Greetings and welcome to the INmune Bio First Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [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 Chief Financial Officer of INmune Bio. David, the floor is yours.

Thank you, Doug and good afternoon everyone. We thank you for joining us for the call of INmune Bio's first quarter 2021 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 facts, the 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's no assurance of any specific outcome. Undue reliance should not be placed on forward-looking statements which speak only as of the date they are made as the facts and circumstances underlying 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, with the forward-looking statements behind us, I'd like to turn the call over to Dr. RJ Tesi, Co-Founder and CEO of INmune Bio. RJ?

Thank you, David and thanks everyone for joining the call. I will arrange my remarks to highlight the key takeaways for the first quarter and provide updates on our platform programs before I pass it back to David to discuss our financial results and upcoming milestones, then we will move to Q&A. As I did last quarter, I will begin today's call with XPro1595 which we are developing for Alzheimer's disease and other CNS indications where neuroinflammation plays an important role. Recapping our hypothesis, neuroinflammation results in synaptic loss and neurodegeneration also known as nerve cell loss or death in patients with Alzheimer's disease. Nerve cells are where the memories are stored. Synapses are the wires that allow the nerve cells to communicate. Cognitive decline can occur when nerve cells die that is the memories are lost or with synaptic dysfunction that is the nerve cells can't communicate with each other. The combination of synaptic dysfunction and neurodegeneration causes cognitive decline in patients with Alzheimer's disease. We believe that for a drug to be effective in treating Alzheimer's disease, it must fix one or both of these pathologies. Based on data released so far, XPro1595, the drug we are developing for the treatment of Alzheimer's disease appears to improve both pathologies. Our Alzheimer's program is all about targeting and controlling neuroinflammation with XPro1595. We believe neuroinflammation is a core pathology of Alzheimer's dementia that must be controlled to treat cognitive decline. On the 23rd of January, we reported data on nine patients who had completed the full 12-week treatment period with XPro, three in the low-dose group and six in the high-dose group of one milligram per kilogram once a week as a subcutaneous injection. We expanded the data presented from -- that we had presented in July of 2020…

Thank you, RJ. I'll provide a brief overview of our financial results and upcoming milestones. Net loss attributable to common stockholders for the quarter ended March 31, 2021 was approximately $4.6 million compared to approximately $2.0 million for the comparable period in 2020. Research and development expenses totaled approximately $2.5 million for the quarter ended March 31, 2021 compared with approximately $800,000 for the comparable period in 2020. The primary reason for the increase in expense was an increase in R&D activities related to our clinical programs and costs associated with manufacturing additional drug supply. General and administrative expenses was approximately $2.1 million for the quarter ended March 31, 2021 compared to $1.3 million for the comparable period in 2020. At March 31, 2021 the company had cash and cash equivalents of approximately $45.3 million with no debt. The cash includes net proceeds of approximately $28.4 million that we raised through our ATM facility during the three months ending March 31, 2021. As of May 5, 2021, the company had approximately 14.9 million shares of common stock outstanding. Now I'd like to move on and list our upcoming milestones and catalysts. As RJ had pointed out earlier, this summer we'll provide a go no-go decision by the Data and Safety Monitoring Board following the first group of patients treated regarding the continuation of our Quellor trial for the treatment of pulmonary complications from COVID-19. Towards the end of this year, we plan to initiate our Phase 2 Alzheimer's disease program with XPro1595 in patients with neuroinflammation. We'll provide more clarity on the design of this program including the estimated cost and time line of the Phase 2 trial as we get closer to this milestone. Also towards the end of the year, we plan to initiate a Phase 2 trial of XPro1595 in patients with treatment-resistant depression that is partially funded by a $2.9 million NIH grant that we should receive over the length of the Phase 2 trial. Furthermore, as RJ mentioned earlier we are currently screening patients for INKmune study in high-risk MDS and will report further information as this trial moves forward. 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 a go ahead. These include LIVNate Phase 2 for the treatment of NASH; INB03 Phase 2 for the treatment of MUC4-resistant metastatic HER2-positive breast cancer. So in summary, notwithstanding, the pandemic we believe we're making very good progress particularly in our neuroinflammatory franchise, following the compelling expanded Alzheimer's disease data that we reported in January. At this point, I'd like to thank you very much for your time and attention. And I'd like to turn it back to the operator, Doug to pull for questions. Doug?

Thank you. Ladies and gentlemen, at this time we would be conducting the question-and-answer session. [Operator Instructions] Our first question comes from the line of Jonathan Aschoff with ROTH Capital Partners. Please proceed with your question.

Thank you. RJ, can you tell us what biomarker data we can expect to see in the final Phase 1 Alzheimer's data release, and if the FDA favors any specific markers?

Okay. Thank you Jonathan. Remember the purpose of that trial is to -- is really two-fold. One is to help us define, which biomarkers to use for patient selection in our Phase 2 trial. And two to really use, shall, we say indirect measures or provide indirect evidence of the biology of improvements in the brain. So when I talk about biomarkers, I'm talking about things like white matter free water, apparent fiber density, looking at CRP in the blood those are biomarkers of inflammation and of improvement of cortical tissue. The FDA quite frankly doesn't yet care about these. They have made it abundantly clear that the only approvable endpoints for Alzheimer's disease relate to improvements in cognition using some choice of a panel of analytics that are well-established in the literature. So to be blunt, the FDA doesn't care what biomarkers we want to use. They're going to be looking at those cognitive endpoints, which will be part of the endpoints in the Phase 2 trial. Our biomarkers help us pick the patients, pick the dose, pick the duration, design the study to hopefully prevent us from having a study that's not conclusive. So I just use this think about a biomarker that is used for oncology. The biomarker can either be used to help with the drug development, patient selection, et cetera or be used as a validated surrogate biomarker for efficacy. Progression-free survival is a great example of a validated surrogate endpoint, although it doesn't predict overall survival of the FDA acceptance. To my knowledge there are no validated surrogate endpoints in Alzheimer's disease. So for our Phase 2 and beyond trials, we will always use cognition as an important endpoint because at the end of the day as it stands now that's the only thing you can get approved for with the FDA in Alzheimer's. Does that answer your question, Jonathan?

Absolutely. Thank you very much, RJ. That's all that I had.

Our next question comes from the line of Mayank Mamtani with B. Riley Securities. Please proceed with your question.

Hi. Good afternoon. Thanks for taking my question. And congrats on the progress. So in terms of -- just following up on the previous question on the upcoming extra data disclosure. RJ, could you clarify how many patients you may have on the low and high dose? And also on the free water update that biomarker, would you have more patients that you could report more data on that? And then I have a follow-up on the phase 2 study design.

Yes. Thank you, Mayank. We anticipate having 17 minimum maybe as many as 18 or 20 -- excuse me, it’s 24 for that data analysis. But what's important we really have two categories of data and I'm glad you gave you the chance to talk about this. Remember, I stated that the primary trial goes three months. So we'll have white matter free water on all of those patients. We'll also have some of our more interesting biomarkers like apparent fiber density and cortical disarray measures on those patients. But as the patients get rolled over into the extension trial, they still get biomarkers not CSF, but they get bloods and MRI scans at six, nine and 12 months. So not the full cohort, but many of the patients that have reached six, nine or 12 months we will have scans on those as well as cognitive testing and as well as safety laboratories and all of that. So we will be able to expand the amount of information that we are able to give, not only expand the number of patients, but we'd be able to expand the length of the therapy. And one of the things I really want to reemphasize is that at three months all the patients had CSF proteome drawn. The CSF proteome is this incredible warehouse of information. I mean, there are something like 37,000 proteins. We've only reported a small number of those. We continue to mine that data. And quite frankly, it's pretty interesting stuff. But the bottom line is from the perspective of you as the investor, we will be talking about more patients, we will be talking about patients who have been followed for up to a year. And that set of data will be -- we will put into the sausage maker so to speak. And one of the primary tasks that we will do in the August release will be to give you very clear guidance on what the phase 2 looks like? Who the patients are going to be? What’s the duration? What the dose et cetera because we will be starting it soon after that. And as you know, the phase 2 blinded placebo-controlled trial is really what makes or breaks this program.

Right. Thank you. That was very helpful. And then on the phase 2 design, RJ, are there any biomarkers here that, be it MRI, be it blood any that you feel could have prognostic value where you could have an enrichment strategy for maybe identifying the early responders and maybe following that through in your longer-term kind of study? I'm just curious, since you are seeing some movement in these biomarkers at a very short time period.

So. Great question. And so as you know when – we designed the trial really to focus on neuroinflammation. And we selected patients who had either an elevated CRP, elevated sed rate, elevated hemoglobin A1c, or were APOE4 positive. And based on our analytics to date we – to the credit of CJ Barnum who's the Head of our Neuroscience Program, I think we got it right. We did a good job selecting those patients, right, because those patients all had neuroinflammation by both CSF cytokines, which is what you're used to seeing, and by the white matter free water. So we're pretty comfortable with our patient selection. We have some of the – we are very intrigued with some biomarkers that may show evidence of early response. And we'll be talking more about that in August. We're not yet ready to go public, but I will say unequivocally that our biomarker strategy is paying dividends. Some of that is you just get lucky. When you're doing something novel like this, you have to make some informed guesses. Our informed guesses are turning out to be pretty good and we will provide all that data going forward. But just think about – just think as white matter free water as being a little bit of a tip of an iceberg here, because there's a lot – there'll be more interesting stuff coming behind. And I hate to leave you hanging, but you're going to have to wait till August, right? Yes.

Great. And just my final question was on – if anything like this any insight on the biomarker work you may also do in TRD, and if there's any read-through from the work you've done in Alzheimer's already?

Yes. So good question. The biomarker we're using is a functional MRI scan. That's very specific for treatment-resistant depression. This is work out of by Miller and Felger from the University -- from Emory University. We will be using all of our other tricks that we've been deploying in the Alzheimer's trials in these patients. Remember, I said, during the discussion one of the beauties of XPro is we target neuroinflammation. Neuroinflammation cuts across a lot of different diseases in the CNS space both neurodegenerative disease and psychiatric diseases. So the things we learn in Alzheimer's, we can apply to treatment-resistant depression. The things we learn in treatment-resistant depression and Alzheimer's we can apply to the next disease. The things we apply and learn in the first three diseases, we can apply to the fourth disease. So it's really -- there are no kind of one-offs here. This is what is pretty exciting. And I gave the example of targeting amyloid with an anti-amyloid drug. I mean, once you get back -- get done with Alzheimer's disease, you have nothing to do with that drug. Now that's a good place to be, if you have an effective drug. But in our case, we will not only be we think very effective for each individual disease, but the fact is we can play this card over and over again across -- I can give you a long list of diseases, but just go look at our website, look at the publications, and you can make a list of 10 or 12 different diseases that we'll be attacking with this single drug.

Great. Looking forward to updates. Thank you, RJ.

Our next question comes from the line of Jason McCarthy with Maxim Group. Please proceed with your question.

Hey guys. Thanks for taking the questions. Just kind of building a little bit more on the Alzheimer's disease. Given all the activity you've seen in the last, I don't know 12 months or so, around inflammatory biomarkers and use of biomarkers to advance to later stage trials, is the next Phase 2 program going to have call it 30 patients to 50 patients maybe a little bit more with a three-month biomarker end-point that you could look at and say I have a drug here. We'll continue on with the cognition stuff out to 12 months, maybe six, nine, and 12 months. But we can start designing a Phase 3 around what we're seeing here. We did see it once before this year. And we're wondering if that's something that you're thinking about? Or how you're thinking about it?

Look, Jason nothing like putting me on the slot here, I love it. So I think you're barking up the right tree here. Basically, we believe, the biomarkers will allow us to make sure we're headed in the right direction. I think it's a little bit early to say that, will -- because we see what's happening at three months, we know what's going to be happening in 12 months. At least I don't think we can do that with the small number of patients we have. When we have more patients under our belt, I think we will be able to make that conclusion. There is a precedent, in Alzheimer's disease for three-month data not being consistent with, a little bit longer term data. But that's in one category of drugs. The bottom-line is you're exactly correct. And you've heard me say this before we are working very hard to avoid having to do an 18-month trial. We think an 18-month trial might be relevant in amyloid -- anti-amyloid strategies. It might be relevant in anti-tau strategy. But we think the reason that's relevant there is, because you are taking an indirect approach to actually treating the disease. If you take a more direct approach which we believe XPro is targeting neuroinflammation. We don't believe you need to wait that long. And I predict, although I'm not yet ready to give an exact number, but I predict, that we will -- our Phase 2 will be significantly shorter than 18 months and will provide us with all the quality data we need. Now, our goal is a little different than what you articulated. You articulated that, we want to take a look at three months to know if we have a drug. Our goal is after the end of the Phase 2 to have enough insight that, when we pick the patient enrollment criteria for the Phase 3, we basically know we picked the group of patients where we're going to ring the bell, right? In fact, so far we know that we have -- like I said earlier, we did -- the very simple biomarkers we chose for enrollment criteria did a very good job of enriching for patients with neuroinflammation. And now we have more tools to work with. So we're going to get even better.

Got it. And on the treatment-resistant depression side, is the program going to have measures of depression along matter scores, pick your flavor or number of matter score? That's one question. And in terms of prioritizing mental health-related diseases like TRD, how do you look at it through the lens of what's coming down the road with all of the psychedelic-based companies piling into treatment-resistant depression because it's happening now and there's going to be a lot more NASDAQ listings in the next six to 12 months, and it's going to be right in the window of when you start this trial? Is that something that you're considering as well?

So that's good question. So yes, we are definitely measuring all the other measures of depression. The anhedonia or motivation, I called it motivation in the text is really the primary clinical endpoint we use. That turns out to be a very difficult treatment and a very common symptom in patients with treatment-resistant depression. The psychedelics is an interesting question. The question is, is this a bubble? One of those -- the new shiny ball on Wall Street or is what is there? And I think time will tell. I think the use of psychedelic -- I'm a child of the '60s man I remember a different use of psychedelics but I think it's fascinating, how they're being repurposed to treat these difficult diseases. So I think time will tell. I'm very confident -- we have -- the site that is doing the TRD study. We have it at Emory and at UAB. These are investigators who are very interested in the role of TNF in this disease. I am confident that we'll be able to enroll this small number of patients. If we reach the point that we need to do a 500 patient trial after this then competition with this -- with drug development and the psychedelics may be problematic. But for now I think that I continue to watch this with interest like you do.

That's right. My point was not -- like you said shiny ball on Wall Street that was my point. And not competing against them but more of -- do you become more TRD facing in terms of prioritizing it as a public company because of what happens sometimes with these shiny balls on Wall Street like NASH we saw probably -- you know all the story. That was my question also.

Yes. I'll let -- we've been pretty clear about our strategies. We have followed the science more than we followed the investor interest. I think the COVID-19 is the exception there. We followed what we felt was the right thing to do as a company in the space during the dark days of March 2020. You remember that when New York was just about to fall off the map with COVID-19. But for the most part we pretty much follow the science and we follow who gives us money. Why are we in Alzheimer's disease because the Alzheimer's Association gave us $1 million. Why are we in the TRD because the NIH gave us almost $3 million. So we're -- I don't know are we -- we're opportunists but we also have a drug that we can play in various spaces. And even if you gave us money we're not going to go there unless the science is sound. Our science is sound.

Got it. Thank you RJ.

Our next question comes from the line of Thomas Shrader with BTIG. Please proceed with your question.

Hey, guys. This is Sung Nam calling in for Tom. First of all thank you for the update and taking my question. So kind of building off the biomarker for the XPro1595 for your ongoing phase 3 one trial for Alzheimer, I was wondering if we should expect any additional imaging biomarker data beyond the white matter free water for the future readouts.

Definitely. And we are very excited about these. We've been working with two vendors Imeka and Oxford Brain Diagnostics. Imeka is our white matter analytics group and Oxford Brain Diagnostics is our gray matter group. I mean, we will definitely have data on more patients and white matter free water on more patients, so increased breadth. But increased depth in the white matter in particular, because there are biomarkers that we only hinted at previously, for instance, apparent fiber density, which turned out to be quite interesting. But I will say that we need to do some more work and we're working closely with Imeka all the time on this and you will hear more about it. But I think the bottom line is that CNS drug development is changing. With these new tools that we have on our fingertips, we're going to do -- we, meaning the biotech community, is going to do a better job of developing drugs in the CNS space. And I think we, INmune Bio, have been leaders in this. I think we're ahead of everyone and we hope to convince you of that every time we get to talk to you and present new data.

It’s exciting. Thank you/

Our next question comes from the line of Michael Irwin with Univest Securities. Please proceed with your question.

Hi. So there's recently been some [Indiscernible] the APOE4 gene has some link to Alzheimer's with brain inflammation causing damages synapsis and can also be used for early detection. Is it the gene of interest for research and development for XPro1595 moving forward?

So, yes. At this point, we used APOE4 which is a gene for one of our inclusion criteria. Interestingly, in the United States a lot of people know what their APOE4 status is. And as you know, it is enriched in patients with Alzheimer's disease. I don't think we are yet convinced of other gene approaches at this point. But I would say that we are -- always have an open mind. I mean, obviously, the beauty of genetic markers is, they're relatively easy to get. But at this point, we do not have plans beyond APOE4. But as the data changes not only what's available to us but our own data changes, that may change.

Okay. And also there has been some research around a candidate drug sargramostim for the resurfacing for Alzheimer's drugs to create more white blood cells for fighting diseases and they have actually shown some promising data in a clinical trial. What is your opinion on the -- this approaches in white blood cells? And can you [Indiscernible] drug?

So if I understand your question there, are attempts to improve white -- basically white blood cell or macrophage function as a way to treat Alzheimer's disease. So I'm not going to comment on those, but I will say unequivocally, we agree with the hypothesis that part of the problem with at least Alzheimer's is that microglial dysfunction which -- and microglial cells are a branch of the white blood cell family is the cause of the disease because they lose their ability to phagocytize debris particularly amyloid debris. So the principle is correct. We believe that improving phagocytic function will help clean out the garbage of the brain. And if you clean out the garbage of the brain, you're going to have a better effect on your ability to treat diseases. What I think is interesting and Jason kind of mentioned it a little bit is, how suddenly -- you're seeing a lot of new therapeutic strategies come out of the woodwork since -- in the last year or 2. I mean, 4, 5 years ago I mean we were a lonely voice in the Alzheimer's space besides really for all practical purposes Biogen. That has changed. And I think it reflects the increased optimism by the biopharma and investor community that we may have a chance with Alzheimer's particularly, if the FDA green lights aducanumab from Biogen this June. So we're excited. At this point we're like anybody who wants to come join the party that's fine. But this is a hard disease. It's a hard disease to crack. And -- but we're going to do it.

Our next question comes from the line of Daniel Carlson with Tailwinds Research. Please proceed with your question.

Hey guys. RJ a question for you about neuroinflammation as it relates to on COVID. And I'm wondering if you guys are going to be doing anything in this anytime soon?

Well as you know we're careful about talking about our strategic plans until we're really ready to talk about them. But we have been following the long COVID story very carefully. Obviously it's a -- appears to be a very big problem. It appears to be a problem without a lot of hypotheses of what is causing it. Obviously we think neuroinflammation plays an important role. Although I have to say that data are thin. The data -- the symptoms look like neuroinflammation, but the clinical correlation has been thin to date. We are very closely following the space Dan. And given once we get one enough data and ideally two, the government -- the NIH steps up with some funding streams this is obviously an option for XPro, if we can be convinced and others including the NIH who would do the funding, that neuroinflammation plays an important role.

Got you. And then if I could just ask one other question. Since it looks like if you're successful you'll be treating Alzheimer's patients for a very long time, I'm just wondering if you have any additional long-term safety data as XPro continued to be safe for your patients who are on it for 12, 18 months. And then also along those lines are you looking at any other delivery methodologies besides injection?

Yes, yes to both. I mean we have -- as I said we have a handful of patients out to 12 months. They remain on the drug -- have remained on the drug for 12 months and that's as much data as we've had so far. And I can tell you that, no one has stopped the drug after three months, because of safety issues. Just think of the current TNF inhibitors. Remember, this is a better TNF inhibitor. And the current TNF inhibitors people are on those for many, many years. So I am we are -- have always felt that the risk of this drug development program failing because of safety was going to be low compared to some other types of drugs that you might treat. Other delivery strategies are pretty interesting ideas we do, although we break that into two areas. Obviously, there's delivery strategies to allow us to go after different diseases that becomes kind of shall we say a technique to expand the usefulness of the drug. And the other one is to determine whether to decide, make it easier to give to patients. Quite honestly patients have been pretty comfortable with a once a week subcu injection. It's not like you're a diabetic where you're having to give yourself five injections a day or two injections a day. This is once a week with a 26-gauge needle. And our hope is that, it will be a -- one of these self-injectors that people use like an EpiPen that is very well tolerated. So our -- I have to say those -- we talk about that, but our main focus currently is to make sure we get the Phase 2 trial design, right? Because if the Phase 2 trial design doesn't do what we expect it to do, we could have all the formulations and delivery systems we want, but they're not going to be very useful.

I'm looking forward to seeing that design and the other Phase 1 results. So thank you.

There are no further questions in the queue. I'd like to hand the call back to Dr. Tesi for closing remarks.

Well, thank you all for quite a long call. This was almost 90 minutes, and I appreciate you allowing me to stand on my soapbox, but part of that is because I think we are very excited about the XPro program in Alzheimer's disease. I think you can sense that from the way we present the data. And I think you should be able to sense an increasing confidence in our program as we go forward. And a lot of that is due to the credit of the team led by CJ Barnum. Likewise, the COVID and INKmune programs are coming along. We believe our future is bright. We thank you for your interest, and I can't wait until we get to see you all face-to-face again. Thank you very much.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time. And have a wonderful day.