Earnings Call Transcript - IMNN Q2 2024

Operator, Operator

Good morning, everyone. My name is Jamie, and I will be your operator today. At this time, I would like to welcome you to Imunon's Second Quarter 2024 Financial Results Conference Call. Please also note today's event is being recorded. At this time, I'd like to turn the floor 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 second quarter 2024 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, August 14, 2024. 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 Michael Tardugno, Imunon's Executive Chairman. Michael?

Michael Tardugno, Executive Chairman

Thank you, Kim. And good morning, everyone. I just wanted to take the liberty to say a few words before turning the call over to Stacy Lindborg, our President and Chief Executive Officer; and to David Gaiero, who is our Interim Chief Financial Officer, as we seek a permanent replacement for our retired CFO, Jeff Church. And just to point out, following our prepared remarks, there will be time for questions, and this is your opportunity. We encourage you to, if you have a question, to use this time to ask us. We're happy to respond to your questions and concerns. On the fundamentals, I can report that your company is sound. The second quarter and recent weeks give testament to that and to Dr. Lindborg's strategy and leadership. As you know, we recently reported long-awaited top-line data from our Phase II study of IMNN-001, our unique IL-12 candidate in ovarian cancer. These are women with very few options facing a standard of care that has seen very little change over the past 25 years. Given that, I can report that the results from our study in a word are outstanding, unequivocally outstanding. In support of this remarkable outcome, Stacy has streamlined the company, refocused its attention, reduced expenses, and despite the challenging comparable deal terms that we've seen recently, closed on a truly investor-friendly financing in this tough capital market. I am delighted with our company's progress over the past quarter as I hope you are and with the future promise that IMNN-001 has for ovarian cancer patients. I'll also remind you that during the second quarter, Dr. Lindborg was appointed President and Chief Executive of Imunon. I'm sure that it was a difficult decision for her as she left a similar position with a company that she very much believed in to lead the development of our lead asset, IMNN-001, and to shape the company's strategy. I trust that you will agree with me that she has hit the ground running. So now it's my pleasure to turn the call over to Stacy.

Stacy Lindborg, President and CEO

Thank you, Michael. It has been an exciting and rewarding time at Imunon over the past few months as we get closer to making a meaningful impact on the lives of patients with our scientific advancements. I am inspired by the talent and commitment of treating physicians and our Imunon team. We are prepared for the next chapter at Imunon and are motivated by the opportunity to advance the treatment options for women with ovarian cancer. Recently, we released top-line data from our OVATION 2 study, a Phase 2 trial focused on ovarian cancer, which may present us with the first effective immunotherapy for this disease. Ovarian cancer is a devastating illness, resulting in over 20,000 new cases and approximately 13,000 deaths annually in the U.S., and over a quarter million women being diagnosed worldwide each year. To give a brief overview of the trial, IMNN-001 is a DNA-mediated IL-12 immunotherapy under evaluation for advanced ovarian cancer treatment. OVATION 2 is a well-controlled, randomized open-label study involving 112 patients that assesses the safety, efficacy, and biological activity of administering IMNN-001 combined with neoadjuvant chemotherapy (NACT). We are studying newly diagnosed treatment-naive patients with epithelial ovarian, fallopian tube, or primary peritoneal cancers. The trial design contrasts NACT plus IMNN-001 provided weekly against standard NACT alone. Patients assigned to the IMNN-001 arm received up to 17 doses of our drug alongside NACT. The findings are promising and particularly relevant for our planned Phase 3 trial. We observed an 11.1-month increase in overall survival with IMNN-001 compared to the intent-to-treat population, indicating a 35% improvement in overall survival. This represents a clinically significant enhancement in a challenging treatment area. For the 90% of patients receiving three or more of the specified doses, the median overall survival improved by nearly 16 months, aligning with the dose-dependent response noted in OVATION 1. In addition, we detected a notable potential for enhanced overall survival benefits in patients who had been treated with standard PARP inhibitor therapy, which accounted for 38% of the intent-to-treat group. Here, the hazard ratio fell to 0.41, and the median overall survival for the IMNN-001 group had not yet been reached, in contrast to the standard care group’s median of 37.1 months. As for our next steps, we are taking measures to conserve our capital and align critical needs with our funding availability. We are nearing the request for an end-of-Phase 2 meeting with the FDA to confirm our findings and clarify the path forward for our registration study. We expect to have this meeting with the FDA this fall, which will allow us to initiate our Phase 3 ovarian cancer study in the first quarter of 2025. The study's timeline will depend on factors such as capital access and patient recruitment, but we are currently projecting to share top-line data by the end of 2028. Moreover, OVATION 2 is not our only study involving IMNN-001 for ovarian cancer. We have another ongoing study funded primarily by the Breakthrough Cancer Foundation at the University of Texas MD Anderson Cancer Center and Memorial Sloan Kettering Cancer Center, led by Dr. Amir Jazaeri. This study is looking at IMNN-001 for minimal residual disease, assessed by second-look laparoscopy in conjunction with bioequivalent Avastin and NACT. We have enrolled seven patients so far, and as the first few reach the primary endpoint, Dr. Jazaeri will start a pilot study to evaluate circulating tumor DNA levels following treatment through a next-generation ctDNA assay. We look forward to sharing insights from this data and applying them to OVATION 3. Switching gears to our proof-of-concept Phase 1 study of our DNA vaccine candidate for COVID-19, we began patient enrollment in the second quarter for IMNN-101 as a seasonal COVID-19 booster vaccine. We believe that the preclinical efficacy we have achieved, combined with our superior handling logistics, will make this vaccine appealing to a pharmaceutical partner. Our objective is to finalize the Phase I report data by year-end and actively seek a partner for further development. Now I will hand the call over to Dave Gaiero, our Interim CFO, to discuss our quarterly financial results.

David Gaiero, Interim CFO

Thank you, Stacy. Details of Imunon second quarter 2024 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. As of June 30, 2024, Imunon had $5.3 million in cash investments and accrued interest receivable. Subsequent to the close of the quarter, we received net proceeds of approximately $9 million from a registered direct offering. We will continue to focus on strong cash management. And as Stacy indicated, we have taken steps to evaluate and prioritize our spending and expect our cash runway to extend into the third quarter of 2025. Imunon reported a net loss for the second quarter of 2024 of $4.8 million or $0.51 per share compared with a net loss of $5.6 million or $0.61 per share for the second quarter of 2023. Operating expenses were $5 million for the second quarter of 2024, a decrease of $500,000 or 8% from the second quarter of 2023. R&D expenses were $2.8 million in the second quarter of 2024 compared with $3.1 million in the same period of 2023. CMC costs decreased to $500,000 compared with $700,000 a year ago. The lower CMC costs were primarily due to the establishment of internal capability to produce plasma DNA. Costs associated with our PlaCCine program decreased by $200,000 in the second quarter of 2024 compared to the second quarter of 2023. These decreases were partially offset by a $200,000 increase in regulatory and other clinical costs in the second quarter of 2024 compared to the second quarter of 2023. General and administrative expenses were $2.2 million in the second quarter of 2024 compared with $2.3 million in the same period of 2023. The decrease was primarily attributable to lower non-cash stock compensation expense of $100,000 and employee-related expenses of $100,000, partially offset by an increase in legal fees of $100,000. Other non-operating income was $200,000 in the second quarter of 2024 compared with other non-operating expense of $100,000 in the same period of 2023. The company incurred a loss on extinguishment of debt of $300,000 on its loan facility with Silicon Valley Bank in the second quarter of 2023 upon the repayment in full of this loan facility. Turning briefly to the financial results for the first half of 2024. The company reported a net loss of $9.7 million or $1.03 per share in the first half of 2024 compared with a net loss of $11.2 million or $1.28 per share for the first half of 2023. R&D expenses were $6.1 million in the first half of 2024 compared with $5.8 million in the same period of 2023. Costs associated with the PlaCCine program increased to $2.8 million in the first half of 2024 compared to $2.3 million in the first half of 2023. Regulatory and other clinical costs increased to $1.1 million in the first half of 2024 compared to $700,000 in the first half of 2023. These increases were partially offset by a $600,000 decrease in CMC costs in the first half of 2024 compared to the same period of 2023. General and administrative expenses were $3.9 million in the first half of 2024 compared with $5.4 million in the same period of 2023. The decrease was primarily attributable to lower non-cash stock compensation expense of $400,000, legal expenses of $400,000, employee-related expenses of $300,000 and insurance expense of $100,000. Other non-operating income was $300,000 in the first half of 2024 compared with $8,505 in the same period of 2023. The company incurred interest expense of $200,000 as well as $300,000 of debt extinguishment expense associated with its loan facility with Silicon Valley Bank in the first half of 2023. Investment income from the company's short-term investments decreased by $200,000 for the first half of 2024 from the same period in 2023 due to lower investment balances. With that financial review, I'll turn the call back to Stacy.

Stacy Lindborg, President and CEO

Thank you, Dave, and I appreciate your smooth transition following Jeff's retirement. We recently announced a financing of $10 million in gross proceeds on highly competitive terms, priced at $2 per share in an at-the-market deal that included one warrant for each share sold, with a strike price of $2. This additional capital enhances our June balance, bringing our cash to about $14.5 million, which historically gives us over 3.5 quarters of operating runway before considering further capital conservation measures and ensures a bridge to key catalysts that we can discuss. After speaking with several top healthcare investors, we are confident in our ability to secure capital moving forward, including utilizing our ATM and potential interest from partners. I hope you'll agree that the future of Imunon looks promising and that, together with our shareholders, we will make a significant impact on patients' lives. Now, I would like to open the call to your questions. Operator?

Operator, Operator

Our first question today comes from Emily Bodnar from H.C. Wainwright.

Emily Bodnar, Analyst

I want to follow up on some of the financing and funding discussions that you made. Could you maybe just talk about how you're thinking about strategy for financing a Phase 3 study, given obviously, those tend to be pretty large studies? Maybe if you can kind of comment on how extensive you think such a study could cost? And if you're potentially looking to raise additional capital or other strategies that you're evaluating. And potentially if you've gotten any partnership interest since the OVATION 2 data came out? And then second, on the COVID booster, could you discuss the blinding for the Phase 1 study and if you're able to see the data as it kind of accrues?

Stacy Lindborg, President and CEO

I'll start with both questions and then Michael may want to add to it. We're expecting that this trial could cost around $50 million. Adding $10 million to our balance sheet, as we discussed regarding our cash runway, will extend us well into 2025, actually into the third quarter. Our goal is to initiate the trial as planned. We intend to manage the company in a way that allows us to continue achieving our core business objectives. This serves as a bridge and gives us time to raise additional capital. Michael, do you want to provide further insights?

Michael Tardugno, Executive Chairman

It's always a challenge, particularly in recent days for micro-cap companies to raise capital, you know that, and you probably cover a number of them. But I can say unequivocally that the quality of the investors that we spoke to during this financing roadshow were among the very best. And I think across the board, except maybe for a very small number, and we spoke to a good number of quality investors. And I think across the board, the reaction was overwhelmingly positive. Market conditions, among other things, may have limited their most recent interest. But I think that the story to tell from this financing roadshow is a little bit more time with the data; they like to see more maturity. I think that will give us an opportunity to reengage and reengage successfully. In the meantime, the company looks forward to some additional catalysts that may provide an opportunity to use the ATM, engage strategic partners, or consider another equity round financing. On the whole, this has been the kind of the history of many companies like ours. And I don't think, honestly, from the data that we've seen and the impact on the lives of ovarian cancer patients that this study will go without important financial support.

Stacy Lindborg, President and CEO

And Emily, you asked one other question about the trial. So we are intending for this trial to be an open-label study, as I think we all understand that with the route of administration for Imunon being through a catheter directly into the micro tumor environment. This is really more of an ethical decision that the only way you could preserve blinding would be to require for the control arm to also have that, which would be an unnecessary surgical procedure. So we are intending that there will be full agreement with FDA that this will be open-label. And we'll certainly get buy-in on plans for event-driven endpoints and the ability to report out appropriately in the trial.

Michael Tardugno, Executive Chairman

I think she was talking about the COVID vaccine.

Emily Bodnar, Analyst

So for the IMNN-101, that was your question?

Stacy Lindborg, President and CEO

So it is an open-label trial. We are with this trial really, we do have part of what will be very exciting and interesting are the immunogenicity data that we expect to have by the end of the year. So we, of course, can do them in batches. But really, we're expecting to have the full sample from the trial and to be able to report out based on the effects that we're seeing, and which really will establish proof of concept and we'll set up the partnership discussions.

Michael Tardugno, Executive Chairman

In the meantime, the DSMB is being evaluated for safety…

Stacy Lindborg, President and CEO

That's right. So we have an ongoing, as you would expect, in a Phase 1 trial, where you're needing to have a regular planned DSMB reviews, that trigger the release of additional patients being treated. We've gone through multiple DSMB reviews of our data, seamlessly getting approval to continue, and the study is enrolling exactly as planned. So it's moving very, very well, very efficiently.

Operator, Operator

Our next question comes from Kemp Dolliver from Brookline Capital Markets.

Kemp Dolliver, Analyst

Just quickly on 101. When you say the study is enrolling exactly as planned, COVID waves are not what they were a couple of years ago. So are you seeing steady enrollment, or is this a case where as we get into the fall, with the potential spike in COVID, you'll see a similar spike in enrollment?

Stacy Lindborg, President and CEO

So the study is enrolling healthy subjects. We have a very experienced center that's running it. Per the numbers I've reviewed, and I look at them quite regularly, we're about 70%, above 70% of the patients that we will enroll in the trial, and they've been dosed. So I don't think the flu season is likely to influence it. In fact, we expect really to be ahead of it in terms of completing the trial and the observation.

Michael Tardugno, Executive Chairman

I'd like to comment on it also. So there are a number of advantages that we believe will be demonstrated in this Phase 1 study, at the least of which is durability. And of course, the handling characteristics of this formulation to be managed at temperatures that are very friendly for global distribution. That said, there may be an opportunity to replace mRNA vaccines depending upon the data that would be as boosters. As you point out, the market is waning some. But I think the more important outcome from this study is the proof of concept that a DNA vaccine can provide in other indications. And you may want to speak…

Stacy Lindborg, President and CEO

Yes, I'd like to add to that. I do think that we were very thoughtful in choosing what we would study to establish proof of concept of our technology. But as you guys are likely quite aware, there have been more than 80 pathogenic viruses discovered since 1980. The target of choice would really need to be decided in conjunction with the party who's going to develop it. We think there is enormous value to the technology that we want to make sure we maximize through a partnership. And there's equally exciting when we think about our core and our strategy down the path. There's even a potential for an oncology vaccine. So the platform itself, the technology is very, very exciting for many reasons.

Kemp Dolliver, Analyst

And then on 001 and the end of Phase 2 process. Where does that stand? Are you in a position that you have been able to request the meeting? And if not, when do you anticipate it? Because it strikes me that given your expected timing for presenting the full data set and having clarity around the Phase 3 trial design, you can dovetail those two events together. You're going to have a lot more certainty in the eyes of potential partners and investors.

Stacy Lindborg, President and CEO

We expect to present the complete data set at a major event in the fall, and we will announce those plans as soon as they are finalized. As I mentioned earlier, we are close to requesting the end-of-Phase 2 meeting. Our ultimate goal is aligned with all the necessary steps leading up to the first patient dose and starting the study, and everything is set to proceed well in Q1. I anticipate that there will be numerous synergies related to the catalysts you've mentioned, along with others.

Operator, Operator

Our next question comes from David Bautz from Zacks.

David Bautz, Analyst

So Stacy, I was wondering if you could talk about maybe what are some of the most important design factors for the Phase 3 trial that you're hoping to come into alignment with the FDA during your upcoming meeting?

Stacy Lindborg, President and CEO

We are eager to showcase what we believe is a compelling design informed by leading clinicians who not only treat with Imunon but have also dedicated their careers to ovarian cancer. Following the OVATION 2 study, we observe a promising potential synergistic effect with PARP inhibitors. We are carefully considering how to maintain balance across the treatment arms, especially for women with genetic mutations that may indicate a strong response, such as those with BRCA mutations and HR deficiency, who are likely to benefit from PARP inhibitors. Our goal is to answer essential questions clearly and provide evidence of a significant treatment effect across the study, including important subgroups. The primary endpoint is expected to be clear and direct, and we anticipate a smooth discussion around it. Overall survival is our primary focus. We are also confident in the consistency of the data we are observing in OVATION 2, which includes key factors integrated into the study design and the establishment of inclusion criteria that will support a first-line indication statement. These are the main considerations we have in mind.

David Bautz, Analyst

Now in regards to the MRD study, are you pleased with how enrollment is going? Is there anything maybe that can be done to kind of speed up enrollment in that study?

Stacy Lindborg, President and CEO

I reviewed this just yesterday with our team, and they are doing a fantastic job managing this study internally. The enrollment rate is quite competitive; it's actually higher than in OVATION 2, but we currently have seven patients treated out of 50. While MD Anderson has performed exceptionally well, we have two additional sites. Memorial Sloan Kettering is now on board, and we expect Johns Hopkins to join soon. I believe we can expect an increase in enrollment as these sites engage with patients and begin to enroll them in the study. We will certainly meet with each of the principal investigators to ensure they have access to the latest data from OVATION 2, enabling them to effectively communicate the potential of our product to the women they are counseling and ensuring they have what they need to enroll patients who meet the inclusion criteria. We are very pleased.

Michael Tardugno, Executive Chairman

I mean we're looking to report some information at the end of the year…

Stacy Lindborg, President and CEO

That is correct. So not only by the end of the year, but also Dr. Jazaeri, our PI, is interested and is planning on looking at some pilot study of this. I talked about this a little bit in the opening remarks of circulating tumor DNA, a very interesting biomarker. He has worked a lot on very interesting translational biomarkers, so the rich data that will come out of the study. Instead of sitting and waiting passively, we're really looking at pilot studies. And then with second laparoscopy being the primary endpoint, we do expect to be able to release data on that endpoint before the end of the year.

David Bautz, Analyst

I just want to clarify whether the company plans to seek a partnership to advance the program if positive results come from 101. Is this partnership intended to further the COVID program specifically, or are you considering it for the entire vaccine platform?

Stacy Lindborg, President and CEO

So we would look to partner the entire platform.

Operator, Operator

Our next question comes from James Molloy from Alliance Global Partners.

James Molloy, Analyst

I have a question about the PlaCCine program and the preclinical development related to 102, and you mentioned that you're looking to partner the entire project. Would it be accurate to say there's a shift back to focusing on immunotherapy instead of the PlaCCine DNA plasmid vector going forward? Can you explain how the partnership landscape currently appears for PlaCCine? Additionally, I assume you're also open to partnerships for immunotherapy if opportunities arise. Could you outline how that partnership environment looks as well?

Stacy Lindborg, President and CEO

Reflecting on my time on the Board before becoming an employee and CEO, Imunon has always been a highly focused company. Strategically, we view the PlaCCine platform as a valuable extension of our IL-12 technology. We will continue to explore significant opportunities and ways to introduce transformative options into the market. Additionally, we need to decide which initiatives to pursue that will advance our business, secure non-dilutive funding for our core operations, and leverage partnerships. For several years, we have discussed the potential of our proof-of-concept study, which was focused more on the underlying technology rather than directly launching into COVID-19. This path is a means to achieve our goals, and we aim to clarify that. My intent since joining has been to ensure our internal resources are aligned with our priorities, and we effectively achieved that in the last quarter. While it may be too early to discuss partnerships, Michael has shared some insights. We find ourselves in a strong position compared to current options, highlighting strengths we look forward to discussing in future calls. There is significant potential that we believe should be in the hands of motivated and focused partners.

Operator, Operator

And ladies and gentlemen, with that, we'll be concluding today's question-and-answer session. I'd like to turn the floor back over to management for any closing remarks.

Stacy Lindborg, President and CEO

Thank you. And really thank you to everyone for participating in this conference call. As our work in providing options to women with ovarian cancer progresses and the population's exposure to potential pandemics increases, we remain very excited about reporting data from ongoing clinical studies in the upcoming months. I also want to flag that I'm being interviewed in a prerecorded fireside chat that will go live on 7 a.m., September 9th, at the start of the H.C. Wainwright 26th Annual Global Investor Conference, which will be held in New York. We'll be putting that information out so you can view the conversation. And for those that are interested, we'll be available for one-on-one meetings at the conference and virtually. So contact us if you'd like a meeting. But we look forward to keeping you informed of our progress, and wish you a nice afternoon. Thanks for joining.

Operator, Operator

And ladies and gentlemen, with that, we'll conclude today's presentation. We do thank you for joining. You may now disconnect your lines.