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Item 7. Management’s Discussion and Analysis

2024-02-22 compared with 2023-02-23 · 173 added, 260 removed, 196 unchanged (69% of the section changed)

6 unchanged sentences

and its subsidiaries.

We are a clinical-stage biopharmaceutical company with a pipeline of selective oral immunology therapies focused on treating chronic inflammatory and autoimmune diseases.

Immunic, Inc.

("Immunic," “we,” “us,” “our” or the "Company") is a biotechnology company developing a clinical pipeline of selective oral immunology therapies focused on treating chronic inflammatory and autoimmune diseases.

We are headquartered in New York City with our main operations in Gräfelfing near Munich, Germany.

We currently have approximately 66 employees.

We are currently pursuing clinical development of three orally administered, small molecule programs, each of which has unique features intended to directly address the unmet needs of patients with serious chronic inflammatory and autoimmune diseases.

These include the vidofludimus calcium (IMU-838) program, which is in Phase 3 clinical development for patients with multiple sclerosis (“MS”);

the izumerogant (proposed International Nonproprietary Name (“INN”) for IMU-935) program, which is an inverse agonist of retinoic acid receptor-related orphan nuclear receptor gamma truncated (“RORγt”) that inhibits the interleukin-17 (“IL-17”) pathway in diseases such as psoriasis;

and the IMU-856 program, which is targeted to restore intestinal barrier function and regenerate bowel epithelium.

We have incurred net losses since inception of $317.3 million through December 31, 2022.

We had 77 employees as of February 1, 2024.

We are pursuing clinical development of orally administered, small molecule programs, each of which has unique features intended to directly address the unmet needs of patients with serious chronic inflammatory and autoimmune diseases.

These include the vidofludimus calcium (IMU-838) program, which is in Phase 3 clinical development for patients with multiple sclerosis (“MS”) and which has shown therapeutic activity in Phase 2 clinical trials in patients suffering from relapsing-remitting MS, progressive MS and moderate-to-severe ulcerative colitis (“UC”);

the IMU-856 program, which is targeted to regenerate bowel epithelium and restore intestinal barrier function, which could potentially be applicable in numerous gastrointestinal diseases, such as celiac disease, inflammatory bowel disease, short bowel syndrome and irritable bowel syndrome with diarrhea;

and the IMU-381 program, which is a next generation molecule being developed to specifically address the needs of gastrointestinal diseases.

We have incurred net losses since inception and have an accumulated deficit of $410.9 million through December 31, 2023.

We anticipate that we will continue to incur losses for at least the next several years.

1 unchanged sentence

Recent Events

$60 Million Private Placement Equity Financing

On October 10, 2022, we entered into a Securities Purchase Agreement for a private placement with select accredited investors and certain existing investors.

Pursuant to the Purchase Agreement, the Company agreed to sell to the Purchasers (i) 8,696,552 shares of the Company’s common stock, par value $0.0001 per share (the “Shares”), at a purchase price of $4.35 per Share, and (ii) 5,096,552 pre-funded warrants to purchase Common Stock, at a purchase price of $4.34 per Pre-Funded Warrant.

The Pre-Funded Warrants have an exercise price of $0.01 per share of Common Stock, be immediately exercisable and remain exercisable until exercised in full.

The holders of Pre-Funded Warrants may not exercise a Pre-Funded Warrant if the holder, together with its affiliates, would beneficially own more than 9.99% of the number of shares of Common Stock outstanding immediately after giving effect to such exercise.

The holders of Pre-Funded Warrants may increase or decrease such percentages not in excess of 19.99% by providing at least 61 days’ prior notice to the Company.

The Pre-Funded Warrants are classified as a component of permanent equity because they are freestanding financial instruments that are legally detachable and separately exercisable from the shares of common stock with which they were issued, are immediately exercisable, do not embody an obligation for the Company to repurchase its shares, and permit the holders to receive a fixed number of shares of common stock upon exercise.

In addition, the Pre-Funded Warrants do not provide any guarantee of value or return.

All of the pre-funded warrants were exercised in January 2023.

The Private Placement closed on October 12, 2022.

The gross proceeds of the Private Placement were approximately $60.0 million, before deducting offering expenses payable by us of approximately $4.0 million.

We intend to use the net proceeds from the Private Placement to fund the ongoing clinical development of our three lead product candidates, vidofludimus calcium (IMU-838), izumerogant (IMU-935) and IMU-856, and for other general corporate purposes.

New Data From Phase 2 EMPhASIS Trial of Vidofludimus Calcium in Relapsing-Remitting Multiple Sclerosis Supporting the Drug’s Neuroprotective Potential

On November 17, 2022, we reported newly available data from the Phase 2 EMPhASIS trial of vidofludimus calcium in patients with relapsing-remitting multiple sclerosis (“RRMS”).

The trial includes an optional long-term open-label extension (“OLE”) phase running up to 9.5 years.

An interim analysis was performed with data extraction in October 2022, when 209 patients remained on treatment in the OLE phase, some of whom have already received more than 180 continuous weeks (approximately four years) of active treatment with vidofludimus calcium.

Long-term open-label treatment with vidofludimus calcium was associated with a low rate of confirmed disability worsening over time, comparing favorably to historical trial data for currently available MS medications.

During the 24-week double-blind main treatment period, 12-week and 24-week Confirmed Disability Worsening (“12w/24wCDW”) events occurred in 1.6% of subjects in the combined vidofludimus calcium treatment arms as compared to 3.7% in the placebo group.

In the OLE phase, the proportion of patients free from 12wCDW was 97.6% after 48 weeks and 94.5% after 96 weeks of vidofludimus calcium treatment as compared to the start of the OLE phase.

Similar results were observed for 24wCDW and sustained CDW.

The OLE phase also showed low relapse activity.

Presentation of Data From Phase 2 EMPhASIS Trial of Vidofludimus Calcium in RRMS at ACTRIMS Forum 2023

On February 22, 2023, we announced that Robert J.

Fox, M.D., Staff Neurologist, Mellen Center for Multiple Sclerosis, Vice-Chair for Research, Neurologic Institute, Cleveland Clinic, Cleveland, Ohio, will present data from the blinded and OLE parts of our phase 2 EMPhASIS trial of vidofludimus calcium in RRMS at the eighth annual Americas Committee for Treatment and Research in Multiple Sclerosis (ACTRIMS) Forum 2023, taking place February 23-25 in San Diego, California.

The poster presentation includes our previously announced data from the trial showing that long-term open-label treatment with vidofludimus calcium was associated with a low rate of confirmed disability worsening over time, comparing favorably to historical trial data for currently available MS medications.

Publication of Data From Phase 2 EMPhASIS Trial of Vidofludimus Calcium in RRMS in Peer Reviewed Journal

On June 15, 2022, we announced that data from our Phase 2 EMPhASIS trial of vidofludimus calcium in patients with RRMS has been published in the peer reviewed journal, Annals of Clinical and Translational Neurology.

The paper, authored by coordinating investigator, Robert J.

Fox, M.D., Staff Neurologist, Mellen Center for Multiple Sclerosis, Vice-Chair for Research, Neurologic Institute, Cleveland Clinic, Cleveland, Ohio, is entitled, “Safety and efficacy of vidofludimus calcium, a selective dihydroorotate dehydrogenase inhibitor, in relapsing-remitting multiple sclerosis (EMPhASIS):

a double-blind, randomized, placebo-controlled Phase 2 trial.”

Results of Phase 1 Trial of Vidofludimus Calcium in Hepatic Impaired Patients

We completed a Phase 1 trial in a total of 24 patients with either no liver function impairment or liver disease of Child-Pugh A Child-Pugh B grade which was designed to explore dose optimization of vidofludimus calcium.

The study showed little influence on the PK of vidofludimus calcium in patients with Child-Pugh A Child-Pugh B liver impairmen t.

Update on the Use of Steroids in the Phase 2 EMPhASIS Trial in RRMS

Based on the observed interaction between vidofludimus calcium and chronic steroid use in the CALDOSE-1 trial in ulcerative colitis patients, we performed a post-hoc analysis of our Phase 2 EMPhASIS data in RRMS patients to explore the potential influence of steroids on these study results.

As anticipated, steroid use was rare and among those RRMS patients who received any steroids, the majority received only short steroid courses following relapse events or acute neurological events.

Only four patients received any steroids for reasons other than relapse (COVID-19 infection, eczema, acute bronchitis, and contact urticaria, one patient each).

Most patients only had one single short course of steroids, and only nine patients had two or more steroid courses.

The average duration of steroid treatment in this RRMS trial was 4.4 days with a maximum duration of 10 days.

This indicates to us that steroids are rarely used in MS patients and mostly for a very short duration.

In conclusion, comparing patients who received at least one dose of corticosteroids with those who did not, we do not see any difference in clinical parameters or any evidence that the rare, short-term use of steroids in RRMS patients has any influence on the effectiveness of vidofludimus calcium in this patient population.

Celiac Disease Research and Development Webcast

On February 9, 2023, we hosted a celiac disease research and development webcast.

Our management, including Daniel Vitt, Ph.D., Chief Executive Officer and President;

Andreas Muehler, M.D., M.B.A., Chief Medical Officer;

and Hella Kohlhof, Ph.D., Chief Scientific Officer, were joined by renowned key opinion leaders to discuss the dynamics of this multifactorial, complex autoimmune disease, immune stimulation and its connection to clinical symptoms, the role of the epithelial barrier in the pathogenesis of the disease, current and potential treatment options, and the continued unmet medical need for effective therapeutics, which is driving an increased focus within the industry.

Phase 1 Clinical Trial of IMU-856, Results of Parts A and B in Healthy Human Subjects

On September 20, 2022, we announced positive unblinded safety, tolerability and pharmacokinetic (“PK”) results from Part A (single ascending doses) and Part B (multiple ascending doses) of our Phase 1 clinical trial of IMU-856 in healthy human subjects.

In the single ascending doses part, healthy human subjects were randomized in a double-blinded manner to either placebo or active treatment with single ascending doses of IMU-856 at 10 mg, 20 mg, 40 mg, 80 mg, 120 mg and 160 mg.

Single ascending doses of IMU-856 were found to be safe and well-tolerated and no maximum tolerated dose was reached.

No serious adverse events occurred.

Moreover, a dose-linear PK profile was observed across the investigated dose range.

In the multiple ascending doses part, healthy human subjects were dosed for 14 consecutive days with 40 mg, 80 mg or 160 mg once-daily of IMU-856 or placebo in a double-blinded manner.

Multiple ascending doses of IMU-856 were found to be safe and well-tolerated and no maximum tolerated dose was reached.

Treatment emergent adverse events were mostly mild in severity.

No Investigational Medicinal Product-related serious adverse events were reported.

No dose-dependent changes in laboratory parameters (including no effects on liver enzymes or in hematological parameters), vital signs, physical examination or electrocardiographic evaluations were found.

PK analysis showed a quick achievement of stable steady-state plasma concentrations within the first week and stable steady-state trough levels over the 14-day treatment period with a low accumulation factor for IMU-856, allowing predictable trough levels during daily dosing.

PK parameters in steady-state revealed a Tmax (time to reach maximum plasma concentration) of 2 to 3 hours post-dose, a plasma half-life of 17.4 to 21.5 hours and dose proportional increases in Cmax (maximum plasma drug concentration) and AUC (area under the concentration-time curve).

IMU-856 Composition-of-Matter Patent Granted

On August 16, 2022, we announced that we have received a Notice of Allowance from the U.S.

Patent and Trademark Office (“USPTO”) for patent application 16/646130, entitled, “Compound Having Cyclic Structure.” The patent covers composition-of-matter of IMU-856 and related pharmaceutical compositions and is expected to provide protection into at least 2038, without accounting for potential PTE.

Start of Patient Cohorts in Phase 1 Clinical Trial of IMU-856 in Celiac Disease

On May 5, 2022, we announced the start of the patient cohorts in our ongoing Phase 1 clinical trial of IMU-856 in patients with celiac disease.

Part C is structured as a 28-day, double-blind, placebo-controlled trial designed to assess the safety, tolerability, PK, pharmacodynamic (“PD”) and biomarker responses of IMU-856 in patients with celiac disease during periods of gluten-free diet and gluten challenge.

Approximately 42 patients were planned to be enrolled in two consecutive cohorts with IMU-856 given once-daily over 28 days.

Secondary objectives include PK and disease markers, including those evaluating gastrointestinal architecture and inflammation.

Sites in Australia and New Zealand are participating in Part C.

Initial results are expected to be available in mid-2023.

Top-Line Data from Phase 2 CALDOSE-1 Trial of Vidofludimus Calcium in Patients with Moderate-to-Severe Ulcerative Colitis

On June 2, 2022, we reported top-line data from our Phase 2 CALDOSE-1 trial of vidofludimus calcium in patients with moderate-to-severe ulcerative colitis (“UC”).

The trial did not achieve the primary endpoint of clinical remission for the pooled 30 and 45 mg/day active dose groups of vidofludimus calcium versus placebo at week 10.

In addition, no meaningful differences were observed between the three active dose groups for the overall intent-to-treat patient population (10 mg/day:

14.9%, 30 mg/day:

10.6%, 45 mg/day:

13.6%, placebo:

12.5%) or for the trial’s other secondary endpoints, including symptomatic remission, or endoscopic healing.

Consistent with prior data sets in other patient populations, administration of vidofludimus calcium in this clinical trial was observed to be safe and well-tolerated.

No new safety signals were observed.

As compared to placebo, there were no increased rates of infections and infestations, no elevated rates of liver events or liver enzyme elevations, and no elevated rates for changes in hematology-related laboratory variables.

The most common adverse events in this clinical trial were anemia (15/263 patients, 5.7%), headache (9/263 patients, 3.4%) and COVID-19 (7/263 patients, 2.7%).

Most adverse events were generally mild in severity.

As is common for the design of clinical trials in UC, the use of oral systemic corticosteroids (≤20 mg/day prednisolone equivalent) was allowed in CALDOSE-1 in patients who had been treated with corticosteroids for at least four weeks before

randomization.

Doses of corticosteroids were required to be kept constant throughout the induction phase (weaning was not allowed in this phase of the clinical trial), and the distribution of patients using corticosteroids was equal throughout all treatment groups.

Surprisingly, CALDOSE-1 data suggest a previously unknown treatment interference between the efficacy of vidofludimus calcium and the concurrent use of corticosteroids in the UC patient population.

More specifically, the non-steroid patient population showed an 11.4% advantage in clinical remission for vidofludimus calcium over placebo (pooled vidofludimus calcium treatment groups at week 10:

14.7%, placebo:

Such a difference in clinical remission between active treatment and placebo would traditionally be considered as confirming therapeutic activity.

In contrast, patients concomitantly taking vidofludimus calcium and corticosteroids during induction treatment had a lower rate of clinical remission at week 10 (11.5%) than placebo patients (20.6%) and also lower than the group of vidofludimus calcium monotherapy without concurrent use of steroids (14.7%).

This treatment interference between vidofludimus calcium and corticosteroids was not expected based on our analysis of currently available preclinical or clinical data.

Based on these results, we announced that our development programs in the IBD indications will not be continued without a partner.

Investigator-Sponsored Phase 2 IONIC Trial in Moderate-to-Severe COVID-19 Closed Down

On June 23, 2022, sponsor and lead site, University Hospitals Coventry and Warwickshire NHS Trust, London, United Kingdom, informed us that the investigator-sponsored Phase 2 IONIC trial for the treatment of patients with moderate-to-severe COVID-19 is being closed down.

Recruitment for the trial ended on May 20, 2022 and the last patient follow-up occurred in September 2022.

On September 29, 2022, we were informed that the sponsor submitted the end of trial declaration.

The trial was a prospective, randomized, parallel-group, open-label Phase 2b trial, designed to evaluate efficacy and safety of vidofludimus calcium in combination with the neuraminidase inhibitor, Oseltamivir (Tamiflu Ⓡ ), in approximately 120 adult patients with moderate-to-severe COVID-19.

Pre-Planned Phase 1b Interim Analysis of Izumerogant in Moderate-to-Severe Psoriasis and Goodwill Impairment

On October 20, 2022, we announced the outcome of a pre-planned interim group-level data analysis of our Phase 1b clinical trial of izumerogant in patients with moderate-to-severe psoriasis.

The overall trial is ongoing.

The pre-planned interim analysis revealed that the group averages for Psoriasis Area and Severity Index ("PASI”) reductions in the two active arms did not separate from placebo at four weeks.

Although the active arms performed in line with expectations, based on similarly designed trials, the trial experienced a greater decrease than expected in PASI in the placebo arm.

Administration of izumerogant and placebo in this trial were demonstrated to be safe and well-tolerated, and no new safety signals were observed.

We plan to provide further updates and guidance on potential next steps for this development program towards the end of the first quarter of 2023.

Following the announcement of our interim group level data on October 20, 2022, our stock price experienced a significant decline from the prices preceding the announcement and the recent prices raised in our October 10, 2022 Private Placement.

We considered these to be triggering events indicating that it is more likely than not that goodwill is impaired.

Upon further evaluation we incurred a non-cash full impairment of our goodwill of approximately $33.0 million in the quarter ended December 31, 2022.

Phase 1 Clinical Trial of Izumerogant in mCRPC

The pre-planned dose escalation in the Phase 1 clinical trial of izumerogant in mCRPC with dosing of up to 900 mg daily has been completed.

Initial safety data available, to date, show a promising safety profile, with only benign adverse events and no dose limiting toxicities.

Izumerogant Composition-of-Matter Patents Granted

On February 2, 2022, we received a Notice of Allowance from the USPTO for patent application 16/644581, entitled, “IL-17 and IFN-gamma inhibition for the treatment of autoimmune diseases and chronic inflammation”.

We also received notice of allowance of patent application EP18762111.5 in Europe, and notice of grant of patent application 2018330633 in Australia.

All three patents cover composition-of-matter of izumerogant and related formulations, and are expected to provide protection into at least 2038, without accounting for potential Patent Term Extension ("PTE") in the United States or Supplementary Protection Certificates in Europe, respectively.

Results of Exploratory Phase 1 Drug-Drug Interaction Study of Izumerogant

An exploratory Phase 1 study was completed in 15 evaluable healthy human subjects to assess the drug-drug interaction potential of izumerogant.

No relevant signals for drug-drug interaction potential were observed and treatment was safe and well-tolerated.

Phase 1 Clinical Trial of Izumerogant, Results of Parts A and B in Healthy Human Subjects

On July 12, 2021, we provided an update on our izumerogant program, including new preclinical and clinical data.

The main result from preclinical investigations was that izumerogant inhibits cytokine production (thought to be a pre-condition for its use in immunological and autoimmune diseases) while maintaining the known and required physiological functions of maturing T lymphocytes.

In ex vivo mouse cell differentiation and maturation assays, izumerogant was observed to selectively inhibit RORγt-dependent gene expression during Th17 differentiation without affecting either RORγt-dependent gene regulation relevant to thymocyte development, or the viability of these cells.

In third-party research, impairment of thymocyte development has been shown to be associated with serious safety issues, including, among others, T cell malfunction and potential lymphoma formation.

We believe that izumerogant's observed selectivity may enable it to inhibit both the generation of Th17 cells and the production of IL-17 cytokines that are responsible for the development of autoimmune diseases, without impairing thymocyte development, which is associated with the potential risk of lymphoma seen with other, third-party RORγt programs.

On December 14, 2021, we provided an update on the preclinical and clinical development of izumerogant , announcing that:

• Unblinded data from the single ascending dose part of the ongoing Phase 1 clinical trial of a new powder-in-capsule formulation of izumerogant, in which healthy human subjects were treated with 100 mg, 200 mg, 300 mg and 400 mg of this new formulation or placebo, found these single ascending daily doses of izumerogant to be safe and well-tolerated, and no maximum tolerated dose was reached.

No serious adverse events occurred.

A dose-proportional PK profile was observed across the investigated dose range.

• Unblinded data from the multiple ascending dose part of the ongoing Phase 1 clinical trial, in which healthy human subjects were dosed for 14 days with 150 mg either once or twice daily doses of izumerogant or placebo, found these multiple ascending doses of izumerogant to be safe and well-tolerated, and no maximum tolerated dose was reached.

Treatment emergent adverse events were generally mild in severity, with moderate treatment emergent adverse events reported in one of eleven izumerogant treated subjects, compared with one of four subjects on placebo.

No serious adverse events were reported.

No dose-dependent changes in laboratory values (including no effects on liver enzymes or in hematological parameters), vital signs or in electrocardiographic evaluations were found.

PK analysis showed that stable steady-state plasma concentrations were achieved within the first week of dosing with an accumulation factor for izumerogant allowing predictable trough levels during daily dosing.

• Based on the favorable safety and tolerability data observed in healthy human subjects, our Phase 1 clinical trial of izumerogant was expanded in October 2021 to include a third portion, part C, in which moderate-to-severe psoriasis patients are randomized to 28-day treatment of izumerogant or placebo.

Assessments include safety, tolerability, PK and PD markers, as well as skin evaluations.

• In previous preclinical in vitro data, it was shown that izumerogant selectively inhibits Th17 differentiation and IL-17 production, whereas RORγt was unaffected by izumerogant during thymocyte maturation and, therefore, does not harm normal thymocyte maturation.

Data from acute and chronic treatment of mice corroborated in vivo that izumerogant is the first molecule observed to impact neither thymus size, thymocyte numbers, nor the maturation status of thymocytes, in contrast to two other known inhibitors of RORγt.

Changes in Board of Directors

On July 6, 2022, we announced the appointment of Monika Maria Törnsén as a member of our Board of Directors, effective as of July 5, 2022.

As a Class III director, Ms.

Törnsén’s term lasts until the Company’s 2023 annual meeting of stockholders.

Concurrently, we also announced that current Class III director, Jan Van den Bossche, resigned from the Board.

The Board accepted Mr.

Van den Bossche’s resignation effective July 5, 2022.

Van den Bossche’s decision to resign did not result from any disagreement with the Company on any matter relating to Company operations, policies or practices.

Executive Chairman Agreement with Duane Nash

On April 15, 2020, the compensation committee of the Board of Directors of the Company independently reviewed and approved entering into an employment agreement with the Executive Chairman of the Board, Duane Nash, MD, JD, MBA (the “Executive Chairman Agreement”) and pursuant to such approval, on April 17, 2020, the Company and Dr.

Nash entered into the Executive Chairman Agreement.

The Executive Chairman Agreement establishes an “at will” employment relationship with a base salary of $25,417 per month pursuant to which Dr.

Nash serves as Executive Chairman and contemplated a term that ends on October 15, 2020.

On October 15, 2020, the Company and Dr.

Nash entered into an addendum (the “First Addendum”) to extend the term of the Executive Chairman Agreement to April 15, 2021.

In connection with the First Addendum, the Company made a one-time award to Dr.

Nash of an option to purchase 120,000 shares of Company common stock, which vests monthly over six months commencing on November 15, 2020.

On April 15, 2021, the Company and Dr.

Nash entered into Addendum No.

Two (the “Second Addendum”) to extend the term of the Executive Chairman Agreement to April 15, 2022.

In connection with the Second Addendum, the Company made a one-time award to Dr.

Nash of an option to purchase 90,000 shares of Company common stock, which vests monthly over 12 months commencing on May 15, 2021, and to increase Dr.

Nash’s monthly base salary to $27,960 from $25,417.

On March 15, 2022, the Company and Dr.

Nash entered into Addendum No.

Three (the “Third Addendum”), which extended the term of employment from April 15, 2022 to December 31, 2022 with a base salary of $29,358 per month.

In connection with the Third Addendum, the Company made a one-time award to Dr.

Nash of an option to purchase 75,000 shares of the Company’s common stock, which vests monthly over 12 months commencing on April 10, 2022.

On December 28, 2022, the Company and Dr.

Nash entered into Addendum No.

Four, which extended the term of employment from December 31, 2022 to December 31, 2023 with a base salary of $30,250 per month (which includes the cash retainer payable for serving on the Company’s Board or for acting as the Chairman of the Board).

All other terms of the Executive Chairman Agreement remain the same.

Private Placement of up to $240 Million

On January 4, 2024, Immunic entered into a Securities Purchase Agreement with select accredited investors, pursuant to which the Company agreed to issue and sell to the Investors in a three-tranche private placement shares of the Company’s common stock, $0.0001 par value per share or in lieu thereof, pre-funded warrants to purchase shares of Common Stock.

The Pre-Funded Warrants are exercisable immediately for $0.0001 per share and until exercised in full.

• The first tranche, which closed on January 8, 2024, resulted in the purchase by the Investors of an aggregate of $80 million of Common Stock (or Pre-Funded Warrants) from the Company at a price of $1.43 per share;

• The second tranche is a conditional mandatory purchase by the Investors of an additional $80 million of Common Stock (or Pre-Funded Warrants) from the Company at a price of $1.716 per share, equal to 120% of the price paid in the first tranche and is subject to the satisfaction of three conditions:

◦ release by the Company of topline data from its Phase 2b clinical trial of vidofludimus calcium (IMU-838) in progressive multiple sclerosis, which data is currently expected in or around April 2025;

◦ the 10-day volume-weighted average price of the Common Stock is at least $8.00 per share during the 6 months following the data release;

◦ aggregate trading volume during the same 10-day period is at least $100 million.

• The third tranche must occur no later than three years after the second tranche and is conditioned on the same volume-weighted average share price and minimum trading volumes as the second tranche.

The third tranche provides for the issuance of $80 million of shares of common stock (or pre-funded warrants) at the same price per share as the second tranche, but permits investors to fund their purchase obligations on a “cashless” or net settlement basis, which would reduce the cash proceeds to be raised by the Company in the Private Placement.

Any of the conditions in the second or third tranches can be waived by holders of a majority of the outstanding securities (including the lead Investor).

The Private Placement resulted in gross proceeds to the Company of approximately $80 million in the first tranche, and an additional $80 million if and when the second tranche occurs.

Assuming that the second tranche is completed and conditions for the third tranche are satisfied or waived, the Company could receive up to an additional $80 million in the third tranche.

However, the amount of cash received in the third tranche would depend on the extent to which the Investors elect to fund the third tranche through a “cashless” or net settlement basis.

Therefore, total gross proceeds from the offering to the Company could actually be between $80 million and $240 million.

Gross proceeds to the Company will be reduced by fees paid to the placement agents, capital markets advisors and payments of transaction expenses.

The Company intends to use the net proceeds from the Private Placement to fund the ongoing clinical development of its three lead product candidates, vidofludimus calcium (IMU-838), IMU-856 and IMU-381, and for other general corporate purposes.

Notice of Allowance for United States Patent Protecting Vidofludimus Calcium's Dosing Regimens in Multiple Sclerosis

On November 21, 2023, we announced that we have received a Notice of Allowance from the United States Patent and Trademark Office (“USPTO”) for patent application 17/992,162, entitled, “Compounds and Dosage Regimen for Use in the Prevention or Treatment of Chronic Inflammatory and/or Autoimmune Diseases.” Specifically, the resulting patent covers dosing regimens associated with vidofludimus calcium and other salt forms as well as free acid forms for the treatment of MS, including all regimens tested in the company’s MS clinical program.

The patent is expected to provide protection into 2038, unless extended further.

The patent was previously granted to us in Japan and certain other countries.

Notice of Allowance for United States Patent Protecting the Treatment of Relapsing Multiple Sclerosis with Vidofludimus and Its Salts

On November 2, 2023, we announced that we have received a Notice of Allowance from the USPTO for patent application 17/391,442, entitled, “Treatment of Multiple Sclerosis Comprising DHODH Inhibitors,” covering a daily dose of about 10 mg to 45 mg of vidofludimus calcium and other salt as well as free acid forms for the treatment of RMS.

The claims are expected to provide protection into 2041, unless extended further.

Positive Interim Data from Phase 2 CALLIPER Trial of Vidofludimus Calcium in Progressive Multiple Sclerosis

On October 9, 2023, we announced positive interim data from our Phase 2 CALLIPER trial of vidofludimus calcium in patients with progressive multiple sclerosis ("PMS").

The predefined interim analysis examined the change from baseline to 24 weeks in serum neurofilament light chain (“NfL”) and glial fibrillar acidic protein ("GFAP") levels among approximately the first half of patients enrolled in this trial.

We believe that this data showed biomarker evidence that vidofludimus calcium's activity extends beyond the previously observed anti-inflammatory effects, thereby further reinforcing its neuroprotective potential.

Serum NfL responses were consistently observed for vidofludimus calcium across progressive MS disease and all subpopulations.

In the overall PMS population at 24 weeks (N=203), vidofludimus calcium was associated with a 6.7% reduction from baseline in serum NfL, compared to a 15.8% increase over baseline in placebo (p=0.01, post hoc).

At 48 weeks (N=79), vidofludimus calcium reduced serum NfL by 10.4% from baseline, compared to a 6.4% increase in placebo.

Substantial reductions were also seen across all PMS subtypes, as well as in patients that show or do not show disease and/or magnetic resonance imaging ("MRI") activity.

Although early, interim GFAP data also showed a promising signal:

at 24 weeks (N=203), GFAP increased by 3.7% for vidofludimus calcium, and 4.4% for placebo.

At 48 weeks (N=79), the change was only 2.7% for vidofludimus calcium, with a 6.4% increase for placebo.

Progression of GFAP response is generally thought to evolve more slowly than NfL, and we believe that a longer follow-up may further strengthen this signal.

Completion of Enrollment of Phase 2 CALLIPER Trial of Vidofludimus Calcium in Progressive Multiple Sclerosis

On August 17, 2023, we announced completion of enrollment of our Phase 2 CALLIPER trial of vidofludimus calcium in patients with PMS.

In total, 467 patients with primary PMS, or active or non-active secondary PMS have been randomized to either 45mg of vidofludimus calcium or placebo.

A top-line data readout of the full 467 patients is expected in April 2025.

Vidofludimus Calcium Acts as Potent Nurr1 Activator, Reinforcing Neuroprotective Potential in MS

On May 17, 2023, we announced the publication of preclinical data showing that vidofludimus calcium acts as a potent Nurr1 activator, in addition to its known mode of action as a DHODH inhibitor.

Activation of Nurr1 could be responsible for the drug’s postulated neuroprotective effects and may contribute to the previously reported reduction of confirmed disability worsening events in MS patients.

Specifically, preclinical data shows potent Nurr1 activation by vidofludimus calcium at low concentrations in several test systems.

The data was published in the peer-reviewed, high impact Journal of Medicinal Chemistry, in a paper entitled, “Development of a potent Nurr1 agonist tool for in vivo applications” (Vietor et al., 2023).

Presentation of Clinical and Preclinical Data for IMU-856 at Digestive Disease Week 2023, Including Its Molecular Mode of Action

On May 6, 2023, we announced the presentation of clinical and preclinical data for IMU-856 as a virtual e-poster at Digestive Disease Week 2023.

Included in this presentation were new data on IMU-856’s mode of action as a potent modulator of SIRT6, a protein which serves as a transcriptional regulator of intestinal barrier function and regeneration of bowel epithelium.

Positive Results From Phase 1b Clinical Trial of IMU-856 in Celiac Disease

On May 4, 2023, we announced positive results from our Phase 1b clinical trial of IMU-856 in patients with celiac disease.

The data demonstrated positive effects for IMU-856 over placebo in four key dimensions of celiac disease pathophysiology:

protection of the gut architecture, improvement of patients’ symptoms, biomarker response, and enhancement of nutrient absorption.

IMU-856 was also observed to be safe and well-tolerated in this trial.

We believe that this data set provides initial clinical proof-of-concept for an entirely new therapeutic approach to gastrointestinal disorders by promoting regeneration of bowel architecture.

The data provides first clinical evidence that IMU-856’s ability, observed in preclinical studies, to induce physiological gut cell renewal translates into clinical benefits for patients with celiac disease.

Most importantly, the observed protection of intestinal villi from gluten-induced destruction, independent of targeting immune mechanisms involved specifically in celiac disease, appears to be unique among proposed therapeutic approaches and may be applicable to other gastrointestinal diseases such as inflammatory bowel disease, short bowel syndrome and irritable bowel syndrome with diarrhea.

Appointment of Richard Rudick, M.D.

to Board of Directors

On April 27, 2023, we announced the appointment of Dr.

Richard Rudick as a member of our Board of Directors, effective as of April 26, 2023.

As a Class III director, Dr.

Rudick’s initial term lasted until our 2023 Annual Meeting of Stockholders held on June 28, 2023, at which meeting he was elected to a three year term expiring at the 2026 Annual Meeting of Stockholders.

Richard Rudick, age 72, has over 35 years of experience in the biopharmaceutical industry and academic medicine.

Since January 2023, Dr.

Rudick has been the President and CEO of Astoria Biologic, a private biotechnology company developing novel therapies for MS.

Previously, Dr.

Rudick served as the Vice President of Development Science at Biogen, Inc., a biotechnology company which engages in discovering, developing, and delivering therapies for neurological and neurodegenerative diseases, from May 2014 until September 2020.

Rudick also served as a staff neurologist and director of the Mellen Center for the Cleveland Clinic from January 1987 until May 2014.

Rudick holds an M.D.

from Case Western Reserve University School of Medicine.

The Nominating and Corporate Governance Committee and the Board believe that Dr.

Rudick‘s extensive leadership in clinical research and development of MS treatments provides valuable clinical, strategy and management skills to the Board.

Director Resignation

Vincent Ossipow retired from the Board of Directors on June 28, 2023.

Ossipow’s decision not to stand for re-election was not the result of any disagreement with the Company or its management on any matter relating to the Company’s operations, policies or practices.

Positive Data from Maintenance Phase of Phase 2 CALDOSE-1 Trial of Vidofludimus Calcium in Moderate-to-Severe UC

On April 5, 2023, we reported positive data from the maintenance phase of our Phase 2b CALDOSE-1 trial of vidofludimus calcium in patients with moderate-to-severe UC.

The data showed a dose-linear increase in clinical remission as compared to placebo at week 50.

Moreover, an exploratory statistical analysis confirmed the 30 mg dose of vidofludimus

calcium to be statistically superior (p=0.0358) in achieving clinical remission at week 50, with a 33.7% absolute improvement over placebo.

A similar effect on clinical remission rates at week 50 was also found among those patients who received corticosteroids during the induction phase.

Finally, a dose-linear increase in endoscopic healing was observed, with the 30 mg dose of vidofludimus calcium being associated with a 37.8% absolute improvement over placebo and also achieving statistical significance in an exploratory statistical analysis (p=0.0259).

We believe that the maintenance phase data of CALDOSE-1 confirms vidofludimus calcium's activity in the absence of chronic corticosteroid co-administration.

Consistent with prior data sets in other patient populations, administration of vidofludimus calcium in the maintenance phase of this trial was observed to be safe and well-tolerated.

Deprioritization of Izumerogant (IMU-935) Development Program

In order to focus on the rapidly advancing vidofludimus calcium and IMU-856 programs, and considering the totality of available data for izumerogant, including changes in expected time to market and increased complexity of potential further development in this competitive field, we announced on April 5, 2023 to focus our resources and, therefore, deprioritized the clinical portion of our izumerogant development program in psoriasis and castration-resistant prostate cancer.

Critical Accounting Policies and Estimates

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The total purchase price of an acquisition is allocated to the underlying identifiable net assets, based on their respective estimated fair values as of the acquisition date.

Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, probabilities of success, discount rates, and asset lives, among other items.

Determining the fair value of assets acquired and liabilities assumed requires management’s judgment and often involves the

use of significant estimates and assumptions, including assumptions with respect to future cash inflows and outflows, probabilities of success, discount rates, and asset lives, among other items.

Assets acquired and liabilities assumed are recorded at their estimated fair values.

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Upon further evaluation, we recorded an approximately $33.0 million goodwill impairment charge in the fourth quarter of 2022, which represents a full write down of our previous goodwill balance.

We did not have any goodwill impairment during the year ended December 31, 2021.

Research and Development Expenses

These costs primarily include external development expenses and internal personnel expenses for the three development programs, vidofludimus calcium, izumerogant and IMU-856.

Immunic has spent the majority of its research and development resources on vidofludimus calcium, the Company's lead development program for clinical trials in RRMS, UC, PMS and COVID-19.

These costs primarily include external development expenses and internal personnel expenses for the three development programs, vidofludimus calcium, IMU-856 and IMU-381.

Immunic has spent the majority of its research and development resources on vidofludimus calcium, the Company's lead development program for clinical trials in MS and UC.

Research and development expenses consist of expenses incurred in research and development activities, which include clinical trials, contract research services, certain milestone payments, salaries and related employee benefits, allocated facility costs and other outsourced services.

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On January 5, 2020, the Company exercised its option to obtain the exclusive worldwide right to commercialization of IMU-856.

Among other things, the option exercise grants Immunic AG the rights to Daiichi Sankyo’s patent application related to IMU-856, for which the Company received a notice of allowance from the US Patent & Trademark Office in August 2022.

Among other things, the option exercise grants Immunic AG the rights to Daiichi Sankyo’s patent application related to IMU-856, for which the Company received a notice of allowance from the U.S.

Patent & Trademark Office in August 2022.

In connection with the option exercise, the Company paid a one-time upfront licensing fee to Daiichi Sankyo.

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If factors change and different assumptions are used, the Company’s stock-based compensation expense could be materially different in the future.

We are subject to corporate income tax laws and regulations in the U.S., Germany and Australia.

The Company is subject to corporate income tax laws and regulations in the U.S., Germany and Australia.

Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment in their application.

We utilize the asset and liability method of accounting for income taxes which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the audited consolidated financial statements.

The Company utilizes the asset and liability method of accounting for income taxes which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the audited consolidated financial statements.

Deferred income tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

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As of December 31, 2023 and 2022, respectively, the Company maintained a full valuation allowance against the balance of deferred tax assets.

It is our policy to provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities.

we recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

We are subject to U.S.

It is the Company’s policy to provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities.

The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

The Company is subject to U.S.

federal, New York, California, Texas, German and Australian income taxes.

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These costs primarily include external development expenses and internal personnel expenses for the three development programs, vidofludimus calcium, izumerogant and IMU-856.

We have spent the majority of our research and development resources on vidofludimus calcium, our lead development program, for clinical trials in MS, UC, COVID-19 and PSC.

We have spent the majority of our research and development resources on vidofludimus calcium, our lead development program, for clinical trials in MS and UC.

In August 2019, Immunic AG received a grant of up to approximately $726,000 from the German Federal Ministry of Education and Research, in support of the InnoMuNiCH (Innovations through Munich-Nippon Cooperation in Healthcare) project.

The grant funds have been used to fund a three-year research project relating to autoimmune diseases by us and our three project partners.

Since the inception of the grant, we have recorded $611,000 of income in total of which $254,000 and $178,000 were recorded in 2022 and 2021, respectively, and were classified in Other Income in the accompanying consolidated statement of operations.

Since the inception of the grant, we have recorded $726,000 of income in total of which $100,000 and $254,000 were recorded in the twelve months ended December 31, 2023 and 2022, respectively, and were classified in Other Income in the accompanying consolidated statement of operations.

The funding of this grant is now completed.

Our research and development expenses are expected to increase in the foreseeable future as we continue to conduct ongoing research and development activities, initiate new preclinical and clinical trials and build our pipeline of product candidates.

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Interest income consists of interest earned on our money market funds and bank accounts which are a portion of our cash and cash equivalents balance.

Our interest income has been increasing throughout 2022 as interest rates in the U.S.

have been increasing.

Our interest income has been increasing throughout 2022 and 2023 as global interest rates have been increasing.

Other Income (Expense), Net

Other income (expense) consists primarily of a research and development tax incentive related to clinical trials performed in Australia and foreign currency transaction gains and losses related to long-term intercompany loans that are payable in the

foreseeable future.

Other income (expense) consists primarily of a research and development tax incentive related to clinical trials performed in Australia, a German Government research and development grant and foreign currency transaction gains and losses related to long-term intercompany loans that are payable in the foreseeable future.

The intercompany loan between Immunic, Inc.

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Goodwill impairment (see Note 2) — 32,970 (32,970) NM

4SC royalty settlement (see note 4) — 17,250 (17,250) NM

Total operating expenses 99,223 119,488 (20,265) (17) %

Loss from operations (99,223) (119,488) 20,265 (17) %

Total other expense, net (919) (1,280) 361 (28) %

Total other income (expense), net 5,611 (919) 6,530 (711) %

Net loss (93,612) (120,407) 26,795 (22) %

Research and development expenses increased by $12.0 million during the twelve months ended December 31, 2023, as compared to the twelve months ended December 31, 2022.

The increase reflects (i) a $9.2 million increase in external development costs related to the Phase 3 program of vidofludimus calcium in relapsing multiple sclerosis, (ii) a $3.9 million increase in external development costs related to the clinical trials of izumerogant, (iii) a $3.9 million increase in external development costs related to the Phase 2 clinical trial of vidofludimus calcium in progressive multiple sclerosis, (iv) a $2.5 million increase in personnel expense in research and development, $1.5 million of which is related to non-cash stock compensation expense and the remainder of which is related to an increase in headcount, and (v) a $1.4 million increase in external development costs related to the Phase 1 clinical trial of IMU-856.

The increases were partially offset by (i) a decrease of $5.8 million in external development costs related to the Phase 2 clinical trial of vidofludimus calcium in ulcerative colitis, (ii) a $3.0 million decrease in external development costs related to the Phase 2 clinical trial of vidofludimus calcium in COVID-19, (iii) a decrease of $1.3 million in external development costs related to the Phase 2 clinical trial of vidofludimus calcium in relapsing-remitting multiple sclerosis, and (iv) a decrease of $0.7 million in external development costs across numerous categories.

The increase reflects (i) a $10.2 million increase in external development costs related to the Phase 3 clinical program of vidofludimus calcium in relapsing multiple sclerosis, (ii) a $5.2 million increase in external development costs related to the Phase 2 clinical trial of vidofludimus calcium in progressive multiple sclerosis, (iii) a $2.2 million increase in drug supply costs for vidofludimus calcium to support our ongoing trials, (iv) a $2.2 million increase in personnel expense in research and development related to an increase in headcount, $0.2 million of which was due to non-cash stock based compensation and (v) a $1.5 million increase in external development costs related to IMU-856.

The increases were partially offset by (i) a decrease of $6.5 million from deprioritizing the izumerogant program in psoriasis and castration-resistant prostate cancer, (ii) a decrease of $2.5 million in external development costs related to the Phase 2 clinical trial of vidofludimus calcium in ulcerative colitis and (iii) a $0.3 million increase in related costs across numerous categories.

General and administrative expenses increased by $0.7 million during the twelve months ended December 31, 2023, as compared to the twelve months ended December 31, 2022.

The increase was primarily due to (i) a $1.6 million increase in personnel expense in general and administrative, $0.5 million of which is related to non-cash stock compensation expense and the remainder of which is related to an increase in headcount, (ii) a $0.3 million increase in travel expenses, and (iii) a $0.1 million net increase across numerous categories.

The increase was primarily due to (i) a $0.4 million increase in legal and consultancy expense, (ii) a $0.3 million increase in travel expense, (iii) a $0.2 million increase in facility expenses primarily due to additional lease space and (iv) a $0.3 million increase across numerous categories.

The increases were partially offset by a decrease of $0.5 million in personnel expense in general and administrative which was primarily due to non-cash stock based compensation decrease.

On October 20, 2022, we announced the outcome of a significant interim analysis of our Phase 1b clinical trial of izumerogant in patients with moderate-to-severe psoriasis, which was not deemed positive progress.

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The Company considered this to be a triggering event, indicating that it is more likely than not that goodwill is impaired.

Upon further evaluation, we recorded an approximately $33.0 million non-cash goodwill impairment charge in the fourth quarter of 2022 which represents a full write down of our previous goodwill balance.

On March 31, 2021, Immunic AG and 4SC AG entered into a Settlement Agreement, pursuant to which Immunic AG settled its remaining obligation of the 4.4% royalty on net sales for $17.25 million (Tranche III of the Agreement).

The payment was made 50% in cash and 50% in shares of Immunic’s common stock.

No further payment obligations remain between Immunic and 4SC AG.

Other expense decreased by $0.4 million during the twelve months ended December 31, 2022, as compared to the twelve months ended December 31, 2021.

The decrease was primarily attributable to (i) a $1.0 million increase in interest income as a

result of higher interest rates, and (ii) a $0.5 million increase in research and development tax incentives for clinical trials in Australia as a result of increased spending on clinical trials in Australia.

This was offset by a $1.1 million decrease in grants.

Upon further evaluation, we recorded an approximately $33.0 million non-cash goodwill impairment charge in the fourth quarter of 2022, which represented a full write down of our previous goodwill balance.

Other income increased by $6.5 million during the twelve months ended December 31, 2023, as compared to the twelve months ended December 31, 2022.

The increase was primarily attributable to (i) a $3.9 million decrease in foreign exchange losses, (ii) a $2.3 million research allowance attributable to tax year 2021 and 2022 from the German Federal Ministry of Finance and (iii) a $2.0 million increase in interest income as a result of higher interest rates.

The increase was partially offset by (i) a $1.6 million decrease in research and development tax incentives for clinical trials in Australia as a result of decreased spending on clinical trials in Australia and (ii) a $0.1 million decrease across numerous categories.

Liquidity and Capital Resources

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Substantially all of our operating losses resulted from expenses incurred in connection with our research and development programs and from general and administrative costs associated with our operations.

We expect to incur significant expenses and increasing operating losses for the foreseeable future as we initiate and continue the development of our product candidates and add personnel necessary to operate as a company with an advanced pipeline of product candidates.

To the extent additional funds are necessary to meet long-term liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of indebtedness, additional equity financings or a combination of these potential sources of funds, although we can provide no assurance that these sources of funding will be available on reasonable terms.

From inception through December 31, 2022, we have raised net cash of approximately $355.5 million from private and public offerings of preferred and common stock.

As of December 31, 2022, we had cash and cash equivalents of approximately $106.7 million and investments - other of $9.6 million.

With these funds we expect to be able to fund our operations beyond twelve months from the date of the issuance of the accompanying condensed consolidated financial statements.

We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future as we initiate and continue the preclinical and clinical development of our product candidates and add personnel necessary to operate as a company with an advanced clinical pipeline of product candidates.

From inception through January 31, 2024, Immunic has raised net cash of approximately $431.4 million from private and public offerings of preferred and common stock.

As of December 31, 2023, the Company had cash and cash equivalents of approximately $46.7 million.

On January 4, 2024, we raised net cash proceeds in a private placement of approximately $75.0 million.

With these funds we expect to be able to fund our operations beyond twelve months from the date of the issuance of the accompanying consolidated financial statements.

In November 2023, we filed a shelf registration statement on Form S-3 (the "2023 Shelf Registration Statement").

The 2023 Shelf Registration Statement permits the offering, issuance and sale of up to $250.0 million of common stock, preferred stock, warrants, debt securities, and/or units in one or more offerings and in any combination of the foregoing.

As of February 17, 2023, there is $75.0 million remaining on this shelf registration statement.

In December 2020, we filed a Prospectus Supplement for the offering, issuance and sale of up to a maximum aggregate offering price of $50.0 million of common stock that may be issued and sold under an at-the-market sales agreement with SVB Leerink as agent ("December 2020 ATM").

As of January 31, 2024, the 2023 Shelf Registration statement has not been made effective, however, we can (i) continue to sell, subject to applicable SEC requirements, unsold securities remaining on the expiring 2020 Shelf Registration Statement;

and (ii) offer and sell additional securities to be registered on the new Form S-3.

In November 2020, we filed a shelf registration statement on Form S-3 (the "2020 Shelf Registration Statement").

The 2020 Shelf Registration Statement permitted the offering, issuance and sale of up to $250.0 million of common stock, preferred stock, warrants, debt securities, and/or units in one or more offerings and in any combination of the foregoing.

As of January 31, 2024, there is $75.0 million of unsold securities remaining on from the 2020 Shelf Registration Statement.

We have used and intend to continue to use the net proceeds from the December 2020 ATM to continue to fund the ongoing clinical development of our product candidates and for other general corporate purposes, including funding existing and potential new clinical programs and product candidates.

The December 2020 ATM will terminate upon the earlier of (i) the issuance and sale of all of the shares through SVB Leerink on the terms and subject to the conditions set forth in the December 2020 ATM or (ii) termination of the December 2020 ATM as otherwise permitted thereby.

The December 2020 ATM may be terminated at any time by either party upon ten days’ prior notice, or by SVB Leerink at any time in certain circumstances, including the occurrence of a material adverse effect on us.

As of February 17, 2023, $8.4 million in capacity remains under the December 2020 ATM.

In May 2022, we filed a Prospectus Supplement for the offering, issuance and sale of up to a maximum aggregate offering price of $80.0 million of common stock that may be issued and sold under another at-the-market sales agreement ("May 2022 ATM") with SVB Securities LLC as agent.

The December 2020 ATM will terminate upon the earlier of (i) the issuance and sale of all of the shares through Leerink Partners LLC on the terms and subject to the conditions set forth in the December 2020 ATM or (ii) termination of the December 2020 ATM as otherwise permitted thereby.

The December 2020 ATM may be terminated at any time by either party upon ten days’ prior notice, or by Leerink Partners LLC at any time in certain circumstances, including the occurrence of a material adverse effect on us.

As of January 31, 2024, $7.5 million in capacity remains under the December 2020 ATM.

We intend to use the net proceeds from the offering to continue to fund the ongoing clinical development of our product candidates and for other general corporate purposes, including funding existing and potential new clinical programs and product candidates.

The May 2022 ATM will terminate upon the earlier of (i) the issuance and sale of all of the shares through SVB Securities LLC on the terms and subject to the conditions set forth in the May 2022 ATM or (ii) termination of the May 2022 ATM as otherwise permitted thereby.

The May 2022 ATM may be terminated at any time by either party upon ten days’ prior notice, or by SVB Securities LLC at any time in certain circumstances, including the occurrence of a material adverse effect on the Company.

As of February 17, 2023, $80.0 million in capacity remains under the May 2022 ATM.

The May 2022 ATM will terminate upon the earlier of (i) the issuance and sale of all of the shares through Leerink Partners LLC on the terms and subject to the conditions set forth in the May 2022 ATM or (ii) termination of the May 2022 ATM as otherwise permitted thereby.

The May 2022 ATM may be terminated at any time by either party upon ten days’ prior notice, or by Leerink Partners LLC at any time in certain circumstances, including the occurrence of a material adverse effect on the Company.

As of January 31, 2024, $80.0 million in capacity remains under the May 2022 ATM.

For the year ended December 31, 2023, we raised gross proceeds of $0.9 million pursuant to the December 2020 ATM through the sale of 657,012 shares of common stock at a weighted average price of $1.34 per share.

The net proceeds from the December 2020 ATM were $0.9 million after deducting underwriter commissions of $26,000.

For the year ended December 31, 2022, we raised gross proceeds of $40.9 million pursuant to the December 2020 ATM through the sale of 4,204,113 shares of common stock at a weighted average price of $9.72 per share.

The net proceeds from the December 2020 ATM were $39.6 million after deducting underwriter commissions of $1.2 million.

Equity Offerings

$60 Million Private Placement Equity Financing

On October 10, 2022, we entered into a Securities Purchase Agreement for a private placement with select accredited investors and certain existing investors.

Pursuant to the Securities Purchase Agreement, the Company agreed to sell to the Purchasers (i) 8,696,552 shares of the Company’s common stock, par value $0.0001 per share (the “Shares”), at a purchase price of $4.35 per Share, and (ii) 5,096,552 pre-funded warrants to purchase Common Stock, at a purchase price of $4.34 per Pre-Funded Warrant.

The Pre-Funded Warrants have an exercise price of $0.01 per share of Common Stock, are immediately exercisable and remain exercisable until exercised in full.

The holders of Pre-Funded Warrants may increase or decrease such percentages not in excess of 19.99% by providing at least 61 days’ prior notice to the Company.

All of the Pre-Funded Warrants were exercised in January 2023.

The Private Placement closed on October 12, 2022.

The gross proceeds of the Private Placement were approximately $60.0 million, before deducting offering expenses payable by the Company.

The Company intends to use the net proceeds from the Private Placement to fund the ongoing clinical development of its three lead product candidates, vidofludimus calcium (IMU-838), izumerogant (IMU-935) and IMU-856, and for other general corporate purposes.

July 2021 Public Equity Offering

On July 15, 2021, we entered into an underwriting agreement with Piper Sandler & Co., as representative of the several underwriters listed on Schedule A thereto, in connection with our public offering of 4,500,000 shares of our common stock, $0.0001 par value per share, at a public offering price of $10.00 per share.

Under the terms of the underwriting agreement, we granted the underwriters an option, exercisable for 30 days, to purchase up to an additional 675,000 shares of common stock at the public offering price, less underwriting discounts and commissions.

This option was not exercised.

On July 19, 2021, we closed the offering.

The net proceeds to us from the offering were approximately $42.0 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

Private Placement of up to $240 Million

The Pre-Funded Warrants are exercisable immediately for $0.0001 per share and until exercised in full.

The first tranche, which closed on January 8, 2024, resulted in the purchase by the Investors of an aggregate of $80 million of Common Stock (or Pre-Funded Warrants) from the Company at a price of $1.43 per share;

The second tranche is a conditional mandatory purchase by the Investors of an additional $80 million of Common Stock (or Pre-Funded Warrants) from the Company at a price of $1.716 per share, equal to 120% of the price paid in the first tranche and is subject to the satisfaction of three conditions:

• release by the Company of topline data from its Phase 2b clinical trial of vidofludimus calcium (IMU-838) in progressive multiple sclerosis, which data is currently expected in or around April 2025;

• the 10-day volume-weighted average price of the Common Stock is at least $8.00 per share during the 6 months following the data release;

• aggregate trading volume during the same 10-day period is at least $100 million.

The third tranche must occur no later than three years after the second tranche and is conditioned on the same volume-weighted average share price and minimum trading volumes as the second tranche.

Any of the conditions in the second or third tranches can be waived by holders of a majority of the outstanding securities (including the lead Investor).

The Private Placement resulted in gross proceeds to the Company of approximately $80 million in the first tranche, and an additional $80 million if and when the second tranche occurs.

Assuming that the second tranche is completed and conditions for the third tranche are satisfied or waived, the Company could receive up to an additional $80 million in the third tranche.

However, the amount of cash received in the third tranche would depend on the extent to which the Investors elect to fund the third tranche through a “cashless” or net settlement basis.

Therefore, total gross proceeds from the offering to the Company could actually be between $80 million and $240 million.

Gross proceeds to the Company will be reduced by fees paid to the placement agents, capital markets advisors and payments of transaction expenses.

Future Capital Requirements

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We do not expect to generate any revenue from product sales unless and until we obtain regulatory approval for and commercialize any of our product candidates.

At the same time, we expect our expenses to increase as we continue the ongoing research, development, manufacture and clinical trials of, and seek regulatory approval for, our product candidates.

We expect our expenses to continue to increase as we continue the ongoing research, development, manufacture and clinical trials of, and seek regulatory approval for, our product candidates.

We also incur additional costs associated with operating as a public company.

In addition, subject to obtaining regulatory approval of any of our product candidates, we anticipate that we will need substantial additional funding in connection with our continuing operations.

Our future expenses and capital requirements are difficult to forecast and will depend on many factors, including, but not limited to:

Our future expenses and capital requirements are difficult to forecast and will depend on many factors, including, but not

• the timing and structure of any strategic options and transactions, if any;

• the cost, timing and outcome of any future litigation;

• personnel-related expenses, including salaries, benefits, stock-based compensation expense and other compensation expenses related to retention and termination of personnel;

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• the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patents, including litigation costs and the outcome of such litigation;

• the cost, timing and outcome of any future litigation;

• the timing, receipt and amount from the sales of, or royalties on, any future products.

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Recent developments, however, will make it more difficult and costly for us to obtain funding for our cash needs.

We do not expect to achieve revenue from product sales prior to the use of the net proceeds from our public and private offerings to date.

We do not expect to achieve revenue from product sales prior to the use of all the net proceeds from our public and private offerings to date.

We do not have any committed external source of funds.

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If we raise additional funds through collaborations and licensing arrangements with third parties, we would expect to relinquish substantial rights to our technologies or our future products, or grant licenses on terms that may not be favorable to us.

If we were to complete a merger, we may relinquish all control over the organization and could experience detrimental tax effects.

If we are unable to raise adequate funds, we may have to liquidate some or all of our assets.

If we were to complete a merger, or other business combination, we may relinquish all control over the organization and could experience detrimental tax effects.

If we are unable to raise adequate funds, we may have to curtail our product development programs and liquidate some or all of our assets.

Any of these factors could harm our operating results and could result in substantial declines in the trading price of our common stock.

As of December 31, 2023, we had cash and cash equivalents of approximately $46.7 million.

On January 4, 2024, we raised net cash proceeds in a private placement of approximately $75.0 million.

The following table shows a summary of our cash flows for the years ended December 31 (in thousands):

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During the year ended December 31, 2023, operating activities used $70.8 million of cash.

The use of cash related to our net loss of $120.4 million adjusted for non-cash charges of $45.7 million related to $33.0 million of goodwill impairment, $7.9 million of stock-based compensation and a $4.8 million foreign currency loss as well as a $9.5 million net change in our operating assets and liabilities.

Changes in our operating assets and liabilities consisted primarily of an decrease of $7.5 million in prepaid expenses and other current assets combined with a $2.0 million increase in other current liabilities, accrued expenses and accounts payable.

The use of cash related to our net loss of $93.6 million adjusted for non-cash charges of $7.1 million of stock-based compensation and a $0.5 million foreign currency loss as well as a $15.0 million net change in our operating assets and liabilities.

Changes in our operating assets and liabilities consisted primarily of a decrease of $3.9 million in prepaid expenses and other current assets combined with a $11.2 million increase in other current liabilities, accrued expenses and accounts payable.

The decrease in prepaid expenses and other current assets is primarily due to lower prepaid clinical costs.

The increase in liabilities is primarily due to an increase in clinical costs as a result of the start of our Phase 3 clinical studies for RMS and Phase 2 clinical studies for PMS.

The increase in liabilities is primarily due to an increase in clinical costs as a result of our Phase 3 clinical studies for RMS and Phase 2 clinical studies for PMS.

During the year ended December 31, 2022, operating activities used $65.1 million of cash.

The use of cash related to our net loss of $92.9 million adjusted for non-cash charges of $8.6 million related to common stock issued for the 4SC AG transaction, $5.9 million related to stock-based compensation and a $4.3 million unrealized foreign currency loss as well as a $9.3 million net change in our operating assets and liabilities.

Changes in our operating assets and liabilities consisted primarily of an increase of $12.8 million in prepaid expenses and other current assets partially offset by $3.5 million increase in other current liabilities, accrued expenses and accounts payable.

The increase in prepaid expenses and other current assets is primarily due to higher prepaid clinical costs and an increased receivable for the Australian research and development credit.

Changes in our operating assets and liabilities consisted primarily of a decrease of $7.5 million in prepaid expenses and other current assets combined with a $2.0 million increase in other current liabilities, accrued expenses and accounts payable.

The decrease in prepaid expenses and other current assets is primarily due to lower prepaid clinical costs.

The increase in liabilities is primarily due to an increase in clinical costs as a result of the start of our Phase 3 clinical studies for RMS and Phase 2 clinical studies for PMS.

Net cash used in investing activities

During the year ended December 31, 2023, net investing activities provided $9.5 million of cash, primarily due to the sale of $9.8 million of time deposits partially offset by the purchase of $0.3 million of property and equipment.

During the year ended December 31, 2022, net investing activities used $9.7 million of cash, primarily due to purchase of $9.6 million of time deposits that had an original maturity of greater than three months and the purchase of equipment.

During the year ended December 31, 2021, net investing activities used $0.1 million of cash, primarily due to purchase of equipment.

Net cash provided by financing activities

During the year ended December 31, 2022, financing activities provided $95.8 million of cash of consisting of net cash proceeds from the sale of common stock under the $60 Million Private Placement Equity Financing and the December 2020 ATM.

During the year ended December 31, 2021, financing activities provided $42.8 million of cash of consisting of net cash proceeds from the sale of common stock under the July 2021 equity offering and the December 2020 ATM.

During the year ended December 31, 2023, financing activities provided $1.0 million due primarily to net cash proceeds from the sale of common stock under our December 2020 ATM.

During the year ended December 31, 2022, financing activities provided $95.8 million of cash consisting of net cash proceeds from the sale of common stock under the $60 Million Private Placement Equity Financing and the December 2020 ATM.

Off-Balance Sheet Arrangements

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Other Commitments and Obligations

In May 2016, the Company entered into a purchase agreement with 4SC whereby the Company acquired certain assets, including the rights to patents and patent applications, trademarks and know-how.

This transaction was accounted for as an asset acquisition under Accounting Standards Update 2017-01 - Business Combinations (Topic 805):

Clarifying the Definition of a Business.

The Agreement included payments (Tranches III and IV) that were contingent upon the occurrence of certain events and required the Company to pay royalties equal to 4.4% of the aggregated net sales for a certain period as defined in the Agreement (Tranche III) upon commercialization of the acquired assets.

Effective April 12, 2019, the parties agreed to settle Tranche IV by issuing 120,070 shares of the Company’s common stock to 4SC at the time, while keeping the obligation to pay Tranche III in effect.

Approximately $1.5 million of expense was recorded as a result of the issuance of these shares on April 12, 2019.

On March 31, 2021, Immunic AG, a wholly-owned subsidiary of the Company, and 4SC AG entered into a Settlement Agreement, pursuant to which Immunic AG settled its remaining obligation of the 4.4% royalty on net sales for $17.3 million (Tranche III of the purchase agreement).

The payment was made 50% in cash and 50% in shares of Immunic’s common stock.

Pursuant to the Agreement, the Company filed a resale shelf registration statement on Form S-3 covering the

resale of the Shares.

With the execution of the Agreement, no further payment obligations remain between Immunic AG and 4SC AG.

See Note 2 - Collaboration Arrangements of the Notes to the Financial Statements regarding the Company’s obligations under the option agreement with Daiichi Sankyo, which includes the potential payment of future development, regulatory and sales milestone payments, as well as royalties related to IMU-856 .

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What changed 10-K

Item 7. Management’s Discussion and Analysis