IMUX - NASDAQ

Good morning and welcome to Immunic's First Quarter 2022 Earnings Call. My name is Jessica Breu, Head of Investor Relations and Communications at Immunic. I will also be the moderator on today's call. Speaking on the call are Dr. Daniel Vitt, our Chief Executive Officer and President as well as Glenn Whaley, our recently promoted Chief Financial Officer. Please note 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. If you joined the webcast via this new platform, there are two ways to submit questions. You can either submit your question in writing via the Q&A tool of the

Thank you, Jessica. I would like to welcome everybody to Immunic's first quarter 2022 earnings call. Earlier this morning, we announced our financial results for the quarter ended March 31st, 2022, and highlighted recent activities as well as upcoming milestones related to our clinical development pipeline. During today's call, we will talk through our first quarter 2022 and subsequent highlights, financial and operating results, as well as anticipated milestones. As Jessica noted, before we close of the call, you will have the opportunity to ask questions. The first quarter of 2022 was marked by continued [Indiscernible]

My apologies, Daniel. I had to mute you for a second. It seems like the audio had a little problem. Maybe you can restart with the review of the quarter, please.

[Indiscernible]

No. Still a technical issue with the line. My apologies to the audience. No, not working. I'm not sure. Maybe, Glenn, would you like to take over?

Sure. We'll -- we'll do Jessica.

So earlier this morning, we announced our financial results for the quarter ended March 31st, 2022, and highlighted recent activities as well as upcoming milestones related to our clinical development pipeline. During today's call, we will walk through our first quarter 2022 and subsequent highlights, financial and operating results, as well as anticipated milestones. As Jessica noted, before we close the call, you have the opportunity to ask questions. The first quarter of 2022 was marked by continued advancement across the business, including financially and within our key pipeline programs. The progress we have made, as I stated in last quarter, is clearing the way for several important data readouts this year that could be transformative for Immunic. Let me walk you through the first quarter '22 and subsequent events in more detail. In February, we presented preclinical data at the potent anti-inflammatory activity of vidofludimus calcium at the 17th Congress of ECCO. Highlights included: First, that vidofludimus calcium reduces proinflammatory immune cell responses by inducing regulatory macrophages, reducing proinflammatory cytokines secretion and reducing t-cell proliferation. Second, vidofludimus calcium shows additive to synergistic effect with anti-TNF antibodies. And finally, the DHODH is important in the fraction cell that receive a strong immune stimulus and are highly metabolically active. In conjunction with the Eco Congress as you may recall, we also announced the blinded baseline characteristics of our Phase III CALDOSE-1 trial of vidofludimus calcium [Indiscernible] Patients in the trial had active to moderate severe disease. And as we noted, we were pleased to see that only 17% of the patients were pre -treated with biologics. The trial utilized a central independent reader to evaluate the endoscopic eligibility criteria. At baseline, 55% of patients had a modified mayor endoscopic score of three and 45% of patients had a score of two. As previously noted, we firmly believe that the randomized patient data and the methodology regarding endoscopic assessments used in the trial to contribute to ensuring optimized study readout. We continue to believe that the results of the interim analysis, along with vidofludimus calcium, already established strong safety and tolerability profile, suggest that the drug could become a preferred oral treatment option for patients suffering from ulcerative colitis and obvious alternatives to biologics. Moving to our second asset, IMU-935, our potentially best-in-class oral IL-17 inhibitor. In February, we significantly bolstered our intellectual property protection for IMU-935 with the receipt of notice of allowances for composition of matter patents in the U.S. Europe, and Australia. These patents provide protection, at least to 2038, with further extension possible through the potential PTE in the U.S. or SPC in Europe, respectively. In March, we promoted Glenn Whaley to our Chief Financial Officer. He has done an outstanding job in 2019. Pleased to have plan in this position. Most recently, we announced the start of the patient cohorts and our ongoing Phase 1 clinical trial of IMU-856, our third clinical asset and patients with celiac disease. Marking the first time, patients will be treated with this early available small molecule, which targets restoration of intestinal barrier function and regeneration about epithelium. This is an important milestone in the clinical development of this program as data from preclinical studies have suggested to us that IMU-856 can restore barrier function in the gastrointestinal track and regenerate intestinal architecture while maintaining immuno - compency. Moving on to the financial results. Let me start with the cash overview. We ended the first quarter with $95.7 million in cash and cash equivalents and then subsequently, in April, we raised an additional $10 million through our at-the-market facility.

Recording in progress.

We anticipate this cash balance to be sufficient to fund operations into the third quarter of 2023. Regarding the operating results; research and development expenses for the quarter ended March 31st, 2022 were $17.4 million as compared to $11.5 million for the same period in 2021. The increase in costs for the quarter reflect the continued ramp-up of clinical expenses related to our three clinical programs as well as increased personnel expenses related to the hiring of more people to support the company's growth. The increases were partially offset by decreased costs related to our Phase 2 clinical trials in COVID-19 and ulcerative colitis and a decrease in drug supply costs for vidofludimus calcium. General and administrative expenses were $4 million for the quarter ended March 31st 2022 as compared to $3.6 million for the same period last year. The increase in costs was primarily due to personnel expenses as well as smaller increase in costs across numerous categories. Net loss for the three months ended March 31st, 2022 was approximately $20.8 million or $0.74 per share based on approximately $28.1 million weighted average common shares outstanding Compared to a net loss of approximately $34.5 million or $1.63 per share based on $21.2 million weighted average common shares outstanding for the same period in 2021. Moving on to notably one of our most important upcoming value inflection points will be the highly anticipated readout of our Phase II CALDOSE-1 trial of vidofludimus calcium in patients with moderate-to-severe UC, which we previously reported having completed enrollment during the fourth quarter of last year. As a reminder, at the completion of patient recruitment, the trial had randomized a total of 263 patients into four arms. Three active dosing arms of 10, 30, and 45 milligrams, as well as placebo. As for IMU-935, after having previously reported positive unblinded safety, PK and PD data from healthy volunteer portions are ongoing Phase 1 trial of IMU-935 as planned. We expanded the trial in Q4, '21 to include a third portion to treat patients with mild to severe psoriasis. This was a key milestone for us as it represents the first-time patients are being treated with this compound. As mentioned in our fourth quarter call, in order to address the COVID-19 related limitations in Australia and New

Thank you, Glenn. Thank you very much for jumping in here and apologies again to the audience for the technical issues. That's what sometimes happens in the digital world. Daniel, do you want to say some closing remarks for the former part of the presentation?

Well, I just want to say thank you to Glenn and you to manage that despite the challenges here. We hope that works now for the Q&A session. I think what I wanted to add to the end of the presentation is that we're really pleased that we will really out this number of important clinical trials very soon. And we can do that with striking financial base, decent cash reach, as well as we have raised an additional more than $40 million since beginning of this year to our HAM facility. And with that, maybe Jessica, you can open the Q&A session.

Sure. More than happy to do this. Just as a reminder, if you joined a webcast via the

Great. Thanks, guys. Thanks for taking the questions. Just a couple on our end. First on the vidofludimus trial in ulcerative colitis. We've seen a number of Phase 2 readouts over the last few weeks. When you're looking at some of these results, can you just help put your study with vidofludimus in the context and remind us what's driving your confidence in success at the top line here in June?

Sure. Happy to do that. I think we really prepared intensively with care outs to design of the trial inclusion criteria. And we've tried to make sure that the trial is well-designed, looking on baseline purposes as mentioned, also making sure that we technically have a good trial ongoing. So far, we're satisfied with what we have seen, technically, from the trial. So, we're very confident that this trial will reap out probably. Our confidence on the data -- on positive data, comes from a couple of other findings in the past. First of all, you may remember that there was a small interim analysis done after 25% of the patients have been -- have completed the 10-week induction phase, and the data review committee at that time had suggested to continue with all active doses because none of the dose was expected to be ineffective compared with placebo. This was not done on a statistical assessment, but just from a data review committee perspective. Also, there was prior data from an open-label small proof-of-concept trial, the entrant’s trial in the past, showing that the [Indiscernible] may have activity in these indications. So, we're quite optimistic and confident that works.

Okay, great. That's helpful. And then just a couple on IMU-935. First, can you just clarify if you started dosing psoriasis stations in the Part C portion of the study. And then as you look to expand enrollment here in the Eastern Europe and you're opening up the trial sites in Bulgaria and Macedonia, how are you thinking about regional enrollment? Do you expect more patients to come from the Australia - New

Yes, thank you once again. I think -- good points. So, we -- yes, we are recruiting patients right now in the psoriasis portion in -- we currently have active recruitment of the low-dose cohort, which 150-milligram once daily. That's going on in Australia and New

Okay. Got it. That's helpful. Thanks for taking the questions.

Thank you, Tom. Next guest in our line here today is Yasmeen Rahimi of Piper Sandler. Yas, please unmute yourself and go ahead.

Good morning, team. Thank you so much for taking my questions. I've a number for you. Maybe the first place to start off is, recently we saw another competitor program who missed on their primary endpoint driven by losing maybe some patients due to the European conflict. So maybe, can you kindly ensure us that the number of samples that were analyzed specifically for clinical remission, or exactly as you predicted, there are no lost follow-ups. So, let's start there then I have a few more.

Sure. I think the good thing is that the ten-week phase, which is the primary endpoint, was completed before the war started in Ukraine. So yes.

Okay. Great. Second question for you is, we did also notice that there's quite a bit of sponsors who have lots of sites ongoing, there is quite a bit of heterogeneity that could influence the placebo. So, given the CALDOSE study has a very large clinical sites up and running, how can we get confident that there's not going to be an introduction on site heterogeneity? So just any commentary you could provide us as we head into the top-line could be helpful.

That's true and I think this will also -- this is a challenge and you see tracks for a [Indiscernible] basically and we try to really address it by, for example, doing eligibility assessment based on baseline endoscopy streaming. So, we make that in a central unbiased fashion just to make sure there's no site bias and no country bias in these things and I think that's good. Also, another part of that is to ensure data integrity, we also implemented a two plus one [Indiscernible] scheme for the endoscopy. So, it's some in the sense of session a double-blind fashion and the two independent readers are looking on the endoscopies and if they don't come to the same conclusion, there's a third adjudicator taking care of that. That's also interesting being our recommendation from the FDA in the new drop paper for UC guidance for Phase 3. So, I think we did what we can do to make sure there's not an unwanted noise. Also, we are straight fighting for prior therapies, also stratifying for stereo use, for example. So, everything in place to make sure there is no statistical issues here from there.

Thank you, Daniel. And then where are we as obviously we have maybe 2 and 1/2, maybe three weeks left into June. Can you just give us a quick snapshot on -- has the data been unblinded yet, what is -- what is going to be -- what's left to do between now and reporting topline data? And if you feel comfortable to narrow down, when in June, whether it's early June or mid-June or late June that could be really helpful for us so, and thank you again my mere detailed questions to you.

Yes, I would love to give you a date, but I can't do that. So, and we're just so blinded. So, I've not seen the blinded date. I should not have this call if I would be unblinded. No, I think it's June. It's maybe more -- more likely first-half of June, but we keep the guidance for June. Database is still not locked. So that's work in progress. It's a final signature hunting and cleanup work on the database ongoing right now.

Okay. Great, thank you. I'll jump back in the queue.

Thank you, Yas. Our next guess is Andreas Argyrides of Wedbush. Andreas, please unmute yourself and go ahead.

All right. Good morning. And thanks for taking our question. Just a quick one from us here also on CALDOSE-1. The studies powered for an 8% to 12% improvement in clinical remission based on an expected placebo response of 5% to 10%. Can you just talk about how you have planned to mitigate the placebo response? Some other trials have seen a higher than 5% to 10% in their trials. I appreciate that. Thank you.

I think there are endless discussions on that that I know. And there maybe lot of reasons why in some trials, placebo rates are higher. What we see as the biggest risk and I think it was also repeated by KOLs recently as it shelled out too much co-medication, which sometimes has an unpredicted activity on placebo patients. So, we don't allow immune-suppressers as CORE therapies, for example, that we're seeing with some other trials in the past. And they were coordinated with a higher risk of placebo raise. The other thing we're doing is just to make sure we have stringent inclusion criteria and we follow our own principles here and then I think the trial should be comparable to other successful trends.

Great. Thank you. I'll jump in the queue.

Thank you, Andreas. Next one is Matthew Kaplan of Ladenburg Thalmann. Matt, please unmute yourself and go ahead.

Hi, good morning. Thanks for taking the questions. I just wanted to kind of stay with the CALDOSE study a little bit. I guess, given the interim analysis results that you saw, can you talk about -- a little bit about kind of the -- how you're going to be analyzing the different doses in the study? And should we expect a dose response given the, I guess, interim dose that SAD continual doses?

Thank you, Matt. Thank you for asking what is the call on the doses. I think I had a very strong opinion on that when we started the trial and in between [Indiscernible] our wonderful in [Indiscernible] data, in 2020, where, I think 30 and 45 [Indiscernible] from the two high-dose groups came on almost -- at the same good activity level. So, I can't tell you really if I believe 45 is the highest active dose. I'm a little bit careful on that end. What we, I think, can deliver here is to identify a suitable dose for Phase 3. And we're very lucky that we have three active doses in the trial in placebo. So, this trial is designed to deliver the answer to the question, what is suitable dose for Phase 3? I think that's the purpose and that we likely we'll deliver. Yes. So those responses that would be wonderful. But if you look on other trials, it's sometimes following interesting curves.

And then in terms of 856 the Phase I program, you said you're expanding into colitis patients, can you -- sorry, celiac patients, can give us a sense in terms of what to look for there as the data -- potential data readouts, I guess, from the SAD MAD grouping in the third quarter?

I think that -- thank you once again. This is, of course, a big step because the third program is currently actively recruiting patients in the MAD portion of the healthy volunteer part of voluntary treatment in healthy volunteers. And this data and together with these -- with the single-ascending goals part is expected to be available in the third quarter of this year. Not too far from now, we should have safety and PK data. For the [Indiscernible] and it was the message here on celiac disease is we think that celiac disease as a good proof-of-concept indication for a drug, which is without impacting directly the immune system, able to restore the various function. And therefore, we believe that this is a very good indication for proof-of-concept

Thanks, Daniel.

Thank you, Matt. [Operator Instructions]. Next question comes from Boobalan Pachaiyappan at H.C. Wainwright. Boobalan please unmute yourself and go ahead.

Hi, can you hear me, okay?

Yes. Hi.

Wonderful.

Awesome. So just to follow-up on 856. Trying to get an understanding of the biomarkers that you might be evaluating down the road. So, are you planning to investigate some histological biomarkers that might require [Indiscernible] biopsy, or some less invasive peripheral blood [Indiscernible] cytokine biomarkers? And also, if these biomarkers [Indiscernible] in any of the prior competitors’ trials.

Yeah, I think that -- thank you for the question, Boobalan. I think, yes, sure. We will measure also biomarkers in that part of the trial. We will also give more update on the trial itself in the next couple of months to come when we progress through the trial. The idea is really to have an indication where you really have more synchronized process of barrier function modulation and to use that strength also to demonstrate that 856 has the potential to restore barrier function and maybe also and it brings us to the histology question, restore the proper structure here in the gap wall.

Okay. I understand. And one more on this. You mentioned that about -- you'll be -- the drug will be evaluated in 28 days. So just curious whether that period is sufficient to gain initial evidence for drug activity? Specifically, can interest in barriers function normalize and bowl epithelium regenerate in 28 days?

Yeah, I think based on the discussions we're having with the experts and our teams had a very intense work there, we believe that should be possible in the 28-day timeframe.

Okay. That's it from me. Thanks so much

Thank you.

Great. Thank you, Boobalan. The last one I currently have in the line here is Brandon Holly of Roth Capital. Please unmute yourself and go ahead.

Hi. This is

Yeah, thank you exactly for that question. We -- I looked around or with the team looked around on other trials and we found on the baseline characteristics, maybe the best competitive would be the ozanimod Phase 2 trial, which was -- has seen level of precluded patients also severe achievers comparable. I think that's maybe the -- from what I have seen, I promise it's the best comparator.

Thank you. And then the next one year is just, again as we prepare for the first preclinical data for the psoriasis patients treated with IMU-935. Again, what should we be keeping in mind as we think about benchmarking the data that's coming out again? And then have you begun active conversations with regularly bodies in the U.S. and Europe?

With respect to the -- sorry. With respect to the 935 or?

Yeah. 935 psoriasis specifically.

Yes. I think the -- thank you for the question. And 935 is a wonderful molecule with very unique [Indiscernible] inhibition off IL-17 as an oral drug. So, we believe the drug is poised to be a successful drug between currently used oral treatments namely the [Indiscernible] I think is the dominant player there, and the broadly very successfully used IL-17 pathway antibodies. So, if you asked me regarding what can we expect, the treatment is limited to four weeks. Therefore, we can only show four-week data and therefore we set -- we look on reduction of the PASI score. So, we will not look on PASI-50, PASI 75. That is something we will do in Phase II, but for the Phase I, proof-of-concept, basically, what we're doing here, we are looking on the PASI reduction. But the good thing is there's so much data ultimately drugs, where you can actually compare this. Typically, if you look on historic trials there, the placebo rates are ranging between 10%, 15% sometimes up to 20%, that's it. So, we think we should see quite good differentiation already after four weeks if we compare active -- the two active doses with placebo group. And therefore, this trial is really designed to deliver a very strong rationale for a Phase II trial, which is now bridging to the next question on regulatory discussion. We're currently working on packages for discussions with the FDA and also with other regulatory bodies but it's not yet done so that's work in progress.

Thanks, Daniel. And then the last one here, with so many catalysts coming up it's easy to forget about the ensuring CALLIPER studies, but I was just wondering if you can provide any additional color on progress there with enrollment or side activations?

Well, as you know, we usually don't give any guidance on updates on the enrollment of the trials. We give guidance on how we believe they're running. So -- and given that, ENSURE and CALLIPER started not too long ago, they are still in this startup mode and phase. They are actively recruiting in several countries, we're adding more countries, more science step-by-step, so that's progressing. Also, I think -- and you're right. We have so many other things we're currently focusing on in the readouts for the next couple of months that we don't talk too much about that. But, as you know, it's a good opportunity to remind everybody that the drug has shown -- its rate has shown wonderful, good activity in the very big Phase 2 trial in relapsing MS and therefore, we think or we continue believing that the drug is likely successful in the Phase 3 RMS phase trial as the insured trials. But we were also quite throughout about the potential in progressive MS and that's usually not covered too much in the press and everywhere but we think that mode of action and the features we have seen and recently had also some data in the context of our 10-K findings from our second quarter to minimum dose cohort that we see a lot of [Indiscernible] is really neuro protective and may have a very strong benefit also for progressive patients with PMS there and, so that's also an important piece we're working on.

Thank you. And looking forward to the updates.

Thank you,

Thank you, Jessica. I just need to find them. Thank you, Jessica. And thanks to today's attendees for your insightful questions. We're highly enthusiastic about the progress we achieved recently, and the important upcoming milestones we anticipate this year. Including the Phase II UC data for vidofludimus calcium in June and the initial psoriasis patient data for IMU-935 in the second half of this year. With that, I would like to close today's call. Thank you very much for joining, and we're very happy to answer any additional questions in one-on-ones. And once again, apologize for the technical issues we had during this call.