What changed in this filing

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Item 1. Financial Statements

2021-11-03 compared with 2021-08-04 · 209 added, 180 removed, 536 unchanged (42% of the section changed)

1 unchanged sentence

INMUNE BIO, INC.

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

September 30,

CURRENT ASSETS

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INMUNE BIO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF

OPERATIONS AND COMPREHENSIVE LOSS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(In thousands, except share and per share amounts)

For the Three

September 30,

OPERATING EXPENSES

7 unchanged sentences

COMPREHENSIVE LOSS

Other comprehensive income (loss) - foreign currency translation

Other comprehensive loss - foreign currency translation

Total comprehensive loss

2 unchanged sentences

INMUNE BIO, INC.

CONDENSED CONSOLIDATED STATEMENT OF

CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2021

CONDENSED CONSOLIDATED STATEMENT OF CHANGES

IN STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021

(In thousands, except share amounts)

1 unchanged sentence

Stockholders’

Income (Loss)

Balance as of December 31, 2020

9 unchanged sentences

Balance as of June 30, 2021

Issuance of common stock for cash

Cashless exercise of warrants

Exercise of stock options

Stock-based compensation

Loss on foreign currency translation

Balance as of September 30, 2021

The accompanying

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

CONDENSED CONSOLIDATED STATEMENT OF

CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2020

CONDENSED CONSOLIDATED STATEMENT OF CHANGES

IN STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

(In thousands, except share amounts)

1 unchanged sentence

Stockholders’

Income (Loss)

Balance as of December 31, 2019

9 unchanged sentences

Balance at June 30, 2020

Issuance of common stock for cash, net

Cashless exercise of warrants

Stock-based compensation

Loss on foreign currency translation

Balance as of September 30, 2020

The accompanying notes are an integral part of

1 unchanged sentence

INMUNE BIO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

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CASH FLOWS FROM INVESTING ACTIVITIES:

paid to Xencor to settle warrant for acquired research and development intangible assets

Cash paid to Xencor to settle warrant for acquired research and development intangible assets

Net cash used in investing activities

2 unchanged sentences

Net proceeds from sale of common stock

Net proceeds from exercise of stock options

Net proceeds from the exercise of warrants

2 unchanged sentences

Impact on cash from foreign currency translation

NET INCREASE (DECREASE) IN CASH

NET INCREASE IN CASH

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

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INMUNE BIO, INC.

NOTES TO THE UNAUDITED CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND

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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.

DN-TNF is currently being developed for Alzheimer’s and treatment resistant depression (XPro595) and cancer (INB03).

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 June 30, 2021, the Company had an accumulated

As of September 30, 2021, the Company had an accumulated

deficit of approximately $ 54.0 million and experienced losses since its inception.

5 unchanged sentences

Company has taken the following steps to capitalize the business and achieve its business plan:

● During July 2021, the Company completed a

registered direct public offering in which it sold 1,818,182 shares of common stock to investors for estimated net proceeds of $ 36.9

● During July 2021, the Company completed a registered direct public offering in which it sold 1,818,182 shares of common stock to investors for estimated net proceeds of $ 36.9 million.

● During June 2021, the Company entered into a loan and security agreement and drew down a $ 15.0 million term loan.

1 unchanged sentence

The Company is required to pay BTIG a commission of 3 % of the gross proceeds from the sale of shares.

During July 2021, the Company sold 713,192 shares of its common stock at an average price of $ 21.73 through the 2021 ATM for net proceeds of $ 15.0 million.

● 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.

The Company has sold 713,192 shares of its common stock at an average price of $ 21.73 through the 2021 ATM for net proceeds of $ 14.9 million.

● 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”).

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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 six months ended June 30, 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 June 30, 2021, sales of our common stock pursuant to the 2020 ATM have been completed.

During the nine months ended September 30, 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 September 30, 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 June 30, 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 June 30, 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.

liquidity requirements, as of September 30, 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 September 30, 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.

NOTE 3 – SUMMARY OF SIGNIFICANT

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basic and diluted shares outstanding due to the Company’s net loss position.

At June 30, 2021 and 2020, the Company had potentially

issuable shares as follows:

At September 30, 2021 and 2020, the Company had

potentially issuable shares as follows:

September 30,

Stock options

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Subsequent Events

evaluates events that have occurred after the balance sheet date of June 30, 2021, through the date which the financial statements are

evaluates events that have occurred after the balance sheet date of September 30, 2021, through the date which the financial statements

NOTE 4 – RESEARCH AND DEVELOPMENT

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$ 833,000 , respectively.

During the six months ended June 30, 2021 and 2020, the Company received $ 0 of R&D tax credit reimbursements

The Company expects to receive R&D tax credit reimbursements during the second half of 2021.

During the nine months ended September 30, 2021 and 2020, the Company received $ 0 of R&D tax credit reimbursements

The UK subsidiary expects to receive R&D tax credit reimbursements during the fourth quarter of 2021.

According to AUS tax law, the Company is allowed

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The Company’s Australian subsidiary submits R&D tax credit requests annually for research and development expenses incurred.

At June 30, 2021 and December 31, 2020, the Company recorded a research and development tax credit receivable of $ 1,281,000 and $ 853,000 ,

At September 30, 2021 and December 31, 2020, the Company recorded a research and development tax credit receivable of $ 2,016,000 and $ 853,000 ,

respectively, for R&D expenses incurred in Australia.

During the six months ended June 30, 2021 and 2020, the Company received $ 0

R&D tax credit reimbursements from Australia.

The Company expects to receive R&D tax credit reimbursements during the second half of 2021.

During the nine months ended September 30, 2021 and 2020, the Company received

$ 0 and $ 0.2 million, respectively, of R&D tax credit reimbursements from Australia.

The Australian subsidiary received an R&D

tax reimbursement of approximately $ 1.3 million during October 2021.

License Agreement

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on the market price of the common stock as of June 10, 2021, which the Company issued in June 2021.

The Company agreed to file a registration

statement covering the resale of these shares on or before the earlier to occur of September 8, 2021, or the date on which the Company

next files a registration statement (other than a registration statement on Form S-8 or any statement on Form S-3 previously filed) and

to keep the registration statement continuously effective until all such shares cease to be outstanding or otherwise cease to be registrable

securities as defined in the Option Cancellation Agreement.

The Company charged the cash consideration paid to Xencor to enter into the

Option Cancellation Agreement to equity as the fair value of the warrant immediately prior to the Option Cancellation Agreement was greater

than the consideration paid to Xencor.

The Company filed a registration statement

covering the resale of these shares during September 2021 and agreed to keep the registration statement continuously effective until all

such shares cease to be outstanding or otherwise cease to be registrable securities as defined in the Option Cancellation Agreement.

Company charged the cash consideration paid to Xencor to enter into the Option Cancellation Agreement to equity as the fair value of the

warrant immediately prior to the Option Cancellation Agreement was greater than the consideration paid to Xencor.

INKmune License Agreement

4 unchanged sentences

In consideration for the patent rights, the Company

agreed to the following milestone payments (of which none were met as of June 30, 2021):

agreed to the following milestone payments:

(in thousands)

4 unchanged sentences

Each NDA/EMA awarded

During July 2021, the Company initiated a Phase

I clinical trial using INKmune and the Company paid Immune Ventures a $ 25,000 milestone payment.

In addition, the Company agreed to pay Immune

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are the owners of Immune Ventures.

As of June 30, 2021, no sales had occurred under this license.

As of September 30, 2021, no sales had occurred under this license.

The term of the agreement began on October 29,

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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

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of written notice by Immune Ventures, then Immune Ventures may provide notice to terminate the license or convert it to a non-exclusive

During July 2021, the Company initiated a Phase

I clinical trial using INKmune and the Company paid Immune Ventures a $ 25,000 milestone payment.

University of Pittsburg License Agreement

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The Company had no amounts owed pursuant to the

PITT Agreement as of June 30, 2021.

PITT Agreement as of September 30, 2021.

The PITT Agreement expires upon the earlier of:

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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.

On July 15, 2021, the Company notified UCLB of its intent to terminate

the license agreement.

During July 2021, the Company terminated

its license agreement with UCLB.

NOTE 5 – LEASE

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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 June 30, 2021:

In September 2021, the Company signed a lease

for office space in Boca Raton, Florida.

Below is a summary of the Company’s right-of-use

assets and liabilities as of September 30, 2021:

(in thousands, except years and rate)

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NOTE 6 – RELATED PARTY TRANSACTIONS

At June 30, 2021 and December 31, 2020, the Company

owed UCL Consultants Limited (“UCL”) $ 9,000 and $ 34,000 , respectively, in connection with medical research performed on behalf

of the Company.

At June 30, 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 six months ended June 30, 2021 and 2020, the Company paid UCL $ 132,000

and $ 0 , respectively, for medical research performed on behalf of the Company.

UCL is a wholly owned subsidiary of the University of London.

At September 30, 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 September 30, 2021 and December 31, 2020, the Company recorded prepaid expenses of $ 14,000 and $ 0 , respectively,

for medical research to be performed on behalf of the Company by UCL.

During the nine months ended September 30, 2021 and 2020, the Company

paid UCL $ 176,000 and $ 335,000 , 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.

During the six months ended June 30, 2021 and

2020, the Company paid CTI $ 0 and $ 127,000 , respectively, for medical research performed on behalf of the Company.

During the six months

ended June 30, 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 June 30, 2021 and December 31, 2020.

During the nine months ended September 30, 2021

and 2020, the Company paid CTI $ 0 and $ 127,000 , respectively, for medical research performed on behalf of the Company.

During the nine

months ended September 30, 2020, the Company recorded a capital contribution of $ 216,000 for the forgiveness of certain accounts payable

The Company had no amounts payable to CTI as of September 30, 2021 and December 31, 2020.

NOTE 7 – DEBT

On June 10, 2021, the Company entered into a

Loan and Security Agreement (the “Term Loan”) with Silicon Valley Bank and SVB Innovation Credit Fund VIII, L.P., together

(the “Lenders”).

The Term Loan provides for a $ 15.0 million term loan, of which the Company borrowed the entire

amount on June 10, 2021, and is secured by the Company’s assets.

The Term Loan also provides for the Company to request an

additional $ 5.0 million term loan from the Lenders, which may be granted or denied at the sole discretion of the Lenders.

On June 10, 2021, the Company entered into a Loan

and Security Agreement (the “Term Loan”) with Silicon Valley Bank and SVB Innovation Credit Fund VIII, L.P., together (the

The Term Loan provides for a $ 15.0 million term loan, of which the Company borrowed the entire amount

on June 10, 2021, and is secured by the Company’s assets.

The Term Loan also provides for the Company to request an additional

$ 5.0 million term loan from the Lenders, which may be granted or denied at the sole discretion of the Lenders.

The Company paid the Lenders $ 47,000 to access

the term loan, which has been included as a component of the debt discount and is amortized to interest expense over the term of the

The term loan and debt discount are as follows as of June 30, 2021:

the term loan, which has been included as a component of the debt discount and is amortized to interest expense over the term of the loan.

The term loan and debt discount are as follows as of September 30, 2021:

(in thousands)

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Long-term debt

three and six months ended June 30, 2021 the Company recognized interest expense of $ 0.1 million related to the Term Loan.

The term loan repayment schedule provides for

interest only payments beginning on July 1, 2021, and continuing for 12 months, followed by 30 consecutive equal monthly installments

of principal, plus monthly payments of accrued interest, starting on July 1, 2022 and continuing through the maturity date of January

The interest-only period may be extended for one year upon the achievement of an equity

milestone as fully defined in the Term Loan .

All outstanding principal and accrued and unpaid interest will be due and payable

on the maturity date.

The Term Loan provides for an annual interest rate equal to the greater of (i) the prime rate then in effect

as reported in The Wall Street Journal plus 4.50 % and (ii) 7.75 %.

At June 30, 2021, the interest rate was 7.75 %.

three and nine months ended September 30, 2021 the Company recognized interest expense of $ 0.4 million and $ 0.5 million, respectively,

related to the Term Loan.

The term loan repayment schedule provided for

interest only payments beginning on July 1, 2021, and continuing for 12 months, followed by monthly principal and interest payments,

starting on July 1, 2022 and continuing through the maturity date of January 1, 2025.

During August, the Lenders extended the interest-only

period for one year due to the Company achieving an equity milestone as fully defined in the Term Loan .

As a result of achieving

the equity milestone, monthly principal and interest payments begin on July 1, 2023.

All outstanding principal and accrued and unpaid

interest will be due and payable on the maturity date.

The Term Loan provides for an annual interest rate equal to the greater of

(i) the prime rate then in effect as reported in The Wall Street Journal plus 4.50 % and (ii) 7.75 %.

At September 30, 2021, the

interest rate was 7.75 %.

The Term Loan includes a final payment fee equal

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of the original principal amount borrowed for any prepayment after the second anniversary of the loan but before the maturity date.

expected repayment of the $ 15.0 million Term loan principal is as follows as of June 30, 2021:

repayment of the $ 15.0 million Term loan principal is as follows as of September 30, 2021:

(in thousands, except years)

occurrence of certain events, including but not limited to the Company’s failure to satisfy its payment obligations under the Term

Upon the occurrence of certain events, including but not limited to the Company’s failure to satisfy its payment obligations under the Term

Loan, the breach of certain of its other covenants under the Term Loan, or the occurrence of a material adverse change, the Lenders will

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the final payment fee and, if the payment of principal and interest is due prior to maturity, the applicable prepayment fee.

Term Loan, the Company agreed to issue the Lenders warrants to purchase shares of its common stock.

On June 10, 2021, upon the draw of

the term loan, the Company issued to the Lenders warrants to purchase in aggregate 45,386 shares of common stock at a per share exercise

price of $ 14.05 .

The warrants were immediately exercisable upon issuance, and other than in connection with certain mergers or acquisitions,

will expire on the ten-year anniversary of the date of issuance.

The fair value of the warrants was estimated at $ 0.6 million

using a Black-Scholes model and assuming:

(i) expected volatility of 103 % based on the trading history of similar companies ,

(ii) discount rate of 1.45 % based on the applicable US Treasury bill rate , (iii) an expected

life of 10 years and (iv) zero expected dividends.

The fair value of the warrants was included as a discount to

the term loan and also as a component of additional paid-in capital at June 30, 2021.

NOTE 8 – STOCKHOLDERS’

NOTE 8 – STOCKHOLDERS’ EQUITY

On May 15, 2019, the Company entered into both

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the 24-month period that commenced on May 15, 2019.

During the six months ended June 30, 2020, the Company issued 196,000 shares of its

common stock to Lincoln Park for approximately $ 1.0 million of cash.

During the nine months ended September 30, 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

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cancelled 220,000 shares of its common stock from a shareholder in exchange for approximately $ 1.0 million of cash.

Underwritten Stock Offering

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.

The 2,500,000 shares

sold included the full exercise of the underwriters’ option to purchase 326,086 shares at a price of $ 10.00 per share.

net proceeds from the underwritten public offering were $ 23.1 million, net of $ 1.9 million in underwriting discounts and commissions and

offering expenses.

Common Stock – At the Market Offering

During the six months ended June 30, 2020, we

issued and sold 150,682 shares of common stock at an average price of $ 5.44 per share under the 2020 ATM program.

The aggregate net proceeds

were approximately $ 0.7 million after BTIG’s commission and other offering expenses.

During the six months ended June 30, 2021, the

Company sold 1,439,480 shares of its common stock at an average price of $ 20.17 per share under the 2020 ATM program.

During the nine months ended September 30, 2020,

we issued and sold 178,600 shares of common stock at an average price of $ 5.45 per share under the 2020 ATM program.

The aggregate net

proceeds were approximately $ 0.8 million after BTIG’s commission and other offering expenses.

During the nine months ended September 30, 2021,

the Company sold 1,439,480 shares of its 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 the nine months ended September 30, 2021,

the Company sold 713,192 shares of its common stock at an average price of $ 21.73 per share under the 2021 ATM program.

The aggregate

net proceeds were approximately $ 14.9 million after BTIG’s commission and other offering expenses.

Registered Direct Offering

During July 2021, the Company completed a registered

direct offering whereby the Company sold 1,818,182 shares of its common stock to investors for net proceeds of $ 36.9 million.

Common Stock Issued for Services

During July 2020, the Company granted a consultant

50,000 fully vested warrants with a 5 -year term, of which 25,000 warrants had an exercise price of $ 5.50 per share and 25,000 warrants

had an exercise price of $ 10.00 per share.

The fair value of these warrants was $ 356,874 based on the Black-Scholes Option Pricing Model

and was recorded within general and administrative expense.

The assumptions used for these warrants consist of the exercise prices, expected

dividends of 0 %, expected volatility of 111.67 % based on the trading history of similar companies, risk-free rate of 0.30 % based on the

applicable US Treasury bill rate and an expected life of 5.0 years.

During July 2020, the Company issued the consultant 20,000 shares

of common stock and cancelled the 50,000 warrants.

The 20,000 shares were issued from the Company’s 2019 Incentive Stock Plan and

had a fair value of approximately $ 230,000 based on the market value of the Company’s common stock on the grant date.

accounted for the exchange of the warrants for shares of common stock as a modification and recorded no additional expense in connection

with the exchange as the fair value of warrants exceeded the fair value of the shares issued.

Issuance of shares to Xencor

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expected dividends.

During July, August and September 2021,

the Company granted certain employees and consultants options to purchase in aggregate 373,000 shares of its common stock pursuant to

the 2021 Incentive Stock Plan.

The stock options have a fair value of approximately $ 6.3 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 0.96 % - 1.31 % based on the

applicable US Treasury bill rate (2) expected life of 6.0 – 10.0 years, (3) expected volatility of approximately 105 % - 109 % based

on the trading history of similar companies, and (4) zero expected dividends.

The following

table summarizes stock option activity during the six months ended June 30, 2021:

table summarizes stock option activity during the nine months ended September 30, 2021:

(in thousands, except share and per share amounts)

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Options cancelled

Outstanding at June 30, 2021

Exercisable at June 30, 2021

During the six months ended June 30, 2021 and

2020, the Company recognized stock-based compensation expense of approximately $ 1.7 million and $ 1.4 million, respectively, related to

the vesting of stock options.

As of June 30, 2021, there was approximately $ 9.9 million of total unrecognized compensation cost related

to non-vested stock options which is expected to be recognized over a weighted-average period of 2.87 years.

The Company issued 45,386 warrants to the Company’s lenders upon

obtaining its loan in June 2021.

Outstanding at September 30, 2021

Exercisable at September 30, 2021

During the nine months ended September 30, 2021

and 2020, the Company recognized stock-based compensation expense of approximately $ 3.3 million and $ 2.1 million, respectively, related

to the vesting of stock options.

As of September 30, 2021, there was approximately $ 14.6 million of total unrecognized compensation cost

related to non-vested stock options which is expected to be recognized over a weighted-average period of 2.73 years.

The Company issued 45,386 warrants

to the Company’s lenders upon obtaining its loan in June 2021.

The warrants have a 10-year term and an exercise price of $ 14.05 .

The warrants have a fair value of approximately

$ 0.6 million that was calculated using the Black-Scholes option-pricing model.

Variables used in the Black-Scholes option-pricing model

(1) discount rate of 1.45 % based on the applicable US Treasury bill rate (2) expected life of 10.0 years, (3) expected volatility

of approximately 103 % based on the trading history of similar companies, and (4) zero expected dividends.

At June 30, 2021, the intrinsic

value of these warrants is $ 160,000 .

The warrants have a fair value of approximately $ 0.6 million that was calculated using the Black-Scholes option-pricing model.

used in the Black-Scholes option-pricing model include:

(1) discount rate of 1.45 % based on the applicable US Treasury bill rate (2)

expected life of 10.0 years, (3) expected volatility of approximately 103 % based on the trading history of similar companies, and (4)

zero expected dividends.

At September 30, 2021, the intrinsic value of these warrants is $ 244,000 .

In connection with the Company’s initial

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an exercise price of $ 9.60 per common share, which warrants are exercisable until December 19, 2023.

At June 30, 2021, 34,835 of these

warrants are outstanding and the intrinsic value is $ 278,000 .

During the nine months ended September

30, 2021, 6,147 of these warrants were exercised on a cashless basis in exchange for 3,758 shares of common stock.

At September 30, 2021,

28,688 of these warrants are outstanding and the intrinsic value is $ 282,000 .

On June 30, 2017, the Company issued fully vested

1 unchanged sentence

The warrants have a $ 1.50 exercise price and expire on June 30, 2022 .

During the six months ended June 30, 2021, 11,875 of these

warrants were exercised for cash proceeds of $ 18,000 .

At June 30, 2021, 19,792 of these warrants are outstanding, with an intrinsic value

of $ 318,000 .

During the nine months ended September 30, 2021, 11,875 of

these warrants were exercised for cash proceeds of $ 18,000 .

At September 30, 2021, 19,792 of these warrants are outstanding, with an intrinsic

value of $ 355,000 .

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 and six months ended June 30, 2021 and 2020 respectively:

compensation expense in the consolidated statements of operations for the three and nine months ended September 30, 2021 and 2020

respectively:

(in thousands)

Three Months Ended

September 30,

Research and development

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in vitro and to fund a study of the efficacy of XPro1595 to protect against ALS model phenotypes in vivo.

During the six months ended

June 30, 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.

During the nine months ended

September 30, 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.

30, 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.

of September 30, 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

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in patients with treatment resistant depression.

As of June 30, 2021, the Company has not received any proceeds pursuant to this grant.

As of September 30, 2021, the Company has not received any proceeds pursuant to this

NOTE 10 – COMMITMENTS AND CONTINGENCIES

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The lessor is CTI.

During September 2021,

the Company signed a lease agreement with a third party for office space in Boca Raton, Florida.

The lease agreement has a 64 -month term

and will commence during the fourth quarter of 2021.

Future minimum payments pursuant

to the lease are as follows:

to the leases are as follows:

(in thousands, except years)

During the three and six months ended June 30,

During the three and nine months ended September

30, 2021, the Company recognized $ 19,000 and $ 45,000 , respectively, in operating lease expense, which is included in general and administrative

expenses in the Company’s consolidated statement of operations.

The Company is subject to claims and suits that arise from time to

time in the ordinary course of our business.

Although management currently believes that resolving claims against the Company, individually

or in aggregate, will not have a material adverse impact in the Company’s consolidated financial statements, these matters are subject

to inherent uncertainties and management’s view of these matters may change in the future.

NOTE 11 – SUBSEQUENT EVENTS

During July 2021, the Company sold 713,192 shares

of its common stock through 2021 ATM program for net proceeds of $ 15.0 million.

During July 2021, the Company sold 1,818,182 shares

of its common stock to investors through a registered direct offering for estimated net proceeds of $ 36.9 million.

During July 2021, the Company awarded 333,000

stock options to employees with a 3 -year vesting term and an estimated fair value of $ 5.6 million.

Variables used in the Black-Scholes

option-pricing model include:

(1) discount rate of 1.04 -1.19% based on the applicable US Treasury bill rate (2) expected life of 6.0 years,

(3) expected volatility of approximately 108 % based on the trading history of similar companies, and (4) zero expected dividends.

During July 2021, certain employees of the Company

exercised 45,000 stock options in exchange for approximately $ 176,000 of cash proceeds.

The Company is subject to claims and suits that

arise from time to time in the ordinary course of our business.

Although management currently believes that resolving claims against the

Company, individually or in aggregate, will not have a material adverse impact in the Company’s consolidated financial statements,

these matters are subject to inherent uncertainties and management’s view of these matters may change in the future.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements