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Item 1. Business

2023-03-02 compared with 2022-03-03 · 929 added, 921 removed, 929 unchanged (67% of the section changed)

Our objective is to develop and commercialize our product candidates

to treat diseases where the innate immune system is not functioning normally and contributing to the patient’s disease.

be in cancer where Natural Killer (“NK”) cells are inactive and contribute to a tumor’s evasion of the immune system

and/or disease progression while expression of MUC4 and immunosuppressive cells of the tumor microenvironment proliferate to protect the

tumor from attack by the patient’s immune system or this can be other diseases such as neurologic and metabolic diseases where chronic

inflammation results in innate immune system dysfunction.

Our objective is to develop

and commercialize our product candidates to treat diseases where the innate immune system is dysfunctional causing and contributing to

the patient’s disease.

Innate immune dysfunction can occur for a variety of reasons including genetics, lifestyle, and other factors

however, age plays a significant role in the development of immune dysfunction.

Innate immune dysfunction can be in cancer where Natural

Killer (“NK”) cells are inactive and contribute to a tumor’s evasion of the immune system and/or disease progression.

Further, chronic inflammation causes expression of MUC4 and immunosuppressive cells of the tumor microenvironment proliferate to protect

the tumor from attack by the patient’s immune system and can cause other diseases such as neurologic and metabolic diseases where

chronic inflammation results in innate immune system dysfunction.

Our initial focus will be the treatment of cancer, treatment of Alzheimer’s

Disease (“AD”), and the treatment of Treatment Resistant Depression (“TRD”).

In cancer, we plan to pursue two

parallel development programs:

(1) with INKmune we will initially focus on treating women with resistant disease relapse refractory ovarian

carcinoma and patients with high-risk myelodysplastic syndrome (high risk MDS);

(2) with INB03, we will treat patients with cancers that

express MUC4, a mucinous polyglucan on the surface of some epithelial cancer cells, that appears to predict resistant to immunotherapy

including women with MUC4 expressing HER2+ breast cancer.

Our third drug candidate XPro1595 (“XPro"), targets Alzheimer’s

Disease and TRD.

XPro for AD has completed Phase I trials and is being prepared for Phase II trials.

XPro for TRD is being prepared for

Phase II trials.

During 2021, we closed our Phase II clinical trial for treatment of pulmonary complications due to COVID-19 infection

as the Company determined it was a high-risk, low reward program due to the development of vaccinations and therapies which were not available

when we started the clinical trial.

The principal components of our strategy to achieve this objective are to:

Disease (“AD”), the treatment of Treatment Resistant Depression (“TRD”) and an out-licensing strategy for Duchenne’s

Muscular Dystrophy (“DMD”).

In cancer, we plan to pursue two parallel development programs:

(1) with INKmune we will initially

focus on treating women with resistant disease relapse refractory carcinoma solid tumor and patients with high-risk myelodysplastic syndrome

(high risk MDS);

(2) with INB03, we plan to treat patients with cancers that express MUC4, a mucinous polyglucan on the surface of some

epithelial cancer cells, that appears to predict resistant to immunotherapy including women with MUC4 expressing HER2+ breast cancer and

potentially other MUC4 resistant cancers.

Our third drug candidate XPro1595 (“XPro”), targets Alzheimer’s Disease and

XPro for AD has completed Phase I trials and Phase II trials are underway in Australia and Canada.

The Company is currently in discussions

with the US FDA to obtain approval to commence the Phase II AD trials in the U.S.

which the FDA placed on full clinical hold on May 20,

XPro for TRD is being prepared for Phase II trials and will start after the FDA has cleared XPro for use in the US.

In early 2023,

the Company also announced pre-clinical data in DMD including new intellectual property for the purpose of trying to seek partnership

for the development of this program.

DMD is a X-linked genetic disease that occurs most often in young boys.

People with DMD do not produce

dystrophin, a protein necessary for normal skeletal muscle function.

The patients develop weakness of skeletal muscles initially seen

as weakness in standing and walking.

Over time, the disease progresses forcing the patient to be wheelchair bound by early teens.

patients die young due to respiratory and cardiac failure before they reach thirty years old.

Therapies for DMD delay progression, there

The overall principal components

of our business strategy to achieve these objectives are to:

pursue development strategies and regulatory approval pathways that allow the treatment of oncology patients with our lead product candidates, INKmune and INB03;

pursue development strategies

and regulatory approval pathways that allow the treatment of neurodegenerative diseases in patients with our lead product candidates,

pursue development strategies and regulatory approval pathways that allow the treatment of neurodegenerative diseases in patients with our lead product candidates, XPro;

Pursue development strategies with a dominant-negative

tumor necrosis factor (“DN-TNF”) compound for the treatment of DMD;

adopt a product development strategy that solidifies our existing intellectual property (“IP”) to prevent competition and expand our IP suite into related immunotherapeutic areas;

provide clear value propositions to third-party payers, such as managed care companies or government programs like Medicare, to merit reimbursement for our product candidates;

with other pharmaceutical companies with respect to, among other things, our INKmune and the DN-TNF platform that includes INB03 and

XPro product candidates and other products that will benefit from development or marketing beyond our current resources.

Collaborate with other pharmaceutical companies with respect to, among other things, our INKmune and the DN-TNF platform that includes INB03 and XPro product candidates, our DMD DN-TNF candidate and other products that will benefit from development or marketing beyond our current resources.

Pursue development and

regulatory approval pathways.

We believe INKmune, INB03 and XPro may be approvable under pathways that are potentially shorter

than those typically available for drug products based on novel active ingredients, including as an orphan drug under the Orphan Drug

Act and approval under the Food and Drug Administration (the “FDA”) Accelerated Approval Program (see “Government Regulation”).

We believe INKmune, INB03 and XPro may be approvable under pathways that are potentially shorter than

those typically available for drug products based on novel active ingredients, including as an orphan drug under the Orphan Drug Act and

approval under the Food and Drug Administration (the “FDA”) Accelerated Approval Program (see “Government Regulation”).

We have not yet had a discussion with the Medicines and Healthcare Products Regulatory Agency (“MHRA”) and/or FDA regarding

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We believe the INKmune MDS cancer program may qualify for orphan status.

that it would take a minimum of six months to receive Orphan Drug status once we submit an application and a minimum of 12 months

that it would take a minimum of six months to receive Orphan Drug status once we apply for application and a minimum of 12 months

to receive a designation once we submit an application.

We might never have these discussions, submit applications under the Orphan Drug

Act as the FDA Accelerated Approval Program or have these applications approved if we do.

Act or the FDA Accelerated Approval Program or have these applications approved if we do.

Adopt a two-pronged patent

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the patient’s quality of life and decrease the total cost of care for patients with these lethal malignancies.

For example, ovarian

cancer patients relapse frequently.

For example, cancer

patients relapse frequently.

Each relapse requires a complex treatment regimen that has decreasing benefits.

Treatment with INKmune

as an out-patient may provide a more durable remission and limit the need for treatment-associated hospitalizations.

Treatment with INKmune as

an out-patient may provide a more durable remission and limit the need for treatment-associated hospitalizations.

At the patient level,

we believe INKmune and INB03 therapy, once approved, should improve survival and quality of life.

we believe INKmune and INB03 therapy, if approved, should improve survival and quality of life.

At the payor level, we believe INKmune,

once approved, should provide more predictable costs and outcomes.

if approved, should provide more predictable costs and outcomes.

Therapies for Alzheimer’s disease are needed for medical, social

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The cost of Alzheimer’s disease to the government is large and growing.

The cost to families and care givers

is real and burdensome.

We believe treatment of patients with dementia, including Alzheimer’s disease, may provide a strategy to

alter the costly dynamic of this disease in society today.

Recently approved therapies that target

amyloid have a modest impact on disease progression and are difficult to use due to side-effects in some patients.

The cost of AD

to families and care givers is real and burdensome.

We believe treatment of dementia patients with XPro, including Alzheimer’s disease,

may provide a strategy to alter the costly dynamic of this disease in society today.

Collaborate to maximize

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The first is the

further development of INKmune, INB03 and XPro by either providing additional innovations to the product, including combination therapy

strategies, and/or providing resources to improve the speed and breadth of the development process.

The second is to optimize the commercialization

of our products either globally or regionally.

further development of INKmune, INB03, XPro and DN-TNF by either providing additional innovations to the product, including combination

therapy strategies, and/or providing resources to improve the speed and breadth of the development process.

The second is to optimize

the commercialization of our products either globally or regionally.

The ideal partner will benefit us in both ways.

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stem cells with minimal batch-to-batch variability.

We believe this may solve the problem associated with supplying an adequate supply

of human mesenchymal stem cells for clinical applications.

We have established a reliable supply of human umbilical cords based on our

agreement with the Anthony Nolan Cord Blood Bank in the United Kingdom.

We have developed a validated manufacturing process that reliably

produces contract manufacturer of the clinical grade (“cGMP”) quality mesenchymal stem cells that we call CORDstrom.

The manufacturing

process can be performed at a contract manufacturing site under the direction of Mark Lowdell, the Company’s CSO.

We will seek academic

laboratories and biopharma companies who need a reliable source of high quality pooled human umbilical cord mesenchymal stem cells for

research of and development of clinical products.

Once identified, we plan to act as a cGMP for the development of therapeutic products

by utilizing contract manufacturers.

Because the production of the product is not continuous, we do not expect to engage a contract manufacturer

until we have a customer identified.

To date, we are supporting two academic clinical trials with CORDstrom.

One program is a Phase 2

trial sponsored by the Great Ormond Street Children’s Hospital in the UK treating children with erythematous bullousa, a disfiguring

skin disease in children that is similar to a second degree burn and the second program is treatment of system lupus in adults.

studies are ongoing.

INmune Bio is supplying the clinical product for treatment of these patients.

The Company does not know the results

of these trials until they are announced by the principle investigators at the clinical sites.

We have identified contract manufacturers

in the UK that have the capability to produce cGMP stem cells.

We expect the commercial arrangement with academic laboratories or biopharma

companies to be a combination of fee-for-service and licensing that does not require additional investment by us.

We will be opportunistic

in pursuing therapeutic opportunities for our own portfolio with this platform in the future if resources become available.

The regulatory

path for therapeutic applications of the mesenchymal stem cell products is well established and similar to the regulatory approval process

for other cell therapies.

We will only be responsible for regulatory compliance related to manufacturing of the mesenchymal stem cells

when the product is being developed by a third party.

When developing a therapeutic product for the Company’s commercial portfolio,

the Company will be responsible for all aspects of the regulatory process.

We have established a reliable supply of human umbilical cords based on our agreement

with the Anthony Nolan Cord Blood Bank in the United Kingdom and may seek additional supplies in the future.

We have developed a validated

manufacturing process that reliably produces contract manufacturer of the clinical grade (“cGMP”) quality mesenchymal stem

cells that we call CORDstrom.

The manufacturing process can be performed at a contract manufacturing site under the direction of Mark

Lowdell, the Company’s CSO.

We will seek academic laboratories and biopharma companies who need a reliable source of high quality

pooled human umbilical cord mesenchymal stem cells for research of and development of clinical products.

Once identified, we plan to act

as a cGMP for the development of therapeutic products by utilizing contract manufacturers.

Because the production of the product is not

continuous, we do not expect to engage a contract manufacturer until we have a customer identified.

To date, we are supporting two academic

clinical trials with CORDstrom.

One program is a Phase 2 trial sponsored by the Great Ormond Street Children’s Hospital in the UK

treating children with Erythematous Bullousa (“EB”), a disfiguring skin disease in children that is similar to a second degree

burn and the second program is treatment of system lupus in adults.

Both these studies are ongoing.

INmune Bio is supplying the clinical

product for treatment of these patients.

The Company does not know the results of these trials until they are announced by the principal

investigators at the clinical sites.

We have identified contract manufacturers in the UK that have the capability to produce cGMP stem

We expect the commercial arrangement with academic laboratories or biopharma companies to be a combination of fee-for-service and

licensing that does not require additional investment by us.

We will be opportunistic in pursuing therapeutic opportunities for our own

portfolio with this platform in the future if resources become available.

The regulatory path for therapeutic applications of the mesenchymal

stem cell products is well established and similar to the regulatory approval process for other cell therapies.

We will only be responsible

for regulatory compliance related to manufacturing of the mesenchymal stem cells when the product is being developed by a third party.

When developing a therapeutic product for the Company’s commercial portfolio, the Company will be responsible for all aspects of

the regulatory process.

Overview of Immunotherapy for Cancer

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approaches are summarized below.

of the early applications of immunotherapy is the use of cytokines, including interferons and interleukin-2 (“IL-2”).

are molecules that inhibit the growth and replication of diseased cells and stimulate innate immune cells to attack them.

They have been

used as standard of care for hepatitis B and C and multiple sclerosis, and to a lesser extent, as treatment for certain cancers, including

chronic myeloid leukemia, cutaneous T-cell lymphoma, myeloma and non-Hodgkin’s lymphoma.

However, the use of interferons has generally

decreased over the years due to serious adverse events ( e.g.

, flu-like symptoms and dramatic weight loss) and introduction of new

therapies with higher efficacy, better safety profiles and more convenient administration although Alpha-interferon remains the treatment

of choice for some hematological conditions such as polycythemia.

Necrosis Factor alpha (“TNF”) is the focus of XPro and INB03.

TNF biology has four elements that include two cytokines, soluble

TNF and trans-membrane TNF (“sTNF” and “tmTNF,” respectively), and two receptors, TNF Receptor 1 and 2 (“TNFR1”

and “TNFR2”).

The biology of TNF ligation of TNFR varies dramatically based on what elements of the TNF system that are used.

sTNF binding to TNFR1 is responsible for inflammation and cell death while sTNF binding to TNFR2 promotes proliferation of regulatory

T cells (“Treg”).

In patients with advanced cancers, increased sTNF is not favorable to long-term survival because it promotes

epithelial-mesenchymal transformation and metastasis while making the tumor microenvironment more immunosuppressive promoting resistance

In the CNS, sTNF promotes neuronal cell death, demyelination and synaptic pruning while tmTNF promotes nerve cell survival,

improves synaptic function and stimulates remyelination.

In brief, sTNF is the “bad” TNF and tmTNF is the “good”

In patients with cancer, infection or neurologic disease, blockade of tmTNF function has negative consequences such as immunosuppression,

increased infection, synaptic dysfunction and demyelination.

One of the early applications

of immunotherapy is the use of cytokines, including interferons and interleukin-2 (“IL-2”).

Interferons are molecules that

inhibit the growth and replication of diseased cells and stimulate innate immune cells to attack them.

They have been used as standard

of care for hepatitis B and C and multiple sclerosis, and to a lesser extent, as treatment for certain cancers, including chronic myeloid

leukemia, cutaneous T-cell lymphoma, myeloma and non-Hodgkin’s lymphoma.

However, the use of interferons has generally decreased

over the years due to serious adverse events ( e.g.

, flu-like symptoms and dramatic weight loss) and introduction of new therapies

with higher efficacy, better safety profiles and more convenient administration although Alpha-interferon remains the treatment of choice

for some hematological conditions such as polycythemia.

IL-2 activates T-cells and NK cells to attack diseased cells.

been used to treat select cancers, but due to its relatively poor safety profile, physicians often only resort to this therapy for the

most advanced settings.

Tumor Necrosis Factor alpha (“TNF”) is the focus of INB03.

TNF biology has four elements that include

two cytokines, soluble TNF and trans-membrane TNF (“sTNF” and “tmTNF,” respectively), and two receptors, TNF Receptor

1 and 2 (“TNFR1” and “TNFR2”).

The biology of TNF ligation of TNFR varies dramatically based on what elements

of the TNF system that are used.

sTNF binding to TNFR1 is responsible for inflammation and cell death while sTNF binding to TNFR2 promotes

proliferation of regulatory T cells (“Treg”).

In patients with advanced cancers, increased sTNF is not favorable to long-term

survival because it promotes epithelial-mesenchymal transformation and metastasis while making the tumor microenvironment more immunosuppressive

promoting resistance to therapy.

In the CNS, sTNF promotes neuronal cell death, demyelination and synaptic pruning while tmTNF promotes

nerve cell survival, improves synaptic function and stimulates remyelination.

In brief, sTNF is the “bad” TNF and tmTNF is

the “good” TNF.

In patients with cancer, infection or neurologic disease, blockade of tmTNF function has negative consequences

such as immunosuppression, increased infection, synaptic dysfunction and demyelination.

IL-2 has been used

to treat select cancers, but due to its relatively poor safety profile, physicians often only resort to this therapy for the most advanced

Antibody therapy.

Antibodies exist in three formats:

monoclonals (“mAbs”),

oligo/polyclonal and antibody-drug conjugates.

mAbs represent an effective therapeutic modality and are important to the treatment paradigm

of various diseases.

Drug manufacturers have leveraged mAbs’ ability to induce an antibody-dependent cell-mediated cytotoxicity,

or ADCC effect to develop better treatments that prolong survival and quality of life of patients.

In addition, mAbs designed to inhibit

specific checkpoints in the immune system have overcome in vivo immune suppression and the resulting immune responses have led to profound

therapeutic benefit in some patients.

However, the degree of efficacy of these therapies is heavily reliant on the immune system of patients,

many of whom are severely immuno-compromised.

In addition, mAbs are manufactured through a complex process that requires purification

of cell products created from a cell line.

Polyspecific antibodies, for example bi-specific antibodies, are able to target more than one

These are often used to bring and effector T cell in contact with a target cell.

Antibody drug conjugates are mAbs attached to

a toxin, chemotherapy or radio therapy that delivers the cancer killing payload directly to the cancer.

monoclonals (“mAbs”), oligo/polyclonal and antibody-drug conjugates.

mAbs represent an

effective therapeutic modality and are important to the treatment paradigm of various diseases.

Drug manufacturers have leveraged mAbs’

ability to induce an antibody-dependent cell-mediated cytotoxicity, or ADCC effect to develop better treatments that prolong survival

and quality of life of patients.

In addition, mAbs designed to inhibit specific checkpoints in the immune system have overcome in vivo

immune suppression and the resulting immune responses have led to profound therapeutic benefit in some patients.

However, the degree of

efficacy of these therapies is heavily reliant on the immune system of patients, many of whom are severely immuno-compromised.

mAbs are manufactured through a complex process that requires purification of cell products created from a cell line.

Polyspecific antibodies,

for example bi-specific antibodies, are able to target more than one antigen.

These are often used to bring and effector T cell in contact

with a target cell.

Antibody drug conjugates are mAbs attached to a toxin, chemotherapy or radio therapy that delivers the cancer killing

payload directly to the cancer.

Dendritic Cell Therapies.

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Our Innate Immune Dominant-Negative

TNF product candidate

We renamed XPro, which

we license from Xencor, to INB03 when it is used for cancer related indications.

We will continue to call the drug XPro when

used for treatment of neuropsychiatric diseases, including Alzheimer’s disease and TRD discussed below.

INB03 and XPro are the

same drug with different names for marketing purposes.

INB03 is a novel innate immune system check-point inhibitor that we believe

decreases expression of MUC4 by the tumor, an important resistance mechanism to immunotherapy, decreases proliferation of MDSC,

promotes recruitment of cytotoxic T cells to the TME and may convert immunosuppressive tumor macrophages into tumor phagocytic

In murine models, these changes make the tumor reverse resistance to treatment with immunotherapy alone or in

combination with tyrosine kinase inhibitors (TKI) such a lapatinib.

MUC4 expression is increased by sTNF.

Resistance to trastuzumab

therapy by MUC4 expressing HER2+ breast and gastric cancer cells is driven by steric hinderance.

TNF (“DN-TNF”) product candidate

We renamed XPro, which we license

from Xencor, to INB03 when it is used for cancer related indications.

We will continue to call the drug XPro when used for treatment of

neurologic and psychiatric diseases, including Alzheimer’s disease and TRD discussed below.

INB03 and XPro are the same drug with

different names.

INB03 neutralizes soluble TNF in the tumor microenvironment (“TME”).

Neutralizing sTNF in the TME has two main effects

– decreases expression of MUC4 by the tumor and converting the immunosuppressive cancer promoting TME that promotes tumor growth

to an immunologically active TME that promotes tumor cell death.

INB03 decreases proliferation of MDSC, promotes recruitment of cytotoxic

T cells to the TME and may convert immunosuppressive tumor macrophages into tumor phagocytic macrophages.

In murine models, these changes

make the tumor reverse resistance to treatment with immunotherapy alone or in combination with tyrosine kinase inhibitors (TKI) such a

lapatinib and tucatinib.

MUC4 expression is increased by sTNF produced by the tumor.

MUC4 causes resistance to trastuzumab therapy in

HER2+ breast and gastric cancer cells by preventing binding of trastuzumab to HER2 by steric hinderance.

By neutralizing sTNF with INB03,

MUC4 expression decreases allow trastuzumab to bind HER2/neu.

decreases MUC4 expression to allow trastuzumab to bind HER2.

The importance of trastuzumab based immunotherapy in the treatment of HER2

expressing tumors has increased recently due to the success of trastuzumab-deruxtecan (Enhertu, TDxd).

TDxd improves survival in women

with metastatic HER2+ breast cancer in both high and low HER2 expressing tumors.

MUC4 expression inhibits the TDxd tumor killing in a

murine model of HER2+ trastuzumab resistant HER2+ breast cancer.

The mechanism by which combination of INB03 with TKI improves efficacy

over TKI alone remains under investigation.

By using INB03 as part of combination therapy for cancer, we believe the patient’s

dysregulated immune response, a hallmark of cancer progression and resistance to therapy, to be converted to a coordinated immune

response that can overcome resistance mechanisms to immunotherapy.

By using INB03 as part of combination therapy for cancer, we believe the patient’s dysregulated

immune response, a hallmark of cancer progression and resistance to therapy, to be converted to a coordinated immune response that can

overcome resistance mechanisms to immunotherapy in MUC4 expressing cancers.

These immune responses have been studied in at least two animal

In a murine model of an inflammatory cancer, where 3-methylcholanthrese is given to mice in a subcutaneous injection that

causes the development of multiple cutaneous fibrosarcoma.

This model was developed by Y Akamatsu in 1967 while working at the

National Cancer Institute of the NIH.

In research published by Professor Nikola Vujanovic in Cancer Immunology

Research in 2016, treatment with INB03 resulted in smaller and fewer cancers with increased survival.

INB03 is an engineered

PEGylated protein that neutralizes human soluble TNF, a human inflammatory cytokine that is increased in patients with advanced

By specifically neutralizing the cytokine, there is decreased phosphorylation of STAT3, an essential step required for the

proliferation of the MDSC population, and secretion of the immunosuppressive cytokines.

The combination of decreased MDSC

proliferation and decreased immunosuppressive cytokines allows the immune system to respond to the tumor.

This data was published in

an article entitled Inhibition of Soluble Tumor Necrosis Factor Prevents Chemically Induced Carcinogenesis in Mice in Cancer

Immunology Research in Cancer Immunology Research 2016.

In summary, INB03 functions as an innate immune system

checkpoint inhibitor by eliminating the population of MDSC that provides an immunosuppressive shield protecting the tumor, the

patient’s immune system is able to function normally to the benefit of the patient – it can attack the tumor.

an important role in breast cancer (Schillaci R, Front.

Oncol., 22 April 2020

| https://doi.org/10.3389/fonc.2020.00584 ).

In a murine model of trastuzumab resistant breast cancer using JMIT-1 cells,

a human cell line of HER2 positive breast cancer resistant to trastuzumab placed into immunocompromised mice, INB03 downregulates

MUC4 from the surface of the JMIT-1 HER2+ breast cancer cells to allow the trastuzumab resistant cells to become trastuzumab

sensitive (Figure A from Bruni, NYAS 2020) to decrease tumor growth (from Schillaci SABCS 2018, Figure B).

JMIT-1 cells are also

resistant to lapatinib, a TKI inhibitor used as a second line therapy in women with trastuzumab resistant HER2+ breast cancer.

addition of INB03 to lapatinib in the animal model reverses lapatinib resistance in part by decreasing expression of MUC4 (from

Bruni NYAS 2020, Figure C).

In addition to decreasing resistance to trastuzumab by decreasing MUC4 expression, INB03 decreases the

immunosuppressive tumor microenvironment (Schillaci SABCS 2018, Bruni NYAS 2020).

In a murine model of an inflammatory cancer, where 3-methylcholanthrese is given to mice in a subcutaneous injection that causes

the development of multiple cutaneous fibrosarcoma.

This model was developed by Y Akamatsu in 1967 while working at the National Cancer

Institute of the NIH.

In research published by Professor Nikola Vujanovic in Cancer Immunology Research in 2016, treatment

with INB03 resulted in smaller and fewer cancers with increased survival.

INB03 is an engineered PEGylated protein that neutralizes human

soluble TNF, a human inflammatory cytokine that is increased in patients with advanced cancer.

By specifically neutralizing the cytokine,

there is decreased phosphorylation of STAT3, an essential step required for the proliferation of the MDSC population, and secretion of

the immunosuppressive cytokines.

The combination of decreased MDSC proliferation and decreased immunosuppressive cytokines allows the

immune system to respond to the tumor.

This data was published in an article entitled Inhibition of Soluble Tumor Necrosis Factor Prevents

Chemically Induced Carcinogenesis in Mice in Cancer Immunology Research in Cancer Immunology Research, 2016.

INB03 functions as an innate immune system checkpoint inhibitor by eliminating the population of MDSC that provides an immunosuppressive

shield protecting the tumor, the patient’s immune system is able to function normally to the benefit of the patient – it can

attack the tumor.

TNF plays an important role in breast cancer (Schillaci R, Front.

Oncol., 22 April 2020 | https://doi.org/10.3389/fonc.2020.00584 ).

In a murine model of trastuzumab resistant breast cancer using JMIT-1 cells, a human cell line of HER2 positive breast cancer resistant

to trastuzumab placed into immunocompromised mice, INB03 downregulates MUC4 from the surface of the JMIT-1 HER2+ breast cancer cells to

allow the trastuzumab resistant cells to become trastuzumab sensitive (Figure A from Bruni, NYAS 2020) to decrease tumor growth (from

Schillaci SABCS 2018, Figure B).

JMIT-1 cells are also resistant to lapatinib, a TKI inhibitor used as a second line therapy in women

with trastuzumab resistant HER2+ breast cancer.

The addition of INB03 to lapatinib in the animal model reverses lapatinib resistance in

part by decreasing expression of MUC4 (from Bruni NYAS 2020, Figure C).

In addition to decreasing resistance to trastuzumab by decreasing

MUC4 expression, INB03 decreases the immunosuppressive tumor microenvironment (Schillaci SABCS 2018, Bruni NYAS 2020).

Recently, Dr.

Schillaci reported the MUC4

expressing triple negative breast (TNBC) cancer patients have a worse overall survival.

reported the MUC4 expressing triple negative breast (TNBC) cancer patients have a worse overall survival.

(Schillaci SABCS 2021).

These data may be

relevant to all tumors that express HER2 or MUC4 including upper gastrointestinal malignancies such as gastric and pancreatic

We believe MUC4 expression is a biomarker of resistance that may dictate changes therapeutic strategy by clinical teams

recently, Schillaci has shown that MUC4 causes resistance to trastuzumab ADC (trastuzumab-XXX and TDxd).

Combination therapy with INB03

overcomes resistance in this breast cancer model.

These data may be relevant to all tumors that express HER2 or MUC4 including upper gastrointestinal

malignancies such as gastric and pancreatic cancer.

We believe MUC4 expression is a biomarker of resistance that may improve therapeutic

decision making by clinical teams

Because INB03 targets the

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Our Phase I clinical trial preceded

the identification of MUC4 as a biomarker and focused on using INB03 as monotherapy.

This is a typical Phase I clinical trial design for

first-in-man trials in cancer.

We expect to use INB03 as part of combination therapy with approved cancer therapies as part of Phase II

We do not expect to need to modify INB03 therapy to treat each different type of cancer, because INB03 therapy targets the

immune system, not the cancer.

We do expect to develop the INB03 beyond Phase II to target a specific type of cancer to meet the current

system of regulatory approval.

For instance, INB03 may be approved to treat patients with HER2+/MUC4+ breast cancer.

To get subsequent

approval for the treatment of patients with MUC4+ TNBC or MUC4+ pancreatic cancer, we will need to perform a pivotal trial in patients

with TNBC and pancreatic cancer respectively.

After the first regulatory approval, if and when achieved, we believe the difficulty and

cost of achieving these labels extensions will decline with each successive approval.

At this time, we cannot predict if patients without

biomarkers of inflammation, elevated MDSC or cytokines, or increased expression of MUC4 will benefit from treatment with INB03.

studies may be performed in the future, but they are not a priority.

XPro neutralizes soluble

TNF in the brain in exactly the same way INB03 neutralizes soluble TNF in the tumor microenvironment but the effects of soluble TNF neutralization

the identification of MUC4 as a biomarker and focused on using determining the safety of INB03 as monotherapy in patients with advanced

solid tumors.

This is a typical Phase I clinical trial design for first-in-man trials in cancer.

We expect to use INB03 as part of combination

therapy with approved cancer therapies as part of Phase II development.

We do not expect to need to modify INB03 therapy to treat each

different type of cancer, because INB03 therapy targets the immune system, not the cancer.

We do expect to develop the INB03 beyond Phase

II to target a specific type of cancer to meet the current system of regulatory approval.

For instance, INB03 may be approved to treat

patients with HER2+/MUC4+ breast cancer.

To get subsequent approval for the treatment of patients with MUC4+ TNBC or MUC4+ pancreatic

cancer, we will need to perform a pivotal trial in patients with TNBC and pancreatic cancer respectively.

After the first regulatory approval,

if and when achieved, we believe the difficulty and cost of achieving these labels extensions will decline with each successive approval.

At this time, we cannot predict if patients without biomarkers of inflammation, elevated MDSC or cytokines, or increased expression of

MUC4 will benefit from treatment with INB03.

Those studies may be performed in the future, but they are not a priority.

XPro neutralizes soluble TNF

in the brain in exactly the same way INB03 neutralizes soluble TNF in the tumor microenvironment but the effects of soluble TNF neutralization

in the brain are different.

The cause of the destructive neuroinflammation in the brain are microglial and astroglial cells.

cell are two of four cells in the neural unit that also includes oligodentrocytes and nerve cells.

cell are two of four cells in the neural unit that also includes oligodendrocytes and nerve cells.

Activated microglial cells are considered

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of the neural unit.

The Company has completed a Phase I trial using XPro to reverse neuroinflammation

in patients with Alzheimer’s disease.

The trial was performed in Australia and is partially funded by a $1M USD Part-the-Cloud Award

from the Alzheimer’s Association.

The clinical trial is the first in the Company’s development program for the treatment of

The open label, dose escalation trial in patients with Alzheimer’s disease with biomarkers of peripheral inflammation

(one of CRP>1.5mg/L, HgbA1c>6.0, ESR>10sec or have ApoE4) treats the patients with XPro as a once-a-week subcutaneous injection

for 3 months.

Patients have multiple biomarkers of neuroinflammation tested before and during therapy including soluble biomarkers in

blood and cerebral spinal fluid, behavioral biomarkers (neuropsychiatric symptoms of AD) and neuroimaging biomarkers using MRI.

goal of this short, open label study is to demonstrate that treatment with XPro decreases neuroinflammation safely and to define the dose

of XPro to use in the Phase II trial.

Studies of cognitive function are performed on the patients but are not expected to show significant

change because of the short duration of the trial and the wide range of disability in patients enrolled in the clinical trial (MMSE range:

The goal of the planned Phase II trial will be to demonstrate the prolonged control of neuroinflammation in patients with dementia

will help control cognitive decline.

The Company plans two Phase II trials, one each in mild cognitive impairment (MCI) and mild AD.

trial enrolled 18 patients at doses of 0.3, 0.6 and 1.0mg/kg given once a week as subcutaneous injection for three months.

the 10mg/kg group were offered extended us of the drug for up to 12 months.

The Company has completed

a Phase I trial using XPro to reverse neuroinflammation in patients with Alzheimer’s disease.

The trial was performed in Australia

and is partially funded by a $1M USD Part-the-Cloud Award from the Alzheimer’s Association.

The clinical trial was the first in

the Company’s development program for the treatment of dementia.

The open label, dose escalation trial in patients with Alzheimer’s

disease with biomarkers of peripheral inflammation (one of CRP>1.5mg/L, HgbA1c>6.0, ESR>10sec or have ApoE4) treats the patients

with XPro as a once-a-week subcutaneous injection for 3 months.

AD patients with one biomarker of inflammation are classified as having

AD with neuroinflammation (ADi).

The company estimates this group of patients includes at least 40% of patients with AD.

Patients have

multiple biomarkers of neuroinflammation tested before and during therapy including soluble biomarkers in blood and cerebral spinal fluid,

behavioral biomarkers (neuropsychiatric symptoms of AD) and neuroimaging biomarkers using MRI.

The primary goal of this short, open label

study was to demonstrate that treatment with XPro decreases neuroinflammation safely and to define the dose of XPro to use in the Phase

The Company has opened a Phase II trial in ADi in Australia (“AUS”) and Canada (“CAN”).

We anticipate

opening additional countries including the US in 2023.

The Phase II ADi program is not yet open in the US.

The FDA has placed a full

clinical hold on the program related to product characteristics in the product produced for the Phase II program at KBI Biosciences in

The XPro produced by KBI is being used in the Phase II trial in AUS and CAN, the Phase II extension trial in patients that have

completed the Phase II trial in AUS and the Expanded Access Scheme in patients who completed the Phase I trial in AUS.

The Company is

working closely with the FDA to reverse the clinical hold.

We cannot predict when this will occur.

Our plan is to continue to enroll

patients in the Phase II ADi trial in regulatory venues outside of the US while working to resolve the concerns of the FDA.

of the Phase II trial will be to demonstrate the prolonged control of neuroinflammation in patients with dementia will help control cognitive

The Company has review its two Phase II trials in dementia, one each in mild cognitive impairment due to neuroinflammation (“MCI”)

and mild ADi.

New data supports combining the two trials into a single trial.

Instead of having separate blinded randomized Phase II

clinical trials in mild ADi and MCI 2 , there will be one clinical trial in early ADi that will include patients with either

mild ADi or MCI.

Combination of the two trials into a single clinical trial may speed enrollment and decrease costs and will likely mirror

the planned Phase III registration trial without increasing the risk of the clinical program.

The Phase I trial enrolled

18 patients at doses of 0.3, 0.6 and 1.0mg/kg given once a week as subcutaneous injection for three months.

Patients in the 10mg/kg group

were offered extended use of the drug for up to 12 months.

Three patients remained on XPro for 12 months.

data was presented in a webinar on 13 July 2020.

Preliminary data was presented

in a webinar on 13 July 2020.

Neuroimaging data from six patients were presented in the figure below.

treatment with XPro at either 0.3 or 1.0mg/kg once-a-week as a subcutaneous injection (low and target dose respectively) decreased white

matter free water (WMFW) as measured by MRI.

In summary, treatment with XPro

at either 0.3 or 1.0mg/kg once-a-week as a subcutaneous injection (low and target dose respectively) decreased white matter free water

(“WMFW”) as measured by MRI.

WMFW is a validated biomarker of neuroinflammation.

Although the number of patients is low,

there was a dose response with a greater decrease in WMFW in the target dose compared to the low dose group.

An analysis of inflammation

in white matter tracts demonstrated a significant decrease in WMFW (40%;

range 20-52%) in the arcute fasciculus, a white matter tract

important in the control of language and short-term memory (Figure D).

These data suggest XPro is decreasing neuroinflammation in patients

with Alzheimer’s disease who have biomarkers of peripheral inflammation.

Additional data was presented on January 21, 2021.

The goal of the

January 21 data release was to show a correlation between the white matter free water, a novel biomarker of inflammation with cerebral

spinal fluid (“CSF”) cytokines and chemokine levels, a traditional measure neuroinflammation.

CSF cytokine/chemokines were

measure in 9 patients before and after 12 weeks of weekly therapy with XPro using a panel from OLINK Target 48 Cytokine ( https://www.olink.com/products/olink-target-48-cytokine/ ),

that measures 45 (Figure AD1).

In the 6 patients in the 1mg/kg per week dose, only one cytokine and

chemokine, interferon gamma (INFg) did not change in the CSF of patients, the remainder all decreased on average of 15%.

Using data from

all patients treated for 12 weeks (3 low dose, 6 target dose), a high correlation (R 2 =.7561) between the white matter free

water safe mask and the inflammation composite score is shown in figure AD2.

The data analyzed provides evidence that XPro decreases neuroinflammation

in patients with Alzheimer’s disease.

Although the number of patients is low, there was a dose

response with a greater decrease in WMFW in the target dose compared to the low dose group.

An analysis of inflammation in white matter

tracts demonstrated a significant decrease in WMFW (40%;

range 20-52%) in the arcute fasciculus, a white matter tract important in the

control of language and short-term memory (Figure D).

These data suggest XPro is decreasing neuroinflammation in patients with Alzheimer’s

disease who have biomarkers of peripheral inflammation.

Additional data was presented

on January 21, 2021.

The goal of the January 21 data release was to show a correlation between the white matter free water, a novel biomarker

of inflammation with cerebral spinal fluid (“CSF”) cytokines and chemokine levels, a traditional measure neuroinflammation.

CSF cytokine/chemokines were measured in 9 patients before and after 12 weeks of weekly therapy with XPro using a panel from OLINK Target

48 Cytokine ( https://www.olink.com/products/olink-target-48-cytokine/ ), that measures 45 (Figure AD1).

In the 6 patients in the 1mg/kg

per week dose, only one cytokine and chemokine, interferon gamma (“INFg”) did not change in the CSF of patients, the remainder all decreased

on average of 15%.

Using data from all patients treated for 12 weeks (3 low dose, 6 target dose), a high correlation (R 2 =.7561)

between the white matter free water safe mask and the inflammation composite score is shown in figure AD2.

The data analyzed provides

evidence that XPro decreases neuroinflammation in patients with Alzheimer’s disease.

We believe these data support the use of XPro to treat other diseases

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in the 6 patients from target dose group (XPro 1mg/kg for 12 weeks) be looking at the CSF proteome using technology for Proteome Sciences

using their TMT Calibrator™ platform ( https://www.proteomics.com/services/tmtcalibrator-workflow ).

A large data set of proteins

were identified.

Early analysis of the data focusing on 26 AD related proteins demonstrated changes in inflammation, neuronal and synaptic

proteins caused by decreasing neuroinflammation after treatment with XPro (Figure AD3).

The proteome also demonstrated a clear dose response

with a greater number of proteins being affected by the target dose compared to low dose XPro therapy (0.3 vs 1.0 mg/kg/week for 12 weeks)

(Figure AD4).

using their TMT Calibrator™ platform.

A large data set of proteins were identified.

Early analysis of the data focusing on 26 AD

related proteins demonstrated changes in inflammation, neuronal and synaptic proteins caused by decreasing neuroinflammation after treatment

with XPro (Figure AD3).

The proteome also demonstrated a clear dose response with a greater number of proteins being affected by the target

dose compared to low dose XPro therapy (0.3 vs 1.0 mg/kg/week for 12 weeks) (Figure AD4).

The CSF proteome data is only partially analyzed.

Additional data may result from these ongoing analytics.

The results of the Phase I study demonstrates that XPro safely decreases

neuroinflammation in patients with AD who have biomarkers of peripheral inflammation or are ApoE4 positive when given for at least 3 months

at the 1mg/kg once a week dose.

Decreasing neuroinflammation with XPro appears to decrease neurodegeneration and improve synaptic function

and promote remyelination.

The biologic characteristics suggests XPro therapy in patients with peripheral biomarkers of inflammation or

ApoE4 allele(s) may impact cognitive decline.

Although there were anecdotes of improved cognitive function in patients receiving the target

dose of XPro, this cannot be verified because the trial was not a blinded, randomized trial.

The impact on cognition of controlling neuroinflammation

with XPro will be studied in the Phase II programs.

The Company plans two Phase

II trials in patients with AD with biomarkers of inflammation.

A blinded randomized trial in patients with mild AD plans to enroll 201

patients in a 2:1 ratio (XPro:placebo) at 1mg/kg once a week.

The results of the Phase I

study demonstrated that XPro safely decreases neuroinflammation in patients with ADi who have biomarkers of peripheral inflammation or

are ApoE4 positive when given for at least 3 months at the 1mg/kg once a week dose.

Decreasing neuroinflammation with XPro appears to

decrease neurodegeneration and improve synaptic function and promote remyelination.

The effect of XPro on the biology and immunology of

the brain in patients with AD suggest XPro therapy in patients with peripheral biomarkers of inflammation or ApoE4 allele(s) may impact

cognitive decline.

Although there were anecdotes of improved cognitive function in patients receiving the target dose of XPro, this cannot

be verified because the trial was not a blinded, randomized trial.

The impact on cognition of controlling neuroinflammation with XPro

will be studied in the Phase II program which is a blinded randomized, placebo controlled clinical trial.

The Company has consolidated

the two Phase II trials into a single trial of early ADi.

Early ADi patients have either mild AD or MCI with neuroinflammation.

AD or MIC patients must with at least one of elevated CRP, hemoglobinA1c, ESR in blood or have an ApoE4 allele are eligible for the trial.

The blinded randomized trial in patients with early ADi will enroll 201 patients in a 2:1 ratio (XPro:placebo) at 1mg/kg once a week.

The trial is currently enrolling study subjects.

Patients will be treated for 6 months.

A patient enrichment strategy will

be used to ensure patients have neuroinflammation – patients must have at least two of elevated CRP, hemoglobinA1c, ESR or have

an ApoE4 allele.

The primary end-point is Early/Mild Alzheimer’s Cognitive Composite (EMACC), a sensitive cognitive end-point validated

for use in patients with early AD.

Secondary cognitive (ADAS-Cog13, CDR-SB and NPI) and functional (GAS, ADCS-ADL) end-points will be

Biomarkers of inflammation using white and gray matter analytics measured by MRI DTI similar to those used in the Phase I trial

will also be used.

All patients will be eligible to continue on XPro for at least 6 additional months.

Clinical and MRI metrics will be

followed during the extension trial.

The second Phase II trial will be a blinded randomized trial in patients

with MCI in which the Company plans to enroll 60 patients in two arms in a 2:1 ratio (1mg/kg/week XPro, placebo).

Patients will be treated

for 3 months.

Patients must have at least one ApoE4 allele to qualify for the trial.

The primary end-point is EMACC, a sensitive cognitive

end-point validated for use in patients with early AD.

Secondary clinical endpoints include the CDR-SB, Cogstate Battery, E-Cog, NPI,

and ADCS-ADL.

Imaging endpoints of neuroinflammation (White matter free water), white matter integrity (apparent fiber density, radial

diffusivity), and gray matter quality (cortical disarray measurement) will be assessed via MRI.

Changes in brain metabolism will be assessed

Additional secondary measures of function include EEG, and speech and language.

All patients will be eligible to continue

on XPro for at least 9 additional months.

The primary end-point is Early/Mild Alzheimer’s

Cognitive Composite (EMACC), a sensitive cognitive end-point validated for use in patients with early AD.

Secondary cognitive (ADAS-Cog13,

CDR-SB and NPI) and functional (GAS, ADCS-ADL) end-points will be measured.

Biomarkers of inflammation using white and gray matter analytics

measured by MRI DTI similar to those used in the Phase I trial will also be used.

All patients will be eligible to continue XPro for

at 12 additional months.

Clinical and MRI metrics will be followed during the extension trial.

The Company may

amend the clinical trial design from time-to-time to improve the quality of the data or the probability of success.

Effective therapy for TRD is a large unmet need.

Twenty percent of

patients with a Major Depressive Disorder have TRD.

Once third of TRD patients have peripheral biomarkers to inflammation (elevated CRP).

Effective therapy for TRD

is a large unmet need.

Twenty percent of patients with a Major Depressive Disorder have TRD.

Once third of TRD patients have peripheral

biomarkers to inflammation (elevated CRP).

This is a large patient population.

The role of TNF and anti-TNF therapeutics was explored in a small open label clinical trial by Prof.

Andrew Miller, MD of Emory University whereby it was demonstrated that patients which have elevated TNF levels responded to treatment

with infliximab (Miller, 2011).

The Company received a $2.9M

USD award from the National Institute of Mental Health (“NIMH”) to treat TRD with XPro.

The blinded, randomized Phase II trial

will use a biomarkers of peripheral inflammation to select patients with TRD for enrollment.

The role of TNF and anti-TNF therapeutics was explored

in a small open label clinical trial by Prof.

Andrew Miller, MD of Emory University whereby it was demonstrated that patients which have

elevated TNF levels responded to treatment with infliximab (Miller, 2011).

The Company received a $2.9M USD award from the National Institute

of Mental Health (“NIMH”) to treat TRD with XPro.

The blinded, randomized Phase II trial will use a biomarkers of peripheral

inflammation to select patients with TRD for enrollment.

Patients will be treated for 6 weeks.

end-points include both clinical and neuroimaging measures.

Primary end-points include both clinical

and neuroimaging measures.

The final trial design is ongoing and discussions with the FDA are not complete.

The Company anticipates receiving authorization to initiate the clinical trial in the second half of 2022.

The Company anticipates receiving

authorization to initiate the clinical trial in 2023 at which point the Company may begin to request funds from the NIMH pursuant to the

INB03 and XPro are delivered

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injection similar to an insulin injection (the therapy patients give themselves for treatment of Type 1 diabetes mellitus), we expect

patients to administer the therapy to themselves and not require expensive or logistically challenging clinic visits to receive the therapy.

Three step process to preparation

for INB03 and XPro for human clinical trials:

patients to administer the therapy by themselves or caregivers and not require expensive or logistically challenging clinic visits to

receive the therapy.

Release of INB03 and XPro drug supply

GMP DN-TNF product (INB03 and XPro) are available for clinical development

after completion of release testing.

The annual process for release testing was completed in February 2018, January 2019, December 2019

and November 2020.

The supply of DN-TNF product is limited, but allowed completion of the Phase I study in Alzheimer’s disease and

support of patients in the extension study.

For future trials, new batches of XPro have been produced.

The Company engaged KBI Biopharma

to manufacture 6 lots of XPro/INB03 at the Boulder, Colorado facility using the original master cell bank and updated manufacturing process.

Two lots have been converted into drug product using the US fill/finish facility of Vetter Pharma.

Two of the lots are frozen as drug

substance at -80C with a plan to convert to drug product the second half of 2023.

The final two lots are frozen as a cell paste with a

plan to process to drug substance in during 2023 or 2024 as needed to support the clinical trials.

We plan to use a two-step approach

to improve the yield of the drug substance from the fermentation process.

We hope to improve the yield of the drug product using the existing E.coli

based system.

GMP DN-TNF product (INB03 and XPro) used in the

oncology Phase I, AD Phase I and COVID-19 Phase II trial were manufactured by Lonza at a site in New Hampshire.

The supply of Lonza DN-TNF

product is limited but allowed completion of the Phase I study in Alzheimer’s disease and support of patients in the extension

study for 12 months.

New batches of XPro have been produced to support future clinical trials.

The Company engaged KBI Biopharma to manufacture

6 lots of XPro/INB03 at the Boulder, Colorado facility using the original master cell bank and updated manufacturing process.

have been converted into drug product using the US fill/finish facility of Vetter Pharma.

Two of the lots are frozen as drug substance

at -80C with a plan to convert to drug product the second half of 2023.

The final two lots are frozen as a cell paste with a plan to

process to drug substance in during 2023 or 2024 as needed to support the clinical trials.

We plan to use a two-step approach to improve

the yield of the drug substance from the fermentation process.

We hope to improve the yield of the drug product using the existing E.coli-based

Once the new process is validated and functional, we will perform a manufacturing campaign drug for future clinical trials.

In the future, the Company may consider a strain change to improve yield of the fermentation step further.

the future, the Company may consider a strain change to improve yield of the fermentation step further.

The decision for strain improvements

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I trial with XPro in patients with Alzheimer’s disease.

The Phase II program with Alzheimer’s disease will start first half

The Phase I trial with XPro in patients with Alzheimer’s disease is performed in Australia under the regulatory authority

of the TGA using the Clinical Trials Exemption (“CTX”) scheme.

Our first interaction with the regulatory body occurred in

The Phase II program with Alzheimer’s disease started during 2022.

The Phase I trial with XPro in patients with Alzheimer’s disease was performed in Australia under the regulatory authority of the

TGA using the Clinical Trials Exemption (“CTX”) scheme.

Our first interaction with the regulatory body occurred in March 2018.

The Company received approval to initiate the Phase I trial with INB03 in patients with advanced solid tumors on May 21, 2018.

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failure in patients hospitalized with COVID-19 infection.

We plan to complete the regulatory process for the Phase II clinical trials in

patients with Alzheimer’s disease and Phase II TRD clinical trials with the FDA during the first half of 2022.

The newly manufactured XPro is being used to support the Phase II AD trial in

AUS and CAN, the extension trial in AUS, and the Expand Access Scheme in AUS.

The FDA has not allowed the use of this drug in the US yet.

The FDA has asked for additional analytical testing to demonstrate comparability between the XPro used in the Phase I oncology, AD and

Phase II COVID-19 clinical trials with the drug planned to be used in the Phase II AD clinical trials.

This comparability testing is underway.

We cannot predict when the FDA will release the US Phase II from clinical hold.

The CAN and AUS regulatory authorities are aware of the

FDA clinical hold – they have not asked for similar information and allow the clinical program to proceed.

INB03 Product Development Path:

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Phase I open label study in

patients with advance solid tumors has been completed.

patients with advanced solid tumors has been completed.

All future studies cancer will use INB03 as part of combination therapy.

on the results of the Phase I study and work performed and reported by Prof.

Roxana Schillaci, we are planning a study of INB03 in combination

with currently approved second line therapy for treatment of tumors that express MUC4.

This may include a study in women with trastuzumab

resistant HER2+ metastatic breast cancer where primary or secondary resistance to trastuzumab is common and may include women with brain

Alternatively, the Phase II trial may include women with MUC4+ TNBC or patients with MUC4+/HER2+ gastric cancer or MUC4+ pancreatic

These trials will not be initiated until the COVID-19 pandemic has run its course.

We do not expect to treat patients in an oncology

INB03 Phase II trial with INB03 before 2023.

Pre-clinical studies of INB03 in MUC4 expressing tumors continue.

The evolution

of oncology standard of care occurs quickly.

Immune checkpoint inhibitors (“CPI”) were introduced 5 years ago.

The success of CPI change

the focus of cancer therapy from cytotoxic based cancer regimens to immunotherapy-based cancer regimens.

The approval of Trastuzumab (“TDxd”)

in 2022 had a similar effect on HER2 expressing cancers.

For example, use of trastuzumab based therapy in HER2+ breast cancer required

3+ expression of HER2.

With TDxd, low HER2 expression (1+ or 2+ but not null) benefit for TDxd.

This has dramatically expanded the number

of women eligible for trastuzumab based immunotherapy from 20% to half of women with breast cancer.

This dramatic change in breast cancer

standard-of-care impacted our development plans for INB03 in breast cancer.

The Phase II trial is planned to be in women who have failed

TDxd therapy.

About half of women who receive TDxd are resistant to therapy.

We believe, but need to confirm, that many of those women

express MUC4.

We believe an exploratory, single arm open label Phase II in woman who progress after TDxd is warranted.

We believe the

combination of TDxD, INB03 and TKI will be effective.

We continue to conduct pre-clinical studies of INB03 in MUC4 expressing tumors.

A decision on the clinical trial will not be made until the pre-clinical work has been completed and the data has been presented to an

Advisory Board of clinical experts.

INB03 Registration Studies and/or Partnering

We plan to pursue an efficient

registration strategy using INB03 to improve the lives of patients with cancer and biomarkers of inflammation such as MUC4.

that this strategy has use across many types of solid tumors including patients who have failed CPI, tyrosine kinase inhibitors (“TKI”)

registration strategy using INB03 to improve the lives of patients with cancer and biomarkers of resistance such as MUC4.

We believe that

this strategy has use across many types of solid tumors including patients who have failed CPI, tyrosine kinase inhibitors (“TKI”)

and anti-cancer antibody therapy such as trastuzumab monoclonal antibodies and trastuzumab based antibody drug conjugates.

active partnering position as it relates to INB03 development in cancer, although no partnering discussion are underway at this time.

We do not expect partnering discussions to begin until Phase II data demonstrating efficacy of INB03 as part of combination therapy for

cancer are available.

active partnering position as it relates to INB03 development in cancer, although limited partnering discussion are underway at this time

We do not expect partnering discussions to begin until Phase II data demonstrating efficacy of INB03 as part of combination

therapy for cancer are available.

Our INB03 platform can be

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INB03 and XPro Regulatory Strategy

Drugs from the DN-TNF platform will be developed using adequately powered,

well designed studies with the goal to demonstrate a meaningful clinical benefit to patients.

Beyond Phase I, these will be blinded, randomized

clinical trials using validated end-points that have been authorized by a regulatory authority – the FDA, TGA, MHRA, EMA, etc.

all planned studies will be performed in North America, AUS and/or the UK.

Studies will be expanded to Europe and beyond as resources

permit and development needs expand.

Because there are no therapies similar to INB03 or XPro approved in any market and no therapies approved

for the treatment of the diseases we are pursuing, we plan to take advantage of the regulatory opportunities afforded to therapies that

treat markets with a high unmet need.

In the U.S., this includes Orphan Drug Designation and expedited programs for approval including

Accelerated Approval, Breakthrough Therapy Designation, Fast Track Designation, and priority review (see “Government Regulation”),

and in the setting of COVID-19, Emergency Use Authorization.

We cannot predict which, if any, of these programs we will benefit from without

further discussions with the FDA.

Similar programs exist in the EU with the EMA.

We will engage the EMA once we have initiated Phase II

trials in the United States and Australia.

Drugs from the DN-TNF platform

will be developed using adequately powered, well designed studies with the goal to demonstrate a meaningful clinical benefit to patients.

Beyond Phase I, these will most often be blinded, randomized clinical trials using validated end-points that have been authorized by a

regulatory authority – the FDA, TGA, MHRA, EMA, etc.

Currently, all planned studies will be performed in North America, AUS, EU

and/or the UK.

Because there are no therapies similar to INB03 or XPro approved in any market, we plan to take advantage of the regulatory

opportunities afforded to therapies that treat markets with a high unmet need.

In the U.S., this includes Orphan Drug Designation and

expedited programs for approval including Accelerated Approval, Breakthrough Therapy Designation, Fast Track Designation, and priority

review (see “Government Regulation).

We cannot predict which, if any, of these programs we will benefit from without further discussions

with the FDA, EMA and other competent regulatory authorities.

Immunotherapy for Treatment of Alzheimer’s Disease

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amyloid plaques and tau neurofibrillary tangles, the traditional targets in AD drug development and neuroinflammation is complex.

targeting plaques and tangles is not an effective treatment strategy, but that targeting neuroinflammation, the common pathway leading

to synaptic dysfunction and nerve cell death, may be an effective treatment strategy.

Substantial pre-clinical data supports the use of

XPro in murine models of AD.

Substantial indirect data supports use of XPro in humans including a decreased risk of AD in patients treated

with non-selective TNF inhibitors for rheumatoid arthritis and treatment using direct injection into paraspinous venous plexus.

of different mechanism of action of XPro compared to the non-selective TNF inhibitors, we expect a lower risk of immunosuppression and

demyelinating complications such as multiple sclerosis (MS).

The Company reported preliminary data on July 13, 2020 and January 21, 2021

supporting the use of XPro to decrease neuroinflammation in patients with Alzheimer’s disease and biomarkers of peripheral inflammation

targeting plaques and tangles will have limited benefit.

Targeting neuroinflammation, the common pathway leading to synaptic dysfunction

and nerve cell death, may be an effective treatment strategy.

Substantial pre-clinical data supports the use of XPro in murine models

Substantial indirect data supports use of XPro in humans including a decreased risk of AD in patients treated with non-selective

TNF inhibitors for rheumatoid arthritis and treatment using direct injection into paraspinous venous plexus.

Because of different mechanism

of action of XPro compared to the non-selective TNF inhibitors, we expect a lower risk of immunosuppression and demyelinating complications

such as multiple sclerosis (MS).

The Company reported preliminary data on July 13, 2020 and January 21, 2021 supporting the use of XPro

to decrease neuroinflammation in patients with Alzheimer’s disease and biomarkers of peripheral inflammation (see above).

We completed enrollment of

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with dementia with the diagnosis of AD with biomarkers of chronic inflammation that includes at least one of a hs-CRP>1.5 mg/L, a ESR>10

mm/h, a HbgA1C>6.0% or are ApoE4 positive will be treated with XPro for 12 weeks.

mm/h, a HbgA1C>6.0% or are ApoE4 positive were treated with XPro for 12 weeks.

Three dosing cohorts were preformed – 0.3, 0.6

and 1.0 mg per week as a subcutaneous injection.

Patients had multiple inflammatory biomarkers test before therapy, at 6 weeks and

Biomarkers were reported in blood and cerebral spinal fluid, MRI measures of white matter tract neuroinflammation, axonal

quality and axon myelin, and MRI measures of gray matter quality after XPro therapy.

Cognitive end-points were not the focus of the Phase

1 clinical trial because of the wide range of disease severity enrolled and lack of a placebo group.

Patients enrolled in the Phase I

trial had MMSE ranging from 24 to 12.

This wide range of disease severity at the time of enrollment and the lack of a blinded concurrent

control group did not allow for determination of cognitive benefit beyond several anecdotal reports.

The first patient was enrolled in

the low dose 0.3mg/kg/week cohort in the last week of November 2019.

The Safety Review Committee met by teleconference on January 7, 2020

to review the course of the patients in the first cohort and voted to open the second cohort, 1.0mg/kg/week, to enrollment.

patients were enrolled in the cohort the second week of February 2020.

Based on preliminary data released on July 13, 2020 and January

21, 2021, we closed after completion of a 0.6mg/kg treatment group.

Patients had multiple inflammatory biomarkers test before therapy, at 6 weeks and at

Biomarkers were reported in blood and cerebral spinal fluid, MRI measures of white matter tract neuroinflammation, axonal quality

and axon myelin, and MRI measures of gray matter quality after XPro therapy.

Cognitive end-points were not the focus of the Phase 1 clinical

trial because of the wide range of disease severity enrolled and lack of a placebo group.

Patients enrolled in the Phase I trial had MMSE

ranging from 24 to 12.

This wide range of disease severity at the time of enrollment and the lack of a blinded concurrent control group

did not allow for determination of cognitive benefit beyond several anecdotal reports.

The first patient was enrolled in the low dose

0.3mg/kg/week cohort in the last week of November 2019.

The Safety Review Committee met by teleconference on January 7, 2020, to review

the course of the patients in the first cohort and voted to open the second cohort, 1.0mg/kg/week, to enrollment.

The first patients were

enrolled in the cohort the second week of February 2020.

Based on preliminary data released on July 13, 2020, and January 21, 2021, we

closed after completion of a 0.6mg/kg treatment group.

We canceled plans to treat patients with 3.0mg/kg.

The data from the

Phase I trial allow the Company to choose a design the Phase II trials described above.

The data from the Phase I trial

allowed the Company to choose a design the Phase II trials described above.

XPro Registration Studies and/or Partnering

We plan to aggressively pursue an efficient registration strategy using

XPro to improve the lives of patients with ADi.

We plan to aggressively pursue an efficient registration

strategy using XPro to improve the lives of patients with ADi.

We define ADi as Alzheimer’s disease with biomarkers of inflammation.

ADi is not the only indication for XPro in neurodegenerative and neuropsychiatric diseases.

We plan to pursue other indications in neurodegenerative

diseases as resources become available.

We have received NIMH funding to support a Phase II TRD program that hopes to start patient enrollment

in the second half of 2022.

We have an active partnering position as it relates to XPro development in neurodegenerative and neuropshyciatric

diseases, although no partnering discussion are underway at this time.

There are two partnering opportunities with this novel immunotherapy

for the treatment of neurologic and psychiatric diseases.

The first is a traditional partnership focused on the developing the drug for

all neurodegenerative and neuropsychiatric applications.

The second is a more focused partnership developing XPro as part of a combination

therapy for a company’s existing therapy.

After completion of proof-of-concept Phase II studies, we will decide what the most efficient

registration strategy is available to the company with XPro.

We may to have biopharma partners participate in this decision making.

may also seek to be acquired at this stage.

We believe ADi is not the only indication for XPro in neurodegenerative and neuropsychiatric diseases.

We plan to pursue other indications

in neurodegenerative diseases as resources become available.

We have received NIMH funding to support a Phase II TRD program that hopes

to start patient enrollment in 2023.

We have an active partnering position as it relates to XPro development in neurodegenerative and

neuropshyciatric diseases, although limited partnering discussion are underway at this time.

There are two partnering opportunities with

this novel immunotherapy for the treatment of neurologic and psychiatric diseases.

The first is a traditional partnership focused on the

developing the drug for all neurodegenerative and neuropsychiatric applications.

The second is a more focused partnership developing XPro

as part of a combination therapy for a company’s existing therapy.

After completion of proof-of-concept Phase II studies, we will

decide what the most efficient registration strategy is available to the company with XPro.

DN-TNF for the treatment of Duchene Muscular

The Company also is exploring partnership opportunities

outside of neurodegenerative disease with DN-TNF such as DMD.

DMD is a X-linked muscular dystrophy that occurs in 1 in 3500 male births

The disease is caused by defects in dystrophin, a protein needed for efficient function of skeletal muscle.

Boys with DMD develop

skeletal muscle weakness that manifests early on with difficult standing and walking.

The boys become wheelchair bound by late adolescence

and die of respiratory and cardiac failure in their twenties.

There is no cure.

Symptomatic therapies include corticosteroids and novel

strategies to replace dystrophin including ASO and gene therapies.

Better therapies are needed.

The pathology of DMD is inflammation, skeletal

muscle cell destruction, replacement of muscle fibers with fat and fibrosis.

The most widely used therapy, corticosteroids are focused

on decreasing skeletal muscle inflammation.

Although anti-inflammatory, corticosteroids cause metabolic and immunologic problems including

insulin resistance, obesity, hirsutism, short stature, depression and behavioral problems.

Long term use of corticosteroids exacerbates

skeletal muscle weakness.

In collaboration with Professor

Armando Vallarta of University of California Irvine, the Company has completed and has ongoing studies with DN-TNF in murine models of

The animal models show that DN-TNF therapy decreases inflammation and muscle degradation, promotes muscle regeneration and decreases

This is a unique set of attributes compared to other therapies on the market or in development.

Because muscle cells produce

TNF, we believe the benefits of DN-TNF therapy extends beyond the obvious immunologic attributes of modifying T cell and macrophage infiltrates.

Pre-clinical animal studies continue to better define the exact mechanism for these effects.

The Company has filed global

IP on the use of DN-TNF to treat muscular dystrophy.

The Company has placed the IP and knowhow into a wholly owned subsidiary called DN02,

The purpose of this structure is to facilitate partnering and/or co-development of DN-TNF for DMD in a way that does not complicate

or compromise the development of XPro for CNS diseases.

The Company is actively seeking a partner to develop DN-TNF for DMD.

predict if or when or under what terms a partnership will be formed.

Our NK cell Directed Product Candidate

INKmune is our lead product candidate that converts the patient’s

resting NK cells into cancer memory like NK cells, an essential step to allow them to participate in the immune control the patient’s

We have shown this works ex vivo in human tissue cell cultures, and we believe that this will work in vivo which is the purpose

of our planned clinical trials.

Cancers grow and relapse

because they evade the immune system.

In many cancers, NK cells are the most important cell for the elimination of residual disease that

causes cancer relapse.

NK cells target cells based on a series of complex antigens on the cancer cell surface that signal the NK cells

to activate and kill the cancer cell.

INKmune is our lead product

candidate that converts the patient’s resting NK cells into cancer memory like NK cells, an essential step to allow them to participate

in the immune control of the patient’s cancer.

We have shown this works ex vivo in human tissue cell cultures, and we believe that

this will work in vivo which is the purpose of our planned clinical trials.

Cancers grow and relapse because

they evade the immune system.

In many cancers, NK cells are the most important cell for the elimination of residual disease that causes

cancer relapse.

NK cells target cells based on a series of complex antigens on the cancer cell surface that signal the NK cells to activate

and kill the cancer cell.

NK cells develop a memory like NK cell phenotype to enhance killing of cancer cells.

This phenotype

requires multiple simultaneous signals to be delivered to the NK cells.

A cocktail of three cytokines, IL12, IL15 and IL18 can be used

to convert a resting NK cell to cytokine induced memory like NK cells (CIML) [Fehneger 2016 ] or by INKmune priming with INB16 (TpNK

– tumor primed NK cells).

Although the intracellular biology if these two strategies has yet to be worked out, they do not appear

to be identical.

In summary, INKmune converts resting NK cells in to tumor killing memory like NK cells.

This phenotype requires

multiple simultaneous signals to be delivered to the NK cells.

A cocktail of three cytokines, IL12, IL15 and IL18 can be used to convert

a resting NK cell to cytokine induced memory like NK cells (“CIML”) [Fehneger 2016 ] or by INKmune priming with INB16 (TpNK – tumor

primed NK cells).

Although the intracellular biology of these two strategies has yet to be worked out, they do not appear to be identical.

In summary, INKmune converts resting NK cells into tumor killing memory like NK cells that function well in the hostile environment of

(Figure 1 below).

The ability of NK cells to kill tumor cells depends on the strength

and duration of the cell-cell interaction.

The ability of NK cells to

kill tumor cells depends on the strength and duration of the cell-cell interaction.

This is call avidity.

The higher the avidity the greater the tumor cell killing.

Cytokine stimulation

may increase avidity of NK binding to some cancer cells whereas, in all experiments to date, INKmune priming enhances NK binding to all

cancer cells tested.

The relative increase in avidity to specific cancer cells is cytokine specific;

as shown below, IL15 increases NK

avidity for the ovarian cancer line SKOV-3 whereas IL2 has a limited effect.

IL15 primed NK cells lyse SKOV-3 cells whereas IL2 primed

INKmune primed NK (TpNK) showed the highest avidity for the tumor cells and the highest level of cytotoxicity.

that the use of multiple cytokines will achieve the same level of avidity and cytotoxicity as INKmune but studies with multiple cytokines

have not yet been performed (Figure below).

We have demonstrated TpNK

killing of many tumor types in laboratory studies.

The higher the avidity the

greater the tumor cell killing.

Cytokine stimulation may increase avidity of NK binding to some cancer cells whereas, in all experiments

to date, INKmune priming enhances NK binding to all cancer cells tested.

The relative increase in avidity to specific cancer cells is

cytokine specific;

as shown below, IL15 increases NK avidity for the ovarian cancer line SKOV-3 whereas IL2 has a limited effect.

primed NK cells lyse SKOV-3 cells whereas IL2 primed NK do not.

INKmune primed NK (TpNK) showed the highest avidity for the tumor cells

and the highest level of cytotoxicity.

It is likely that the use of multiple cytokines will achieve the same level of avidity and cytotoxicity

as INKmune but studies with multiple cytokines have not yet been performed (Figure below).

We have demonstrated

TpNK killing of many tumor types in laboratory studies.

Tumor priming is effective regardless of the source of the NK cells (normal volunteers

or patients with cancer) and in many types of tumors – both cell lines and primary tumors from patients.

The principle of TpNK killing

has also been demonstrated in two Phase I trials in patient with acute myelogenous leukemia (“AML”).

These trials were not

supported by us and used a first-generation personalized cell therapy product and treatment strategy that is different from the INKmune

product and treatment strategy.

In these trials, haplo-identical NK cells obtained from a first degree relative by leukapheresis were

primed ex-vivo using a lysate of the parent cell line from which we derived INB16 - INKmune.

Once the TpNK therapy has been produced and

passed quality testing, the patient received conditioning therapy with chemotherapy (cyclophosphamide and fludarabine), the primed haplo-identical

NK cells were given to patients by intravenous infusion.

Two Phase I clinical trials have been performed using that first-generation adoptive

cell therapy treatment strategy.

An investigator initiated trial performed at the Royal Free Hospital in London 2009 was funded by a UK

The principle of TpNK

killing has also been demonstrated in two Phase I trials in patient with acute myelogenous leukemia (“AML”).

were not supported by us and used a first-generation personalized cell therapy product and treatment strategy that is different from

the INKmune product and treatment strategy.

In these trials, haplo-identical NK cells obtained from a first degree relative by leukapheresis

were primed ex-vivo using a lysate of the parent cell line from which we derived INB16 - INKmune.

Once the TpNK therapy has been produced

and passed quality testing, the patient received conditioning therapy with chemotherapy (cyclophosphamide and fludarabine), the primed

haplo-identical NK cells were given to patients by intravenous infusion.

Two Phase I clinical trials have been performed using that first-generation

adoptive cell therapy treatment strategy.

An investigator-initiated trial performed at the Royal Free Hospital in London 2009 was funded

by a UK charity.

Fifteen patients with relapsed, high-risk AML were enrolled in the trial.

Because of drop-out due to disease progression, delays

in product production and complications of conditioning therapy, only 7 of the fifteen patients were treated with the TpNK cell product.

Four of seven patients showed clear benefit from the treatment with the TpNK product with prolonged relapse free remission and, in one

patient, conversion of a partial remission to full remission.

Because of drop-out due to disease progression,

delays in product production and complications of conditioning therapy, only 7 of the fifteen patients were treated with the TpNK cell

Four of seven patients showed clear benefit from the treatment with the TpNK product with prolonged relapse free remission and,

in one patient, conversion of a partial remission to full remission.

None of the remissions were durable;

all patients ultimately died from disease

The safety of the product was found to be a combination of toxicity from the chemotherapy/radiotherapy conditioning regimen

and the TpNK therapy.

all patients ultimately died

from disease progression.

The safety of the product was found to be a combination of toxicity from the chemotherapy/radiotherapy conditioning

regimen and the TpNK therapy.

In general, the complications were well tolerated although did require medical intervention including prolonged

20 unchanged sentences

S1083-8791(18)30132-0.

10.1016/j.bbmt.2018.03.019.) The results of the laboratory and Phase I studies provide evidence that

our strategy for treating residual disease is sensible but unproven.

Because INKmune primes NK cells to target naturally

occurring antigens, we believe INKmune can be used in to treat a wide variety of cancers including hematologic malignancy (AML, MM, CML,

high risk MDS) and solid tumors (renal, prostate, breast, ovarian, pancreas and lung).

We expect the list of INKmune sensitive tumors

to continue to expand.

The primary role for INKmune will be an immunotherapy

targeting residual disease in patients after debulking cancer therapies such as cytotoxic chemotherapy and surgery.

At this time, we plan

to give INKmune as monotherapy.

We do not rule out the possibility of using INKmune as part of combination therapy in the future.

not expect to need to modify INKmune to treat these additional types of cancer, because we believe INKmune is a universal cancer therapy

where “one size fits all”.

We believe for INKmune to receive regulatory approval for each cancer indication, clinical trials

will need to be performed which demonstrate its safety and effectiveness as a treatment for each such cancer.

We believe the difficulty

and cost of achieving these labels extensions will decline with each successive approval, if and when achieved.

For example, if INKmune

is proven to be effective therapy in patients with ovarian cancer and high-risk MDS, we will need to perform separate pivotal trials for

approval in lung, prostate or renal cancer.

10.1016/j.bbmt.2018.03.019.) The results of the laboratory and Phase I studies provide evidence

that our strategy for treating residual disease is sensible but unproven.

Because INKmune primes NK

cells to target naturally occurring antigens, we believe INKmune can be used in to treat a wide variety of cancers including hematologic

malignancy (AML, MM, CML, high risk MDS) and solid tumors (renal, prostate, breast, ovarian, pancreas and lung).

We expect the list of

INKmune sensitive tumors to continue to expand.

The primary role for INKmune

will be an immunotherapy targeting residual disease in patients after debulking cancer therapies such as cytotoxic chemotherapy and surgery.

At this time, we plan to give INKmune as monotherapy.

We do not rule out the possibility of using INKmune as part of combination therapy

in the future.

We do not expect to need to modify INKmune to treat these additional types of cancer, because we believe INKmune is a universal

cancer therapy where “one size fits all”.

We believe for INKmune to receive regulatory approval for each cancer indication,

clinical trials will need to be performed which demonstrate its safety and effectiveness as a treatment for each such cancer.

the difficulty and cost of achieving these labels extensions will decline with each successive approval, if and when achieved.

if INKmune is proven to be effective therapy in patients with ovarian cancer and high-risk MDS, we will need to perform separate pivotal

trials for approval in lung, prostate or renal cancer.

Three step process to preparation for INKmune

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cancer and in patients with high-risk MDS.

We have validated storage of INKmune for up over 3 years in vapor phase nitrogen and have a

fully scalable, closed system manufacturing process in validation which can produce up to 6 patient doses per week during phase I and

We have validated storage of INKmune for up over 3 years in vapor phase nitrogen and have

a fully scalable, closed system manufacturing process in validation which can produce up to 6 patient doses per week during phase I and

At intermediate scale we can manufacture 40 doses per week in a single 80-liter bioreactor.

6 unchanged sentences

We may need additional INKmune for future clinical trials.

INKmune Biomarker Development Program

We have discovered two biomarker

strategies that we believe can be used to demonstrate:

i) who should receive INKmune therapy;

ii) if the INKmune therapy is working;

iii) when INKmune therapy should be repeated.

For the initial Phase I/II trials in patients with ovarian cancer and high-risk MDS, we

expect the biomarker testing will be performed in a single laboratory under our direction.

We may develop training programs for our standard

operating procedures to ensure uniform testing of the biomarkers to facilitate expansion of the clinical programs to multiple sites.

anticipate that, in the future, the biomarker program may be a surrogate marker for both clinical effectiveness and marketing purposes.

Interaction with Regulatory Authorities Regarding

INKmune Development

INKmune Phase I studies in high-risk MDS and ovarian cancer will be performed in the UK and US.

We met with the Medicines and Healthcare

Products Regulatory Agency (“MHRA”), the UK version of the FDA as part of a Scientific Advice Meetings in preparation for

submitting the CTA for our first planned program.

The purpose of the meeting was to explain to the MHRA our manufacturing process and

clinical plan for the development of INKmune in a Phase I relapse/refractory ovarian cancer.

We plan to expand the MDS program beyond

This may include sites in the EU and the US.

We will need to work with the relevant regulatory authorities as we make those expansions.

We will seek regulatory approval to start the ovarian cancer program in the US after the first cohort of patients have been treated in

INKmune Product Development Path Proposed Phase

I Study in patients with ovarian cancer

Pending the resolution of

the COVID-19 pandemic in 2022, we plan to initiate an open label Phase I cancer study in patients with ovarian carcinoma.

Patients will

be enrolled who have a low burden of relapse refractory disease and have peripheral blood or ascites NK cells which can respond to INKmune

in a laboratory test on NK function.

The study design agreed upon after discussion with the MHRA on September 12, 2017 was for a two-step

Phase I/II study but this has been modified to an classic Phase I study followed by a randomized phase II.

At present we anticipate the

Phase I to be performed under the modified CTA at a single UK site, Sheffield University Hospital.

We expect to initiate trial by the

third quarter of 2022.

In the Phase I trial, women with relapse refractory ovarian cancer will be treated with INKmune, given as an intravenous

infusion in a traditional open label study to demonstrate safety and determine the dose of INKmune to be carried into the larger Phase

II portion of the study.

Based on pre-clinical studies that indicate that women with relapsed/refractory ovarian cancer have NK cells

in their peritoneal cavity that response to INKmune to kill SKOV3, an NK-resistant ovarian cell line, we believe intravenous delivery

of INKmune will be therapeutically effective in treating intra-peritoneal disease.

The key secondary efficacy end-points to be studied

are i) increased NK cell priming as determined by multicolor flow cytometry of NK cells from the patient;

ii) increased NK cell killing

of SKOV3 tumor in a bioassay as shown in Figure 2 below;

and iii) a decrease in tumor burden as measured by CA125 levels in the blood.

Once safety and the optimal INKmune dose have been determined, a randomized study of women treated with INKmune will be compared to a

group of control patients who receive only standard of care.

We expect to treat six patients in the Phase I portion of the trial, but

this number can increase by as many as 18.

The INKmune Phase I studies

in high-risk MDS are being performed in the UK and Greece.

We met with the Medicines and Healthcare Products Regulatory Agency (“MHRA”),

the UK version of the FDA as part of a Scientific Advice Meetings in preparation for submitting the CTA for our first planned program.

The purpose of the meeting was to explain to the MHRA our manufacturing process and clinical plan for the development of INKmune in a

Phase I relapse/refractory ovarian cancer.

We are working to seek regulatory approval to start a solid tumor program in the US.

has had initial discussion with the FDA.

Those discussions are ongoing.

We plan to file an IND for a solid tumor indication in 2023.

have not announced the solid tumor target.

INKmune Product Development Path Proposed Phase

I Study in patients with high-risk MDS

During 2021, we initiated an open label Phase I cancer study in patients

with high-risk myelodysplastic syndrome (“MDS”).

Patients are being enrolled who have a low burden of disease after completion

of conventional therapy.

At present we anticipate the Phase I to be performed at two sites UK site and will expand into additional sites

in EU and/or US during 2022.

The first patients was enrolled in the first quarter of 2021.

In the Phase I trial, patients with detectable

residual disease in bone marrow and/or peripheral blood (<15% blasts by conventional tests) will be treated with intravenous infusions

of INKmune and monitored for changes in peripheral blood NK activation, NK function and changes in residual blast counts in blood and

We and others have previously shown that MDS patients with inadequate NK function have statistically significantly poorer

prognosis than matched patients with normal levels of NK function (Tsirogianni et al 2019) and we have shown in laboratory experiments

that the functional activity of NK cells from MDS patients can be enhanced by exposure to INKmune.

Moreover, INKmune-primed NK cells are

not inhibited by the hypoxic conditions of the diseased bone marrow microenvironment.

The first patient was treated in the second quarter of 2021.

is now more than 6 months out from therapy with INKmune.

The patient, part of the first cohort, received 1x10^8 INKmune cells on day 1,8

and 15 as an in-patient.

The patient did not require any type of conditioning therapy or cytokine support.

The patient tolerated the three

infusions without any problems.

During 2021, we initiated

an open label Phase I cancer study in patients with high-risk myelodysplastic syndrome (“MDS”).

Patients are being enrolled

who have a low burden of disease after completion of conventional therapy.

The first patients were enrolled in the first quarter of 2021.

In the Phase I trial, patients with detectable residual disease in bone marrow and/or peripheral blood (<15% blasts by conventional

tests) will be treated with intravenous infusions of INKmune and monitored for changes in peripheral blood NK activation, NK function

and changes in residual blast counts in blood and bone marrow.

We and others have previously shown that MDS patients with inadequate NK

function have statistically significantly poorer prognosis than matched patients with normal levels of NK function (Tsirogianni et al

2019) and we have shown in laboratory experiments that the functional activity of NK cells from MDS patients can be enhanced by exposure

Moreover, INKmune-primed NK cells are not inhibited by the hypoxic conditions of the diseased bone marrow microenvironment.

The first patient was treated

in the second quarter of 2021.

The patient is now more than 12 months out from therapy with INKmune.

The patient, part of the first cohort,

received 1x10^8 INKmune cells on day 1,8 and 15 as an in-patient.

The patient did not require any type of conditioning therapy or cytokine

The patient tolerated the three infusions without any problems.

The patient underwent intensive monitoring over 120 days.

There are 4 observations from this first patient.

The patient has dramatically increased the number of activated, “memory-like” NK cells in circulation.

Memory-like NK cells

(mlNK) are activated NK cells with a unique cell surface protein phenotype and which show enhanced lysis of tumor cell in vitro.

treatment with INKmune, elevated levels of mlNK cells were present in the patients in the peripheral blood for more than 119 days when

trial follow-up ceased.

are 4 observations from this first patient.

The patient has dramatically increased the number of activated, “memory-like”

NK cells in circulation.

Memory-like NK cells (mlNK) are activated NK cells with a unique cell surface protein phenotype and which show

enhanced lysis of tumor cell in vitro.

Post treatment with INKmune, elevated levels of mlNK cells were present in the patients in the

peripheral blood for more than 119 days when trial follow-up ceased.

The patient mlNK actively kill NK resistant cancer targets in vitro.

Finally, the patient has had a significant

clinical improvement with a reduction of his ECOG score from 2 to 0 and a significant reduction in blood product support.

Two compassionate use cases

Finally, the patient has had a significant clinical improvement with a reduction of his ECOG score from 2 to 0 and a significant reduction

in blood product support.

Three compassionate use cases

have also been treated.

Both were young patients with AML who had failed previous hematopoietic stem cell transplants (HSCT).

Two were young patients with AML who had failed previous hematopoietic stem cell transplants (“HSCT”).

compassionate-treatment patient showed such improved neutrophil and platelet counts that she was discharged from hospital for the first

time in six months.

She remains well and at home three months under the care of her clinical team.

The second patient treated compassionately

had failed two high risk HSCT and entered the course of INKmune therapy with high percentage of blasts in his bone marrow.

NK cells responded in differentiation into mlNK as hoped but it is too early to determine if INKmune has provide any clinical benefit.

Because both INKmune programs

are being run in the UK, delays due to the COVID-19 pandemic continues to delay enrolment into the MDS clinical trial and is delaying

site initiation for the ovarian cancer trial.

The second patient treated compassionately had failed two high risk HSCT and entered the course of INKmune therapy

with high percentage of blasts in his bone marrow.

His blood NK cells responded in differentiation into mlNK as hoped but it is too early

to determine if INKmune has provide any clinical benefit.

INKmune Registration Studies and/or Partnering

After completion of proof-of-concept

Phase II studies with INKmune, we will decide whether to continue to develop INKmune as a treatment for ovarian carcinoma indication and/or

high risk MDS.

Other solid cancers are of interest including nasopharyngeal cancer (“NPC”) which is a known target for NK

cells and an important unmet clinical need in emerging markets such as mainland China.

Renal cell carcinoma is also a known target for

We expect to have biopharma partners participate in this decision.

We may also seek to be acquired at this stage or partner INKmune.

Although our development strategy is focused on North America and Europe, we believe INKmune will also be attractive for markets on the

Pacific Rim, South Asia and South America, but will wait for partners to help with the development in those regions, however, at this

time, we are not negotiating with any potential partners.

The Company plans to file

an Investigational New Drug (“IND”) application in 2023 for a Phase I/II trial of INKmune in a solid tumor indication.

Other solid cancers

are of interest including nasopharyngeal cancer (“NPC”) which is a known target for NK cells and an important unmet clinical

need in emerging markets such as mainland China.

Renal cell carcinoma is also a known target for INKmune.

We may seek partner or sell

Although our development strategy is focused on North America and Europe, we believe INKmune will also be attractive for markets

on the Pacific Rim, South Asia and South America, but will wait for partners to help with the development in those regions, however, at

this time, we are not negotiating with any potential partners.

Importantly, we have published

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We believe tumor primed NK cells are superior to ex vivo or in vivo cytokine strategies.

Data to support this belief

should be presented in 2022.

INKmune Regulatory Strategy

INKmune is a new therapy for the treatment of cancer that will need

to be proven safe and effective by well-designed clinical trials that show a meaningful clinical benefit to patients.

We believe that

registration trials will need to be designed as randomized trials in patients with cancer where one group of patients received INKmune

and another receive best available care.

We received advice from the MHRA on September 12, 2017 on the design the Phase I clinical trial

for ovarian cancer.

And have used that advice to plan both current phase I trials.

We plan to initiate the Phase I trials with INKmune

in the United Kingdom under two clinical trials authorizations (“CTA”) – one for each indication.

Both trials will be

expanded to sites in the US after opening of an IND.

We expect those IND’s to be open by the end of 2022.

If either phase I elicits

“positive” data we plan to open one or more Phase II programs to additional sites in the United Kingdom, EU and/or US.

each regulatory jurisdiction outside of the UK, the competent regulatory authority will need to be engaged.

In the US, that is the FDA.

In the EU, it will be the country specific regulatory authority.

These follow-on regulatory submissions will include data from the patients

treated in the UK in the clinical trials or as part of compassionate use.

Because there are no therapies similar to INKmune approved in

any market, we plan to take advantage of the regulatory opportunities afforded to therapies that treat small markets with a high unmet

In the U.S., this includes Orphan Drug Designation and expedited programs for approval including Accelerated Approval, Breakthrough

Therapy Designation, Fast Track Designation, and priority review (see “Government Regulation”).

We cannot predict which of

these programs we will benefit from, if any at all, without further discussions with the FDA.

Similar programs exist in the EU with the

European Medicines Agencies (“EMA”) and in the UK with the MHRA.

Emerging Market Opportunity

The cancer therapy market

is large, diverse and competitive.

Although the concept of immunotherapy with monoclonal antibodies has been around for more than 20 years,

the concept that patient derived immunosuppressive factors was a barrier to effective cancer treatment was recently recognized and had

its first therapy approved just four years ago (ipilimumab, Yervoy, BMS, March 2011).

Since then, more than five additional “check

point” inhibitors have been approved, but the market is in its infancy.

Most of the focus on strategies for modulating tumor-based

immunosuppression focus is on the adaptive immune system (“T-cells”).

The role of, and the importance of manipulating the

innate immune system has more recently become a target of therapeutic development.

NK cells are part of the innate immune system and are

critical in both tumor surveillance (prevention) and treatment (killing).

MDSCs and Tumor Associated Macrophages (TAM) are part of the

innate immune system that only appear in the TME of patients with cancer.

The main role of the MDSC and TAM is to protect the tumor from

attack by the patient’s immune system.

Because T-cell focused strategies do not have an effect on the innate immune system, patient’s

receiving such treatments may fail to recruit half of the patient’s immune system, the innate immune system, to attack the patient’s

Clinicians increasingly recognize that durable responses to cancer require a coordinated attack by the patient’s adaptive

and innate immune system.

Normalizing the response of the innate immune system requires eliminating the dysregulated innate immune response

that decreases the patient’s ability to see and attack the cancer as well as mechanisms the protect the cancer from immunologic

attack (effector and protector function respectively).

INKmune primes NK cells to enable them to attack the tumor.

INB03, by decreasing

the immunosuppressive function of MDSC and TAM, will lessen the immunosuppressive shield that protects the tumor from immunologic attack

and, through NK/DC crosstalk, recruit the adaptive immune system to the fight and potentially increase local innate anti-tumor effects

such as improved NK cell function and anti-tumor macrophage phagocytic activity.

Challenges in the Market for Our Product Candidates

The market for new oncology

therapies is busy, complicated, and rapidly evolving.

We will be competing with companies that are older, larger, better financed and

have greater experience.

There are two types of drug companies – development companies and commercial companies.

Development companies

take the risk of developing new products to proof-of-concept.

Once proof-of-concept has been achieved, if the drug provides clinical benefit,

the product is usually acquired by a commercial company, which completes the drug’s clinical development and markets the product.

We are a development company which will seek to develop products such as INKmune from the bench to the bedside to demonstrate proof-of-concept.

The goal for us is to successfully develop such products to the point where they are attractive targets for potential partners/acquirers.

According to a recent Markets

and Markets report, the immunotherapy market is growing rapidly at an annual rate of over 13%.

Recently, the market is biased towards

T cell-based immunotherapies including bi-specific antibody therapies, checkpoint inhibitors and CAR-T cell-based therapies.

substantial numbers of clinical trials that are focused on the adaptive immune system versus clinical trials that are focused on the innate

immune system for the treatment of cancer.

The market for new oncology therapies is competitive, complicated,

and rapidly evolving.

We will be competing with companies that are older, larger, better financed and have greater experience.

two types of drug companies – development companies and commercial companies.

Development companies take the risk of developing

new products to proof-of-concept.

Once proof-of-concept has been achieved, if the drug provides clinical benefit, the product is usually

acquired by a commercial company, which completes the drug’s clinical development and markets the product.

We are a development

company which will seek to develop products such as INKmune from the bench to the bedside to demonstrate proof-of-concept.

us is to successfully develop such products to the point where they are attractive targets for potential partners/acquirers.

According to a recent Markets and Markets report, the immunotherapy

market is growing rapidly at an annual rate of over 13%.

Recently, the market is biased towards T cell-based immunotherapies including

bi-specific antibody therapies, checkpoint inhibitors and CAR-T cell-based therapies.

There are substantial numbers of clinical trials

that are focused on the adaptive immune system versus clinical trials that are focused on the innate immune system for the treatment of

Our challenge will be to educate partners on the value of NK cell-based therapeutic strategies.

The need to educate people of the importance of INB03 is equally challenging.

At the academic and investor level, there is little recognition

of the role MUC4 plays in causing resistance to immunotherapy.

The concept of adding a drug to modify the immunosuppressive environment

of the TME to allow immunotherapy to be effective is also new.

We will be responsible for educating them on the importance of MUC4 expression,

TAM, MDSC and why INB03 may be an important addition to the oncologist’s armamentarium.

We believe educating investors and partners

about new therapeutic opportunities is an easier task than trying to differentiate our company from the many other cancer immunotherapy

We plan to use a combination of publication, presentation and investor relations to promote INKmune and INB03 and to educate

the clinical, biopharma and investor community on the value of these novel therapeutic approaches.

The need to educate people of

the importance of INB03 is equally challenging.

At the academic and investor level, there is little recognition of the role MUC4 plays

in causing resistance to immunotherapy.

The concept of adding a drug to modify the immunosuppressive environment of the TME to allow immunotherapy

to be effective is also new.

We will be responsible for educating them on the importance of MUC4 expression, TAM, MDSC and why INB03 may

be an important addition to the oncologist’s armamentarium.

We believe educating investors and partners about new therapeutic opportunities

is an easier task than trying to differentiate our company from the many other cancer immunotherapy companies.

We plan to use a combination

of publication, presentation and investor relations to discuss INKmune and INB03 and to educate the clinical, biopharma and investor community

on the value of these novel therapeutic approaches.

DN-TNF Competition

To our knowledge, there are

no other innate immune system check-point inhibitors in development that combine the characteristics of neutralizing soluble TNF, decreasing

the population and function of MDSC while promoting NK/DC crosstalk that expands, decreases expression of MUC4 and recruits the adaptive

immune response to attack the patient’s tumor.

Lilly is developing LY3022855, a human IgG1 monoclonal antibody designed to target

the CSF1R that should inhibit MDSC from receiving CSF1 signals, decreasing their survival and relieving the effect of MDSC in the tumor.

Daiichi Sankyo Inc., in collaboration with Bristol Myers Squibb, is testing DS-8273a, a TRIAL-R2 agonistic antibody in combination with

a PDL1 inhibitor to decrease the number of MDSC in patients with colorectal cancer.

Rgenix Inc., is developing RGX-104, an orally bioavailable

small molecule immunotherapy that targets LXR (liver X Receptor).

RGX-104 reportedly depletes MDSC.

Syntrix Biosystems is developing SX-682.

SX-682 is a small-molecule dual-inhibitor of CXCR1 and CXCR2, the chemokine receptors pivotal to tumor metastasis, therapy-resistance,

and myeloid cell suppression of cancer surveillance by the adaptive immune system.

By blocking the CXCR1/2 pathway, SX-682 may prevent

recruitment of MDSC to the tumor microenvironment.

The University of Minnesota has a trivalent antibody program aimed at treating patients

with advanced hematologic malignancies.

This CD16/IL-15/CD33 (161533) Tri-Specific Killer Engagers (TriKes) product may target CD33+ MDSC.

Siamab Therapeutics is developing an anti-sialyl-Tn monoclonal antibody that targets MDSC in some tumor types.

Clathera Biosciences, in

collaboration with Incyte, a US based biotech, is developing CB-1158 (INCB01158), an arginase inhibitor to decreases MDSC.

clinical trial is open that combines CB-1158 with nivolumab, an anti-PD1 CPI marketed by Bristol Myers Squib.

Reata Pharmaceuticals is

testing omaveloxolone (RTA 408) in the phase Ib/II REVEAL trial in combination with either ipilimumab (Yervoy) or nivolumab (Opdivo) in

patients with advanced unresectable or metastatic melanoma.

Currently approved non-selective TNF inhibitors, infliximab, etanercept, adalimumab

and others, are not considered direct competitors of INB03 in the treatment of cancer because of their mechanism of action and safety

side effects.

Non- selective TNF inhibitors block the function of both sTNF and tmTNF.

Blockade of tmTNF is immunosuppressive increasing

the risk of infection and cancer in patients.

This is shown in Figure 3 below where maintaining function to tmTNF by genetic or pharmacologic

means results in an immunocompetent animal that can protect itself against infection.

Blockade or knock-out of both sTNF and tmTNF results

in death from infection.

no other companies developing a therapy to treat patients with MUC4+HER2+ tumors.

This set of biomarkers predicts a tumor that will be

resistant to therapy.

We believe MUC4 expression means that patient will be resistant to first line trastuzumab based immunotherapy and

will be resistant to CPI.

INB03 is a unique category of cancer therapies.

It is does not kill cancer cells.

INB03 modulates the immunology

of the TME to make existing therapies more effective.

The advantage of this strategy is that it can be used prospectively, and it does

not add toxicity to existing therapy.

INKmune Competition

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covers a variety of dominant negative tumor necrosis factor (“DN-TNF”) variant proteins, including the pegylated DN-TNF protein

variants known as XPro, INB03, LIVNate.

These DN-TNF protein variants can be considered a platform technology for treating the underlying

immune dysfunction associated with many disease manifestations.

variants known as XPro and INB03.

These DN-TNF protein variants can be considered a platform technology for treating the underlying immune

dysfunction associated with many disease manifestations.

Unlike approved anti-TNF therapeutics, DNTNF selectively targets and neutralizes

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INB16 TM , INKmune TM , PSEUDOKINE TM , and XPro TM are trademarks of INmune Bio, Inc.

of these trademarks may be protected by applications pending at the USPTO and other trademark registration authorities globally.

these trademarks may be protected by applications pending at the USPTO and other trademark registration authorities globally.

of the trademark registration process, we may be required to submit a statement of use evidencing bona fide use of each mark in

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milestone and royalty payments.

The term of the Immune Ventures Agreement began on October 29, 2015

and, if not terminated sooner pursuant to the agreement, ends on a country-by-country basis on the date of the expiration of the last

to expire patent rights where patent rights exists.

Subject to granting, prosecution-related patent term adjustments, and requirements

for maintenance and renewals, the latest to expire patent is scheduled to expire on March 15, 2038 (“Natural Expiration”).

Upon Natural Expiration of the Immune Ventures Agreement, we shall have a fully paid up, perpetual, royalty-free license without further

obligation to Immune Ventures.

The Immune Ventures Agreement can be terminated by Immune Ventures if, after 60 days from our receipt of

notice that we have not made a payment under the Immune Ventures Agreement we still do not make this payment.

On July 18, 2018, the parties

amended the agreement under which the Company was required to 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:

The term of the Immune Ventures

Agreement began on October 29, 2015, and, if not terminated sooner pursuant to the agreement, ends on a country-by-country basis on the

date of the expiration of the last to expire patent rights where patent rights exist.

Subject to granting, prosecution-related patent

term adjustments, and requirements for maintenance and renewals, the latest to expire patent is scheduled to expire on March 15, 2038

(“Natural Expiration”).

Upon Natural Expiration of the Immune Ventures Agreement, we shall have a fully paid up, perpetual,

royalty-free license without further obligation to Immune Ventures.

The Immune Ventures Agreement can be terminated by Immune Ventures

if, after 60 days from our receipt of notice that we have not made a payment under the Immune Ventures Agreement we still do not make

this payment.

On July 18, 2018, the parties amended the agreement under which the Company was required to 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

13 unchanged sentences

Pursuant to the Assignment and Assumption Agreement (the “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

all 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”).

As consideration under the

17 unchanged sentences

Xencor License Agreement

On October 3, 2017, the Company entered into a license agreement with

(“Xencor”), which has discovered and developed a proprietary biological molecule that inhibits soluble tumor

necrosis factor (the “Xencor Agreement”).

During June 2021, the Company entered into the First Amendment to License Agreement

Pursuant to the Xencor Agreement, Xencor granted the Company an exclusive worldwide, royalty-bearing license in licensed

patent rights, licensed know-how and licensed materials (as defined in the Xencor Agreement) to make, develop, use, sell and import any

pharmaceutical product that comprises, contains, or incorporates Xencor’s proprietary protein known as “XPro” that inhibits

soluble tumor necrosis factor (or all modifications, formulations and variants of the licensed protein that specifically bind soluble

tumor necrosis factor) alone or in combination with one or more active ingredients, in any dosage or formulation.

The Xencor Agreement

expires upon the later of:

(a) the expiration of the last to expire valid claim covering any pharmaceutical product that contains, comprises,

or incorporates Xencor’s proprietary protein known as XPro alone or in combination with one or more active ingredients, in any dosage

On October 3, 2017, the

Company entered into a license agreement with Xencor, Inc.

(“Xencor”), which has discovered and developed a proprietary biological

molecule that inhibits soluble tumor necrosis factor (the “Xencor Agreement”).

During June 2021, the Company entered into

the First Amendment to License Agreement with Xencor.

Pursuant to the Xencor Agreement, Xencor granted the Company an exclusive worldwide,

royalty-bearing license in licensed patent rights, licensed know-how and licensed materials (as defined in the Xencor Agreement) to make,

develop, use, sell and import any pharmaceutical product that comprises, contains, or incorporates Xencor’s proprietary protein

known as “XPro” that inhibits soluble tumor necrosis factor (or all modifications, formulations and variants of the licensed

protein that specifically bind soluble tumor necrosis factor) alone or in combination with one or more active ingredients, in any dosage

or formulation.

(“Licensed Product”) in such country or (b) ten years following the first sale to a third party of the licensed

product in such country.

Net Sales with respect to any Licensed Product is the gross amounts invoiced by us for sales of the Licensed

Products less deductions actually incurred.

A valid claim is an issued, unexpired or pending claim with the patent rights that Xencor

controls as of October 3, 2017 which patent rights are necessary to make, develop, use, sell, have sold, offer for sale and import a Licensed

Product in the Field (the Field means all applications for the treatment of diseases in humans) or the Product Patent Rights, which claim

has not lapsed, been abandoned, been revoked or been held to be unpatentable, invalid or unenforceable by a final judgment of a court

or other governmental agency or competent jurisdiction from which no appeal can be or is taken within the time allowed for appeal and

which has not been admitted to be invalid or unenforceable through reissue, re-examination, disclaimer or otherwise.

Product Patent Rights

shall mean any and all our patent rights that are necessary to make, develop, use, sell, have sold, offer for sale and import a Licensed

Product in the Field, including any improvements or patent rights directed to the Licensed Product.

Either party may terminate the Xencor

Agreement upon 60 days’ (10 days for any payment default) prior written notice to the other party after the breach of any material

provision of the agreement by the other party if the breaching party has not cured the breach within the 60-day period (10-day period

for any payment default) following written notice of termination by the non-breaching party.

We can terminate the Xencor Agreement upon

180 days prior written notice to Xencor.

Xencor may terminate the Xencor Agreement in its entirety or with respect to any specific Licensed

Product upon written notice in the event that we contest, oppose or challenge or assist any party in contesting, opposing or challenging,

Xencor’s ownership of, or the enforceability or validity of the Patent Rights that Xencor controls as of October 3, 2017 which Patent

Rights are necessary to make develop, use, sell, have sold, offered for sale and import a Licensed Product in the Field.

may terminate the Xencor Agreement upon written notice to the other party upon or after the insolvency, bankruptcy, dissolution or winding

up of such other party or the making or seeking to make or arrange an assignment for the benefit of creditors of such other party or the

initiation of proceedings in voluntary or involuntary bankruptcy which proceeding or action remains undismissed or unstayed for a period

of more than 60 days.

The Xencor Agreement expires upon the later of:

(a) the expiration of the last to expire valid claim covering any pharmaceutical

product that contains, comprises, or incorporates Xencor’s proprietary protein known as XPro alone or in combination with one or

more active ingredients, in any dosage or formulation.

(“Licensed Product”) in such country or (b) ten years following the

first sale to a third party of the licensed product in such country.

Net Sales with respect to any Licensed Product is the gross amounts

invoiced by us for sales of the Licensed Products less deductions actually incurred.

A valid claim is an issued, unexpired or pending

claim with the patent rights that Xencor controls as of October 3, 2017 which patent rights are necessary to make, develop, use, sell,

have sold, offer for sale and import a Licensed Product in the Field (the Field means all applications for the treatment of diseases in

humans) or the Product Patent Rights, which claim has not lapsed, been abandoned, been revoked or been held to be unpatentable, invalid

or unenforceable by a final judgment of a court or other governmental agency or competent jurisdiction from which no appeal can be or

is taken within the time allowed for appeal and which has not been admitted to be invalid or unenforceable through reissue, re-examination,

disclaimer or otherwise.

Product Patent Rights shall mean any and all our patent rights that are necessary to make, develop, use, sell,

have sold, offer for sale and import a Licensed Product in the Field, including any improvements or patent rights directed to the Licensed

Either party may terminate the Xencor Agreement upon 60 days’ (10 days for any payment default) prior written notice to

the other party after the breach of any material provision of the agreement by the other party if the breaching party has not cured the

breach within the 60-day period (10-day period for any payment default) following written notice of termination by the non-breaching party.

We can terminate the Xencor Agreement upon 180 days prior written notice to Xencor.

Xencor may terminate the Xencor Agreement in its entirety

or with respect to any specific Licensed Product upon written notice in the event that we contest, oppose or challenge or assist any party

in contesting, opposing or challenging, Xencor’s ownership of, or the enforceability or validity of the Patent Rights that Xencor

controls as of October 3, 2017 which Patent Rights are necessary to make develop, use, sell, have sold, offered for sale and import a

Licensed Product in the Field.

Either party may terminate the Xencor Agreement upon written notice to the other party upon or after the

insolvency, bankruptcy, dissolution or winding up of such other party or the making or seeking to make or arrange an assignment for the

benefit of creditors of such other party or the initiation of proceedings in voluntary or involuntary bankruptcy which proceeding, or

action remains undismissed or unstayed for a period of more than 60 days.

In consideration of the

Xencor Agreement, we agreed to royalty payments and a percentage of any payments received in exchange for a sub-license.

University College London License Agreement

On July 19, 2019, the Company

entered into license agreement with UCL Business PLC (“UCLB”) with a ten (10) year term.

Pursuant to the license agreement,

the Company acquired an exclusive license (and a right to sub-license) to the technology and know-how relating to an isolation and commercial

scale expansion methodology of GMP grade human umbilical cord mesenchymal stem/stromal cells (“MSC”).

On July 16, 2021, we provided

notice of intent to terminate the agreement with UCLB, which per the agreement became effective August 15, 2021.

INKmune Research and Development

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Human Mesenchymal Stem

In November 2017, we entered

into a Material Transfer and License Agreement with the Anthony Nolan Cord Blood Bank (“AN”), the oldest and largest non-directed

cord blood bank in the United Kingdom for the supply the starting material for the mesenchymal stem cells - umbilical cords not used after

cord blood harvest.

Mark Lowdell’s research group developed and validated a methodology for producing large numbers of clinical-grade

pooled human umbilical cord derived mesenchymal stem cells (“HucMSC”).

We believe the reproducible and reliable supply of

large quantities of high-quality a may solve one of the major problems associated with the development of mesenchymal stem cell therapies

for medicine.

We believe we are well positioned to become a preferred manufacturing partner for companies who need MSC for clinical programs.

Manufacture of HucMSC is performed under the direction of Mark Lowdell in a licensed GMP facility that is contracted to the Company as

part of existing research and development agreements.

The starting material for the HucMSC product is provided by the AN.

The HucMSC product

produced in this facility are fully qualified to be used for either research or clinical trials.

We have developed a validated manufacturing

process that reliably produces contract manufacturer of the clinical grade (“cGMP”) quality mesenchymal stem cells that we

call CORDstrom.

To date, we are supporting two academic clinical trials with CORDstrom.

One program is a in the UK treating children with

erythematous bullousa, a disfiguring skin disease in children that is similar to a second degree burn and treatment of system lupus in

In November 2017 (amended in October 2022), we entered into a Material

Transfer and License Agreement with the Anthony Nolan Cord Blood Bank (“AN”), the oldest and largest non-directed cord blood

bank in the United Kingdom for the supply the starting material for the mesenchymal stem cells - umbilical cords not used after cord blood

Mark Lowdell’s research group developed and validated a methodology for producing large numbers of clinical-grade pooled

human umbilical cord derived mesenchymal stem cells (“HucMSC”).

We believe we are well positioned to become a preferred manufacturing

partner for companies who need MSC for clinical programs.

Manufacture of HucMSC is performed under the direction of Mark Lowdell in a

licensed GMP facility that is contracted to the Company as part of existing research and development agreements.

The starting material

for the HucMSC product is provided by the AN.

The HucMSC product produced in this facility are fully qualified to be used for either research

or clinical trials.

We have developed a validated manufacturing process that reliably produces contract manufacturer of the clinical grade

(“cGMP”) quality mesenchymal stem cells that we call CORDstrom.

To date, we are supporting two academic clinical trials with

One program is a in the UK treating children with erythematous bullousa, a disfiguring skin disease in children that is similar

to a second degree burn and treatment of system lupus in adults.

Both these studies are ongoing.

INmune Bio is supplying the clinical product for treatment of these patients.

The Company does

not know the results of these trials until they are announced by the principal investigators at the clinical sites.

Currently, we plan

to supply HucMSC to third parties for their research use and in clinical trials as part of the development process for commercial pro/ducts.

We may decide to expand this agreement in the future if the commercial and/or development opportunities warrant such expansion.

current time, we expect this program to be funded by revenues from commercial sales.

INmune Bio is supplying the clinical

product for treatment of these patients.

The Company does not know the results of these trials until they are announced by the principal

investigators at the clinical sites.

Currently, we plan to supply HucMSC to third parties for their research use and in clinical trials

as part of the development process for commercial pro/ducts.

We may decide to expand this agreement in the future if the commercial and/or

development opportunities warrant such expansion.

At the current time, we expect this program to be funded by revenues from commercial

The agreement with AN terminates on November 29, 2027.

AN may terminate the license on written notice to us, if a donor withdraws consent to the continued use of umbilical cord tissue

samples that were obtained by AN.

Additionally, either party may terminate the agreement on 30 days prior written notice to the other

if that other party materially breach any term of the agreement and such breaches (to the extent it is remediable) is not remedied within

30 days of the written request to the other party to do so.

AN may terminate the license on written notice to us, if a donor withdraws

consent to the continued use of umbilical cord tissue samples that were obtained by AN.

Additionally, either party may terminate the agreement

on 30 days prior written notice to the other if that other party materially breach any term of the agreement and such breaches (to the

extent it is remediable) is not remedied within 30 days of the written request to the other party to do so.

Challenges in the Market for Immunotherapy

91 unchanged sentences

be used to monitor participant safety.

Regulatory procedures differ in each country we will be working in., For example, in the US, each

Regulatory procedures differ in each country we will be working in.

For example, in the US, each

protocol is submitted to the FDA as part of the IND for their review and consent before enrolling patients in the clinical trial.

53 unchanged sentences

solid tumors and biomarkers of inflammation in their blood.

The Phase I trial has been

completed and provided evidence of safety and a pharmacodynamic drug affect, decrease of inflammatory biomarkers, needed to move the program

to a Phase II clinical trial in cancer.

The Phase II clinical trial will combine INB03 with approved second line therapy in patients with

MUC4+ breast cancer with or without brain metastasis that have a measurable pharmacodynamic biomarker.

This is a combination trial where

the addition of INB03 to approved second line therapy may provide a therapeutic alternative in a disease without any drugs approved.

Company has not lost interest in combining INB03 with immune checkpoint inhibitors (CPI), but competition for patients is fierce in this

Our plan is to pursue treatment of tumors that express MUC4 as our lead indication.

Tumors that express MUC4 are resistant to all

forms of immunotherapy due to a combination of increased MDSC in the tumor, decrease tumor macrophage (TAM) phagocytosis, decreased inflammation

in the tumor (a “cold” tumor) and direct effects of MUC4 and soluble TNF on HER2/neu function.

If combination therapy with

INB03 decreases MUC4 expression and changes the TME to make the “cold” tumor “hot”, then addition of a CPI will

be warranted.

At this time, the combination trial to treat MUC4+ trastuzumab resistant HER2+ expressing cancer is our most probable registration

strategy for INB03.

This includes the combination of INB03 with trastuzumab antibody drug conjugate therapies such as ENHERTU (trastuzumab-deruxtecan;

(Daiichi-Sankyo).

Current therapies for trastuzumab resistant cancers are used on a trial by error approach.

Using MUC4 expression as

a biomarker for to predict trastuzumab resistance brings a precision medicine approach to this difficult clinical scenario.

INB03 to the treatment regimen for treating HER2+ cancers may convert “cold” tumors to “hot” tumors making the

eligible for treatment with CPI.

Finally, the clinical development landscape for CPI combination therapies to treat CPI resistant therapies

The design and successful completion of a Phase II trial is not guarantee of clinical relevance or commercial viability.

are multiple therapies on the market or in development for the treatment of trastuzumab resistant breast cancer.

The most prominent are

antibody conjugates including ado-trastuzumab emtansine (Kadycycla/T-DM1, Genentech/Roche) and trastuzumab deruxtecan (Enhertu, Daiichi

The INBO3 Phase I trial has been completed and provided evidence

of safety and a pharmacodynamic drug affect, decrease of inflammatory biomarkers, needed to move the program to a Phase II clinical trial

The Phase II clinical trial will combine INB03 with approved second line therapy in patients with HER2+ breast cancer with

or without brain metastasis that have progressed after treatment with TDxd.

This is a combination trial where the addition of INB03 to

approved second line therapy may provide a therapeutic alternative in a disease without any drugs approved.

The Company has not lost interest

in combining INB03 with immune checkpoint inhibitors (CPI), but competition for patients is fierce in this arena.

Our plan is to pursue

treatment of tumors that express MUC4 as our lead indication.

Tumors that express MUC4 are resistant to all forms of immunotherapy due

to a combination of increased MDSC in the tumor, decrease tumor macrophage (TAM) phagocytosis, decreased inflammation in the tumor (a

“cold” tumor) and direct effects of MUC4 and soluble TNF on HER2 function.

If combination therapy with INB03 decreases MUC4

expression and changes the TME to make the “cold” tumor “hot”, then addition of a CPI will be warranted.

time, the combination trial to treat MUC4+ TDxd resistant HER2+ expressing cancer is our most probable registration strategy for INB03.

This includes the combination of INB03 with trastuzumab antibody drug conjugate therapy TDxd in combination with a TKI and/or CPI.

therapies for TDxd resistant cancers are used on a trial by error approach.

Using MUC4 expression as a biomarker for to predict resistance

may bring a precision medicine approach to this difficult clinical scenario.

Addition of INB03 to the treatment regimen for treating MUC4+

cancers may convert “cold” tumors to “hot” tumors making the eligible for treatment with CPI.

The design and successful

completion of a Phase II trial is not guarantee of clinical relevance or commercial viability.

There are multiple therapies on the market

or in development for the treatment of resistant breast cancer.

The introduction of TDxd to the clinician’s armamentarium is new

and evolving.

The future standard-of-care is not known.

The registration and development strategy for INB03 is multinational.

The Phase II program may enroll patients in other countries,

including the United States after submitting an Investigational New Drug application, or IND, to the U.S.

Food and Drug Administration,

If partnering is successful at any stage of INB03 development, we expect the partner to influence the development and regulatory

decisions needed with moving the drug to commercialization.

Finally, combination therapy to treat patients resistant to trastuzumab or

CPI are not the only oncology application for INB03.

INB03 can be combined with other immune-oncology therapy to improve efficacy, safety

INB03 can be used as part of combination therapy with immuno-oncology drugs, paired with tradition therapies such as cytotoxic

chemotherapy, kinase inhibitors, cell therapies or radiation therapy.

The company is pursuing pre-clinical data in some of these areas.

II program may enroll patients in other countries, including the United States after submitting an Investigational New Drug application,

or IND, to the U.S.

Food and Drug Administration, or FDA.

If partnering is successful at any stage of INB03 development, we expect the

partner to influence the development and regulatory decisions needed with moving the drug to commercialization.

Finally, combination therapy

to treat patients resistant to trastuzumab or CPI are not the only oncology application for INB03.

INB03 can be combined with other immune-oncology

therapy to improve efficacy, safety or both.

INB03 can be used as part of combination therapy with immuno-oncology drugs, paired with

tradition therapies such as cytotoxic chemotherapy, kinase inhibitors, cell therapies or radiation therapy.

The company is pursuing pre-clinical

data in some of these areas.

When and if positive developments occur, we will communicate them to our shareholders.

There are other regulatory venues that will be

important for both our products – the largest and most important is Europe.

In Europe, the European Medicines Agencies (“EMA”)

is responsible for authorization of clinical trials in member states.

In EU, there may be a requirement to get individual country authorization

at the same time as EMA authorization.

The initial development of INB03 and XPro occurred in AUS followed by trials in other regulatory

jurisdictions including the US.

The development of INKmune will start in the United Kingdom followed by trials in the US.

XPro is being

developed for the treatment of Alzheimer’s disease under a Part-the-Cloud Award received Feb 2019.

The biomarker directed Phase

I trial is being performed in AUS using a regulatory strategy identical to that used for INB03 in cancer.

Regulatory approval to initiate

the trial was received on February 8, 2019.

XPro treats microglial activation and innate immune dysregulation may be the cause with Alzheimer’s

disease in some patients.

To our knowledge, there are few companies using an anti-inflammatory strategy for the treatment of Alzheimer’s

There are other regulatory

venues that will be important for both our products – the largest and most important is Europe.

In Europe, the European Medicines

Agencies (“EMA”) is responsible for authorization of clinical trials in member states.

In EU, there may be a requirement to

get individual country authorization at the same time as EMA authorization.

The initial development of INB03 and XPro occurred in AUS

followed by trials in other regulatory jurisdictions including the US.

The development of INKmune will start in the United Kingdom followed

by trials in the US.

XPro is being developed for the treatment of Alzheimer’s disease under a Part-the-Cloud Award received Feb

The biomarker directed Phase I trial was performed in AUS using a regulatory strategy identical to that used for INB03 in cancer.

Regulatory approval to initiate the trial was received on February 8, 2019.

XPro treats microglial activation and innate immune dysregulation

may be the cause with Alzheimer’s disease in some patients.

To our knowledge, there are few companies using an anti-inflammatory

strategy for the treatment of Alzheimer’s disease.

Those companies include Denali Therapeutics (NASDAQ:

developing DNL747 that targets critical signaling proteins in the

TNF pathway that regulate inflammation and cell death.

developing DNL747

that targets critical signaling proteins in the TNF pathway that regulate inflammation and cell death.

Alector (NASDAQ:

ALEC) in partnership with Abbvie is developing AL002 that targets

TREM2 on microglial cells.

Gliacure is targeting microglial cells in Alzheimer’s disease with a small molecule candidate GC021109.

ALEC) in partnership

with Abbvie is developing AL002 that targets TREM2 on microglial cells.

Gliacure is targeting microglial cells in Alzheimer’s disease

with a small molecule candidate GC021109.

Lecanemab (Leqembi™;

Eisai) was approved for the treatment

of patients with Early AD in January 2023 This is this the second anti-amyloid drug for the treatment of ealy AD to be approved.

(Lilly), a third drug anti-amyloid therapy for early AD is expected to be approved in the second half of 2023.

These three drugs have

similar efficacy and safety profiles.

One of the common safety problems is the development of ARIA (Alzheimer’s Related Imaging

Abnormality) that causes a delay or discontinuation of therapy.

ARIA is neuroinflammation related side-effect more common in patients

expressing ApoE4.

The modest efficacy, sub-optimal safety and difficulty of use makes combination therapy for the treatment of early AD

an attractive development and therapeutic strategy.

The Company is following the developments in this area closely.

Clinical testing must satisfy

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Pharmaceutical

manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies, and are

subject to periodic unannounced inspections by the FDA and certain state agencies for compliance with GMP, which impose certain procedural

and documentation requirements upon us and our third-party manufacturers.

Changes to the manufacturing process are strictly regulated,

and, depending on the significance of the change, may require prior FDA approval before being implemented.

FDA regulations also require

investigation and correction of any deviations from cGMP and impose reporting requirements upon us and any third-party manufacturers that

we may decide to use.

Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality

control to maintain compliance with cGMP and other aspects of regulatory compliance.

If our future suppliers are not able to comply with

these requirements, the FDA may, among other things, halt our clinical trials, require us to recall a product from distribution, or withdraw

approval of the product.

manufacturers and their subcontractors are required to register their establishments with the FDA and certain state agencies and are subject

to periodic unannounced inspections by the FDA and certain state agencies for compliance with GMP, which impose certain procedural and

documentation requirements upon us and our third-party manufacturers.

Changes to the manufacturing process are strictly regulated, and,

depending on the significance of the change, may require prior FDA approval before being implemented.

FDA regulations also require investigation

and correction of any deviations from cGMP and impose reporting requirements upon us and any third-party manufacturers that we may decide

Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain

compliance with cGMP and other aspects of regulatory compliance.

If our future suppliers are not able to comply with these requirements,

the FDA may, among other things, halt our clinical trials, require us to recall a product from distribution, or withdraw approval of the

The FDA may withdraw approval

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been significantly affected by major legislative initiatives.

By way of example, in March

2010, the Affordable Care Act was signed into law, intended to broaden access to health insurance, reduce or constrain the growth of healthcare

spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries,

impose new taxes and fees on the health industry and impose additional health policy reforms.

Among the provisions of the Affordable Care

Act of importance to our potential drug candidates are:

By way of example, in March 2010, the Affordable Care Act (“ACA”)

was signed into law, intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies

against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees

on the health industry and impose additional health policy reforms.

Among the provisions of the ACA of importance to our potential drug

candidates are:

an annual, nondeductible fee on any entity that manufactures, or imports specified branded prescription drugs and biologic agents, apportioned among these entities according to their market share in certain government healthcare programs;

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a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.

In addition, other legislative

changes have been proposed and adopted since the Affordable Care Act was enacted.

These changes include, among others, the Budget Control

Act of 2011, which mandates aggregate reductions to Medicare payments to providers of up to 2% per fiscal year effective April 1, 2013,

and, due to subsequent legislative amendments, will remain in effect through 2024 unless additional Congressional action is taken.

January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare

payments to several providers, including hospitals and cancer treatment centers, increased the statute of limitations period for the government

to recover overpayments to providers from three to five years.

These new laws may result in additional reductions in Medicare and other

healthcare funding, which could have a material adverse effect on customers for our product candidates, if approved, and, accordingly,

our financial operations.

We expect that the Affordable

Care Act, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria

and lower reimbursement, and in additional downward pressure on the price that we receive for any approved product.

Any reduction in reimbursement

from Medicare or other government-funded programs may result in a similar reduction in payments from private payors.

The implementation

of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize

In addition, other legislative changes have been proposed and

adopted since the ACA was enacted.

These changes include, among others, the Budget Control Act of 2011, which mandates aggregate reductions

to Medicare payments to providers of up to 2% per fiscal year effective April 1, 2013, and, due to subsequent legislative amendments,

will remain in effect through 2024 unless additional Congressional action is taken.

In January 2013, President Obama signed into law the

American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several providers, including hospitals

and cancer treatment centers, increased the statute of limitations period for the government to recover overpayments to providers from

three to five years.

These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a material

adverse effect on customers for our product candidates, if approved, and, accordingly, our financial operations.

its enactment, there have been judicial, administrative, executive and legislative challenges to certain aspects of the ACA.

17, 2021 the U.S.

Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically

ruling on the constitutionality of the ACA.

Thus, the ACA will remain in effect in its current form.

Further, prior to the U.S.

Court ruling, President Biden issued an executive order to, among other things, instruct certain governmental agencies to review and reconsider

their existing policies and rules that limit access to health care, including among others, reexamining Medicaid demonstration projects

and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance

coverage through Medicaid or the ACA.

March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate

cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning

January 1, 2024.

Payment methodologies may also be subject to changes in healthcare legislation and regulatory initiatives.

Centers for Medicare and Medicaid Services may develop new payment and delivery models, such as bundled payment models.

There also has

been heightened governmental scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription

drugs and biologics.

Such scrutiny has resulted in several recent U.S.

Congressional inquiries and proposed and enacted federal and state

legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare,

review the relationship between pricing and manufacturer patient programs and reform government program reimbursement methodologies for

By way of example, in August 2022, the Inflation Reduction Act of 2022, or the IRA, was signed into law.

Among other things, the

IRA requires manufacturers of certain drugs to engage in price negotiations with Medicare (beginning in 2026), with prices that can be

negotiated subject to a cap;

imposes rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inflation

(first due in 2023);

and replaces the Part D coverage gap discount program with a new discounting program (beginning in 2025).

permits the Secretary of the Department of Health and Human Services to implement many of these provisions through guidance, as opposed

to regulation, for the initial years.

For that and other reasons, it is currently unclear how the IRA will be effectuated, or the impact

of the IRA on our business.

the state level, legislatures in the United States have also increasingly passed legislation and implemented regulations designed to control

pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access

and marketing cost disclosure and transparency measures and, in some cases, designed to encourage importation from other countries and

bulk purchasing.

In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine

what pharmaceutical products and which suppliers will be included in their prescription drug and other healthcare programs.

We expect that the ACA, as well as other healthcare reform measures

that may be adopted in the future, may result in more rigorous coverage criteria and lower reimbursement, and in additional downward pressure

on the price that we receive for any approved product.

Any reduction in reimbursement from Medicare or other government-funded programs

may result in a similar reduction in payments from private payors.

The implementation of cost containment measures or other healthcare

reforms may prevent us from being able to generate revenue, attain profitability or commercialize our drugs.

Human Capital Resources

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What changed 10-K

Item 1. Business