Immuron Limited Q4 FY2022 earnings call

• Refreshed corporate structure and acquired Joanne Casey as R&D Manager. - International travel rebounding, sales increased significantly. - Strong balance sheet supports organic and M&A growth strategy. - Completing assessment of portfolio, target markets, etc., to implement growth strategy. - Next major milestone: file IND with FDA and initiate clinical trial for Travelan, IMM-124E this financial year. - Technology platform allows production of highly specific orally active immunoglobulins to target enteric pathogens. - Clinical programs include Immuron programs (Travelan, IMM-529) and partnered programs (e.g., with University of Uniformed Services, Naval Medical Research Center). - Distribution capabilities: strong in Australian retail pharmacy, B2B with Passport Health in US, and presence in Canada.

FY 2023 revenue exceeded budget by 92%, driven largely by resurgence in global travel. The company has commercial products Travelan and Protectyn. Travelan is sold in Australia, USA, and Canada, with over 3,500 pharmacies covered in Australia and a key customer in Passport Health in the US. Protectyn is a liver and gut health product planned for launch into networks in the USA and Canada.

• Plan to file IND with FDA for Travelan, IMM-124E this financial year and initiate clinical trial next calendar year with topline results before end of calendar year. - Aim to resolve clinical hold on CampETEC program and get it underway hopefully before end of next calendar year. - Manufacture clinical drug product for IMM-529 in beginning of next calendar year, submit IND to FDA before end of year, and start clinical program in first half of 2024 if approved. - Uniformed Services University trial of Travelan and Florastor to start around first half of 2023.

• CampETEC program currently on clinical hold. - Previous failed acquisition of a SARS-CoV-2 related opportunity due to inability to find necessary mechanism of action. - Supply challenges with Amazon in the US. - Marketing challenges for Travelan in standing out among competing products. - Mixed results in NASH trials leading to decision to focus on other pathogens and indications for Protectyn.

Q: Congratulations on becoming CEO, with our market cap languishing at approximately A$20 million and considering we have almost close to $30 million in the bank, once we received the DoD grant of approximately $6 million, which should be soon? And what measures will you be taking to get the share price trading above cash backing or much higher in the short-term?

A: Look, that's a very good question and a fair one. I share your disappointment with the current market cap, especially given their current cash balance which exceeds their market cap. I mentioned during our presentation that we plan to wisely spend that money on growing the value for shareholders. So we're undertaking that evaluation with all of our commercial and clinical programs with a view to establishing a strategy for both organic and M&A growth. I think you'll hear more about that relatively soon, because we have a number of activities underway on both fronts. So we've almost completed a revised marketing plan for Travelan in Australia and next cab off the rank will be Travelan for the U.S. market. And on the M&A front, there are a number of interesting opportunities, too early to talk about those, but some of them which are quite promising.

Q: Hello, Steven and congratulations to you and Joanne on coming on board for the new -- a new era for the company and a better era, hopefully, early on for -- early on for shareholder returns. Reading through the presentation document, There was reference made to a quarterly updates from Immuron moving forward. Definitely welcome that, as previous management's regular communication with shareholders has been very poor. Also with Hensley involved, will they be increases Immuron in the short-term?

A: That's also a very good point. The scale of the work that we're doing is clearly that message is not getting out there. So webinars like this, we will do quarterly, I plan to actually create an opt in provide your email to the company so we can share newsletters and the like. Hensley is assisting Immuron in Investor Relations and Public Relations and they're promoting what we're doing, not only to their shareholders, but also to potential investors and brokers and investment groups, so setting up meetings and the like for me. They're also assisting me at the moment in identifying potential M&A opportunities and they will assist me in evaluating those before moving forward.

Q: What is the company doing to try and increase shareholder value?

A: Similar question to the first, I guess, so there's two texts there. One is on the commercial products, I think, the sales that we're currently doing on those, at our peak, we were just shy of $3 million. I think Travelan alone could be more than $10 million product without doing too many things and we just execute on those items that I showed before, which is expanding within existing markets in new channels. So, for example, in the pharmacy market in the U.S. and we've had success in Australia, there's no reason why we couldn't be successful in the in the U.S. market, as well as in Canada. So I didn't show those as growing as Canada, because we exist in those channels, but wouldn't say we're performing well. So if we ramp up our sales and marketing strategy and invest wisely, we can grow Travelan into more than $10 million within the next few years. On the on the M&A front, we've got opportunities to expand into new markets. So that's either out licensing or distribution agreements with companies in other markets who are potentially acquiring companies that have a beachhead and markets that we wish to enter. Hopefully, we could find some targets that would allow us to expand not only geographically, but add new products into the portfolio. So even in Australia, having two products only in a market where we have good evidence base clients in over 3,500 pharmacies, it would obviously make sense to have more products in that category. So there's many, many things that we can do and you can be assured that we're looking at all of them to grow value for the company and get that share price back up to where it should be.

Q: At what stage is the company at with its FDA submission for Travelan?

A: As I mentioned that right at the beginning of the slide deck and also towards the end, so we're getting very close at the moment to filing the IND. So that's an Investigational New Drug. That's the first step in the process of getting approval to start a clinical trial. That first clinical trial for Travelan will be a controlled human infection model study likely to be done in the United States. I'm getting results for that and in the deck, you'll be able to download this after the webinar and you can see the dates there. Yeah, we'll discuss those results with the FDA to determine what additional studies. Likely there will be two more studies that I would think for a better life filing for the US that would commence after that.

Q: In regards to the company's failed acquisition last year, is the company looking at a possible alternative to the acquisition like a JV? And if not, is the company planning to address how the submission was handled and managed by the ACX – ASX, sorry?

A: Yeah. Look that was a disappointing event for the company, no doubt. Problem is that time has passed and the market is somewhat moved on. You would have seen recently we put out an ASX release saying that we'd evaluated the SARS-CoV-2 market opportunity with a view to taking our own product IMM-124E into that space. We had very good preclinical in vitro data showing activity against SARS-CoV-2. Unfortunately, we couldn't find a mechanism of action which is necessary to take it through those next steps into animal and to human clinical trials. So the key point here is that, we've decided not to take that forward, because the market opportunity itself is moved such that we don't think there would be a place for us with either our own product, IMM-124E or that previous opportunity. So I think the time has passed. We're not pursuing a JV or any other alternative structure for that particular company or product and we're not taking any activity action against the ASX. I don't see that as a wise investment for Immuron’s resources.

Q: Amazon U.S. seems to be out of stock a lot. Recently, it's been at least three weeks without stock. Are there challenges with supply and specifically supplied to Amazon?

A: Look, yeah, that is true. We have been stopped out on Amazon. We're just going through a transition at the moment. So we've been marketing our product Travelan through a third-party called Medic [ph] in the U.S. So they have their own Amazon Shop and they sell Travelan along with a lot of other products. Our plan is to go direct into the U.S. market. So we'll have an Immuron on Amazon Shop. We think there's greater advantages in that that we will be selling directly. We'll get obviously a higher selling price, could be the retail price. We're moving to a new company that's going to support us in this this arena. So we will look to do the same also in Canada. So this is a transitional thing moving from one supplier to another. We expect to be up and running again I'll think probably right around November.

Q: In reference to Travelan, with such a compelling product, why is the awareness of the benefits so poorly promoted at Chemist Warehouse outlets. The comment has been made that, at the chemists warehouse, you have to really search for Travelan as it's a lot -- it's lost amongst many competing products and the comment was the marketing is pretty hopeless?

A: Look, a point taken, I don't think that we can change the many products and if you go into a pharmacy, whether it's Chemist Warehouse or somewhere else, you'll see products that are used for traveler's diarrhea after you get it, so things like Imodium or gastro stop and they have their place if you do get traveler's diarrhea then that -- clearly that's something you would consider using alongside other things that can help relieve or take away some of the symptoms of traveler's diarrhea. One of which is Travelan, by the way, I mentioned that before. It doesn't only reduce the occurrence. It also helps reduce the symptoms of traveler's diarrhea. We do sit there on the shelf in most pharmacies. Next, another product called Travacalm, so there's a bit of confusion there, because Travacalm is for motion sickness essentially and not traveler's diarrhea. The marketing could be improved and I mentioned that we've just about to complete a complete review of the marketing strategy for Australia and that's covering not only what we do in pharmacies, but also online and through social media. We do intend to increase promotional spend both in the social media marketing space in search engine optimization, but also in pharmacy programs. So in order to stand out from that crowd of gut-related travel products, you need to train both the pharmacy and the pharmacy and system, so when somebody asks for a product that they recommend our product has been the only product available over the counter for to prevent traveler's diarrhea, we wouldn't prefer to prevent it rather than having to deal with after you get it. To make it stand out on the shelf there's marketing things that we can do with the end displays and wobblers and things like that. But all of those things are being looked at and we plan to implement those for the upcoming peak travel season around Christmas and New Year.

Q: Research report, broker analysis -- analyst report in the short-term would assist with current valuation of Immuron and 12-month target price would be another proactive measure. Unfortunately, previous senior management have not liked the idea. However, the share price has greatly underperformed over the last 12 months to 18 months under current management. I hope you see things differently, Steven, on this topic, and I am – and will initiate such a report to be undertaken and released. It's all well and good to report, good and improving Travelan sales numbers with travel back on the agenda for many people. But unfortunately, this has not done anything to excite the market, and therefore, the share price, have you get any comments to that?

A: Look, I certainly do. You're right. Getting the word out there is important and a broker or research analyst report is one tool that can be used to do that. I'm certainly not against it. I've seen that it been successful at two other ASX companies that I've been with in the past and it is something that I will consider. I promise that we'll do that. But I will consider. I think it is important that if we do have a research analyst report that it's done independently, so somebody independently reviews and makes their own assessment of the market potential and the potential target share price for the company because that's what's going to resonate best with potential investors and existing shareholders an independent view, not a, yeah, company view on that. I think generally we have to increase communication with the market both with existing shareholders and also new potential immense investors. As I said before, we're planning on stepping that up with more webinars, more information on social media channels, more meetings with shareholders and investors and brokers in the live presentations at conferences, et cetera.

Q: And on that note, that sounds great regarding presentations and media coverage to boost Immuron’s market profile moving forward. Does Immuron have a Twitter account, Instagram, which you will post this information on?

A: We do, actually, I think, Instagram, I think, might be limited to Travelan, our key product. We also have a Facebook account for that, and in fact, our Facebook account for Travelan has more than 25,000 followers, which show you there's a loyal base of people out there for Travelan. We do have a Twitter account. I must admit that I haven't -- the company hasn't really ended LinkedIn account for that matter. We haven't been active on posting anything. I posted something just the other day these this results presentation on LinkedIn for the first time and shared that with my own personal LinkedIn base, which is more than 3,000 people. People that are listening today and shareholders please share that view own contacts and get the word out. But, yes, we do have those accounts and we will start using those. We've got a strategy for using them for the product. We're going to develop a strategy for using them for the company itself as well.

Q: Some years back the Phase II NASH trials were reportedly indicating that we had the best infield product. What -- why has nothing progressed in this opportunity?

A: We've had mixed results with that product. I think it's important that we demonstrated through preclinical and clinical trials and mechanisms of action. One of which has to do with the LPS toxin, which is one of the key reasons why our Protectyn product is so effective in liver and gut health. We did have one -- didn't quite meet the endpoints studying in NASH and the company has taken a decision to focus on other pathogens and other indications for the product going forward. So we don't plan any further studies in NASH.