Immunic, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. 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 position
| Metric | Q1 2022 | Q1 2021 or comparison |
|---|---|---|
| Revenue from product sales | None | None |
| Research and development expense | $17.4 million | $11.5 million; up 51% |
| General and administrative expense | $4.0 million | $3.6 million; up 10% |
| Total operating expenses | $21.4 million | $32.4 million; down 34% |
| Net loss | $20.8 million | $34.5 million; down 40% |
| Basic and diluted loss per share | $0.74 | $1.63 |
| Cash used in operating activities | $20.7 million | $12.9 million |
| Cash and cash equivalents | $95.7 million | $86.9 million at December 31, 2021 |
Cash and cash equivalents increased by $8.8 million during the quarter, chiefly because the company raised $29.6 million net through its December 2020 at-the-market (ATM) facility. Cash used in investing activities was $12,000. The company reported no financial debt on its balance sheet; liabilities were principally accounts payable, accruals, and operating lease obligations. Current assets were $115.9 million and current liabilities were $11.5 million. Accumulated deficit was $217.7 million. Profit margins are not meaningful because the company had no product revenue.
Material changes versus the prior period
- R&D spending rose $5.9 million, mainly reflecting clinical development costs for vidofludimus calcium in Phase 3 relapsing multiple sclerosis and Phase 2 progressive multiple sclerosis, as well as IMU-935 and IMU-856 trials. Lower COVID-19, ulcerative colitis, and drug-supply costs partly offset the increases.
- Q1 2021 included a $17.25 million 4SC royalty settlement expense, paid half in cash and half in shares; there was no comparable expense in Q1 2022. This largely explains the lower total expenses and net loss year over year.
- Other income was $0.6 million versus $2.1 million of net other expense in Q1 2021, reflecting lower intercompany-loan foreign-exchange losses, foreign-exchange gains, and higher Australian R&D tax incentives.
- Operating cash use increased to $20.7 million from $12.9 million, despite the lower reported net loss. The prior-year cash-flow comparison included noncash settlement shares and related payable movements.
Outlook, programs, and risks
- Management expected available funds, including $10.0 million net raised through the ATM in Q2 2022, to fund operations beyond 12 months from the financial statements’ issuance date. The company expects significant expenses and operating losses to continue and may need additional capital; future financing could dilute shareholders or impose unfavorable terms.
- Vidofludimus calcium: Phase 3 ENSURE studies in relapsing MS began enrolling in November 2021; the Phase 2 CALLIPER progressive-MS trial began in September 2021. Top-line results from the Phase 2 CALDOSE-1 ulcerative-colitis trial were expected in June 2022.
- IMU-935: Phase 1 studies were ongoing, including a psoriasis-patient portion. Initial results from that portion were pushed to the second half of 2022 from the previously expected end of Q2, partly due to restrictive COVID-19-related conditions in Australia and New Zealand.
- IMU-856: The Phase 1 trial was ongoing; patient cohorts in celiac disease were announced as starting on May 5, 2022, after quarter-end.
- Russia’s invasion of Ukraine may disrupt trial recruitment and follow-up in Ukraine, Russia, and Belarus, delaying studies and increasing costs. Management reported efforts to activate alternative countries and sites. Other key risks include clinical-trial failure or delay, regulatory non-approval, and the need for additional funding.
- Foreign-currency exposure is material: management estimated that a hypothetical 10% adverse exchange-rate change could reduce net current assets by about $3.7 million and affect quarterly net loss by about $1.6 million. The company reported no currency hedging. Of cash, $26.1 million was held in German accounts earning negative interest of 0.5% at quarter-end.
- There were no material litigation matters reported. Development-program contractual obligations totaled approximately $3.0 million, expected to be paid in 2022; the present value of operating lease obligations was $0.9 million.
Important facts for investors to verify
- Whether CALDOSE-1 results and other stated clinical milestones were achieved on the anticipated timelines, and what the data show.
- Actual quarterly cash burn and updated runway, given rising R&D spending, trial timing, and subsequent ATM proceeds.
- ATM usage, remaining capacity, and the resulting share count and dilution. The company sold 2.90 million shares in Q1 for $29.7 million net; it reported a further $10.0 million net raised in Q2.
- Whether geopolitical disruption, site availability, or enrollment conditions affect ongoing trials and their costs or timelines.
- Foreign-exchange exposure and the effect of the company’s unhedged euro and Australian-dollar operations on reported results.