Form 8-K IMMUNIC, INC. For: Jun 21

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June 21, 2019 8:24 AM EDT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K/A

(Amendment No. 1)

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 21, 2019

IMMUNIC, INC.
(Exact name of registrant as specified in its charter)



Delaware	001-36201	56-2358443
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

Am Klopferspitz 19
82152 Martinsried

Germany

(Address of principal executive offices)

Registrant's telephone number, including area code: 49 89 250079460

Vital Therapies, Inc.

15222-B Avenue of Science
San Diego, CA 92128

______________________________________________________________________________
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:



	[ ]	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	[ ]	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	[ ]	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	[ ]	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b2 of this chapter).

Emerging growth company ý

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the

Exchange Act. Yes ý No ¨

EXPLANATORY NOTE

On April 12, 2019 (the “Closing Date’), pursuant to the terms of the Exchange Agreement, dated as of January 6, 2019, between Immunic, Inc. (then known as Vital Therapies, Inc.), a Delaware corporation (the “Company”), Immunic AG, a German corporation (“Former Immunic”), and the shareholders of Former Immunic party thereto, the holders of Former Immunic ordinary shares exchanged all of their outstanding shares for shares of Company common stock, resulting in Former Immunic becoming a wholly-owned subsidiary of the Company (the “Transaction”). In connection with the Transaction, the Company changed its name from Vital Therapies, Inc. to Immunic, Inc.

On the Closing Date, the Company filed a Current Report on Form 8-K (the “Original 8-K”) reporting, among other things, the closing of the Transaction. This amendment amends the Original 8-K to provide certain historical and pro-forma financial information required by Items 9.01(a) and 9.01(b) of Form 8-K. Such financial information was excluded from the Original 8-K in reliance on the instructions to such Items.

Item 8.01. Other Events.

On June 21, 2019, Immunic, Inc. issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

The audited consolidated financial statements of Former Immunic for the years ended December 31, 2018 and 2017, and the unaudited interim condensed consolidated financial statements for the three months ended March 31, 2019 and 2018, are filed as Exhibits 99.2 and 99.3 to this Current Report on Form 8-K and are incorporated herein by reference.

(b) Pro Forma Financial Information.

The pro forma financial information required by Item 9.01(b) is filed as Exhibit 99.4 to this Current Report on Form 8-K and is incorporated herein by reference.

(d) Exhibits



Exhibit	Description

99.1	Press Release dated June 21, 2019.
99.2	Audited Consolidated Financial Statements of Former Immunic for the years ended December 31, 2018 and 2017.
99.3	Unaudited Condensed Consolidated Financial Statements of Former Immunic for the three months ended March 31, 2019.
99.4	Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2019 and Statements of Operations of the Company and Former Immunic for the three months ended March 31, 2019 and year ended December 31, 2018.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.



		VITAL THERAPIES, INC.

		By: /s/ Daniel Vitt
		Daniel Vitt Chief Executive Officer

Date: June 21, 2019

Exhibit 99.1

Immunic, Inc. Files Financial Statements and Pro Forma Financial Information in Accordance with Previously Completed Stock-for-Stock Exchange Transaction and Provides Corporate Update

- Phase 2 Trial in Relapsing-Remitting Multiple Sclerosis Expected to be the First Efficacy Read-Out of IMU‑838; Top-line Data Anticipated in Q3 2020 -

SAN DIEGO, June 21, 2019 - Immunic, Inc. (Nasdaq: IMUX), a clinical-stage biopharmaceutical company focused on developing potentially best-in-class, oral therapies for the treatment of chronic inflammatory and autoimmune diseases, today announced that it has filed an amended Current Report on Form 8-K containing certain financial statements and pro forma financial information required to be provided in connection with the stock-for-stock exchange transaction between Immunic, Inc. (then known as Vital Therapies, Inc.) and Immunic AG, which was completed on April 12, 2019. Management also provided an update on the progress of its key development programs.

The amended Current Report on Form 8-K contains the audited consolidated financial statements of Immunic AG as of and for the years ended December 31, 2018 and December 31, 2017, and the unaudited condensed consolidated financial statements as of and for the three months ended March 31, 2019 and the corresponding period of the preceding fiscal year. The filing also includes pro forma combined financial information of Immunic AG and Vital Therapies, Inc.

Clinical Development Progressing Well


•	Although all ongoing phase 2 trials with IMU-838 remain blinded, the observed safety results from these trials are consistent with the previously defined reference safety information and no new safety signals have been observed to date.

•

Patient recruitment for the company’s phase 2, international, multicenter, double-blind, placebo-controlled, randomized, parallel-group trial of IMU-838, in development for the treatment of relapsing-remitting multiple sclerosis (EMPhASIS), is progressing faster than anticipated and is expected to be completed in the first half of 2020. Top-line data is anticipated to be available during the third quarter of 2020.

•

Patient recruitment for the phase 2, multicenter, randomized, double-blind, placebo-controlled, dose-finding study of IMU-838 in patients with moderate-to-severe ulcerative colitis (CALDOSE-1) was updated based on current recruitment rates and the anticipated impact of supportive measures. Study enrollment is projected to conclude during the second half of 2020. Top-line data is expected to be available in the first quarter of 2021.

•

Initiation of the phase 2, multicenter, randomized, double-blind, placebo-controlled, dose-finding trial of IMU-838 for the treatment of active Crohn’s disease (CALDOSE-2) is expected to occur during the second half of 2019, as per previous guidance. All preparations are in the advanced stage in anticipation of the interim dosing analysis of CALDOSE-1 in the third quarter of 2019, which will inform the dose selection for CALDOSE-2.


•	The investigator-sponsored trial of IMU-838 in patients with primary sclerosing cholangitis, which will be conducted at the Mayo Clinic, is expected to start enrollment soon.


•	Immunic’s earlier stage programs are on track. The company expects to begin its phase 1 double-blind, placebo-controlled, single and multiple ascending dose trials of IMU-935 during September 2019.

Immunic also plans to extend these studies in the first half of 2020 to assess safety and mechanism-related biomarkers in patients with psoriasis.


•	Immunic has started preclinical regulatory safety studies of IMU-856, a drug candidate targeting the intestinal barrier function. Initiation of phase 1 clinical trials is expected in the first half of 2020.

About Immunic, Inc.

Immunic, Inc. (Nasdaq: IMUX) is a clinical-stage biopharmaceutical company developing a pipeline of selective oral immunology therapies aimed at treating chronic inflammatory and autoimmune diseases, including ulcerative colitis, Crohn’s disease, relapsing-remitting multiple sclerosis, and psoriasis. The company is developing three small molecule products: IMU-838 is a selective immune modulator that inhibits the intracellular metabolism of activated immune cells by blocking the enzyme DHODH; IMU-935 is an inverse agonist of RORãt; and IMU-856 targets the restoration of the intestinal barrier function. Immunic’s lead development program, IMU-838, is in phase 2 clinical development for ulcerative colitis and relapsing-remitting multiple sclerosis, with an additional phase 2 trial in Crohn’s disease planned for 2019. An investigator-sponsored proof-of-concept clinical trial for IMU-838 in primary sclerosing cholangitis is planned to start at the Mayo Clinic. For further information, please visit: www.immunic-therapeutics.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains “forward-looking statements” that involve substantial risks and uncertainties for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, included in this press release regarding strategy, future operations, future financial position, future revenue, projected expenses, prospects, plans and objectives of management are forward-looking statements. Examples of such statements include, but are not limited to, statements relating to Immunic’s three development programs and the targeted diseases; the potential for IMU-838, IMU-935 and IMU-856 to safely and effectively target diseases; the timing of future clinical trials; the nature, strategy and focus of the company; and the development and commercial potential of any product candidates of the company. Immunic may not actually achieve the plans, carry out the intentions or meet the expectations or projections disclosed in the forward-looking statements and you should not place undue reliance on these forward-looking statements. Such statements are based on management’s current expectations and involve risks and uncertainties. Actual results and performance could differ materially from those projected in the forward-looking statements as a result of many factors, including, without limitation, risks and uncertainties associated with the ability to project future cash utilization and reserves needed for contingent future liabilities and business operations, the availability of sufficient resources to meet business objectives and operational requirements, the fact that the results of earlier studies and trials may not be predictive of future clinical trial results, the protection and market exclusivity provided by Immunic’s intellectual property, risks related to the drug development and the regulatory approval process and the impact of competitive products and technological changes. Immunic disclaims any intent or obligation to update these forward-looking statements to reflect events or circumstances that exist after the date on which they were made.

Contact Information

Immunic, Inc.

Jessica Breu

Manager IR and Communications

+49 89 250 0794 69

[email protected]

Rx Communications Group

Melody Carey

+1-917-322-2571

[email protected]

Exhibit 99.2

IMMUNIC AG

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

As of and for the years ended December 31, 2018 and 2017



	Page
Report of Baker Tilly Virchow Krause LLP, Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets	F-3
Consolidated Statements of Operations	F-4
Consolidated Statements of Comprehensive Loss	F-5
Consolidated Statements of Preferred Stock and Stockholders’ Deficit	F-6
Consolidated Statements of Cash Flows	F-7
Notes to Consolidated Financial Statements	F-8

F- 1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the board of directors of Immunic AG:

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Immunic AG (the "Company") as of December 31, 2018 and 2017, the related consolidated statements of operations, comprehensive loss, preferred stock and stockholders' deficit, and cash flows, for each of the two years in the period ended December 31, 2018, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Baker Tilly Virchow Krause, LLP

We have served as the Company's auditor since 2019.

Minneapolis, Minnesota

June 20, 2019

F- 2

IMMUNIC AG

Consolidated Balance Sheets

(In thousands, except share and per share amounts)



	December 31,
	2018			2017
Assets
Current assets:
Cash and cash equivalents	$	13,072		$	4,504
Other current assets and prepaid expenses	259			492
Total current assets	13,331			4,996
Property and equipment, net	40			25
Total assets	$	13,371		$	5,021
Liabilities, Preferred Stock and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	1,400		$	254
Accrued expenses	416			61
Other current liabilities	104			107
Total current liabilities	1,920			422
Commitments and contingencies (note 5)	—			—
Series A-2 Convertible preferred stock, €1.00 par value, 299,456 shares authorized, issued and outstanding at December 31, 2018 and 2017, Liquidation Preference €46,809 ($53,539) at December 31, 2018	34,313			15,057
Series A-1 Convertible preferred stock, €1.00 par value, 13,541 shares authorized, issued and outstanding at December 31, 2018 and 2017, Liquidation Preference €4,380 ($5,010) at December 31, 2018	2,879			2,879
Stockholders’ deficit:
Common stock, €1.00 par value; 50,000 shares authorized, issued and outstanding at December 31, 2018 and 2017	56			56
Accumulated other comprehensive income (loss)	(819		)	43
Accumulated deficit	(24,978		)	(13,436		)
Total stockholders’ deficit	(25,741		)	(13,337		)
Total liabilities, preferred stock and stockholders’ deficit	$	13,371		$	5,021

The accompanying notes are an integral part of these consolidated financial statements.

F- 3

IMMUNIC AG

Consolidated Statements of Operations

(In thousands, except share and per share amounts)



	Years Ended December 31,
	2018			2017
Operating expenses:
Research and development	$	9,595		$	8,753
General and administrative	2,402			1,252
Total operating expenses	11,997			10,005
Loss from operations	(11,997		)	(10,005		)
Other income:
Interest expense	(1		)	(4		)
Other income, net	456			47
Total other income	455			43
Net loss	$	(11,542	)	$	(9,962	)

Net loss per share, basic and diluted	$	(230.84	)	$	(199.24	)

Weighted-average common shares outstanding, basic and diluted	50,000			50,000

The accompanying notes are an integral part of these consolidated financial statements.

F- 4

IMMUNIC AG

Consolidated Statements of Comprehensive Loss

(In thousands)



	Years Ended December 31,
	2018				2017
Net loss	$	(11,542	)	$	$	(9,962	)
Other comprehensive income (loss):
Foreign currency translation	(862		)		477
Total comprehensive loss	$	(12,404	)	$	$	(9,485	)

The accompanying notes are an integral part of these consolidated financial statements.

F- 5

IMMUNIC AG

Consolidated Statements of Preferred Stock and Stockholders’ Deficit

(In thousands, except shares)



	Series A-2 Preferred Stock			Series A-1 Preferred Stock			Common Stock			Accumulated Other Comprehensive Income (Loss)			Accumulated Deficit			Total Stockholders’ Deficit
	Shares	Amount		Shares	Amount		Shares	Amount
Balance at January 1, 2017	170,834	$	6,967	13,541	$	2,879	50,000	$	56	$	(434	)	$	(3,474	)	$	(3,852	)
Net loss	—	—		—	—		—	—		—			(9,962		)	(9,962		)
Other comprehensive income	—	—		—	—		—	—		477			—			477
Issuance of preferred stock	128,622	8,090		—	—		—	—		—			—			—
Balance at December 31, 2017	299,456	15,057		13,541	2,879		50,000	56		43			(13,436		)	(13,337		)
Net loss	—	—		—	—		—	—		—			(11,542		)	(11,542		)
Other comprehensive loss	—	—		—	—		—	—		(862		)	—			(862		)
Issuance of preferred stock	—	19,256		—	—		—	—		—			—			—
Balance at December 31, 2018	299,456	$	34,313	13,541	$	2,879	50,000	$	56	$	(819	)	$	(24,978	)	$	(25,741	)

The accompanying notes are an integral part of these consolidated financial statements.

F- 6

IMMUNIC AG

Consolidated Statements of Cash Flows

(In thousands)



	For the Years Ended December 31,
	2018			2017
Cash flows from operating activities:
Net loss	$	(11,542	)	$	(9,962	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	15			11
Loss on disposal of property and equipment	1			—
Changes in operating assets and liabilities:
Other current assets and prepaid expenses	218			165
Accounts payable	1,200			5
Accrued expenses	369			39
Other current liabilities	1			78
Net cash used in operating activities	(9,738		)	(9,664		)
Cash flows from investing activities:
Purchases of property and equipment	(32		)	(29		)
Net cash used in investing activities	(32		)	(29		)
Cash flows from financing activities:
Proceeds from issuance of preferred stock	19,256			8,090
Net cash provided by financing activities	19,256			8,090
Effect of exchange rate changes on cash and cash equivalents	(918		)	450
Net change in cash and cash equivalents	8,568			(1,153		)
Cash and cash equivalents, beginning of year	4,504			5,657
Cash and cash equivalents, end of year	$	13,072		$	4,504

Supplemental disclosure for cash flow information:
Cash paid for interest	$	1		$	4

The accompanying notes are an integral part of these consolidated financial statements.

F- 7

Notes to Consolidated Financial Statements

1. Description of Business and Basis of Financial Statements

Description of Business

Immunic AG (“Immunic” or the “Company”) is a specialist in selective oral drugs in immunology and is focused on developing novel oral therapies with best-in-class potential for chronic inflammatory and autoimmune diseases. Immunic’s three development programs target inflammatory bowel diseases, multiple sclerosis, and psoriasis and include orally available, small molecule inhibitors of DHODH (IMU-838 program), an inverse agonist of RORgt (IMU-935 program), and IMU-856 (targeting improvement in intestinal barrier function). Immunic’s lead development program, IMU-838 is currently in phase 2 clinical development for ulcerative colitis and multiple sclerosis with additional phase 2 trials in Crohn’s disease and an investigator- initiated proof of concept study in primary sclerosing cholangitis planned for 2019.

The Company’s business, operating results, financial condition and growth prospects are subject to significant risks and uncertainties including the failure of its clinical trials to meet their endpoints, failure to obtain regulatory approval to commercialize and failure to secure additional funding to complete the development and commercialization of the three development programs.

Liquidity and Financial Condition

Immunic has no products approved for commercial sale and has not generated any revenue from product sales. Immunic has never been profitable and has incurred operating losses in each year since inception. Immunic has an accumulated deficit of approximately $25.0 million and $13.4 million as of December 31, 2018 and 2017, respectively. Substantially all of Immunic’s operating losses resulted from expenses incurred in connection with its research and development programs and from general and administrative costs associated with its operations.

Immunic expects to incur significant expenses and increasing operating losses for the foreseeable future as Immunic initiates and continues the preclinical and clinical development of its product candidates and adds personnel necessary to operate as a company with an advanced clinical pipeline of product candidates. In addition, after completion of the reverse acquisition as explained below, operating as a SEC registrant will involve the hiring of additional financial and other personnel, upgrading financial information systems, and incurring costs associated with operating as a public company. Immunic expects that its operating losses will fluctuate significantly from quarter-to-quarter and year-to-year due to timing of clinical development programs.

From inception to December 31, 2018, Immunic has raised net cash proceeds of approximately €31.8 million (approximately $36.4 million) in Series A financing rounds from private placements of preferred stock. As of December 31, 2018, Immunic had cash and cash equivalents of approximately $13.1 million. In connection with the reverse acquisition transaction, on April 12, 2019 as explained below, Immunic´s current shareholders invested an additional €26.7 million (approximately $30.5 million) in the Company. With these funds, Immunic expects to be able to fund its operations beyond the twelve months from the date of the issuance of the accompanying consolidated financial statements.

Reverse Acquisition

On April 12, 2019 (the “Closing Date”), pursuant to the terms of the Exchange Agreement, dated as of January 6, 2019, between Vital Therapies, Inc., a Delaware corporation (“Vital”), Immunic AG, and the shareholders of Immunic party thereto (the “Exchange Agreement”), the holders of Immunic ordinary shares exchanged all of their outstanding shares for shares of Vital common stock, resulting in Immunic becoming a wholly-owned subsidiary of Vital (the “Transaction”). Immediately following the Transaction, Vital Therapies, Inc. changed its name to “Immunic, Inc.” and its ticker symbol to “IMUX”.

At the closing of the Transaction, (i) each Immunic preferred share was converted into one Immunic ordinary share, and (ii) each Immunic ordinary share was converted into the right to receive 17.17 shares of Vital’s common stock, after giving effect to the reverse stock split. The exchange ratio was determined through arm’s-length negotiations between Vital and Immunic.

F- 8

Immunic owned approximately 88.25% of the common stock of Immunic, Inc., and the shareholders of Vital immediately prior to the Transaction owned approximately 11.75% of the common stock of Immunic, Inc. The issuance of shares of Vital’s common stock in the Transaction was registered with the Securities and Exchange Commission on a Registration Statement on Form S-4 (Registration No. 333-229510).

Immediately prior to the closing of the Transaction, Immunic issued, in a private placement transaction (the “Financing”), an aggregate of 129,744 ordinary shares to certain of its shareholders for aggregate consideration of €26.7 million (approximately $30.5 million), pursuant to the terms of the Investment and Subscription Agreement, dated as of January 6, 2019, between Immunic and the shareholders and investors party thereto (the “Subscription Agreement”).

The merger transaction will be accounted for as a reverse acquisition under the purchase method of accounting. Because Immunic’s pre-transaction owners held an 88.25% economic and voting interest in the combined company immediately following the closing of the merger, Immunic is considered the acquirer of Vital for accounting purposes.

Basis of Presentation and Consolidation

The accompanying consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles, or “GAAP”, and include the accounts of Immunic AG and its wholly-owned subsidiaries, Immunic Research GmbH which began operations in 2016 and Immunic Australia Pty Ltd (collectively referred to as the “Company” or “Immunic”). The business activities of the subsidiary, Immunic Australia Pty Ltd., located in Collingwood, Australia, began in 2018. All intercompany accounts and transactions have been eliminated in consolidation. Immunic manages its operations as a single reportable segment for the purposes of assessing performance and making operating decisions.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires the Company to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements. The most significant estimates in the Company’s financial statements and accompanying notes relate to the accounting for research and development activities, share-based compensation and notes related to contractual obligations. Management believes its estimates to be reasonable under the circumstances. Actual results could differ materially from those estimates and assumptions.

Foreign Currency Translation and Presentation

The Company’s reporting currency is U.S. dollars. During the years ended December 31, 2018 and 2017, Immunic’s main operations were located in Germany with the euro being its functional currency. Immunic Australia Pty Ltd.’s functional currency is the Australian Dollar. All amounts in the financial statements where the functional currency is not the U.S. dollar are translated into U.S. dollar equivalents at exchange rates as follows:

• assets and liabilities at reporting period-end rates,

• income statement accounts at average exchange rates for the reporting period, and

• components of equity at historical rates.

Gains and losses from translation of the financial statements into U.S. dollars are recorded in stockholders’ equity as a component of accumulated other comprehensive income (loss). Realized and unrealized gains and losses resulting from foreign currency transactions denominated in currencies other than the functional currency are reflected as general and administrative expenses in the Consolidated Statements of Operations. The Consolidated Statement of Cash Flows was prepared by using the average exchange rate in effect during the reporting period which reasonably approximates the timing of the cash flows.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

F- 9

Cash and cash equivalents consist of cash on hand and deposits in banks located in Germany and Australia. The Company maintains cash and cash equivalent balances denominated in euros with major financial institutions in Germany in excess of the deposit limits insured by the government. Management periodically reviews the credit standing of these financial institutions and believes that the Company is not exposed to any significant credit risk.

Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants on the measurement date. Accounting guidance establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1—Quoted prices in active markets for identical assets or liabilities. The Company had no Level 1 assets or liabilities for the periods presented.

Level 2— Inputs other than observable quoted prices for the asset or liability, either directly or indirectly; these include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. The Company had no Level 2 assets or liabilities for the periods presented.

Level 3—Unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of assets or liabilities. The Company had no Level 3 assets or liabilities for the periods presented.

The carrying value of cash and cash equivalents, other current assets and prepaid expenses, accounts payable, accrued expenses, and other current liabilities approximates fair value due to the short period of time to maturity.

Property and Equipment

Property and equipment is stated at cost. Depreciation is computed using the straight-line method based on the estimated service lives of the assets which range from three to eight years. Depreciation expense was $15,000 and $11,000 during the years ended December 31, 2018 and 2017, respectively.

Impairment of Long-Lived Assets

The Company records impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. Impaired assets are then recorded at their estimated fair value. There were no impairment losses during the years ended December 31, 2018 or 2017.

Research and Development Expenses

Research and development expenses have principally been related to the two development programs, IMU-838 and IMU-935. These two programs include orally available, small molecule inhibitors of DHODH (IMU-838 program) and inverse agonists of RORγt (IMU-935 program) relevant to diseases such as ulcerative colitis, Crohn’s disease and psoriasis. In 2018, IMU-838 is tested in a phase 2 clinical trial (CALDOSE-1) in patients with ulcerative colitis and the Company is preparing further phase 2 clinical trials in Crohn’s disease (CD) and multiple sclerosis. Furthermore, the preclinical development of IMU-935 was advanced.

Research and development expenses consist of expenses incurred in performing research and development activities including clinical trials, contract research services, salaries and related employee benefits, allocated facility costs and other outsourced services. Research and development expenses are charged to operations as incurred.

Collaboration Arrangements

F- 10

milestones. The Company regularly assesses the timing of payments against the completion of the respective milestones and ensures a proper accrual of related expenses in the appropriate accounting period.

Certain collaboration and license agreements might include payments to or from the Company of one or more of the following: non-refundable or partially refundable upfront or license fees; development, regulatory and commercial milestone payments; manufacturing supply services; partial or complete reimbursements of research and development costs; and royalties on net sales of licensed products. The Company assesses whether such contracts are within the scope of Financial Accounting Standards Board (FASB) Account Standards Update (“ASU”) 2014-09 “Revenue from Contracts with Customers” (“Topic 606”) and ensures proper accounting treatment.

Currently, the Company has entered into one option agreement with a third party which grants the Company the right to license a group of compounds, designated by the Company as IMU-856, a new oral treatment option for inflammatory bowel diseases such as ulcerative colitis and Crohn’s disease. During the option period the Company will perform the agreed upon research and development activities. The related research and development expenses are being reimbursed by the third party up to a maximum agreed-upon limit. Such reimbursements are recorded as other income. The Company may exercise its option right at any time during the option period. Once the option is exercised the Company is required to make a one-time option execution payment as well as milestone and royalty payments. To date, the option right has not been exercised.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related costs for personnel in executive, finance, business development and other support functions. Other general and administrative expenses include but are not limited to related facility costs, stock-based compensation, travel, professional fees for legal, consulting, accounting and tax services and insurance costs.

Stock-Based Compensation

The Company measures the cost of employee services received in exchange for equity awards based on the grant-date fair value of the award recognized generally as an expense on a straight-line basis over the requisite service period for those awards whose vesting is based upon a service condition, and either a straight-line or an accelerated method for awards whose vesting is based upon a performance condition, but only to the extent it is probable that the performance condition will be met. Employee stock-based compensation is estimated at the date of grant based on the award’s fair value for equity classified awards and upon final measurement date for liability classified awards.

Leases

Immunic leases office space and may enter into other operating lease agreements in conducting its business. At the inception of each lease, the Company evaluates the lease agreement to determine whether the lease is an operating or capital lease. Certain of the lease agreements may contain renewal options, tenant improvement allowances, rent holidays or rent escalation clauses. The rent expense related to operating leases is recognized on a straight-line basis in the consolidated statements of operations over the term of each lease.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Accumulated other comprehensive income (loss) has been reflected as a separate component of stockholders’ equity in the accompanying consolidated balance sheets.

Income Taxes

The Company is subject to corporate income tax laws and regulations in Germany and Australia. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment in their application.

F- 11

financial statements. Deferred income tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of changes in tax rates on deferred tax assets and liabilities is recognized in operations in the period that includes the enactment date. Deferred taxes are reduced by a valuation allowance when, in the opinion of management, it is more likely than not some portion or the entire deferred tax asset will not be realized.

It is the Company’s policy to provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

Net Loss Per Share

Basic net loss per share attributable to common stockholders is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period, without consideration for common stock equivalents. Diluted net loss per share attributable to common stockholders is computed by dividing the net loss by the weighted-average number of common shares and, if dilutive, common stock equivalents outstanding for the period is determined using the treasury-stock method.

For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

Subsequent Events

The Company has evaluated events occurring after the date of the consolidated financial statements through June 20, 2019 for events requiring disclosure in the consolidated financial statements.

Recently Issued and/or Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No. 2016-02, "Leases," or ASU 2016-02. ASU 2016-02 will require that lease arrangements longer than 12 months result in an entity recognizing an asset and liability equal to the present value of the lease payments in the statement of financial position. ASU 2016-02 is effective for annual periods beginning after December 15, 2018, and interim periods therein. This standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. Immunic will adopt ASU 2016-02 in 2019. The adoption of this guidance is expected to result in an increase in assets and liabilities reported on the Company’s consolidated balance sheets.

In May 2017, the FASB issued ASU No. 2017-09, “Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting,” or ASU 2017-09. The amendments in this update provide guidance on determining which changes to the terms and conditions of share-based payment awards require an entity to apply modification accounting under Topic 718. ASU 2017-09 is effective for annual periods beginning after December 15, 2017. The Company adopted this Standard as of January 2018. The application of this standard did not have any impact on Immunic’s consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07, "Improvements to Non-employee Share-Based Payment Accounting," or ASU 2018-07. ASU 2018-07, which simplifies the accounting for non-employee share-based payment transactions, specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor's own operations by issuing share-based payment awards. ASU 2018-07 is effective for public business entities for fiscal years beginning after December 15, 2018. Immunic will adopt ASU 2018-07 in 2019 and does not expect the adoption of this standard to have any material impact on its consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement - Disclosure Framework," or ASU 2018-13. ASU 2018-13 modifies the disclosure requirements for fair value measurements. The amendments relate to disclosures regarding unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty, and are to be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, and early adoption is

F- 12

permitted. The Company is currently evaluating the impact of ASU 2018-13 on the Company's disclosures and does not expect the adoption of this standard to have any material impact on the consolidated financial statements.

In November 2018, the FASB issued ASU No. 2018-18, "Collaborative Arrangements”, or ASU 2018-18. ASU 2018-18, clarifies that elements of collaborative arrangements could qualify as transactions with customers in the scope of ASC 606. The new guidance is effective for public business entities for fiscal years beginning after December 15, 2019. Immunic is currently evaluating the impact of ASU 2018-18 on the Company's consolidated financial statements.

3. Property and Equipment

Property and equipment consist of the following as of December 31 (in thousands):



	December 31,
	2018			2017
Office and operating equipment	$	50		$	31
Computer software	11			2
	61			33
Less: accumulated depreciation	(21		)	(8		)
Property and equipment, net	$	40		$	25

4. Accrued Expenses

Accrued expenses consist of the following as of December 31 (in thousands):



	December 31,
	2018		2017
Accrued clinical and related costs	$	197	$	24
Accrued professional services costs	173		35
Accrued other	46		2
Total	$	416	$	61

5. Commitments and Contingencies

Operating Leases

The Company leases office space and office equipment. The underlying lease agreements have lease terms of less than 12 months and up to two years. Future minimum annual obligations under non-cancelable operating lease commitments as of December 31, 2018 are as follows (in thousands):



	Total		2019		2020		2021
Operating lease obligations	$	89	$	31	$	29	$	29

Immunic recognizes rent expense for its facility operating leases on a straight-line basis. The Company accounts for the difference between the minimum lease payments and the straight-line amount as deferred rent. Rent expense was $43,000 and $28,000 during the years ended December 31, 2018 and 2017, respectively.

Contractual Obligations

As of December 31, 2018, the Company has non-cancellable contractual obligations under certain agreements related to its development programs IMU-838, IMU-935 and IMU-856 totaling approximately $0.6 million, all of which will be paid in 2019.

Other Commitments and Obligations

F- 13

In November 2018, the Company signed an engagement letter with BMO Capital Markets Corp. ("BMO") subject to which BMO acts as exclusive financial advisor in connection with a possible acquisition. In exchange BMO receives a fee payable in respect of any transaction that is consummated and payable promptly on the closing thereof, equal to $1 million ("Transaction Fee"). In addition, under certain conditions, the agreement includes a fee of 20% of any transaction-related break-up fee. As noted above, in January 2019, Immunic entered into an Exchange Agreement with Vital which was completed as of April 12, 2019. As a result, the Transaction Fee amounting to $1 million was subsequently paid to BMO in April 2019.

In May 2016, the Company entered into a purchase agreement (the "Agreement”) with 4SC AG whereby the Company acquired certain compounds including the rights to patents and patent applications, trademarks and know-how. This transaction has been accounted for as an asset acquisition under Update 2017-01 - Business Combinations (Topic 805): Clarifying the Definition of a Business ("ASC805"). This Agreement included payments (Tranches III and IV) that were contingent upon the occurrence of certain events. The arrangement required the Company to pay royalties equal to 4.4% of the aggregated net sales for a certain period as defined in the Agreement (Tranche III) upon commercialization of the assets. As of April 12, 2019, the parties agreed to settle Tranche IV by transferring 120,070 shares of the Company’s common stock, immediately following the merger Transaction on a post-reverse stock split basis, to 4SC AG while keeping Tranche III in effect. No royalties are payable as of December 31, 2018 or 2017 as sales have not commenced.

Legal Proceedings

The Company is not currently a party to any litigation, nor is it aware of any pending or threatened litigation, that it believes would materially affect its business, operating results, financial condition or cash flows. However, its industry is characterized by frequent claims and litigation including securities litigation, claims regarding patent and other intellectual property rights and claims for product liability. As a result, in the future, the Company may be involved in various legal proceedings from time to time.

6. Preferred Stock

As per the Shareholders’ Agreement dated as of August 10, 2016, the Company issued 13,541 Series A-1 and 170,834 Series A-2 preferred shares, par value €1.00 per share, to seven investors as part of its growth financing plan in the total amount of €8.8 million (approximately $9.8 million).

The Company issued 128,622 additional shares of Series A-2 preferred shares for a total of €15.9 million (approximately $19.2 million) and a total of €7.0 million (approximately $8.1 million) in cash during years ended December 31, 2018 and 2017, respectively.

The general terms of the Preferred Shares are as follows:


•	Voting rights: Holders of the Preferred Shares are entitled to one vote for each Preferred Share held by them. All shares rank equally as to voting and other matters. For shareholders’ meeting resolutions “special majority” (60% or more of shares) is required.

•

Liquidation preference: In the event of any sale of 50% or more of the Company’s shares, disposal of its tangible and intangible assets or swap, contribution or merger of its shares, as applicable, after payment or provision for payment of the debts and liabilities of the Company, holders of the Preferred Shares will be entitled to a preference payment of 1.5 times their amount invested on any of preferred shares included in the transaction increased by 6% per annum on each such share (so-called liquidation dividend). In case the proceeds are not sufficient to satisfy all amounts, the entire proceeds shall be divided between the holders of the Preferred Shares in proportion of the maximum amounts they are entitled to as per the aforementioned clause. Any proceeds in excess of the preference payments, up to the amount of €3,000,000, will then be distributed to the holders of Common Stock. Any exceeding amount will be divided between all shareholders pro rata to the number of shares included in the transaction.


•	Conversion into common shares: Each holder of the Preferred Shares is entitled to demand any time and from time to time the conversion of his Preferred Shares into Common Shares in whole or part on a one-for-one basis.

F- 14


•	Dividends: The Preferred Shares do not have dividend rights.

7. Common Stock

The Company, a non-public company as of the balance sheet date, has authorized 50,000 shares of common stock, par value €1.00 per share, which were paid in March 2016 at approximately $56,000. Common shares confer upon the holders thereof the right to receive notice of, participate in, and vote at general meetings of the Company. Holders also have the right to receive cash and stock dividends, if declared or upon dissolution, subject to the preferential rights of the holders of the series of preferred shares.

Each share of the Company’s common stock is entitled to vote and all shares rank equally as to voting and other matters. Dividends may be declared and paid on the common stock from funds legally available thereof, if, as and when determined by the Board of Directors. No dividends have been declared as of December 31, 2018.

8. Stock-Based Compensation Plans

Stock Option Programs

Under two stock option programs, the Company grants stock options to the members of the Supervisory Board and to key employees. The programs are intended to incentivize the beneficiaries to dedicate their working capabilities in the best manner possible to the benefit of the Company.

Under the stock option program for the members of the Supervisory Board (the “VSOP SB”), the Company may grant stock options of the Company to members of the Company’s Supervisory Board for the time period of their service as members of the Company’s Supervisory Board. The shareholders’ meeting approved the VSOP SB with a total of 1,840 stock options, corresponding to approximately 0.5% of the Company’s issued share capital at the time of the decision, of which 260 were granted as of December 31, 2018. Under the stock option program for key employees (the “VSOP”), the Company may grant stock options of the Company to certain key employees. With the approval of the Supervisory Board, the Management Board shall determine how many stock options shall be granted and how they shall be allocated to the respective beneficiaries. The Company intends to issue a total of up to 1,840 stock options of which 144 stock options were granted as of December 31, 2018.

Further terms and conditions of both programs, the VSOP SB and the VSOP, are substantially similar. The following information is therefore shown aggregated for both programs. The stock options vest if and when an exit event occurs, i.e. a direct initial public offering has taken place, or an indirect initial public offering has taken place, or a trade sale has been consummated, or a disposal of the Company’s assets has been consummated, or another financially equivalent circumstance has been consummated where the previous shareholders of the Company are put in the same position as in the aforementioned cases and a realization has occurred. The Company accounts for the VSOP SB options as well as the VSOP options as cash-settled stock options, and will classify their fair value as a liability upon vesting. As the vesting of the VSOP SB and VSOP option is contingent upon an exit event whose occurrence is not probable as of December 31, 2018, the Company has recorded no compensation expense related to its stock options as of December 31, 2018.

Movements during the year

The following table illustrates the number and weighted average exercise prices of, and movements in, stock options during the years ended December 31:

F- 15



	2018			2017
	Options	Exercise Price		Options	Exercise Price
Outstanding as of January 1	260	$	0.00	—
Granted during the period	144	$	0.00	260	$	0.00
Forfeited during the period	—			—
Exercised during the period	—			—
Expired during the period	—			—
Outstanding at December 31	404	$	0.00	260	$	0.00
Exercisable at December 31	—			—

In addition to the 404 stock options outstanding at December 31, 2018, Immunic granted 1,874 shares from January through April of 2019 for a total of 2,278 stock options under both stock option programs. Compensation expense of €443,000 (approximately $506,000) related to the stock option grants will be recognized upon consummation of the exit event in April of 2019, therefore, no expense was recognized during the years ended December 31, 2018 and 2017. There were no cancellations or modifications to the awards in 2018 or 2017.

The remaining contractual life for the stock options was not limited.

Measurement

The fair value of the Company’s stock of €194.53 was determined based on negotiation with investors participating in the Financing as noted above.

The fair value of the zero-cost option granted in course of the VSOP SB and the VSOP equals the fair value of the underlying stock (assuming no dividends).

Executive bonus agreement

In December 2018, the Company signed bonus agreements with all members of the Management Board. In case of an exit event each member of the Management Board has the right to receive 2.00% of the overall disposal proceeds, including contingent or deferred proceeds like earn-out payments, reduced by transaction costs incurred.

The agreements qualify and are accounted for as equity-settled share-based payments. In total 27,176 shares were granted and the fair value of each share granted was €194.53 as of December 31, 2018. The shares will vest and compensation cost of €5.3 million (approximately $6 million) will be recognized upon the consummation of the exit event which occurred on April 12, 2019.

9. Net Loss Per Share

Because the Company has reported a net loss attributable to common stockholders for both periods presented, basic and diluted net loss per share attributable to common stockholders are the same for both years. All preferred stock and stock options have been excluded from the computation of diluted weighted-average shares outstanding because such securities would have an anti-dilutive impact.

The following table sets forth the computation of basic and diluted net loss per share:



	Years Ended December 31,
	2018			2017
Numerator:
Net loss	$	(11,542	)	$	(9,962	)
Net loss attributable to common shareholders	$	(11,542	)	$	(9,962	)
Denominator:
Weighted-average common share outstanding, basic and diluted	50,000			50,000
Net loss per share attributable to common stockholders, basic and diluted	$	(230.84	)	$	(199.24	)

F- 16

The following potential common shares outstanding at the end of the periods presented were excluded from the calculation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect:



	Years Ended December 31,
	2018	2017
Convertible preferred shares	312,997	312,997
Stock awards – Executive Bonus	27,176	—

10. Income Taxes

Net loss before income tax was subject to tax in the following jurisdictions for the following periods (in thousands):



	Years Ended December 31,
	2018			2017
United States	$	—		$	—
Germany	(11,445)			(9,962)
Foreign (Australia)	(97)			—
	$	(11,542	)	$	(9,962	)

The rate reconciliation consists of the following:



	Years Ended December 31,
	2018		2017
German corporate income tax (Körperschaftsteuer)	15.0	%	15.0	%
German solidarity tax (Solidaritätszuschlag)	0.8	%	0.8	%
German business tax (Gewerbesteuer)	11.7	%	11.5	%
Australian corporate tax (Australische Körperschaftsteuer)	0.0	%	0.0	%
Change in valuation allowance	(27.5	)%	(27.3	)%
Effective tax rate	0.0	%	0.0	%

Deferred income taxes result from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements that will result in taxable or deductible amounts in future years. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in years in which those temporary differences are expected to be recovered or settled. As tax laws and rates change, deferred tax assets and liabilities are adjusted through income tax expense. There is no current or deferred income tax expense in the years ended December 31, 2018 and 2017, respectively.

Significant components of the Company’s net deferred tax assets are shown below. A valuation allowance has been established as realization of such net deferred tax assets has not met the more likely-than-not threshold requirement. If the Company’s judgment changes and it is determined that it will be able to realize these net deferred tax assets, the tax benefits relating to any reversal of the valuation allowance on the net deferred tax assets will be accounted for as a reduction to income tax expense.



	Years Ended December 31,
	2018			2017
	(in thousands)
Deferred tax assets:
Net operating loss carry forwards (German companies)	$	6,010		$	3,010
Foreign net operating loss carryforwards (Australian company)	10			—
Total deferred tax assets	6,020			3,010
Loss valuation allowance	(6,020		)	(3,010		)
	$	0		$	0

F- 17

The Company has incurred net operating losses each year since inception due to its history as a development stage company with no realized revenues from its planned principal operations. These cumulative operating losses provide significant negative evidence in the determination of whether or not the Company will be able to realize deferred tax assets such as net operating losses and other favorable temporary differences. There can be no assurance that it will ever generate taxable income. As a result, the Company has maintained a full valuation allowance against the entire balance of its net deferred tax assets since the date of inception. The valuation allowance has increased by $3.0 million and $2.6 million for the years ended December 31, 2018 and 2017, respectively.

As of December 31, 2018, Immunic had available net operating loss carryforwards, or NOLs, of approximately $21.8 million in Germany and Australia. These NOLs do not expire.

Immunic recognizes interest and penalties related to unrecognized tax benefits on the income tax expense line in the accompanying consolidated statement of operations. Accrued interest and penalties are included on the related tax liability line in the consolidated balance sheet. The Company does not have uncertain tax positions for the years ended December 31, 2018 and 2017, respectively. Tax years 2016 through 2018 are subject to audit by the German tax authorities. The Company is not currently under examination by any tax jurisdictions.

F- 18

Exhibit 99.3

IMMUNIC AG

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

As of and for the three months ended March 31, 2019 and 2018



	Page
Condensed Consolidated Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets	F-2
Condensed Consolidated Statements of Operations	F-3
Condensed Consolidated Statements of Comprehensive Loss	F-4
Condensed Consolidated Statements of Preferred Stock and Stockholders' Deficit	F-5
Condensed Consolidated Statements of Cash Flows	F-6
Notes to Condensed Consolidated Financial Statements	F-7

F- 1

IMMUNIC AG

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

(Unaudited)



	March 31, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	7,593		$	13,072
Restricted cash	20,426			—
Other current assets and prepaid expenses	502			259
Total current assets	28,521			13,331
Property and equipment, net	41			40
Operating lease right-of-use assets	74			—
Total assets	$	28,636		$	13,371
Liabilities, Preferred Stock and Stockholders’ Deficit
Current liabilities:
Accounts payable	$	511		$	1,400
Accrued expenses	562			416
Other current liabilities	93			104
Total current liabilities	1,166			1,920
Long term liabilities	48			—
Total liabilities	1,214			1,920
Commitments and contingencies (note 3)	—			—
Series A-2 Convertible preferred stock, €1.00 par value, 299,456 shares authorized, issued and outstanding at March 31, 2019 and December 31, 2018, Liquidation Preference €47,465 ($53,237) at March 31, 2019	34,313			34,313
Series A-1 Convertible preferred stock, €1.00 par value,13,541 authorized, issued and outstanding at March 31, 2019 and December 31, 2018, Liquidation Preference €4,438 ($4,978) at March 31, 2019	2,879			2,879
Stockholders’ deficit:
Common stock, €1.00 par value; 50,000 shares authorized, issued and outstanding at March 31, 2019 and December 31, 2018, respectively	56			56
Stock subscription not yet issued	20,531			—
Accumulated other comprehensive loss	(1,066		)	(819		)
Accumulated deficit	(29,291		)	(24,978		)
Total stockholders’ deficit	(9,770		)	(25,741		)
Total liabilities, preferred stock and stockholders’ deficit	$	28,636		$	13,371

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F- 2

IMMUNIC AG

Condensed Consolidated Statements of Operations

(In thousands, except share and per share amounts)

(Unaudited)



	Three Months Ended March 31,
	2019			2018
Operating expenses:
Research and development	$	3,355		$	1,783
General and administrative	1,307			505
Total operating expenses	4,662			2,288
Loss from operations	(4,662		)	(2,288		)
Other income:
Interest expense	—			(1		)
Other income, net	349			26
Total other income	349			25
Net loss	$	(4,313	)	$	(2,263	)

Net loss per share, basic and diluted	$	(86.26	)	$	(45.26	)

Weighted-average common shares outstanding, basic and diluted	50,000			50,000

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F- 3

IMMUNIC AG

Condensed Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)



	Three Months Ended March 31,
	2019			2018
Net loss	$	(4,313	)	$	(2,263	)
Other comprehensive income (loss):
Foreign currency translation	(247		)	28
Total comprehensive loss	$	(4,560	)	$	(2,235	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F- 4

IMMUNIC AG

Condensed Consolidated Statements of Preferred Stock and Stockholders’ Deficit

(In thousands, except shares)

(Unaudited)



	Series A-2 Preferred Stock			Series A-1 Preferred Stock			Common Stock			Stock subscription not yet issued		Accumulated Other Comprehensive Income (Loss)				Accumulated Deficit			Total Stockholders’ Deficit
	Shares	Amount		Shares	Amount		Shares	Amount
Balance at January 1, 2019	299,456	$	34,313	13,541	$	2,879	50,000	$	56	$	—	$	(819	)	$	$	(24,978	)	$	(25,741	)
Net loss	—	—		—	—		—	—		—		—				(4,313		)	(4,313		)
Other comprehensive income	—	—		—	—		—	—		—		(247		)		—			(247		)
Stock subscription not yet issued	—	—		—	—		—	—		20,531		—				—			20,531
Balance at March 31, 2019	299,456	$	34,313	13,541	$	2,879	50,000	$	56	$	20,531	$	(1,066	)		$	(29,291	)	$	(9,770	)



Balance at January 1, 2018	299,456	$	15,057	13,541	$	2,879	50,000	$	56	$	—	$	43	$	(13,436	)	$	(13,337	)
Net loss	—	—		—	—		—	—		—		—		(2,263		)	(2,263		)
Other comprehensive income	—	—		—	—		—	—		—		28		—			28
Issuance of preferred stock	—	12,564		—	—		—	—		—		—		—			—
Balance at March 31, 2018	299,456	$	27,621	13,541	$	2,879	50,000	$	56	$	—	$	71	$	(15,699	)	$	(15,572	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F- 5

IMMUNIC AG

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



	Three Months Ended March 31,
	2019			2018
Cash flows from operating activities:
Net loss	$	(4,313	)	$	(2,263	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	5			3
Changes in operating assets and liabilities:
Other current assets and prepaid expenses	(252		)	240
Accounts payable	(880		)	347
Accrued expenses	158			(48		)
Other current liabilities	(35		)	(74		)
Net cash used in operating activities	(5,317		)	(1,795		)
Cash flows from investing activities:
Purchases of property and equipment	(7		)	(1		)
Net cash used in investing activities	(7		)	(1		)
Cash flows from financing activities:
Proceeds from stock subscription not yet issued	20,531			—
Proceeds from issuance of preferred stock	—			12,564
Net cash provided by financing activities	20,531			12,564
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(260		)	29
Net change in cash, cash equivalents and restricted cash	14,947			10,797
Cash, cash equivalents and restricted cash, beginning of period	13,072			4,504
Cash, cash equivalents and restricted cash, end of period	$	28,019		$	15,301
Supplemental disclosures for cash flow information:
Cash paid for interest	$	—		$	1
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	7,593		$	15,301
Restricted cash	20,426			—
Total cash, cash equivalents and restricted cash	$	28,019		$	15,301

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

F- 6

Notes to Consolidated Financial Statements

1. Description of Business and Basis of Financial Statements

Description of Business

Liquidity and Financial Condition

Immunic has no products approved for commercial sale and has not generated any revenue from product sales. Immunic has never been profitable and has incurred operating losses in each year since inception. Immunic has an accumulated deficit of approximately $29.3 million as of March 31, 2019 and $25.0 million as of December 31, 2018. Substantially all of Immunic’s operating losses resulted from expenses incurred in connection with its research and development programs and from general and administrative costs associated with its operations.

Immunic expects to incur significant expenses and increasing operating losses for the foreseeable future as Immunic initiates and continues the preclinical and clinical development of its product candidates and adds personnel necessary to operate as a company with an advanced clinical pipeline of product candidates. In addition, after completion of the reverse acquisition, as explained below, operating as a SEC registrant will involve the hiring of additional financial and other personnel, upgrading financial information systems, and incurring costs associated with operating as a public company. Immunic expects that its operating losses will fluctuate significantly from quarter-to-quarter and year-to-year due to timing of clinical development programs.

From inception to March 31, 2019, Immunic has raised net cash proceeds of approximately €50 million (approximately $56.0 million) from private placements of preferred and common stocks. As of March 31, 2019, Immunic had cash and cash equivalents of approximately $28.0 million. In connection with the reverse acquisition, as explained below, Immunic´s current shareholders invested €26.7 million (approximately $30.0 million) in the Company of which €18.2 million (approximately $20.5 million) was received in March 2019. The remaining amount of €8.5 million (approximately $9.5 million) was received in April 2019 before the closing of the reverse acquisition. With these funds, Immunic expects to be able to fund its operations beyond twelve months from the date of the issuance of the accompanying unaudited condensed consolidated financial statements.

Reverse Acquisition

F- 7

effect to the reverse stock split. The exchange ratio was determined through arm’s-length negotiations between Vital and Immunic.

The aggregate consideration issuable in the Transaction, after giving effect to the reverse stock split, was 8,927,130 shares of Vital’s common stock. Following the Transaction and after giving effect to the reverse stock split, the former shareholders of Immunic owned approximately 88.25% of the common stock of the Company, and the shareholders of Vital immediately prior to the Transaction owned approximately 11.75% of the common stock of the Company. The issuance of shares of Vital’s common stock in the Transaction was registered with the Securities and Exchange Commission on a Registration Statement on Form S-4 (Registration No. 333-229510).

Immediately prior to the closing of the Transaction, Immunic issued, in a private placement transaction (the “Financing”), an aggregate of 129,744 ordinary shares to certain of its shareholders for aggregate consideration of €26.7 million (approximately $30.0 million), pursuant to the terms of the Investment and Subscription Agreement, dated as of January 6, 2019, between Immunic and the shareholders and investors party thereto (the “Subscription Agreement”).

Basis of Presentation and Consolidation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles, or GAAP, and include the accounts of Immunic AG and its wholly-owned subsidiaries, Immunic Research GmbH which began operations in 2016 and Immunic Australia Pty Ltd (collectively referred to as the “Company” or “Immunic”). The business activities of the subsidiary, Immunic Australia Pty Ltd., located in Collingwood, Australia, began in 2018. All intercompany accounts and transactions have been eliminated in consolidation. Immunic manages its operations as a single reportable segment for the purposes of assessing performance and making operating decisions.

Unaudited Interim Financial Information

Immunic has prepared the accompanying interim unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“US GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X of the Securities and Exchange Commission (“SEC”). Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. These interim unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals which, in the opinion of management, are necessary to present fairly Immunic‘s consolidated financial position, consolidated results of operations, consolidated statement of stockholders’ equity and consolidated cash flows for the periods and as of the dates presented. The Company‘s fiscal year ends on December 31. The condensed consolidated balance sheet as of December 31, 2018 was derived from audited consolidated financial statements but does not include all disclosures required by US GAAP. These condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements and the notes thereto included in this Current report on Form 8-K\A. The nature of Immunic‘s business is such that the results of any interim period may not be indicative of the results to be expected for the entire year. Certain prior period amounts have been reclassified to conform to the current basis of presentation.

2. Summary of Significant Accounting Policies

Use of Estimates

F- 8

Foreign Currency Translation and Presentation

The Company’s reporting currency is U.S. dollars. During the three months ended March 31, 2019 and 2018, Immunic’s main operations were located in Germany with the euro being its functional currency. Immunic Australia Pty Ltd.’s functional currency is the Australian Dollar. All amounts in the financial statements where the functional currency is not the U.S. dollar are translated into U.S. dollar equivalents at exchange rates as follows:

• assets and liabilities at reporting period-end rates,

• income statement accounts at average exchange rates for the reporting period, and

• components of equity at historical rates.

Gains and losses from translation of the financial statements into U.S. dollars are recorded in stockholders’ equity as a component of accumulated other comprehensive income (loss). Realized and unrealized gains and losses resulting from foreign currency transactions denominated in currencies other than the functional currency are reflected as general and administrative expenses in the unaudited condensed consolidated statements of operations. The unaudited condensed consolidated statement of cash flows was prepared by using the average exchange rate in effect during the reporting period which reasonably approximates the timing of the cash flows.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Cash and cash equivalents consist of cash on hand and deposits in banks located in Germany and Australia. The Company maintains cash and cash equivalent balances denominated in euro with major financial institutions in Germany in excess of the deposit limits insured by the government. Management periodically reviews the credit standing of these financial institutions and believes that the Company is not exposed to any significant credit risk.

Fair Value Measurement

Level 1—Quoted prices in active markets for identical assets or liabilities. The Company had no Level 1 assets or liabilities for the periods presented.

Property and Equipment

Property and equipment is stated at cost. Depreciation is computed using the straight-line method based on the estimated service lives of the assets which range from three to eight years. Depreciation expense was $5,000 and $3,000 during the three months ended March 31, 2019 and 2018, respectively.

Impairment of Long-Lived Assets

F- 9

Research and Development Expenses

Research and development expenses have principally been related to the two development programs, IMU-838 and IMU-935. These two programs include orally available, small molecule inhibitors of DHODH (IMU-838 program) and inverse agonists of RORγt (IMU-935 program) relevant to diseases such as ulcerative colitis, Crohn’s disease and psoriasis. In 2019, IMU-838 is currently being tested in two phase 2 clinical trial in patients with ulcerative colitis and multiple sclerosis. The Company is preparing for a phase 2 clinical trial in Crohn’s disease (CD) later this year. Furthermore, the preclinical development of IMU-935 was advanced.

Collaboration Arrangements

The Company enters into agreements with contract research organizations (“CROs”) to provide clinical trial services for individual studies and projects by executing individual work orders governed by Master Service Arrangements (“MSAs”). The MSAs and associated work orders are designed such that certain payments are to be made upon completion of certain milestones. The Company regularly assesses the timing of payments against the completion of the respective milestones and ensures a proper accrual of related expenses in the appropriate accounting period.

General and Administrative Expenses

Stock-Based Compensation

F- 10

Leases

The Company has two existing leases for office space and one lease for office equipment. One lease for office space and the equipment lease have initial terms of less than 12 months. At inception of a lease agreement, it is determined whether an agreement represents a lease and at commencement each lease agreement is assessed as to classification as an operating or financing lease. One of the office leases contains a renewal option. As described below under "Recently Issued and/or Adopted Accounting Standards - Change in Accounting Principle," the Company adopted the Financial Accounting Standards Board Accounting Standards Update, or ASU, "Leases," or ASU 2016-02, as of January 1, 2019.

Pursuant to ASU 2016-02, both office leases outstanding on January 1, 2019 continued to be classified as operating leases. With the adoption of ASU 2016-02, an operating lease right-of-use asset and an operating lease liability have been recorded on the Company’s balance sheet. Right-of-use lease assets represent the Company’s right to use the underlying asset for the lease term and the lease obligation represents its commitment to make the lease payments arising from the lease. Right-of-use lease assets and obligations are recognized at the commencement date based on the present value of remaining lease payments over the lease term. As the Company’s leases do not provide an implicit rate, an estimated incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments has been used. The right-of-use lease asset includes any lease payments made prior to commencement and excludes any lease incentives. The lease term may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as common area costs and property taxes are expensed as incurred. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Accumulated other comprehensive income has been reflected as a separate component of stockholders’ equity in the accompanying unaudited condensed consolidated balance sheets.

Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the unaudited condensed consolidated financial statements. Deferred income tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of changes in tax rates on deferred tax assets and liabilities is recognized in operations in the period that includes the enactment date. Deferred taxes are reduced by a valuation allowance when, in the opinion of management, it is more likely than not some portion or the entire deferred tax asset will not be realized. As of March 31, 2019, and December 31, 2018, the Company maintained a full valuation allowance against the balance of deferred tax assets.

Net Loss Per Share

F- 11

For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

Recently Issued and/or Adopted Accounting Standards

Recently Adopted Accounting Standards

In February 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update No. 2016-02, "Leases." ASU 2016-02 is intended to improve financial reporting of leasing transactions by requiring organizations that lease assets to recognize assets and liabilities for the rights and obligations created by leases on the balance sheet. The Company has elected to adopt ASU 2016-02 retrospectively at January 1, 2019 using a simplified transition option that allows companies to initially apply the new lease standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company also elected to adopt the package of practical expedients permitted in Accounting Standards Codification Topic 842, or ASC 842. Accordingly, the leases outstanding at January 1, 2019 continue to be classified as operating leases under the new guidance, without reassessing whether the contracts contain a lease under ASC 842 or whether classification of the operating leases would be different under ASC Topic 842. All of the Company’s leases at the adoption date were operating leases for facilities and did not include any non-lease components.

As a result of the adoption of ASU 2016-02, on January 1, 2019, the Company recognized (a) a lease liability of approximately $80,000, which represents the present value of the remaining lease payments using an estimated incremental borrowing rate of 6% and (b) a right-of-use asset of approximately $80,000. (The cumulative-effect adjustment was immaterial. Due to the adoption of the standard using the retrospective cumulative-effect adjustment method, there are no changes to the Company’s previously reported results prior to January 1, 2019. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Lease expense has not changed materially as a result of the adoption of ASU 2016-02.

In June 2018, the FASB issued ASU No. 2018-07, "Improvements to Non-Employee Share-Based Payment Accounting," or ASU 2018-07. ASU 2018-07, which simplifies the accounting for non-employee share-based payment transactions, specifies that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to be used or consumed in a grantor's own operations by issuing share-based payment awards. ASU 2018-07 is effective for public business entities for fiscal years beginning after December 15, 2018, and early adoption is permitted. The Company adopted ASU 2018-07 in the first quarter of 2019. The adoption of this standard had no impact on the Company’s unaudited condensed consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230), Restricted Cash” which requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. ASU 2016-18 is effective for the Company for fiscal years beginning after December 15, 2018. The adoption of this ASU did not have a significant impact on the Company’s unaudited condensed consolidated financial statements.

Recently Issued Accounting Standards

In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement - Disclosure Framework," or ASU 2018-13. ASU 2018-13, modifies the disclosure requirements for fair value measurements. The amendments relate to disclosures regarding unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements and the narrative description of measurement uncertainty, and are to be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. The amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact of ASU 2018-13 on its disclosures.

In November 2018, the FASB issued ASU No. 2018-18, "Collaborative Arrangements”, or ASU 2018-18. ASU 2018-18, clarifies that elements of collaborative arrangements could qualify as transactions with customers in the scope of ASC 606. The new guidance is effective for public business entities for fiscal years beginning after December 15, 2019. The Company is currently evaluating the impact of ASU 2018-18 on its disclosures.

F- 12

3. Commitments and Contingencies

Operating Lease

The Company leases office space and office equipment. The underlying lease agreements have lease terms of less than 12 months and up to two years. The short term leases are deemed immaterial and have not been included in the operating lease right of use asset and operating lease liability.

The Company leases certain office space under a non-cancelable operating lease. The lease does not have significant rent escalation holidays, concessions, leasehold improvement incentives or other build-out clauses. Further the lease does not contain contingent rent provisions. The lease terminates on December 31, 2019 with a renewal option for additional two years that is reasonably likely to be exercised. This lease does include both lease (e.g., fixed rent) and non-lease components (e.g., common-area and other maintenance costs). The non-lease components are deemed to be executory costs and are therefore excluded from the minimum lease payments used to determine the present value of the operating lease obligation and related right-of-use asset.

The lease does not provide an implicit rate and, due to the lack of a commercially salable product, the Company is generally considered unable to obtain commercial credit. Therefore, the Company estimated its incremental interest rate to be 6%, considering the quoted rates for the lowest investment-grade debt and the interest rates implicit in recent financing leases. Immunic used it’s estimated incremental borrowing rate and other information available at the lease commencement date in determining the present value of the lease payments.

Immunic’s operating lease cost and variable lease costs were $12,000 and $10,000, for the three months ended March 31, 2019 and 2018, respectively. Variable lease costs consist primarily of common area maintenance costs, insurance and taxes which are paid based upon actual costs incurred by the lessor.

Maturities of the operating lease obligation are as follows as of March 31, 2019 (in thousands):



2019	$	22
2020	29
2021	29
Total lease payments	80
Less: interest portion	6
Present value of lease obligation	$	74

Contractual Obligations

As of March 31, 2019, the Company has non-cancelable contractual obligations under certain agreements related to its development programs IMU-838, IMU-935 and IMU-856 totaling approximately $0.7 million, all of which will be paid in 2019.

Other Commitments and Obligations

In November 2018, the Company signed an engagement letter with BMO Capital Markets Corp. ("BMO") subject to which BMO acts as exclusive financial advisor in connection with a possible acquisition. In exchange BMO receives a fee payable in respect of any transaction that is consummated and payable promptly on the closing thereof, equal to $1 million ("Transaction Fee"). In addition under certain conditions the agreement includes a fee of 20% of any transaction-related break-up fee. As noted above, in January 2019, Immunic entered into an Exchange Agreement with Vital which was completed as of April 12, 2019. As a result, the Transaction Fee amounting to $1 million was subsequently paid to BMO.

In May 2016 the Company entered into a purchase agreement (the "Agreement") with 4SC AG whereby the Company acquired certain assets including the rights to patents and patent applications, trademarks and know-how. This transaction has been accounted for as an asset acquisition under Update 2017-01 - Business Combinations (Topic 805): Clarifying the Definition of a Business ("ASC805"). The Agreement included payments (Tranches III and IV) that were contingent upon the

F- 13

occurrence of certain events. The arrangement required the Company to pay royalties equal to 4.4% of the aggregated net sales for a certain period as defined in the Agreement (Tranche III) upon commercialization of the assets. As of April 12, 2019, the parties agreed to settle Tranche IV by transferring 120,070 shares of the Company’s common stock, immediately following the merger Transaction on a post-reverse stock split basis, to 4SC AG while keeping Tranche III in effect. No royalties are payable as of March 31, 2019 or December 31, 2018 as sales have not commenced.

Legal Proceedings

4. Preferred Stock

The Company issued 13,541 Series A-1 and 299,456 Series A-2 preferred shares, par value €1.00 per share, to investors as part of its growth financing plan in the total amount of €31.7 million (approximately $37.2 million) from inception (2016) through 2018. During the three months ended March 31, 2018, the Company raised $12.6 million in cash in connection with Series A-2 preferred shares.

The general terms of the Preferred Shares are as follows:


•	Voting rights: Holders of the Preferred Shares are entitled to one vote for each Preferred Share held by them. All shares rank equally as to voting and other matters. For shareholders’ meeting resolutions “special majority” (60% or more of shares) is required.

•

Liquidation preference: In the event of any sale of 50% or more of the Company’s shares, disposal of its tangible and intangible assets or swap, contribution or merger of its shares, as applicable, after payment or provision for payment of the debts and liabilities of the Company, holders of the Preferred Shares will be entitled to a preference payment of 1.5 times their amount invested on any of the preferred shares included in the transaction increased by 6% per annum on each such share (so-called liquidation dividend). In case the proceeds are not sufficient to satisfy all amounts, the entire proceeds shall be divided between the holders of the Preferred Shares in proportion of the maximum amounts they are entitled to as per the aforementioned clause. Any proceeds in excess of the preference payments, up to the amount of €3,000,000, will then be distributed to the holders of Common Stock. Any exceeding amount will be divided between all shareholders pro rata to the number of shares included in the transaction.


•	Conversion into common shares: Each holder of the Preferred Shares is entitled to demand any time and from time to time the conversion of his Preferred Shares into Common Shares in whole or part on a one-for-one basis.


•	Dividends: The Preferred Shares do not have dividend rights.

5. Common Stock

The Company, a non-public company as of the balance sheet date, has authorized 50,000 shares of common stock, par value €1.00 per share, which were paid in March 2016 at approximately $56,000. Common shares confer upon the holders thereof the right to receive notice of, participate in, and vote at general shareholder meetings of the Company. Holders also have the right to receive cash and stock dividends, if declared or upon dissolution, subject to the preferential rights of the holders of the series of preferred shares.

F- 14

As explained below, on March 27, 2019, the general shareholders meeting has resolved to convert all outstanding Series A-1 and Series A-2 preferred shares into common share. Under German law a capital increase is valid as soon as the consummation of the capital increase has been officially registered with the commercial register. The consummation of the capital increase was registered in the commercial register on April 3, 2019.

Stock Subscription Not Yet Issued

On March 27, 2019, the shareholders’ meeting resolved to increase the Company’s share capital by issuing an additional 156,920 common shares, par €1.00 per share, of which 27,176 shares are related to the stock bonus for executive officers of the Company. Under German law a capital increase is valid as soon as the consummation of the capital increase has been officially registered with the commercial register. The consummation of the capital increase was registered in the commercial register on April 3, 2019. Therefore, the capital increase became effective subsequent to March 31, 2019. All cash payments totaling €18.2 million (approximately $20.5 million) received as a result of this capital increase have been classified as restricted cash and stock subscription not yet issued in the Company’s unaudited condensed consolidated balance sheet as of March 31, 2019.

6. Stock-Based Compensation Plans

Stock Option Programs

Under the stock option program for the members of the Supervisory Board (the “VSOP SB”), the Company may grant stock options of the Company to members of the Company’s Supervisory Board for the time period of their service as members of the Company’s Supervisory Board. The shareholders’ meeting approved the VSOP SB with a total of 1,840 stock options, corresponding to approximately 0.5% of the Company’s issued share capital at the time of the decision, of which 460 were granted as of March 31, 2019. Under the stock option program for key employees (the “VSOP”), the Company may grant stock options of the Company to certain key employees. With the approval of the Supervisory Board, the Management Board shall determine how many stock options shall be granted and how they shall be allocated to the respective beneficiaries. The Company intends to issue a total of up to 1,840 stock options of which 299 stock options were granted as of March 31, 2019.

Further terms and conditions of both programs, the VSOP SB and the VSOP, are substantially similar. The following information is therefore shown aggregated for both programs. The stock options vest if and when an exit event occurs, i.e. a direct initial public offering has taken place, or an indirect initial public offering has taken place, or a trade sale has been consummated, or a disposal of the Company’s assets has been consummated, or another financially equivalent circumstance has been consummated where the previous shareholders of the Company are put in the same position as in the aforementioned cases and a realization has occurred. The Company accounts for both programs as cash-settled options and will classify their fair value as a liability upon vesting. As the vesting of the VSOP SB and VSOP options is contingent upon an exit event whose occurrence is not probable as of March 31, 2019, the Company has recorded no compensation expense related to its stock options as of March 31, 2019.

Movements during the year

The following table illustrates the number and weighted average exercise prices of, and movements in, stock options during the three months ended:

F- 15



	March 31, 2019			March 31, 2018
	Options	Exercise Price		Options	Exercise Price
Outstanding as of January 1	404	$	0.00	260
Granted during the period	355	$	0.00	—	$	0.00
Forfeited during the period	—			—
Exercised during the period	—			—
Expired during the period	—			—
Outstanding at March 31	759	$	0.00	260	$	0.00
Exercisable at March 31	—			—

In addition to the 759 stock options outstanding at March 31, 2019, Immunic granted 1,519 shares in April of 2019 for a total of 2,278 stock options under both stock option programs. Compensation expense of €449,000 (approximately $503,000) related to the stock option grants will be recognized upon consummation of the exit event on April 12, 2019, therefore, no expense was recognized during the three months ended March 31, 2019 and 2018, respectively. There were no cancellations or modifications to the awards in 2019 or 2018.

The remaining contractual life for the stock options was not limited.

Measurement

The fair value of the Company’s stock of €197.24 was determined based on negotiation with investors participating in the Financing as noted above.

The fair value of the zero-cost option granted in course of the VSOP SB and the VSOP equals the fair value of the underlying stock (assuming no dividends).

Executive bonus agreement

The agreements qualify and are accounted for as equity-settled share-based payments. In total 27,176 shares were granted in December 31, 2018, and the fair value of each share granted was €197.24 as of March 31, 2019. The shares will vest and compensation cost of €5.3 million (approximately $6 million) will be recognized upon the consummation of the exit event which occurred on April 12, 2019.

F- 16

Exhibit 99.4

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On January 6, 2019, Vital Therapies, Inc., or Vital Therapies, a Delaware corporation, and Immunic AG, or Immunic, a stock corporation formed under the laws of Germany focused on developing novel oral therapies for chronic inflammatory and autoimmune diseases, entered into a definitive agreement, or the Exchange Agreement, pursuant to which and subject to, among other things, the satisfaction or waiver of the conditions set forth in the Exchange Agreement, Vital Therapies acquired all of the outstanding shares of Immunic in exchange for newly-issued shares of Vital Therapies in an all-stock transaction, or the Transaction. The exchange, or the Merger, constituted a transaction qualifying for federal income tax purposes as a tax-free exchange under the provisions of Section 351(a) of the Internal Revenue Code of 1986, as amended. The Merger closed on April 12, 2019.

Subject to the terms and conditions of the Exchange Agreement, at the effective time of the exchange, or the Effective Time, (a) each holder of Immunic’s outstanding shares contributed and transferred by assignment all of the Immunic shares held by such holder in exchange for Vital Therapies’ common stock based on the exchange ratio described below. Immediately following the exchange, Immunic AG is a wholly-owned subsidiary of Vital Therapies and the name of Vital Therapies changed from “Vital Therapies, Inc.” to “Immunic, Inc.”

Under the exchange ratio provided in the Exchange Agreement, as of and immediately after the Merger, the Immunic security holders own 88.25% of the aggregate number of shares of Immunic Inc.'s common stock issued and outstanding plus any common stock equivalent outstanding on the Effective Date, or the Post-Closing Shares, and the stockholders of Vital Therapies own 11.75% of the aggregate number of Post-Closing Shares, as of the Effective Date. The aggregate consideration issuable in the Transaction, after giving effect to the reverse stock split, was 8,927,130 shares of Vital Therapies common stock.

Concurrent with Immunic’s entry into the Exchange Agreement, certain of Immunic’s existing security holders entered into an Investment and Subscription Agreement to purchase shares of Immunic’s common stock in a private financing prior to consummation of the Transaction for an aggregate purchase price of $30.0 million, referred to as the Pre-Closing Financing.

The following unaudited pro forma condensed combined financial information gives effect to the exchange of all of the outstanding shares of Immunic AG for newly-issued shares of Vital Therapies in the Transaction, pursuant to the Exchange Agreement between the companies, and were prepared in accordance with the regulations of the Securities and Exchange Commission, or the SEC. Immunic was determined to be the accounting acquirer based upon the terms of the Transaction and other factors including: (i) Immunic’s security holders own over 80% of the company, (ii) Immunic directors hold a majority of the board seats in the company, and (iii) Immunic management hold all key positions in the management of the combined company, immediately following the closing of the Transaction.

In the unaudited pro forma condensed combined financial statements, the Transaction is recorded as a business combination using the acquisition method of accounting under accounting principles generally accepted in the United States, or “U.S. GAAP”. The Transaction is accounted for as a reverse acquisition under the accounting guidance and Immunic, as the accounting acquirer, recorded the assets acquired and liabilities assumed of Vital Therapies in the Transaction at their fair values as of the acquisition date. Vital Therapies and Immunic have determined a purchase price calculated as described in Note 3 to the unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined balance sheet as of March 31, 2019 gives effect to the Transaction as if it took place on March 31, 2019 and combines the historical balance sheets of Vital Therapies and Immunic as of such date. The unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2019 and for the year ended December 31, 2018 gives effect to the Transaction as if it took place on January 1, 2019, and 2018, respectively, and combines the historical results of Vital Therapies and Immunic for each period. The historical financial statements of Vital Therapies and Immunic have been adjusted to give pro forma effect to events that are (i) directly attributable to the Transaction, (ii) factually supportable, and (iii) with respect to the unaudited pro forma condensed combined statements of operations, at the date hereof are expected to have a continuing impact on the combined companies’ results.

Immunic has not completed the detailed valuations necessary to estimate the fair value of the assets acquired and the liabilities assumed from Vital Therapies and the related allocations of purchase price. Additionally, a final determination of the fair value of assets acquired and liabilities assumed from Vital Therapies will be based on the actual net tangible and intangible assets and liabilities of Vital Therapies that existed as of the closing date. Accordingly, the pro forma purchase price adjustments presented herein are preliminary. Immunic estimated the fair value of Vital Therapies' assets and liabilities based on discussions with Vital Therapies' management, due diligence and preliminary work performed by third-party valuation specialists. As the final valuations are being

performed, increases or decreases in the fair value of relevant balance sheet amounts will result in adjustments, which may result in material differences from the information presented herein.

The unaudited pro forma condensed combined financial information does not give effect to the potential impact of current financial conditions, regulatory matters, operating efficiencies or other savings or expenses that may be associated with the integration of the two companies, if any. The unaudited pro forma condensed combined financial information is preliminary and has been prepared for informational purposes only and is not necessarily indicative of the financial position or results of operations in future periods or the results that actually would have been realized had Vital Therapies and Immunic been a combined company during the specified periods.

IMMUNIC AG

Unaudited Pro Forma Condensed Combined Balance Sheet

March 31, 2019

(in thousands)



	Vital Therapies			Immunic U.S. GAAP Adjusted			Pro Forma Adjustments			Note	Pro Forma Combined
Assets
Current assets
Cash and cash equivalents	$	9,595		$	7,593		$	30,026		A	$	47,214
Restricted cash	—			20,426			(20,426		)	A	—
Prepaid expenses and other current assets	393			502			1,000			B	1,895
Total current assets	9,988			28,521			10,600				49,109
Property and equipment, net	482			41			—				523
Other assets	12			74			(12		)	H	74
Intangible assets, net	—			—			—				—
In process research and development	—			—			702			C	702
Goodwill	—			—			34,568			D	34,568
Total assets	$	10,482		$	28,636		$	45,858			$	84,976
Liabilities, Preferred Stock and Stockholders’ Equity/(Deficit)
Current liabilities:
Accounts payable	$	184		$	511		$	—			$	695
Accrued expenses and other current liabilities	1,249			655			7,447			E	9,351
Total current liabilities	1,433			1,166			7,447				10,046
Long term liabilities	—			48			—				48
Series A-2 Convertible preferred stock, €1.00 par value, 299,456 shares authorized, issued and outstanding at March 31, 2019 and December 31, 2018, Liquidation Preference €47,465 ($53,237) at March 31, 2019	—			34,313			(34,313		)	A	—
Series A-1 Convertible preferred stock, €1.00 par value,13,541 authorized, issued and outstanding at March 31, 2019 and December 31, 2018, Liquidation Preference €4,438 ($4,978) at March 31, 2019	—			2,879			(2,879		)	A	—
Stockholders’ equity/(deficit):
Common Stock	4			56			(56		)	G	—
							(4		)	G	—
Additional paid-in capital	355,874			—			30,026			A	115,527
							34,313			A
							2,879			A
							8,853			F
							(316,418		)	G
Stock subscription not yet issued	—			20,531			(20,531		)	A	—
Accumulated other comprehensive income	80			(1,066		)	(80		)	G	(961		)
							105			A
Accumulated deficit	(346,909		)	(29,291		)	(1,540		)	E	(39,684		)
							(8,853		)	F
							346,909			G
Total stockholders’ equity/(deficit)	9,049			(9,770		)	75,603				74,882
Total liabilities, preferred stock and stockholders’ equity/(deficit)	$	10,482		$	28,636		$	45,858			$	84,976

See accompanying notes to the unaudited pro forma condensed combined financial statements.

IMMUNIC AG

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Three Months Ended March 31, 2019

(in thousands, except share and per share amounts)



	Vital Therapies			Immunic U.S. GAAP Adjusted			Pro Forma Adjustments			Note	Pro Forma Combined			Note
Operating Expenses:
Research and development	$	494		$	3,355		$	—			$	3,849
General and administrative	2,690			1,307			—				3,997
Severance costs	6,369			—			—				6,369
Total operating expenses	9,553			4,662			—				14,215
Loss from operations	(9,553		)	(4,662		)	—				(14,215		)
Other income (expense):
Interest income (expense), net	62			—			—				62
Other income (expense), net	(2		)	349			—				347
Total other income (expense)	60			349			—				409
Net loss	$	(9,493	)	$	(4,313	)	$	—			$	(13,806	)

Net loss per share, basic and diluted	$	(0.22	)	$	(86.26	)	$	—			$	(1.38	)

Weighted-average common shares outstanding, basic and diluted	43,714,626			50,000			(390,772,012		)		10,019,795			I

See accompanying notes to the unaudited pro forma condensed combined financial statements.

IMMUNIC AG

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2018

(in thousands, except share and per share amounts)



	Vital Therapies			Immunic U.S. GAAP Adjusted			Pro Forma Adjustments			Note	Pro Forma Combined			Note
Operating Expenses:
Research and development	$	24,825		$	9,595		$	(1,000	)	B	$	33,420
General and administrative	13,585			2,402			—				15,987
Severance costs	2,395			—			—				2,395
Impairment loss	1,219			—			—				1,219
Total operating expenses	42,024			11,997			(1,000		)		53,021
Loss from operations	(42,024		)	(11,997		)	1,000				(53,021		)
Other income (expense):
Interest income (expense), net	521			(1		)	—				520
Other income (expense), net	28			456			—				484
Total other income (expense)	549			455			—				1,004
Net loss	$	(41,475	)	$	(11,542	)	$	1,000			$	(52,017	)

Net loss per share, basic and diluted	$	(0.98	)	$	(230.84	)	$	—			$	(5.21	)

Weighted-average common shares outstanding, basic and diluted	42,369,245			50,000			(389,460,265		)		9,986,161			I

See accompanying notes to the unaudited pro forma condensed combined financial statements.

Notes to the Unaudited Pro Forma Condensed Combined Financial Information

1. Description of the Transaction

On January 6, 2019, Vital Therapies, Inc., a Delaware corporation, and Immunic AG, a stock corporation formed under the laws of Germany focused on developing novel oral therapies for chronic inflammatory and autoimmune diseases, entered into a definitive agreement, or the Exchange Agreement, pursuant to which and subject to, among other things, the satisfaction or waiver of the conditions set forth in the Exchange Agreement, Vital Therapies acquired all of the outstanding shares of Immunic in exchange for newly-issued shares of Vital Therapies in an all-stock transaction, or the Transaction. The exchange constituted a transaction qualifying for federal income tax purposes as a tax-free exchange under the provisions of Section 351(a) of the Internal Revenue Code of 1986, as amended. The Merger closed on April 12, 2019.

Under the exchange ratio provided in the Exchange Agreement, as of and immediately after the merger, the Immunic security holders own 88.25% of the aggregate number of shares of the company’s common stock issued and outstanding plus any common stock equivalent outstanding on the Effective Date, or the Post-Closing Shares, and the stockholders of Vital Therapies own 11.75% of the aggregate number of Post-Closing Shares, as of the Effective Date.

In addition to other customary conditions, the Transaction required Vital Therapies’ stockholders to approve the issuance of shares to the Immunic security holders, and the amendment of Vital Therapies’ certificate of incorporation effected a reverse split of its shares and changed its name to Immunic, Inc.

2. Basis of Presentation

The accompanying unaudited pro forma condensed combined financial information was prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP, and pursuant to Article 11 of SEC Regulation S-X. The condensed combined pro forma financial position and results of operations of the combined companies is based upon the separate historical data of Vital Therapies and Immunic. Immunic’s historical financial statements were prepared under International Financial Reporting Standards as issued by the International Accounting Standards Board and converted to U.S. GAAP.

The accompanying unaudited pro forma condensed combined balance sheet as of March 31, 2019 is presented as if the Transaction had been completed on March 31, 2019. The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2019 and for the year ended December 31, 2018 gives effect to the Transaction as if it took place as of January 1, 2019, and 2018, respectively, and were prepared using the historical results of Vital Therapies and Immunic for the three months ended March 31, 2019, and for the year ended December 31, 2018, respectively.

Accounting Policies

During the preparation of the accompanying unaudited pro forma condensed combined financial information, management did not identify any material differences between Vital Therapies’ accounting policies and the accounting policies of Immunic.

3. Accounting for the Transaction

The management of Vital Therapies and Immunic have concluded that the Transaction represents a business combination pursuant to Financial Accounting Standards Board Accounting Standards Codification Topic 805, Business Combinations , or ASC 805. For accounting purposes, Immunic has been determined (i) to be the accounting acquirer based upon the terms of the Transaction and other factors including: (x) Immunic’s security holders own over 80% of the company immediately following the closing of the Transaction, (y) Immunic directors hold a majority board seats in the company, and (z) Immunic management hold all key positions in

the management of the combined company, and (ii) that the Transaction was accounted for as a reverse acquisition using the acquisition method of accounting for business combinations under the guidance of ASC 805. Accordingly, Immunic recorded the acquired assets and liabilities at their fair value as of the Transaction closing date.

A purchase price allocation has been used to prepare the pro forma adjustments in the unaudited pro forma condensed combined balance sheet. The final purchase price allocation will be determined when the final assets and liabilities and any asset sales are known, and detailed valuations and any other studies and calculations deemed necessary have been completed. The final purchase price allocation could differ materially from the preliminary purchase price allocation used to prepare the pro forma adjustments resulting from changes to assets and liabilities.

The purchase price, or the proportional value to be retained by the Vital Therapies stockholders and the holders of its common stock equivalents, has been based on the last reported sale price of Vital Therapies common stock on The Nasdaq Global Market on April 12, 2019. This preliminary purchase price is based on the aggregate number of shares of Vital Therapies’ common stock and common stock equivalents expected to be outstanding at the closing of the Transaction as summarized below (amounts in thousands, except share and per share amounts):



Estimated number of shares to be owned by Vital Therapies stockholders	47,469,694
Multiplied by the fair value per share of Vital Therapies commons stock	$	0.83
Estimated purchase price	$	39,400

Any excess of the purchase price over the estimated fair value of the net assets acquired will be recorded as goodwill on the balance sheet. Any excess of the estimated fair value of the net assets acquired over the purchase price paid will be recorded as a bargain purchase gain in the statement of operations.

The net tangible and intangible assets acquired and liabilities assumed in connection with the Transaction are recorded at their acquisition date fair values with the excess going to goodwill. The following summarizes an allocation of the purchase price as if the Transaction was completed on March 31, 2019:



Cash and cash equivalents	$	9,595
Prepaid expenses and other assets	1,393
Property and equipment	482
In-process research and development	702
Accounts payable, accrued expenses and other liabilities	(7,340		)
Net assets acquired	4,832
Less: preliminary purchase price	39,400
Goodwill	$	34,568

4. Pro forma adjustments

The pro forma adjustments, based on preliminary estimates that may change significantly as additional information is obtained, are as follows:



	A.	Adjustments to reflect an estimated $30.0 million in net proceeds from the sale of equity capital to be raised by Immunic as part of the Pre-Closing Financing prior to consummation of the Transaction, the issuance of Immunic shares in conjunction with such financing and the simultaneous conversion of Series A-2 and A-1 preferred shares into common shares.



	B.	Reflects the estimated fair value of inventory and supplies on hand at April 12, 2019 that had been expensed by Vital Therapies in accordance with U.S. GAAP.



	C.	To reflect the estimated fair value of indefinite-lived intangible assets associated with Vital Therapies’ ELAD System. These intangible assets would only be amortized over their respective estimated useful lives after approval, if any, by the FDA or other regulatory agencies.



	D.	Represents an adjustment to record goodwill resulting from the Transaction. Goodwill represents the excess of the preliminary estimated purchase price over the estimated fair value of Vital Therapies identified net assets.



	E.	To reflect the accrued liabilities that are transaction costs to be incurred by Immunic of $1.0 million for investment banking services and $0.5 million in legal and other expenses as well as by Vital Therapies of $2.2 million in severance, benefits and taxes, $1.3 million in investment banking services, $1.3 million in director and officer liability insurance and $1.1 million in legal and other expenses. These pro forma transaction costs are not reflected in the unaudited pro forma condensed combined statements of operations as these amounts are not expected to have a continuing effect on the operating results of the combined company.



	F.	Adjustment to reflect the acceleration of restricted stock units held by Vital Therapies officers on termination, the issuance of shares to Immunic officers as a transaction bonus and issuance of shares to 4SC AG in connection with agreement executed in April 2019 upon closing of Transaction.



	G.	To reflect (1) the elimination of Vital Therapies’ historical stockholders’ equity and (2) the issuance of Vital Therapies common shares in exchange for Immunic’s common and preferred shares to finance the acquisition.



	H.	Adjustment to reflect the fair value of other assets relating to Vital Therapies right-of-use asset in regard to its existing lease.



	I.	Reflects the pro forma weighted average shares outstanding, including the issuance of common shares to finance the Transaction after giving effect to the reverse stock split. See Note 5 below.

5. Earnings Per Share

Pro forma loss per share, basic and diluted, including pro forma impacts of the Merger, is calculated as follows:



	For the Three Months Ended March 31, 2019			For the Year Ended December 31, 2018
Basic and Diluted

Net loss, as originally reported	$	(9,493	)	$	(41,475	)
Pro forma net loss	(13,806		)	(52,017		)

Weighted average outstanding shares for the year, as originally reported	43,714,626			42,369,245
Pro forma adjustment - common shares issued to finance the transaction	357,077,181			357,077,181
Effect of 1 to 40 reverse stock split	(390,772,012		)	(389,460,265		)
Pro forma weighted average outstanding shares for the year	10,019,795			9,986,161
Basic and diluted loss per share, as originally reported	$	(0.22	)	$	(0.98	)
Pro forma basic and diluted loss per share	$	(1.38	)	$	(5.21	)

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Form 8-K IMMUNIC, INC. For: Jun 21

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