Immunic, Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. Immunic is a clinical-stage biopharmaceutical company developing oral therapies for inflammatory and autoimmune diseases. It had no approved products and generated no product revenue.
Financial performance and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | No product revenue | |||
| Research and development expense | $15.5m | $11.0m | $42.7m | $27.5m |
| General and administrative expense | $2.9m | $2.5m | $10.0m | $7.3m |
| 4SC royalty settlement expense | — | — | $17.3m | — |
| Net loss | $19.3m | $12.9m | $71.8m | $32.9m |
| Net loss per share, basic and diluted | $0.76 | $0.70 | $3.33 | $2.35 |
| Cash used in operating activities | Not provided for quarter | Not provided for quarter | $59.6m | $32.2m |
At September 30, cash and cash equivalents were $110.4m, down from $127.5m at December 31, 2020. Total current assets were $122.5m versus current liabilities of $10.6m; total liabilities were $11.3m, including $1.1m of operating lease liabilities. The company reported no funded debt. The EIB had offered a loan facility of up to €24.5m, but it was terminated effective October 20, 2021, with no funds drawn. Management expected available cash to fund operations beyond 12 months from issuance of the statements, while noting that additional capital may be needed over the longer term. Margins are not meaningful because the company had no product revenue.
Financing provided $42.0m net from a July 2021 public offering of 4.5m shares at $10 per share. Common shares outstanding increased to 26.25m at September 30 from 21.17m at year-end 2020. The company also had $50.0m of remaining capacity under its ATM program.
Material changes versus comparable periods
- Q3 operating expenses rose 36% to $18.4m, and net loss increased 49% to $19.3m. R&D expense increased as the company prepared IMU-838 trials in relapsing and progressive MS and ulcerative colitis, and advanced IMU-935.
- For the first nine months, operating expenses more than doubled, primarily reflecting increased clinical development spending and the $17.25m 4SC royalty settlement. The settlement was paid half in cash and half in company shares and eliminated the remaining royalty obligation.
- Other expense was $0.9m in Q3 versus $0.6m of other income a year earlier, primarily due to foreign-exchange losses on a $52.0m intercompany loan. For the nine months, other expense was $1.8m versus $1.9m of other income in 2020.
- Operating cash use increased to $59.6m from $32.2m year over year. Financing cash inflows were lower than in 2020, when multiple equity offerings generated $136.3m net.
Outlook, programs, risks and unusual items
- IMU-838: FDA clearance for the Phase 3 ENSURE program in relapsing-remitting MS was announced; the first patient was expected to dose in Q4 2021. The company also reported first enrollment in its Phase 2 CALLIPER progressive-MS trial. CALDOSE-1 ulcerative-colitis enrollment was completed in October 2021, with top-line induction data expected in Q2 2022. A Phase 1 study in hepatic-impaired patients for potential PSC dose optimization began in September 2021.
- IMU-935: Phase 1 testing was ongoing. The company expected healthy-volunteer data in Q4 2021 and initial data from an added psoriasis-patient portion in Q2 2022. A Phase 1 dose-escalation trial in metastatic castration-resistant prostate cancer was expected to begin in Q4 2021.
- IMU-856: Phase 1 testing was ongoing; the company expected healthy-volunteer safety data in Q3 2022 and planned a patient portion in the first half of 2022.
- The company in-licensed technology covering combinations of DHODH inhibitors and nucleoside analogues for viral infections. It described preclinical results as promising but said it would consider partnership, collaboration, or external funding for the program.
- Management expects significant expenses and increasing operating losses as clinical programs advance. Key risks include trial failure, inability to obtain regulatory approval, and difficulty obtaining future funding; additional equity could dilute shareholders. Clinical timelines and outcomes remain uncertain.
- Foreign-currency exposure is material: the filing estimates a 10% adverse currency move could reduce German subsidiaries’ net current assets by about $3.9m, and a 10% exchange-rate change over the nine-month period would have affected net loss by about $6.1m. The company reported no hedging plans. It also held $32.7m in German bank accounts earning negative interest of 0.5%.
- The filing reported no material litigation, no material changes to previously disclosed risk factors, and effective disclosure controls. No impairment of goodwill was recorded.
Important facts for investors to verify
- Whether the ENSURE Phase 3 program and other trials began and progressed on the stated timelines, and what subsequent data show.
- Cash burn and runway relative to management’s beyond-12-month estimate, including the effect of expanding clinical trials and foreign exchange.
- Potential dilution from future equity or ATM issuance; the July offering added 4.5m shares, and 50.0m of ATM capacity remained.
- The terms, funding strategy, and clinical rationale for the newly in-licensed antiviral combination program.
- The consequences of terminating the EIB facility and whether alternative financing is needed as development costs rise.