Immunic: New MS Drugs Need Extreme Product Differentiation (NASDAQ:IMUX)

Immunic (NASDAQ:IMUX) shares more than doubled recently after a successful, oversubscribed PIPE financing of $60mn. A PIPE financing is where large private players buy large amounts of public shares from the company at a discount to the market price. The PIPE financiers of IMUX include Deep Track Capital, Commodore Capital, BVF Partners LP, RTW Investments, LP, Great Point Partners, Logos Capital, Vivo Capital, Invus, Adage Capital Partners LP, Parkman Healthcare Partners, and Sphera Healthcare.

Before that, in June, the stock dropped 30% after failing a trial in Ulcerative Colitis for its lead candidate, IMU-838. This program has now been abandoned. This was after a failed covid-19 program from the previous year, where the molecule failed two successive trials, although for reasons unrelated to the molecule’s activity against the disease.

I covered IMUX in January last year. Immunic is a German-origin company developing selective oral medicines for autoimmune and inflammatory diseases. They currently have three molecules in the pipeline:

Vidofludimus calcium (IMU-838) program, which is focused on the development of oral formulations of small molecule inhibitors of the enzyme dihydroorotate dehydrogenase, or DHODH; the IMU-935 program, which is focused on an inverse agonist of retinoic acid receptor-related orphan nuclear receptor gamma truncated, or RORγt, an immune cell-specific isoform of RORγ; and the IMU-856 program, which involves the development of a drug targeting the restoration of intestinal barrier function and regeneration of bowel epithelium.

They produced some strong data in RRMS from their lead candidate IMU-838 last year, which I covered. The company compared the safety and efficacy of IMU-838 with a number of competing, approved molecules. In some comparisons, safety was similar, while in others, efficacy was similar. However, in none of the cases were these similarities between the same pair of molecules. That means, compared to all of them, IMU-838 showed both better safety and better efficacy. The company especially underlines the molecule’s superlative safety and tolerability across 1100 treated patients.

IMU-838 is currently in a phase 3 trial in RRMS and phase 2 trials targeting Progressive Multiple Sclerosis (PMS) – CALLIPER Trial and Primary Sclerosing Cholangitis (PSC). Interim analysis is planned for both the MS trials. IMU-838, according to the company, is differentiated from other MS drugs because its target is the reduction of disability worsening rather than “prevention of relapses via broad immunosuppression,” which has been the historical focus. This it aims to achieve through its multifaceted antiviral, anti-inflammatory and neuroprotective effects.

I read through the company’s corporate presentation but found it difficult to figure out how the product candidate differentiates itself from the legion of other MS drugs available in the market. I mean, the company gives us a lot of theory, which is quite interesting, but there is no hard data available to back a theory of effective differentiation. Earlier trials were successful but hardly differentiated the molecule from other drugs. Data will only be available starting 2024 and conclusive data will only be available as the company submits its first NDA, sometime in 2026.

Financials

IMUX has a market cap of $121mn and a cash reserve of $88mn. Research and development expenses were $16.5 million for the 3 months ended June 30, 2022, while G&A expenses were $4.1mn. That gives them a cash runway of around 4 quarters, not considering the $60mn PIPE funds.

The company has strong patent protection for IMU-838, with a composition of matter patent running to 2031, and additional patents, if granted, going on to 2041. They also have New Chemical Entity status in the US and EU, which gives them additional protection.

Bottom Line

While IMUX has gone up considerably, and on very high volume, remember that those PIPE warrants were exercisable immediately, so that could well be one of the reasons for the high volume. In terms of the science, there’s still not a lot to go on. The phase 2 trial has shown drug activity in MS, which is commendable; and there are early signs of some differentiation. But MS is a crowded market, and IMUX needs to do really very well to have any sort of impact here. At the time of writing, there’s no data, either way, to show signs of such an impact.

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