Inmune Bio, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Inmune Bio is a clinical-stage biotechnology company developing therapies through its DN-TNF and natural killer cell (INKmune) platforms. Its product candidates are investigational and have not been approved by regulators.
Financial performance and position
| Metric | Q1 2023 | Q1 2022 / comparison |
|---|---|---|
| Revenue | $38,000 | $163,000 |
| Research and development expense | $4.133 million | $4.309 million |
| General and administrative expense | $2.328 million | $2.332 million |
| Net loss | $6.536 million | $6.903 million |
| Net loss per share, basic and diluted | $0.36 | $0.39 |
| Cash used in operating activities | $1.141 million | $8.865 million |
- At March 31, cash and cash equivalents were $51.003 million; working capital was $46.6 million. Total assets were $73.979 million and stockholders’ equity was $55.296 million.
- Debt had $15.0 million of principal outstanding and a $14.764 million net carrying value. The interest rate was 12.5%; principal and interest payments were scheduled to begin July 2023, with maturity on January 1, 2025.
- Operating cash use was lower year over year, substantially reflecting collection of research and development tax credits and other working-capital movements, rather than a comparable reduction in net loss. The company received $2.710 million from the UK and $3.763 million from Australia in R&D tax reimbursements during the quarter.
- Stock-based compensation was $1.737 million, a significant noncash expense. The company reported no financing cash inflow in Q1 2023.
Material changes versus the prior comparable period
- Revenue declined by $125,000. Management attributed revenue in both periods to sales of MSCs to one third party.
- R&D expense decreased by $176,000, principally from lower Alzheimer’s clinical-program and preclinical/other-program costs, partly offset by higher INKmune costs and personnel-related costs.
- Net loss improved by $367,000, including a $312,000 reduction in net other expense, which management attributed to interest income on money-market accounts partly offsetting debt interest expense.
- Cash and cash equivalents decreased from $52.153 million at year-end 2022 to $51.003 million at March 31, 2023. The R&D tax-credit receivable fell from $8.099 million to $1.814 million, mainly reflecting reimbursements received.
Outlook, management commentary, and risks
- Management believes available cash will fund projected operating requirements for at least 12 months following the filing date. It expects continuing and potentially increasing losses and says additional financing will be needed to fund operations and planned trials; financing may not be available on acceptable terms.
- The Alzheimer’s Phase II trial was open in Australia and Canada; opening in the US was subject to lifting an FDA clinical hold. The planned treatment-resistant depression Phase II trial was also awaiting the hold’s resolution, with final design and FDA discussions not complete.
- The company reported a Phase I INKmune study underway in high-risk MDS/AML and intended to initiate a separate prostate-cancer trial in 2024. It reported submitting an IND for that trial in late March 2023. Management described early patient observations as encouraging, but these remain limited clinical data.
- On April 17, 2023, after quarter-end, the company amended the INKmune license agreement to remove clinical-trial and filing timeline requirements. Other license terms remained in force.
- The company disclosed that it had violated certain nonfinancial debt covenants at December 31, 2022, received a lender waiver during Q1, and was in compliance at March 31, 2023. A breach or other specified event could allow lenders to accelerate repayment.
- Key risks include clinical and regulatory uncertainty, trial delays and enrollment challenges, the need for substantial future financing, foreign-currency exposure, and the possibility that development or commercialization will not succeed. Management cited potential COVID-19-related effects on trials and operations. The filing says ordinary-course claims may arise but identifies no pending legal proceeding believed to have a material adverse effect.
Important facts for investors to verify
- Whether the FDA clinical hold is lifted and the resulting timing and scope of Alzheimer’s and depression trials.
- Whether the $51.0 million cash balance and management’s 12-month runway estimate remain adequate as trial spending increases.
- Debt-payment obligations beginning in July 2023, the 12.5% rate, and continued compliance with loan covenants.
- Timing and collectability of remaining R&D tax-credit receivables and the sustainability of reimbursement-related cash-flow benefits.
- Potential dilution: 17,945,995 common shares were outstanding at March 31, 2023; the filing reported 5,441,000 options and 74,074 warrants outstanding.