INmune Bio: INKmune For Solid Tumors And Other Potential Catalysts (NASDAQ:INMB)

Thesis

INmune Bio, Inc. (NASDAQ:INMB) is the odd one out among the many biotech companies I have studied. I have done a deep dive into their two main drugs, as well as looked at competitors. My understanding of the science, and early data comparisons, suggests that both XPro and INKmune have a good probability of being very successful

I have covered the company before regarding its drug XPro for Alzheimer’s disease, mild cognitive impairment and treatment-resistant depression. The company has received a no-objection letter to start trials with XPro in Canada in November 2022, but the resolution of the US-related FDA-imposed clinical hold is still awaited. I expect the opening of trial sites in Canada and the lift of the US-hold to be potential catalysts, as these will put the gas pedal on three long-awaited short placebo-controlled Phase 2 trials, all largely untapped multi-billion markets.

Next to its ongoing trial in high-risk MDS/AML, INmune Bio is about to file and IND for its second asset INKmune in a large solid tumor indication in the US. INKmune, and recent results the company has published on it, will therefore be the prime focus of this coverage.

INKmune or INB16, the company’s second asset, is a proprietary replication-incompetent tumor cell line, which triggers existing natural killer cells (NK cells) into killing cancer cells. INKmune has so far been neglected in analyst coverages of the entire NK or immunotherapy space. The solid tumor market is 90% of the entire cancer market, and many other immunotherapy candidates have yet to show good results in those cancers.

The company’s assets

This is INmune Bio’s current pipeline:

XPro: potential catalyst in Alzheimer’s, MCI and TRD

For those that have not read me before on INmune Bio, I believe that XPro is the drug with the highest potential in Alzheimer’s disease, and neurodegenerative diseases more broadly. INmune’s Phase 2 placebo-controlled trials will be enriched, meaning that they will only allow patients whose biology – neuroinflammation – makes them likely to respond to the drug’s action. This is exceptional in the field of neurodegenerative diseases, where most companies use an all-comers approach, and I believe it is a recipe for success. That basically makes me excited for 2023.

I believe INmune may have garnered some additional investor attention over the past year, with several other competitors such as Anavex (AVXL) or Synaptogenix (SNPX) dropping out of the race or bringing less than hoped for results.

INmune Bio has on November 14, 2022 received a no objection letter from Health Canada to start its Phase 2 clinical trials with XPro, and I expect the company to announce opening trial sites there soon. INmune Bio is also still awaiting the lift of a manufacturing-related clinical hold on XPro, its drug candidate for Alzheimer’s, mild cognitive impairment and treatment-resistant depression. That lift could be an additional catalyst for investments, also in light of the fact that the upcoming Phase 2 trials are particularly short.

With the global market for Alzheimer’s alone being able to reach $25 billion by 2029, I believe no significant valuation is given to XPro at this time, though earlier results are strong. In treatment-resistant depression, a ~100 million patient market, the potential is equally large. One could refer to the valuation analysis on Compass Pathways by Seeking Alpha contributor Stephen Tobin, coming to a potential $5.2 trillion market cap here. Different to COMPASS Pathways (CMPS) which faces abundant competition from other companies trying to market psychedelic substances, I see no serious competitors for XPro here. I do not believe there are other anti-inflammatory drug with similar potential in trials for treatment-resistant depression. I hope to cover XPro for treatment-resistant depression another time, but will now take a deeper dive into INKmune and upcoming developments.

INKmune as an immunotherapy candidate

INmune Bio defines INKmune as follows:

INKmune is a proprietary pharmaceutical-grade, replication-incompetent human tumor cell line which conjugates to resting NK cells and delivers multiple, essential priming signals akin to treatment with at least three cytokines in combination. INKmune™ is stable at -80°C and is delivered by a simple IV infusion. The INKmune:NK interaction ligates multiple activating and co-stimulatory molecules on the NK cell and enhances its avidity of binding to tumor cells; notably those resistant to normal NK-mediated lysis. Tumor-primed NK (TpNK) cells can lyse a wide variety of NK-resistant tumors including leukemias, lymphomas, myeloma, ovarian cancer, breast cancer and the solid tumors shown above.

As an immunotherapy candidate, INKmune puts the patient’s immune system to work against cancer cells. Contrary to other therapy candidates, it does so by the use of a replication-incompetent modified tumor cell line that has been shown to elicit particular responses in NK cells. INKmune gives a complex signaling to resting NK cells, priming them and allowing them to kill otherwise ignored malignant cells. NK cells also crosstalk with T cells, and may be able to draw them in to fight cancer cells, by secreting cytokines and expressing certain proteins.

INKmune is allogeneic. The few approved CAR-T immunotherapies are based on an autologous process, consisting of extracting the patients’ T-cells, proliferating and engineering them, and then reinserting the cells in the patient’s body. Adding one or more chimeric-antigen-receptors or CARs, which are antigen-specific, may allow patients’ engineered T-cells to kill tumor cells that would otherwise not have been killed. More novel immunotherapy candidates are often allogeneic or off-the-shelf, to speed up duration to treatment.

INKmune does not require differentiation of treatment based on HLA-matching. For T-cell-based approaches, there is a need for human leukocyte antigen or HLA-matching, which impacts the possibility of a one-size-fits-all treatment. INKmune does not have that issue.

INKmune is not an ‘engineered’ cell line. The field has recently looked at other targets than T-cells, mostly at natural killer or NK cells. Getting an NK cell to kill is a complex process, however, which has led the field to proceed ‘multiplexed’ engineering of NK cells. For example, Fate Therapeutics’ (FATE) quadruple-engineered FT536 features an IL-15 receptor fusion that should make NK cells persist longer, a CD16-receptor that should make them less inhibited to kill, monoclonal antibodies targeting NK-cell receptors MICA and MICB that should prevent tumor immune-escape, and knock-out of CD38 receptor that should prolong metabolism and avoid fratricide. All of this comes at a huge engineering cost, with dose levels in current – Phase I – trials often ranging from 100 million cells per dose up to several billion cells per dose. The cells of INKmune, on the contrary, do not require further engineering.

Elimination of the disadvantages of other immunotherapy candidates

As an investor, I try to focus on where the immunotherapy market may be heading to, in light of ongoing and recurrent issues it is facing. INKmune may eliminate the disadvantages associated with other immunotherapies, with no additional engineering and at a lower cost, and I believe this will be an important issue for the FDA, Medicare and big pharma going forward. I rank INKmune’s advantages in order of importance as an investor.

Drastically lower manufacturing cost – affordability and availability

INKmune is easy and cheap to make. On a commercial scale, INKmune’s total production cost is estimated to be about $6,000 per dose, including staff costs. It is shipped at -80°C, which allows more easy transport and storage than other immunotherapies. The low cost may allow repeat dosing or use as a maintenance therapy.

In contrast, manufacturing cost and cost to patients of CAR-T immunotherapy are huge. The manufacturing cost of autologous immunotherapy was estimated at about $100,000, and storage and transport are necessary at -180°C. About half of the manufacturing cost is related to the lentiviral vectors to make CARs, which saw industry-wide shortages in the year 2022, leading to treatment unavailability and myeloma patients dying on a waiting list. Where the cost to patients of cancer therapy was $50,000 in the mid-nineties was, now it is $250,000, four times the median household income. The cost of immunotherapy is even higher, starting around $350,000, with total therapy cost going up to $850,000. CMS intervention of the initial price ranges in between 50% to 65% of that cost, or about $240,000. Many cancer patients choose not to fill a prescription due to cost, and about 20 percent chose to fill part of the prescription or took a lower dose than the prescribed amount. Treatment unavailability due to high costs will eventually impact revenues and profit margins.

The issues of cost, treatment unavailability and affordability are important, and I believe quite ignored by many investors. In the field of immunotherapy, I do not see any other companies that have treatment candidates with appealing profiles in this respect, and believe that many immunotherapy candidates may not ever be commercially scalable. If the companies developing them would want to reach final trial stages, I believe much further financing may be needed merely to manufacture their treatment candidates.

INKmune may offer a drastic and elegant cost-cutting solution here, allowing expansion of an affordable immunotherapy to a much larger patient population. That should eventually positively impact sales revenue and profits.

Moving into a large solid tumor indication

Introduction

Solid tumors make up 90% of all tumors, but immunotherapy treatments have so far not yielded impressive results in these tumors. The solid tumor market size was estimated at $186 billion, compared to $14 billion for the hematological tumor market. Yet pretty much all immunotherapy trials are in hematological tumors, and the few approvals to date are also in those tumors.

INmune Bio believes INKmune may be relevant for about 50% all cancers, namely those with sensitivity for NK cell killing. During the last quarterly call, INmune Bio has announced that it would be moving INKmune into a large solid tumor indication with a large unmet medical need in the US. It has not yet disclosed which cancer indication that would be. Preclinical results presented so far have been particularly strong in prostate, renal, ovarian and nasopharyngeal cancer, so I am expecting the trial to start in one of these. My bet is on prostate cancer, as ovarian cancer had previously been put forward, but this is no longer so.

Strong preclinical tests in various solid tumors

INKmune has been tested preclinically in tumor cell lines which are known for their sensitivity to NK cell killing. Those tests showed that INKmune primes NK cells to lyse NK-resistant solid tumors from ovarian cancer, breast cancer, prostate cancer, renal cell carcinoma and nasopharyngeal cancer. The value in the tables below show the percentage of tumor cells killed. Negative values mean that the tumor cells grew faster than the NK cells could kill them.

Preclinical results so far show strong results in hypoxia, outperformance compared to cytokine-treated NK cells, respiratory capacity, metabolism function and avidity. INKmune-primed NK cells have been shown to substantially outperform resting NK cells in hypoxic conditions.

Tests in vitro show outperformance of INKmune-primed NK cells compared to resting NK cells or IL-15 treated NK cells in ovarian cancer cells, on performance in hypoxic conditions, and in multiple solid tumor models.

INKmune showed strong results on NK metabolism and respiratory capacity, which are important in the hypoxic tumor micro-environment.

INKmune-primed NK cells are more ‘avid’ to bind to tumor cells than those having been activated with cytokines. The level of avidity may be indicative of lysis actually taking place.

These preclinical results are in contrast with those I have seen for CAR-T and CAR-NK immunotherapies in solid tumors. The highly hypoxic and immunosuppressive solid tumor micro-environment or TME makes it hard for immune cells to penetrate, survive and kill. Additionally, finding an antigen present on tumor cells but not on healthy tissue is not easy, and in many cases, tumors avoid the immune system by no longer presenting such antigen. Recent downgrades of NK-focusing companies by Oppenheimer were based on lack of efficacy, lack of pipeline progression, and reassessment of the market potential in hematological tumors. Solid tumors are really where the field should be able to move to, and I believe INKmune has a serious shot on goal here.

Persistence/durability

INKmune is the first to create memory-like NK cells in vivo

INKmune appears to solve the Achilles heel of immunotherapy, which is durability. INKmune leads to a memory-like phenotype which has been seen to last up to four months in vivo. That phenotype enhances the metabolism of existing NK cells, by upregulating a considerable number of nutrient receptors and survival proteins, some of them different to cytokines used to induce persistence. INKmune upregulates more than 1,500 proteins. In comparison to a cytokine cocktail of IL-12, IL-15 and IL-18, 141 of the 250 most upregulated proteins are unique to INKmune priming, many of which are involved in cell survival and enhanced metabolism.

“In our hands, no single cytokine has such broad physiological effects on NK cells compared to INKmune-primed NK cells, and this has inspired us to refer to INKmune™ as a pseudokine.“

If NK cells survive longer and kill better, therapeutic persistence should improve and long-term survival should be higher. All of this is important, because it shows INKmune’s competitive position in light of the complex engineering of NK cells. The unique phenotype generated by INKmune also makes it stand out for future combination therapies.

Lack of durability/persistence in other immunotherapy candidates

Durability is a serious issue in immunotherapy. Early results from several companies with NK immunotherapy candidates, such as Fate or Adicet (ACET), have shown good initial results, but lack of persistence of response to therapy is problematic. Almost systematically, one sees the share price of biotech companies focusing on immunotherapy spike on intermediate results, to then come down when follow-up results are published due to lack of durability. Their stocks have hence come under pressure, Fate’s market cap has dropping from $9 billion in January 2021 to below $1 billion at this point.

‘Armoring’ NK cells with cytokines such as IL-15 brings better but still suboptimal results, leading Stifel analyst Benjamin Burnett to recently consider that efficacy is underwhelming. And with costs so high and manufacturing issues, re-treatment or continuous treatment are not an option.

The NK field has been looking to create ‘memory-like NK cells‘ or mlNK in patients. In vitro, the memory-like NK cell phenotype has been generated in vitro by combining three cytokines, IL-12, IL-15 and IL-18.

No one has achieved this in vivo, however, apart from INKmune. The creation of memory-like NK cells in vivo which bode particularly well for long term persistence.

Lower risk of immune-evasion due to antigen-shedding

INKmune activates multiple molecules on the NK cell and delivers multiple priming signals similar to treatment with at least three cytokines. Hence the name ‘pseudokyne’, as INKmune activates the immune system more broadly by the multiple signals it gives.

The encircled genes CXCL10, STAT5B, CD70 and highlighted CXCR4 are relevant for migration of NK cells into the tumor.

In other cancer treatment therapies, often a tumor antigen which is not found on healthy cells has been identified as a target for therapy. The phenomenon of resistance to therapy is often caused by tumor tumor-shedding of antigens, such as MICA or MICB. This leads to reduced treatment response or no response to treatment at all. For lasting remissions, the success rate of CAR-T immunotherapy is about 30-40%. Some immunotherapy candidates try to solve this issue by making the cell constructs more complex, or combining therapies targeting different antigens, but both come at a high cost and do no prevent further antigen shedding and immune evasion as such.

As INKmune is not antigen-specific, there is no need to identify a tumor antigen, hence shedding of antigens by the tumor should not lead to tumor immune-evasion. This again separates INKmune from other therapy candidates.

Safety

INKmune has so far been shown to be safe, without toxicity or side effects. There is no need to condition patients, nor to suppress their immune system or to give any cytokines or drugs to allow administration of INKmune.

In contrast, CAR-T immunotherapies lead to substantial toxicity, e.g. cytokine release syndrome or CRS, and immune effector cell-associated neurotoxicity syndrome or ICANS. CAR-NK immunotherapies do not come with this issue.

INKmune for the treatment of cancer: high-risk MDS/AML and a large solid tumor

INmune Bio is running a Phase I trial in high-risk MDS/AML in the UK. Trial enrolment has not been picking up as it should have, and INmune Bio has decided to open up an additional trial site in the UK and Greece. The announcement of the addition of these additional trial sites should be for the near future. I believe the additional trial sites may get things moving here.

Four patients on compassionate use have been treated in the UK, and data on these patients has been made available by the company at the ASH conference recently. The compassionate use program allowed patients with high level of disease who had no normal means of therapy available to them anymore to receive INKmune, and allowed INmune to analyze and present their data without awaiting the trial end.

INmune Bio is now about to file an investigational new drug application or IND in an undisclosed solid tumor indication with a large market in the US. As set out above, I believe this trial initiation may kick off additional investor and analyst interest in INKmune, as it may set INKmune apart from other immunotherapies. This has been the prime focus of the current coverage.

Tumor market sizes

According to INmune Bio, INKmune is relevant for more than 50% of the oncology market.

The MDS market was valued at $3.26 billion, with a forecasted CAGR of 9.3%. The acute myeloid leukemia market was valued at USD 1,355.58 million in 2021, and it is expected to record a CAGR of 10.88% over the forecast period, 2022-2027. This will in any case be a more competitive market, given the number of immunotherapy treatment candidates in hematological tumors.

The relevant cancers would be those that have been linked to NK cell activity. During the last quarterly call, INmune Bio mentioned that the solid tumor indication they would be moving INKmune into is ‘a tumor that’s a big issue globally and certainly has a very large unmet need in the United States, which is why we’ve got such a large number of clinicians in the states who want to run the — want to work on the trial with us.‘ With the solid tumor still undisclosed, one can only guess. Good preclinical results were seen in ovarian cancer, which had been considered before. The prostate cancer market is the biggest by far, with an $11 billion market size and forecasted CAGR of 6.9%. For reference, the ovarian cancer market size was valued at $ 1.57 billion in 2021, with a forecasted CAGR of 23.7%. The renal cell carcinoma market was valued at $635 million in 2021, with a forecasted CAGR of 5.90%.

Financials

At the end of Q3 2022, INmune Bio had $57 million in cash, which should be sufficient to last until the end of 2023. The cash burn for the last quarter is low, at about $4 million. On a yearly basis, net loss was $7.7 million compared to $9.5 million the year before.

Shares outstanding are 18 million, with another 4.9 million from options, so fully diluted there would be about 23 million shares.

Given the potential and the results produced at this stage, INmune Bio is trading low compared to its potential.

Risks

Risks here are unchanged compared to my previous coverage. Success is not for granted, and in case of success, the market can interpret it otherwise. A successful trial is no guarantee for commercial or regulatory success; many obstacles and time still separate a promising drug from eventual approval or successful marketing. One does not know the state of the competition either now or in the years to come.

Conclusion

With a trial in solid tumors upcoming, the present coverage has focused on INKmune’s potential in solid tumors, which I believe is ignored by analysts and the market.

INKmune offers substantial advantages compared to other immunotherapy candidates. It is much cheaper to manufacture with costs of therapy being a serious issue, should not face availability issues, is allogeneic or off-the-shelf, creates memory-like NK cells with strong metabolism and expected durability, is not antigen-specific, and is safe to administer.

INKmune has shown good results in patients, and strong potential in different preclinical solid tumor models, the next frontier for immunotherapy. with a market size that is many times bigger than blood tumors. Starting trials in solid tumors are the logical next step. INmune Bio is about to announce which major solid tumor indication with a large unmet need it will file an IND for in the US.

Investors are also awaiting the start of trials with XPro in Canada, and the lift of the US-related clinical hold. That should speed up the short placebo-controlled Phase 2 trials in Alzheimer’s disease, mild cognitive impairment and treatment-resistant depression, all large mostly untapped markets.

I believe these multiple potential catalysts may garner investor and analyst attention.