Inmune Bio, Inc. — Q3 2020 Form 10-Q
Business and period: Clinical-stage biotechnology company developing DN-TNF and natural-killer-cell therapies. This unaudited report covers the three and nine months ended September 30, 2020; the comparable periods are 2019. The company reported no revenue and has no commercialized products.
Financial performance and liquidity
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| General and administrative expense | $2.46 million | $1.92 million | $4.96 million | $4.55 million |
| Research and development expense | $2.36 million | $1.17 million | $4.06 million | $2.42 million |
| Net loss | $4.72 million | $3.07 million | $8.89 million | $5.36 million |
| Basic and diluted loss per share | $0.36 | $0.28 | $0.77 | $0.53 |
Margins are not meaningful because the company had no revenue. For the first nine months, operating cash use was $6.55 million, versus $4.95 million in 2019. Financing provided $23.90 million, primarily from equity issuance. Cash and cash equivalents were $24.31 million at September 30, up from $7.00 million at December 31, 2019.
Working capital was $24.66 million and accumulated deficit was $30.17 million. Total liabilities were $1.61 million, including $156,226 of related-party operating lease liabilities; the filing reports no conventional borrowings. Total assets were $42.82 million, including $16.51 million of acquired in-process R&D intangible assets.
Changes and notable items
- Q3 net loss increased by $1.65 million year over year; nine-month net loss increased by $3.53 million. R&D spending rose as the company advanced its programs and incurred DN-TNF manufacturing costs.
- Q3 G&A expense rose by about $0.54 million, reflecting higher professional fees and stock-based compensation, partly offset by lower investor-relations expense.
- The 2019 nine-month comparison included a $1.54 million expense reversal after a consultant waived shares owed; there was no similar item in 2020.
- In July, the company sold 2.5 million shares at $10 per share in an underwritten offering, raising about $23.1 million net. ATM and Lincoln Park stock sales also raised funds; common shares outstanding reached 13,447,948 at September 30.
- Other income included an approximately $0.1 million refund from a third-party vendor under a settlement agreement. The company recorded $2.41 million of stock-based compensation for the nine months.
Outlook, risks and contingencies
Management believed September 30 cash would fund projected operating requirements for at least 12 months after filing. It expects continued losses and higher spending as clinical and preclinical development advances; it does not expect products to be commercially available for at least several years, if ever. No specific financial forecasts were provided.
Planned development includes trials or studies involving INB03 for HER2-positive breast cancer, XPro1595 for Alzheimer’s disease and treatment-resistant depression, LIVNate for NASH, Quellor for COVID-19 complications, and INKmune for cancers. These are plans, not assurances of trial initiation, enrollment, results, or regulatory approval. COVID-19 could delay site initiation, enrollment, and trial operations.
The company disclosed that its disclosure controls and procedures were not effective at September 30, 2020, citing its small size and limited segregation of duties; it engaged an accounting consultant to help address the issue. Management reported no material change in internal control over financial reporting during the quarter. No pending legal proceeding was identified as likely to have a material adverse effect. The filing also describes license milestones, royalties, and related-party arrangements, including office space leased from a company majority-owned by a board member.
Investor verification points
- Track cash burn, clinical-development spending, and whether the stated 12-month liquidity outlook remains achievable.
- Verify progress, enrollment, timelines, and results for planned or ongoing clinical programs, including potential COVID-19-related delays.
- Assess the dilution and availability of future equity financing, including remaining Lincoln Park capacity and outstanding options and warrants.
- Monitor resolution of the ineffective disclosure-controls finding and the company’s related-party lease and research arrangements.
- Confirm grant funding and reimbursement timing; the NIH award was up to $2.9 million, with no proceeds received as of September 30, 2020.