IMUX - NASDAQ

Good morning, and welcome to Immunic's Second Quarter 2023 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. Please note that all participants will be in listen only mode and this event is being recorded. [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 results 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.

Yes. Thank you, Jessica. I would also like to welcome everybody to Immunic's second quarter 2023 earnings call. Earlier this morning, we announced our financial results for the second quarter ended June 30, 2023, and highlighted recent activities as well as upcoming milestones. During today's call, we will walk through our second quarter 2023 and subsequent highlights, financial and operating results as well as anticipated upcoming milestones. After the presentation, as Jessica noted, we will open the line to give the audience an opportunity to ask questions. Let's start with a review of our second quarter 2023 and subsequent highlights. In April, we reported positive data from the maintenance phase of our Phase IIb CALDOSE-1 trial of vidofludimus calcium in patients with moderate-to-severe ulcerative colitis. These results were extremely encouraging as they demonstrated statistically significant activity of vidofludimus Calcium as compared to placebo, while confirming the very favorable safety and tolerability profile for the drug already observed in other trials. As illustrated on the slide, data showed a dose-linear increase in clinical remission as compared to placebo at week 50. An exploratory statistical analysis showed a p-value of 0.0358, confirm the 30-milligram dose of vidofludimus calcium to be statistically superior in achieving clinical remission at week 50 with a 33.7% absolute improvement over placebo. Overall, we believe the maintenance phase data confirms vidofludimus calcium's activity in ulcerative colitis patients. Also in April, we welcomed Dr. Richard Rudick to our Board of Directors. Rick has spent decades as a clinical expert in multiple sclerosis and as a clinical trialist, overseeing multiple successful pivotal studies. His insights are already proving valuable as we continue to progress the development of vidofludimus calcium in multiple sclerosis as well as in our earlier programs. In May, we have posted stronger-than-expected positive results from the Part C portion of our Phase I clinical trial of IMU-856 in patients with celiac disease during periods of gluten-free diet and gluten challenge. The data set shows the first clinical evidence of disability as observed preclinically to regenerate the gut wall. In particular, the Phase Ib data showed that IMU-856 was effective compared to placebo and improving four crucial aspects of celiac disease pathophysiology, prospect -- protection of gut architecture, improvement and reversal of patient’s gluten-induced symptoms, biomarker response and enhancement of nutrient absorption, such as vitamin B12. IMU-856 was also observed to be safe and well treated in this trial. Most importantly, the observed protection of the lining of the gut and intestinal villi from gluten-induced destruction independent of targeting immune mechanisms involved specifically in celiac disease. It appears to be unique among proposed therapeutic approaches. We believe this data provides initial proof of concept that this oral first-in-class molecule may represent an entirely new therapeutic approach, which could be a game changer in the way we treat gastrointestinal disorders, such as celiac disease, but also, for example, ulcerative colitis, Crohn's disease or irritable bowel syndrome with diarrhea. We are extremely enthusiastic about the potential for our IMU-856 program. On the years of these results was our announcement at the Digestive Disease Week in Chicago of clinical and preclinical data for IMU-856, including its molecular mode of action as a potent and highly selective modulator of SIRT6, a protein, which serves as a transcriptional regulator of intestinal barrier function and regeneration of bowel epithelial. Through its effect on SIRT6, IMU-856 has shown the ability in preclinical models to restore intestinal barrier function and regenerate all architecture. Importantly, in May, we also announced publication in the Journal of Medicinal chemistry of preclinical evidence showing that vidofludimus calcium acts as a potent Nurr1 activator in addition to its known mode of action as a DHODH inhibitor. We believe that the activation of Nurr1 could be responsible for the drug's postulated neuroprotective effects and may contribute to the reduction of confirmed disability worsening events in MS patients as previously reported from our Phase II EMPhASIS trial in patients with relapsing-remitting MS. That said, these findings could be relevant not just in multiple sclerosis, but also in other neurological indications. As a reminder, the potential neuroprotective properties of vidofludimus calcium were already identified in our EMPhASIS trial where the trial did not show encouraging clinical signals regarding prevention of confirmed disability worsening as well as a remarkable reduction of the biomarker neurofilament light chain, NFL. Most recently, last month, we hosted a virtual celiac disease expert round table to discuss ongoing active celiac disease or ACD, a serious lifelong autoimmune disorder and the substantial unmet medical need for our therapeutic solutions. We were honored to have been joined for this event by three renowned thought leaders from Harvard Medical School, Mayo Clinic and the Celiac Disease Foundation. We could not be more grateful for their participation. During the call, our Chief Medical Officer, Andreas Muehler also provided an overview of our IMU-856 program, including our positive Phase Ib trial results in celiac disease patients, which we discussed a little earlier this call. That concludes our summary of the second quarter 2023 and subsequent highlights. 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 second quarter ended June 30, 2023. Let me start with the cash overview. We ended the quarter with $77.3 million in cash which we expect will be sufficient to fund operations into the fourth quarter of 2024. Regarding the operating results. R&D expenses were $21.2 million for the three months ended June 30, 2023, as compared to $16.5 million for the three months ended June 30, 2022. These costs were mainly driven by external development costs related to ongoing clinical trials of vidofludimus calcium and IMU-856 and partially offset by a decrease in external development costs related to the Phase II clinical trial of vidofludimus calcium and ulcerative colitis and IMU-935 program. For the six months ended June 30, 2023, R&D were $44.1 million as compared to $34 million for the same period ended June 30, 2022. These costs also were mainly driven by external development costs related to the ongoing clinical trials in vidofludimus calcium and IMU-856 and were partially offset by a decrease in external development costs related to the Phase II clinical trial of vidofludimus calcium in ulcerative colitis in the IMU-935 program. General and administrative expenses were $3.8 million for the three months ended June 30, 2023, as compared to $4.1 million for the same period ended June 30, 2022. The slight decrease was chiefly driven by a decrease in noncash-based stock compensation, partially offset by increased costs across a number of categories. For the six months ended June 30, 2023, G&A expenses were $8.1 million as compared to $8 million for the same period ended June 30, 2022. The nominal increase was related to an increase across a number of categories which was partially offset by a decrease in personnel expense and G&A, primarily due to non-cash based stock compensation decrease. Other income was $1 million for the three months ended June 30, 2023, as compared to negative $1.3 million for the same period ended June 30, 2022. The increase was primarily attributable to a decrease in foreign exchange losses 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 for clinical trials in Australia. For the six months ended June 30, 2023, other income was $3 million as compared to negative $0.7 million for the same period ended June 30, 2022. The increase was primarily attributable to an increase in interest income as a result of higher interest rates, a decrease in foreign exchange losses and a research allowance attributable for the tax year 2021 from the German Federal Ministry of Finance. The increase was partially offset by a decrease in R&D tax expenses for clinical trials in Australia. The net loss for the three months ended June 30, 2023, was approximately $24 million or $0.54 per basic and diluted share based on 44.4 million weighted average common shares outstanding. Compared to a net loss of approximately $21.9 million or $0.72 per basic and diluted share based on 30.2 million weighted average common shares outstanding for the same period ended June 30, 2022. Net loss for the six months ended June 30, 2023, was approximately $49.3 million or $1.12 per basic and diluted share based on 44 million weighted average common shares outstanding. Compared to a net loss of approximately $42.7 million or $1.49 per basic and diluted share based on 28.7 million weighted average common shares outstanding for the same period ended June 30, 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 available development programs. Our current expectation is to report an interim biomarker analysis from our Phase II CALLIPER trial in progressive MS, including serum neurofilament light chain NFL in the fall of this year. This now more precise time line provides additional clarity compared to our previous guidance on the second half of 2023. We expect to readout this trial at the end of 2024. Additionally, we look forward to reporting data from the interim analysis of our Phase III ENSURE program late next year and to readout the first of our identical twin Phase III ENSURE trials in relapsing MS at the end of 2025. As we have stated before, based on the strong clinical activity observed thus far and vidofludimus calcium solidly established safety and tolerability profile to date, we continue to believe that the design of the Phase III ENSURE program will provide a straightforward path to potential regulatory approval in relapsing MS. As I noted earlier, the Phase II CALLIPER trial is designed to corroborate the neuroprotective potential of vidofludimus calcium in progressive MS and could, therefore, be an additional differentiator for the drug in the MS market. Vidofludimus calcium with its combined anti-inflammatory, antiviral and direct neuroprotective effects, may represent an important and unique treatment option targeting the complex pathophysiology of MS. With regards to our IMU-856 program as a result of the overwhelmingly positive data generated from the final portion of our Phase I clinical trial in celiac disease patients, we have begun preparing for a Phase II clinical trial in ongoing active celiac disease patients. Once again, we are very excited about this program and believe that IMU-856 could represent an entirely new and innovative oral treatment option -- approach for a number of gastrointestinal diseases 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.

Yes. Thank you, Daniel, and also thank you to Daniel and Glenn for walking us through the first half of 2023 and subsequent highlights as well as our upcoming value inflection points. [Operator Instructions] And we jump right into it with Yasmeen Rahimi from Piper Sandler. Yasmeen, please unmute yourself and go ahead.

This is Lauren on for Yas. Congrats for all the pipeline progress. Two questions from us. So first, I know you guys have historically said that for NFL and GFAP that you want to see separation versus placebo maybe could you dig in a little bit? And is there any type of magnitude that you want to see to be considered a strong signal -- and with that, what do we know about the separation in regard to how it will correlate to present brain volume change on the primary end point. And then the second question, have you had your end of Phase II meeting with the FDA prior to the Phase II in celiac? And when can you come back and communicate your next steps for the Phase II? Thanks.

Yes. Thank you, Lauren. Coming to NFL. I think -- as you're aware, NFL is maybe a more established market compared to GFAP. But we don't know a lot about other studies effects in NFL changes in progressive MS. And therefore, it's difficult to really give a guidance for what we see. I think the goal is here to look for a signal. And specifically, and that's maybe the main purpose of this trial, is to look whether the sub-indications. So it's not [indiscernible] indications we are testing here. So we have patients with primary progressive active and non-active secondary progressive to see whether there is a specific indication where patients benefit more based on the biomarker signal. Everything else, I think, would be a little bit over interpretation risk if that is done. And for the correlation with the brain volume, I don't think that's established. I think that's something we really want to observe and need to observe. And finally, also underline then with other endpoints, more on the clinical side, for example, confirmed disability worsening, which I believe is a very important readout for the progressive MS study for the CALLIPER study. Coming to the 856 question. Yes. So we -- this was the Phase Ib study. So there is no end of Phase II meeting plan. I think our regulatory interactions are currently focusing on IND submission. And based on that, I think there is an active dialogue done with the FDA. So that's ongoing there. And it's a more reliable time line, I think that's the main reason why we think this is the right track for the regulatory interaction right now.

Perfect. Thank you, guys.

Thank you, Lauren. And we have a follow-up question on the CALLIPER interim analysis that came in writing from Tom Smith at Leerink. Can you elaborate on what data you expect to report with the interim biomarker analysis from the CALLIPER trial analysis in the fall? What are your expectations for this readout?

Yes. As I said -- maybe I need to repeat myself a little bit here. So it's really more a qualitative analysis. So to see a difference here. If we, for example, see in the treatment groups a more benign NFL change effect. So for example, a reduction there, that would be great. But I think the main purpose is really to identify some indications where we believe what is the most promising path forward in the progressive MS space for the treatments here. And I really -- I can't quantify here. I give any guidance on the amount we expect. This is the forefront of research, I would say, there's not too much of historic comparison available here. So let's keep fingers crossed for good differentiation here between active and placebo in this study.

Thank you, Daniel. Thank you, Tom, for the question. Next one, we have live here in the queue, Andreas Argyrides from Wedbush. Andreas, please unmute yourself and go ahead.

Good morning. And thanks for taking our question. For the -- sorry, I mean this is not my question. So can you quickly also provide any insight into the patient enrollment for ENSURE? Is it progressing according to your expectations? And when do you expect the trial to be fully enrolled? And then a quick one on the vidofludimus calcium in ulcerative colitis. Can you update us on where the program stands and if you continue to look for a partner for the program? Thank you.

Yes. First of all, I think the ENSURE enrollment goes well right now. We have -- the two studies ENSURE 1 and ENSURE 2 running and they are on track compared to the planned enrollment right now. So that's, I think, a pretty good situation there. On the UC front, yes, that's an ongoing discussion we are having. That's also the important -- also an important thing is here that we -- as you may have seen, we also have IMU-381 added to the pipeline which is a program which is dedicated to GI indications and may also benefit from the data we have obtained from the -- from the CALDOSE study from the maintenance phase, to potentially also come up with another molecule, which may be effective there and can leverage the proof-of-concept we have generated for vidofludimus calcium in ulcerative colitis. So there is more potential. And we will -- I strongly believe that the mode of action here we have was for the first to proven and that allows, I think, a pretty interesting development going forward in that space with both.

And just one quick follow-up. Can you just also remind us what gives you confidence that the Nurr1 activator would work in progressive forms in multiple sclerosis?

Yes. I think -- it's more the general -- the established biology on that coming from literature. And so far, also our ins, we have seen on the -- on confirmed disability of worsening. And our conclusion that vidofludimus may have an effect on relapse independent disability worsening. And therefore, it may then also work in progressive MS. But that's, I think, the objective of the clinical study. I think we really need to prove that in this study.

Thank you, Andreas. [Operator Instructions] And we also have Matt Kaplan in the line from Ladenberg. Matt, please unmute yourself and go ahead.

Thanks, Jessica. And good morning. Just a follow-up on 856 and Celiac. I guess you're in preparation mode with the IND, what are your current thoughts on the design of the Phase II as you move it into Phase II?

Yes. Thank you, Matt. This is, of course, an important thing right now here. As you see from our presentation, our excitement about the program, and we believe it really deserves to continue as quickly as possible into celiac disease. And therefore, we align with a couple of global experts, had a number of good meetings, discussed what is the right design, also carefully looked on the FDA draft guideline for Phase III in celiac disease which was published second half of last year. And based on that, we -- maybe some things, some thoughts. This is not set in stone. So this is an ongoing discussion and I'm happy to share some of the thoughts. So we think we should -- the patient population is certainly really little bit equivalent to what the FDA guidance says. So we will look specifically on active celiac disease patients here and endpoint are things tested will be, for example, histological changes, symptomatic changes and also some biomarkers and functional changes and improvements. T I think the FDA guideline states that they want to see for Phase III studies, improvement of symptomatic and histological improvement here, which also should be tested in effectively because we really want to define the right doses and the right design for the Phase III studies. Duration also, maybe one comment here. As I said, not finally decided, but likely the study will mainly look on a three-month time line for improvement on those scores. And what I can say right now is the exact size of the trial that's work in progress to determine the exact size of each group of the trial. But maybe one remark on the doses, we are looking a spread of doses, which would clearly result in identification of this best suitable dose for a Phase III study going forward.

That's very helpful. And then one follow-up on that, I guess, given the potential utility of 856 outside of celiac disease and ulcerative colitis. How are you thinking internally about the development of 856 and 838 and ulcerative colitis?

Well, both are interesting, honestly. I think the challenge with 838 is that we are in a very important MS study at the same time. So therefore, I think our GI focus is right now with the fresh results from the Phase Ib study on 856. And clearly, I think 856 has something very special. It is not immunosuppressive. And therefore, I think the drug could really add something new to the treatment landscape in GI disorders. And if you look on the current treatments and things in development for indications like Crohn's and colitis, clearly a non-immunosuppressive drug, which is able to restore the proper healthy epithelial layer in the gut wall, would add something substantial. And I think that's the beauty of that concept could easily combine with other treatments as well down the road. And therefore, maybe the first choice to over-the-counter so-called efficacy ceiling we see with just immunosuppressive therapies. So I think, I see a very bright future for 856 in the broader GI space really beyond celiac disease as well. It's early to say what indications exactly, were we in the focus there, but likely IBD is a core -- that's a core theme in further development.

Thanks Daniel. That’s very helpful.

Thank you, Matt, and thank you to all our guests today. This concludes our question-and-answer 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 insightful questions. In summary, we remain well funded with 77.3 million on our balance sheet providing expected run rate through multiple value-creating clinical milestones into the fourth quarter of 2024. Looking ahead, as noted, we expect to report data from the interim analysis of our Phase II CALLIPER trial, vidofludimus calcium in progressive MS in the fall of this year. As progress is made, we expect to also provide an update on our preparation for the Phase II clinical trial of IMU-856 in patients with ongoing active celiac disease. 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.