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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 001-39692

 

IN8BIO, INC.

(Exact name of Registrant as specified in its Charter)

 

Delaware

82-5462585

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

350 5th Avenue, Suite 5330

New York, New York

10118

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (646) 600-6438

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

 

INAB

 

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YesNo

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). YesNo

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YesNo

The number of shares of Registrant’s Common Stock outstanding as of August 7, 2024 was 46,786,948.

 

 

 


 

Table of Contents

 

Page

PART I

FINANCIAL INFORMATION

 

Item 1.

Condensed Financial Statements (Unaudited)

1

 

Condensed Balance Sheets

1

 

Condensed Statements of Operations

2

 

Condensed Statements of Stockholders’ Equity

3

 

Condensed Statements of Cash Flows

4

 

Notes to Condensed Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

26

Item 4.

Controls and Procedures

26

 

 

 

PART II

OTHER INFORMATION

 

Item 1.

Legal Proceedings

27

Item 1A.

Risk Factors

27

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

70

Item 3.

Defaults Upon Senior Securities

70

Item 4.

Mine Safety Disclosures

71

Item 5.

Other Information

71

Item 6.

Exhibits

71

 

Signatures

72

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

IN8BIO, INC.

CONDENSED BALANCE SHEETS

(In thousands, except share and per share data)

 

 

 

June 30,

 

 

 

 

 

 

2024

 

 

December 31,

 

 

 

(unaudited)

 

 

2023

 

Assets

 

 

 

 

(Note 2)

 

Current assets

 

 

 

 

 

 

Cash

 

$

10,217

 

 

$

21,282

 

Prepaid expenses and other current assets

 

 

2,465

 

 

 

3,343

 

Total Current Assets

 

 

12,682

 

 

 

24,625

 

Non-current assets

 

 

 

 

 

 

Property and equipment, net

 

 

3,112

 

 

 

3,514

 

Construction in progress

 

 

265

 

 

 

182

 

Restricted cash

 

 

259

 

 

 

256

 

Right-of-use assets - finance leases

 

 

1,531

 

 

 

1,364

 

Right-of-use assets - operating leases

 

 

4,327

 

 

 

3,513

 

Other non-current assets

 

 

320

 

 

 

255

 

Total Non-Current Assets

 

 

9,814

 

 

 

9,084

 

Total Assets

 

$

22,496

 

 

$

33,709

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

1,444

 

 

$

924

 

Accrued expenses and other current liabilities

 

 

1,533

 

 

 

2,955

 

Short-term finance lease liability

 

 

895

 

 

 

694

 

Short-term operating lease liability

 

 

887

 

 

 

820

 

Total Current Liabilities

 

 

4,759

 

 

 

5,393

 

Long-term finance lease liability

 

 

526

 

 

 

525

 

Long-term operating lease liability

 

 

3,590

 

 

 

2,854

 

Total Non-Current Liabilities

 

 

4,116

 

 

 

3,379

 

Total Liabilities

 

 

8,875

 

 

 

8,772

 

Stockholders' Equity

 

 

 

 

 

 

Preferred stock, par value $0.0001 per share; 10,000,000 shares authorized at June 30, 2024 and December 31, 2023, respectively. No shares issued and outstanding

 

 

 

 

 

 

Common stock, par value $0.0001 per share; 490,000,000 shares authorized at June 30, 2024 and December 31, 2023; 46,434,656 and 43,287,325 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

 

 

5

 

 

 

4

 

Additional paid-in capital

 

 

122,026

 

 

 

116,152

 

Accumulated deficit

 

 

(108,410

)

 

 

(91,219

)

Total Stockholders' Equity

 

 

13,621

 

 

 

24,937

 

Total Liabilities and Stockholders' Equity

 

$

22,496

 

 

$

33,709

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

1


 

IN8BIO, INC.

CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Research and development

$

5,156

 

 

$

4,134

 

 

$

10,059

 

 

$

8,519

 

General and administrative

 

3,533

 

 

 

3,581

 

 

 

7,275

 

 

 

7,051

 

Total operating expenses

 

8,689

 

 

 

7,715

 

 

 

17,334

 

 

 

15,570

 

Interest income

 

60

 

 

 

 

 

 

143

 

 

 

 

Other income

 

 

 

 

 

 

 

 

 

 

330

 

Loss from operations

 

(8,629

)

 

 

(7,715

)

 

 

(17,191

)

 

 

(15,240

)

Net loss

$

(8,629

)

 

$

(7,715

)

 

$

(17,191

)

 

$

(15,240

)

Net loss per share – basic and diluted

$

(0.19

)

 

$

(0.27

)

 

$

(0.39

)

 

$

(0.57

)

Weighted-average number of shares used in computing net loss per common share, basic and diluted

 

45,126,064

 

 

 

28,472,346

 

 

 

44,493,815

 

 

 

26,612,794

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

2


 

IN8BIO INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Stockholders' Equity

 

Balance at December 31, 2022

 

 

24,545,157

 

 

$

3

 

 

$

83,941

 

 

$

(61,212

)

 

$

22,732

 

Issuance of common stock, net of issuance costs

 

 

415,712

 

 

 

 

 

 

722

 

 

 

 

 

 

722

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

859

 

 

 

 

 

 

859

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(7,525

)

 

 

(7,525

)

Balance at March 31, 2023

 

 

24,960,869

 

 

 

3

 

 

 

85,522

 

 

 

(68,737

)

 

 

16,788

 

Issuance of common stock, net of issuance costs

 

 

5,645,250

 

 

 

1

 

 

 

11,706

 

 

 

 

 

 

11,707

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,019

 

 

 

 

 

 

1,019

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(7,715

)

 

 

(7,715

)

Balance at June 30, 2023

 

 

30,606,119

 

 

$

4

 

 

$

98,247

 

 

$

(76,452

)

 

$

21,799

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2023

 

 

43,287,325

 

 

$

4

 

 

$

116,152

 

 

$

(91,219

)

 

$

24,937

 

Issuance costs

 

 

 

 

 

 

 

 

(89

)

 

 

 

 

 

(89

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,240

 

 

 

 

 

 

1,240

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,562

)

 

 

(8,562

)

Balance at March 31, 2024

 

 

43,287,325

 

 

 

4

 

 

 

117,303

 

 

 

(99,781

)

 

 

17,526

 

Issuance of common stock, net of issuance costs

 

 

3,127,331

 

 

 

1

 

 

 

3,527

 

 

 

 

 

 

3,528

 

Issuance of common stock upon exercise of Series A warrants, net of issuance costs

 

 

20,000

 

 

 

 

 

 

25

 

 

 

 

 

 

25

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,171

 

 

 

 

 

 

1,171

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,629

)

 

 

(8,629

)

Balance at June 30, 2024

 

 

46,434,656

 

 

$

5

 

 

$

122,026

 

 

$

(108,410

)

 

$

13,621

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

3


 

IN8BIO, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2024

 

 

2023

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(17,191

)

 

$

(15,240

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

473

 

 

 

486

 

Non-cash stock-based compensation

 

 

2,411

 

 

 

1,878

 

Amortization of finance lease right-of-use assets

 

 

397

 

 

 

418

 

Amortization of operating lease right-of-use assets

 

 

393

 

 

 

323

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

878

 

 

 

1,580

 

Other non-current assets

 

 

(65

)

 

 

 

Accounts payable

 

 

518

 

 

 

(1,390

)

Accrued expenses and other current liabilities

 

 

(1,422

)

 

 

(485

)

Short-term operating lease liabilities

 

 

69

 

 

 

50

 

Long-term operating lease liabilities

 

 

(471

)

 

 

(397

)

Net cash used in operating activities

 

 

(14,010

)

 

 

(12,777

)

Investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(71

)

 

 

(407

)

Construction in progress

 

 

(83

)

 

 

(44

)

Net cash used in investing activities

 

 

(154

)

 

 

(451

)

Financing activities

 

 

 

 

 

 

Payment of issuance costs from December 2023 issuance of common stock

 

 

(89

)

 

 

 

Proceeds from the issuance of common stock, net of issuance costs

 

 

3,528

 

 

 

12,429

 

Proceeds from the exercise of Series A warrants, net of issuance costs

 

 

25

 

 

 

 

Principal payments on finance leases

 

 

(362

)

 

 

(389

)

Net cash provided by financing activities

 

 

3,102

 

 

 

12,040

 

Net decrease in cash and restricted cash

 

 

(11,062

)

 

 

(1,188

)

Cash and restricted cash at beginning of period

 

 

21,538

 

 

 

18,434

 

Cash and restricted cash at end of period

 

$

10,476

 

 

$

17,246

 

 

 

 

 

 

 

Cash, end of period

 

$

10,217

 

 

$

16,993

 

Restricted cash, end of period

 

 

259

 

 

 

253

 

Cash and restricted cash, end of period

 

$

10,476

 

 

$

17,246

 

 

 

Supplemental disclosure of non-cash financing and investing activities:

 

 

 

 

 

 

Initial measurement of operating lease right-of-use assets and liabilities

 

$

714

 

 

$

536

 

Initial measurement of finance lease right-of-use assets and liabilities

 

$

564

 

 

$

 

Lease modification of operating lease right-of-use assets and liabilities

 

$

492

 

 

$

7

 

Transfer from construction in progress to property and equipment

 

$

 

 

$

36

 

Construction in progress in accounts payable and accrued expenses

 

$

 

 

$

48

 

Purchase of property and equipment in accounts payable

 

$

 

 

$

22

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

4


 

IN8BIO, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1. ORGANIZATION AND NATURE OF OPERATIONS

Organization and Business

IN8bio, Inc. (the "Company") is a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of gamma-delta T cell product candidates for solid and liquid tumors. The Company’s lead product candidate, INB-400, is currently in a company-sponsored Phase 2 clinical trial in which autologous, genetically modified gamma-delta T cells are being assessed in newly diagnosed glioblastoma ("GBM") patients at centers across the United States. In addition, the Company has two programs in Phase 1 clinical trials: INB-200, for the treatment of patients with newly diagnosed GBM, and INB-100, for the treatment of patients with hematologic malignancies that are undergoing hematopoietic stem cell transplantation ("HSCT"). In addition, the Company’s DeltEx platform has yielded a broad portfolio of preclinical programs, including INB-300 and INB-500, focused on addressing acute myeloid leukemia ("AML") and other solid and hematological tumor types.

Incysus, Inc. ("Incysus") was a corporation formed in the State of Delaware on November 23, 2015 and Incysus, Ltd. was incorporated in Bermuda on February 8, 2016. Incysus was the wholly owned United States subsidiary of Incysus, Ltd. On May 7, 2018, Incysus, Ltd. reincorporated in the United States in a domestication transaction (the "Domestication") in which Incysus, Ltd. converted into a newly formed Delaware corporation, Incysus Therapeutics, Inc. ("Incysus Therapeutics"). On July 24, 2019, Incysus Therapeutics merged with Incysus. Incysus Therapeutics subsequently changed its name to IN8bio, Inc. in August 2020. Following the Domestication in May 2018 and the merging of Incysus Therapeutics and Incysus in July 2019, the Company does not have any subsidiaries to consolidate. The Company is headquartered in New York, New York.

Liquidity and Going Concern

To date, the Company has funded its operations primarily with proceeds from various public and private offerings of its common stock, preferred stock and warrants. The Company has incurred recurring losses and negative operating cash flows since its inception, including net losses of $17.2 million and $15.2 million for the six months ended June 30, 2024 and 2023, respectively. As of June 30, 2024, the Company had an accumulated deficit of $108.4 million. We continue to deploy cash preservation measures to defer or reduce costs in the near term in order to preserve capital and increase financial flexibility given the on-going market environment for biotechnology stocks. These cash preservation measures may impact our ability and the timing to execute our strategy, including our ability to achieve the anticipated milestones and the timing of regulatory filings for our preclinical and clinical programs.

The Company has not yet generated product sales and as a result has experienced operating losses since inception. The Company expects to incur additional losses in the future as it advances its product candidates through clinical trials, seeks to expand its product candidate portfolio through developing additional product candidates, grows its clinical, regulatory and quality capabilities, and incurs costs associated with operating as a public company. The actual amount of cash that the Company will need to operate is subject to many factors. Based on the Company’s business strategy, its existing cash of $10.2 million as of June 30, 2024 will only fund the Company’s projected operating expenses and capital expenditure requirements into January 2025. Accordingly, there is substantial doubt about the Company’s ability to continue to operate as a going concern for a period of 12 months from the date of issuance of these condensed financial statements. To continue to fund the operations of the Company, management has developed plans, which primarily consist of raising additional capital through some combination of equity and/or debt offerings, including through at-the-market program ("ATM") offerings and/or private placements of securities, and identifying strategic collaborations, licensing or other arrangements to support development of the Company’s product candidates. During the three and six months ended June 30, 2024, the Company sold an aggregate of 3,127,331 shares of its common stock under the ATM program, resulting in net proceeds of approximately $3.5 million after deducting commissions and offering expenses.

The Company may receive an additional $14.8 million in aggregate proceeds if the holders of the Series A ordinary warrants ("Series A warrants") exercise their warrants. Further, if not otherwise redeemed by the Company, the Company may also receive aggregate proceeds of up to $17.7 million from the exercise of its outstanding Series B ordinary warrants ("Series B warrants"). See Note 8, Warrants, for additional information. There is no assurance, however, that the Company will receive any additional proceeds from these warrants or that any additional financing or any revenue-generating collaboration will be available when needed, that management of the Company will be able to obtain financing or enter into a collaboration on terms acceptable to the Company, or that any additional financing or revenue generated through third-party collaborations will be sufficient to fund our operations through this time period. If additional capital is not available on a timely basis, or at all, the Company will have to significantly delay, scale back or discontinue its research and development programs. If the Company becomes unable to continue as a going concern, it may have to terminate its operations and dispose of its assets and might realize significantly less than the values at which they are carried on its condensed financial statements. These actions may cause the Company’s stockholders to lose all or part of their investment in the Company’s common stock. The accompanying condensed financial statements have been prepared on the basis that the Company will continue as a going concern and do not include adjustments that might result from the outcome of this uncertainty.

5


 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies

The Company’s significant accounting policies, which are disclosed in the audited financial statements for the year ended December 31, 2023 and the notes thereto, are included in the Company’s Annual Report on Form 10-K (the “Annual Report”) that was filed with the Securities and Exchange Commission ("SEC") on March 14, 2024. Since the date of that filing, there have been no material changes to the Company’s significant accounting policies.

 

Basis of Presentation

The Company has prepared the accompanying condensed financial statements in conformity with generally accepted accounting principles in the United States ("U.S. GAAP").

Unaudited Interim Financial Information

The condensed financial statements of the Company included herein have been prepared pursuant to the rules and regulations of the SEC. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from these condensed financial statements, as is permitted by such rules and regulations. Accordingly, these condensed financial statements should be read in conjunction with the financial statements and notes thereto in the Company's Annual Report. The results for any interim period are not necessarily indicative of results for any future period. In the opinion of the Company’s management, all adjustments (consisting of normal and recurring adjustments) considered necessary for a fair statement of the results for the interim periods presented have been included.

Use of Estimates

The preparation of condensed financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed financial statements, and the reported amounts of expenses during the reporting periods presented. Such estimates and assumptions are used for, but are not limited to, the accrual of research and development expenses, deferred tax assets and liabilities and the related valuation allowance, stock-based compensation, the useful lives of property and equipment and the valuation of warrants. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to significant concentrations of credit risk consist primarily of cash. All of the Company’s cash and restricted cash is deposited in accounts with major financial institutions. Such deposits are in excess of the federally insured limits.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation. Depreciation and amortization of property and equipment is calculated using the straight-line method over the estimated useful lives of the assets. Significant replacements and improvements are capitalized, while maintenance and repairs, which do not improve or extend the life of the respective assets, are charged to expense as incurred. The estimated useful lives of the Company’s respective assets are as follows:

Estimated Useful Life

Furniture

5 years

Machinery and equipment

 

 

3-5 years

 

Software

3 years

Leasehold improvements

 

 

The shorter of the useful life of the leasehold improvement or the remaining term of the lease

 

Costs for capital assets not yet placed into service are capitalized as construction in progress and depreciated and amortized in accordance with the above guidelines once placed into service. Upon retirement or disposal of property and equipment, the cost and

6


 

related accumulated depreciation and amortization are removed from the balance sheet and any gain or loss is reflected in the statement of operations.

Capitalized Software

The Company capitalizes the application development phase costs of internal use software in accordance with Accounting Standards Codification (“ASC”) 350-40, Intangibles-Goodwill and Other-Internal Use Software. Capitalized costs will be amortized on a straight-line basis over the estimated useful life of the asset upon completion.

Recently Issued Accounting Standards Updates

 

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an annual and interim basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis. The adoption of this ASU did not have a material impact on the Company's disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which expands the disclosures required for income taxes. This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendment should be applied on a prospective basis while retrospective application is permitted. The Company is currently evaluating the effect of this pronouncement on its disclosures.

The Company has evaluated all other issued and unadopted Accounting Standard Updates and believes the adoption of these standards will not have a material impact on the condensed financial statements.

3. PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following (in thousands):

 

 

 

June 30,
2024

 

 

December 31,
2023

 

Prepaid research and development

 

$

1,755

 

 

$

2,283

 

Prepaid insurance

 

 

181

 

 

 

790

 

Other

 

 

529

 

 

 

270

 

Prepaid expenses and other current assets

 

$

2,465

 

 

$

3,343

 

 

4. PROPERTY AND EQUIPMENT, NET

Property and equipment, net consist of the following (in thousands):

 

 

 

June 30,
2024

 

 

December 31,
2023

 

Machinery and equipment

 

$

448

 

 

$

379

 

Furniture and fixtures

 

 

370

 

 

 

370

 

Software

 

 

126

 

 

 

126

 

Leasehold improvements

 

 

3,924

 

 

 

3,922

 

Less accumulated depreciation and amortization

 

 

(1,756

)

 

 

(1,283

)

Property and equipment, net

 

$

3,112

 

 

$

3,514

 

 

Depreciation and amortization expense was $0.2 million for the three months ended June 30, 2024 and 2023 and was $0.5 million for the six months ended June 30, 2024 and 2023.

5. CONSTRUCTION IN PROGRESS

Construction in progress consists of the following (in thousands):

 

7


 

 

 

June 30,
2024

 

 

December 31,
2023

 

Internal use software not yet in service

 

$

265

 

 

$

182

 

Construction in progress

 

$

265

 

 

$

182

 

 

6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following (in thousands):

 

 

 

June 30,
2024

 

 

December 31,
2023

 

Accrued clinical trials

 

$

110

 

 

$

598

 

Accrued compensation

 

 

1,029

 

 

 

1,673

 

Accrued legal

 

 

113

 

 

 

306

 

Accrued other

 

 

281

 

 

 

378

 

Accrued expenses and other current liabilities

 

$

1,533

 

 

$

2,955

 

 

7. STOCKHOLDERS' EQUITY

The Company’s authorized capital stock consists of 500,000,000 shares, all with a par value of $0.0001 per share, of which 490,000,000 shares are designated as common stock and 10,000,000 shares are designated as preferred stock.

ATM Facility

In November 2022, the Company filed a shelf registration statement on Form S-3 (File No. 333-268288) (the “Shelf Registration Statement”) with the SEC, which permits the offering, issuance and sale by the Company of up to a maximum aggregate offering price of $200.0 million of its common stock and preferred stock, various series of debt securities and/or warrants to purchase any of such securities, of which $50.0 million of common stock may be issued and sold pursuant to an ATM. The Company entered into a Controlled Equity OfferingSM sales agreement (the "Sales Agreement") with Cantor Fitzgerald & Co. (“Cantor Fitzgerald”) and Truist Securities, Inc. (“Truist”) under which Cantor Fitzgerald and Truist agreed to act as sales agents to sell shares of the Company’s common stock, from time to time, through the ATM program. On March 8, 2024, the Company delivered a termination notice to Truist, removing them as a sales agent under the ATM program. Such termination became effective on March 14, 2024.

Under current SEC regulations, if at any time the Company's public float is less than $75.0 million, and for so long as the Company's public float remains less than $75.0 million, the amount the Company can raise through primary public offerings of securities in any 12-month period using shelf registration statements is limited to an aggregate of one-third of the Company's public float, which is referred to as the baby shelf rules. As of December 31, 2023, the Company's calculated public float was less than $75.0 million. During the year ended December 31, 2023, the Company sold an aggregate of 7,492,580 shares of its common stock under the ATM program, resulting in net proceeds of approximately $14.4 million after deducting underwriting discounts. During the three and six months ended June 30, 2024, the Company sold an aggregate of 3,127,331 shares of its common stock under the ATM program, resulting in net proceeds of approximately $3.5 million after deducting underwriting discounts. As of June 30, 2024, $31.1 million remained available for the sale of our common stock under the ATM program.

 

8. WARRANTS

 

In December 2023, the Company issued 574,241 pre-funded warrants, 11,823,829 Series A warrants and 11,823,829 Series B warrants. The pre-funded warrants have an exercise price of $0.0001 per share, are exercisable immediately and are exercisable until the pre-funded warrant is exercised in full. In lieu of making the cash payment otherwise contemplated to be made to the Company upon exercise of a pre-funded warrant in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of shares of common stock determined according to a formula set forth in the pre-funded warrants terms. The pre-funded warrants meet the criteria for permanent equity classification. As of June 30, 2024, 574,241 pre-funded warrants were issued and outstanding.

The Series A warrants have an exercise price of $1.25 per share. The Series A warrants are exercisable immediately and expire on June 13, 2025. The Series A warrants meet the criteria for permanent equity classification. As of June 30, 2024, 11,805,587 Series A warrants were issued and outstanding.

8


 

The Series B warrants have an exercise price of $1.50 per share. The Series B warrants are exercisable immediately and expire on December 13, 2028. The Series B warrants allow the Company to redeem such warrants at a price of $0.01 per Series B warrant upon the Company’s public announcement of its INB-100 data for all enrolled patients covering a period of at least 22 months, along with certain stock price and trading volume requirements. Holders of Series B warrants may choose to exercise such warrants at a purchase price of $1.50 per share prior to such redemption. The Series B warrants meet the criteria for permanent equity classification. As of June 30, 2024, 11,823,829 Series B warrants were issued and outstanding.

9. STOCK-BASED COMPENSATION

2018 Equity Incentive Plan

On May 7, 2018, the Company established and adopted the 2018 Equity Incentive Plan (the “2018 Plan”) providing for the granting of stock awards for employees, directors and consultants to purchase shares of the Company’s common stock. Upon the effectiveness of the 2020 Plan (as defined below), the 2018 Plan was terminated and no further issuances were made under the 2018 Plan, although it continues to govern the terms of any equity grants that remain outstanding under the 2018 Plan.

2020 Equity Incentive Plan

The 2020 Equity Incentive Plan (the “2020 Plan”) was approved by the Company's Board of Directors and the Company’s stockholders and became effective on July 29, 2021. Upon the effectiveness of the 2023 Plan (as defined below), the 2020 Plan was terminated and no further issuances were made under the 2020 Plan, although it continues to govern the terms of any equity grants that remain outstanding under the 2020 Plan.

Amended and Restated 2023 Equity Incentive Plan

The Amended and Restated 2023 Equity Incentive Plan (the “2023 Plan”) was approved by the Company's Board of Directors and the Company’s stockholders and became effective on June 15, 2023. The Board of Directors, or a committee thereof, is authorized to administer the 2023 Plan. The 2023 Plan provides for the grant of Incentive Stock Options ("ISO") within the meaning of Section 422 of the Internal Revenue Code ("IRC") as amended, to employees, and for the grant of non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of awards to the Company’s employees, directors and consultants and any Company affiliates’ employees and consultants. The number of shares initially reserved for issuance under the 2023 Plan was 7,400,000, which automatically increases on January 1 of each year for a period of 10 years, beginning on January 1, 2024 and continuing through January 1, 2033, in an amount equal to 5% of the total number of shares of common stock outstanding on the last day of the immediately preceding year, or a lesser number of shares determined by the Board of Directors no later than the last day of the immediately preceding year. The maximum number of shares of common stock that may be issued upon the exercise of ISOs under the 2023 Plan is 41,000,000 shares. Pursuant to the terms of the 2023 Plan, the number of shares available under the 2023 Plan was increased by 2,164,366 shares effective January 1, 2024. As of June 30, 2024, 6,732,865 shares were available for grant pursuant to the 2023 Plan, including the increase effective January 1, 2024.

2020 Employee Stock Purchase Plan

The 2020 Employee Stock Purchase Plan (the “ESPP”) was approved by the Company’s Board of Directors and the Company’s stockholders and became effective on July 29, 2021. A total of 200,000 shares of common stock were initially reserved for issuance under this plan, which automatically increases on January 1 of each year by the lesser of (i) 1% of the outstanding number of shares of common stock on the immediately preceding December 31 and (ii) 400,000, or such lesser number of shares as determined by the Board of Directors. As of June 30, 2024, no shares of common stock had been issued under the ESPP and 387,812 shares remained available for future issuance under the ESPP. The Company’s Board of Directors or designated committee has not set an offering period. Pursuant to the terms of the ESPP, the number of shares available under the ESPP increased by 400,000 shares, effective January 1, 2024.

9


 

Stock Option Activity

The following is a summary of the stock option award activity during the six months ended June 30, 2024:

 

 

 

Number
of Stock
Options

 

 

Weighted-
Average
Exercise
Price

 

 

Weighted-
Average
Remaining
Contractual
Term
(in years)

 

 

Aggregate
Intrinsic
Value
(in thousands)

 

Outstanding at December 31, 2023

 

 

6,695,933

 

 

$

3.52

 

 

 

8.32

 

 

$

361

 

Granted

 

 

2,185,225

 

 

 

1.24

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

 

 

Forfeited

 

 

(50,335

)

 

 

4.43

 

 

 

 

 

 

 

Outstanding at June 30, 2024

 

 

8,830,823

 

 

$

2.95

 

 

 

8.33

 

 

$

 

Exercisable at June 30, 2024

 

 

3,727,158

 

 

$

4.36

 

 

 

7.54

 

 

$

 

Options expected to vest as of June 30, 2024

 

 

5,103,665

 

 

$

1.92

 

 

 

8.91

 

 

$

 

 

The weighted-average grant date fair value of options granted during the six months ended June 30, 2024 and 2023 was $1.24 and $1.59, respectively. The aggregate intrinsic value is calculated as the difference between the exercise price and the market price of the Company’s common stock at June 30, 2024 and December 31, 2023.

Stock-Based Compensation Expense

For the six months ended June 30, 2024 and 2023, the Company utilized the Black-Scholes option-pricing model for estimating the fair value of the stock options. The following table presents the assumptions and the Company’s methodology for developing each of the assumptions used:

 

 

 

June 30,
2024

 

June 30,
2023

Volatility

 

90.31% - 102.54%

 

91.91% - 95.08%

Expected life (years)

 

5.27 - 6.08

 

5.27 - 6.08

Risk-free interest rate

 

3.98% - 4.65%

 

3.58% - 3.99%

Dividend rate

 

 

 

Volatility—The Company estimates the expected volatility of its common stock at the date of grant based on the historical volatility of comparable public companies over the expected term.
Expected life—The expected term represents the period that the Company’s stock option grants are expected to be outstanding. The expected term of the options granted to employees and non-employee directors by the Company has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. Under this approach, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option.
Risk-free interest rate—The risk-free rate for periods within the estimated life of the stock award is based on the U.S. Treasury yield curve in effect at the time of grant.
Dividend rate—The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future.

Stock-based compensation expense was recorded in the following line items in the condensed statements of operations for the three and six months ended June 30, 2024 and 2023 (in thousands):

 

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Research and development

 

$

514

 

 

$

442

 

 

$

1,046

 

 

$

831

 

General and administrative

 

 

657

 

 

 

577

 

 

 

1,365

 

 

 

1,047

 

Total stock-based compensation expense

 

$

1,171

 

 

$

1,019

 

 

$

2,411

 

 

$

1,878

 

 

10


 

 

No related tax benefits from stock-based compensation expense were recognized for the three and six months ended June 30, 2024 and 2023. As of June 30, 2024, there was $6.3 million in unrecognized stock-based compensation expense, which is expected to be recognized over a weighted-average period of 2.51 years.

10. LICENSE AGREEMENTS

Emory University, Children’s Healthcare of Atlanta, Inc. and UAB Research Foundation

In June 2016, the Company entered into an exclusive license agreement with Emory University, Children’s Healthcare of Atlanta, Inc. and UAB Research Foundation (UABRF), as amended from time to time (the “Emory License Agreement”). The Emory License Agreement was amended in October 2017 and July 2020. Under the Emory License Agreement, the Company obtained an exclusive worldwide license under certain immunotherapy related patents and know-how related to gamma-delta T cells developed by Emory University, Children’s Healthcare of Atlanta, Inc. and UABRF’s affiliate, the University of Alabama at Birmingham, to develop, make, have made, use, sell, import and otherwise commercialize products that are covered by such patents or otherwise incorporate or use the licensed technology. Such exclusive license is subject to certain rights retained by these institutions and also the U.S. government.

In consideration of the license granted under the Emory License Agreement, the Company paid Emory University a nominal upfront payment. In addition, the Company is required to pay Emory University development milestones totaling up to an aggregate of $1.4 million, low-single-digit to mid-single-digit tiered running royalties on the net sales of the licensed products, including an annual minimum royalty beginning on a specified period after the first sale of a licensed product, and a share of certain payments that the Company may receive from sublicenses. In addition, in the event no milestone payments have been paid in certain years, the Company will be required to pay an annual license maintenance fee. The Emory License Agreement also requires the Company to reimburse Emory University for the cost of the prosecution and maintenance of the licensed patents. Pursuant to the Emory License Agreement, the Company is required to use its best efforts to develop, manufacture and commercialize the licensed product, and is obligated to meet certain specified deadlines in the development of the licensed products.

The term of the Emory License Agreement will continue until 15 years after the first commercial sale of the licensed product, or the expiration of the relevant licensed patents, whichever is later. The Company may terminate the Emory License Agreement at will at any time upon prior written notice to Emory University. Emory University has the right to terminate the Emory License Agreement if the Company materially breaches the agreement (including failure to meet diligence obligations) and fails to cure such breach within a specified cure period, if the Company becomes bankrupt or insolvent or decides to cease development and commercialization of the licensed product, or if the Company challenges the validity or enforceability of any licensed patents.

Exclusive License Agreement with UABRF

In March 2016, the Company entered into an exclusive license agreement with UABRF, as amended from time to time (the “UABRF License Agreement”). The Company amended the UABRF License Agreement in December 2016, January 2017, June 2017 and November 2018. Under the UABRF License Agreement, the Company obtained an exclusive worldwide license under certain immunotherapy-related patents related to the use of gamma-delta T cells, certain CAR-T cells and combination treatments for cellular therapies developed by the University of Alabama at Birmingham and owned by UABRF to develop, make, have made, use, sell, import and otherwise commercialize products that are covered by such patents. Such exclusive license is subject to certain rights retained by UABRF and also the U.S. government.

In consideration of the license granted under the UABRF License Agreement, the Company paid UABRF a nominal upfront payment and issued 91,250 shares of common stock to UABRF, which were subject to certain antidilution rights.

In addition, the Company is required to pay UABRF development milestones totaling up to an aggregate of $1.4 million, lump-sum royalties on cumulative net sales totaling up to an aggregate of $22.5 million, mid-single-digit running royalties on net sales of the licensed products, low-single-digit running royalties on net sales of the licensed products, and a share of certain non-royalty income that the Company may receive, including from any sublicenses. The UABRF License Agreement also requires the Company to reimburse UABRF for the cost of the prosecution and maintenance of the licensed patents.

Pursuant to the UABRF License Agreement, the Company is required to use good faith reasonable commercial efforts to develop, manufacture and commercialize the licensed product.

The term of the UABRF License Agreement will continue until the expiration of the licensed patents. The Company may terminate the UABRF License Agreement at will at any time upon prior written notice to UABRF. UABRF has the right to terminate the UABRF License Agreement if the Company materially breaches the agreement and fails to cure such breach within a specified cure period, if the Company fails to diligently undertake development and commercialization activities as set forth in the development and commercialization plan, if the Company underreports its payment obligations or underpays by more than a specified threshold, if the Company challenges the validity or enforceability of any licensed patents, or if the Company becomes bankrupt or insolvent.

11


 

11. NET LOSS PER SHARE

 

Basic net loss per share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is the same as basic net loss per share for the periods presented since the effects of potentially dilutive securities are antidilutive given the net loss of the Company.

Basic and diluted net loss per share is calculated as follows (in thousands, except share and per share amounts):

 

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Net loss

 

$

(8,629

)

 

$

(7,715

)

 

$

(17,191

)

 

$

(15,240

)

Net loss per share—basic and diluted

 

$

(0.19

)

 

$

(0.27

)

 

$

(0.39

)

 

$

(0.57

)

Weighted-average number of shares used in computing net loss
   per share—basic and diluted

 

 

45,126,064

 

 

 

28,472,346

 

 

 

44,493,815

 

 

 

26,612,794

 

 

The following outstanding potentially dilutive securities have been excluded from the calculation of diluted net loss per share, as their effect is antidilutive:

 

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

2024

 

2023

 

 

2024

 

2023

 

Stock options to purchase common stock

 

 

8,587,961

 

 

5,408,113

 

 

 

8,148,863

 

 

4,643,765

 

Series A warrants

 

 

11,805,587

 

 

 

 

 

11,814,708

 

 

 

Series B warrants

 

 

11,823,829

 

 

 

 

 

11,823,829

 

 

 

Total

 

 

32,217,378

 

 

5,408,113

 

 

 

31,787,400

 

 

4,643,765

 

 

 

 

 

 

 

 

 

 

 

 

 

12. COMMITMENTS AND CONTINGENCIES

Intellectual Property

The Company has existing commitments to the licensors of the intellectual property which the Company has licensed. These commitments are based upon certain clinical research, regulatory, financial and sales milestones being achieved. Additionally, the Company is obligated to pay a single-digit royalty on commercial sales on a global basis of licensed products under the Emory License Agreement and the UABRF License Agreement. The royalty term is the later of 15 years from first commercial sale or expiration of the last-to-expire component of the licensed intellectual property.

Legal Proceedings

The Company is not currently party to any material legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses as incurred costs related to such legal proceedings.

13. EQUIPMENT AND Facility LEASES

The Company has historically entered into lease arrangements for its facilities. As of June 30, 2024, the Company had four operating leases with required future minimum payments. The Company determined the classification of these leases to be operating leases and recorded right-of-use assets and lease liabilities as of the effective date. The Company’s leases generally do not include termination or purchase options.

Finance Leases

The Company entered into an agreement with an equipment leasing company in 2018, which provided up to $2.5 million for equipment purchases in the form of sale and leasebacks or direct leases. As of June 30, 2024, the Company has 11 active leases from the leasing company. The terms of the leases are three years and afterwards provide for either annual extensions or an outright purchase of the equipment.

The Company entered into an agreement with another equipment leasing company in the second quarter of 2023. As of June 30, 2024, the Company has one active lease from this leasing company. In June 2024, the Company entered into two new finance lease

12


 

agreements with another leasing company. The terms of these lease are three years and afterwards provide for either annual extensions or an outright purchase of the equipment.

The equipment leases require three advance rental payments to be held as security deposits. The security deposits held amounted to approximately $0.3 million as of June 30, 2024 and December 31, 2023, and are included in other non-current assets on the condensed balance sheets.

Operating Leases

The Company has an operating lease for office space in Birmingham, Alabama, which was modified and expanded in March 2024 for a 60-month term ending in March 2029, with an option to extend five years, resulting in an increase to both the right of use assets and operating lease liabilities. Throughout the term of the lease, the Company is responsible for paying certain costs and expenses, in addition to the rent, as specified in the lease, including a proportionate share of applicable taxes, operating expenses and utilities.

The Company has an operating lease for office space in New York, New York, with a term that commenced on September 15, 2021, and continues through March 2027. Throughout the term of the lease, the Company is responsible for paying certain costs and expenses, in addition to the rent, as specified in the lease, including a proportionate share of applicable taxes, operating expenses and utilities.

The Company has identified an embedded lease within the University of Louisville Manufacturing Services Agreement, as the Company has the exclusive use of, and control over, a portion of the manufacturing facility and equipment of the facility during the contractual term of the manufacturing arrangement. The commencement date of the embedded lease was August 4, 2022 and it continues through August 2028.

The operating leases require security deposits at the inception of each lease. The security deposits amounted to approximately $0.3 million as of June 30, 2024 and December 31, 2023. As of June 30, 2024 and December 31, 2023, approximately $259,000 was included in restricted cash and $10,000 was included in other current assets.

The following table contains a summary of the lease costs recognized and other information pertaining to the Company’s finance and operating leases for the three and six months ended June 30, 2024 and 2023 (in thousands):

 

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

 

 

2024

 

 

2023

 

 

2024

 

 

2023

 

Lease Cost

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of finance right-of-use assets

 

$

193

 

 

$

230

 

 

$

397

 

 

$

418

 

Interest on finance lease liabilities

 

 

28

 

 

 

40

 

 

 

55

 

 

 

73

 

Operating lease cost

 

 

346

 

 

 

287

 

 

 

650

 

 

 

575

 

Short-term lease cost

 

 

34

 

 

 

165

 

 

 

117

 

 

 

281

 

Variable lease cost

 

 

36

 

 

 

 

 

 

60

 

 

 

 

Total lease cost

 

$

637

 

 

$

722

 

 

$

1,279

 

 

$

1,347

 

 

 

 

June 30,
2024

 

Other Lease Information

 

 

 

Cash paid for amounts included in the measurement of lease liability – finance leases

 

$

55

 

Cash paid for amounts included in the measurement of lease liability – operating leases

 

$

660

 

Weighted-average remaining lease term – finance leases (years)

 

 

1.79

 

Weighted-average remaining lease term – operating leases (years)

 

 

4.12

 

Weighted-average discount rate – finance leases

 

 

11.3

%

Weighted-average discount rate – operating leases

 

 

12.7

%

 

13


 

 

The following table reconciles the undiscounted cash flows to the operating and finance lease liabilities at June 30, 2024 (in thousands):

 

 

 

Finance Leases

 

 

Operating Leases

 

Remainder of 2024

 

$

497

 

 

$

702

 

2025

 

 

761

 

 

 

1,401

 

2026

 

 

312

 

 

 

1,416

 

2027

 

 

 

 

 

1,224

 

2028

 

 

 

 

 

891

 

Thereafter

 

 

 

 

 

120

 

Total lease payment

 

 

1,570

 

 

 

5,754

 

Less: interest

 

 

149

 

 

 

1,277

 

Total lease liabilities

 

 

1,421

 

 

 

4,477

 

Less: short-term lease liability

 

 

895

 

 

 

887

 

Long-term lease liability

 

$

526

 

 

$

3,590

 

 

14


 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Quarterly Report on Form 10-Q (this "Quarterly Report") contains statements that may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that involve substantial risks and uncertainties. All statements contained in this Quarterly Report other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believes,” “expects,” “intends,” “estimates,” “projects,” “anticipates,” “will,” “plan,” “may,” “should,” or similar language are intended to identify forward-looking statements.

It is routine for our internal projections and expectations to change throughout the year, and any forward-looking statements based upon these projections or expectations may change prior to the end of the next quarter or year. Readers of this Quarterly Report are cautioned not to place undue reliance on any such forward-looking statements. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Risks and uncertainties are identified under “Risk Factors” in Item 1A herein and in our other filings with the Securities and Exchange Commission ("SEC"). All forward-looking statements included herein are made only as of the date hereof. Unless otherwise required by law, we do not undertake, and specifically disclaim, any obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise after the date of such statement.

You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed financial statements and related notes included elsewhere in this Form 10-Q, and our audited financial statements and related notes for the year ended December 31, 2023 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “Annual Report”).

Overview

We are a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of gamma-delta T cell product candidates for solid and liquid tumors. Gamma-delta T cells are a specialized population of T cells that possess unique properties. They are naturally occurring immune cells that can intrinsically differentiate between healthy and diseased tissue. These cells serve as a functional bridge between innate and adaptive immunity to contribute to direct tumor killing, as well as immune cell recruitment and activation to drive deeper and more comprehensive immune responses. The pivotal role of gamma-delta T cells in immune function and activation, against diseases such as cancer, underscores their therapeutic potential across a wide range of solid and hematologic malignancies. We develop ex vivo-expanded and activated gamma-delta T cell candidates based upon our deep expertise in gamma-delta T cell biology, proprietary genetic engineering, and cell-type specific manufacturing capabilities, which we refer to collectively as our DeltEx platform. Our platform employs allogeneic, autologous, induced pluripotent stem cell ("iPSC") and genetically modified cell therapy approaches that are designed to effectively identify and eradicate tumor cells. We are the most clinically advanced gamma-delta T cell focused cellular therapy company and are utilizing our suite of DeltEx platform technologies as we aspire to eliminate cancer cells to achieve our mission of what we refer to as Cancer Zero ─ the safe elimination of all cancer cells in every patient battling the disease. We believe this lofty aspiration will one day be achievable, and that it is our responsibility to directly contribute to related global health efforts by pursuing scientific research that will advance cancer treatment.

We have begun dosing patients in our Phase 2 multi-center clinical trial of our lead product candidate, INB-400, for the treatment of newly diagnosed glioblastoma ("GBM"). This trial will expand the assessment of genetically modified gamma-delta T cells in newly diagnosed GBM patients in specialized brain tumor centers across the United States. We anticipate that the Phase 2 trial will confirm the efficacy signal suggested by the investigator-initiated Phase 1 trial of INB-200 (NCT04165941). The investigator-initiated trial has completed enrollment of Cohort 3; clinical updates and long-term follow-up data will be provided at medical meetings in the second half of 2024 and throughout 2025. In June 2024, preliminary clinical data were presented at the American Society of Clinical Oncology ("ASCO") Annual Meeting, demonstrating that 92% of evaluable patients treated in the investigator-initiated trial exceeded the median progression-free survival ("PFS") of 7 typically months achieved by standard-of-care therapy with concomitant temozolomide (“TMZ”).

With additional funding, we plan to submit an IND for the allogeneic arm of INB-400 in 2025, a phase 1b/2 clinical trial in which allogeneic genetically modified gamma-delta T cells will be assessed in patients with recurrent and newly diagnosed GBM. Should a favorable safety profile be determined in the Phase 1b recurrent GBM portion of the study, we expect to initiate the Phase 2 expansion portion, whereby GBM patients with recurrent and newly diagnosed GBM would both be eligible to receive the allogeneic genetically modified gamma-delta T cell product. In April 2023, we received Orphan Drug Designation ("ODD") for the autologous and allogeneic INB-400 products from the Food and Drug Administration (“FDA”), covering a broad range of malignant glioma indications, including relapsed and newly diagnosed GBM.

 

The investigator-initiated Phase 1 trial of INB-100 for treatment of patients with high-risk leukemias undergoing hematopoietic stem cell transplantation ("HSCT") has completed primary enrollment and a recommended Phase 2 dose ("RP2D") has been determined. The relapse free survival data to date, combined with INB-100’s benefit/risk profile, are encouraging for the treatment of hematological

15


 

malignancies, and the trial is being expanded by an additional ten patients at Dose Level ("DL") 2, the RP2D. Enrollment in the expansion cohort is on-going, and we expect to present updated data at medical meetings in the second half of 2024 and throughout 2025. In June 2024, updated data were presented at the European Hematological Association Congress ("EHA"). This data demonstrated that 100% of evaluable leukemia patients (n=10) remained alive, progression-free, and in durable complete remission through one year as of May 31, 2024. Further, across these 10 patients, gamma-delta T cells demonstrated in vivo expansion and long-term persistence through 365 days, a first for any donor-derived, allogeneic cellular therapy product. Additional long-term follow-up results are expected in late 2024 and in 2025. In addition, with additional funding, we plan to submit an IND with the FDA for a registrational Phase 2 clinical trial for patients with acute myeloid leukemia (“AML”) undergoing their first allogeneic transplant using reduced intensity conditioning regimen.

We also have a portfolio of preclinical programs in development, including INB-300, which focuses on targeting various solid and liquid tumors using a dedicated non-signaling gamma-delta T cell based chimeric antigen receptor ("nsCAR") construct. We presented additional preclinical data demonstrating our proof-of-concept in vitro studies, run in triplicate, against the leukemia antigen targets CD33 and CD123, which demonstrated the ability of our nsCAR constructs to distinguish between tumor and healthy tissue at the American Association for Cancer Research ("AACR") Annual Meeting in 2024. We plan to continue to optimize the construct for advancement towards animal models and potentially IND enabling studies in late 2024 or early 2025.

In May 2022, we unveiled the expansion of our DeltEx platform capabilities to include iPSC derived gamma-delta T cells. iPSCs represent a significant step toward next generation approaches of cellular manufacturing for true allogeneic and potentially ‘off-the-shelf’ innate cell therapies. We provided updates in a presentation at the Society for Immunotherapy of Cancer ("SITC") Annual Meeting in November 2023 whereby to date, hundreds of millions of our iPSC derived iVdelta1+ or iVd1+ gamma-delta T cells have been produced from single iPSC clones at a low passage number. These cells demonstrate a profile associated with a reduced risk for cytokine release syndrome ("CRS") and robust cytotoxic activity across a variety of solid and liquid cancers, including ovarian cancer, GBM, acute myeloid leukemia ("AML") and chronic myelogenous leukemia ("CML"). Furthermore, cryopreservation did not impact the cytotoxic function of iVd1+ gamma-delta T cells with respect to fresh cells, thereby enabling batch manufacturing and storage for on-demand clinical use. These findings highlight our expertise and ability to manufacture multiple gamma-delta T cell populations in a serum and feeder free process that can be scaled for GMP manufacturing and applied as a potentially "off-the-shelf" platform for allogeneic cell therapy.

 

We intend to continue advancing our internal research, including the application of our proprietary DeltEx technologies into additional solid tumor indications with additional funding. We seek to file several company-sponsored IND applications for our pipeline product candidates over the next few years. We have also been advancing our manufacturing capabilities through additional process development along with deeper characterization and profiling of our clinical-scale manufactured products. We presented a comprehensive characterization of DeltEx drug-resistant immunotherapy ("DRI") products manufactured from healthy donors and patients at the American Society of Gene & Cellular Therapy ("ASGCT") Annual Meeting in May 2024. We also presented two posters at the International Society for Cell & Gene Therapy ("ISCT") Annual Meeting in May 2024, one describing the logistical and manufacturing scale-up for the multi-center INB-400 Phase 2 trial and the second characterizing manufactured products from healthy donors and cancer patients highlighting modulation in gene regulation throughout the manufacturing process.

 

 

 

16


 

Our Pipeline

img239787466_0.jpg 

Components of Our Results of Operations

Revenue

Since inception, we have not generated any revenue and do not expect to generate any revenue from the sale of products in the foreseeable future. If our development efforts for one or more of our product candidates are successful and result in regulatory approval, or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from collaboration or license agreements.

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts and the development of our product candidates, and include:

employee-related expenses, including salaries, related-benefits and stock-based compensation expense for employees engaged in research and development functions;
fees paid to consultants for services directly related to our product development and regulatory efforts;
expenses associated with conducting preclinical studies performed by ourselves, outside vendors or academic collaborators;
expenses incurred in connection with conducting clinical trials including investigator grants and site payments for time and pass-through expenses and expenses incurred under agreements with contract research organizations ("CROs") as well as contract manufacturing organizations ("CMOs") and consultants that conduct and provide supplies for our preclinical studies and clinical trials;
costs to manufacture drug product candidates for use in our preclinical studies and clinical trials;
costs associated with preclinical activities and development activities;
costs associated with our intellectual property portfolio; and
costs related to compliance with regulatory requirements.

17


 

We expense research and development costs as incurred. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our condensed financial statements as prepaid or accrued research and development expenses. We allocate our direct external research and development costs across each product candidate. Preclinical expenses consist of external research and development costs associated with activities to support our current and future clinical programs but are not allocated by product candidate due to the overlap of the potential benefit of those efforts across multiple product candidates.

Research and development activities are central to our business. We expect that our research and development expenses will continue to increase for the foreseeable future as we continue clinical development for our product candidates and continue to discover and develop additional product candidates. If any of our product candidates enter into later stages of clinical development, they will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive and finance functions. General and administrative expenses also include professional fees for legal, accounting, auditing, tax and consulting services; travel expenses; director and officer insurance expenses as a publicly traded company; and facility-related expenses, which include allocated expenses for rent and maintenance of facilities and other operating costs not included in research and development.

We expect that our general and administrative expenses will increase for the foreseeable future contingent on additional funding as our organization and headcount needed in the future grow to support continued research and development activities and potential commercialization of our product candidates. These increases will likely include increased costs related to building a team to support our administrative, accounting and finance, communications, legal and business development efforts. In addition, we expect increased expenses associated with being a public company, including costs of additional personnel, accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing and SEC requirements; director and officer insurance costs; and investor and public relations costs.

Interest Income

Interest income includes interest earned from certain bank accounts.

Other Income

We entered into a non-recurring contractual arrangement in the first quarter of 2023 with a non-related third party to transfer two lots of our clinical-scale, GMP-grade gamma-delta T cells, which the third party utilized in their research activities.

Income Taxes

Since our inception, we have not recorded any income tax benefits for the net losses we have incurred or for the research and development tax credits earned in each year, as we believe, based upon the weight of available evidence, that it is more likely than not that all of our net operating loss carryforwards and tax credit carryforwards will not be realized.

Results of Operations

Comparison of the Three Months Ended June 30, 2024 and 2023

The following table sets forth our results of operations for the three months ended June 30, 2024 and 2023 (in thousands):

 

 

 

Three Months Ended June 30,

 

 

 

 

 

 

2024

 

 

2023

 

 

Change

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

$

5,156

 

 

$

4,134

 

 

$

1,022

 

General and administrative

 

 

3,533

 

 

 

3,581

 

 

 

(48

)

Total operating expenses

 

 

8,689

 

 

 

7,715

 

 

 

974

 

Interest income

 

 

60