Inmune Bio, Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Unaudited consolidated financial statements; dollar amounts below are in millions unless otherwise noted. Inmune Bio is a clinical-stage biotechnology company developing DN-TNF and natural killer cell therapies. It reported only limited revenue from MSC sales, not approved drug products.
Financial results and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | $0.098 | $0.014 | $0.277 | $0.018 |
| Research and development expense | $5.159 | $6.520 | $13.657 | $13.475 |
| General and administrative expense | $2.382 | $2.515 | $6.929 | $6.666 |
| Operating loss | $(7.443) | $(9.021) | $(20.309) | $(20.123) |
| Net loss | $(7.725) | $(9.458) | $(21.466) | $(20.669) |
| Basic and diluted loss per share | $(0.43) | $(0.55) | $(1.20) | $(1.33) |
| Net cash used in operating activities | Not presented for quarter | Not presented for quarter | $(16.991) | $(18.724) |
At September 30, 2022, cash and cash equivalents were $57.405 million, including $56.177 million in money market funds, down from $74.810 million at December 31, 2021. Current assets were $66.658 million and current liabilities $6.895 million; the company reported working capital of $59.8 million. Total assets were $83.800 million and total liabilities $20.094 million.
Term-loan principal was $15.0 million, with a $2.5 million current portion and $12.129 million long-term carrying amount net of discount and financing costs. The loan bore 10.75% interest at quarter-end; interest-only payments are due through July 1, 2023, followed by principal and interest payments, with maturity on January 1, 2025. The company reported compliance with loan covenants.
Changes versus prior comparable periods
- Q3 net loss narrowed by $1.733 million year over year, mainly as operating expenses fell $1.494 million; R&D expense was down $1.361 million, primarily due to lower Alzheimer’s and mild cognitive impairment trial costs.
- For the first nine months, net loss widened by $0.797 million despite revenue growth. Operating expenses increased $0.445 million and net other expense increased $0.611 million.
- Nine-month R&D expense rose modestly: higher Alzheimer’s/MCI trial costs and compensation, including stock-based compensation, were partly offset by lower costs for the terminated COVID-19 trial. G&A increased, mainly from compensation and stock-based compensation, partly offset by lower consulting expense.
- Operating cash use improved by $1.733 million year over year. Financing provided only $0.729 million in the first nine months of 2022, versus $96.357 million in 2021, when the company completed substantial equity offerings and received loan proceeds.
- Accumulated deficit increased to $85.181 million from $63.715 million at year-end 2021. Foreign currency translation reduced cash by $1.143 million during the first nine months.
Outlook, programs, risks and unusual items
- Management believes available cash will fund projected operating requirements for at least 12 months following the filing date. It expects continuing losses and cash use, likely increasing as development advances, and says additional financing will be needed. Financing may not be available on acceptable terms; a shortfall could delay, reduce or end programs.
- Clinical updates included enrollment underway in a Phase II mild Alzheimer’s trial, a planned Phase II MCI trial, and continued enrollment in a Phase I INKmune MDS/AML trial. The company planned a separate INKmune solid-tumor Phase I/II trial in the first half of 2023.
- The treatment-resistant depression Phase II trial remained subject to a clinical hold; trial design and FDA discussions were not complete. Management anticipated initiation after the hold is lifted.
- COVID-19 could continue to delay clinical-site initiation, enrollment and trial operations. The company also cited development, regulatory, manufacturing, foreign-exchange and financing uncertainties. It does not hedge foreign currency exposure.
- The UK recently changed its R&D tax incentive program; the company did not expect eligibility for incentives on qualifying expenses incurred beginning in 2022. The company recorded an $89,000 impairment of its La Jolla lease right-of-use asset during the nine months.
- The filing describes ordinary-course claims but no pending legal proceedings management believes would materially adversely affect the company. Management reported effective disclosure controls and no material change in internal control over financial reporting.
Key facts for investors to verify
- Whether the stated 12-month cash runway remains supportable given clinical spending, debt service and the need for additional capital.
- Progress, enrollment, timing and results for the Alzheimer’s, MCI, INKmune and treatment-resistant depression programs, including the status of the clinical hold.
- The expected timing and amount of cash interest and principal payments under the variable-rate term loan, and compliance with its covenants.
- Whether MSC sales are recurring and material; reported revenue remains very small relative to operating expenses.
- The effects of UK R&D incentive changes, currency movements and potential clinical-trial delays on cash needs and program timelines.