INmune Bio(INMB) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements The company reports a net loss of $34.2 million, driven by a $16.5 million asset impairment, and issues a going concern warning Condensed Consolidated Balance Sheets Total assets declined due to a $16.5 million impairment of an intangible research and development asset Balance Sheet Highlights | Balance Sheet Items (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $33,374 | $20,922 | | Acquired in-process R&D intangible assets | $0 | $16,514 | | Total Assets | $37,684 | $39,562 | | Liabilities & Equity | | | | Total Liabilities | $8,817 | $7,465 | | Accumulated deficit | $(197,301) | $(163,104) | | Total Stockholders' Equity | $28,867 | $32,097 | - Total assets decreased primarily due to the full impairment of acquired in-process research and development intangible assets, which were valued at $16.5 million at the end of 2024 and written down to zero[10] Condensed Consolidated Statements of Operations and Comprehensive Loss Net loss significantly increased for the three and six-month periods due to a one-time $16.5 million impairment charge Three-Month Operations | Metric (in thousands, except per share) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Research and development | $5,804 | $7,053 | | Impairment of acquired in-process R&D | $16,514 | $0 | | Net Loss | $(24,458) | $(9,746) | | Net loss per common share | $(1.05) | $(0.50) | Six-Month Operations | Metric (in thousands, except per share) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Research and development | $13,443 | $15,746 | | Impairment of acquired in-process R&D | $16,514 | $0 | | Net Loss | $(34,197) | $(20,771) | | Net loss per common share | $(1.49) | $(1.11) | - The significant increase in net loss for both the three and six-month periods ended June 30, 2025, was primarily driven by a one-time impairment charge of $16.5 million related to the XPro Alzheimer's drug candidate[12] Condensed Consolidated Statements of Cash Flows Cash position improved due to $27.5 million in financing activities, which offset cash used in operations Cash Flow Summary | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,199) | $(15,362) | | Net cash used in investing activities | $(706) | $0 | | Net cash provided by financing activities | $27,545 | $10,497 | | Net increase (decrease) in cash | $12,452 | $(4,779) | | Cash at end of period | $33,374 | $31,069 | - The company's cash position improved significantly due to $27.5 million in net proceeds from the sale of common stock and warrants, which more than offset the $14.2 million cash used in operations[23] Notes to the Unaudited Condensed Consolidated Financial Statements Key disclosures include a going concern warning, a $16.5 million asset impairment, recent financing, and CEO retirement - Going Concern: The company has incurred significant losses ($34.2M net loss for the six months) and projects insufficient liquidity to sustain operations for one year, raising substantial doubt about its ability to continue as a going concern[27] - Intangible Asset Impairment: The company recorded a $16.5 million impairment charge for its Alzheimer's drug candidate, XPro, after its Phase 2 clinical trial failed to meet the primary endpoint[48][65] - Financing Activities: In June 2025, the company raised gross proceeds of $18.9 million from a registered direct offering and approximately $10.1 million in net proceeds through its ATM program in the first half of 2025[85][89] - Subsequent Event: On August 4, 2025, President and CEO Dr. Raymond J. Tesi announced his intention to retire, and a separation agreement was executed[99][100] Management's Discussion and Analysis of Financial Condition and Results of Operations The company discusses clinical trial results, a major asset impairment, and its precarious liquidity position despite recent financing Business Overview and Clinical Development The Alzheimer's drug XPro missed its primary endpoint, but a subgroup showed promise, while other pipeline programs advance - XPro (Alzheimer's): The Phase 2 MINDFuL trial for XPro in early AD did not meet its primary and key secondary endpoints in the modified intent-to-treat (mITT) population (n=200)[111] - XPro Subgroup Analysis: A prespecified subgroup of patients with a higher inflammation burden (n=100) showed a promising signal, with an effect size of 0.27 on the primary endpoint, exceeding the company's threshold of 0.2[114][117] - CORDStrom (RDEB): The MissionEB study showed CORDStrom was well-tolerated and demonstrated beneficial effects, significantly reducing itch scores in patients[136][139] - CORDStrom Regulatory Status: The FDA has granted CORDStrom Rare Pediatric Disease Designation (RPDD) and Orphan Drug Designation (ODD), with a Biologics License Application (BLA) anticipated in the first half of 2026[105][141][142] - INKmune (Cancer): The INKmune program is in a Phase II trial for metastatic castrate resistant prostate cancer, with enrollment expected to be complete in Q4 2025[144][145] Results of Operations Net loss widened significantly due to a $16.5 million impairment charge, partially offset by lower R&D expenses Three-Month Operations Comparison | Metric (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Research and development | $5,804 | $7,053 | $(1,249) | | General and administrative | $2,253 | $2,812 | $(559) | | Impairment of intangible assets | $16,514 | $0 | $16,514 | | Net Loss | $(24,458) | $(9,746) | $(14,712) | Six-Month Operations Comparison | Metric (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Research and development | $13,443 | $15,746 | $(2,303) | | General and administrative | $4,569 | $5,150 | $(581) | | Impairment of intangible assets | $16,514 | $0 | $16,514 | | Net Loss | $(34,197) | $(20,771) | $(13,426) | - The decrease in R&D spending for the six-month period was mainly due to incurring $3.0 million less in expenses for the Alzheimer's clinical program as the trial was completed in 2025[165] Liquidity and Capital Resources The company holds $33.4 million in cash but faces substantial doubt about its ability to continue as a going concern - Cash Position: As of June 30, 2025, the company had cash and cash equivalents of $33.4 million[170] - Going Concern Warning: Recurring net losses and negative cash flows from operations raised substantial doubt about the company's ability to continue as a going concern, with cash projected to be insufficient for the next year[174] - Recent Financing: During the first six months of 2025, the company raised approximately $10.4M (gross) from its ATM program and $18.9M (gross) from a registered direct offering[171] Cash Flow Activity | Cash Flow Summary (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,199) | $(15,362) | | Net cash provided by financing activities | $27,545 | $10,497 | Quantitative and Qualitative Disclosures About Market Risk The company is exempt from providing this information as a 'smaller reporting company' - The company is a 'smaller reporting company' and is exempt from providing these disclosures under Item 305(e) of Regulation S-K[186] Controls and Procedures Management concluded that disclosure controls and internal financial reporting controls were effective - Management, including the Principal Executive Officer and Interim Chief Financial Officer, concluded that disclosure controls and procedures were effective as of June 30, 2025[188] - There were no material changes in the company's internal control over financial reporting during the quarter[190] PART II – OTHER INFORMATION Legal Proceedings The company reports no material legal proceedings but discloses an ongoing $1.6 million dispute with a vendor - The company is not currently party to any material pending legal proceedings[193] - An ongoing dispute exists with a vendor over invoices totaling approximately $1.6 million, though the company has only recorded an estimated obligation of $0.2 million[97] Risk Factors This section is not required as the company qualifies as a smaller reporting company - Not required for smaller reporting companies[194] Other Information This section details significant leadership changes, including the retirement of the CEO and appointment of a successor - CEO Retirement: Dr. Raymond J. Tesi retired as President, CEO, and Chairman, effective August 12, 2025[198] - New CEO Appointment: David J. Moss, previously CFO, was appointed as the new President and CEO[205] - New Chairman: J. Kelly Ganjei, an existing board member, was appointed as Chairman of the Board[204] - Interim CFO: Cory Ellspermann, previously Controller and VP of Finance, was appointed as Interim CFO[209] Exhibits This section lists all exhibits filed with the report, including key employment and severance agreements - Lists exhibits filed with the report, including the severance agreement for Dr. Tesi and the employment agreement for Cory Ellspermann[216]