Inmune Bio, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Inmune Bio is a clinical-stage biotechnology company developing therapies targeting innate immune dysfunction. Its candidates remain in development; none is approved for sale. Unless otherwise noted, amounts below are in U.S. dollars.
Financial performance and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $43,000 | $98,000 | $127,000 | $277,000 |
| Research and development expense | $5.985 million | $5.159 million | $14.266 million | $13.657 million |
| General and administrative expense | $2.586 million | $2.382 million | $7.223 million | $6.929 million |
| Operating loss | $8.528 million | $7.443 million | $21.362 million | $20.309 million |
| Net loss | $8.563 million | $7.725 million | $21.600 million | $21.466 million |
| Net loss per share, basic and diluted | $0.48 | $0.43 | $1.20 | $1.20 |
Revenue came from sales of MSCs to one third party. The filing does not provide a clear gross margin or operating margin measure; revenue is small relative to operating expenses.
- At September 30, cash and cash equivalents were $41.813 million, down from $52.153 million at December 31, 2022. Current assets were $45.611 million and current liabilities were $14.356 million; reported working capital was $31.3 million.
- Cash used in operating activities was $8.579 million for the nine months, compared with $16.991 million in the prior-year period. Management attributed the lower use in part to collections of R&D tax credits and reductions in prepaid expenses; stock-based compensation of $5.489 million was a significant noncash expense.
- Debt principal was $12.5 million, of which $10.0 million was current. The loan bears a 13.0% rate at September 30, matures January 1, 2025, and includes a 6.5% final payment fee. The company repaid $2.5 million during the nine months. It reported compliance with debt covenants at quarter-end and filing date; prior covenant violations had been waived.
Material changes versus comparable periods
- Q3 revenue declined $55,000 year over year; nine-month revenue declined $150,000. Management said both periods’ revenue reflected MSC sales to one third party.
- Q3 operating expenses increased $1.030 million year over year, primarily from higher R&D expense. Nine-month operating expenses increased $903,000.
- Q3 net loss widened by $838,000, while the nine-month net loss increased by $134,000. Lower net other expense partly offset higher operating losses, with management citing increased interest income on money-market accounts.
- Nine-month R&D spending included $8.498 million of external costs for the Alzheimer’s program and $1.697 million for INKmune high-risk MDS/AML and prostate cancer programs. The filing attributes increased R&D expense mainly to INKmune, Alzheimer’s, and employee compensation, partly offset by lower costs in other programs and higher rebates.
Outlook, commentary, and risks
- Management believes September 30 cash will fund projected operating requirements for at least 12 months following the November 1, 2023 filing date. It expects continuing losses and cash needs, with losses and operating cash use expected to increase as development advances. Additional financing will be needed; availability and terms are uncertain.
- The company described an early Alzheimer’s Phase II trial as open in Australia, Canada, and the UK, with U.S. opening pending lifting of an FDA clinical hold. The treatment-resistant depression Phase II design and FDA discussions were ongoing, and initiation also depended on the hold being lifted.
- INKmune’s Phase I high-risk MDS/AML trial was continuing enrollment. The company said it intended to start a separate Phase I/II metastatic castration-resistant prostate cancer trial during 2024.
- The company disclosed that 75,697 ATM shares were sold after the related shelf registration statement had expired. Gross proceeds were approximately $799,000 and net proceeds approximately $775,000. Purchasers may have rescission rights, and the company could face enforcement actions, penalties, or fines. No claims or demands had been made by September 30; the shares were reclassified as temporary equity, and the ATM sales agreement was suspended in September.
- Key risks include clinical and regulatory uncertainty, the FDA hold, need for further financing, reliance on a small number of manufacturing vendors, competition, intellectual-property protection, and macroeconomic and geopolitical uncertainty. The filing says no pending legal proceeding is currently believed to have a material adverse effect.
Important facts for investors to verify
- Cash runway assumptions, expected development spending, and timing or terms of any additional financing.
- Status and scope of the FDA clinical hold, and whether it affects planned U.S. trials or trial timelines.
- Potential rescission claims or regulatory consequences arising from the ATM sales made after registration expiry.
- Debt repayment schedule, interest burden, final payment fee, and continued covenant compliance.
- Clinical enrollment, safety and efficacy evidence, and the timing and cost of planned trials across the Alzheimer’s, depression, cancer, and INKmune programs.