What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-10-31 compared with 2024-08-01 · 307 added, 254 removed, 284 unchanged (66% of the section changed)

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Description of Business

We are a clinical-stage inflammation

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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 and many other potent anti-inflammatory drugs.

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;

anti-inflammatory strategy that does not cause immunosuppression or demyelination which can occur with currently approved non-selective

TNF inhibitors and may occur with many other potent anti-inflammatory drugs.

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;

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

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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.

These mechanisms improve the ability of INKmune™ primed NK cells to overcome the

immune evasion of the patient’s cancer cells.

We believe INKmune™ may be best used to eliminate residual disease after the

patient has completed other cancer therapies.

INKmune converts the patient’s resting NK cells into cancer killing memory like NK cells (mlNK).

improves mlNK killing in the hostile tumor microenvironment in at least three ways:

increasing avidity, improving mitochondrial and cellular

respiration and allowing the cells to function in the immunosuppressive and hypoxic TME.

Avidity is a measure of NK cell binding to cancer

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.

These mechanisms improve

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

We believe INKmune™

may be best used to eliminate residual disease after the patient has completed other cancer therapies.

Both the DN-TNF platform and

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The next indication to be developed with XPro™ will be TRD.

The drug is named

differently for the oncology and CNS indications;

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

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 express causing steric hindrance

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

There is a significant

pre-clinical program on the use on DN-TNF in cancer.

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

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

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

In each case, we believe neutralizing sTNF without blocking tmTNF or TNF receptors 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 based therapies are not effective.

Neutralizing sTNF reverses MUC4 expression converting a trastuzumab resistant breast cancer cell into a trastuzumab sensitive breast cancer

In a nude mouse model, INB03 may change the immunobiology of the tumor microenvironment by decreasing the number of immunosuppressive

myeloid cells, both myeloid derived suppressor cells and tumor active macrophages and phagocytic macrophages in the TME.

In the TME of

immunocompetent mice, INB03 increases the number of cytotoxic lymphocytes modifies the TME by downregulating immune exhaustion markers

– PDL-1, TIGIT, LAG3, CTLA4, CD47 and SIRPꭤ.

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 pre-clinical data in MUC4+ expressing tumors and the clinical

trial informs the design of a future 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.

The company does not plan to commence a Phase II trial in

patients with advanced MUC4+ expressing cancer until a partner can be found or extra-mural funding is secured.

sTNF reverses MUC4 expression converting a trastuzumab resistant breast cancer cell into a trastuzumab sensitive breast cancer cell.

mouse models, INB03 changes the immunobiology of the tumor microenvironment (“TME”) by decreasing the number of immunosuppressive

myeloid cells, both myeloid derived suppressor cells and tumor active macrophages (TAM;

phagocytic macrophages) in the TME.

of immunocompetent mice, INB03 increases the number of cytotoxic lymphocytes modifies and the TME by downregulating immune exhaustion

markers – PDL-1, TIGIT, LAG3, CTLA4, CD47 and SIRPꭤ.

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 pre-clinical data in MUC4+ expressing tumors and

the clinical trial informs the design of a future 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.

The company does not plan to commence a Phase

II trial in patients with advanced MUC4+ expressing cancer until a partner can be found or extra-mural funding is secured.

Likewise, we believe the DN-TNF

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We believe XPro targets activated

microglia and astrocytes of the brain that produce sTNF that promotes nerve cell loss, synaptic dysfunction and prevents myelin repair

- key elements in the development of dementia.

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

pruning and promotes myelin repair.

microglia and astrocytes of the brain that produce sTNF causing nerve cell loss, synaptic dysfunction and prevents myelin repair - key

elements in the development of dementia.

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

and promotes myelin repair.

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

label, dose escalation trial was designed to demonstrate that XPro can safely decrease neuroinflammation in patients with ADi.

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

The endpoints of the trial were 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 brain microstructural changes.

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

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.

The endpoints of the trial were measures of neuroinflammation and

neurodegeneration in blood and cerebral spinal fluid by measuring changes in inflammatory cytokine levels in the CNS.

XPro, at the 1mg/kg/week

dose, decreased inflammatory cytokines in the CSF in the brain demonstrating that XPro can decrease neuroinflammation in patients with

We also studied downstream benefits of decreasing neuroinflammation by measuring changes in the CSF proteome and using EEG as a functional

measure of brain function.

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.

The successful completion of

the Phase I trial in AD has informed the design of a blinded randomized, placebo-controlled Phase II trial in patients with early ADi.

Early ADi includes patients with AD and MCI who have at least one biomarker of inflammation (ADi and MCI2 respectively).

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

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.

After 4 weeks of XPro therapy, EEG Alpha power

improved in patients with AD suggesting improved brain activity.

The successful completion

of the Phase I trial in AD informed the design of the ongoing blinded randomized, placebo-controlled Phase II trial in patients with early

AD with biomarkers of inflammation.

Early ADi includes patients have mild AD or MCI with at least one biomarker of inflammation.

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 one patients are being enrolled in a 2:1 ratio (XPro

Two hundred and one 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 blood level of at least one of C-reactive protein, hemoglobin A1c, erythrocyte sedimentation 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 endpoints used in many studies of patients with early AD.

Although EMACC is

a primary endpoint, CDR-SB, a well recognized cognitive test is being used as a secondary endpoint as well.

The AD program is open in

the United States, Australia, Canada, the United Kingdom, France, Germany, Spain, Czech Republic and Slovakia.

Because of resource constraints,

a planned open-label extension has been stopped.

There are at least 4 clinical milestones associated with the Phase

II trial in AD.

Enrollment of 201 patients in the Phase II AD trial is expected to be complete by mid-year.

Six months after the last

patient is enrolled, top line cognition data with EMACC will be available.

Secondary endpoints which include CDR-SB, blood biomarker,

neuroimaging and additional neuropsychiatric endpoints will be available after data-base lock 2-3 months after top line data.

several months after all the data are analyzed, the Company plans an end-of-phase II meeting with the FDA to finalize plans for the pivotal

Phase III trial.

XPro for treatment of AD may be eligible for one or both accelerated approval pathways The Company plans to apply for

an accelerated pathway during 2024.

The Company plans to submit of Fast Track status in 2024.

We expect to be eligible for Break Through

status after completion of the Phase II trial in 2025.

therapy for TRD is a large unmet need.

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

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 endpoints used in many studies of patient with early AD.

EMACC is a primary endpoint, CDR-SB, a well recognized cognitive test is being used as a secondary endpoint as well.

The AD program is

enrolling patients in Australia, Canada, the United Kingdom, France, Germany, Spain, Poland, Czech Republic and Slovakia.

Because of resource

constraints, a planned open-label extension has been stopped.

There are at least 4 clinical

milestones associated with the Phase II trial in AD.

Closing enrollment to screening of patients in the Phase II AD trial was announced

at the end of the third quarter of 2024.

Approximately seven months after the last patient is enrolled into AD02, top line cognition data

with EMACC and CDR will be available.

Secondary endpoints which include blood biomarker, neuroimaging and additional neuropsychiatric

endpoints will be available after data-base lock 2-3 months after top line data.

Finally, several months after all the data are analyzed,

the Company plans an end-of-phase II meeting with the FDA to finalize plans for the pivotal Phase III trial.

XPro for treatment of AD

may be eligible for one or both accelerated approval pathways.

The Company plans to apply for an accelerated pathway and plans to submit

of Fast Track status.

We expect to be eligible for Break Through status after completion of the Phase II trial in 2025.

Effective therapy for TRD

is a large unmet need.

Twenty percent of patients with 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) – the target population of the TRD program.

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.

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.

end-points include both clinical and neuroimaging measures.

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

The Company expects

to receive authorization to initiate a clinical trial in TRD in the 2H24.

The TRD trial is expected to start enrollment after the AD Phase

II trial finishes patient enrollment.

data show 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 that remains after conventional treatment.

We have in vitro data suggesting that 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 had a Phase I trial using INKmune to treat patients

with high risk MDS/AML, a form of leukemia.

The Company expects to receive authorization to initiate a clinical trial in TRD during the second half of 2024.

The TRD trial is expected

to start enrollment after the AD Phase II trial finishes patient enrollment.

Our data show 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 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 that remains after conventional treatment.

vitro data suggesting that 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 had a Phase I trial using INKmune to treat patients with

high risk MDS/AML, a form of leukemia.

Two patients were treated in the Phase I trial for MDS, three patients have been treated compassionately

in AML and another MDS patient is expected to be treated shortly.

During March 2024, the Company decided to terminate further enrollment

in the MDS/AML trial due to recruitment difficulties in the European trial sites.

However, in the patients who were treated, INKmune therapy

was shown to be safe, and induced development of cancer killing memory-like NK cells that were found in the patient’s circulation

for up to 4 months.

The Company initiated a separate Phase I/2 trial of INKmune in a metastatic castrate resistant prostate cancer in

8 trials sites across the US.

The open label trial enrolled the first patient in December 2023, opened the second cohort in June and is

on track with recruitment.

Phase I/II trial using INKmune™ to treat patients with metastatic castrate resistant prostate cancer (mCPRC) is an open label trial.

Biomarker data from the patients will be visible as patients are treated.

The Company will report data from each cohort as it becomes

In addition to clinical data, the Company will communicate when the Phase I portion of the trial has completed follow-up.

is expected in September 2024.

Because of the modified Bayesian design, the Company estimates the trial will be completely enrolled 1H25

with top-line data available 6 months later.

Topline data are divided into immunologic and tumor response variables.

The most important

immunologic response variable is related to memory like NK cell persistence.

This is how long are the number of mlNK cells in patients’

blood compared to baseline.

During March 2024, the Company decided to terminate further enrollment in the MDS/AML trial due to recruitment difficulties in

the European trial sites.

However, in the patients who were treated, INKmune therapy was shown to be safe, and induced development of

cancer killing memory-like NK cells that were found in the patient’s circulation for up to 4 months.

The Company initiated a separate

Phase I/2 trial of INKmune in a metastatic castrate resistant prostate cancer in 8 trials sites across the US.

The open label trial enrolled

the first patient in December 2023, opened the second cohort in June 2024, and expects to open the third cohort to patient enrollment

in November 2024.

The Phase I/II trial using

INKmune™ to treat patients with metastatic castrate resistant prostate cancer (mCPRC) is an open label trial.

Biomarker data from

the patients will be visible as patients are treated.

The Company will report data from each cohort as it becomes available.

to clinical data, the Company will communicate when the Phase I portion of the trial has completed follow-up.

The limited immunologic

data was reported from the low dose Phase I cohort during the third quarter of 2024 and showed an increase in functional memory like NK

cells in the patient’s circulation.

Because of the modified Bayesian design, the Company estimates trial enrollment will be completed

during the first half of 2025 with top-line data available 6 months later.

Topline data are divided into immunologic and tumor response

The most important immunologic response variable is related to memory like NK cell persistence.

Persistence is how long are

the number of mlNK cells in patients’ blood compared to baseline.

There are 3 important variables to tumor response:

i) blood PSA changes;

ii) change in PMSA scan and iii)

change in circulating tumor DNA (ctDNA).

Ideally, the levels of all three variables decrease with treatment, but, in this patient group

with advanced disease, absence of progression will be a notable achievement.

We do not expect this 6-month trial to provide survival data.

ii) change in PMSA scan and iii) change in circulating tumor DNA (ctDNA).

Ideally, the levels of all three variables decrease

with treatment, but, in this patient group with advanced disease, absence of progression will be a notable achievement.

We do not expect

this 6-month trial to provide survival data.

We continue to look for ways to

utilize our unique manufacturing and biologic capabilities to optimize clinical application of cell therapies.

We believe that we have

developed a way to manufacture human mesenchymal stromal cells for the medical research and biotech community that offers large volumes

of high-quality, low passage human umbilical cord mesenchymal stromal cells with minimal batch-to-batch variability.

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 from US sources in the future.

We have developed a validated manufacturing process that reliably produces clinical

grade (“cGMP”) quality mesenchymal stromal cells that we call CORDstrom.

The manufacturing process is currently performed

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

To date, we are supporting a multicenter

academic clinical trial in the UK with CORDstrom.

This is a Phase I/IIb trial sponsored by the Great Ormond Street Children’s Hospital

in London treating children with the most severe form of Epidermolysis Bullosa (“EB”), a disfiguring and sometimes fatal skin

disease that is similar to a second-degree burn.

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

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 stromal 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 continue to incur significant

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We reported a

net loss of $20.8 million for the six months ended June 30, 2024.

As of June 30, 2024 and December 31, 2023, we had cash and cash equivalents

of $31.1 million and $35.8 million, respectively.

We expect to continue to incur significant losses for the foreseeable future, and we

expect these losses to increase as we continue our research and development of, and seek regulatory approvals for, our product candidates.

The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues,

net loss of $32.9 million for the nine months ended September 30, 2024.

As of September 30, 2024 and December 31, 2023, we had cash and

cash equivalents of $33.6 million and $35.8 million, respectively.

We expect to continue to incur significant losses for the foreseeable

future, and we expect these losses to increase as we continue our research and development of, and seek regulatory approvals for, our

product candidates.

The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability

to generate revenues, if any.

Our recurring net losses and

negative cash flows from operations raised substantial doubt regarding our ability to continue as a going concern within one year after

the issuance of our unaudited condensed consolidated financial statements for the six months ended June 30, 2024.

the issuance of our unaudited condensed consolidated financial statements for the nine months ended September 30, 2024.

Until we can generate

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These provisions include:

only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;

reduced disclosure about our executive compensation arrangements;

no non-binding advisory votes on executive compensation or golden parachute arrangements;

exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting;

delaying the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies.

two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced

“Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;

disclosure about our executive compensation arrangements;

non-binding advisory votes on executive compensation or golden parachute arrangements;

from the auditor attestation requirement in the assessment of our internal control over financial reporting;

the adoption of new or revised accounting standards that have different effective dates for public and private companies until those

standards apply to private companies.

We have elected to take advantage

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Our research and development expense primarily

clinical trial and regulatory-related costs;

trial and regulatory-related costs;

expenses incurred under agreements with investigative sites and consultants that conduct our clinical trials;

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

External Costs

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Other income (expense)

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

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 June

Comparison of the Three Months Ended September

30, 2024 and 2023

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Three Months Ended

September 30,

(in thousands)

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Other income (expense), net

The Company had no sales during

the three months ended June 30, 2024.

During the three months ended June 30, 2023, the Company sold MSC’s to one third-party and

recognized $46,000 of revenues.

The Company had no sales during the three months ended September 30,

During the three months ended September 30, 2023, the Company sold Mesenchymal stem cells to one third-party and recognized $43,000

Research and Development

Research and development expenses

were approximately $7.1 million during the three months ended June 30, 2024, compared to approximately $4.1 million during the three

months ended June 30, 2023.

The change in research and development expenses during the three months ending June 30, 2024 compared to the

three months ending June 30, 2023 is largely due to incurring $2.6 million more expenses with our Alzheimer’s clinical program,

$0.6 million higher expenses with our INKmune clinical programs and 0.6 million higher salaries and stock-based compensation, partially

offset by a $0.8 million increase in our accrued research and development rebate accrual.

were approximately $10.1 million during the three months ended September 30, 2024, compared to approximately $6.0 million during

the three months ended September 30, 2023.

The change in research and development expenses during the three months ending September 30,

2024 compared to the three months ending September 30, 2023 is largely due to incurring $3.8 million more expenses with our Alzheimer’s

clinical program due to the advancement of enrollment in the clinical trial.

General and Administrative

General and administrative

expenses were approximately $2.8 and $2.3 million during the three months ended June 30, 2024 and 2023, respectively.

The increase in

general and administrative expenses was mainly due to a $0.4 million increase in compensation expense (including stock-based compensation)

expenses were approximately $2.2 and $2.6 million during the three months ended September 30, 2024 and 2023, respectively.

in general and administrative expenses was mainly due to the Company incurring $0.3 million lower consulting expenses in 2024.

Other Income (Expense), net

The Company’s other income,

net is higher during the three months ended June 30, 2024, due to the Company earning interest income on its money market accounts and

incurring less interest expense compared to 2023 due to a reduction in the amount of debt owed.

Comparison of the Six Months Ended June

The Company’s other

income, net is higher during the three months ended September 30, 2024, due to the Company earning interest income on its money market

accounts and incurring less interest expense compared to 2023 due to a reduction in the amount of debt owed.

Comparison of the Nine Months Ended September

30, 2024 and 2023

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our results of operations for the periods indicated:

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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Other income (expense), net

During the six months ended

June 30, 2024, and 2023, the Company sold MSC’s to one third-party and recognized $14,000 and $84,000, respectively, of revenues.

During the nine months ended September 30, 2024, and 2023, the Company

sold Mesenchymal stem cells to one third-party and recognized $14,000 and $127,000, respectively, of revenues.

Research and Development

Research and development expenses

were approximately $15.7 million and $8.3 million during the six months ended June 30, 2024 and 2023, respectively.

The change in

research and development expenses during the six months ending June 30, 2024 compared to the six months ending June 30, 2023 is largely

due to incurring $6.5 million more expenses with our Alzheimer’s clinical program, $1.4 million of higher expenses with our INKmune

clinical programs and 0.7 million higher salaries and stock-based compensation, partially offset by a $1.0 million increase in our accrued

research and development rebate accrual.

were approximately $25.8 million and $14.3 million during the nine months ended September 30, 2024 and 2023, respectively.

in research and development expenses during the nine months ending September 30, 2024 compared to the nine months ending September 30,

2023 is mainly due to the advancement of our clinical trials which include incurring $10.3 million of higher expenses with our Alzheimer’s

clinical program as a result of higher enrollment, $1.8 million of higher expenses with our INKmune clinical programs as a result of progress

in our metastatic castration-resistant prostate cancer clinical trial and 0.7 million higher salaries and stock-based compensation, partially

offset by a $1.0 million increase in our accrued research and development rebate accrual.

General and Administrative

administrative expenses were approximately $5.2 million and $4.6 million during the six months ended June 30, 2024 and 2023,

respectively.

The $0.5 million increase in general and administrative expenses was mainly due to higher compensation (including

stock-based compensation) of $0.3 million and $0.3 million higher consulting fees, partially offset by $0.1 million lower travel expenses.

General and administrative

expenses were approximately $7.4 million and $7.2 million during the nine months ended September 30, 2024 and 2023, respectively.

$0.2 million increase in general and administrative expenses was mainly due to higher compensation expense in 2024.

Other Income (Expense), net

The Company’s other

income, net is higher during the six months ended June 30, 2024, due to the Company earning interest income on its money market accounts

and incurring less interest expense compared to 2023 due to a reduction in the amount of debt owed.

income, net is higher during the nine months ended September 30, 2024, due to the Company earning interest income on its money market

accounts and incurring less interest expense compared to 2024 due to a reduction in the amount of debt owed.

Liquidity and Capital Resources

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on an ongoing basis.

incurred a net loss of $20.8 million and $13.0 million for the six months ended June 30, 2024 and 2023, respectively.

Net cash used in

operating activities was $15,362,000 and $4,315,000 for the six months ended June 30, 2024 and 2023, respectively.

Since inception, we

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

As of June 30, 2024, we had cash and cash equivalents

of $31,069,000.

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.

During the six months ending

June 30, 2024, the Company sold 198,364 shares of common stock at an average price of $10.56 for gross proceeds of approximately $2,095,000

under the ATM offering.

On April 19, 2024, the Company

entered into securities purchase agreements with purchasers in which the Company sold 571,592 shares of common stock and warrants to purchase

571,592 shares of common stock for aggregate gross proceeds of approximately $4,771,000.

The exercise price of the warrants is $9.152,

and the term is the earlier of two years from the issuance of the warrants and thirty trading days following the release of top line data

in the Phase 2 Alzheimer’s program, provided that directors and officers of the Company that are subject to a blackout with respect

to trading in the Company’s stock will have an additional 60 days from the termination of the blackout date to exercise the warrant.

incurred a net loss of $32.9 million and $21.6 million for the nine months ended September 30, 2024 and 2023, respectively.

Net cash used

in operating activities was $22,348,000 and $8,579,000 for the nine months ended September 30, 2024 and 2023, respectively.

Since inception,

we have funded our operations primarily with proceeds from the sales of our common stock and warrants.

As of September 30, 2024, we had

cash and cash equivalents of $33,552,000.

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.

During the nine months ending

September 30, 2024, the Company sold 247,126 shares of common stock at an average price of $9.85 for gross proceeds of approximately $2.4 million

under the at the market offerings.

During September 2024,

the Company entered into securities purchase agreements with investors whereby the Company sold 2,341,260 shares of the Company’s

common stock and warrants to purchase an additional 2,341,260 shares of the Company’s common stock exercisable six months from the

issuance date in a registered direct offering in exchange for gross proceeds of $13.0 million (net proceeds of approximately $12.0 million).

Directors and officers that participated in the offering paid a combined offering price of

$6.50 per share and warrant, and other investors paid $5.50 per share and warrant.

On April 24, 2024, the Company

entered into a securities purchase agreement with an investor in which the Company sold 986,000 shares of common stock and warrants to

purchase 986,000 shares of common stock for gross proceeds of approximately $9,702,000.

The exercise price of the warrants is $9.84, and

the term is the earlier of two years from the issuance of the warrants and thirty trading days following the release of top line data

in the Phase 2 Alzheimer’s program.

The exercise price of the warrants is $6.40, and are

exercisable beginning on March 16, 2025 and will terminate on March 16, 2030 unless accelerated pursuant to the terms of the warrant agreements.

On April 24, 2024, the Company entered into a securities purchase agreement with an investor in which the Company sold 986,000 shares

of common stock and warrants to purchase 986,000 shares of common stock for gross proceeds of approximately $9.7 million (net proceeds

of approximately $8.9 million).

The exercise price of the warrants is $9.84, and the term is the earlier of two years from the issuance

of the warrants and thirty trading days following the release of top line data in the Phase 2 Alzheimer’s program.

On April 19, 2024, the Company entered into securities purchase agreements with purchasers in which the Company sold 571,592 shares of

common stock and warrants to purchase 571,592 shares of common stock for aggregate gross proceeds of approximately $4.8 million (net proceeds

of approximately $4.5 million).

The exercise price of the warrants is $9.152, and the term is the earlier of two years from the issuance

of the warrants and thirty trading days following the release of top line data in the Phase 2 Alzheimer’s program, provided that

directors and officers of the Company that are subject to a blackout with respect to trading in the Company’s stock will have an

additional 60 days from the termination of the blackout date to exercise the warrant.

Directors and officers that participated in the

offering paid a combined offering price of $8.445 per share and warrant, and other investors paid $8.32 per share and warrant.

primary uses of capital are, and we expect will continue to be, third-party clinical and preclinical research and development services,

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that strategy is appropriate.

As of June 30, 2024, the cash balance held by our foreign subsidiaries with currencies other than the United

States dollar was approximately $0.3 million.

As of September 30, 2024, the cash balance held by our foreign subsidiaries with currencies other than the

United States dollar was approximately $0.9 million.

recurring net losses and negative cash flows from operations, as well as forecast of continued losses and negative cash flows from operations,

raised substantial doubt regarding our ability to continue as a going concern within one year after the issuance of our unaudited condensed

consolidated financial statements for the year ended June 30, 2024.

consolidated financial statements for the year ended September 30, 2024.

Until we can generate sufficient revenue from the commercialization

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third parties.

Our cash and cash equivalents were $31.1 million and total current assets were $35.5 million at June 30, 2024, which the

Company is projecting will be insufficient to sustain its operations through one year following the date that the financial statements

Our cash and cash equivalents were $33.6 million and total current assets were $35.9 million at September 30, 2024, which

the Company is projecting will be insufficient to sustain its operations through one year following the date that the financial statements

capital may not be available on reasonable terms, if at all.

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with third parties.

There can be no assurances additional capital will be available to secure additional financing, or if available,

that it will be sufficient to meet our needs on favorable terms.

If we are unable to raise additional capital in sufficient amounts or

on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development of one or more of our product

If we raise additional funds through the public or private sale of equity or debt financings, it could result in dilution

to our existing stockholders or increased fixed payment obligations and these securities may have rights senior to those of our common

stock and could contain covenants that would restrict our operations and potentially impair our competitiveness, such as limitations

on our ability to incur additional debt, limitations on our ability to acquire, sell or license our intellectual property rights and

other operating restrictions that could adversely impact our ability to conduct our business.

Any of these events could significantly

harm our business, financial condition and prospects.

There can be no assurances additional capital will be available to secure additional financing, or if available, that

it will be sufficient to meet our needs on favorable terms.

If we are unable to raise additional capital in sufficient amounts or on terms

acceptable to us, we may have to significantly delay, scale back or discontinue the development of one or more of our product candidates.

If we raise additional funds through the public or private sale of equity or debt financings, it could result in dilution to our existing

stockholders or increased fixed payment obligations and these securities may have rights senior to those of our common stock and could

contain covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to

incur additional debt, limitations on our ability to acquire, sell or license our intellectual property rights and other operating restrictions

that could adversely impact our ability to conduct our business.

Any of these events could significantly harm our business, financial

condition and prospects.

The following table summarizes

our cash flows for the periods indicated:

Six Months Ended

Nine Months Ended

September 30,

(in thousands)

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

activities used approximately $15.4 million of cash during the six months ended June 30, 2024, resulting from our loss of $20.8 million,

partially offset by changes in our net operating assets and liabilities of $1.2 million and non-cash stock-based compensation of $4.1

The change in our net operating assets and liabilities was mainly due to an increase in accounts payable and accrued liabilities

of $1.4 million, a decrease in prepaid expenses of $0.5 million and a decrease in other tax receivable of $0.3 million, partially offset

by an increase in research and development tax receivable of $1.2 million.

Operating activities used approximately

$4.3 million of cash during the six months ended June 30, 2023, resulting from our loss of $13.0 million, partially offset by changes

in our net operating assets and liabilities of $5.0 million and non-cash stock-based compensation of $3.6 million.

The change in our net

operating assets and liabilities was mainly due to a decrease in research and development tax credit receivable of $6.2 million and a

decrease in prepaid expenses of $1.3 million, partially offset by a decrease in accounts payable and accrued liabilities of $2.8 million.

activities used approximately $22.3 million of cash during the nine months ended September 30, 2024, resulting from our loss of $32.9

million, partially offset by changes in our net operating assets and liabilities of $4.6 million and non-cash stock-based compensation

of $5.8 million.

The change in our net operating assets and liabilities was mainly due to an increase in accounts payable and accrued

liabilities of $2.7 million, a decrease in research and development tax receivable of $0.8 million, a decrease in prepaid expenses of

$0.6 million and a decrease in other tax receivable of $0.2 million.

Operating activities used

approximately $8.6 million of cash during the nine months ended September 30, 2023, resulting from our loss of $21.6 million, partially

offset by changes in our net operating assets and liabilities of $7.4 million and non-cash stock-based compensation of $5.5 million.

change in our net operating assets and liabilities was mainly due to a decrease in research and development tax credit receivable of $6.0

million and a decrease in prepaid expenses of $2.5 million, partially offset by a decrease in accounts payable and accrued liabilities

of $1.5 million.

Financing Activities

the six months ended June 30, 2024, the Company sold 198,364 shares of its common stock under its ATM program for net proceeds of approximately

$2.0 million.

the six months ended June 30, 2024, the Company sold 1,557,692 shares of its common stock and 1,557,592 warrants to purchase its common

stock for net proceeds of approximately $13.5 million.

the six months ended June 30, 2024, the Company repaid $5.0 million of its debt.

the nine months ended September 30, 2024, the Company sold 247,126 shares of its common stock under its ATM programs for net proceeds

of approximately $2.4 million.

the nine months ended September 30, 2024, the Company sold 3,898,852 shares of its common stock and 3,898,852 warrants to purchase its

common stock in registered direct offerings for net proceeds of approximately $25.4 million.

During the nine months ended

September 30, 2023, the Company sold 75,697 shares of its common stock for net proceeds of $775,000 under the Company’s ATM program

the nine months ended September 30, 2024 and 2023, the Company repaid $7.5 and $2.5 million, respectively, of its debt.

Critical Accounting Policies and Estimates

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

ended December 31, 2023, and there have been no material changes during the six months ended June 30, 2024.

ended December 31, 2023, and there have been no material changes during the nine months ended September 30, 2024.

Quantitative and Qualitative Disclosures

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis