InMed Pharmaceuticals Inc 10-Q for FY2024 Q1
InMed Pharmaceuticals Inc. (MTRI)
About this 10-Q
InMed Pharmaceuticals Inc filed this 10-Q on November 14, 2023, covering the quarter ended September 30, 2023 (FY2024 Q1).
Headline figures
Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $901.86K
- up 181.1% from $320.79K a year earlier
- Net loss
- $2.54M
- compared with a net loss of $3.51M a year earlier
- Diluted EPS
- -$0.76
- compared with -$4.06 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 File Number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | ||
| (Address of Principal Executive Offices) | (Zip Code) |
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| The |
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 Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) 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 was required to submit such files).
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.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act): Yes ☐ No
As of November 10, 2023, the registrant had
INDEX
i
PART I
ITEM 1. CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS.
Unaudited Condensed Consolidated Interim Financial Statements of
InMed Pharmaceuticals Inc.
For the Three Months Ended September 30, 2023 and 2022
Suite 310 – 815 West Hastings Street
Vancouver, BC, Canada, V6C 1B4
Tel: +1-604-669-7207
1
InMed Pharmaceuticals Inc.
(Expressed in U.S. Dollars)
September 30, 2023
| INDEX | Page | ||
| Financial Statements (Unaudited) | |||
| ● | Condensed Consolidated Interim Balance Sheets | 3 | |
| ● | Condensed Consolidated Interim Statements of Operations | 4 | |
| ● | Condensed Consolidated Interim Statements of Shareholders’ Equity | 5 | |
| ● | Condensed Consolidated Interim Statements of Cash Flows | 6 | |
| ● | Notes to the Condensed Consolidated Interim Financial Statements | 7-15 | |
2
InMed Pharmaceuticals Inc.
CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS
Expressed in U.S. Dollars
| September 30, | |||||||||||
| Note | 2023 (unaudited) | June 30, 2023 | |||||||||
| $ | $ | ||||||||||
| ASSETS | |||||||||||
| Current | |||||||||||
| Cash and cash equivalents | |||||||||||
| Short-term investments | 11 | ||||||||||
| Accounts receivable, net | |||||||||||
| Inventories | 3 | ||||||||||
| Prepaids and other current assets | |||||||||||
| Total current assets | |||||||||||
| Non-Current | |||||||||||
| Property, equipment and ROU assets, net | 4 | ||||||||||
| Intangible assets, net | 5 | ||||||||||
| Other assets | |||||||||||
| Total Assets | |||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| Current | |||||||||||
| Accounts payable and accrued liabilities | 6 | ||||||||||
| Current portion of lease obligations | 9 | ||||||||||
| Deferred rent | |||||||||||
| Total current liabilities | |||||||||||
| Non-current | |||||||||||
| Lease obligations, net of current portion | 9 | ||||||||||
| Total Liabilities | |||||||||||
| Commitments and Contingencies (Note 14) | |||||||||||
| Shareholders’ Equity | |||||||||||
| Common shares, par value, unlimited authorized shares: | |||||||||||
| 7 | |||||||||||
| Additional paid-in capital | 7, 8 | ||||||||||
| Accumulated deficit | ( | ) | ( | ) | |||||||
| Accumulated other comprehensive income | |||||||||||
| Total Shareholders’ Equity | |||||||||||
| Total Liabilities and Shareholders’ Equity | |||||||||||
| Related Party Transactions (Note 12) | |||||||||||
| Subsequent Events (Note 13) | |||||||||||
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
3
InMed Pharmaceuticals Inc.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS (unaudited)
Expressed in U.S. Dollars
| For the Three Months Ended | ||||||||||
| September 30 | ||||||||||
| Note | 2023 | 2022 | ||||||||
| $ | $ | |||||||||
| Sales | ||||||||||
| Cost of sales | ||||||||||
| Inventory write-down | 3 | |||||||||
| Gross profit | ( | ) | ||||||||
| Operating Expenses | ||||||||||
| Research and development and patents | ||||||||||
| General and administrative | ||||||||||
| Amortization and depreciation | 4, 5 | |||||||||
| Foreign exchange loss | ||||||||||
| Total operating expenses | ||||||||||
| Other Income (Expense) | ||||||||||
| Interest and other income | ||||||||||
| Loss before income taxes | ( | ) | ( | ) | ||||||
| Tax expense | ( | ) | ||||||||
| Net loss | ( | ) | ( | ) | ||||||
| Net loss per share | ||||||||||
| ( | ) | ( | ) | |||||||
| Weighted average outstanding common shares | ||||||||||
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
4
InMed Pharmaceuticals Inc.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF SHAREHOLDERS’ EQUITY
For the Three Months ended September 30, 2023 and 2022 (unaudited)
Expressed in U.S. Dollars
| Note | Common Shares | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total | |||||||||||||||||||||||
| # | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Balance July 1, 2023 | ( | ) | ||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Share-based compensation | 8 | - | ||||||||||||||||||||||||||
| Balance September 30, 2023 | ( | ) | ||||||||||||||||||||||||||
| Additional | Accumulated Other | |||||||||||||||||||||||||||
| Note | Common Shares | Paid-in Capital | Accumulated Deficit | Comprehensive Income | Total | |||||||||||||||||||||||
| # | $ | $ | $ | $ | $ | |||||||||||||||||||||||
| Balance July 1, 2022 | ( | ) | ||||||||||||||||||||||||||
| Private placement | ||||||||||||||||||||||||||||
| Share issuance costs | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||
| Agents’ investment options | - | |||||||||||||||||||||||||||
| Exercise of pre-funded warrants | ( | ) | ||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||
| Share-based compensation | 8 | - | ||||||||||||||||||||||||||
| Balance September 30, 2022 | ( | ) | ||||||||||||||||||||||||||
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
5
InMed Pharmaceuticals Inc.
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
For the Three Months ended September 30, 2023 and 2022 (unaudited)
Expressed in U.S. Dollars
| Note | 2023 | 2022 | |||||||||
| $ | $ | ||||||||||
| Cash provided by (used in): | |||||||||||
| Operating Activities | |||||||||||
| Net loss | ( | ) | ( | ) | |||||||
| Items not requiring cash: | |||||||||||
| Amortization and depreciation | 4, 5 | ||||||||||
| Share-based compensation | 8 | ||||||||||
| Amortization of right-of-use assets | |||||||||||
| Interest income received on short-term investments | ( | ) | ( | ) | |||||||
| Unrealized foreign exchange loss | |||||||||||
| Inventory write-down | 3 | ||||||||||
| 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 | ( | ) | |||||||||
| Deferred revenue | |||||||||||
| Lease obligations | ( | ) | ( | ) | |||||||
| Total cash used in operating activities | ( | ) | ( | ) | |||||||
| Investing Activities | |||||||||||
| Sale of short-term investments | |||||||||||
| Purchase of short-term investments | ( | ) | |||||||||
| Total cash provided by investing activities | |||||||||||
| Financing Activities | |||||||||||
| Shares issued for cash | |||||||||||
| Share 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 Year for: | |||||||||||
| Income taxes | $ | $ | |||||||||
| Interest | $ | $ | |||||||||
| SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | |||||||||||
| Preferred investment options to its placement agent | $ | $ | |||||||||
The accompanying notes form an integral part of these condensed consolidated interim financial statements.
6
InMed Pharmaceuticals Inc.
Notes to the Condensed Consolidated Interim 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 May 19, 1981 under the Business Corporations Act of British Columbia. InMed is a clinical stage pharmaceutical company developing a pipeline of prescription-based products, including rare cannabinoids and novel cannabinoid analogs, targeting the treatment of diseases with high unmet medical needs as well as developing proprietary manufacturing technologies to produce rare cannabinoids for sale in the health and wellness industry.
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 #310 – 815 West Hastings Street, Vancouver, B.C., Canada, V6C 1B4.
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 consolidated financial statements are issued.
Through September
30, 2023, the Company has funded its operations primarily with proceeds from the sale of common stock. 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 condensed consolidated interim 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.
These condensed consolidated interim financial statements have been prepared on a going concern basis, which assumes that the Company will be able to meet its commitments, realize its assets and discharge its liabilities in the normal course. These condensed consolidated interim financial statements do not reflect adjustments to the carrying values of assets and liabilities that would be necessary if the Company was unable to continue as a going concern and such adjustments could be material.
COVID-19 Impacts
The full extent to which the COVID-19 pandemic may directly or indirectly impact the Company’s business, results of operations and financial condition, including expenses, research and development costs and employee-related amounts, will depend on future developments that are evolving and highly uncertain, such as the duration and severity of outbreaks, including potential future waves or cycles, and the effectiveness of actions taken to contain and treat COVID-19. The Company considered the potential impact of COVID-19 when making certain estimates and judgments relating to the preparation of these consolidated financial statements. While there was no material impact to the Company’s consolidated financial statements as of and for the three months ended September 30, 2023, the Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in a material impact to the Company’s consolidated financial statements in future reporting periods.
7
| 2. | SIGNIFICANT ACCOUNTING POLICIES |
Basis of Presentation
These unaudited condensed consolidated interim financial statements have been prepared in accordance with generally accepted accounting principles as applied in the United States (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for financial information. Accordingly, these financial statements do not include all the information and footnotes required for complete financial statements and should be read in conjunction with the audited consolidated financial statements of the Company and the accompanying notes thereto for the fiscal year ended June 30, 2023.
These unaudited condensed consolidated interim 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 months ended September 30, 2023 and 2022 are not necessarily indicative of results that can be expected for a full year. These unaudited condensed consolidated interim 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, 2023.
Reclassifications
Certain prior year amounts in the 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 three months ended September 30, 2023, we adopted a change in presentation on our consolidated statements of operations loss in order to include foreign exchange loss in operating expenses. Prior periods have been revised to reflect this change in the presentation.
Use of Estimates
The preparation of financial statements in compliance with U.S. 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 consolidated financial statements are the estimate of useful life of intangible assets, the application of the going concern assumption, determining the fair value of share-based payments, income tax provisions, write-down of inventories to net realizable value, and warrant valuations.
Actual results could differ from those estimates.
Basis of Consolidation
These condensed consolidated interim financial statements include the accounts of the Company and its subsidiaries, including subsidiaries: InMed Pharmaceutical Ltd., BayMedica, LLC, Biogen Sciences Inc., and Sweetnam Consulting Inc. 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 interim financial statements.
Foreign Currency
The functional currency of the Company and its subsidiaries is the U.S. Dollar. These 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.
Accounts Receivable
Accounts receivable are recorded at invoiced amounts, net of any allowance for doubtful accounts. 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. Expected credit losses on our accounts receivable were $
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.
8
In
determining any valuation allowances, the Company reviews inventory for obsolete, redundant, and slow-moving goods. As of September 30,
2023 and June 30, 2023, the Company has $
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.
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 (CDIC) insurable limits. The Company has not experienced any losses related
to these balances. The uninsured cash balance as of September 30, 2023, was $
The Company’s customers are primarily concentrated in the United States.
As of September 30,
2023, the Company had three customers with an accounts receivable balance representing
For the three
months ended September 30, 2023, the Company had three customers that accounted for
Financial Assets and Liabilities
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 or elected to be carried at fair value through profit or loss or where changes in fair value are recognized in the 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 short term nature. Accounts receivable are reported at outstanding amounts, net of provisions for uncollectable amounts.
Financial Liabilities
To determine the fair value of financial instruments, the Company uses the fair value hierarchy for inputs used to measure the 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 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 at September 30, 2023 and June 30, 2023 due to their immediate or short-term maturities.
9
Earnings (Loss) Per Share
Basic earnings (loss) per common share (“EPS”) is computed by dividing the net income or loss applicable to common shares of the Company 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 share is anti-dilutive, then Diluted EPS is not presented separately from EPS.
| As of September 30, | ||||||||
| 2023 | 2022 | |||||||
| Options | ||||||||
| Warrants | ||||||||
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 the consolidated financial statements as a result of future adoption.
| 3. | INVENTORIES |
| September 30, 2023 | June 30, 2023 | |||||||
| Raw materials | $ | $ | ||||||
| Work in process | ||||||||
| Finished goods | ||||||||
| Inventories | $ | $ | ||||||
During the three months ended September 30, 2023 and 2022, the write-down
of inventories to net realizable value was $
10
| 4. | PROPERTY, EQUIPMENT AND RIGHT OF USE (‘ROU’) ASSETS, NET |
| September 30, 2023 | June 30, 2023 | |||||||
| Right-of-use assets (leases) | $ | $ | ||||||
| Equipment | ||||||||
| Furnishing | ||||||||
| 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 September 30, 2023 and September 30, 2022, was $
| 5. | INTANGIBLE ASSETS |
| September 30, 2023 | June 30, 2023 | |||||||
| 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
Amortization expense on intangible assets for the period ended September
30, 2023 and 2022 was $
| Period ending June 30, | ||||
| 2024 | $ | |||
| 2025 | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| Thereafter | ||||
| Total | $ | |||
11
| 6. | ACCOUNTS PAYABLE AND ACCRUED LIABILITIES |
| September 30, 2023 | June 30, 2023 | |||||||
| Trade payables | $ | $ | ||||||
| Accrued research and development expenses | ||||||||
| Employee compensation, benefits and related accruals | ||||||||
| Accrued general and administrative expenses | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| 7. | SHARE CAPITAL AND RESERVES |
| Authorized |
As of September 30, 2023, the Company’s authorized share structure consisted of: (i) an unlimited number of common shares without par value; and (ii) an unlimited number of preferred shares without par value. No preferred shares were issued and outstanding as of September 30, 2023 and June 30, 2023.
The Company may issue preferred shares and may, at the time of issuance, determine the rights, preference, 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.
| 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 Board of Directors may, from time to time, in its discretion and in accordance with 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 September 30, 2023 and June 30, 2023, there were
Stock options granted prior to May 2021 were granted with Canadian dollar exercise prices (United States dollar amounts for weighted average exercise prices and aggregate intrinsic value are calculated using prevailing rates as at June 30, 2022). Commencing in May 2021, stock options are granted with United States dollar exercise prices.
12
| Number | Weighted Average Exercise Price | |||||||
| Balance at July 1, 2023 | $ | |||||||
| Granted | ||||||||
| Expired/Forfeited | ( | ) | ||||||
| Balance at September 30, 2023 | $ | |||||||
| September 30, 2023: | ||||||||
| Vested and exercisable | $ | |||||||
| Unvested | $ | |||||||
| b) | Expenses Arising from Share-based Payment Transactions: |
Total expenses arising from share-based payment transactions recognized
during the three months ended September 30, 2023 and 2022 were $
| 9. | LEASE OBLIGATIONS |
| Maturity Analysis | September 30, 2023 | |||
| Less than one year | $ | |||
| One to five years | ||||
| More than five years | ||||
| Total undiscounted lease liabilities(1) | ||||
| Less: imputed interest | ( | ) | ||
| Present value of lease liabilities | ||||
| Less: Current portion of lease liabilities | ( | ) | ||
| Non-current portion of lease liabilities | ||||
| (1) |
On October 5, 2023, BayMedica amended its lease located at 458 Carlton
Court, Suite C, South San Francisco, California. The Company agreed to extend its lease to May 14, 2027. The Company is obligated to pay
$
13
| 10. | SEGMENT INFORMATION |
As of the closing of the BayMedica acquisition, the Company aligned into two operating and reportable segments, the InMed segment and the BayMedica segment. The Company reports segment information based on the management approach which designates the internal reporting used by the Chief Operating Decision Maker (“CODM”), which is the Company’s Chief Executive Officer, 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 and BayMedica based on the information used by the CODM. 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.
The InMed segment is largely organized around the research and development
of cannabinoid-based pharmaceuticals products and the BayMedica segment is largely organized around developing proprietary manufacturing
technologies to produce rare cannabinoids for sale in the health and wellness industry. Total assets held in the InMed segment as of September
30, 2023 and June 30, 2023 are $
| For the period ended | ||||||||||||||||||||||||
| September 30, 2023 | September 30, 2022 | |||||||||||||||||||||||
| InMed | BayMedica | Total | InMed | BayMedica | Total | |||||||||||||||||||
| $ | $ | $ | $ | $ | $ | |||||||||||||||||||
| Sales | ||||||||||||||||||||||||
| Cost of sales | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Inventory write-down | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||
| Operating expenses | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Other income (expense) | ||||||||||||||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
| Unrestricted cash | ||||||||||||||||||||||||
| 11. | COMMITMENTS AND CONTINGENCIES |
Pursuant to the
terms of agreements with various contract research organizations, as of September 30, 2023, the Company is committed for contract research
services and materials at a cost of approximately $
Pursuant to the
terms of agreements with various vendors, as of September 30, 2023, the Company is committed for contract materials and equipment at a
cost of approximately $
Pursuant to the terms of a May 31, 2017, Technology Assignment 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 agreement. To date, no payments have been required to be made.
Pursuant to the terms of a December 13, 2018 Collaborative Research Agreement with UBC in 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 November 1, 2018 Contribution Agreement with 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.
Short-term investments include guaranteed investment certificates,
with one-year terms of $
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 limits the Company’s 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.
14
Pursuant to a
technology licensing agreement, the Company is committed to issue, subject to regulatory approval, up to
BayMedica
LLC, a wholly-owned subsidiary of the Company, entered into a patent license agreement (“Agreement”) with a third party (the
“Licensor”) in an agreement dated February 15, 2021. The Company is required to make future royalty payments to the Licensor
based on net sales of licensed products, with minimum payments required starting in 2021 to maintain an exclusive license. In December
2021, the Company amended the License Agreement including the deferral of the 2021 minimum payments to 2022. As of June 30, 2023, the
Company has paid $
From time to time, the Company may be subject to various legal proceedings and claims related to matters arising in the ordinary course of business. The Company does not believe it is currently subject to any material matters where there is at least a reasonable possibility that a material loss may be incurred.
On September 19, 2023,
the Company received written notice from the listing qualifications department staff of The Nasdaq Capital Market (“Nasdaq”)
notifying it that the average closing bid price of the Company’s common shares over a period of 30 consecutive trading days was
below the minimum $
In accordance with applicable Nasdaq procedures, the Company has a period of 180 calendar days following the receipt of the written notice mentioned above to cure the deficiency and regain compliance. The notice has no immediate impact on the listing of the Company’s common shares, which will continue to trade on the Nasdaq subject to the Company’s continued compliance with the other listing requirements of the Nasdaq. The common shares of the Company will continue to trade under the symbol “INM”. The Company intends to monitor the closing share price for its common shares and explore available options to regain compliance.
In the event the Company does not evidence compliance with the minimum bid price requirement during the 180-day grace period, it is expected that Nasdaq would notify the Company that its common shares are subject to delisting. At such time, the Company may appeal such determination to a Nasdaq Hearings Panel (the “Panel”) and it is expected that the Company’s securities would continue to be listed and available to trade on Nasdaq at least pending the completion of the appeal process. There can be no assurance that any such appeal would be successful or that the Company would be able to evidence compliance with the terms of any extension that may be granted by the Panel.
| 12. | RELATED PARTY TRANSACTIONS |
On February 11,
2022, the Board of Directors appointed Janet Grove as a director of the Company. Ms. Grove is a Partner of Norton Rose Fulbright Canada
LLP (“NRF”). During the three months ended September 30, 2023 and 2022, 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 on Form 10-Q and determined that there have been no events that have occurred that would require adjustments to our disclosures in the consolidated financial statements except for the transactions described below.
On
October 24, 2023, the Company entered into a securities purchase agreement with two accredited institutional investors for the sale and
issuance of an aggregate of
Concurrently
with the Company’s entry into the purchase agreement, the Company also entered into an inducement offer letter agreement with the
holders of existing preferred investment options to purchase up to an aggregate of
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q 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 Form 10-Q include, but are not limited to, statements about:
| ● | The Company’s ability to stem operating losses and the Company’s ability to find further financing to fund operations; |
| ● | The revenues of BayMedica, LLC (“BayMedica”) and the commercial viability of the products in its portfolio; |
| ● | Our researching, developing, manufacturing, and commercializing cannabinoid-based biopharmaceutical products will treat diseases with high unmet medical needs; |
| ● | The continued optimization of cannabinoid manufacturing approaches; |
| ● | Our success in initiating discussions with potential partners for licensing various aspects of our Product Candidates; |
| ● | 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 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 high yields of cannabinoids and will be a significant improvement upon existing manufacturing platforms; |
| ● | The ability of the IntegraSyn approach to introduce a revenue stream to us before the expected commercial approval of our therapeutic programs; |
| ● | Our ability to successfully scale up our IntegraSyn or other cost-effective approaches so that it will be commercial-scale ready after Phase 2 clinical trials are completed, after which time we may no longer need to source active pharmaceutical ingredients (“APIs”) from API manufacturers; |
| ● | The success of the key next steps in our manufacturing approaches, including continuing efforts to diversify the number of cannabinoids produced, scaling-up the processes to larger vessels, and identifying external vendors to assist in the commercial scale-up of the process; |
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| ● | Our ability to successfully make determinations as to which research and development programs to continue based on several strategic factors; |
| ● | Our ability to monetize our IntegraSyn manufacturing approach to the broader pharmaceutical industry; |
| ● | 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; |
| ● | Our ability to explore our manufacturing technologies as processes which may confer certain benefits, either cost, yield, speed, or all of the above, when pursuing specific types of cannabinoids, and filing a provisional patent application for same; |
| ● | Plans regarding our next steps, options, and targeted benefits of our manufacturing technologies; |
| ● | Our IntegraSyn or BayMedica derived products being bio-identical to the naturally occurring cannabinoids, and offering superior ease, control and quality of manufacturing when compared to alternative methods; |
| ● | Our ability to potentially earn revenue from our IntegraSyn approach by (i) becoming a supplier of APIs to the pharmaceutical industry and/or (ii) providing pharmaceutical-grade ingredients to the non-pharmaceutical market; |
| ● | U.S. Food and Drug Administration (“FDA”) regulatory acceptance of synthesizing rare cannabinoids for potential use in the pharmaceutical industry; |
| ● | Our ability to successfully prosecute patent applications; |
| ● | INM-088 being a once-a-day or twice-a-day eye drop medication that will compete with treatment modalities in the medicines category, and with the potential of INM-088 assisting in reducing the high rate of non-adherence with current glaucoma therapies; |
| ● | Our belief that with a novel delivery system, the reduction of interocular pressure (“IOP”) and/or providing neuroprotection in glaucoma patients by topical (eye drop) application of cannabinoids will hold significant promise as a new therapy; |
| ● | The potential for any of our patent applications to provide intellectual property protection for us; |
| ● | Our ability to secure insurance coverage for shipping and storage of Product Candidates, and clinical trial insurance; |
| ● | Our ability to expand our insurance coverage to include the commercial sale of Products and Product Candidates; |
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| ● | 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 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 execute our business strategy; |
| ● | Our disclosure controls and procedures and internal control over financial reporting |
| ● | Critical accounting estimates; |
| ● | Management’s assessment of future plans and operations; |
| ● | The outlook of our business and the global economic and geopolitical conditions; and |
| ● | The competitive environment in which we and our business units operate. |
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 the section heading: Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this 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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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
InMed Pharmaceuticals Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
Three months ended September 30, 2023
InMed Pharmaceuticals Inc.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
Three Months Ended September 30, 2023
This discussion and analysis contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and is subject to the safe harbor created by those sections. For more information, see “Cautionary 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 encourage you to review the risks and uncertainties described in “Risk Factors” in our Annual Report on Form 10-K, dated September 29, 2023 and other filings with the Security and Exchange Commission. These risks and uncertainties could cause actual results to differ materially from those projected or implied by our forward-looking statements contained in this report. These forward-looking statements are made as of the date of this report, 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 unaudited condensed consolidated interim financial statements for the three months ended September 30, 2023, 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 Form 10-K filing. 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 clinical stage pharmaceutical company developing a pipeline of prescription-based products, including rare cannabinoids and novel cannabinoid analogs, targeting the treatment of diseases with high unmet medical needs. Together with our subsidiary, BayMedica, we also have significant know-how in developing proprietary manufacturing approaches to produce cannabinoids for various market sectors. Our know-how includes traditional approaches such as chemical synthesis and biosynthesis, as well as a proprietary, integrated manufacturing approach called IntegraSyn. We are dedicated to delivering new therapeutic alternatives to patients and consumers who may benefit from cannabinoid-based products. Our approach leverages on the several thousand years’ history of health benefits attributed to the Cannabis plant and brings this anecdotal information into the 21st century by applying tried, tested and true scientific approaches to establish non-plant-derived (synthetically manufactured), individual cannabinoid compounds as Product Candidates for InMed’s pharmaceutical product development pipeline or specific rare cannabinoid Products sold to end-product manufacturers by BayMedica. While our activities do not involve direct use of Cannabis nor extracts from the plant, we note that the FDA has, to date, not approved any marketing application for Cannabis for the treatment of any disease or condition and has approved only one Cannabis-derived and three Cannabis-related drug products. Our ingredients are synthetically made and, therefore, we have no interaction with the Cannabis plant. We do not grow nor utilize Cannabis nor its extracts in any of our Products or Product Candidates; our current pharmaceutical drug Product Candidates are applied topically (not inhaled nor ingested); and, we do not utilize THC or CBD, the most common cannabinoid compounds that are typically extracted from the Cannabis plant, in any of our Products or Product Candidates. The API under development for our initial two drug candidates, INM-755 for EB and INM-088 for glaucoma, is CBN. Additional uses of both INM-755 and INM-088 are being explored, as well as the application of novel cannabinoid analogs to treat diseases including but not limited to neurodegenerative diseases such as Alzheimer’s, Parkinson’s, and Huntington’s.
We believe we are positioned to develop multiple pharmaceutical Product Candidates in diseases which may benefit from medicines based on rare cannabinoid compounds. Most currently approved cannabinoid therapies are based specifically on CBD and/or THC and are often delivered orally, which has limitations and drawbacks, such as side effects (including the intoxicating effects of THC). Currently, we intend to deliver our rare cannabinoid pharmaceutical Product Candidates through various topical formulations (cream for dermatology, eye drops for ocular diseases) as a way of enabling treatment of the specific disease at the site of disease while seeking to minimize systemic exposure and any related unwanted systemic side effects, including any drug-drug interactions and any metabolism of the active pharmaceutical ingredient by the liver. The cannabinoid Products sold through our B2B raw material supply business are integrated into various product formats by the companies who then further commercializes such products. We access rare cannabinoids via all non-extraction approaches, including chemical synthesis, biosynthesis and our proprietary integrated IntegraSyn approach, thus negating any interaction with or exposure to the Cannabis plant.
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Since our acquisition of Biogen Sciences Inc., a privately held British Columbia pharmaceutical company focused on drug discovery and development of cannabinoids in 2014, our operations have focused on conducting research and development for our Product Candidates and for our integrated, biosynthesis-based manufacturing technology, establishing our intellectual property, organizing and staffing our Company, business planning and capital raising. On October 13, 2021, we acquired BayMedica, Inc., now named BayMedica, LLC. Upon closing of the transaction, BayMedica became a wholly-owned subsidiary of InMed. To date, we have funded our operations primarily through the issuance of common shares.
We have incurred significant operating losses since our inception and we expect to continue to incur significant operating losses for the foreseeable future. Our ability to generate product revenue that is sufficient to achieve profitability will depend heavily on the revenues generated from our products in the health and wellness sector, on the successful development and eventual commercialization of one or more of our Product Candidates and/or the success of our manufacturing technologies. Our net loss was $2.5 million and $3.5 million for the three months ended September 30, 2023 and 2022, respectively. As of September 30, 2023, we had an accumulated deficit of $103.9 million, which includes all losses since our inception in 1981. We expect our expenses will remain steady as we:
| ● | seek partnerships to advance the INM-755 program, our lead drug candidate for the treatment of EB; |
| ● | continue to further advance research into the role of cannabinoids in treating ocular diseases; |
| ● | continue to advance research in the ocular drug development and INM-901 programs, using cannabinoid analogs to target treatment of neurodegenerative diseases such as Alzheimer’s; |
| ● | investigate our Product Candidates for additional uses beyond their initial target indications; |
| ● | pursue the discovery of drug targets based on proprietary cannabinoid analogs for other diseases with high unmet medical needs and the subsequent development of any resulting new Product Candidates; |
| ● | seek regulatory approvals for any Product Candidates that successfully complete clinical trials; |
| ● | scale-up our manufacturing processes and capabilities, or arrange for a third party to do so on our behalf; |
| ● | continue to support our commercial operations and revenue-generating Products at BayMedica; |
| ● | execute on business development activities, including but not limited to company mergers/acquisitions and acquisition or in-licensing of externally developed products and/or technologies; |
| ● | maintain, expand, enforce, defend and protect our intellectual property; |
| ● | continue to further advance the research and development of various manufacturing technologies; |
| ● | build internal infrastructure, including personnel, to meet our milestones; and |
| ● | add operational, financial and management information systems and personnel, including personnel to support product development and potential future commercialization efforts and our operations as a public company. |
As a result of these activities as well as our working capital requirements, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. We expect to finance our operations through product sales, the sale of equity, debt financings or other capital sources, including collaborations with other companies or other strategic transactions. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on favorable terms, or at all. If we fail to raise capital or enter into such agreements as and when needed, we may have to significantly delay, scale back or discontinue the development and commercialization of one or more of our Products and Product Candidates or grant rights to external entities to develop and market our Product Candidates, even if we would otherwise prefer to develop and market such Products and Product Candidates ourselves.
Because of the numerous risks and uncertainties associated with drug development and commercial growth, we are unable to predict the timing or amount of increased expenses and working capital requirements or the timing of when or if we will be able to achieve or maintain profitability. If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
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Recent Developments
On October 24, 2023, the Company entered into a securities purchase agreement with two accredited institutional investors for the sale and issuance of an aggregate of 3,012,049 of its common shares (or pre-funded warrants in lieu thereof) at a purchase price of $0.83 per share. In addition, the Company agreed to issue to the purchasers unregistered preferred investment options to purchase up to an aggregate of 3,012,049 common shares for an exercise price of at a purchase price of $0.83 per preferred investment option.
Concurrently with the Company’s entry into the purchase agreement, the Company also entered into an inducement offer letter agreement with the holders of existing preferred investment options to purchase up to an aggregate of 3,272,733 common shares of the Company issued to the holders on November 21, 2022. Pursuant to the inducement letter, the holders agreed to exercise for cash their existing preferred investment options to purchase an aggregate of 3,272,733 common shares of the Company at a reduced exercise price of $0.83 per share in consideration of the Company’s agreement to issue new unregistered preferred investment options to purchase up to an aggregate of 6,545,466 shares of the Company’s common shares for an exercise price of $0.83. On October 26, 2023, the parties consummated the Offerings.
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. We recognize revenue when control over the products has been transferred to the customer and to which we have a present right to payment.
Cost of Sales
Cost of sales consist 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, or “CROs”, or CDMOs, and consultants; |
| ● | salaries, payroll taxes, employee benefits expenses for individuals involved in research and development efforts; |
| ● | 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 expense. 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; |
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| ● | 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; |
| ● | 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 decreased in the three months ended September 30, 2023 as compared to the three months ended September 30, 2022, largely due to high start-up costs associated with the multicenter Phase 2 clinical trial in our INM-755 program during the prior year. However, 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 R&D 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.
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Amortization and Depreciation
Intangible assets are comprised of intellectual property that we acquired in 2014 and 2015 and trade secrets, product formulation knowledge, and 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 is 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.
Other Income
Other income consists primarily of interest income earned on our cash, cash equivalents and short-term investments.
Results of Operations
As of the closing of the BayMedica acquisition, we aligned into two operating and reportable segments, InMed Pharmaceuticals (the “InMed” segment) and BayMedica (the “BayMedica” segment).
Comparison of the period ended September 30, 2023 and 2022 for InMed Segment
| Three months ended | ||||||||||||||||
| September 2023 | September 2022 | Change | % Change | |||||||||||||
| (in thousands) | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development and patents | $ | 1,017 | $ | 1,080 | $ | (63 | ) | (6 | )% | |||||||
| General and administrative | 759 | 1,093 | (334 | ) | (31 | )% | ||||||||||
| Amortization and depreciation | 26 | 26 | - | - | % | |||||||||||
| Foreign exchange loss | 48 | 97 | (49 | ) | (51 | )% | ||||||||||
| Total operating expenses | 1,850 | 2,296 | (446 | ) | (19 | )% | ||||||||||
| Interest and other income | 67 | 28 | 39 | 139 | % | |||||||||||
| Loss before income taxes | (1,783 | ) | (2,268 | ) | (389 | ) | (18 | )% | ||||||||
| Tax expense | - | - | - | - | % | |||||||||||
| Net loss | $ | (1,783 | ) | $ | (2, 268 | ) | $ | (485 | ) | (21 | )% | |||||
Research and Development and Patents Expenses
Research and development and patents expenses decreased by $0.06 million in our InMed segment, or 6%, for the period ended September 30, 2023 compared to the period ended September 30, 2022. The decrease in research and development and patents expenses was due to a combination of lower research supplies, stock-based compensation expenses, and personnel compensation partially offset by increases in external contractor fees.
General and administrative expenses
General and administrative expenses decreased by $0.3 million in our InMed segment, or 31%, for the period ended September 30, 2023 compared to the period ended September 30, 2022. The decrease results primarily from a combination of changes including lower office and admin fees, accounting and legal fees, stock-based compensation expenses, regulatory fees, consulting fees, and interest expense on lease obligations.
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Comparison of the three months ended September 30, 2023 and 2022 for BayMedica Segment
| Three months ended September 30, | ||||||||||||||||
| 2023 | 2022 | Change | % Change | |||||||||||||
| (in thousands) | ||||||||||||||||
| Sales | $ | 902 | $ | 321 | $ | 581 | 181 | % | ||||||||
| Cost of sales | 788 | 235 | 553 | 235 | % | |||||||||||
| Loss on decline in NRV | 93 | 577 | (484 | ) | (84 | )% | ||||||||||
| Gross profit | 21 | (491 | ) | 512 | 104 | % | ||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development and patents | 275 | 299 | (24 | ) | (8 | )% | ||||||||||
| General and administrative | 540 | 467 | 73 | 16 | % | |||||||||||
| Amortization and depreciation | 28 | 23 | 5 | 22 | % | |||||||||||
| Total operating expenses | 843 | 789 | (54 | ) | (7 | )% | ||||||||||
| Interest and other income | 69 | 45 | 23 | 50 | % | |||||||||||
| Tax expense | - | (7 | ) | 7 | 100 | % | ||||||||||
| Net loss | $ | (753 | ) | $ | (1,242 | ) | $ | 488 | 39 | % | ||||||
Sales
Sales increased by $0.58 million as a result of an increase in sales volume to $0.9 million in our BayMedica segment, or 181%, for the three months ended September 30, 2023 compared to the three months ended September 30, 2022. While sales increased year over year, there was a decrease in revenue of 61% or $1.4 million quarter over quarter due to fluctuations in distributor order patterns. While we are optimistic about the long-term growth potential in the rare cannabinoids sector, we expect revenue fluctuations to continue in future quarters. 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 increased by $0.6 million in our BayMedica segment, or 235%, for the three months ended September 30, 2023 compared to the three months ended September 30, 2022. The increase in cost of goods sold is a result from the increase in sales mentioned above. The Company’s gross margin fluctuation is primarily affected by the product mix sold within the period.
Inventory Write-Down
The write-down of inventories to net realizable value was $0.09 million in our BayMedica segment for the period ended September 30, 2023, with expenses of $0.6 million for the period ended September 30, 2022. Contributing factors to the decrease in net realizable value included lower demand and downward pricing pressure. BayMedica continues to evaluate new manufacturing approaches for certain products to increase its competitive position in the marketplace.
Research and Development and Patents Expenses
Research and development and patents expenses decreased by $0.02 million in our BayMedica segment, or 8%, for the period ended September 30, 2023 compared to the period ended September 30, 2022. The decrease in research and development and patents expenses was primarily due to lower research supplies expense partially offset by increases in external contractor fees and personnel expenses.
General and administrative expenses
General and administrative expenses increased by $0.07 million in our BayMedica segment, or 16%, for the period ended September 30, 2023 compared to the period ended September 30, 2022. The increase results primarily from a combination of changes including higher personnel expenses, accounting and legal fees, and marketing expenses.
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Liquidity and Capital Resources
Since our inception, we have only generated limited revenue from product sales, no sales from any other sources and have incurred significant operating losses and negative cash flows from our operations. We have only commenced commercial sales with the acquisition of BayMedica and 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 common shares. As of September 30, 2023 the Company has lease obligations of $297,759 and committed for contracted research services and materials at a cost of approximately $2.2 million, expected to occur in the following twelve months following period.
As of September 30, 2023, we had cash, cash equivalents and short-term investments of $6.8 million.
The following table summarizes our cash flows for each of the periods presented:
| (in thousands) | Period Ended September 30, 2023 | Period Ended September 30, 2022 | ||||||
| Net cash (used in) operating activities | $ | (2,174 | ) | $ | (2,255 | ) | ||
| Net cash (used in) investing activities | - | - | ||||||
| Net cash provided by financing activities | - | 5,429 | ||||||
| Net increase (decrease) in cash and cash equivalents | $ | (2,174 | ) | $ | 3,174 | |||
Operating Activities
During the period ended September 30, 2023, we used cash in operating activities of $2.2 million, primarily resulting from our net loss of $2.5 million combined with changes in working capital and non-cash expenses contributed to net cash used in operating activities.
During the three months ended September 30, 2022, we used cash in operating activities of $2.3 million, primarily resulting from our net loss of $3.5 million combined with changes in working capital and non-cash expenses contributed to net cash used in operating activities.
Financing Activities
During the period ended September 30, 2023, cash provided by financing activities of $0.
During the three months ended September 30, 2022, cash provided by financing activities of $5.4 million consisted of $6.0 million of gross proceeds from a private placement of our common shares, offset by total transaction costs of $0.6 million.
Going Concern
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 operating as a US-listed public company and associated with any required investment into BayMedica’s R&D 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 our ability to continue as a going concern within one year after the date that the consolidated financial statements are issued.
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Through September 30, 2023, we have funded our operations primarily with proceeds from the sale of common stock. We have incurred recurring losses and negative cash flows from operations since its inception, including net losses of $2.5 million and $3.5 million for the period ended September 30, 2023 and 2022, respectively. In addition, we have an accumulated deficit of $103.9 million as of September 30, 2023.
As of the issuance date of the consolidated interim financial statements, we expect our cash, cash equivalents, and short-term investments of $6.8 million as of September 30, 2023, combined with the approximate $4.7 million of net proceeds from a private placement which closed on October 26, 2023 (see Note 13), will be sufficient to fund our operating expenses and capital expenditure requirements into the third quarter of calendar year 2024 depending on the level and timing of realizing BayMedica revenues from the sale of Products in the Health & Wellness sector as well as the level and timing of our operating expenses. Our future viability is dependent on our ability to raise additional capital to finance our operations. In addition, there are a number of uncertainties in estimating our operating expenses and capital expenditure requirements including the impact of potential acquisitions.
As a result, we have concluded that there is substantial doubt about our ability to continue as a going concern within one year after the date that the 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 stockholders.
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.
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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.
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 of 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 Annual Report on Form 10-K for the year ended June 30, 2023. There have been no material changes to our critical accounting policies and estimates from those disclosed in our most recent Annual Report on Form 10-K.
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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 disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC and to ensure that information required to be disclosed is accumulated and communicated to management, including our principal executive and financial officers, to allow timely decisions regarding disclosure. As of September 30, 2023, the Chief Executive Officer and the Interim Chief Financial Officer, with assistance from other members of management, have reviewed the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934). Our 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 upon the evaluation, they have concluded that, as of September 30, 2023, our disclosure controls and procedures were not effective at a reasonable assurance level due to a material weakness that existed in our internal controls over financial reporting, primarily the result around a lack of personnel and inadequate controls around segregation of duties in the accounting department from employee turnover, as disclosed in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.
It should be noted that any system of controls is based in part upon certain assumptions designed to obtain reasonable (and not absolute) assurance as to its effectiveness, and there can be no assurance that any design will succeed in achieving its stated goals.
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 our fiscal quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except for the items discussed in remediation below.
Remediation
We began implementing a remediation plan to address the previously reported material weakness in internal control over financial reporting, described in Part II, Item 9A, “Controls and Procedures” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023. Remediation measures include adding additional resources to our finance function, retaining the services of outside consultants and establishing additional review procedures over the accounting for complex and non-routine transactions. The material weakness will not be considered remediated, until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect that the remediation of this material weakness will be completed prior to the end of fiscal year 2024. Notwithstanding the material weakness, we believe the financial statements in this report fairly present, in all material respects, our financial position, results of operations, and cash flows for the periods presented in conformity with U.S. GAAP.
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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 and proceedings, including those that arise in the ordinary course of our business, including the license matter discussed in Note 11 of the Financial Statements.
ITEM 1A. RISK FACTORS.
As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this Item. For a discussion of our potential risks and uncertainties, please review the risks and uncertainties described in “Risk Factors” in our Form 10-K dated September 29, 2023.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURE.
None
ITEM 5. OTHER INFORMATION.
None.
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ITEM 6. EXHIBITS.
Exhibits
The following exhibits are filed as part of this report:
30
31
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: November 13, 2023 | By: | /s/ Jonathan Tegge |
| Interim Chief Financial Officer | ||
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Exhibit 4.13
Description of Registrant’s Securities
Registered under Section 12
of the Securities Exchange Act of 1934
The following description (this “Description”) of our common shares is a summary and does not purport to be complete. It is subject to, and qualified in its entirety by reference to, our Amended and Restated Articles (our “Articles”), which has been filed with the Securities and Exchange Commission. This Description also summarizes relevant provisions of the British Columbia Business Corporations Act (the “BCBCA”) and securities laws in the provinces and territories of Canada. We encourage you to read our Articles, the applicable provisions of the BCBCA and the applicable provisions of securities laws in the provinces and territories of Canada for additional information.
General
Our authorized share capital consists of an unlimited number of common shares without par value and an unlimited number of preferred shares without par value. As of the date of the Annual Report on Form 10-K of which this Description forms a part, no preferred shares were issued and outstanding.
Common Shares
Each common share entitles the holder thereof to one vote at all meetings of shareholders.
There are no limitations on the rights of non-Canadian owners to hold or vote common shares.
In the event of our liquidation, dissolution or winding-up, whether voluntary or involuntary, or other distribution of our assets among shareholders for the purpose of winding up our affairs, subject to the rights, privileges and restrictions attaching to any preferred shares that may then be outstanding, the shareholders shall be entitled to receive our remaining property.
The shareholders are entitled to receive dividends, as and when declared by our board of directors, subject to the rights, privileges and restrictions attaching to our securities, which may be paid in money, property or by the issue of fully paid shares in our capital.
Certain Takeover Bid Requirements
Unless such offer constitutes an exempt transaction, an offer made by a person to acquire outstanding shares of a Canadian entity that, when aggregated with the offeror’s holdings (and those of persons or companies acting jointly with the offeror), would constitute 20% or more of the outstanding shares, would be subject to the take-over provisions of Canadian securities laws. The foregoing is a limited and general summary of certain aspects of applicable securities law in the provinces and territories of Canada, all in effect as of the date of the Annual Report of which this Description forms a part.
In addition to the take-over bid requirements noted above, the acquisition of shares may trigger the application of additional statutory regimes including amongst others, the Investment Canada Act and the Competition Act.
This summary is not a comprehensive description of relevant or applicable considerations regarding such requirements and, accordingly, is not intended to be, and should not be interpreted as, legal advice to any existing or prospective investor and no representation with respect to such requirements to any existing or prospective investor is made. Existing and prospective investors should consult their own Canadian legal advisors with respect to any questions regarding securities law in the provinces and territories of Canada.
Actions Requiring a Special Majority
Under the BCBCA, unless otherwise stated in our Articles, certain corporate actions require the approval of a special majority of shareholders, meaning holders of shares representing 66 2/3% of those votes cast in respect of a shareholder vote addressing such matter. Those items requiring the approval of a special majority generally relate to fundamental changes with respect to our business, and include amongst others, resolutions: (i) removing a director prior to the expiry of his or her term; (ii) altering our Articles, (iii) approving an amalgamation; (iv) approving a plan of arrangement; and (v) providing for a sale of all or substantially all of our assets.
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: November 13, 2023
| /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, Jonathan Tegge, 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: November 13, 2023
| /s/ Jonathan Tegge | ||
| Name: | Jonathan Tegge | |
| Title: | Interim 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 September 30, 2023 (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: November 13, 2023
| /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, Jonathan Tegge, 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 September 30, 2023 (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: November 13, 2023
| /s/ Jonathan Tegge | ||
| Name: | Jonathan Tegge | |
| Title: | Interim Chief Financial Officer | |