Inmune Bio, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. The filing is an annual report, not a standalone fourth-quarter report. U.S. dollars unless stated otherwise.
Business context
Inmune Bio is a clinical-stage biotechnology company developing therapies targeting innate immune dysfunction. Its principal programs are INKmune, an NK-cell priming therapy for cancer, and its DN-TNF platform: INB03 for cancer and XPro for Alzheimer’s disease (AD) and treatment-resistant depression (TRD). The company has no approved products and has generated no significant commercial revenue.
Financial performance and position
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $181,000 | $11,000 |
| Research and development expense | $20.543 million | $5.918 million |
| General and administrative expense | $8.791 million | $6.321 million |
| Net loss | $30.340 million | $12.099 million |
| Net loss per share, basic and diluted | $1.88 | $1.01 |
| Net cash used in operating activities | $28.504 million | $8.943 million |
- Revenue was from sales of mesenchymal stem cells (MSCs) to three customers in 2021, versus one customer in 2020; it remains immaterial relative to operating costs. Profitability and operating margins are not meaningful for this pre-commercial business.
- R&D expense rose by $14.625 million, primarily reflecting higher AD clinical and DN-TNF manufacturing costs, increased COVID-19 trial costs, and higher stock-based compensation. G&A increased by $2.470 million, including higher professional fees, compensation, and stock-based compensation.
- Cash and cash equivalents were $74.810 million at year-end, compared with $21.967 million a year earlier. Working capital was $78.2 million; accumulated deficit was $63.715 million.
- Long-term debt was $14.458 million net of discount, representing a $15 million SVB term loan. The rate was 7.75% at year-end; principal payments were scheduled to begin in July 2023, with maturity in January 2025. The loan includes a 6.5% final payment fee.
- Financing cash flow was $96.357 million, including $80.253 million net proceeds from common-stock sales and $14.951 million net debt proceeds. Shares outstanding increased from 13.48 million at year-end 2020 to 17.84 million at year-end 2021.
Material changes and unusual items
- Net loss increased $18.241 million year over year as operating expenses grew substantially, particularly R&D.
- In June 2021, the company paid Xencor $15 million and issued 192,533 shares to cancel a warrant previously giving Xencor an option to acquire 10% of the company on a fully diluted basis. The cash payment is shown as an investing outflow; the shares had a stated fair value of $3.3 million.
- The company recorded $1.187 million of other expense, primarily reflecting approximately $985,000 of term-loan interest expense. Stock-based compensation was $4.796 million.
- Management reported no material off-balance-sheet arrangements. The auditor issued an unqualified opinion on the financial statements; it did not attest to internal-control effectiveness.
Outlook, management commentary and risks
- Management stated that year-end cash was expected to fund operations for at least 12 months after the filing date. It also expects continuing losses and higher operating costs as clinical development advances; no product candidate was expected to be commercially available for at least several years, if ever.
- For XPro, the company planned Phase II trials in mild AD and mild cognitive impairment. The filing described anticipated AD-trial initiation in 2022 and expected late-2023 top-line data for the mild-AD study. A Phase II TRD study, supported by a $2.9 million NIMH award, was anticipated to begin in the second half of 2022, subject to final design and regulatory discussions.
- INKmune’s high-risk MDS Phase I trial had treated one patient by the filing date; the company reported preliminary biological and clinical observations from that single patient. An ovarian-cancer Phase I trial was planned for 2022. INB03 oncology Phase II initiation was not expected before 2023.
- The company discontinued its COVID-19 pulmonary-complications Phase II program during 2021, citing a less favorable risk-reward outlook as vaccines and treatments became available. It deferred its NASH program and terminated its UCL Business license related to MSC technology in August 2021.
- COVID-19 had delayed clinical-site initiation, enrollment, and supply activities. Other central risks include clinical-trial failure or delay, dependence on additional capital, potential shareholder dilution, competition, manufacturing and regulatory hurdles, patent and licensing risks, and reliance on key personnel and third parties.
- The INKmune license is with Immune Ventures, which is owned by company officers and directors, creating a disclosed related-party conflict risk. The company also disclosed related-party research, lease, and other transactions. It reported no material litigation.
Most important facts for investors to verify
- Cash runway assumptions against the rate of cash use, future trial costs, and financing needs; management’s runway statement is an estimate, not a guarantee.
- Clinical-trial status, enrollment, safety, and results—particularly the limited single-patient MDS observations and whether planned AD, TRD, ovarian-cancer, and INB03 studies proceeded on schedule.
- The terms and repayment economics of the SVB loan, including interest, final payment fee, covenants, and scheduled principal payments.
- The extent of dilution from 2021 equity issuance and outstanding options and warrants; reported options outstanding at year-end were 4.097 million.
- The Xencor option-cancellation accounting and related-party terms, as well as the company’s continuing obligations under its product licenses.
- R&D tax-credit receivables and eligibility: the filing states that UK incentives would not be available for expenditures incurred after 2021 under program changes.