What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-05-03 compared with 2022-11-02 · 303 added, 361 removed, 167 unchanged (80% of the section changed)

16 unchanged sentences

Description of Business

We are a clinical-stage immunology

company focused on developing drugs that may reprogram the patient’s innate immune system to treat disease.

We believe this may

be done by targeting cells of the innate immune system that cause acute and chronic inflammation and are involved in the immune dysfunction

associated with chronic diseases such as cancer and neurodegenerative diseases.

The Company’s drugs are in clinical trials and have

not been approved by a regulatory authority.

The Company has two therapeutic platforms – a dominant-negative TNF platform (“DN-TNF”,

“XPro™”, “XPro1595™” or “ pegipanermin” ) and a Natural Killer (“NK”,

or “INKmune™”) platform.

The DN-TNF platform neutralizes soluble TNF (“sTNF”) without affecting trans-membrane

TNF (“tmTNF”) or TNF receptors -TNFR1 and TNFR2.

This unique biologic mechanism differentiates the DN-TNF drugs from currently

approved non-selective TNF inhibitors that inhibit both sTNF and tmTNF.

Protecting the function of tmTNF and TNF receptors while neutralizing

the function of sTNF is a potent anti-inflammatory strategy that does not cause immunosuppression or demyelination which occur in the

currently approved non-selective TNF inhibitors.

Currently approved non-selective TNF inhibitors treat autoimmune disease, but are contraindicated

in patients with infection, cancer and neurologic diseases because they increase the risk of infection, cancer and demyelinating neurologic

diseases, respectively;

all the safety problems are due to off-target effects on inhibiting tmTNF.

The NK platform targets the dysfunctional

natural killer cells in patients with cancer.

NK cells are part of the normal immunologic response to cancer with important roles in immunosurveillance

to prevent cancer and in preventing relapse by eliminating residual disease.

Residual disease is the cancer left behind after therapy

a clinical-stage immunology company focused on developing drugs that may reprogram the patient’s innate immune system to treat disease.

We believe this may be done by targeting cells of the innate immune system that cause acute and chronic inflammation and are involved

in immune dysfunction associated with chronic diseases such as cancer and neurodegenerative diseases.

The Company’s drugs are in

clinical trials and have not been approved by a regulatory authority.

The Company has two therapeutic platforms – a dominant-negative

TNF platform (“DN-TNF”, “XPro™”, “XPro1595™” or “ pegipanermin” ) and

a Natural Killer (“NK”, or “INKmune™”) platform.

The DN-TNF platform neutralizes soluble TNF (“sTNF”)

without affecting trans-membrane TNF (“tmTNF”) or TNF receptors -TNFR1 and TNFR2.

This unique biologic mechanism differentiates

the DN-TNF drugs from currently approved non-selective TNF inhibitors that inhibit both sTNF and tmTNF.

Protecting the function of tmTNF

and TNF receptors while neutralizing the function of sTNF is a potent anti-inflammatory strategy that does not cause immunosuppression

or demyelination which occur in the currently approved non-selective TNF inhibitors.

Currently approved non-selective TNF inhibitors treat

autoimmune disease, but are contraindicated in patients with infection, cancer and neurologic diseases because they increase the risk

of infection, cancer and demyelinating neurologic diseases, respectively;

all the safety problems are due to off-target effects on inhibiting

The NK platform targets the dysfunctional natural killer cells in patients with cancer.

NK cells are part of the normal immunologic

response to cancer with important roles in immunosurveillance to prevent cancer and in preventing relapse by eliminating residual disease.

Residual disease is the cancer left behind after therapy is finished.

Residual disease can grow to cause relapse.

The mechanism by which INKmune improves the ability of the patient’s NK

cells to kill their cancer is complex.

The NK cells of cancer patients lose the ability to bind and kill cancer cells.

A measure of NK

cell binding to cancer cells is avidity.

The higher the avidity, the greater the bond between the NK cell to cancer cell and thus the

greater NK killing of cancer cells.

INKmune increase NK avidity and further improves mitochondrial function and upregulates nutrient receptors.

These metabolic changes may help the INKmune primed NK cell to function in the hostile tumor microenvironment and persist much longer.

These mechanisms improve the ability of INKmune primed NK cells to overcome the immune evasion of the patient’s cancer cells.

believe INKmune is best used to eliminate residual disease after the patient has completed other cancer therapies.

Both the DN-TNF platform

and the INKmune platform can be used to treat multiple diseases.

The DN-TNF platform will be used as an immunotherapy for the treatment

of cancer and neurodegenerative disease.

INKmune is being developed to treat NK sensitive hematologic malignancies and solid tumors.

We believe our DN-TNF platform

can be used as a cancer therapy to reverse resistance in immunotherapy and as a CNS (“central nervous system”) therapy to

target glial activation to prevent progression of Alzheimer’s disease (“AD”), and to target neuroinflammation in treatment

resistant depression (“TRD”).

The mechanism by which

INKmune improves the ability of the patient’s NK cells to kill their cancer is complex.

The NK cells of cancer patients lose the

ability to bind and kill cancer cells.

A measure of NK cell binding to cancer cells is avidity.

The higher the avidity, the greater the

bond between the NK cell to cancer cell and thus the greater NK killing of cancer cells.

INKmune increases NK avidity and further improves

mitochondrial function and upregulates nutrient receptors.

These metabolic changes may help the INKmune primed NK cell to function in

the hostile tumor microenvironment and persist much longer in the patient.

These mechanisms improve the ability of INKmune primed NK cells

to overcome the immune evasion of the patient’s cancer cells.

We believe INKmune is best used to eliminate residual disease after

the patient has completed other cancer therapies.

Both the DN-TNF platform and the INKmune platform can be used to treat multiple diseases.

The DN-TNF platform will be used as an immunotherapy for the treatment of cancer and neurodegenerative disease.

INKmune is being developed

to treat NK sensitive hematologic malignancies and solid tumors.

believe our DN-TNF platform can be used as a cancer therapy to reduce resistance in immunotherapy and as a CNS (“central nervous

system”) therapy to target glial activation to prevent progression of Alzheimer’s disease (“AD”), and to target

neuroinflammation in treatment resistant depression (“TRD”) and as a drug to prevent muscle degeneration, prevent fibrosis

and promote muscle regeneration in Duchene muscular dystrophy (DMD).

The drug is named differently for the oncology and CNS indications;

INB03™ or XPro™,

respectively, but it is the same drug product.

In each case, we believe neutralizing sTNF is a cornerstone to the treatment of these diseases.

As an immunotherapy for cancer, we are using INB03 to neutralize sTNF produced by HER2+ trastuzumab resistant breast cancers to reverse

resistance to targeted therapy.

sTNF produced by the tumor causes an up-regulation of MUC4 express causing steric hindrance of trastuzumab

binding to the HER receptor on HER2+ breast cancer cells.

Without binding, trastuzumab is not effective.

Neutralizing sTNF reverses MUC4

expression converting a trastuzumab resistant breast cancer cell into a trastuzumab sensitive breast cancer cell.

In addition, INB03 changes

the immunobiology of the tumor microenvironment by decreasing the number of immunosuppressive myeloid cells, both myeloid derived suppressor

cells and tumor active macrophages, and increasing the number of cytotoxic lymphocytes and phagocytic macrophages in the TME.

has completed an open label dose escalation trial in cancer patients with metastatic solid tumors that have failed multiple lines of therapy.

The trial informs the design of the Phase II trial by demonstrating that INB03 was safe and well tolerated, defined the dose of INB03

to carry into Phase II trials, and demonstrated a pharmacodynamic end-point.

A Phase II trial is planned in patients with advanced MUC4+

expressing cancer.

Likewise, we believe the DN-TNF

platform can be used to treat selected neurodegenerative diseases by modifying the brain microenvironment (“BME”).

The Company believes

the core pathology of cognitive decline is a combination of neurodegeneration and synaptic dysfunction.

XPro completed a Phase I trial

treating patients with Alzheimer’s disease that was partially funded by a Part-the-Clouds Award from the Alzheimer’s Association.

We believe XPro targets activated microglia and astrocytes of the brain that produce sTNF that promotes nerve cell loss and synaptic dysfunction,

key elements in the development of dementia.

In animal models, elimination of sTNF prevents nerve cell dysfunction and reverses synaptic

The Phase I trial in patients with biomarkers of inflammation with AD has been completed.

The open label, dose escalation trial

is designed to demonstrate that XPro can safely decrease neuroinflammation in patients with AD.

The endpoints of the trial are measures

of neuroinflammation and neurodegeneration in blood and cerebral spinal fluid, measures of neuroinflammation by measuring cytokines in

the CSF and MRI by measuring white matter free water.

XPro, at the 1mg/kg/week dose decreased inflammatory cytokines in the CSF and white

matter free water in the brain demonstrating that XPro can decrease neuroinflammation in patients with AD.

We also studied downstream

benefits of decreasing neuroinflammation by measuring changes in the CSF proteome and quantifying changes in novel white matter MRI biomarkers.

XPro significantly decreases biomarkers of neurodegeneration as measured by changes in the CSF proteome including neurofilament light

chain, phospho Tau 217 and VILIP-1;

decreases of 84%, 46% and 91% respectively after 3 months of therapy.

Three months of XPro therapy

improved measures of synaptic function, as measured in the CSF proteome including a 222% increase in Contactin 2 and a 56% decrease neurogranin,

proteins that contribute to improved synaptic function.

The successful completion

of the Phase I trial in AD has informed the design of two Phase II trials in patients with AD;

one in mild AD and the other in mild cognitive

impairment (MCI).

The mild AD trial will be a blinded randomized trial to test if treatment of mild AD patients with neuroinflammation

will affect cognitive decline.

The Phase II trial has six important elements.

Two hundred patients will be enrolled in a 2:1 ratio (XPro

INB03™ or XPro™, respectively, but it is the same drug product.

For DMD, the company is exploring DN-TNF compounds optimized

for the treatment of DMD.

This novel compound has the same mechanism of action but has novel IP protection.

In each case, we believe neutralizing

sTNF is a cornerstone to the treatment of these diseases.

As an immunotherapy for cancer, we are using INB03 to neutralize sTNF produced

by HER2+ trastuzumab resistant breast cancers to reverse resistance to targeted therapy.

sTNF produced by the tumor causes an up-regulation

of MUC4 expression causing steric hindrance of trastuzumab binding to the HER receptor on HER2+ breast cancer cells.

Without binding,

trastuzumab based therapies are not effective.

Neutralizing sTNF reverses MUC4 expression converting a trastuzumab resistant breast cancer

cell into a trastuzumab sensitive breast cancer cell.

In addition, INB03 changes the immunobiology of the tumor microenvironment by decreasing

the number of immunosuppressive myeloid cells, both myeloid derived suppressor cells and tumor active macrophages, and increasing the

number of cytotoxic lymphocytes and phagocytic macrophages in the TME.

The Company has completed an open label dose escalation trial in

cancer patients with metastatic solid tumors that have failed multiple lines of therapy.

The trial informs the design of the Phase II

trial by demonstrating that INB03 was safe and well tolerated, defined the dose of INB03 to carry into Phase II trials, and demonstrated

a pharmacodynamic endpoint.

A Phase II trial is planned in patients with advanced MUC4+ expressing cancer.

we believe the DN-TNF platform can be used to treat selected neurodegenerative diseases by modifying the brain microenvironment (“BME”).

The Company believes the core pathology of cognitive decline is a combination of neurodegeneration and synaptic dysfunction.

Neurodegeneration

is nerve cell death that may include demyelination.

Synaptic dysfunction means the connections between nerve cells stop working efficiently

and may decrease in number.

The combination of neurodegeneration and synaptic dysfunction causes cognitive decline and behavioral changes

associated with Alzheimer’s disease (“AD”).

XPro completed a Phase I trial treating patients with Alzheimer’s disease that was

partially funded by a Part-the-Clouds Award from the Alzheimer’s Association.

We believe XPro targets activated microglia and astrocytes

of the brain that produce sTNF that promotes nerve cell loss and synaptic dysfunction, key elements in the development of dementia.

animal models, elimination of sTNF prevents nerve cell dysfunction and reverses synaptic pruning.

The Phase I trial in patients with biomarkers

of inflammation with AD has been completed.

The open label, dose escalation trial was designed to demonstrate that XPro can safely decrease

neuroinflammation in patients with ADi.

ADi is the term used to delineate patients with AD with biomarkers of inflammation.

to be more than 40% of patients with AD.

The endpoints of the trial are measures of neuroinflammation and neurodegeneration in blood and

cerebral spinal fluid by measuring changes in inflammatory cytokine levels in the CNS and using MRI-DTI to measure white matter free water.

White matter free water is a validated measure of neuroinflammation in the brain.

XPro, at the 1mg/kg/week dose decreased inflammatory

cytokines in the CSF and decreased white matter free water in the brain demonstrating that XPro can decrease neuroinflammation in patients

We also studied downstream benefits of decreasing neuroinflammation by measuring changes in the CSF proteome and quantifying

changes in novel white matter MRI biomarkers.

XPro significantly decreases biomarkers of neurodegeneration as measured by changes

in the CSF proteome including neurofilament light chain, phospho Tau 217 and VILIP-1;

decreases of 84%, 46% and 91% respectively after

3 months of therapy.

Three months of XPro therapy improved measures of synaptic function, as measured in the CSF proteome including a

222% increase in Contactin 2 and a 56% decrease neurogranin, changes that contribute to improved synaptic function.

successful completion of the Phase I trial in AD has informed the design of a blinded randomized, placebo-controlled Phase II trials in

patients with early ADi.

Early ADi includes patients with AD and MCI who have at least one biomarker of inflammation (ADi and MCI 2 respectively).

The early ADi trial is a blinded randomized trial to test if treatment of early AD patients with neuroinflammation with XPro will affect

cognitive decline.

The Phase II trial in early ADi has six important elements.

Two hundred and ten patients are being enrolled in a 2:1

ratio (XPro vs placebo).

The patients will receive 1mg/kg/week as a subcutaneous injection for six months.

An enrichment strategy identical to the

successful strategy used in the Phase I trial will be used to ensure patients have neuroinflammation.

Patients will need to have one or

more enrichment criteria:

elevated C-reactive protein, hemoglobin A1c, erythrocyte sedimentation rated in the blood and at least one allele

The primary end-point will be Early/mild Alzheimer’s Cognitive Composite (“EMACC”), a validated cognitive

measure that is more sensitive than traditional end-points used in many studies of patients with early AD.

The trial will be performed

in North America and Australia and enrolled its first patient in April 2022.

All patients will be offered to stay on therapy for at least

12 months in an extension trial.

An enrichment strategy identical

to the successful strategy used in the Phase I trial will be used to ensure patients have neuroinflammation.

Patients will need to have

one or more enrichment criteria:

elevated blood level of at least one of C-reactive protein, hemoglobin A1c, erythrocyte sedimentation

and/or at least one allele of ApoE4.

The primary endpoint will be Early/mild Alzheimer’s Cognitive Composite (“EMACC”),

a validated cognitive measure that is more sensitive than traditional end-points used in many studies of patients with early AD.

is open in Australia and Canada and will open in the US pending the lift of a clinical hold by the US FDA.

All patients will be offered

to stay on therapy for at least 12 months in an extension trial.

Clinical and biomarker data will be collected 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 of the enrichment criteria used in the mild ADi

trial to qualify for the trial.

The primary end-point is EMACC, a sensitive cognitive end-point validated for use in patients with early

Secondary clinical endpoints include the CDR-SB, Cogstate Battery, E-Cog, NPI, and ADCS-ADL.

Imaging endpoints of neuroinflammation

(white matter free water) and white matter quality (apparent fiber density and radial diffusivity in Alzheimer’s disease tracts)

and gray matter quality (cortical disarray measurement) will be 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 in this trial will be eligible

to continue on XPro for at least 12 additional months.

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

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.

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).

Once third of TRD patients

have peripheral biomarkers to inflammation (elevated CRP).

This is a large patient population.

The role of TNF and anti-TNF therapeutics was explored

in a small open label clinical trial by Prof.

Andrew Miller, MD of Emory University demonstrated the patients have elevated TNF levels

and treatment with infliximab treated their depression (Miller, 2011).

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

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

The blinded, randomized Phase II trial will use 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 demonstrated the patients have elevated

TNF levels and treatment with infliximab treated their depression (Miller, 2011).

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

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

The blinded, randomized Phase II trial will use biomarkers of

peripheral inflammation to select patients with TRD for enrollment.

Patients will be treated for 6 weeks.

Primary end-points include both clinical

and neuroimaging measures.

Primary endpoints 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 once the pending clinical hold is lifted.

We believe that INKmune improves

the ability of the patient’s own NK cells to attack their tumor.

INKmune interacts with the patient’s NK cells to convert

them from inert resting NK cells into memory-like NK cells that kill the patient’s cancer cells.

INKmune is a replication incompetent

proprietary cell line that is given to the patient after determining that i) the patient has adequate NK cells in their circulation and

ii) those NK cells are functional when exposed to INKmune in vitro.

INKmune is designed to be given to patients after their immune system

has recovered after cytotoxic chemotherapy to target the residual disease the remains after treatment with cytotoxic therapy.

INKmune can be used to treat numerous hematologic malignancies and solid tumors including leukemia, multiple myeloma, lymphoma, lung,

ovary, breast, renal and prostate cancer.

The Company has initiated a Phase I trial using INKmune to treat patients with high risk MDS/AML,

a form of leukemia.

One patient has been treated in the Phase I trial for MDS and three patients have been treated compassionately in

In the four patients, INKmune therapy is safe, produces memory-like NK cells that kill cancer in vitro, promotes development of

cancer killing memory-like NK cells that can be found in the patient’s circulation of 4 months.

The Company will continue to enroll

patients in the Phase I trial.

The Company intends to initiate a separate Phase I/2 trial of INKmune in a solid tumor during the first

half of 2023.

We believe that INKmune improves

the ability of the patient’s own NK cells to attack their tumor.

INKmune interacts with the patient’s NK cells to convert

them from inert resting NK cells into memory-like NK cells that kill the patient’s cancer cells.

INKmune is a replication incompetent

proprietary cell line that is given to the patient after determining that i) the patient has adequate NK cells in their circulation and

ii) those NK cells are functional when exposed to INKmune in vitro.

INKmune is designed to be given to patients after their immune system

has recovered after cytotoxic chemotherapy to target the residual disease the remains after treatment with cytotoxic therapy.

INKmune can be used to treat numerous hematologic malignancies and solid tumors including leukemia, multiple myeloma, lymphoma, lung,

ovary, breast, renal and prostate cancer.

The Company has initiated a Phase I trial using INKmune to treat patients with high risk MDS/AML,

a form of leukemia.

One patient has been treated in the Phase I trial for MDS and three patients have been treated compassionately in

In the four patients, INKmune therapy is safe, produces memory-like NK cells that kill cancer in vitro, promotes development of cancer

killing memory-like NK cells that can be found in the patient’s circulation of 4 months.

The Company will continue to enroll patients

in the Phase I trial.

The Company anticipates

receiving authorization to initiate the clinical trial once the pending clinical hold is lifted.

completed an extensive series of studies in murine models of DMD.

The data shows DN-TNF decreases muscle fiber inflammation and degeneration,

increases muscle fiber regeneration in an acute model of DMD.

Cardiac function was studied using echocardiography after 30 weeks of treatment.

Cardiac function did not change compared to placebo treated or prednisone treated animals.

These data strongly suggest DN-TNF may be a

therapy for treatment of patients with DMD that may have unique biologic attributes, muscle fiber regeneration, without corticosteroid

associated metabolic toxicity – insulin resistance, diabetes, obesity, hirsutism, short stature and muscle weakness.

that INKmune improves the ability of the patient’s own NK cells to attack their tumor.

INKmune interacts with the patient’s

NK cells to convert them from inert resting NK cells into memory-like NK cells that kill the patient’s cancer cells.

a replication incompetent proprietary cell line that is given to the patient after determining that i) the patient has adequate NK cells

in their circulation and ii) those NK cells are functional when exposed to INKmune in vitro.

INKmune is designed to be given to patients

after their immune system has recovered after cytotoxic chemotherapy to target the residual disease the remains after treatment with cytotoxic

We believe INKmune can be used to treat numerous hematologic malignancies and solid tumors including leukemia, multiple myeloma,

lymphoma, lung, ovary, breast, renal and prostate cancer.

The Company has initiated a Phase I trial using INKmune to treat patients with

high risk MDS/AML, a form of leukemia.

Two patients have been treated in the Phase I trial for MDS and three patients have been treated

compassionately in AML.

In the five patients, INKmune therapy is safe, produces memory-like NK cells that kill cancer in vitro, promotes

development of cancer killing memory-like NK cells that can be found in the patient’s circulation of 4 months.

The Company will

continue to enroll patients in the Phase I trial.

The Company intends to initiate a separate Phase I/II trial of INKmune in a metastatic

castration resistant prostate cancer (“mCRPC”) tumor during 2024.

An IND for a Phase I/II trial in men with mCRPC was submitted late March

The trial will treat up to 30 patients with mCRPC in a open label trial.

The trial has four goals:

i) demonstrate safety of INKmune

in men with mCRPC;

ii) determine what dose of INKmune should be used in a blinded randomized Phase II trial on men with mCRPC;

iii) determine

tumor response using traditional biomarkers of mCRPC including blood PSA level and iv) use exploratory biomarkers of tumor response including

circulating tumor DNA and PET PMSA imaging studies.

The first patients should be treated 9 months after the IND is open.

Since our inception in 2015,

we have devoted substantially all of our resources to the discovery and development of our product candidates, including clinical trials

we have devoted substantially all our resources to the discovery and development of our product candidates, including clinical trials

and preclinical studies as well as general and administrative support for these operations.

To date, we have generated no significant

We have incurred net losses in each year since our inception and, as of September 30, 2022, we had an accumulated deficit of

approximately $85.2 million.

Our net losses were $21,466,000 and $20,669,000 for the nine months ended September 30, 2022 and 2021, respectively.

Substantially all of our net losses resulted from costs incurred in connection with our research and development programs and from general

and administrative costs associated with our operations, including stock-based compensation.

We anticipate that we will continue

to generate losses for the foreseeable future.

We have incurred net losses in each year since our inception and, as of March 31, 2023, we had an accumulated deficit of approximately

$97.6 million.

Our net losses were $6,536,000 and $6,903,000 for the three months ended March 31, 2023 and 2022, respectively.

Substantially

all of our net losses resulted from costs incurred in connection with our research and development programs and from general and administrative

costs associated with our operations, including stock-based compensation.

We anticipate that we will continue to generate losses

for the foreseeable future.

The Company is subject to

3 unchanged sentences

Also, economies worldwide have also been negatively impacted by the COVID-19 pandemic,

however policymakers around the globe have responded with fiscal policy actions to support the healthcare industry and economy as a whole.

The magnitude and overall effectiveness of these actions remain uncertain.

however policymakers around the globe have responded with fiscal policy actions to support the healthcare industry and economy.

The magnitude

and overall effectiveness of these actions remain uncertain.

In addition, the Company’s

7 unchanged sentences

The severity of the impact

of the COVID-19 pandemic on the Company’s business will depend on a number of factors, including, but not limited to, the duration

and severity of the pandemic and the extent and severity of the impact on the Company’s service providers, suppliers, contract research

of the COVID-19 pandemic on the Company’s business will depend on several factors, including, but not limited to, the duration and

severity of the pandemic and the extent and severity of the impact on the Company’s service providers, suppliers, contract research

organizations (“CROs”) and the Company’s clinical trials, all of which are uncertain and cannot be predicted.

1 unchanged sentence

financial condition, liquidity or results of operations is uncertain.

We classify our operating

expenses into two categories:

We classify our operating expenses

into two categories:

research and development;

and general and administrative expenses.

Personnel costs including salaries, benefits

and stock-based compensation expense comprise a significant component of our research and development and general and administrative expense

Personnel costs including salaries, benefits and

stock-based compensation expense comprise a significant component of our research and development and general and administrative expense

We qualify as an “emerging

26 unchanged sentences

employee-related expenses, including salaries, benefits, travel and stock-based compensation.

The following table summarizes our research

and development expenses by product candidate for the periods indicated (in thousands):

Three months Ended

External Costs

DN-TNF – Alzheimer’s disease

INKmune – High Risk MDS/AML

Preclinical and other programs

Accrued research and development rebate

Total external costs

Internal Costs

We typically use our employee

consultant and infrastructure resources across our development programs.

We track outsourced development costs by product candidate or

development program, but we do not allocate personnel costs, other internal costs or external consultant costs to specific product candidates

or development programs.

resources across our development programs.

We track outsourced development costs by product candidate or development program, but we do

not allocate internal costs personnel costs including salaries and stock-based compensation to specific product candidates or development

participate, through our wholly owned subsidiary in Australia, in the Australian research and development tax incentive program, such

4 unchanged sentences

consideration can be reliably measured.

In the future, the Company may elect to cease to perform research and development in Australia

at which point the Company may not participate the Australian research and development tax incentive program.

participate, through our wholly owned subsidiary in the United Kingdom, in the research and development program provided by the United

4 unchanged sentences

has been incurred and the amount of the consideration can be reliably measured.

The Company expects to receive research and development

tax incentives during 2022 for qualifying expenditures incurred prior to December 31, 2021.

However, the United Kingdom recently enacted

changes to the research and development tax incentive whereby the Company does not expect to be eligible to receive the United Kingdom

tax incentives beginning with expenditures incurred during 2022.

Substantially all of our research

Substantially all our research

and development expenses to date have been incurred in connection with our current and future product candidates.

9 unchanged sentences

development of product candidates.

The costs of clinical trials

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

The costs of clinical trials may

vary significantly over the life of a project owing to, but not limited to, the following:

per patient trial costs;

10 unchanged sentences

the cost of manufacturing, finishing, labelling and storage drug used in the clinical trial.

We do not expect any of our

product candidates to be commercially available for at least the next several years, if ever.

We expect to continue to incur significant

expenses and increasing operating losses for the foreseeable future, which may fluctuate significantly from quarter-to-quarter and year-to-year.

We do not expect any of our product

candidates to be commercially available for at least the next several years, if ever.

We expect to continue to incur significant expenses

and increasing operating losses for the foreseeable future, which may fluctuate significantly from quarter-to-quarter and year-to-year.

We anticipate that our expenses will increase substantially as we:

9 unchanged sentences

General and Administrative Expenses

General and administrative

expenses consist principally of payroll and personnel expenses, including stock-based compensation;

professional fees for legal, consulting,

accounting and tax services;

General and administrative expenses

consist principally of payroll and personnel expenses, including stock-based compensation;

professional fees for legal, consulting, accounting

and tax services;

overhead, including rent and utilities;

and other general operating expenses not otherwise classified as

research and development expenses.

and other general operating expenses not otherwise classified as research and

development expenses.

Other income (expense)

expense consists primarily of interest expense incurred on debt.

Other income (expense consists)

primarily of interest expense incurred on debt and interest income on investments in money market accounts.

Results of Operations

Comparison of the Three Months Ended September

Comparison of the Three Months Ended March 31,

2023 and 2022

2 unchanged sentences

Three Months Ended

September 30,

(in thousands)

5 unchanged sentences

Other expense, net

During the nine months ended

September 30, 2022 and 2021, the Company sold MSC’s to one third-party and recognized $98,000 and $14,000, respectively, of revenues.

General and Administrative

During the three months ended

March 31, 2023 and 2022, the Company sold MSC’s to one third-party and recognized $38,000 and $163,000, respectively, of revenues.

General and Administrative

expenses were approximately $2.4 million during the nine months ended September 30, 2022, compared to approximately $2.5 million during

the nine months ended September 30, 2021.

The decrease in general and administrative expenses is largely due to $0.4 million lower consulting

fees, partially offset by $0.3 million higher compensation, including stock-based compensation.

Research and Development

Research and development expenses

were approximately $5.2 million during the three months ended September 30, 2022, compared to approximately $6.5 million during the three

months ended September 30, 2021.

The decrease in research and development expenses during the three months ending September 30, 2022 compared

to the three months ending September 30, 2021 is largely due to incurring $1.8 million less expenses associated with our Alzheimer’s

and mild cognitive impairment clinical trials.

Other Expense

The Company’s other

expense is lower during the nine months ended September 30, 2022 due to the Company incurring higher interest income on its cash.

Comparison of the Nine Months Ended September

30, 2022 and 2021

The following table summarizes

our results of operations for the periods indicated:

Nine Months Ended

September 30,

(in thousands)

Operating expenses:

General and administrative expenses were approximately $2.3 million

during the three months ended March 31, 2023 and 2022.

Research and Development

General and administrative

Total operating expenses

Loss from operations

Research and development expenses were approximately $4.1 million during

the three months ended March 31, 2023, compared to approximately $4.3 million during the three months ended March 31, 2022.

in research and development expenses during the three months ending March 31, 2023 compared to the three months ending March 31, 2022

is largely due to incurring $0.3 million less expenses with our Alzheimer’s clinical program and $0.4 million less related to our

preclinical and other programs, partially offset by $0.2 million higher INKmune costs pursuant to our high risk MDS/AML clinical program,

$0.1 million higher salaries and stock-based compensation and $0.1 million less accrued research and development rebates.

Other Expense, net

During the nine months ended

September 30, 2022, and 2021, the Company sold MSC’s to one third-party and recognized $277,000 and $18,000, respectively, of revenues.

General and Administrative

General and administrative

expenses were approximately $6.9 million during the three months ended September 30, 2022, compared to approximately $6.7 million during

the nine months ended September 30, 2021.

The increase in general and administrative expenses is largely due to higher compensation, including

stock-based compensation ($1.4 million higher during the nine months ended September 30, 2022), partially offset by lower consulting expense

($1.4 million lower during the nine months ended September 30, 2022).

Research and Development

Research and development expenses

were approximately $13.7 million during the nine months ended September 30, 2022, compared to approximately $13.5 million during

the nine months ended September 30, 2021.

The increase in research and development expenses during the nine months ending September

30, 2022 compared to the nine months ending September 30, 2021 is largely due to additional amounts incurred related to the Company’s

Alzheimer’s and mild cognitive impairment clinical trials ($1.2 million higher), higher compensation expense, including stock-based

compensation ($1.6 million increase), partially offset by incurring less costs in connection with the Company’s terminated COVID-19

clinical trial ($2.3 million decrease).

Other Income (Expense)

The Company’s other

expense is higher in 2022 due to the Company incurring interest expense from a loan the Company obtained in June 2021.

The Company’s other expense, net is lower during the three months

ended March 31, 2023, due to the Company earning interest income on its money market accounts, which partially offsets the interest expense

incurred on our debt.

Liquidity and Capital Resources

Liquidity is the ability of

a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing

We incurred a net loss of

$21.5 million and $20.7 million for the nine months ended September 30, 2022 and 2021, respectively.

Net cash used in operating activities

was $17.0 million and $18.7 million for the nine months ended September 30, 2022 and 2021, respectively.

Since inception, we have funded

our operations primarily with proceeds from the sales of our common stock.

As of September 30, 2022, we had cash and cash equivalents

of approximately $57.4 million.

We anticipate that operating losses and net cash used in operating activities will increase over the next

few years as we advance our products under development.

Our primary uses of capital

are, and we expect will continue to be, third-party clinical and preclinical research and development services, compensation and related

expenses, professional fees, patent and other regulatory expenses and general overhead costs.

We believe our use of CROs provides us with

flexibility in managing our spending.

The Company incurs various

expenses in Australia and the United Kingdom.

Liquidity is the ability of a

company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis.

We incurred a net loss of $6.5 million and $6.9 million for the three

months ended March 31, 2023 and 2022, respectively.

Net cash used in operating activities was $1.1 million and $8.9 million for the three

months ended March 31, 2023 and 2022, respectively.

Since inception, we have funded our operations primarily with proceeds from the

sales of our common stock.

As of March 31, 2023, we had cash and cash equivalents of approximately $51.0 million.

We anticipate that operating

losses and net cash used in operating activities will increase over the next few years as we advance our products under development.

Our primary uses of capital are,

and we expect will continue to be, third-party clinical and preclinical research and development services, compensation and related expenses,

professional fees, patent and other regulatory expenses and general overhead costs.

We believe our use of CROs provides us with flexibility

in managing our spending.

The Company incurs various expenses

in Australia and the United Kingdom.

Fluctuations in the rate of exchange between the United States dollar and the pound sterling

1 unchanged sentence

We currently do not hedge foreign currencies but will continue to assess whether that strategy is appropriate.

As of September 30, 2022,

the cash balance held by our foreign subsidiaries with currencies other than the United States dollar was approximately $0.3 million.

We do not have any material financial exposure to one customer or one country that would significantly hinder our liquidity.

As of March 31, 2023, the

cash balance held by our foreign subsidiaries with currencies other than the United States dollar was approximately $0.1 million.

not have any material financial exposure to one customer or one country that would significantly hinder our liquidity.

As a publicly traded company,

5 unchanged sentences

make some activities more time-consuming and costly.

As of September 30, 2022, the Company had an accumulated deficit of

$85.2 million and working capital of $59.8 million.

Losses have principally occurred as a result of stock-based compensation expense as

well as the substantial resources required for research and development of the Company’s products which included the general and

administrative expenses associated with its organization and product development, as well as the lack of sources of revenues until such

time as the Company’s products are commercialized.

As of September 30, 2022, we had cash and cash equivalents of approximately $57.4

We believe our cash and cash equivalents will be sufficient to fund our operations for at least the next 12 months following

the filing date of this Quarterly Report on Form 10-Q based on the balance of cash available as of September 30, 2022.

anticipate, however, that we will continue to generate losses for the foreseeable future, and we expect the losses to increase materially

as we continue the development of, and seek regulatory approvals for, our drug candidates, and seek to commercialize any drugs for which

we receive regulatory approval.

We will need to raise additional capital to fund our operations and complete our ongoing and planned clinical

Although we expect to finance future cash needs through public equity or debt offerings, no assurance can be given that any future

funding will be available to us, or if available that such proposed funding will be on terms that are acceptable to us.

If we are unable

to raise additional capital in sufficient amounts or on terms acceptable to us, we may be required to delay, limit, reduce or terminate

our drug development or future commercialization efforts or grant rights to develop and market drug candidates that we would otherwise

prefer to develop and market ourselves.

Common Stock – Issuance to Directors

During the nine months ended

September 30, 2022, certain directors and officers of the Company purchased 82,900 shares of the Company’s common stock for $0.7

ATM Sales Agreement

During the nine months ended

September 30, 2021, we issued and sold 1,439,480 shares of common stock at an average price of $20.17 per share under the 2020 ATM program.

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

March 2021, the Company entered into the 2021 ATM program with BTIG, as sales agent, to establish an ATM offering program of up to $45

million of common stock.

The Company had no sales of common stock during the nine months ended September 30, 2021 under the 2021 ATM program.

During July 2021, the Company sold 713,192 shares at an average price per share of $21.73 for net proceeds of approximately $15.0 million

under the 2021 ATM program.

As of March 31, 2023, the Company

had an accumulated deficit of $97.6 million and working capital of $46.6 million.

Losses have principally occurred as a result of stock-based

compensation expense as well as the substantial resources required for research and development of the Company’s products which

included the general and administrative expenses associated with its organization and product development, as well as the lack of sources

of revenues until such time as the Company’s products are commercialized.

As of March 31, 2023, we had cash and cash equivalents

of approximately $51.0 million.

We believe our cash and cash equivalents will be sufficient to fund our operations for at least the next

12 months following the filing date of this Quarterly Report on Form 10-Q based on the balance of cash available as of March 31, 2023.

We anticipate, however, that we will continue to generate losses for the foreseeable future, and

we expect the losses to increase materially as we continue the development of, and seek regulatory approvals for, our drug candidates,

and seek to commercialize any drugs for which we receive regulatory approval.

We will need to raise additional capital to fund our operations

and complete our ongoing and planned clinical trials.

Although we expect to finance future cash needs through public equity or debt offerings,

no assurance can be given that any future funding will be available to us, or if available that such proposed funding will be on terms

that are acceptable to us.

If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may be

required to delay, limit, reduce or terminate our drug development or future commercialization efforts or grant rights to develop and

market drug candidates that we would otherwise prefer to develop and market ourselves.

Common Stock – Issuance to Directors and

During the three months ended March 31, 2022, certain directors and

officers of the Company purchased 82,900 shares of the Company’s common stock for $0.7 million.

The following table summarizes

our cash flows for the periods indicated:

Nine Months Ended

September 30,

Three Months Ended

(in thousands)

1 unchanged sentence

Operating activities

Investing activities

Financing activities

4 unchanged sentences

Operating Activities

Our cash used in operating

activities was primarily driven by our net loss.

Operating activities used

approximately $17.0 million of cash during the nine months ended September 30, 2022, resulting from our loss of $21.5 million and changes

in our net operating assets and liabilities of $1.1 million, partially offset by non-cash stock-based compensation of $5.4 million.

change in our net operating assets and liabilities was mainly due to an increase in prepaid expenses of approximately $2.3 million, partially

offset by a decrease in other tax receivable of $0.5 million and a decrease in research and development tax credit receivable of $0.5

activities used approximately $18.7 million of cash during the nine months ended September 30, 2021, resulting from our loss of $20.7

million and changes in our net operating assets and liabilities of $1.4 million, partially offset by non-cash stock-based compensation

Our cash used in operating activities

was primarily driven by our net loss.

Operating activities used approximately

$1.1 million of cash during the three months ended March 31, 2023, resulting from our loss of $6.5 million, partially offset by changes

in our net operating assets and liabilities of $3.6 million and non-cash stock-based compensation of $1.7 million.

The change in our net

operating assets and liabilities was mainly due to a decrease in research and development tax credit receivable of approximately $6.3

million and an increase in prepaid expenses of $0.4 million, partially offset by a decrease in accounts payable and accrued liabilities

of $3.1 million.

activities used approximately $8.9 million of cash during the three months ended March 31, 2022, resulting from our loss of $6.9 million

and changes in our net operating assets and liabilities of $3.6 million, partially offset by non-cash stock-based compensation of $1.5

The change in our net operating assets and liabilities was mainly due to an increase in prepaid expenses of approximately $2.4

$1.1 million, and an increase in research and development tax credit receivable of $3.3 million, partially offset by an increase in accounts

payable and accrued liabilities of $2.7 million and an increase in deferred liabilities of approximately $0.4 million.

Investing Activities

the nine months ended September 30, 2021, the Company paid Xencor $15.0 million to settle an option to acquire 10% of the Company’s

common stock on a fully diluted basis which was issued to acquire the Company’s acquired in-process research and development intangible

million, and a decrease in accounts payable and accrued liabilities of $1.2 million.

Financing Activities

During the nine months ended

September 30, 2022, the Company sold 82,900 shares of its common stock to certain officers and directors for approximately $0.7 million.

the nine months ended September 30, 2021, the Company sold 1,439,480 shares of its common stock under its 2020 ATM program for net proceeds

of approximately $28.4 million.

the nine months ended September 30, 2021, the Company sold 713,192 shares of its common stock under the 2021 ATM program for net proceeds

of approximately $14.9 million.

July 2021, the Company completed a registered direct offering whereby the Company sold 1,818,182 shares of its common stock to investors

for net proceeds of $36.9 million.

During the three months ended March 31, 2022, the Company sold 82,900

shares of its common stock to certain officers and directors for approximately $0.7 million.

Critical Accounting Policies

Our discussion and analysis

of our financial condition and results of operations is based upon our unaudited consolidated financial statements, which have been prepared

in accordance with generally accepted accounting principles in the United States, or GAAP.

The preparation of these financial statements

requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses.

Actual results may differ

from these estimates.

Our critical accounting policies and estimates are discussed in our Annual Report on Form 10-K for the fiscal year

ended December 31, 2021 and there have been no material changes during the nine months ended September 30, 2022.

Our discussion and analysis of our financial condition and results

of operations is based upon our unaudited consolidated financial statements, which have been prepared in accordance with generally accepted

accounting principles in the United States, or GAAP.

The preparation of these financial statements requires us to make estimates and judgments

that affect the reported amounts of assets, liabilities and expenses.

Actual results may differ from these estimates.

Our critical accounting

policies and estimates are discussed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, and there have been

no material changes during the three months ended March 31, 2023.

Quantitative and Qualitative Disclosures

About Market Risk

Pursuant to Item 305(e) of

Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller

reporting company,” as defined by Rule 229.10(f)(1).

Pursuant to Item 305(e) of Regulation

S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting

company,” as defined by Rule 229.10(f)(1).

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis