What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-07 · 181 added, 99 removed, 206 unchanged (58% of the section changed)

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has recently completed a pivotal, blinded, randomized cross-over trial.

Based on these data, the Company is transitioning toward regulatory

submission and commercialization.

We intend to file a Marketing Authorization Application (“MAA”) in the United Kingdom and

the European Union, followed by a Biologics License Application (“BLA”) with the U.S.

Based on these data, the Company is transitioning toward

regulatory submission and commercialization.

We intend to file a Marketing Authorization Application (“MAA”) in the

United Kingdom by the end of Q3 or early Q4 of 2026 and the European Union in early 2027, followed by a Biologics License

Application (“BLA”) with the U.S.

Food and Drug Administration (“FDA”).

targeted for 2026.

Neuroinflammation

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XPro1595 (XPro) :

A next-generation protein therapeutic

that targets neuroinflammation by selectively neutralizing soluble TNF.

XPro has completed Phase I and Phase II clinical trials for the

treatment of Alzheimer’s Disease (“AD”).

The Company intends to pursue strategic partnership opportunities to support

the further development of XPro in neurodegenerative and/or other indications.

The Company does not currently plan to independently advance

XPro into later-stage development.

A novel natural killer (NK) cell-priming

platform designed to harness the patient’s own innate immune system to eliminate cancer cells.

The INKmune program is currently

nearing the completion of an open-label Phase II trial for the treatment of metastatic castrate-resistant prostate cancer (“mCRPC”).

A next-generation protein therapeutic that targets neuroinflammation by selectively neutralizing soluble TNF.

XPro has completed Phase I and Phase II clinical trials for the treatment of Alzheimer’s Disease (“AD”).

The Company intends to pursue strategic partnership opportunities to support the further development of XPro in neurodegenerative and/or other indications.

The Company does not currently plan to independently advance XPro into later-stage development.

A novel natural killer (NK) cell-priming platform designed to harness the patient’s own innate immune system to eliminate cancer cells.

The INKmune program is currently nearing the completion of an open-label Phase II trial for the treatment of metastatic castrate-resistant prostate cancer (“mCRPC”).

targeting the innate immune system across these distinct therapeutic areas, INmune Bio aims to deliver disease-modifying treatments for

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We reported a

net loss of $5.4 million for the three months ended March 31, 2026.

As of March 31, 2026 and December 31, 2025, we had cash and cash equivalents

net loss of $6.7 million for the six months ended June 30, 2026.

As of June 30, 2026 and December 31, 2025, we had cash and cash equivalents

of $18.4 million and $24.8 million, respectively.

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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, 2026.

the issuance of our unaudited condensed consolidated financial statements for the six months ended June 30, 2026.

Until we can generate

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agreement continues until terminated in accordance with its terms or for a period extending beyond the first commercial sale of applicable

The Company does not expect the amended agreement to have a material

impact on its near-term results of operations or liquidity;

however, it may result in future payment obligations and become material in

the event of successful development and commercialization of product candidates utilizing such materials.

The Company believes this agreement

is consistent with its strategy to advance its product candidates through collaborations, strategic relationships and licensing arrangements.

The Company does not expect

the amended agreement to have a material impact on its near-term results of operations or liquidity;

however, it may result in future

payment obligations and become material in the event of successful development and commercialization of product candidates utilizing such

The Company believes this agreement is consistent with its strategy to advance its product candidates through collaborations,

strategic relationships and licensing arrangements.

Research and Development

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Our research and development expense primarily

trial and regulatory-related costs;

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

● manufacturing

and testing costs and related supplies and materials;

● employee-related

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

clinical trial and regulatory-related costs;

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

manufacturing and testing costs and related supplies and materials;

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

The following table summarizes

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Three Months Ended

Six Months Ended

External Costs

DN-TNF - Alzheimer’s disease

INKmune and CORDStrom

CORDStrom (RDEB) & INKmune (Prostate cancer)

Preclinical and other programs

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resources across our development programs.

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

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

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

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

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

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

patient trial costs;

number of sites included in the clinical trials;

countries in which the clinical trials are conducted;

length of time required to enroll eligible patients;

number of patients that participate in the clinical trials;

number of doses that patients receive;

cost of comparative agents used in clinical trials;

drop-out or discontinuation rates of patients;

additional safety monitoring or other studies requested by regulatory agencies;

duration of patient follow-up;

efficacy and safety profile of the product candidate;

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

per patient trial costs;

the number of sites included in the clinical trials;

the countries in which the clinical trials are conducted;

the length of time required to enroll eligible patients;

the number of patients that participate in the clinical trials;

the number of doses that patients receive;

the cost of comparative agents used in clinical trials;

the drop-out or discontinuation rates of patients;

potential additional safety monitoring or other studies requested by regulatory agencies;

the duration of patient follow-up;

the efficacy and safety profile of the product candidate;

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

We do not expect any of our

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Results of Operations

Comparison of the Three Months Ended March

Comparison of the Three Months Ended June

30, 2026 and 2025

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General and administrative

Impairment of acquired research and development intangible assets

Total operating expenses

Loss from operations

Other expense, net

During the three months ended

March 31, 2025 the Company recognized $50,000 of revenues from a license agreement.

Other income, net

Research and Development

Research and development expenses were approximately $3.6 million during the three months ended March 31, 2026, compared to approximately

$7.6 million during the three months ended March 31, 2025.

The decrease in research and development expenses during the three months ending

March 31, 2026 compared to the three months ending March 31, 2025 is largely due to the Company incurring $4.5 million less expenses related

to our Alzheimer’s clinical program due to the Company completing its Phase 2 trial during 2025 and $0.5 million lower expenses

due to the Company incurring lower compensation expense, partially offset by the Company incurring $1.0 million of higher CORDStrom/INKmune

costs related to preparations to submit CORDStrom for marketing authorization in the United Kingdom, Europe and the United States.

Research and development benefit

was approximately $0.8 million during the three months ended June 30, 2026, compared to research and development expense of approximately

$5.8 million during the three months ended June 30, 2025.

The Company recorded $4.2 million of additional R&D rebate during the three

months ended June 30, 2026 primarily as a result of the completion of the Australian government's review of the Company’s 2025 R&D

In addition, the Company incurred $3.3 million less expenses related to our Alzheimer’s clinical program due to the Company

completing its Phase 2 trial during 2025, and $0.5 million lower expenses due to the Company incurring lower internal costs, partially

offset by the Company incurring $1.4 million of higher CORDStrom/INKmune costs related to preparations to submit CORDStrom for marketing

authorization in the United Kingdom, Europe and the United States.

General and Administrative

General and administrative expenses were approximately $2.2 million and $2.3 million during the three months ended March 31, 2026 and

2025, respectively.

This decrease is due to the Company incurring lower stock-based compensation expense.

General and administrative

expenses were approximately $2.3 million during the three months ended June 30, 2026 and 2025.

Other Expense, net

During the three months ended

March 31, 2026 and March 31, 2025, the Company recorded $0.4 million and $0.2 million of other income, respectively.

The increase in other

income is mainly due to a gain on the settlement of a vendor payable during March 2026.

June 30, 2026 and June 30, 2025, the Company recorded $0.2 million and $0.1 million of other income, respectively, mainly from interest

income on investments.

The increase in other income is mainly due to higher interest income as a result of higher amounts invested.

Comparison of the Six Months Ended June

30, 2026 and 2025

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

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.

Research and Development

Research and development expenses

were approximately $2.8 million and $13.4 million during the six months ended June 30, 2026 and 2025, respectively.

The change in

research and development expenses during the six months ending June 30, 2026 compared to the six months ending June 30, 2025 is mainly

due to the Company incurring $7.8 million less Alzheimer’s clinical program expenses due to the trial being completed in 2025, $4.1

million higher rebate mainly due to additional amounts recorded in connection with the completion of a review of the 2025 rebate claim

in Australia and $1.0 million lower internal costs, partially offset by the Company recording $2.3 million higher expenses for CORDStrom/INKmune

related to preparations to submit CORDStrom for marketing authorization in the United Kingdom, Europe and the United States.

General and Administrative

General and administrative

expenses were approximately $4.5 million and $4.6 million during the six months ended June 30, 2026 and 2025, respectively.

in general and administrative expenses was mainly due to incurring lower professional fees in 2026.

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 is 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, 2026 and 2025, the Company recorded $0.6 million and $0.3 million, respectively, of other income primarily from earning interest

income on its cash investments.

The increase in other income in 2026 was due to higher interest income from cash on its investments and

also due to a foreign exchange gain on the settlement of a payable.

Liquidity and Capital Resources

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We incurred a net loss of

$5.4 million and $9.7 million for the three months ended March 31, 2026 and 2025, respectively.

Net cash used in operating activities

was $3.4 million and $6.8 million for the three months ended March 31, 2026 and 2025, respectively.

Since inception, we have funded our

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

As of March 31, 2026, we had cash and cash equivalents of $21.4

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.

$6.7 million and $34.2 million for the six months ended June 30, 2026 and 2025, respectively.

Net cash used in operating activities was

$6.6 million and $14.2 million for the six months ended June 30, 2026 and 2025, respectively.

Since inception, we have funded our operations

primarily with proceeds from the sales of our common stock.

As of June 30, 2026, we had cash and cash equivalents of $18.4 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.

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, 2026, the cash balance held by our foreign subsidiaries with currencies other than the United

As of June 30, 2026, the cash balance held by our foreign subsidiaries with currencies other than the United

States dollar was approximately $0.6 million.

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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, 2026.

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 $21.4 million and total current assets were $22.8 million at March 31, 2026, which the

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

consolidated financial statements as of and for the six months ended June 30, 2026.

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 $18.4 million and total current assets were $23.8 million at June

30, 2026, 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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condition and prospects.

Sales Agreement

December 19, 2025, the Company entered into a sales agreement with A.G.P./Alliance Global Partners (“AGP”), as sales agent,

pursuant to which the Company may offer and sell, from time to time, up to $65,000,000 of shares of its common stock through AGP in

exchange for a 3% commission on gross proceeds.

During the six months ended June 30, 2026, the Company sold 370,417 shares of common

stock at an average price of $1.63 per share under the ATM program.

The aggregate net proceeds were approximately $0.6 million after

Subsequent to the quarter

ending June 30, 2026, the Company sold 100,000 shares of common stock at an average price of $2.09 per share for aggregate net

proceeds of approximately $0.2 million.

Warrants Inducement

June 30, 2026, the Company entered into a warrant inducement agreement with certain holders of its April 2024 common stock purchase warrants.

Under the agreements, the holders exercised an aggregate of 674,155 warrants, representing 50% of their holdings, at a reduced exercise

price of $1.40 per share (original exercise price of $1.95), resulting in gross proceeds to the Company of approximately $0.9 million,

of which approximately $0.1 million was received on June 30, 2026 and $0.8 million was received on July 1, 2026.

consideration for the exercise, the expiration date of the holders' remaining 674,160 April 2024 warrants was extended from June 30, 2026

to December 31, 2027.

All other terms of the remaining warrants, including the $1.95 exercise price, remained unchanged.

The aggregate

intrinsic value of these warrants was $0 at June 30, 2026.

Research and Development

Company participates in government-sponsored research and development incentive programs in Australia and the United Kingdom, which provide

cash rebates for qualifying research and development expenditures.

These programs represent a source of non-dilutive funding that supports

the Company's research and development activities, although the timing and amount of future rebates is dependent upon eligible expenditures,

applicable program requirements, and governmental review and payment processes.

the six months ended June 30, 2026, the Company received approximately $4.4 million of cash rebates under these programs, consisting of

approximately $3.6 million from Australia and approximately $0.8 million from the United Kingdom.

In addition, the Company received a

further approximately $4.2 million research and development rebate from Australia on July 30, 2026.

These cash receipts have strengthened

the Company's liquidity and supported the funding of its ongoing operations.

The following table summarizes

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 used

approximately $3.4 million of cash during the three months ended March 31, 2026, and was primarily due to our net loss of $5.4 million,

partially offset by non-cash stock-based compensation of $1.5 million and changes in our net operating assets and liabilities of $0.5

million which is primarily due to an decrease in research and development tax credit receivable of $3.8 million partially offset by a

decrease in accounts payable and accrued liabilities of $3.0 million.

approximately $6.6 million of cash during the six months ended June 30, 2026, primarily reflecting our net loss of $6.7 million and approximately

$2.8 million of cash used from changes in operating assets and liabilities, principally a $2.6 million decrease in accounts payable and

accrued liabilities.

These uses were partially offset by approximately $2.9 million of non-cash stock-based compensation expense.

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.

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.

Investing Activities

During the six months ended

June 30, 2026 and 2025, the Company acquired $0.4 million and $0.7 million, respectively, of equipment to be used in its CORDStrom clinical

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 six months ended

June 30, 2026, the Company sold 370,417 shares of common stock under its ATM program for net proceeds of $0.6 million.

During June 2026, holders

exercised 674,155 warrants for aggregate gross proceeds of approximately $0.9 million.

The Company received approximately $0.1 million

by June 30, 2026, and recorded the remaining $0.8 million as a subscription receivable, which was collected on July 1, 2026.

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).

Critical Accounting Policies and Estimates

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

The preparation of these condensed

consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities

and expenses.

Actual results may differ from these estimates.

Our critical accounting policies and estimates are discussed in our Annual

Report on Form 10-K for the fiscal year ended December 31, 2025, and there have been no material changes during the three months ended

March 31, 2026.

Quantitative and

Qualitative Disclosures About Market Risk

The preparation of these financial

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

Actual results

may differ from these estimates.

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

ended December 31, 2025, and there have been no material changes during the six months ended June 30, 2026.

Quantitative 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