Immunic, Inc. Q4 FY2023 Earnings Call

Good morning to everybody on the line. I would like to welcome you to Immunic's Fourth Quarter and Year End 2023 Earnings Call. My name is Jessica Breu, Vice President, Investor Relations and Communications at Immunic. I will also be the moderator today. Speaking on the call are Dr. Daniel Vitt, our Chief Executive Officer and President; as well as Glenn Whaley, our Chief Financial Officer. Please note that all participants will be in listen-only mode, and this event is being recorded. After today's presentation, there will be an opportunity to ask questions. Before we begin, I would like to remind you that this presentation may contain forward-looking statements. Such statements can be identified by words such as may, will, expect, anticipate, estimate or words with a similar meaning, and such statements involve a number of risks and uncertainties that could cause Immunic's actual results to differ materially from those discussed here. Please note that these forward-looking statements reflect Immunic's opinions only as of the date of this presentation, and it undertakes no obligation to revise or publicly release the result of any revision to these forward-looking statements in light of new information or future events. Please refer to Immunic's SEC filings for a more detailed description of the risk factors that may affect Immunic's results and these forward-looking statements. I would now like to turn the call over to our CEO and President, Dr. Daniel Vitt, to begin the presentation. Daniel?

Yes. Thank you, Jessica. I would also like to welcome everybody to today's earnings call. Earlier this morning, we announced our financial results for the fourth quarter and the year ended December 31st, 2023, in our press release and Form 10-K. During the call today, we will walk through our fourth quarter's 2023 achievements and subsequent highlights, year-end financial and operating results as well as anticipated upcoming milestones. As Jessica noted, after the presentation, you will have the opportunity to ask questions. Let's start with a review of our fourth quarter 2023 and subsequent highlights. Punctuating our remarkable progress throughout 2023, we announced a three-tranche private placement of up to $240 million last month. The round, led by BVF Partners, included participation from a group of top-tier new and existing investors, including Avidity Partners, Janus Henderson Investors, Soleus Capital, RTW Investments, and Adage Capital Partners. We received a total of $75 million in net proceeds from the first tranche, which closed on January 8th, 2024. The second and third tranches of $80 million each are conditioned on the announcement of Phase IIb top line data for our CALLIPER trial expected in April 2025, volume weighted average share price levels, and minimum trading volumes. Any of these conditions in the second or third tranche can be waived by holders of a majority of the outstanding securities, including the lead investor. This financing completed in a challenging capital markets environment and with such a strong group of investors confirms the enormous value inherent in our two advanced clinical programs. In October, we reported overwhelmingly positive interim data from the Phase II CALLIPER trial of our potentially groundbreaking lead asset, nuclear receptor-related one over one activator, vidofludimus calcium, in progressive multiple sclerosis, or PMS. In total, 203 patients were included in this analysis. The overall population, which includes all subtypes of PMS, saw a 22.4% improvement in serum neurofilament light chain, or NfL, for vidofludimus calcium over placebo at week 24. We believe that this is a substantial and meaningful difference in favor of vidofludimus calcium in this PMS population. Even a statistically significant difference was found for arithmetic mean serum NfL levels at week 24 between vidofludimus calcium and placebo with a p-value of 0.01. If you look at the subtypes of PMS to the right, you can appreciate that this difference in serum NfL at week 24 was consistently observed across all progressive MS subtypes. I would like to point out that we saw a 20.1% reduction of vidofludimus calcium versus placebo in advanced SPMS, meaning the patients with no focal inflammatory activity, but continued to see progression. We believe this subtype is a segment of very high unmet need in MS with no relevant FDA approved therapies available in the United States. This next slide puts our CALLIPER interim data into this perspective of historical third-party studies in the same progressive MS subtypes. On the left, we displayed the data for PPMS compared to the ORATORIO study for ocrelizumab, which showed a spread of NfL values between active and placebo at 24 weeks of 12.4%. In the CALLIPER trial, we observed an 18.8% improvement of active drug over placebo in PPMS at week 24. You may recall that the results of the ORATORIO Phase III study led to the approval of ocrelizumab for treatment of PPMS. In the center of this slide, you see historical data for the secondary progressive MS, both for inflammatory, non-active and active SPMS. In comparison, vidofludimus calcium was able to show a substantial reduction in NfL in both subpopulations. To our knowledge, this is the first time that such a substantial effect in NfL has been shown in non-active SPMS patients, which is again the PMS subtype that has the highest unmet medical need. The right side of the slide shows the comparison between our Phase II EMPhASIS data for vidofludimus calcium in RRMS versus historical relapsing MS studies to complete the picture. In summary, we believe the clear separation observed in serum NfL for vidofludimus calcium over placebo in this PMS patient population, as well as its subtypes, represent another significant step forward for what could potentially be a first-in-class Nurr1 activator for MS. This strong signal also points to a more likely positive outcome of the overall CALLIPER trial as well as clinically relevant endpoints like prevention of disability worsening. Also, in October, Dr. Bob Fox from Cleveland Clinic, who is the coordinating investigator of our ENSURE and CALLIPER programs, presented data from our Phase II EMPhASIS trial of vidofludimus calcium in RRMS in an e-poster at the Joint ECTRIMS-ACTRIMS Meeting. It is important to reiterate that vidofludimus calcium showed an improvement in serum NfL in both treatment arms of 30 and 45 milligrams over placebo. In November, we were granted two fundamental new patents for vidofludimus calcium in the United States. The first covers a daily dose of about 10 milligrams to 45 milligrams of vidofludimus calcium and other salt forms as well as free acid forms for the treatment of relapsing MS, including the 30 milligram dosage used in our ongoing twin Phase III ENSURE trials. The second patent granted covers the dosing regimen associated with vidofludimus calcium and other salts as well as the free acid forms for the treatment of MS, including all regimens tested in our MS clinical program. As a result, our extensive patent portfolio now provides protection into 2041 or even beyond in the United States. Turning to our second key program, IMU-856, an orally available and systemically acting small molecule modulator that targets SIRT6 protein. In October, we presented two abstracts at the United European Gastroenterology Week 2023. My colleague, Dr. Franziska Burianek, Senior Medical Director at Immunic, presented data from our Phase Ib clinical trial of IMU-856 in patients with celiac disease during a moderated poster session. The trial results gathered during periods of gluten-free diet and gluten challenge demonstrated meaningful improvement over placebo in four key dimensions of celiac disease physiology: histology, disease symptoms, biomarkers, and nutrient absorption. IMU-856 was also observed to be safe and well tolerated in this trial. Additionally, Dr. Geert R. D'Haens from Amsterdam University Medical Center, presented data from our Phase II CALDOSE-1 trial of vidofludimus calcium in ulcerative colitis, or UC. As a reminder, the maintenance phase results from the CALDOSE-1 trial demonstrated statistically significant activity of vidofludimus calcium compared to placebo and reaffirmed the drug's favorable safety and tolerability profile. The data validated the potential of vidofludimus calcium in UC and other inflammatory bowel disease indications. In November, we were pleased that Dr. Burianek had another opportunity to present the data from our Phase Ib clinical trial of IMU-856 in patients with celiac disease in a virtual e-poster at the Association of European Celiac Society General Assembly Conference in Athens, Greece. That concludes our summary of the fourth quarter 2023 and most recent highlights. I'm very pleased with the scientific and clinical advancements we have made across our different programs, and we are leveraging this momentum going forward. As an example, for vidofludimus calcium, the release of our overwhelmingly positive biomarker NfL data has been an impetus for partnering discussions with global and regional pharmaceutical companies. There is also a lot going on with our IMU-856 program, which we will update you on as progress is made this year. I would now like to turn the call over to Glenn to provide a financial overview. Glenn?

Thank you, Daniel. I will now review the financial and operating results for the year ended December 31st, 2023. Let me start with a review of our cash position. We ended the year with $46.7 million in cash and cash equivalents. With these funds and the approximately $75 million in net proceeds raised in the first tranche of our January 2024 private placement, we expect to be able to fund operations into the third quarter of 2025. Regarding the operating results, R&D expenses were $83.2 million for the 12 months ended December 31st, 2023, as compared to $71.2 million for the 12 months ended December 31st, 2022. These costs were mainly driven by external development costs related to the ongoing clinical trials, vidofludimus calcium and IMU-856, as well as personnel expenses. This was partially offset by a decrease in external development costs related to the deprioritization of the IMU-935 program and a reduction in costs related to the vidofludimus calcium program in ulcerative colitis. General and administrative expenses were $16 million for the 12 months ended December 31st, 2023, as compared to $15.3 million for the same period ended December 31st, 2022. The slight increase was spread across numerous categories and was partially offset by a decrease in personnel expense. Other income was $5.6 million for the 12 months ended December 31st, 2023, as compared to negative $0.9 million for the same period ended December 31st, 2022. The increase was primarily attributable to a decrease in foreign exchange losses, our research allowance attributable to the 2021 and 2022 tax years from the German Ministry of Finance, and an increase in interest income as a result of higher interest rates. This was partially offset by a decrease in R&D tax incentives as a result of reduced spending for clinical trials in Australia. The net loss for the 12 months ended December 31st, 2023, was approximately $93.6 million, or $2.11 per basic and diluted share, based on approximately 44.3 million weighted average common shares outstanding, compared to a net loss of approximately $120.4 million, or $3.78 per basic and diluted share, based on approximately 31.8 million weighted average common shares outstanding for the same period ended December 31st, 2022. With that, I will turn the call back over to Daniel for a review of our upcoming clinical milestones. Daniel?

Thank you, Glenn. I would now like to provide an update on the anticipated upcoming milestones for our clinical development programs. We eagerly anticipate reporting top line data from our Phase II CALLIPER trial of vidofludimus calcium in progressive MS in April 2025. Additionally, we expect to report an interim futility analysis of our Phase III ENSURE program late this year, and to read out the first of our identical twin Phase III ENSURE trials in relapsing MS in the second quarter of 2026. As stated before, based on the strong clinical activity observed thus far, and vidofludimus calcium's solidly established safety and tolerability profile to date, we believe that the design of our Phase III ENSURE program will provide a straightforward path to potential regulatory approval in relapsing MS. If the top line CALLIPER data continues to show a neuroprotective effect for PMS patients, we may be able to position vidofludimus calcium as the first oral treatment for advanced secondary progressive MS as well. We also expect that the drug's potential first-in-class ability to activate Nurr1 will meaningfully benefit the ongoing clinical trials in multiple sclerosis. We are particularly excited about our MS program in light of the recent developments in the MS market. As we have noted before, if approved, we believe that vidofludimus calcium has the potential to be a unique treatment option targeted to the complex pathophysiology of multiple sclerosis based on its combined neuroprotective, anti-inflammatory, and antiviral effects. With regard to our IMU-856 program, as previously reported, we have begun preparing for a Phase II clinical trial in ongoing active celiac disease patients. At the same time, based on the drug's broad therapeutic potential by targeting physiological epithelial regeneration, we are also considering additional clinical applications in other GI disorders. We are very excited about this program and believe IMU-856 could present an entirely new therapeutic approach to gastrointestinal disorders by promoting the regeneration of old architecture without the serious consequences associated with immunosuppressive therapies. This brings us to the end of our formal presentation. Jessica, please open the call for the Q&A session.

Thank you, Daniel, and also Glenn for walking us through the fourth quarter 2023 and subsequent highlights as well as our upcoming value inflection points. We will now begin the question-and-answer session. Our first guest today is Caroline Pocher from Wedbush. Caroline, please unmute yourself and go ahead.

Hi. Good morning. This is Caroline on for Andreas. Just two questions from us. So if the data from CALLIPER are positive, can you discuss what the regulatory path forward looks like in advanced SPMS? And then since the last quarterly update, it looks like the times were slightly shifted for the readout from the first ENSURE trial from the end of 2025 to Q2 2026. Just any clarity as to why the slight change and just enrollment progression in both of those trials?

Yes, thank you, Caroline, for the question. Let me start with CALLIPER. It's a challenging question to answer. If we consider non-active secondary progressive as a probable indication where there are currently no approvals or options for patients, this could potentially lead to an expedited approval process. However, this will necessitate meetings with regulators across various countries. We anticipate that a Phase III study would only need to conduct one trial, so we expect it to be a streamlined submission after receiving positive results from that study. Regarding ENSURE, we have not altered the timelines since our last update, which was provided a few weeks ago. That update reflects our current recruitment speed and estimates. We continuously assess the progress and adapt our timelines accordingly, but we are currently on track with recruitment.

Great. Thank you so much.

Thank you, Caroline. The next one I have in the queue here is Nat Charoensook from Leerink. Nat, please unmute yourself and go ahead. Nat, can you hear us?

Hi. Can you hear me all right?

Yes. Hello. Good morning.

Hi, there. This is Nat Charoensook on for Tom Smith. So congrats on all the progress, and we have a couple of questions. So the first one is about what are the biomarker results that we can expect from the interim analysis for the ENSURE study expected in late 2024, and what you need to see to continue the development of vidofludimus calcium in RMS.

Yes. Thank you, Nat, for the question. And that's good that you asked because I want to clarify that. This is, as we have written, this will be just a futility analysis. Since this is a Phase III study, we can't read out biomarkers or other clinical data at this time point. So it will just be a futility analysis, and we would get feedback from the Data Safety Monitoring Board about the progression of the study. It may allow us for sample size adjustment. So this is maybe the only outcome which could happen: either continue as planned or sample size adjustment recommendations from the Data Safety Monitoring Board.

Got it. That's very helpful. So the next one is, what are the gating factors to start a Phase II study in ongoing active celiac disease? And can you please go over a potential trial size for the Phase II study? I think you plan to look into additional doses other than the 80 mg or 160 mg that you looked at in the Phase Ib study. And what are the potential endpoints as well as exploratory biomarkers you plan to include in the study?

Yes, that's a great question. We are actively engaged in a celiac disease committee, especially following the positive results from our proof-of-concept study last year, which generated significant interest. This has propelled our preparations for a possible Phase II study in celiac disease and possibly other indications. The successful proof-of-concept from the Phase I study is not confined to celiac disease alone. We’ve observed notable improvements in enterocyte function, such as enhanced uptake of nutrients like vitamin B12. This suggests that the drug may also be effective in other scenarios where increasing the viability and function of these cells is beneficial. Regarding Phase II, as previously mentioned, it is currently not budgeted. We're preparing the study, in discussions with potential partners, and exploring additional financing options for a comprehensive Phase II trial. We will keep the market updated on our progress in these negotiations and future directions, which may extend beyond just celiac disease.

Got it. That's very helpful. Thank you so much.

Thank you, Nat. We have a question that came in via the Q&A tool in writing, and it nicely fits to IMU-856, so I will read it. Can you provide any high-level description of how potential partners view the drug and if completion of Phase II is prerequisite for them?

As of my little bit subjective conclusion on perception of the drug is that people really think it's cool stuff. It's a new target. I think this has the potential really to address the GI disorders in a very different way. So lacking immunosuppressive effects is really a unique benefit we see here, and therefore, I think it is an attractive thing. On the other hand, typically, new targets need to demonstrate that they work. And to our favor, I think we have already achieved this clinical proof-of-concept in the celiac disease patients. So I think generally, the perception is very positive, and people are very excited about a completely new approach for those diseases.

Thank you, Daniel. The next one in the queue here is Matt Kaplan from Ladenburg. Matt, welcome. Please unmute yourself.

Hi. Good morning, guys. Can you hear me?

Good morning. Yes. Good morning.

Great. Well, congrats on the progress. I mean, I just wanted to kind of zero in on the data that you've gotten so far with vidofludimus in terms of the impact on NfL. I guess, what's been the feedback so far you've received from the MS community KOLs with that observed pronounced reduction in the CALLIPER and EMPhASIS studies?

Thank you, Matt, for your question. This is a unique situation, and people are recognizing it. Recently, several key publications have provided compelling data indicating that NfL is significant in progressive MS, especially when we isolate its activity from focal inflammation and relapses. The emerging regenerative contributions in progressive MS patients clearly show NfL's predictive power for future disability outcomes, as highlighted in a couple of recent studies, particularly in the latter half of last year. This drives excitement and reflects scientific progress. Ultimately, our goal is to demonstrate clinical benefit, which is the aim of the Phase II study, and we're approaching that milestone on April 25. There is a significant unmet medical need in all types of progressive MS, especially among patients with non-inflammatory advanced secondary progressive MS. We believe that vidofludimus calcium presents a real opportunity to transform the treatment landscape for these diseases.

Okay. That's helpful. And then you mentioned business development plans or partnering plans. What are your plans for the MS indications for vidofludimus in terms of partnering?

Yes. I think given that some people we are talking to, I mean they're also on the line here, I tend to be careful on projections and the status on business development discussions. But I think we do what we always do. We establish collaborations. We establish trust relationships with potential partners. Progressing towards the readout, I think, clearly paves the way also for partnerships. If the Phase II PMS data is positive, this is certainly something which has relevance for the whole treatment landscape of multiple sclerosis, even beyond PMS, because that may also benefit and support scientifically the ENSURE RMS Phase III studies which are ongoing as well. So I think this is something we really have some activity on, but we are not in a situation that we say we need to do something now. I think we have the funding available to read out the Phase II study in a good way and then to look for what is the best way forward here.

Okay. Great. Thanks for the added detail.

Yeah. Thank you, Matt.

Thank you, Matt. And the next one here is Jun-Goo Kwak from Piper Sandler. Jun-Goo, please unmute yourself and go ahead.

Hi. Good morning, team. This is Jun-Goo on for Yas. Thanks for taking our questions. We have two. For the futility analysis later this year for ENSURE, how should we think about its implications upon readout? And what would be considered a win? And second, for the Phase II celiac study, where are you with finalizing the design? And could you provide more color on your interactions with the regulatory agencies so far?

Give me a second. Yeah, thank you for the question. To the first question, I think the nature of futility analysis is that you just want to get a proceed as planned answer from the committee. Or, and this is one of the reasons, given that we have an event-driven endpoint, we would allow a reasonable sample size adjustment. That's all we can get, and then we will implement it into further development. So it's more of a binary thing, honestly, there. We don't expect any surprises given the Phase II data we obtained from the EMPhASIS studies in relapsing MS; we are very confident that this trial will also deliver comparable results. All the calculations and assumptions were based on the Phase II EMPhASIS data. And the second question, maybe you can repeat it, was on regulatory interactions for PMS?

Celiac.

For celiac. Yes, that's work in progress right now. We are still working on the project for the clinical Phase II study design. There are a couple of thoughts running through, and as soon as there is something to report, we will disclose that.

Right. Got it. Thank you so much.

Thank you. Bye-bye.

Thank you. Next one in the queue is William Wood from B. Riley. William, welcome. Please unmute yourself.

Yes. Can you hear me?

Yes. Hello.

Awesome. Thanks so much and congratulations on the quarter and thank you for taking our questions. Just thinking about your Phase III ENSURE, when should we expect to see the baseline characteristics for that trial and actually I'll just leave it there.

Good question. I don't know exactly when we can disclose that, and even if we can get that because it's a Phase III study. I think likely we need to wait for integrity of the study reasons until we unblind the study in 2026. That's the most likely case there because quality first, and you don't want to end up in difficult discussions with regulators just because we want to know too early these kinds of things. But we will have an eye on this, and maybe more in the future if there is a way to get this information earlier.

Got it. And actually, I do have two more. You also have two presentations at ACTRIMS forums coming up next week. Should we be expecting any additional data on your EMPhASIS interim results which have already been presented? And how should we view sort of the blocking of that EBV reactivation as being an important strategy in improving patient symptomology overall and what that can mean for your Phase II study in PMS? And I have one more.

Yes. I think the second one is really the talking point from one of those posters, the EBV reactivation. This is something we got a little bit quiet the last couple of months regarding that because we were so excited about Nurr1, but it's still true that vidofludimus calcium is a blocker of reactivation of EBV. I think it's still not fully understood how that could have a positive impact on disability, for example, prevention of disability, and how the full indication disease progression is influenced by reactivation of EBV in patients. There are a lot of hints for this. There's a lot of work done by really great scientists here around the world, but also by our collaborators. That's an interesting scientific flashlight on the third aspect of activity of vidofludimus calcium on one poster. The second one is more dedicated to CALLIPER, to trial design and NfL, but no really new data. It's important to put that in context. We figured out that the market is maybe not fully up to speed on the link between NfL and future disability progression. Therefore, we think we want to come into this causal discussion with doctors on this more specifically and also talk about Nurr1 activation and the way this has the neuroprotective potential. That could change the way we treat the disease and could be a major impact for the whole MS market if the data reads out positively next April.

Got it. Very helpful. And thank you for taking our questions and congratulations again.

Yes. Thank you, William.

Thank you, William. I actually have another question here on the Nurr1 target in the Q&A tool. In case of Nurr1 activation confirmation, do you see further benefits of vidofludimus in the future for other neuromuscular disorders such as Parkinson's disease or even Alzheimer's?

A simple answer, yes. So, very clear, this is something, it was a breakthrough finding when we, together with our collaborators at the University here in Munich around Daniel Murak, found that vidofludimus calcium is such a good activator of Nurr1. Most of the historic research on therapeutic use of Nurr1 has been performed in the area of Parkinson's disease. This was the original main focus of researchers in the world. I think Nurr1 still is on the top of the list of hope for potential targets for Parkinson's disease. This primes, of course, our vidofludimus for testing there. But we have more molecules; we have a bunch of derivatives. We have molecules with different properties, maybe priming molecules for different, for example, CNS penetration and so forth. Huge potential there. But once again, currently, our focus is on delivering data for MS. We will not use huge amounts of our budget for these highly innovative new things, but we are also considering collaborations to boost things in parallel with our current MS activities.

I have another question here in writing. Are there any plans for the vidofludimus UC program, given the stronger maintenance phase data?

Yes, that's the money question right now again. I would love to continue with the Phase III directly in that indication. Once again, and that was the reason why we kicked off a new program called IMU-381. We have molecules which may be better suited for GI penetration based on their tissue distribution profile, but using our mode of action and our proof-of-concept from the CALLIPER studies. So yes, in principle, yes. But once again, something we would likely separate in a different development track.

Thanks, Daniel. The final question I have may be a good opportunity for you to summarize the current status and upcoming milestones for vidofludimus calcium. What are the updates regarding IMU-856, I'm sorry.

More or less the summary of what we spoke about. We are intrigued by last year's data, specifically the NfL data that gives us a very nice signal and really increases the likelihood of success for the clinical outcomes of the CALLIPER study with a readout in April 2025. This would make the drug a very large commercial opportunity, I think. This represents a significant potential for vidofludimus calcium. That's the main driving force here right now. In parallel, we have that rock-solid ENSURE program in relapsing MS ongoing, which is based on our very good Phase II data for that molecule we obtain from the EMPhASIS study, allowing us a low-risk pathway towards approval and data readout in 2026. These are the key driving forces for the vidofludimus program. To reiterate, we also had this positive readout on GI, on UC study on the maintenance data, which is boosting other molecule developments in that space. The Nurr1 potential beyond just multiple sclerosis and other related neurological indications is also where we see huge potential. We will definitely look into these things.

Very good. This concludes our question-and-answer session today. I would like to turn the conference back over to Daniel for any closing remarks.

Thanks, Jessica, and thank you to today's attendees for your insightful questions. To summarize, with the positive interim data from our Phase II CALLIPER trial and the continuation of enrollment of our Phase III ENSURE trials, we continue to make tangible progress on the clinical development of vidofludimus calcium. As progress is made, we also expect to provide an update on our preparations for further Phase II clinical development of IMU-856. With our funds at the end of the fourth quarter and the recent closing of the first tranche of our three-tranche private placement, we remain well funded, providing us runway through multiple clinical milestones in the third quarter of 2025. With that, I would like to close today's call. Thank you very much for joining, and we are very happy to answer any additional questions one-on-one.

Thank you, Daniel, and thank you for joining Immunic Fourth Quarter and Year End 2023 Earnings Call. The call has now concluded. You may now disconnect.