What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-07 compared with 2025-05-08 · 382 added, 227 removed, 255 unchanged (70% of the section changed)

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Description of Business

Our objective is to develop and commercialize our product candidates

to treat diseases where the innate immune system is dysfunctional causing or contributing to the patient’s disease.

Our objective is to

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

contributing to the patient’s disease.

Innate immune dysfunction can occur for a variety of reasons including genetics,

lifestyle, and other factors.

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

Innate immune

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

However, age plays a significant role

in the development of immune dysfunction.

Innate immune dysfunction can be seen in cancer where Natural Killer (“NK”) cells

are impaired and facilitate a tumor’s evasion of the immune system and subsequent disease progression.

Chronic inflammation is implicated

in neurologic and metabolic diseases where it impairs the innate immune system.

Our primary focus continues to be treatment of cancer

with INKmune and treatment of Alzheimer’s Disease (“AD”) and Treatment Resistant Depression (“TRD”) with

We have added CORDStrom, a pooled, human umbilical cord mesenchymal stem cell product to treat recessive dystrophic epidermolysis

bullosa (“RDEB”), a pediatric orphan disease caused by mutations in the COL7A1 gene that results in a debilitating disease

of skin blistering, dysphagia and failure to thrive with chronic wound problems that often results in fatal squamous cell carcinoma.

XPro1595 (“XPro”), targets Alzheimer’s Disease and

XPro for AD has completed Phase I trials and a Phase II trial has completed enrollment of patients at clinical sites in the United

Kingdom, EU, Australia and Canada.

Patients are currently being treated with XPro for Early AD as part of that clinical trial.

being prepared for Phase II trials.

We expect to start a pivotal global registration trial in patients with AD after the results of the

Phase II trial have been analyzed.

The INKmune program is in an open label Phase II trial in metastatic castrate resistant prostate cancer

CORDStrom for the treatment of children with RDEB has completed a pivotal blinded randomized cross-over trial.

The data will be submitted for a marketing authorization by filing a Biologics License Application (“BLA”) with the FDA in

the US which is anticipated in the first half of 2026.

Afterwards, the company intends to file a Marketing Authorization Application (MAA)

in the United Kingdom and EU.

We believe our DN-TNF

platform can be used as a CNS (“central nervous system”) therapy to target glial activation to prevent progression of Alzheimer’s

disease (“AD”);

to target neuroinflammation in treatment resistant depression (“TRD”).

The primary focus of the

company’s development efforts for XPro is AD.

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

In each case, we believe

neutralizing sTNF is a cornerstone to the treatment of these diseases.

dysfunction can be seen in cancer where Natural Killer (“NK”) cells are impaired and facilitate a tumor’s evasion

of the immune system and subsequent disease progression.

Chronic inflammation is implicated in various diseases, where it impairs

the innate immune system.

Our primary focus continues to be treatment of cancer with INKmune, treatment of Alzheimer’s Disease

(“AD”) with XPro1595 and treatment of receswsive dystrophic epidermolysis bullosa (RDEB) with CORDStrom, a proprietary,

pooled, human umbilical cord mesenchymal stromal cell platform.

RDEB is a pediatric orphan disease caused by mutations in the COL7A1

gene which results in highly debilitating skin blistering, dysphagia and failure to thrive with chronic wound problems that often

result in fatal squamous cell carcinoma.

XPro for AD has completed

Phase I and Phase II trials with enrollment of patients at clinical sites in the United Kingdom, EU, Australia and Canada.

the recent Phase 2 results of XPro in AD along with company resources, the treatment resistant depression trial will not be pursued.

INKmune program is in an open label Phase II trial in metastatic castrate resistant prostate cancer (“mCRPC”).

CORDStrom for

the treatment of children with RDEB has completed a pivotal blinded randomized cross-over trial.

The data will be submitted for marketing

authorization by filing a Marketing Authorization Application (MAA) in the United Kingdom followed by a Biologics License Application

(“BLA”) with the FDA in the US which is anticipated in the first half of 2026.

We believe our DN-TNF platform

can be used as a CNS (“central nervous system”) therapy to target glial activation to prevent progression of AD along with

other inflammatory diseases.

The primary focus of the Company’s development efforts for XPro is AD.

In each case, we believe neutralizing

sTNF is a cornerstone to the treatment of these diseases.

We believe the DN-TNF platform

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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, 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.

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 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 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.

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

The ADi trial is a blinded randomized

trial to test if treatment of early AD patients with neuroinflammation with XPro will affect cognitive decline.

Two hundred and eight

patients have been enrolled in a 2:1 ratio (XPro vs placebo).

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

An enrichment strategy identical to the successful strategy used in the Phase I trial is used to ensure patients have neuroinflammation.

All patients have one or more enrichment criteria:

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

sedimentation and at least one allele of ApoE4.

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.

program is open in Australia, Canada, the United Kingdom, France, Germany, Spain, Czech Republic and Slovakia.

Full enrollment in the Phase

II AD trial occurred in late 2024 with 208 patients enrolled.

Data is expected to be reported during June.

After all the data is 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.

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 a Major Depressive Disorder have TRD.

Once third of TRD patients have

peripheral biomarkers to inflammation (elevated CRP).

This is a large patient population.

The role of TNF and anti-TNF therapeutics

was explored in a small open label clinical trial by Prof.

Andrew Miller, MD of Emory University demonstrated the patients have

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

The Company has a $2.0M USD award from

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

To date, these funds have not been impacted by

any changes at the NIH.

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.

The TRD trial is expected to start enrollment during 2025 once NIMH funds have been released.

developed by INmune Bio circa 2020, represents a breakthrough in mesenchymal stem cell technology.

The CORDStrom platform leverages, among

other things, proprietary screening, pooling and expansion techniques to create off-the-shelf, allogeneic, pooled human umbilical cord

-derived mesenchymal stromal cells (HucMSCs) as medicines to treat complex inflammatory diseases.

CORDStrom products are designed to provide

high-quality, off-the-shelf, batch-to-batch consistent, scalable, cGMP manufactured, potent cellular medicines that can be produced at

low cost and with repeatable specification independent of donor characteristics.

Initially developed at the INKmune manufacturing facilities

utilizing United Kingdom academic grant funding, CORDStrom is a product platform that shows promise as a therapy for RDEB and many other

debilitating conditions.

While the first generation CORDStrom product is agnostic to indication, the platform enables creation of indication-specific

products, which can be tuned for optimization of anti-inflammatory, immunomodulatory, wound healing, and other characteristics.

CORDStrom product platform shares many similarities, including starting materials, equipment, and procedures, with the Company’s

INKmune oncology product, enabling the Company to leverage economies of scale, experienced staff, and other resources to strategically

manufacture both products in a rotational campaign with resource and environmental efficiencies.

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, synaptic dysfunction and prevents myelin repair - key elements in the development of dementia.

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.

The open label, dose escalation trial was designed to demonstrate

that XPro can safely decrease neuroinflammation in patients with AD and biomarkers of inflammation (ADi).

The goal of the Phase 1 trial

was to demonstrate safety in the target population (patients with AD), demonstrate target engagement by showing XPro got into the brain

in therapeutically relevant concentrations and reduced neuroinflammation) and identify the best dose for phase 2.

XPro got into the brain

( Figure 1a ) and dose dependently decreased biomarker of neuroinflammation in the CSF ( Figure 1b ) with patients treated with

the highest dose (1mg/kg/week dose) having the greatest reduction in neuroinflammation.

A broad analysis of proteomic changes following

treatment of XPro revealed significant changes in CSF proteins related to CNS neuronal function, immune/inflammatory response, Cytoskeletal,

metabolic processes, and dendritic spine morphogenesis and synaptic plasticity.

Of note, XPro reduced neuronal injury markers Visinin-like

protein-1 (91%) and Neurofilament light (84%), improved measures of synaptic function as evinced by a 222% increase in Contactin 2 and

a 56% decrease neurogranin.

Finally, XPro significantly reduced CSL levels of p-Tau217 (43%) and pTau181 (2%) after 3 months of therapy

( Figure 1c ).

(A) XPro gets into the brain

at therapeutically relevant concentrations.

XPro neutralizes 99.9% of soluble TNF when drug levels exceed two logs.

(B) XPro dose dependently

reduces CSF inflammation in the brain.

CSF composite – a composite score of change of all cytokines measured in the OLINK Target

48 Cytokine panel.

The Phase II study, also known

as AD-02 and MINDFuL, was a multicenter, randomized, double-blind, placebo-controlled clinical trial evaluating the safety, tolerability,

and efficacy of XPro1595 in individuals with early Alzheimer’s disease with biomarkers of inflammation (ADi).

The primary goal of

AD02 was to determine if XPro could affect cognition following 6 months of treatment.

Participants with a diagnosis of early AD (mild

cognitive impairment or mild AD) were randomized in a 2:1 (XPro:Placebo) ratio to receive either 1.0 mg/kg of XPro1595 or placebo via

weekly subcutaneous injections for 6 months.

An enrichment strategy mirroring to the successful strategy used in the Phase I trial was

used to align the mechanism of the drug with the patients AD pathology.

Eligibility required the

presence of at least one inflammatory biomarker—either high-sensitivity C-reactive protein (hsCRP > 1.5 mg/L), erythrocyte sedimentation

rate (ESR > 10 mm/h), hemoglobin A1c (HbA1c > 6.0% DCCT), or at least one APOE4 allele.

The primary endpoint was the Early

and Mild Alzheimer’s Cognitive Composite (EMACC), with secondary endpoints of Clinical Dementia Rating Scale – Sum of Boxes

(CDR-SB), Everyday Cognition Scale (E-Cog), Neuropsychiatric Inventory (NPI-12), ADCS-ADL, and biomarkers such as pTau-217 and GFAP.

neuroinflammation and brain volumetrics are also evaluated.

The AD program had sites in Australia, Canada, the United Kingdom, France,

Germany, Spain, Czech Republic and Slovakia.

Full enrollment in the Phase II AD trial occurred

in late 2024 with 208 patients enrolled and top-line data was received during June 2025.

In the Phase 2 MINDFuL trial of XPro™ in

patients with early Alzheimer’s Disease (AD) with biomarkers of inflammation, the modified intent-to-treat (mITT) population (n=200)

did not meet the primary and key secondary endpoints ( figure 1 ).

Efficacy, Demographics and Safety data are shown below.

Phase 2 Study Results – mITT population Primary

and Key Secondary Endpoints, Change From Baseline

As these graphs depict, the primary and secondary

endpoints in this trial were not met as no decline in the placebo groups were observed.

A trend was observed in NPI that favored XPro1595

over placebo.

For reference, A higher EMACC score =better, A lower CDR and NPI score is better.

LS Mean Diff (SE):

-0.018 (0.0414),

-0.0860, 0.0509, p-value:

LS Mean Diff (SE):

-0.11 (0.185), 90% CI:

-0.417, 0.195, p-value:

-0.9 (0.78), 90% CI:

-2.18, 0.39, p-value:

Prespecified subgroups analyses

suggested a signal that favored XPro in a predetermined population of patients that were both amyloid positive and had a higher burden

of inflammation defined by 2 or more biomarkers of inflammation (from hereon referred to as enriched group).

As shown in figure 2, the

mITT placebo group did not decline whereas patients in the enriched group did decline.

Decline in the placebo group is required to test

the ability of a treatment to prevent or slow decline.

Phase 2 Study Results – Placebo group decline in

the mITT and enriched population

patients in the mITT did not show decline on the EMACC over the 24 week study.

In the enriched group, placebo patients did decline over

To evaluate a subgroup after missing the primary

endpoint, we used effect size as the primary metric due to the smaller sample size (n=100).

Effect size, measured by Cohen’s D,

is well-suited for small samples and allows comparisons across different measures (e.g., cognitive tests and biomarkers).

Unlike p-values,

which indicate the likelihood of results being due to chance, effect size reflects clinical relevance and is commonly used for signal

detection in Phase 2 studies.

We defined a promising signal

as a minimum effect size of 0.2, where XPro outperformed placebo on multiple endpoints aligned with our hypothesis and the drug’s

mechanism of action.

Results must also be appropriate for the trial’s parameters, meaning the observed effects should align with

the trial’s duration and endpoints.

For example, if a clinical measure typically requires a longer time to show meaningful change

than the trial’s 6-month timeframe, an observed effect on that endpoint would not be considered supportive.

Signal detection was

based on the effect size difference in LS mean change from baseline (MMRM model) between XPro and placebo at 6 months, ensuring results

were meaningful, relevant, and appropriate for the trial’s design and objectives.

Using this method, the enriched

population (50% of the total sample, n=100) showed trends toward improvement with XPro on the primary endpoint (EMACC) and a key secondary

endpoint (NPI) ( Figure 3 ).

With the placebo group showing the expected decline on EMACC over six months, a beneficial effect of

XPro became evident.

EMACC, which measures cognition (higher scores are better), showed an effect size of 0.27, exceeding the company’s

threshold of 0.2, though the p-value of 0.16 fell short of the <0.1 target.

For neuropsychiatric symptoms (NPI), the enriched population

showed a stronger beneficial effect compared to the overall population, with an effect size of -0.23 and a p-value of 0.2.

effect on CDR-SB, which measures cognition and function (lower scores are better).

We also evaluated the effect size of additional endpoints

( Figure 4 ).

Across most endpoints, XPro showed favorable trends, with effect sizes approaching the 0.2 threshold for clinical relevance.

Phase 2 Study Results – Enriched population primary

and key secondary endpoints, change from baseline

The enriched population show effect size >0.2 favoring

XPro1595 on the EMACC and NPI.

, A higher EMACC score =better, A lower CDR and NPI score is better.

LS Mean Diff (SE):

0.086 (0.0603),

-0.0146, 0.1857, p-value:

LS Mean Diff (SE):

-0.08 (0.307), 90% CI:

-0.593, 0.426, p-value:

-1.6 (1.25), 90% CI:

-3.71, 0.47, p-value:

Phase 2 Study Results – Most endpoints favor treatment

with XPro1595.

Effect size of XPro across multiple endpoints described

as absolute effect sizes (cohen’s D).

Treatment Emergent Adverse Events (TEAEs):

Safety Analyses Set

Placebo (n=67)

XPro1595 (n=139)

Any TEAE by Maximum Severity

Any Serious TEAE

Any Treatment-Related Serious TEAE

Any TEAE Leading to Treatment Discontinuation

Any TEAE Leading to Study Withdrawal

Any TEAE with Fatal Outcome

Organ Class & Preferred Term

General disorders and administration site conditions

Injection site reaction

Injection site erythema

Injection site hypersensitivity

Injection site pruritus

Infections and infestations

Upper respiratory tract infection

Musculoskeletal and connective tissue disorders

Nervous system disorders

The Company believes these

findings from the Phase 2 results indicate that XPro may offer benefits to a readily identified subgroup of Alzheimer’s patients

across all ages with biomarker-defined neuroinflammation, regardless of comorbidities or ApoE4 status and potentially lays the foundation

for advancing XPro as a promising treatment for AD.

The Company is planning an end-of-phase 2 meeting with the FDA, which is expected

to occur towards the end of 2025, to determine next steps and expects to be eligible for Break Through status.

developed by INmune Bio circa 2020, represents a breakthrough in mesenchymal stromal cell technology.

The CORDStrom platform leverages,

among other things, proprietary screening, pooling and expansion techniques to create off-the-shelf, allogeneic, pooled human umbilical

cord -derived mesenchymal stromal cells (HucMSCs) as medicines to treat complex inflammatory diseases.

CORDStrom products are designed

to provide high-quality, off-the-shelf, batch-to-batch consistent, scalable, cGMP manufactured, potent cellular medicines that can be

produced at low cost and with repeatable specification.

Initially developed at the INKmune manufacturing facilities utilizing United Kingdom

academic grant funding, CORDStrom is a product platform that shows promise as a therapy for RDEB and many other debilitating conditions.

While the first generation CORDStrom product is agnostic to indication, the platform enables creation of indication-specific products,

which can be tuned for optimization of anti-inflammatory, immunomodulatory, wound healing, and other characteristics.

CORDStrom product platform shares many similarities, including raw materials, equipment, and procedures, with the Company’s INKmune

oncology product, enabling the Company to leverage economies of scale, experienced staff, and other resources to strategically manufacture

both products in a rotational campaign with resource and environmental efficiencies.

with RDEB have skin that is damaged by even the smallest amount of friction which causes severe blistering, deep wounds, and scars.

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Those who completed the study are asking to continue on therapy, which the Company intends to pursue as an open-label study.

The Mission EB data form the basis of a license that was entered into

between INmune Bio and GOSH, whereby the Company gains exclusive access to the clinical study data for commercial uses in exchange for

payment of an initiation milestone of £250,000 (approximately $0.3 million at March 31, 2025) and a single development milestone

of approximately £6 million (approximately $7.8 million at March 31, 2025) due on receipt of first marketing authorization from

the FDA, EMA, or MHRA, which has not occurred yet, and an ongoing commitment to supply CORDStrom to patients enrolled in an open label

arm of the Mission EB trial, subject to certain limitations.

Mission EB data form the basis of a license that was entered into between INmune Bio and GOSH, whereby the Company gains exclusive access

to the clinical study data for commercial uses in exchange for payment of an initiation milestone of £250,000 (approximately $0.3

million at June 30, 2025) and a single development milestone of approximately £6 million (approximately $7.8 million at June 30,

2025) due on receipt of first marketing authorization from the FDA, EMA, or MHRA, which has not occurred yet, and an ongoing commitment

to supply CORDStrom to patients enrolled in an open label arm of the Mission EB trial, subject to certain limitations.

reviewing results of the Mission EB study, the Company initiated a Type C meeting with the FDA to obtain CMC and regulatory feedback and

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As such, CORDStrom remains eligible to receive a Priority Review Voucher (PRV) if approved by

the FDA on or prior to September 30, 2026.

If granted, a PRV can be redeemed to receive priority review for a different product.

Alternatively,

a PRV may be transferred or sold to another sponsor.

the FDA on or prior to September 30, 2026, assuming the PRV program is not extended.

If granted, a PRV can be redeemed to receive priority

review for a different product.

Alternatively, a PRV may be transferred or sold to another organization.

FDA granted ODD to the Company’s CORDStrom product on January 6, 2025.

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United Kingdom in 2026.

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 that 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 had a Phase I trial using INKmune to treat patients with high risk MDS/AML, a form

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.

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

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

The Company initiated a separate Phase

I/2 trial of INKmune in a metastatic castrate resistant prostate cancer.

The open label trial enrolled the first patient in December 2023.

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.

We have demonstrated 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 designed

to be given to patients after their immune system has recovered after cytotoxic chemotherapy to target the residual disease that remains

after treatment with cytotoxic therapy.

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 sponsored a Phase I trial using INKmune

to treat patients with high risk MDS/AML, a form of leukemia in the UK.

Due to Covid restrictions only one patient completed treatment

and follow-up in the Phase I trial for MDS;

a further three AML patients were treated compassionately.

Due to the post-Covid recruitment

problems, the Company decided to terminate further enrollment in the MDS/AML trial in March 2024.

Nonetheless, from the four patients

treated and completing follow-up it was determined that INKmune therapy is safe and promotes development of cancer killing memory-like

NK cells that are activated and can kill NK-resistant cancer cells which can be found in the patient’s circulation for up to 4 months

after completion of treatment.

The Company initiated a separate multicenter Phase I/II trial of INKmune in a metastatic castrate resistant

prostate cancer in the US.

The open label trial enrolled the first patient in December 2023 and is currently in Phase II across 6 US sites.

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.

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 is 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.

Because of the modified

Bayesian design, the Company estimates the trial will be completely enrolled Q425 with top-line data available 6 months later.

data are divided into immunologic and tumor response variables.

The most important immunologic response variable is related to memory-like

NK cell persistence.

There are 3 important variables to tumor response:

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

Ideally, the levels of all three variables decrease

with treatment.

i) blood PSA changes;

ii) change in PSMA-PET scan and iii) change

in circulating tumor DNA (ctDNA).

INKmune is not a hormone-targeting treatment and will not directly reduce PSA levels but tumor load

measured by PSMA-PET and/or ctDNA are expected to decrease with treatment.

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

We continue to incur significant

development and other expenses related to our ongoing operations.

As a result, we are not and have never been profitable and have incurred

losses in each period since our inception, resulting in substantial doubt in our ability to continue as a going concern.

We reported a

net loss of $9.7 million for the three months ended March 31, 2025.

As of March 31, 2025 and December 31, 2024, we had cash and cash equivalents

of $19.3 million and $20.9 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,

We continue to incur significant development and other expenses related

to our ongoing operations.

As a result, we are not and have never been profitable and have incurred losses in each period since our inception,

resulting in substantial doubt in our ability to continue as a going concern.

We reported a net loss of $34.2 million for the six months

ended June 30, 2025.

As of June 30, 2025 and December 31, 2024, we had cash and cash equivalents of $33.4 million and $20.9 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 three months ended March 31, 2025.

the issuance of our unaudited condensed consolidated financial statements for the six months ended June 30, 2025.

Until we can generate

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Other Developments

administration has announced or imposed a series of tariffs on U.S.

administration

has announced or imposed a series of tariffs on U.S.

trading partners.

In response, several countries have threatened

or imposed retaliatory measures.

At this time, we do not anticipate the tariffs and changes in trade policies in place as of the filing

of this Quarterly Report on Form 10-Q to have a significant adverse effect on our business or operations.

Following recent changes more broadly within the NIH and FDA, we have

not noticed any disruption of communications with the NIH and FDA to date and continue to maintain productive interactions.

In response, several countries have threatened or imposed retaliatory

At this time, we do not anticipate the tariffs and changes in trade policies in place as of the filing of this Quarterly Report

on Form 10-Q to have a significant adverse effect on our business or operations.

Following recent changes more

broadly within the NIH and FDA, we have not noticed any disruption of communications with the NIH and FDA to date and continue to maintain

productive interactions.

To date, there has been no impact to the Company’s operations due to any changes at the NIH or FDA.

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Three Months Ended

Six Months Ended

External Costs

62 unchanged sentences

Results of Operations

Comparison of the Three Months Ended March

Comparison of the Three Months Ended June

30, 2025 and 2024

6 unchanged sentences

General and administrative

Impairment of acquired in-process research and development intangible assets

Total operating expenses

Loss from operations

Other income, net

Research and Development

Research and development expenses were approximately $5.8 million during

the three months ended June 30, 2025, compared to approximately $7.1 million during the three months ended June 30, 2024.

in research and development expenses during the three months ending June 30, 2025 compared to the three months ending June 30, 2024 is

mainly due to the Company incurring $1.5 million less expenses related to our Alzheimer’s clinical program due to the Company completing

the Phase 2 clinical trial.

General and Administrative

General and administrative

expenses were approximately $2.3 million during the three months ended June 30, 2025 compared to $2.8 million during the three months

ended June 30, 2024.

The decrease in general and administrative expenses was mainly due to the Company incurring $0.4 million lower stock-based

compensation during 2025.

Impairment of acquired in-process research

and development intangible assets

During the three months ended

June 30, 2025, the Company released the Phase 2 clinical trial results for our Alzheimer’s drug candidate, XPro, which failed to

meet the primary endpoint, though a subgroup showed potential benefits.

Due to insufficient resources to fund further trials, the Company

has halted immediate plans to develop XPro for Alzheimer’s or other indications and are instead seeking a partner to continue these

As part of preparing its interim unaudited condensed consolidated financial statements, the Company determined that the intangible

asset’s fair value was likely below its carrying value.

Following a quantitative impairment assessment, the Company estimated the

asset’s fair value at $0 as of June 30, 2025, resulting in a recorded impairment of $16.5 million.

Other Expense, net

During the three months ended

March 31, 2025 and 2024, the Company sold MSC’s to third-parties and recognized $50,000 and $14,000, respectively, of revenues.

General and Administrative

June 30, 2025, and 2024, the Company recorded $0.1 million of other income due to the Company earning interest income on its cash investments.

of the Six Months Ended June 30, 2025 and 2024

The following table summarizes

our results of operations for the periods indicated:

Six Months Ended

(in thousands)

Operating expenses:

Research and development

General and administrative

expenses were approximately $2.3 million during each of the three months ended March 31, 2025 and 2024, respectively.

Impairment of acquired in-process research and development intangible assets

Total operating expenses

Loss from operations

Other income, net

During the six months ended

June 30, 2025, the Company recognized revenue from a license agreement that was terminated during 2025.

During the six months ended June

30, 2024, the Company recognized revenue from the sale of MSC’s.

Research and Development

Research and development expenses

were approximately $7.6 million during the three months ended March 31, 2025, compared to approximately $8.7 million during the three

months ended March 31, 2024.

The change in research and development expenses during the three months ending March 31, 2025 compared to

the three months ending March 31, 2024 is largely due to incurring $1.5 million less expenses related to our Alzheimer’s clinical

program due to the Company nearing the completion of the Phase 2 clinical trial, partially offset by $0.3 million of higher employee compensation

costs and a decrease of $0.2 million of accrued rebate.

Other Expense, net

During the three months ended

March 31, 2025, the Company recorded $0.2 million of other income due to the Company earning interest income on its cash investments.

The increase in other income from the prior year is due to the Company paying off its debt in 2024.

were approximately $13.4 million and $15.7 million during the six months ended June 30, 2025 and 2024, respectively.

The change in

research and development expenses during the six months ending June 30, 2025 compared to the six months ending June 30, 2024 is mainly

due to the Company incurring $3.0 million less Alzheimer’s clinical program expenses due to the trial being completed in 2025, partially

offset by the Company recording $0.9 million less accrued rebate during the six months ended June 30, 2025.

General and Administrative

General and administrative

expenses were approximately $4.6 million and $5.2 million during the six months ended June 30, 2025 and 2024, respectively.

The $0.6 million

decrease in general and administrative expenses was mainly due to $0.3 million lower stock-based compensation and $0.3 million lower investor

relations expense.

Impairment of acquired in-process research

and development intangible assets

During the six months ended

June 30, 2025, the Company released the Phase 2 clinical trial results for our Alzheimer’s drug candidate, XPro, which failed to

meet the primary endpoint, though a subgroup showed potential benefits.

Due to insufficient resources to fund further trials, the Company

has halted immediate plans to develop XPro for Alzheimer’s or other indications and are instead seeking a partner to continue these

As part of preparing its interim unaudited condensed consolidated financial statements, the Company determined that the intangible

asset’s fair value was likely below its carrying value.

Following a quantitative impairment assessment, the Company estimated the

asset’s fair value at $0 as of June 30, 2025, resulting in a recorded impairment of $16.5 million.

Other Income, net

During the six months ended

June 30, 2025, the Company recorded $0.3 million of other income due to the Company earning interest income on its cash investments.

the six months ended June 30, 2024, the Company earned $0.1 million of other income consisting of interest income partially offset by

interest expense.

Liquidity and Capital Resources

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We incurred a net loss of

$9.7 million and $11.0 million for the three months ended March 31, 2025 and 2024, respectively.

Net cash used in operating activities

was $6,824,000 and $7,476,000 for the three months ended March 31, 2025 and 2024, respectively.

$34.2 million and $20.8 million for the six months ended June 30, 2025 and 2024, respectively.

Net cash used in operating activities was

$14.2 million and $15.4 million for the six months ended June 30, 2025 and 2024, respectively.

Since inception, we have funded our operations

primarily with proceeds from the sales of our common stock.

As of March 31, 2025, we had cash and cash equivalents of $19,336,000.

As of June 30, 2025, we had cash and cash equivalents of $33.4 million.

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 period from April 1, 2025 through May 8, 2024, the Company sold 279,966 shares of common stock at an average price of $7.62

for gross proceeds of approximately $2.1 million under the ATM offering.

During the six months ending

June 30, 2025, the Company sold 1,304,707 shares of common stock at an average price of $8.01 for gross proceeds of approximately $10.4

million under the ATM offering.

During June 2025, the Company

entered into securities purchase agreements with investors whereby the Company sold 3,000,000 shares of the common stock in a registered

direct offering in exchange for gross proceeds of $18.9 million (net proceeds of approximately $17.4 million).

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 March 31, 2025, the cash balance held by our foreign subsidiaries with currencies other than the United

As of June 30, 2025, the cash balance held by our foreign subsidiaries with currencies other than the United

States dollar was approximately $0.2 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 March 31, 2025.

Until we can generate sufficient revenue from the commercialization

of our product candidates, we expect to finance our operations through the public or private sale of equity, debt financing or other capital

sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with

third parties.

Our cash and cash equivalents were $19.3 million and total current assets were $21.0 million at March 31, 2025, which the

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

Our 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 six months

ended June 30, 2025.

Until we can generate sufficient revenue from the commercialization of our product candidates, we expect to finance

our operations through the public or private sale of equity, debt financing or other capital sources, such as government funding, collaborations,

strategic alliances, divestment of non-core assets, or licensing arrangements with third parties.

Our cash and cash equivalents were $33.4

million and total current assets were $36.0 million at June 30, 2025, which the Company is projecting will be insufficient to sustain

its operations through one year following the date that the financial statements are issued.

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

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our cash flows for the periods indicated:

Three Months Ended

Six Months Ended

(in thousands)

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Operating activities

Investing activities

Financing activities

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Operating Activities

Operating activities used approximately $6.8 million of cash during the three months ended March 31, 2025, and was primarily due to our

loss of $9.7 million, partially offset by non-cash stock-based compensation of $2.1 million and changes in our net operating assets and

liabilities of $0.8 million which is mainly due to an increase in accounts payable and accrued liabilities of $0.7 million.

Operating activities used approximately $14.2 million of cash during

the six months ended June 30, 2025, resulting mainly from our loss of $34.2 million, partially offset by an intangibles impairment expense

of $16.5 million and non-cash stock-based compensation of $3.6 million.

Operating activities used

approximately $7.5 million of cash during the three months ended March 31, 2024, resulting from our loss of $11.0 million, partially offset

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 million.

in our net operating assets and liabilities was mainly due to an increase in accounts payable and accrued liabilities of $1.4 million,

and a decrease in prepaid expenses of $0.4 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.

Investing Activities

During the six months ended

June 30, 2025, the Company acquired $0.7 million of equipment to be used in its CORDStrom clinical program.

Financing Activities

During the three months ended

March 31, 2025, the Company sold 649,860 shares of common stock in exchange for net proceeds of $5.3 million.

During the three months ended

March 31, 2024, the Company repaid $2.5 million of its debt.

Critical Accounting Policies and Estimates

During the six months ended

June 30, 2025, the Company sold 1,304,707 shares of common stock under its ATM program for net proceeds of $10.1 million.

During June 2025, the Company

sold 3,000,000 shares of its common stock in a registered direct offering in exchange for gross proceeds of $18.9 million (net proceeds

of $17.4 million).

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 $13.5 million.

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

Critical Accounting Estimates

Our discussion and analysis

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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, 2024, and there have been no material changes during the three months ended March 31, 2025.

Quantitative and Qualitative Disclosures

About Market Risk

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

ended December 31, 2024, and there have been no material changes during the six months ended June 30, 2025.

and Qualitative Disclosures About Market Risk

Pursuant to Item 305(e) of

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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