Greetings and welcome to the INmune Bio’s Fourth Quarter and Full Year 2019 Earnings Call. At this time, all lines have been placed on a listen-only mode and the floor will be open for questions and comments following the presentation. [Operator Instructions] As a reminder, this conference is recorded.

A transcript will follow within 24 hours of this conference call. At the time, it is my pleasure to introduce your host, [Lyndon Britto]. Lyndon, the floor is yours..

Thank you, Christine. Good morning. Good afternoon everyone. We thank all of you for joining us for the INmune Bio fourth quarter and full year 2019 financial results call. Note, this is the Company's first such call. With me on the call is our CEO, R.J. Tesi, MD and CFO, David Moss.

Before we begin, I remind everyone that except for statements of historical facts, 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 statement disclaimer on the Company's earnings press release as well as the risk factors in the Company's SEC filings included in our most recent quarterly filing filed 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 obligation to update these forward looking statements to reflect future information, events, or circumstances. Now, I would like to turn the call over to R.J. Tesi, MD, the Chief Executive Officer of INmune Bio. R.J, please proceed..

Thank you, [Lyndon]. Thanks everyone for joining today. I will arrange my remarks to highlights and key takeaways from INmune Bio first year as a public company. Then share operational updates on our programs then I will introduce David Moss to discuss our financial results, upcoming milestone before we open the lines for Q&A.

But first, we would be remiss not to acknowledge the remarkable speed at which coronavirus, the COVID-19 is changing our lives. At INmune Bio, we are carefully assessing the impact of the pandemic on our business, our capital market strategy and our clinical development programs.

Today, the impact is measured, manageable, but that may change just yesterday, two major medical meetings. The AACR in San Diego was canceled or rescheduled and the Alzheimer's and Parkinson's Diseases Annual Meeting in Vienna was converted to a virtual meeting.

On a more, shall we say optimistic note, although our DN-TNF platform does not have a role in neutralizing or treating COVID-19 directly. Many of the complications related to a coronavirus infection relate to inflammation. Often, it is worse in the vulnerable elderly population.

INmune Bio understands inflammation and we understand unique immunology of this high risk population. They are the group that we are treating in an Alzheimer's disease program. We are actively assessing if and what role, we can play in response to this national emergency. Once the assessment is complete, we will communicate our plans to you.

Now onto our busy last year, 2019 was eventful with significant developments for the Company.

We started the year with three programs across two drug platforms dedicated to the treatment of cancer and that is a year with five programs across those two drug platforms including the three cancer or now three in cancer and one eight and Alzheimer's disease and NASH.

Our work in 2019 sets the stage for a busy 2020 where we plan to initiate Phase 2 programs in oncology and NASH Phase 1 programs in ovarian cancer and high risk MDS, a form of AML, and report the results of our ongoing Alzheimer's disease Phase 1 program. The foundation for the progress has been the two therapeutic platforms.

The first platform is our natural killer cell priming platform that makes the patient's own NK cells better and I emphasize the patient's own NK cells.

The second platform is the dominant negative TNF platform, a novel next generation selective inhibitor of the bad TNF that generates three of the programs XPro for Alzheimer's disease, INB03 for cancer and LIVNate for NASH.

I cannot overemphasize the fact that DN-TNF platform is unique and very different from the currently approved non-selective TNF inhibitors. The DN-TNF platform neutralizes bad TNF while promoting the function of the good TNF.

To put these biological differences in perspective, extensive third party preclinical data show that the DN-TNF platform causes less immunosuppression for most demyelination and improves the immune response against cancer and infection.

A set of biologic characteristic that did not occur with the current, but very good TNF inhibitors like Humira and Embrel and others, those cause immunosuppression and demyelination, the unique attributes of our DN-TNF platform allows INmune Bio to initiate programs in therapeutic areas that are off limits for the currently approved first-generation TNF inhibitors, namely in an oncology where immune suppressors has disastrous consequences to the patient.

CNS indications were demyelination may worsen the patient's disease. We have many and I emphasize many publications on our website to support these findings and I encourage you to review them. INmune Bio completed our IPO in February 4th.

The Company had two immune-oncology programs INB03 for cancer with the DN-TNF platform, INKmune, for cancer and the NK platform. Now, we have matured into five programs and therapeutic areas that are both in malignant disease and diseases that did not involve cancer like Alzheimer's in NASH.

I will now highlight into the program starting with XPro1595 our flagship program for the treatment of Alzheimer's disease.

One week after our IPO on February 2019, we were awarded a $1 million grant called the cloud award from the Alzheimer's association to advance XPro1595 our novel therapy targeting neuroinflammation, synaptic dysfunction into a Phase 1 clinical trial.

That Phase 1 trial enrolled this first patient last year and continues to move forward with a unique biomarker directed trial design.

In addition to assessing the safety of XPro1595 in Alzheimer's disease patients, the trial is designed to demonstrate as a drug decreases neuroinflammation, neurodegeneration and affects the symptoms of this devastating disease. This is the first, two step program studying XPro1595 in Alzheimer's disease.

The ongoing first step is to show that XPro safely decreases neuroinflammation in patients with Alzheimer's disease. The second step, a larger and longer Phase 2 clinical trial will demonstrate, if the drug by decreasing neuroinflammation in patients with Alzheimer's disease can slow or prevent cognitive decline.

To be clear, this approach differs from the therapeutic strategies targeting plaques and tangles of amyloid tau respectively. We believe the key pathologic elements of dementia of any cause or a nerve cell death and synaptic dysfunction. In preclinical models, XPro prevents nerve cell death and improves synaptic dysfunction.

We expect to report the clinical trial results in the second half of the year and we have already begun planning the Phase 2 program. Our goal, assuming positive data is to initiate the Phase 2 program quickly. You all know that Alzheimer is both the debilitating and deadly.

According to the Alzheimer's Association, Alzheimer's disease is the sixth leading cause of death in the United States with almost 6 million Americans living with the disease, costing roughly $290 billion in 2019. The Alzheimer's Association forecast that this number will more than double and the cost will more than triple by 2050.

There are currently no disease modifying therapies, but we think that may change in the near future. Moving on to INKmune, it is the name of our second or I guess maybe it was actually our first DN-TNF program because it went into patients first.

It was a program in immuno-oncology and we announced or completed the Phase 1 trial of INB03 in patients with advanced solid tumors last year. The trial was an open label dose escalation trial in patients with solid tumors who had had failed multiple lines of previous therapy and the trial met all of its goals.

It demonstrates an INB03 was safe and well tolerated as the dose tested. We determined the dose to be used in the upcoming Phase 2 trial and demonstrated a downstream pharmacodynamic effect by demonstrating a decrease in IL-6, one of the inflammatory cytokines, whose up regulation depends on soluble TNF.

After the successful Phase 1 trial and due to the unique effects of INB03 on the tumor micro environment, there were actually many avenues where we could have followed as part of a Phase 2 program. The planned Phase 2 clinical trial will enroll woman with HER2+ breast cancer who have brain metastasis.

These women will receive INB03 as part of combination therapy, most if not all of these women won't be resistant to trastuzumab also called Herceptin and will most likely express MUC4 a glycoprotein on the cancer cell surface that is expressed in the presence of soluble TNF.

This program is based on the work by professor, Roxana Schillaci, who first reported the role of MUC4 in trastuzumab-resistant at the San Antonio Breast Cancer Symposium in 2018.

Professor Schillaci’s work can be summarized in two simple points, one is express in MUC4 who have HER2+ breast cancer had worse survival than those that do not express MUC4 and MUC4 can be easily stained for on biopsy.

And that MUC4 expression requires soluble TNF and that treatment with INB03 or neutralization of that soluble TNF with INB03 decreases MUC4 expression to allow trastuzumab sensitivity to be reestablished.

Put simply, MUC4 expressing HER2+ breast cancers appear to be resistant to all forms of trastuzumab-based immunotherapy and INB03 reverses that resistance. This is not a small problem in many women who have HER2+ breast cancer.

The treatment options for those who have failed trastuzumab or have developed metastatic disease either before or after trastuzumab treatment are poor, and we have identified a novel combination that uses INB03 with to treat these brain metastases in these women or being a little coy, I mean, originally, quite frankly, we were planning to announce what that drug was when AACR released the abstracts for the upcoming AACR that was supposed to occur March 17th.

I mentioned earlier that, that meaning has been delayed. We have not been told yet when they plan to release those abstracts. We -- that information is embargoed shall we say until those abstracts are released. As soon as becomes available, we'll tell you what that combination therapy is and we think you will be intrigued.

How big is this market? According to the American Cancer Society, breast cancer is the largest, most common cancer in women. In U.S.

women actually all women with expecting over 400,000 new cases in 2030, HER2 breast cancers are approximately a quarter of these women and the global data service expects the HER2+ breast cancer market across the major eight countries to grow at a CAGR of more than 4% with a value of approximately $10 billion in 2025.

So, HER2+ breast cancer is common. It is a large market and there is the need for improved therapy for patients who develop resistance to first line therapy with trastuzumab. Our third drug candidate on the DN-TNF platform is LIVNate. This is our newest program so to speak, and we are focused on the treatment of non-alcoholic steatohepatitis or NASH.

As of today, there are no approved treatments for NASH, a disease that in the next decade will be the most common cause of end-stage liver disease in the U.S. as hepatitis C decreases. By any standard, NASH represents a significant unmet need. We're not the only company pursuing a therapy for NASH, but our approach is different.

LIVNate for the DN-TNF program by targeting metabolic, intestinal and immunologic pathologies that combined to cost to steatosis, liver cell death, inflammation and fibrosis may provide a unique solution to this difficult disease. Let me give you an example of how our thinking differs from others.

An underappreciated cause of NASH or contributor to NASH is intestinal leak. Obesity a common, so to say a metabolic problem associated with the disease causes intestinal inflammation that decreases the function of the tight junction proteins causing a leaky gut.

In response to the leaky gut, there is an increase in mesenteric fat also known as a potbelly. Potbelly fat is very different than let's call it love handle fat. It is drained adipose tissue that actually main lines inflammatory cytokines directly into the vein, the portal vain, for wreak havoc with the liver.

There has been little discussion of this pathologic mechanism in the many of the conversations regarding NASH, we think that is an important oversight. The NASH clinical trial is designed to give a clinical signal quickly and efficiently.

The Phase 2a open-label trial will enroll patients with F2, F3 NASH using non-invasive testing, both blood and imaging to stage patients and determine treatment effects. LIVNate will be delivered as a once a week subcutaneous injection for three months and steatosis inflammation and fibrosis will be evaluated twice at 6-weeks and 12-weeks.

Maybe onto INKmune, it is the name of our NK cell priming platform and it was really the program, the Company was formed around in September of 2015. Two clinical programs are expected to begin enrolling patients in 2020.

INKmune for the treatment of high risk MDS, a hematologic malignancy and INKmune for the treatment of refractory and resistant ovarian cancer is solid tumor.

INmune Bio’s NK cell primary platform delivers essential primary signals to the patient's NK cells so they will attack their cancer and I emphasize this is priming the patient's case cells to attack their cancer. That is the patient's NK cells have all the machinery they need to kill cancer, but they don't use it.

They need to be reactivated or woken up. INKmune provides the missing priming signals, one of the two switches that must be, shall we say, triggered or trigged for a resting NK to attack the cancer. This biologically and pharmacologically platform, our priming process was described in detail recently in a class one article.

The difference of INKmune compared to other programs that focused on NK cells for cancer is real. INKmune enables the patient's own NK cells to attack the cancer. We aren't giving you know, somebody else's NK cells or NK cells that are produced in a master cell band. That is not what INKmune is. This is not a replacement therapy.

We give a therapy, a biologic that actually is an on switch that turns the patient's own NK cells on.

The simple differences important looking beyond efficacy that is we believe INKmune will be less complicated to give, less complicated to make and will be highly cost effective in the treatment of both a variety of solid tumors and hemalogic malignancies. The program that INKmune is seen targeted for and this will eliminate is the residual disease.

Why is that? Residual disease causes relapse and relapse is one of the most heartbreaking events that a cancer patient and the family must've built, once patients relapse chance of dying from the disease goes up dramatically. Most do not realize that it was actually NK cells, not T cells that are responsible for eliminating residual disease.

Thus to eliminate residual disease and give patients a chance, they need an NK cell that is fully engaged in the job of killing cancer. We believe INKmune should help patients NK cells go from apathetic to a ferocious cancer killing machine.

To highlight the flexibility of INKmune to treat both solid and liquid tumors, we chose to initiate one in each ovarian and high risk MDS, pAML. MDS is myelodysplastic syndrome. It is a disease of the bone marrow primarily seen in elderly patients.

High risk MDS is best described as a pre-leukemia and if left untreated progresses to bone marrow failure and become acute leukemia. These elderly patients are poorly served by current therapies and the disease is incurable in most cases. We believe INKmune maybe an excellent solution. This trial is expected in the second half of 2020.

The second program will treat women with refractory ovarian cancer. As you know, most women diagnosed with this die of the disease despite repeated reduction of tumor burden by a combination of surgery and chemotherapy. That is the residual disease, often invisible to clinical teams with times to cause progression, relapse and death.

That trial is also expected to initiate in the second half of 2020.

Both trials -- in Both trials, the INKmune will be given as a monotherapy over several weeks in patients who have a low burden of disease, ideally just with residual disease, other than determining safety and tolerability of the INKmune therapy, patients will be monitored closely to determine if their previous class and NK cells have woken up and begun to attack the tumor.

Tumor burden will be monitored when possible. 2019 was a busy year. We became a public company. We started a second clinical trial. We've expanded our pipeline dramatically with clinical programs, in some of the most important diseases of our time. We've published data, supporting our clinical programs.

We've spoken at meetings and we have got to know many of you in the financial community. Now IP has been issued and remained very active in filing intellectual property, even as a small company of seven employees, none of our employees in house IP council.

We added two new directors to our Board who will help us be the best company possible and 2020 should see further advancement of programs in our pipeline. In closing, I started my career as a transplant surgeon caring for patients. My goal has not changed. At INmune Bio, we strive to make a difference at the bedside.

Patient care is what we are all about. Now, I'll turn it over to David Moss to further discuss our financial results and those upcoming milestones. David..

Thank you RJ. I'll provide a brief overview of our financial results and upcoming milestones. Net loss attributed to common stockholders for the fourth quarter ended December 31, 2019, was $2.3 million, compared to $1.9 million for the quarter ended December 31, 2018.

We have not had any revenue in the past and the Company does not expect to have any material revenue in the near future. Research and development expense totaled approximately $0.9 million for the fourth quarter ended December 31, 2019, compared with approximately $1 million for the quarter ended December 31, 2018.

During the quarter ended December 31, 2019, the Company received 0.3 million of grants from the Alzheimer's Association, which the Company recorded as a reduction of research and development expense.

Excluding the $0.3 million of grants, research and development expenses increased during the three months ended December 31, 2019 as a result of the further advancement of our drug platforms.

General and administrative expense was approximately $1.5 million in the quarter ended December 31, 2019 compared to approximately $0.9 million in the quarter ended December 31, 2018.

The $0.6 million increase in general and administrative expense is largely due to cost associated with being a public company and higher compensation costs including higher stock-based compensation. At December 31, 2019 the Company had cash and cash equivalents of approximately $7 million with no debt.

During 2019, the Company received $0.4 million cash proceeds from Australia and $0.4 million of cash proceeds from the United Kingdom pursuant to the R&D tax rebates. As of March 9, 2020, the Company had approximately 10.7 million shares outstanding. I'd like to list our upcoming milestones, which are.

First, for 2020, we expect to report the results of the ongoing Phase 1 XPro1595 trial in Alzheimer's disease expected to complete second half of 2020. Second, initiate a Phase 2 INB03 program in women with CNS metastasis from HER2-positive breast cancer. INB03 will be part of a combination therapy.

The trial is expected to begin in the second half of 2020. Third, initiate a Phase 2 LIVNate trial in NASH expected mid 2020. Four, initiate a Phase 1 INKmune trial in high-risk MDS cancer expected second half of 2020. Five, initiate a Phase 1 INKmune trial in ovarian cancer expected in second half 2020. So, we have a lot of catalysts coming up.

If you look into 2020 and further into 2021, we feel that we have an exciting time ahead of us. I'd echo R.J.'s enthusiasm. We believe our product platforms are unique. We are working hard to show these programs will make a difference in patients' lives.

In the near-term, we remain focused on meeting our milestones and delivering data and rewarding investors’ faith in our business. Thank you for your time and attention. I'd like to turn it back to Christine, the operator for Q&A.

Christine, can you please pull for questions?.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question comes from the line of Jonathan Aschoff with ROTH Capital Partners. Please proceed with your question..

I was wondering I had three questions. I was wondering how you justify going down the COVID-19 route with the current balance sheet? And then the other two were. What's happening on the ALS front? I know that’s quite new, but I was just still curious.

And the last one was, how to only burn 400-K over the fourth quarter?.

So, thank you, Jonathan. This is RJ Tessie. I'll take the first two and I'll leave the financial question to David. So, I think the question about why we didn't think about COVID-19 is an excellent month. And, in fact, we are thinking about how we can play a role.

But we aren't just going to throw our hat in the ring because there's a big need for COVID-19 therapies or solutions. We're only going to throw our hat in the ring, if in fact our solution for COVID-19 also has commercial value beyond a COVID-19 application. And let me be a little more specific there.

If you look at how most of these viral pandemics play out, they have a shelf life, I mean they are pandemic related virus, 24-months after the first patient has virtually disappeared.

So, for a company of our size, it doesn't make sense to just dive into something because we can because it may not be commercially relevant by the time the program reaches the market. We will only dive into the program if in fact can be translated into a non-COVID-19 application and we've got a couple of those in mind.

I don't want to expand beyond that at this point, but if you kind of take a hard look at what our therapies do, you'll probably come up with some ideas.

So, the other thing is obviously, we will try to get non-dilutive financing for these activities, what either through the NIH, the DOD, BARDA, there's money kicking around, it's competitive, but we're not going to waste a lot of time, just focusing on COVID-19. We're going to focus on diseases related to COVID-19 that have commercial applications.

With the ALS this was a surprise. Obviously, we applied for grant once again, we were successful getting new grant. But just to be clear, it's a preclinical grant. This is IND enabling studies. Those studies should last 18 to 24 months.

And at the end of that period, we are going to be teed up to initiate an ALS clinical trial, if one, the data from the preclinical work supports that. And two, we have investor support either through a clear signal from the capital markets or actually we get non-dilutive financing to carry the trial forward.

So, as we did with Alzheimer's disease, our plan is to move carefully in expanding indications, because right now, we don't have a budget for that. But all of the work that we're doing in ALS is supported by these funds from the Alzheimer's foundation. So, I'll let David answer the financial question and then see if there's a follow-up from Jonathan..

So, you'll note that we ended Q3 with about 7.3 million in cash that the year with seven. So, you're correct. We didn't burn a lot of cash and yet we moved on our programs forward.

How did we do that? So, we received about $700,000 in non-dilutive funding from the R&D rebates that we did take place mainly in the UK and primarily in Australia, where a lot of our work is being done on the clinical programs.

That we also received approximately 250,000 from the Alzheimer's Association on top of that, that really reduced our burn and allowed us to move forward.

To give you an example, the money that we received from the Alzheimer's Association, it's a million dollars U.S., when you convert that to Australian dollars, the exchange rates roughly $0.65 to $0.75 -- to $0.70 cents in that range comes out to about 1.4 million. We got a rebate of close to it varies, but it's between 35% and 45% of that.

That takes it close to AUD2 million. And the total trial runs close to 2.4, 2.3 it will be somewhere around that range. So the Company has to come up with another call it AUD400,000, which is like $300,000. And then I'll point out that our burn from a G&A level, if you take out the stock based compensation is relatively low.

I think management doesn't pay itself extravagant salaries. Our interest is that we're really large stocks, shareholders and stockholders of this business. I'll point out, we've invested in every single round and our belief is in the value of the equity.

So we believe that we're very much aligned with shareholders by virtue of our ownership in the equity because we're very smitten by our programs. We like our programs. And I also point out, first few years of this company, we didn't even take salaries. So we just, we contributed obviously our time because we're well compensated in equity.

So we run a lean shop, we don't have a lot of high fixed costs is the message. We're pretty tight with our capital and we're always trying to do as many non-dilutive activities as we possibly can. We're very sensitive to what I would say is capitalization, dilution and also asset dilution. So I hope that answers your question Jonathan..

[Operator Instructions] Our next question comes from the line of Jason McCarthy with Maxim. Please proceed with your question..

Hi, this is Norene on for Jason. I'm actually jumping back to the cash burn question first.

So you were starting a lot of studies this year and I understand, you have non-dilutive financing and so forth, but what do you expect the burn to be for the year or even on the quarterly rate? Could you give some color on that?.

Yes, I appreciate that, Norene. We do expect our burn to increase towards the second half of this year. Currently, we're burning not including the non-dilutive activity for burning about 500,000 a month. I expect that to increase around the June, July timeframe.

And I would expect that to close to double or triple towards the end of the month -- towards the second half in that range..

So, switching over to your Alzheimer's study, with XPro1595, can you comment on how enrollment is going? And as an extension of that, you did say that the first patient was enrolled in December, which means the readout from that patient would be about now.

I know you mentioned that you'll be reporting data in the second half, but would you report maybe some of the initial patient data earlier?.

Okay, thanks Noreen. This is R.J. Two points. First of all, enrollment, I don't want to use the word game busters, but was very enthusiastic. As you recall, the trial came online almost exactly at the same time the biogens basically pulled the rug out from via aducanumab study and before they restarted enrolling patients. So we fell right into that void.

And quite honestly, just the technical aspects when a patient's identified, there's a several week process of testing, et cetera to make sure that they qualify many clinical trials.

They actually had to close enrollment because we had kind of, we had lined up all those patients we needed for a reasonable period of time or else those all that testing would go stale. So we are well on schedule. We are very confident of the readout date.

And you did hint that we may be able to get a peek at the data since this is an open label trial that uses biomarkers. And your answer is yes, we are hoping to get a peak at that. We're in the process of working with our imaging [CRO AMITA] and the clinicians at the site as the first and second cohorts become mature so to speak.

So I don't want to promise this, but we are hopeful. As soon as we have data we're comfortable with, we will share with you because we understand the importance of the trial to the investor community and we also appreciate the inexhaustible appetite that investors have for clinical data. So, the answer is, yes.

We hope to have something sooner than later..

Great. That's helpful. And one last one with regards to your study, in the trastuzumab-resistant breast cancer study.

I know you can't share what you'll be combining in INB03 with, but can you provide some color on the expected study design possibly?.

Yes. So, yes, thank you. So, obviously I'll make a single comment that, the combination drug will be a drug that is currently approved for second line therapy and trastuzumab-resistant women. So, it's not going to be kind of an off-label use both.

We get combining it with the drug and obviously both INB03 and that drug across the blood barrier, which is an important problem for trastuzumab. It will be open label. The goal is basically to demonstrate a clinical response, whether it be by tumor size or the failure of progression.

And as you know, use of corticosteroids for development of seizures is a common or a biomarker shall we say for progression in these women. So, we will use a composite end point, and our hope is that with some clinical data, we can use this little in Australia.

We'll use this as a way to initiate a dialogue with the FDA to start treating patients in the U.S. and hopefully we'll do that under some form of the expedited programs, whether it’d be a fast track or breakthrough therapy that the FDA offers.

It's hard to know whether it will be eligible for any of that stuff, because we're talking about a year down the line and whole the cancer world is moving very fast these days. But if you look at the availability of effective therapies for women with metastatic breast cancer that have CNS lesions, those options are not that great.

So, we are throwing our hat into that ring..

[Operator Instructions]Our next question comes from line of Swayampakula Ramakanth with H. C. Wainwright. Please proceed with your question..

Thank you. This is R.K. Good morning R.J. and David. A couple of questions from me.

Continuing on the topic of trastuzumab-resistant in HER2+ breast cancer, is it possible for you to give us some color regarding what percentage of patients have them up for over expression? And I think you stated this but I just want to double check with you, has the work done by the academician, able to show that INB03 actually decreases MUC4 expression in breast cancer cells in the preclinical models?.

Yes. Thank you, R.K. So, well, currently at least at the time of diagnosis, about a third of the women have our MUC4 over-expresses, okay.

We are in the process of trying to determine, if that expression goes up in the setting of metastatic disease as particularly brain mets, as you know they don't frequently biopsy brain mets, but they frequently biopsy other mets.

But one of the things that MUC4 does is it makes to be euphemistic, it makes the breast cancer cells greasy, so they can sneak out of the tumor and basically seed sites that are beyond the primary tumors. So, one of the biologic purposes of MUC4 is one to protect itself, protect the tumor from the immune system and two to promote metastatic disease.

So, most of women with metastatic HER2+ breast cancer are going to be MUC4 positive, if not all of them. She has shown unequivocally that the MUC4 expression depends on soluble TNF. And if you neutralize soluble TNF with INB03, you actually reverse expression of MUC4. So, that is an unequivocal connection.

The question is where the heck is the soluble TNF coming from? It turns out that if you look in most of these women, they don't have sky high levels of TNF in their blood, which would be soluble TNF. It turns out that the tumors basically express transmembrane TNF and the warm up for they make them work transmembrane TNF they make.

And as transmembrane TNF is converted to soluble TNF by an enzyme called PACE or ADAM17, which is in the tumor microenvironment. So, actually, the tumor is feeding itself. It's a very interesting bit of biology that we actually can intervene with, with INB03. So, it's a perfect setup, there are additional tumors that that express MUC4.

She’s already shown in preclinical models that in gastric carcinoma that where about 20% of gastric carcinoma tumors, express HER2, same thing goes, and I'll remind everyone that Herceptin is approved to treat HER2+ gastric carcinoma.

And the most famous tumor with MUC4 is pancreatic cancer about not more than 90% of all pancreatic cancers express MUC4. We're in the process of exploring that biology. So, I can't give you any answers yet, but I will say stay tuned. We expect to have those results sometime this year..

Regarding the Phase 1 study, where are you with the design and is there any additional color that you can give on that?.

Phase 1 for which program or Phase 2 which you referring to here?.

Yes, for the breast cancer study?.

Well, as I said with Norene, I mean the program is, we're expecting to perform it in Australia. It will be women with HER2+ brain Mets and they will receive combination therapy with, INB03 plus this other drug which crosses the blood brain barrier. So, we really think it's a good trial and there maybe some additional elements.

I will say just in passing because it is relevant. Australia hasn't intruded a “pandemic program”. They actually had a plan in place of pandemic in the health care system.

So, we're already scrambling not the right word, but we are being informed of changes that must occur in the way we do our ongoing clinical trials and what impact this will have on future clinical trials is difficult to predict.

So, right now let me give you an example for instance the moderators are not allowed to do personal visits to the clinic sites any longer. They have to do telephone visit, which doesn't cause a problem in our trials, but it is a change in the way business is done. So, this trial is slated to begin in June.

Currently, we're moving in that direction and, but I don't want to if it -- I can't predict what's going to happen with corona virus in Australia or the US for that..

RK, David here. I just want to highlight it is the Phase 2 study, the Phase 1 was already complete..

Okay, sorry about that. Then when you put out your expected milestones for 2020, I didn't see anything on the CPA resistant solid tumors.

Is that still an indication that you're planning to pursue or will that come later?.

Now, good question and you're right. We were optimistic or hopeful that we would get MDs or myelodysplastic data out of the Phase 1 trial. We have assays in place by two vendors and there were technical problems. It was just difficult to do. So, it's very -- it was very hard for us to actually build because I didn't have data at my fingertips.

I was only little nervous about building a clinical program around MDSCs, circulating MDSCs as you know, that was based on preclinical work of a fibrosarcoma model. We have not abandoned that by any stretch of the imagination.

In fact, one of the things that the combination of INB03 plus this drug does, or let me rephrase that, one of the things that when you eliminate MUC4 expression by INB03 you've changed the immuno biology of the tumor micro environment. You decrease myeloid cells, MDSCs and TAMs and you increase lymphocytes in the tumor.

So, we are actually very hopeful that the combination of INB03 with this other drug will actually make cold tumors hot and give us the opportunity as a third step, but actually adding a CPI or a checkpoint inhibitor to this therapy.

Currently, breast cancer is not an area that is really for the most part effectively managed with checkpoint inhibitors because they are immune deserts. It's an area we think we may have a leg up, but the first step is to get rid of trastuzumab or the resistance associated with the MUC4 expression.

The second step will be to add the checkpoint inhibitor..

Our next question comes from line Carl Byrnes with Northland Securities. Please proceed with your question..

Congratulations on the progress. What are your expectations with respect to grants and other grant funding receipts in 2020 that would be recognized and offsetting overall R&D spend at this juncture? Thanks. Then I have a follow-up as well..

So, as David mentioned, we are aggressive in filing for a non-dilutive funding. Some of that is directly with the NIH to do things like SDIRs, some of that is directly with foundations such as the Alzheimer's Association in ADDF Alzheimer's Drug Development Foundation, the Parkinson's Disease Foundation and J. Fox, et cetera, ALS Foundation.

So, we are submitting grants all the time. And in fact some of you have met CJ Garam who is our director of neuroscience and that is sort of his area. I will say that most of the grant activity is in the neurosciences because, we have pretty attractive asset and we compete very well there.

I don't want to give you an exact list at this point because it's just a little bit about managing expectations. We have been successful so far. We continue to put out grants and we expect to be successful in the future.

I just don't want to put a number on that because as it stands and we're disciplined within the Company that we don't assume we receive the money until we actually get the first check.

David, anything you want to add there?.

No, I mean I'll just add that we have some -- we have two third party resources that we use to continually monitor and apply for non-dilutive type funding activities. And the one thing Carl, that I think you should keep in mind is we're very sensitive again to both the asset dilution and capital dilution.

What do I mean by that? I mean if we partner an asset, we hear a lot about investors about how do you partner an asset? When are you going to partner and ask them, et cetera, et cetera.

You know, the way we look at it is that we want to generate as much data as we can about the assets and then we partner the assets so you can dilute the asset base of the Company or you could dilute the capital base. And we're just very sensitive and we're doing our best to try and manage that as we go forward.

And we do that through non-dilutive financing activities and, and the typical business development discussions that a lot of companies that our size do..

And then just to follow up on the Phase 1 Alzheimer's trial, one of the key, I think, key secondary end points is changing baseline of hsCRP.

Just remind me, if you can, is that measured by a blood or cerebral fluid or both?.

Good question. We're actually measuring both. hsCRP is known to be elevated -- correlate with the blood. We'll also measure inflammatory cytokines and neurodegenerative biomarkers in those patients both blood and CSF.

I can tell you that, the two biomarkers or the three set of biomarkers we're most excited about are actually the non-invasive ones including, looking for white matter free water. It's an MRI technique, which I think holds tremendous promise. It's been developed by AMITA, our imitating CRO based in Canada.

We have that breath test, which most of you, we've talked to you about. And then, obviously, these behavioral biomarkers of sleep, depression, aggression, psychosis and apathy. So it's a unique design. We think that, going beyond difficult blood and CSF biomarkers is going to be very helpful and we are optimistic..

[Operator Instructions] Our next question comes from line of Daniel Carlson with Tailwinds Research. Please proceed with your question..

Firstly, I had regarding your INKmune program. I'm just wondering. It's getting a lot of press people approaching NK cells. I'm wondering if you could talk about how your strategy differs from what else is happening out there..

Yes. Thanks, Dan. The main difference is that we think the patients of NK cells are just fine. And what I mean by that, they have all the guns, knives and missiles, the thing you need to kill cancer cells, but they're apathetic or they're blind, for whatever reason, do not attack the cancer cells.

Actually, we know the reason, it's actually the cancer has figured out a way to avoid the immune surveillance that NK cells do. But it turns out, if you flip that switch, that odd switch, you can turn that NK cell from an apathetic NK cell into a cancer killing machine. Now, there's a number of ways to do this. You can do it with cytokines IL-2, IL-15.

They actually turn the NK cell on. You can do it with INKmune. We have shown in the public work that I mentioned that those are not equivalent. It turns out when you turn it with INKmune, you up regulated some very specific, shall we say, cell showing bits of cell killing machinery that you don't do with you turn them on with cytokines.

Furthermore, the cytokines have to be present as soon as you remove the cytokines from the environment, those NK cells go back to sleep. That's certainly a problem with many of the companies that actually think that you need to replace the NK cells.

So just to reinforce, all of our competitors as far as we can tell, actually thinks that the patient's NK cells aren't good enough, they’re diseased. And hence, you’ve got to get new ones. Now, we admit there are some patients that just after being beat up with chemotherapy just don't have enough NK cells.

And yes, you must replace those NK cells, but that's a minority of cancer patients. Most cancer patients have normal amounts of NK cells. In fact, NK cells come storming back after the leukopenia associated with chemotherapy. They're the first lymphocyte population to come back. So, when they come back, they're still -- so, we've turn them on.

So we are different. We are not giving NK cells. We depend on the patient's NK cells. We think there's ample support. I mean remember Genentech built a franchise based on rituximab and Herceptin, which is turning on the patient's own NK cells to treat lymphoma and breast cancer respectively.

So, we think Genentech got it right, and we just think we have a better way to do it..

Got you. Thank you.

Turning it over to your TNF program for a second, with inflammation being such a problem, is there a potential at some point that, instead of being a therapy, it could become sort of a vaccine as people get older to be proactive about inflammation?.

So, that's a very interesting question. I'm not going to go deep into that on this kind of call. I will say that we agree strongly that chronic inflammation is a major pathology in the elderly population. It's in fact the NIH has coined the term inflammation and this is not acute inflammation.

It's the chronic inflammation that's immunosuppressive and causes immune dysfunction. And in fact, if you look at the way the elderly respond to the influenza vaccine, the older you are, the worse you respond.

And in fact, in the groups that die from influenza every year, who are they? Most of them are age greater than 65, actually, most of them age greater than 80. And a lot of people I see die from influenza over here because it's such a common disease.

The only ones that die are the elderly, many of them have had the vaccine, but they only 85 year olds only respond about 30% of the time. And it's because of this chronic inflammation and immune senescence that they have.

We're pretty confident that if you get rid of that they'll start to respond to not only vaccines, but also get rid of many other diseases of aging. But anyway, just to be clear, we're not pursuing an anti-aging program here.

But I want to re emphasize the chronic inflammation, which is one in our sweet spot is a common disease in the elderly, and it does have medical consequences..

Yes, it was very, very interesting possibilities for that going forward. And then my last question, I found it very interesting that the Company repurchase some shares recently. I know you guys, inside have put a lot of money into the common stock last year with the market going down your stock and then under pressure here.

I'm assuming a window opens up, are you guys looking to get back into the stock just out of curiosity?.

A very, very direct question, Dan, I can only tell you is stay tuned. I can't answer that directly..

[Operator instructions] Our next question comes from line of David Bautz with Zacks Investment Research. Please proceed with your question..

So, I wanted to ask you about the NASH trial that's coming up.

Did I hear you correctly that you're going to F2, F3 NASH patients, but they're going to be enrolled in the trial through non-invasive diagnosis?.

So, yes, I mean, let me just step back a little bit. First of all, when you talk to both clinicians, patients, and other companies in NASH, one of the biggest hurdles is the biopsy. So, we have to biopsy that going in and biopsy them coming out. I mean, as costs, and it is a barrier to enrollment.

The complex non-invasive strategies using some kind of blood, fiber scan and MRI imaging to stage patients has become quite accurate. Accurate enough for our RMEs, which is to verify that we have a therapeutic strategy NASH and otherwise there's not a registration trial it's small.

This is a trial to say we're going to make an investment of a modest size until a disease that has tremendous potential. But where there had been a lot of failures but has a lot potential, and we think we have an excellent therapeutic strategy based on our preclinical mechanism.

[Technical Difficulty] and if we were not an NASH company, it's not our primary focus, it is a good focus. And that positioning may change after the Phase 2 trial. But this is a way for us to put our toe in the water in a fiscally responsible way follow-up and following-up on what we think is stellar preclinical data..

How many patients are you planning on enrolling? And then how many centers you're going to be at?.

So, we're going to enroll 20 patients and it will be 4 or 5 centers. So, it's not a big trial, but one of the advantages of the non-invasive staging is you can monitor them more frequently, and as you increase the intensity of monitoring, you decrease the variability of the response that allows you to do smaller clinical trials.

This will be a recurring phase in the Phase 2 programs..

Are you going to be looking at liver fat also?.

Yes, the one thing the MRI really does well as look at the liver fat. Now, at the end of the day, the FDA has yet to embrace non-invasive endpoints. They still want biopsy everyone in the field figures by the time three years from now that they will be accepting non-invasive studies for these endpoints for approvable endpoints..

Okay.

And then lastly, for the INKmune trials, what is left that needs to be done before you can start enrolling patients?.

For the INKmune trials, I mean, basically it's just -- the drug has made, the protocols are written, there's a three step process of regulatory and ethics and scientific review committees in the UK system. And that's what we're involved in right now.

The MHRA, which is the equivalent of the FDA, there's ethics committee and then there are scientific review boards that each academic hospital. And unfortunately, much of this goes in sequence instead of in parallel, but it's moving forward.

Once again, I will just say that like any regulatory agency, the MHRA has it worse because they just became a freestanding agency when they left the EU. So Brexit had an impact and obviously, coronavirus has an impact over there too. They actually have more places than we do on a capital basis..

[Operator Instructions] Our next question comes from the line of Paul Morris with Alliance Global Partners. Please proceed with your question..

Hi RJ. Thanks, great presentation today. You've, you've answered this I think a few times.

Could you just give us a very brief description of how your TNF compares to the existing TNF?.

Yes, Paul, thanks. I got to really make it simple here. Basically, TNF biology's complicated and there's a good TNF and a bad TNF. Now, you've heard us in the past talk about soluble and transmembrane in TNF. We’re really found that people really understand the good versus the bad concept much better.

The bad TNF is the one that actually causes inflammation, causes cell death. It's bad hence the name. The good TNF is the one nobody knows about. That's transmembrane TNF. The good TNF is protects cells, help them live. It enhances the immune system, so the patient or the can respond to cancer or infection.

And it promotes a synaptic function and remyelination. Myelin is the insulation of neurons, which is essential for the neurons to work and synapses are how the neurons talk to each other. So the good TNF is definitely good. The current drugs, and they're great drugs, mind you, they have revolutionized the care of autoimmune disease.

They are the largest pharmaceutical franchise on the planet, soon to be overtaken by checkpoint inhibitors. But they basically block both the good and the bad TNF. Now, what they're trying to do is block the bad TNF, but the good TNF blocking the good TNF is an off target effect.

And unblocking the good TNF, they increase the risk of infection, they increase the risk of cancer and they cause MS Demyelination. Those are obviously not good for the patient. And it also means that they cannot -- are contraindicated in any setting where immunosuppression would be problematic, i.e.

in treatment of cancer or treatment of infection or any case where demyelination would be problematic and that would be treating brain diseases or CNS diseases, both neurologic and psychiatric. The TNF platform is like a rifle shot. It completely eliminates the bad TNF and doesn't touch, not even an iota, doesn't touch a bit the good TNF.

So what you do is you polarize the whole TNF biology to the good TNF and this is why we can go after a cancer.

We can go after neurologic diseases because not only is that the perfect drug, the perfect anti-inflammatory strategy, it actually has benefits that improve the response of the immune system, improve the function of the neurologic system, and they can't be there. I want to have to compete with Amgen or AbbVie.

I mean there are these 800-pound gorillas. We're just 3 pounds even a squirrel at this point. Look at that size, but we aren’t now. So, the differences are stark, they're real and we are applying those differences in a way that gives us a unique, both medical and marketing opportunities..

Our final question comes from the line of Michael Erwin with Universe Securities. Please proceed with your question..

So, I have two questions I guess. So the first one is, another chronic inflammation is becoming a much more widely known condition.

Would you say that, especially since you are one of the pioneers in this kind of school of thought, would you say that chronic inflammation can be considered a disease now or is a condition?.

Well, thank you. We do believe we are one of the pioneers in bringing chronic inflammation to the forefront of thinking in both the medical and investment community.

And although it isn't there yet, our belief, and once again I'm speculating here, this is not part of a business plan, but you know, as chronic inflammation is understood to have the impact on many facets of diseases, particularly aging and chronic diseases, it will be recognized as something that has to be measured and something that if you could measure it and have a therapy for you should treat.

So, we predicted in the future and I don't know whether it's five years or 10 years from now, when you go to the doctor and right now they're testing your blood pressure and testing your glucose level, and they testing your level to see whether they need to intervene and give you any therapies to prevent the development of diabetes or cardiovascular disease.

They're also going to look to see, if you have chronic inflammation, because if you have chronic inflammation, you have an increased risk of cancer, you have an increased risk of neurologic diseases, metabolic diseases and cardiovascular diseases. And if the docs have a therapy in their hand, they're going to give it to you.

So, it's up to us and biopharma to give them the tool that is the test and the therapy because treating chronic inflammation will have -- and here I will go out on a limb and say, have more of an impact than treating cholesterol for heart disease. We will have more of an impact than treating glucose in patients with metabolic syndrome..

Alright. Thank you for that. And then the second question is about the Alzheimer's, and since you said before, the [BA] amyloids scorecard was being walked away from it because of the failed trials have been.

Would you say that our -- now that, that's been walked from that market has become more aggressive in search for a solution because Alzheimer's being such a big disease that has no cure yet.

What would you expect from your Alzheimer's disease trials and how would it compare to other companies that also focus on neuroinflammation?.

Yes. Thank you. I think it's tragic from a patient perspective and an investor perspective, but having, having finally [wrung] out the enthusiasm for amyloid by both biopharma and investors means that those of us that are focused on amyloid actually now have a chance because it used to [suck] all the oxygen out of the room.

And in fact, it's probably part of the disease, but not an important part. So, what you're going to see over the next five years is that, you're going to see all the kinds of innovation and diversity in drug development that occurs now in cancer and Alzheimer's disease.

Now, when you ask the experts, some of the important pathologies in Alzheimer's disease are neuroinflammation comes up, as very high on their list. And honestly, that's what we do. . And so we're way ahead of almost anybody. I mean, I don't think there's anybody ahead of us.

There are some people who are running neck-and-neck with us who have anti-inflammatory or shall we say, anti-glial activation strategies, but this will just be part of the solution.

Alzheimer's disease is a complicated, just like cancer, just like cardiovascular disease, just like how many patients with either cardiovascular disease or cancer get one drug, almost none. They get combination therapies. So, the future for Alzheimer's disease will be combination therapies.

We believe that neuroinflammation is a key element to the whole disease spectrum. So, although there will be some patients who benefit from just a monotherapy with XPro1595 and that group will not be small, we think it's as big as the third.

The other two thirds of the patients may need other therapies and those other therapies may benefit from combinations with XPro1595. So, I don't know exactly what the future looks like. I know that obviously, we're aggressively pursuing clinical strategies in Alzheimer's disease.

We think that both modern therapies and combination therapies are part of the future and that will be a big part of that..

We have reached the end of the question-and-answer session. I would now like to turn the floor back over to management for closing comments..

Yes, so this is RJ, and I'll make a quick comment before I turn it over to David for the final comments. This is a watershed day. This is our first really earnings call. Earnings, I guess, it's with a small e and quotes, since we didn't -- it was more like a spending call.

But the most important thing is to give you a chance to interact with us, hear about our plans, here's what we've done, and prepare yourself for what we're going to do next year. And we hope you answered all those questions. Well, guys, you know how to get a hold of us. We like to think we're responsive.

If you have other questions that didn't get answered or did not think of it the time of this call, we'll make ourselves available for further discussions.

David, anything you want to add?.

No, I echo what you said, appreciate everybody taking the time to listen in, and we will look forward to having more open communications with you. Please do reach out to us with questions and thank you for joining us on the call today..

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day..