INmune Bio, Inc. (NASDAQ:INMB) Q1 2024 Earnings Call Transcript

INmune Bio, Inc. (NASDAQ:INMB) Q1 2024 Earnings Call Transcript May 11, 2024

INmune Bio, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Greetings and welcome to the INmune Bio First Quarter 2024 Earnings Call. At the end of the presentation, there will be a question-and-answer session. [Operator Instructions] As a reminder this conference is being recorded. A transcript will follow within 24 hours of this conference call. At this time, it is my pleasure to introduce Mr. David Moss, CFO of INmune Bio. David?

David Moss: Thank you, James, and good afternoon, everybody. We thank you for joining us for the call for INmune Bio’s first quarter 2024 financial results. With me on the call is Dr. RJ Tesi, CEO and Co-Founder of INmune Bio and Dr. Mark Lowdell, Chief Scientific Officer and Co-Founder of INmune Bio, who will provide an update on INKmune, our memory-like natural killer cell oncology platform. Before we begin, I remind everyone that except for statements of historical fact, the statements made by management and responses to questions on this conference call are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that can cause actual results to differ materially from those such as forward-looking statements.

Please see the forward-looking statements disclaimer on the Company’s earnings press release, as well as risk factors in the Company’s SEC filings including our most recent quarterly filings with the SEC. There is no assurance of any specific outcome. Undue reliance should not be placed on forward-looking statements, which speak only as of the date they are made as the facts and circumstances underlying these forward-looking statements may change. Except as required by law, INmune Bio disclaims any obligations to update these forward-looking statements to reflect future information events or circumstances. With that behind us, now I’d like to turn the call over to Dr. RJ Tesi, CEO of INmune Bio. RJ?

Dr. RJ Tesi: Thank you, David, and I thank everyone for joining the call. As usual, I will arrange my remarks to highlight key takeaways from the first quarter and the subsequent period and provide updates on our platform programs. I will start by reviewing developments in the XPro platform and then pass it over to Mark Lowdell, who will update the INKmune program. David will conclude with a discussion of our financial results, including some commentary around the recent equity capital infusions and provide an update on upcoming milestones. At a high-level, steady progress on all fronts has continued over the last six weeks since we held our fourth quarter conference call in March. We continue to enroll patients globally in our early Phase II trial in Alzheimer’s disease called AD02, and we expect to meet our target enrollment by mid-2024.

Clinical trial sites continue to enroll patients at a good clip, and we reiterate our commitment to complete enrollment midyear. I know you want to know the exact date of our last patient enrollment, but we will not predict this because of the vagaries of predicting exact enrollment rates and case. I promise you that as soon as we enroll that last patient, we will let everyone know. Like you, we eagerly await the conclusion of the Phase II and the corresponding data readout that will occur about six weeks or six months or so after that last patient is enrolled. Recently, we provided an update on the long-term use of XPro in patients with Alzheimer’s disease. And in that press release a week ago, we described two patients who participated in the Australian Phase I trial, one with MCI and the other with mild — actually, moderate Alzheimer’s disease.

Both have been taking XPro for roughly three years. Due to the rules of clinical development in Australia, we cannot communicate directly with the patients, but the anecdotes that we see from their treating physicians highlighted the positive impact of XPro on the patient’s cognitive health and overall quality of life. If you haven’t viewed the video links associated with that press release, I strongly encourage you to do so as they exemplify what we are trying to achieve with XPro in patients suffering with early AD. Obviously, this is a small sample, but the results speak for themselves. Long-term treatment with XPro in patients with Alzheimer’s disease has been shown to be safe, well tolerated and made a difference in the lives of these patients and their caregivers.

The ongoing blinded randomized placebo-controlled trials are a necessary step in the development process and we believe we are helping these patients, their families and their caregivers who live with this dreadful disease, every day. We want to help you better understand three important elements of our ongoing Phase II trial. The elements are duration, size and primary endpoint. I’ll start with the endpoint, primary endpoints. The clinical trial is powered on the cognitive scale called CDR. CDR is a validated endpoint that has been used in the recent Phase III anti-amyloid trials that will all result in approval of those drugs. The endpoint is acceptable to regular authorities, certainly in the U.S., and I we suspect globally. In our Phase I trial, eight of the nine evaluable patients had stable or better cognition at three months.

Three of those patients had improved cognition. Two of those were highlighted in the recent press release. We and this is where we differ a little bit from what the other companies do. We believe some of the patients in AD02 on XPro will respond like those in the Phase I trial. We need to be able to measure clinical improvement. To do that, we need a better, more sensitive cognitive scale than CDR, and that is why we’re using EMACC. EMACC will allow us to accurately determine if patients have improved cognitive function, and we believe that will be an important finding of the Phase II trial. To be clear, the primary endpoint that will be used in the Phase III pivotal trial will come after discussion and after agreement with the regulatory agencies that we work with, including the FDA, EMA and MHRA.

It may be CDR or it may be EMACC. That decision will be driven by data and the regulatory authorities, not by INmune Bio. The size and duration of AD02, the Alzheimer’s trial, are both smaller and shorter, respectively, compared to the other trials in Alzheimer’s disease. This trial design was based on careful analysis of our preclinical data, clinical data, and publicly available databases. First, I want to make a personal statement as a clinician. This is me talking. This is not the Company. But when you put a patient into a clinical trial and they get randomized to placebo, we are asking that patient to allow their disease to progress under our care. In my opinion, we need to do everything possible to limit the number of patients who receive placebo and how long they’re on that placebo because we’re really not benefiting that patient.

The AD02 trial exposes patients to six months of placebo. This is just one-third of the time in the anti-amyloid trials. They were 18 months long. Shorter trials are good for patients, but is it bad for drug development in Alzheimer disease? And the answer is clear. It is not bad for drug development in Alzheimer’s disease. AD02 is fully powered to demonstrate a benefit at six months with XPro. And in fact, you realize that both the lecanemab and donanemab trials were statistically positive at six months. They could have stopped those trials at six months and have the same results that we have today. That is the drug therapy is better than placebo. There’s nothing magical about an 18-month trial or 12-month trial. The issue is statistical power, and this is where our unique trial design matters.

To our knowledge, AD02 is the only Alzheimer’s trial that it uses enrichment criteria to enroll patients. AD02 enrolled early Alzheimer’s patients with biomarkers of information. There is a biologic and statistical advantage to this simple enrollment strategy. The biological advantage is that the mechanism of action of XPro targeting neuroinflammation is matched with the patient’s disease that is the pathology that’s driving their cognitive decline. Trials that don’t use enrichment gamble that a large number of patients treated for a long time will overcome statistical noise. That’s a risky and expensive strategy. The benefits of enrichment are best seen in oncology drug development. Oncology clinical trials routinely use enrichment to derisk clinical trials.

This is called precision medicine. Precision medicine is the standard in clinical oncology drug development. It should be the standard in CNS drug development too. We are using a precision medicine approach. The second advantage is statistical, and it’s more subtle than this enrichment strategy. Patients with neuroinflammation with Alzheimer’s disease progress more quickly and more reliably than patients without neuroinflammation. This is kind of a terrible thing to say, but it’s a biologic reality. Put in the language of a statistician who are critical in the design of the trial, the increased delta difference between placebo and active and arm, and the lower variance provide important statistical advantages. Overall, the trial was well design to derisk enrolment to today’s patients with Alzheimer’s disease.

To be smart with drug and drug supply and capital resources, we have closed enrollment of the Phase II open-label extension. Remember, the open-label extension was patients who are going to be offered 12 months of therapy in an open-label trial as sort of a reward for being in the randomized blinded trial and also to give us additional safety and efficacy data. This was a practical consideration by the Company. Having a large patient population on drugs for 12 months consumes both drug and treasure. The first question many ask is, what will the FDA say? I remind you the Phase II trial is not a registration trial. The purpose of the Phase II is to demonstrate safety and efficacy of XPro in the target population, patients with early AD and biomarkers of neuroinflammation.

At the end of the Phase II trial, we’ll have end of Phase II meetings with the regulatory authorities where we will negotiate the design of the Phase III clinical trial. The FDA worries about both safety and efficacy. There’s no question the FDA will want more patients treated with XPro who have Alzheimer’s disease. The question is, will they want patients treated for a longer period of time? In my mind, the FDA is very focused on doing no harm. That is part of their charter. And to ask a patient to be on placebo for 12 or 18 months when we are in one-day and we already have data to show that you get an effective clinical readout after six months may prove to be an ethical dilemma. At this time, we can now predict with the FDA along with the Phase III trial.

I predict and once again this is, RJ Tesi talking not INmune Bio, that the FDA will want a larger trial, but not necessarily a longer trial. The FDA does provide mechanisms to speed drugs through the development process. The accelerated approval pathways are in place for this purpose. We believe XPro for Alzheimer’s disease will qualify for accelerated approval pathway. We will apply for a fast-track approval based on our preclinical and Phase I data. We may be eligible for a breakthrough status after we complete the Phase II clinical trial. We cannot predict how the FDA will respond to our application, but we believe XPro’s unique mechanism of action, the importance of neuroinflammation and glial activation in the pathophysiology of Alzheimer’s disease combined with our clinical data will be a compelling story.

Finally, you’ve heard us talk about the many CNS diseases that XPro can be applied to all that have neuroinflammation as part of their underlying pathophysiology. We have 87 publications on our website with 12 different disease. This is the future of XPro. It is a CNS franchise and a drug. For now, treatment resistant depression will be the first disease beyond Alzheimer’s disease that we develop. We will have further announcements on the treatment resistant depression Phase II program using XPro in the near future. Our goal is to arrive enroll that first patient in this NIH boarded Phase II trial in the second half of this year. I will now pass the mic to Mark Lowdell, Co-Founder and CSO of INmune Bio to update progress on the INKmune program.

Mark?

Dr. Mark Lowdell: Thanks, RJ, and thanks everyone for dialing in. Yes. I’m going to tell you where we’ve got to with our prostate cancer trial, called CaRePC, and it’s unique in many ways, as appears to be typical for our company. First, the concept. This is an NK targeting therapy that doesn’t actually administer NK cells or use cytokines, which are the typical historical use of NK targeting therapies. INKmune converts the patient’s own NK cells in their circulation and probably actually within their tumor from resting non-cancer killing state to what we now know are memory like NK cells that are able to destroy NK resistant cancer cells. Unlike more conventional adoptive immunotherapies with NK cells from donors, patients don’t require any type of preconditioning chemotherapy, nor do they require NK stimulating cytokines that is common to other NK activating therapies.

The INmune patients sitting in a chair as an outpatient get an intravenous infusion, over about 20 minutes, and then having received their dose of INKmune, they’re able to leave. We’ve given over 20 doses of INKmune in outpatient settings so far. Each infusion has been remarkably boring for the patient. And as importantly, boring for the clinical team because it’s been so well tolerated. Each patient in the trial is monitored for immunological endpoints as you would expect. And these include NK cell number, phenotype of those NK cells, their ability to kill NK resistant tumor cells. We also measure tumor-related variables. In this metastatic castrate resistant prostate cancer trial, we measure antitumor effects by following blood, prostate specific antigen levels, tumor volume with PMSA scans, and we measure circulating tumor DNA.

So, this rich data set will allow us to determine whether the drug is ready for a pivotal trial at the end of Phase II. The Phase I, Phase II trial is expected to enroll 30 patients. And the men enrolled in CaRePC have all received previous high dose therapy, but now have metastatic castrate resistant disease. In the trial, they received three infusions of INKmune, as I said, on outpatient basis with a six-month follow-up. We have three centers enrolling patients at the moment, a fourth opening this month and four more are planned to open over the next few months. The Phase I portion of the trial will be completed by September this year. And we expect patient enrollment in the Phase II portion to be completed by the second quarter of next year with data available for all of the patients by the end of 2025 at the latest.

It is an open-label trial, which means that we’re looking forward to some snapshots of the data in 2024 or early 2025. Equally important is the trial. The INKmune team has been working very hard on perfecting the manufacturing and logistics elements of INKmune for future clinical and commercial development. So, I still have a part time university post. I’m wearing my academic hat over the last 35 years. I’ve seen an awful lot of promising therapeutic strategies in the cell and gene therapy space fail due to manufacturing and logistical problems. And I’m sure you’ll all be aware of some of those associated with adoptive immunotherapies like CAR-T cells. We’re scaling up the manufacturing process for INKmune in preparation for the pivotal trial.

And we perfected the quality and release assays, which will be required by the regulatory authorities as we move forward. Because the product ships on dry ice, logistics and storage at treatment centers are easy, and they fit with many other commercial drugs. So, in summary, we can make the drug, we can quality control release the drug, we can ship it and hospitals can store the drug. The clinical trials will determine the drug’s therapeutic value as we move forward. Our pivot from hematological malignancies to solid tumors was not a one tumor project and it’s been well planned as an initial transition into the solid tumor space. The unique attributes of INKmune primed NK cells make them ideal to treat a wide variety of solid tumors, and we’ve published papers on some of those.

Prostate cancer is a test case, but we’ve sound preclinical work in ovarian cancer, and we’re developing the same data in renal cell carcinoma at the moment. As we obtain resources, these will be the next targets for INKmune therapy. So that ends my update on the INKmune platform. And I’d like to turn the call over to David Moss, CFO and the Co-Founder to discuss the financials. Thank you, David.

David Moss: Thank you, Mark. As usual, I’ll provide a brief overview of our financial results and upcoming milestones before we head to our Q&A session. However, I’d like to begin with some comments on our recent capital equity raises as we get closer to our Phase II Alzheimer’s readout and INKmune data. We are pleased to have raised $14.5 million in gross proceeds from two separate equity offerings over the past weeks at an average price of $8.35 and $9.84 per share. In the two transactions, the Company issued an aggregate of approximately 1.5 million shares of common stock and warrants to purchase an aggregate of approximately 1.5 million shares of common stock. The exercise price of the warrants is $9.15 and $9.84 respectively.

The warrants are exercisable on the earlier of two-year anniversary of the initial exercise date or 30 days following reporting of top line data in the Phase II Alzheimer’s program for XPro. In the first $4.8 million raise, management, employees and members of the Board of Directors purchased over $1 million worth of stock. I cannot underscore how financially committed and align the entire INmune team is the success of the Company. We greatly appreciate the support from our existing shareholders and the support we saw in both offerings for mostly existing investors, our team here at INmune, but also we welcome a few new holders to the registry. Now moving on to the financials. Net loss attributable to common stockholders for the quarter ended March 31, 2024 was approximately $11 million compared with approximately $6.5 million for the comparable period as we’ve reached a scale with both of our clinical programs.

Research and development expenses total approximately $8.7 million for the quarter ended March 31, 2024 compared with approximately $4.1 million for the comparable period. General and administrative expenses was approximately $2.3 million for the quarter ended March 31, ’24 compared with approximately $2.3 million for the comparable period in $2.3 million. At March 31, 2024, the Company had cash and cash equivalents of approximately $26 million. This figure does not include the recent raises. Based on our current operating plan, we believe our cash is sufficient to fund our operations into 2025. As of May 9, 2024, the Company had approximately 19.8 million shares of common stock outstanding. Now I’d like to focus on some key upcoming milestones.

Full enrollment in the Phase II XPro trial for the treatment of neuroinflammation as a cause of Alzheimer’s disease our expected mid-2024 followed by top line data approximately six months from the last patient enrolled. We will initiate a Phase II trial of XPro in patients with treatment resistant depression in the second half of this year. Last week, we announced completion of Cohort 1 for the first of our three patients taking part in the metastatic castration resistant prostate program. We expect Cohort 2 to start shortly. We expect complete enrollment in the Phase I portion of the metastatic castration resistant prostate trial by the end of Q3 ’24 and the Phase II portion is expected to complete enrollment Q2 of ’25. Although, we’ve secured additional funding, as always, we continue to focus on achieving our primary clinical objectives while remaining cost prudent with the potential recover a portion of R&D expenses in Australia and the UK.

Further, the recent changes RJ mentioned with regards to the open-label extension will save the Company a couple million dollars in drug and trial related expenses. In summary, we secured a meaningful equity infusion recently that puts us in good position, heading into data and our focus remains solely on execution. At this point, I’d like to thank you for your time and attention. I’d like to turn it back to James to poll for questions. James?

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Q&A Session

Operator: [Operator Instructions] And we’ll take our first question today from Tom Shrader with BTIG.

Tom Shrader: So, RJ, you must be thinking about the role of a beta antibodies in your Phase III. Is there any guidance or thoughts? Are you going to be able to stratify or could you still do a monotherapy trial? I’m just curious, if there’s any sort of thought yet. And then a quick one for Mark. I understand, Mark, boring is good, but would you expect some fever if you’re turning on NK cells? Just your historical thoughts on why things are so safe? So, thanks.

Dr. RJ Tesi: Yes. So let me, thank you, Tom, for those. Very interesting question about the anti-amyloid. We have signaled very strongly. We are aware that we’re going to have to be able to answer the question about combination therapy. And I think we’ve said that you should expect some preclinical data to that regard from us midyear. What’s more important though is how will it affect the Phase III clinical trial. And you know, at least in the United States, the only place these drugs are currently approved, adoption has been slow. So, I believe that there will be plenty of patients who are not on the anti-amyloid drugs, who will be potential clinical trial participants in the United States. And other regulatory jurisdictions like the Europe, UK, Canada, and beyond, we don’t know when those drugs are going to be approved.

They’ll be approved by the time we start our Phase III, no doubt. But once again, those drugs have had slow adoption. So I am, we are not concerned at this point. We believe a combination trial is actually a different development pathway that may be answering a different question than whether XPro works alone for patients in Alzheimer’s with neuroinflammation. David, do you want me to comment on, is Mark on the phone? I think his call may have dropped. Mark, you there? Mark?

Dr. Mark Lowdell: Yes. Hello.

Dr. RJ Tesi: Mark is not…

David Moss: Yes. I’ll tell you what, Mark got dropped. He’s got a, they’ll try and add him back in. He’s over in Europe having problems. But in relation to your question, Tom, why you don’t see a fever or some sort of inflammatory response, why the drug is so safe?

Dr. Mark Lowdell: Yes. So, the answer, the question was about no fever. Why no inflammatory reactions with INKmune? Well, INKmune activates NK cells and it doesn’t activate T cells. So, we spent a lot of time looking at that. So, the inflammatory response you see in cytokine release syndrome is entirely T cell mediated. So, that’s released in inflammatory cytokines from CD4 T cells. And NK cells, which are activated by INKmune or even by cytokines, don’t secrete inflammatory cytokines. So, no NK therapy itself, and it has been associated with inflammatory type reactions. And it’s a very smart question actually because it’s normally the cytokines that are administered to sustain NK cells that that cause side effects. And, of course, INKmune doesn’t require the administration of cytokines. So, it is specifically NK cell targeting.

Operator: Our next question will come from Joel Beatty with Baird.

Joel Beatty: The first one is for the ongoing Phase II trial in early AD. Can you remind us of the mix of patients you’re targeting in enrollment between the ones that have mild cognitive impairment versus mild AD and how enrollment is tracking with that?

Dr. RJ Tesi: Yes. Good question. So, two things, two points to make. It’s relevant considering my comments on placebo. We have a team to one enrollment of active to placebo. In other words, for every group of three patients, two patients get that problem and one patient gets placebo. So that’s number one. Number two, the way the protocol is written, there will not be more than a two to one balance. In other words, we don’t specify whether there’s twice as many mild AD as MCI or twice as many MCI as mild AD. It will not be — it will really be an early AD trial like all the other ones do. Statistically, I would expect — you would expect more MCI patients. But as you recall, we started the trial with only enrolling mild AD patients. So, I suspect it will be very close to a 50-50 mix. Don’t hold me to that. That’s a prediction. But the way it’s looking right now, it’s going to be about a 50-50 mix.

Joel Beatty: And then a question on the open-label extension study that’s, I guess a clarification, has it just been enrollments that’s closed but some patients in the study are continuing to be dosed or is dosing complete in all patients? And then in any case, are there plans to share the open-label extension data that you have collected?

Dr. RJ Tesi: Yes. So that’s a good question. The open-label extension data that we have has always been complicated by the fact that we don’t know what the patients were on at entry. Remember, they come into the trial after a blinded randomized trial, so we don’t know. So, we haven’t figured out the best way to analyze those. Right now, because of really, as I said, both drug supply and financial, financial considerations abide really. Drug supply is a financial consideration because making the stuff is not a small task. We are basically working with the sites to decide the best path. Some patients will go on to a kind of a scheme where they are — they get compassionate use if that’s available to them and some will not be — will be discontinued.

It’s not, the Company is not happy with this turn of events, but it is a practical consideration. Our goal and our commitment to investors is to make sure we finish the Phase II trial, get the result we’re looking for and that’s where we’re focusing our resource.

Operator: Our next question will come from Jason McCarthy with Maxim Group.

Jason McCarthy: Thanks for taking the questions. I guess this is RJ’s thoughts type of question. RJ, can you kind of opine a little bit on what do you think regulators might want in terms of timing for this trial? You said that the two approved amyloid drugs, six months they already saw that they were effective. But given what you know now about markers of inflammation, seemingly FDA willingness to accept correlation between biomarkers and outcomes in Alzheimer’s disease and with any current standard of care in mild or early Alzheimer’s, what is the expected rate of decline? Like, can you really get away with a trial that’s just three to six months because of all the inflammatory biomarkers that are available that the FDA seems to be more accepting of?