Immunic Inc (NASDAQ: IMUX) has seen its share price plummet by over 75% after it announced disappointing results from a phase 1b clinical trial of IMU-935.
The trial, which saw the treatment used in patients with moderate-to-severe psoriasis, appears to have shown an unusually high rate of recovery for placebo patients, raising questions about the effectiveness of Immunic’s treatment.
However, the business did stress that it has only limited access to data from the trial at present.
Immunic CEO and President, Daniel Vitt, commented:
"Although we did not see the desired activity signal over placebo in this group-level interim analysis, we retain a high degree of conviction on IMU-935's potential promise in psoriasis and beyond."
Investors seem disappointed by these early results, but is IMUX stock a good investment?
What is Immunic?
Immunic is a clinical-stage biopharmaceutical company which is developing a pipeline of selective oral immunology therapies for the treatment of chronic inflammatory and autoimmune diseases.
Its lead development program is IMU-838, which is in Phase 3 clinical for treatment of relapsing-remitting multiple sclerosis, as well as phase 2 trials for progressive multiple sclerosis and primary sclerosing cholangitis.
The company is also developing IMU-935, an inverse agonist of RORγt, and IMU-856 for the restoration of the intestinal barrier function in patients suffering from diseases, such as inflammatory bowel disease, irritable bowel syndrome with diarrhea, immune checkpoint inhibitor induced colitis, and other intestinal barrier function diseases.
Immunic is headquartered in New York.
How Does Immunic Make Money?
As a clinical-stage company, Immunic is yet to generate significant revenues.
IMUX Stock Financials
In the company’s most recent earnings, which covered the quarter ended 30 June 2022, Immunic had cash and cash equivalents of $88.1m, which its management said would be sufficient to fund operations into the fourth quarter of 2023.
Additionally, the company has since announced the successful raising of $60m from an oversubscribed private placement. The business sold an aggregate of 8,696,552 shares of its common stock at a price of $4.35 each and pre-funded warrants to purchase up to an aggregate of 5,096,552 shares at a purchase price of $4.34 per pre-funded warrant share.
Net losses from the company’s most recent quarter stood at $21.9m, with research and development costs ramping up due to ongoing clinical trials.
The company’s share price has declined by 79.17% across the year to date and by 73.27% across the last 12 months. This period saw it reach a high of $14.50 and a low of $1.96.
IMUX Growth Potential
There is a significant amount of money to be made from treatments for multiple sclerosis. The global multiple sclerosis market sees annual sales in excess of $23bn. Immunic claims that its treatment candidate addresses significant unmet needs for patients with the condition, including the addressing of neurodegenerative drivers.
In its current pipeline, the company expects to submit for new drug authorization (NDA) approval for the treatment in 2026.
The company holds several patents for IMU-838, including for antiviral activity for use in COVID-19.
Additionally, there is the IMU-935 candidate, which today’s announcement relates to. Immunic is optimistic that the treatment is compatible with treatment for multiple autoimmune diseases through its inhibition of IL-17.
These include psoriasis, rheumatoid arthritis and psoriatic arthritis. Immunic says these three conditions alone represent a combined market opportunity of more than $50bn.
IMUX Investment Risks
Today’s news highlights one of the key risks to investing in Immunic, or any similar clinical stage business. Treatments can suffer major setbacks during clinical trials, leading to delays in commercialization or complete failure to progress. The extent of today’s setback remains unclear until the company offers further updates.
It is worth noting however, that IMU-935 is not the company’s most advanced treatment candidate, with IMU-838 having advanced to phase 3 trials.
Even so, the company looks almost certain to require more funding before any of its candidates reach the commercial stage. This funding could be unsuccessful or dilute the value of existing shareholders’ investments in the business.
Additionally, it is worth noting that the business faces significant competition from pre-existing and under development treatments.
Is IMUX Stock a Good Investment?
The news which sent IMUX’s share price into a tailspin is disappointing, but the reaction from investors does appear a little overblown at first. This month had already seen the stock price jump from $3.00 to a high of $10.80, with investors reacting warmly to its successful fundraising efforts.
Consequently, a panicked sell off might explain today’s strong reaction from investors.
Aside from the setback relating to IMU-935, the business appears to be in solid shape. It is well funded and has clear goals for two treatment candidates which have significant market opportunities.
Even so, investing in clinical stage businesses is inherently speculative, and with around four years to wait until the company expects to submit an NDA application for its primary candidate many things can change before Immunic’s treatments are on the market.
Prospective investors should be aware that the business’ stock price could fluctuate wildly on newsflow, particularly due to the company’s penny stock status.
IMUX stock has a consensus rating of Buy from the six analysts covering it for the Wall Street Journal, along with an average price target of $21.67 compared with its price at the time of writing of $2.24.
