Inmune Bio, Inc. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. Inmune Bio is a clinical-stage biotechnology company developing DN-TNF and natural killer cell therapies. Its candidates are not approved for sale, and reported revenue is limited to sales of MSCs.
Financial results and liquidity
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Revenue | 2023: $46,000; 2022: $16,000 | 2023: $84,000; 2022: $179,000 |
| Research and development expense | 2023: $4.148 million; 2022: $4.189 million | 2023: $8.281 million; 2022: $8.498 million |
| General and administrative expense | 2023: $2.309 million; 2022: $2.215 million | 2023: $4.637 million; 2022: $4.547 million |
| Operating loss | 2023: $6.411 million; 2022: $6.388 million | 2023: $12.834 million; 2022: $12.866 million |
| Net loss | 2023: $6.501 million; 2022: $6.838 million | 2023: $13.037 million; 2022: $13.741 million |
| Basic and diluted loss per share | 2023: $0.36; 2022: $0.38 | 2023: $0.73; 2022: $0.77 |
| Operating cash flow | Not provided for the quarter | 2023: $(4.315) million; 2022: $(13.624) million |
At June 30, cash and cash equivalents were $47.825 million, down from $52.153 million at year-end 2022. Working capital was $39.6 million; accumulated deficit was $104.1 million. The six-month operating cash outflow was lower than the prior year partly because of cash receipts and changes in working capital, including a $6.2 million reduction in R&D tax-credit receivables. The company reported no positive operating cash flow.
Total debt principal was $15.0 million, with a 12.75% interest rate at June 30. The loan requires $5.0 million principal repayment in 2023 and $10.0 million in 2024; it matures January 1, 2025. The June 2023 amendment changed certain covenants. The company reported compliance at June 30 and the filing date, after receiving a waiver for specified non-financial covenant violations at December 31, 2022. Lease liabilities totaled $564,000.
Changes versus prior comparable periods
- For the quarter, net loss narrowed by $337,000, although operating loss increased $23,000. Lower net other expense, including interest income from money-market accounts, was the main contributor to the lower net loss.
- For the first half, net loss narrowed by $704,000 and operating expenses declined $127,000. Revenue fell $95,000, while R&D expense decreased $217,000 and G&A expense increased $90,000.
- Management attributed lower first-half R&D spending mainly to lower Alzheimer’s and preclinical/other program costs, partly offset by higher INKmune program costs, salaries, and stock-based compensation.
- First-half cash used in operations fell to $4.315 million from $13.624 million. This comparison reflects working-capital movements and timing of tax-credit receipts, not a comparable reduction in reported net loss.
Outlook, risks, and notable items
- Management believes cash on hand will fund projected operating requirements for at least 12 months after the filing date. It expects continuing losses and anticipates higher expenses and cash use as development advances; additional financing will be needed, with no assurance it will be available on acceptable terms.
- The Alzheimer’s Phase II trial was open in Australia and Canada; opening in the U.S. was contingent on lifting an FDA clinical hold. The company also anticipated a treatment-resistant depression Phase II trial after the hold is lifted and completion of trial design and FDA discussions. An INKmune Phase I/II trial in metastatic castration-resistant prostate cancer was planned, with first treatment expected about nine months after its May 2023 IND opening.
- Management cited clinical-development uncertainty, potential trial delays, financing needs, and foreign-exchange exposure. The company does not hedge foreign currencies. COVID-19-related effects on clinical operations were described as uncertain.
- Material securities-law contingency: The company disclosed that its Form S-3 shelf registration statement expired April 2, 2023, before 75,697 shares were sold under the ATM program through July 17 at an average $10.56 per share. The filing says the sales could be treated as unregistered, potentially giving purchasers rescission rights and exposing the company to regulatory enforcement, penalties, or fines. The company could not predict claims or amounts. A separate subsequent-events note reports approximately $775,000 net proceeds from July sales.
- The company reported no pending legal proceeding believed to have a material adverse effect. It received no proceeds from the NIH grant of up to $2.9 million as of June 30. Stock-based compensation was $3.6 million for the first half; 5.501 million options were outstanding at June 30.
Key facts investors should verify
- Current status and financial/legal resolution of the ATM sales made after the S-3 expired, including any rescission claims, penalties, or corrective filings.
- Whether the company maintains sufficient liquidity as trial spending rises, and the timing and terms of any required financing.
- Debt repayment capacity, the effect of the 12.75% borrowing rate, and continued compliance with loan covenants.
- Status of the FDA clinical hold and progress, enrollment, and funding for the Alzheimer’s, depression, and INKmune trials.
- Timing and collectability of R&D tax-credit reimbursements and the impact of working-capital timing on operating cash flow.