Inmune Bio, Inc. Q3 FY2024 Earnings Call

Greetings, and welcome to the INmune Bio Third Quarter 2024 Earnings Call. As a reminder, this conference is being recorded. A transcript will follow within 24 hours of this conference call. At this time, it is my pleasure to introduce Mr. David Moss, CFO of INmune Bio. David?

Thank you, Chloe, and good afternoon, everyone. We thank you for joining us for the call for INmune Bio's Third Quarter 2024 financial results. With me on the call today are Dr. RJ Tesi, CEO and Co-Founder of INmune Bio; Dr. Mark Lowdell, Chief Scientific Officer and Co-Founder of INmune Bio, and Dr. CJ Barnum, Head of Neuroscience. 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 disclaimer on the company's earnings press release as well as the risk factors in the company's SEC filings, including our most recent quarter filing with the SEC. There's no assurance of any specific outcome. Undue reliance should not be placed on forward-looking statements, which speak only as of 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 the forward-looking statements behind us, it's now my pleasure to turn the call over to Dr. RJ Tesi. RJ?

Thank you, David, and good afternoon to everyone. For our third quarter 2024 call, I will review the key takeaways and provide an update on our platform programs. Following my review of recent developments at INmune Bio, I will pass the microphone to Dr. CJ Barnum, who runs our CNS development efforts for updates on the Alzheimer's program and the treatment-resistant depression program. Then I will pass it to Dr. Mark Lowdell, a founder and INmune Bio CSO and the inventor of INKmune, who will provide an update on the CaRe PC INKmune program in metastatic castrate-resistant prostate cancer. David will include our prepared remarks with a review of our financial results for the third quarter, after which we will be happy to take your questions. First and foremost, we announced that we closed enrollment to our ADO2 global, blinded and randomized Phase II trial of XPro in patients with Alzheimer's disease and biomarkers of inflammation. This milestone was reached on September 27 and symbolizes a major achievement for our team. This was a huge and visible milestone that really overshadowed the incredible work that was required to get there. The complexity of managing a clinical trial in countries with 30 sites forced us to work fast, smart and efficiently. In doing so, our team demonstrated remarkable perseverance by successfully navigating the complex regulatory landscape outside of the U.S. Despite the many hurdles, we are delivering a program that is being conducted with the highest quality standards, and we've had a couple of very careful reviews of the trial to ensure that this continues. This experience may provide or should provide preparation for a global Phase III study that will most likely include more countries and more sites in the Alzheimer's program. The achievement not only underscores our commitment to advancing our program in AD but can translate to our other programs in Treatment-Resistant Depression, prostate cancer, and beyond. Furthermore, we are confident that the data we are generating in our diverse international sites will provide robust insights into XPro's efficiency and safety profile, and I emphasize the critical safety profile in patients with early Alzheimer's disease. While XPro is our most advanced program, it is not the only clinical asset at INmune Bio. INKmune, a novel NK-focused cancer program, is currently enrolling patients with metastatic castrate-resistant prostate cancer in a Phase I/II trial. We call this open-label trial CaRe PC; we have recently enrolled the first patient into the highest dose cohort, which is the highest of three dosing cohorts, and are also enrolling patients into the Phase II extension portion of the middle dose cohort. This is a Bayesian design that allows you to overlap the Phase I and Phase II parts of the trial. Results from the first low-dose cohort were released late in September and showed consistent immunologic effects in the NK cell department and confirmed the excellent safety profile, which we've come to expect for the INKmune. Do not underestimate the importance of the safety when treating men with metastatic castrate-resistant prostate cancer. The average age of men in the U.S. with mCRPC is 76 years old, and these patients become increasingly frail as their disease progresses. Patients and clinical teams are looking for effective therapies that do not cause significant toxicities. So far, INKmune meets that low toxicity threshold. We look forward to better understanding efficacy as we continue to treat patients at the higher doses. The program was introduced to the prostate cancer community last weekend at the 31st Annual Scientific Meeting of the Prostate Cancer Foundation, a meeting that includes important clinical leaders in the U.S. Prostate Cancer Community. The program was well received. Mark Lowdell will provide a more in-depth report on INKmune in a few moments. But for now, I'd like to turn it over to CJ Barnum, who leads ImmunoBio-CNS drug development efforts. He will provide more details on our ongoing Phase II trial and our soon-to-be-started treatment-resistant depression trial. CJ?

Thank you, RJ. I'm here to provide an update on our XPro clinical programs and outline what lies ahead in the coming months. I will start with our Phase II Alzheimer's study. The primary objective of ADO2 is to demonstrate that patients treated with XPro exhibit improved cognitive function compared to those receiving placebo. As reported last month, enrollment has been completed. During this critical phase between the last patient enrolled and the release of top-line data, our clinical team is diligently focused on data collection and preparation to expedite the delivery of these crucial results. Notably, our third-party vendors have continually highlighted two exceptional aspects of this trial: the superior quality of data collection and the outstanding performance of our primary endpoint, EMACC, which has surpassed our expectations in its ability to measure cognitive change in patients with early Alzheimer's disease. While we're thrilled about EMACC’s potential, it's important to note that ADO2 is powered by the clinical dementia rating scale, some boxes. This key secondary cognitive endpoint has served as a primary endpoint and been instrumental in gaining approval for all three anti-amyloid Phase III trials. Empowering the study on the CDR, we mitigate risks in the regulatory pathway by providing a second well-validated cognitive endpoint. To provide further insights into EMACC and our regulatory strategy, we will be hosting a webinar on November 7. Our neuro site consultants will lead the discussion, and you can expect additional details about the webinar shortly. On a parallel track, our operations team is making significant progress in launching our Phase II trial for treatment-resistant depression. We anticipate opening the first site by the end of the year. This blinded, randomized, placebo-controlled NIH-funded study will enroll 90 patients with biomarkers of information. Participants will receive XPro or placebo over the course of six weeks. The primary endpoint is change in functional MRI within a brain pathway that subserves depression and inflammation. This trial will also measure clinical scales that will provide the critical data necessary to conduct a future proof-of-concept study. We look forward to sharing more updates on this trial in future calls. Thank you, and I'll turn it back over to RJ.

Thank you, CJ. With that, I'll turn the microphone over to Mark to discuss the INKmune program. Mark?

Thank you, RJ, and good afternoon, everyone. Thank you for joining the call. So as RJ said, the CaRe PC trial continues to recruit completely in line with our predicted timeline, and we now have opened the Phase II extension of the intermediate dose cohort, which allows a further six patients to receive this dose of INKmune in the Bayesian design that RJ described. The first of these six extension patients were already identified and have begun screening. There is a queue, apparently, of patients awaiting treatment. Meanwhile, the first patient in the high-dose group was enrolled this week and will receive his first treatment on the 5th of November. We expect to complete treatment of all patients in this high dose group during January 2025 and then progress immediately to the Phase II extension for a further six patients in February and March at the highest dose. Monitoring of the response in patients in the intermediate cohort is underway and results will be communicated as soon as they are available. As RJ said, we saw INKmune-related changes in NK cell function in the first three patients at the lowest dose with increases in activated NK cells in the peripheral blood and the generation of increased potency of these NK cells in tumor killing assays. So we're eagerly awaiting the data from the second dose cohort, which we'll be keen to share. We see metastatic castrate-resistant prostate cancer as the first of many solid tumor targets for INKmune. And we've recently completed our preclinical study of renal cell cancer as a potential trial group. This adds to our preclinical data in ovarian cancer, B-cell lymphoma, and other blood cancers and allows us to consider multiple options for future clinical development of this drug. Clinical trials are the poster children of drug development, but moving from trials to market requires much more, not least a full development of the drug manufacturing pathway, which meets regulatory requirements and is cost-effective at a scale which meets the likely global demand. INmune Bio is laser-focused on this, rather less glamorous aspect of drug development, and I'm delighted to report that we've made significant progress in what's called chemistry manufacture and control (CMC) aspects and scaled up manufacture fivefold, with associated cost efficiencies, but more work to further simplify manufacture is also underway. All of the drug doses for the Phase I and intermediate Phase II extension are in stock and ready for shipment, and many are already in the United States, and we will complete manufacture of the remainder of the current trial products before the end of this year. With drug stability data to support over two years of storage at our U.S. distribution facility and up to one month local storage at clinical sites. And we've worked with our clinical sites to engineer the drug delivery to the clinical team and the infusion protocols to make this the most easily delivered product in the world. And I say that from many, many years of experience with many trials. If CaRe PC provides the efficacy data, we hope then INKmune will be ready for commercial manufacturing for future drug registration trials and subsequent BLA submission. 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 the financials. David?

Thank you, Mark, RJ, and CJ. 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 third quarter, we raised $13 million in gross proceeds from a registered direct equity offering. The company issued approximately 2.3 million shares of common stock and warrants in aggregate of about 2.3 million shares of common stock. The warrants have a 5.5-year term with the potential for acceleration under the terms of the warrant agreement, which, if exercised, would provide additional capital. The company has approximately 3.9 million warrants outstanding, and if all were accelerated, it would raise just over $30 million. In the financing, management, employees, and Board members purchased about $800,000 worth of stock. I want to emphasize the financial commitment and alignment of the entire INmune Bio team with the company's success. We also greatly appreciate the support we received from both new and existing investors, along with our team at INmune Bio. Now moving on to the financials. The net loss attributable to common stockholders for the quarter ended September 30, 2024, was approximately $12.1 million, compared to approximately $8.6 million for the same period in 2023. Research and development expenses were approximately $10.1 million for the quarter ended September 30, 2024, compared to about $6 million for the same period in 2023. General and administrative expenses were approximately $2.2 million for the quarter ended September 30, 2024, compared to about $2.6 million for the same period in 2023. As of September 30, 2024, the company had cash and cash equivalents of approximately $33.6 million. Based on our current operating plan, we believe our cash is sufficient to fund operations into Q3 of 2025. As of October 31, 2024, the company had approximately 22.2 million shares of common stock outstanding. Now I'd like to highlight some key upcoming milestones. We expect to have top-line cognitive data from our Phase II trial in Alzheimer's disease in Q2 of 2025. We will initiate a Phase II trial of XPro in patients with treatment-resistant depression towards the end of this year. We expect to complete enrollment in the third cohort of the metastatic castration-resistant prostate cancer program around January of 2025, and the Phase II portion is expected to be completed either in Q2 or Q3 of 2025, with results released as they become available. Although we have secured additional funding, we continue to focus on achieving our primary clinical objectives while being cost prudent with the potential to recover a portion of R&D expenses in Australia and the U.K. We will have further paid off our Silicon Valley bank debt on December 1 of this year, which will help reduce our quarterly spending. Additionally, at the beginning of next year, we anticipate some costs associated with the ADO2 program to decrease. In summary, we recently secured a significant equity infusion that positions us well for 2025, and we remain focused on executing our programs. Now, I would like to turn the microphone back to RJ to conclude our prepared remarks. RJ?

Thank you, David. I'd like to wrap up our prepared remarks by saying we are busy. It is head down at INmune Bio as we work towards data and are mindful of Phase II in Alzheimer's disease and our CaRe PC trial in metastatic castrate-resistant prostate cancer. We hope to open another chapter in our D&S story with Phase II in treatment-resistant depression before our next quarterly call. We have strong science backing our cutting-edge programs and may provide unique solutions to difficult medical problems and have the necessary funding to see them through important milestones. We appreciate our strong and committed shareholder base, and we all thank you for investing alongside us as we work to achieve our goals. Operator, I'd like to poll for questions.

We will take our first question from Gary Nachman with Raymond James. Your line is open.

Hi, great. Thanks everyone, good afternoon and congratulations on the progress. I have a few questions. First, regarding the XPro Phase II in Alzheimer's, could you discuss the patient enrollment process and the focus on specific inflammatory biomarkers? How has that process been for you? Would it present challenges if you transition to a larger Phase III in the future, or even when considering XPro commercially? Let's start with that, and I have a couple of follow-up questions after.

Yes. Let me begin, and then I'm sure CJ will have some additional insights. This is RJ. As you are aware, our approach is grounded in two key aspects, Gary, and we've been quite open about this. Firstly, we believe that aligning the mechanism of XPro, which targets glial activation and neuroinflammation, with the specific type of Alzheimer's disease in our patients is crucial for minimizing risks in the clinical program. Our focus is on patients whose Alzheimer's is driven by inflammation, which appears to be around 50% among Caucasian patients. For instance, one of the biomarkers we utilize is ApoE4. Here in Madrid at the CTAD meeting—a significant event centered on Alzheimer's—it's evident from the trials presented that around 50% of the participants have ApoE4. Thus, I feel confident stating that we are targeting half of the patient population. For a small company, having a strategy that reduces risks in clinical trials to achieve early success while only capturing 50% of a large market is a reasonable approach. The regulatory aspect is a different matter, and while we have some ideas, it will certainly be a critical topic at the upcoming Phase II discussion with the FDA. I'm not sure what to expect from that meeting, but I am confident we will navigate it effectively. CJ, do you have anything to add?

Gary. And maybe if I don't quite answer your question, please correct me. I think the simple answer is RJ's right, is I don't think the biomarker is going to be a major issue as we move into Phase III and beyond because there are plenty of patients with inflammation. Our sort of restrictiveness or our selectivity with the trial really has more to do with an early phase study comparing apples to apples. So you really want to make sure that you're in this study that patients have similar pathology. And that's, in some ways, what makes it a little more challenging for enrollment. So I think that's probably the bigger issue as I look at the data compared to the inflammatory stuff.

Okay. That's helpful. And then I think you said in the press release, if you still have patients that are already screened that will end up enrolling at some point, just could that push out the timing of the data readout potentially to later in Q2 given the 24-week endpoint. So just confirm within Q2 that we should be thinking about that, I don't know whether the first half or the second half? And then just also remind us of your confidence in the 24-week endpoint on the EMAC score, given some challenges that we've seen in other Alzheimer's studies when they look out six months?

Yes, let me begin by addressing the trial duration. I've observed that there is an increase in the number of shorter trials. By short, I refer to durations that are neither 18 months nor 76 weeks. We've encountered several 48-week trials and some that last 6 months. Researchers are designing trials more intelligently, allowing for these reduced lengths. We have asserted that we are quite comfortable with a 6-month endpoint, so we don’t have concerns on that front. We believe the field is recognizing that 18-month trials are often unnecessary, especially when the drug’s mechanism of action is understood. Currently, there are a few additional patients in the screening phase, but we won’t dismiss anyone who has already committed to the program. The final cutoff date is approximately 10 days away, after which everyone will be processed out of the system. Therefore, you can start measuring progress from that timeline. David, CJ, and I have indicated that we anticipate results in the second quarter, and we feel confident about that expectation. This depends on CJ's clinical operations team working continuously to ensure the data's cleanliness and accuracy, allowing us to lock the database and release the findings promptly.

Okay. Great. And then just last question, RJ, bigger picture. So with the news of AbbVie acquiring Aliada for $1.4 billion to have an early-stage thought on goal in Alzheimer's, how does that impact your thinking about potential M&A in this space, if at all, how it might be evolving? And just on that, have you been having any potential partnership discussions, just sort of what the interest level is out there? Thanks.

Yes. I agree with what David Moss mentioned; every time anyone speaks with them, they firmly believe that everyone is waiting for data. Since we are not pursuing the amyloid or trial path, which is where most of the mergers and acquisitions have been happening, they are primarily acquiring assets that they view as less risky. I can predict that all anti-amyloid programs will exhibit similar efficacy profiles, although the safety profiles may vary. These drugs effectively remove amyloid from the brain, and we understand the resulting outcomes. Therefore, we believe that once we demonstrate that targeting glial activation makes a difference, people will start engaging in discussions. Occasionally, we receive calls, but they tend to be superficial inquiries. We do not have any substantial business development conversations ongoing. Frankly, it ties back to what David consistently emphasizes; it is all about data. Once we have data, people will start talking.

We'll move next to George Farmer with Scotiabank. Your line is open.

Hi, good afternoon. Thanks for taking my questions. I was wondering if you could comment on your depression study that you're gearing up to do. And you mentioned some inflammatory biomarkers that you're going to be screening for as well. Are these the same as the ones in Alzheimer's disease? Or are they different? To the extent that you can talk about them that would be great. And then I have a follow-up.

CJ?

Yes. Thanks. Great question. Thanks for asking. This is the program that I'm really excited about. So the simple answer to that is, yes, we are enriching for patients that have inflammation. And this is based on really well-researched studies, both in the clinic and with animal data supported by a group at Emery University that's led by Andy Miller, and Gen Felger. So we have two biomarkers that we're using. One is blood C-reactive protein. And the other one is a behavioral biomarker of anhedonia. So anhedonia is a core symptom of depression, and for those of you that don't know what anhedonia is, it's the lack of pleasure of driving pleasure and things that you enjoy. It's a very difficult symptom to treat, and it is tightly regulated with inflammation. So we will be selecting patients based on those two inflammatory biomarkers. And again, we expect that about somewhere between 45% and 55% of patients will meet criteria for those biomarkers. And by the way, you'll see this consistent theme across any program that we start is that the inflammatory biomarkers is somewhere around 40% to 50%. So those are the two key biomarkers associated with that.

Okay. Great. Very interesting. And then a question on INKmune. What do you need to see in this trial to really give you confidence that continued investment is worthwhile? Specifically, you talked about reductions in PSA, which is great, but have you seen any impact on measurable tumors? And do you need to see that in order to move forward with this program?

It's a very good question. Thank you. So first of all, it's a Phase I trial. So we're treating very, very advanced-stage patients with very bulky disease. So from an immunological perspective, what I want to know is that we're changing their ability to make an immune response against their tumor because that means that moving it into a better risk patient group in further drug development is indicated, because we know from other research that patients with good NK responses have a better prognosis with prostate cancer. With this particular group, because we've got the PSMA PET scans, we are able not only to look at their total tumor load but to look at individual tumors within the individual patients. And that I think is going to be very informative. We've probably got some evidence already that some tumors do shrink while others are growing. So basically, what I'm looking for is any form of a clinical outcome that convinces Matt Rettig, as the chief investigator, that there's been a clinical response. And it really falls to him to believe in the data, so it will be data that he's able to say, yes, that convinces me we're having a clinical response.

I want to emphasize the importance of safety. Matt Rettig has mentioned that focusing on therapies that significantly extend life, even if they don't completely eliminate the tumor, while maintaining a good quality of life is crucial for patients. Many of the metastatic cancer-resistant programs are targeting patients who are younger than the median age of 76, typically in their late 50s or early 60s. Unfortunately, many older patients do not receive much care because they cannot handle the side effects of traditional treatments. Therefore, I keep returning to the safety profile. If we observe the anticipated immunologic and tumor effects, this will be highly beneficial for a large part of the prostate cancer community.

All right. Thanks RJ.

We'll move next to Joel Beatty with Baird. Your line is open.

Hi, thanks for the update, and congrats on finishing enrollment in the Phase II Alzheimer's disease trial. Maybe first question is, earlier this summer, you shared a favorable interim analysis of the trial. Any changes in the trial or operations since then would lead to any differences since that time?

CJ?

Thanks, Joel. I'm not entirely sure I understand your question, but I'll do my best to address it. There have been no changes regarding the interim data analysis. In fact, we have continued to monitor that, and you'll receive more information about it during the webinar. To summarize, as we gather more data, it appears to be looking increasingly positive.

Very good. I look forward to more on the webinar. I have a question about INKmune. It was mentioned earlier in today's call that it could be the most easily delivered cellular medicine in the world. Could you provide more details on the delivery and what it might look like in the future?

Mark?

Yes, certainly. Yes. So if you think about other better-known medicines like CAR-T cells, virtually every one of them is shipped in, I think, we try and ship in vapor-phase nitrogen at minus 160 degrees Centigrade or below. And then when they get into hospitals, they have to go through a special handling route, quite often delivered directly to the patient bedside. And that's not the route that most drugs go into hospitals. Every other drug comes in through pharmacy and is held in the pharmacy and then issued from pharmacy to go to the patient. And so we've done a lot of work from the get-go to make INKmune fit into that. So it comes in at minus 80 degrees, like COVID vaccines. It goes into a minus 80 freezer, and since COVID, every pharmacy has many, many of those. And then when it goes to the patient bedside, it goes in a cool box with nitrogen and is stored in an automated thawing device that we have developed, which we buy in, but the program for this is being developed by us. And it's a bit like a microwave; it goes in, it's closed. And when it's ready, it detects that the thawing has been done. It goes in and there's no washing thereafter; the bag gets hooked up like any other chemotherapy-type bag and is delivered through a peristaltic pump. So the nurses like it because it's exactly what they're familiar with using in these patients. Patients like it because there's nothing scary about it; there isn't vapor-phase nitrogen gas coming off, with a lot of vapor spilling around their bed. And this is meant to be delivered in the outpatient setting. So these patients don't even have to be hospitalized, and we've been able to go into Veterans’ hospitals in the U.S. that are not delivering CAR-T therapies and other cellular medicines. So we really have nailed the delivery of this, the local storage, and a temperature that fits in with other drugs and makes it very easy and therefore cost-effective. So that's what we meant about that. We've tailored the delivery to fit in with routine clinical practice and other regular medicine not cellular medicines.

Yes. I want to reiterate Mark's point that this treatment does not require specialized centers accustomed to administering cellular medicines. It can be provided at any infusion site. In fact, our first two patients were treated at commercial facilities that had never administered a cellular medicine before. Mark and his team have created videos and training resources for these sites. The nursing and pharmacy staff completed the training and felt very comfortable, and everything went smoothly. It's truly user-friendly and patient-friendly. Now we are looking forward to demonstrating that it effectively targets cancer and helps eliminate the disease in patients, though that will take a bit more time to establish.

Good afternoon. I wanted to revisit the TRD area since we haven't discussed it much. How are you considering the commercialization of an injectable drug in the TRD setting, even though it's early? Specifically, could this be applicable in ketamine clinics? Is the delivery system ready enough that the necessary infrastructure has already been established? I also have a follow-up question.

CJ?

Yes, I can respond to that. I would not classify this alongside ketamine. I believe this will be more akin to an insulin shot, an injectable that patients can take home and administer themselves. This represents a fundamentally different approach. There are other injectable medications for psychiatric conditions, although there may be fewer options for depression. The patients we are targeting, especially those with treatment-resistant or inflamed depressions, tend to have more severe conditions. In contrast, individuals with milder issues might prefer trying a pill first, but we don’t anticipate any problems with the injectables. When you speak to clinicians treating these patients and pose this specific question, they often do not express concern. Of course, how this ultimately unfolds remains to be seen, but currently, we do not foresee any challenges.

So it's an auto infusion.

Yes, it's the same as we give to the AD patients. Yes.

And then one more sort of slightly wacky question. Does inflammation play a role in the psychedelics? Is that known? It seems like it easily could, given all the changes going on?

I'm not prepared to answer that right now. I would need some time to think it over. I'm not sure. Yes. No, that's alright. It's quite an interesting question.

To address your question about delivery, I recall the early days when there was significant concern regarding subcutaneous injections. One of the major benefits of the GLP revolution in the obesity market is that there is now widespread acceptance of subcutaneous drug delivery. For instance, Lilly is transitioning to a subcutaneous formulation for their anti-amyloid drugs with Donanemab. Infusions present a challenge that can complicate patient management.

This does conclude today's program. Thank you for your participation. You may disconnect at any time, and have a wonderful afternoon.