Immunic: Multiple Sclerosis Data In H2 2023 Could Provide Major Shift (NASDAQ:IMUX)

Immunic, Inc. (NASDAQ:IMUX) is a great speculative biotech play to look into, because it has already established some proof of concept in a phase 2 study using its drug vidofludimus calcium (IMU-838) in treating patients with relapsing remitting multiple sclerosis [RRMS] in 2022. There is an ongoing phase 3 study known as ENSURE, which is also using this drug to treat this patient population. This program is coming along well, the only thing to consider is that this phase 3 ENSURE study is not expected to have results released until the end of 2025. That’s a few years from now, so it is prudent to be patient for this. However, that doesn’t mean that there won’t be other catalysts to look forward to in 2023. In particular, interim results from the phase 2 CALLIPER study using IMU-838 for the treatment of patients with Progressive MS, are expected in the 2nd half of 2023. From there, top-line results from this very same study are expected by the end of 2024. A risk here is that while IMU-838 was able to do well in the RRMS population, there is no guarantee that it will do well with Progressive MS patients. Before these data readouts, there is another drug candidate to keep an eye on which is IMU-935 which is being explored for the treatment of patients with Psoriasis. A release of 4-week interim analysis data from the phase 1b trial of this drug for this patient population revealed that two arms failed to separate from placebo. However, an update on whether or not Immunic will move this program forward is expected to be provided to investors in Q1 of 2023. Lastly, there is a third catalyst to keep an eye on, which is the release of results from Part C of a phase 1 study using IMU-856 for the treatment of patients with Celiac Disease. Results from this early-stage study are expected to be released at some point in 2023. With several catalysts expected in 2023, plus proof of concept being established for the treatment of patients with relapsing multiple sclerosis (RMS), these are the reasons why I believe that Immunic is a great speculative biotech play to look into.

IMU-838 For The Treatment Of Patients With Relapsing/Remitting Multiple Sclerosis

The first program to go over involves the use of IMU-838 for the treatment of patients with Relapsing/Remitting Multiple Sclerosis (MS). Before diving into the Relapsing/Remitting portion, it’s important to understand what MS itself is. Multiple Sclerosis itself is an immune-mediated disease, in which there is an abnormal type of response by a patient’s very own immune system. What do I mean by Immune-mediated? Basically, a directed attack by the immune system. However, what happens in MS is that the immune system mistakenly attacks the myelin sheath (nerve fibers) in the central nervous system [CNS]. This causes scarring in multiple places, thus the name multiple sclerosis. The nerve fibers are damaged causing pain and neurological symptoms. The thing is that nobody knows what exactly causes the immune system to start attacking a person’s own myelin sheath. Some believe it is genetics and the environment, but it is not exactly clear. Symptoms that may occur with this disease are:

• Fatigue
• Vision Problems
• Muscle pain and weakness
• Trouble thinking properly
• Anxiety
• Depression
• Other neurological issues
• Constipation
• Sleeping problems

Now that I have gone over MS, it’s time to focus on what IMU-838 from Immunic is dealing with. The company is focused on treating relapsing/remitting patients with MS. This version of MS is devastating, because the disease comes and goes. There are times of the disease being stable where the patient has symptoms partially or completely go away. Then, there are what’s called relapses. Relapses, meaning that symptoms last for about 24 hours and get worse during these phases. The MS market is a huge opportunity should the biotech be successful. That’s because the global Multiple Sclerosis market is estimated to be worth $40.66 billion by 2027. Now, one thing to point out is that IMU-838 will be for the Relapsing-Remitting form of MS. That’s not bad at all because it is said that about 50% of patients have Relapsing Remitting Multiple Sclerosis [RRMS]. I haven’t listed it for Progressive MS yet, because it first needs to establish proof of concept in the ongoing phase 2 CALLIPER study.

The use of IMU-838 treating patients with RRMS is going well, because Immunic had already reported positive results from its phase 2 study. The phase 2 study was known as EMPhASIS and it recruited a total of 210 patients that were split up into several dosing groups. These dosing groups were as follows:

• 71 patients taking 30 mg IMU-838
• 69 patients taking 45 mg IMU-838
• 69 patients taking placebo

Ultimately, about 198 were included into the randomized portion of this phase 2 study. The primary endpoint was the reduction of cumulative number of combined unique active (CUA) magnetic resonance imaging (MRI) lesions up to week 24. The goal of this study was to see if IMU-838 could do a better job at reducing lesions compared to placebo. The primary endpoint was easily met. How was this proven? Basically, both doses of IMU-838 were able to achieve a statistically significant reduction in CUA MRI lesions up to week 24 compared to placebo. The p-values given at the time of the company’s data release is as follows:

• Cohort that took 45 mg of IMU-838 – reduction by 62% in lesions with a p-value of p=0.0002
• Cohort that took 30 mg of IMU-838 – reduction by 70% in lesions with a p-value of p<0.0001

As you can see, the primary endpoint was not only met with both doses but exceeded expectations. Management even believes that it is comparable and favorable with front-line MS drugs. I believe that these results are solid and why the company had enough positive data to move forward with a phase 3 clinical trial.

Having said that, Immunic moved on to initiate two phase 3 twin studies under the ENSURE program. These are going to be twin multicenter, randomized, double-blind phase 3 studies designed to look at safety, efficacy and tolerability of IMU-838. Each study will have 1,050 adult patients with active RMS randomized to either receive 30 mg daily of IMU-838 or placebo for up to 72 weeks. The primary endpoint for both trials is going to be time to relapse up to that 72 week period. Secondary endpoints in place will be new T2-lesions observed, time to confirmed disability progression, time to sustained clinically relevant changes in cognition and percentage of whole brain volume change. This program is coming along very well, but now for the downside. Not a really bad thing, it’s just that traders/investors will have to be patient with respect to this phase 3 RMS trial. It is expected that results from the first of the two late-stage studies will be released by the end of 2025. There will be some interim analysis updates before then possibly, but only after a certain number of relapses have occurred. The reason why is to inform the company if it needs to adjust sample size accordingly.

What I can report is that the phase 2 EMPhASIS study results in the beginning of this subsection are from 2020. It only looked at the endpoint of lesion reduction which it achieved. Well, additional results were released from this very same study in November of 2022. It was shown that patients who took IMU-838 had been better off in preventing or delaying confirmed disability worsening over a 12-week or 24-week period. I will go over this study now, but note that the phase 3 studies are deploying a different primary endpoint and that’s where the big risk comes in. Just because IMU-838 performed well with these other respective endpoints, doesn’t guarantee success of the ongoing phase 3 ENSURE program. Going back to the latest released data from this phase 2 EMPhASIS study, it was shown that 12-week and 24-week Confirmed Disability Worsening events only occurred in 1.6% of patients who took IMU-838, compared to 3.7% of patients in the placebo group. As you can see, patients who took Immunic’s drug fared better with respect to this endpoint compared to those who took the placebo instead.

Financials

According to the 10-Q SEC Filing, Immunic Therapeutics had cash and cash equivalents of $72.8 million as of September 30, 2022. However, in 2022 it closed a $60 million private placement with participation from new and existing institutional investors. This is where it sold a total of 8,696,552 shares of its common stock at a price of $4.35 per share. Plus it also sold pre-funded warrants for purchase up to an aggregate of 5,096,552 shares of common stock at a purchase price of $4.34 per pre-funded warrant share through a private investment in a public equity “PIPE” financing. It raised approximately $60 million from this PIPE equity financing in October of 2022. With the cash on hand of $72.8 million as of September 2022, plus the newly added $60 million it raised in October 2022, it believes it has enough cash to fund its operations into Q4 of 2024. This gives it a lot of flexibility where it won’t need to raise cash for an extended period of time. However, I believe it highly depends how well the results are in the 2nd half 2023, with respect to the PMS data that is expected then. If the primary endpoint is met, then I expect the stock price to climb significantly. In that case, or by any other positive news development, I think it will choose to raise cash immediately. Again, that’s only if the primary endpoint is met and the results are good from the planned interim analysis of the phase 2 CALLIPER trial using IMU-838 for the treatment of patients with PMS.

Risks To Business

There are several risks that traders/investors should be aware of before investing in Immunic. The biggest risk to consider would be with respect to the ongoing phase 3 ENSURE studies, which are using IMU-838 for the treatment of patients with RRMS. Results from the first late-stage study is not expected to be released until around the end of 2025. Even though the phase 2 study was successful, there is no guarantee that this phase 3 study will meet the primary endpoint. A second risk would be with respect to the ongoing phase 2 CALLIPER study, which is using IMU-838 for the treatment of patients with Progressive MS. Results from this mid-stage study are expected to be released in the 2nd half of 2023. While IMU-838 did well in treating patients with RRMS, there is no guarantee that it will be able to do the same or better in patients with Progressive MS. A third risk to consider would be with respect to the Psoriasis program. As I stated in the beginning above, the phase 1b study using IMU-935 for the treatment of patients with Psoriasis failed. However, there might be some wiggle room to move the program forward, since the maximum tolerated dose [MTD] was not reached. Thus, management has a choice in that it will either continue this program as planned or end up terminating it. This is a major risk, because it’s possible that management could end up choosing to cut this program completely. A decision on whether or not it is going to terminate this program is going to happen in Q1 of 2023. A final risk to consider would be with respect to the phase 1 study using IMU-856 for the treatment of patients with Celiac Disease. Results from this study are expected to be released in 2023. There is no guarantee that this early-stage study will end up being successful.

Conclusion

The final conclusion is that Immunic Therapeutics is a great speculative biotech play to look into. The reason why I state that is because it has several catalysts which are expected in 2023. They are dealing with the use of IMU-838 for Progressive MS, IMU-935 for Psoriasis and IMU-856 for Celiac Disease. Whether or not IMU-838 also works in treating patients with Progressive MS remains to be seen, but at least it is known that this drug has been able to establish proof of concept in being able to treat patients with RRMS. Final results from the first phase 3 ENSURE study, using this drug to treat this patient population, are expected to be released by the end of 2025. In the meantime, there are several catalysts expected in 2023 for investors to look forward to.