Immunic, Inc. — 2021 Form 10-K Summary
Business and reporting period. Immunic is a clinical-stage biopharmaceutical company developing oral therapies for inflammatory and autoimmune diseases. This annual report covers the fiscal year ended December 31, 2021; the company had no approved products or product-sales revenue. Its three programs are vidofludimus calcium (IMU-838), IMU-935 and IMU-856.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue from product sales | None | None |
| Research and development expense | $61.1 million | $38.6 million |
| General and administrative expense | $13.3 million | $10.3 million |
| Total operating expenses | $91.7 million | $49.0 million |
| Net loss | $92.9 million | $44.0 million |
| Basic and diluted loss per share | $3.93 | $2.81 |
| Cash used in operating activities | $83.2 million | $46.1 million |
| Cash and cash equivalents at year-end | $86.9 million | $127.5 million |
Gross margin and operating margin are not meaningful for this pre-commercial company. The 2021 operating loss was $91.7 million. Current assets were $105.0 million and current liabilities $11.4 million, implying working capital of approximately $93.6 million. Total liabilities were $12.0 million; the company reported no funded debt. Its $24.5 million European Investment Bank facility was terminated in October 2021 without any funds drawn. Operating lease liabilities totaled $1.0 million.
Cash declined by $40.6 million during 2021. Financing provided $42.8 million, primarily from a July public offering with net proceeds of $42.0 million. The company also raised $16.2 million net under its ATM facility in early 2022, after year-end. It reported an accumulated deficit of $196.9 million.
Material changes and notable items
- Net loss more than doubled year over year, reflecting higher clinical-development spending, the $17.25 million 4SC royalty settlement, and a shift in other income/expense from $5.0 million of income in 2020 to $1.3 million of expense in 2021.
- R&D expense rose 58%, largely as vidofludimus calcium advanced into Phase 3 RMS trials and Phase 2 progressive MS and UC trials. Spending on COVID-19 development declined compared with 2020.
- The 4SC settlement extinguished the remaining 4.4% royalty obligation on net sales for $17.25 million, paid half in cash and half in common shares.
- Common shares outstanding increased from 21.2 million to 26.3 million during 2021, including the public offering and shares issued for the 4SC settlement.
Development outlook, commentary and risks
- IMU-838: The first patient entered ENSURE-1, a Phase 3 RMS trial, in November 2021; ENSURE-2 began enrollment in January 2022. The two trials are designed to enroll about 1,050 patients each. The supportive Phase 2 CALLIPER progressive MS trial began enrollment in September 2021. CALDOSE-1 completed enrollment of 263 UC patients; topline induction results were expected in June 2022. A small investigator-sponsored PSC trial reported positive topline findings, but enrollment was curtailed during the pandemic.
- IMU-935: Phase 1 single- and multiple-dose results in healthy volunteers were described as well tolerated, with no serious adverse events reported in those parts. Psoriasis-patient results were delayed to the second half of 2022, partly due to COVID-related site and enrollment constraints. A Phase 1 mCRPC trial enrolled its first patient in December 2021; initial safety data were expected in the third quarter of 2022.
- IMU-856: Phase 1 dosing was ongoing. The company expected unblinded safety data in the third quarter of 2022 and planned a patient portion to assess initial activity.
- Liquidity outlook: Management forecast cash reach through the first quarter of 2023 and said ongoing operations depend on financing. The filing identifies funding needs and clinical-development risks as substantial; management stated that expenditure controls, working-capital management and $16.2 million raised through the ATM in 2022 supported adequate liquidity for at least 12 months from the financial-statement release date. This runway is based on assumptions and further financing may be required.
- Key risks: Clinical results may not support approval; trials may be delayed by COVID-19, enrollment or site constraints, and the threatened Russia-Ukraine conflict; additional capital could dilute shareholders or be unavailable on acceptable terms. The company also relies on third-party manufacturers and trial operators and faces regulatory, competition, intellectual-property and commercialization risks.
- The filing reports no material pending litigation. The auditor issued an unqualified opinion on the financial statements and identified clinical-trial expense accrual estimates as a critical audit matter. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor did not express an opinion on internal-control effectiveness.
Important facts for investors to verify
- Whether cash burn, the ATM facility and other financing can support the planned clinical programs without material dilution.
- Actual readouts and timing for ENSURE, CALLIPER, CALDOSE-1, and the IMU-935 and IMU-856 Phase 1 studies; stated dates were expectations, not guarantees.
- Whether geopolitical, pandemic-related or enrollment disruptions affect trials, especially studies with sites in Ukraine and Russia.
- The potential clinical and commercial value of early-stage or investigator-sponsored findings, which require confirmation in appropriately designed trials.
- Potential milestone and royalty obligations under the IMU-856 Daiichi Sankyo license, and the durability and scope of product-candidate patent protection.