INMUNE BIO, INC. Forward-Looking Statements
This Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "estimate" or "continue" or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.
Description of Business Overview
We are a clinical-stage immunology company focused on developing drugs that may reprogram the patient's innate immune system to treat disease. We believe this may be done by targeting cells of the innate immune system that cause acute and chronic inflammation and are involved in the immune dysfunction associated with chronic diseases such as cancer and neurodegenerative diseases. The Company's drugs are in clinical trials and have not been approved by a regulatory authority. The Company has two therapeutic platforms - dominant-negative TNF platform ("DN-TNF", "XPro™", "XPro1595™" or "pegipanermin") and the Natural Killer ("NK", or "INKmune™") platform. The DN-TNF platform neutralizes soluble TNF ("sTNF") without affecting trans-membrane TNF ("tmTNF") or TNF receptors -TNFR1 and TNFR2. This unique biologic mechanism differentiates the DN-TNF drugs from currently approved non-selective TNF inhibitors that inhibit both sTNF and tmTNF. Protecting the function of tmTNF and TNF receptors while neutralizing the function of sTNF is a potent anti-inflammatory strategy that does not cause immunosuppression or demyelination which occur in the currently approved non-selective TNF inhibitors. Currently approved non-selective TNF inhibitors treat autoimmune disease, but are contraindicated in patients with infection, cancer and neurologic diseases because they increase the risk of infection, cancer and demyelinating neurologic diseases, respectively; all the safety problems are due to off-target effects on inhibiting tmTNF. The NK platform targets the dysfunctional natural killer cells in patients with cancer. NK cells are part of the normal immunologic response to cancer with important roles in immunosurveillance to prevent cancer and in preventing relapse by eliminating residual disease. Residual disease is the cancer left behind after therapy is finished. Residual disease can grow to cause relapse. The mechanism by which INKmune improves the ability of the patient's NK cells to kill their cancer is complex. The NK cells of cancer patients lose the ability to bind and kill cancer cells. A measure of NK cell binding to cancer cells is avidity. The higher the avidity, the greater the bond between the NK cell to cancer cell and thus the greater NK killing of cancer cells. INKmune increase NK avidity and further improves mitochondrial function and upregulates nutrient receptors. These metabolic changes may help the INKmune primed NK cell to function in the hostile tumor microenvironment and persist much longer. These mechanisms improve the ability of INKmune primed NK cells to overcome the immune evasion of the patient's cancer cells. We believe INKmune is best used to eliminate residual disease after the patient has completed other cancer therapies. Both the DN-TNF platform and the INKmune platform can be used to treat multiple diseases. The DN-TNF platform will be used as an immunotherapy for the treatment of cancer and neurodegenerative disease. INKmune is being developed to treat NK sensitive hematologic malignancies and solid tumors.
We believe our DN-TNF platform can be used as a cancer therapy to reverse resistance in immunotherapy and as a CNS ("central nervous system") therapy to target glial activation to prevent progression of Alzheimer's disease ("AD"), and to target neuroinflammation in treatment resistant depression ("TRD"). The drug is named differently for the oncology and CNS indications; INB03™ or XPro™, respectively, but it is the same drug product. In each case, we believe neutralizing sTNF is a cornerstone to the treatment of these diseases. As an immunotherapy for cancer, we are using INB03 to neutralize sTNF produced by HER2+ trastuzumab resistant breast cancers to reverse resistance to targeted therapy. sTNF produced by the tumor causes an up-regulation of MUC4 express causing steric hindrance of trastuzumab binding to the HER receptor on HER2+ breast cancer cells. Without binding, trastuzumab is not effective. Neutralizing sTNF reverses MUC4 expression converting a trastuzumab resistant breast cancer cell into a trastuzumab sensitive breast cancer cell. In addition, INB03 changes the immunobiology of the tumor microenvironment by decreasing the number of immunosuppressive myeloid cells, both myeloid derived suppressor cells and tumor active macrophages, and increasing the number of cytotoxic lymphocytes and phagocytic macrophages in the TME. The Company has completed an open label dose escalation trial in cancer patients with metastatic solid tumors that have failed multiple lines of therapy. The trial informs the design of the Phase II trial by demonstrating that INB03 was safe and well tolerated, defined the dose of INB03 to carry into Phase II trials, and demonstrated a pharmacodynamic end-point. A Phase II trial is planned in patients with advanced MUC4+ expressing cancer.
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Likewise, we believe the DN-TNF platform can be used to treat selected
neurodegenerative diseases by modifying the brain microenvironment (BME). The
Company believes the core pathology of cognitive decline is a combination of
neurodegeneration and synaptic dysfunction. XPro completed a Phase I trial
treating patients with Alzheimer's disease that was partially funded by a
Part-the-Clouds Award from the
The successful completion of the Phase I trial in AD has informed the design of
two Phase II trials in patients with AD; one in mild AD and the other in mild
cognitive impairment (MCI). The mild AD trial will be a blinded randomized trial
to test if treatment of mild AD patients with neuroinflammation will affect
cognitive decline. The Phase II trial has six important elements. Two hundred
patients will be enrolled in a 2:1 ratio (XPro vs placebo). The patients will
receive 1mg/kg/week as a subcutaneous injection for six months. An enrichment
strategy identical to the successful strategy used in the Phase I trial will be
used to ensure patients have neuroinflammation. Patients will need to have one
or more enrichment criteria: elevated C-reactive protein, hemoglobin A1c,
erythrocyte sedimentation rated in the blood and at least one allele of ApoE4.
The primary end-point will be Early/mild Alzheimer's Cognitive Composite
("EMACC"), a validated cognitive measure that is more sensitive than traditional
end-points used in many studies of patients with early AD. The trial will be
performed in
The second Phase II trial will be a blinded randomized trial in patients with MCI in which the Company plans to enroll 60 patients in two arms in a 2:1 ratio (1mg/kg/week XPro, placebo). Patients will be treated for 3 months. Patients must have at least one ApoE4 allele to qualify for the trial. The primary end-point is EMACC, a sensitive cognitive end-point validated for use in patients with early AD. Secondary clinical endpoints include the CDR-SB, Cogstate Battery, E-Cog, NPI, and ADCS-ADL. Imaging endpoints of neuroinflammation (White matter free water), white matter integrity (apparent fiber density, radial diffusivity), and gray matter quality (cortical disarray measurement) will be assessed via MRI. Changes in brain metabolism will be assessed via FDG-PET. Additional secondary measures of function include EEG, and speech and language. All patients in both trials will be eligible to continue on XPro for at least 6 additional months. Clinical and MRI metrics will be followed during the extension trial. The Company may amend the clinical trial design from time-to-time to improve the quality of the data or the probability of success.
Effective therapy for TRD is a large unmet need. Twenty percent of patients with
a Major Depressive Disorder have TRD. Once third of TRD patients have peripheral
biomarkers to inflammation (elevated CRP). This is a large patient population.
The role of TNF and anti-TNF therapeutics was explored in a small open label
clinical trial by Prof.
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We believe that INKmune improves the ability of the patient's own NK cells to attack their tumor. INKmune interacts with the patient's NK cells to convert them from inert resting NK cells into memory-like NK cells that kill the patient's cancer cells. INKmune is a replication incompetent proprietary cell line that is given to the patient after determining that i) the patient has adequate NK cells in their circulation and ii) those NK cells are functional when exposed to INKmune in vitro. INKmune is designed to be given to patients after their immune system has recovered after cytotoxic chemotherapy to target the residual disease the remains after treatment with cytotoxic therapy. We believe INKmune can be used to treat numerous hematologic malignancies and solid tumors including leukemia, multiple myeloma, lymphoma, lung, ovary, breast, renal and prostate cancer. The Company has initiated a Phase I trial using INKmune to treat patients with high risk MDS/AML, a form of leukemia. One patient has been treated in the Phase I trial for MDS and two patients have been treated compassionately in AML. In the three patients, INKmune therapy is safe, produces memory-like NK cells that kill cancer in vitro, promotes development of cancer killing memory-like NK cells that can be found in the patient's circulation of 4 months. The Company will continue to enroll patients in the Phase I trial. The Company intends to initiate a separate Phase I trial of INKmune in a solid tumor late 2022 or early 2023.
Since our inception in 2015, we have devoted substantially all of our resources
to the discovery and development of our product candidates, including clinical
trials and preclinical studies as well as general and administrative support for
these operations. To date, we have generated no significant revenue. We have
incurred net losses in each year since our inception and, as of
The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company's business is highly uncertain and difficult to predict. Also, economies worldwide have also been negatively impacted by the COVID-19 pandemic, however policymakers around the globe have responded with fiscal policy actions to support the healthcare industry and economy as a whole. The magnitude and overall effectiveness of these actions remain uncertain.
In addition, the Company's clinical trials have been affected by and may continue to be affected by the COVID-19 pandemic. Clinical site initiation and patient enrollment have and may continue to be delayed due to prioritization of hospital resources toward the COVID-19 pandemic. Some patients have not and others may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services. Similarly, the ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may adversely impact the Company's clinical trial operations.
The severity of the impact of the COVID-19 pandemic on the Company's business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company's service providers, suppliers, contract research organizations ("CROs") and the Company's clinical trials, all of which are uncertain and cannot be predicted. As of the date of issuance of Company's financial statements, the extent to which the COVID-19 pandemic may materially impact the Company's financial condition, liquidity or results of operations is uncertain.
We classify our operating expenses into two categories: research and development; and general and administrative expenses. Personnel costs including salaries, benefits and stock-based compensation expense comprise a significant component of our research and development and general and administrative expense categories.
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We qualify as an "emerging growth company" under the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:
? only two years of audited financial statements in addition to any
required unaudited interim financial statements with correspondingly
reduced "Management's Discussion and Analysis of Financial Condition
and Results of Operations" disclosure;
? reduced disclosure about our executive compensation arrangements;
? no non-binding advisory votes on executive compensation or golden
parachute arrangements;
? exemption from the auditor attestation requirement in the assessment of
our internal control over financial reporting; and
? delaying the adoption of new or revised accounting standards that have
different effective dates for public and private companies until those
standards apply to private companies.
We have elected to take advantage of the above-referenced exemptions and we may
take advantage of these exemptions for up to five years or such earlier time
that we are no longer an emerging growth company. We would cease to be an
emerging growth company if we have more than
Research and Development
Research and development expense consists of expenses incurred while performing research and development activities to discover and develop our product candidates. This includes conducting preclinical studies and clinical trials, manufacturing development efforts and activities related to regulatory filings for product candidates. We recognize research and development expenses as they are incurred. Our research and development expense primarily consist of:
? clinical trial and regulatory-related costs;
? expenses incurred under agreements with investigative sites and
consultants that conduct our clinical trials;
? manufacturing and testing costs and related supplies and materials; and
? employee-related expenses, including salaries, benefits, travel and
stock-based compensation.
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We typically use our employee, consultant and infrastructure resources across our development programs. We track outsourced development costs by product candidate or development program, but we do not allocate personnel costs, other internal costs or external consultant costs to specific product candidates or development programs.
We participate, through our wholly-owned subsidiary in
We participate, through our wholly-owned subsidiary in the
Substantially all of our research and development expenses to date have been incurred in connection with our current and future product candidates. We expect our research and development expenses to increase significantly for the foreseeable future as we advance an increased number of our product candidates through clinical development, including the conduct of our planned clinical trials and manufacturing drug to be used in those clinical trials. The process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. The successful development of product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing or costs required to complete the remaining development of any product candidates. This is due to the numerous risks and uncertainties associated with the development of product candidates.
The costs of clinical trials may vary significantly over the life of a project owing to, but not limited to, the following:
? per patient trial costs;
? the number of sites included in the clinical trials;
? the countries in which the clinical trials are conducted;
? the length of time required to enroll eligible patients;
? the number of patients that participate in the clinical trials;
? the number of doses that patients receive;
? the cost of comparative agents used in clinical trials;
? the drop-out or discontinuation rates of patients;
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? potential additional safety monitoring or other studies requested by
regulatory agencies;
? the duration of patient follow-up;
? the efficacy and safety profile of the product candidate; and
? the cost of manufacturing, finishing, labelling and storage drug used
in the clinical trial.
We do not expect any of our product candidates to be commercially available for at least the next several years, if ever. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future, which may fluctuate significantly from quarter-to-quarter and year-to-year. We anticipate that our expenses will increase substantially as we:
? continue research and development, including preclinical and clinical
development of our existing product candidates;
? potentially seek regulatory approval for our product candidates;
? seek to discover and develop additional product candidates;
? establish a commercialization infrastructure and scale up our
manufacturing and distribution capabilities to commercialize any of our
product candidates for which we may obtain regulatory approval;
? seek to comply with regulatory standards and laws;
? maintain, leverage and expand our intellectual property portfolio;
? hire clinical, manufacturing, scientific and other personnel to support
our product candidates development and future commercialization
efforts;
? add operational, financial and management information systems and
personnel; and
? incur additional legal, accounting and other expenses in operating as a
public company.
General and Administrative Expenses
General and administrative expenses consist principally of payroll and personnel expenses, including stock-based compensation; professional fees for legal, consulting, accounting and tax services; overhead, including rent and utilities; and other general operating expenses not otherwise classified as research and development expenses.
Other income (expense)
Other expense consists primarily of interest expense incurred on debt.
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Results of Operations
Comparison of the Three Months Ended
The following table summarizes our results of operations for the periods
indicated:
Three Months Ended
June 30,
(in thousands) 2022 2021 Change
Revenues $ 16 $ - $ 16
Operating expenses:
Research and development 4,189 4,464 (275 )
General and administrative 2,215 2,090 125
Total operating expenses 6,404 6,554 (150 )
Loss from operations (6,388 ) (6,554 ) (166 )
Other expense (450 ) (101 ) 349
Net loss $ (6,838 ) $ (6,655 ) $ 183
Revenues
During the six months ended
General and Administrative
General and administrative expenses were approximately
Research and Development
Research and development expenses were approximately
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Other Expense
The Company's other expense is higher in 2022 due to the Company incurring
interest expense from a loan the Company obtained in
Comparison of the Six Months Ended
The following table summarizes our results of operations for the periods
indicated:
Six Months Ended
June 30,
(in thousands) 2022 2021 Change
Revenues $ 179 $ 4 $ 175
Operating expenses:
Research and development 8,498 6,955 1,543
General and administrative 4,547 4,151 396
Total operating expenses 13,045 11,106 1,939
Loss from operations (12,866 ) (11,102 ) (1,764 )
Other expense (875 ) (109 ) (766 )
Net loss $ (13,741 ) $ (11,211 ) $ (2,530 )
Revenues
During the six months ended
General and Administrative
General and administrative expenses were approximately
Research and Development
Research and development expenses were approximately
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Other Income (Expense)
The Company's other expense is higher in 2022 due to the Company incurring
interest expense from a loan the Company obtained in
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis.
We incurred a net loss of
Our primary uses of capital are, and we expect will continue to be, third-party clinical and preclinical research and development services, compensation and related expenses, professional fees, patent and other regulatory expenses and general overhead costs. We believe our use of CROs provides us with flexibility in managing our spending.
The Company incurs various expenses in
As a publicly traded company, we incur significant legal, accounting and other
expenses. In addition, the Sarbanes-Oxley Act of 2002, as well as rules adopted
by the
As of
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Common Stock - Issuance to Directors and Officers
During the six months ended
ATM Sales Agreement
During the six months ended
During
Cash Flows
The following table summarizes our cash flows for the periods indicated:
Six Months Ended
June 30,
(in thousands) 2022 2021Net cash and cash equivalents (used in) provided by: Operating activities
$ (13,624 ) $ (10,801 ) Investing activities - (15,000 ) Financing activities 729 43,415 Change in cash and cash equivalents (12,895 ) 17,614 Impact on cash from foreign currency translation (702 ) (61 ) Cash and cash equivalents, beginning of period 74,810 21,967 Cash and cash equivalents, end of period$ 61,213 $ 39,520 Operating Activities
Our cash used in operating activities was primarily driven by our net loss.
Operating activities used approximately
Operating activities used approximately
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Investing Activities
During the six months ended
Financing Activities
During the six months ended
During the six months ended
Critical Accounting Policies
Our discussion and analysis of our financial condition and results of operations
is based upon our unaudited consolidated financial statements, which have been
prepared in accordance with generally accepted accounting principles in
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