IMUX - NASDAQ

Good morning, everybody and welcome to Immunic’s Second 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 Chief Financial Officer. For the Q&A section of today’s webcast, we also have with us our Chief Scientific Officer, Dr. Hella Kohlhof. [Operator Instructions] 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 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 the 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 revisions 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 webcast over to our CEO and President, Dr. Daniel Vitt, to begin the presentation. Daniel, up to you.

Yes. Thank you, Jessica. And I would like to welcome everybody to Immunic’s second quarter 2022 earnings call. Earlier today, we announced our financial results for the quarter and mid-June 30, 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 second quarter 2022 and subsequent highlights, additional clinical updates we provided in the filings this morning, financial and operating results as well as anticipated milestones. As Jessica noted, before we close the call, you will have the opportunity to ask questions. The second quarter of 2022 was a period of continued progress in our clinical programs, which we believe set the stage for important data readouts during the second half of this year. In particular, we look forward to reporting first clinical activity data for our selective oral IL-17 inhibitor, IMU-935 in psoriasis and first in human healthy-volunteer data from IMU-856 are already available and systemically acting small molecule that has shown preclinical lead to regulate intestinal barrier function and regenerate bowel epithelium. But let me move to a more detailed review of our second quarter updates. In May, we announced the start of the patient cohort in our ongoing Phase 1 clinical trial of IMU-856 in patients with celiac disease. This represents the first-time patients are being treated with this small molecule, oral epigenetic regulator that appears to influence the tightly regulated network of genes and proteins associated with intestinal epithelial cell interaction and adhesion. With respect to vidofludimus calcium, our selective oral DHODH inhibitor, in June we reported top line data from our Phase 2 CALDOSE-1 trial in patients with moderate to severe UC. The data reveals a previously unknown interaction with chronic concurrent steroid use, resulting in the trial missing its primary endpoint. As a consequence, we decided not to continue our development of vidofludimus calcium for inflammatory bowel disease indications without a partner. Consistent with prior data sets in other patient populations, administration of vidofludimus calcium and its drivers observed to be safe and well tolerated. Also in June, the data from Cohort 1 of our Phase 2 EMPhASIS trial in RRMS, comprising 30 and 45 milligrams of vidofludimus calcium and placebo was published in the peer reviewed journal, Annals of Clinical and Translational Neurology. The publication underlines the importance of our excellent Phase 2 findings for vidofludimus calcium in patients with RRMS. I would like to express my thanks to the lead author and coordinating investigator, Robert Fox from Cleveland Clinic and to the entire team involved in preparing this article. In other corporate news, last month, we announced the appointment of Maria Tornsen an industry executive with 20 years of global commercial expertise and experience in U.S. and ex-U.S. markets to our Board of Directors and the resignation of Jan Van den Bossche from the Board, both of which were effective on July 5, 2022. Before I hand over to Glenn for the financial summary, I would like to highlight some other interesting clinical updates we provided in our earnings filing this morning. Based on the observation of the observed interaction between vidofludimus calcium and chronic steroid use in the CALDOSE-1 Trial UC patients, we performed the post-hoc analysis of our Phase 2 EMPhASIS data in RMS patients to explore the potential influence of steroids on these study results. As anticipated, steroid use was rare and among those RMS patients who received any steroids, the majority received only short steroid courses following relapse events or acute neurological events. Most of these patients only had one short course of steroids and the average duration of steroid treatment in these patients was 4.4 days. This underlines that steroids are rarely used in MS patients and mostly for very short duration. In conclusion, comparing patients who received at least 1 dose of corticosteroids with those who did not, we neither see differences in clinical parameters nor evidence that the rare short-term use of steroids in RMS patients has any influence on the effectiveness of vidofludimus calcium in this patient population. With respect to IMU-935, we are progressing well in our development program. In this context, we’ve already completed an exploratory Phase 1 study in 15 evaluable healthy human subjects to assess the drug-drug interaction potential for the drug. No relevant signals for DDI potential were observed, and the treatment in this trial was safe and well tolerated. Finally, the first two dose cohorts of our Phase 1 clinical trial of IMU-935 in metastatic castration-resistant prostate cancer have been fully recruited with 6 patients enrolled in the 300-milligram cohort and 6 patients enrolled in the 600-milligram cohort. Of these patients, all have completed the 28-day dose-limiting toxicity observation period. The third 900-milligram cohort is expected to start dosing soon. Initial safety data available so far show a promising safety profile of IMU-935 in metastatic CRPC with only benign adverse events and no dose-limiting toxicities. We plan to provide a more comprehensive update on safety and also on potential signs of anti-tumor activity of IMU-935 in this trial as soon as data from the planned dose expansion part are available. That concludes our summary of the second quarter 2022 and subsequent highlights as well as our clinical updates. I’d like to turn the call over to Glenn, who will provide the financial overview. Glenn?

Thank you, Daniel. I will now review the financial and operating results for the quarter ended June 30, 2022. Let me start with the cash overview. We ended the second quarter with $88.1 million in cash and cash equivalents, which we expect to be sufficient to fund our operations into the fourth quarter of 2023. Regarding the operating results, research and development expenses were $16.5 million for the 3 months ended June 30, 2022, as compared to $15.7 million for the 3 months ended June 30, 2021. These costs were mainly driven by external development costs related to the ongoing clinical trials of vidofludimus calcium and IMU-935. For the 6 months ended June 30, 2022, R&D expenses were $34 million as compared to $27.3 million for the same period last year. These expenses were also mainly driven by external development costs of our 3 clinical development programs. General and administrative expenses were $4.1 million for the 3 months ended June 30, 2022 as compared to $3.4 million for the same period ended June 30, 2021. The increase is mainly driven by personnel expenses, including non-cash stock compensation related to headcount. For the 6 months ended June 30, 2022, G&A expenses were $8.1 million as compared to $7.1 million for the same period in 2021. The increase was driven primarily by personnel expenses, including non-cash stock compensation related to headcount. Other expense was negative $1.3 million for the 3 months ended June 30, 2022, as compared to other income of $1.2 million for the same period ended June 30, 2021. The decrease was primarily attributable to an increase in the loss on intercompany loan between Immunic Inc. and Immunic AG as a result of changes in currency exchange rates. For the 6 months ended June 30, 2022, other expense was negative $0.7 million as compared to negative $0.9 million for the same period last year. Net loss for the 3 months ended June 30, 2022, was approximately $21.9 million or $0.72 per basic and diluted share based on approximately 30.2 million weighted average common shares outstanding compared to a net loss of approximately $17.9 million or $0.82 per basic and diluted share based on 21.7 million weighted average common shares outstanding for the same period ended June 30, 2021. Net loss for the 6 months ended June 30, 2022, was approximately $42.7 million or $1.49 per basic and diluted share based on approximately 28.7 million weighted average common shares outstanding compared to a net loss of approximately $52.5 million or $2.44 per basic and diluted share based on 21.5 million weighted average common shares outstanding for the period ended June 30, 2021. With that, I will turn the call back over to Daniel for an outlook on our upcoming clinical milestones. Daniel?

Yes. Thank you, Glenn. As mentioned in the beginning of the call, we have several important data readouts coming up. Our Phase 3 program of vidofludimus calcium in RMS is progressing based on the excellent clinical data package obtained in our EMPhASIS Phase 2 trial. It’s interesting to see the new third-party data clearly highlights the unmet need of preventing disability progression, which is seen across the spectrum of patients with MS. The understanding of MS has evolved with evidence showing a smoldering disease that is connected to Epstein–Barr virus infections and subsequent inflammation and associated with neurodegeneration in the MS patients. With its anti-viral, anti-inflammatory and potential neuroprotective effects, vidofludimus calcium came into quell smoldering multiple sclerosis and is uniquely positioned to address this high unmet medical need. As mentioned, several recent new findings from clinical research are underlining this concept and the relevance for the next-generation MS therapy. An important epidemiologic study published by Beyond Naked Eye in Science earlier this year showed a clear association between EBV infection and occurrence of MS with a 32-fold increased risk of EBV in EBV-infected patients with serum levels of neurofilament light chain increased. Another study published by Lanz et al, In Nature this year revealed that cross-reactive antibodies between the EBV antigen EBNA1 and CNS protein GlialCAM were found in the cerebro fluid of MS patients, basically linking EBV infections and neurodegeneration. Interestingly, the anti-CD20 directed therapies deplete B cells, but do not deplete their progeny antibody-producing plasma cells, which are CD20 negative, and therefore, unlikely are able to reduce those cross-reactive antibodies. One out there that probably many of us have been waiting for is our first-time public guidance of time lines for our ongoing clinical MS programs ENSURE and CALLIPER. We have carefully analyzed the impact that the current events in the Ukraine and Russia may have on our ongoing clinical programs. Based on this assessment, our current goal is to report data from the interim analysis of our Phase 2 CALLIPER trial of vidofludimus calcium in progressive MS patients in the second half of 2023 and to read our top line data at the end of 2024. The readout of the first of our Phase 3 ENSURE trials of vidofludimus calcium in relapsing multiple sclerosis is currently targeted for the end of 2025. We plan to periodically review this assessment and provide updates of material changes as appropriate. We believe that the design of the two ENSURE trials provided a straightforward path towards potential regulatory approval of vidofludimus calcium in RMS, which should be further supported by the data from the CALLIPER trial, focusing on vidofludimus calcium’s potential neuro-protective effects. We remain highly enthusiastic about the potential of vidofludimus calcium to become highly differentiated and uniquely valuable treatment option for this RMS patient population. Recruitment of our Phase 1 clinical trial of IMU-935 in patients with moderate to severe psoriasis is ongoing in Australia, New

Yes. Thank you, Daniel, and also Glenn, for walking us through the second quarter update. [Operator Instructions] Our first guest today is Andreas Argyrides of Wedbush. Sorry.

Need a minute to switch here.

My apologies. Andreas, please unmute yourself and go ahead.

Yes. Thank you, no worries. Good morning, and thanks for taking our question. Just two quick ones from us. So can you just describe the baseline characteristics of the celiac patients enrolled in the Phase 1 trial? And what are your expectations for the readout? And then perhaps you could just provide a little bit more color on the insurer readout. According to our time lines, it seems like it got pushed out a bit, we may not have that correctly. So any impact from Ukraine conflict or other factors would be great. Thank you.

Yes, I will try my best to answer the questions. So regarding the celiac disease trial, I think this trial is really proof-of-concept. So the goal is to really demonstrate that we somewhat confirm the impact of 856 on barrier functions. So we said, okay, let’s do that in patients where it’s proven that barrier function plays an important role. So that was the reason why we picked celiac disease. And it’s a 4-week treatment and we start treating for 2 weeks in a randomized fashion between active and placebo. And then after 14 days, we trigger a gluten challenge. And therefore, patients – and that’s maybe the most important basics characteristic need to really be on proper diet before inclusion in the studies, a gluten-free diet before inclusion in the study. And there are two endpoints we’re looking at. The one is an inflammatory endpoint, so we have mentioned IL-2, and the second one is then histological assessment of height and the patient, so two, quite important; one structural and one inflammatory parameter to be read out and to give us an impression whether we have an effect of the drug in these patients. Switching to the second question, I think that maybe we were a little bit misunderstood here in our presentation. These are the adjusted numbers. So we have more or less in our current guidance for the duration of the ENSURE trial and also CALLIPER. We’ve now priced in that we have not access to patients in Ukraine and in Russia. And so we – I think that’s now priced in, and this is the new guidance we are giving here on our way forward. Of course, compared with our initial plans, that, of course has slowed down a little bit, but I think we are very happy that the team was very successful in managing this challenge and finding new sites and also including new countries to get the best as possible recruitment in this challenging environment. So thanks – by this way I would also thank our internal team for all these efforts to managing that in this challenging situation.

Great. Thanks. I will jump back in the queue.

Thank you, Andreas. Our next speaker or guest is Yasmeen Rahimi of Piper Sandler. Yasmeen, please unmute yourself and go ahead.

Good morning, team. And thank you so much for my question.

Yasmeen, you’re on mute.

Okay. Good morning, team. Can you hear me?

Yes. Sorry, we were lost you for some reason.

No ways. Thank you so much for taking my question. The first question that’s directed to you is, is there an opportunity to go into the CALLIPER and the EMPhASIS trial and exclude or make it clear that steroid use should not be present? And then can you comment on if in the analysis that you presented this morning, if the doses and the duration of steroid use and MS were similar to what we had seen in the Crohn’s study. And then I have a follow-up question.

I can really be very clear on that answer. I mentioned in the call, and this was – I think the goal was to show that basically corticosteroid treatment does not play a role in MS therapy. So I mentioned that we had only less than 20% of patients with any steroid treatment during the trial at all and the average duration was 4.4 days. In UC trial, we have 50% of the patients put up on steroid treatment, and it has an average treatment duration of 300 days. So that’s, of course, a huge difference. It’s totally different. It does not play a role in the – there is no chronic steroid use in MS. It’s only in the case of – and I mentioned that in the case of an acute relapse, that patients get an infusion for a couple of days, and then that’s it. So we think – and also we look back on the data, as I said in the presentation, we look back on the data for the Phase 2, and there is no difference. So we see really no hint that this is at all a challenge. It seems to be really a UC-limited problem we have identified here for the steroids interaction.

Thank you. And then team could you maybe comment on to this exploratory DDI study? What prompted the idea of measuring to run the study with IMU-935 and maybe what are some of the findings of the study?

The finding, I mentioned there is no finding. That was the goal, exactly, to see that there is no DDIs. And what prompted the study is clearly the way forward. We are preparing Phase 2. And of course, there is a broad package to be done. And there is an important piece going forward in all these indications to make sure you don’t have a DDI problem. And therefore, we said, okay, let’s get that done early and we’re very happy that this trial was done and it was really showing that like, obviously has not no DDI risk.

Thank you. And sorry for one last question, can you just give us a little bit more color in terms of how enrollment is progressing into the 1C psoriasis cohort? I know you tend to give us a little bit of more details in each call.

It’s going well. And I think I mentioned – I think the last call, I mentioned that somehow it was challenging in our Australian sites to get new patients active, that changed. I think – I’m very happy and maybe that’s also because our team was visiting the sites and had good discussions with our investigators. I think even the Australian and New

Okay. Thank you, Daniel.

Pleasure.

Thank you, Yas. Next question comes from Matt Kaplan at Ladenburg. Matt, please unmute yourself and go ahead.

Good morning. Thanks for taking the questions. Just wanted to dig in a little bit more to the Phase 3 study for vidofludimus and MS, given the recent publications on EBV, are you monitoring for EBV activity in the study? And what could you see given the activity against say, EBV potentially?

So yes, of course, we have preclinical data that we inhibit the – or prevent the reactivation of Epstein-Barr virus infection that was tested in several other testing. And we will monitor this as well in the Phase 3 clinical study because we will take sputum samples and really check for shedding of virus. So that’s implemented.

And that was by the way it was implemented before the paper came out.

Yes.

So I’m very glad that our clinical team was forward-looking on that. And the team was believing in the EBV relevance already before the science paper came out.

And in parallel to this, to the shedding investigation, we will do the antibody distribution as well, anti EBV antibodies.

Great. And then a second question in terms of 935 the psoriasis cohort. What should we be looking for when we see the data in the fourth quarter in terms of activity?

As you know, Matt, we are very bullish about the program. So we think this is – it’s a big thing. On the other hand, this is the Phase 1 trial. So we are aiming to get around about 40 patients treated in these two dose groups. So what we want to see is a clear signal of activity. And I think it’s maybe not fair to say, okay, this and that present our success. The success is if there is a medically meaningful signal for activity. And I think that’s what we’re aiming for. There will be a success and a signal for really getting full speed to Phase 2 also in our partnering discussions for it. And I think the whole team is really excited about the progress right now. The next couple of weeks are really, really busy here, and we will do everything to get the data as quickly as possible.

Great. Thanks for the detail.

Thank you, Matt. [Operator Instructions] We currently have one more, which is Tom Smith of SVB Securities. Tom, please unmute yourself and go ahead.

Hi, everyone. This is Mike on for Tom. Thanks for taking our questions. I guess a quick follow-up to the last one. In terms of what you kind of see as a winning scenario in the upcoming 935 readout, curious if you could give any additional details just on what kind of efficacy signals you’re looking for?

Yes. Okay. I see, I need to tell more. Of course, at the end, if you look on the current market situation, what is perceived as a success, of course, the goal would be to be better than our Premier last, to come closer to the – what we’re seeing with anti-TNF antibodies and IL-17 antibodies in the patient situation. I just want to reemphasize, this is a Phase 1, we have two doses. And this is not a full Phase 2 – and this is not a full Phase 2 trial with the broad coverage of exposure. So therefore, we want to see activity here. But we’re not looking only on the percent PASI reduction, which is the main readout for efficacy. So percent reduction after 4 weeks, basically, that’s what we’re looking for and to compare it with other drugs published. We will also look, for example, for something like PASI 50 reduction, which may be is something worth after 4 weeks to look at. We also will look on itch and other parameters. The plan is to publish here whatever we have at that readout in the fourth quarter and give as much insight as possible at that time point. Just to give a bit of heads up on the details, the full unblinding of the trial is expected then to happen a little bit later than the first top line readout and then including also, for example, the histological assessment of skin punctures, for example, where we can look on cytokines and inflammatory subsets and so forth. That would be – give us much more insight than in a second portion of readouts. Yes. But I think I don’t want to make it small. It’s a big readout, it is an important step for the company going forward.

Got it. That’s really helpful additional color, I appreciate it. And then I guess just one last follow-up is, in terms of partnership discussions that you’ve mentioned previously. Curious if there is any progress you can provide there and when you might be able to expect to reach some kind of agreement?

So what the – sorry, I missed the first part. Partnership? Okay, good. Yes, I think this is a good point. Of course, there is always – there are different ways to progress. And what we do is basically, we try to be open to communicate a full set of data, not only to shareholders and investors, but also to our friends at pharma companies. And of course, we have activated discussions on basically in all the three programs with pharma and biotech companies. And going forward, of course, data is also driving these discussions. Maybe one remark on expectations here, we think that 935 is really uniquely positioned here as the first Th17, IL-17 selective RORgamma t inverse agonist. And we know that this is an outstanding feature, and we have high expectations on the value of the program, the broadness of development and any partnership should reflect that value we see in that asset. So we will likely not do a quick cheap deal. So we really want to make sure that value is also covered if we would go for a licensing transaction or something like that.

Understand. Thanks very much for the color.

Thank you, Mike. Alright. Given we have no more questions in the queue, we conclude our Q&A session. I would like to turn the conference back over to Daniel for any closing remarks.

Yes. Thanks, Jessica, and thank you to today’s attendees for your interesting questions. To summarize, we are highly enthusiastic about the progress we have achieved so far in 2022 as well as the important upcoming milestones to our earlier clinical programs we anticipate later this year. These include the unblinded safety data from both the single and multiple-ascending dose parts of our Phase 1 clinical trial of IMU-856 in healthy human subjects expected in the third quarter as well as the initial clinical activity results from Part C of our Phase 1 clinical trial of IMU-935 in moderate to severe psoriasis patients expected in the fourth quarter. With that, I would like to close the call. Again, thank you very much for joining our webcast today, and we are very happy to answer any additional questions in one-on-ones.