InMed Pharmaceuticals Inc 10-Q for FY2025 Q2
InMed Pharmaceuticals Inc. (MTRI)
About this 10-Q
InMed Pharmaceuticals Inc filed this 10-Q on February 12, 2025, covering the quarter ended December 31, 2024 (FY2025 Q2).
Headline figures
Quarter ended December 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $1.11M
- down 10.4% from $1.24M a year earlier
- Net loss
- $2.58M
- compared with a net loss of $1.48M a year earlier
- Diluted EPS
- -$3.64
- compared with -$3.71 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarterly period ended
or
For the transition period from __________ to __________
Commission
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
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has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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| Emerging growth company |
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As
of February 7, 2025, the registrant had
INDEX
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Quarterly Report”) contains “forward-looking statements” within the meaning of United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities law, which are included but are not limited to statements with respect to the Company’s anticipated results and progress of the Company’s operations, research and development in future periods, plans related to its business strategy, and other matters that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. We may, in some cases, use words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “predict”, “project”, “will”, “would”, and similar expressions that convey uncertainty of future events or outcomes to identify these forward-looking statements. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Forward-looking statements in this Quarterly Report include, but are not limited to, statements about:
| ● | Ongoing compliance with applicable standards and requirements for the continued listing on Nasdaq of our common shares, no par value (the “Common Shares”); | |
| ● | The efficacy of the Company’s Reverse Stock Split which was effected by the Company on November 14, 2024, including its direct and indirect impact on the liquidity of our Common Shares; |
| ● | The Company’s ability to stem operating losses and the Company’s ability to obtain additional financing to fund its operations, including under the terms of the SEPA (as defined below) and Amended ATM Agreement (as defined below); |
| ● | The revenues of BayMedica, LLC (“BayMedica”) and the commercial viability of its product portfolio; |
| ● | The Company’s ability to effectively research, develop, manufacture and commercialize pharmaceutical drug candidates that will treat diseases with high unmet medical needs; |
| ● | The continued optimization of key, proprietary manufacturing approaches and technologies; |
| ● | Our ability to commercialize and, where required, register products in the pharmaceutical R&D programs (“Product Candidates”) and those targeted to the health and wellness sector (“Products”) in the United States and other jurisdictions; |
| ● | Our success in initiating discussions with potential partners for licensing various aspects of our Product Candidates; |
| ● | Our ability to successfully access existing manufacturing capacity via leases with third-parties or to transfer our manufacturing processes to contract manufacturing organizations; |
| ● | Our belief that our manufacturing approaches that we are developing are robust and effective and will result in commercially viable yields of cannabinoids and will be a significant improvement upon existing manufacturing platforms; |
| ● | Our ability to successfully scale up our IntegraSyn approach to cannabinoid manufacturing. InMed has created genetically engineered microbes that produce proprietary enzymes, which are then used to optimize subsequent biotransformation reactions or other cost-effective manufacturing approaches; |
| ● | The success of the key next steps in our manufacturing approaches, including continuing efforts to diversify the number of products produced, scaling-up the processes to larger vessels and identifying external vendors to assist in the commercial scale-up of the process; |
| ● | Our ability to successfully make determinations as to which research and development programs to continue based on several strategic factors; |
| ● | Our ability to continue to outsource the majority of our research and development activities through scientific collaboration agreements and arrangements with various scientific collaborators, academic institutions, and their personnel; |
| ● | The success of work to be conducted under the research and development collaboration between us and various contract development and manufacturing organizations (“CDMOs”); |
| ● | Our ability to develop our therapies through early human testing; |
| ● | Our ability to evaluate the financial returns on various commercialization approaches for our Product Candidates, such as a ‘go-it-alone’ commercialization effort, out-licensing to third parties, or co-promotion agreements with strategic collaborators; |
| ● | Our ability to find a partnership early in the development process for our various programs; |
ii
| ● | Our ability to explore our manufacturing technologies as processes which may confer certain benefits, including cost, yield, speed, or all the above, when pursuing specific types of molecules, and filing a provisional patent application for same; |
| ● | Plans regarding our next steps, options, and targeted benefits of our manufacturing technologies; |
| ● | Our Products being bio-identical to the naturally occurring molecules, and offering superior ease, control and quality of manufacturing when compared to alternative methods; |
| ● | U.S. Food and Drug Administration (“FDA”) regulatory acceptance of Product Candidates for potential use in the pharmaceutical industry; |
| ● | Our ability to successfully file, prosecute and defend patent applications; |
| ● | The potential for any of our patent applications to provide intellectual property protection for us; |
| ● | The termination or renegotiation of our supplier, technology and other material contracts, including the invoking of force majeure or termination clauses, and actual or threatened claims of our failure to comply with any obligations set forth under such contracts; |
| ● | The adequacy of, or gaps in, insurance coverage upon the occurrence of a catastrophic or other material adverse event, as well as our ability to (i) expand our insurance coverage to include the commercial sale of Products and Product Candidates and (ii) secure insurance coverage for shipping and storage of Product Candidates, and clinical trial insurance; |
| ● | Developing patentable New Chemical Entities (“NCE”) which, if issued, will confer market exclusivity to us for the potential development into pharmaceutical Product Candidates, license, partner or sell to interested external parties; |
| ● | Our ability to initiate discussions and conclude strategic partnerships to assist with the development of certain programs; |
| ● | Our ability to position ourselves to achieve value-driving, near term milestones for our Product Candidates with limited investment; |
| ● | Our ability to effectively execute our business strategy; |
| ● | The sufficiency of our internal controls, including any exposure arising from the failure to (i) establish and maintain effective internal control over financial reporting in accordance with applicable regulatory requirements, and (ii) fully remediate any material weakness identified with respect to such internal controls; |
| ● | Epidemics, pandemics, global health crises, or other public health events and concerns, including any future resurgence of COVID-19, and the effectiveness of associated vaccinations and treatments; |
| ● | Consolidation of our competitors and suppliers; |
| ● | Effects of new products and new technology on the market, including with respect to automation and the use of artificial intelligence; |
| ● | The impact of geopolitical, global, regional or local economic and financial market risks and challenges, applicability of foreign laws, including foreign labor and employment laws, foreign tax and customs regimes, and foreign currency exchange rate risk; |
| ● | Political disturbances, geopolitical instability and tensions, or terrorist attacks, and associated changes in global trade policies and economic sanctions, including, but not limited to, in connection with (i) the Russo-Ukrainian war and (ii) any impact, effect, damage, destruction and/or bodily harm directly or indirectly relating to the ongoing hostilities in the Middle East; |
| ● | The transition to a new presidential administration in the United States, including but not limited to the potential use and effects of tariffs to address the administration’s policy goals, could materially impact the macroeconomic framework in which we operate; and |
| ● | Our ability to effectively and readily identify suitable strategic transaction candidates, including mergers, acquisitions, in- or out-licensing, at reasonable valuations, consummate any transactions and/or successfully integrate any acquired business into our operations, or otherwise consummate a wide range of strategic transactions, and the fact that any such transaction, even if consummated, may not be successful or improve our operating results and financial condition. |
This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under IA. “Risk Factors” in our Form 10-K for the year ended June 30, 2024, which was filed with the SEC on September 30, 2024 (the “2024 Annual Report”), Item 1A. “Risk Factors” in this Quarterly Report and Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Quarterly Report. Although we have attempted to identify important factors that could cause actual results to differ materially from those described in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated, or expected. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made and are based only on the information available to us at that time. Except as required by law, we disclaim any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
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PART I
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
Unaudited Condensed Consolidated Financial Statements of
InMed Pharmaceuticals Inc.
For the Three and Six Months Ended December 31, 2024 and 2023
1
InMed Pharmaceuticals Inc.
(Expressed in U.S. Dollars)
December 31, 2024
| INDEX | Page | ||
| Financial Statements (Unaudited) | |||
| ● | Condensed Consolidated Balance Sheets | 3 | |
| ● | Condensed Consolidated Statements of Operations | 4 | |
| ● | Condensed Consolidated Statements of Shareholders’ Equity | 5 | |
| ● | Condensed Consolidated Statements of Cash Flows | 6 | |
| ● | Notes to the Condensed Consolidated Financial Statements | 7-20 | |
2
InMed Pharmaceuticals Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
Expressed in U.S. Dollars
| December 31, | June 30, | |||||||
| 2024 | 2024 | |||||||
| Unaudited | ||||||||
| $ | $ | |||||||
| ASSETS | ||||||||
| Current | ||||||||
| Cash and cash equivalents | ||||||||
| Short-term investments | ||||||||
| Accounts receivable (less provision for credit losses of $ in each of December 31, 2024 and June 30, 2024) | ||||||||
| Inventories, net | ||||||||
| Prepaids and other current assets | ||||||||
| Total current assets | ||||||||
| Non-Current | ||||||||
| Property, equipment and operating lease right-of-use (“ROU”) assets, net | ||||||||
| Intangible assets, net | ||||||||
| Other assets | ||||||||
| Total Assets | ||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| Current portion of operating lease obligations | ||||||||
| Total current liabilities | ||||||||
| Non-current | ||||||||
| Operating lease obligations, net of current portion | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 11) | ||||||||
| Shareholders’ Equity | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total Shareholders’ Equity | ||||||||
| Total Liabilities and Shareholders’ Equity | ||||||||
The accompanying notes form an integral part of these condensed consolidated financial statements.
3
InMed Pharmaceuticals Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Expressed in U.S. Dollars
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| $ | $ | $ | $ | |||||||||||||
| Sales | ||||||||||||||||
| Cost of sales | ||||||||||||||||
| Gross profit | ||||||||||||||||
| Operating Expenses | ||||||||||||||||
| Research and development and patents | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Amortization and depreciation | ||||||||||||||||
| Foreign exchange loss (gain) | ( | ) | ( | ) | ||||||||||||
| Total operating expenses | ||||||||||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest and other income | ||||||||||||||||
| Finance expense | ( | ) | ( | ) | ||||||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Tax expense | ||||||||||||||||
| Net loss for the period | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss per share for the period | ||||||||||||||||
| Basic and diluted | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Weighted average outstanding common shares | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
The accompanying notes form an integral part of these condensed consolidated financial statements.
4
InMed Pharmaceuticals Inc.
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)
For the Three and Six Months ended December 31, 2024 and 2023
Expressed in U.S. Dollars
| Common Shares | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total | ||||||||||||||||||||
| # | $ | $ | $ | $ | $ | |||||||||||||||||||
| Balance July 1, 2024 | ( | ) | ||||||||||||||||||||||
| Private placement | ||||||||||||||||||||||||
| Share issuance costs | - | ( | ) | ( | ) | |||||||||||||||||||
| Exercise of pre-funded warrants | ( | ) | ||||||||||||||||||||||
| Loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||
| Balance September 30, 2024 | ( | ) | ||||||||||||||||||||||
| Private Placement | ||||||||||||||||||||||||
| Share issuance costs | - | ( | ) | ( | ) | |||||||||||||||||||
| Loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||
| Balance December 31, 2024 | ( | ) | ||||||||||||||||||||||
| Common Shares | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total | ||||||||||||||||||||
| # | $ | $ | $ | $ | $ | |||||||||||||||||||
| Balance July 1, 2023 | ( | ) | ||||||||||||||||||||||
| Loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||
| Balance September 30, 2023 | ( | ) | ( | ) | ||||||||||||||||||||
| Private placement | ||||||||||||||||||||||||
| Share issuance costs | - | ( | ) | ( | ) | |||||||||||||||||||
| Loss for the period | - | ( | ) | ( | ) | |||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||
| Balance December 31,2023 | ( | ) | ||||||||||||||||||||||
The accompanying notes form an integral part of these condensed consolidated financial statements.
5
InMed Pharmaceuticals Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the Six Months ended December 31, 2024 and 2023
Expressed in U.S. Dollars
| 2024 | 2023 | |||||||
| $ | $ | |||||||
| Cash provided by (used in): | ||||||||
| Operating Activities | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Items not requiring cash: | ||||||||
| Amortization and depreciation | ||||||||
| Share-based compensation | ||||||||
| Amortization of ROU assets | ||||||||
| Interest income received on short-term investments | ( | ) | ( | ) | ||||
| Unrealized foreign exchange loss | ||||||||
| Inventory write-down | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Inventories | ||||||||
| Prepaids and other currents assets | ( | ) | ( | ) | ||||
| Other non-current assets | ||||||||
| Accounts receivable | ( | ) | ||||||
| Accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
| Deferred rent | ||||||||
| Operating lease obligations | ( | ) | ( | ) | ||||
| Total cash used in operating activities | ( | ) | ( | ) | ||||
| Investing Activities | ||||||||
| Sale of short-term investments | ||||||||
| Purchase of short-term investments | ( | ) | ( | ) | ||||
| Purchase of property and equipment | ( | ) | ||||||
| Total cash used in investing activities | ( | ) | ||||||
| Financing Activities | ||||||||
| Proceeds from the private placement | ||||||||
| Private placement issuance costs | ( | ) | ( | ) | ||||
| Total cash provided by financing activities | ||||||||
| (Decrease) increase in cash during the period | ( | ) | ||||||
| Cash and cash equivalents beginning of the period | ||||||||
| Cash and cash equivalents end of the period | ||||||||
| SUPPLEMENTARY CASH FLOW INFORMATION: | ||||||||
| Cash Paid During the Period for: | ||||||||
| Income Taxes | $ | $ | ||||||
| Interest | $ | $ | ||||||
| SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
| Fair value of warrant modification recorded as equity issuance costs | $ | |||||||
| Preferred investment options to its placement agent | $ | |||||||
| Recognition of ROU asset and corresponding operating lease liability | $ | $ | ||||||
The accompanying notes form an integral part of these condensed consolidated financial statements.
6
InMed Pharmaceuticals Inc.
Notes to the Condensed Consolidated Financial Statements
| 1. | CORPORATE INFORMATION AND CONTINUING OPERATIONS |
Business
InMed
Pharmaceuticals Inc. (“InMed” or the “Company”) was incorporated in the Province of British Columbia on
The Company’s shares are listed on the Nasdaq Capital Market (“Nasdaq”) under the trading symbol “INM”. InMed’s office and principal place of business is located at Suite 1445– 885 West Georgia Street, Vancouver, B.C., Canada, V6C 3E8.
Going Concern
In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued.
Through
December 31, 2024, the Company has funded its operations primarily with proceeds from the sale of the Company’s common shares,
no par value per share (the “Common Shares”). The Company has incurred recurring losses and negative cash flows from operations
since its inception, including net losses of approximately $
As
of the issuance date of these unaudited condensed consolidated financial statements, the Company expects its cash, cash equivalents and
short-term investments of $
The Company expects to continue to seek additional funding through equity financings, debt financings or other capital sources, including collaborations with other companies, government contracts or other strategic transactions. The Company may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of the Company’s existing shareholders.
In connection with the Company’s assessment of going concern considerations in accordance with Subtopic 205-40, management has determined that the Company’s liquidity condition raises substantial doubt about the Company’s ability to continue as a going concern, which is considered to be for a period of one year from the issuance of these condensed consolidated financial statements. These unaudited condensed consolidated financial statements do not include any adjustments relating to recoverability and classification of recorded asset amounts or the amounts of classification of liabilities that might result from the outcome of this uncertainty. Such adjustments could be material.
7
| 2. | SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation
These unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles as applied in the United States (“US GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for financial information.
These unaudited condensed consolidated financial statements reflect all adjustments, consisting solely of normal recurring adjustments, which, in the opinion of management, are necessary for a fair presentation of results for the interim periods presented. The results of operations for the three and six months ended December 31, 2024 and 2023 are not necessarily indicative of results that can be expected for a full year. These unaudited condensed consolidated financial statements follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company for the fiscal year ended June 30, 2024.
On November 14, 2024, the Company effected a reverse stock split of the Company’s issued and outstanding Common Shares, by a ratio of 20-to-1 (the “Reverse Stock Split”). Accordingly, all Common Shares, stock options, warrants, as well as per share information, for all periods presented in the condensed consolidated financial statements and notes thereto have been adjusted retrospectively to reflect this Reverse Stock Split.
Reclassifications
Certain prior year amounts in the unaudited condensed consolidated financial statements and the notes thereto have been reclassified where necessary to conform to the current year’s presentation. These reclassifications did not affect the prior period’s total assets, total liabilities, stockholders’ deficit, net loss or net cash used in operating activities. During the year ended June 30, 2024, the Company adopted ASU 2023-07 - Improvements to Reportable Segment Disclosures which has required prior periods to reflect the change in presentation. Refer to discussion on Recent Accounting Pronouncements below.
Use of Estimates
The preparation of financial statements in compliance with US GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities as of the balance sheet date, and the corresponding revenues and expenses for the periods reported. It also requires management to exercise judgment in applying the Company’s accounting policies. In the future, actual experience may differ from these estimates and assumptions. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to these unaudited condensed consolidated financial statements are the application of the going concern assumptions, determining the fair value of share-based payments, income tax provisions, write-down of inventories to net realizable value, and the assumptions used in the determination of research & development accruals.
Actual results could differ from those estimates.
Basis of Consolidation
These unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiaries, InMed Pharmaceutical Ltd; BayMedica, LLC; Biogen Sciences Inc.; and Sweetnam Consulting Inc. Biogen Sciences Inc. and Sweetnam Consulting Inc. are inactive subsidiaries. A subsidiary is an entity that the Company controls, either directly or indirectly, where control is defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. All inter-company transactions and balances including unrealized income and expenses arising from intercompany transactions are eliminated in preparing these condensed consolidated financial statements.
Foreign Currency
The functional currency of the Company and its subsidiaries is the U.S. Dollar. These unaudited condensed consolidated financial statements are presented in U.S. Dollars. References to “$” and “US$” are to United States (“U.S.”) dollars and references to “C$” are to Canadian dollars.
Cash and Cash Equivalents
Cash
and cash equivalents include cash-on-hand, demand deposits with financial institutions and other short-term, highly liquid investments
with original maturities of three months or less when acquired that are readily convertible to known amounts of cash and subject to an
insignificant risk of change in value. As of December 31, 2024 and June 30, 2024, the Company held $
8
Short-term Investments
Short-term investments include fixed and variable rate guaranteed investment certificates, with terms greater than three months and less than twelve months. Due to the short-term nature of these investments the fair value of the investments approximates the current value. Guaranteed investment certificates are convertible to known amounts of cash and are subject to an insignificant risk of change in value.
Accounts Receivable
Accounts receivable are recorded at invoiced amounts, net of any credit losses. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in existing accounts receivable.
The Company evaluates the collectability of accounts receivable on a regular basis based upon various factors including the financial condition and payment history of customers, an overall review of collections experience on other accounts and economic factors or events expected to affect future collections experience.
Concentration of Credit Risk and Other Risks and Uncertainties
At
times, cash balances may exceed the Federal Deposit Insurance Corporation (“FDIC”) or Canadian Deposit Insurance Corporation
insurable limits. The Company has not previously experienced any losses related to these balances. The uninsured cash balance as of December
31, 2024 was $
The Company’s customers are primarily concentrated in the United States.
Concentration of customers
The following tables summarizes the information about the Company’s concentration of customers:
| Customer A | Customer B | Customer C | Customer D | Customer E | ||||||||||||||||
| Three Months Ended December 31, 2024 | ||||||||||||||||||||
| Revenues, customer concentration risk | % | % | % | |||||||||||||||||
| Three Months Ended December 31, 2023 | ||||||||||||||||||||
| Revenues, customer concentration risk | % | % | ||||||||||||||||||
| Six Months Ended December 31, 2024 | ||||||||||||||||||||
| Revenues, customer concentration risk | % | % | % | % | ||||||||||||||||
| Six Months Ended December 31, 2023 | ||||||||||||||||||||
| Revenues, customer concentration risk | % | % | % | % | % | |||||||||||||||
| As of December 31, 2024 | ||||||||||||||||||||
| Accounts receivable, customer concentration risk | % | % | % | |||||||||||||||||
| As of June 30, 2024 | ||||||||||||||||||||
| Accounts receivable, customer concentration risk | % | % | % | % | % | |||||||||||||||
| * |
Inventories
Inventories are initially valued at weighted average cost and subsequently valued at the lower of weighted average cost and net realizable value. Costs included in inventories are the purchase price of goods and cost of services rendered, freight costs, warehousing costs, purchasing costs and production and labor costs related to manufacturing.
In determining any valuation allowances, the Company reviews inventory for obsolete, redundant, and slow-moving goods.
9
Property, Equipment and ROU Assets, Net
Computer equipment, lab equipment and furnishings are recorded at cost, less accumulated depreciation and accumulated impairment losses. The initial cost of computer equipment, lab equipment and furnishings comprises their purchase price. The computer equipment, lab equipment and furnishings are reviewed at least once per year for impairment. Equipment and furniture are depreciated using the straight-line method based on their estimated useful lives as follows:
| ● | Computer equipment — | |
| ● | Lab equipment — |
| ● | Furnishings — |
Computer equipment, lab equipment and furnishings, acquired or disposed of during the year, are depreciated proportionately for the period they are in use.
The ROU assets are initially measured based on the initial amount of the operating lease liability adjusted for any lease payments made at or before the commencement date, less any lease incentives received. The assets are amortized to the earlier of the end of the useful life of the ROU asset or the lease term using the straight-line method as this most closely reflects the expected pattern of consumption of the future economic benefits. The lease term includes periods covered by an option to extend if the Company is reasonably certain to exercise that option. In addition, the ROU assets are periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability (see Note 2 Lease (i)).
Intangible Assets, Net
Intangible
assets are comprised of acquired intellectual property, which consists of certain patents and technical know-how. The intellectual property
is recorded at cost and is amortized on a straight-line basis over an estimated useful life of
Impairment of Long-Lived Assets
The Company assesses the recoverability of its long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset or assets. If carrying value exceeds the sum of undiscounted cash flows, the Company then determines the fair value of the underlying asset. Any impairment to be recognized is measured as the amount by which the carrying amount of the asset group exceeds the estimated fair value of the asset group. Assets classified as held for sale are reported at the lower of the carrying amount or fair value, less costs to sell.
Fair Value Measurements
Financial Assets
Financial assets are initially recognized at fair value, plus transaction costs that are directly attributable to their acquisition or issue and subsequently carried at amortized cost, using the effective interest rate method, less any impairment losses. No financial assets are elected to be carried at fair value through profit or loss, or where changes in fair value are recognized in these consolidated statements of operations and comprehensive loss in other comprehensive loss.
Short-term investments are subsequently recorded at cost plus accrued interest, which approximates fair value due to their short-term nature. Accounts receivable are reported at outstanding amounts, net of credit losses.
10
Financial Liabilities
To determine the fair value of financial instruments, the Company uses the fair value hierarchy for inputs used to measure fair value of financial assets and liabilities. This hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels: Level 1 (highest priority), Level 2, and Level 3 (lowest priority).
| Level 1 – | Unadjusted quoted prices in active markets for identical instruments. |
| Level 2 – | Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (i.e., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs). |
| Level 3 – | Inputs are unobservable and reflect the Company’s assumptions as to what market participants would use in pricing the asset or liability. The Company develops these inputs based on the best information available. Assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Changes in the observability of valuation inputs may result in a reclassification of levels for certain securities within the fair value hierarchy. |
The carrying value of cash and cash equivalents, short-term investments, accounts receivable, and accounts payable and accrued liabilities, approximate their carrying values as of December 31, 2024 and June 30, 2024 due to their immediate or short-term maturities.
Revenue Recognition
The Company recognizes revenue when the Company satisfies the performance obligations under the terms of a contract and control of its products and services is transferred to its customers in an amount that reflects the consideration the Company expects to receive from its customers in exchange for those products and services. ASC 606, Revenue from Contracts with Customers defines a five-step process to recognize revenue that requires judgment and estimates, including identifying the contract with the customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations in the contract, and recognizing revenue when or as the performance obligation is satisfied.
Revenue consists of manufacturing and distribution sales of bulk rare cannabinoids, which are generally recognized at a point in time. The Company recognizes revenue when control over the products has been transferred to the customer and the Company has a present right to payment. Sales and other taxes that are required to be remitted to regulatory authorities are recorded as liabilities and excluded from sales. Limited rights of return for claims of damaged or non-compliant products, exist with the Company’s customers.
The Company has elected the practical expedient that allows it to recognize the incremental costs of obtaining a contract as an expense, when incurred, if the amortization period of the asset that the Company otherwise would have recognized is one year or less.
Revenues within the scope of ASC 606 do not include material amounts of variable consideration. Customer payments are generally due in advance of when control is transferred to the customer. Some of our larger customers are eligible for payment terms up to ‘net 30 days’.
Cost of Sales
Cost of sales consists primarily of the purchase price of goods and cost of services rendered, freight costs, warehousing costs, and purchasing costs. Cost of sales also includes production and labor costs for the Company’s manufacturing business.
11
Shipping and Handling
The Company records freight billed to customers within net sales. Shipping and handling costs associated with inbound freight and goods shipped to customers are recorded in cost of sales. Other shipping and handling costs, such as for quality assurance, are recorded in operating expenses.
Earnings (Loss) Per Share
Basic earnings (loss) per Common Share (“EPS”) is computed by dividing the net income or loss applicable to Common Shares by the weighted average number of Common Shares outstanding for the relevant period. Diluted earnings (loss) per Common Share (“Diluted EPS”) is computed by dividing the net income or loss applicable to Common Shares by the sum of the weighted average number of Common Shares issued and outstanding and all additional Common Shares that would have been outstanding, if potentially dilutive instruments were converted. If the conversion of outstanding stock options and warrants into Common Shares is anti-dilutive, then diluted EPS is not presented separately from EPS.
The following table sets forth the number of potential Common Shares that have been excluded from diluted net income (loss) per because their effect was anti-dilutive:
| As of December 31, | ||||||||
| 2024 | 2023 | |||||||
| Options | ||||||||
| Warrants | ||||||||
Share-based Payments
The Company follows the requirements of FASB ASC 718-10-10, Share-Based Payments with regards to stock-based compensation issued to employees and non-employees. The Company has agreements and arrangements that call for stock to be awarded to the employees and consultants at various times as compensation and periodic bonuses. The expense for this stock-based compensation is equal to the fair value of the stock price on the day the stock was awarded multiplied by the number of shares awarded. The Company has a relatively low forfeiture rate of stock-based compensation and forfeitures are recognized as they occur.
The valuation methodology used to determine the fair value of the options issued during the period is the Black-Scholes option-pricing model. The Black-Scholes model requires the use of a number of assumptions, including the volatility of the stock price, the average risk-free interest rate, and the weighted average expected life of the options. Risk-free interest rates are calculated based on continuously compounded risk-free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its Common Shares and does not intend to pay dividends on its Common Shares in the foreseeable future. The expected forfeiture rate is estimated based on management’s best assessment.
Estimated volatility is a measure of the amount by which InMed’s stock price is expected to fluctuate each year during the expected life of the award. The Company’s calculation of estimated volatility is based on historical stock prices over a period equal to the expected life of the awards.
Research and Development Costs
The Company conducts research and development programs and incurs costs related to these activities, including research and development personnel compensation, services provided by contract research organizations and lab supplies. Research and development costs are expensed in the periods in which they are incurred.
12
Patents and Intellectual Property Costs
The costs of filing for patents and of prosecuting and maintaining intellectual property rights are expensed as incurred due to the uncertainty surrounding the drug development process and the uncertainty of future benefits. Patents and intellectual property acquired from third parties for approved products or where there are alternative future uses are capitalized and amortized over the remaining life of the patent.
Segment Reporting
The Company’s operations consist of two operating and reportable segments, the “InMed Pharma” segment and the “BayMedica Commercial” segment.
The InMed Pharma segment is largely organized around the research and development of small molecule pharmaceuticals drug candidates and the BayMedica Commercial segment is largely organized around manufacturing technologies to produce and commercialize bulk rare cannabinoids for sale as ingredients in the health and wellness industry (See Note 10).
Leases
At inception of a contract, the Company assesses whether a contract is, or contains, a lease based on whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
The lease liability is initially measured as the present value of future lease payments excluding payments made at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate. Generally, the Company uses its incremental borrowing rate as the discount rate. The lease liability is measured at amortized cost using the effective interest method. It is re-measured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Company’s estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension, or termination option. When the lease liability is re-measured in this way, a corresponding adjustment is made to the carrying amount of the ROU asset or is recorded in profit or loss if the carrying amount of the ROU asset has been reduced to nil.
The Company has lease arrangements that include both lease and non-lease components. The Company accounts for each separate lease component and its associated non-lease components as a single lease component for all of its asset classes.
The Company has elected to apply the practical expedient to exclude initial direct costs such as annual operating costs from the measurement of the ROU asset at the date of initial application. The Company has elected to apply the practical expedient not to recognize ROU assets and lease liabilities for short-term leases that have a lease term of 12 months or less. The lease payments associated with these leases is recognized as an expense on a straight-line basis over the lease term.
Recent Accounting Pronouncements
The Company has reviewed recent accounting pronouncements and concluded that they are either not applicable to the Company or that there was no material impact or no material impact is expected in these unaudited condensed consolidated financial statements as a result of future adoption.
In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting Comprehensive Income - Expense Disaggregation Disclosures, which requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The amendments in this update improve financial reporting by requiring that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. This ASU should be applied on a prospective basis, with retrospective application permitted. The amendments in this update are effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the future effect the adoption of this ASU will have on our consolidated financial statements and related disclosures.
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of specific categories meeting a quantitative threshold within the income tax rate reconciliation, as well as disaggregation of income taxes paid by jurisdiction. This ASU, which can be applied either prospectively or retrospectively, is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of this ASU and expects to include updated income tax disclosures in its fiscal year 2026.
In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances reportable segment disclosure requirements primarily through expanded disclosures around significant segment expenses. The amendments are effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company has early adopted this accounting pronouncement.
13
| 3. | INVENTORIES |
Inventories consisted of the following:
| December 31, 2024 | June
30, 2024 | |||||||
| $ | $ | |||||||
| Raw materials | ||||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| Inventories | ||||||||
In
determining any valuation allowances, the Company reviews inventory for obsolete, redundant, and slow-moving goods. During the three
months ended December 31, 2024 and 2023, the write-down of inventories to net realizable value was $ and $
| 4. | PROPERTY, EQUIPMENT AND ROU ASSETS, NET |
Property, equipment and ROU assets consisted of the following:
| December 31, 2024 | June
30, 2024 | |||||||
| $ | $ | |||||||
| ROU Assets (leases) | ||||||||
| Equipment | ||||||||
| Furnishings | ||||||||
| Property and equipment | ||||||||
| Less: accumulated depreciation and amortization | ( | ) | ( | ) | ||||
| Property, equipment and ROU assets, net | ||||||||
Depreciation
expense on computer equipment, lab equipment and furnishing for the three months ended December 31, 2024 and 2023, was $
Depreciation
expense on computer equipment, lab equipment and furnishing for the six months ended December 31, 2024 and 2023, was $
| 5. | INTANGIBLE ASSETS |
The following table summarizes the Company’s intangible assets:
| December 31, 2024 | June
30, 2024 | |||||||
| $ | $ | |||||||
| Intellectual property | ||||||||
| Patents | ||||||||
| Intangible assets | ||||||||
| Less: accumulated amortization | ( | ) | ( | ) | ||||
| Intangible assets, net | ||||||||
Acquired
intellectual property is recorded at cost and is amortized on a straight-line basis over
14
Amortization
expense on intangible assets for the three months ended December 31, 2024 and 2023 was $
| Year ending June 30, | $ | |||
| 2025 (remaining) | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Thereafter | ||||
| Total | ||||
| 6. | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
Accounts payable and accrued liabilities consist of the following:
| December 31, 2024 | June
30, 2024 | |||||||
| $ | $ | |||||||
| Trade payables | ||||||||
| Accrued research and development expenses | ||||||||
| Inventory related accruals | ||||||||
| Employee compensation, benefits and related accruals | ||||||||
| Accrued general and administrative expenses | ||||||||
| Accounts payable and accrued liabilities | ||||||||
| 7. | SHARE CAPITAL AND RESERVES |
Authorized
As of December 31, 2024, the Company’s authorized share structure consisted of an unlimited number of: (i) Common Shares; and (ii) preferred shares without par value. preferred shares were issued and outstanding as of December 31, 2024 and June 30, 2024.
The Company may, from time to time, issue preferred shares and may, at the time of issuance, determine the rights, preferences and limitations pertaining to these shares. Holders of preferred shares may be entitled to receive a preference payment in the event of any liquidation, dissolution or winding up of the Company before any payment is made to the holders of Common Shares.
On
June 27, 2024, the Company entered into an amendment (the “ATM Amendment”) to its At-the-Market Offering Agreement, dated
April 7, 2022 (the “Original ATM Agreement” and together with the ATM Amendment, the “Amended ATM Agreement”),
pursuant to which the Company may offer and sell Common Shares, from time to time, in “at the market” offerings through the
Agent. The ATM Amendment amends the Original ATM Agreement to reflect, among other provisions, updates to certain sales settlement provisions
and reimbursement terms, and to supplement the representations being made by the Company to the Agent. During the six months ended December
31, 2024, the Company issued
On
December 13, 2024, the Company entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, LTD (the “Investor”)
to sell up to $
Under the terms of the SEPA, the Company paid the Investor a one-time structuring fee in the amount of
15
Common Share Warrants
The Company did not grant any warrants during the six months ended December 31, 2024.
A summary of the Company’s warrant activity and related information for the periods covered were as follows:
| Number
of Shares Under Warrants | Weighted Average Exercise Price | |||||||
| Balance as at June 30, 2024 | $ | |||||||
| Warrants Granted | ||||||||
| Exercised | ( | ) | ||||||
| Expire/Cancelled | ||||||||
| Warrants Outstanding as at December 31, 2024 | $ | |||||||
| Warrants Exercisable as at December 31, 2024 | $ | |||||||
As
of December 31, 2024 and June 30, 2024, the warrants exercisable and outstanding have an intrinsic value of $ and $
| 8. | SHARE-BASED PAYMENTS |
| a) | Option Plan Details |
On
March 24, 2017, and as amended on November 20, 2020, the Company’s shareholders approved: (i) the adoption of a new stock option
plan (the “Plan”) pursuant to which the Company’s Board of Directors may, from time to time, in its discretion and
in accordance with applicable regulatory requirements, grant to directors, officers, employees and consultants of the Company, non-transferable
options to purchase Common Shares, provided that the number of Common Shares reserved for issuance will not exceed twenty percent (
As
of each of December 31, 2024 and June 30, 2024, there were
On
December 20, 2024, the Company granted
The weighted average assumptions used in the Black-Scholes option pricing model in valuing stock options granted during the three and six months ended December 31, 2024 and 2023, are summarized in the table below.
| 2024 | 2023 | |||||||
| Exercise price | $ | $ | ||||||
| Risk-free interest rate | % | % | ||||||
| Volatility | % | % | ||||||
| Expected life (years) | ||||||||
| Dividend yield | % | % | ||||||
16
The following is a summary of changes in outstanding options from July 1, 2024 to December 31, 2024 :
| Number | Weighted Average Exercise Price | |||||||
| Balance at July 1, 2024 | $ | |||||||
| Granted | ||||||||
| Expired/Forfeited | ( | ) | ||||||
| Balance at December 31, 2024 | $ | |||||||
| December 31, 2024: | ||||||||
| Vested and exercisable | $ | |||||||
| Unvested | $ | |||||||
Total
expenses arising from share-based payment transactions recognized during the three months ended December 31, 2024 and 2023 were $
Total
expenses arising from share-based payment transactions recognized during the six months ended December 31, 2024 and 2023 were $
Unrecognized
compensation cost as of December 31, 2024 (which was related to unvested options) was $
| 9. | LEASE OBLIGATIONS |
The Company is committed to minimum operating lease payments as follows:
| Maturity Analysis | June 30, | |||
| $ | ||||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| Total undiscounted operating lease liabilities | ||||
| Less: imputed interest | ( |
) | ||
| Present value of operating lease liabilities | ||||
| Less: Current portion of operating lease liabilities | ( |
) | ||
| Non-current portion of operating lease liabilities | ||||
On
July 29, 2024, the Company entered into a lease agreement for new office space. This office occupies approximately
On
October 5, 2023, BayMedica amended its lease located at 458 Carlton Court, Suite C, South San Francisco, California, in order to
| 10. | SEGMENT INFORMATION |
The Company reports segment information based on the management approach, which designates the internal reporting used by the Chief Operating Decision Maker (“CODM”), the Company’s Chief Executive Officer and the senior management team, for making decisions and assessing performance as the source of the Company’s reportable segments. The CODM allocates resources and assesses the performance of each operating segment based on potential licensing opportunities, historical and potential future product sales, operating expenses, and operating income (loss) before interest and taxes. The Company has determined its reportable segments to be ‘InMed Pharma’ and ‘BayMedica Commercial’ based on the information used by the CODM. As such, the pharmaceutical-related research and development carried out at BayMedica is included with the InMed Pharma segment. Other than cash, cash equivalents and short-term investments (“Unrestricted cash”) balances, the CODM does not regularly review asset information by reportable segment and, therefore, the Company does not report asset information by reportable segment.
17
The
‘InMed Pharma’ segment is largely organized around the research and development of small molecule pharmaceuticals drug candidates
and the BayMedica Commercial segment is largely organized around manufacturing technologies to produce and commercialize bulk rare cannabinoids
for sale as ingredients in the health and wellness industry. Total assets held in the ‘InMed Pharma’ segment as of December
31, 2024 and June 30, 2024 were $
The following table presents information about the Company’s reportable segments for the three months ended December 31, 2024 and 2023:
| Three Months Ended December 31, | ||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||
| InMed | BayMedica | Total | InMed | BayMedica | Total | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Sales | ||||||||||||||||||||||||
| Cost of sales | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
| Research and development patents | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| General and Administrative | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Amortization and depreciation | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Foreign exchange gain (loss) | ( |
) | ( |
) | ||||||||||||||||||||
| Interest and other income | ||||||||||||||||||||||||
| Finance expense | ( |
) | ( |
) | ||||||||||||||||||||
| Net Income (Loss) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
The following table presents information about the Company’s reportable segments for the six months ended December 31, 2024 and 2023:
| Six Months Ended December 31, | ||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||
| InMed | BayMedica | Total | InMed | BayMedica | Total | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Sales | ||||||||||||||||||||||||
| Cost of sales | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
| Research and development patents | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| General and Administrative | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Amortization and depreciation | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
| Foreign exchange gain (loss) | ( |
) | ( |
) | ||||||||||||||||||||
| Interest and other income | ||||||||||||||||||||||||
| Finance expense | ( |
) | ( |
) | ||||||||||||||||||||
| Net Income (Loss) | ( |
) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||
| Cash and Cash Equivalents | ||||||||||||||||||||||||
| 11. | COMMITMENTS AND CONTINGENCIES |
Pursuant
to the terms of agreements with various contract research organizations, as of December 31, 2024, the Company was committed for contract
research services and materials at a cost of approximately $
Pursuant to the terms of a certain Technology Assignment Agreement, dated as of May 31, 2017 (the “Technology Agreement”), between the Company and the University of British Columbia (“UBC”), the Company is committed to pay royalties to UBC on certain licensing and royalty revenues received by the Company for biosynthesis of certain drug products that are covered by the Technology Agreement. To date, no payments have been required to be made.
18
Pursuant to the terms of a certain Collaborative Research Agreement, dated as of December 13, 2018, between the Company and UBC, pursuant to which the Company owns all rights, title and interests in and to any intellectual property, in addition to funding research at UBC, the Company is committed to make a one-time payment upon filing of any PCT patent application arising from the research. To date, one such payment has been made to UBC.
Pursuant to the terms of a certain Contribution Agreement, dated as of November 1, 2018, between the Company and National Research Council Canada, as represented by its Industrial Research Assistance Program (NRC-IRAP), under certain circumstances contributions received, including the disposition of the underlying intellectual property developed in part with NRC-IRAP contributions, may become repayable. As of December 31, 2024, there have been no triggering events to cause a repayment.
Short-term
investments include guaranteed investment certificates, with one-year terms, of $
In addition to the foregoing, the Company has entered into certain agreements in the ordinary course of operations that may include indemnification provisions, which are common in such agreements. In some cases, the maximum amount of potential future indemnification is unlimited; however, the Company currently holds commercial general liability insurance. This insurance may limit the Company’s overall liability and may enable the Company to recover a portion of any future amounts paid. Historically, the Company has not made any indemnification payments under such agreements, and it believes that the fair value of these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations for any period presented.
Pursuant
to that certain Technology Licensing Agreement, dated as of March 11, 2021, between the Company and EyeCRO LLC, the Company is committed
to issue, subject to regulatory approval, up to
BayMedica
entered into a patent license agreement (“Patent License Agreement”) with a third party (the “Licensor”) on February
15, 2021. The Company was required to begin making royalty payments to the Licensor based on net sales of licensed products in 2021 in
order to maintain an exclusive license. In December 2021, the Company amended the Patent License Agreement, which amendment included
the deferral of the 2021 minimum payments to 2022. As of June 30, 2023, the Company had paid $
19
On July 18, 2024, BayMedica received a letter from the Licensor alleging breach of the Patent License Agreement and asserting monies due thereunder. On August 7, 2024, BayMedica responded asserting that the counterparty’s interpretation of the Patent License Agreement was again incorrect and that BayMedica, therefore, does not owe any funds under the Patent License Agreement.
To date, the Licensor has not initiated a lawsuit with respect to the foregoing matters. If a lawsuit is ultimately brought alleging a breach of the Patent License Agreement, the proceeding will be subject to final, binding and non-appealable arbitration under the Arbitration Act, 1991 (Ontario) and determined pursuant to Ontario law. BayMedica intends to vigorously defend its position. At this time, it is not possible to reasonably estimate a potential loss due to the terms of the Patent License Agreement, the nature of the legal theory advanced by the counterparty, and the ultimate outcome of any proceeding (including the interpretation by the arbitrator with respect to applicable requirements under Ontario law regarding contract formation).
| 12. | RELATED PARTY TRANSACTIONS |
On
February 11, 2022, the Board of Directors appointed Janet Grove as a director of the Company, a position she held until February 10,
2025, at which time the Company’s Board of Directors (the “Board”), upon the outcome of the Nominating & Governance
Committee’s determination and recommendation, elected to accept her resignation from the Board (see Note
13 – Subsequent Events). Ms. Grove is a Partner of Norton Rose Fulbright Canada LLP (“NRFC”). During the three
months ended December 31, 2024 and 2023, NRFC and Norton Rose Fulbright US LLP (“NRFUS” and together with NRFC, “NRF”)
rendered legal services in the amount of $
| 13. | SUBSEQUENT EVENTS |
The Company has evaluated subsequent events through the date of the filing of this Quarterly Report and determined that there have been no events that have occurred that would require adjustments to our disclosures in the unaudited condensed consolidated financial statements except for the matters described below.
In
January 2025, the Company issued
In
January 2025, the Company issued
At the Company’s 2024 Annual General Meeting held on December 18, 2024 (the “2024 AGM”), the Company’s shareholders withheld the election of one nominee, Ms. Janet Grove, from being appointed as a member of the Company’s Board of Directors (the “Board”), in accordance with the Company’s Majority Voting Policy. As a result, Ms. Grove offered her resignation to the Board, and the Company’s Nominating & Governance Committee, in accordance with the Majority Voting Policy, considered her resignation and ultimately recommended to the Board to accept Ms. Grove’s resignation. On February 10, 2024, the Board elected to accept Ms. Grove’s resignation. The Board intends to initiate a search for an independent director to replace Ms. Grove as soon as reasonably practicable. In the interim, the Board will continue to operate with the remaining four directors, and each committee of the Board will be comprised of the three independent directors who were re-appointed for directorship at the 2024 AGM. The Board Chair will assume the role of Chair of the Nominating & Governance Committee.
20
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
This discussion and analysis contains certain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and is subject to the safe harbor created by those sections. For more information, see “Special Note Regarding Forward-Looking Statements.” When reviewing the discussion below, you should keep in mind the substantial risks and uncertainties that impact our business. In particular, we strongly encourage you to review the risks and uncertainties described in “Risk Factors” in the 2024 Annual Report, the “Risk Factors” identified in Item 1A. of this Quarterly Report, and other filings we make from time to time with the SEC. These risks and uncertainties could cause actual results to differ materially from those projected or implied by our forward-looking statements contained in this Quarterly Report on Form 10-Q. These forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q, and we do not intend, and do not assume any obligation, to update these forward-looking statements, except as required by law.
The following discussion and analysis should be read in conjunction with our audited consolidated financial statements for the year ended June 30, 2024, and the related notes thereto, which have been prepared in accordance with U.S. GAAP. Additionally, the following discussion and analysis should be read in conjunction with our audited consolidated financial statements included in our Annual Report. Throughout this discussion, unless the context specifies or implies otherwise the terms “InMed,” “Company,” “we,” “us,” and “our” refer to InMed Pharmaceuticals Inc.
All dollar amounts stated herein are in U.S. dollars unless specified otherwise.
Overview
We are a pharmaceutical company developing a pipeline of proprietary small molecule drug candidates that are preferential signaling ligands of the endogenous CB1 and CB2 receptors as well as other receptor targets linked to human disease. CB1 and CB2 receptors are each part of the endocannabinoid system that is found throughout the human body and is responsible for many homeostatic functions. CB1 receptors are primarily located in the brain and central nervous system, while CB2 receptors are involved in modulating neuroinflammation and immune responses. Our research efforts target the treatment of diseases with high unmet medical needs. Together with BayMedica, we also have significant know-how in developing proprietary manufacturing approaches to produce and sell bulk rare cannabinoids as ingredients for various market sectors.
InMed has sought to focus on the research and development of preferential signaling ligands of CB1 and CB2, and has produced a library of novel, proprietary drug candidates (“Product Candidates”). These Product Candidates are patentable new chemical entities (“NCEs”) for pharmaceutical development, aimed at targeting diverse clinical indications. Our current pharmaceutical pipeline consists of three programs, with drug candidates targeting Alzheimer’s disease, dry age-related macular degeneration, and Epidermolysis Bullosa.
InMed’s INM-901 is a proprietary small molecule, disease modifying drug candidate being developed as a potential treatment for Alzheimer’s disease. INM-901 has multiple potential mechanisms of action as a preferential signaling agonist for both CB1 and CB2 receptors, as well as impacting the peroxisome proliferator-activated receptor (“PPAR”) signaling pathway. Combined, these mechanisms of action may offer a unique treatment approach targeting several biological pathways associated with Alzheimer’s disease.
Outcomes from our ocular research, based on the proprietary small molecule INM-089, indicates potentially promising neuroprotective effects in the back of the eye, which may lead to the preservation of the retinal function. Neuroprotection in dry Aged-related Macular Degeneration (“dry AMD”) remains an unmet medical need and a new treatment option may help solve this multifactorial disease.
InMed has completed a Phase 2 clinical trial of INM-755 (cannabinol) cream studying its safety and efficacy in treating symptoms related to Epidermolysis Bullosa (“EB”). Results from the Phase 2 clinical trial showed a positive indication of enhanced anti-itch activity for INM-755 cream versus the control cream alone in an exploratory clinical evaluation. The Company is also pursuing strategic partnership opportunities for INM-755 in epidermolysis bullosa and other itch-related skin conditions.
Together with our wholly owned subsidiary BayMedica, our manufacturing capabilities include traditional approaches such as chemical synthesis and biosynthesis, as well as a proprietary, integrated manufacturing approach called IntegraSyn. With multiple manufacturing approaches, InMed has sought to maintain enhanced flexibility to select the most cost-effective method to deliver high quality, high purity Products and Product Candidates fit for their intended use. BayMedica’s commercial business specializes in the B2B commercialization of bulk rare, non-intoxicating cannabinoids as raw materials for the Health and Wellness sector that are bioidentical to those found in nature.
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Recent Developments
NASDAQ Compliance
As previously reported by the Company, on March 19, 2024, the Company received written notification from the Listing Qualifications Department of Nasdaq (the “Nasdaq Staff”), that the Company has been granted an additional 180-day compliance period, or until September 16, 2024 (the “Extended Compliance Period”), to regain compliance with Nasdaq’s minimum bid price requirement for the continued listing on Nasdaq, as set forth in Nasdaq Listing Rule 5550(a)(2) (“the Minimum Bid Price Rule”). The Company was unable to regain compliance during the Extended Compliance Period and on September 17, 2024, the Company received an additional notification from the Nasdaq Staff stating that due to the deficiency, the Company’s securities would be delisted from Nasdaq on September 26, 2024, unless the Company appealed Nasdaq’s determination to a Hearings Panel (“the Panel”). The Company subsequently timely requested the Hearing before the Panel to appeal the determination by Nasdaq and present its plan to regain and sustain compliance with the Minimum Bid Price Rule. On October 31, 2024, the Hearing was held before the Panel regarding the Company’s request for (i) continued listing on Nasdaq and (ii) additional time to regain compliance with the Minimum Bid Price Rule. On November 1, 2024, the Panel issued its determination (the “Panel Determination Letter”) to the Company granting the Company’s request for the continued listing of the Common Shares on Nasdaq, but subject to the Company’s evidencing compliance with the Minimum Bid Price Rule for ten consecutive trading days as of December 2, 2024 (the “Requisite Compliance Date”) and of other conditions stipulated by the Panel Determination Letter. On November 14, 2024, the Company effected the Reverse Stock Split in order to regain compliance with the Minimum Bid Price Rule, and on December 2, 2024, the Company received a written notification from the Nasdaq Staff that (i) it had regained compliance with the Minimum Bid Price Rule prior to the Requisite Compliance Date, and (ii) the Panel had therefore determined to continue the listing of our Common Shares on the Nasdaq Stock Market and was closing this matter.
Reverse Stock Split
On November 14, 2024, the Company effected a reverse stock split of the Company’s issued and outstanding Common Shares, by a ratio of 20-to-1 (the “Reverse Stock Split”). Trading of our Common Shares on Nasdaq on a split-adjusted basis began as of November 14, 2024. As a result of the Reverse Stock Split, every twenty shares of Common Shares were combined into one Common Share, and the total number of Common Shares outstanding were reduced from approximately 14,361,550 Common Shares to approximately 718,032 Common Shares. No fractional Common Shares were issued if, as a result of the Reverse Stock Split, a registered shareholder would otherwise become entitled to a fractional share. Instead, shareholders who otherwise were entitled to receive fractional Common Shares because they held a number of Common Shares not evenly divisible by the ratio of the Reverse Stock Split were automatically entitled to receive an additional Common Share. Unless otherwise noted, the share-related information reflected herein reflects our Common Shares on a split-adjusted basis.
Renewal of ATM Program
As previously reported by the Company on the Company’s Current Report on Form 8-K filed on June 28, 2024, on June 27, 2024, the Company entered into an amendment (the “ATM Amendment”) to its At-the-Market Offering Agreement, dated April 7, 2022 (the “Original ATM Agreement” and together with the ATM Amendment, the “Amended ATM Agreement”), by and between the Company and H.C. Wainwright & Co., LLC (the “Agent”), as sales agent, pursuant to which the Company may offer and sell shares of our Common Shares, from time to time, in “at the market” offerings through the Agent. The Original ATM Agreement was previously filed with the Securities and Exchange Commission on April 7, 2022 on the Company’s Current Report on Form 8-K. The ATM Amendment amends the Original ATM Agreement to reflect, among other provisions, updates to certain sales settlement provisions and reimbursement terms, and to supplement the representations being made by the Company to the Agent. Our Common Shares sold under the Amended ATM Agreement will be offered and sold pursuant to the Company’s shelf registration statement on Form S-3, which was initially filed on February 4, 2022 and amended on February 9, 2022, and was declared effective by the SEC on February 11, 2022. The foregoing description of the terms of the ATM Amendment does not purport to be complete and is qualified in its entirety by reference to the full text of the ATM Amendment.
As of the date of this Quarterly Report, the Company has issued a total of 313,245 Common Shares for gross proceeds of $1.9 million, pursuant to the terms of the Amended ATM Agreement. The Company’s Registration Statement on Form S-3 which was previously filed with the SEC in connection with the transactions contemplated by the Amended ATM Agreement expired on February 10, 2025.
Standby Equity Purchase Agreement
On December 13, 2024, the Company entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, LTD (the “Investor”) to sell up to $10 million in the aggregate of our Common Shares at any time during the 36-month period following the effective date of the SEPA (the “Effective Date”). The total number of Common Shares under the terms of the SEPA is limited to a number equivalent to 19.99% of the outstanding Common Shares as of the Effective Date unless certain pricing conditions are met, which could have the effect of limiting the total proceeds made available to the Company under the SEPA. In addition, the issuance of our Common Shares under the SEPA is subject to further limitations, including that the Common Shares beneficially owned by the Investor and its affiliates will not exceed 9.99% in the aggregate of our Common Shares issued and outstanding. The Common Shares issued and sold to the Investor will be priced at 97% of the Market Price (as defined in the SEPA) during a specified three-day pricing period.) The Company reserves the right to set a minimum acceptable price for the Common Share issuances made under the SEPA. The Company did not issue any Common Shares under the SEPA as at December 31, 2024. Certain terms of the SEPA, including with respect to the specified three-day pricing period discussed above, may be modified or waived, as mutually agreed upon by the Investor, on the one hand, and the Company, on the other, in accordance with Section 12.02 and the other provisions of the SEPA. The foregoing description of the terms of the SEPA does not purport to be complete and is qualified in its entirety by reference to the full text of the SEPA.
Under the terms of the SEPA, the Company paid the Investor a one-time structuring fee in the amount of $25,000 and the Company is also obligated to pay a commitment fee in an amount equal to 2.50% of the Commitment Amount (or $250,000), 25% of which was paid in December 2024. The remaining 75% of the Commitment Fee shall be paid in three equal quarterly installments beginning on the three-month anniversary of the Effective Date, with each such installment to be paid at the Company’s option either in cash or by the issuance to the Investor of such number of Common Shares that is equal to such portion of the deferred fee divided by the lowest daily VWAP of the Common Shares during the consecutive Trading Days immediately prior to the date of such installment at the Effective Date. The Commitment Fee and other SEPA related fees of $351,549 were expensed during the three and six months ended December 31, 2024, since at the inception of the arrangement, the fees exceeded the fair value of the asset recognized. The SEPA was precluded from equity treatment in accordance with ASC 815-40-25 as the SEPA was not deemed fixed according to the accounting standard.
As of the date of this Quarterly Report, the Company has issued a total of 413,336 Common Shares for gross proceeds of $2,455,600 pursuant to the terms of the SEPA.
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Annual General Meeting – Director Resignation
At the Company’s 2024 Annual General Meeting held on December 18, 2024 (the “2024 AGM”), the Company’s shareholders withheld the election of one nominee, Ms. Janet Grove, from being appointed as a member of the Company’s Board of Directors (the “Board”), in accordance with the Company’s Majority Voting Policy. As a result, Ms. Grove offered her resignation to the Board, and the Company’s Nominating & Governance Committee, in accordance with the Majority Voting Policy, considered her resignation and ultimately recommended to the Board to accept Ms. Grove’s resignation. On February 10, 2024, the Board elected to accept Ms. Grove’s resignation. The Board intends to initiate a search for an independent director to replace Ms. Grove as soon as reasonably practicable. In the interim, the Board will continue to operate with the remaining four directors, and each committee of the Board will be comprised of the three independent directors who were re-appointed for directorship at the 2024 AGM. The Board Chair will assume the role of Chair of the Nominating & Governance Committee.
Advancements to the INM-901 program
On January 21, 2025, we announced positive results from a long-term in vivo preclinical Alzheimer’s Disease (“AD”) study. In the study, INM-901 demonstrated a reduction in several plasma and brain markers of neuroinflammation, a recognized contributor to Alzheimer’s disease development and progression. Results from the long-term study of INM-901 in a well-characterized Alzheimer’s disease model demonstrated the following:
| ● | Improved cytokine profile – INM-901 treated groups showed a dose-dependent and statistically significant reduction in plasma pro-inflammatory cytokines such as TNF-α, IL-1ß and INF-γ. Cytokine networks, when deregulated, may contribute to tissue inflammation. |
| ● | Reduction in neurodegeneration biomarker – INM-901 demonstrated a dose-dependent and statistically significant reduction in neurofilament light chain (“NfL”) in the plasma for the high dose treated group. NfL is a protein that is released from neurons in response to injury or disease. NfL levels are used to assess cellular damage in neurodegenerative disease. |
| ● | Study supported by mRNA data – mRNA assessments showed a reduction of several key neuroinflammatory genes in the brain, such as GFAP, CD-33 and TLR-2, further supporting the overall results from the study. |
Advancements to the INM-089 program
On February 3, 2025, we announced the selection of an intravitreal formulation for INM-089 as a drug candidate to be utilized in the Company’s ongoing development program targeting the treatment of Age-related Macular Degeneration (“AMD”). The Company’s proprietary IVT formulation, combined with the INM-089 active pharmaceutical ingredient (“API”), has been successfully delivered to the targeted area of the eye in preclinical studies in doses of up to 10 times the calculated safety margin relative to the therapeutic dose level. This INM-089 IVT formulation will be used in the next stages of preclinical studies, including GLP-enabling studies and subsequent stages of clinical development. Additionally, the Company has recently completed a series of dose-ranging in vivo studies, which will help guide the Company in selecting the appropriate doses for the pivotal preclinical toxicology studies.
Components of Results of Operations
Revenue
Our revenue consists of manufacturing and distribution sales of bulk rare cannabinoid Products, which are generally recognized at a point in time. The Company recognizes revenue when control over the products has been transferred to the customer and the Company has a present right to payment.
Cost of Sales
Cost of sales consists primarily of the purchase price of goods and cost of services rendered, freight costs, warehousing costs, and purchasing costs. Cost of sales also includes production and labor costs for our manufacturing business.
Operating Expenses
Research and Development and Patent Expenses
Research and development and patent expenses represent costs incurred by us for the discovery, development, and manufacture of our Products and Product Candidates, and include:
| ● | external research and development expenses incurred under agreements with contract research organizations (“CROs”), CDMOs and consultants; |
| ● | salaries, payroll taxes, employee benefits expenses for individuals involved in research and development efforts; |
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| ● | research supplies; and | |
| ● | legal and patent office fees related to patent and intellectual property matters. |
We expense research and development costs as incurred. We recognize expenses for certain development activities, such as preclinical studies and manufacturing, based on an evaluation of the progress to completion of specific tasks using data or other information provided to us by our vendors. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of expenses incurred. Non-refundable advance payments for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. These amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered, or the services rendered.
External costs represent a significant portion of our research and development expenses, which we track on a program-by-program basis following the nomination of a development candidate. Our internal research and development expenses consist primarily of personnel-related expenses, including salaries, benefits, and stock-based compensation expenses. We do not track our internal research and development expenses on a program-by-program basis as the resources are deployed across multiple projects.
The successful development of our Products and Product Candidates is highly uncertain. At this time, we cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete the remainder of the development of our Product Candidates or to develop and commercialize additional Products. We are also unable to predict when, if ever, material net cash inflows will commence from our Product Candidates, if approved. This is due to the numerous risks and uncertainties associated with development, including the uncertainty related to:
| ● | the timing and progress of preclinical and clinical development activities; |
| ● | the number and scope of preclinical and clinical programs we decide to pursue; |
| ● | our ability to raise additional funds necessary to complete preclinical and clinical development and commercialization of our Product Candidates, to further advance the development of our manufacturing technologies, and to develop and commercialize additional Products, if any; |
| ● | our ability to maintain our current research and development programs and to establish new ones; |
| ● | our ability to establish sales, licensing or collaboration arrangements; |
| ● | the progress of the development efforts of parties with whom we may enter into collaboration arrangements; |
| ● | the successful initiation and completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory authority; |
| ● | the receipt and related terms of regulatory approvals from applicable regulatory authorities; |
| ● | the availability of materials for use in production of our Products and Product Candidates; |
| ● | our ability to secure manufacturing supply through relationships with third parties or establish and operate a manufacturing facility; |
| ● | our ability to consistently manufacture our Product Candidates in quantities sufficient for use in clinical trials; |
| ● | our ability to obtain and maintain intellectual property protection and regulatory exclusivity, both in the United States and internationally; |
| ● | our ability to maintain, enforce, defend and protect our rights in our intellectual property portfolio; |
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| ● | the commercialization of our Product Candidates, if and when approved, and of new Products; |
| ● | our ability to obtain and maintain third-party payor coverage and adequate reimbursement for our Product Candidates, if approved; |
| ● | the acceptance of our Product Candidates, if approved, by patients, the medical community and third-party payors; |
| ● | competition with other products; and |
| ● | a continued acceptable safety profile of our Product Candidates following receipt of any regulatory approvals. |
A change in the outcome of any of these variables with respect to the development of any of our Products or Product Candidates would significantly change the costs and timing associated with the development of those Products or Product Candidates.
Research and development activities account for a significant portion of our operating expenses. Research and development expenses increased in the six months ended December 31, 2024, as compared to our six months ended December 31, 2023, primarily due to an increased level of work in support of our current programs. During the year, we expect our research and development expenses to increase significantly in future periods as we continue to implement our business strategy, which includes advancing our drug candidates and our manufacturing technologies into and through clinical development, expanding our research and development efforts, including hiring additional personnel to support our research and development efforts, ultimately seeking regulatory approvals for our drug candidates that successfully complete clinical trials, and further developing selected research and development and commercial BayMedica activities. In addition, drug candidates in later stages of clinical development generally incur higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. Accordingly, although we expect our research and development expenses to increase as our drug candidates advance into later stages of clinical development, we do not believe that it is possible, at this time, to accurately project total program-specific expenses through to commercialization. There are numerous factors associated with the successful commercialization of any of our Product Candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development.
General and Administrative Expenses
General and administrative expenses consist of personnel-related costs, including salaries, benefits and stock-based compensation expense, for our personnel in executive, finance and accounting, human resources, business operations and other administrative functions, investor relations activities, legal fees related to corporate matters, fees paid for accounting and tax services, consulting fees and facility-related costs.
Amortization and Depreciation
Intangible assets are comprised of intellectual property that we acquired in 2014 and 2015 and trade secrets, product formulation knowledge, patents that we acquired in October 2021. The acquired intellectual property and patents are amortized on a straight-line basis based on their estimated useful lives. Equipment and leasehold improvements are depreciated using the straight-line method based on their estimated useful lives.
Share-based Payments
Share-based payments are the stock-based compensation expense related to our granting of stock options to employees and others. The fair value, at the grant date, of equity-settled share awards is charged to our loss over the period for which the benefits of employees and others providing similar services are expected to be received. The vesting components of graded vesting employee awards are measured separately and expensed over the related tranche’s vesting period. The amount recognized as an expense is adjusted to reflect the number of share options expected to vest. The fair value of awards is calculated using the Black-Scholes option pricing model, which considers the exercise price, current market price of the underlying shares, expected life of the award, risk-free interest rate, expected volatility and the dividend yield.
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Other Income
Other income consists primarily of interest income earned on our cash, cash equivalents and short-term investments.
Results of Operations
The Company has two operating and reportable segments based on the management approach which designates the internal reporting used by the CODM, the Company’s Chief Executive Officer and the senior management team, for making decisions and assessing performance as the source of the Company’s reportable segments. The CODM allocates resources and assesses the performance of each operating segment based on potential licensing opportunities, historical and potential future product sales, operating expenses, and operating income (loss) before interest and taxes. The Company has determined its reportable segments to be ‘InMed Pharma’ and ‘BayMedica Commercial’ based on the information used by the CODM.
Comparison of the three months ended December 31, 2024 and 2023 for InMed Pharma Segment
| Three
Months Ended December 31, | ||||||||||||||||
| 2024 | 2023 | Change | % Change | |||||||||||||
| (in thousands) | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development and patents | $ | 1,056 | $ | 567 | $ | 489 | 86 | % | ||||||||
| General and administrative | 1,333 | 1,164 | 169 | 15 | % | |||||||||||
| Amortization and depreciation | 53 | 55 | (2 | ) | (4 | )% | ||||||||||
| Foreign exchange (gain) loss | 48 | (60 | ) | 108 | (180 | )% | ||||||||||
| Total operating expenses | 2,490 | 1,726 | 764 | 44 | % | |||||||||||
| Interest and other income | 31 | 165 | (134 | ) | (81 | )% | ||||||||||
| Finance expense | (352 | ) | - | (352 | ) | (100 | )% | |||||||||
| Net loss | $ | (2,811 | ) | $ | (1,561 | ) | $ | (1,250 | ) | 80 | % | |||||
Research and Development and Patents Expenses
Research and development and patents expenses increased by $489,000 in our InMed Pharma segment, or 86%, for the three months ended December 31, 2024, as compared to the three months ended December 31, 2023. The increase in research and development and patents expenses primarily resulted from an increase in external contractors relating to our INM-901 and INM-089 programs and patent fees, offset by a decrease in compensation expense. However, we expect our research and development expenses to increase significantly in future periods as we move closer towards clinical trials for the INM-901 and INM-089 programs which will result in higher costs related studies, drug supplies, and increased regulatory requirements, as we continue to implement our business strategy.
General and administrative expenses
General and administrative expenses increased by $169,000 in our InMed Pharma segment, or 15%, for the three months ended December 31, 2024, as compared to the three months ended December 31, 2023. The increase results primarily from a combination of changes including higher consulting fees, legal fees, and personnel expenses. This was offset by a decrease in lower office and administrative expenses.
Foreign exchange loss
The Company’s functional currency is the US dollar and our foreign exchange loss is predominantly due to transactions with foreign currency. Foreign exchange loss increased by $108,000 in our InMed Pharma segment, or 180%, for the three months ended December 31, 2024, as compared to the three months ended December 31, 2023, as a consequence of the Company holding non-U.S. denominated assets and liabilities combined with fluctuations in foreign exchange rates.
Finance expense
Finance expenses increased by $352,000 in our InMed Pharma segment, for the three months ended December 31, 2024, as compared to the three months ended December 31, 2023. The increase in finance expenses resulted from the fees incurred pursuant to the SEPA.
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Comparison of the three months ended December 31, 2024 and 2023 for BayMedica Commercial Segment
| Three
Months Ended December 31, | ||||||||||||||||
| 2024 | 2023 | Change | % Change | |||||||||||||
| (in thousands) | ||||||||||||||||
| Sales | $ | 1,112 | $ | 1,240 | $ | (128 | ) | (10 | )% | |||||||
| Cost of sales | 651 | 916 | (265 | ) | (29 | )% | ||||||||||
| Gross profit | 461 | 324 | 137 | 42 | % | |||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development and patents | 5 | 43 | (38 | ) | (88 | )% | ||||||||||
| General and administrative | 221 | 200 | 21 | 11 | % | |||||||||||
| Amortization and depreciation | 1 | 1 | - | - | ||||||||||||
| Total operating expenses | 227 | 244 | (17 | ) | (7 | )% | ||||||||||
| Tax expense | - | 1 | (1 | ) | (100 | )% | ||||||||||
| Net Income | $ | 234 | $ | 81 | $ | 153 | 189 | % | ||||||||
Sales
Sales decreased by $128,000 in our BayMedica Commercial segment, or 10%, for the three months ended December 31, 2024, as compared to the three months ended December 31, 2023. The decrease in sales primarily resulted from the Company lowering product pricing due to increased competition. BayMedica will continue to evaluate opportunities for potential structured supply arrangements and collaborations for the commercial business. Sales and marketing efforts will remain focused on products that contribute the highest margins, where BayMedica continues to hold a strong competitive position.
Cost of Sales
Cost of goods sold decreased by $265,000 in our BayMedica Commercial segment, or 29%, for the three months ended December 31, 2024, as compared to the three months ended December 31, 2023. The decrease in cost of goods sold is primarily the result of a decrease in write-down of inventories to net realizable value during the three months ended December 31, 2024.
Comparison of the Six months ended December 31, 2024 and 2023 for InMed Pharma Segment
| Six
Months Ended December 31, | ||||||||||||||||
| 2024 | 2023 | Change | % Change | |||||||||||||
| (in thousands) | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development and patents | $ | 1,819 | $ | 1,839 | $ | (20 | ) | (1 | )% | |||||||
| General and administrative | 2,571 | 2,227 | 344 | 15 | % | |||||||||||
| Amortization and depreciation | 107 | 109 | (2 | ) | (2 | )% | ||||||||||
| Foreign exchange (gain) loss | 28 | (11 | ) | 39 | 355 | % | ||||||||||
| Total operating expenses | 4,525 | 4,164 | 361 | 9 | % | |||||||||||
| Interest and other income | 88 | 301 | (213 | ) | (71 | )% | ||||||||||
| Finance expense | (352 | ) | - | (352 | ) | (100 | )% | |||||||||
| Net loss | $ | (4,789 | ) | (3,863 | ) | $ | (926 | ) | 24 | % | ||||||
General and administrative expenses
General and administrative expenses increased by $344,000 in our InMed Pharma segment, or 15%, for the six months ended December 31, 2024, as compared to the six months ended December 31, 2023. The increase resulted primarily from a combination of changes including higher consulting fees, accounting and legal fees, personnel expenses, and investor relation expenses. This was offset by a decrease in lower office and administrative expenses.
Finance expense
Finance expenses increased by $352,000 in our InMed Pharma segment, for the six months ended December 31, 2024, as compared to the three months ended December 31, 2023. The increase in finance expenses resulted from the fees incurred pursuant to the SEPA.
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Comparison of the six months ended December 31, 2024 and 2023 for BayMedica Commercial Segment
| Six
Months Ended December 31, | ||||||||||||||||
| 2024 | 2023 | Change | % Change | |||||||||||||
| (in thousands) | ||||||||||||||||
| Sales | $ | 2,376 | $ | 2,142 | $ | 234 | 11 | % | ||||||||
| Cost of sales | 1,422 | 1,797 | (375 | ) | (21 | )% | ||||||||||
| Gross profit | 954 | 345 | 609 | 177 | % | |||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development and patents | 13 | 63 | (50 | ) | (79 | )% | ||||||||||
| General and administrative | 404 | 435 | (31 | ) | (7 | )% | ||||||||||
| Amortization and depreciation | 1 | 1 | - | - | % | |||||||||||
| Total operating expenses | 418 | 499 | (81 | ) | (16 | )% | ||||||||||
| Tax expense | - | 1 | (1 | ) | (100 | )% | ||||||||||
| Net Income | $ | 536 | $ | (153 | ) | $ | 689 | 450 | % | |||||||
Sales
Sales increased by $234,000 in our BayMedica Commercial segment, or 11%, for the six months ended December 31, 2024, as compared to the six months ended December 31, 2023. The increase in sales resulted from expanded marketing efforts and increased demand for certain cannabinoid products. BayMedica will continue to evaluate opportunities for potential structured supply arrangements and collaborations for the commercial business. Sales and marketing efforts will remain focused on products that are expected to contribute highest margins, where BayMedica continues to hold a strong competitive position.
Cost of Sales
Cost of goods sold decreased by $375,000 in our BayMedica Commercial segment, or 21%, for the six months ended December 31, 2024, as compared to the six months ended December 31, 2023. The decrease in cost of goods sold is primarily the result of a decrease in write-down of inventories to net realizable value during the six months ended December 31, 2024.
Liquidity and Capital Resources
Since our inception, we have incurred significant operating losses, generated limited revenue from product sales, and no sales from any other sources, and have negative cash flows from our operations. We have not yet commercialized any of our Product Candidates and we do not expect to generate revenue from sales of any Product Candidates for several years, if at all. We have funded our operations to date primarily with proceeds from the sale of our Common Shares.
As of December 31, 2024, we had cash, cash equivalents and short-term investments of $3.5 million.
The following table summarizes our cash flows for each of the periods presented:
| (in thousands) | Six
Months Ended December 31, 2024 | Six
Months Ended December 31, 2023 | ||||||
| Net cash used in operating activities | $ | (4,329 | ) | $ | (4,022 | ) | ||
| Net cash used in investing activities | - | (9 | ) | |||||
| Net cash provided by financing activities | 1,177 | 4,653 | ||||||
| Net (decrease) increase in cash and cash equivalents | $ | (3,152 | ) | $ | 622 | |||
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Operating Activities
During the six months ended December 31, 2024, we used cash in operating activities of $4.3 million, primarily resulting from our net loss of $4.3 million combined with a $218,000 decrease in changes in our non-cash working capital, partially offset by non-cash share-based compensation expenses and inventory write-down.
During the six months ended December 31, 2023, we used cash in operating activities of $4.0 million, primarily resulting from our net loss of $4.0 million combined with changes in our working capital and non-cash expenses contributing to net cash used in operating activities.
Investing Activities
During the six months ended December 31, 2023, cash used in investing activities of $9,291 resulted from the purchases and sale of short-term investments, as well as the purchase of property and equipment.
Financing Activities
During the six months ended December 31, 2024, cash provided by financing activities of $1.2 million consisted of $1.4 million in gross proceeds derived from the Amended ATM Agreement, offset by total transaction costs of $250,000. The Company’s Registration Statement on Form S-3 which was previously filed with the SEC in connection with the transactions contemplated by the Amended ATM Agreement expired on February 10, 2025.
During the six months ended December 31, 2023, cash provided by financing activities consisted of $4.7 million consisted of $5.2 million of gross proceeds from private placements of our common shares, offset by total transaction costs of $0.5 million.
Funding Requirements
We expect our expenses to increase substantially in connection with our ongoing research and development activities, particularly as we continue the research and development of and the clinical trials for our Product Candidates. In addition, we expect to incur additional costs associated with any required investment into BayMedica’s research and development efforts targeting cannabinoid analogs. As a result, we expect to incur substantial operating losses and negative operating cash flows for the foreseeable future.
In accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), we have evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued.
Through December 31, 2024, we funded our operations primarily with proceeds from the sale of our Common Shares. We have incurred recurring losses and negative cash flows from operations since its inception, including net losses of $4.3 million and $4.0 million for the six months ended December 31, 2024 and 2023, respectively. In addition, we have an accumulated deficit of $113 million as of December 31, 2024. The Company expects to continue to generate operating losses for the foreseeable future.
As of the issuance date of these unaudited condensed consolidated financial statements, the Company expects its cash, cash equivalents and short-term investments of $3.5 million as of December 31, 2024 and the receipt of $2.9M in gross proceeds from financing activities which took place in January 2025 (refer to Note 7 – Share Capital and Reserves and Note 13 – Subsequent Events included in this Quarterly Report), to be sufficient to fund its operating expenses and capital expenditure requirements through the end of the second quarter of calendar 2025, depending on the level and timing of realizing BayMedica revenues from the sale of bulk rare cannabinoids in the ‘health & wellness’ sector as well as the level and timing of Company operating expenses. The future viability of the Company is dependent on its ability to raise additional capital to finance its operations. The Company has concluded that there is substantial doubt about its ability to continue as a going concern within one year after the date that the unaudited condensed consolidated financial statements are issued.
We expect to continue to seek additional funding through equity financings, debt financings or other capital sources, including collaborations with other companies, government contracts or other strategic transactions. We may not be able to obtain financing on acceptable terms, or at all. The terms of any financing may adversely affect the holdings or the rights of our existing shareholders.
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Our funding requirements and timing and amount of our operating expenditures will depend largely on:
| ● | the scope, progress, results and costs of discovery research, preclinical development, laboratory testing and clinical trials for our Product Candidates; |
| ● | the scope, progress, results and costs of development of our manufacturing technologies; |
| ● | the number of and development requirements for other Products and Product Candidates that we pursue; |
| ● | the costs, timing and outcome of regulatory review of our Product Candidates; |
| ● | our ability to enter into contract manufacturing arrangements for supply of materials and manufacture of our Products and Product Candidates and the terms of such arrangements; |
| ● | the impact of any acquired, or in-licensed, externally developed product(s) and/or technologies; |
| ● | our ability to establish and maintain strategic collaborations, licensing or other arrangements, including sales arrangements, and the financial terms of such arrangements; |
| ● | the sales, costs and timing of future commercialization activities, including product manufacturing, sales, marketing and distribution, for any of our Products and for Product Candidates for which we may receive marketing approval; |
| ● | the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights and defending any intellectual property- related claims; |
| ● | expansion costs of our operational, financial and management systems and increases to our personnel, including personnel to support our clinical development, manufacturing and commercialization efforts and our operations as a dual listed company; |
| ● | the costs to obtain, maintain, expand and protect our intellectual property portfolio; and |
| ● | the level and timing of realizing revenues from the BayMedica commercial operations. |
A change in the outcome of any of these, or other variables with respect to the development of any of our Products and Product Candidates, could significantly change the costs and timing associated with their development. We will need to continue to rely on additional financing to achieve our business objectives.
In addition to the variables described above, if and when any of our Product Candidates successfully complete development, we will incur substantial additional costs associated with regulatory filings, marketing approval, post-marketing requirements, maintaining our intellectual property rights, and regulatory protection, in addition to other commercial costs. We cannot reasonably estimate these costs at this time.
Until such time, if ever, as we can generate substantial revenues from either our Products or Product Candidates, we expect to finance our cash needs through a combination of equity or debt financings and collaboration arrangements. We currently have no credit facility or committed sources of capital. To the extent that we raise additional capital through the future sale of equity securities, the ownership interests of our shareholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common shareholders. If we raise additional funds through the issuance of debt securities, these securities could contain covenants that would restrict our operations. We may require additional capital beyond our currently anticipated amounts, and additional capital may not be available on reasonable terms, or at all. If we raise additional funds through collaboration arrangements or other strategic transactions in the future, we may have to relinquish valuable rights to our technologies, future revenue streams, Products or Product Candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate development or future commercialization efforts or grant rights to develop and market Products or Product Candidates that we would otherwise prefer to develop and market ourselves.
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Off-Balance Sheet Arrangements
During the periods presented, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations promulgated by the SEC.
Critical Accounting Policies and Significant Judgments and Estimates
Our significant accounting policies are described in Note 2 of the Financial Statements. The estimates will require us to rely upon assumptions that were highly uncertain at the time the accounting estimates are made, and changes in them are reasonably likely to occur from period to period. Changes in estimates used in these and other items could have a material impact on our financial statements in the future. Our estimates will be based on our experience and our interpretation of economic, political, regulatory, and other factors that affect our business prospects. Actual results may differ significantly from our estimates. For detailed information regarding our critical accounting policies and estimates, see our financial statements and notes thereto included in this Report and in our 2024 Annual Report. There have been no material changes to our critical accounting policies and estimates from those disclosed in our 2024 Annual Report.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and, as such, are not required to provide the information under this Item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2024. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to its management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2024, our principal executive officer and principal financial officer concluded that, as of such date, our disclosure controls and procedures were effective.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the six-month period ended December 31, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II
ITEM 1. LEGAL PROCEEDINGS.
We are not presently involved in any active legal proceedings that we believe to be material to the Company. However, from time to time, we may be subject to various pending or threatened legal actions, claims and proceedings, including those that arise in the ordinary course of our business (including, but not limited to, the matters discussed in Note 11 of the unaudited condensed consolidated financial statements included in this Quarterly Report).
ITEM 1A. RISK FACTORS.
Reference is made to Part I, Item 1A, “Risk Factors” included in the 2024 Annual Report for information concerning risk factors, which should be read in conjunction with the factors set forth in “Cautionary Statement Regarding Forward-Looking Statements” of this Report. There have been no material changes with respect to the risk factors disclosed in our 2024 Annual Report, except as set forth below. You should carefully consider such factors in the 2024 Annual Report, and below, which could materially affect our business, financial condition or future results. The risks described in the 2024 Annual Report and below, are not exhaustive and therefore, there are additional risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
We may require additional financing, and a failure to obtain this necessary capital when needed could force us to delay, limit, or reduce our investments in advertising and other strategic initiatives planned for future growth.
On December 13, 2024, we entered the SEPA with the Investor, whereby we have the right, but not the obligation, to sell to the Investor Common Shares up to the Commitment Amount during the 36-month period following the Effective Date, subject to certain conditions. The Common Shares that may be issued under the SEPA may be sold by us to the Investor at our discretion from time to time and sales of Common Shares under the SEPA will depend upon market conditions and other factors. Additionally, in no event may we sell and issue the aggregate number of Common Shares that is equal to or in excess of the Exchange Cap, unless we obtain shareholder approval to issue Common Shares in excess of the Exchange Cap in accordance with applicable Nasdaq rules and comply with certain other requirements as described in the SEPA. We are unable to predict or provide assurances as of the date of this Quarterly Report that such shareholder approval would be obtained on a timely manner, if at all. As a result, unless our stock price exceeds $5.15, we will be unable to sell the full Commitment Amount to the Investor without seeking stockholder approval to issue additional Common Shares in excess of the Exchange Cap. In addition, the issuance of Common Shares under the SEPA is subject to further limitations, including that the Common Shares beneficially owned by the Investor and its affiliates will not exceed 9.99%, in the aggregate.
We may ultimately decide to sell all or some of the Common Shares that may be available for us to sell pursuant to the SEPA. Because the purchase price per share to be paid by the Investor for the Common Shares that we may elect to sell under the SEPA will fluctuate based on the market prices of our Common Shares during the applicable pricing period for each of those sales, it is not possible for us to predict, as of the date of this Quarterly Report and prior to any such sales, the number of Common Shares that we will sell under the SEPA, the purchase price per share or the aggregate gross proceeds that we will receive from those purchases under the SEPA. Further, the resale by the Investor of a significant number of Common Shares at any given time, or the perception that such sales may or are likely to occur, could cause the market price of our Common Shares to materially decline and be highly volatile.
Accordingly, due to the foregoing, we may not have access to the full Commitment Amount unless the market price of our Common Shares remains stable throughout the term of the SEPA. Any significant decrease to the price of our Common Shares could materially limit our ability to sell the full Commitment Amount to the Investor. If the aggregate selling price of our Common Shares under the SEPA is below $5.15, it is possible that we may not be permitted to draw the full amount of proceeds of the drawdown request from the Investor, which may not provide adequate funding for our planned operations and may materially decrease our liquidity.
The transition to a new presidential administration in the United States, including the potential use and effects of tariffs to address the administration’s policy goals, could materially impact the macroeconomic framework in which we operate.
The transition to a new presidential administration in the United States could impact the macroeconomic framework in which we operate, and we are unable to precisely predict what actions the new administration will take. For example, on February 1, 2025, the current U.S. presidential administration announced the implementation of a 25% additional tariff on imports from Canada. While the administration agreed to put a 30-day pause on the implementation of such tariffs, such tariffs may ultimately be re-implemented in the event that the United States and Canada are ultimately unable to agree to economic terms. Any trade wars, through the implementation of tariffs or otherwise, has the potential to adversely affect us, including by impacting (a) the supply chains for our operations as well as the third parties with whom we engage, and (b) the macroeconomic markets at large.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURE.
None
ITEM 5. OTHER INFORMATION.
Rule 10b5-1 Plan and Non-Rule 10b5-1 Trading Arrangement Adoptions, Terminations, and Modifications
During
the six months ended December 31, 2024, none of our directors or “officers” (as defined in Rule 16a-1(f) under the Exchange
Act)
Annual General Meeting – Director Resignation
At the 2024 AGM, the Company’s shareholders withheld the election of one nominee, Ms. Janet Grove, from being appointed as a member of the Board, in accordance with the Company’s Majority Voting Policy. As a result, Ms. Grove offered her resignation to the Board, and the Company’s Nominating & Governance Committee, in accordance with the Majority Voting Policy, considered her resignation and ultimately recommended to the Board to accept Ms. Grove’s resignation. On February 10, 2024, the Board elected to accept Ms. Grove’s resignation. The Board intends to initiate a search for an independent director to replace Ms. Grove as soon as reasonably practicable. In the interim, the Board will continue to operate with the remaining four directors, and each committee of the Board will be comprised of the three independent directors who were re-appointed for directorship at the 2024 AGM. The Board Chair will assume the role of Chair of the Nominating & Governance Committee.
ITEM 6. EXHIBITS.
Exhibits
The following exhibits are filed as part of this report:
| * | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| INMED PHARMACEUTICALS INC. | ||
| (Registrant) | ||
| Dated: February 12, 2025 | By: | /s/ Netta Jagpal |
| Chief Financial Officer | ||
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Exhibit 31.1
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Eric A. Adams, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of InMed Pharmaceuticals Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 12, 2025
| /s/ Eric A. Adams | ||
| Name: | Eric A. Adams | |
| Title: | President and Chief Executive Officer | |
Exhibit 31.2
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Netta Jagpal, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of InMed Pharmaceuticals Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 12, 2025
| /s/ Netta Jagpal | ||
| Name: | Netta Jagpal | |
| Title: | Chief Financial Officer | |
Exhibit 32.1
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Eric A. Adams, the President and Chief Executive Officer of InMed Pharmaceuticals Inc. (the “Company”), hereby certify that, to my knowledge:
| 1. | The Quarterly Report on Form 10-Q for the quarter ended December 31, 2024 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: February 12, 2025
| /s/ Eric A. Adams | ||
| Name: | Eric A. Adams | |
| Title: | President and Chief Executive Officer | |
Exhibit 32.2
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, I, Netta Jagpal, the Chief Financial Officer of InMed Pharmaceuticals Inc. (the “Company”), hereby certify that, to my knowledge:
| 1. | The Quarterly Report on Form 10-Q for the quarter ended December 31, 2024 (the “Report”) of the Company fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: February 12, 2025
| /s/ Netta Jagpal | ||
| Name: | Netta Jagpal | |
| Title: | Chief Financial Officer | |