarter of 2023 resulted from the early repayment of the company's loan facility with Silicon Valley Bank. This was offset by equity sales under the at-the-market equity facility. Combined with the $1.8 million in planned future sales of Imunon State of New Jersey net operating losses, we believe we have sufficient capital resources to fund the company's operation through 2024. Let me now turn to a review of our financial results. Imunon reported a net loss for the second quarter of 2023 of $5.6 million or $0.61 per share. This compares with a net loss of $6 million or $0.87 per share in the second quarter of 2022. Operating expenses were $5.5 million in the second quarter of 2023. It was down about 10% from the $6.1 million that we reported in the second quarter of 2022. Let me break down each of these line items. Research and development expenses were $3.1 million in the second quarter of 2023, a decrease of about $100,000 from the prior year second quarter. More specifically, research and development costs associated with our PLACCINE DNA vaccine modality increased to $1.3 million from $600,000 a year ago. R&D costs supporting the OVATION study as well as the Phase III OPTIMA program decreased to $2.3 million from $0.8 million in the second quarter of 2022. R&D costs associated with the preclinical development of IMNN-001 decreased to $0.4 million in the second quarter compared to $0.8 million in the same period of 2022. Other clinical and regulatory costs were $0.4 million this year compared to $0.7 million in the prior year. CMC, or manufacturing costs, increased $0.7 million this year from $0.3 million, reflecting the development of the in-house pilot manufacturing capability, which Corinne referred to earlier for DNA plasmids and nanoparticle delivery systems. General and administrative expenses were $2.3 million in the second quarter of 2023, compared to $2.9 million for the comparable prior year period. This decrease was primarily attributable to lower non-cash stock compensation and lower professional fees, including legal fees, offset by higher compensation expenses related to the CEO succession plan, which we announced in mid-2022. Other non-operating expenses were $85,000 in the second quarter of 2023, compared to $65,000 in the prior year period. The company incurred an early debt extinguishment expense of $300,000 on its loan facility with Silicon Valley Bank, which was offset by higher investment income from short-term investments due to the higher returns we're seeing on these investments. Recall that in April 2023, we repaid the loan to First Citizens Bank, which was previously Silicon Valley Bank for a total of $6.4 million, which included principal interest, prepayment fees, and end-of-term fees. The $6 million collateral account, which we classified as restricted cash, was released and utilized to pay off the loan. Investment income from the company's short-term investments increased by $300,000 for the second quarter compared to the prior year due to higher returns on these investments. Let me take just a brief look at the first half of the year, both first and second quarter. For the six months ended, we reported a net loss of $11.2 million. That compares to $16.5 million in the same period of 2022. Operating expenses were $11.2 million in the first half of 2023, which was an 8% decrease from the $12.1 million that we reported in the same period last year. Net cash used for operating activities was $10.8 million for the first six months of 2023 compared to $13.4 million for the same period in 2022. This decrease was primarily related to a one-time payment of $4.5 million in interest expense and related costs resulting from the sale and subsequent redemption of $30 million of Series A & B convertible redeemable preferred stocks in the year-ago period. Cash used by the financing activities of $3.7 million during the first six months of 2023 resulted from, as I mentioned earlier, the earlier repayment of our loan facility with Silicon Valley Bank, offset by $2.7 million of sales of equity under our at-the-market facility. We also received net proceeds of $1.4 million from the sale of unused New Jersey net operating losses in the first quarter of 2023. Our projected cash utilization for the balance of 2023 is approximately $4.5 million per quarter. The majority of expenses are related to the development of our PLACCINE modality. We will now turn the call back over to Corinne.

Corinne Le Goff, President and CEO

Thank you, Jeff. Imunon is tightly focused on harnessing the power of being a system by developing novel DNA-based approaches in immuno-oncology and infectious diseases. We believe that non-viral DNA will be a key driver of the future of global medicines. We are very excited about the potential at Imunon to improve the health of millions if not billions of people while creating significant value for our shareholders. Along our achievements, we have de-risked the PLACCINE modality across several pathogens of interest by demonstrating the immunogenicity and safety of our vaccines. We have generated compelling data in SARS-CoV-2 and IMNN-101, the next-generation COVID-19 booster which will be in the clinic in Q1 next year. We also have generated excellent immunological responses for vaccines against pathogens of concern, especially monkeypox, arenaviruses, and others. We unveiled a state-of-the-art manufacturing site in Hansfield to reduce our reliance on others. We entered into collaborations designed to advance our technology, and we are actively building capabilities for the development of cancer vaccines. Looking forward, we expect to reach several value-creating milestones over the next six to eighteen months. Some of them include recording additional interim data on IMNN-001 for vision study and the combination study with bevacizumab in advanced ovarian cancer, and reporting top-line data from the OVATION 2 study, as well as starting the IND for our SARS-CoV-2 vaccine and announcing proof-of-concept vaccine data for another virus program. We are very excited to tell you about our programs in more detail in an R&D Day that we plan to hold this fall. We will have several leaders discussing our work during this vital program. So please keep an eye out for more details in the coming weeks. With that, I open up the call to your questions. Operator.

Operator, Operator

We will now begin the question-and-answer session. Our first question comes from Emily Bodnar of HC Wainwright.

Emily Bodnar, Analyst

Hi, thanks for taking the question. I guess two on the COVID program. First, can you touch on the remaining steps and studies that you might need before you could submit the IND in the first quarter? And then, do you plan to have the Phase I/II study just be in general healthy volunteers or do you think you might focus development on either elderly or immunocompromised patients? And then just clarifying timelines for OVATION 2. I think you previously talked about interim data in the third quarter. Is that still happening? And is the top-line data supposed to be still on track for the first half of next year? Thank you.

Corinne Le Goff, President and CEO

Thank you, Emily. I'll start with the timelines on Ovation. Yes, so I confirm that we should have additional interim data in the third quarter. And for the top lines, we are still planning on having the top lines at the end of the second quarter of 2024. To your question on COVID. So I'll ask Dr. Khursheed Anwer to complete my answers.

Khursheed Anwer, Chief Science Officer

Yes, sure. I think you've covered it well. Emily, we have at least two sets of studies that are IND-enabling currently in progress. One is to look at safety in animals. That safety study is about to start soon, and a bio-distribution study will look at the delivery system and how long it takes to clear. These are the two fundamental IND-enabling studies that will complete the submission of the IND. As Corinne said, the Phase I study will be in healthy volunteers. The question on looking at immunocompromised patients is indeed an interesting one, and that is something that we will address with our advisers. That could be a subsequent study.

Emily Bodnar, Analyst

Okay, great. That’s very helpful. Thank you.

Operator, Operator

Our next question comes from David Bautz from Zacks. Go ahead.

David Bautz, Analyst

Hey, good morning everyone. Thanks for taking the questions. First ones on the PlaCCine technology. Do we have any idea right now about how long the antigen is going to be expressed in someone who gets immunized with PlaCCine? Are we talking days or weeks or months? Do you have any clue right now?

Corinne Le Goff, President and CEO

Hi David. Yes, we certainly do. Khursheed, can you please answer the question?

Khursheed Anwer, Chief Science Officer

Yes, of course. Well David, compared to mRNA, DNA has a longer expression period, especially in our studies. With other genes, such as reporter genes, we have seen expression for several weeks. So I anticipate that the expression of the antigen will last several weeks after a single injection or even months.

David Bautz, Analyst

Is there any concern about tolerance development or even an allergic reaction with such long expression of the antigen?

Khursheed Anwer, Chief Science Officer

The levels of the antigen are not high enough to cause any intolerance issues. That generally happens if you have a significant antigen bolus given over time, but these levels should initiate immune responses without causing intolerance. However, we haven't specifically looked for that.

Corinne Le Goff, President and CEO

What I’d like to add is that we believe the increased expression of the antigen is beneficial because it gives the immune system time to build memory cells. That's a concern with RNA vaccines, where memory cells may not develop sufficiently.

David Bautz, Analyst

Okay, that sounds good. And then as far as the Phase I study goes, I guess how do you determine what variant you're going to target for that? And then can you change which variant you target, between going from say the Phase I to the Phase II?

Corinne Le Goff, President and CEO

That's a good question. The FDA will inform manufacturers every year which variant to target, similar to flu vaccines. They met the VPAC and indicated that we need to produce the Omicron XBB 1.5 variant. The FDA agreed that this was the right choice for us. When we begin the Phase I, we will immediately move to the Phase II program with the same variant once we determine a safe dose.

David Bautz, Analyst

Okay. So is this system being set up like the flu vaccine, where you won't need to conduct animal studies again every year for a different variant?

Corinne Le Goff, President and CEO

Yes, that's correct. The FDA confirmed our plug-and-play strategy, which means we won't have to redo TUC studies in animals when changing the antigen cases.

David Bautz, Analyst

Okay, great. Thanks for taking the questions.

Operator, Operator

The next question comes from Kemp Dolliver from Brooklyn Capital Markets.

Kemp Dolliver, Analyst

Great, thank you. Just to continue on with the vaccine discussion. Do you expect you would have Phase I data in the second half of '24, given the timing of the IND filing?

Corinne Le Goff, President and CEO

I believe so. That's what we're planning to do.

Kemp Dolliver, Analyst

Okay. All right, thank you. You had originally hoped to file the IND by the end of the year. Is there a significant change in the timeline? Does the change in the timeline reflect the timing of FDA feedback or the pre-IND functions that you're currently performing?

Corinne Le Goff, President and CEO

Yes, we thought we could move faster with our IND filing, you're correct. The shift in the timelines reflects wanting to ensure we pursue a variant recommended by the FDA. We wanted to wait for the June 16 meeting, and the feedback on our Pre-IND package was also delayed compared to what we had anticipated.

Kemp Dolliver, Analyst

Great. Thank you very much.

Operator, Operator

Our next question comes from James Molloy of Alliance Global Partners. Please go ahead.

James Molloy, Analyst

Hi, good morning. Thank you for taking my questions. Most of them have been answered, but I had a question on the combo with AVASTIN, Phase I/II underway. What's the expectation for the potential interim look for that and moving into a Phase II portion of that trial?

Corinne Le Goff, President and CEO

Good morning, James. As I mentioned, this trial is under the sponsorship of the Break Through Cancer Foundation. We're expecting to have four centers enrolling patients in this clinical trial. The first center in Anderson is up and running. They have not enrolled any patients yet, but they are indeed up and running. We expect the other centers to join the study in Q3, maybe around the September-October time frame this year. For the Phase I/II trial, the first phase is to evaluate the dose we need to administer to patients in combination with AVASTIN, and then the Phase II will follow. It's a bit difficult at the moment to give you an exact timeline for the first data, but certainly, in the course of 2024, we will have more certainty as the new centers get involved.

Khursheed Anwer, Chief Science Officer

You're right. The initial part, as Corinne said, is to demonstrate safety in combination with AVASTIN and chemotherapy. Once the four sites we have targeted come on board, the Phase I portion shouldn’t take long to complete. I don’t want to put a specific date or time, but I think it’s starting now. So we expect the Phase I trial to only take about three to four months before we transition into Phase II.

James Molloy, Analyst

Okay, great, thank you. I have on my model expectations for another combination at some point with OPDIVO. Is that something you guys are still considering for Epithelial Ovarian Cancer?

Corinne Le Goff, President and CEO

Yes, in theory, I believe there is a lot of value in testing IL-12 in combination with checkpoint inhibitors. Mechanistically, that makes a lot of sense given the need to motivate the tumor microenvironment. We might consider this, but for now, we’re focusing on one trial at a time. The reason we pursued a combination with AVASTIN is that we have compelling synergistic data in a preclinical mouse model. However, it’s not out of the question to explore a combination with a checkpoint inhibitor later.

James Molloy, Analyst

Absolutely. So, I know you have limited resources as everyone does. Has there been any discussion about potential larger pharma partners that might come in to assist with the R&D?

Corinne Le Goff, President and CEO

Yes, collaboration and partnership will be key to our operating model. We are certainly eager to pursue partnerships. That’s why we’re looking forward to entering a Phase I program with our vaccine modality to reach proof of principle in humans, after which we are confident it will open doors for more collaborations.

James Molloy, Analyst

Absolutely. Thank you for taking the questions.

Corinne Le Goff, President and CEO

Thank you very much. As you know, we have been using the phrase 'banking of the future' to describe our work, and this is exactly what our vision is: to be the provider of safe and effective vaccines that are superior to current vaccines in terms of durability and breadth of protection, stable at workable temperatures, rapidly manufactured to respond to evolving pathogens, and offer better compliance. We also believe our technology holds excellent promise in immuno-oncology. We look forward to keeping you informed of our progress. Thank you for joining us, and we look forward to speaking with you again at our upcoming R&D Day event. Have a very nice day.

Operator, Operator

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