What changed in this filing

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Item 1. Financial Statements

2022-08-03 compared with 2022-05-05 · 363 added, 349 removed, 281 unchanged (72% of the section changed)

Financial Statements

INMUNE BIO, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

CONSOLIDATED BALANCE SHEETS

thousands, except share and per share amounts)

CURRENT ASSETS

5 unchanged sentences

TOTAL CURRENT ASSETS

Operating lease – right of use asset – related party

Operating lease – right of use asset

Acquired in-process research and development intangible assets

15 unchanged sentences

Additional paid-in capital

Accumulated other comprehensive income

Accumulated other comprehensive (loss) income

Accumulated deficit

1 unchanged sentence

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

INMUNE BIO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE LOSS

(In thousands, except share and per share amounts)

Three months ended

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

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

thousands, except share and per share amounts)

For the Three Months Ended

For the Six Months Ended

OPERATING EXPENSES

4 unchanged sentences

OTHER EXPENSE

Other expense, net

Total other expense, net

Net loss per common share – basic and diluted

Weighted average number of common shares outstanding – basic and diluted

Weighted average common shares outstanding - basic and diluted

COMPREHENSIVE LOSS

Other comprehensive income – foreign currency translation

Other comprehensive loss - foreign currency translation

Total comprehensive loss

The accompanying

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

INMUNE BIO, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES

IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2022

(In thousands, except share amounts)

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

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

THE SIX MONTHS ENDED JUNE 30, 2022

thousands, except share amounts)

Comprehensive

Stockholders’

Income (Loss)

Balance as of December 31, 2021

4 unchanged sentences

Balance as of March 31, 2022

The accompanying

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

CONDENSED CONSOLIDATED STATEMENT OF CHANGES

IN STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2021

(In thousands, except share amounts)

Stock-based compensation

Loss on foreign currency translation

Balance as of June 30, 2022

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

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

THE SIX MONTHS ENDED JUNE 30, 2021

thousands, except share amounts)

Comprehensive

Stockholders’

Income (Loss)

Balance as of December 31, 2020

4 unchanged sentences

Balance as of March 31, 2021

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

INMUNE BIO, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

For the Three Months

Ended March 31,

Stock-based compensation

Settlement of Xencor warrant for cash and common stock

Warrants issued to lenders as debt inducement

Loss on foreign currency translation

Balance as of June 30, 2021

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

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

13 unchanged sentences

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

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

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

1 unchanged sentence

Net proceeds from the exercise of warrants

Net proceeds from the issuance of debt

Net cash provided by financing activities

6 unchanged sentences

Cash paid for interest expense

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

INMUNE BIO, INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND DESCRIPTION

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 (XPro1595,

XPro™, pegipanermin ) 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 Alzheimer’s and treatment resistant

depression (XPro™) 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 March 31, 2022, the Company had an accumulated

NONCASH INVESTING AND FINANCING ACTIVITIES:

Common stock issued to Xencor to settle warrant issued for acquired research and development intangible assets

Warrants issued as debt inducement

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

TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

(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

The DN-TNF product platform (XPro1595, XPro™, pegipanermin ) 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 Alzheimer’s and treatment resistant depression (XPro™) 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

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.

2 – LIQUIDITY

As of June 30, 2022, the Company had an accumulated

deficit of $ 77,456,000 and experienced losses since its inception.

Losses have principally occurred as a result of 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 2022, the Company sold 82,900 shares of common stock to

certain officers and directors of the Company at a price per share of $ 8.43 (which was the closing

price of the Company’s common stock on March 22, 2022) for gross proceeds of $ 0.7 million

● 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.

● During March 2021, the Company entered into a sales agreement with BTIG, LLC (“BTIG”), as agent, to establish an At-The-Market (“ATM”) offering 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.

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.

Although it is difficult to predict the Company’s

liquidity requirements, as of March 31, 2022, 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, 2022.

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

ACCOUNTING POLICIES

The Company had cash, cash equivalents of $ 61,213,000 as of June 30,

2022 and has not generated positive cash flows from operations.

To date, the Company has funded its operations primarily through the

sale of its common stock.

Although it is difficult to predict the Company’s liquidity requirements, as of June 30, 2022, 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, 2022.

Management expects operating losses to continue

for the foreseeable future.

There can be no assurance that the Company will ever earn revenues or achieve profitability, or if achieved,

that they will be sustained on a continuing basis.

In addition, the manufacturing, clinical and preclinical development activities as

well as the commercialization of the Company’s products, if approved, will require significant additional financing.

may be unable to secure such financing when needed, or if available, such financings may be under terms that are unfavorable to the Company

or the current stockholders.

If the Company is unable to raise additional funds when needed, it may be required to delay, reduce the scope

of, or eliminate development programs, which may adversely affect its business and operations.

3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

of Presentation

The accompanying financial statements are presented

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.

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

Securities and Exchange Commission (“SEC”).

The consolidated financial statements include the accounts of INmune Bio, Inc.

The consolidated financial statements include the accounts of INmune

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, 2021 included in the Company’s Annual Report on Form 10-K

for the year ended December 31, 2021, filed with the SEC on March 3, 2022.

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.

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.

Intercompany transactions and balances have been eliminated.

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, 2021 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with

the SEC on March 3, 2022.

and Uncertainties

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.

addition, the Company’s clinical trials have been affected by and may continue to be affected by the COVID-19 pandemic.

site initiation and patient enrollment have and may continue to be delayed due to prioritization of hospital resources toward the COVID-19

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.

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.

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

considers all short-term, highly liquid investments with an original maturity at the date of purchase of three months or less to be cash

The Company maintains cash balances that may be uninsured or in deposit accounts that exceed Federal Deposit Insurance Corporation

Fair Value of Financial Instruments

The Company measures certain assets and liabilities

in accordance with authoritative guidance which requires fair value measurements to be classified and disclosed in one of the following

three categories:

Quoted prices (unadjusted)

in active markets that are accessible at the measurement date for assets or liabilities.

Observable prices that

are based on inputs not quoted on active markets, but corroborated by market data.

Unobservable inputs are

used when little or no market data is available.

Assets and liabilities are classified based on

the lowest level of input that is significant to the fair value measurements.

The Company reviews the fair value hierarchy classification

on a quarterly basis.

Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain assets

or liabilities within the fair value hierarchy.

The Company did not have any transfers of assets and liabilities between the levels of

the fair value measurement hierarchy during the years presented.

The carrying amounts of financial instruments

such as cash and cash equivalents, research and development tax credit receivable, other receivable, prepaid expenses, and accounts payable

and accrued liabilities approximate the related fair values due to the short-term maturities of these instruments.

and Cash Equivalents

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.

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

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.

the assets are determined to have a finite life (upon completion of the development of the in-process research and development for its

DN-TNF platform), the useful life will be determined and the in-process research and development intangible assets will be amortized.

During the fourth quarter and if business factors

indicate more frequently, the Company performs an assessment of the qualitative factors affecting the fair value of our in-process research

and development.

If the qualitative assessment suggests that impairment is more likely than not, a quantitative analysis is performed.

The quantitative analysis involves a comparison of the fair value of the in-process research and development with the carrying amount.

If the carrying amount of the in-process research and development exceeds its fair value, an impairment loss is recognized in an amount

equal to that excess.

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, 2022 and 2021, the Company had potentially

issuable shares as follows:

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.

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.

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.

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.

When the assets are determined to have a finite life (upon completion of the development of the in-process

research and development for its DN-TNF platform), the useful life will be determined and the in-process research and development intangible

assets will be amortized.

the fourth quarter and if business factors indicate more frequently, the Company performs an assessment of the qualitative factors affecting

the fair value of our in-process research and development.

If the qualitative assessment suggests that impairment is more likely than

not, a quantitative analysis is performed.

The quantitative analysis involves a comparison of the fair value of the in-process research

and development with the carrying amount.

If the carrying amount of the in-process research and development exceeds its fair value, an

impairment loss is recognized in an amount equal to that excess.

and Diluted Loss per Share

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.

June 30, 2022 and 2021, the Company had potentially issuable shares as follows:

Stock options

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:

contract(s) with a customer;

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;

determine the transaction price;

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

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.

(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.

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

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

6 unchanged sentences

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

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.

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.

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).

on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment

Foreign Currency Translation

The Company’s financial statements are presented

dollar (“$”), which is the Company’s reporting currency, while its functional currencies are the 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

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

In June 2016, the FASB issued ASU No.

2016-13, Financial

Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, as clarified in subsequent amendments.

and Development

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.

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.

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.

Currency Translation

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).

Adopted Accounting Pronouncements

June 2016, the FASB issued ASU No.

2016-13, Financial Instruments—Credit Losses (Topic 326), Measurement of Credit Losses

on Financial Instruments, as clarified in subsequent amendments.

ASU 2016-13 changes the impairment model for certain financial instruments.

The new model is a forward-looking expected loss model and

will apply to financial assets subject to credit losses and measured at amortized cost and certain off-balance sheet credit exposures.

This includes loans, held-to-maturity debt securities, loan commitments, financial guarantees and net investments in leases, as well as

trade receivables.

For available-for-sale debt securities with unrealized losses, credit losses will be measured in a manner similar to

today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities.

2019, the FASB voted to delay the effective date of this standard.

Topic 326 will be effective for the Company on January 1, 2023.

adoption is permitted.

The Company is currently assessing the effect that this ASU will have on its condensed financial position,

results of operations, and disclosures.

Subsequent Events

evaluates events that have occurred after the balance sheet date of March 31, 2022, through the date which the financial statements are

NOTE 4 – RESEARCH AND DEVELOPMENT

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.

31, 2022 and December 31, 2021, the Company recorded a research and development tax credit receivable in the amount of $ 3,225,000 and

$ 3,319,000 , respectively.

During the three months ended March 31, 2022 and 2021, the Company received $ 0 of R&D tax credit reimbursements

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, 2022 and December 31, 2021, the Company recorded a research and development tax credit receivable of $ 1,924,000 and $ 1,594,000 ,

respectively, for R&D expenses incurred in Australia.

During the three months ended March 31, 2022 and 2021, the Company received

$ 0 R&D tax credit reimbursements from Australia.

The new model is a forward-looking expected loss model and will apply to financial assets subject to credit losses and measured at amortized

cost and certain off-balance sheet credit exposures.

This includes loans, held-to-maturity debt securities, loan commitments, financial

guarantees and net investments in leases, as well as trade receivables.

For available-for-sale debt securities with unrealized losses,

credit losses will be measured in a manner similar to today, except that the losses will be recognized as allowances rather than reductions

in the amortized cost of the securities.

In October 2019, the FASB voted to delay the effective date of this standard.

Topic 326 will

be effective for the Company on January 1, 2023.

Early adoption is permitted.

The Company is currently assessing the effect that

this ASU will have on its condensed financial position, results of operations, and disclosures.

Company evaluates events that have occurred after the balance sheet date of June 30, 2022, through the date which the financial statements

4 – RESEARCH AND DEVELOPMENT ACTIVITY

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 June 30, 2022 and December 31, 2021, the Company recorded a research and development tax credit

receivable in the amount of $ 2,982,000 and $ 3,319,000 , respectively.

During the six months ended June 30, 2022 and 2021, the Company

received $ 0 of R&D tax credit reimbursements from the UK.

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 June 30, 2022 and December 31, 2021, the Company recorded a research and development tax credit

receivable of $ 1,944,000 and $ 1,594,000 , respectively, for R&D expenses incurred in Australia.

During the six months ended June 30,

2022 and 2021, the Company received $ 0 R&D tax credit reimbursements from Australia.

License Agreement

3, 2017, the Company entered into a license agreement (“Xencor License Agreement”) with Xencor, Inc.

October 3, 2017, the Company entered into a license agreement (“Xencor License Agreement”) with Xencor, Inc.

which discovered and developed a proprietary biological molecule that inhibits soluble tumor necrosis factor.

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in the Option Cancellation Agreement.

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-

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

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In addition, the Company 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:

License Agreement

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:

(in thousands)

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Each NDA/EMA awarded

In addition, the Company agreed to pay the licensor

a royalty of 1 % of net sales during the life of each patent granted to the Company.

addition, the Company agreed to pay the licensor a royalty of 1 % of net sales during the life of each patent granted to the Company.

The License is owned by Immune Ventures.

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.

No sales have occurred under this license.

The term of the agreement began on October 29,

2015 and ends on a country-by-country basis on the date of the expiration of the last to expire patent rights where patent rights exists,

unless terminated earlier in accordance with the agreement.

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 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

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

Annual maintenance fees under the PITT Agreement

include the following:

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.

No sales have

occurred under this license.

term of the agreement began on October 29, 2015 and ends on a country-by-country basis on the date of the expiration of the last to expire

patent rights where patent rights exists, unless terminated earlier in accordance with the agreement.

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:

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

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

of NDA or equivalent by October 29, 2026 or equivalent

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.

of Pittsburg License Agreement

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.

maintenance fees under the PITT Agreement include the following:

(in thousands)

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June 26 of each year 2025 until first commercial sale

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

Moreover, under the PITT Agreement the Licensee

is required to make milestone payments as follows:

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.

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

(in thousands)

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First commercial sale of product making use of licensed technology

The Company had no amounts owed pursuant to the

PITT Agreement as of March 31, 2022.

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;

Company had no amounts owed pursuant to the PITT Agreement as of June 30, 2022.

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,

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the appointment of a trustee, receiver or liquidator of its assets or seeks relief under any law for the aid of debtors.

NOTE 5 – FAIR VALUE MEASUREMENTS

following table presents the hierarchy for assets and liabilities measured at fair value on a recurring basis:

(in thousands)

Quoted Price in

Active Market

Significant Other

Observable Inputs

June 30, 2022:

Cash equivalents

Money market fund

Total cash equivalents

The Company had no assets and liabilities measured

at fair value on a recurring basis as of December 31, 2021.

NOTE 6 – LEASE

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NOTE 7 – RELATED PARTY TRANSACTIONS

31, 2022 and December 31, 2021, the Company owed UCL Consultants Limited (“UCL”) $ 9,000 and $ 10,000 , respectively, in

connection with medical research performed on behalf of the Company.

During the three months ended March 31, 2022 and 2021, the Company

paid UCL $ 32,000 and $ 88,000 , respectively, for medical research performed on behalf of the Company.

At March 31, 2022 and December

31, 2021, the Company recorded $ 14,000 of prepaid expenses – related party for payments made to UCL in advance of services to be

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.

June 30, 2022 and December 31, 2021, the Company owed UCL Consultants Limited (“UCL”) $ 9,000

and $ 10,000 , respectively, in connection with medical research performed on behalf of the Company.

During the six months ended June

30, 2022 and 2021, the Company paid UCL $ 123,000 and $ 132,000 , respectively, for medical research performed on behalf of the

At June 30, 2022 and December 31, 2021, the Company recorded $ 51,000 and $ 0 ,

respectively, of prepaid expenses – related party for payments made to UCL in advance of services to be provided.

wholly owned subsidiary of the University of London.

The Company’s Chief Scientific and Manufacturing Officer is a professor

at the University of London.

30, 2022 and December 31, 2021, the Company owed AmplifyBio $ 0 and $ 70,000 , respectively in connection with medical research performed

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The CEO of AmplifyBio is on the Board of Directors of the Company.

During the three months ended March 31, 2022

During the six months ended June 30, 2022

and 2021, the Company paid AmplifyBio $ 138,000 and $ 0 , respectively, for pre-clinical research performed on behalf of the Company.

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of the Lenders.

The term loan and debt discount are as follows as of March 31, 2022:

loan and debt discount are as follows as of June 30, 2022:

(in thousands)

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Long-term debt

three months ended March 31, 2022, the Company recognized interest expense of $ 435,000 related to the Term Loan.

six months ended June 30, 2022, the Company recognized interest expense of $ 900,000 related to the Term Loan.

is required to make interest only payments monthly until July 1, 2023 at which time the Company shall make interest and principal payments

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

At March 31, 2022, the interest rate was 8.0 %.

At June 30, 2022, the interest rate was 9.25 %.

Loan includes a final payment fee equal to 6.5 % of the original principal amount borrowed payable on the earlier of the repayment

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The Company has the option to prepay the outstanding balance of the term loans in full,

subject to a prepayment premium of (i) 3 % of the original principal amount borrowed for any prepayment on or prior to the first anniversary

of the loan, (ii) 2 % of the original principal amount borrowed for any prepayment after the first anniversary and on or before the

second anniversary of the loan or (iii) 1 % of the original principal amount borrowed for any prepayment after the second anniversary

of the loan but before the maturity date.

repayment of the $ 15.0 million Term loan principal is as follows as of March 31, 2022:

subject to a prepayment premium of (i) 2 % of the original principal amount borrowed for any prepayment after the first anniversary

and on or before the second anniversary of the loan or (ii) 1 % of the original principal amount borrowed for any prepayment after

the second anniversary of the loan but before the maturity date.

repayment of the $ 15.0 million Term loan principal is as follows as of June 30, 2022:

(in thousands,

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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.

was in compliance with its debt covenants at March 31, 2022.

was in compliance with its debt covenants at June 30, 2022.

NOTE 9 – STOCKHOLDERS’ EQUITY

Common Stock – Issuance to Directors

During the three months ended March 31, 2022,

directors and officers of the Company purchased 82,900 shares of the Company’s common stock at

a per share of $ 8.43 (which was the closing price of the Company’s common stock on March 22, 2022) for gross proceeds

of $ 699,000 .

During the six months ended June 30, 2022, directors

and officers of the Company purchased 82,900 shares of the Company’s common stock from the Company at

$ 8.43 per share (which was the closing price of the Company’s common stock on March 22, 2022) for gross proceeds of

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

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.

aggregate net proceeds were approximately $28.4 million after BTIG’s commission and other offering expenses.

of shares to Xencor

10, 2021, the Company and Xencor entered into an Option Cancellation Agreement whereby the Company issued 192,533 shares of

its common stock to Xencor (See Note 4).

Stock options

During the three months ended March 31, 2022,

the Company granted certain employees and directors options to purchase 789,000 shares of its common stock pursuant to the 2021 Incentive

The stock options have a fair value of approximately $ 5.3 million that was calculated using the Black-Scholes option-pricing

During the six months ended June 30, 2022, the

Company granted certain employees and directors options to purchase 819,000 shares of its common stock pursuant to the 2021 Incentive

The stock options had a fair value of approximately $ 5.5 million that was calculated using the Black-Scholes option-pricing

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

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The following

table summarizes stock option activity during the three months ended March 31, 2022:

table summarizes stock option activity during the six months ended June 30, 2022:

(in thousands, except share and per share amounts)

Weighted- average

Weighted-average

Outstanding at January 1, 2022

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Options cancelled

Outstanding at March 31, 2022

Exercisable at March 31, 2022

During the three months ended March 31, 2022 and

Outstanding at June 30, 2022

Exercisable at June 30, 2022

During the six months ended June 30, 2022 and

2021, the Company recognized stock-based compensation expense of approximately $ 3.4 million and $ 1.7 million, respectively, related to

the vesting of stock options.

As of March 31, 2022, there was approximately $ 17.1 million of total unrecognized compensation cost related

As of June 30, 2022, there was approximately $ 14.9 million of total unrecognized compensation cost related

to non-vested stock options which is expected to be recognized over a weighted-average period of 2.39 years.

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price of $ 14.05 .

At March 31, 2022, 45,386 of these warrants are outstanding and the intrinsic value of these warrants is $ 0 .

At June 30, 2022, 45,386 of these warrants are outstanding and the intrinsic value of these warrants is $ 0 .

issued warrants to its placement agents in connection with its February 2019 initial public offering.

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December 19, 2023 and have an exercise price of $ 9.60 .

At March 31, 2021, 28,688 of these warrants are outstanding and the intrinsic

At June 30, 2022, 28,688 of these warrants are outstanding and the intrinsic

value is $ 0 .

the Company issued warrants to purchase shares of the Company’s common stock to a third party in conjunction with common stock

sold for cash.

The warrants had a $ 1.50 exercise price.

During the three months ended March 31, 2022, the 19,792 of these

warrants were exercised for cash proceeds of approximately $ 30,000 .

At March 31, 2022, none of these warrants are outstanding.

six months ended June 30, 2022, a third party exercised 19,792 warrants which were issued in 2017 for cash proceeds of approximately $ 30,000 .

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, 2022 and 2021 respectively:

compensation expense in the consolidated statements of operations for the three and six months ended June 30, 2022 and 2021 respectively:

(in thousands)

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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 three months ended

March 31, 2022 and 2021, the Company received $ 0.0 million and $ 0.1 million, respectively, of cash proceeds pursuant to this grant which

During the six months ended

June 30, 2022 and 2021, the Company received $ 0.0 million and $ 0.1 million, respectively, of cash proceeds pursuant to this grant which

the Company recorded as deferred liabilities.

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in patients with treatment resistant depression.

As of March 31, 2022, the Company has not received any proceeds pursuant to this grant.

As of June 30, 2022, the Company has not received any proceeds pursuant to this grant.

NOTE 11 – COMMITMENTS

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to the leases are as follows:

(in thousands,

except years)

thousands, except years)

Total lease payments

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Long-term operating lease liabilities

During the three months ended March 31, 2022 and

During the six months ended June 30, 2022 and

2021, the Company recognized $ 108,000 and $ 26,000 , respectively, in operating lease expense, which is included in general and administrative

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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