Inmune Bio, Inc. — Form 10-Q Summary
Business context and reporting period
Quarterly report for the three and nine months ended September 30, 2019. Inmune Bio is a clinical-stage immunotherapy company developing programs targeting innate immune cells, including INKmune, INB03, XPro1595 and NeuLiv. The company reported no revenue and has no commercialized products.
Financial results and liquidity
| Metric | Q3 2019 | Q3 2018 | Nine months 2019 | Nine months 2018 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development expense | $1.17 million | $0.65 million | $2.42 million | $2.36 million |
| General and administrative expense | $1.92 million | $0.89 million | $4.55 million | $8.20 million |
| Net loss | $3.07 million | $1.54 million | $5.36 million | $10.56 million |
| Loss per share, basic and diluted | $0.28 | $0.18 | $0.53 | $1.22 |
- Nine-month operating cash use was $4.95 million, versus $1.60 million in 2018. Net cash from financing was $12.21 million, primarily equity proceeds. Cash and cash equivalents were $7.38 million at September 30, 2019, compared with $0.19 million at December 31, 2018.
- Current assets were $8.68 million and current liabilities $0.52 million. Total liabilities were $0.69 million, including $0.19 million in operating lease liabilities; the filing reports no conventional borrowings.
- Gross margin is not applicable because the company had no revenue. Nine-month R&D expense was broadly flat year over year, while Q3 R&D increased. The nine-month net loss narrowed, primarily reflecting lower stock-based compensation and a $1.54 million reversal tied to a consultant’s waiver of shares previously issuable.
Material changes, outlook and risks
- Q3 net loss increased year over year as R&D and G&A spending rose. Management attributed higher R&D to advancement of drug platforms and higher G&A largely to public-company costs.
- The company raised net proceeds of approximately $7.25 million in its February 2019 IPO and approximately $4.73 million in April–May stock sales. A Lincoln Park agreement permits, but does not require, the company to sell up to an additional $19.7 million of shares over the agreement term, subject to conditions and limits.
- Management disclosed substantial doubt about the company’s ability to continue as a going concern. It estimated existing cash and expected non-dilutive funding would support planned operations into the second quarter of 2020; continued operations depend on additional funding, for which there is no assurance. Product revenue is not expected for several years, if ever.
- Management expects R&D spending and operating losses to increase as development advances. It described planned development priorities including XPro1595 for Alzheimer’s disease, NeuLiv for NASH, and oncology programs; clinical and commercial success remains uncertain. The Alzheimer’s Association grant supported a Phase I trial, and further development would require additional funding.
- Potentially material obligations include license milestones and royalties, including INKmune and University of Pittsburgh license terms. No INKmune milestones had been met by quarter-end; the company reported a $50,000 University of Pittsburgh milestone payment in March 2019.
- Related-party transactions included research payments to CTI and UCL, and a new office sublease with CTI, which is majority-owned by a board member. The filing also identifies Novamune as owned by a significant shareholder.
- Management concluded disclosure controls and procedures were not effective as of September 30, 2019, citing the company’s small size and limited segregation of duties. No material adverse legal proceeding was reported as pending.
Important facts for investors to verify
- Cash runway assumptions, timing and availability of additional financing, including any future use of the Lincoln Park facility.
- Clinical-trial progress, costs, milestones and funding needs across the company’s development programs.
- Basis for the $1.54 million common-stock-issuable waiver reversal and the resulting year-over-year expense comparison.
- Related-party research and lease arrangements, associated balances, and any changes in those relationships or terms.
- Remediation of the disclosed ineffective disclosure controls and procedures.