0001213900-21-024692.txt : 20210505 0001213900-21-024692.hdr.sgml : 20210505 20210505161633 ACCESSION NUMBER: 0001213900-21-024692 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 48 CONFORMED PERIOD OF REPORT: 20210331 FILED AS OF DATE: 20210505 DATE AS OF CHANGE: 20210505 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Inmune Bio, Inc. CENTRAL INDEX KEY: 0001711754 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 475205835 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-38793 FILM NUMBER: 21893512 BUSINESS ADDRESS: STREET 1: 1200 PROSPECT STREET STREET 2: SUITE 525 CITY: LA JOLLA STATE: CA ZIP: 92037 BUSINESS PHONE: 8589643720 MAIL ADDRESS: STREET 1: 1200 PROSPECT STREET STREET 2: SUITE 525 CITY: LA JOLLA STATE: CA ZIP: 92037 10-Q 1 f10q0321_inmunebio.htm QUARTERLY REPORT

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021

 

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

INMUNE BIO INC.
(Exact name of registrant as specified in its charter)

 

Nevada   47-5205835
(State of incorporation)   (I.R.S. Employer Identification No.)

 

David Moss

1200 Prospect Street, Suite 525

La Jolla, CA 92037

(Address of principal executive office) (Zip code)

 

(858) 964-3720

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period than the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. 

 

Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐ No ☒

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, par value $0.001 per share   INMB   The NASDAQ Stock Market LLC

 

As of May 5, 2021, there were 14,932,638 shares of our common stock, par value $0.001 per share, outstanding.

 

 

 

 

 

 

INMUNE BIO INC.

FORM 10-Q

FOR THE THREE MONTHS ENDED MARCH 31, 2021

 

INDEX

 

PART I – FINANCIAL INFORMATION 1
     
Item 1. Financial Statements 1
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 16
     
Item 3. Quantitative and Qualitative Disclosure About Market Risk 24
     
Item 4. Controls and Procedures 24
     
PART II – OTHER INFORMATION 25
     
Item 1. Legal Proceedings 25
     
Item 1A. Risk Factors 25
     
Item 2. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities 25
     
Item 3. Defaults Upon Senior Securities 25
     
Item 4. Mine Safety Disclosures 25
     
Item 5. Other Information 25
     
Item 6. Exhibits 25

 

i

 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements 

INMUNE BIO, INC.

 

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

 

(Unaudited)

 

  

March 31,

2021

  

December 31,

2020

 
ASSETS        
CURRENT ASSETS        
Cash and cash equivalents  $45,340   $21,967 
Research and development tax credit receivable   2,190    1,686 
Other tax receivable   154    113 
Prepaid expenses   1,514    220 
Prepaid expenses – related party   15    - 
           
TOTAL CURRENT ASSETS   49,213    23,986 
           
Operating lease – right of use asset – related party   147    156 
Acquired in-process research and development intangible assets   16,514    16,514 
           
TOTAL ASSETS  $65,874   $40,656 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
           
CURRENT LIABILITIES          
Accounts payable and accrued liabilities  $1,572   $1,518 
Accounts payable and accrued liabilities – related parties   10    34 
Deferred liabilities   591    190 
Operating lease, current liability – related party   23    34 
TOTAL CURRENT LIABILITIES   2,196    1,776 
           
Long-term operating lease liability – related party   116    126 
TOTAL LIABILITIES   2,312    1,902 
           
COMMITMENTS AND CONTINGENCIES          
           
STOCKHOLDERS’ EQUITY          
Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding   -    - 
Common stock, $0.001 par value, 200,000,000 shares authorized, 14,932,638 and 13,481,283 shares issued and outstanding, respectively   15    13 
Additional paid-in capital   101,466    72,105 
Accumulated other comprehensive income   12    11 
Accumulated deficit   (37,931)   (33,375)
TOTAL STOCKHOLDERS’ EQUITY   63,562    38,754 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $65,874   $40,656 

  

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

1

 

 

INMUNE BIO, INC.

 

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share amounts)

 

(Unaudited)

 

    Three months ended
March 31,
 
    2021     2020  
             
REVENUE   $ 4     $ -  
                 
OPERATING EXPENSES                
General and administrative     2,061       1,299  
Research and development     2,491       793  
Total operating expenses     4,552       2,092  
                 
LOSS FROM OPERATIONS     (4,548 )     (2,092 )
                 
OTHER (EXPENSE) INCOME                
Other (expense) income     (8 )     22  
Total other (expense) income     (8 )     22  
                 
NET LOSS   $ (4,556 )   $ (2,070 )
                 
Net loss per common share – basic and diluted   $ (0.32 )   $ (0.19 )
                 
Weighted average number of common shares outstanding – basic and diluted     14,322,659       10,747,300  
                 
COMPREHENSIVE LOSS                
Net loss   $ (4,556 )   $ (2,070 )
Other comprehensive income (loss) – foreign currency translation     1       (21 )
Total comprehensive loss   $ (4,555 )   $ (2,091 )

  

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

2

 

  

INMUNE BIO, INC.

 

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2021 

(In thousands, except share amounts)

 

(Unaudited) 

 

                      Accumulated              
                Additional     Other           Total  
    Common Stock     Paid-In     Comprehensive     Accumulated     Stockholders’  
    Shares     Amount     Capital     Income     Deficit     Equity  
Balance as of December 31, 2020     13,481,283     $ 13     $ 72,105     $             11     $ (33,375 )   $ 38,754  
Issuance of common stock for cash     1,439,480       2       28,444       -       -       28,446  
Exercise of warrants for cash     11,875       -       18       -       -       18  
Stock-based compensation     -       -       899       -       -       899  
Gain on foreign currency translation     -       -       -       1       -       1  
Net loss     -       -       -       -       (4,556 )     (4,556 )
Balance as of March 31, 2021     14,932,638     $ 15     $ 101,466     $ 12     $ (37,931 )   $ 63,562  

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

3

 

 

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2020 

(In thousands, except share amounts)

 

(Unaudited)

 

                            Accumulated              
                Additional     Common     Other           Total  
    Common Stock     Paid-In     Stock     Comprehensive     Accumulated     Stockholders’  
    Shares     Amount     Capital     Issuable     Loss     Deficit     Equity  
Balance as of December 31, 2019     10,770,948     $     11     $ 44,834     $ 50     $               (9 )   $ (21,276 )   $ 23,610  
Issuance of common stock and warrants for cash, net     196,000       -       1,003       -       -       -       1,003  
Acquisition and retirement of common stock     (220,000 )     -       (1,012 )     -       -       -       (1,012 )
Capital contribution     -       -       216       -       -       -       216  
Stock-based compensation     -       -       682       -       -       -       682  
Loss on foreign currency translation     -       -       -       -       (21 )     -       (21 )
Net loss     -       -       -       -       -       (2,070 )     (2,070 )
Balance as of March 31, 2020     10,746,948     $ 11     $ 45,723     $ 50     $ (30 )   $ (23,346 )   $ 22,408  

 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

4

 

 

INMUNE BIO, INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS 

(In thousands)

 

(Unaudited)

 

   For the Three Months
Ended March 31,
 
   2021   2020 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss  $(4,556)  $(2,070)
Adjustments to reconcile net loss to net cash used in operating activities:          
Stock-based compensation   899    682 
Changes in operating assets and liabilities:          
Research and development tax credit receivable   (504)   (145)
Other tax receivable   (41)   6 
Prepaid expenses   (1,294)   (170)
Prepaid expenses – related party   (15)   26 
Accounts payable and accrued liabilities   54    294 
Accounts payable and accrued liabilities – related parties   (24)   29 
Deferred liabilities   401    300 
Operating lease liability – related party   (12)   13 
Net cash used in operating activities   (5,092)   (1,035)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Net proceeds from sale of common stock   28,446    1,003 
Net proceeds from the exercise of warrants   18    - 
Purchase of common stock   -    (1,012)
Net cash provided by (used in) financing activities   28,464    (9)
           
Impact on cash from foreign currency translation   1    (21)
           
NET INCREASE (DECREASE) IN CASH   23,373    (1,065)
           
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   21,967    6,996 
           
CASH AND CASH EQUIVALENTS AT END OF PERIOD  $45,340   $5,931 
           
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:          
Cash paid for income taxes  $-   $- 
Cash paid for interest expense  $-   $- 
           
NONCASH INVESTING AND FINANCING ACTIVITIES:          
Capital contribution  $-   $216 

  

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

5

 

 

INMUNE BIO, INC.

 

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

  

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

INmune Bio, Inc. (the “Company” or “INmune Bio”) was organized in the State of Nevada on September 25, 2015, and is a clinical stage biotechnology pharmaceutical company focused on developing and commercializing its product candidates to treat diseases where the innate immune system is not functioning normally and contributing to the patient’s disease. INmune Bio has two product platforms. The DN-TNF product platform utilizes dominant-negative technology to selectively neutralize soluble TNF, a key driver of innate immune dysfunction and mechanistic target of many diseases. DN-TNF is currently being developed for COVID-19 complications (Quellor), cancer (INB03), Alzheimer’s and treatment resistant depression (XPro595), and NASH (LIVNate). The Natural Killer Cell Priming Platform includes INKmune aimed at priming the patient’s NK cells to eliminate minimal residual disease in patients with cancer. INmune Bio’s product platforms utilize a precision medicine approach for the treatment of a wide variety of hematologic malignancies, solid tumors and chronic inflammation.

  

NOTE 2 – LIQUIDITY

 

As of March 31, 2021, the Company had an accumulated deficit of approximately $37.9 million and experienced losses since its inception. Losses have principally occurred as a result of non-cash stock-based compensation expense and the substantial resources required for research and development of the Company’s products, which included the general and administrative expenses associated with its organization and product development as well as the lack of sources of revenues until such time as the Company’s products are commercialized.

 

To meet its current and future obligations the Company has taken the following steps to capitalize the business and achieve its business plan:

  

  During March 2021, the Company entered into a sales agreement with BTIG, LLC (“BTIG”), as sales agent, to establish an At-The-Market (“ATM”) offering program of up to $45 million of common stock (the “2021 ATM”), subject to certain limitations on the amount of common stock that may be offered and sold by the Company set forth in the sales agreement. The Company is required to pay BTIG a commission of 3% of the gross proceeds from the sale of shares. There have been no sales of the Company’s common stock pursuant to the 2021 ATM.

 

 

During July 2020, the Company completed an underwritten public offering in which it sold 2,500,000 shares of common stock at a public offering price of $10.00 per share. Aggregate net proceeds from the underwritten public offering were approximately $23.1 million, net of $1.9 million in underwriting discounts and commissions and offering expenses. 

 

 

During April 2020, the Company entered into a sales agreement with BTIG, as sales agent, to establish an ATM offering program to sell up to $10.0 million of the Company’s common stock (the “2020 ATM”). In August 2020, the sales agreement was amended whereby the aggregate offering was increased from $10.0 million to $30.0 million. From April 2020 through December 2020, the Company sold 178,600 shares of common stock at an average price of $5.45 per share for net proceeds of approximately $0.8 million. During the three months ended March 31, 2021, the Company sold in aggregate 1,439,480 shares on common stock at an average price of $20.17 per share for net proceeds of $28.4 million. As of March 31, 2021, sales of our common stock pursuant to the 2020 ATM have been completed. 

 

Although it is difficult to predict the Company’s liquidity requirements, as of March 31, 2021, and based upon the Company’s current operating plan, the Company believes that it will have sufficient cash to meet its projected operating requirements for at least the next 12 months following the filing date of this Quarterly Report on Form 10-Q based on the balance of cash available as of March 31, 2021. The Company anticipates that it will continue to incur net losses for the foreseeable future as it continues the development of its clinical drug candidates and preclinical programs and incurs additional costs associated with being a public company.

 

6

 

 

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of INmune Bio, Inc. and its subsidiaries. Intercompany transactions and balances have been eliminated.

 

In the opinion of management, the interim financial information includes all normal recurring adjustments necessary for a fair statement of the results for the interim periods. These unaudited consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 4, 2021.

 

Risks and Uncertainties

 

The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company’s business is highly uncertain and difficult to predict. Also, economies worldwide have also been negatively impacted by the COVID-19 pandemic, however policymakers around the globe have responded with fiscal policy actions to support the healthcare industry and economy as a whole. The magnitude and overall effectiveness of these actions remain uncertain.

 

In addition, the Company’s clinical trials have been affected by and may continue to be affected by the COVID-19 pandemic. Clinical site initiation and patient enrollment have and may continue to be delayed due to prioritization of hospital resources toward the COVID-19 pandemic. Some patients have not and others may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services. Similarly, the ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may adversely impact the Company’s clinical trial operations.

 

The severity of the impact of the COVID-19 pandemic on the Company’s business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company’s service providers, suppliers, contract research organizations (“CROs”) and the Company’s clinical trials, all of which are uncertain and cannot be predicted. As of the date of issuance of Company’s financial statements, the extent to which the COVID-19 pandemic may materially impact the Company’s financial condition, liquidity or results of operations is uncertain.

 

Use of Estimates

 

Preparing financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management’s estimates and assumptions.

 

Cash and Cash Equivalents

 

The Company considers all short-term, highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. The Company maintains cash balances that may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation limits. The Company maintains its cash deposits with major financial institutions.

 

7

 

 

Research and Development Tax Incentive Receivable

 

The Company, through its wholly-owned subsidiary in Australia (“AUS”), participates in the Australian research and development tax incentive program, such that a percentage of our qualifying research and development expenditures are reimbursed by the Australian government, and such incentives are reflected as a reduction of research and development expense. The Australian research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured. At each period end, management estimates the reimbursement available to the Company based on available information at the time.

 

The Company, through its wholly-owned subsidiary in the United Kingdom (“UK”), participates in the research and development program provided by the United Kingdom tax relief program, such that a percentage of our qualifying research and development expenditures are reimbursed by the United Kingdom government, and such incentives are reflected as a reduction of research and development expense. The United Kingdom research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured. At each period end, management estimates the reimbursement available to the Company based on available information at the time.

 

Intangible Assets

 

The Company capitalizes costs incurred in connection with in-process research and development purchased from others if the asset has alternative uses and such uses are not restricted under applicable license agreements; patent applications (principally legal fees), patent purchases, and trademarks related to its cell line as intangible assets. Acquired in-process research and development costs that do not have alternative uses are expensed as incurred. Amortization is initiated for acquired in-process research and development intangible assets when their useful lives have been determined. These acquired in-process research and development intangible assets are tested at least annually or when a triggering event occurs that could indicate a potential impairment.

   

Basic and Diluted Loss per Share

 

Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

 

At March 31, 2021 and 2020, the Company had potentially issuable shares as follows:

 

    March 31,  
  2021     2020  
Stock options     3,655,549       3,417,000  
Warrants     2,126,047       1,658,199  
Total     5,781,596       5,075,199  

 

 Revenue Recognition

 

The Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC Topic 606: (1) identify contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenues when (or as) the Company satisfies the performance obligations. The Company records the expenses related to revenue in research and development expense, in the periods such expenses were incurred.

 

The Company records deferred revenues when cash payments are received or due in advance of performance, including amounts which are refundable.

 

8

 

 

Stock-Based Compensation

 

The Company utilizes the Black-Scholes option pricing model to estimate the fair value of stock option awards at the date of grant, which requires the input of highly subjective assumptions, including expected volatility and expected life. Changes in these inputs and assumptions can materially affect the measure of estimated fair value of our share-based compensation. These assumptions are subjective and generally require significant analysis and judgment to develop. When estimating fair value, some of the assumptions will be based on, or determined from, external data and other assumptions may be derived from our historical experience with stock-based payment arrangements. The appropriate weight to place on historical experience is a matter of judgment, based on relevant facts and circumstances. The Company accounts for forfeitures of stock options as they occur.

 

Research and Development

 

Research and development (“R&D”) costs are expensed as incurred. Research and development credits are recorded by the Company as a reduction of research and development costs. Major components of research and development costs include cash compensation, stock-based compensation, costs of preclinical studies, clinical trials and related clinical manufacturing, costs of drug development, costs of materials and supplies, facilities cost, overhead costs, regulatory and compliance costs, and fees paid to consultants and other entities that conduct certain research and development activities on the Company’s behalf.

 

The Company recognizes grants as contra research and development expense in the consolidated statement of operations on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate.

 

Income Taxes

 

The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

Foreign Currency Translation

 

The Company’s financial statements are presented in the U.S. dollar (“$”), which is the Company’s reporting currency, while its functional currencies are the U.S. Dollar for its U.S. based operations, British Pound (“GBP”) for its United Kingdom-based operations and Australian Dollars (“AUD”) for its Australian-based operations. All assets and liabilities are translated at the exchange rate on the balance sheet date, stockholders’ equity is translated at historical rates and statement of operations items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income. Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statement of operations and comprehensive income (loss).

 

Recently Adopted Accounting Pronouncements

 

There were various accounting standards and interpretations issued recently, none of which are expected to a have a material impact on the Company´s consolidated financial position, operations or cash flows.

 

Subsequent Events

 

The Company evaluates events that have occurred after the balance sheet date of March 31, 2021, through the date which the financial statements are issued.

 

9

 

 

NOTE 4 – RESEARCH AND DEVELOPMENT ACTIVITY

 

According to UK tax law, the Company is allowed an R&D tax credit that reduces a company’s tax bill in the UK for expenses incurred in R&D subject to certain requirements. The Company’s UK subsidiary submits R&D tax credit requests annually for research and development expenses incurred. At March 31, 2021 and December 31, 2020, the Company recorded a research and development tax credit receivable in the amount of $1,104,000 and $833,000, respectively. During the three months ended March 31, 2021 and 2020, the Company received $0 of R&D tax credit reimbursements from the UK.

 

According to AUS tax law, the Company is allowed an R&D tax credit that reduces a company’s tax bill in AUS for expenses incurred in R&D subject to certain requirements. The Company’s Australian subsidiary submits R&D tax credit requests annually for research and development expenses incurred. At March 31, 2021 and December 31, 2020, the Company recorded a research and development tax credit receivable of $1,086,000 and $853,000, respectively, for R&D expenses incurred in Australia. During the three months ended March 31, 2021 and 2020, the Company received $0 R&D tax credit reimbursements from Australia.

 

Xencor, Inc. License Agreement

 

On October 3, 2017, the Company entered into a license agreement (“Xencor License Agreement”) with Xencor, Inc. (“Xencor”), which has discovered and developed a proprietary biological molecule that inhibits soluble tumor necrosis factor. Pursuant to the license agreement, Xencor granted the Company an exclusive worldwide, royalty-bearing license in licensed patent rights, licensed know-how and licensed materials (as defined in the license agreement) to make, develop, use, sell and import any pharmaceutical product that comprises, contains, or incorporates Xencor’s proprietary protein known as “XPro1595” that inhibits soluble tumor necrosis factor (or all modifications, formulations and variants of the licensed protein that specifically bind soluble tumor necrosis factor) alone or in combination with one or more active ingredients, in any dosage or formulation (“Licensed Products”). The Company believes the protein has numerous medical applications. Such additional alternative applications of the technology are available under the Xencor License Agreement. In connection with the Xencor License Agreement, the Company paid Xencor a one-time non-creditable and non-refundable fee of $100,000 and issued Xencor 1,585,000 shares of the Company’s common stock with a fair value of $12,221,000. In addition, the Company issued Xencor fully vested warrants with a fair value of $4,193,000 to purchase an additional number of shares of common stock equal to 10% of the fully diluted company shares immediately following such purchase. The aggregate purchase price for the full exercise of the option is $10,000,000 which purchase price shall be pro-rated for any partial exercise of the warrant. In August 2018, the Company entered into a First Amendment to Stock Issuance Agreement. Pursuant to the amendment, the purchase price for the additional shares may only be paid by cash. The warrants expire on October 3, 2023.

 

The Company recorded $16,514,000 for the acquisition of intangible assets for the in-process research and development as the fair value of the cash, stock and warrants on the date of the License Agreement acquisition in accordance with Accounting Standards Codification 730 – Research and Development. The Company has the license rights to pursue alternative applications of the technology as part of its future development plans.

 

The Company also agreed to pay Xencor a royalty on Net Sales of all Licensed Products in a given calendar year, which are payable on a country-by- country and licensed product by licensed product basis until the date that is the later of (a) the expiration of the last to expire valid claim covering such Licensed Product in such country or (b) ten years following the first sale to a third party of the licensed product in such country.

 

Under the Xencor License Agreement, the Company also agreed to pay Xencor a percentage of any sublicensing revenue that it receives.

 

INKmune License Agreement

 

On October 29, 2015, the Company entered into an exclusive license agreement (the “INKmune License Agreement”) with Immune Ventures, LLC (“Immune Ventures”). Pursuant to the INKmune License Agreement, the Company was granted exclusive worldwide rights to the patents, including rights to incorporate any improvements or additions to the patents that may be developed in the future. In consideration for the patent rights, the Company agreed to the following milestone payments (of which none have been met as of March 31, 2021):

 

(in thousands)

Each Phase I initiation  $25 
Each Phase II initiation  $250 
Each Phase III initiation  $350 
Each NDA/EMA filing  $1,000 
Each NDA/EMA awarded  $9,000 

 

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In addition, the Company agreed to pay Immune Ventures a royalty of 1% of net sales during the life of each patent granted to the Company. RJ Tesi, the Company’s President and a member of our Board of Directors, David Moss, its Chief Financial Officer and Treasurer and Mark Lowdell, its Chief Scientific Officer, are the owners of Immune Ventures. As of March 31, 2021, no sales had occurred under this license.

 

The term of the agreement began on October 29, 2015 and, if not terminated sooner pursuant to the agreement, ends on a country-by-country basis on the date of the expiration of the last to expire patent rights where patent rights exists. Upon the termination of the agreement, we shall have a fully paid up, perpetual, royalty-free license without further obligation to Immune Ventures. The agreement can be terminated by Immune Ventures if, after 60 days from the Company’s receipt of notice that the Company has not made a payment under the agreement, and the Company still does not make this payment. On July 20, 2018, the parties amended the agreement under which the Company was required achieve milestones pursuant to the agreement. On October 30, 2020, the parties executed an additional amendment to the agreement under which the Company is required to achieve the following milestones:

 

Initiation of Phase 1 clinical or equivalent trials by October 29, 2021

 

Initiation of Phase II clinical trials or equivalent by October 29, 2023

 

Initiation of Phase III clinical trials or equivalent by October 29, 2025

 

Filing of NDA or equivalent by October 29, 2026 or equivalent

 

If the Company doesn’t achieve the above milestones, it is required to negotiate in good faith with Immune Ventures to determine how it can either remedy the failure or achieve an alternate development. If the Company fails to make any required efforts, or if the efforts do not remedy the situation within 60 days of written notice by Immune Ventures, then Immune Ventures may provide notice to terminate the license or convert it to a non-exclusive license.

 

University of Pittsburg License Agreement

 

On October 3, 2017, the Company entered into an Assignment and Assumption Agreement with Immune Ventures related to intellectual property licensed from the University of Pittsburgh. Pursuant to the Assignment and Assumption Agreement (“Assignment Agreement”), Immune Ventures assigned all of its rights, obligations and liabilities under an Exclusive License Agreement between the University of Pittsburgh – Of the Commonwealth System of Higher Education (“Licensor”) and Immune Ventures to INmune Bio (“Licensee”), (the “PITT Agreement”).

 

Consideration under the PITT Agreement includes: (i) annual maintenance fees, (ii) royalty payments based on the sale of products making use of the licensed technology, and (iii) milestone payments.

  

Annual maintenance fees under the PITT Agreement include the following:

 

(in thousands)

June 26 of each year 2021-2022  $5 
June 26 of each year 2023-2024  $10 
June 26 of each year 2025 until first commercial sale  $25 

 

Upon first commercial sale of a product making use of the licensed technology under the PITT Agreement, the Licensee is required to pay royalties equal to 2.5% of Net Sales each calendar quarter.

 

Moreover, under the PITT Agreement the Licensee is required to make milestone payments as follows:

 

(in thousands)

Each Phase I initiation

  $50 
Each Phase III initiation  $500 
First commercial sale of product making use of licensed technology  $1,250 

 

The Company had no amounts owed pursuant to the PITT Agreement as of March 31, 2021.

 

The PITT Agreement expires upon the earlier of: (i) expiration of the last claim of the Patent Rights (as defined in the PITT Agreement) forming the subject matter of the PITT Agreement; or (ii) the date that is 20 years from the effective date of the agreement (June 26, 2037).

 

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The Licensee may terminate the PITT Agreement upon 3 months prior written notice provided all payments under the license are current. The Licensor may terminate the PITT Agreement upon written notice if: (i) Licensee defaults as to performance of material obligations which have not been cured within 60 days after receiving written notice; or (ii) Licensee ceases to carry out its business, becomes bankrupt or insolvent, applies for or consents to the appointment of a trustee, receiver or liquidator of its assets or seeks relief under any law for the aid of debtors.

 

University College London License Agreement – MSC

 

On July 19, 2019, the Company entered into license agreement with UCL Business PLC (“UCLB”) with a ten (10) year term. Pursuant to the license agreement, the Company acquired an exclusive license (and a right to sub-license) to the technology and know-how relating to an isolation and commercial scale expansion methodology of GMP grade human umbilical cord mesenchymal stem/stromal cells (“MSC”).

 

In exchange for the license agreement, the Company paid UCLB an initial license fee of $10,000 and shall pay annual licensing fees of approximately $13,000 per year for the remaining term of the agreement. The Company will pay UCLB a royalty of 3-3.5%% of the net sales value (as defined in the agreement) of all licensed products sold or used by the Company. In the event the Company sub-licenses the technology and know-how, the Company will pay UCLB a royalty of twelve (12) percent of consideration (cash or non-cash) received by the Company in relation to the development or sub-licensing of any of the technology and know-how.

 

NOTE 5 – LEASE 

 

In May 2019, the Company signed a sublease agreement with a related party for office space in La Jolla, California, which serves as the new headquarters of the Company. The lease has a 61-month term, which corresponds to the lease term of the lessor. The lessor is CTI Clinical Trial & Consulting Services (“CTI”). CTI is majority-owned by a member of the Company’s Board of Directors. The lessor may extend its lease for an additional 5 years, and, if it does, the Company may also extend its sublease for 5 years. The Company did not include the option to extend in the calculation of the lease liabilities as such extension is not reasonably certain to occur. Variable lease costs for the Company’s lease consists of operating expenses for the spaces. Below is a summary of the Company’s right-of-use assets and liabilities as of March 31, 2021:

 

(in thousands, except years and rate)  

Right-of-use asset – related party  $147 
      
Operating lease, current liability – related party  $23 
Long-term operating lease liability – related party   116 
Total lease liability  $139 
      
Weighted-average remaining lease term   3.2 years 
      
Weighted-average discount rate   10.00%

 

During the three months ended March 31, 2021, the Company recognized $13,000 in operating lease expense, which is included in general and administrative expenses in the Company’s consolidated statement of operations.

 

NOTE 6 – RELATED PARTY TRANSACTIONS

 

UCL

 

At March 31, 2021 and December 31, 2020, the Company owed UCL Consultants Limited (“UCL”) $10,000 and $34,000, respectively, in connection with medical research performed on behalf of the Company. At March 31, 2021 and December 31, 2020, the Company recorded prepaid expenses of $15,000 and $0, respectively, for medical research to be performed on behalf of the Company by UCL. During the three months ending March 31, 2021 and 2020, the Company paid UCL $88,000 and $0, respectively, for medical research performed on behalf of the Company. UCL is a wholly owned subsidiary of the University of London. The Company’s Chief Scientific and Manufacturing Officer is a professor at the University of London.

 

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CTI

 

During the three months ending March 31, 2021 and 2020, the Company paid CTI $0 and $79,000, respectively, for medical research performed on behalf of the Company. During the three months ended March 31, 2020, the Company recorded a capital contribution of $216,000 for the forgiveness of certain accounts payable due to CTI. The Company had no amounts payable to CTI as of March 31, 2021 and December 31, 2020.

 

NOTE 7 – STOCKHOLDERS’ EQUITY

  

Lincoln Park

 

On May 15, 2019, the Company entered into both a securities purchase agreement and registration rights agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”). Under the terms and subject to the conditions of the securities purchase agreement, the Company had the right to sell to Lincoln Park, and Lincoln Park was obligated to purchase, up to $20.0 million in shares of the Company’s common stock, subject to certain limitations, over the 24-month period that commenced on May 15, 2019. During the three months ended March 31, 2020, the Company issued 196,000 shares of its common stock to Lincoln Park for approximately $1.0 million of cash.

 

During April 2021, the Company terminated the securities purchase agreement with Lincoln Park.

 

Purchase and retirement of common stock

 

During January 2020, the Company purchased and cancelled 220,000 shares of its common stock from a shareholder in exchange for approximately $1.0 million of cash.

 

Common Stock – At the Market Offering

 

During the three months ended March 31, 2021, the Company sold 1,439,480 shares of its common stock for aggregate gross proceeds of approximately $29.0 million (net proceeds of approximately $28.4 million) under the 2020 ATM program. The Company paid BTIG commissions and fees of $582,000 in connection with the sale of these shares.

  

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Stock options

 

During January 2021, the Company granted certain employees and directors options to purchase 198,549 shares of its common stock pursuant to the 2017 and 2019 Incentive Stock Plans. The stock options have a fair value of approximately $4.2 million that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.78% based on the applicable US Treasury bill rate (2) expected life of 6.0 - 6.25 years, (3) expected volatility of approximately 113% - 114% based on the trading history of similar companies, and (4) zero expected dividends.

 

The following table summarizes stock option activity during the three months ended March 31, 2021:

 

(in thousands, except share and per share amounts) 

Number of

Shares

  

Weighted- average

Exercise

Price

  

Weighted-average

Remaining

Contractual

Term (years)

  

Aggregate

Intrinsic

Value

 
Outstanding at January 1, 2021   3,457,000   $5.82    8.05   $39,405 
Options granted   198,549   $24.82    -    - 
Options exercised   -   $-    -    - 
Options cancelled   -   $-    -    - 
Outstanding at March 31, 2021   3,655,549   $6.85    7.91   $20,945 
Exercisable at March 31, 2021   2,415,889   $6.54    7.42   $12,906 

 

During the three months ended March 31, 2021 and 2020, the Company recognized stock-based compensation expense of approximately $0.9 million and $0.7 million, respectively, related to the vesting of stock options. As of March 31, 2021, there was approximately $7.3 million of total unrecognized compensation cost related to non-vested stock options which is expected to be recognized over a weighted-average period of 2.72 years.

 

Warrants

 

In connection with the Company’s initial public offering in February 2019, the Company issued warrants to the placement agents to purchase the Company’s common stock at an exercise price of $9.60 per common share, which warrants are exercisable until December 19, 2023. At March 31, 2021, 34,835 of these warrants are outstanding and the intrinsic value is $79,000.

 

In October 2017, in connection with the Xencor License Agreement, the Company issued fully vested warrants to purchase an additional number of shares of common stock equal to 10% of the fully diluted Company shares immediately following such purchase. See Note 4. These warrants had an intrinsic value of approximately $14.6 million as of March 31, 2021.

 

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On June 30, 2017, the Company issued fully vested warrants to purchase 31,667 shares of the Company’s common stock to a third party in conjunction with the common stock sold for cash. The warrants have a $1.50 exercise price and expire on June 30, 2022. During the three months ended March 31, 2021, 11,875 of these warrants were exercised for cash proceeds of $18,000. At March 31, 2021, 19,792 of these warrants are outstanding, with an intrinsic value of $205,000.

 

Stock-based Compensation by Class of Expense

 

The following summarizes the components of stock-based compensation expense in the consolidated statements of operations for the three months ended March 31, 2021 and 2020 respectively:

 

(in thousands)  Three
Months
Ended
March 31,
2021
   Three
Months
Ended
March 31,
2020
 
Research and development  $186   $139 
General and administrative   713    543 
Total  $899   $682 

 

Shareholder Rights Agreement

 

On December 30, 2020, the Board of Directors (the “Board”) of the Company approved and adopted a Rights Agreement, dated as of December 30, 2020, by and between the Company and VStock Transfer, LLC, as rights agent, pursuant to which the Board declared a dividend of one preferred share purchase right (each, a “Right”) for each outstanding share of the Company’s common stock held by stockholders as of the close of business on January 11, 2021. When exercisable, each right initially would represent the right to purchase from the Company one one-thousandth of a share of a newly designated series of preferred stock, Series A Junior Participating Preferred Stock, par value $0.001 per share, of the Company, at an exercise price of $300.00 per one one-thousandth of a Series A Junior Participating Preferred Share, subject to adjustment. Subject to various exceptions, the Rights become exercisable in the event any person (excluding certain exempted or grandfathered persons) becomes the beneficial owner of twenty percent or more of the Company’s common stock without the approval of the Board. The Rights are scheduled to expire on December 30, 2021.

 

NOTE 8 – COLLABORATIVE AGREEMENTS

  

During 2020, the Company was awarded a $0.5 million grant from the Amyotrophic Lateral Sclerosis (“ALS”) Association to fund a study of the efficacy of XPro1595 to reverse ALS in vitro and to fund a study of the efficacy of XPro1595 to protect against ALS model phenotypes in vivo. During the three months ended March 31, 2021 and 2020, the Company received $0.1 million and $0.3 million, respectively, of cash proceeds pursuant to this grant which the Company recorded as deferred liabilities. The Company offsets costs incurred related to this research against the grants. As of March 31, 2021 and December 31, 2020, the Company recorded approximately $0.2 million and $0.1 million, respectively, as deferred liabilities in the consolidated balance sheet related to the ALS grant.

 

During September 2020, the Company was awarded a grant of up to $2.9 million from the National Institutes of Health (“NIH”). The grant will support a Phase 2 study of XPro1595 in patients with treatment resistant depression. As of March 31, 2021, the Company has not received any proceeds pursuant to this grant. 

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Forward-Looking Statements

 

This Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.

 

Description of Business

 

Overview

 

We are a clinical-stage immunotherapy company focused on developing drugs that may reprogram the patient’s innate immune system to treat disease. We believe this may be done by targeting cells of the innate immune system that cause acute and chronic inflammation and are involved in the immune dysfunction associated with chronic diseases such as cancer, neurodegenerative, metabolic and infectious diseases. The Company has two therapeutic platforms – dominant-negative TNF platform (“DN-TNF”) and the Natural Killer (“NK”) platform. The DN-TNF platform neutralizes soluble TNF (“sTNF”) without affecting trans-membrane TNF (“tmTNF”) or the receptors TNFR1 and TNFR2. This unique biologic mechanism differentiates the DN-TNF drugs from currently approved non-selective TNF inhibitors that inhibit the function of both sTNF and tmTNF. Protecting the function of tmTNF while neutralizing the function of sTNF is a potent anti-inflammatory drug that does not cause immunosuppression or demyelination. Currently approved non-selective TNF inhibitors are approved to treat autoimmune disease, however they are contraindicated in patients with infection, cancer and neurologic diseases because they increase the risk of infection, cancer and demyelinating neurologic diseases, respectively, because of off-target effects on inhibiting tmTNF. The NK platform targets the dysfunctional natural killer cells (“NK cells”) in patients with cancer. NK cells are part of the normal immunologic response to cancer with important roles in immunosurveillance to prevent cancer and in preventing relapse by clearing residual disease. Residual disease is the cancer left behind, often undetected, that can grow and cause relapse. The NK cells of cancer patients have the ability to kill cancer cells but are not effective because cancer cells mutate to evade NK cell immune surveillance. INKmune provides the missing signals needed to prime NK cells to overcome the immune evasion mutation to allow NK cells to kill the cancer cell. We believe INKmune is best used to eliminate residual disease after the patient has completed other cancer therapies. Both the DN-TNF platform and the INKmune platform can be used to treat multiple diseases. The DN-TNF platform will be used as an immunotherapy for the treatment of cancer, neurodegenerative, metabolic and infectious diseases. INKmune is being developed to treat NK sensitive hematologic malignancies and solid tumors.

 

We believe our DN-TNF platform can be used to reverse resistance in immunotherapy, to target glial activation to prevent progression of Alzheimer’s disease (“AD”), to target neuroinflammation in treatment resistant depression (“TRD”), to target intestinal leak and inflammation to treat non-alcoholic steatohepatitis (“NASH”) and to treat complications of the cytokine storm associated with COVID-19 infection. The drug is named differently for each indication; INB03, XPro1595, LIVNate and Quellor, respectively, but it is the same drug product. In each case, we believe neutralizing sTNF is a cornerstone to the treatment of each of these diseases. As an immunotherapy for cancer, we are using INB03 to neutralize sTNF produced by HER2+ trastuzumab resistant breast cancers to reverse resistance to therapy. sTNF causes an up-regulation of MUC4 expression that causes steric hindrance of trastuzumab binding to the HER2/Neu receptor on HER2+ breast cancer cells. Without binding, trastuzumab is not effective. In addition, INB03 changes the immunobiology of the tumor microenvironment by decreasing the number of immunosuppressive myeloid cells, both myeloid derived suppressor cells and tumor active macrophages, and increasing the number of cytotoxic lymphocytes in the TME. The Company has completed an open label dose escalation trial in cancer patients with metastatic solid tumors that have failed multiple lines of therapy. The trial informs the design of the Phase II trial by demonstrating that INB03 was safe and well tolerated, defined the dose of INB03 to carry into Phase II trials, and demonstrated a pharmacodynamic end-point. A Phase II trial is planned in women with advanced HER2+ breast cancer with metastasis. 

 

Likewise, we believe the DN-TNF platform can be used to treat selected neurodegenerative diseases. XPro1595 is being used to treat patients with Alzheimer’s disease in a Phase I trial partially funded by a Part-the-Clouds Award from the Alzheimer’s Association. XPro1595 targets activated microglia and astrocytes of the brain that produce sTNF that promotes nerve cell loss and synaptic dysfunction, key elements in the development of dementia. In animal models, elimination of sTNF prevents nerve cell dysfunction and reverses synaptic pruning. The Phase I trial in patients with biomarkers of inflammation with AD is enrolling patients. The open label, dose escalation trial is designed to demonstrate that XPro1595 decreases neuroinflammation in patients with AD. This end-points of the trial are measures of neuroinflammation and neurodegeneration in blood and cerebral spinal fluid, measures of neuroinflammation by MRI by measuring white matter free water and breath by measuring volatile organic compounds in exhaled breath and by monitoring neuropsychiatric symptoms known to be associated with neuroinflammation including depression, apathy, aggression, hallucinations and sleep disorders. 

 

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In addition, we believe the DN-TNF platform can be used to treat selected metabolic diseases. LIVNate is being developed to treat NASH. NASH is a pleiotropic disease caused by a complex mix of metabolic, inflammatory and fibrotic pathophysiology. We believe targeting inflammation caused by intestinal leak, mesenteric and peripheral fat will prevent lipotoxicity, hepatic stellate cell activation and hepatocyte death that causes fibrosis and liver dysfunction associated with advanced disease. sTNF is elevated in obesity and is believed to cause intestinal leak. Intestinal leak combined with cytokines coming from mesenteric fat may dramatically increase the concentration of inflammatory cytokines in portal blood destined for the liver. The cytokine load contributes to the development of non-alcoholic fatty liver disease (“NAFLD”) and progression to NASH. LIVNate, by neutralizing sTNF improves insulin sensitivity, decreases the inflammation in peripheral and mesenteric fat and may also seal the intestinal leak. This combination prevents development of NAFLD or NASH in animal models. The Company is planning a Phase II open label randomized study using non-invasive measures to enroll patients with NASH in a study using a fixed dose of LIVNate delivered as a once a week sub-cutaneous injection.

 

We also believe the DN-TNF platform may be used to treat the complications associated with the cytokine storm caused by coronavirus disease 2019 (“COVID-19”). Three inflammatory cytokines make up the cytokine storm associated with COVID19 infection – sTNF, IL-6 and IL-1β. Targeting sTNF with Quellor may have advantages because IL-6 and IL-1 expression occur after sTNF expression; sTNF promotes endothelial activation causing expression of proteins that promote trafficking of immune cells from the blood vessel to the tissue and expression of Tissue Factor that stimulates the coagulopathy that is a prominent pathology of COVID-19 infection. The Company plans a Phase II trial in patients with symptomatic COVID-19 infection and hypoxia. The goal of the study is to prevent the catastrophic complications of advanced COVID-19 infection including one or more of the need for mechanical ventilation, new onset of cardiovascular, neurologic or thromboembolic disease, admission to an intensive care unit or death. The randomized trial will treat patients requiring hospitalization because of their disease.

 

Effective therapy for treatment resistant depression (TRD) is a large unmet need. Twenty percent of patients with a Major Depressive Disorder have TRD. Once third of TRD patients have peripheral biomarkers to inflammation (elevated CRP). This is a large patient population. The role of TNF and anti-TNF therapeutics was explored in a small open label clinical trial by Prof. Andrew Miller, MD of Emory University demonstrated the patients have elevated TNF levels and treatment with infliximab treated their depression (Miller, 2011). The Company received a $2.9M USD award from the National Institute of Mental Health (NIMH) to treat TRD with XPro1595. The blinded, randomized Phase II trial will use a biomarkers of peripheral inflammation to select patients with TRD for enrollment. Patients will be treated for 6 weeks. Primary end-points include both clinical and neuroimaging measures. The final trial design has is ongoing and discussions with the FDA are not complete. The Company anticipates receiving authorization to initiate the clinical trial in the second half of 2021.

 

We believe that INKmune improves the ability of the patient’s own NK cells to attack their tumor. INKmune interacts with the patient’s NK cells to convert them from inert resting NK cells that ignores the cancer into primed NK cells that kill the cancer cell. INKmune is a replication incompetent proprietary cell line we have named INB16 that is given to the patient after determining that i) the patient has adequate NK cells in their circulation and ii) those NK cells are functional when exposed to INKmune in vitro. INKmune is designed to be given to patients after their immune system has recovered after cytotoxic chemotherapy to target the residual disease the remains after treatment with cytotoxic therapy. INKmune can be used to treat numerous hematologic malignancies and solid tumors including leukemia, multiple myeloma, lymphoma, lung, ovary, breast, renal and prostate cancer. The Company plans Phase I trials using INKmune to treat patients with high risk MDS, a form of leukemia and women with relapsed refractory ovarian.

 

Since our inception in 2015, we have devoted substantially all of our resources to the discovery and development of our product candidates, including clinical trials and preclinical studies as well as general and administrative support for these operations. To date, we have generated no significant revenue. We have incurred net losses in each year since our inception and, as of March 31, 2021, we had an accumulated deficit of approximately $37.9 million. Our net losses were $4,556,000 and $2,070,000 for the three months ended March 31, 2021 and 2020, respectively. Substantially all of our net losses resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations, including stock-based compensation. 

 

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The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company’s business is highly uncertain and difficult to predict. Also, economies worldwide have also been negatively impacted by the COVID-19 pandemic, however policymakers around the globe have responded with fiscal policy actions to support the healthcare industry and economy as a whole. The magnitude and overall effectiveness of these actions remain uncertain.

 

In addition, the Company’s clinical trials have been affected by and may continue to be affected by the COVID-19 pandemic. Clinical site initiation and patient enrollment have and may continue to be delayed due to prioritization of hospital resources toward the COVID-19 pandemic. Some patients have not and others may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services. Similarly, the ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may adversely impact the Company’s clinical trial operations.

 

The severity of the impact of the COVID-19 pandemic on the Company’s business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company’s service providers, suppliers, contract research organizations (“CROs”) and the Company’s clinical trials, all of which are uncertain and cannot be predicted. As of the date of issuance of Company’s financial statements, the extent to which the COVID-19 pandemic may materially impact the Company’s financial condition, liquidity or results of operations is uncertain.

 

We classify our operating expenses into two categories: research and development; and general and administrative expenses. Personnel costs including salaries, benefits and stock-based compensation expense comprise a significant component of our research and development and general and administrative expense categories.

 

We qualify as an “emerging growth company” under the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:

 

  only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;
     
  reduced disclosure about our executive compensation arrangements;
     
  no non-binding advisory votes on executive compensation or golden parachute arrangements;
     
  exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting; and
     
  delaying the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies.

 

We have elected to take advantage of the above-referenced exemptions and we may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.07 billion in annual revenues, we have more than $700 million in market value of our stock held by non-affiliates, or we issue more than $1 billion of non-convertible debt over a three-year period. We may choose to take advantage of some but not all of these reduced burdens.

 

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Research and Development

 

Research and development expense consists of expenses incurred while performing research and development activities to discover and develop our product candidates. This includes conducting preclinical studies and clinical trials, manufacturing development efforts and activities related to regulatory filings for product candidates. We recognize research and development expenses as they are incurred. Our research and development expense primarily consist of:

 

  clinical trial and regulatory-related costs;

 

  expenses incurred under agreements with investigative sites and consultants that conduct our clinical trials;
     
  manufacturing and testing costs and related supplies and materials; and
     
  employee-related expenses, including salaries, benefits, travel and stock-based compensation.

 

We typically use our employee, consultant and infrastructure resources across our development programs. We track outsourced development costs by product candidate or development program, but we do not allocate personnel costs, other internal costs or external consultant costs to specific product candidates or development programs.

 

We participate, through our wholly-owned subsidiary in Australia, in the Australian research and development tax incentive program, such that a percentage of our qualifying research and development expenditures are reimbursed by the Australian government, and such incentives are reflected as a reduction of research and development expense. The Australian research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured. In the future, the Company may elect to cease to perform research and development in Australia at which point the Company may not participate the Australian research and development tax incentive program.

 

We participate, through our wholly-owned subsidiary in the United Kingdom, in the research and development program provided by the United Kingdom tax relief program, such that a percentage of our qualifying research and development expenditures are reimbursed by the United Kingdom government, and such incentives are reflected as a reduction of research and development expense. The United Kingdom research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured. In the future, the Company may elect to cease to perform research and development in the United Kingdom at which point the Company may not participate in the United Kingdom tax relief program.

 

Substantially all of our research and development expenses to date have been incurred in connection with our current and future product candidates. We expect our research and development expenses to increase significantly for the foreseeable future as we advance an increased number of our product candidates through clinical development, including the conduct of our planned clinical trials and manufacturing drug to be used in those clinical trials. The process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. The successful development of product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing or costs required to complete the remaining development of any product candidates. This is due to the numerous risks and uncertainties associated with the development of product candidates. 

 

The costs of clinical trials may vary significantly over the life of a project owing to, but not limited to, the following:

 

  per patient trial costs;
     
  the number of sites included in the clinical trials;
     
  the countries in which the clinical trials are conducted;
     
  the length of time required to enroll eligible patients;
     
  the number of patients that participate in the clinical trials;
     
  the number of doses that patients receive;
     
  the cost of comparative agents used in clinical trials;
     
  the drop-out or discontinuation rates of patients;

 

19

 

 

  potential additional safety monitoring or other studies requested by regulatory agencies;
     
  the duration of patient follow-up;
     
  the efficacy and safety profile of the product candidate; and
     
  the cost of manufacturing, finishing, labelling and storage drug used in the clinical trial.

 

We do not expect any of our product candidates to be commercially available for at least the next several years, if ever. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future, which may fluctuate significantly from quarter-to-quarter and year-to-year. We anticipate that our expenses will increase substantially as we:

 

  continue research and development, including preclinical and clinical development of our existing product candidates;
     
  potentially seek regulatory approval for our product candidates;
     
  seek to discover and develop additional product candidates;
     
  establish a commercialization infrastructure and scale up our manufacturing and distribution capabilities to commercialize any of our product candidates for which we may obtain regulatory approval;

 

  seek to comply with regulatory standards and laws;
     
  maintain, leverage and expand our intellectual property portfolio;
     
  hire clinical, manufacturing, scientific and other personnel to support our product candidates development and future commercialization efforts;
     
  add operational, financial and management information systems and personnel; and
     
  incur additional legal, accounting and other expenses in operating as a public company.

 

General and Administrative Expenses

 

General and administrative expenses consist principally of payroll and personnel expenses, including stock-based compensation; professional fees for legal, consulting, accounting and tax services; overhead, including rent and utilities; and other general operating expenses not otherwise classified as research and development expenses.

 

Other income (expense)

 

Other income primarily consists of interest income on money market accounts and foreign currency exchange gains and losses.

 

20

 

 

Results of Operations

 

Comparison of the Three Months Ended March 31, 2021 and 2020

 

The following table summarizes our results of operations for the periods indicated:

  

  

Three Months Ended

March 31,

     
(in thousands)  2021   2020   Change 
Revenues  $4    -    4 
Operating expenses:               
Research and development  $2,491   $793   $1,698 
General and administrative   2,061    1,299    762 
Total operating expenses   4,552    2,092    2,460 
Loss from operations   (4,548)   (2,092)   (2,456)
Other (expense) income   (8)   22    (30)
Net loss  $(4,556)  $(2,070)  $(2,486)

   

Revenues

 

During the three months ended March 31, 2021, the Company sold MSC’s to one third-party and recognized $4,000 of revenues. There were no revenues during the three months ended March 31, 2020.

 

General and Administrative

 

General and administrative expenses were approximately $2.1 million during the three months ended March 31, 2021, compared to approximately $1.3 million during the three months ended March 31, 2020. The increase in general and administrative expenses is largely due to higher professional fees ($0.5 million higher during the three months ended March 31, 2021) and higher stock-based compensation ($0.2 million higher during the three months ended March 31, 2021).

 

Research and Development

 

Research and development expenses were approximately $2.5 million during the three months ended March 31, 2021, compared to approximately $0.8 million during the three months ended March 31, 2020.   The increase in research and development expenses during the three months ending March 31, 2021 compared to the three months ending March 31, 2020 is largely due to additional amounts incurred related to manufacturing additional drugs and amounts incurred in connection with the Company’s COVID-19 clinical trial.

 

Other Income (Expense)

 

The Company’s other income (expense) is mainly interest earned from money market accounts and foreign exchange gains and losses.

 

Liquidity and Capital Resources

 

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis.

 

We incurred a net loss of $4,556,000 and $2,070,000 for the three months ended March 31, 2021 and 2020, respectively. Net cash used in operating activities was $5,092,000 and $1,035,000 for the three months ended March 31, 2021 and 2020, respectively. Since inception, we have funded our operations primarily with proceeds from the sales of our common stock. As of March 31, 2021, we had cash and cash equivalents of approximately $45.3 million. We anticipate that operating losses and net cash used in operating activities will increase over the next few years as we advance our products under development.

 

21

 

 

Our primary uses of capital are, and we expect will continue to be, third-party clinical and preclinical research and development services, compensation and related expenses, professional fees, patent and other regulatory expenses and general overhead costs. We believe our use of CROs provides us with flexibility in managing our spending.

 

The Company incurs the majority of its research and development expenses in Australia and the United Kingdom. Fluctuations in the rate of exchange between the United States dollar and the pound sterling as well as the Australian dollar could adversely affect our financial results, including our expenses as well as assets and liabilities. We currently do not hedge foreign currencies but will continue to assess whether that strategy is appropriate. As of March 31, 2021, the cash balance held by our foreign subsidiaries with currencies other than the United States dollar was approximately $0.3 million. We do not have any material financial exposure to one customer or one country that would significantly hinder our liquidity.

 

As a publicly traded company, we incur significant legal, accounting and other expenses. In addition, the Sarbanes-Oxley Act of 2002, as well as rules adopted by the SEC and The Nasdaq Stock Market, require public companies to implement specified corporate governance practices that were inapplicable to us as a private company. We expect these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly.

  

As of March 31, 2021, the Company had an accumulated deficit of $37,931,000 and working capital of $47,017,000. Losses have principally occurred as a result of stock-based compensation expense as well as the substantial resources required for research and development of the Company’s products which included the general and administrative expenses associated with its organization and product development, as well as the lack of sources of revenues until such time as the Company’s products are commercialized. As of March 31, 2021, we had cash and cash equivalents of approximately $45.3 million. We believe our cash and cash equivalents will be sufficient to fund our operations for at least the next 12 months following the filing date of this Quarterly Report on Form 10-Q based on the balance of cash available as of March 31, 2021.

   

ATM Sales Agreement

 

During the three months ended March 31, 2021, we issued and sold 1,439,480 shares of common stock at an average price of $20.17 per share under the 2020 ATM program. The aggregate net proceeds were approximately $28.4 million after BTIG’s commission and other offering expenses.

 

During March 2021, the Company entered into the 2021 ATM program with BTIG, as sales agent, to establish an ATM offering program of up to $45 million of common stock. There have been no sales of the Company’s common stock pursuant to 2021 ATM.

 

The Lincoln Park Transaction

 

On May 15, 2019, the Company and Lincoln Park entered a purchase agreement (the “Purchase Agreement”) pursuant to which the Company had the right to sell to Lincoln Park up to $20.0 million in shares of the Company’s common stock, subject to certain limitations and conditions set forth in the Purchase Agreement. During the three months ended March 31, 2020, the Company issued 196,000 shares of the Company’s common stock to Lincoln Park for gross proceeds of $1,003,000. During April 2021, the Company terminated the Purchase Agreement.

 

Grants

 

During the three months ended March 31, 2020, the Company was awarded a $500,000 grant from the Amyotrophic Lateral Sclerosis Association (“ALS”) to fund a study of the efficacy of XPro1595 to reverse ALS in vitro and to fund a study of the efficacy of XPro1595 to protect against ALS model phenotypes in vivo. During the three months ended March 31, 2021 and 2020, the Company received $100,000 and $300,000, respectively, of cash proceeds pursuant to this grant which the Company recorded within deferred liabilities. The Company records costs incurred related to the ALS study as a reduction of deferred liabilities. As of March 31, 2021 and December 31, 2020, the Company recorded $222,000 and $122,000, respectively, as deferred liabilities in the consolidated balance sheets related to the ALS grant.

 

22

 

 

Cash Flows

 

The following table summarizes our cash flows for the periods indicated:

 

  

Three Months Ended

March 31,

 
(in thousands)  2021   2020 
Net cash and cash equivalents (used in) provided by:        
Operating activities  $(5,092)  $(1,035)
Financing activities   28,464    (9)
Change in cash and cash equivalents   23,372    (1,044)
Impact on cash from foreign currency translation   1    (21)
Cash and cash equivalents, beginning of period   21,967    6,996 
Cash and cash equivalents, end of period  $45,340   $5,931 

  

Operating Activities

 

Our cash used in operating activities was primarily driven by our net loss.

 

Operating activities used approximately $5.1 million of cash during the three months ended March 31, 2021, resulting from our loss of $4.6 million and changes in our net operating assets and liabilities of $1.4 million, partially offset by non-cash stock-based compensation of $0.9 million. The change in our net operating assets and liabilities was mainly due to an increase in prepaid expenses of approximately $1.3 million, and an increase in research and development tax credit receivable of $0.5 million, partially offset by an increase in deferred liabilities of approximately $0.4 million.

 

Operating activities used approximately $1.0 million of cash for the three months ended March 31, 2020, primarily resulting from our net loss of approximately $2.1 million, a net cash inflow of approximately $0.4 million for changes in our net operating assets and liabilities, and non-cash stock-based compensation charges of approximately $0.7 million. The change in our net operating assets and liabilities was primarily driven by an increase in accounts payable and accrued liabilities of approximately $0.3 million and an increase in deferred grant of $0.3 million, partially offset by an increase in prepaid expenses of approximately $0.2 million, and an increase in research and development tax credit receivable of approximately $0.1 million.

  

Financing Activities

 

During the three months ended March 31, 2021, the Company sold 1,439,480 shares of its common stock under its 2020 ATM program for net proceeds of approximately $28.4 million.

 

During the three months ended March 31, 2020, the Company purchased 220,000 shares from an investor for approximately $1.0 million. In addition, the Company sold 196,000 shares of its common stock to Lincoln Park for cash proceeds of approximately $1.0 million.

 

23

 

  

Critical Accounting Policies

 

Our discussion and analysis of our financial condition and results of operations is based upon our unaudited consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. Actual results may differ from these estimates. Our critical accounting policies and estimates are discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 and there have been no material changes during the three months ended March 31, 2021.

   

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1). 

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) at the end of the period covered by this quarterly report.

 

Based on this evaluation, we concluded that, as of such date, our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

We recognize that any controls system, no matter how well designed and operated, can provide only reasonable assurance of achieving its objectives, and our management necessarily applies its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during the period covered by this quarterly report that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

 

24

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We are not currently a party to any pending legal proceedings that we believe will have a material adverse effect on our business or financial conditions. We may, however, be subject to various claims and legal actions arising in the ordinary course of business from time to time.

 

Item 1A. Risk Factors

 

Not required for smaller reporting companies.

 

Item 2. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

 

None.

 

Item 3. Defaults Upon Senior Securities

 

Not applicable.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

Not applicable.

  

Item 6. Exhibits

 

No.   Description 
31.1   Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer*
     
31.2   Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer*
     
32.1   Section 1350 Certification of Chief Executive Officer**
     
32.2   Section 1350 Certification of Chief Financial Officer**
     
101.INS   XBRL Instance Document
101.SCH   XBRL Taxonomy Extension Schema
101.CAL   XBRL Taxonomy Extension Calculation Linkbase
101.DEF   XBRL Taxonomy Extension Definition Linkbase
101.LAB   XBRL Taxonomy Extension Label Linkbase
101.PRE   XBRL Taxonomy Extension Presentation Linkbase

 

25

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

  

  INmune Bio Inc.
     
Date: May 5, 2021 By: /s/ Raymond J. Tesi
    Raymond J. Tesi
    Chief Executive Officer
(Principal Executive Officer)

 

Date: May 5, 2021 By: /s/ David J. Moss
    David J. Moss
   

Chief Financial Officer, Treasurer, Secretary

(Principal Financial and Accounting Officer)

 

 26

 

 

 

 

EX-31.1 2 f10q0321_ex31-1inmunebio.htm CERTIFICATION

EXHIBIT 31.1

 

Certifications

 

I, Raymond J. Tesi, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of INmune Bio Inc.
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 5, 2021

 

/s/ Raymond J. Tesi  
Raymond J. Tesi  

Chief Executive Officer

(Principal Executive Officer)

 

 

 

 

EX-31.2 3 f10q0321_ex31-2inmunebio.htm CERTIFICATION

EXHIBIT 31.2

 

Certifications

 

I, David J. Moss, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of INmune Bio Inc.;
   
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
   
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
   
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

  (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
     
  (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
     
  (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
     
  (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

  (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
     
  (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: May 5, 2021

 

   
/s/ David J. Moss  
David J. Moss  

Chief Financial Officer

(Principal Financial Officer)

 

 

 

 

EX-32.1 4 f10q0321_ex32-1inmunebio.htm CERTIFICATION

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of INmune Bio Inc.  (the “Company”) on Form 10-Q for the period ended March 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Raymond J. Tesi, Chief Executive Officer of the Company, certify to my knowledge and in my capacity, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

  

Dated: May 5, 2021

 

   
/s/ Raymond J. Tesi  
Raymond J. Tesi  

Chief Executive Officer

(Principal Executive Officer)

 

 

 

 

EX-32.2 5 f10q0321_ex32-2inmunebio.htm CERTIFICATION

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of INmune Bio Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David J. Moss, Chief Financial Officer of the Company, certify to my knowledge and in my capacity, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

  (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

  

Dated: May 5, 2021

 

   
/s/ David J. Moss  
David J. Moss  

Chief Financial Officer

(Principal Financial Officer)

 

 

 

 

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In August 2020, the sales agreement was amended whereby the aggregate offering was increased from $10.0 million to $30.0 million. From April 2020 through December 2020, the Company sold 178,600 shares of common stock at an average price of $5.45 per share for net proceeds of approximately $0.8 million. During the three months ended March 31, 2021, the Company sold in aggregate 1,439,480 shares on common stock at an average price of $20.17 per share for net proceeds of $28.4 million. 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Some patients have not and others may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services. 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The United Kingdom research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured. 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The Company recognizes revenue following the five-step model prescribed under ASC Topic 606: (1) identify contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenues when (or as) the Company satisfies the performance obligations. The Company records the expenses related to revenue in research and development expense, in the periods such expenses were incurred.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company records deferred revenues when cash payments are received or due in advance of performance, including amounts which are refundable.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Stock-Based Compensation</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt; ">The Company utilizes the Black-Scholes option pricing model to estimate the fair value of stock option awards at the date of grant, which requires the input of highly subjective assumptions, including expected volatility and expected life. Changes in these inputs and assumptions can materially affect the measure of estimated fair value of our share-based compensation. These assumptions are subjective and generally require significant analysis and judgment to develop. When estimating fair value, some of the assumptions will be based on, or determined from, external data and other assumptions may be derived from our historical experience with stock-based payment arrangements. The appropriate weight to place on historical experience is a matter of judgment, based on relevant facts and circumstances. The Company accounts for forfeitures of stock options as they occur.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Research and Development</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Research and development (&#x201c;R&amp;D&#x201d;) costs are expensed as incurred. Research and development credits are recorded by the Company as a reduction of research and development costs. Major components of research and development costs include cash compensation, stock-based compensation, costs of preclinical studies, clinical trials and related clinical manufacturing, costs of drug development, costs of materials and supplies, facilities cost, overhead costs, regulatory and compliance costs, and fees paid to consultants and other entities that conduct certain research and development activities on the Company&#x2019;s behalf.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt; ">The Company recognizes grants as contra research and development expense in the consolidated statement of operations on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate. </font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Income Taxes</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Foreign Currency Translation</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company&#x2019;s financial statements are presented in the U.S. dollar (&#x201c;$&#x201d;), which is the Company&#x2019;s reporting currency, while its functional currencies are the U.S. Dollar for its U.S. based operations, British Pound (&#x201c;GBP&#x201d;) for its United Kingdom-based operations and Australian Dollars (&#x201c;AUD&#x201d;) for its Australian-based operations. All assets and liabilities are translated at the exchange rate on the balance sheet date, stockholders&#x2019; equity is translated at historical rates and statement of operations items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income. Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statement of operations and comprehensive income (loss).</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Recently Adopted Accounting Pronouncements </i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt; ">There were various accounting standards and interpretations issued recently, none of which are expected to a have a material impact on the Company&#xb4;s consolidated financial position, operations or cash flows.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subsequent Events</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt; ">The Company evaluates events that have occurred after the balance sheet date of March 31, 2021, through the date which the financial statements are issued.</font></p><br/> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt; "><b><i>Basis of Presentation</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The accompanying financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (&#x201c;US GAAP&#x201d;), and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (&#x201c;SEC&#x201d;). The consolidated financial statements include the accounts of INmune Bio, Inc. and its subsidiaries. Intercompany transactions and balances have been eliminated.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font>In the opinion of management, the interim financial information includes all normal recurring adjustments necessary for a fair statement of the results for the interim periods. </font>These unaudited consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2020 included in the Company&#x2019;s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 4, 2021</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Risks and Uncertainties</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company&#x2019;s business is highly uncertain and difficult to predict. Also, economies worldwide have also been negatively impacted by the COVID-19 pandemic, however policymakers around the globe have responded with fiscal policy actions to support the healthcare industry and economy as a whole. The magnitude and overall effectiveness of these actions remain uncertain.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In addition, the Company&#x2019;s clinical trials have been affected by and may continue to be affected by the COVID-19 pandemic. Clinical site initiation and patient enrollment have and may continue to be delayed due to prioritization of hospital resources toward the COVID-19 pandemic. Some patients have not and others may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services. Similarly, the ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may adversely impact the Company&#x2019;s clinical trial operations.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The severity of the impact of the COVID-19 pandemic on the Company&#x2019;s business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company&#x2019;s service providers, suppliers, contract research organizations (&#x201c;CROs&#x201d;) and the Company&#x2019;s clinical trials, all of which are uncertain and cannot be predicted. As of the date of issuance of Company&#x2019;s financial statements, the extent to which the COVID-19 pandemic may materially impact the Company&#x2019;s financial condition, liquidity or results of operations is uncertain.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Use of Estimates</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Preparing financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management&#x2019;s estimates and assumptions.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Cash and Cash Equivalents</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt; ">The Company considers all short-term, highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. The Company maintains cash balances that may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation limits. The Company maintains its cash deposits with major financial institutions.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt; "><b><i>Research and Development Tax Incentive Receivable</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company, through its wholly-owned subsidiary in Australia (&#x201c;AUS&#x201d;), participates in the Australian research and development tax incentive program, such that a percentage of our qualifying research and development expenditures are reimbursed by the Australian government, and such incentives are reflected as a reduction of research and development expense. The Australian research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured. At each period end, management estimates the reimbursement available to the Company based on available information at the time.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The Company, through its wholly-owned subsidiary in the United Kingdom (&#x201c;UK&#x201d;), participates in the research and development program provided by the United Kingdom tax relief program, such that a percentage of our qualifying research and development expenditures are reimbursed by the United Kingdom government, and such incentives are reflected as a reduction of research and development expense. The United Kingdom research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured. At each period end, management estimates the reimbursement available to the Company based on available information at the time.</p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Intangible Assets</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company capitalizes costs incurred in connection with in-process research and development purchased from others if the asset has alternative uses and such uses are not restricted under applicable license agreements; patent applications (principally legal fees), patent purchases, and trademarks related to its cell line as intangible assets. Acquired in-process research and development costs that do not have alternative uses are expensed as incurred. Amortization is initiated for acquired in-process research and development intangible assets when their useful lives have been determined. These acquired in-process research and development intangible assets are tested at least annually or when a triggering event occurs that could indicate a potential impairment.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Basic and Diluted Loss per Share </i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company&#x2019;s net loss position.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">At March 31, 2021 and 2020, the Company had potentially issuable shares as follows:</font></p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: justify">&#xa0;</td> <td>&#xa0;</td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>March 31,</b></font></td> <td>&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"></td> <td>&#xa0;</td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2021</b></font></td> <td>&#xa0;</td> <td>&#xa0;</td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2020</b></font></td> <td>&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 76%; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Stock options</font></td> <td style="width: 1%">&#xa0;</td> <td style="width: 1%">&#xa0;</td> <td style="width: 9%; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3,655,549</font></td> <td style="width: 1%">&#xa0;</td> <td style="width: 1%">&#xa0;</td> <td style="width: 1%">&#xa0;</td> <td style="width: 9%; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3,417,000</font></td> <td style="width: 1%">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Warrants</font></td> <td>&#xa0;</td> <td style="border-bottom: black 1.5pt solid">&#xa0;</td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2,126,047</font></td> <td>&#xa0;</td> <td>&#xa0;</td> <td style="border-bottom: black 1.5pt solid">&#xa0;</td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,658,199</font></td> <td>&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Total</b></font></td> <td>&#xa0;</td> <td style="border-bottom: black 4.5pt double">&#xa0;</td> <td style="border-bottom: black 4.5pt double; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5,781,596</font></td> <td>&#xa0;</td> <td>&#xa0;</td> <td style="border-bottom: black 4.5pt double">&#xa0;</td> <td style="border-bottom: black 4.5pt double; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5,075,199</font></td> <td>&#xa0;</td></tr> </table> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Revenue Recognition</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC Topic 606: (1) identify contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenues when (or as) the Company satisfies the performance obligations. The Company records the expenses related to revenue in research and development expense, in the periods such expenses were incurred.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company records deferred revenues when cash payments are received or due in advance of performance, including amounts which are refundable.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Stock-Based Compensation</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt; ">The Company utilizes the Black-Scholes option pricing model to estimate the fair value of stock option awards at the date of grant, which requires the input of highly subjective assumptions, including expected volatility and expected life. Changes in these inputs and assumptions can materially affect the measure of estimated fair value of our share-based compensation. These assumptions are subjective and generally require significant analysis and judgment to develop. When estimating fair value, some of the assumptions will be based on, or determined from, external data and other assumptions may be derived from our historical experience with stock-based payment arrangements. The appropriate weight to place on historical experience is a matter of judgment, based on relevant facts and circumstances. The Company accounts for forfeitures of stock options as they occur.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Research and Development</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Research and development (&#x201c;R&amp;D&#x201d;) costs are expensed as incurred. Research and development credits are recorded by the Company as a reduction of research and development costs. Major components of research and development costs include cash compensation, stock-based compensation, costs of preclinical studies, clinical trials and related clinical manufacturing, costs of drug development, costs of materials and supplies, facilities cost, overhead costs, regulatory and compliance costs, and fees paid to consultants and other entities that conduct certain research and development activities on the Company&#x2019;s behalf.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt; ">The Company recognizes grants as contra research and development expense in the consolidated statement of operations on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Income Taxes</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Foreign Currency Translation</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company&#x2019;s financial statements are presented in the U.S. dollar (&#x201c;$&#x201d;), which is the Company&#x2019;s reporting currency, while its functional currencies are the U.S. Dollar for its U.S. based operations, British Pound (&#x201c;GBP&#x201d;) for its United Kingdom-based operations and Australian Dollars (&#x201c;AUD&#x201d;) for its Australian-based operations. All assets and liabilities are translated at the exchange rate on the balance sheet date, stockholders&#x2019; equity is translated at historical rates and statement of operations items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income. Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statement of operations and comprehensive income (loss).</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Recently Adopted Accounting Pronouncements </i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt; ">There were various accounting standards and interpretations issued recently, none of which are expected to a have a material impact on the Company&#xb4;s consolidated financial position, operations or cash flows.</font></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Subsequent Events</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt; ">The Company evaluates events that have occurred after the balance sheet date of March 31, 2021, through the date which the financial statements are issued.</font></p> <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="text-align: justify">&#xa0;</td> <td>&#xa0;</td> <td colspan="6" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>March 31,</b></font></td> <td>&#xa0;</td></tr> <tr style="vertical-align: bottom"> <td style="text-align: justify"></td> <td>&#xa0;</td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2021</b></font></td> <td>&#xa0;</td> <td>&#xa0;</td> <td colspan="2" style="border-bottom: black 1.5pt solid; text-align: center"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>2020</b></font></td> <td>&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 76%; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Stock options</font></td> <td style="width: 1%">&#xa0;</td> <td style="width: 1%">&#xa0;</td> <td style="width: 9%; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3,655,549</font></td> <td style="width: 1%">&#xa0;</td> <td style="width: 1%">&#xa0;</td> <td style="width: 1%">&#xa0;</td> <td style="width: 9%; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3,417,000</font></td> <td style="width: 1%">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Warrants</font></td> <td>&#xa0;</td> <td style="border-bottom: black 1.5pt solid">&#xa0;</td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">2,126,047</font></td> <td>&#xa0;</td> <td>&#xa0;</td> <td style="border-bottom: black 1.5pt solid">&#xa0;</td> <td style="border-bottom: black 1.5pt solid; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,658,199</font></td> <td>&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b>Total</b></font></td> <td>&#xa0;</td> <td style="border-bottom: black 4.5pt double">&#xa0;</td> <td style="border-bottom: black 4.5pt double; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5,781,596</font></td> <td>&#xa0;</td> <td>&#xa0;</td> <td style="border-bottom: black 4.5pt double">&#xa0;</td> <td style="border-bottom: black 4.5pt double; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">5,075,199</font></td> <td>&#xa0;</td></tr> </table> 3655549 3417000 2126047 1658199 5781596 5075199 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif"><b><font style="text-decoration:underline">NOTE 4</font> &#x2013; RESEARCH AND DEVELOPMENT ACTIVITY</b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">According to UK tax law, the Company is allowed an R&amp;D tax credit that reduces a company&#x2019;s tax bill in the UK for expenses incurred in R&amp;D subject to certain requirements. The Company&#x2019;s UK subsidiary submits R&amp;D tax credit requests annually for research and development expenses incurred. At March 31, 2021 and December 31, 2020, the Company recorded a research and development tax credit receivable in the amount of $1,104,000 and $833,000, respectively. During the three months ended March 31, 2021 and 2020, the Company received $0 of R&amp;D tax credit reimbursements from the UK.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">According to AUS tax law, the Company is allowed an R&amp;D tax credit that reduces a company&#x2019;s tax bill in AUS for expenses incurred in R&amp;D subject to certain requirements. The Company&#x2019;s Australian subsidiary submits R&amp;D tax credit requests annually for research and development expenses incurred. At March 31, 2021 and December 31, 2020, the Company recorded a research and development tax credit receivable of $1,086,000 and $853,000, respectively, for R&amp;D expenses incurred in Australia. During the three months ended March 31, 2021 and 2020, the Company received $0 R&amp;D tax credit reimbursements from Australia.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>Xencor, Inc. License Agreement</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">On October 3, 2017, the Company entered into a license agreement (&#x201c;Xencor License Agreement&#x201d;) with Xencor, Inc. (&#x201c;Xencor&#x201d;), which has discovered and developed a proprietary biological molecule that inhibits soluble tumor necrosis factor. Pursuant to the license agreement, Xencor granted the Company an exclusive worldwide, royalty-bearing license in licensed patent rights, licensed know-how and licensed materials (as defined in the license agreement) to make, develop, use, sell and import any pharmaceutical product that comprises, contains, or incorporates Xencor&#x2019;s proprietary protein known as &#x201c;XPro1595&#x201d; that inhibits soluble tumor necrosis factor (or all modifications, formulations and variants of the licensed protein that specifically bind soluble tumor necrosis factor) alone or in combination with one or more active ingredients, in any dosage or formulation (&#x201c;Licensed Products&#x201d;). The Company believes the protein has numerous medical applications. Such additional alternative applications of the technology are available under the Xencor License Agreement</font><font style="font-family: Times New Roman, Times, Serif">. In connection with the Xencor License Agreement, the Company paid Xencor a one-time non-creditable and non-refundable fee of $100,000 and issued Xencor 1,585,000 shares of the Company&#x2019;s common stock with a fair value of $12,221,000. In addition, the Company issued Xencor fully vested warrants with a fair value of $4,193,000 to purchase an additional number of shares of common stock equal to 10% of the fully diluted company shares immediately following such purchase. The aggregate purchase price for the full exercise of the option is $10,000,000 which purchase price shall be pro-rated for any partial exercise of the warrant. In August 2018, the Company entered into a First Amendment to Stock Issuance Agreement. Pursuant to the amendment, the purchase price for the additional shares may only be paid by cash. The warrants expire on October 3, 2023.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company recorded $16,514,000 for the acquisition of intangible assets for the in-process research and development as the fair value of the cash, stock and warrants on the date of the License Agreement acquisition in accordance with Accounting Standards Codification 730 &#x2013; <i>Research and Development</i>. The Company has the license rights to pursue alternative applications of the technology as part of its future development plans.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Company also agreed to pay Xencor a royalty on Net Sales of all Licensed Products in a given calendar year, which are payable on a country-by- country and licensed product by licensed product basis until the date that is the later of (a) the expiration of the last to expire valid claim covering such Licensed Product in such country or (b) ten years following the first sale to a third party of the licensed product in such country.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Under the Xencor License Agreement, the Company also agreed to pay Xencor a percentage of any sublicensing revenue that it receives.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>INKmune License Agreement</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On October 29, 2015, the Company entered into an exclusive license agreement (the &#x201c;INKmune License Agreement&#x201d;) with Immune Ventures, LLC (&#x201c;Immune Ventures&#x201d;). Pursuant to the INKmune License Agreement, the Company was granted exclusive worldwide rights to the patents, including rights to incorporate any improvements or additions to the patents that may be developed in the future. In consideration for the patent rights, the Company agreed to the following milestone payments (of which none have been met as of March 31, 2021):</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>(in thousands)</i></font></p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: justify">Each Phase I initiation</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">25</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify">Each Phase II initiation</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">250</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">Each Phase III initiation</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">350</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify">Each NDA/EMA filing</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">1,000</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">Each NDA/EMA awarded</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">9,000</td><td style="text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">In addition, the Company agreed to pay Immune Ventures a royalty of 1% of net sales during the life of each patent granted to the Company. RJ Tesi, the Company&#x2019;s President and a member of our Board of Directors, David Moss, its Chief Financial Officer and Treasurer and Mark Lowdell, its Chief Scientific Officer, are the owners of Immune Ventures. As of March 31, 2021, no sales had occurred under this license.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The term of the agreement began on October 29, 2015 and, if not terminated sooner pursuant to the agreement, ends on a country-by-country basis on the date of the expiration of the last to expire patent rights where patent rights exists. Upon the termination of the agreement, we shall have a fully paid up, perpetual, royalty-free license without further obligation to Immune Ventures. The agreement can be terminated by Immune Ventures if, after 60 days from the Company&#x2019;s receipt of notice that the Company has not made a payment under the agreement, and the Company still does not make this payment. On July&#xa0;20, 2018, the parties amended the agreement under which the Company was required achieve milestones pursuant to the agreement. On October 30, 2020, the parties executed an additional amendment to the agreement under which the Company is required to achieve the following milestones:</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Initiation of Phase 1 clinical or equivalent trials by October 29, 2021</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Initiation of Phase II clinical trials or equivalent by October 29, 2023</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Initiation of Phase III clinical trials or equivalent by October 29, 2025</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Filing of NDA or equivalent by October 29, 2026 or equivalent</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">If the Company doesn&#x2019;t achieve the above milestones, it is required to negotiate in good faith with Immune Ventures to determine how it can either remedy the failure or achieve an alternate development. If the Company fails to make any required efforts, or if the efforts do not remedy the situation within 60 days of written notice by Immune Ventures, then Immune Ventures may provide notice to terminate the license or convert it to a non-exclusive license.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>University of Pittsburg License Agreement</i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On October 3, 2017, the Company entered into an Assignment and Assumption Agreement with Immune Ventures related to intellectual property licensed from the University of Pittsburgh. Pursuant to the Assignment and Assumption Agreement (&#x201c;Assignment Agreement&#x201d;), Immune Ventures assigned all of its rights, obligations and liabilities under an Exclusive License Agreement between the University of Pittsburgh &#x2013; Of the Commonwealth System of Higher Education (&#x201c;Licensor&#x201d;) and Immune Ventures to INmune Bio (&#x201c;Licensee&#x201d;), (the &#x201c;PITT Agreement&#x201d;).</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Consideration under the PITT Agreement includes: (i) annual maintenance fees, (ii) royalty payments based on the sale of products making use of the licensed technology, and (iii) milestone payments.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Annual maintenance fees under the PITT Agreement include the following:</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>(in thousands)</i></font></p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: justify">June 26 of each year 2021-2022</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">5</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify">June 26 of each year 2023-2024</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">10</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">June 26 of each year 2025 until first commercial sale</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">25</td><td style="text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Upon first commercial sale of a product making use of the licensed technology under the PITT Agreement, the Licensee is required to pay royalties equal to 2.5% of Net Sales each calendar quarter.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Moreover, under </font><font style="font-family: Times New Roman, Times, Serif; font-size: 11pt">the PITT Agreement the Licensee is required to make milestone payments as follows:</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>(in thousands)</i></font></p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; 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font-size: 10pt">Each Phase III initiation</font></td><td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#xa0;</font></td> <td style="text-align: left"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td><td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">500</font></td><td style="text-align: left"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#xa0;</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">First commercial sale of product making use of licensed technology</font></td><td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#xa0;</font></td> <td style="text-align: left"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td><td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,250</font></td><td style="text-align: left"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#xa0;</font></td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 11pt">The Company had no a</font><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">mounts owed pursuant to the PITT Agreement as of March 31, 2021.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif">The PITT Agreement expires upon the earlier of: (i) expiration of the last claim of the Patent Rights (as defined in the PITT Agreement) </font><font style="font-family: Times New Roman, Times, Serif">forming the subject matter of the PITT Agreement; or (ii) the date that is 20 years from the effective date of the agreement (June 26, 2037).</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The Licensee may terminate the PITT Agreement upon 3 months prior written notice provided all payments under the license are current. The Licensor may terminate the PITT Agreement upon written notice if: (i) Licensee defaults as to performance of material obligations which have not been cured within 60 days after receiving written notice; or (ii) Licensee ceases to carry out its business, becomes bankrupt or insolvent, applies for or consents to the appointment of a trustee, receiver or liquidator of its assets or seeks relief under any law for the aid of debtors.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><i>University College London License Agreement &#x2013; MSC </i></b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On July 19, 2019, the Company entered into license agreement with UCL Business PLC (&#x201c;UCLB&#x201d;) with a ten (10) year term. Pursuant to the license agreement, the Company acquired an exclusive license (and a right to sub-license) to the technology and know-how relating to an isolation and commercial scale expansion methodology of GMP grade human umbilical cord mesenchymal stem/stromal cells (&#x201c;MSC&#x201d;).</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In exchange for the license agreement, the Company paid UCLB an initial license fee of $10,000 and shall pay annual licensing fees of approximately $13,000 per year for the remaining term of the agreement. The Company will pay UCLB a royalty of 3-3.5%% of the net sales value (as defined in the agreement) of all licensed products sold or used by the Company. In the event the Company sub-licenses the technology and know-how, the Company will pay UCLB a royalty of twelve (12) percent of consideration (cash or non-cash) received by the Company in relation to the development or sub-licensing of any of the technology and know-how.</font></p><br/> 1104000 833000 0 1086000 853000 0 100000 1585000 12221000 4193000 0.10 10000000 16514000 0.01 0.025 The PITT Agreement expires upon the earlier of: (i) expiration of the last claim of the Patent Rights (as defined in the PITT Agreement) forming the subject matter of the PITT Agreement; or (ii) the date that is 20 years from the effective date of the agreement (June 26, 2037). In exchange for the license agreement, the Company paid UCLB an initial license fee of $10,000 and shall pay annual licensing fees of approximately $13,000 per year for the remaining term of the agreement. The Company will pay UCLB a royalty of 3-3.5%% of the net sales value (as defined in the agreement) of all licensed products sold or used by the Company. In the event the Company sub-licenses the technology and know-how, the Company will pay UCLB a royalty of twelve (12) percent of consideration (cash or non-cash) received by the Company in relation to the development or sub-licensing of any of the technology and know-how. <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: justify">Each Phase I initiation</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">25</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify">Each Phase II initiation</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">250</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">Each Phase III initiation</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">350</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify">Each NDA/EMA filing</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">1,000</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">Each NDA/EMA awarded</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">9,000</td><td style="text-align: left">&#xa0;</td></tr> </table> 25000 250000 350000 1000000 9000000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: justify">June 26 of each year 2021-2022</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">5</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify">June 26 of each year 2023-2024</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">10</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">June 26 of each year 2025 until first commercial sale</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">25</td><td style="text-align: left">&#xa0;</td></tr> </table> 5000 10000 25000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: justify"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Each Phase I initiation</font></p></td><td style="width: 1%"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#xa0;</font></td> <td style="width: 1%; text-align: left"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td><td style="width: 9%; text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">50</font></td><td style="width: 1%; text-align: left"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#xa0;</font></td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">Each Phase III initiation</font></td><td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#xa0;</font></td> <td style="text-align: left"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td><td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">500</font></td><td style="text-align: left"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#xa0;</font></td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">First commercial sale of product making use of licensed technology</font></td><td><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#xa0;</font></td> <td style="text-align: left"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">$</font></td><td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">1,250</font></td><td style="text-align: left"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#xa0;</font></td></tr> </table> 50000 500000 1250000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><font style="text-decoration:underline">NOTE 5</font> &#x2013; LEASE</b>&#xa0;</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In May 2019, the Company signed a sublease agreement with a related party for office space in La Jolla, California, which serves as the new headquarters of the Company. The lease has a 61-month term, which corresponds to the lease term of the lessor. The lessor is CTI Clinical Trial &amp; Consulting Services (&#x201c;CTI&#x201d;). CTI is majority-owned by a member of the Company&#x2019;s Board of Directors. The lessor may extend its lease for an additional 5 years, and, if it does, the Company may also extend its sublease for 5 years. The Company did not include the option to extend in the calculation of the lease liabilities as such extension is not reasonably certain to occur. Variable lease costs for the Company&#x2019;s lease consists of operating expenses for the spaces. Below is a summary of the Company&#x2019;s right-of-use assets and liabilities as of March 31, 2021:</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>(in thousands, except years and rate)&#xa0;&#xa0;</i></font></p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: justify">Right-of-use asset &#x2013; related party</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">147</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">Operating lease, current liability &#x2013; related party</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">23</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify; padding-bottom: 1.5pt">Long-term operating lease liability &#x2013; related party</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">116</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify; padding-bottom: 4pt">Total lease liability</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">139</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">Weighted-average remaining lease term</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.2 years</font></td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">Weighted-average discount rate</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">10.00</td><td style="text-align: left">%</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During the three months ended March 31, 2021, the Company recognized $13,000 in operating lease expense, which is included in general and administrative expenses in the Company&#x2019;s consolidated statement of operations.</font></p><br/> P61M The lessor may extend its lease for an additional 5 years, and, if it does, the Company may also extend its sublease for 5 years. 13000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 88%; text-align: justify">Right-of-use asset &#x2013; related party</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">147</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">Operating lease, current liability &#x2013; related party</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">23</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify; padding-bottom: 1.5pt">Long-term operating lease liability &#x2013; related party</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">116</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify; padding-bottom: 4pt">Total lease liability</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">139</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">Weighted-average remaining lease term</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">3.2 years</font></td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">&#xa0;</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">Weighted-average discount rate</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">10.00</td><td style="text-align: left">%</td></tr> </table> 139000 P3Y73D 0.1000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><font style="text-decoration:underline">NOTE 6</font> &#x2013; RELATED PARTY TRANSACTIONS</b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">UCL</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">At March 31, 2021 and December 31, 2020, the Company owed UCL Consultants Limited (&#x201c;UCL&#x201d;) $10,000 and $34,000, respectively, in connection with medical research performed on behalf of the Company. At March 31, 2021 and December 31, 2020, the Company recorded prepaid expenses of $15,000 and $0, respectively, for medical research to be performed on behalf of the Company by UCL. During the three months ending March 31, 2021 and 2020, the Company paid UCL $88,000 and $0, respectively, for medical research performed on behalf of the Company. UCL is a wholly owned subsidiary of the University of London. The Company&#x2019;s Chief Scientific and Manufacturing Officer is a professor at the University of London.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><font style="text-decoration:underline">CTI</font></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During the three months ending March 31, 2021 and 2020, the Company paid CTI $0 and $79,000, respectively, for medical research performed on behalf of the Company. During the three months ended March 31, 2020, the Company recorded a capital contribution of $216,000 for the forgiveness of certain accounts payable due to CTI. The Company had no amounts payable to CTI as of March 31, 2021 and December 31, 2020.</font></p><br/> 10000 34000 15000 0 88000 0 0 79000 216000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><font style="text-decoration:underline">NOTE 7</font> &#x2013; STOCKHOLDERS&#x2019; EQUITY</b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Lincoln Park </i></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">On May 15, 2019, the Company entered into both a securities purchase agreement and registration rights agreement with Lincoln Park Capital Fund, LLC (&#x201c;Lincoln Park&#x201d;). Under the terms and subject to the conditions of the securities purchase agreement, the Company had the right to sell to Lincoln Park, and Lincoln Park was obligated to purchase, up to $20.0 million in shares of the Company&#x2019;s common stock, subject to certain limitations, over the 24-month period that commenced on May 15, 2019. During the three months ended March 31, 2020, the Company issued 196,000 shares of its common stock to Lincoln Park for approximately $1.0 million of cash.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During April 2021, the Company terminated the securities purchase agreement with Lincoln Park.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Purchase and retirement of common stock</i></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During January 2020, the Company purchased and cancelled 220,000 shares of its common stock from a shareholder in exchange for approximately $1.0 million of cash.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Common Stock &#x2013; At the Market Offering</i></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the three months ended March 31, 2021, the Company sold 1,439,480 shares of its common stock for aggregate gross proceeds of approximately $29.0 million (net proceeds of approximately $28.4 million) under the 2020 ATM program. The Company paid BTIG commissions and fees of $582,000 in connection with the sale of these shares.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Stock options</i></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During January 2021, the Company granted certain employees and directors options to purchase 198,549 shares of its common stock pursuant to the 2017 and 2019 Incentive Stock Plans. The stock options have a fair value of approximately $4.2 million that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.78% based on the applicable US Treasury bill rate (2) expected life of 6.0 - 6.25 years, (3) expected volatility of approximately 113% - 114% based on the trading history of similar companies, and (4) zero expected dividends.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt; ">The following table summarizes stock option activity during the three months ended March 31, 2021:</font></p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-style: italic; text-align: justify; border-bottom: Black 1.5pt solid">(in thousands, except share and per share amounts)</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Number of</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Shares</b></p></td><td style="padding-bottom: 1.5pt">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Weighted- average</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Exercise</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Price</b></p></td><td style="padding-bottom: 1.5pt">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Weighted-average</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Remaining</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Contractual</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Term (years)</b></p></td><td style="padding-bottom: 1.5pt">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Aggregate</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Intrinsic</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Value</b></p></td><td style="padding-bottom: 1.5pt">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 52%; text-align: justify">Outstanding at January 1, 2021</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">3,457,000</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">5.82</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">8.05</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">39,405</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify">Options granted</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">198,549</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">24.82</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">-</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">-</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">Options exercised</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">-</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">-</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">-</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">-</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify; padding-bottom: 1.5pt">Options cancelled</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">$</td><td style="padding-bottom: 1.5pt; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify; padding-bottom: 4pt">Outstanding at March 31, 2021</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">3,655,549</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="padding-bottom: 4pt; text-align: left">$</td><td style="padding-bottom: 4pt; text-align: right">6.85</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt; text-align: right">7.91</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="padding-bottom: 4pt; text-align: left">$</td><td style="padding-bottom: 4pt; text-align: right">20,945</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify; padding-bottom: 4pt">Exercisable at March 31, 2021</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">2,415,889</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="padding-bottom: 4pt; text-align: left">$</td><td style="padding-bottom: 4pt; text-align: right">6.54</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt; text-align: right">7.42</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="padding-bottom: 4pt; text-align: left">$</td><td style="padding-bottom: 4pt; text-align: right">12,906</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During the three months ended March 31, 2021 and 2020, the Company recognized stock-based compensation expense of approximately $0.9 million and $0.7 million, respectively, related to the vesting of stock options. As of March 31, 2021, there was approximately $7.3 million of total unrecognized compensation cost related to non-vested stock options which is expected to be recognized over a weighted-average period of 2.72 years.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Warrants</i></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In connection with the Company&#x2019;s initial public offering in February 2019, the Company issued warrants to the placement agents to purchase the Company&#x2019;s common stock at an exercise price of $9.60 per common share, which warrants are exercisable until December 19, 2023. At March 31, 2021, 34,835 of these warrants are outstanding and the intrinsic value is $79,000.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">In October 2017, in connection with the Xencor License Agreement, the Company issued fully vested warrants to purchase an additional number of shares of common stock equal to 10% of the fully diluted Company shares immediately following such purchase. See Note 4. These warrants had an intrinsic value of approximately $14.6 million as of March 31, 2021.</font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On June 30, 2017, the Company issued fully vested warrants to purchase 31,667 shares of the Company&#x2019;s common stock to a third party in conjunction with the common stock sold for cash. The warrants have a $1.50 exercise price and expire on June 30, 2022. During the three months ended March 31, 2021, 11,875 of these warrants were exercised for cash proceeds of $18,000. At March 31, 2021, 19,792 of these warrants are outstanding, with an intrinsic value of $205,000.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Stock-based Compensation by Class of Expense</i></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">The following summarizes the components of stock-based compensation expense in the consolidated statements of operations for the three months ended March 31, 2021 and&#xa0;2020 respectively:</font></p><br/><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-style: italic">(in thousands)</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Three<br/> Months<br/> Ended<br/> March&#xa0;31,<br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Three<br/> Months<br/> Ended<br/> March&#xa0;31,<br/> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Research and development</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">186</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">139</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt">General and administrative</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">713</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">543</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">899</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">682</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Shareholder Rights Agreement</i></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On December 30, 2020, the Board of Directors (the &#x201c;Board&#x201d;) of the Company approved and adopted a Rights Agreement, dated as of December 30, 2020, by and between the Company and VStock Transfer, LLC, as rights agent, pursuant to which the Board declared a dividend of one preferred share purchase right (each, a &#x201c;Right&#x201d;) for each outstanding share of the Company&#x2019;s common stock held by stockholders as of the close of business on January 11, 2021. When exercisable, each right initially would represent the right to purchase from the Company one one-thousandth of a share of a newly designated series of preferred stock, Series A Junior Participating Preferred Stock, par value $0.001 per share, of the Company, at an exercise price of $300.00 per one one-thousandth of a Series A Junior Participating Preferred Share, subject to adjustment. Subject to various exceptions, the Rights become exercisable in the event any person (excluding certain exempted or grandfathered persons) becomes the beneficial owner of twenty percent&#xa0;or more of the Company&#x2019;s common stock without the approval of the Board. The Rights are scheduled to expire on December 30, 2021.</p><br/> Under the terms and subject to the conditions of the securities purchase agreement, the Company had the right to sell to Lincoln Park, and Lincoln Park was obligated to purchase, up to $20.0 million in shares of the Company&#x2019;s common stock, subject to certain limitations, over the 24-month period that commenced on May 15, 2019. 20000000 196000 1.0 220000 1.0 1439480 29.0 28.4 582000 198549 4.2 0.0078 P6Y P6Y3M 1.13 1.14 0 0.9 0.7 7.3 P2Y262D In connection with the Company&#x2019;s initial public offering in February 2019, the Company issued warrants to the placement agents to purchase the Company&#x2019;s common stock at an exercise price of $9.60 per common share, which warrants are exercisable until December 19, 2023. 9.60 34835 79000 0.10 14.6 31667000000 1.50 2022-06-30 11875 18000 19792 205000 the Company one one-thousandth of a share of a newly designated series of preferred stock, Series A Junior Participating Preferred Stock, par value $0.001 per share, of the Company, at an exercise price of $300.00 per one one-thousandth of a Series A Junior Participating Preferred Share, subject to adjustment. Subject to various exceptions, the Rights become exercisable in the event any person (excluding certain exempted or grandfathered persons) becomes the beneficial owner of twenty percent or more of the Company&#x2019;s common stock without the approval of the Board. <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-style: italic; text-align: justify; border-bottom: Black 1.5pt solid">(in thousands, except share and per share amounts)</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Number of</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Shares</b></p></td><td style="padding-bottom: 1.5pt">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Weighted- average</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Exercise</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Price</b></p></td><td style="padding-bottom: 1.5pt">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Weighted-average</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Remaining</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Contractual</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Term (years)</b></p></td><td style="padding-bottom: 1.5pt">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Aggregate</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Intrinsic</b></p> <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>Value</b></p></td><td style="padding-bottom: 1.5pt">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 52%; text-align: justify">Outstanding at January 1, 2021</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">3,457,000</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">5.82</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 9%; text-align: right">8.05</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">39,405</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify">Options granted</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">198,549</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">24.82</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">-</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">-</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify">Options exercised</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">-</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">$</td><td style="text-align: right">-</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">-</td><td style="text-align: left">&#xa0;</td><td>&#xa0;</td> <td style="text-align: left">&#xa0;</td><td style="text-align: right">-</td><td style="text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify; padding-bottom: 1.5pt">Options cancelled</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">$</td><td style="padding-bottom: 1.5pt; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="text-align: justify; padding-bottom: 4pt">Outstanding at March 31, 2021</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">3,655,549</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="padding-bottom: 4pt; text-align: left">$</td><td style="padding-bottom: 4pt; text-align: right">6.85</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt; text-align: right">7.91</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="padding-bottom: 4pt; text-align: left">$</td><td style="padding-bottom: 4pt; text-align: right">20,945</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: justify; padding-bottom: 4pt">Exercisable at March 31, 2021</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">&#xa0;</td><td style="border-bottom: Black 4pt double; text-align: right">2,415,889</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="padding-bottom: 4pt; text-align: left">$</td><td style="padding-bottom: 4pt; text-align: right">6.54</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt; text-align: right">7.42</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="padding-bottom: 4pt; text-align: left">$</td><td style="padding-bottom: 4pt; text-align: right">12,906</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 3457000 5.82 P8Y18D 39405000 198549 24.82 3655549 6.85 P7Y332D 20945000 2415889 6.54 P7Y153D 12906000 <table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif"> <tr style="vertical-align: bottom"> <td style="font-style: italic">(in thousands)</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Three<br/> Months<br/> Ended<br/> March&#xa0;31,<br/> 2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#xa0;</td> <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">Three<br/> Months<br/> Ended<br/> March&#xa0;31,<br/> 2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="width: 76%; text-align: left">Research and development</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">186</td><td style="width: 1%; text-align: left">&#xa0;</td><td style="width: 1%">&#xa0;</td> <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">139</td><td style="width: 1%; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; "> <td style="text-align: left; padding-bottom: 1.5pt">General and administrative</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">713</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td><td style="padding-bottom: 1.5pt">&#xa0;</td> <td style="border-bottom: Black 1.5pt solid; text-align: left">&#xa0;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">543</td><td style="padding-bottom: 1.5pt; text-align: left">&#xa0;</td></tr> <tr style="vertical-align: bottom; background-color: rgb(204,238,255)"> <td style="padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">899</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td><td style="padding-bottom: 4pt">&#xa0;</td> <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">682</td><td style="padding-bottom: 4pt; text-align: left">&#xa0;</td></tr> </table> 186000 139000 713000 543000 899000 682000 <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><b><font style="text-decoration:underline">NOTE 8</font> &#x2013; COLLABORATIVE AGREEMENTS</b></font></p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">During 2020, the Company was awarded a $0.5 million grant from the Amyotrophic Lateral Sclerosis (&#x201c;ALS&#x201d;) Association to fund a study of the efficacy of XPro1595 to reverse ALS in vitro and to fund a study of the efficacy of XPro1595 to protect against ALS model phenotypes in vivo. During the three months ended March 31, 2021 and 2020, the Company received $0.1 million and $0.3 million, respectively, of cash proceeds pursuant to this grant which the Company recorded as deferred liabilities. The Company offsets costs incurred related to this research against the grants. As of March 31, 2021 and December 31, 2020, the Company recorded approximately $0.2 million and $0.1 million, respectively, as deferred liabilities in the consolidated balance sheet related to the ALS grant.</p><br/><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><font style="font-family: Times New Roman, Times, Serif; font-size: 10pt">During September 2020, the Company was awarded a grant of up to $2.9 million from the National Institutes of Health (&#x201c;NIH&#x201d;). The grant will support a Phase 2 study of XPro1595 in patients with treatment resistant depression. As of March 31, 2021, the Company has not received any proceeds pursuant to this grant.&#xa0;</font></p><br/> During 2020, the Company was awarded a $0.5 million grant from the Amyotrophic Lateral Sclerosis (&#x201c;ALS&#x201d;) Association to fund a study of the efficacy of XPro1595 to reverse ALS in vitro and to fund a study of the efficacy of XPro1595 to protect against ALS model phenotypes in vivo. 100000 300000 200000 100000 the Company was awarded a grant of up to $2.9 million from the National Institutes of Health (&#x201c;NIH&#x201d;). The grant will support a Phase 2 study of XPro1595 in patients with treatment resistant depression. As of March 31, 2021, the Company has not received any proceeds pursuant to this grant. 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Document And Entity Information - shares
3 Months Ended
Mar. 31, 2021
May 05, 2021
Document Information Line Items    
Entity Registrant Name Inmune Bio, Inc.  
Document Type 10-Q  
Current Fiscal Year End Date --12-31  
Entity Common Stock, Shares Outstanding   14,932,638
Amendment Flag false  
Entity Central Index Key 0001711754  
Entity Current Reporting Status Yes  
Entity Filer Category Non-accelerated Filer  
Document Period End Date Mar. 31, 2021  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q1  
Entity Small Business true  
Entity Emerging Growth Company true  
Entity Shell Company false  
Entity Ex Transition Period false  
Entity File Number 001-38793  
Entity Incorporation, State or Country Code NV  
Entity Interactive Data Current Yes  
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Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Thousands
Mar. 31, 2021
Dec. 31, 2020
CURRENT ASSETS    
Cash and cash equivalents $ 45,340 $ 21,967
Research and development tax credit receivable 2,190 1,686
Other tax receivable 154 113
Prepaid expenses 1,514 220
Prepaid expenses – related party 15
TOTAL CURRENT ASSETS 49,213 23,986
Operating lease – right of use asset – related party 147 156
Acquired in-process research and development intangible assets 16,514 16,514
TOTAL ASSETS 65,874 40,656
CURRENT LIABILITIES    
Accounts payable and accrued liabilities 1,572 1,518
Accounts payable and accrued liabilities – related parties 10 34
Deferred liabilities 591 190
Operating lease, current liability – related party 23 34
TOTAL CURRENT LIABILITIES 2,196 1,776
Long-term operating lease liability – related party 116 126
TOTAL LIABILITIES 2,312 1,902
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY    
Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding
Common stock, $0.001 par value, 200,000,000 shares authorized, 14,932,638 and 13,481,283 shares issued and outstanding, respectively 15 13
Additional paid-in capital 101,466 72,105
Accumulated other comprehensive income 12 11
Accumulated deficit (37,931) (33,375)
TOTAL STOCKHOLDERS’ EQUITY 63,562 38,754
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 65,874 $ 40,656
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Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares
Mar. 31, 2021
Dec. 31, 2020
Statement of Financial Position [Abstract]    
Preferred stock par value (in Dollars per share) $ 0.001 $ 0.001
Preferred stock, shares authorized 10,000,000 10,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock par value (in Dollars per share) $ 0.001 $ 0.001
Common stock, shares authorized 200,000,000 200,000,000
Common stock, shares issued 14,932,638 13,481,283
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Consolidated statements of operations and comprehensive loss (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Income Statement [Abstract]    
REVENUE $ 4
OPERATING EXPENSES    
General and administrative 2,061 1,299
Research and development 2,491 793
Total operating expenses 4,552 2,092
LOSS FROM OPERATIONS (4,548) (2,092)
OTHER (EXPENSE) INCOME    
Other (expense) income (8) 22
Total other (expense) income (8) 22
NET LOSS $ (4,556) $ (2,070)
Net loss per common share – basic and diluted (in Dollars per share) $ (0.32) $ (0.19)
Weighted average number of common shares outstanding – basic and diluted (in Shares) 14,322,659 10,747,300
COMPREHENSIVE LOSS    
Net loss $ (4,556) $ (2,070)
Other comprehensive income (loss) – foreign currency translation 1 (21)
Total comprehensive loss $ (4,555) $ (2,091)
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Consolidated Statement of Changes in Stockholders’ Equity (Unaudited) - USD ($)
$ in Thousands
Common Stock
Additional Paid-In Capital
Accumulated Other Comprehensive Income LossLoss
Accumulated Deficit
Common Stock Issuable
Total
Balance at Dec. 31, 2019 $ 11 $ 44,834 $ (9) $ (21,276) $ 50 $ 23,610
Balance (in Shares) at Dec. 31, 2019 10,770,948          
Issuance of common stock and warrants for cash, net 1,003   1,003
Issuance of common stock and warrants for cash, net (in Shares) 196,000          
Acquisition and retirement of common stock (1,012)   (1,012)
Acquisition and retirement of common stock (in Shares) (220,000)          
Capital contribution 216 216
Stock-based compensation 682 682
Gain/Loss on foreign currency translation (21) (21)
Net loss (2,070) (2,070)
Balance at Mar. 31, 2020 $ 11 45,723 (30) (23,346) $ 50 22,408
Balance (in Shares) at Mar. 31, 2020 10,746,948          
Balance at Dec. 31, 2020 $ 13 72,105 11 (33,375)   38,754
Balance (in Shares) at Dec. 31, 2020 13,481,283          
Issuance of common stock for cash $ 2 28,444   28,446
Issuance of common stock for cash (in Shares) 1,439,480          
Exercise of warrants 18   18
Exercise of warrants (in Shares) 11,875          
Stock-based compensation 899   899
Gain/Loss on foreign currency translation 1   1
Net loss (4,556)   (4,556)
Balance at Mar. 31, 2021 $ 15 $ 101,466 $ 12 $ (37,931)   $ 63,562
Balance (in Shares) at Mar. 31, 2021 14,932,638          
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Consolidated Statements of Cash Flows (Unaudited) - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (4,556) $ (2,070)
Adjustments to reconcile net loss to net cash used in operating activities:    
Stock-based compensation 899 682
Changes in operating assets and liabilities:    
Research and development tax credit receivable (504) (145)
Other tax receivable (41) 6
Prepaid expenses (1,294) (170)
Prepaid expenses – related party (15) 26
Accounts payable and accrued liabilities 54 294
Accounts payable and accrued liabilities – related parties (24) 29
Deferred liabilities 401 300
Operating lease liability – related party (12) 13
Net cash used in operating activities (5,092) (1,035)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Net proceeds from sale of common stock 28,446 1,003
Net proceeds from the exercise of warrants 18  
Purchase of common stock   (1,012)
Net cash provided by (used in) financing activities 28,464 (9)
Impact on cash from foreign currency translation 1 (21)
NET INCREASE (DECREASE) IN CASH 23,373 (1,065)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 21,967 6,996
CASH AND CASH EQUIVALENTS AT END OF PERIOD 45,340 5,931
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:    
Cash paid for income taxes
Cash paid for interest expense
NONCASH INVESTING AND FINANCING ACTIVITIES:    
Capital contribution   $ 216
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Organization and Description of Business
3 Months Ended
Mar. 31, 2021
Accounting Policies [Abstract]  
ORGANIZATION AND DESCRIPTION OF BUSINESS

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS


INmune Bio, Inc. (the “Company” or “INmune Bio”) was organized in the State of Nevada on September 25, 2015, and is a clinical stage biotechnology pharmaceutical company focused on developing and commercializing its product candidates to treat diseases where the innate immune system is not functioning normally and contributing to the patient’s disease. INmune Bio has two product platforms. The DN-TNF product platform utilizes dominant-negative technology to selectively neutralize soluble TNF, a key driver of innate immune dysfunction and mechanistic target of many diseases. DN-TNF is currently being developed for COVID-19 complications (Quellor), cancer (INB03), Alzheimer’s and treatment resistant depression (XPro595), and NASH (LIVNate). The Natural Killer Cell Priming Platform includes INKmune aimed at priming the patient’s NK cells to eliminate minimal residual disease in patients with cancer. INmune Bio’s product platforms utilize a precision medicine approach for the treatment of a wide variety of hematologic malignancies, solid tumors and chronic inflammation.


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Liquidity
3 Months Ended
Mar. 31, 2021
Liquidity Disclosure [Abstract]  
LIQUIDITY

NOTE 2 – LIQUIDITY


As of March 31, 2021, the Company had an accumulated deficit of approximately $37.9 million and experienced losses since its inception. Losses have principally occurred as a result of non-cash stock-based compensation expense and the substantial resources required for research and development of the Company’s products, which included the general and administrative expenses associated with its organization and product development as well as the lack of sources of revenues until such time as the Company’s products are commercialized.


To meet its current and future obligations the Company has taken the following steps to capitalize the business and achieve its business plan:


  During March 2021, the Company entered into a sales agreement with BTIG, LLC (“BTIG”), as sales agent, to establish an At-The-Market (“ATM”) offering program of up to $45 million of common stock (the “2021 ATM”), subject to certain limitations on the amount of common stock that may be offered and sold by the Company set forth in the sales agreement. The Company is required to pay BTIG a commission of 3% of the gross proceeds from the sale of shares. There have been no sales of the Company’s common stock pursuant to the 2021 ATM.

 

During July 2020, the Company completed an underwritten public offering in which it sold 2,500,000 shares of common stock at a public offering price of $10.00 per share. Aggregate net proceeds from the underwritten public offering were approximately $23.1 million, net of $1.9 million in underwriting discounts and commissions and offering expenses. 


 

During April 2020, the Company entered into a sales agreement with BTIG, as sales agent, to establish an ATM offering program to sell up to $10.0 million of the Company’s common stock (the “2020 ATM”). In August 2020, the sales agreement was amended whereby the aggregate offering was increased from $10.0 million to $30.0 million. From April 2020 through December 2020, the Company sold 178,600 shares of common stock at an average price of $5.45 per share for net proceeds of approximately $0.8 million. During the three months ended March 31, 2021, the Company sold in aggregate 1,439,480 shares on common stock at an average price of $20.17 per share for net proceeds of $28.4 million. As of March 31, 2021, sales of our common stock pursuant to the 2020 ATM have been completed. 


Although it is difficult to predict the Company’s liquidity requirements, as of March 31, 2021, and based upon the Company’s current operating plan, the Company believes that it will have sufficient cash to meet its projected operating requirements for at least the next 12 months following the filing date of this Quarterly Report on Form 10-Q based on the balance of cash available as of March 31, 2021. The Company anticipates that it will continue to incur net losses for the foreseeable future as it continues the development of its clinical drug candidates and preclinical programs and incurs additional costs associated with being a public company.


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Summary of Significant Accounting Policies
3 Months Ended
Mar. 31, 2021
Accounting Policies [Abstract]  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Basis of Presentation


The accompanying financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of INmune Bio, Inc. and its subsidiaries. Intercompany transactions and balances have been eliminated.


In the opinion of management, the interim financial information includes all normal recurring adjustments necessary for a fair statement of the results for the interim periods. These unaudited consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 4, 2021.


Risks and Uncertainties


The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company’s business is highly uncertain and difficult to predict. Also, economies worldwide have also been negatively impacted by the COVID-19 pandemic, however policymakers around the globe have responded with fiscal policy actions to support the healthcare industry and economy as a whole. The magnitude and overall effectiveness of these actions remain uncertain.


In addition, the Company’s clinical trials have been affected by and may continue to be affected by the COVID-19 pandemic. Clinical site initiation and patient enrollment have and may continue to be delayed due to prioritization of hospital resources toward the COVID-19 pandemic. Some patients have not and others may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services. Similarly, the ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may adversely impact the Company’s clinical trial operations.


The severity of the impact of the COVID-19 pandemic on the Company’s business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company’s service providers, suppliers, contract research organizations (“CROs”) and the Company’s clinical trials, all of which are uncertain and cannot be predicted. As of the date of issuance of Company’s financial statements, the extent to which the COVID-19 pandemic may materially impact the Company’s financial condition, liquidity or results of operations is uncertain.


Use of Estimates


Preparing financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management’s estimates and assumptions.


Cash and Cash Equivalents


The Company considers all short-term, highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. The Company maintains cash balances that may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation limits. The Company maintains its cash deposits with major financial institutions.


Research and Development Tax Incentive Receivable


The Company, through its wholly-owned subsidiary in Australia (“AUS”), participates in the Australian research and development tax incentive program, such that a percentage of our qualifying research and development expenditures are reimbursed by the Australian government, and such incentives are reflected as a reduction of research and development expense. The Australian research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured. At each period end, management estimates the reimbursement available to the Company based on available information at the time.


The Company, through its wholly-owned subsidiary in the United Kingdom (“UK”), participates in the research and development program provided by the United Kingdom tax relief program, such that a percentage of our qualifying research and development expenditures are reimbursed by the United Kingdom government, and such incentives are reflected as a reduction of research and development expense. The United Kingdom research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured. At each period end, management estimates the reimbursement available to the Company based on available information at the time.


Intangible Assets


The Company capitalizes costs incurred in connection with in-process research and development purchased from others if the asset has alternative uses and such uses are not restricted under applicable license agreements; patent applications (principally legal fees), patent purchases, and trademarks related to its cell line as intangible assets. Acquired in-process research and development costs that do not have alternative uses are expensed as incurred. Amortization is initiated for acquired in-process research and development intangible assets when their useful lives have been determined. These acquired in-process research and development intangible assets are tested at least annually or when a triggering event occurs that could indicate a potential impairment.


Basic and Diluted Loss per Share


Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.


At March 31, 2021 and 2020, the Company had potentially issuable shares as follows:


    March 31,  
  2021     2020  
Stock options     3,655,549       3,417,000  
Warrants     2,126,047       1,658,199  
Total     5,781,596       5,075,199  

 Revenue Recognition


The Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC Topic 606: (1) identify contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenues when (or as) the Company satisfies the performance obligations. The Company records the expenses related to revenue in research and development expense, in the periods such expenses were incurred.


The Company records deferred revenues when cash payments are received or due in advance of performance, including amounts which are refundable.


Stock-Based Compensation


The Company utilizes the Black-Scholes option pricing model to estimate the fair value of stock option awards at the date of grant, which requires the input of highly subjective assumptions, including expected volatility and expected life. Changes in these inputs and assumptions can materially affect the measure of estimated fair value of our share-based compensation. These assumptions are subjective and generally require significant analysis and judgment to develop. When estimating fair value, some of the assumptions will be based on, or determined from, external data and other assumptions may be derived from our historical experience with stock-based payment arrangements. The appropriate weight to place on historical experience is a matter of judgment, based on relevant facts and circumstances. The Company accounts for forfeitures of stock options as they occur.


Research and Development


Research and development (“R&D”) costs are expensed as incurred. Research and development credits are recorded by the Company as a reduction of research and development costs. Major components of research and development costs include cash compensation, stock-based compensation, costs of preclinical studies, clinical trials and related clinical manufacturing, costs of drug development, costs of materials and supplies, facilities cost, overhead costs, regulatory and compliance costs, and fees paid to consultants and other entities that conduct certain research and development activities on the Company’s behalf.


The Company recognizes grants as contra research and development expense in the consolidated statement of operations on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate.


Income Taxes


The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.


Foreign Currency Translation


The Company’s financial statements are presented in the U.S. dollar (“$”), which is the Company’s reporting currency, while its functional currencies are the U.S. Dollar for its U.S. based operations, British Pound (“GBP”) for its United Kingdom-based operations and Australian Dollars (“AUD”) for its Australian-based operations. All assets and liabilities are translated at the exchange rate on the balance sheet date, stockholders’ equity is translated at historical rates and statement of operations items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income. Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statement of operations and comprehensive income (loss).


Recently Adopted Accounting Pronouncements


There were various accounting standards and interpretations issued recently, none of which are expected to a have a material impact on the Company´s consolidated financial position, operations or cash flows.


Subsequent Events


The Company evaluates events that have occurred after the balance sheet date of March 31, 2021, through the date which the financial statements are issued.


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Research and Development Activity
3 Months Ended
Mar. 31, 2021
Research and Development [Abstract]  
RESEARCH AND DEVELOPMENT ACTIVITY

NOTE 4 – RESEARCH AND DEVELOPMENT ACTIVITY


According to UK tax law, the Company is allowed an R&D tax credit that reduces a company’s tax bill in the UK for expenses incurred in R&D subject to certain requirements. The Company’s UK subsidiary submits R&D tax credit requests annually for research and development expenses incurred. At March 31, 2021 and December 31, 2020, the Company recorded a research and development tax credit receivable in the amount of $1,104,000 and $833,000, respectively. During the three months ended March 31, 2021 and 2020, the Company received $0 of R&D tax credit reimbursements from the UK.


According to AUS tax law, the Company is allowed an R&D tax credit that reduces a company’s tax bill in AUS for expenses incurred in R&D subject to certain requirements. The Company’s Australian subsidiary submits R&D tax credit requests annually for research and development expenses incurred. At March 31, 2021 and December 31, 2020, the Company recorded a research and development tax credit receivable of $1,086,000 and $853,000, respectively, for R&D expenses incurred in Australia. During the three months ended March 31, 2021 and 2020, the Company received $0 R&D tax credit reimbursements from Australia.


Xencor, Inc. License Agreement


On October 3, 2017, the Company entered into a license agreement (“Xencor License Agreement”) with Xencor, Inc. (“Xencor”), which has discovered and developed a proprietary biological molecule that inhibits soluble tumor necrosis factor. Pursuant to the license agreement, Xencor granted the Company an exclusive worldwide, royalty-bearing license in licensed patent rights, licensed know-how and licensed materials (as defined in the license agreement) to make, develop, use, sell and import any pharmaceutical product that comprises, contains, or incorporates Xencor’s proprietary protein known as “XPro1595” that inhibits soluble tumor necrosis factor (or all modifications, formulations and variants of the licensed protein that specifically bind soluble tumor necrosis factor) alone or in combination with one or more active ingredients, in any dosage or formulation (“Licensed Products”). The Company believes the protein has numerous medical applications. Such additional alternative applications of the technology are available under the Xencor License Agreement. In connection with the Xencor License Agreement, the Company paid Xencor a one-time non-creditable and non-refundable fee of $100,000 and issued Xencor 1,585,000 shares of the Company’s common stock with a fair value of $12,221,000. In addition, the Company issued Xencor fully vested warrants with a fair value of $4,193,000 to purchase an additional number of shares of common stock equal to 10% of the fully diluted company shares immediately following such purchase. The aggregate purchase price for the full exercise of the option is $10,000,000 which purchase price shall be pro-rated for any partial exercise of the warrant. In August 2018, the Company entered into a First Amendment to Stock Issuance Agreement. Pursuant to the amendment, the purchase price for the additional shares may only be paid by cash. The warrants expire on October 3, 2023.


The Company recorded $16,514,000 for the acquisition of intangible assets for the in-process research and development as the fair value of the cash, stock and warrants on the date of the License Agreement acquisition in accordance with Accounting Standards Codification 730 – Research and Development. The Company has the license rights to pursue alternative applications of the technology as part of its future development plans.


The Company also agreed to pay Xencor a royalty on Net Sales of all Licensed Products in a given calendar year, which are payable on a country-by- country and licensed product by licensed product basis until the date that is the later of (a) the expiration of the last to expire valid claim covering such Licensed Product in such country or (b) ten years following the first sale to a third party of the licensed product in such country.


Under the Xencor License Agreement, the Company also agreed to pay Xencor a percentage of any sublicensing revenue that it receives.


INKmune License Agreement


On October 29, 2015, the Company entered into an exclusive license agreement (the “INKmune License Agreement”) with Immune Ventures, LLC (“Immune Ventures”). Pursuant to the INKmune License Agreement, the Company was granted exclusive worldwide rights to the patents, including rights to incorporate any improvements or additions to the patents that may be developed in the future. In consideration for the patent rights, the Company agreed to the following milestone payments (of which none have been met as of March 31, 2021):


(in thousands)


Each Phase I initiation  $25 
Each Phase II initiation  $250 
Each Phase III initiation  $350 
Each NDA/EMA filing  $1,000 
Each NDA/EMA awarded  $9,000 

In addition, the Company agreed to pay Immune Ventures a royalty of 1% of net sales during the life of each patent granted to the Company. RJ Tesi, the Company’s President and a member of our Board of Directors, David Moss, its Chief Financial Officer and Treasurer and Mark Lowdell, its Chief Scientific Officer, are the owners of Immune Ventures. As of March 31, 2021, no sales had occurred under this license.


The term of the agreement began on October 29, 2015 and, if not terminated sooner pursuant to the agreement, ends on a country-by-country basis on the date of the expiration of the last to expire patent rights where patent rights exists. Upon the termination of the agreement, we shall have a fully paid up, perpetual, royalty-free license without further obligation to Immune Ventures. The agreement can be terminated by Immune Ventures if, after 60 days from the Company’s receipt of notice that the Company has not made a payment under the agreement, and the Company still does not make this payment. On July 20, 2018, the parties amended the agreement under which the Company was required achieve milestones pursuant to the agreement. On October 30, 2020, the parties executed an additional amendment to the agreement under which the Company is required to achieve the following milestones:


Initiation of Phase 1 clinical or equivalent trials by October 29, 2021


Initiation of Phase II clinical trials or equivalent by October 29, 2023


Initiation of Phase III clinical trials or equivalent by October 29, 2025


Filing of NDA or equivalent by October 29, 2026 or equivalent


If the Company doesn’t achieve the above milestones, it is required to negotiate in good faith with Immune Ventures to determine how it can either remedy the failure or achieve an alternate development. If the Company fails to make any required efforts, or if the efforts do not remedy the situation within 60 days of written notice by Immune Ventures, then Immune Ventures may provide notice to terminate the license or convert it to a non-exclusive license.


University of Pittsburg License Agreement


On October 3, 2017, the Company entered into an Assignment and Assumption Agreement with Immune Ventures related to intellectual property licensed from the University of Pittsburgh. Pursuant to the Assignment and Assumption Agreement (“Assignment Agreement”), Immune Ventures assigned all of its rights, obligations and liabilities under an Exclusive License Agreement between the University of Pittsburgh – Of the Commonwealth System of Higher Education (“Licensor”) and Immune Ventures to INmune Bio (“Licensee”), (the “PITT Agreement”).


Consideration under the PITT Agreement includes: (i) annual maintenance fees, (ii) royalty payments based on the sale of products making use of the licensed technology, and (iii) milestone payments.


Annual maintenance fees under the PITT Agreement include the following:


(in thousands)


June 26 of each year 2021-2022  $5 
June 26 of each year 2023-2024  $10 
June 26 of each year 2025 until first commercial sale  $25 

Upon first commercial sale of a product making use of the licensed technology under the PITT Agreement, the Licensee is required to pay royalties equal to 2.5% of Net Sales each calendar quarter.


Moreover, under the PITT Agreement the Licensee is required to make milestone payments as follows:


(in thousands)


Each Phase I initiation

  $50 
Each Phase III initiation  $500 
First commercial sale of product making use of licensed technology  $1,250 

The Company had no amounts owed pursuant to the PITT Agreement as of March 31, 2021.


The PITT Agreement expires upon the earlier of: (i) expiration of the last claim of the Patent Rights (as defined in the PITT Agreement) forming the subject matter of the PITT Agreement; or (ii) the date that is 20 years from the effective date of the agreement (June 26, 2037).


The Licensee may terminate the PITT Agreement upon 3 months prior written notice provided all payments under the license are current. The Licensor may terminate the PITT Agreement upon written notice if: (i) Licensee defaults as to performance of material obligations which have not been cured within 60 days after receiving written notice; or (ii) Licensee ceases to carry out its business, becomes bankrupt or insolvent, applies for or consents to the appointment of a trustee, receiver or liquidator of its assets or seeks relief under any law for the aid of debtors.


University College London License Agreement – MSC


On July 19, 2019, the Company entered into license agreement with UCL Business PLC (“UCLB”) with a ten (10) year term. Pursuant to the license agreement, the Company acquired an exclusive license (and a right to sub-license) to the technology and know-how relating to an isolation and commercial scale expansion methodology of GMP grade human umbilical cord mesenchymal stem/stromal cells (“MSC”).


In exchange for the license agreement, the Company paid UCLB an initial license fee of $10,000 and shall pay annual licensing fees of approximately $13,000 per year for the remaining term of the agreement. The Company will pay UCLB a royalty of 3-3.5%% of the net sales value (as defined in the agreement) of all licensed products sold or used by the Company. In the event the Company sub-licenses the technology and know-how, the Company will pay UCLB a royalty of twelve (12) percent of consideration (cash or non-cash) received by the Company in relation to the development or sub-licensing of any of the technology and know-how.


XML 22 R11.htm IDEA: XBRL DOCUMENT v3.21.1
Lease
3 Months Ended
Mar. 31, 2021
Leases [Abstract]  
LEASE

NOTE 5 – LEASE 


In May 2019, the Company signed a sublease agreement with a related party for office space in La Jolla, California, which serves as the new headquarters of the Company. The lease has a 61-month term, which corresponds to the lease term of the lessor. The lessor is CTI Clinical Trial & Consulting Services (“CTI”). CTI is majority-owned by a member of the Company’s Board of Directors. The lessor may extend its lease for an additional 5 years, and, if it does, the Company may also extend its sublease for 5 years. The Company did not include the option to extend in the calculation of the lease liabilities as such extension is not reasonably certain to occur. Variable lease costs for the Company’s lease consists of operating expenses for the spaces. Below is a summary of the Company’s right-of-use assets and liabilities as of March 31, 2021:


(in thousands, except years and rate)  


Right-of-use asset – related party  $147 
      
Operating lease, current liability – related party  $23 
Long-term operating lease liability – related party   116 
Total lease liability  $139 
      
Weighted-average remaining lease term   3.2 years 
      
Weighted-average discount rate   10.00%

During the three months ended March 31, 2021, the Company recognized $13,000 in operating lease expense, which is included in general and administrative expenses in the Company’s consolidated statement of operations.


XML 23 R12.htm IDEA: XBRL DOCUMENT v3.21.1
Related Party Transactions
3 Months Ended
Mar. 31, 2021
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 6 – RELATED PARTY TRANSACTIONS


UCL


At March 31, 2021 and December 31, 2020, the Company owed UCL Consultants Limited (“UCL”) $10,000 and $34,000, respectively, in connection with medical research performed on behalf of the Company. At March 31, 2021 and December 31, 2020, the Company recorded prepaid expenses of $15,000 and $0, respectively, for medical research to be performed on behalf of the Company by UCL. During the three months ending March 31, 2021 and 2020, the Company paid UCL $88,000 and $0, respectively, for medical research performed on behalf of the Company. UCL is a wholly owned subsidiary of the University of London. The Company’s Chief Scientific and Manufacturing Officer is a professor at the University of London.


CTI


During the three months ending March 31, 2021 and 2020, the Company paid CTI $0 and $79,000, respectively, for medical research performed on behalf of the Company. During the three months ended March 31, 2020, the Company recorded a capital contribution of $216,000 for the forgiveness of certain accounts payable due to CTI. The Company had no amounts payable to CTI as of March 31, 2021 and December 31, 2020.


XML 24 R13.htm IDEA: XBRL DOCUMENT v3.21.1
Stockholders' Equity
3 Months Ended
Mar. 31, 2021
Stockholders' Equity Note [Abstract]  
STOCKHOLDERS’ EQUITY

NOTE 7 – STOCKHOLDERS’ EQUITY


Lincoln Park


On May 15, 2019, the Company entered into both a securities purchase agreement and registration rights agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”). Under the terms and subject to the conditions of the securities purchase agreement, the Company had the right to sell to Lincoln Park, and Lincoln Park was obligated to purchase, up to $20.0 million in shares of the Company’s common stock, subject to certain limitations, over the 24-month period that commenced on May 15, 2019. During the three months ended March 31, 2020, the Company issued 196,000 shares of its common stock to Lincoln Park for approximately $1.0 million of cash.


During April 2021, the Company terminated the securities purchase agreement with Lincoln Park.


Purchase and retirement of common stock


During January 2020, the Company purchased and cancelled 220,000 shares of its common stock from a shareholder in exchange for approximately $1.0 million of cash.


Common Stock – At the Market Offering


During the three months ended March 31, 2021, the Company sold 1,439,480 shares of its common stock for aggregate gross proceeds of approximately $29.0 million (net proceeds of approximately $28.4 million) under the 2020 ATM program. The Company paid BTIG commissions and fees of $582,000 in connection with the sale of these shares.


Stock options


During January 2021, the Company granted certain employees and directors options to purchase 198,549 shares of its common stock pursuant to the 2017 and 2019 Incentive Stock Plans. The stock options have a fair value of approximately $4.2 million that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 0.78% based on the applicable US Treasury bill rate (2) expected life of 6.0 - 6.25 years, (3) expected volatility of approximately 113% - 114% based on the trading history of similar companies, and (4) zero expected dividends.


The following table summarizes stock option activity during the three months ended March 31, 2021:


(in thousands, except share and per share amounts) 

Number of

Shares

  

Weighted- average

Exercise

Price

  

Weighted-average

Remaining

Contractual

Term (years)

  

Aggregate

Intrinsic

Value

 
Outstanding at January 1, 2021   3,457,000   $5.82    8.05   $39,405 
Options granted   198,549   $24.82    -    - 
Options exercised   -   $-    -    - 
Options cancelled   -   $-    -    - 
Outstanding at March 31, 2021   3,655,549   $6.85    7.91   $20,945 
Exercisable at March 31, 2021   2,415,889   $6.54    7.42   $12,906 

During the three months ended March 31, 2021 and 2020, the Company recognized stock-based compensation expense of approximately $0.9 million and $0.7 million, respectively, related to the vesting of stock options. As of March 31, 2021, there was approximately $7.3 million of total unrecognized compensation cost related to non-vested stock options which is expected to be recognized over a weighted-average period of 2.72 years.


Warrants


In connection with the Company’s initial public offering in February 2019, the Company issued warrants to the placement agents to purchase the Company’s common stock at an exercise price of $9.60 per common share, which warrants are exercisable until December 19, 2023. At March 31, 2021, 34,835 of these warrants are outstanding and the intrinsic value is $79,000.


In October 2017, in connection with the Xencor License Agreement, the Company issued fully vested warrants to purchase an additional number of shares of common stock equal to 10% of the fully diluted Company shares immediately following such purchase. See Note 4. These warrants had an intrinsic value of approximately $14.6 million as of March 31, 2021.


On June 30, 2017, the Company issued fully vested warrants to purchase 31,667 shares of the Company’s common stock to a third party in conjunction with the common stock sold for cash. The warrants have a $1.50 exercise price and expire on June 30, 2022. During the three months ended March 31, 2021, 11,875 of these warrants were exercised for cash proceeds of $18,000. At March 31, 2021, 19,792 of these warrants are outstanding, with an intrinsic value of $205,000.


Stock-based Compensation by Class of Expense


The following summarizes the components of stock-based compensation expense in the consolidated statements of operations for the three months ended March 31, 2021 and 2020 respectively:


(in thousands)  Three
Months
Ended
March 31,
2021
   Three
Months
Ended
March 31,
2020
 
Research and development  $186   $139 
General and administrative   713    543 
Total  $899   $682 

Shareholder Rights Agreement


On December 30, 2020, the Board of Directors (the “Board”) of the Company approved and adopted a Rights Agreement, dated as of December 30, 2020, by and between the Company and VStock Transfer, LLC, as rights agent, pursuant to which the Board declared a dividend of one preferred share purchase right (each, a “Right”) for each outstanding share of the Company’s common stock held by stockholders as of the close of business on January 11, 2021. When exercisable, each right initially would represent the right to purchase from the Company one one-thousandth of a share of a newly designated series of preferred stock, Series A Junior Participating Preferred Stock, par value $0.001 per share, of the Company, at an exercise price of $300.00 per one one-thousandth of a Series A Junior Participating Preferred Share, subject to adjustment. Subject to various exceptions, the Rights become exercisable in the event any person (excluding certain exempted or grandfathered persons) becomes the beneficial owner of twenty percent or more of the Company’s common stock without the approval of the Board. The Rights are scheduled to expire on December 30, 2021.


XML 25 R14.htm IDEA: XBRL DOCUMENT v3.21.1
Collaborative Agreements
3 Months Ended
Mar. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
COLLABORATIVE AGREEMENTS

NOTE 8 – COLLABORATIVE AGREEMENTS


During 2020, the Company was awarded a $0.5 million grant from the Amyotrophic Lateral Sclerosis (“ALS”) Association to fund a study of the efficacy of XPro1595 to reverse ALS in vitro and to fund a study of the efficacy of XPro1595 to protect against ALS model phenotypes in vivo. During the three months ended March 31, 2021 and 2020, the Company received $0.1 million and $0.3 million, respectively, of cash proceeds pursuant to this grant which the Company recorded as deferred liabilities. The Company offsets costs incurred related to this research against the grants. As of March 31, 2021 and December 31, 2020, the Company recorded approximately $0.2 million and $0.1 million, respectively, as deferred liabilities in the consolidated balance sheet related to the ALS grant.


During September 2020, the Company was awarded a grant of up to $2.9 million from the National Institutes of Health (“NIH”). The grant will support a Phase 2 study of XPro1595 in patients with treatment resistant depression. As of March 31, 2021, the Company has not received any proceeds pursuant to this grant. 


XML 26 R15.htm IDEA: XBRL DOCUMENT v3.21.1
Accounting Policies, by Policy (Policies)
3 Months Ended
Mar. 31, 2021
Accounting Policies [Abstract]  
Basis of Presentation

Basis of Presentation


The accompanying financial statements are presented in U.S. dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”), and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The consolidated financial statements include the accounts of INmune Bio, Inc. and its subsidiaries. Intercompany transactions and balances have been eliminated.


In the opinion of management, the interim financial information includes all normal recurring adjustments necessary for a fair statement of the results for the interim periods. These unaudited consolidated interim financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 4, 2021

Risks and Uncertainties

Risks and Uncertainties


The Company is subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on the Company’s business is highly uncertain and difficult to predict. Also, economies worldwide have also been negatively impacted by the COVID-19 pandemic, however policymakers around the globe have responded with fiscal policy actions to support the healthcare industry and economy as a whole. The magnitude and overall effectiveness of these actions remain uncertain.


In addition, the Company’s clinical trials have been affected by and may continue to be affected by the COVID-19 pandemic. Clinical site initiation and patient enrollment have and may continue to be delayed due to prioritization of hospital resources toward the COVID-19 pandemic. Some patients have not and others may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services. Similarly, the ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may adversely impact the Company’s clinical trial operations.


The severity of the impact of the COVID-19 pandemic on the Company’s business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic and the extent and severity of the impact on the Company’s service providers, suppliers, contract research organizations (“CROs”) and the Company’s clinical trials, all of which are uncertain and cannot be predicted. As of the date of issuance of Company’s financial statements, the extent to which the COVID-19 pandemic may materially impact the Company’s financial condition, liquidity or results of operations is uncertain.

Use of Estimates

Use of Estimates


Preparing financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management’s estimates and assumptions.

Cash and Cash Equivalents

Cash and Cash Equivalents


The Company considers all short-term, highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents. The Company maintains cash balances that may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation limits. The Company maintains its cash deposits with major financial institutions.

Research and Development Tax Incentive Receivable

Research and Development Tax Incentive Receivable


The Company, through its wholly-owned subsidiary in Australia (“AUS”), participates in the Australian research and development tax incentive program, such that a percentage of our qualifying research and development expenditures are reimbursed by the Australian government, and such incentives are reflected as a reduction of research and development expense. The Australian research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured. At each period end, management estimates the reimbursement available to the Company based on available information at the time.


The Company, through its wholly-owned subsidiary in the United Kingdom (“UK”), participates in the research and development program provided by the United Kingdom tax relief program, such that a percentage of our qualifying research and development expenditures are reimbursed by the United Kingdom government, and such incentives are reflected as a reduction of research and development expense. The United Kingdom research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured. At each period end, management estimates the reimbursement available to the Company based on available information at the time.

Intangible Assets

Intangible Assets


The Company capitalizes costs incurred in connection with in-process research and development purchased from others if the asset has alternative uses and such uses are not restricted under applicable license agreements; patent applications (principally legal fees), patent purchases, and trademarks related to its cell line as intangible assets. Acquired in-process research and development costs that do not have alternative uses are expensed as incurred. Amortization is initiated for acquired in-process research and development intangible assets when their useful lives have been determined. These acquired in-process research and development intangible assets are tested at least annually or when a triggering event occurs that could indicate a potential impairment.

Basic and Diluted Loss per Share

Basic and Diluted Loss per Share


Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common shares during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.


At March 31, 2021 and 2020, the Company had potentially issuable shares as follows:


    March 31,  
  2021     2020  
Stock options     3,655,549       3,417,000  
Warrants     2,126,047       1,658,199  
Total     5,781,596       5,075,199  
Revenue Recognition

Revenue Recognition


The Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for those goods or services. The Company recognizes revenue following the five-step model prescribed under ASC Topic 606: (1) identify contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenues when (or as) the Company satisfies the performance obligations. The Company records the expenses related to revenue in research and development expense, in the periods such expenses were incurred.


The Company records deferred revenues when cash payments are received or due in advance of performance, including amounts which are refundable.

Stock-Based Compensation

Stock-Based Compensation


The Company utilizes the Black-Scholes option pricing model to estimate the fair value of stock option awards at the date of grant, which requires the input of highly subjective assumptions, including expected volatility and expected life. Changes in these inputs and assumptions can materially affect the measure of estimated fair value of our share-based compensation. These assumptions are subjective and generally require significant analysis and judgment to develop. When estimating fair value, some of the assumptions will be based on, or determined from, external data and other assumptions may be derived from our historical experience with stock-based payment arrangements. The appropriate weight to place on historical experience is a matter of judgment, based on relevant facts and circumstances. The Company accounts for forfeitures of stock options as they occur.

Research and Development

Research and Development


Research and development (“R&D”) costs are expensed as incurred. Research and development credits are recorded by the Company as a reduction of research and development costs. Major components of research and development costs include cash compensation, stock-based compensation, costs of preclinical studies, clinical trials and related clinical manufacturing, costs of drug development, costs of materials and supplies, facilities cost, overhead costs, regulatory and compliance costs, and fees paid to consultants and other entities that conduct certain research and development activities on the Company’s behalf.


The Company recognizes grants as contra research and development expense in the consolidated statement of operations on a systematic basis over the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate.

Income Taxes

Income Taxes


The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for the estimated tax consequences attributable to differences between the financial statement carrying values and their respective income tax basis (temporary differences). The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Foreign Currency Translation

Foreign Currency Translation


The Company’s financial statements are presented in the U.S. dollar (“$”), which is the Company’s reporting currency, while its functional currencies are the U.S. Dollar for its U.S. based operations, British Pound (“GBP”) for its United Kingdom-based operations and Australian Dollars (“AUD”) for its Australian-based operations. All assets and liabilities are translated at the exchange rate on the balance sheet date, stockholders’ equity is translated at historical rates and statement of operations items are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income. Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statement of operations and comprehensive income (loss).

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements


There were various accounting standards and interpretations issued recently, none of which are expected to a have a material impact on the Company´s consolidated financial position, operations or cash flows.

Subsequent Events

Subsequent Events


The Company evaluates events that have occurred after the balance sheet date of March 31, 2021, through the date which the financial statements are issued.

XML 27 R16.htm IDEA: XBRL DOCUMENT v3.21.1
Summary of Significant Accounting Policies (Tables)
3 Months Ended
Mar. 31, 2021
Accounting Policies [Abstract]  
Schedule of potentially issuable shares
    March 31,  
  2021     2020  
Stock options     3,655,549       3,417,000  
Warrants     2,126,047       1,658,199  
Total     5,781,596       5,075,199  
XML 28 R17.htm IDEA: XBRL DOCUMENT v3.21.1
Research and Development Activity (Tables)
3 Months Ended
Mar. 31, 2021
Research and Development [Abstract]  
Schedule of milestone payments in consideration for the patent rights
Each Phase I initiation  $25 
Each Phase II initiation  $250 
Each Phase III initiation  $350 
Each NDA/EMA filing  $1,000 
Each NDA/EMA awarded  $9,000 
Schedule of consideration of annual maintenance fees under the PITT agreement
June 26 of each year 2021-2022  $5 
June 26 of each year 2023-2024  $10 
June 26 of each year 2025 until first commercial sale  $25 
Schedule of licensee required to make milestone payments

Each Phase I initiation

  $50 
Each Phase III initiation  $500 
First commercial sale of product making use of licensed technology  $1,250 
XML 29 R18.htm IDEA: XBRL DOCUMENT v3.21.1
Lease (Tables)
3 Months Ended
Mar. 31, 2021
Leases [Abstract]  
Schedule of right-of-use assets and liabilities for operating lease
Right-of-use asset – related party  $147 
      
Operating lease, current liability – related party  $23 
Long-term operating lease liability – related party   116 
Total lease liability  $139 
      
Weighted-average remaining lease term   3.2 years 
      
Weighted-average discount rate   10.00%
XML 30 R19.htm IDEA: XBRL DOCUMENT v3.21.1
Stockholders' Equity (Tables)
3 Months Ended
Mar. 31, 2021
Stockholders' Equity Note [Abstract]  
Schedule of stock option activity
(in thousands, except share and per share amounts) 

Number of

Shares

  

Weighted- average

Exercise

Price

  

Weighted-average

Remaining

Contractual

Term (years)

  

Aggregate

Intrinsic

Value

 
Outstanding at January 1, 2021   3,457,000   $5.82    8.05   $39,405 
Options granted   198,549   $24.82    -    - 
Options exercised   -   $-    -    - 
Options cancelled   -   $-    -    - 
Outstanding at March 31, 2021   3,655,549   $6.85    7.91   $20,945 
Exercisable at March 31, 2021   2,415,889   $6.54    7.42   $12,906 
Schedule of stock-based compensation expense
(in thousands)  Three
Months
Ended
March 31,
2021
   Three
Months
Ended
March 31,
2020
 
Research and development  $186   $139 
General and administrative   713    543 
Total  $899   $682 
XML 31 R20.htm IDEA: XBRL DOCUMENT v3.21.1
Liquidity (Details) - USD ($)
$ / shares in Units, $ in Thousands
1 Months Ended 3 Months Ended 9 Months Ended
Jul. 31, 2020
Apr. 30, 2020
Mar. 31, 2021
Mar. 31, 2020
Dec. 31, 2020
Liquidity (Details) [Line Items]          
Accumulated deficit     $ (37,931)   $ (33,375)
Offering program common stock value     $ 45,000    
Gross proceeds from the sale of shares, percentage     3.00%    
Net proceeds from common stock     $ 28,446 $ 1,003  
Sales Agreement [Member]          
Liquidity (Details) [Line Items]          
Sale of common stock shares (in Shares)     1,439,480,000   178,600,000
Average price per share (in Dollars per share)     $ 20.17   $ 5.45
Net proceeds from common stock     $ 28,400   $ 800
Sales Agreement [Member] | Minimum [Member]          
Liquidity (Details) [Line Items]          
Aggregate offering price   $ 10,000      
Sales Agreement [Member] | Maximum [Member]          
Liquidity (Details) [Line Items]          
Aggregate offering price   30,000      
Initial Public Offering [Member]          
Liquidity (Details) [Line Items]          
Sale of common stock shares (in Shares) 2,500,000        
Public offering price, per share (in Dollars per share) $ 10.00        
Aggregate offering price $ 23,100        
Underwriting expenses $ 1,900        
ATM Offering Program [Member]          
Liquidity (Details) [Line Items]          
Offering program common stock value   $ 10,000      
XML 32 R21.htm IDEA: XBRL DOCUMENT v3.21.1
Summary of Significant Accounting Policies (Details) - Schedule of potentially issuable shares - shares
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Summary of Significant Accounting Policies (Details) - Schedule of potentially issuable shares [Line Items]    
Total 5,781,596 5,075,199
Stock options [Member]    
Summary of Significant Accounting Policies (Details) - Schedule of potentially issuable shares [Line Items]    
Total 3,655,549 3,417,000
Warrants [Member]    
Summary of Significant Accounting Policies (Details) - Schedule of potentially issuable shares [Line Items]    
Total 2,126,047 1,658,199
XML 33 R22.htm IDEA: XBRL DOCUMENT v3.21.1
Research and Development Activity (Details) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended
Oct. 03, 2017
Mar. 31, 2021
Dec. 31, 2020
Research and Development Activity (Details) [Line Items]      
Common stock issued (in Shares)   14,932,638 13,481,283
License fee, description   In exchange for the license agreement, the Company paid UCLB an initial license fee of $10,000 and shall pay annual licensing fees of approximately $13,000 per year for the remaining term of the agreement. The Company will pay UCLB a royalty of 3-3.5%% of the net sales value (as defined in the agreement) of all licensed products sold or used by the Company. In the event the Company sub-licenses the technology and know-how, the Company will pay UCLB a royalty of twelve (12) percent of consideration (cash or non-cash) received by the Company in relation to the development or sub-licensing of any of the technology and know-how.  
Research and Development Expense [Member] | UNITED KINGDOM      
Research and Development Activity (Details) [Line Items]      
Research and development tax credit receivable   $ 1,104,000 $ 833,000
Reimbursements of research and development tax credit   0  
Research and Development Expense [Member] | AUSTRALIA      
Research and Development Activity (Details) [Line Items]      
Research and development tax credit receivable   1,086,000 $ 853,000
Reimbursements of research and development tax credit   0  
Xencor, Inc. License Agreement [Member]      
Research and Development Activity (Details) [Line Items]      
Non refundable fee $ 100,000    
Common stock issued (in Shares) 1,585,000    
Common stock with fair value on discounted cash flow $ 12,221,000    
Fair value of warrants $ 4,193,000    
Common stock equal to fully diluted shares to purchase with fair value 10.00%    
Aggregate purchase price for exercise of option pro-rated for any partial exercise $ 10,000,000    
In-process research and development   $ 16,514,000  
Inkmune License Agreement [Member]      
Research and Development Activity (Details) [Line Items]      
Percentage of licensor royalty patent grant   1.00%  
University of Pittsburg License Agreement [Member]      
Research and Development Activity (Details) [Line Items]      
Percentage of net sales to pay royalties   2.50%  
Immune Ventures to Inmune Bio [Member]      
Research and Development Activity (Details) [Line Items]      
Agreement expiry period, description   The PITT Agreement expires upon the earlier of: (i) expiration of the last claim of the Patent Rights (as defined in the PITT Agreement) forming the subject matter of the PITT Agreement; or (ii) the date that is 20 years from the effective date of the agreement (June 26, 2037).  
XML 34 R23.htm IDEA: XBRL DOCUMENT v3.21.1
Research and Development Activity (Details) - Schedule of milestone payments in consideration for the patent rights - Inkmune License Agreement [Member] - Immune Ventures LLc [Member] - Patents [Member]
$ in Thousands
3 Months Ended
Mar. 31, 2021
USD ($)
Each Phase I initiation [Member]  
Research and Development Activity (Details) - Schedule of milestone payments in consideration for the patent rights [Line Items]  
Payment method of milestone payments $ 25
Each Phase II initiation [Member]  
Research and Development Activity (Details) - Schedule of milestone payments in consideration for the patent rights [Line Items]  
Payment method of milestone payments 250
Each Phase III initiation [Member]  
Research and Development Activity (Details) - Schedule of milestone payments in consideration for the patent rights [Line Items]  
Payment method of milestone payments 350
Each NDA/EMA filing [Member]  
Research and Development Activity (Details) - Schedule of milestone payments in consideration for the patent rights [Line Items]  
Payment method of milestone payments 1,000
Each NDA/EMA awarded [Member]  
Research and Development Activity (Details) - Schedule of milestone payments in consideration for the patent rights [Line Items]  
Payment method of milestone payments $ 9,000
XML 35 R24.htm IDEA: XBRL DOCUMENT v3.21.1
Research and Development Activity (Details) - Schedule of consideration of annual maintenance fees under the PITT agreement - University of Pittsburg License Agreement [Member] - Annual Maintenance Fees [Member]
$ in Thousands
Mar. 31, 2021
USD ($)
June 26 of each year 2021-2022 [Member]  
Research and Development Activity (Details) - Schedule of consideration of annual maintenance fees under the PITT agreement [Line Items]  
Annual maintenance fees until first commercial sale $ 5
June 26 of each year 2023-2024 [Member]  
Research and Development Activity (Details) - Schedule of consideration of annual maintenance fees under the PITT agreement [Line Items]  
Annual maintenance fees until first commercial sale 10
June 26 of each year 2025 until first commercial sale [Member]  
Research and Development Activity (Details) - Schedule of consideration of annual maintenance fees under the PITT agreement [Line Items]  
Annual maintenance fees until first commercial sale $ 25
XML 36 R25.htm IDEA: XBRL DOCUMENT v3.21.1
Research and Development Activity (Details) - Schedule of licensee required to make milestone payments - Immune Ventures to Inmune Bio [Member]
$ in Thousands
3 Months Ended
Mar. 31, 2021
USD ($)
Each Phase I initiation [Member]  
Research and Development Activity (Details) - Schedule of licensee required to make milestone payments [Line Items]  
Payment method of milestone payments $ 50
Each Phase III initiation [Member]  
Research and Development Activity (Details) - Schedule of licensee required to make milestone payments [Line Items]  
Payment method of milestone payments 500
First commercial sale of product making use of licensed technology [Member]  
Research and Development Activity (Details) - Schedule of licensee required to make milestone payments [Line Items]  
Payment method of milestone payments $ 1,250
XML 37 R26.htm IDEA: XBRL DOCUMENT v3.21.1
Lease (Details)
3 Months Ended
Mar. 31, 2021
USD ($)
Lease (Details) [Line Items]  
Lease term 61 months
Description of extend lease term The lessor may extend its lease for an additional 5 years, and, if it does, the Company may also extend its sublease for 5 years.
General and Administrative [Member]  
Lease (Details) [Line Items]  
General and administrative expenses $ 13,000
XML 38 R27.htm IDEA: XBRL DOCUMENT v3.21.1
Lease (Details) - Schedule of right-of-use assets and liabilities for operating lease - USD ($)
$ in Thousands
Mar. 31, 2021
Dec. 31, 2020
Schedule of right-of-use assets and liabilities for operating lease [Abstract]    
Right-of-use asset – related party $ 147 $ 156
Operating lease, current liability – related party 23 34
Long-term operating lease liability – related party 116 $ 126
Total lease liability $ 139  
Weighted-average remaining lease term 3 years 73 days  
Weighted-average discount rate 10.00%  
XML 39 R28.htm IDEA: XBRL DOCUMENT v3.21.1
Related Party Transactions (Details) - USD ($)
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Dec. 31, 2020
UCL Consultants Limited [Member]      
Related Party Transactions (Details) [Line Items]      
Amount of company owed to UCL Consultants Limited $ 10,000   $ 34,000
Prepaid expenses 15,000   $ 0
Payment for medical research performed expense 88,000 $ 0  
Clinical Trial and Consulting Services [Member]      
Related Party Transactions (Details) [Line Items]      
Payment for medical research performed expense 0 $ 79,000  
Capital contribution $ 216,000    
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.21.1
Stockholders' Equity (Details) - USD ($)
1 Months Ended 3 Months Ended
May 15, 2019
Jan. 31, 2021
Jan. 20, 2020
Oct. 31, 2017
Jun. 30, 2017
Mar. 31, 2021
Mar. 31, 2020
Jul. 31, 2020
Feb. 28, 2019
Stockholders' Equity (Details) [Line Items]                  
Issuance of value           $ 28,446,000      
Amount of sale           45,000,000      
Discount rate   0.78%              
Minimum volatility rate   113.00%              
Maximum volatility rate   114.00%              
Expected dividends   $ 0              
Stock-based compensation expense           0.9      
Unrecognized compensation cost           $ 7.3      
Weighted-average period           2 years 262 days      
Warrant, description           In connection with the Company’s initial public offering in February 2019, the Company issued warrants to the placement agents to purchase the Company’s common stock at an exercise price of $9.60 per common share, which warrants are exercisable until December 19, 2023.      
Warrants are outstanding (in Shares)           19,792      
Warrants intrinsic value           $ 205,000      
Percentage of common stock       10.00%          
Intrinsic value of warrant           $ 14.6      
Expiration date         Jun. 30, 2022        
Warrants exercised (in Shares)           11,875      
Cash proceeds           $ 18,000      
Shareholder rights agreement, description           the Company one one-thousandth of a share of a newly designated series of preferred stock, Series A Junior Participating Preferred Stock, par value $0.001 per share, of the Company, at an exercise price of $300.00 per one one-thousandth of a Series A Junior Participating Preferred Share, subject to adjustment. Subject to various exceptions, the Rights become exercisable in the event any person (excluding certain exempted or grandfathered persons) becomes the beneficial owner of twenty percent or more of the Company’s common stock without the approval of the Board.      
Minimum [Member]                  
Stockholders' Equity (Details) [Line Items]                  
Expected life   6 years              
Maximum [Member]                  
Stockholders' Equity (Details) [Line Items]                  
Expected life   6 years 3 months              
Common Stock [Member]                  
Stockholders' Equity (Details) [Line Items]                  
Issuance of shares (in Shares)           1,439,480      
Issuance of value           $ 2,000      
Number of common stock sold (in Shares)     220,000            
Amount of sale     $ 1.0            
Warrant [Member]                  
Stockholders' Equity (Details) [Line Items]                  
Number of common stock sold (in Shares)         31,667,000,000        
Exercise price (in Dollars per share)               $ 1.50 $ 9.60
Xencor License Agreement [Member]                  
Stockholders' Equity (Details) [Line Items]                  
Warrants are outstanding (in Shares)           34,835      
Warrants intrinsic value           $ 79,000      
Share-based Payment Arrangement, Option [Member]                  
Stockholders' Equity (Details) [Line Items]                  
Stock-based compensation expense             $ 0.7    
Lincoln Park [Member]                  
Stockholders' Equity (Details) [Line Items]                  
Description of sale of stock Under the terms and subject to the conditions of the securities purchase agreement, the Company had the right to sell to Lincoln Park, and Lincoln Park was obligated to purchase, up to $20.0 million in shares of the Company’s common stock, subject to certain limitations, over the 24-month period that commenced on May 15, 2019.                
Lincoln Park [Member] | Common Stock [Member]                  
Stockholders' Equity (Details) [Line Items]                  
Sale of value $ 20,000,000                
Issuance of shares (in Shares)             196,000    
Issuance of value             $ 1.0    
2020 ATM Program [Member]                  
Stockholders' Equity (Details) [Line Items]                  
Sale of value           $ 28.4      
Number of common stock sold (in Shares)           1,439,480      
Amount of sale           $ 29.0      
BTIG's Commission [Member]                  
Stockholders' Equity (Details) [Line Items]                  
Amount of sale           $ 582,000      
Initial public offering [Member]                  
Stockholders' Equity (Details) [Line Items]                  
Purchase of shares (in Shares)   198,549              
Aggregated fair value of stock options (in Shares)   4.2              
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.21.1
Stockholders' Equity (Details) - Schedule of stock option activity
$ / shares in Units, $ in Thousands
3 Months Ended
Mar. 31, 2021
USD ($)
$ / shares
shares
Schedule of stock option activity [Abstract]  
Number of shares, Outstanding | shares 3,457,000
Weighted- average Exercise Price, Outstanding | $ / shares $ 5.82
Weighted-average Remaining Contractual Term (years), Outstanding 8 years 18 days
Aggregate Intrinsic Value, Outstanding | $ $ 39,405
Number of shares, Options granted | shares 198,549
Weighted- average Exercise Price, Options granted | $ / shares $ 24.82
Number of shares, Options exercised | shares
Weighted- average Exercise Price, Options exercised | $ / shares
Number of shares, Options cancelled | shares
Weighted- average Exercise Price, Options cancelled | $ / shares
Number of shares, Outstanding | shares 3,655,549
Weighted- average Exercise Price, Outstanding | $ / shares $ 6.85
Weighted-average Remaining Contractual Term (years), Outstanding 7 years 332 days
Aggregate Intrinsic Value, Outstanding | $ $ 20,945
Number of shares, Exercisable at September 30, 2020 | shares 2,415,889
Weighted- average Exercise Price, Exercisable at September 30, 2020 | $ / shares $ 6.54
Weighted-average Remaining Contractual Term (years), Exercisable at September 30, 2020 7 years 153 days
Aggregate Intrinsic Value, Exercisable at September 30, 2020 | $ $ 12,906
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.21.1
Stockholders' Equity (Details) - Schedule of stock-based compensation expense - USD ($)
$ in Thousands
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Research and development [Member]    
Stockholders' Equity (Details) - Schedule of stock-based compensation expense [Line Items]    
Total $ 186 $ 139
General and administrative [Member]    
Stockholders' Equity (Details) - Schedule of stock-based compensation expense [Line Items]    
Total 713 543
Total [Member]    
Stockholders' Equity (Details) - Schedule of stock-based compensation expense [Line Items]    
Total $ 899 $ 682
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.21.1
Collaborative Agreements (Details) - USD ($)
$ in Thousands
1 Months Ended 3 Months Ended
Sep. 30, 2020
Mar. 31, 2020
Mar. 31, 2021
Dec. 31, 2020
Collaborative Agreements (Details) [Line Items]        
Grand award,description the Company was awarded a grant of up to $2.9 million from the National Institutes of Health (“NIH”). The grant will support a Phase 2 study of XPro1595 in patients with treatment resistant depression. As of March 31, 2021, the Company has not received any proceeds pursuant to this grant. During 2020, the Company was awarded a $0.5 million grant from the Amyotrophic Lateral Sclerosis (“ALS”) Association to fund a study of the efficacy of XPro1595 to reverse ALS in vitro and to fund a study of the efficacy of XPro1595 to protect against ALS model phenotypes in vivo.    
Grants received   $ 300 $ 100  
Deferred liabilities     591 $ 190
ALS [Member]        
Collaborative Agreements (Details) [Line Items]        
Deferred liabilities     $ 200 $ 100
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