INmune Bio, Inc. (NASDAQ:INMB) Q4 2023 Earnings Call Transcript

INmune Bio, Inc. (NASDAQ:INMB) Q4 2023 Earnings Call Transcript March 28, 2024

INmune Bio, Inc. beats earnings expectations. Reported EPS is $-0.47, expectations were $-0.58. INMB isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Ladies and gentlemen, greetings and welcome to the INmune Bio Fourth Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief 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.

David Moss: Thank you, Ryan, and good afternoon everybody. We thank you for joining us for the call for INmune Bio’s yearend 2023 financial results. With me on the call is Dr. RJ Tesi, CEO and Co-Founder of INmune Bio and Dr. Mark Lowdell, Chief Scientific Officer and Co-Founder of INmune Bio, who will provide an update on INKmune, our memory-like natural killer cell oncology platform. Before we begin, I remind everyone that except for statements of historical fact, the statements made by management and responses to questions on this conference call are forward-looking statements under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that can cause actual results to differ materially from those such as forward-looking statements.

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

RJ Tesi: 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 fourth quarter and the subsequent period and provide updates on our platform programs. I will start by reviewing developments on our XPro platform and then pass it over to Mark Lowdell, who will provide an update on INKmune. David will conclude with a discussion of our final results and providing an update on upcoming and new milestones. During the fourth quarter in early 2024, there were several positive developments in our Phase 2 trial in patients with early Alzheimer’s disease. First, we received acceptance of our clinical trial application by several EU countries to allow us to initiate the Phase 2 trial in those countries.

Clinical trial sites in Poland, Spain, France, Czech Republic and Slovakia will soon be enrolling patients. The UK continues to be very active in recruiting patients for the Phase 2 trial, and the UK is ideal, an ideal jurisdiction to expand or to develop our program because it possesses one of the highest rates of Alzheimer’s disease in the rest of the world, coupled with a robust for-profit medical research infrastructure. Patient enrolment tends to be faster in the private for-profit sites compared to academic or government-run hospitals. The FDA listed the clinical hold for the AV program in January of this year. We have previously announced we will not be enrolling patients or adding trial locations in the US. This is a simple issue of timing.

The time and cost to open US sites is such that we probably would not be successful getting any patients enrolled before the Phase 1 and Phase 2, excuse me, enrolment is completed. That cost just can’t be justified. We expect no US patients to be enrolled in this trial, period. We are often asked if this strategy will compromise the XPro development program in Alzheimer’s disease. The answer is a loud, no. There is no requirement that US patients be included in any drug trial. The FDA’s preference for including US patients in clinical trials is due to demographic considerations, not due to doubts about the validity of non-US clinical trial results. Although the FDA has issued guidance recommending that clinical trials reflect demographic diversity of the US population, this goal has not been achieved in the recent pivotal trials for the anti-amyloid treatments.

We expect the US will be a key jurisdiction for clinical trials and patient enrolment in the pivotal AD trial that will follow this trial. One of the realities of a six-month clinical trial is that Phase 3 planning must begin well before patient enrolment in the Phase 2 trial is complete. Our goal is to complete end of Phase 2 meetings with the FDA and other regulatory authorities in mid-2025 to get a clear outline of what would be required for an approvable Phase 3 trial. Discussions of patient diversity in the US cohort will be had at that time. This does not mean we are not in communication with the FDA on XPro for Alzheimer’s disease. We plan to submit for accelerate approval pathways for XPro in Alzheimer’s disease. The first submission will be a fast track pathway.

Then once we have compelling Phase 2 human data, we will submit a breakthrough status. Recently, in fact a month ago or less, the FDA released draft guidance on the development of drugs for the treatment of patients with early and prodromal Alzheimer’s disease. The guidance supports many of the strategies we have been including in our trials, including enrichment and novel endpoints. The guidance also provides direction on how to think about prevention of Alzheimer’s in patients with prodromal disease. This is something we think XPro will be very good at and we will be talking about more in the future. I want to take a moment to address two unique elements of our Phase 2 clinical trial; the endpoint and the six-month duration of the trial. We are often reminded that we do not look like, excuse me, that we look different than the gold standard set by a big pharma in their anti-amyloid trials, but looks can be deceiving.

When they look below the surface shows many similarities between those long — large and long trials and our trial. Despite all the talk about EMAC [ph] as our primary endpoint for ADO2, the trial is powered on CDR. CDR is a well-accepted cognitive endpoint used in all of the anti-amyloid trials. In fact, let’s compare our trial with XPro for the treatment of early AD with the positive Phase 3 trials that use the anti-amyloid drug for the treatment of early AD. The three trials have two things in common, the use of CDR and a six-month trial and time point. Both the lecanemab and donanemab Phase 3 trials showed statistically significant advantages of the anti-amyloid treated patients compared to placebo at six months. Put another way, both of those trials could have been stopped at six months with positive results.

The difference seen between the placebo and treatment groups in the anti-amyloid trials is exactly the same difference we expect to see between XPro treated and placebo treated patients. In summary, we are very confident that the XPro trial is well designed, statistically sound and substantially de-risked. The XPro trial looks almost exactly what has been successful with lecanemab and donanemab. In early March, INmune initiated joint press release with Cumulus Bioscience, highlighting advanced AD patients who received weekly XPro treatment for four weeks had a statistically significant increase in alpha wave frequency and power. Reduced alpha wave power has been linked to cognitive decline and progression in MCI and Alzheimer’s disease. The EEG, long considered a gold standard in objectively measuring brain activity, provides valuable insight into brain function and neural connectivity.

Studies have consistently highlighted a progressive decline in alpha band power in patients like ours. To our knowledge, we are unaware of reports of drugs in AD development that show consistent decreases in alpha wave power. We believe this is an easily measured biomarker of improved brain function in patients without Alzheimer’s disease, but without a roadmap, that is other results, we need to wait for the results of our trial to determine if an increase in alpha wave power correlates with cognitive improvement. Just to be clear, the seven patients in this pilot study are patients with moderate to severe Alzheimer’s disease and so they’re very different than those in the early Alzheimer’s trial. We sought to evaluate the utility of EEG as a functional biomarker in this group.

We believe this is just the beginning, or like, as we like to say, the tip of the iceberg of what we can expect to be positive news on Alzheimer’s, not only in halting the progression of cognitive decline in Alzheimer’s disease, but hopefully in restoring cognitive functionality. This last point is why we’re using EMAC. EMAC has the ability to demonstrate improved cognitive function after XPro treatment. Standard cognitive measures in Alzheimer’s disease can only measure stable or decrease in cognitive function. We like to boast that targeting neuroinflammation with XPro provides many market expansion opportunities into other neurodegenerative and behavioural diseases. Go no further than our website to see 87 publications and more than 12 different diseases where XPro has been effective in clinical models, preclinical models.

Treatment resistant depression or TRD will be the first disease beyond Alzheimer’s that we develop. We will be making further announcements on the TRD Phase 2 trial using XPro in the near future. Our goal is to enrol the first patient in this NIH supported Phase 2 trial in the second half of 2024. I now pass the mic to Mark Lowdell, the Co-Founder and CSO of INmune Bio to update progress on the incoming program. Before I do so, I and the entire INmune Bio team want to recognize and congratulate Mark for a recent significant achievement. Two weeks ago, we received notice that Mark was awarded a career achievement award in cell and gene therapy by the International Society of Cell and Gene Therapy. The ISCT is the society in cell and gene therapy and the organization considers this award its highest honor.

The award was announced as part of the annual ISCT major awards announcement and Professor Lowdell received the award during the organization’s Annual Meeting in Vancouver on May 29. We couldn’t be happier for Mark and believe this recognition is well deserved. Congratulations. Mark?

Operator: Ladies and gentlemen, the line of Dr. Mark Lowdell has been disconnected. Please stay connected while I connect him. Thank you.

David Moss: Okay. Mark, there’s a storm in the UK where Mark is.

RJ Tesi: I’ll tell you what, I’ll go to my part and then we can come back to Mark if you don’t mind. Okay, that’s fine. So, I hope the audience doesn’t mind that, but I think that’s the way to go because Mark is really the one that needs to speak about it. So, David?

David Moss: Yeah, I’ll jump on here. And, yes, and RJ, maybe what you could do is just text Mark, so you can get him on the line. So, I’m going to provide a brief overview of our financial results and upcoming milestones and we’ll go back to Mark and then Mark will move on to Q&A. Net loss attributable to common stockholders for the year ended December 31, 2023 was approximately $30 million compared to with approximately $27.3 million for 2022. Research and development expenses totalled approximately $20.3 million for the year ended December 31, 2023 compared with approximately $17.1 million for 2022. General and administrative expenses was approximately $9.6 million for the year ended December 31, 2023 compared with approximately $9.3 million for 2022.

At December 31, 2023, the company had cash and cash equivalents of approximately $35.8 million. Based on our current operating plan, we believe our cash is sufficient to fund our operations into Q4. As of March 27, 2024, 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 objectives while remaining cost prudent with the potential to recover a portion of R&D expenses in Australia and the UK. Now I’d like to move on and list our upcoming important milestones. Full enrolment in the Phase 2 XPro trial for the treatment of neuroinflammation as a cause of Alzheimer’s disease are expected mid-2024, followed by top-line data approximately six months from the last patient enrolled.

We will initiate a Phase 2 trial of XPro in patients with treatment-resistant depression in the second half of 2024. Cohort 1 of the metastatic castration-resistant prostate cancer program is nearly complete with all three patients enrolled. We expect Cohort 2 to start in April with open label data to follow. We expect complete enrolment in the Phase 1 portion of the metastatic castration-resistant prostate cancer trial by the end of Q3, 2024, and the Phase 2 portion is expected to complete enrolment in Q2 of 2025. An upcoming webinar on using XPro to promote remyelination in neurodegenerative disease will be announced in Q2. We encourage you to look out for this event and do your best to try and join. It should be pretty exciting. And then at this point, I think, Mark, are you back on the line?

RJ Tesi: David, Mark is still not online.

David Moss: Yeah, so he says he’s going to try a web call, but let me go ahead and get started and even jump in. So, on to INKmune. So, we apologize for the technical problems. So, we achieved…

Mark Lowdell: I’ve actually joined. RJ?

RJ Tesi: Okay, go ahead, Mark. Mark, I did give your accolades about your awards, so you can start from there.

Mark Lowdell: That’s very kind of you. Yeah. Sorry, everyone. I’m in the UK and we’ve got a thunderstorm going on and I got dropped out. Anyway, thank you very much, RJ. Of course, I’m very honored by the ISCT’s recognition and obviously pass my thanks to all of my current and former colleagues that I’ve had the pleasure to work with over the years. It’s a great reflection on the entire research effort and success of everyone I’ve been lucky to work and collaborate with over the course of my career, and I hope it continues. So, most notably for us, though, that we achieved the accompanying milestone at the end of 2023 in the last weeks before Christmas, with the launching of the Phase 1-2 open-label trial of INKmune in metastatic castration-resistant prostate cancer, or MCRPC for short, with the first patient dosing taking place in the final week at the end of last year.

The trial is actually unique in many ways, as seems to be the trend of our company. First, the concept. This is an NK therapy trial that does not give NK cells or use cytokines. INKmune converts the patient’s own residual NK cells in their circulation from resting, non-cancer-killing state, to what we now know are memory-like NK cells that are able to destroy NK-resistant cancer cells. So, unlike more conventional adoptive immunotherapies with NK cells from donors, patients don’t require any type of conditioning chemotherapy, and nor do they require NK-stimulating cytokines, as is common to other NK-activating therapies. INmune patients sitting in a chair as an outpatient can get an IV, or intravenous infusion, over 20 minutes, and then having received their dose of INKmune, they’re able to leave.

We’ve given over 20 doses of INKmune in an outpatient setting so far. Each infusion was remarkably boring for the patient, and as importantly for the clinical team, as it appears to be so well-tolerated. In each patient in the trial, we’re monitoring immunologic endpoints, as you would expect, that include NK cell number, the phenotype of those NK cells, and their ability to kill NK-resistant tumor cells. We also measured tumor-related variables. In this MCRPC trial, we measure anti-tumor effects by following blood PSA levels, tumor volume with PMSA scans, and circulating tumor DNA. So, this rich data set will allow us to predict if the therapy warrants a pivotal trial at the end of Phase 2. The Phase 1, Phase 2 trial is expected to enrol 30 patients.

These men have all received previous [ph] therapy and now have metastatic castrate-resistant prostate cancer. They receive three infusions of INKmune as an outpatient treatment, as I said, during that six-month trial. We have three centers enrolling patients, and another five are expected to open over the next few months. The Phase 1 portion of the trial will be completed by September this year, and we expect patient enrolment in the Phase 2 portion to be completed by the second quarter of next year, with data available for all of the patients by the end of 2025 at the latest. It is an open-label trial, and we expect some snapshots of the data in 2024 or in early 2025. Equally importantly, the INKmune team has been working very hard on perfecting the manufacturing and logistics elements of INKmune therapy.

So when wearing my academic hat over the last 35 years, I’ve seen many promising therapeutic strategies in the cell and gene therapy space fail due to manufacturing and logistical problems, and you’ll all be aware of some of those associated with adoptive immunotherapies like CAR-T. We’re scaling up the manufacturing process in preparation for the pivotal trial, and we perfected the quality and release assays requested by the regulatory authorities. Because the product ships on dry ice, logistics and storage at treatment centers is easy and fits in with many other drugs, commercial drugs. So simply put, we can make the drug, we can ship and store it, and the clinical trials will determine the therapeutic value in this setting. Our pivot from hematological malignancies to solid tumors was not a one-tumor project and has been well-planned.

The unique attributes of INKmune primed NK cells make them ideal to treat a wide variety of solid tumors, and we’ve published on those. Prostate cancer is the test case, but we found sound preclinical work in ovarian cancer, and we’re developing the same data in renal cell carcinoma. So given resources, these will be the next targets of INKmune therapy. So that ends my update on the INKmune platform, and I’d like to turn the call over to David Moss, our CFO, to discuss the financials. Thank you, David.

David Moss: Well, I appreciate it, Mark, and thank you for the update. Since I’ve already gone through the financials and summary management fields, the company has two great platforms, and it’s a small organization with limited resources, we’ll try to expand the application of these platforms when resources allow. We greatly, greatly appreciate your continued belief in our small company and support of shareholders. At this point, I’d like to thank you for your time and attention. I’d like to turn it back to Brian to poll for questions. Brian?

Operator: [Operator instructions] Our first question is from Thomas Shrader with BTIG. Please go ahead.

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Q&A Session

UnidentifiedAnalyst: Hi. Good morning. Good afternoon. This is [indiscernible] for Tom. Thanks for taking my question. So two for us. So first, for the plan study in TRD patients, is there an obvious criteria for patient stratification to enrich for patients who are likely to benefit from XPro? And then question number two is, so for the recent EEG data that was presented, how established is the correlation between EEG changes and improvements in cognition and memory? Any additional insights will be helpful. Thank you.

Mark Lowdell: Yeah. So thanks. So the first question is on TRD and in fact, we will use CRP. So these patients have had to be confirmed to be treatment resistant, which means they failed two previous lines of antidepressant therapy, and they need to have an elevated CRP. So we’re not adding the other three biomarkers we use in the AD trial, but it’s the same principle that patients with neuroinflammation will benefit from XPro and it turns out that neuroinflammation makes patients resistant to traditional antidepressant drugs. So this is an ideal treatment group for us to treat. Now, I missed the first part of your second question. So ask it again, please.

UnidentifiedAnalyst: Just how established is the correlation between EEG changes and improvements in cognition and memory in Alzheimer’s disease?

RJ Tesi: Yeah, good question. In fact, it’s not established. As far as we obviously did a very deep dive here and we could only, so we could only find published data on patients with head injury. In other words, if you have a head injury, TBI, your alpha wave declines and then four weeks later, when you get better, your alpha wave goes up. So there’s an improvement in alpha wave in a patient who has cognitive dysfunction after TBI that improves. That is not a drug trial. We looked hard at the drug literature and could find no data that really supports that correlation and that’s why I was saying we don’t really have a roadmap. There’s a couple, there’s some debate with the [indiscernible], whether it in fact increases alpha wave power in patients that respond, but I would say that’s a debate at this point.

I would honestly, we believe, and the experts believe that it is consistent with improvement in synaptic function and brain function. We’ll see after our Phase 2 trial. We hope it’s the case.

Mark Lowdell: And if you don’t mind, RJ, I’d just like to add a little bit on the TRD and I wish we had CJ on the call because CJ is really a TRD expert, but one of the reasons why we’re very interested in TRD is that Andy Miller and Jen Felger, two KOLs that are in the space, there was a trial that was previously run with TNF inhibitors. It’s a published paper on it. I’d be happy to send it to you. I think it’s listed on our slide on the TRD deck and it shows a failed trial that just took all comers, but it shows that patients that had elevated CRP, elevated measures of neuroinflammation had a very statistically different result, a positive result when treated. And so if you select your patient population and you use a better TNF inhibitor, i.e. XPro, we feel very confident that that is a trial that will be successful and really Andy Miller has really been chomping at the bit to do this trial for many, many years and that’s the reason it’s set up and one of the reasons why the NIMH, the National Institutes of Mental Health, gave the company a $2.9 million grant to do that trial.

Operator: Thank you. Our next question is from the line of Joel Beatty with Baird. Please go ahead.

Joel Beatty: Great. Thanks for taking the questions and for the update today. First question is, as you enrol the Phase 2 Alzheimer’s trial, what about the profile of XPro or the previous data that resonates the most with investigators?

RJ Tesi: So, yeah, thank you, Joel. So remember that this trial is occurring in jurisdictions that do not have the anti-amyloid drugs approved. So, that’s Canada, Australia, Europe and the UK. So in fact, number one, they’re excited about the fact that they have something to offer their patients. Number two, they read the literature like everybody else and they, especially those that haven’t had hands-on experience with the anti-amyloids, they’re just not sure and here we are giving them a drug that is both safe and we think, and we’ve convinced them is effective. So they like the safety profile. They like the idea that it is not — it is targeting something else besides the amyloid and they also like the idea that the trial is only six months because if in fact the patient doesn’t respond, then the patient can move on to another clinical trial and still probably qualify where if it was an 18-month trial, that wouldn’t be the case.

Joel Beatty: Yeah, that’s helpful and then a question on INKmune, with the prostate cancer trial now underway, share anything about the potential of cadence of when you might be able to share data from the trial with investors?

RJ Tesi: Yeah. The best thing I can tell you is that today we treated the third patient. So the last patient in the first cohort with the final dose of drug, obviously that’s the lowest dose and we will start analysing those data as they come through. We have got patients lined up now to start the second cohort. So we’re right on schedule to deliver this trial on time. I believe we will be coming out with good news as it comes through and I think September is when we will be looking for that — for those days to come out because we’ll be able to maturely analyse them across the three dose levels, but if we get any remarkable data prior to that, then plainly, we’ll go public with that.

Operator: Our next question is from the line of Daniel Carlson with Tailwinds Research. Please go ahead.

Daniel Carlson: Hi guys. Thanks for taking my questions. RJ, you’ve talked about comparing XPro to the anti-amyloid trials at six months. We know those trials are much larger in size than your XPro trial. What gives you confidence that you’ll be successful in comparing your trial to theirs at six months?