Inmune Bio, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. Dollar amounts below are in millions unless stated otherwise. Inmune Bio is a clinical-stage biotechnology company developing therapies targeting innate immune dysfunction; it has DN-TNF and natural-killer-cell platforms and has no significant commercial product revenue.
Financial performance and liquidity
| Metric | Q1 2022 | Q1 2021 |
|---|---|---|
| Revenue | $0.163 | $0.004 |
| Research and development expense | $4.309 | $2.491 |
| General and administrative expense | $2.332 | $2.061 |
| Operating loss | $(6.478) | $(4.548) |
| Net loss | $(6.903) | $(4.556) |
| Basic and diluted loss per share | $(0.39) | $(0.32) |
| Net cash used in operating activities | $(8.865) | $(5.092) |
- Revenue came from sales of mesenchymal stem/stromal cells to one third party. The filing does not report a meaningful commercial gross margin.
- Cash and cash equivalents were $66.729 at March 31, 2022, down from $74.810 at year-end 2021. Working capital was $73.8; accumulated deficit was $70.618.
- Long-term debt had a $15.0 face amount and $14.514 carrying value, net of discount. The loan bears 8.0% interest at quarter-end; interest-only payments are due through July 1, 2023, followed by monthly principal and interest through maturity on January 1, 2025. A 6.5% final payment fee applies. The company reported covenant compliance.
- Management said available cash should fund projected operating needs for at least 12 months after filing, while warning that losses and operating cash use are expected to rise as development advances.
Changes versus the prior-year quarter
- Revenue increased by $0.159 but remained small relative to operating expenses.
- R&D expense rose $1.818, primarily reflecting higher spending on mild Alzheimer’s disease (AD) and mild cognitive impairment (MCI) trials and higher compensation, partly offset by lower COVID-19 trial and manufacturing expenses.
- G&A expense increased $0.271, largely due to higher stock-based compensation. Total operating expenses rose $2.089, and net loss increased $2.347.
- Other expense rose to $0.425, principally because of interest on the loan obtained in June 2021. Operating cash use increased by $3.773 year over year.
- Q1 2022 financing provided $0.729, mainly from a $0.699 sale of 82,900 shares to officers and directors and $0.030 from warrant exercises. By comparison, Q1 2021 financing provided $28.464, largely from ATM share sales.
Outlook, developments, and risks
- AD: The Phase II mild AD trial enrolled its first patient in April 2022; the planned study includes 200 patients. Management expected top-line data in late 2023. A separate Phase II MCI trial is planned for 60 patients.
- Treatment-resistant depression: The planned Phase II trial design and FDA discussions were ongoing; the company anticipated authorization to initiate the trial in the second half of 2022.
- Oncology: INKmune’s Phase I high-risk MDS trial had treated one patient, with enrollment targeted for completion in 2022. A separate ovarian-cancer Phase I trial was planned to begin during 2022. A Phase II trial of INB03 in advanced MUC4-positive breast cancer was planned.
- The company deferred its NASH program because of a complex and evolving clinical and regulatory environment; it may resume or abandon the program.
- Management expects significant future R&D spending and continuing losses; product candidates may not reach commercialization for several years, if ever. Clinical development, enrollment, regulatory outcomes, manufacturing, and financing needs are uncertain.
- COVID-19 could delay trial site initiation or enrollment and disrupt patients, investigators, suppliers, or contract research organizations. The company also cited foreign-exchange exposure and does not currently hedge currencies.
- UK tax-relief rules changed; management did not expect eligibility for UK R&D incentives on qualifying expenditures incurred from 2022, although it expected to receive incentives for qualifying earlier expenditures.
- Commitments include potential license milestone and royalty payments. The INKmune license has development milestones, including Phase II initiation by October 29, 2023; failure may lead to renegotiation and possible termination or conversion to a non-exclusive license. The company disclosed ordinary-course claims but no pending proceedings it believed would materially harm the business.
- Stock-based compensation was $1.536 for the quarter; the company granted options covering 789,000 shares, with approximately $17.1 of unrecognized compensation cost. The related-party officer/director share purchase and stock-based compensation are notable equity and dilution considerations.
Important facts for investors to verify
- Cash runway assumptions and subsequent cash use relative to the stated 12-month runway.
- Clinical trial enrollment, regulatory progress, and the timing and outcome of the AD, MCI, depression, and oncology programs.
- Debt service, interest-rate exposure, final payment fee, and compliance with loan covenants.
- Expected receipt and effect of Australian and UK R&D tax incentives, including the UK rule change.
- Potential dilution from outstanding options and warrants, and the terms and governance context of related-party transactions.