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EP

EOM Pharmaceutical Holdings, Inc. (IMUC)·Q3 2017 Earnings Summary

Executive Summary

  • Q3 2017 net loss was $3.9M; net loss available to common shareholders was $6.1M due to $1.6M deemed dividends and $0.6M original issue discount from the July 2017 preferred financing; EPS was $(0.40) vs $(1.02) in Q2 and $(1.58) in Q3 2016, reflecting higher share count post-financing and non-cash charges .
  • R&D fell to $2.8M from $10.4M in Q2 and $4.6M y/y, driven by the suspension and wind-down of the ICT-107 Phase 3 trial in June 2017; G&A rose to $1.1M vs $0.9M y/y on higher professional fees .
  • Liquidity improved: cash was $6.0M at quarter-end vs $1.8M at 6/30, aided by $4.1M preferred financing and $5.8M cumulative warrant exercises through October; shares outstanding were 23.8M at 9/30 vs 3.6M at 6/30 .
  • Strategic pivot: management is prioritizing the Stem-to-T-Cell research program with anticipated milestones in 12–18 months and actively seeking partners/acquirers for clinical-stage assets (ICT-107/121/140), a potential narrative catalyst .

What Went Well and What Went Wrong

What Went Well

  • “As a result of the July financing and streamlining of operations, we have been able to significantly improve our financial condition and reduce our operating expenses,” positioning the company to operate at a “significantly reduced burn rate” .
  • Clear R&D focus: Management emphasized Stem-to-T-Cell as a potentially “game-changing” approach with specific preclinical milestones expected within 12–18 months, creating an execution roadmap .
  • Cash runway improved on financing and warrant exercises; cash at quarter-end was $6.0M, and subsequent warrant exercises added $3.6M after 9/30; all October warrants were exercised .

What Went Wrong

  • ICT-107 Phase 3 trial was suspended and wound down, with related costs and operational disruption; Q2 included ~$2.3M supplies write-off and ~$3.0M wind-down accruals, and a $7.7M CIRM debt forgiveness credit .
  • Vendor payment delays and creditor payment plans underscore working capital constraints amid restructuring .
  • G&A rose to $1.1M from $0.9M y/y due to higher professional fees, partially offsetting R&D reductions .

Financial Results

Income Statement Summary (USD)

MetricQ1 2017Q2 2017Q3 2017
Revenue ($)$0 $0 $0
Research and Development ($)$4,685,720 $10,353,601 $2,763,659
General and Administrative ($)$793,178 $988,266 $1,137,329
Loss Before Other Income/Expenses ($)$(5,478,898) $(11,341,867) $(3,900,988)
Net Loss ($)$(5,824,987) $(3,609,148) $(3,900,879)
Net Loss Available to Common Shareholders ($)N/AN/A$(6,079,190)
EPS, Basic & Diluted ($)$(1.64) $(1.02) $(0.40)

KPIs and Balance Sheet Indicators

KPIQ1 2017Q2 2017Q3 2017
Cash and Equivalents ($)$5,341,433 $1,814,005 $6,005,298
Shares Outstanding (period-end)3.5M 3.6M 23,788,510
CIRM Liability Forgiveness (period impact)$0 $7,719,440 $0 (current period)

Segment breakdown: Not applicable (development-stage, no revenue segments) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Stem-to-T-Cell milestones (preclinical/in vivo)Next 12–18 monthsNone disclosedMilestones expected within 12–18 months; initiating preclinical in-vivo experiments and data readouts in 1H18 New
Operating burn rateOngoingNone disclosedOperating at a “significantly reduced burn rate” through streamlining and focus on research Strategic shift
Clinical programs (ICT-107/121/140)OngoingICT-107 Phase 3 executionICT-107 wound down; seeking partners/acquirers to advance clinical-stage assets Lowered/paused

No financial guidance provided on revenue, margins, OpEx, OI&E, tax rate, or dividends in Q3 materials .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Pipeline focus shiftQ1: Strategic alternatives for ICT-107 given limited financing . Q2: Suspension/wind-down of ICT-107; exploring merger/reorg; refocus on Stem-to-T-Cell .Emphasis on Stem-to-T-Cell as core strategy; detailed platform description and milestones .Pivot from late-stage clinical to research platform.
Financing/liquidityQ1 cash $5.3M . Q2 cash $1.8M; July preferred financing announced; CIRM debt forgiveness $7.7M .Cash $6.0M; $2.2M warrants exercised through 9/30; additional $3.6M after; all Oct warrants exercised .Improved liquidity post-financing/warrants.
Partnerships/strategic alternativesQ1 considering partner/acquirer for ICT-107 . Q2 seeking collaborative relationships; potential merger or asset sale .Actively seeking partners/acquirers for ICT-107/121/140; cannot predict timing/outcome .Continued outreach; uncertainty remains.
Listing/regulatoryQ2 NYSE MKT deficiency letter; plan submitted to regain compliance by 12/23/2018 .Not updated on call/press release; remains a disclosed risk context .Monitoring status; unresolved.
R&D executionQ1 R&D ~$4.7M; increasing trial sites/patients . Q2 R&D $10.4M with write-offs/wind-down accruals .R&D $2.8M; wind-down costs tapering expected; preclinical programs advancing .R&D spend sharply lower; preclinical activity planned.

Management Commentary

  • “We have been able to significantly improve our financial condition and reduce our operating expenses… enabling us to focus resources on advancing our Stem-to-T-Cell program and continue operations at a significantly reduced burn rate” — Anthony J. Gringeri, President & CEO .
  • “We believe that our stem cell technology represents a major step forward… and expect to achieve a number of meaningful milestones in the next 12 to 18 months” — Anthony J. Gringeri .
  • Detailed Stem-to-T-Cell platform overview: patient-derived hematopoietic stem cells transfected with TCR libraries via lentiviral vectors to generate antigen-specific killer T cells, targeting solid and hematologic tumors; anticipated lower toxicity and long-term immunosurveillance potential — Steven Swanson, SVP Research .
  • CFO recap: Q3 net loss $3.9M; net loss to common $6.1M includes $1.6M deemed dividends and $0.6M OID; cash $6.0M; 23.8M shares; financing and warrant exercises outlined .

Q&A Highlights

  • The transcript provided prepared remarks and an invitation to Q&A; no Q&A exchanges were included in the available transcript content. Management reiterated strategic focus, financing status, and near-term milestones without providing numerical guidance .

Estimates Context

  • Wall Street consensus EPS and revenue estimates via S&P Global were unavailable for IMUC for Q3 2017 and the prior two quarters; the company did not provide financial guidance in Q3 materials, so no estimate comparison can be made .

Key Takeaways for Investors

  • Liquidity inflection: cash increased to $6.0M with additional post-quarter warrant proceeds, reducing near-term financing risk and supporting the research pivot .
  • Expense reset: R&D fell sharply as ICT-107 was wound down; management expects wind-down costs to taper further, implying lower burn and extended runway .
  • Strategic optionality: ongoing partner/acquirer discussions for ICT-107/121/140 could crystallize value; however, timing is uncertain, and investors should discount outcomes appropriately .
  • Platform thesis: Stem-to-T-Cell offers a differentiated approach (autologous HSCs, TCR library “plug-and-play”), with clear 12–18 month preclinical milestones that can drive narrative and incremental data catalysts .
  • Capital structure changes: preferred financing and warrant exercises increased share count materially (23.8M at 9/30), impacting per-share metrics; analyze both net loss and loss available to common given non-cash dividends/OID .
  • Listing risk remains an overhang from the NYSE MKT deficiency notice; monitor responses and compliance trajectory as it may influence trading liquidity and institutional participation .
  • Near-term trading: headline catalysts likely tied to additional warrant exercises, creditor payment plans, and any partnership announcements; medium-term thesis rests on demonstrating preclinical progress and securing strategic funding for clinical development .