Immunic, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Immunic is a clinical-stage biotechnology company developing oral therapies for inflammatory and autoimmune diseases. It had no products approved for sale and generated no product revenue.
Financial performance and liquidity
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $23.0 million | $17.4 million; up 32% |
| General and administrative expense | $4.3 million | $4.0 million; up 7% |
| Total operating expenses | $27.3 million | $21.4 million; up 27% |
| Net loss | $25.3 million | $20.8 million; loss increased 21% |
| Net loss per share | $0.58 | $0.74; weighted-average shares rose to 43.7 million from 28.1 million |
| Operating cash used | $19.5 million | $20.7 million |
| Cash, cash equivalents and investments | $97.1 million | $116.4 million at December 31, 2022 |
Other income was $2.0 million, up from $0.6 million, including interest income and government research support/tax incentives. No operating margin is meaningful for this pre-revenue company. Cash and cash equivalents were $92.8 million, with $4.4 million of time deposits classified as investments. Management expects available funds to support operations beyond 12 months from issuance of the statements, but anticipates continuing losses and expects additional capital may be needed. No borrowings are presented; liabilities principally comprise payables, accruals, and operating lease obligations.
Current assets were $106.6 million and current liabilities $16.3 million at quarter-end. Operating lease liabilities had a $2.0 million present value. The company reported $4.4 million of non-cancelable development-program obligations, expected to be paid in 2023.
Material changes and operating developments
- R&D expense increased mainly because of higher external development costs for the Phase 3 vidofludimus calcium relapsing-MS program, the Phase 2 progressive-MS trial, and the IMU-856 Phase 1 trial. Increased spending was partly offset by lower UC and IMU-935 costs.
- Operating cash use improved modestly year over year, but cash and investments declined by $19.3 million from year-end. Q1 investing cash inflow primarily reflected the sale of $5.4 million of time deposits; Q1 financing cash inflow was $51,000.
- All 5.1 million pre-funded warrants were exercised in January 2023, increasing shares outstanding to 44.4 million at March 31. There was no ATM activity in Q1. As of May 2, the company reported $8.4 million remaining under its December 2020 ATM, $80.0 million under its May 2022 ATM, and $75.0 million remaining on its shelf registration statement.
Outlook, risks and notable items
- Vidofludimus calcium Phase 3 ENSURE trials and the Phase 2 CALLIPER progressive-MS trial were ongoing and enrolling. Management expected interim CALLIPER data in the second half of 2023 and top-line data at year-end 2024; ENSURE interim analysis was expected in late 2024, with the first trial’s top-line readout expected at year-end 2025. These timelines depend on factors beyond the company’s control.
- After quarter-end, Immunic reported positive Phase 1 celiac-disease data for IMU-856 and positive maintenance-phase Phase 2b CALDOSE-1 ulcerative-colitis data for vidofludimus calcium. These are company-reported clinical results; the filing describes some CALDOSE-1 statistical analyses as exploratory.
- On April 5, 2023, the company deprioritized clinical development of izumerogant (IMU-935) in psoriasis and castration-resistant prostate cancer to focus resources on vidofludimus calcium and IMU-856. It also described preparation of a Phase 2b IMU-856 trial in active celiac disease and continued preclinical work on IMU-381 and antiviral programs.
- Management expects increasing expenses and operating losses. Funding may require equity, debt, collaborations, or licensing; none is assured on acceptable terms. Equity financing could dilute shareholders, while debt could carry restrictive terms. The company also warned of clinical-trial, regulatory, commercialization, and funding risks.
- Foreign-currency exposure is material: management estimated a hypothetical 10% adverse exchange-rate move could reduce foreign subsidiaries’ net current assets by about $2.2 million and affect quarterly net loss by about $2.2 million. The company does not hedge currency exposure. Bank-deposit concentration and broader financial-sector disruption were also identified as risks.
- No material litigation was reported. The company recorded a $33.0 million non-cash goodwill impairment in Q4 2022 after izumerogant interim results and a decline in market capitalization; no impairment charge was reported for Q1 2023. Disclosure controls were reported effective, with no material change in internal control during the quarter.
Important facts for investors to verify
- Clinical-trial enrollment, data quality, statistical significance, safety, and timing for ENSURE, CALLIPER, and the planned IMU-856 Phase 2b study.
- Whether reported post-quarter clinical results are confirmed in full datasets and subsequent trials, particularly given the exploratory analyses noted for CALDOSE-1.
- Cash burn, actual runway relative to management’s beyond-12-month estimate, and the timing and terms of any future financing or strategic transactions.
- Potential dilution from ATM or shelf offerings and outstanding options; the filing reports 5.6 million options outstanding at March 31, 2023.
- Execution and cost implications of deprioritizing IMU-935, and the remaining contractual, milestone, or royalty exposure under the IMU-856 Daiichi Sankyo agreement.