ImmuPharma plc

Chairman's Statement

INTERIM HIGHLIGHTS

The first half of 2019 saw a number of developments for ImmuPharma including the announcement of results for the open label extension study for Lupuzor^TM. 

On 26 June 2019, the Company announced that it entered into a subscription agreement with Lanstead Capital Investors LP ('Lanstead'), an institutional investor, together with a sharing agreement, raising approximately £2.66 million.

Lupuzor^TM Phase III open label extension results and next steps

Following on from Lupuzor^TM's pivotal Phase III trial that was completed in 2018, in June 2019, the Company announced the results of Lupuzor^TM's open label extension study.  There were 62 patients enrolled in the study throughout the US and Europe who completed a 24-week treatment period.  The primary endpoint was successfully achieved confirming the safety profile of Lupuzor^TM with no serious adverse events reported.  Insights provided by the study allow an optimised Lupuzor^TM phase III design to progress.

The open label extension study followed the pivotal Phase III clinical trial for Lupuzor^TM, the results of which were announced in April 2018.  The Phase III trial was a double-blind, randomised, placebo-controlled trial. The study involved patients being dosed for one year, receiving 0.2mg once per month subcutaneously. 293 patients were screened illustrating the demand from physicians for a new, safe and effective treatment for lupus. Of these, the required 202 patients were successfully recruited and randomised (dosed).  Patients participated in the trial in 7 countries across 28 sites. 

The clinical trial was undertaken primarily by Simbec-Orion, an international clinical research organisation, who specialises in rare and orphan conditions and has previous direct experience in lupus trials. This was a pivotal study designed to demonstrate the safety and efficacy of Lupuzor^™.

Lupuzor™ demonstrated a superior response rate over placebo (52.5% vs 44.6% "responders") in the primary analysis on the Full Analysis Set of all 202 patients. However, due to the high response rate in the placebo group, this superior response did not allow statistical significance to be reached (p = 0.2631) and the trial's primary end point was not met.

Across the whole study population, in those patients who had anti-dsDNA autoantibodies, Lupuzor^TM demonstrated a superior response rate over placebo (61.5% vs 47.3%, p = 0.0967).  Although these results were not statistically significant, further data analysis demonstrated that in the Europe cohort (130 patients) Lupuzor^TM plus standard of care showed statistically significant reductions in disease activity compared to placebo plus standard of care in 79 patients who were anti-dsDNA autoantibody positive (71.1% vs 48.8%, p = 0.0218). 

The study confirmed the outstanding safety profile of Lupuzor^TM, with no serious adverse events reported. 

Scientific literature indicates that approximately 60% - 70% of patients diagnosed for lupus are anti-dsDNA autoantibody positive.  These proportions were seen in the Europe cohort (60.8% of patients) and could therefore be considered as representative of the overall lupus population.

In those patients who were anti-dsDNA autoantibody negative, there was almost no difference in disease activity reduction between the active group and the comparator group. Anti-dsDNA autoantibodies are a recognised biomarker for Systemic Lupus Erythematosus. 

This finding indicates that the activity of Lupuzor^TM could be correlated with the presence of anti-dsDNA autoantibodies in lupus patients.  ImmuPharma believes that predictive biomarkers, such as anti-dsDNA autoantibodies, could allow identification of patients that are more likely to respond positively to treatment with Lupuzor^TM. 

Lupuzor^TM next steps

ImmuPharma believes there are still a number of pathways to market for Lupuzor^TM and, as such, continues to consult with regulatory advisors on these activities.  The prime objective of any strategy would be to maximise shareholder return.

ImmuPharma also maintains a focus on exploring opportunities within the P140 platform for different auto-immune indications outside of lupus, based on encouraging pre-clinical data. 

ImmuPharma has also taken steps toward the implementation of a Managed Access Program for Lupuzor^TM.  Recognising that lupus is a disease with significant unmet medical need and given the advanced level of clinical trial investigation completed, ImmuPharma would like to meet demand for access to Lupuzor^TM through clinicians.  These plans have been postponed while alternative options are explored.

Ureka 

The Group's subsidiary Ureka sarl ('Ureka') has been developing lead compounds from its novel and patented peptide technology platform Urelix^TM.  Ureka is based at the Institut Europeen de Chimnie et Biologie (IECB) in Bordeaux, France which is under the joint authority of the CNRS, Inserm and the University of Bordeaux.

Urelix^TM is focusing on oligourea foldamers as a tool to improve the pharmaceutical properties of peptides.  One of the first focus areas of Ureka has been GLP-1 analogues for the treatment of Type II diabetes and NASH (Non-Alcoholic-Steato-Hepatitis) as proof of concept for its technology.  In February 2019, the peer reviewed scientific research journal 'Nature Communications' published a paper on Ureka's technology.

As announced in May 2019, the Company is pursuing plans to combine the Ureka and Elro subsidiaries. The intention is to maximise value from the combined entity whilst retaining an interest in any future commercial success. 

Nucant Platform

A number of options have been under review to develop the Company's Nucant cancer programme.

In September 2018, the Company signed a Heads of Terms agreement with Incanthera ("Incanthera") regarding a potential collaboration on the Nucant program.  At the same time, ImmuPharma invested £2 million to purchase 363,637 shares at £5.50 per share in Incanthera and received warrants for a further 363,637 shares at £5.50.  In May 2019, following a period of wide-ranging discussions, ImmuPharma announced that discussions regarding a clinical development collaboration with Incanthera Limited had ceased.  The Company continues to be supportive of Incanthera and retains a 15% shareholding. 

Following a review of options for progressing this program, ImmuPharma is pursuing a strategy to combine Elro with the Group's Ureka subsidiary. 

Lanstead Capital Subscription

On 26 June 2019, the Company announced that it entered into a subscription agreement with Lanstead Capital Investors LP ("Lanstead"), an institutional investor, together with a related sharing agreement ("Sharing Agreement"), raising approximately £2.66 million.  Lanstead subscribed for 26,565,200 new ordinary shares of 10 pence each in the Company at an issue price of 10 pence per Subscription Share to raise gross proceeds of approximately £2.66 million, representing approximately 19% of the Company's existing share capital (the "Subscription").  The subscription represents a further supportive investment in the Company by Lanstead following the £4.43 million investment in February 2016, from which the Company ultimately received just over £5.0 million from Lanstead including the additional funds received through the Sharing Agreement over time.

The £2.66 million gross proceeds of the Subscription were pledged by the Company pursuant to the Sharing Agreement with Lanstead.  The Sharing Agreement, details of which are contained in the Notes to the Interim Accounts, entitles the Company to receive back those proceeds on a pro rata monthly basis over a period of 24 months, structured to commence two months following the admission to AIM of the Subscription Shares, subject to adjustment upwards or downwards each month depending on the Company's share price at the time. The Sharing Agreement provides the opportunity for the Company to benefit from positive future share price performance.

The Company also agreed to issue Lanstead 1,328,290 ordinary shares in connection with entering into the Sharing Agreement.

Financial Review

ImmuPharma's cash balance at 30 June 2019 was £2.3 million (£4.9 million at 31 December 2018, £9.0 million at 30 June 2018).  As a result of the Lanstead Subscription and Sharing Agreement, the Company had a derivative financial asset of £1.9 million at 30 June 2019 (30 June 2018: £nil). Basic and diluted loss per share were 2.80p and 2.80p respectively (30 June 2018: 2.94p and 2.94p).  In line with the Company's current policy, no interim dividend is proposed.

Operating loss for the Period was £3.3 million (£4.1 million for the six months ended 30 June 2018).  Research and development expenditure in the Period was £1.4 million (£2.5 million for the six months ended 30 June 2018) reflecting primarily the expenditure related to the Lupuzor^TM Phase III clinical trial. Administrative expenses were £0.9 million during the Period (£1.0 million for the six months ended 30 June 2018).  The share based expense was £1.0 million (£0.8 million for the six months ended 30 June 2018).  Finance costs for the Period were £842k (£29k for the six months ended 30 June 2018). This primarily arose due to the calculation of fair value of the Lanstead Sharing Agreement based on the Company's share price at 30 June 2019.  The restatement to fair value will be calculated at the end of each accounting period during the course of the Sharing Agreement and will vary according to the Company's share price performance.

Given the stage of ImmuPharma's development, the fact that losses have continued to be made is to be expected since there is minimal revenue and business activity is concerned with significant investment in the form of clinical development expenditure, in addition to maintaining the infrastructure of the Company.

Current Activities and Outlook

The Board has been focused on delivering a business strategy which provides the optimum route forward for ImmuPharma and its shareholders, based on its current assets, resources and knowhow.  In the medium term, we remain focussed on achieving the full regulatory approval of Lupuzor^TM which we believe has the potential to be a ground breaking drug for lupus patients with blockbuster potential in commercial terms. 

Our Ureka subsidiary and Nucant programme have been part of our portfolio for a number of years.  We are equally excited by the potential of both.  We believe the strategy we are pursuing with the merger of Ureka and Elro will create enhanced value for shareholders going forward.

The Board would like to thank its shareholders for their support as well as its staff, corporate and scientific advisers including Simbec-Orion and the CNRS (Centre Nationale de la Recherche Scientifique) for their continued collaboration.

Tim McCarthy                                  

Chairman

ImmuPharma plc

CONSOLIDATED INCOME STATEMENT

FOR THE PERIOD ENDED 30 JUNE 2019