By David Bautz, PhD

NASDAQ:INMB

READ THE FULL INMB RESEARCH REPORT

We recently initiated coverage of INmune Bio, Inc. (INMB) with a $19 valuation. INmune is a biopharmaceutical company developing therapies that target the innate immune system to treat cancer. In contrast to the adaptive immune system, which relies upon a highly targeted response to specific antigens, the innate immune system is designed to deliver a non-specific response to abnormal cells or foreign antigens. The company targets myeloid derived suppressor cells (MDSC) and natural killer (NK) cells through its lead development products, INB03 and INKmune. INB03 is designed to inhibit soluble tumor necrosis factor (sTNF), a key signaling molecule for MDSC activation while INKmune provides the necessary priming signal to convert NK cells from a ‘resting’ to an ‘active’ state. In addition to the two cancer therapies, INmune is also developing XPro1595 (which has a similar MOA as INB03) as a treatment for mild to moderate Alzheimer’s Disease.

Upcoming catalysts for the company include:

INB03 – A Phase 1 monotherapy trial is currently underway. This trial will transition to a combination therapy clinical trial in the summer of 2019. A Phase 2 clinical trial testing INB03 with checkpoint inhibitors in patients who are resistant to checkpoint inhibitor therapy will initiate in 2020.

XPro1595 – We anticipate a Phase 1 clinical trial in patients with Alzheimer’s disease will initiate in the summer of 2019. This study is supported by a $1 million grant from the Alzheimer’s Association.

INKmune – A Phase 1/2 clinical trial will initiate later in 2019 in patients with relapsed/refractory ovarian cancer.

Financial Update

On May 15, 2019, INmune announced financial results for the first quarter of 2019. As expected, the company did not report any revenues. Net R&D expenses for the first quarters of both 2019 and 2018 were $0.1 million, however in 2019 gross R&D expenses totaled $0.4 million and were partially offset by a grant from the Alzheimer’s Association of which $0.3 million was recorded as an offset to R&D expenses. G&A expenses in the first quarter of 2019 were $1.8 million compared to $2.7 million in the first quarter of 2018. The decrease was attributable to lower stock-based compensation expense partially offset by higher professional fees and payroll expenses. Net loss for the first quarter of 2019 was $1.9 million compared to a net loss of $2.8 million in the first quarter of 2018.

As of March 31, 2019, INmune had approximately $6.0 million in cash and cash equivalents, which was due in part to the completion of an IPO in February 2019 that resulted in net proceeds to the company of $7.3 million. In May 2019, the company completed a private placement with existing investors (including the CEO and CFO, who purchased 11,100 and 5,000 shares, respectively) that resulted in gross proceeds of approximately $4.7 million. In addition, the company entered into a stock purchase agreement with Lincoln Park Capital Fund, whereby the company will have the option, but not obligation, to sell to Lincoln Park up to $20 million in common stock. Lincoln Park made an initial investment of $300,000 as part of that deal. We believe this financing will be sufficient to help advance the company’s development products into Phase 2 testing.

As of May 10, 2019, INmune had approximately 10.3 million shares of common stock outstanding and when factoring in stock options and warrants a fully diluted share count of approximately 13.3 million.

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