Chairman Q&A with Tim McCarthy at ImmuPharma PLC (LON:IMM)

ImmuPharma plc (LON:IMM) Chairman Tim McCarthy caught up with DirectorsTalk for an exclusive interview to discuss their final results, spend going forward, corporate strategy for Lupuzor, Nucant & Ureka, key milestones for shareholders and the initiation note issued by The Life Sciences Division.


Q1: ImmuPharma have just issued final results so first Tim, can you give us a summary of the financial highlights and include for us the loss for the year and your cash position?

A1: We posted financial year results for December 2018 last Friday showing an operating loss of around £8 million although almost £2 million of that are accounting adjustments so if you strip those out it’s around £6 million of which almost £5 million is R&D expenditure.

All of those numbers are very much in line with what we were expecting, the expenditure on R&D reflects the spend on the Phase III programme for Lupuzor and also what we’re calling the ‘open label’ extension study on Lupuzor as well which is a further 6-month study.

So, very much reflects the business model of the company which is called a virtual model or an outsourcing business model so as we spend on programmes, obviously the overall spend goes up and perhaps those programmes come to a close then the expenditure dramatically reduces.

So, no surprises there, we ended the year with just under £5 million in cash, that’s following a £10 million fundraising we did at the beginning of last year so we’re in pretty good shape especially looking forward when a lot of the expenditure on these programmes have now finished.


Q2: You’ve touched on spend, can you just provide us a little guidance on spend going forward and your cash runway?

A2: As I say, just under £5 million in the bank at the end of 2018 and what you will see going forward in 2019 and beyond is a dramatic decrease in that R&D expenditure which I just mentioned, about £5 million for last year. We’re not running a Phase III programme at that moment and the open label extension study, we took an awful lot of the cost for that last year as well, a few residual costs in this year.

Whilst I think about it, we are on track to report the results of that open label study within the next month, we said we’d report it before the end of Q2 which is the end of June so we’re on track to do that.

Overall, looking forward, the £5 million puts us in a good position because the dramatic decrease in R&D expenditure from this year on so good cash position for the foreseeable future.


Q3: Over the last month, ImmuPharma has provided an update to shareholders on its future corporate strategy for both Lupuzor and its earlier stage assets, Nucant and Ureka. Can you provide an update on the pipeline?

A3: We first updated at the beginning of May with the corporate update and then we reiterated that in the results last Friday. So, it breaks into two parts so the main asset being Lupuzor which is our Phase III product for lupus, just to remind your listeners, and we reported the results of that study last year.

So, unfortunately, we didn’t meet the statistical significance on the primary end point but within the study, we did show it was effective and very very importantly, the drug has a very very safe profile, that’s unusual with any drug of this type.

What we are seeing is an awful lot of renewed interest in Lupuzor, we as a company are very much concentrated on the paths to market for Lupuzor so that’s both the development pathway and also the regulatory pathway.

With a lot of the data, obviously now being examined form that Phase III study, it’s showing us an awful lot of very good signs and that is what other people are seeing as well so we’ve had a number of discussions ongoing for a little while now. Those discussions are starting to come to fruition so we are expecting to see some movement in and around Lupuzor over the next few months so we’ll see where that gets us but it’s looking quite good at the moment.

On the other part of the portfolio, these are two pieces of technology, one is a cancer technology called Nucant and the other is a peptide technology platform, both of these in subsidiaries of the company. We’ve indicating previously that we’re looking to divest certainly Ureka in one way or another and get it separately funded and what we recently decided to do was to make it a more stronger investment proposition but putting those two technologies together. They’re actually formally in separate subsidiary companies so those two companies will merge, we will then spin-off the merged unit.

Again, we’ve had a lot of interest surrounding those technologies and so that will likely be a private equity type deal where we spin-off into a separately funded vehicle or even possible a separate listing on a European exchange. So, whichever way it goes, the advantages to IMM shareholders will be that it will be separately funded so it won’t be diluted to our current shareholders.

I don’t think there’s any value recognised in the IMM share price and its corporation valuation for those technologies. Everybody is always concentrating on Lupuzor and when you look at the share price at the moment, the corresponding valuation which is about 10p and about a £14/15 million market cap, there is absolutely no value ascribed to those technologies at all.

By spinning them out, without further dilution to shareholders and potentially unlocking an awful lot of value, recognised value, in those two technologies, that then should flow back into recognition in the share price on AIM plus whatever we do with Lupuzor in the future.

So, I think some pretty good stuff coming up in the future, very much.


Q4: Just looking forward, what key milestones should shareholders be looking out for over the next 12 months?

A4: Well, the very first one which I mentioned briefly there was the results of the open label extension study, we call it an extension study because the study is open to patients who participated in the Phase III study. So, we’ve got just over 60 patients in the study, we should be reporting those results within the next month, certainly by the end of June, so that’s the first piece of news.

As I alluded to, the two main parts of the company, certainly over the next 12 months, it maybe sooner, but we should be doing something very practically with the spin-out and then we’ll see where we get to with the interest with Lupuzor.

So, if you add all of that up, quite a lot of potentially positive news flow coming up.


Q5: Today, an independent research outfit, The Life Sciences Division have issued an initiation note on ImmuPharma with a price target of 92p, can you give us some insight into their views behind this pretty bullish price target really?

A5: Yes, obviously it’s always nice to have a buy recommendation and a bullish price target which is frankly way above where we are, virtually 10p versus 92p price target but this is very much based on their own independent research.

A lot of the note concentrates on Lupuzor although there is comment on the technologies as well and what it’s focussing on is the differentiation that Lupuzor has against other drugs in development for Lupus.

Very much what I alluded to earlier that it’s a very safe drug which is quite unique in itself but the results that we did get from the Phase III are very encouraging especially when you look at it in targeted populations.

They’ve done, I think, a very very good job at analysing all that data and putting it in a context with the other drugs in development in this area which unfortunately for patients are not getting a very good run through, either because of associated safety or frankly lack of efficacy.

In that context, they’ve had a look at Lupuzor and its chances of getting through to the market and I think on that basis alone, that’s why they’re very positive and they’ve come up with a recommendation.

Very pleased to get that and I think, certainly in these days with post-MiFID which a lot of your listeners will be familiar with, it’s very difficult for small companies like us to get good independent research. That is what investors require otherwise they’re investing in companies blindly whereas 5/10 years ago, there was a lot more research available even for small companies.

So, to get something as well written as this I think is a real bonus for the company and its shareholders in turn.

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