Greetings, and welcome to the INmune Bio Third Quarter 2020 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. A transcript will follow within 24 hours of this conference call. At this time, it is my pleasure to introduce Mr. David Moss, Co-Founder and CFO of INmune Bio. David, the floor is yours.

Thank you, Kevin, and good afternoon, everyone. We thank you for joining us for the call of INmune Bio's third quarter 2020 financial results. With me on the call is Dr. RJ Tesi, CEO and Co-Founder of INmune Bio, who will provide a business update. Before we begin, I remind everyone that except for statements of historical fact, statements made by management and responses to questions on this conference call are forward-looking statements under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward-looking statements. Please see the forward-looking statements disclaimer on the company's earnings press release as well as risk factors in the company's SEC filings including our most recent quarterly filing with the SEC. There is no assurance of any specific outcome. Undue reliance should not be placed on the forward-looking statements, which speak only as of the date they are made as the facts and circumstances underlying those these forward-looking statements may change. Except as required by law, INmune Bio disclaims any obligations to update these forward-looking statements to reflect future information, events or circumstances. Now I'd like to turn the call over to Dr. RJ Tesi, Co-Founder and CEO of INmune Bio. RJ?

Thank you, David, and thank you, everyone, for joining the call. I will arrange my remarks to highlight key takeaways for the third quarter, year-to-date and provide updates of our two platform programs, before I pass it back to David to discuss our financial results and upcoming milestones. Then we will move to Q&A. I'll start with our DN-TNF program, beginning with XPro1595, which we are developing for Alzheimer's disease and other CNS indications where a neuroinflammation plays an important role. A significant highlight since our last quarterly update was the announcement in September that we were awarded a $2.9 million SBIR grant from the NIH to support a Phase II study in XPro1595 in patients with treatment-resistant depression. In rough numbers, we expect to receive $0.75 million this year, $1.2 million in 2021 and the balance in 2022. Importantly, we will conduct this trial in collaboration with 2 of the world's pioneers in this field, Professor Andrew Miller, MD; and Associate Professor, Jennifer Felger, both at Emory University. Treatment resistant depression is an indication with a significant unmet need. An estimated 7 million patients in the U.S. with major depressive disorder are resistant to current therapies. The definition of treatment resistant depression is simple. The patient must fail 2 lines of treatment for their depression to be labeled treatment resistant. There are two surprises hidden in that simple statement. The diagnosis is one - that one comes to by trial and error of treatment. There are no biomarkers that predict which patients are going to be successful or fail or which drug you should use. Imagine a disease with 7 million patients is treated with the diagnostic precision of some ancient time, namely hit and miss. I find that remarkable. This trial hopes to change that, at least to…

Thank you, RJ. I'll provide a brief overview of our financial results and upcoming milestones. Net loss attributable to common stockholders for the second quarter ended September 30, 2020, was approximately $4.7 million compared to approximately $3.1 million for the quarter ended September 30, 2019. Research and development expenses totaled $2.4 million for the third quarter ended September 30, 2020, compared with approximately $1.2 million for the quarter ended September 30, 2019. The primary reason for the increase in loss was an increase in R&D activities related to our clinical programs, as RJ outlined. G&A, general and administrative expense was approximately $2.5 million for the quarter ended September 30, 2020, compared to $1.9 million for the quarter ended September 30, 2019. At September 30, 2020, the company had cash and cash equivalents of approximately $24.3 million with no debt. This figure includes closing of a public offering of common stock in July that raised gross proceeds of $25 million and net proceeds of approximately $23.1 million after deducting underwriting discounts and commissions and other offering expenses payable by the company. As of November 5, 2020, the company had approximately 13.4 million shares of common stock outstanding and middle preferred. Now I'd like to move on to a list of our upcoming milestones and catalysts. Before the year-end, as RJ had mentioned, we plan to initiate enrollment of patients with Quellor for the treatment of complications of COVID-19 infection. In January, we plan to report additional data on the Phase Ib XPro1595 in Alzheimer's disease. The company will host another KOL call in tandem with this announcement. Midyear 2021, we plan to initiate a Phase II trial of XPro1595 in treatment resistant depression that is partially funded by a $2.9 million National Institutes of Mental Health grant. Also midyear 2021, we plan to initiate a Phase II program for Alzheimer's disease with XPro1595 and in patients with neuroinflammation. In addition, assuming the clinical landscape has not changed, we are planning trials in our other programs once the COVID-19 pandemic has been controlled and our trial sites give us to go ahead. These include enrolling our INKmune Phase I program for the treatment of ovarian cancer; enrolling patients in the INKmune Phase I trial in high risk MDS; LIVNate Phase II program for the treatment of NASH; and finally, INB03 Phase II for treatment of MUC4 resistant metastatic cancers. So in summary, notwithstanding the pandemic, we believe we are making good progress, particularly in our neuroinflammation franchise following the very compelling data that we reported in July. At this point, I'd like to thank you for your time and your attention. I'd like to turn it back to the operator, Kevin, for Q&A. Kevin, could you please poll for questions?

[Operator Instructions] First question is from Jonathan Aschoff with ROTH Capital Partners.

Thank you. RJ, at the next 80 data release, will you release any new biomarkers that will be in addition to what you released at the first interim look?

Yes, we are peddling hard to expand the biomarker set. We think it's important to do that. I don't want to promise it at this point, but we are certainly planning to expand the biomarker set. And we hope to begin to get people comfortable that this concept of measuring white matter free water as a biomarker of neuroinflammation correlates well with the kind of things they're more used to seeing like cytokine measurements in the CSF, et cetera.

RJ, what's the sort of the other biomarkers that make you have to paddle so hard?

It's just a matter that you have to get them analyzed. That's all. I mean, when we did this study from a cost control point of things, we batched all the studies, okay? So the plan was to do them once. Well, we - because things are moving relatively quickly, we've had to change that process. And it's just - this isn't - you don't - it's not like dialing up and ordering a hamburger. There's a considerable amount of planning because of the way the specimens are stored, et cetera. So it takes time and takes effort and takes resources.

What do you think of the Biogen plan documents? And what could that potentially mean?

Well, I'm not going to comment on the Biogen's - on the aducanumab data, but I am going to - I am fascinated and quite encouraged by the FDA's response here. My view is - and this is pretty simple. I think the FDA has decided that Alzheimer's disease is a lethal disease. It's currently the seventh most common cause of death, and that might be an underestimation. But the fact is it's a lethal disease. And historically, I think they've used a drug development set of hurdles that are more consistent with the quality of life disease, that is they were aiming for perfection. I think what they clearly signaled, and this is, once again, my take on it is that they have signaled that they are now going to approach this the way they approach lethal diseases like oncology, where they accept less than perfection. In other words, their goal is to have more therapies for a patient tomorrow than they have today. They understand that the first products that come to market aren't going to be perfect. They're going to have worse and temples, but they're certainly going to be better than no product, right? They also know that the second product is going to be better than the first. And the third product is going to be better than the second. So I think the FDA, by finally acknowledging that Alzheimer's disease is a lethal disease, they're able to kind of change the mindset to allow the development to look more like oncology than asthma, for instance, right, where - I mean, to get asthma drug approved, you really have to have a perfect drug. You all know to get a cancer drug approved, you don't have to have a cancer perfect drug. You just have to make a difference at the bed side.

Did you know if fractography was used in any of the Biogen patients?

To my knowledge, they do not. I do know that AMITA, which is the CRO that we are working with, has a very close relationship with Biogen. I mean, it's on the website. Obviously, I'm not privy to what that relationship is. I think fractography is kind of the future for CMS. I mean, what the - we've got this funny view that neurology is gray matter disease. In fact, there's a lot going on in the white matter, and we all need to learn about it. And I think we're farther along the most, and it provides us with a set of tools that really give us a little bit.

And then lastly, the MUC4 trial. I believe you used to speak about MUC4 breast cancer. Did that all of a sudden morph to MUC4 cancer? Or is that always the case?

No. Actually, I - I've always said breast cancer and other muscular cancer because I like the MUC4 story. If you look at the gastric cancer, HER2-positive gastric cancers express MUC4, pancreatic cancers express MUC4, and TKIs have a role in some of these diseases. And so we believe that the MUC4, which is a very easy biomarker to measure. It's just an immunohistic chemistry is in combinations, potentially with INB03 and something else, whether it be Herceptin or the Herceptin-based combination therapies or TKIs is the way forward. We'll make a decision based on the work we're doing. Right now, we've got great data that suggests we should move forward in breast cancer. But I'll be honest with you, Jon, you know how hard - Jonathan, you know how hard it is to ring the bell in breast cancer. They require big trials that have to go a long time. We're a small company. There might be some better places for us to do our drug development. But it will be based on MUC4 expression. I can promise you that.

[Operator Instructions] Next question is from Tom Shrader with BTIG.

This is Julian on for Tom. I actually had another question in the wake of briefing documents. I was wondering if you could talk about the relationship between XPro1595's mechanism and a beta, thought where maybe there's some overlap in that effects and key differences.

Yes. Thank you very much. We have some very strong opinions here. And many of you are familiar with and have spoken with CJ Barnam, who's the head of our neuroscience programs. And so a lot of what I'm saying really is from him. But we believe that inflammation causes expression of amyloid. And then amyloid actually promotes inflammation. So you get this positive feedback. Actually, it's actually negative because of the pathology. So that is to say that you - if you don't have neuroinflammation, the chance of expressing the amyloid is low. Once you get amyloid, you got more inflammation, which causes more expression of them, and you get this feed forwardly. So we - our personal opinion or our corporate opinion is that neuroinflammation is an important part of the pathophysiology in patients with Alzheimer's disease that have amyloid. Okay. We don't - we actually believe that like most complex diseases, Alzheimer's disease will ultimately need to be treated with some kind of combination therapy. And you could very easily see the combination therapy that targets neuroinflammation like XPro and combine it with a drug that's trying to get rid of the cause of the inflammation, which would be an antibody trying to get rid of amyloid. So we think that we are thrilled that it looks like aducanumab is moving forward because we think it's great for the space. We think it's a tremendous opportunity for XPro1595, either as a monotherapy because neuroinflammation is part of this disease complex or even as part of combination with drugs such as aducanumab.

And then on treatment resistant depression, I was curious how far the NIH grant gets you through proof-of-concept development. And what kind of signals would support further development in this direction?

So we think that it basically funds for a majority of the Phase II trial. And we think that, as you know, we are big fans of using biomarkers. And really, the people we're working with have been pioneers in the use of biomarkers and tumor resistant depression. We think that this will set us up really to move forward. If we get the kind of results that we are expecting, we would transition quickly, assuming things go well with what discussions you have to have with the regulatory agencies to a potential registration trial. It's the same drug. It doesn't require anything special as far as or anything. We just need to hone the patient selection criteria and the response criteria. So you can be guaranteed to ring the bell when you do the trial. I didn't mention that the endpoint is only 6 weeks, right? That's one of the beauties of depression trials, quite frankly. Clinical development that has long endpoints is - are difficult for companies of our size. They're difficult for any company. But if you get into - get back to Jonathan Aschoff's question about breast answer. If you get into a breast cancer trial where you can't get an endpoint for 24 months, that's a great - that's a trial that you can design, you can do it, but it just takes a long time. I would much rather have an endpoint at 6 weeks, 2 months, 6 months, 12 months. I'd rather not have to do long-term trials. So we like depression. We think that it's a significant unmet need, but we are approaching it like we do everything with biomarkers. And we are going after the patients that we think their mechanism, their disease pathology aligns with our mechanism of action.

[Operator Instructions] Next question is from Jason McCarthy with Maxim Group.

On the Quellor trial, have you selected what regions of the U.S. that you'll target center of which is obviously a big deal now. And also, when you consider the inclusion/exclusion criteria, how will you manage patients who are coming into the hospital getting oxygen? Maybe they're going to get steroids. Maybe if they're that far along, they'll get some sort of IL-6 inhibitors. Are those factors that are going to play a role in your study?

So good question. So we are in the south for the most part, which is still busy. I mean, we are beginning to look at sites in the upper Midwest, all of - such as Michigan and Wisconsin and Salt Lake, i.e. which is the intermountain west. Things are - the legacy states, New York, Massachusetts, Washington are relatively quiet. The rest of the country is really quite active. Unfortunately, you can't call them up a hospital on Monday and be enrolling patients on Friday. It takes a lot longer than that. So anyway, right now, where we are, which is which we think we're okay. Having said that, I think your question about what happens when a patient comes in the hospital is a good question. The trial allows dexamethasone, as is written by the U.K. study, which is I think it's 6 milligrams a day for up to 5 days, maybe 10 days. It allows remdesivir. I will say that clinicians are not sold on either of those treatments for these patients. It does not allow another cytokine inhibitor. So if the patient is - the standard of care cannot include an anti-IL-6 an anti-IL-1. But for the most part, we don't see that to be a major problem because most of those trials have been patients that are already in the ICU. And that's - you've already failed this trial with - we're not treating patients in the ICU. So we are - we - there's no question that I was - a month ago, I was very worried that the standard of care arm was a very much a moving target. But I'll be honest with you, Jason, there have been so many failures out there now, I'm less worried. Unfortunately, what's happening is even when the trial fails, they don't stop it necessarily. So they actually - they actually cannibalize patients that could be on a new product like ours. But the fact is, so far, we don't have much that works, right? Hopefully, Quellor will. We are quite confident in the mechanism of action. But at the end of the day, as Chris Berman used to say on ESPN, that's why we do the study, right? We got to do the study and prove it. And so we're underway.

And then just last one on the MDS study. I know it's really an issue for next year. But when you're thinking about the patients, is this going to be in first-line in combination with ASO, will be second line and as failures, in which case [indiscernible] and if so, would you be looking at specific mutation types?

So they will be on - many of them will be on ASA already, and we won't stop that. So it will be actually both. It could be first line, but most of the patients will have - will be on ASA and be considered not progressing on the disease - progressing on therapy.

Next question is from Michael Irwin with Univest Security.

I have two questions for the treatment resistant depression, will expanding to the cancer and state for you probably to some regard?

Ask the question again. I didn't quite get the tenor. I'm sorry.

So for the treatment resistant depression XPro1595, if that goes well, will that expand and new original patient?

So the TRD, treatment resistant depression is one trial. That's part of the CNS franchise, right? The INB03, which is our cancer program, and LIVNate which is the NASH programs, is - are different programs. And really, it's just a matter - I mean, I'm not telling any of you something you haven't heard. Every - virtually every company is experiencing delays in initiating trials and enrolling trials. From our perspective, we just decided to focus on Quellor, which is COVID and our CNS franchise, which is where we have funding and where we have a very unique offering. So those are moving forward. And it's not that we don't like INB03 or LIVNate, it's just that right now, we're focusing on the programs we know we can move forward.

And for the recent for failing to reventilate in the near to how would that affect your COVID trial?

I'm sorry. So say that again? Where are we decreasing mortality?

[Indiscernible]?

So our endpoint is although mortality is considered a bad outcome. And if you die before 28 days, you are considered, that is a negative outcome. We're looking in patients that are - come into the hospital but are not in the intensive care unit, right? It is pretty rare. It happens in the U.K. because of their medical system. But in the United States, for the most part, patients don't come into the hospital and die with COVID-19. They go to the ICU, where some - after some period of time as they get worse. The primary endpoint of our COVID-19 trial is respiratory failure. We define respiratory failure as anything with a plug. So if you need CPAP, BiPAP or need to be intubated and mechanical ventilation, you have failed. So we're enrolling patients who are hypoxic, have symptoms of respiratory distress, but aren't so bad that they are going right off to the ICU. So yes, one of the great bright spots of the COVID-19 pandemic is the mortality rate in November 2020 is, I think, fourfold lower at least than it was in March because the clinical teams have gotten much better at taking care of the patients. They don't have many more tools. They're just better at taking care of the patients. So I am not concerned about that decrease in mortality because what we're focused on is, does the patient's respiratory disease progress, and that's related to their cytokine storm.

There are no further questions. I'll turn the call back over to Tesi.

Okay. Well, we appreciate you attending this call, and we are delighted with the questions. They've been excellent questions. We will conclude today's call, and we look forward to our next quarterly update, which will be the end of the year call, which will be in March 2021. Thank you very much.

So everyone, that does conclude our call for today. We thank you for participating, and you may now disconnect.