Immunic, Inc. — Form 10-Q Summary
Reporting period: Quarter ended September 30, 2020; filed November 6, 2020. Immunic is a clinical-stage biopharmaceutical company with no approved products or product-sales revenue. Its lead candidate, IMU-838, is in Phase 2 development; IMU-935 and IMU-856 are in Phase 1.
Financial results and liquidity
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Research and development expense | $11.0 million | $7.1 million | $27.5 million | $16.5 million |
| General and administrative expense | $2.5 million | $2.1 million | $7.3 million | $12.4 million |
| Total operating expenses | $13.5 million | $9.2 million | $34.8 million | $28.8 million |
| Net loss | $12.9 million | $8.2 million | $32.9 million | $27.2 million |
| Basic and diluted loss per share | $0.70 | $0.82 | $2.35 | $3.96 |
- No product-sales revenue was reported. There is no meaningful gross margin measure for the period.
- At September 30, 2020, cash and cash equivalents were $133.2 million, compared with $29.4 million at December 31, 2019. Current assets were $137.5 million and current liabilities $8.0 million; total liabilities were $8.8 million, including operating lease liabilities. The filing reports no borrowings outstanding at period end.
- For the first nine months, operating cash use was $32.2 million, investing cash use $0.1 million, and financing cash provided $136.3 million. Financing was principally from equity offerings. Management expected existing cash to fund operations beyond twelve months from the financial statements’ issuance date, while also anticipating substantial future funding needs.
Material changes and financing
- Q3 net loss increased 57% year over year, largely reflecting higher development spending; R&D expense rose 55%, while G&A rose 21%. For the nine-month period, R&D rose 67%, while G&A fell 41%, mainly because 2019 included non-recurring transaction-related stock compensation and professional fees.
- 2020 R&D increases included COVID-19 trial costs for IMU-838, licensing, drug-supply and Phase 1 costs for IMU-856, and development costs for IMU-935. The increases were partly offset by lower IMU-838 RRMS-trial costs.
- The company raised net proceeds of approximately $13.9 million in an April registered direct offering, $23.0 million in a June public offering and $96.5 million in an August public offering. It also received $2.8 million net through its ATM during the first nine months. Shares outstanding increased from 10.7 million at year-end 2019 to 20.7 million at September 30, 2020; 20.7 million shares were outstanding on October 31.
Outlook, clinical developments and risks
- Immunic reported that the Phase 2 EMPhASIS trial of IMU-838 in relapsing-remitting multiple sclerosis met its primary and key secondary MRI endpoints: 45 mg reduced cumulative combined unique active lesions by 62% versus placebo, and 30 mg by 70%. The company described the candidate as safe and well-tolerated in the trial. It was considering 30 mg for a future Phase 3 program and initiated a 60-patient, 10 mg exploratory cohort. It planned to seek end-of-Phase 2 regulatory meetings, expected around May 2021, and said it did not then expect significant delay to Phase 3 start.
- Management said IMU-838 ulcerative colitis top-line results were delayed to the first half of 2022 from Q4 2021, partly due to pandemic-related site access and recruitment constraints. Recruitment in the investigator-sponsored PSC study was paused; a potential Q4 2020 readout was based on 18 enrolled patients, versus a 30-patient target.
- The CALVID-1 Phase 2 moderate COVID-19 study reached its 200-patient enrollment goal, announced November 2, 2020; the main analysis was expected in Q1 2021. The filing cautioned that changing COVID-19 disease patterns could affect trial conditions and outcomes. An investigator-sponsored combination trial with oseltamivir was also underway.
- IMU-856’s Phase 1 program began dosing healthy volunteers in August 2020. IMU-935 remained in Phase 1. Management expected R&D spending and operating losses to increase as programs advance; results and expenses may vary with clinical-trial timing.
- After quarter end, on October 19, 2020, Immunic entered into an EIB facility for up to €24.5 million in three milestone-dependent tranches, intended to support IMU-838 development in moderate COVID-19. Principal and interest on the first two tranches may be deferred for five years; the third has scheduled repayment. The agreement includes revenue-based payments, prepayment penalties, covenants and a parent guarantee. This was a subsequent event, not period-end debt.
- Key risks include clinical-trial failure, regulatory approval uncertainty, continued need for capital and possible dilution, pandemic-related trial disruption, foreign-exchange exposure, and EIB covenant/default provisions. Management reported disclosure controls were effective and no material litigation was pending or known.
Important facts for investors to verify
- Full EMPhASIS data, dose selection, regulatory feedback and the timing and design of any Phase 3 program.
- CALVID-1 analysis results and whether the trial’s assumptions remain applicable as COVID-19 disease patterns change.
- Updated enrollment and readout timing for the ulcerative colitis and PSC trials, including continuing pandemic effects.
- Actual EIB tranche availability, milestone conditions, interest and repayment terms, revenue-based payments, covenants and guarantee documentation.
- Cash use relative to the company’s funding outlook, future financing needs and potential shareholder dilution.