IMUX - NASDAQ

Good morning, and welcome to Immunic's First Quarter 2024 Earnings Call. My name is Jessica Breu, Vice President, Investor Relations and Communications here 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. [Operator Instructions] This event is being recorded. After today's presentation, there will be an opportunity to ask questions. [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 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 on today's earnings call. Earlier this morning, we announced our financial results for the first quarter ended March 31, 2024, in our press release. During the call today, we will walk through our first quarter 2024 achievements and subsequent highlights, financial and operating results as well as our clinical development programs, including 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 first quarter 2024 and subsequent highlights. With our early January announcement of the completion of the three-tranche private placement of up to $240 million, we are well capitalized into the third quarter of 2024. This nicely covers the read-out of our Phase II CALLIPER trial of our potentially groundbreaking lead asset, vidofludimus calcium, in progressive multiple sclerosis, which is anticipated in April 2025. 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. As a reminder, we received a total of $80 million in the first tranche, which closed on January 8, 2024. The second tranche is a purchase of $80 million, which is conditioned on the announcement of the Phase II top line data for the CALLIPER trial. The third $80 million tranche is to occur no later than 3 years after the second tranche. All in all, this financing, completed in a difficult capital market environment and with such a strong group of investors, affirms the enormous potential inherent in our clinical programs. In February, Dr. Bob Fox from Cleveland Clinic, who is the coordinating investigator of our ENSURE and CALLIPER programs, presented extremely positive data from an interim analysis of our Phase II CALLIPER trial of vidofludimus calcium at the ACTRIMS Forum 2024. From the interim analysis, we saw a clear separation of vidofludimus calcium from placebo in serum neurofilament light chain levels across all PMS patients as well as all subtypes. We believe that this dataset provide biomarker evidence that vidofludimus calcium's activity extends beyond the previously observed anti-inflammatory impacts, further reinforcing its neuroprotective potential. This [ strong cycle ] also points to a more likely positive outcome for all -- for the overall CALLIPER trial as well as clinically relevant key secondary end points like prevention of disability worsening. Also at the ACTRIMS Forum 2024, Dr. Alexandra Hermann, Manager of Translation Pharmacology at Immunic, presented a poster on our previous Phase II CALVID-1 trial. Because of vidofludimus calcium's broad-spectrum antiviral activity and potential ability to prevent the reactivation of the Epstein-Barr virus, it may also contribute to the reduction of fatigue in MS patients. While fatigue is one of the most dominant symptoms among MS patients, greatly influencing the quality of life and ability to participate in social activities, it remains largely unsolved from the clinical perspective. Our clinical trial in COVID-19 patients showed an initial signal that patients treated with vidofludimus calcium exhibited the post-COVID symptom of fatigue less frequently than the patients in the placebo arm. Recent third-party data in post-COVID patients identified EBV reactivation as a potential cause for fatigue in this patient group. Our goal is to confirm the ability of vidofludimus calcium to influence fatigue and EBV reactivation in our ongoing Phase III ENSURE trials in relapsing multiple sclerosis patients as this could result in yet another key differentiating feature for this medication candidate. In March, we had the opportunity to further extend the visibility of our program with the presentation of data at both the Annual Meeting of the Society for Virology and Frontiers in Medicinal Chemistry, highlighting vidofludimus calcium's potent activation of a neuroprotective transcription factor, Nurr1, as well as its potent broad-spectrum antiviral activity in vitro. As a reminder, last year, we confirmed in preclinical testing that vidofludimus calcium acts as a potent Nurr1 activator in addition to its known mode of action as inhibitor of DHODH. 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 MS. Also in March, we received Notice of Allowance from the U.S. Patent and Trademark Office for a patent covering the composition-of-matter of a specific polymorph of vidofludimus calcium and related method of production of the material. This patent provides another layer of proprietary intellectual property protection around our lead asset. Importantly, we currently have 8 patent families protecting vidofludimus calcium. We remain deeply committed to protecting the technology behind this Phase III asset, which has been made that much stronger by the addition of this U.S. patent directed to the use of vidofludimus calcium in multiple sclerosis. As a result, our extensive patent portfolio is expected to provide protection into at least 2041 in the United States and 2039 internationally unless extended further. Just last month, we hosted a Multiple Sclerosis R&D Day, highlighting the latest developments in the MS landscape as well as our highly encouraging preclinical and clinical data supporting the neuroprotective potential and reduced disability worsening associated with vidofludimus calcium, which presents important distinctions compared with currently available MS therapies. We also shared our strong belief that vidofludimus calcium could elevate today's standard of care by providing a holistic solution for the full spectrum of MS patients, given that it is designed to selectively manage all the 3 components of smoldering MS with its neuroprotective anti-inflammatory and antiviral effects. Thank you to everyone who was able to join us for this event in person or who were able to listen to the recording. That concludes our summary of the first quarter of 2024 and most recent highlights. I am very pleased with the scientific and clinical achievements we have made across our programs. As it relates to vidofludimus calcium, we continue to advance both our Phase II CALLIPER trial in patients with progressive MS and our twin Phase III ENSURE trials in relapsing multiple sclerosis. Based on the strong clinical evidence to date, we continue partnering discussions with both global and regional pharmaceutical companies. There's also a lot going on with our IMU-856 program, which could become a game changer for the treatment of a broad range of gastrointestinal disorders. I will provide more detail on this existing program later in this call. I would now like to turn the call over to Glenn to provide financial overview. Glenn?

Thank you, Daniel. I will now review the financial and operating results for the first quarter ended March 31, 2024. Let me start with a review of our cash position. We ended the first quarter of 2024 with $97.3 million in cash and cash equivalents. As Daniel noted, with these funds, we expect to be able to fund our operations in the third quarter of 2025. Regarding the operating results. R&D expenses were $18.7 million for the 3 months ended March 31, 2024, as compared to $22.9 million for the 3 months ended March 31, 2023. The decrease was mainly driven by reductions in clinical development costs. This was partially offset by an increase in personnel costs. G&A expenses were $5.1 million for the 3 months ended March 31, 2024, as compared to $4.2 million for the same period ended March 31, 2023. This slight increase was primarily related to personnel expenses. Interest income was $1.2 million for the 3 months ended March 31, 2024, as compared to $0.8 million for the same period ended March 31, 2023. This increase was due to higher interest rates. We also reported a change in the fair value of the tranche rights for the 3 months ended March 31, 2024. The charge of $4.8 million was a noncash charge related to the change of the value of the tranche rights associated with the future tranches 2 and 3 of our January 2024 financing. These tranches were initially classified as a liability on the closing of tranche 1 on January 2024, but were reclassified to equity on March 4, 2024, when shareholders approved an increase in the company's authorized shares from 130 million to 500 million shares of common stock. Therefore, the tranche 2 and tranche 3 rights needed to be revalued to fair value as of March 4, 2024, upon the reclassification to equity. Other income was negative $2.1 million for the 3 months ended March 31, 2024, as compared to $1.2 million for the same period ended March 31, 2023. The decrease was primarily attributable to a $1.7 million expense related to the portion of costs from the January 2024 financing related to the tranche rights that were established at the time of the closing of tranche 1 as well as the timing of recognizing the German Federal Ministry of Finance grant. The net loss for the 3 months ended March 31, 2024, was approximately $29.6 million or $0.30 per basic and diluted share based on approximately 97.3 million weighted average common shares outstanding compared to a net loss of approximately $25.3 million or $0.58 per basic and diluted share based on approximately 43.7 million weighted average common shares outstanding for the same period ended March 31, 2023. With that, I will turn the call back over to Daniel for a review of our development pipeline and upcoming milestones. Daniel?

Thank you, Glenn. I would now like to provide an update on our clinical development programs and anticipated upcoming milestones. We very much look forward to reporting top line data from our Phase II CALLIPER trial in progressive MS in April 2025. This read-out could be a transforming value inflection point for Immunic. Additionally, we expect to report an interim futility analysis of our Phase III ENSURE program later 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, with the read-out of the second ENSURE trial expected in the second half of 2026. [ It bears repeating ], based on the strong clinical evidence observed thus far, the vidofludimus calcium's unrivaled safety and tolerability profile observed in multiple clinical trials. We believe that the design of our Phase III ENSURE program will provide a straightforward path to potential regulatory approval in relapsing MS. On top of this, if the top line CALLIPER data continues to show a neuroprotective effect in PMS patients, we may be able to position vidofludimus calcium as the first oral treatment for non-relapsing secondary progressive MS as well. The progressive MS subtypes were the highest unmet medical need. We also expect that the drug's potential first-in-class ability to activate Nurr1 will meaningfully benefit the ongoing clinical trials in MS. As we have noted before, [indiscernible], we believe that vidofludimus calcium has the potential to be a unique treatment option targeted to the complex pathophysiology of MS based on its combined neuroprotective, anti-inflammatory and antiviral effects. Turning to our second program, IMU-856, an orally available and systemically acting first-in-class small molecule modulator of Sirtuin 6, we are very excited about this program and believe that its innovative mode of action is uniquely suited to treat a broad range of serious gastrointestinal disorders by targeting physiological intestinal epithelial regeneration, achieving gut wall healing with the absence of broad immunosuppression. As a reminder, data from our Phase Ib clinical proof-of-concept trial of IMU-856 in patients with celiac disease during periods of gluten-free diet and gluten challenge demonstrated meaningful improvements over placebo in 4 key dimensions of clinical outcomes in celiac disease: protection of architecture, protection of patients regarding celiac disease symptoms, enhancement of nutrient absorption and also a strong biomarker response. We believe this data provides initial clinical proof-of-concept for a potentially new oral therapy approach to a multitude of gastrointestinal disorders through the physiological regeneration of gut wall barrier function, utilizing a new innovative targeted mechanism while avoiding the immunosuppression seen in many gastrointestinal medications today. As previously reported, we have begun preparing our Phase II clinical testing of IMU-856. Based on its potential paradigm-shifting potential for the treatment of GI diseases in addition to celiac disease, we are also exploring multiple additional clinical applications where the renewal of the gut wall is important, including, for example, inflammatory bowel disease or short bowel syndrome. This brings us to the end of our formal presentation. Jessica, please open the call for the Q&A session.

Yes. Thank you, Glenn and Daniel for walking us through the first quarter and subsequent highlights as well as our clinical development pipeline and upcoming value inflection points. [Operator Instructions] Our first guest today is Matt Kaplan from Ladenburg Thalmann.

Congrats on the progress. A few questions on the vidofludimus program. I guess how was the impact on the NfL that you observed in the CALLIPER study interim analysis? How was that received at the ACTRIMS meeting when you presented that?

Yes. Thank you, Matt. I'm happy to share some feedback here. Generally, I would say what we have seen here is very much appreciated from experts broadly, I would say, because I think so far, we are not aware of any other comparable data with such a strong reduction on NfL reduction. And so we take that as a positive feedback here from all the conferences we attended.

Okay. That's helpful. And then in terms of the interim futility analysis for the ENSURE program, what are the potential read-outs from this analysis that you're expecting to announce later this year?

Yes. Good that you asked, because this is really -- since this is really a Phase III program, we will rarely get any data. We will get just a response to the questions to the -- coming from the committee, from the Safety Monitoring Committee, basically on either to go ahead as planned or to suggest some sample size adjustment. That's all we can read-out there. So we will not see any medical results or any biomarkers from that futility analysis. So it's really more reconfirming our estimates when we started the study. And since this trial is an event-driven trial, it's important to have an eye on do we have enough events based on our statistical assumptions we made initially.

Thank you, Matt. The next one in the queue here is Yasmeen Rahimi with Piper Sandler.

This is Jun-Goo on for Yas. The first question we had was if you could comment if you had any visibility on a blinded basis to event rates across ENSURE trials. If you do, are these like event rates in line with expectations? And secondly, have you had a chance to meet with the agency in regards to 856? Could you provide any color where you are in terms of Phase II prep and study design?

Okay. Thank you for the questions. Let me first start with the ongoing studies. No, we don't have the current event rates on disability worsening so far, so I can't comment on that. What I can tell is so far, the study is on track. And we may have an eye on that may be coming closer to the futility analysis time, also to have some blinded data updates we can share with the public. Regarding 856 further plans and regulatory interactions, we are working on those. We are planning for a meeting with the U.S. regulators. We are preparing several Phase II studies, so indications, as I said in the presentation. So it's, of course, given the very good proof-of-concept in celiac disease, that's the #1 indication we're looking at. But I mentioned also that -- also looking on the preclinical data, we think this drug makes a lot of sense beyond celiac disease and other indications, and the team here is actively working on a couple of different concepts. And we will look how -- what is the best way to develop it further and also to get the appropriate funding for all of the ideas we have with that wonderful molecule.

Thank you. [Operator Instructions] The next one here is Mayank Mamtani with B. Riley.

Congrats on the updates. Just quickly on the Phase II CALLIPER study, could you talk to the functional end points being evaluated there, and which ones you think can be attributed to vidofludimus' dual Nurr1 DHODH mechanism based on what you've seen in the [ plan ] Phase II? And then secondly, remind us of the brain volume changes schematics noted relative to NfL, [ with that ] maybe other studies that are out there of, say, in B-cell depleting agents. And then I have a quick follow-up.

Yes. Thank you for the questions. So the CALLIPER study is an important study, and since this is really limited to non-relapsing patients, we think that the mentioned functional analysis make a lot of sense here and that the data -- the set of patients here can really give good answers to all of or a lot of these questions. So the first thing, of course, is that the classical established EDSS scores [indiscernible] and change in confirmed disability worsening is the key secondary end point of the study, I think the most important medical secondary end point. On top of this, and this also was also seen from other studies and other companies, that functional read-out's playing a more important role, and they're not completely covered in EDSS. So one thing is the 25-foot walk test, which is pretty established; cognition testing; and the nine-hole peg test specifically. So those three are the established tests which are also recorded during the study. So we will also expect data on those end points on top of just the EDSS clinical read-out.

Got it. And any comment on the brain volume changes schematics relative to NfL, given your interim at 24-week and then obviously, the final analysis at 72-week?

Yes. I think brain volume change is believed to be a robust and sensitive measure of neurodegeneration in MS patients. Specifically, if it comes to the long time line, we have a 120-week full uptime in the CALLIPER study. So brain volume change should be a strong signal here. And we know that this is -- they are traditionally is expected to correlate with disability and also then with NfL changes. There is, to my knowledge, not too many publications on the direct correlation between brain volume change and NfL, but they all refer usually to disability change in the patients. And specifically, I think in the recent months, I think there were a couple of good publications where the office nicely separated inflammatory for noninflammatory patients, which is, I think, very important to quantify any signal on NfL in progressive MS in contrast to relapsing, because as we all know, if there is an overlying relapse activities from the NfL side, usually has a high risk of overlay the signal of NfL.

Yes. Makes sense. And then on the Phase III sample size reassessment or futility for ENSURE later in the year, could you just remind us of the different scenarios in terms of how high you have to increase the patient number or vice versa? Could you -- given what you're seeing versus placebo, because you don't have an active competitor here, could you also -- maybe a good -- if you're seeing the event rates that you expect or better than that? Is there a positive scenario where you could expedite the program? So maybe just loop in the scenarios there from the reassessment.

Yes. Thank you for that question. It's important that you asked that, I think. We need to repeat these things a couple of times. The FDA does not allow any acceleration of the program for the stopping for early response signals because that is -- due to the statistical planning of such a study, they exclude this option, so we can't do that. What we did is we -- so it's a futility analysis, so we can most likely or we hope to get a proceed as planned feedback from the committee. What could also be -- we will have a couple of scenarios of sample size adjustment, but only if such ones which makes sense. I think it doesn't make sense to make sample size adjustment if it's getting a huge number of patients to that. So only these viable approaches could be an answer to that analysis. And else, we will maybe then have an answer that we should stop the study.

Thank you, Mayank. We have one more in the queue, Tom Smith with Leerink Partners.

Just a couple on our end. I guess, first, for the Phase II CALLIPER study, can you -- and this extends I guess, across your entire MS program, but can you just remind us how you're measuring neurofilament light chain, what assay you're using and how much variability there is with measuring of marker? And then with respect to life cycle management, can you comment on whether you're working on any additional IP for vidofludimus calcium or preclinical Nurr1 activator compounds that could help extend the franchise?

Yes. Thank you, Tom, for the good questions. First of all, I think we -- in the past, we commented a lot on the technologies here. I think what we are using is more or less state-of-the-art Simoa technology by Quanterix. We use also the newest dual-antibody test system there for this technology. So that is, I think, really with the goal to reduce the signal/noise ratio as much as possible. Another thing is that we do -- we measure all the batches in parallel in one. So we really try to avoid any operational variability in testing that. So I think this -- the data on NfL will be as precise as possible from a technology point of view right now. But to remind you, I think every technology has its own absolute level. So we just need to look always on relative changes on NfL at the read-out. So that's on the technology side. On more on the strategic side on IP and life cycle management, we don't talk too much about, but of course, we're doing that. And if you'll read between the lines what we are telling you, I think what we -- last year, when we identified that vidofludimus calcium is a potent activator of Nurr1, and this is importantly means also we see in the gene regulation, an up to 500% increase of gene regulation. This is really at the upper end of what you can get at all, and to my knowledge, really the only molecule in the clinics [ to test on ] something like that. This makes it an attractive platform. So it's not only that vidofludimus has another trick, which is wonderful, because this opens up the avenue towards neuroprotection, it also gives us at Immunic [ a platform ] of Nurr1 modulation. And we are working here internally, but also in collaboration with researchers at different universities on the one hand, on the biology, and on the other hand, also on the chemistry, to broaden what we're doing here. We have some IP filed on this. We have some interesting derivatives of vidofludimus calcium in research. Yes, I think -- absolutely, so we think this is a great platform. And just think about the great biology which was published and where a lot of work was done on Parkinson's disease and other neurodegenerative diseases where Nurr1 is believed to play a major role. And this opens up a lot of potential for further preclinical and clinical work later.

Thank you, Tom. This concludes our question-and-answer session. I would like to turn the conference back over to Daniel for any closing remarks.

Yes. Thank you, Jessica, and thank you to today's attendees for your insightful questions today. To summarize, we have a well-differentiated advanced clinical pipeline in various stages of development. With top line data from our Phase II CALLIPER trial executed in April of next year and the ongoing enrollment of our Phase III ENSURE trials, we continue to make meaningful progress on the clinical development of vidofludimus calcium. We also continue to strengthen our intellectual property position and remain committed to that effort. Further, the successful three-tranche PIPE financing earlier this year means that we are well capitalized to execute, with $97.3 million on our balance sheet, which is expected to fund the company into the third quarter of 2025. As progress is made, we expect to also provide an update on our preparations for a Phase II clinical trial of IMU-856 and its potential for the treatment of a broad array of serious gastrointestinal disorders. 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 one-on-one.