Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our financial statements and notes thereto appearing elsewhere in this Annual Report. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results could differ materially from those anticipated by these forward-looking statements as a result of many factors. We discuss factors that we believe could cause or contribute to these differences below and elsewhere in this Form 10-K, including those set forth under "Risk Factors" and "Forward-Looking Statements."

Overview

INmune Bio is a clinical-stage biotechnology company dedicated to developing and commercializing a pipeline of product candidates designed to reprogram the innate immune system. Our mission is to address a broad range of diseases where chronic inflammation and immune dysfunction are primary drivers of pathology.

Lead Program: CORDStrom™ for RDEBOur primary focus is the treatment of Recessive Dystrophic Epidermolysis Bullosa ("RDEB") using CORDStrom, our proprietary, pooled, human umbilical cord-derived mesenchymal stromal cell platform. RDEB is a devastating pediatric orphan disease caused by mutations in the COL7A1 gene. This genetic deficiency leads to systemic complications, including highly debilitating skin blistering, chronic non-healing wounds, dysphagia, and failure to thrive. Over time, the chronic inflammatory environment associated with RDEB often progresses to fatal squamous cell carcinoma. RDEB is a systemic disease with no approved systemic treatments. The only approved products to date are topical and do not address the systemic issues of the disease, which is the focus of CORDStrom.

CORDStrom 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. Food and Drug Administration ("FDA") targeted for 2026.

Neuroinflammation and Oncology PipelinesIn addition to our lead rare disease program, the Company is advancing two other clinical-stage platforms:

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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"), with enrollment spanning clinical sites in the United Kingdom, the European Union, Australia, and Canada.

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INKmune™: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").

By targeting the innate immune system across these distinct therapeutic areas, INmune Bio aims to deliver disease-modifying treatments for patients with high unmet medical needs.

We continue to incur significant development and other expenses related to our ongoing operations. As a result, we are not and have never been profitable and have incurred losses in each period since our inception, resulting in substantial doubt in our ability to continue as a going concern. We reported a net loss of $45.9 million and $42.1 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024, we had cash and cash equivalents of $24.8 million and $20.9 million, respectively. We expect to continue to incur significant losses for the foreseeable future, and we expect these losses to increase as we continue our research and development of, and seek regulatory approvals for, our product candidates. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues, if any.

Our recurring net losses and negative cash flows from operations raise substantial doubt regarding our ability to continue as a going concern within one year after the issuance of our consolidated financial statements for the year ended December 31, 2025. Until we can generate sufficient revenue from the commercialization of our product candidates, we expect to finance our operations through the public or private sale of equity, debt financings or other capital sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties. To date, the Company has relied on equity and debt financing to fund its operations.

Components of Operating Results

Operating Expenses

Research and Development

Research and development expense consists of expenses incurred while performing research and development activities to discover and develop our product candidates. This includes conducting preclinical studies and clinical trials, manufacturing development efforts and activities related to regulatory filings for product candidates. We recognize research and development expenses as they are incurred. Our research and development expense primarily consist of:

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

The following table summarizes our research and development expenses by product candidate for the periods indicated (in thousands):

		Year Ended December 31,
		2025				2024
External Costs
DN-TNF - Alzheimer's disease		$	10,026			$	23,765
INKmune (Prostate Cancer) and CORDStrom			5,547				4,589
Preclinical and other programs			141				611
Accrued research and development rebate			(2,919	)			(1,823	)
Total external costs			12,795				27,142
Internal Costs			7,864				6,024
		$	20,659			$	33,166

We typically use our employee resources across our development programs. We track outsourced development costs by product candidate or development program, but we do not allocate internal personnel costs including salaries and stock-based compensation to specific product candidates or development programs.

We participate, through our wholly owned subsidiary in Australia, in the Australian research and development tax incentive program, such that a percentage of our qualifying research and development expenditures are reimbursed by the Australian government, and such incentives are reflected as a reduction of research and development expense. The Australian research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured.

We participate, through our wholly owned subsidiary in the United Kingdom, in the research and development program provided by the United Kingdom tax relief program, such that a percentage of our qualifying research and development expenditures are reimbursed by the United Kingdom government, and such incentives are reflected as a reduction of research and development expense. The United Kingdom research and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured.

Substantially all of our research and development expenses to date have been incurred in connection with our current and future product candidates. We expect our research and development expenses to increase significantly for the foreseeable future as we advance an increased number of our product candidates through clinical development, including the conduct of our planned clinical trials and manufacturing drug to be used in those clinical trials. The process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. The successful development of product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing or costs required to complete the remaining development of any product candidates. This is due to the numerous risks and uncertainties associated with the development of product candidates.

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

	●	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; and
	●	the cost of manufacturing, finishing, labeling and storage drug used in the clinical trial

We intend to file an MAA for CORDStrom in the United Kingdom and the European Union, followed by a BLA with the FDA targeted for 2026. There can be no assurance that any such applications will be submitted on our anticipated timeline, accepted for review, approved within any particular timeframe, or approved at all.

The regulatory review process in each jurisdiction is lengthy, complex, and inherently unpredictable. Regulatory authorities may require additional information, analyses, or clinical data, which could result in delays or prevent approval. Even if approval is obtained in one or more jurisdictions, we may experience delays in commercial launch, pricing and reimbursement approvals, manufacturing scale-up, distribution, or market acceptance.

Accordingly, we may not generate any product revenue for the foreseeable future, if ever. We expect to continue to incur significant operating expenses and substantial losses as we pursue regulatory approvals, prepare for potential commercialization, and continue development of our product candidates. Our operating results are likely to fluctuate significantly from quarter to quarter and year to year due to the timing and outcome of regulatory submissions, regulatory review processes in multiple jurisdictions, potential approval decisions, and commercial preparation activities.

We anticipate that our expenses will increase substantially as we:

	●	continue research and development, including preclinical and clinical development of our existing product candidates;
	●	potentially seek regulatory approval for our product candidates;

	●	seek to discover and develop additional product candidates;
	●	establish a commercialization infrastructure and scale up our manufacturing and distribution capabilities to commercialize any of our product candidates for which we may obtain regulatory approval;

	●	seek to comply with regulatory standards and laws;
	●	maintain, leverage and expand our intellectual property portfolio;
	●	hire clinical, manufacturing, scientific and other personnel to support our product candidate's development and future commercialization efforts;
	●	add operational, financial and management information systems and personnel; and
	●	incur additional legal, accounting and other expenses in operating as a public company.

General and Administrative Expenses

General and administrative expenses consist principally of payroll and personnel expenses, including stock-based compensation; professional fees for legal, consulting, accounting and tax services; insurance, overhead, including rent and utilities; and other general operating expenses not otherwise classified as research and development expenses.

Other income, net

Other expense consists primarily of interest income on money market investments. In addition, other income includes interest expense incurred on debt, if any, and other items such as gain on forgiveness of payables.

Critical Accounting Estimates

This management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States. The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of our financial statements, as well as the reported revenues and expenses during the reported periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

The Company does not have any critical accounting estimates that are likely to have a material impact on our financial condition or results of operation.

Off-Balance Sheet Arrangements

During the periods presented, we did not have any off-balance sheet arrangements as defined under SEC rules.

Licensing and Collaboration Agreements

We anticipate that in-licensing, out-licensing and strategic collaborations will become an integral part of our operations, providing the company with opportunities to leverage our partners' expertise and capabilities to further expand the potential of our technologies, product candidates and revenue streams.

CORDStrom Clinical Data License Agreement

On February 6, 2025, the Company and Great Ormond Street Hospital for Children NHS Foundation Trust ("GOSH") entered into a license agreement for the exclusive commercial use to clinical trial data associated with a GOSH study investigating the potential of CORDStrom to treat RDEB in pediatric patients (the "MissionEB study"). The Company owns the intellectual property covering CORDStrom, the investigational medicinal product used in the Mission EB study. In addition, the Company owns intellectual property and maintains trade secret protections covering the manufacturing of CORDStrom. With this license to the clinical trial data, the Company intends to prepare applications seeking marketing authorization of CORDStrom for treatment of pediatric RDEB in each of the FDA, EMA, and MHRA.

Xencor

In October 2017, we licensed INB03 (also known as XPro) from Xencor. This exclusive, global, unrestricted license came with considerable know-how, intellectual property, pre-clinical data, regulatory documentation and product stocks. Currently, we are focused on using this asset in a neurological indication. In the future, we may develop the asset in a wide variety of therapeutic areas, with a variety of delivery techniques by ourselves or in conjunction with partners.

Results of Operations

Comparison of the Years Ended December 31, 2025 and 2024

		Year Ended
(in thousands)		December 31, 2025				December 31, 2024				Change
Revenues		$	50			$	14			$	36
General and Administrative			10,260				9,483				777
Research and Development			20,659				33,166				(12,507	)
Impairment of acquired in-process research and development intangible assets			16,514				-				16,514
Other Income, net			(1,450	)			(553	)			(897	)
Net loss		$	45,933			$	42,082			$	3,851

Revenues

During 2025 the Company recognized $50,000 of revenue in connection with a license agreement. In 2024, the Company sold MSC's to one customer in the United Kingdom and recognized $14,000 of revenues.

General and Administrative

General and administrative expenses were $10.3 million for the year ended December 31, 2025, compared to $9.5 million for the year ended December 31, 2024. The increase in general and administrative expenses is mainly due to higher stock-based compensation ($1.3 million higher), partially offset by lower investor relations expense ($0.2 million lower) and lower payroll expense ($0.2 million lower) compared to the prior year.

Research and Development

Research and development expenses decreased to $20.7 million for the year ended December 31, 2025 from $33.2 million for the year ended December 31, 2024. The decrease in research and development expenses during the year ended December 31, 2025 compared to 2024 is mainly due to the Company incurring $13.7 million lower costs with our Alzheimer's clinical trial as a result of completing the Phase 2 trial in 2025, $1.1 million higher accrued rebate and $0.5 million lower preclinical and other expenses, partially offset by $1.8 million of higher internal costs, and $1.0 million higher costs in connection with our INKmune/CORDStrom products under development.

Impairment of acquired in-process research and development intangible assets

During the year ended December 31, 2025, the Company released the Phase 2 clinical trial results for our Alzheimer's drug candidate, XPro, which failed to meet the primary endpoint, though a subgroup showed potential benefits. Due to insufficient resources to fund further trials, the Company has halted immediate plans to develop XPro for Alzheimer's or other indications and are instead seeking a partner to continue these studies. As part of preparing its 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, resulting in a recorded impairment of $16.5 million during the second quarter of 2025.

Other Income, net

During 2025, the Company recognized $0.6 million of gain on the forgiveness of payables compared to $0 in 2024. Also, in 2025 the Company recognized $0.9 million of interest income compared to $1.3 million in 2024. During 2024, the Company recognized $0.7 million of interest expense related to debt that was paid off during 2024.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations and otherwise operate on an ongoing basis.

We incurred a net loss of $45,933,000 and $42,082,000 for the years ended December 31, 2025 and 2024, respectively. Net cash used in operating activities was $22,582,000 and $33,361,000 for the years ended December 31, 2025 and 2024, respectively. Since inception, we have funded our operations primarily with proceeds from the sales of our common stock. As of December 31, 2025, we had cash and cash equivalents of $24,751,000.

We anticipate that we will continue to incur net losses for the foreseeable future as we continue the research and development of our product candidates, expand our clinical activities, hire additional personnel, and incur expenses associated with operating as a public company. We expect to incur significant expenses and operating losses as we advance our clinical development programs, pursue regulatory submissions, and, if approved, prepare for the potential commercialization of CORDStrom. As a result, we expect that we will require additional capital to fund our operations, which we may seek to obtain through equity or debt financings, collaborations, licensing arrangements, or other strategic transactions. There can be no assurance that such financing will be available on acceptable terms, or at all.

The Company incurs significant research and development expenses in Australia and the United Kingdom. Fluctuations in the rate of exchange between the United States dollar and the pound sterling as well as the Australian dollar could adversely affect our financial results, including our expenses as well as assets and liabilities. We currently do not hedge foreign currencies but will continue to assess whether that strategy is appropriate. As of December 31, 2025, the cash balance held by our foreign subsidiaries with currencies other than the United States dollar was approximately $0.2 million.

Our recurring net losses and negative cash flows from operations, as well as forecast of continued losses and negative cash flows from operations, raised substantial doubt regarding our ability to continue as a going concern within one year after the issuance of our consolidated financial statements for the year ended December 31, 2025. Until we can generate sufficient revenue from the commercialization of our product candidates, we expect to finance our operations through the public or private sale of equity, debt financing or other capital sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties. Our cash and cash equivalents were $24.8 million and total current assets were $29.9 million at December 31, 2025, which the Company is projecting will be insufficient to sustain its operations through one year following the date that the financial statements are issued.

Additional capital may not be available on reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development of one or more of our product candidates or cease operations. If we raise additional funds through the issuance of additional debt or equity securities it could result in dilution to our existing stockholders, increased fixed payment obligations and these securities may have rights senior to those of our common stock and could contain covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license our intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Any of these events could significantly harm our business, financial condition and prospects.

Financing strategies we may pursue include, but are not limited to, the public or private sale of equity, debt financing or funds from other capital sources, such as government or grant funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties. There can be no assurances additional capital will be available to secure additional financing, or if available, that it will be sufficient to meet our needs on favorable terms. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, scale back or discontinue the development of one or more of our product candidates. If we raise additional funds through the public or private sale of equity or debt financings, it could result in dilution to our existing stockholders or increased fixed payment obligations and these securities may have rights senior to those of our common stock and could contain covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license our intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Any of these events could significantly harm our business, financial condition and prospects.

ATM Sales Agreement

During the year ending December 31, 2025, the Company sold 1,304,707 shares of common stock at an average price of $8.01 for gross proceeds of approximately $10.4 million under the at-the-market offerings.

Registered Direct Offering

During June 2025, the Company entered into securities purchase agreements with investors whereby the Company sold 3,000,000 shares of the common stock in a registered direct offering in exchange for gross proceeds of $18.9 million (net proceeds of approximately $17.4 million).

Cash Flows

The following table provides information regarding our cash flows for the years ended December 31, 2025 and 2024:

		Year Ended December 31,
(in thousands)		2025				2024
Net cash used in operating activities		$	(22,582	)		$	(33,361	)
Net cash used in investing activities			(1,042	)			-
Net cash provided by financing activities			27,612				18,211
Impact on cash from foreign currency translation			(159	)			224
Net increase (decrease) in cash and cash equivalents		$	3,829			$	(14,926	)

Net Cash Used in Operating Activities

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

Operating activities used $22.6 million of cash for the year ended December 31, 2025, primarily resulting from our net loss of $45.9 million, $2.5 million of changes in our net operating assets and liabilities and $0.6 million of gain on payables, partially offset by $16.5 million of intangible impairment expense, and $9.9 million of non-cash stock-based compensation expense. The change in our net operating assets and liabilities was primarily due to an increase in research and development tax rebate receivable of $3.1 million, a decrease in deferred liabilities of $0.5 million and a decrease in other assets of $0.5 million, partially offset by a decrease of $1.9 million in accounts payable and accrued liabilities.

Operating activities used $33.4 million of cash for the year ended December 31, 2024, primarily resulting from our net loss of $42.1 million, partially offset by a net cash inflow of $1.0 million for changes in our net operating assets and liabilities, and non-cash stock-based compensation charges of $7.6 million. The change in our net operating assets and liabilities was primarily due to a decrease in prepaid expenses of $1.2 million, a decrease in research and development tax rebate receivable of $0.7 million and a decrease in other tax receivable of $0.3 million, partially offset by a decrease of $1.4 million in accounts payable and accrued liabilities.

Net Used in Investing Activities

During the year ended December 31, 2025, the Company purchased $1.0 million of equipment to be used in connection with its CORDStrom clinical program.

Net Cash Provided by Financing Activities

During the year ended December 31, 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).

During December 2025, the Company amended warrants for certain warrant holders in exchange for $67,000.

During the year ended December 31, 2024, the Company paid off $10.0 million of its debt.

During the year ended December 31, 2024, the Company sold 247,126 shares of its common stock for net proceeds of $2.4 million under the Company's ATM program.

During September 2024, the Company entered into securities purchase agreements with investors whereby the Company sold 2,341,260 shares of the Company's common stock and warrants to purchase an additional 2,341,260 shares of the Company's common stock exercisable six months from the issuance date in a registered direct offering in exchange for gross proceeds of $13.0 million (net proceeds of approximately $12.0 million).

On April 24, 2024, the Company entered into a securities purchase agreement with an investor in which the Company sold 986,000 shares of common stock and warrants to purchase 986,000 shares of common stock for gross proceeds of approximately $9.7 million (net proceeds of approximately $8.9 million).

On April 19, 2024, the Company entered into securities purchase agreements with purchasers in which the Company sold 571,592 shares of common stock and warrants to purchase 571,592 shares of common stock for aggregate gross proceeds of approximately $4.8 million (net proceeds of approximately $4.5 million).

During the year ended December 31, 2024, the Company received $0.4 million in exchange for the exercise of 108,000 stock options.