Greetings, and welcome to the INmune Bio Second Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. As a reminder, this conference is being recorded. A transcript will follow within 24 hours of this conference call. At this time, it's my pleasure to introduce Mr. David Moss, CFO of INmune Bio. David?

Thank you, operator, and good afternoon, everyone. We thank you for joining us for the call for INmune Bio's second quarter 2024 financial results. With me on the call today are Dr. RJ Tesi, CEO and Co-Founder of INmune Bio; and Dr. Mark Lowdell, Chief Scientific Officer and Co-Founder of INmune Bio, who will provide an update on INKmune, our memory-like natural killer cell oncology platform. Also on the call is Dr. CJ Barnum, Head of Neuroscience, who will provide some details on our ongoing Phase II Alzheimer's study. Before we begin, I remind everyone that except for statements of historical facts, the statements made by management and responses to questions on this conference call are forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that can cause actual results to differ materially from those such as forward-looking statements. Please see the forward-looking statements disclaimers on the company's earnings press release as well as risk factors in the company's SEC filings, including our most recent quarterly filing with the SEC. There is no assurance of any specific outcome. Undue reliance should not be placed on forward-looking statements, which speak only as to the date they are made as the facts and circumstances underlying these forward-looking statements may change. Except as required by law, INmune Bio disclaims any obligation to update these forward-looking statements to reflect future information, events or circumstances. With that behind us, now it's my pleasure to turn the call over to Dr. RJ Tesi. RJ?

Thank you, David, and good afternoon to everyone. We will keep our prepared remarks brief. I will review the key takeaways from the second quarter, relevant news from recent weeks and provide updates on our platform programs. I will then pass it to CJ Barnum, VP of CNS Drug Development, for more details on the ongoing Phase II trial in Alzheimer's disease. Dr. Mark Lowdell will follow with an update on our INKmune program in prostate cancer, and David Moss will conclude with a review of our financial results for the second quarter before we take your questions. Since our first quarter conference call in May, we continue to make steady progress in both clinical programs. Before I comment on our XPro program in Alzheimer's disease, I want to make a couple of comments about the rapidly changing landscape of Alzheimer's disease diagnosis and treatment. Just in the last month, a second drug, donanemab, was approved for the treatment of Alzheimer's disease. It is an anti-amyloid drug and does have a black box warning for highlighting the increased risk of edema in the brain in patients with two copies of the ApoE4 gene. Last week, the EU regulatory authorities did not approve Eisai-Biogen's drug lecanemab for the treatment of Alzheimer's disease. We don't know if the EU's decision is going to be unique to lecanemab or affect other drugs in the anti-amyloid class. Today, the last day of AAIC in Philadelphia, AAIC is the Alzheimer's Disease International Conference, which is the largest meeting in AD that occurs every year. But at this meeting, there is cautious hope for the future of therapeutic options for patients with Alzheimer's disease and a lot of discussion about alternatives to amyloid therapy. People understand the risk and efficacy profile of this class of drugs, and they look forward to other options in the future. Much excitement was focused on the anti-inflammatory treatment strategies, and obviously, we like to think we are leaders in this particular area. All in all, it was a very bullish meeting for XPro in Alzheimer's disease. In June, we completed a planned blinded interim analysis of AD02, our Phase II trial of XPro in patients with early Alzheimer's disease with biomarkers of inflammation. The purpose of the analysis was to evaluate power and performance characteristics of the primary endpoint. The primary endpoint is EMACC, which is the Early Mild Alzheimer's Cognitive Composite score. Independent third-party statisticians and neuropsychologists determined the AD02 trial as appropriately powered and concluded the trial design, operational execution, data collection and management are of the highest quality. As of today, we have many patients in the screening process and pipeline, and are on track to reach full enrollment of this trial by the end of September. We really await top line data readout on the primary endpoint approximately six months after the last patient is enrolled. At AAIC this week, we presented additional data on the effects of XPro in the brain of patients with Alzheimer's disease. The data demonstrate XPro's direct impact on synaptic proteins and provide biological support for the improvement in synaptic function that we recently demonstrated with EEG. I remind you that synapses are the things that allow nerve cells to communicate with each other, and they are a critical part of neurological disease in general and Alzheimer's disease specifically. These data are another example of how XPro normalizes the brain's immune system to improve the biology of the aging brain that includes less neurodegeneration, that's nerve cell death, increased remyelination and improved synaptic function. We predict the ongoing Phase II trial will demonstrate these biological benefits correlate with cognitive benefits. The importance of controlling neuroinflammation extends well beyond Alzheimer's disease, and we continue to move forward with our plans to initiate a treatment-resistant depression Phase II study. The trial is sponsored by the NIH, and we expect to enroll patients later this year. INKmune, our novel NK-focused cancer program, also continues to make progress. We announced the publication of a paper in the prestigious high-impact journal of ImmunoTherapy of Cancer. The data shows the unique ability of INKmune to create cancer killing memory-like NK cells in situ, meaning within the patient's blood system using NK cells of their own. Dr. Lowdell will provide more detail on this in a moment. We're excited by these data and their implications for treating multiple types of solid tumors with INKmune in the future. We plan to provide patient-level data from the ongoing Phase I/II trial in castrate resistant metastatic prostate cancer later this year. For now, I'll turn it over to CJ Barnum, VP of CNS Drug Development, to provide a more in-depth discussion of our ongoing Phase II trial in patients with Alzheimer's disease. CJ?

Thank you, RJ. As you said, I'd like to take some time to discuss the ongoing Phase II trial in Alzheimer's and the recent unblinded analysis we performed. The clinical trial is powered on the Clinical Dementia Rating Scale or CDR, and is using both EMACC and CDR as our primary and key secondary endpoints, respectively. These clinically valid endpoints were chosen based on their ability to accurately assess cognition in our target population of early Alzheimer's patients with biomarkers of inflammation. It's our belief that patients on XPro for the treatment of early AD will have stable or possibly improved cognition, and our endpoints were selected to give us the best chance of a successful outcome. As RJ said, we are close to completing enrollment. This has admittedly taken slightly longer than originally forecast, and I think it's important to address why that is the case as it plays right into why we believe we'll get a positive result. At INmune, we are running the first clinical trial in Alzheimer's using biomarkers as selection criteria. Our trial is designed to have a small enrollment and a very short duration. Smaller studies require higher quality data to minimize the impact of variance. As such, patient selection is key to success. We need to enroll patients who are not only likely to benefit from our therapy, but are also highly likely to complete the duration of the trial. This selectivity leads to a slower enrollment process. We could easily relax our criteria to speed enrollment; however, there is a trade-off between speed and quality. We are very biased towards the latter. This focus on execution is demonstrated through the recently completed blinded interim analysis of our data. As that independent evaluation revealed, and I quote, 'The assumptions made during the planning are being met within the conduct of the trial.' In other words, the EMACC is performing exactly as expected. This is a testament to our operational and clinical teams who continue to exceed my expectations in executing a trial of the highest quality. While the final results from the trial have yet to be determined, I can say with great confidence that the trial is being conducted in such a way that at completion, we will know without a doubt if we have a successful therapy. With that, I'll turn the microphone over to Mark to discuss the INKmune program, and I look forward to answering any questions investigators might have about the Alzheimer's program. Mark?

Thanks, CJ, and good afternoon, everybody, and thank you for joining us. As INmune announced recently, together with several of my colleagues, I was pleased to lead the publication of a landmark paper entitled 'Proteomic and Phenotypic Characteristics of Memory-like Natural Killer Cells for Cancer Immunotherapy,' which, as RJ said, was published in the Journal for the ImmunoTherapy of Cancer. In this study, we demonstrated that memory-like natural killer cells or mlNK cells generated by INKmune are the same as the more traditional cytokine-driven mlNK cells. Both types of NK cells show increased cytotoxicity against multiple tumor types. However, while most studies are conducted on NK cells from healthy volunteers, this study demonstrated that NK cells from cancer patients can be primed with INKmune and are equally as potent as those generated from healthy volunteers, providing further support for our in vivo treatment strategy. This research also provides new insights into the metabolic and proteomic mechanisms underlying NK cell memory, paving the way for innovative treatments in both hematological malignancies and, more importantly for us, multiple solid tumors. This is an area of NK cell biology research that is evolving very rapidly, and our study is the first to identify the unique characteristics of mlNK cells. Most significantly, the study is the first to report in vivo generation of mlNK cells, as RJ said, and that's something which cannot be done with the cytokine cocktail used in vitro by other groups because of the toxicity of the cytokines. Our research successfully showed that these mlNK cells primed by INKmune can be found in patients' blood after they've been treated with the drug, which is a critical step in proving our claimed mechanism of action. We also believe this points ways to enhance the potential of mlNK cells in further advances in cancer immunotherapy. Our paper highlighted the improved metabolic function of mlNK cells, which predicts better performance in the tumor microenvironment or TME. We believe these findings are particularly noteworthy as NK cell dysfunction in the TME has been reported by many others to be due to impaired metabolic function. So showing that INKmune priming can overcome these metabolic barriers encourages our belief that INKmune will target solid tumors. This is further supported by our observation in the same paper that INKmune priming increases survival proteins for nutrient receptors expressed on NK cells. This combination of changes following INKmune priming is exciting for our ongoing clinical trial in metastatic castration-resistant prostate cancer. This research study was a commercial and academic collaboration led by INmune over many years, and we were delighted to see the results of the work published in a high-impact peer-reviewed scientific journal. Elsewhere in our INKmune development program, we're pleased to announce a new formulation of INKmune that supports the highest trial dose with a single bag administration, which makes it much easier to deliver in the clinic, and the expansion of our bioreactor capacity in preparation for more scalable manufacturing. An IND amendment to the FDA with the improved formulation has been submitted. It also includes additional validation data supporting an alternative critical reagent used in the manufacture of INKmune to improve our supply chain redundancy. All of these seem minor, but there are essential steps in preparation for commercial development and supply of the drug. Since our last call, we've completed the first cohort in our Phase I/II open-label trial of INKmune in metastatic castrate-resistant prostate cancer called CarePC. Following review by the Safety Review Committee, approval was granted to proceed with the second dose level, cohort 2, and we're nearly halfway through that cohort, with patients in line waiting to be recruited. Data from this open-label trial are expected to be released intermittently as they become available for us. But most importantly at the moment, the safety record of INKmune remains excellent. There have been 12 administrations of INKmune in the CarePC study given as an outpatient with no significant adverse events and 0 cases of cytokine release syndrome. Combining those data with the experience from INKmune from the MDS/AML trial, over 25 infusions of INKmune have now been given safely without the need for conditioning therapy, premedication or cytokine support. So that ends my update on the INKmune platform, and I'd like to turn the call over to David Moss, our CFO, to discuss financials. David?

Thank you, Mark. As usual, I'll provide a brief overview of our financial results and upcoming milestones before we head to our Q&A session. During our second quarter, we were pleased to have raised approximately $14.5 million in gross proceeds from two separate equity offerings over the past weeks at an average price of $8.35 to $9.84 per share. In the two transactions, the company issued an aggregate of approximately 1.558 million shares of common stock and warrants to purchase an aggregate of approximately 1.558 million shares of common stock. The warrants have a two-year term with acceleration on positive Phase II data from our AD program, which if exercised would raise additional cash for the company. In the first approximate $4.8 million raise, management, employees, and members of the Board of Directors purchased over $1 million of stock. I cannot underscore how financially committed and aligned the entire INmune team is to the success of the company. We greatly appreciate the support we saw in both offerings from mostly existing investors and our team here at INmune Bio, but we also welcome a few notable holders to the registry, including a sole investor in the approximately $9.7 million offering, a person that I've had a relationship with for more than a decade. In addition, we received approximately $2.5 million in R&D rebates in July as we continue to manage our shareholder resources carefully while completing our clinical programs. Now moving on to financials. Net loss attributable to common stockholders for the quarter ended June 30, 2024 was approximately $9.7 million compared with approximately $6.5 million for the comparable period in 2023. Research and development expense totaled $7.1 million for the quarter ended June 30, 2024 compared with approximately $4.1 million for the comparable period in '23. General and administrative expenses were approximately $2.8 million for the quarter ended June 30, 2024, compared with approximately $2.3 million for the comparable period in 2023. As of June 30, 2024, the company had cash and cash equivalents of approximately $31.1 million. Based on our current operating plan, we believe our cash is sufficient to fund our operations into 2025. As of August 1, the company had approximately 19.8 million shares of common stock outstanding. Effective as of July 1, the company joined the Russell 3000 Index as part of its 2024 reconstitution, a positive development for our company and our shareholders that we believe will increase our visibility within the investment community and help broaden our shareholder base. This is the first significant index the company has joined since going public in 2019. We also believe our inclusion in the Russell 3000 is a testament to the hard work and dedication of our entire team and underscores our commitment to advancing our innovative immunology and inflammation platforms in early Alzheimer's treatment, treatment-resistant depression, and metastatic castration-resistant prostate cancer. Now I'd like to focus on some key upcoming milestones. As RJ and CJ have mentioned, we expect full enrollment in our Phase II XPro trial for the treatment of neuroinflammation as a cause of Alzheimer's disease before the end of Q3, and top line data is expected to read out approximately six months from the last patient enrolled. We will initiate a Phase II trial of XPro in patients with treatment-resistant depression in the second half of 2024. We expect to complete enrollment in the second cohort in metastatic castration-resistant prostate cancer by the end of Q3 '24, and the Phase I portion is expected to complete enrollment by Q2 of 2025. Results of the trial will be released as they become available starting later this year. Although we have secured additional funding, as always, we continue to focus on achieving our primary clinical objectives while remaining cost prudent with the potential to recover a portion of R&D expenses in Australia and the U.K. In summary, we secured a meaningful equity infusion that puts us in a good position into 2025 with our focus on remaining execution. At this point, I'd like to turn the microphone back to RJ to conclude our prepared remarks and then go to Q&A. RJ?

Yes. Thank you, David. This is an exciting time for the company. The therapeutic landscape of Alzheimer's disease is changing rapidly, and the changes are making the XPro program in Alzheimer's disease more relevant. As people get frustrated with the anti-amyloid strategies, they look towards neuroinflammation as a potential way to improve patients' lives. We expect to be reporting meaningful data from both the XPro and INKmune programs in what now seems to be the near future. Each of our programs has a strong scientific foundation. Our clinical trials are designed to take advantage of the unique biology each drug brings to patients. The company has funding to see the development through important milestones, and we are grateful for the strong and committed shareholder base that continues to support INmune Bio. In particular, we thank those who are invested alongside us and management as we work to achieve our goals. So now I'd like the operator to poll for questions.

And we'll take our first question from Tom Shrader with BTIG. Please go ahead. Your line is open.

Good afternoon. Thanks for taking the questions. Congratulations on all the progress. I wanted to ask a kind of a remedial question first on the synaptic markers. And one of the most exciting things at AAIC is Phospho-tau as a temporal treatment marker. Where does synaptic markers fit in there? Are they early? Are they late? You've done a lot of work to measure them. Are they useful treatment markers? And then, I have a INKmune follow-up.

CJ, I'll let you handle this one. It's a fairly sophisticated question. Go ahead.

Thanks, RJ. Hi, Tom. So I'm not sure they're a long-term solution as it relates to biomarker measurement. It's something you can do if you collect CSF, which is where the analysis was performed. It hasn't really translated to blood yet. But what we know about synaptic proteins and synaptic dysfunction and synaptic loss in Alzheimer's, we've actually known for quite a while that there's been a little bit of a resurgence to this at this point. I think that's something that we can take advantage of. The other thing is it aligns really nicely with EEG. So changes in EEG are likely to be subserved by changes at the level of the synapse as opposed to an improvement in cell building or even axons as well, because it tends to be a little bit faster. But EEG is a nice surrogate outcome for that. I would say that while they're great they add to the story, they're probably not a long-term biomarker solution, but it does reinforce the biology of what we understand XPro can do. And I think that's really exciting to us because it targeted really what we were able to show is that we saw broad changes and networks of proteins that are critical for synaptic function. To us, it's another biomarker to help support our decision-making and that the biology is aligning as we expect. But I don't know, aside from maybe EEG in the future that the biomarker proteins themselves are particularly useful in later stages.

Got it. Mark, is it a priority to understand what components of INKmune are driving its biological effects? From the side effect profile, it seems it's not a cytokine, which indicates it might have an additive effect with cytokines. Do you have insights into what it is? Is it a combination of various factors? Could it be something you might purify? Where do you stand in understanding what INKmune relies on? Thanks.

That's a great question, and I wish I had all the answers. We've been researching INKmune since 2005 and have conducted extensive work. Initially, we believed we could identify the key signals that INKmune sends to NK cells and replicate them. Our findings from 2011 revealed that INKmune is a cell with millions of molecules on its surface. We identified three critical molecules that are essential to its function, which we published. We attempted to create an artificial version of these molecules, but we struggled with achieving the right concentrations. Each of the three variables could vary in intensity, and we couldn't match the natural cell's effectiveness. Additionally, when INKmune binds to an NK cell, much like it does with a tumor cell, the NK cell removes a membrane from INKmune. This process, known as trogocytosis, allows the NK cell to incorporate material from INKmune, enabling it to function and even prime other resting NK cells. We believe this is why we observe a prolonged effect after just three injections. We haven't found a way to create an artificial version of INKmune. The proteins involved are complex and come from INKmune's surface, and their incorporation into the NK cell creates a function that artificial production can't replicate. On a positive note, INKmune is inexpensive to manufacture and easy to transport.

And just I want to reemphasize your point about cytokines, Tom, because we think one of the really big deals about INKmune is it doesn't require cytokines. As you said, the safety profile is markedly improved, and as Mark just implied, the cost profile was markedly improved. We really like it, even though, as Mark said, he's still studying it.

Got it. Okay. Thank you.

We'll take our next question from George Farmer with Scotiabank.

Hi. Good afternoon. Thanks for taking my questions. You mentioned the way you're enriching for enrollment in the Phase II AD trial, two things. One is selecting patients with specific biomarkers that would indicate a higher inflammatory state. And then also patients who will likely complete the study. The first one is understandable, but how are you enriching for the second?

CJ?

Yeah. So this is a great question. And there's really a couple of answers to that. What you got was a simplified explanation. So the study itself, because we opted to go for a shorter study, six months, requires quite a bit of monitoring, probably much more so on a per day or per week basis than you would see in other studies. There are times when patients in other studies need to come in once a month. In our study, you need to come in at least once a week, and we're doing multiple measurements as well. That's going to be quite challenging for some patients to come in and do that. So a lot of times what will happen is you enroll a patient and you end up with patients that miss visits or they leave the study early. That creates problems as it relates to data analysis. So we try to have the conversation with the patients, let them understand that the commitment is pretty high, and we really need their participation to make sure that they can complete all of those different things. Our investigators have done a really good job to ensure that the patients that get into the trial are really willing to make that commitment. We're seeing that in our retention rate. We have had a number of patients at the beginning that said they weren't sure they could do that. From our perspective, it's easier for us to move on. The other aspect is we're a little more rigid regarding the clinical diagnosis criteria of MCI and mild AD than we would normally be, because we have a small study. There's quite a bit of variance across investigators in what mild AD and MCI are in terms of diagnosis. In order to compare apples-to-apples, we have to homogenize that. That's not a problem when you get to a Phase III study where you have more patients; you can relax some of that criteria. But those two things really force us to slow enrollment and be more selective for patients, and it takes a little bit longer. The biomarker enrichment regarding inflammation is about what we expected it to be, somewhere around 40% to 55% of those patients that show up have those biomarkers.

And then regarding those biomarkers, how do those patients fare relative to the general populations with respect to, say, baseline characteristics?

Good question. I don't have that exact data for the study here. But generally speaking, patients that have biomarkers of inflammation, if you look at the registry databases, they have more severe disease and faster progressing disease. What's really unusual and works in our favor is that the variance in progression between patients with these biomarkers is smaller. So this allows us, again, to do these shorter trials with fewer patients.

And we have received a question from the web. It reads, CJ, you seem excited about the interim data. How does this update, even though it's blinded, give your insight into how the trial is progressing?

Yeah. This is a great question. I get this question quite a bit, is why is blinded data so exciting. The biggest challenge when you're in a new area, especially when you're using biomarkers and selecting patients, is when you go to power this study, the sample size you use is really representative of the patients out there. You only have the data that's available to go on to do that. And of course, that's a sample. And the biggest question for me is, do we have the right test? Can we capture those things? And is it performing as we expect? To not only see that was the case, but even numerically better and the quality of the data that we're able to collect fills me with optimism. We record every single assessment, and if there are errors, we fix them quickly. The teams in charge of reviewing and reaching out to sites and training and working with investigators really are incredible. The independent consultants that we had, a neuropsychologist, noted this as the highest quality data they've seen, and that's all you can ask for. It means we've done absolutely everything within our control, and that's what really excites me about that.

And there are no further questions on the line at this time. I will turn the call to Dr. Tesi for any additional or closing comments.

Thank you. As all of you know, the success in biotech depends on sound science, committed investors, and medical need. The Alzheimer's space is added by the intrigue of honest disagreements on the value of recently approved drugs. We see real opportunity for XPro in Alzheimer's disease as these other drugs are better understood. INKmune brings a unique perspective to the castrate-resistant prostate cancer arena because of its safety profile. There are drugs in development for metastatic castrate-resistant prostate cancer, but you're not talking about young patients, and these drug cocktails tend to be quite toxic. So safety matters in patients like that. Both of our platforms also show promise beyond their current indications. We've talked about treatment-resistant depression in Alzheimer's with XPro and other solid tumors with INKmune. Look no further than our website to see more than 80 publications that point to the many uses of these drugs. At the end of the day, our aim is to provide data readouts on both of these programs as quickly as we can. We are grateful for shareholder support. We believe the future is bright. Thank you.

This does conclude today's program. Thank you for your participation, and you may now disconnect.