INMB - NASDAQ

Greetings and welcome to the INmune Bio Third Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [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, the floor is yours.

Thank you, Claudia, and good afternoon everybody. We thank you for joining us for INmune Bio's third quarter 2023 financial results. With me on the call is RJ Tesi, CEO of INmune Bio and Mark Lowdell, Chief Scientific Officer 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 in such 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?

Thank you, David, and thank you everyone for joining the call. As usual I will arrange my remarks to highlight the key takeaways for the third quarter and the subsequent period and include updates on our platform programs. I will start by reviewing our developments of XPro before passing it over to Mark Lowdell who will provide an update on INKmune. And then David Moss will continue conclude with a discussion of our financial results, and provide an update on upcoming and new milestones then we move to Q&A. During the third quarter, our primary focus remained enrolment of patients in the AD02. Our blinded randomized Phase 2 trial in patients with early Alzheimer's disease with information. And we focused on increasing our geographic footprint of that trial. We had notable success on both fronts. The MHRA, the UK equivalent of the FDA approved our clinical trial application in August, five of the six sites in the UK are already screening and enrolling patients into AD02. The UK is an ideal jurisdiction to expand our Alzheimer's disease trial given it possesses one of the highest rates of Alzheimer's disease in the western world coupled with robust for profit medical research infrastructure. Re:Cognition Health, our lead vendor in the UK has five memory centers with a large Rolodex of clinical trial ready patients. This provides a ready pool of patients to screen for participation in the trial. Re:Cognition Health has a history of enrolling a large number of patients and are incentivized to find the right patients to enroll in our program. Australia where the trial is further advanced continue to see patients who have completed the six-month blinded trial and opt into the Phase 2 open label extension program. We have also submitted regulatory dossiers to additional countries with the plan to have additional sites open soon. This leaves the US and the FDA; the FDA is the outlier here. We remain on track with the FDA to meet the conditions necessary to lift the clinical hold. We believe the hold will be lifted before the end of the year. There are two main themes from the just completed CTAD or Clinical Trials Alzheimer's Disease meeting in Boston earlier treatment and better treatments. As you can imagine, we heard a lot about the anti-amyloid therapies. Little new was presented and no matter how they cut the data. There is no change in safety or efficacy of the various anti-amyloid products. Unsurprisingly a meta-analysis demonstrated all three drugs aducanumab, lecanemab and donanemab performed the same. This is shaping up to be an interesting marketing battle debating features, not benefit. In my opinion the desire for earlier treatments is driven by the frustrating results from anti-amyloid monotherapy. That is if the results of anti-amyloid drugs were better, there may be less talk about earlier treatments. Both of these themes the limit efficacy of anti-amyloid drugs in the early treatment play to Xpro strengths. The universe of therapies for Alzheimer's disease is expanding targeting neuroinflammation is high on everyone's list. Dr. Howard Fillit, the Chief Scientific Officer of the Alzheimer's Drug Discovery Foundation highlighted the role of inflammation in aging and cognitive decline. In a recent Fierce biotech interviewed Dr. Fillit points out that Ed autopsy beta amyloid is present in the brains of many and elderly and individuals that have died with normal cognitive function. Only those and this is the key point only those with both amyloid and inflammation have dementia. And in other words the immune response to amyloid appears to drive nerve cell death and synaptic dysfunction that results in cognitive decline. His comments highlight our long-standing position without inflammation there's no cognitive decline in patients with amyloid pathology. Combination therapy with the anti-amyloid drugs was much discussed at CTAD but no data was presented. Once again the desire for combination therapy reflects the frustration with the current results. Combination therapies excuse me must improve safety or efficacy, ideally both because the major safety problem with anti-amyloid class of drugs is neuroinflammation we believe Xpro plays a role in combination therapy. INmune Bio has initiated preclinical studies testing combination therapy and amyloid in animal models. I emphasize the combination therapy is preclinical and in no way dilutes our focus on the Phase II trial currently enrolling patients. The discussion on early diagnosis focused on blood test aiming to produce a simple accurate cost-effective triage system. Our view is simple. Cognitive decline is predicted by biomarkers of neuroinflammation neurodegeneration, blood amyloid is a biomarker of disease, the disease of Alzheimer's, disease staging, by staging. I mean the severity of the disease requires a different set of biomarkers. In my opinion and many of those at the meeting the most promising Duo is GFAP was Glial Fibrillary Acidic Protein at biomarker of Astra site activation and phospho-tau T217 a biomarker of neurodegeneration are promising. Although we do not use GFAB or P-tau T217 as screening biomarkers for enrollment excuse me in the Phase I trial. They were measured part as part of the biomarker response package. Both biomarkers decreased in patients after treatment house with XPro. We hope to show that this decrease correlates with clinical response in the Phase II trial. We are persistent in our belief that cognitive decline is the sum of synaptic dysfunction and nerve cell death, phospho-tau as an excellent measure of neurodegeneration or nerve cell death in patients with Alzheimer's disease. Measuring such synaptic function is more complicated a small group of Alzheimer's patients use a self-administered EEG using the novel system from Cumulus Neuroscience. The study confirmed in the small number of patients the feasibility of collecting high quality EEG signals at home the patients liked it. And there was evidence of benefit as demonstrated by cute and chronic changes in the P300 amplitude on EEG after treatment with XPro. All the group is small and the data are early. We believe this work is further evidence of improved and synaptic function after extra treatment, and future work will correlate this activity with cognitive function and pharmacodynamic responses to the NTNS. This type of home testing may be a key element two CNS drug development in the future. Two other applications of the DN-TNF family of drugs are worth mentioning. New data using MBO3 to treat cancer will be presented at the 38th Annual Society for Immunotherapy Meeting in San Diego later this week. MBO3 has been shown to be an checkpoint inhibitors that down regulars SIRP Alpha. SIRP Alpha that is SIRP Alpha is Signal Regulatory Protein Alpha that is the macro phase side of the CD47 don't eat me signal down regulation of SIRP Alpha Repolarized as immunosuppressive macrophages in the tumour micro environment into M2 macrophages that directly kill and phagocytosis tumours and improves ADCP which is Antibody Dependent Cellular Cytotoxicity a key but often ignored effector of anticancer antibody therapy. Recent data from the DMD program confirms the potency of the 10 keloid on pSar DN-TNF in mouse models of the disease. As a reminder the pSar DN-TNF compounds are the sons of Xpro with similar biologic activity that allows INmune Bio to expand applications of the DN-TNF class of compounds beyond CNS. The goal of the MBO3 cancer program in the DMD program is to out-license these promising drugs. Somewhere you are wondering how a single drug dominant negative TNF inhibitor can be useful in the treatment of cancer and the treatment of Alzheimer's disease. Macrophage function is the glue that holds the story together. Microglia are tissue-based macrophages of the brain TAM's or Tumour Activated Macrophages are tissue-based macrophages in the TME of cancer. And disease chronic inflammation shall we say stuns the macrophages into not working in the brain chronic neuroinflammation causes the microglia to become a dysfunctional phenotype that produces destructive cytokine does not phagocytize cellular a mile and debris and does not prune synapses appropriately. This results in nerve cell loss demyelination and synaptic dysfunction the hallmarks of neurodegenerative disease including Alzheimer's. DN-TNF converts the destructive microglia phenotype interoperative cell type that promotes nerve cell survival demyelination synaptic plasticity. The remodelling repair we have seen in the brains of patients with Alzheimer's disease treated with XPro reflect the normalization of microglial function caused by XPro. In cancer soluble TNF produced by tumour cells causes expression of Mach4 SIRP Alpha and other immunosuppressive cytokine the polarized amps to an immunosuppressive phenotype that promotes and protects tumour growth and metastasis. These elements promote also promote resistance to immunotherapy. XPro neutralizes soluble TNF resulting in M2 macrophages that do not express SIRP Alpha kill tumour cells promote ADCP. On the tumour extra downregulate much forward to expose the tumour to immune attack. In summary XPpro improves the function of innate immune cells needed to defeat the ravages of neurodegenerative diseases of the brain and cancer and the macrophage is the common denominator to these effects. I will now pass this to Mark Lowdell, the founder and CSO of INmune Bio to update the progress on the INKmune program. Mark?

Thank you very much, RJ. And once again, I'd like to pass my thanks to those that are listening in and joining this third-quarter report. So as from the last quarter report, we filed an IND with the FDA in April this year for a US trial of INKmune in metastatic castration resistant prostate cancer. We received subsequent clearance in May, for the use of INKmune in a Phase 1 Phase 2 open label trial across multiple US centers. And the response since then from potential clinical sites has really been overwhelming. We have eight sites already selected to participate in the trial. The first two sites will be initiated within two weeks' time, in November meaning that we are ahead of schedule for the planned first patient treatment, before the end of the year. The other sites will come online in the first quarter of 2024. Most importantly, the batch of INKmune has already been manufactured for the treatment of the first US cohort and is just about to be shipped to amplify via the US distribution center. Patients at each dose level will receive all three doses of INKmune, as an outpatient treatment during the six months trial this is really critical to our future development of the drug. Two types of INKmune efficacy will be measured, immunological efficiency and therapeutic efficacy. Immunologic efficacy will measure the increase in these memory-like NK cells for the INKmune generates in the blood of the patient and how long those cells remain in the patient's blood after treatment, just as we have done in the MDS patients in the Laurel drug. Therapeutic efficacy will measure tumour response to immune therapy using biomarkers of prostate cancer tumour burden, such as changes in blood PSA level PMSA scan and circulating tumour DNA. In addition, traditional measures of disease progression will be measured including progression free survival, changes in resist criteria using CT scan and bone scans. But as you might imagine, these are not expected to change in such a short six-month study. In the UK and Europe, we managed to advance the Laurel trial in MDS and AML. I'm sure you would be you've shared us with us this extreme frustration in the lack of recruitment in the UK to that trial. And this has been due to the changes in the clinical management of these patients in the UK in the new what we like to call post COVID era, and as a man who got COVID for the first time in August we're planning not post-COVID. And a meeting of the trial safety committee held earlier this year. The enrollment safety criteria was modified in attempt to limit screening failures. A protocol amendment was submitted to the MHRA back in May and filing was approved last week. So we've submitted the revised protocol to the two UK clinical sites for immediate initiation and the largest cancer center in the UK The Royal Marsden Hospital has just come online and will be initiated soon. Meanwhile, the complexities of importing immune into grease for the Greek trial and establishing local laboratory monitoring of patients have all been resolved over the summer, and the first batch of drug is ready to be delivered to the hospital in Athens. A patient has completed screening and is going to be reviewed on the 3rd of November for a determination finally of suitability for inclusion and treatment. So we hope to close the first cohort with that patient. We remain very excited about the potential of the immune platform as it begins its transition into the treatment of solid tumors. And I remind you, those are the tumors that account for approximately 90% of human cancer. For reasons we understand, most cell therapies currently focus on that 10% of cancers that are hematological tumors. But our confidence in the use of INKmune solid tumors is based on good biology. In vitro data in solid tumors from my lab shows that immune arms natural killer cells to override the immunosuppression of hypoxia and regulatory cells in the solid -- in the tumor microenvironment of solid tumors. The company presented the data on the INKmune-driven memory-like NK cells in the Presidential Symposium at the Annual Conference of the International Society of Cell & Gene Therapy in June. And we continue to follow up those data to study INKmune NK cells at the molecular level. You'll hear more on this in the future. In my previous role as Director of the Cell & Gene Therapy facility at the [indiscernible] University College London, I spent over 30 years producing cell therapies for academic and small spin-out company clinical trials. When these are therapies attempted to enter the commercial world, many failed due to manufacturing issues. As I'm sure you know from the CAR-T story, manufacturing of cell therapies is difficult to do at scale. But we've solved that problem with a robust and scalable process for INKmune. We've been successful in upscaling the manufacturing process and have completed the validation of that new process to CGMP. We've since signed a contract with a commercial contract manufacturing site, and the installation of equipment for that site has now started. So we're ready to move out into a commercial manufacturing setting. This investment paves the way for our ambitious plans for trials in other solid tumors, including ovarian, renal and nasopharyngeal cancer as we acquire more and more and more of the relevant supporting data. The company remains committed to execute on its vision of moving INKmune forward towards commercialization. That ends my update on the INKmune platform, and I'd like to turn the call over to David Moss, CFO, to discuss the financials. Thank you, David.

Super, thank you, Mark. I'll provide a brief overview of our financial results and upcoming milestones before we head to the Q&A session. Net loss attributable to common stockholders for the quarter ended September 30th, 2023 was approximately $8.6 million compared with approximately $7.7 million for the comparable period in 2022. Research and development expense totaled approximately $6 billion for the quarter ended September 30th, 2023 compared with approximately $5.2 million for the comparable period in 2022. General and administrative expense was approximately $2.6 million for the quarter ended September 30th, 2023 compared with approximately $2.4 million for the comparable period in 2022. At September 30th, 2023, the company had cash and cash equivalents of approximately $41.8 million. Based our current operating plan we believe cash is sufficient to fund our operations into late 2024. As of November 1st, 2023, the company had approximately 18 million shares of common stock outstanding. As highlighted in the prior quarter's Investor Call we continue to focus on achieving our primary clinical trial objectives or remaining cost prudent with the potential recover a portion of R&D expenses in Australia and in the UK. Now, I'd like to move on to their list of upcoming and important milestones. First milestone that we have which is we hope to have before year end is the removal of the FDA hold. Second, we expect some topline results from our Phase 2 early AD program towards the end of 2024. Upon release of the FDA hold we'll initiate a Phase 2 trial of XPro in patients with Treatment-Resistant Depression. Additional open-label Phase 1 data of INKmune in high-risk MDS and AML in 2024 and the initiation of a Phase 1/2 program in metastatic castration resistant prostate cancer. With the first patient treated before year end and open label data in 2024. We expect an upcoming webinar on the use of XPro remyelination in neurodegenerative disease. And finally, wearing my business development hat for a moment. The DMD market with inconsistent results in gene therapy and confirmatory trials for access skipping drug still long underway is confusing. We feel that XPro could be a novel solution to replace corticosteroids in DMD. Corticosteroids, including one approved last week, target the same glucocorticoid receptor pathway and have the same immunologic metabolic and cosmetic side effects and paradoxically cause muscle atrophy. Targeting soluble TNF with DN-TNF prevents inflammation and muscle degeneration and promote muscle regeneration in animal models without evidence of off-target safety issues seen with the use of corticosteroids or non-selective TNF inhibitors. Interestingly TNF is overexpressed in DMD at early stages of the disease where inflammation induces muscle degradation. Because corticosteroids are the most common drug used to treat DMD, a strategy that provides the benefit of corticosteroids without the side effects will benefit all patients with DMD regardless of age, stage of disease, or concomitant therapy. This is what excites us about the DN-TNF platform for DMD. As always, I think our shareholders understand that we continue to pursue business development partnership opportunities for DN-TNF in DMD and potentially other applications, but there can be no assurance that the company can complete any of these transactions if they're complex and difficult. In summary, management feels that the company has two great platforms and as a small organization with limited resources we will tried to expand the applications of these platforms in order to benefit shareholders. Naturally, we'll update investors should material business development events occur. At this point, I'd like to thank you for your time and attention. I'd like to turn it back to Claudia to poll for questions. Claudia?

Thank you very much sir. At this time, we will be conducting a question-and-answer session. [Operator Instructions] The first question comes from Joel Beatty from Baird. Please proceed with your question, Joel.

Hi. Thanks for taking the questions and congrats on the progress. My first question is on XPro. Could you discuss a little bit more about what gives you confidence that the clinical hold will be lifted by the end of the year?

Yes. Thank you, Joel. RJ here. Although it took a while to get to an agreement with the FDA. As I think I highlighted at the last call they gave us a list of things they wanted done. Obviously, those are that list was different than any of the other regulatory agencies. And we have gone through that list. And the data is been completed. It is being packaged and will be sent to the FDA for to meet the goal to have a soft hold by the end of the year. They ultimately gave us quite a clear list. And we have fulfilled it.

Great. And then as a follow-up for the ADO2 to study in early Alzheimer's. Are you able to provide any more information on where you're at in enrollment or what the approximate geographic split could end up looking like?

Yes I think we mentioned this last time we're changing our geography so quickly that we've been reluctant to really give names -- numbers and names yet. I think later in early in 2024 will when things have kind of settled down I guess that's the way to describe it. We'll be able to give you a clear direction on where we are outside of as far as clinical sites how many sites are involved, but I would be willing to bet they'll be more than 50 sites open by the end of this process. I won't promise that any will be in the US because we're really expanding so quickly outside of the US. But as we said last time this is really setting us up for the Phase 3 trial I mean its global -- multiple continents. And I know this has been a very frustrate us. But the one thing we are careful about is we don't want to -- when we give you enough information we want it to be perfect. In other words we want to be able to back it up and things are just changing so quickly and quite frankly to our advantage. And I think the UK is a good example we have. We're ahead of where we expected to be in the UK. They had a great backlog of patients that hopefully will all be screened and many of those will end up in the trial. So all I can say Joel hang tough and I think right now we have not changed our guidance. We still expect to be able to provide top line data by the end of the 2024. And I can tell you that everyone in this company is busting a gut to get us there.

That makes sounds great. Thank you.

Thank you. The next question comes from Tom Shrader from BTIG. Please proceed with your question, Tom.

Good afternoon. Thanks for holding the call. We enjoyed your CTAD presentations. Just to follow up on Joel's line of questioning. The late 24 data could that be done with no US participation or are they linked?

So, yeah, it couldn't be done we're driving forward Tom. And by the way Tom this is RJ. Thank you for the question. No, it could be done without US participation. I mean remember from the time -- let me use the prostate cancer trial that we're running as a great example. Mark said we got the green light in I believe it was May and we didn't do any front-loading planning there because that's expensive. And as you know we're careful with our money. So from the time we got the green light to the time we got to get our first enrolled patient enrolled will be six months to seven months, right? That's just what it takes. If you go from a standing start high. So, in the US, that's what will happen. If we once we get off hold, we'll start casting the US net. But by the time those sites get ready to go. We may have enrolled the trial. Now, there's a lot of other things we can do. We don't want to frustrate clinical sites, but I couldn't -- I think I've said it before. Maybe I've just said it privately. One of the things that frustrates us is that clearly what the FDA is doing is different from what are the other regulatory agencies are doing. All these other countries, their patients are getting access to what we think is a pretty good drug XPro for Alzheimer's disease. The US patients are sitting on the sidelines because of regulatory challenges both with the FDA. I can promise you the US will be involved in the Phase 3 trial and will probably be the main driver of the Phase 3 trial. But I wouldn't be surprised if we complete the Phase 2 trial without US patients.

Good. If I can follow-up given we have Mark on the line. Mark, in INKmune prostate cancer trial, who are these patients, are they post taxing? And I guess is the trial monotherapy? Then the final question is the oncology world has bent over backwards trying to get prostate cancer to be an INKmune reactive tumor that XTANDI Nevo went on for years. And now it's Nevo Ap and do you see INKmune playing there that it might be the final piece to make prostate cancer Nevo reactive? Is that interesting to you? Or is this pretty much a monotherapy endeavor for at least a while?

Sure. It’s a really, really excellent question. And I would love to spend a long time of size and put my academic hat on, and so I think with the first question is, yes, these are going to be post tax same patients the end-stage patients because that's what you always do it get into Phase 1 trial. The question about failure of the checkpoint inhibitors, every immunotherapy that's been tried in prostate so far has targeted T cell responses and the immune suppressive microenvironment of the tumour is high and whether that be checkpoint inhibitors or whether it be antibody conjugates. [indiscernible] If you look -- if you read the literature. And if you go and speak to a histopathologist, they'll tell you that very few. If you look at patients who do well in interventional therapy in prostate cancer, their patients who have a large NK cell infiltrate in their tumor there is no association with the T-cell infiltrate. So what we're targeting ourselves are already in the tumor. We just trying to switch them on to be better like we are in AML and MDS. And we know that the dirty little secret about solid tumors. This thing called neutrophil extracellular traps that coat the tumor and they inhibit NK cell activity. It means the NK cells and the T cells can't get the tumor, but we're targeting tumour infiltrating NK cells that are already there. So that overcomes part of that problem. But the really interesting thing about these neutrophil extracellular traps that let's stop particularly T cells invading from the peripheral blood is that they are broken down by M2 macrophages. So one of the great things that might come out of the XPro trial is that there are three, you could actually combine those two drugs in a very, very nice way to break down the trap to enhance the T cell entry into the tumor. And then respond to initial responses generated by the NK cells that are there. So that's a really exciting combination drug I'd love to that could also be combined with a checkpoint activation T-cell checkpoint inhibitor because once the T-cells are there we want to make certain that are not inhibited further by the inhibitory checkpoints in the tumor. So yes, I'd love to think further down the line we would look at combination therapy. The immune system never works on a single cell. There's never been I think the process works. So, it's be really nice to think that we could provide long-term benefit by combining these.

Great. Thank you.

Thank you. [Operator Instructions] The next question comes from Daniel Carlson from Tailwinds Research. Please proceed with your question, Daniel.

Hey guys. I'm just a couple of follow-up questions here regarding INKmune. And I just saw that Amgen pulled a drug from clinical trials yesterday in prostate and wrote down about $600 million. I was wondering if you could comment on, how that impacts, your thinking about your program at all if at all.

Yeah. I have a stab at that. I think you most as I said just now. I don't think T cells immediately are the answer in prostate cancer and the anti-T47, antibody you're talking about is a good example of that. And the checkpoint inhibitor somewhat the anti-CD3 combination of antibodies work, so I think we need to look at -- excuse me -- we need to look at activating cells are actually there. And so it just makes me more enthusiastic about the prospects where it need.

Great. And that's what I thought, thanks. Thanks mark. And then a question about them rep missed their top line yesterday as well. I know there is leader in DMD, is this something that you think might push them towards working with you guys or how do you see that items following [Indiscernible].

David?

You're asking me to guess what corrupt is going on. I can tell you; they're going through probably pipeline reorganization. I think that you recently had a steroid that was approved that supposed to be a slightly better steroid than the current standard of care. As I spoke about earlier we believe that XPro going down a completely different pathway than where steroids, than what steroids pathway provides significant benefit over a lot of the problems that we are that are associated with steroids. DMD is really an interesting space, because the Exon-Skipping drugs all have confirmation trials which are still ongoing there kind of along that been taken a long time while they keep these drugs on the market. It's going to be interesting to see what the FDA does with the fact that the confirmation trial for the Gene Therapy that Sarepta ran it failed. And there's some thought on the street that they keep the market keep the program on the market. I don't know what's going to happen. My guess is with what the FDA's done with regard to that program have been wrong. So I wouldn't hold any of that water. But the bottom-line is that we feel that there needs to be a new approach to DMD beyond Exon-Skipping, beyond steroids and beyond Gene Therapy. And we think that the DN-TNF is a really creative approach. We like it a lot.

Thanks. Thanks David. That's it for me guys. All my other questions were asked already. So thank you.

Thank you very much. Ladies and gentlemen, we have reached the end of the question-and-answer session. And I'd like to turn the call back to RJ, for closing remarks. Thank you, sir.

So thank you. INmune Bio has making progress on two-fronts. Each of our platforms have had a significant increase in shall we say profile and then last quarter. With XPro we hope to have a therapy that stops the progression of cognitive client in patients with ADI with Alzheimer's Disease, that's very different than what is offered patients today. With INKmune in Metastatic Castration-Resistant Prostate Cancer, we hope to control a disease that in many men can be quiet and indolent. But in many is lethal. We are confident in these ambitious goals. We thank you for your attention today and to those of you that are shareholders, we thank you for your continuing support. With that, have a good day.