Immunic (IMUX) Risk Analysis

Because we have limited resources and access to capital to fund our operations, we must decide which dosages and indications to pursue for the clinical development of our current product candidates and the amount of resources to allocate to each. Our decisions concerning the allocation of research, collaboration, management and financial resources toward dosages or therapeutic areas may not lead to the development of viable commercial products and may divert resources away from better opportunities. If we make incorrect determinations regarding the market potential of our current product candidates or if we misread trends in the pharmaceutical industry, our business, financial condition, results of operations and prospects could be materially adversely affected.

For our most advanced indication, RMS, marketing approval will depend on the successful completion of one or more adequate and well-controlled Phase 3 clinical trials. Phase 3 development is costly and resource-intensive and typically spans multiple years. Clinical trials are inherently unpredictable, and studies that are initiated as planned may be delayed, require modification or fail to produce results sufficient to support approval. Protocol amendments, safety observations, manufacturing constraints, evolving regulatory expectations or inconclusive efficacy data may each effect trial timing or outcomes. Additional preclinical and clinical work will also be required to support regulatory submissions. Regulatory feedback during development may alter the scope or timing of required studies, which could increase costs or extend development timelines. We must also establish manufacturing processes capable of supporting commercial supply. This includes scaling production, validating manufacturing methods and implementing controls designed to demonstrate consistent product quality and compliance with applicable regulatory requirements. Manufacturing development and validation are complex and may require significant investment and regulatory review. Even where clinical results are favorable, difficulties in developing or validating manufacturing capabilities may delay or prevent approval. If clinical development, supporting studies or manufacturing readiness activities are delayed or unsuccessful, regulatory approval may be postponed or not obtained, which would limit our ability to commercialize this product candidate and could materially adversely affect our business, financial condition and results of operations.

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. The FDA and comparable foreign regulatory authorities have substantial discretion when and if to grant approval to our product candidates. Even if we believe the data collected from clinical trials of our current product candidates are promising, such data may not be sufficient to support approval by the FDA or comparable foreign regulatory authorities. Our future clinical trial results also may not be successful. It is impossible to predict the extent to which the clinical trial process may be affected by existing or prospective legislative and regulatory developments or changes in regulatory priorities, guidance or review practices. Our clinical trials are conducted at multiple sites, including some sites in countries outside the United States and the European Union, which may subject us to further delays and expenses as a result of increased shipment costs, additional regulatory requirements and the engagement of foreign and non-European Union contract research organizations ("CROs"), as well as expose us to risks associated with clinical investigators who are unknown to the FDA or European regulatory authorities, and with different standards of diagnosis, screening and medical care. Most of our clinical trials of vidofludimus calcium planned at sites in Ukraine and Russia had to be delayed, suspended or relocated because of the invasion of Ukraine by Russia in February 2022, which caused disruptions to our clinical development program and increased our costs. To date, we have not completed all clinical trials required for the approval of any of our current product candidates. The commencement and completion of clinical trials for our current product candidates may be delayed, suspended or terminated as a result of many factors, including but not limited to: - the delay or refusal of regulators or institutional review boards ("IRBs") at the medical institutions where the clinical trials are conducted to authorize us to commence a clinical trial at a prospective trial site;- changes in regulatory requirements, policies and guidelines;- the FDA or comparable foreign regulatory authorities disagreeing as to the design or implementation of our clinical trials;- failure to reach agreement on acceptable terms with prospective CROs, and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;- delays in patient enrollment and variability in the number and types of patients available for clinical trials;- the inability to enroll a sufficient number of patients in trials to ensure adequate statistical power to detect statistically significant treatment effects;- lower than anticipated retention rates of patients and volunteers in clinical trials;- clinical sites deviating from trial protocols or dropping out of a trial;- adding new clinical trial sites or relocating planned or existing clinical trial sites;- negative or inconclusive results, which may require us to conduct additional preclinical or clinical trials or to abandon projects that we expect to be promising;- safety or tolerability concerns, which could cause us to suspend or terminate a trial if we find that participants are exposed to unacceptable health risks;- regulators or IRBs requiring that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or adverse events experienced by participants in clinical trials;- our third-party research and manufacturing contractors failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;- third-party researchers becoming debarred or otherwise penalized by the FDA or other regulatory authorities for violations of regulatory requirements, which could call into question data collected by such researcher and potentially affecting our ability to rely on some or all of the data in support of our marketing applications;- difficulty in maintaining contact with patients after treatment, resulting in incomplete data;- delays in establishing the appropriate dosage levels;- the quality or stability of our current product candidates falling below acceptable standards;- the inability to produce or obtain sufficient quantities of our current product candidates to complete clinical trials; and - exceeding budgeted costs due to difficulty in accurately predicting the costs associated with clinical trials. Patient enrollment is a significant factor in the timing of clinical trials and is affected by many factors, including the size and nature of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the clinical trial, the design of the clinical trial, and competing clinical trials and clinicians' and patients' perceptions as to the potential advantages of the drug being studied in relation to other available therapies, including any new drugs or treatments that may be approved for the indications we are investigating. There are significant requirements imposed on us and on clinical investigators who conduct clinical trials that we sponsor. Although we are responsible for selecting qualified clinical investigators, providing them with the information they need to conduct the clinical trial properly, ensuring proper monitoring of the clinical trial, and ensuring that the clinical trial is conducted in accordance with the general investigational plan and protocols contained in the IND, we cannot ensure that clinical investigators will maintain compliance with all regulatory requirements at all times. The pharmaceutical industry has experienced cases where clinical investigators have been found to incorrectly record, omit, or even falsify data. We cannot ensure that the clinical investigators in our trials will not make mistakes or otherwise compromise the integrity or validity of data, any of which would have a significant negative effect on our ability to obtain marketing approval, our business, and our financial condition. We could encounter delays if a clinical trial is suspended or terminated by us, the IRBs or ethics committees of the institutions in which such trial is being conducted, the independent steering committee, the data safety monitoring board for such trial, or the FDA or comparable foreign regulatory authorities. We or such authorities may impose a suspension or termination due to a number of factors, including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical protocols, inspection of the clinical trial operations or trial site by the FDA or comparable foreign regulatory authorities resulting in the imposition of a clinical hold, safety issues or adverse side effects, failure to demonstrate a benefit from using the drug, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical trial. Delay or termination of clinical trials of our current product candidates will harm their commercial prospects and impair our ability to potentially generate revenues from such product candidates. In addition, any delays in completion of our clinical trials will increase our costs, slow our development and approval process and jeopardize our ability to commence product sales and generate revenues. Moreover, clinical investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. We are required to report certain financial relationships with clinical investigators to the FDA and, where applicable, take steps to minimize the potential for bias resulting from such financial relationships. The FDA may evaluate the reported information and conclude that a financial relationship between us and a clinical investigator has created a conflict of interest or otherwise affected interpretation of the study. The FDA may therefore question the integrity of the data generated at the applicable clinical trial site, and the utility of the clinical trial itself may be jeopardized. The FDA may refuse to accept our marketing applications, and other delays or even denial of marketing approval could result. Preclinical testing or clinical trials of any development candidate may also show new and unexpected findings regarding safety and tolerability. Such findings may harm the ability to conduct further development of product candidates, delay such development, require additional expensive tests, harm our ability to attract, establish and maintain strategic collaborations, licensing or other arrangements for these development candidates, or delay or prevent marketing approval by regulatory agencies. Such findings may also harm our ability to compete in the market with other products or to achieve certain pricing thresholds. Any of these occurrences could materially adversely affect our business, financial condition, results of operations, and prospects. In addition, many of the factors that could cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of marketing approval of our product candidates. Significant clinical trial delays could also allow our competitors to bring products to market before we can, shorten any periods during which we may have the exclusive right to commercialize any approved product candidates, and impair our ability to commercialize any approved product candidates, which may harm our business, financial condition, results of operations and prospects.

In recent years, due to regulatory changes, patient-reported outcomes ("PROs"), may have an important role in the development and regulatory approval of any of our product candidates. PROs involve patients' subjective assessments of efficacy, and this subjectivity increases the uncertainty in determining achievement of clinical endpoints. Such assessments can be influenced by factors outside of our control, and can vary widely from day-to-day for a particular patient, and from patient-to-patient and site-to-site within a clinical trial. Use of PROs may make the outcome of trials more uncertain and may increase our costs and time to finish regulatory approval trials.

Clinical failure can occur at any stage of clinical development. The results of preclinical studies and early clinical trials of our product candidates may not be predictive of the results of later-stage clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through preclinical studies and initial clinical trials. A number of pharmaceutical companies have suffered significant setbacks in advanced clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials. Clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical or preclinical testing. - We announced in October 2022 the analysis of interim group-level data of our Phase 1b clinical trial of IMU-935 in patients with moderate-to-severe psoriasis did not separate from placebo. Following this announcement, our stock price declined significantly, which caused us to record a full impairment of our goodwill in the quarter ended December 31, 2022. Data obtained from trials are susceptible to varying interpretations, and regulators may not interpret our data as favorably as we do, which may delay, limit or prevent marketing approval of our product candidates. In addition, the design of a clinical trial can determine whether its results will support approval of a product, or approval of a product for desired indications, and flaws or shortcomings in the design of a clinical trial may not become apparent until the clinical trial is well advanced. We have limited experience in designing clinical trials and may be unable to properly design and execute a clinical trial to support marketing approval for our desired indications. Further, clinical trials of product candidates often reveal that it is not practical or feasible to continue development efforts. If one of our product candidates is found to be unsafe or lack efficacy, we will not be able to obtain marketing approval for such product candidate and our business would be harmed. If the results of our clinical trials of our product candidates do not achieve pre-specified endpoints, we are unable to provide primary or secondary endpoint measurements deemed acceptable by the FDA or comparable foreign regulators, or we are unable to demonstrate an acceptable level of safety relative to the efficacy associated with our proposed indications, the prospects for approval of our product candidates would be materially and adversely affected. For example, we announced in June 2022 that a phase 2 clinical trial of our most advanced drug candidate, vidofludimus calcium, did not achieve its primary endpoint in patients with moderate-to-severe ulcerative colitis. As a result, we do not plan any further drug development activities in ulcerative colitis without a partner. - In October 2024, an independent data monitoring committee, or IDMC, conducted a non-binding, interim futility analysis of our Phase 3 ENSURE program for the treatment of RMS and reported that the trials are not futile and should continue as planned. In addition, the IDMC recommended that we continue the trials without any adjustment to the sample sizes of each trial. There can be no assurances that the observations made at the interim regarding futility will be consistent with the final study results for various reasons, including that the final study results based upon the full sample size may not be consistent with the results achieved by the limited sample size used to conduct the interim analysis and the current sample size of approximately 1,050 adult patients with active RMS in each trial may not be sufficiently large to demonstrate efficacy. - In February 2025, we reported that IMU-856, our orally available small molecule modulator targeting SIRT6, demonstrated a dose-dependent increase in endogenous glucagon-like peptide-1 levels in a post-hoc analysis of patients from our Phase 1b clinical trial in celiac disease, and dose-dependent reductions in body weight gain and food consumption in preclinical in vivo testing. These data suggest potential effects on GLP-1 and weight management; however, such findings arise from a post-hoc analysis of a small Phase 1b study and preclinical models, which are inherently subject to limitations. - In April 2025, we announced data from our Phase 2 CALLIPER trial of vidofludimus calcium in patients with progressive multiple sclerosis, including a reported reduction in the relative risk of 24-week confirmed disability worsening events by approximately 20% in the overall PMS population and by approximately 30% in the primary progressive multiple sclerosis subgroup compared to placebo. - In June 2025, we reported new, positive long-term open-label extension data from our Phase 2 EMPhASIS trial of vidofludimus calcium for the treatment of relapsing-remitting multiple sclerosis. The OLE portion of the EMPhASIS trial is ongoing and is generally designed to evaluate longer-term safety and tolerability and to explore longer-term outcomes; however, OLE data are inherently subject to important limitations, including the absence of a concurrent control group, potential selection bias (including that patients who remain in the OLE may differ from those who discontinue participation), and the potential influence of confounding factors. Notwithstanding any of the foregoing, many companies in the pharmaceutical industry, including those with greater resources and experience than we, have suffered significant setbacks in Phase 2 and Phase 3 clinical trials, even after seeing promising results in earlier clinical trials. In some instances, there can be significant variability in safety and/or efficacy results between different trials of the same product candidate due to numerous factors, including differences in trial protocols and design, the size and type of the patient population, adherence to the dosing regimen and the rate of dropout among clinical trial participants. We do not know whether any clinical trials we may conduct will demonstrate consistent and/or adequate efficacy and safety to obtain marketing approval for our product candidates.

Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive "approved use" label or the delay or denial of marketing approval by the FDA or other comparable foreign regulatory authorities. If any of our current or future product candidates is associated with serious adverse, undesirable or unacceptable side effects, we may need to abandon such candidate's development or limit development to certain uses or sub-populations in which such side effects are less prevalent, less severe or more acceptable from a risk-benefit perspective. Many drug candidates that initially showed promise in early-stage clinical testing have later been found to cause side effects that prevented their further development. Results of our trials could reveal a high and unacceptable prevalence of these or other side effects. In such an event, our trials could be suspended or terminated and the FDA or comparable foreign regulatory authorities could order us to cease further development of, or deny approval of, our product candidates for any or all targeted indications. Drug-related side effects could also adversely affect patient recruitment or the ability of enrolled patients to complete the trial, or could result in potential product liability claims. If our product candidates receive marketing approval, and we or others later identify undesirable side effects caused by such products, a number of potentially significant negative consequences could result, including: - regulatory authorities may withdraw approvals of such products;- we may be required to recall a product or change the way such product is administered to patients;- additional restrictions may be imposed on the marketing of the particular product or the manufacturing process for the product or any component thereof;- regulatory authorities may require the addition of labeling statements, such as a precaution, "black box" warning of serious risks or other warnings or a contraindication;- we or our collaborators may be required to implement a REMS or create a medication guide outlining the risks of such side effect for distribution to patients;- we or our collaborators could be sued and held liable for harm caused to patients;- the product may become less competitive and revenues could decline substantially; and - our reputation would suffer. Any of these events could prevent us from achieving or maintaining market acceptance of any approved product candidates, and could materially adversely affect our business, financial condition, results of operations and prospects.

We have invested substantially all of our efforts and financial resources to identify, acquire and develop our portfolio of product candidates. Our future success is dependent on our ability to successfully further develop, obtain regulatory approval for, and commercialize one or more product candidates. We have never generated revenue from sales of any products, and we may never be able to develop or commercialize a product candidate. Our most advanced product candidate, vidofludimus calcium, had the first patient enrolled in a Phase 3 program for relapsing multiple sclerosis ("RMS") in November 2021 and we do not expect the readout of topline data from this trial until the end of 2026. We are not permitted to market or promote any of our product candidates before we receive regulatory approval from the FDA or comparable foreign regulatory authorities, and we may never receive such regulatory approval for any of our product candidates. We cannot be certain that any of our product candidates will be successful in clinical trials or receive regulatory approval. Further, our product candidates may not receive regulatory approval even if they are successful in clinical trials. If we do not receive regulatory approvals for our product candidates, we may not be able to continue our operations.

Because we have limited financial and operational resources, we may forego or delay pursuit of opportunities in some programs, product candidates or indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or more profitable market opportunities. Our spending on current and future research and development programs and future product candidates for specific indications may not yield any commercially viable products. We may also enter into strategic collaboration agreements to develop and commercialize some of our programs and potential product candidates in indications with potentially large commercial markets. If we do not accurately evaluate and predict the commercial potential or target market for a particular product candidate, we may (i) relinquish valuable rights to that product candidate through strategic collaborations, licensing or other royalty arrangements when it would have been more advantageous to retain sole development and commercialization rights to such product candidate, or (ii) allocate internal resources to a product candidate in a therapeutic area in which it would have been more advantageous to enter into a collaborative arrangement.

Identifying and qualifying sufficient numbers of eligible patients to participate in clinical trials of our product candidates is essential to our success. The timing of our clinical trials depends in part on the rate at which we can recruit eligible patients to participate in clinical trials of our product candidates, and we may experience delays in our clinical trials if we encounter difficulties in enrollment. The specific eligibility criteria of our planned clinical trials may further limit the population of available eligible trial participants. We may not be able to identify, recruit, and enroll a sufficient number of eligible patients to initiate or complete our clinical trials in a timely manner because of the perceived risks and benefits of the product candidate under study, the availability and efficacy of competing therapies and clinical trials, and the willingness of physicians to participate in our planned clinical trials. If patients are unwilling to participate in our clinical trials for any reason, the timeline for conducting trials and obtaining regulatory approval of our product candidates may be delayed. If we experience delays in the completion of, or experience termination of, any clinical trials of our product candidates, the commercial prospects of our product candidates could be harmed, and our ability to generate product revenue from product candidates could be delayed or impaired. We have experienced delays in our planned clinical trials of vidofludimus calcium at sites in Ukraine and Russia because of the invasion of Ukraine by Russia in 2022 and the ongoing conflict. These and other delays we may encounter in initiating or completing clinical trials would likely increase our overall costs, impair product candidate development and impair our ability to obtain regulatory approval. Any of these occurrences may harm our business, financial condition, and prospects significantly.