Immuron Limited (NASDAQ:IMRN) Q4 2022 Earnings Conference Call September 6, 2022 7:00 PM ET
Company Participants
Steven Lydeamore – Chief Executive Officer
Conference Call Participants
Unidentified Company Representative
Good morning, everyone. And welcome to Immuron’s Full Year Results Webinar. Today is Wednesday, the 7th of September, 2022. I’d like to welcome the CEO, Steven Lydeamore to provide a brief overview of the results before we move to a Q&A. If you’d like to submit a question, please do so via the Q&A box at the bottom of the screen.
I will now hand over to Steven to commence the presentation. Thank you.
Steven Lydeamore
Well, thank you. It’s my first webinar on behalf of Immuron as CEO. So thank you for joining today. I’ll just click through to the first slide here. Immuron is a globally integrated biopharmaceutical company. And important point to note here is that we both commercializing, so we have two commercial products, as well as developing gut mediated disease products.
We have been around a long time market. Capitalization of $20.5 million as of the 23rd of August and we had cash and equivalents of $22.1 million as of the 30th of July, 2022. We’ve refreshed our corporate structure. So I’m here today as CEO and we recently acquired Joanne Casey, as an R&D Manager.
Great news for the company is that, international travel starting to rebound again and you would have seen an aseculation on the travel and sales increased significantly. The addressable market continues to grow and Immuron expands its distribution capability into FY 2023.
We are capable of producing highly specific orally active immunoglobulins. That’s a lot of words there isn’t it, but I’ll talk a little bit more about that later. Essentially, it’s a technology, a platform technology that allows us to target enteric pathogens.
We’re presently completing an assessment of the entire portfolio, target markets, competitive advantage and growth drivers, with the view to implementing a growth strategy for the company to increase shareholder value.
FY 2023 revenue exceeded budget by 92%, driven largely by resurgence in global travel. We have an extremely strong balance sheet, which supports our plan for an organic and M&A strategy to grow the company. The next major milestone for the company is filed with the FDA an IND and to initiate clinical trial for Travelan, IMM-124E this financial year.
Quick snapshot of the company here, you can see that, once again, market cap $20 million, cash and cash equivalents $22.1. I think it would be fair to say that we are undervalued and we’ll talk more about where that value in the company lies.
You can see below there, the shareholders, so roughly 35% of our shares held in the U.S. by BNY Mellon, the holder of the American Depository shares, management and board also has a substantial interest of 3% in the company. We are aligned with our shareholders and plan to grow the wealth of the company.
Strengths of the company lied not only in the platform technology that I talked about before, but also the distribution relationships. I’ll touch more about that later. Essentially, we’re in Australia, well established in the retail pharmacy network with over 3,500 pharmacies covered.
We saw evidence based OTC products. In the U.S. we have a cornerstone customer in Passport Health, the largest provider of travel medicine services in the United States. The second product Protectyn which is a liver and gut health product, we plan to launch into our network. We’re exploring both USA and Canada for that.
Let’s just have a look at the addressable market here. So digestive health market for supplements is greater than $15 billion, it’s a large market and it’s growing. Traveler’s diarrhea in of itself is a $1 billion market growing at 7%. Travelan has a large market potential.
So if we look at U.S. and EU travel numbers, assuming a penetration rate of 15%. On those conservative assumptions, we’re looking at potential sales of $83 million and $50 million, respectively, in the U.S. and Europe. The Clostridiodes difficile infections market and this was one of our lead clinical programs has a market that’s expected to be $1.7 billion by 2026 according to Global Data.
Just touching on the right there you can see our flagship product Travelan. Wouldn’t we all like to start traveling again? If we do, we should remember that 30% to 70% of travelers experienced traveler’s diarrhea. So it’s important to take Travelan, the only preventative medicine for traveler’s diarrhea.
Let’s just quickly have a look at our technology platform. So it’s based on bovine colostrum. So you get a lot of natural benefits from that. But what we do is we take a highly specific vaccine. We immunize, like a cow broad carving, we isolate hyperimmune antibody rich bovine colostrum, which is specific for targeted pathogens. We neutralize those toxins and we clear the pathogens and it results in a number of label claims that we’re allowed to make in Australia.
So for Travelan, for example, not only can we reduce the occurrence, we can also reduce and relieve diarrhea, reduce and relief abdominal cramping, gastrointestinal pain, immune defense, liver function health, as well as repairing gastrointestinal gut wall lining. So you can see it’s a broad activity in the gut. Not only does it target those pathogens, it has broad liver and gut activity.
Let’s have a look at our clinical programs here. So there’s two sections here. The first is Immuron programs and the second of those partnered programs. We’re quite proud of our partnered programs. So we’ve got some of the leading Government Defense Departments working with us. So University of Uniformed Services is doing a trial with Travelan and another OTC product for the armed forces.
CampETEC is a product that we’ve developed in conjunction with the Naval Medical Research Center. That’s currently on clinical hold. Unfortunately, you would have seen that ASX release. We’re hoping to resolve that clinical hold as soon as possible and get this research underway.
With regards to Travelan, that milestone I mentioned before, we’re planning on filing the IND soon with the FDA in order to get this controlled human infection model study in ETEC, that’s Enterotoxigenic E. coli challenge study planning to do that in the U.S. market.
Also IMM-529 that product I mentioned before for Clostridiodes, the $1.7 billion market opportunity. We’re currently undertaking a market evaluation, just double check that program has been on hold for the last two years during the pandemic to make sure that that both the technology and the market opportunity is what we think it is and confirming that we will plan to move ahead with clinical trials of that product as well.
Touching back on the distribution capability, so companies spoken a lot about its science and its programs for new diseases, but we’re already in the market, we’re selling commercial products, Travelan and Protectyn. Travelan sold in Australia, USA and Canada. We have strengths in Australian retail pharmacy, more than 3,500 pharmacies. In the US we have the B2B or business-to-business market with the largest travel clinic Passport Health. In Canada, we have a presence in retail pharmacy and e-commerce.
Here is a profit and loss statement. So this was a results presentation. After all, you can see that offer low based with growing revenue 425% with growth in both Australia and the rest of the world, which includes U.S. and Canada.
We have very good profit margins here. The commercial side of the business is almost breakeven. Back before the pandemic we’d reached a run rate of around $3 million for these products and we’re planning to get back to there and to grow even beyond that.
I mentioned before a strong balance sheet, cash of $22.1 million and essentially no debt. The only other non-current liability we have there is recognition of a lease commitment. What does this allow for? It allows us to pursue both an organic and M&A strategy. So not only are we going to focus on growing our products, commercial products Travelan and Protectyn; looking to expand sales across target geographies beyond the U.S., Canada and Australia; growth in our distribution, network sales and marketing activities. We have got other channels within the markets. We currently exist so we can expand. We’re looking at new formulations as well, for example, once-daily dosing, which would be a good thing for the FDA approval.
On the M&A side, some of the key criteria that we’re focusing on, obviously, expanding market verticals and product offering, expanding our customer base. Keys to this and making sure that the target company or product has strong IP and management, and that we can secure cost and earnings synergies, as well as growing our revenue base.
Key milestones for our science program. Travelan I mentioned before, so filing that IND, that’s coming up for this — half of this calendar year. We plan to initiate that trial upon approval of the IND in the first half of next calendar year with a view to having topline results before the end of the calendar year.
The CampETEC program in conjunction with the NMRC, we plan to submit the complete response letter to the clinical hold that I mentioned before and get that program underway hopefully before the end of the next calendar year. There are two programs in that, so that’s Campylobacter and ETEC and Enterotoxigenic E. coli, two separate clinical trials are planned for that particular product.
On the IMM-529, we plan to manufacture the clinical drug product, assuming the market evaluation I mentioned before, confirms that go through this project in the beginning of next calendar year, with a view to submitting an IND to the FDA before the end of the year. If that is approved, we’ll be looking at first half of 2024 of getting that clinical program underway.
The Uniformed Services University trial of Travelan and Florastor, we’re looking at that trial starting around the first half of 2023. This one’s important for our commercial products in that. It’s a field trial and it’ll show in a real world setting, how well Travelan performs and people that are traveling to areas of high risk.
That concludes my presentation. I’m sure that you’ll have many questions. And before we move on to Q&A, I just like to share this last slide here. This is scientific references for those that are scientifically minded. I’ve shown some of the key references showing the evidence base that we have for our lead commercial product Travelan, as well as IMM-529 for Clostridiodes difficile.
I’ll hand back to you for Q&A. Thank you.
Question-and-Answer Session
A – Unidentified Company Representative
Thanks, Steven. There’s been a number of questions that have been submitted. So I’ll just go and read through these questions and comments as they come through one by one. The first one, Steven, congratulations on becoming CEO, with our market cap languishing at approximately A$20 million and considering we have almost close to $30 million in the bank, once we received the DoD grant of approximately $6 million, which should be soon? And what measures will you be taking to get the share price trading above cash backing or much higher in the short-term?
Steven Lydeamore
Look, that’s a very good question and a fair one. I share your disappointment with the current market cap, especially given their current cash balance which exceeds their market cap. I mentioned during our presentation that we plan to wisely spend that money on growing the value for shareholders. So we’re undertaking that evaluation with all of our commercial and clinical programs with a view to establishing a strategy for both organic and M&A growth.
I think you’ll hear more about that relatively soon, because we have a number of activities underway on both fronts. So we’ve almost completed a revised marketing plan for Travelan in Australia and next cab off the rank will be Travelan for the U.S. market. And on the M&A front, there are a number of interesting opportunities, too early to talk about those, but some of them which are quite promising.
Unidentified Company Representative
And next comment that’s been submitted. Hello, Steven and congratulations to you and Joanne on coming on board for the new — a new era for the company and a better era, hopefully, early for — early on for shareholder returns. Reading through the presentation document, There was reference made to a quarterly updates from Immuron moving forward. Definitely welcome that, as previous management’s regular communication with shareholders has been very poor. Also with Hensley involved, will they be increases Immuron in the short-term?
Steven Lydeamore
That’s also a very good point. The scale of the work that we’re doing is clearly that message is not getting out there. So webinars like this, we will do quarterly, I plan to actually create an opt in provide your email to the company so we can share newsletters and the like.
Hensley is assisting Immuron in Investor Relations and Public Relations and they’re promoting what we’re doing, not only to their shareholders, but also to potential investors and brokers and investment groups, so setting up meetings and the like for me. They’re also assisting me at the moment in identifying potential M&A opportunities and they will assist me in evaluating those before moving forward.
Unidentified Company Representative
Okay. Thanks, Steven. Next set of questions that have come through, what is the company doing to try and increase shareholder value?
Steven Lydeamore
Similar question to the first, I guess, so there’s two texts there. One is on the commercial products, I think, the sales that we’re currently doing on those, at our peak, we were just shy of $3 million. I think Travelan alone could be more than $10 million product without doing too many things and we just execute on those items that I showed before, which is expanding within existing markets in new channels.
So, for example, in the pharmacy market in the U.S. and we’ve had success in Australia, there’s no reason why we couldn’t be successful in the in the U.S. market, as well as in Canada. So I didn’t show those as growing as Canada, because we exist in those channels, but wouldn’t say we’re performing well. So if we ramp up our sales and marketing strategy and invest wisely, we can grow Travelan into more than $10 million within the next few years.
On the on the M&A front, we’ve got opportunities to expand into new markets. So that’s either out licensing or distribution agreements with companies in other markets who are potentially acquiring companies that have a beachhead and markets that we wish to enter. Hopefully, we could find some targets that would allow us to expand not only geographically, but add new products into the portfolio.
So even in Australia, having two products only in a market where we have good evidence base clients in over 3,500 pharmacies, it would obviously make sense to have more products in that category. So there’s many, many things that we can do and you can be assured that we’re looking at all of them to grow value for the company and get that share price back up to where it should be.
Unidentified Company Representative
And there seems to be little to no market awareness of Immuron and this is reflected in the share price and lack of volume. Again, what is the company doing to change this?
Steven Lydeamore
Yeah. So communicate, communicate, communicate, so not only with existing shareholders, but new potential investors and that will be through webinars, through social media, through direct acquisition and newsletters to subscribers to emails, meetings with brokers and investor groups presentation. So I’ve signed up to present in Perth at the AusBiotech Investor Conference in coming up in October and looking for the more opportunities to do more of that, not only in Australia, but also in the U.S. I mentioned before that we have 35% of our shareholders in the U.S. and at one time it was a greater than 50%, we should try and get that back up again and drive that share price up by making that awareness higher.
Unidentified Company Representative
At what stage is the company at with its FDA submission for Travelan?
Steven Lydeamore
As I mentioned that right at the beginning of the slide deck and also towards the end, so we’re getting very close at the moment to filing the IND. So that’s an Investigational New Drug. That’s the first step in the process of getting approval to start a clinical trial.
That first clinical trial for Travelan will be a controlled human infection model study likely to be done in the United States. I’m getting results for that and in the deck, you’ll be able to download this after the webinar and you can see the dates there.
Yeah, we’ll discuss those results with the FDA to determine what additional studies. Likely there will be two more studies that I would think for a better life filing for the US that would commence after that.
Unidentified Company Representative
And what stage is the European patient’s admission now?
Steven Lydeamore
I guess it depends on which European patents. So we have two, so there’s the full, I will leave the technical words out of it, but essentially the protecting against pathogens patent, that was recently approved in Europe, back in, I think, it was in January and there was a ASX release put out about that.
We also have a European patent for clostridium difficile and that was — we got a notification of intent to grant? Not yet granted. We’re expecting that relatively soon. I think that was also announced to the ASX relatively recently.
Unidentified Company Representative
Next question, in regards to the company’s failed acquisition last year, is the company looking at a possible alternative to the acquisition like a JV? And if not, is the company planning to address how the submission was handled and managed by the ACX – ASX, sorry?
Steven Lydeamore
Yeah. Look that was a disappointing event for the company, no doubt. Problem is that time has passed and the market is somewhat moved on. You would have seen recently we put out an ASX release saying that we’d evaluated the SARS-CoV-2 market opportunity with a view to taking our own product IMM-124E into that space.
We had very good preclinical in vitro data showing activity against SARS-CoV-2. Unfortunately, we couldn’t find a mechanism of action which is necessary to take it through those next steps into animal and to human clinical trials.
So the key point here is that, we’ve decided not to take that forward, because the market opportunity itself is moved such that we don’t think there would be a place for us with either our own product, IMM-124E or that previous opportunity.
So I think the time has passed. We’re not pursuing a JV or any other alternative structure for that particular company or product and we’re not taking any activity action against the ASX. I don’t see that as a wise investment for Immuron’s resources.
Unidentified Company Representative
Next question, Amazon U.S. seems to be out of stock a lot. Recently, it’s been at least three weeks without stock. Are there challenges with supply and specifically supplied to Amazon?
Steven Lydeamore
Look, yeah, that is true. We have been stopped out on Amazon. We’re just going through a transition at the moment. So we’ve been marketing our product Travelan through a third-party called Medic [ph] in the U.S. So they have their own Amazon Shop and they sell Travelan along with a lot of other products. Our plan is to go direct into the U.S. market. So we’ll have an Immuron on Amazon Shop.
We think there’s greater advantages in that that we will be selling directly. We’ll get obviously a higher selling price, could be the retail price. We’re moving to a new company that’s going to support us in this this arena. So we will look to do the same also in Canada. So this is a transitional thing moving from one supplier to another. We expect to be up and running again I’ll think probably right around November.
Unidentified Company Representative
Next one, Travelan — in reference to Travelan, with such a compelling product, why is the awareness of the benefits so poorly promoted at Chemist Warehouse outlets. The comment has been made that, at the chemists warehouse, you have to really search for Travelan as it’s a lot — it’s lost amongst many competing products and the comment was the marketing is pretty hopeless?
Steven Lydeamore
Look, a point taken, I don’t think that we can change the many products and if you go into a pharmacy, whether it’s Chemist Warehouse or somewhere else, you’ll see products that are used for traveler’s diarrhea after you get it, so things like Imodium or gastro stop and they have their place if you do get traveler’s diarrhea then that — clearly that’s something you would consider using alongside other things that can help relieve or take away some of the symptoms of traveler’s diarrhea. One of which is Travelan, by the way, I mentioned that before. It doesn’t only reduce the occurrence. It also helps reduce the symptoms of traveler’s diarrhea.
We do sit there on the shelf in most pharmacies. Next, another product called Travacalm, so there’s a bit of confusion there, because Travacalm is for motion sickness essentially and not traveler’s diarrhea. The marketing could be improved and I mentioned that we’ve just about to complete a complete review of the marketing strategy for Australia and that’s covering not only what we do in pharmacies, but also online and through social media.
We do intend to increase promotional spend both in the social media marketing space in search engine optimization, but also in pharmacy programs. So in order to stand out from that crowd of gut-related travel products, you need to train both the pharmacy and the pharmacy and system, so when somebody asks for a product that they recommend our product has been the only product available over the counter for to prevent traveler’s diarrhea, we wouldn’t prefer to prevent it rather than having to deal with after you get it.
To make it stand out on the shelf there’s marketing things that we can do with the end displays and wobblers and things like that. But all of those things are being looked at and we plan to implement those for the upcoming peak travel season around Christmas and New Year.
Unidentified Company Representative
Great. Another question, research report, broker analysis — analyst report in the short-term would assist with current valuation of Immuron and 12-month target price would be another proactive measure. Unfortunately, previous senior management have not liked the idea. However, the share price has greatly underperformed over the last 12 months to 18 months under current management. I hope you see things differently, Steven, on this topic, and I am – and will initiate such a report to be undertaken and released. It’s all well and good to report, good and improving Travelan sales numbers with travel back on the agenda for many people. But unfortunately, this has not done anything to excite the market, and therefore, the share price, have you get any comments to that?
Steven Lydeamore
Look, I certainly do. You’re right. Getting the word out there is important and a broker or research analyst report is one tool that can be used to do that. I’m certainly not against it. I’ve seen that it been successful at two other ASX companies that I’ve been with in the past and it is something that I will consider. I promise that we’ll do that. But I will consider.
I think it is important that if we do have a research analyst report that it’s done independently, so somebody independently reviews and makes their own assessment of the market potential and the potential target share price for the company because that’s what’s going to resonate best with potential investors and existing shareholders an independent view, not a, yeah, company view on that.
I think generally we have to increase communication with the market both with existing shareholders and also new potential immense investors. As I said before, we’re planning on stepping that up with more webinars, more information on social media channels, more meetings with shareholders and investors and brokers in the live presentations at conferences, et cetera.
Unidentified Company Representative
Great. And on that note, that sounds great regarding presentations and media coverage to boost Immuron’s market profile moving forward. Does Immuron have a Twitter account, Instagram, which you will post this information on?
Steven Lydeamore
We do, actually, I think, Instagram, I think, might be limited to Travelan, our key product. We also have a Facebook account for that, and in fact, our Facebook account for Travelan has more than 25,000 followers, which show you there’s a loyal base of people out there for Travelan.
We do have a Twitter account. I must admit that I haven’t — the company hasn’t really ended LinkedIn account for that matter. We haven’t been active on posting anything. I posted something just the other day these this results presentation on LinkedIn for the first time and shared that with my own personal LinkedIn base, which is more than 3,000 people.
People that are listening today and shareholders please share that view own contacts and get the word out. But, yes, we do have those accounts and we will start using those. We’ve got a strategy for using them for the product. We’re going to develop a strategy for using various social media channels for the company itself as well.
Unidentified Company Representative
Great. And another question, some years back the Phase II NASH trials were reportedly indicating that we had the best infield product. What — why has nothing progressed in this opportunity?
Steven Lydeamore
We’ve had mixed results with that product. I think it’s important that we demonstrated through preclinical and clinical trials and mechanisms of action. One of which has to do with the LPS toxin, which is one of the key reasons why our Protectyn product is so effective in liver and gut health. We did have one — didn’t quite meet the endpoints studying in NASH and the company has taken a decision to focus on other pathogens and other indications for the product going forward. So we don’t plan any further studies in NASH.
Unidentified Company Representative
All right. It seems to be all the questions today, Steven. I’ll throw back to you for some final comments.
Steven Lydeamore
Look, it was a pleasure to speak to you for the first time. I will be sharing this recorded webinar both on our website and through social media. Please share it with your own contacts as well. I hope you get energized around the company.
It seems absurd to me that we can have a market cap of $20 million and cash equivalent to sitting in the bank. I personally think coming in and this is what excites me that we have two commercial products on the market, we have multiple clinical assets moving into Phase II trials. That doesn’t sound like the profile of company that is valued at cash.
So I plan to and with your help increase communication about what we’re doing and to move these programs forward. I think the key thing with these programs is, we’ll say we’re going to do XYZ. The plan is to do that and to be able to report that to the market. Delivering on the — on what you promise is one of the keys to getting that share price back up again and that’s what we’re going to do.
Unidentified Company Representative
Great. Thanks, everyone. That now concludes today’s webinar. Thank you everyone for attending. Have a good day.
Steven Lydeamore
Thank you, everybody.
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