10-Q 1 inab-20240331.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended March 31, 2024

OR

 

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

Commission File Number: 001-39692

 

IN8BIO, INC.

(Exact name of Registrant as specified in its Charter)

 

Delaware

82-5462585

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

350 5th Avenue, Suite 5330

New York, New York

10118

(Address of principal executive offices)

(Zip Code)

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

 

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

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

 

INAB

 

The Nasdaq Stock Market LLC

 

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

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

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

 

Large accelerated filer

Accelerated filer

 

 

 

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

 

 

 

 

Emerging growth company

 

 

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

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

The number of shares of Registrant’s Common Stock outstanding as of May 6, 2024 was 44,123,949.

 

 

 


 

Table of Contents

 

Page

PART I

FINANCIAL INFORMATION

 

Item 1.

Condensed Financial Statements (Unaudited)

1

 

Condensed Balance Sheets

1

 

Condensed Statements of Operations

2

 

Condensed Statements of Stockholders’ Equity

3

 

Condensed Statements of Cash Flows

4

 

Notes to Condensed Financial Statements

5

Item 2.

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

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

26

Item 4.

Controls and Procedures

26

 

 

 

PART II

OTHER INFORMATION

 

Item 1.

Legal Proceedings

27

Item 1A.

Risk Factors

27

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

70

Item 3.

Defaults Upon Senior Securities

70

Item 4.

Mine Safety Disclosures

70

Item 5.

Other Information

70

Item 6.

Exhibits

70

 

Signatures

72

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

IN8BIO, INC.

CONDENSED BALANCE SHEETS

(In thousands, except share and per share data)

 

 

 

March 31,

 

 

 

 

 

 

2024

 

 

December 31,

 

 

 

(unaudited)

 

 

2023

 

Assets

 

 

 

 

(Note 2)

 

Current assets

 

 

 

 

 

 

Cash

 

$

13,015

 

 

$

21,282

 

Prepaid expenses and other current assets

 

 

2,740

 

 

 

3,343

 

Total Current Assets

 

 

15,755

 

 

 

24,625

 

Non-current assets

 

 

 

 

 

 

Property and equipment, net

 

 

3,325

 

 

 

3,514

 

Construction in progress

 

 

203

 

 

 

182

 

Restricted cash

 

 

256

 

 

 

256

 

Right-of-use assets - finance leases

 

 

1,160

 

 

 

1,364

 

Right-of-use assets - operating leases

 

 

4,530

 

 

 

3,513

 

Other non-current assets

 

 

320

 

 

 

255

 

Total Non-Current Assets

 

 

9,794

 

 

 

9,084

 

Total Assets

 

$

25,549

 

 

$

33,709

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

1,413

 

 

$

924

 

Accrued expenses and other current liabilities

 

 

895

 

 

 

2,955

 

Short-term finance lease liability

 

 

680

 

 

 

694

 

Short-term operating lease liability

 

 

856

 

 

 

820

 

Total Current Liabilities

 

 

3,844

 

 

 

5,393

 

Long-term finance lease liability

 

 

351

 

 

 

525

 

Long-term operating lease liability

 

 

3,828

 

 

 

2,854

 

Total Non-Current Liabilities

 

 

4,179

 

 

 

3,379

 

Total Liabilities

 

 

8,023

 

 

 

8,772

 

Stockholders' Equity

 

 

 

 

 

 

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

 

 

 

 

 

 

Common stock, par value $0.0001 per share; 490,000,000 shares authorized at March 31, 2024 and December 31, 2023; 43,287,325 shares issued and outstanding at March 31, 2024 and December 31, 2023

 

 

4

 

 

 

4

 

Additional paid-in capital

 

 

117,303

 

 

 

116,152

 

Accumulated deficit

 

 

(99,781

)

 

 

(91,219

)

Total Stockholders' Equity

 

 

17,526

 

 

 

24,937

 

Total Liabilities and Stockholders' Equity

 

$

25,549

 

 

$

33,709

 

 

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

1


 

IN8BIO, INC.

CONDENSED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

 

 

Three Months Ended
March 31,

 

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

 

Research and development

$

4,903

 

 

$

4,385

 

General and administrative

 

3,742

 

 

 

3,470

 

Total operating expenses

 

8,645

 

 

 

7,855

 

Interest income

 

83

 

 

 

 

Other income

 

 

 

 

330

 

Loss from operations

 

(8,562

)

 

 

(7,525

)

Net loss

$

(8,562

)

 

$

(7,525

)

Net loss per share – basic and diluted

$

(0.20

)

 

$

(0.30

)

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

 

43,287,325

 

 

 

24,732,580

 

 

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

2


 

IN8BIO INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except share data)

(Unaudited)

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Total

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Stockholders' Equity

 

Balance at December 31, 2022

 

 

24,545,157

 

 

$

3

 

 

$

83,941

 

 

$

(61,212

)

 

$

22,732

 

Issuance of common stock, net of issuance costs

 

 

415,712

 

 

 

 

 

 

722

 

 

 

 

 

 

722

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

859

 

 

 

 

 

 

859

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(7,525

)

 

 

(7,525

)

Balance at March 31, 2023

 

 

24,960,869

 

 

 

3

 

 

 

85,522

 

 

 

(68,737

)

 

 

16,788

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2023

 

 

43,287,325

 

 

 

4

 

 

 

116,152

 

 

 

(91,219

)

 

 

24,937

 

Issuance costs

 

 

 

 

 

 

 

 

(89

)

 

 

 

 

 

(89

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,240

 

 

 

 

 

 

1,240

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(8,562

)

 

 

(8,562

)

Balance at March 31, 2024

 

 

43,287,325

 

 

$

4

 

 

$

117,303

 

 

$

(99,781

)

 

$

17,526

 

 

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

3


 

IN8BIO, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(8,562

)

 

$

(7,525

)

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

 

 

 

 

 

 

Depreciation and amortization

 

 

239

 

 

 

243

 

Non-cash stock-based compensation

 

 

1,240

 

 

 

859

 

Amortization of finance lease right-of-use assets

 

 

204

 

 

 

188

 

Amortization of operating lease right-of-use assets

 

 

189

 

 

 

159

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

603

 

 

 

510

 

Other non-current assets

 

 

(65

)

 

 

 

Accounts payable

 

 

489

 

 

 

(1,035

)

Accrued expenses and other current liabilities

 

 

(2,060

)

 

 

(667

)

Short-term operating lease liabilities

 

 

37

 

 

 

25

 

Long-term operating lease liabilities

 

 

(233

)

 

 

(196

)

Net cash used in operating activities

 

 

(7,919

)

 

 

(7,439

)

Investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(50

)

 

 

(371

)

Construction in progress

 

 

(21

)

 

 

(58

)

Net cash used in investing activities

 

 

(71

)

 

 

(429

)

Financing activities

 

 

 

 

 

 

Payment of issuance costs

 

 

(89

)

 

 

 

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

 

 

 

 

 

722

 

Principal payments on finance leases

 

 

(188

)

 

 

(175

)

Net cash (used in) provided by financing activities

 

 

(277

)

 

 

547

 

Net decrease in cash and restricted cash

 

 

(8,267

)

 

 

(7,321

)

Cash and restricted cash at beginning of period

 

 

21,538

 

 

 

18,434

 

Cash and restricted cash at end of period

 

$

13,271

 

 

$

11,113

 

 

 

 

 

 

 

 

Cash, end of period

 

$

13,015

 

 

$

10,860

 

Restricted cash, end of period

 

 

256

 

 

 

253

 

Cash and restricted cash, end of period

 

$

13,271

 

 

$

11,113

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash financing and investing activities:

 

 

 

 

 

 

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

 

$

714

 

 

$

 

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

 

$

492

 

 

$

 

 

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

4


 

IN8BIO, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1. ORGANIZATION AND NATURE OF OPERATIONS

Organization and Business

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

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

Liquidity and Going Concern

To date, the Company has funded its operations primarily with proceeds from various public and private offerings of its common stock, preferred stock and warrants. The Company has incurred recurring losses and negative operating cash flows since its inception, including net losses of $8.6 million and $7.5 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, the Company had an accumulated deficit of $99.8 million.

The Company has not yet generated product sales and as a result has experienced operating losses since inception. The Company expects to incur additional losses in the future as it advances its product candidates through clinical trials, seeks to expand its product candidate portfolio through developing additional product candidates, grows its clinical, regulatory and quality capabilities, and incurs costs associated with operating as a public company. Based on the Company’s business strategy, its existing cash of $13.0 million as of March 31, 2024 will only fund the Company’s projected operating expenses and capital expenditure requirements into January 2025. Accordingly, there is substantial doubt about the Company’s ability to continue to operate as a going concern for a period of 12 months from the date of issuance of these condensed financial statements. To continue to fund the operations of the Company beyond this time period, management has developed plans, which primarily consist of raising additional capital through some combination of equity and/or debt offerings, including through at-the-market program ("ATM") offerings and private placements of securities, and identifying strategic collaborations, licensing or other arrangements to support development of the Company’s product candidates. Through May 2, 2024, the Company sold an aggregate of 856,624 shares of its common stock under the ATM program, resulting in net proceeds of approximately $1.0 million after deducting underwriting discounts.

In addition, the Company may receive an additional $14.8 million in aggregate proceeds if the holders of the Series A ordinary warrants exercise their warrants pursuant to the mandatory exercise feature, which is triggered upon the Company's public announcement of INB-100 data for the 10 currently enrolled patients, should they remain alive and evaluable, covering a period of at least 11 months of long-term follow-up for each patient, along with certain stock price and trading volume requirements. Further, if not otherwise redeemed by the Company, the Company may also receive aggregate proceeds of up to $17.7 million from the exercise of its outstanding Series B ordinary warrants. There is no assurance, however, that the Company will receive any additional proceeds from these warrants or that any additional financing or any revenue-generating collaboration will be available when needed, that management of the Company will be able to obtain financing or enter into a collaboration on terms acceptable to the Company, or that any additional financing or revenue generated through third party collaborations will be sufficient to fund our operations through this time period. If additional capital is not available, the Company will have to significantly delay, scale back or discontinue research and development programs or future commercialization efforts. The actual amount of cash that the Company will need to operate is subject to many factors. The accompanying condensed financial statements have been prepared on the basis that the Company will continue as a going concern and do not include adjustments that might result from the outcome of this uncertainty.

5


 

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Significant Accounting Policies

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

 

Basis of Presentation

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

Unaudited Interim Financial Information

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

Use of Estimates

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

Concentration of Credit Risk

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

Property and Equipment

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

Estimated Useful Life

Furniture

5 years

Machinery and equipment

 

 

3-5 years

 

Software

3 years

Leasehold improvements

 

 

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

 

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

6


 

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

Capitalized Software

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

Recently Issued Accounting Standards Updates

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

3. PREPAID EXPENSES AND OTHER CURRENT ASSETS

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

 

 

 

March 31,
2024

 

 

December 31,
2023

 

Prepaid research and development

 

$

1,752

 

 

$

2,283

 

Prepaid insurance

 

 

449

 

 

 

790

 

Other

 

 

539

 

 

 

270

 

Prepaid expenses and other current assets

 

$

2,740

 

 

$

3,343

 

 

4. PROPERTY AND EQUIPMENT, NET

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

 

 

 

March 31,
2024

 

 

December 31,
2023

 

Machinery and equipment

 

$

427

 

 

$

379

 

Furniture and fixtures

 

 

370

 

 

 

370

 

Software

 

 

126

 

 

 

126

 

Leasehold improvements

 

 

3,924

 

 

 

3,922

 

Less accumulated depreciation and amortization

 

 

(1,522

)

 

 

(1,283

)

Property and equipment, net

 

$

3,325

 

 

$

3,514

 

 

Depreciation and amortization expense was $0.2 million for the three months ended March 31, 2024 and 2023.

5. CONSTRUCTION IN PROGRESS

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

 

 

 

March 31,
2024

 

 

December 31,
2023

 

Internal use software not yet in service

 

$

203

 

 

$

182

 

Construction in progress

 

$

203

 

 

$

182

 

 

7


 

6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

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

 

 

 

March 31,
2024

 

 

December 31,
2023

 

Accrued clinical trials

 

$

153

 

 

$

598

 

Accrued compensation

 

 

480

 

 

 

1,673

 

Accrued legal

 

 

79

 

 

 

306

 

Accrued other

 

 

183

 

 

 

378

 

Accrued expenses and other current liabilities

 

$

895

 

 

$

2,955

 

 

7. STOCKHOLDERS' EQUITY

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

ATM Facility

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

Under current SEC regulations, if at any time the Company's public float is less than $75.0 million, and for so long as the Company's public float remains less than $75.0 million, the amount the Company can raise through primary public offerings of securities in any 12-month period using shelf registration statements is limited to an aggregate of one-third of the Company's public float, which is referred to as the baby shelf rules. As of December 31, 2023, the Company's calculated public float was less than $75.0 million. During the year ended December 31, 2023, the Company sold an aggregate of 7,492,580 shares of its common stock under the ATM program, resulting in net proceeds of approximately $14.4 million after deducting underwriting discounts. Through May 2, 2024, the Company sold an aggregate of 856,624 shares of its common stock under the ATM program, resulting in net proceeds of approximately $1.0 million after deducting underwriting discounts.

 

 

 

8. WARRANTS

 

In December 2023, the Company issued 574,241 pre-funded warrants, 11,823,829 Series A warrants and 11,823,829 Series B warrants. The pre-funded warrants have an exercise price of $0.0001 per share, are exercisable immediately and are exercisable until the pre-funded warrant is exercised in full. In lieu of making the cash payment otherwise contemplated to be made to the Company upon exercise of a pre-funded warrant in payment of the aggregate exercise price, the holder may elect instead to receive upon such exercise (either in whole or in part) the net number of shares of common stock determined according to a formula set forth in the pre-funded warrants terms. The pre-funded warrants meet the criteria for permanent equity classification. As of March 31, 2024, 574,241 pre-funded warrants were issued and outstanding.

The Series A warrants have an exercise price of $1.25 per share. The Series A warrants are exercisable immediately and expire on June 13, 2025. The Company has the option to cause the Series A warrants to be exercised at a strike price of $1.25 per share upon the Company’s public announcement of INB-100 clinical data for the 10 currently enrolled patients, should they remain alive and evaluable, covering a period of at least 11 months, along with certain stock price and trading volume requirements. The Series A warrants meet the criteria for permanent equity classification. As of March 31, 2024, 11,823,829 Series A warrants were issued and outstanding.

The Series B warrants have an exercise price of $1.50 per share. The Series B warrants are exercisable immediately and expire on December 13, 2028. The Series B warrants allow the Company to redeem such warrants at a price of $0.01 per Series B warrant upon the Company’s public announcement of its INB-100 data for all enrolled patients covering a period of at least 22 months, along with

8


 

certain stock price and trading volume requirements. Holders of Series B warrants may choose to exercise such warrants at a purchase price of $1.50 per share prior to such redemption. The Series B warrants meet the criteria for permanent equity classification. As of March 31, 2024, 11,823,829 Series B warrants were issued and outstanding.

9. STOCK-BASED COMPENSATION

2018 Equity Incentive Plan

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

2020 Equity Incentive Plan

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

Amended and Restated 2023 Equity Incentive Plan

The Amended and Restated 2023 Equity Incentive Plan (the “2023 Plan”) was approved by the Company's Board of Directors and the Company’s stockholders and became effective on June 15, 2023. The Board of Directors, or a committee thereof, is authorized to administer the 2023 Plan. The 2023 Plan provides for the grant of Incentive Stock Options ("ISO") within the meaning of Section 422 of the Internal Revenue Code ("IRC") as amended, to employees, and for the grant of non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of awards to the Company’s employees, directors and consultants and any Company affiliates’ employees and consultants. The number of shares initially reserved for issuance under the 2023 Plan was 7,400,000, which automatically increases on January 1 of each year for a period of 10 years, beginning on January 1, 2024 and continuing through January 1, 2033, in an amount equal to 5% of the total number of shares of common stock outstanding on the last day of the immediately preceding year, or a lesser number of shares determined by the Board of Directors no later than the last day of the immediately preceding year. The maximum number of shares of common stock that may be issued upon the exercise of ISOs under the 2023 Plan is 41,000,000 shares. Pursuant to the terms of the 2023 Plan, the number of shares available under the 2023 Plan was increased by 2,164,366 shares effective January 1, 2024. As of March 31, 2024, 7,227,415 shares were available for grant pursuant to the 2023 Plan, including the increase effective January 1, 2024.

2020 Employee Stock Purchase Plan

The 2020 Employee Stock Purchase Plan (the “ESPP”) was approved by the Company’s Board of Directors and the Company’s stockholders and became effective on July 29, 2021. A total of 200,000 shares of common stock were initially reserved for issuance under this plan, which automatically increases on January 1 of each year by the lesser of (i) 1% of the outstanding number of shares of common stock on the immediately preceding December 31 and (ii) 400,000, or such lesser number of shares as determined by the Board of Directors. As of March 31, 2024, no shares of common stock had been issued under the ESPP and 787,812 shares remained available for future issuance under the ESPP. The Company’s Board of Directors or designated committee has not set an offering period. Pursuant to the terms of the ESPP, the number of shares available under the ESPP increased by 400,000 shares, effective January 1, 2024.

9


 

Stock Option Activity

The following is a summary of the stock option award activity during the three months ended March 31, 2024:

 

 

 

Number
of Stock
Options

 

 

Weighted-
Average
Exercise
Price

 

 

Weighted-
Average
Remaining
Contractual
Term
(in years)

 

 

Aggregate
Intrinsic
Value
(in thousands)

 

Outstanding at December 31, 2023

 

 

6,695,933

 

 

$

3.52

 

 

 

8.32

 

 

$

361

 

Granted

 

 

1,690,675

 

 

 

1.24

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

 

 

Forfeited

 

 

(50,335

)

 

 

4.43

 

 

 

 

 

 

 

Outstanding at March 31, 2024

 

 

8,336,273

 

 

$

3.05

 

 

 

8.49

 

 

$

40

 

Exercisable at March 31, 2024

 

 

2,797,539

 

 

$

5.04

 

 

 

7.45

 

 

$

17

 

Options expected to vest as of March 31, 2024

 

 

5,538,734

 

 

$

2.05

 

 

 

9.02

 

 

$

23

 

 

The weighted-average grant date fair value of options granted during the three months ended March 31, 2024 and 2023 was $1.24 and $2.00, respectively. The aggregate intrinsic value is calculated as the difference between the exercise price and the market price of the Company’s common stock at March 31, 2024 and December 31, 2023.

Stock-Based Compensation Expense

For the three months ended March 31, 2024 and 2023, the Company utilized the Black-Scholes option-pricing model for estimating the fair value of the stock options. The following table presents the assumptions and the Company’s methodology for developing each of the assumptions used:

 

 

 

March 31,
2024

 

March 31,
2023

Volatility

 

94.20% - 102.54%

 

91.91%

Expected life (years)

 

6.08

 

6.08

Risk-free interest rate

 

3.98% - 4.16%

 

3.99%

Dividend rate

 

 

 

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

Stock-based compensation expense was recorded in the following line items in the condensed statements of operations for the three months ended March 31, 2024 and 2023 (in thousands):

 

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Research and development

 

$

532

 

 

$

389

 

General and administrative

 

 

708

 

 

 

470

 

Total stock-based compensation expense

 

$

1,240

 

 

$

859

 

 

10


 

No related tax benefits from stock-based compensation expense were recognized for the three months ended March 31, 2024 and 2023. As of March 31, 2024, there was $7.5 million in unrecognized stock-based compensation expense, which is expected to be recognized over a weighted-average period of 2.63 years.

10. LICENSE AGREEMENTS

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

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

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

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

Exclusive License Agreement with UABRF

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

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

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

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

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

11


 

11. NET LOSS PER SHARE

 

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

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

 

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Net loss

 

$

(8,562

)

 

$

(7,525

)

Net loss per share—basic and diluted

 

$

(0.20

)

 

$

(0.30

)

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

 

 

43,287,325

 

 

 

24,732,580

 

 

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

 

 

 

Three Months Ended
March 31,

 

 

2024

 

2023

 

Stock options to purchase common stock

 

 

7,707,784

 

 

3,870,924

 

Pre-Funded Warrants

 

 

574,241

 

 

 

Series A Warrants

 

 

11,823,829

 

 

 

Series B Warrants

 

 

11,823,829

 

 

 

Total

 

 

31,929,683

 

 

3,870,924

 

 

 

 

 

 

 

 

12. COMMITMENTS AND CONTINGENCIES

Intellectual Property

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

Legal Proceedings

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

13. EQUIPMENT AND Facility LEASES

The Company has historically entered into lease arrangements for its facilities. As of March 31, 2024, the Company had four operating leases with required future minimum payments. The Company determined the classification of these leases to be operating leases and recorded right-of-use assets and lease liabilities as of the effective date. The Company’s leases generally do not include termination or purchase options.

Finance Leases

The Company entered into an agreement with an equipment leasing company in 2018, which provided up to $2.5 million for equipment purchases in the form of sale and leasebacks or direct leases. As of March 31, 2024, the Company has 11 active leases from the leasing company. The terms of the leases are three years and afterwards provide for either annual extensions or an outright purchase of the equipment.

12


 

The Company entered into an agreement with another equipment leasing company in the second quarter of 2023. As of March 31, 2024, the Company has one active lease from this leasing company. The terms of the lease are three years and afterwards provide for either annual extensions or an outright purchase of the equipment.

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

Operating Leases

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

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

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

The operating leases require security deposits at the inception of each lease. The security deposits amounted to approximately $0.3 million as of March 31, 2024 and December 31, 2023. As of March 31, 2024 and December 31, 2023, approximately $256,000 was included in restricted cash and $10,000 was included in other current assets.

The following table contains a summary of the lease costs recognized and other information pertaining to the Company’s finance and operating leases for the three months ended March 31, 2024 and 2023 (in thousands):

 

 

 

Three Months Ended
March 31,

 

 

 

2024

 

 

2023

 

Lease Cost

 

 

 

 

 

 

Amortization of finance right-of-use assets

 

$

204

 

 

$

149

 

Interest on finance lease liabilities

 

 

27

 

 

 

14

 

Operating lease cost

 

 

304

 

 

 

112

 

Short-term lease cost

 

 

83

 

 

 

105

 

Variable lease cost

 

 

24

 

 

 

 

Total lease cost

 

$

642

 

 

$

380

 

 

 

 

March 31,
2024

 

Other Lease Information

 

 

 

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

 

$

27

 

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

 

$

310

 

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

 

 

1.57

 

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

 

 

4.36

 

Weighted-average discount rate – finance leases

 

 

9.5

%

Weighted-average discount rate – operating leases

 

 

12.7

%

 

13


 

 

The following table reconciles the undiscounted cash flows to the operating and finance lease liabilities at March 31, 2024 (in thousands):

 

 

 

Finance Leases

 

 

Operating Leases

 

Remainder of 2024

 

$

552

 

 

$

1,051

 

2025

 

 

501

 

 

 

1,401

 

2026

 

 

52

 

 

 

1,416

 

2027

 

 

 

 

 

1,224

 

2028

 

 

 

 

 

891

 

Thereafter

 

 

 

 

 

120

 

Total lease payment

 

 

1,105

 

 

 

6,103

 

Less: interest

 

 

74

 

 

 

1,419

 

Total lease liabilities

 

 

1,031

 

 

 

4,684

 

Less: short-term lease liability

 

 

680

 

 

 

856

 

Long-term lease liability

 

$

351

 

 

$

3,828

 

 

14


 

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

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

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

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

Overview

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

We recently dosed the first patient in our Phase 2 multi-center clinical trial of our lead product candidate, INB-400, for the treatment of newly diagnosed glioblastoma ("GBM"). This trial will expand the assessment of autologous, genetically modified gamma-delta T cells in newly diagnosed GBM patients in specialized brain tumor centers across the United States. We anticipate that the Phase 2 trial will confirm the efficacy signal suggested by the investigator-initiated Phase 1 trial known as INB-200. We have completed enrollment of Cohort 3 for INB-200 and will provide clinical updates and long-term follow-up data at medical meetings throughout 2024, starting with a presentation at the American Society of Clinical Oncology ("ASCO") Annual Meeting in June 2024. We presented an interim clinical update to INB-200 in an oral presentation at the ASCO Annual Meeting in June 2023 and an update via poster at the Society of Neuro-Oncology ("SNO") Annual Meeting in November 2023. In addition, with additional funding, we plan to submit an IND in 2025 for the Phase 1b/2 clinical trial of INB-400 in which allogeneic genetically modified gamma-delta T cells will be assessed in patients with recurrent and newly diagnosed GBM. Should a favorable safety profile be determined in the Phase 1b recurrent GBM portion of the study, we expect to initiate the Phase 2 expansion portion, whereby GBM patients with recurrent and newly diagnosed GBM would both be eligible to receive the allogeneic genetically modified gamma-delta T cell product. In April 2023, we received Orphan Drug Designation ("ODD") for the autologous and allogeneic INB-400 products from the FDA, covering a broad range of malignant glioma indications, including relapsed and newly diagnosed GBM.

In INB-100, the investigator-initiated Phase 1 trial for treatment of patients with high-risk leukemias undergoing hematopoietic stem cell transplantation ("HSCT") we determined a recommended Phase 2 dose ("RP2D") in 2023. We have completed primary enrollment of the Phase 1 clinical trial and we presented a clinical update at the European Society for Blood and Marrow Transplantation ("EBMT") Annual Meeting in April 2023 and at the American Society of Hematology ("ASH") Annual Meeting in December 2023.

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The complete remission ("CR") data to date, combined with INB-100’s benefit/risk profile are encouraging for the treatment of hematological malignancies and the trial is being expanded by an additional ten patients at Dose Level ("DL") 2, the RP2D. Enrollment in the expansion cohort is on-going and updated data is expected to be presented at medical meetings in 2024, starting with the European Hematological Association Congress ("EHA") in June 2024 with additional long-term follow-up results expected in late 2024 and in 2025.

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

In May 2022, we unveiled the expansion of our DeltEx platform capabilities to include iPSC derived gamma-delta T cells. iPSCs represent a significant step toward next generation approaches of cellular manufacturing for true allogeneic and potentially ‘off-the-shelf’ innate cell therapies. We provided updates in a presentation at the Society for Immunotherapy of Cancer ("SITC") Annual Meeting in November 2023 whereby to date, hundreds of millions of our iPSC derived iVdelta1+ or iVd2+ gamma-delta T cells have been produced from single iPSC clones at a low passage number. These cells demonstrate a profile associated with a reduced risk for cytokine release syndrome ("CRS") and robust cytotoxic activity across a variety of solid and liquid cancers, including ovarian cancer, GBM, acute myeloid leukemia ("AML") and chronic myelogenous leukemia ("CML"). Furthermore, cryopreservation did not impact the cells with the cryopreserved Vd1+ gamma-delta T cells showing comparable cytotoxicity to fresh cells, which allows them to be expanded and banked for potential on-demand clinical use. These data highlight our ability to manufacture multiple gamma-delta T cell populations in a serum and feeder free process that can be scaled for GMP manufacturing and applied as a potentially "off-the-shelf" platform for allogeneic cell therapy.

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

Going Concern

Since inception in 2016, our operations have focused on identifying and developing potential product candidates, conducting clinical trials, organizing and staffing, business planning, establishing our intellectual property portfolio, raising capital, and providing general and administrative support for these operations. We do not have any product candidates approved for sale and have not generated any revenue. We have funded our operations primarily through the sale of equity and equity-linked securities, including through our initial public offering ("IPO"), follow-on offerings, private placements and our at-the-market ("ATM") program with Cantor Fitzgerald & Co. ("Cantor Fitzgerald").

We expect to incur additional losses in the future as we advance our product candidates through clinical trials, seek to expand our product candidate portfolio through developing additional product candidates, grow our clinical, manufacturing, regulatory and quality capabilities, and incur costs associated with operating as a public company. Based on our business strategy, our existing cash of $13.0 million as March 31, 2024 will only fund the projected operating expenses and capital expenditure requirements into January 2025. Accordingly, there is substantial doubt about our ability to continue as a going concern for a period of 12 months from the date of issuance of these condensed financial statements.

We continue to deploy cash preservation measures to defer or reduce costs in the near term in order to preserve capital and increase financial flexibility given the on-going market environment for biotechnology stocks. These cash preservation measures may impact our ability and the timing to execute our strategy, including our ability to achieve the anticipated milestones and the timing of regulatory filings for our preclinical and clinical programs. To continue to fund our operations, management has developed plans, which primarily consist of raising additional capital through some combination of equity and/or debt offerings, including through our ATM program, and identifying strategic collaborations, licensing or other arrangements, to support the development of our product candidates. In addition, we may receive an additional $14.8 million in aggregate proceeds if the holders of our outstanding Series A warrants exercise their warrants pursuant to the mandatory exercise feature, which is triggered upon our public announcement of INB-100 data for the ten currently enrolled patients, should they remain alive and evaluable, covering a period of at least 11 months of long-term follow-up for each patient, along with certain stock price and trading volume requirements. Further, if not otherwise redeemed by us, we may also

16


 

receive aggregate proceeds of up to $17.7 million from the exercise of our outstanding Series B warrants. There is no assurance, however, that we will receive any additional proceeds from these warrants or that any additional financing or any revenue-generating collaboration will be available when needed, that management will be able to obtain financing or enter into a collaboration on terms acceptable to us, or that any additional financing or revenue generated through third-party collaborations will be sufficient to fund our operations. If additional capital is not available to us on a timely basis, or at all, we will be required to take additional actions beyond the cost preservation measures initiated to date to address our liquidity needs, including exploring other strategic options, continuing to further reduce operating expense or delaying, reducing the scope of, discontinuing or altering our research and development activities. For additional information, see “—Liquidity and Capital Resources” below.

The actual amount of cash that we will need to operate is subject to many factors, including those described in the section titled “Risk Factors.” The condensed financial statements have been prepared on the basis that we will continue as a going concern and do not include adjustments that might result from the outcome of this uncertainty.

 

 

Our Pipeline

img239784584_0.jpg 

Components of Our Results of Operations

Revenue

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

Operating Expenses

Research and Development Expenses

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

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

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

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

General and Administrative Expenses

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

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

Interest Income

Interest income includes interest earned from certain bank accounts.

Other Income

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

Income Taxes

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

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Results of Operations

Comparison of the Three Months Ended March 31, 2024 and 2023

The following table sets forth our results of operations for the three months ended March 31, 2024 and 2023 (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

 

 

 

2024

 

 

2023

 

 

Change

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Research and development

 

$

4,903

 

 

$

4,385

 

 

$

518

 

General and administrative

 

 

3,742

 

 

 

3,470

 

 

 

272

 

Total operating expenses

 

 

8,645

 

 

 

7,855

 

 

 

790

 

Interest income

 

 

83

 

 

 

 

 

 

83

 

Other income

 

 

 

 

 

330

 

 

 

(330

)

Loss from operations

 

 

(8,562

)

 

 

(7,525

)

 

 

(1,037

)

Net loss

 

$

(8,562

)

 

$

(7,525

)

 

$

(1,037

)

Research and Development Expenses

The following table summarizes our research and development expenses for the three months ended March 31, 2024 and 2023 (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

 

 

 

2024

 

 

2023

 

 

Change

 

Direct research and development expenses:

 

 

 

 

 

 

 

 

 

INB-100

 

$

125

 

 

$

86

 

 

$

39

 

INB-200

 

 

252

 

 

 

60

 

 

 

192

 

INB-400

 

 

989

 

 

 

1,135

 

 

 

(146

)

Unallocated expenses

 

 

 

 

 

 

 

 

 

Preclinical expenses

 

 

27

 

 

 

34

 

 

 

(7

)

Personnel-related expenses (including stock-based compensation)

 

 

2,521

 

 

 

2,026

 

 

 

495

 

Facility-related and other expenses

 

 

989

 

 

 

1,044

 

 

 

(55

)

          Total research and development expenses

 

$

4,903

 

 

$

4,385

 

 

$

518

 

Research and development expenses were $4.9 million for the three months ended March 31, 2024, compared to $4.4 million for the comparable prior year period. The increase of $0.5 million was primarily due to a $0.5 million increase in personnel-related costs, including salaries and stock-based compensation as a result of the increase in our headcount. Direct clinical costs increased by $0.1 million due to costs for INB-100, INB-200 and INB-400.

General and Administrative Expenses

General and administrative expenses were $3.7 million for the three months ended March 31, 2024, compared to $3.5 million for the comparable prior year period. The increase of $0.3 million was primarily due to an increase in personnel-related costs, including stock-based compensation, and rent expense, offset by cost savings related to directors' and officers' insurance premiums and a reduction in professional services.

Interest Income

Interest income was $0.1 million for the three months ended March 31, 2024. We did not have interest income for the comparable period in the prior year. The increase was due to interest income earned from cash sweep accounts, which we opened during the first quarter of 2024.

Other Income

We did not have other income for the three months ended March 31, 2024. The decrease of $0.3 million was due to a non-recurring contractual arrangement with a non-related third party to transfer two lots of our clinical-scale, GMP-grade gamma-delta T cells in the comparable prior year period.

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Liquidity and Capital Resources

Overview

We have funded our operations primarily through the sale of equity and equity-linked securities, including through our IPO, follow-on offerings, private placements and our ATM program. Through the date of this Quarterly Report, we have raised an aggregate of $115.8 million of gross proceeds from the sale of our securities.

As of March 31, 2024, we had cash of $13.0 million. Our current plan of operation is to continue to implement our business strategy, including continuing clinical development of INB-400, INB-200, INB-100, and advancing our other product candidates, including our preclinical pipeline and our internal research and development capabilities and seek potential collaborative partners for our earlier stage assets. Based on this business strategy, our existing cash as of March 31, 2024 will only fund the projected operating expenses and capital expenditure requirements into January 2025.

ATM Program

In November 2022, we filed a shelf registration statement on Form S-3 (File No. 333-268288) (Shelf Registration Statement) with the SEC, which permits the offering, issuance and sale by us of up to a maximum aggregate offering price of $200 million of our securities, of which $50 million of common stock may be issued and sold pursuant to an ATM program. We entered into a Controlled Equity OfferingSM sales agreement, or the Sales Agreement, with Cantor Fitzgerald and Truist, under which Cantor Fitzgerald and Truist agreed to act as our sales agents to sell shares of our common stock, from time to time, through the ATM program. Through May 2, 2024, we sold an aggregate of 856,624 shares of our common stock under the ATM program, resulting in net proceeds of approximately $1.0 million after deducting underwriting discounts. On March 8, 2024, we delivered a termination notice to Truist, removing them as a sales agent under the ATM program. Such termination became effective on March 14, 2024.

Outstanding Warrants

 

As of March 31, 2024, we had issued and outstanding 574,241 pre-funded warrants, 11,823,829 Series A warrants and 11,823,829 Series B warrants. The pre-funded warrants have an exercise price of $0.0001 per share. The Series A warrants have an exercise price of $1.25 per share. The Series B warrants have an exercise price of $1.50 per share.

 

The Series A warrants are exercisable immediately and will expire on June 13, 2025. We have the option to cause the Series A warrants to be mandatorily exercised at a strike price of $1.25 per share upon the public announcement of INB-100 clinical data for the 10 currently enrolled patients, should they remain alive and evaluable, covering a period of at least 11 months, along with certain stock price and trading volume requirements. The Series B warrants are exercisable immediately and will expire on December 13, 2028. The Series B warrants allow us to mandatorily redeem such warrants at a price of $0.01 per Series B warrant upon the public announcement of our INB-100 data for all enrolled patients covering a period of at least 22 months, along with certain stock price and trading volume requirements. Holders of Series B warrants may choose to exercise such warrants at a purchase price of $1.50 per share prior to such redemption.

 

We may receive up to an aggregate of approximately $32.5 million of gross proceeds from the exercise of the Series A and Series B warrants, assuming the exercise in full of all of the warrants for cash. However, we will only receive proceeds to the extent the holders of the warrants elect to exercise or, in the case of the Series A warrants, if the mandatory exercise feature is triggered.

Going Concern

Our condensed financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the Company on a going concern basis. The going concern basis assumes that assets are realized, and liabilities are extinguished in the ordinary course of business at amounts disclosed in the condensed financial statements. We have not yet generated product sales and, as a result, have experienced operating losses since inception. We expect to incur additional losses in the future as we advance our product candidates through clinical trials, seek to expand our product candidate portfolio through developing additional product candidates, grow our clinical, regulatory and quality capabilities, and incur costs associated with operating as a public company. Based on our business strategy, our existing cash of $13.0 million as of March 31, 2024 will only fund the projected operating expenses and capital expenditure requirements into January 2025. We have taken measures to defer or reduce costs in the near term in order to preserve capital and increase financial flexibility. These cash preservation measures may impact our ability and the timing to execute our strategy, including our ability to achieve the anticipated milestones and the timing of regulatory filings for our preclinical and clinical programs.

To continue to fund our operations, management has developed plans, which primarily consist of raising additional capital through some combination of equity and/or debt offerings, including through our ATM program, and identifying strategic collaborations,

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licensing or other arrangements to support development of our product candidates. In addition, we may receive an additional $14.8 million in aggregate proceeds if the holders of our Series A ordinary warrants exercise their warrants pursuant to the mandatory exercise feature, which is triggered upon our public announcement of INB-100 data for the 10 currently enrolled patients, should they remain alive and evaluable, covering a period of at least 11 months of long-term follow-up for each patient, along with certain stock price and trading volume requirements. Further, if not otherwise redeemed by us, we may also receive aggregate proceeds of up to $17.7 million from the exercise of our outstanding Series B warrants. There is no assurance, however, that we will receive any additional proceeds from these warrants or that any additional financing or any revenue-generating collaboration will be available, when needed, that management will be able to obtain financing or enter into a collaboration on terms acceptable to us, or that any additional financing or revenue generated through third-party collaborations will be sufficient to fund our operations for at least 12 months from the issuance of the condensed financial statements. If additional capital is not available to us on a timely basis, or at all, we will be required to take additional actions beyond the cost preservation measures initiated to address our liquidity needs, including exploring other strategic options, continuing to further reduce operating expense or delaying, reducing the scope of, discontinuing or altering our research and development activities.

The actual amount of cash that we will need to operate is subject to many factors, including those described in the section titled “Risk Factors.” The condensed financial statements have been prepared on the basis that we will continue as a going concern and do not include adjustments that might result from the outcome of this uncertainty.

Funding Requirements

We expect our expenses to increase substantially contingent on additional funding in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our product candidates. Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party clinical research and development services, the costs of manufacturing our clinical and preclinical product candidates, clinical costs, legal and other regulatory expenses and general overhead costs.

Additionally, the process of testing drug candidates in clinical trials is costly, and the timing of progress in these trials is uncertain. We cannot estimate the actual amounts necessary to successfully complete the development and commercialization of our product candidates or whether, or when, we may achieve profitability. Our future capital requirements will depend on many factors, including:

the scope, timing, progress, costs, and results of discovery, preclinical development, and clinical trials for our current and future product candidates;
the number of clinical trials required for regulatory approval of our current and future product candidates;
the costs, timing, and outcome of regulatory review of any of our current and future product candidates;
the cost and timing of manufacturing clinical and commercial supplies of our current and future product candidates;
the costs and timing of future commercialization activities, including manufacturing, marketing, sales, and distribution, for any of our product candidates for which we receive marketing approval;
the costs and timing of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property rights, and defending any intellectual property-related claims, including any claims by third parties that we are infringing upon their intellectual property rights;
our ability to maintain existing, and establish new, strategic collaborations, licensing, or other arrangements and the financial terms of any such agreements, including the timing and amount of any future milestone, royalty, or other payments due under any such agreement;
the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval;
expenses to attract, hire and retain skilled personnel;
the costs of operating as a public company;
our ability to establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third-party and government payers;
addressing any potential interruptions, delays and/or cost increases resulting from public health crises, increased interest rates and geopolitical tensions, such as the Israel-Hamas war and the Russia-Ukraine war;
economic weakness, including inflation, or political instability in particular economies and markets;
the effect of competing technological and market developments; and

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the extent to which we acquire or invest in businesses, products and technologies.

A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate.

Additionally, inflationary factors, such as increases in the cost of our clinical trial materials and supplies, interest rates and overhead costs may adversely affect our operating results. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date, we may experience increases in the near future (especially if inflation rates rise) on our operating costs, including our labor costs and research and development costs, due to supply chain constraints, consequences associated with geopolitical tensions such as the Israel-Hamas war and the Russia-Ukraine war, and employee availability and wage increases, which may result in additional stress on our working capital resources.

Since inception, we have not generated any product revenue and have incurred net losses and negative cash flows from our operations. We have not yet commercialized any of our product candidates, which are in various phases of preclinical and clinical development, and we do not expect to generate revenue from sales of any products for the foreseeable future, if at all. It is likely that we will seek third-party collaborators for the future commercialization of our product candidates that are approved for marketing. However, we may seek to commercialize our products at our own expense, which would require us to incur significant additional expenses for marketing, sales, manufacturing and distribution.

Until such time as we can generate significant revenue from product sales, if ever, we expect to continue to finance our operations from the sale of additional equity or debt financings, or other capital which comes in the form of strategic collaborations, licensing, or other arrangements. In the event that additional financing is required, we may not be able to raise it on terms acceptable to us, or at all. If we raise additional funds through the issuance of equity or convertible debt securities, it may result in dilution to our existing stockholders.

If we raise funds through strategic collaboration, licensing or other arrangements, we may relinquish significant rights or grant licenses on terms that are not favorable to us. Our ability to raise additional funds may be adversely impacted by potential worsening global economic conditions, increases in inflation expectations and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from recent bank failures, public health crises such as the COVID-19 pandemic and other geopolitical tensions, such as the Israel-Hamas war and the Russia-Ukraine war. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or explore other strategic options for our product development or future commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise prefer to develop and market ourselves.

Material Cash Requirements

Our material cash requirements as of March 31, 2024 included operating lease commitments, including the lease of our current headquarters office in New York, New York, laboratory and office space in Birmingham, Alabama and a manufacturing service agreement with a third party to engage in research of cell therapy products. As of March 31, 2024, we had fixed lease payment obligations of $7.2 million, with $2.1 million payable within 12 months. Refer to Note 12 to our condensed financial statements for additional information.

Except as disclosed above, we have no long-term debt and no material non-cancelable purchase commitments with service providers, as we have generally contracted on a cancelable, purchase-order basis. We enter into contracts in the normal course of business with equipment and reagent vendors, CROs, CMOs and other third parties for clinical trials, preclinical research studies and testing and manufacturing services. These contracts are cancelable by us upon prior notice. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation. These payments are not determinable.

Cash Flows

The following table summarizes our sources and uses of cash for each of the periods below (in thousands):

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Net cash used in operating activities

 

$

(7,919

)

 

$

(7,439

)

Net cash used in investing activities

 

 

(71

)

 

 

(429

)

Net cash (used in) provided by financing activities

 

 

(277

)

 

 

547

 

Net decrease in cash and restricted cash

 

$

(8,267

)

 

$

(7,321

)

 

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Operating Activities

Cash used in operating activities was $7.9 million during the three months ended March 31, 2024, primarily due to our net loss of $8.6 million and changes in operating assets and liabilities of $1.1 million, partially offset by an increase in non-cash charges of $1.9 million. Decreases in our operating assets and liabilities consisted primarily of $2.1 million in accrued expenses and other current liabilities relating primarily to accrued compensation, accrued clinical trials, and accrued legal and $0.2 million in long-term operating liabilities, partially offset by an increase of $0.8 million in prepaid expenses and other current assets and $0.5 million in accounts payable. Increases in our non-cash charges consisted primarily of $1.2 million in stock-based compensation due to increased employee headcount resulting from growth in our business, $0.4 million in amortization of right-of-use assets associated with our operating and finance leases for the period and $0.2 million of depreciation.

Cash used in operating activities was $7.4 million during the three months ended March 31, 2023, primarily due to our net loss of $7.5 million and changes in operating assets and liabilities of $1.4 million, partially offset by an increase in non-cash charges of $1.5 million. Decrease in our operating assets and liabilities consisted primarily of $1.0 million in accounts payable, $0.7 million in accrued expenses and other current liabilities relating to accrued leasehold improvements and accrued manufacturing costs and $0.2 million in long-term operating liabilities, partially offset by $0.5 million in prepaid expenses and other current assets. Increases in our non-cash charges consisted primarily of $0.9 million in stock-based compensation due to increased employee headcount resulting from growth in our business, $0.4 million in amortization of operating and finance leases for the quarter and $0.2 million of depreciation.

Investing Activities

Cash used in investing activities was $0.1 million during the three months ended March 31, 2024, primarily due to purchases of property and equipment and construction in progress activity in relation to capitalized software.

Cash used in investing activities was $0.4 million during the three months ended March 31, 2023, primarily due to increased construction-in-progress activity in relation to leasehold improvements to the leased space located in Alabama

Financing Activities

Cash used in financing activities was $0.3 million during the three months ended March 31, 2024, primarily due to principal payments of $0.2 million on our leases and $0.1 million of issuance costs.

Cash provided by financing activities was $0.5 million during the three months ended March 31, 2023, primarily due to proceeds received from the issuance and sale of common stock pursuant to the ATM program of $0.7 million offset by principal payments of $0.2 million on our leases.

 

Critical Accounting Estimates

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is based on our condensed financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our condensed financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, costs and expenses. We base our estimates and assumptions on historical experience, known trends and other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates. In making estimates and judgments, management employs critical accounting policies.

We have listed below our critical accounting policies that we believe to have the greatest potential impact on our condensed financial statements. Historically, our assumptions, judgments and estimates relative to our critical accounting estimates have not differed materially from actual results.

 

Critical Accounting Policies

 

We define our critical accounting policies as those accounting principles that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles. Our significant accounting policies are more fully described in Note 2 to our condensed financial statements located elsewhere in this Quarterly Report. We have listed below our critical accounting estimates and accounting policies that we believe to have the greatest potential impact on our condensed financial statements.

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Historically, our assumptions, judgments and estimates relative to our critical accounting estimates have not differed materially from actual results.

 

Research and Development Costs

We expense all costs incurred in performing research and development activities. Research and development expenses include salaries and benefits, stock-based compensation expense, lab supplies and facility costs, as well as fees paid to nonemployees and entities that conduct certain research and development activities on our behalf and expenses incurred in connection with license agreements. Non-refundable advance payments for goods or services that will be used for rendered or future research and development activities are deferred and amortized over the period that the goods are delivered, or the related services are performed, subject to an assessment of recoverability.

As part of the process of preparing our financial statements, we are required to estimate our accrued research and development expenses. We make estimates of our accrued expenses as of each balance sheet date in the condensed financial statements based on facts and circumstances known to us at that time. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or the amount of prepaid expenses accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses.

 

Stock-Based Compensation

We measure all stock-based awards granted to employees, nonemployees and directors based on the fair value on the date of the grant and recognize compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. We account for our stock-based compensation as an expense in the statements of operations based on the awards’ grant date fair values. We account for forfeitures as they occur by reversing any expense recognized for unvested awards. We estimate the fair value of options granted using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires inputs based on certain subjective assumptions, including (a) the expected stock price volatility, (b) the calculation of expected term of the award, (c) the risk-free interest rate and (d) expected dividends. Due to the lack of company-specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The computation of expected volatility is based on the historical volatility of a representative group of companies with similar characteristics to us, including stage of product development and life science industry focus. We use the simplified method as allowed by the SEC Staff Accounting Bulletin (SAB) No. 107, Share-Based Payment, to calculate the expected term for options granted to employees, as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The expected dividend yield is assumed to be zero as we have never paid dividends and have no current plans to pay any dividends on our common stock.

Recent Accounting Pronouncements

We did not adopt any new accounting guidance during the three months ended March 31, 2024 and as of the date of this report that had a material impact on the condensed financial statements or disclosures.

Emerging Growth Company and Smaller Reporting Company Status

We qualify as an emerging growth company ("EGC") as defined in the Jumpstart Our Business Startups Act ("JOBS Act"). As an EGC, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies, including reduced disclosure about our executive compensation arrangements, exemption from the requirements to hold non-binding advisory votes on executive compensation and golden parachute payments and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

We may take advantage of these exemptions until December 31, 2026, or such earlier time that we are no longer an emerging growth company. We would cease to be an EGC earlier if we have more than $1.235 billion in annual revenue, we have more than $700.0 million in market value of our stock held by non-affiliates or we issue more than $1.0 billion of non-convertible debt securities over a three-year period. For so long as we remain an EGC, we are permitted, and intend, to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not EGCs. We may choose to take advantage of some, but not all, of the available exemptions.

In addition, the JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an EGC to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected not to “opt out” of such extended transition period, which means that when a

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standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an EGC. Therefore, the reported results of operations contained in our financial statements may not be directly comparable to those of other public companies.

We are also a “smaller reporting company,” and we may continue to be a smaller reporting company until either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million.

If we are a smaller reporting company at the time we cease to be an EGC, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report and, similar to EGCs, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Item 10 of Regulation S-K and are not required to provide the information otherwise required under this item.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of the end of the period covered by this Quarterly Report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of March 31, 2024, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended March 31, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

From time to time, we may become involved in various legal proceedings arising in the ordinary course of our business. We are not currently a party to any material legal proceedings that we believe could have a material adverse effect on our business, operating results or financial condition.

Item 1A. Risk Factors.

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this Quarterly Report on Form 10-Q, including our financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our common stock. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and prospects. In such an event, the market price of our common stock could decline and you may lose all or part of your investment.

Summary of Selected Risk Factors Associated with Our Business

The following is a summary of the principal risks associated with an investment in our common stock:

There is substantial doubt regarding our ability to continue as a going concern. We will require substantial additional funding to finance our operations through regulatory approval, and if we are unable to raise capital, we could be forced to delay, reduce or explore other strategic options for certain of our development programs, or even terminate our operations.
Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our product candidates.
A sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.
Our outstanding warrants may not be exercised and we may not receive any cash proceeds from any exercise of warrants.
The report of our independent registered public accounting firm for the years ended December 31, 2023 and 2022 contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern.
We have incurred significant operating losses since inception and anticipate that we will continue to incur substantial operating losses for the foreseeable future and may never achieve or maintain profitability.
Our ability to raise capital may be limited by applicable laws and regulations.
We have a limited operating history and have no products approved for commercial sale, which may make it difficult for you to evaluate the success of our business to date and to assess our future viability.
We are dependent on the successful clinical development, regulatory approval and commercialization of our gamma-delta T cell product candidates. If we are not able to obtain required regulatory approvals, we will not be able to commercialize our product candidates and our ability to generate product revenue will be adversely affected.
Interim, “topline” and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.
Our DeltEx product candidates utilize novel approaches to cell therapies, including cancer treatment, which presents significant challenges to successfully develop, manufacture and commercialize our product candidates.
The clinical and commercial utility of our DeltEx platform is uncertain and may never be realized. Additionally, certain aspects of the function and production of gamma-delta T cells are poorly understood or currently unknown, and may only become known through further preclinical and clinical testing.
Clinical product candidate development involves a lengthy and expensive process with uncertain outcomes. We may incur additional costs and encounter substantial delays or difficulties in our clinical trials.
If we encounter difficulties in enrolling patients in our clinical trials, our clinical development activities could be delayed or otherwise adversely affected.
We may not be able to file investigational new drug ("IND") applications to commence additional clinical trials on the timelines we expect, and even if we are able to, the FDA may not permit us to proceed.

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Development of a product candidate intended for use in combination with an already approved therapy may present increased complexity and more or different challenges than development of a product candidate for use as a single agent or monotherapy.
Public opinion and scrutiny of our competitors, cell-based immunotherapy and genetic modification approaches may impact public perception of our company and product candidates, or may adversely affect our ability to conduct our business, raise additional capital and our business plans.
We face significant competition, and many of our competitors have substantially greater experience and resources than we have.
Our manufacturing process is complex, and we may encounter difficulties in production, which would delay or prevent our ability to provide a sufficient supply of our product candidates for future clinical trials or commercialization, if approved.
We may rely on third-party contractors or contract development manufacturing organization for the manufacturing of our product candidates, and failure by those parties to adequately perform their obligations could harm our business.
We currently store our gamma-delta T cells and biologic correlative and research specimens from clinical trials and development programs and clinical lentivectors at our research and development facilities and at the facilities of our clinical and/or manufacturing partners, and any damage or loss to our storage freezers and/or facilities from natural disasters or otherwise would cause delays in replacement, and our business could suffer.
We are currently dependent on a single third-party supplier for manufacture of our automated manufacturing device and our lentiviral vectors. These are critical products required for the manufacturing of our product candidates, including INB-100, INB-200 and INB-400. Any damage or loss to the ability of our suppliers to deliver supplies in a timely manner could cause delays in manufacturing or our clinical trials and our business could suffer.
We rely on third-party healthcare professionals to procure cells for manufacturing and to administer gamma-delta T cells to patients, and our business could be harmed if these third parties administer these processes and/or cells incorrectly.
Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues. If we breach our license agreements with the University of Alabama at Birmingham Research Foundation, Children’s Healthcare of Atlanta, Inc. and Emory University, or any of the other agreements under which we acquired, or will acquire, the intellectual property rights to our product candidates, we could lose the ability to continue the development and commercialization of the related product.
If we are unable to obtain and maintain patent protection for our product candidates and technology, or if the scope of the patent protection obtained is not sufficiently broad or robust, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize our product candidates and technology may be adversely affected.
Our ability to compete in the pharmaceuticals industry depends upon our ability to attract and retain highly qualified managerial, scientific, medical and other personnel. We are highly dependent on the services of our co-founders, William Ho, our President and Chief Executive Officer, and Dr. Lawrence Lamb, our Chief Scientific Officer, and the loss of these members of our management team or other key employees could impede, delay or prevent the successful development of our product pipeline, the completion of our current and planned clinical trials, and the commercialization of our products or in-licensing or acquisition of new assets, and could negatively impact our ability to successfully implement our business plan.
Actual or perceived failures to comply with applicable data privacy and security obligations, including laws, regulations, standards and other requirements could lead to regulatory investigations or actions, litigation, fines and penalties, disruptions of our business operations, reputational harm, loss of revenue or profits, and other adverse business consequences.
Unstable market and economic conditions, including as a result of bank closures, public health crises or geopolitical tensions, such as the Russia-Ukraine and the Israel-Hamas wars, may have serious adverse consequences on our business, ability to raise capital, financial condition and share price.
We maintain cash deposits in excess of federally insured limits. Adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions could adversely affect our liquidity, current financial condition and projected business operations.

Risks Related to Our Financial Position and Capital Needs

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There is substantial doubt regarding our ability to continue as a going concern. We will require substantial additional funding to finance our operations, and if we are unable to raise capital, we could be forced to delay, reduce or explore other strategic options for certain of our development programs, or even terminate our operations.

Based on our current business strategy, there is substantial doubt concerning our ability to continue as a going concern. Our existing cash as of March 31, 2024 will only fund our operations into January 2025. We continue to deploy cash preservation to defer or reduce costs in the near term in order to preserve capital and increase financial flexibility. These cash preservation measures may impact our ability and the timing to execute our strategy. Our ability to continue as a going concern will depend on our ability to obtain additional funding, as to which no assurances can be given. We continue to analyze various alternatives, including additional debt or equity financings or other arrangements.

We expect our expenses to continue to increase in connection with our ongoing activities, particularly as we conduct clinical trials of, and seek marketing approval for, our product candidates and advance our other programs. Developing pharmaceutical products, including conducting preclinical studies and clinical trials, is a very time-consuming, expensive and uncertain process that takes years to complete. Other unanticipated costs may also arise. Because the design and outcome of our ongoing and anticipated clinical trials are highly uncertain, we cannot reasonably estimate the actual amount of resources and funding that will be necessary to successfully complete the development and commercialization of any product candidate we develop. Moreover, we will need to obtain substantial additional funding in connection with our continuing operations and planned research and clinical development activities. Our future capital requirements will depend on many factors, including:

the timing, progress, costs and results of our ongoing preclinical studies and clinical trials of our product candidates;
the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials of other product candidates that we may pursue;
our ability to establish collaborations on favorable terms, if at all;
the costs, timing and outcome of regulatory review of our product candidates;
the costs and timing of future commercialization activities, including product manufacturing, marketing, sales, reimbursement and distribution, for any of our product candidates for which we may receive marketing approval;
the revenue, if any, received from commercial sales of our product candidates for which we may receive marketing approval;
the cost of any milestone and royalty payments with respect to any approved product candidates;
the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims;
the costs of operating as a public company; and
the extent to which we acquire or in-license other product candidates and technologies.

We may never generate the necessary data or results required to obtain regulatory approval in order to generate revenue from product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for several years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be available to us on acceptable terms, or at all. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions, inflation expectations, and the recent disruptions to and volatility in the credit and financial markets in the United States and worldwide resulting from public health crises and geopolitical tensions, such as the Israel-Hamas war and the Russia-Ukraine war. If we are unable to raise capital when needed or on acceptable terms, we could be forced to delay, reduce, or explore other strategic options for our research and development programs or other opportunities, or even our operations. If we do not obtain additional financing and are required to terminate our operations, our stockholders will lose their investment.

Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our product candidates.

Until such time, if ever, as we can generate substantial product revenue, we will need to finance our cash needs through public or private equity or debt financings, third-party funding, marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches. We do not have any committed external source of funds. To the extent that we raise additional capital, if available, through the sale of equity or convertible debt securities, including through our ATM program, your ownership interest in our company may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt and equity financings, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as redeeming our shares, making investments,

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incurring additional debt, making capital expenditures, declaring dividends or placing limitations on our ability to acquire, sell or license intellectual property rights.

If we raise additional capital through future collaborations, strategic alliances or third-party licensing arrangements, we may have to relinquish valuable rights to our intellectual property, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us, if at all. If we are unable to raise additional capital when needed, we may be required to delay, limit, reduce or explore other strategic options for our product candidate development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise develop and market ourselves.

A sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

Sales of a substantial number of shares of our common stock in the public market could occur at any time, including as a result of exercises of the outstanding warrants. If our stockholders sell, or the market perceives that our stockholders intend to sell, substantial amounts of our common stock in the public market, the market price of our common stock could decline significantly. We cannot predict what effect, if any, sales of our shares in the public market or the availability of shares for sale will have on the market price of our common stock. However, future sales of substantial amounts of our common stock in the public market, including shares issued upon exercise of outstanding options, or the perception that such sales may occur, could adversely affect the market price of our common stock.

We also expect that significant additional capital may be needed in the future to continue our planned operations. To raise capital, we may sell common stock, convertible securities or other equity securities in one or more transactions at prices and in a manner we determine from time to time. These sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock.

 

Our outstanding Series A and Series B warrants may not be exercised and we may not receive any cash proceeds from any exercise of warrants.

 

As of March 31, 2024, we had 574,241 pre-funded warrants, 11,823,829 Series A warrants and 11,823,829 Series B warrants outstanding.

 

The Series A warrants are exercisable immediately and will expire on June 13, 2025. We have the option to cause the Series A warrants to be exercised at a strike price of $1.25 per share upon the public announcement of INB-100 clinical data for the 10 currently enrolled patients, should they remain alive and evaluable, covering a period of at least 11 months, along with certain stock price and trading volume requirements. The Series B warrants are exercisable immediately and will expire on December 13, 2028. The Series B warrants allow us to redeem such warrants at a price of $0.01 per Series B warrant upon the public announcement of our INB-100 data for all enrolled patients covering a period of at least 22 months, along with certain stock price and trading volume requirements. Holders of Series B warrants may choose to exercise such warrants at a purchase price of $1.50 per share prior to such redemption.

 

We may receive up to an aggregate of approximately $32.5 million from the exercise of the Series A or Series B warrants assuming the exercise in full of all of the warrants for cash. However, we will only receive proceeds to the extent the holders of warrants elect to exercise or, in the case of the Series A warrants, if the mandatory exercise feature is triggered. We can provide no assurances as to the amount of proceeds we will receive from the exercise of warrants or whether we will receive any proceeds at all. Additionally, the warrants may, in certain circumstances, be exercised by way of a cashless exercise, meaning that the holder may not pay a cash purchase price upon exercise, but instead would receive upon such exercise the net number of shares of our common stock determined according to the formula set forth in the applicable warrant. Accordingly, we may not receive any additional funds, or any significant additional funds, upon any exercise of the warrants.

The report of our independent registered public accounting firm for the years ended December 31, 2023 and 2022 contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern.

Due to the uncertainty of our ability to meet our current operating and capital expenses, in its report on our audited annual financial statements as of and for the years ended December 31, 2023 and 2022, our independent auditors included an explanatory paragraph regarding our ability to continue as going concern. Substantial doubt about our ability to continue as a going concern may materially and adversely affect the price per share of our common stock and we may have a more difficult time obtaining financing. Further, the perception that we may be unable to continue as a going concern may impede our ability to raise additional funds or operate our business due to concerns regarding our ability to discharge our contractual obligations.

We have incurred significant operating losses since inception and anticipate that we will continue to incur substantial operating losses for the foreseeable future and may never achieve or maintain profitability.

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We have incurred significant operating losses since inception. Our net loss was $8.6 million and $7.5 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, we had an accumulated deficit of $99.8 million. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. Since inception, we have devoted substantially all of our efforts to research and preclinical and clinical development of our product candidates, organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio and conducting clinical trials. To date, we have never obtained regulatory approval for, or commercialized, any product candidates. It could be several years, if ever, before we have a commercialized product. The net losses we incur may fluctuate significantly from quarter to quarter and year to year. We anticipate that our expenses will increase substantially if, and as, we:

conduct our current and future clinical trials for our product candidates;
continue to develop and advance our preclinical product candidates;
seek regulatory and marketing approvals for any of our current and future product candidates that successfully complete clinical trials;
establish our manufacturing capability, including developing our contract development and manufacturing relationships, and building our internal manufacturing facilities;
maintain, expand and protect our intellectual property portfolio;
expand our operational, financial, and management systems and increase personnel, including personnel to support our preclinical and clinical development, manufacturing and commercialization efforts;
establish a sales, marketing and distribution infrastructure in the future to commercialize any current or future product candidate for which we may obtain marketing approval;
seek to identify, discover, develop and commercialize additional product candidates; and
incur additional legal, accounting or other expenses in operating our business, including the additional costs associated with operating as a public company.

To become and remain profitable, we must succeed in developing and eventually commercializing products that generate significant revenue. This will require us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials of our current and future product candidates, obtaining regulatory approval, establishing and validating commercial-scale current good manufacturing practices ("cGMP") facilities, marketing and selling any products for which we obtain regulatory approval (including through third parties), as well as discovering or acquiring and developing additional product candidates. We are only in the preliminary stages of some of these activities. As inflation expectations remain uncertain in the United States and globally, we expect the costs of certain activities will increase. Should suppliers and consultants increase prices to cover increased wages and materials costs, we expect our expenses and cash utilization could increase substantially. We may never succeed in these activities and, even if we do, may never generate revenues that are sufficient to offset our expenses and achieve profitability.

Because of the numerous risks and uncertainties associated with product candidate development, we are unable to accurately predict the timing or amount of expenses or when, or if, we will be able to achieve profitability. If we are required by regulatory authorities to perform clinical trials or preclinical studies in addition to those currently expected, or if there are any delays in the initiation and completion of our clinical trials or the development of any of our product candidates, our expenses could increase.

Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our common stock could also cause you to lose all or part of your investment.

Our ability to raise capital may be limited by applicable laws and regulations.

Using a shelf registration statement on Form S-3 to raise additional capital generally takes less time and is less expensive than other means, such as conducting an offering under a Form S-1 registration statement. However, our ability to raise capital using a shelf registration statement may be limited by, among other things, SEC rules and regulations. Under SEC rules and regulations, if our public float (the market value of our common stock held by non-affiliates) is less than $75.0 million, then the aggregate market value of securities sold by us or on our behalf under our Form S-3 in any 12-month period is limited to an aggregate of one-third of our public float. As our public float is currently less than $75.0 million, we are currently subject to this limitation. If our ability to utilize a Form S-3 registration statement for a primary offering of our securities continues to be limited to one-third of our public float, we may need to conduct such an offering pursuant to an exemption from registration under the Securities Act or under a Form S-1 registration statement, which would increase the cost of raising additional capital relative to utilizing a Form S-3 registration statement.

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We have a limited operating history and have no products approved for commercial sale, which may make it difficult for you to evaluate the success of our business to date and to assess our future viability.

We are an early clinical-stage biotechnology company with a limited operating history upon which you can evaluate our business and prospects. Our operations to date have been limited to financing and staffing our company, developing our technology, identifying and developing our product candidates, undertaking preclinical studies, initiating and conducting clinical trials for INB-400, INB-200 and INB-100, business planning and raising capital. Other than INB-400, INB-200 and INB-100, all of our research programs are still in the preclinical or research stage of development, and the risk of failure in the biopharmaceutical industry for programs or products candidates at such stage of development is even higher than those in the clinical stage of development. We have not yet demonstrated an ability to successfully conduct or complete any clinical trials, including large-scale, multi-center pivotal clinical trials, obtain marketing approval, manufacture a clinical or commercial scale product or arrange for a third party to do so on our behalf or conduct sales and marketing activities necessary for successful product commercialization. Typically, it takes about six to ten years to develop a new drug from the time it enters Phase 1 clinical trials to when it is approved for treating patients, but in many cases it may take longer. Consequently, predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history or a history of successfully developing and commercializing genetic medicine product candidates.

In addition, as a business with a limited operating history, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. We will eventually need to transition from a company with a research and clinical focus to a company, if any of our product candidates are approved, capable of supporting commercial activities. We may not be successful in such a transition.

Risks Related to the Development of Our Product Candidates

We are dependent on the successful clinical development, regulatory approval and commercialization of our gamma-delta T cell product candidates. If we are not able to obtain required regulatory approvals, we will not be able to commercialize our product candidates and our ability to generate product revenue will be adversely affected.

Our business is dependent on our ability to successfully complete development of, obtain regulatory approval for, and, if approved, successfully commercialize our product candidates in a timely manner. We may face unforeseen challenges in our product candidate development strategy, and we can provide no assurances that our product candidate or clinical trial design will prove to be effective, that we will be able to take advantage of abbreviated regulatory pathways for any of our product candidates, or that we will ultimately be successful in our future clinical trials. We expect that a substantial portion of our efforts and expenses over the next several years will be devoted to the development of our lead product candidates, INB-400, INB-200, and INB-100, in our ongoing clinical trials. We expect that a substantial portion of our efforts and expenses over the next several years will be devoted to the development of our lead product candidates, INB-400, INB-200, and INB-100, in ongoing clinical trials. Our product candidates are in early stages of development and may never be commercialized.

We currently anticipate seeking initial regulatory approvals in the United States and the European Union, but may in the future submit applications for the regulatory approval of one or more of our product candidates to additional foreign regulatory authorities. We have not applied or obtained regulatory approval for any product candidate in the United States or abroad, and it is possible that neither our current product candidates nor any product candidates we may seek to develop in the future will obtain regulatory approval. Neither we nor any of our partners are permitted to market any of our product candidates in the United States or abroad until we receive regulatory approval from the FDA or the applicable foreign regulatory agency.

All of our product candidates will require additional clinical and non-clinical development, regulatory review and approval in multiple jurisdictions, substantial investment, access to sufficient commercial manufacturing capacity and significant marketing efforts before they can be successfully commercialized. Prior to obtaining approval to commercialize any product candidate in the United States or abroad, we must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA or comparable foreign regulatory authorities, that such product candidate is safe and effective for its intended uses. Results from preclinical studies and clinical trials can be interpreted in different ways. Even if we believe that the preclinical or clinical data for our product candidates are promising, such data may not be sufficient to support approval by the FDA and other regulatory authorities. The FDA may also require us to conduct additional preclinical studies, assay development or clinical trials for our product candidates either pre- or post-approval, or it may object to elements of our clinical development program, requiring their alteration. We may also decide to modify clinical protocols or procedures in future clinical trials based on clinical and experimental data.

Of the large number of products in development, only a small percentage successfully complete the FDA or comparable foreign regulatory authorities’ approval processes and are commercialized. The lengthy approval or marketing authorization process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval or marketing authorization to market our product candidates, which would significantly harm our business, financial condition, results of operations and prospects.

Our product candidates could fail to receive regulatory approval from the FDA or a comparable foreign regulatory authority for many reasons, including, among others:

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disagreement with the design or conduct of any of our clinical trials;
failure to demonstrate to the satisfaction of regulatory agencies that our product candidates are safe and effective, or have a positive benefit/risk profile for its proposed indication;
failure of clinical trials to meet the level of statistical significance required for approval;
disagreement with our interpretation of data from preclinical studies or clinical trials;
the insufficiency of data collected from clinical trials of our product candidates to support the submission and filing of a Biologics License Application ("BLA") or other submission or to obtain regulatory approval;
failure to obtain approval of our manufacturing processes or facilities of third-party manufacturers with whom we contract for clinical and commercial supplies or our own manufacturing facility; or
changes in the approval policies or regulations that render our preclinical and clinical data insufficient for approval.

Additionally, any delay in, or termination of, our clinical trials will delay the submission of a BLA to the FDA or other similar applications with other relevant foreign regulatory authorities and, ultimately, our ability to commercialize our product candidates, if approved, and generate product revenue.

Even if we eventually complete clinical testing and receive approval of a BLA, or foreign marketing application for our product candidates, the FDA or the comparable foreign regulatory authorities may grant approval or other marketing authorization contingent on the performance of costly additional clinical trials, including post-market clinical trials. The FDA or the comparable foreign regulatory authorities also may approve or authorize for marketing a product candidate for a more limited indication or patient population than we originally request, and the FDA or comparable foreign regulatory authorities may not approve or authorize the labeling that we believe is necessary or desirable for the successful commercialization of a product candidate. Any delay in obtaining, or inability to obtain, applicable regulatory approval or other marketing authorization would delay or prevent commercialization of that product candidate and would adversely impact our business and prospects.

Moreover, because all of our product candidates are based on the same core gamma-delta T cell technology, if any of our product candidates encounter safety or efficacy problems, developmental delays or regulatory issues or other problems including the failure to demonstrate comparability or equivalence, these could impact the development plans for our other product candidates. Our failure to timely complete clinical trials, obtain regulatory approval or, if approved, commercialize our product candidates could adversely affect our business, financial condition and results of operations.

Our product candidates are in early stages of development, and therefore they will require extensive additional preclini