INmune Bio Annual Report 2023

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FY2023 Annual Report · INmune Bio

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2023

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission file number: 001-38793

INMUNE BIO INC.
(Exact name of registrant as specified in its charter)

Nevada
(State or other jurisdiction of
incorporation or organization)

47-5205835
(I.R.S. Employer
Identification No.)

225 NE Mizner Blvd, Suite 640
Boca Raton, FL 33432
(Address of principal executive offices)(Zip Code)

(858) 964 3720
(Registrant’s telephone number, including area code)

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

Title of each class
Common Stock ($0.001 par value)

Trading Symbol
INMB

Name of Market Where Traded
The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by checkmark 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. Yes ☒ No ☐

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). Yes ☒ No ☐

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
Non-accelerated filer
Emerging Growth Company

☐
☒
☒

Accelerated filer
Smaller reporting 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 has ﬁled a report on and attestation to its management’s assessment of the eﬀectiveness of its internal
control over ﬁnancial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting ﬁrm that
prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the ﬁnancial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the registrant’s common stock held by non-aﬃliates of the registrant was approximately $ 106 million as of the last
business day of the registrant’s most recently completed second ﬁscal quarter (June 30, 2023), based upon the closing sale price for the registrant’s
common stock on that day as reported by the NASDAQ Capital Market. For purposes of this computation only, all executive oﬃcers and directors have
been deemed affiliates.

As of March 27, 2024, there are 18,026,473 shares of common stock, $0.001 par value per share outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information in Part III of this Annual Report on Form 10-K is incorporated by reference to our deﬁnitive Proxy Statement for the 2024 Annual
Meeting of Shareholders to be filed with the Securities and Exchange Commission within 120 days after the fiscal year ended December 31, 2023.

FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2023

TABLE OF CONTENTS

Item Number and Caption
Forward-Looking Statements

PART I

1.
1A.
1B.
1C.
2.
3.
4.

PART II

5.
6.
7.
7A.
8.
9.
9A.
9B.
9C.

PART III

10.
11.
12.
13.
14.

PART IV

15.
16.

Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
[Reserved]
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting, and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers, and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services

Exhibits
Form 10-K Summary
Signatures

PART I

Page
ii

1
33
58
58
58
58
58

59
59
59
68
F-1
69
69
69
69

70
70
70
70
70

71
74
75

All brand names or trademarks appearing in this report are the property of their respective holders. Unless the context requires otherwise, references in
this report to “INmune Bio” the “Company,” “we,” “us,” and “our” refer to INmune Bio Inc., a Nevada corporation.

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (this “Annual Report”) contains “forward-looking statements” Forward-looking statements reﬂect our current
view about future events. When used in this Report, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of
these terms and similar expressions, as they relate to us or our management, identify forward-looking statements. Such statements include, but are not
limited to, statements contained in this Report relating to our business strategy, our future operating results and liquidity and capital resources outlook.
Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions.
Because forward–looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to
predict. Our actual results may diﬀer materially from those contemplated by the forward-looking statements. They are neither statements of historical fact
nor guarantees of assurance of future performance. We caution you therefore against relying on any of these forward-looking statements. Important
factors that could cause actual results to differ materially from those in the forward-looking statements include, without limitation, our ability to raise capital
to fund continuing operations; our ability to protect our intellectual property rights; the impact of any infringement actions or other litigation brought against
us; competition from other providers and products; our ability to develop and commercialize products and services; changes in government regulation;
our ability to complete capital raising transactions; and other factors (including the risks contained in the section of this Annual Report entitled “Risk
Factors”) relating to our industry, our operations and results of operations. Actual results may diﬀer signiﬁcantly from those anticipated, believed,
estimated, expected, intended or planned.

Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We
cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the
United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

PART I

Item 1. Business

Our Strategy

Our objective is to develop and commercialize our product candidates to treat diseases where the innate immune system is dysfunctional
causing or contributing to the patient’s disease. Innate immune dysfunction can occur for a variety of reasons including genetics, lifestyle, and other
factors. However, age plays a signiﬁcant role in the development of immune dysfunction. Innate immune dysfunction can be seen in cancer where
Natural Killer (“NK”) cells are impaired and facilitate a tumor’s evasion of the immune system and subsequent disease progression. Further,
immunologically-mediated chronic inﬂammation causes expression of MUC4, inducing immunosuppressive cells of the tumor microenvironment to
proliferate and protect the tumor from attack by the patient’s immune system. Chronic inﬂammation is implicated in neurologic and metabolic diseases
where it impairs the innate immune system. Our initial focus is on the treatment of cancer, Alzheimer’s Disease (“AD”), Treatment Resistant Depression
(“TRD”) and an out-licensing strategy. In cancer, we plan to pursue two parallel development programs: (1) with INKmune we are treating men with
castration-resistant, metastatic prostate cancer (“mCPRC”); (2) with INB03, we plan to develop pre-clinical data in cancers that express MUC4, a
mucinous polyglucan on the surface of some epithelial cancer cells with a goal to out-license the program. MUC4 expression appears to predict
resistance to immunotherapy including women with MUC4 expressing HER2+ breast cancer and potentially other MUC4 resistant cancers.

Our third drug candidate, XPro1595 (“XPro”), targets Alzheimer’s Disease and TRD. XPro for AD has completed Phase I trials and a Phase II
trial is open in, UK, EU, Australia and Canada. XPro for TRD is being prepared for Phase II trials and will start after the current AD global Phase II trial
has completed recruitment. In early 2023, the Company also announced pre-clinical data in Duchene’s Muscular Dystrophy (“DMD”) including new
intellectual property for the purpose of trying to seek partnership for the development of this program. DMD is an X-linked genetic disease that occurs
most often in young boys. People with DMD do not produce dystrophin, a protein necessary for normal skeletal muscle function. The patients develop
weakness of skeletal muscles initially seen as weakness in standing and walking. Over time, the disease progresses forcing the patient to be wheelchair
bound by early teens. The patients typically die young due to respiratory and cardiac failure before they reach thirty years old. Therapies for DMD delay
progression, there is no cure.

The overall principal components of our business strategy to achieve these objectives are to:

●

pursue development strategies and regulatory approval pathways that allow us to expand the treatment of oncology patients with our lead
product candidate INKmune;

●

pursue pre-clinical development strategies to facilitate out-licensing INB03;

● pursue development strategies and regulatory approval pathways that allow the treatment of neurodegenerative diseases in patients with our

lead product candidate, XPro;

● Pursue development strategies with a dominant-negative tumor necrosis factor (“DN-TNF”) compound for the treatment of DMD;

●

adopt a product development strategy that solidiﬁes our existing intellectual property (“IP”) to prevent competition and expand our IP suite
into related immunotherapeutic areas;

provide clear value propositions to third-party payers, such as managed care companies or government programs like Medicare, to merit
reimbursement for our product candidates; and

● Collaborate with other pharmaceutical companies with respect to, among other things, our INKmune and the DN-TNF platform that includes
INB03 and XPro product candidates, our DMD DN-TNF candidate and other products that will beneﬁt from development or marketing
beyond our current resources.

Pursue development and regulatory approval pathways. We believe INKmune, INB03 and XPro may be approvable under pathways that are
potentially shorter than those typically available for drug products based on novel active ingredients, including as an orphan drug under the Orphan Drug
Act and approval under the Food and Drug Administration (the “FDA”) Accelerated Approval Program (see “Government Regulation”). We have not yet
had a discussion with the Medicines and Healthcare Products Regulatory Agency (“MHRA”) and/or FDA regarding such designation, but plan to do so in
the future. We believe the INKmune program to treat castration resistant prostate cancer may qualify for orphan status. We believe that it would take a
minimum of six months to receive Orphan Drug status once we apply for application and a minimum of 12 months to receive a designation once we
submit an application. We might never have these discussions, submit applications under the Orphan Drug Act or the FDA Accelerated Approval
Program or have these applications approved if we do.

Adopt a two-pronged patent strategy. We are pursuing a two-pronged product development strategy that will seek to solidify our existing IP to
prevent competition and expand our IP suite into related therapeutic areas. We are conﬁdent that our core in-licensed IP (see “Intellectual Property”) will
allow us both freedom-to-operate and provide robust protection from outside competition. We will continue to invest in expanding our patent suite. We
will also seek to further strengthen our IP position by looking to in-license IP related to our focus on the innate immune system.

Provide clear value propositions to third-party payors to merit reimbursement for our product candidates . We are designing our clinical
development programs to demonstrate compelling, competitive advantages to patients and prescribers, and to demonstrate value propositions to third-

party payors. We believe the use of INKmune and/or INB03 in patients with a high risk of tumor progression and death from tumor should prolong
survival, improve the patient’s quality of life and decrease the total cost of care for patients with these lethal malignancies. For example, cancer patients
relapse frequently. Each relapse requires a complex treatment regimen that has decreasing beneﬁts. Treatment with INKmune as an out-patient may
provide a more durable remission and limit the need for treatment-associated hospitalizations. At the patient level, we believe INKmune, if approved,
should improve survival and quality of life. At the payor level, we believe INKmune, if approved, should provide more predictable costs and outcomes.
Therapies for Alzheimer’s disease are needed for medical, societal and economic reasons. The cost of Alzheimer’s disease to the government is large
and growing. Recently approved therapies that target amyloid have a modest impact on disease progression and are diﬃcult to use due to side-eﬀects in
some patients. The cost of AD to families and care givers is real and burdensome. We believe treatment of dementia patients with XPro, including
Alzheimer’s disease, may provide a strategy to alter the costly dynamic of this disease in society today.

Collaborate to maximize the value of our technology . We believe there are two reasons for us to enter collaborations with other companies. The
ﬁrst is the further development of INKmune, INB03, XPro and DN-TNF by either providing additional innovations to the product, including combination
therapy strategies, and/or providing resources to improve the speed and breadth of the development process. The second is to optimize the
commercialization of our products either globally or regionally. The ideal partner will benefit us in both ways.

We continue to look for ways to utilize our unique capabilities to optimize clinical application of cell therapies. We believe that we have developed
a way to manufacture human mesenchymal stromal cells for the medical research and biotech community that oﬀers large volumes of high-quality, low
passage human umbilical cord mesenchymal stromal cells with minimal batch-to-batch variability. We have established a reliable supply of human
umbilical cords based on our agreement with the Anthony Nolan Cord Blood Bank in the United Kingdom and may seek additional supplies from US
sources in the future. We have developed a validated manufacturing process that reliably produces clinical grade (“cGMP”) quality mesenchymal stromal
cells that we call CORDstrom. The manufacturing process is currently performed at a contract manufacturing site under the direction of Mark Lowdell, the
Company’s CSO. To date, we are supporting a multicenter academic clinical trial in the UK with CORDstrom. This is a Phase I/IIb trial sponsored by the
Great Ormond Street Children’s Hospital in London treating children with the most severe form of Erythematous Bullosa (“EB”), a disﬁguring and
sometimes fatal skin disease that is similar to a second degree burn. INmune Bio is supplying the clinical product for treatment of these patients. The
Company does not know the results of this trial until they are announced by the principal investigators at the clinical sites. We have identiﬁed contract
manufacturers in the UK that have the capability to produce cGMP stem cells. We expect the commercial arrangement with academic laboratories or
biopharma companies to be a combination of fee-for-service and licensing that does not require additional investment by us. We will be opportunistic in
pursuing therapeutic opportunities for our own portfolio with this platform in the future if resources become available. The regulatory path for therapeutic
applications of the mesenchymal stem cell products is well established and similar to the regulatory approval process for other cell therapies. We will only
be responsible for regulatory compliance related to manufacturing of the mesenchymal stromal cells when the product is being developed by a third
party. When developing a therapeutic product for the Company’s commercial portfolio, the Company will be responsible for all aspects of the regulatory
process.

Overview of Immunotherapy for Cancer

The immune system has two parts, innate and adaptive. The innate immune system is the body’s ﬁrst line of defense against an infection,
providing immediate, non-speciﬁc responses to eliminate harmful cells in the body. Components of the innate immune system include cytokines,
chemokines, macrophages, neutrophils and NK cells, among others.

The adaptive immune system is often initially triggered by the innate immune system, mounts a delayed response against diseased cells and
plays a role protecting against re-infection. An adaptive immune response is highly speciﬁc to a pathogen or antigen and is developed or learned from
prior exposure. Key components of the adaptive immune system include antibodies which bind to antigens and mark them for destruction by other
immune cells, B-cells which produce these antibodies upon exposure to antigens, and T-cells which attack and eliminate the diseased cells.

The biopharmaceutical industry has made signiﬁcant advances in harnessing speciﬁc components of innate and adaptive immune systems for

therapeutic use. Some of these approaches are summarized below.

Cytokines. Tumor Necrosis Factor alpha (“TNF”) is the focus of XPro and INB03. TNF biology has four elements that include two cytokines,
soluble TNF and trans-membrane TNF (“sTNF” and “tmTNF,” respectively), and two receptors, TNF Receptor 1 and 2 (“TNFR1” and “TNFR2”). The
biology of TNF ligation of TNFR varies dramatically based on what elements of the TNF system that are used. sTNF binding to TNFR1 is responsible for
inﬂammation and cell death while sTNF binding to TNFR2 promotes proliferation of regulatory T cells (“Treg”). In patients with advanced cancers,
increased sTNF is not favorable to long-term survival because it promotes epithelial-mesenchymal transformation and metastasis while making the tumor
microenvironment more immunosuppressive promoting resistance to therapy. In the CNS, sTNF promotes neuronal cell death, demyelination and
synaptic pruning while tmTNF promotes nerve cell survival, improves synaptic function and stimulates remyelination. In brief, sTNF is the “bad” TNF and
tmTNF is the “good” TNF. In patients with cancer, infection or neurologic disease, blockade of tmTNF function has negative consequences such as
immunosuppression, increased infection, synaptic dysfunction and demyelination.

One of the early applications of immunotherapy is the use of cytokines, including interferons and interleukin-2 (“IL-2”). Interferons are molecules
that inhibit the growth and replication of diseased cells and stimulate innate immune cells to attack them. They have been used as standard of care for
hepatitis B and C and multiple sclerosis, and to a lesser extent, as treatment for certain cancers, including chronic myeloid leukemia, cutaneous T-cell
lymphoma, myeloma and non-Hodgkin’s lymphoma. However, the use of interferons has generally decreased over the years due to serious adverse
events (e.g., ﬂu-like symptoms and dramatic weight loss) and introduction of new therapies with higher eﬃcacy, better safety proﬁles and more
convenient administration although Alpha-interferon remains the treatment of choice for some hematological conditions such as polycythemia. IL-2
activates T-cells and NK cells to attack diseased cells. IL-2 has been used to treat select cancers, but due to its relatively poor safety proﬁle, physicians
often only resort to this therapy for the most advanced settings.

Antibody therapy. Antibodies exist in three formats: monoclonals (“mAbs”), oligo/polyclonal and antibody-drug conjugates. mAbs represent an
eﬀective therapeutic modality and are important to the treatment paradigm of various diseases. Drug manufacturers have leveraged mAbs’ ability to
induce an antibody-dependent cell-mediated cytotoxicity, or ADCC eﬀect to develop better treatments that prolong survival and quality of life of patients.
In addition, mAbs designed to inhibit speciﬁc checkpoints in the immune system have overcome in vivo immune suppression and the resulting immune
responses have led to profound therapeutic beneﬁt in some patients. However, the degree of eﬃcacy of these therapies is heavily reliant on the immune
system of patients, many of whom are severely immuno-compromised. In addition, mAbs are manufactured through a complex process that requires
puriﬁcation of cell products created from a cell line. Polyspeciﬁc antibodies, for example bi-speciﬁc antibodies, are able to target more than one antigen.
These are often used to bring and eﬀector T cell in contact with a target cell. Antibody drug conjugates are mAbs attached to a toxin, chemotherapy or
radio therapy that delivers the cancer killing payload directly to the cancer.

Dendritic Cell Therapies. This approach is designed to indirectly stimulate a patient’s T-cells by leveraging the role of dendritic cells in
presenting antigens to T-cells. Cancer vaccines are the most common application of dendritic cells. FDA-approved dendritic cell therapies such as
PROVENGE, which entails collecting monocytes from the patient, maturing them into dendritic cells, “loading” ex vivo with the patient’s cancer antigens,
and then re-infusing in the patient. Currently, this process is cumbersome and expensive, and again, relies on an intact and eﬀective immune system of
the patient. There are additional ongoing preclinical studies and clinical trials being conducted by our competitors aimed at addressing certain of the
limitations associated with this approach. To date, current clinical results of dendritic cell therapies have been mixed.

CAR-T and TCR Therapies. T-cells recognize diseased cells by receptors engaging with antigens that are present on or inside the diseased
cells. CAR-T therapy entails genetically engineering T-cells to express synthetic CARs that direct T-cells to antigens on the surface of cancer cells. TCR
therapy modiﬁes T-cells to express high-aﬃnity tumor speciﬁc TCRs that recognize intra-cellular antigens that must be presented on the surface of target
cells. In early clinical trials, CAR-T and TCR therapies have demonstrated impressive anti-tumor activity in a narrow spectrum of hematologic cancers
and garnered signiﬁcant attention by research institutions and biopharmaceutical companies. We believe a key limitation of adaptive autologous
immunotherapy is the need to retrieve non-compromised immune cells from a cancer patient which requires a complex and costly manufacturing
process to develop the therapy. The complexity of this personalized process is reﬂected in the price of the two approved therapies. CAR-T therapies -
tisagenlecleucel and axicabtagene ciloleucel for advanced leukemia and lymphoma respectively. The cost of a single therapy is many hundreds of
thousands of dollars. As a consequence of this need to harvest active T-cells, current Phase I clinical trials for autologous CAR-T cell therapy in large part
enroll patients from highly selected, often relatively early-stage disease in a narrow spectrum of cancers, including bulky hematological cancers. In
addition, Phase I clinical trials of CAR-T cell immunotherapy have reported severe adverse toxicities of cytokine release syndrome and neurotoxicity,
requiring hospitalization, pre-conditioning and, in some instances, intensive care unit admission following side eﬀects associated with cytokine release
syndrome. As a result, though our competitors continue to develop their CAR-T and TCR product candidates with the goal of addressing certain of the
limitations associated with these approaches, we believe these serious challenges may limit their potential and use in a variety of indications, including
solid tumors.

Checkpoint Inhibitors. Immune cells express proteins that are immune checkpoints that control and down-regulate the immune response.
These are best deﬁned in T lymphocytes and include PD-1, CTLA-4, TIM-3 and LAG3. Tumor cells express the ligands to these receptors. When T cells
bind the ligand to these proteins on the tumor cells, the T cell is turned oﬀ and does not attempt to attack the tumor cell. Thus, checkpoint inhibitors
(“CPI”) are part of the complex strategy used by the tumor to evade the patient’s immune system and are responsible for resistance to immunotherapy.
Biopharmaceutical companies have successfully developed CPI that block the receptor/ligand interaction to promote the adaptive immune response to
the tumor. Six CPI are currently approved, pembrolizumab, nivolumab, atezolizumab, avelumab, durvalumab, and ipilimumab for a wide variety of solid
tumors including melanoma, lung, bladder, gastric cancers and others. More CPI are in development and more tumor types will be added to the list of
sensitive tumors over the next years. CPI have become the backbone of cancer therapy and are expected to be the best -selling class of drugs in the
future.

NK Cells. NK cells typically represent approximately 2% to 13% of circulating lymphocytes and are a critical component of the immune system
responsible for innate immunity. Unlike adaptive immune cells, they are ever present and ready to attack, having the inherent ability to detect and
eliminate diseased cells without the need for antigen presentation, which is why they are called “natural killers.”

NK cells bind to stress ligands expressed by the diseased cells and directly eliminate them. This binding induces NK cells to release cytokines,
including, interferons and GM-CSF, which are integral in recruiting additional innate and adaptive immune responses by the host. NK cells also represent
a critical eﬀector cell for ADCC, whereby target cells bound with human antibodies, whether made by the patient’s body or administered, are selectively
destroyed by the NK cells.

Our Innate Immune Dominant-Negative TNF (“DN-TNF”) product candidate

We renamed XPro, which we license from Xencor, to INB03 when it is used for cancer related indications. We will continue to call the drug XPro
when used for treatment of neurologic and psychiatric diseases, including Alzheimer’s disease and TRD discussed below. INB03 and XPro are the same
drug with diﬀerent names. INB03 neutralizes soluble TNF in the tumor microenvironment (“TME”). Neutralizing sTNF in the TME has two main eﬀects –
decreases expression of MUC4 by the tumor and converting the immunosuppressive cancer promoting TME that promotes tumor growth to an
immunologically active TME that promotes tumor cell death. INB03 alters the immunologic environment of the TME to promote tumor killing. INB03
decreases proliferation of MDSC, promotes recruitment of cytotoxic T cells to the TME and may convert immunosuppressive tumor macrophages into
tumor phagocytic macrophages. In murine models, these changes make the tumor reverse resistance to treatment with immunotherapy alone or in
combination with tyrosine kinase inhibitors (TKI) such a lapatinib and tucatinib. MUC4 expression is increased by sTNF produced by the tumor. MUC4
causes resistance to trastuzumab therapy in HER2+ breast and gastric cancer cells by preventing binding of trastuzumab to HER2 by steric hinderance.
By neutralizing sTNF with INB03, decreases MUC4 expression to allow trastuzumab to bind HER2. The importance of trastuzumab based
immunotherapy in the treatment of HER2 expressing tumors has increased recently due to the success of trastuzumab-deruxtecan (Enhertu, TDxd).
TDxd improves survival in women with metastatic HER2+ breast cancer in both high and low HER2 expressing tumors. MUC4 expression inhibits the
TDxd tumor killing in a murine model of HER2+ trastuzumab resistant HER2+ breast cancer. The mechanism by which combination of INB03 with TKI
improves eﬃcacy over TKI alone remains under investigation. By using INB03 as part of combination therapy for cancer, we believe the patient’s
dysregulated immune response, a hallmark of cancer progression and resistance to therapy, to be converted to a coordinated immune response that can
overcome resistance mechanisms to immunotherapy in MUC4 expressing cancers. These immune responses have been studied in at least two animal
models. In a murine model of an inﬂammatory cancer, where 3-methylcholanthrese is given to mice in a subcutaneous injection that causes the
development of multiple cutaneous ﬁbrosarcoma. This model was developed by Y Akamatsu in 1967 while working at the National Cancer Institute of the
NIH. In research published by Professor Nikola Vujanovic in Cancer Immunology Research in 2016, treatment with INB03 resulted in smaller and fewer
cancers with increased survival. INB03 is an engineered PEGylated protein that neutralizes human soluble TNF, a human inﬂammatory cytokine that is
increased in patients with advanced cancer. By speciﬁcally neutralizing the cytokine, there is decreased phosphorylation of STAT3, an essential step
required for the proliferation of the MDSC population, and secretion of the immunosuppressive cytokines. The combination of decreased MDSC
proliferation and decreased immunosuppressive cytokines allows the immune system to respond to the tumor. This data was published in an article
entitled Inhibition of Soluble Tumor Necrosis Factor Prevents Chemically Induced Carcinogenesis in Mice in Cancer Immunology Research in Cancer
Immunology Research, 2016. In summary, INB03 functions as an innate immune system checkpoint inhibitor by eliminating the population of MDSC that
provides an immunosuppressive shield protecting the tumor, the patient’s immune system is able to function normally to the beneﬁt of the patient – it can
attack the tumor. TNF plays an important role in breast cancer (Schillaci R, Front. Oncol., 22 April 2020 https://doi.org/10.3389/fonc.2020.00584). In a

murine model of trastuzumab resistant breast cancer using JMIT-1 cells, a human cell line of HER2 positive breast cancer resistant to trastuzumab
placed into immunocompromised mice, INB03 downregulates MUC4 from the surface of the JMIT-1 HER2+ breast cancer cells to allow the trastuzumab
resistant cells to become trastuzumab sensitive (Figure A from Bruni, NYAS 2020) to decrease tumor growth (from Schillaci SABCS 2018, Figure B).
JMIT-1 cells are also resistant to lapatinib, a TKI inhibitor used as a second line therapy in women with trastuzumab resistant HER2+ breast cancer. The
addition of INB03 to lapatinib in the animal model reverses lapatinib resistance in part by decreasing expression of MUC4 (from Bruni NYAS 2020, Figure
C). In addition to decreasing resistance to trastuzumab by decreasing MUC4 expression, INB03 decreases the immunosuppressive tumor
microenvironment (Schillaci SABCS 2018, Bruni NYAS 2020). Recently, Dr. Schillaci reported the MUC4 expressing triple negative breast (TNBC)
cancer patients have a worse overall survival. (Schillaci SABCS 2021). More recently, Schillaci has shown that MUC4 causes resistance to trastuzumab
ADC (trastuzumab-durextecn; TDxd). Combination therapy with INB03 overcomes resistance in this breast cancer model. These data may be relevant to
all tumors that express HER2 or MUC4 including upper gastrointestinal malignancies such as gastric and pancreatic cancer. We believe MUC4
expression is a biomarker of resistance that may improve therapeutic decision making by clinical teams.

Because INB03 targets the patient’s immune system and not the tumor, we believe INB03 is an immunotherapy that can be used to treat many

types of hematologic malignancies and solid tumors as part of combination therapy. The decision to use INB03 in a patient will be based on biomarkers
that should predict that a patient will beneﬁt from treatment with the drug. We believe the ideal biomarker is easy to use and is determined before
treatment begins. MUC4 expression by epithelial tumors is an example of this type of biomarker. Our Phase I clinical trial preceded the identiﬁcation of
MUC4 as a biomarker and focused on using determining the safety of INB03 as monotherapy in patients with advanced solid tumors. This is a typical
Phase I clinical trial design for ﬁrst-in-man trials in cancer. We expect to use INB03 as part of combination therapy with approved cancer therapies as
part of Phase II development. We do not expect to need to modify INB03 therapy to treat each diﬀerent type of cancer, because INB03 therapy targets
the immune system, not the cancer. We do expect to develop the INB03 beyond Phase II to target a speciﬁc type of cancer to meet the current system of
regulatory approval. For instance, INB03 may be approved to treat patients with HER2+/MUC4+ breast cancer. To get subsequent approval for the
treatment of patients with MUC4+ TNBC or MUC4+ pancreatic cancer, we will need to perform a pivotal trial in patients with TNBC and pancreatic cancer
respectively. After the ﬁrst regulatory approval, if and when achieved, we believe the diﬃculty and cost of achieving these labels extensions will decline
with each successive approval. At this time, we cannot predict if patients without biomarkers of inﬂammation, elevated MDSC or cytokines, or increased
expression of MUC4 will beneﬁt from treatment with INB03. Those studies may be performed in the future, but they are not a current priority. We
continue to produce pre-clinical data for use of INB03 in cancer indications with a goal to ﬁnd a development partner or out-license the program. The
Company does not have plans to perform clinical trials with INB03 at this time.

XPro neutralizes soluble TNF in the brain in exactly the same way INB03 neutralizes soluble TNF in the tumor microenvironment but the eﬀects
of soluble TNF neutralization in the brain are diﬀerent. The cause of the destructive neuroinﬂammation in the brain are microglial and astroglial cells. Glial
cell are two of four cells in the neural unit that also includes oligodendrocytes and nerve cells. Activated microglial cells are considered the resident
macrophages of the brain. The primary role of microglial cells is to protect the neural unit from infection. When innate immune dysfunction causes chronic
inﬂammation, activated microglial cells produce soluble TNF that activates astrocytes. Activated glial cells cause nerve cell and oligodrocyte dysfunction
that results in synaptic pruning, nerve cell death and demyelination of neurons. These pathologies contribute, in part, to neurodegenerative diseases
such as AD, Parkinson’s disease, ALS, MS, Huntington’s disease, glaucoma and TBI (traumatic brain injury) may contribute to neuropsychiatric diseases
such as depression, bi-polar disease, sleep disorders, autism, schizophrenia and PTSD. In the setting of AD, microglial activation causes dendritic
pruning, synaptic dysfunction and nerve cell death that contributes to cognitive decline and the behavioral manifestations of AD including depression,
aggressiveness, sleep disorders, hallucinations and anhedonia. Elimination of microglial activation should reverse these symptoms. Because soluble TNF
is the apex cytokine in the inﬂammatory cytokine cascade, neutralization of soluble TNF with XPro should prevent glial activation and normalizes function
of the neural unit.

The Company has completed a Phase I trial using XPro to reverse neuroinﬂammation in patients with Alzheimer’s disease. The trial was
performed in Australia and was partially funded by a $1M USD Part-the-Cloud Award from the Alzheimer’s Association. The clinical trial was the ﬁrst in
the Company’s development program for the treatment of dementia. The open label, dose escalation trial in patients with Alzheimer’s disease with
biomarkers of peripheral inﬂammation (one of CRP>1.5mg/L, HgbA1c>6.0, ESR>10sec or have ApoE4) treats the patients with XPro as a once-a-week
subcutaneous injection for 3 months. AD patients with one biomarker of inﬂammation are classiﬁed as having AD with neuroinﬂammation (ADi). The
company estimates this group of patients includes at least 40% of patients with AD. Patients have multiple biomarkers of neuroinflammation tested before
and during therapy including soluble biomarkers in blood and cerebral spinal ﬂuid, behavioral biomarkers (neuropsychiatric symptoms of AD), EEG and
neuroimaging biomarkers using MRI. The primary goal of this short, open label study was to demonstrate that treatment with XPro decreases
neuroinflammation safely and to define the dose of XPro to use in the Phase II trial.

The Company is enrolling a global blinded randomized Phase II trial in ADi patients with Early AD in Australia (“AUS”), Canada (“CAN”), the
United Kingdom (“UK”), Spain (“ES”), France (“FR”), Germany (“DE”), Poland (“PO”), the Czech Republic (“CZ”), Slovakia (“SL”) and the United States
(“US”). Early AD is patients that have MCI (Mild Cognitive Impairment) or mild AD. The XPro produced by KBI is being used in the Phase II trial. After
completion of the Phase II trial, patients will be oﬀered to enroll in the Phase II open label extension trial (OLE). An Expanded Access Scheme in patients
who completed the Phase I trial in AUS. The goal of the Phase II trial will be to demonstrate the prolonged control of neuroinﬂammation in patients with
dementia will help control cognitive decline.

The Phase I trial enrolled 18 patients at doses of 0.3, 0.6 and 1.0mg/kg given once a week as subcutaneous injection for three months. Patients in the
10mg/kg group were oﬀered extended use of the drug for up to 12 months. Three patients remained on XPro for 12 months. Preliminary data was
presented in a webinar on 13 July 2020. Additional data was presented on January 21, 2021CSF cytokine/chemokines were measured in 9 patients
before and after 12 weeks of weekly therapy with XPro using a panel from OLINK Target 48 Cytokine (https://www.olink.com/products/olink-target-48-
cytokine/), that measures 45 (Figure AD1).

In the 6 patients in the 1mg/kg per week dose, only one cytokine and chemokine, interferon gamma (“INFg”) did not change in the CSF of
patients, the remainder all decreased on average of 15%. The data analyzed provides evidence that XPro decreases neuroinﬂammation in patients with

Alzheimer’s disease.

We believe these data support the use of XPro to treat other diseases where neuroinﬂammation is a part of the pathophysiology of the disease.
The company studied the consequences of decreasing neuroinﬂammation in the 6 patients from target dose group (XPro 1mg/kg for 12 weeks) be
looking at the CSF proteome using technology for Proteome Sciences using their TMT Calibrator™ platform. A large data set of proteins were identiﬁed.
Early analysis of the data focusing on 26 AD related proteins demonstrated changes in inﬂammation, neuronal and synaptic proteins caused by
decreasing neuroinﬂammation after treatment with XPro (Figure AD2). The proteome also demonstrated a clear dose response with a greater number of
proteins being aﬀected by the target dose compared to low dose XPro therapy (0.3 vs 1.0 mg/kg/week for 12 weeks) (Figure AD3). The CSF proteome
data is only partially analyzed. Additional data may result from these ongoing analytics.

The results of the Phase I study demonstrated that XPro safely decreases neuroinﬂammation in patients with ADi who have biomarkers of
peripheral inﬂammation or are ApoE4 positive when given for at least 3 months at the 1mg/kg once a week dose. Decreasing neuroinﬂammation with
XPro appears to decrease neurodegeneration and improve synaptic function and promote remyelination. The eﬀect of XPro on the biology and
immunology of the brain in patients with AD suggest XPro therapy in patients with peripheral biomarkers of inﬂammation or ApoE4 allele(s) may impact
cognitive decline. Although there were anecdotes of improved cognitive function in patients receiving the target dose of XPro, this cannot be veriﬁed
because the trial was not a blinded, randomized trial. The impact on cognition of controlling neuroinﬂammation with XPro will be studied in the Phase II
program which is a blinded randomized, placebo controlled clinical trial.

The ongoing blinded randomized global Phase II trial in patients with early ADi will enroll 201 patients in a 2:1 ratio (XPro:placebo) at 1mg/kg
once a week. The trial is currently enrolling study subjects. Patients will be treated for 6 months. The primary end-point is Early/Mild Alzheimer’s
Cognitive Composite (EMACC), a sensitive cognitive end-point validated for use in patients with early AD. Secondary cognitive (ADAS-Cog13, CDR-SB
and NPI) and functional (GAS, ADCS-ADL) end-points will be measured. Exploratory structural and function biomarkers of brain function and structural
integrity using EEG and MRI DTI will be used in some or all patients. All patients will be eligible to continue XPro for 12 additional months in the Open
Label Extension trial. Clinical and MRI metrics will be followed during the extension trial.

elevated TNF levels responded to treatment with infliximab (Miller, 2011).

The Company received a $2.9M USD award from the National Institute of Mental Health (“NIMH”) to treat TRD with XPro. The blinded,
randomized Phase II trial will use biomarkers of peripheral inﬂammation to select patients with TRD for enrollment. Patients will be treated for 6 weeks.
Primary end-points include both clinical and neuroimaging measures. The ﬁnal trial design is ongoing and discussions with the FDA are not complete.
The Company anticipates receiving authorization to initiate the clinical trial in 2H24. At which point the Company may begin to request funds from the
NIMH pursuant to the award.

INB03 and XPro are delivered as a subcutaneous injection, similar to an insulin treatment or anti-obesity GLP-1 drugs, is given once a week.
More frequent treatment cannot be ruled out for future indications. Because this is a simple subcutaneous injection similar to an insulin injection (the
therapy patients give themselves for treatment of Type 1 diabetes mellitus), we expect patients to administer the therapy by themselves or caregivers and
not require expensive or logistically challenging clinic visits to receive the therapy.

Release of INB03 and XPro drug supply

GMP DN-TNF product (INB03 and XPro) used in the oncology Phase I, AD Phase I and COVID-19 Phase II trial were manufactured by Lonza at
a site in New Hampshire. The supply of Lonza DN-TNF product is limited but allowed completion of the Phase I study in Alzheimer’s disease and support
of patients in the extension study for 12 months. New batches of XPro have been produced to support future clinical trials. The Company engaged KBI
Biopharma to manufacture 6 lots of XPro/INB03 at the Boulder, Colorado facility using the original master cell bank and updated manufacturing process.
One lot has been converted into drug product using the US ﬁll/ﬁnish facility of Vetter Pharma. Half of the ﬁrst lot is frozen as drug substance at -80C with
a plan to convert to drug product as clinical supplies are needed to support the AD and TRD Phase II trials in May 2024. The unfrozen drug product is
being used in the ongoing AD02 AD trial. The remainder of the original fermentation runs is frozen as a cell paste with a plan to process to drug
substance. The company expects to convert the drug substance to drug product 1H25. Downstream processing to drug product and ﬁll/ﬁnish to drug
product of the cell paste will occur in 2025 as needed to support the clinical trials. We plan to use a two-step approach to improve the yield of the drug
substance from the fermentation process. The company has two Phase III readiness programs in progress in preparation for the Phase III pivotal trial in
patients with AD. The Company is working on the yield of the drug product using the existing E.coli-based system. A second program is focused on
down-stream process improvements in the drug manufacturing program. Once the new strain and process is validated and functional, we will perform a
manufacturing campaign drug for future clinical trials. In the future, the Company may consider a strain change to improve yield of the fermentation step
further. The decision for strain improvements and strain change will be made in the future as clinical development programs proceed.

Interaction with Regulatory Authorities Regarding INB03 and XPro Development

We have completed a Phase I trial with INB03 in oncology. At this time we do not plan additional clinical trials with INB03 in oncology. A Phase I
trial with XPro in patients with Alzheimer’s disease is underway. The Phase II program with Alzheimer’s disease started during 2022. The Phase I trial
with XPro in patients with Alzheimer’s disease was performed in Australia under the regulatory authority of the TGA using the Clinical Trials Exemption
(“CTX”) scheme. Our ﬁrst interaction with the regulatory body occurred in March 2018. The Company received approval to initiate the Phase I trial with
INB03 in patients with advanced solid tumors on May 21, 2018. The second interaction with the regulatory body occurred in March 2019. The Company
received approval to initiate the Phase I trial with XPro in patients with Alzheimer’s disease in May 2019 and received authorization to start the Phase II
trial in patients with mild AD on January 5, 2022. Our ﬁrst interaction with the FDA occurred in July 2020 as part of the Phase II Quellor program to treat
respiratory failure in patients hospitalized with COVID-19 infection. The newly manufactured XPro is being used to support the Phase II AD trial and the
Expanded Access Scheme.

INB03 Product Development Path: Continued pre-clinical studies to find a partner or out-license the progam

Phase I open label study in patients with advanced solid tumors has been completed. All future cancer studies will use INB03 as part of
combination therapy. The evolution of oncology standard of care occurs quickly. Immune checkpoint inhibitors (“CPI”) were introduced 5 years ago. The
success of CPI change the focus of cancer therapy from cytotoxic based cancer regimens to immunotherapy-based cancer regimens. The approval of
Trastuzumab (“TDxd”) in 2022 had a similar eﬀect on HER2 expressing cancers. For example, use of trastuzumab based therapy in HER2+ breast
cancer required 3+ expression of HER2. With TDxd, low HER2 expression (1+ or 2+ but not null) beneﬁt for TDxd. This has dramatically expanded the
number of women eligible for trastuzumab based immunotherapy from 20% to half of women with breast cancer. This dramatic change in breast cancer
standard-of-care impacted our development plans for INB03 in breast cancer. The Phase II trial is planned to be in women who have failed TDxd
therapy. About half of women who receive TDxd are resistant to therapy. We believe, but need to conﬁrm, that many of those women express MUC4. We
believe an exploratory, single arm open label Phase II in woman who progress after TDxd is warranted. We believe the combination of TDxD, INB03 and
TKI will be eﬀective. We continue to conduct pre-clinical studies of INB03 in MUC4 expressing tumors. The Company does not plan to perform further
clinical studies with INB03 in oncology at this time. We continue to support pre-clinical studies as we search for a partner or an out-licensing opportunity.

INB03 Pre-clinical Studies and/or Partnering

We plan to pursue an eﬃcient registration strategy using INB03 to improve the lives of patients with cancer and biomarkers of resistance such as
MUC4. We believe that this strategy has use across many types of solid tumors including patients who have failed CPI, tyrosine kinase inhibitors (“TKI”)
and anti-cancer antibody therapy such as trastuzumab monoclonal antibodies and trastuzumab based antibody drug conjugates. We have an active
partnering position as it relates to INB03 development in cancer, although limited partnering discussion are underway at this time for INB03.

Our INB03 platform can be used in cancer patients in many ways. The Phase I trial suggests the drug should not be used alone to treat cancer
but used in combination with, but not limited to, other cancer therapies including cytotoxic chemotherapy, immunotherapy, radiation and surgery. We
believe that INB03 can also be used to treat many types of hematologic and epithelial cancers.

XPro Regulatory Strategy

Drugs from the DN-TNF platform will be developed using adequately powered, well designed studies with the goal to demonstrate a meaningful

clinical beneﬁt to patients. Beyond Phase I, these will most often be blinded, randomized clinical trials using validated end-points that have been
authorized by a regulatory authority – the FDA, TGA, MHRA, EMA, etc. Currently, all planned studies will be performed in North America, AUS, EU
and/or the UK. Because there are no therapies similar to XPro approved in any market, we plan to take advantage of the regulatory opportunities afforded
to therapies that treat markets with a high unmet need. In the U.S., this includes Orphan Drug Designation and expedited programs for approval including
Accelerated Approval, Breakthrough Therapy Designation, Fast Track Designation, and priority review (see “Government Regulation). We cannot predict
which, if any, of these programs we will beneﬁt from without further discussions with the FDA, EMA and other competent regulatory authorities. A partner
or licensee of INB03 may take a similar path to registration as XPro. The Company cannot predict details of any INB03 registration strategy.

Immunotherapy for Treatment of Alzheimer’s Disease

XPro is being developed for the treatment of Alzheimer’s disease. Microglial activation and neuroinﬂammation are important causes of the
synaptic dysfunction and nerve cell death that causes cognitive decline in patient with dementia and Alzheimer’s disease. The relationship between β
amyloid plaques and tau neuroﬁbrillary tangles, the traditional targets in AD drug development and neuroinﬂammation is complex. We believe targeting
plaques and tangles will have limited beneﬁt. Targeting neuroinﬂammation, the common pathway leading to synaptic dysfunction and nerve cell death,
may be an eﬀective treatment strategy. Substantial pre-clinical data supports the use of XPro in murine models of AD. Substantial indirect data supports
use of XPro in humans including a decreased risk of AD in patients treated with non-selective TNF inhibitors for rheumatoid arthritis and treatment using
direct injection into paraspinous venous plexus. Because of diﬀerent mechanism of action of XPro compared to the non-selective TNF inhibitors, we
expect a lower risk of immunosuppression and demyelinating complications such as multiple sclerosis (MS). The Company reported preliminary data on
July 13, 2020 and January 21, 2021 supporting the use of XPro to decrease neuroinﬂammation in patients with Alzheimer’s disease and biomarkers of
peripheral inflammation (see above).

We completed enrollment of patients into an open label, biomarker directed, Phase I clinical trial in AUS that approaches AD as an immunologic
disease. Patients with dementia with the diagnosis of AD with biomarkers of chronic inﬂammation that includes at least one of a hs-CRP>1.5 mg/L, a
ESR>10 mm/h, a HbgA1C>6.0% or are ApoE4 positive were treated with XPro for 12 weeks. Three dosing cohorts were preformed – 0.3, 0.6 and 1.0
mg per week as a subcutaneous injection. Patients had multiple inﬂammatory biomarkers test before therapy, at 6 weeks and at 12 weeks. Biomarkers
were reported in blood and cerebral spinal ﬂuid. Experient biomarkers including MRI measures of white matter tract neuroinﬂammation, axonal quality
and axon myelin, and MRI measures of gray matter quality were included. Cognitive end-points were not the focus of the Phase 1 clinical trial because of
the wide range of disease severity enrolled and lack of a placebo group. Patients enrolled in the Phase I trial had MMSE ranging from 24 to 12. This wide
range of disease severity at the time of enrollment and the lack of a blinded concurrent control group did not allow for determination of cognitive beneﬁt
beyond several anecdotal reports. The ﬁrst patient was enrolled in the low dose 0.3mg/kg/week cohort in the last week of November 2019. The Safety
Review Committee met by teleconference on January 7, 2020, to review the course of the patients in the first cohort and voted to open the second cohort,
1.0mg/kg/week, to enrollment. The ﬁrst patients were enrolled in the cohort the second week of February 2020. Based on preliminary data released on
July 13, 2020, and January 21, 2021, we closed after completion of a 0.6mg/kg treatment group. We canceled plans to treat patients with 3.0mg/kg. The
data from the Phase I trial informed the design of the Phase II trials described above.

XPro Registration Studies and/or Partnering

We plan to aggressively pursue an eﬃcient registration strategy using XPro to improve the lives of patients with ADi. We deﬁne ADi as
Alzheimer’s disease with biomarkers of inﬂammation. We believe ADi is not the only indication for XPro in neurodegenerative and neuropsychiatric
diseases. We plan to pursue other indications in neurodegenerative diseases as resources become available. We have received NIMH funding to support
a Phase II TRD program that hopes to start patient enrollment in 2024. We have an active partnering position as it relates to XPro development in
neurodegenerative and neuropsychiatric diseases, although limited partnering discussion are underway at this time. There are two partnering
opportunities with this novel immunotherapy for the treatment of neurologic and psychiatric diseases. The ﬁrst is a traditional partnership focused on the
developing the drug for all neurodegenerative and neuropsychiatric applications. The second is a more focused partnership developing XPro as part of a
combination therapy for a company’s existing therapy. After completion of proof-of-concept Phase II studies, we will decide what the most eﬃcient
registration strategy is available to the company with XPro.

DN-TNF for the treatment of Duchene Muscular Dystrophy

The Company also is exploring partnership opportunities outside of neurodegenerative disease with DN-TNF such as DMD. DMD is a X-linked
muscular dystrophy that occurs in 1 in 3500 male births in the US. The disease is caused by defects in dystrophin, a protein needed for eﬃcient function
of skeletal muscle. Boys with DMD develop skeletal muscle weakness that manifests early on with diﬃcult standing and walking. The boys become
wheelchair bound by late adolescence and die of respiratory and cardiac failure in their twenties. There is no cure. Symptomatic therapies include
corticosteroids and novel strategies to replace dystrophin including ASO and gene therapies. Better therapies are needed.

The pathology of DMD is inﬂammation, skeletal muscle cell destruction, replacement of muscle ﬁbers with fat and ﬁbrosis. The most widely used
therapy, corticosteroids are focused on decreasing skeletal muscle inﬂammation. Although anti-inﬂammatory, corticosteroids cause metabolic and
immunologic problems including insulin resistance, obesity, hirsutism, short stature, depression and behavioral problems. Long term use of
corticosteroids exacerbates skeletal muscle weakness.

In collaboration with Professor Armando Vallarta of University of California Irvine, the Company has completed and has ongoing studies with
DN-TNF in murine models of DMD. The animal models show that DN-TNF therapy decreases inﬂammation and muscle degradation, promotes muscle
regeneration and decreases ﬁbrosis. This is a unique set of attributes compared to other therapies on the market or in development. Because muscle
cells produce TNF, we believe the beneﬁts of DN-TNF therapy extends beyond the obvious immunologic attributes of modifying T cell and macrophage
infiltrates. Pre-clinical animal studies continue to better define the exact mechanism for these effects.

The Company has ﬁled global IP on the use of DN-TNF to treat muscular dystrophy. The Company has placed the IP and knowhow into a wholly
owned subsidiary called DN02, Inc. The purpose of this structure is to facilitate partnering and/or co-development of DN-TNF for DMD in a way that does
not complicate or compromise the development of XPro for CNS diseases. The Company is actively seeking a partner to develop DN-TNF for DMD. We
cannot predict if or when or under what terms a partnership will be formed.

INKmune: Our NK cell Directed Product Candidate

INKmune is our lead product candidate that converts the patient’s resting NK cells into cancer memory like NK cells, an essential step to allow
them to participate in the immune control of the patient’s cancer. We have shown this works ex vivo in human tissue cell cultures, and we believe that
this will work in vivo which is the purpose of our planned clinical trials.

Cancers grow and relapse because they evade the immune system. In many cancers, NK cells are the most important cell for the elimination of
residual disease that causes cancer relapse. NK cells target cells based on a series of complex antigens on the cancer cell surface that signal the NK
cells to activate and kill the cancer cell. NK cells develop a memory like NK cell phenotype to enhance killing of cancer cells. This phenotype requires
multiple simultaneous signals to be delivered to the NK cells. A cocktail of three cytokines, IL12, IL15 and IL18 can be used to convert a resting NK cell to
cytokine induced memory like NK cells (“CIML”) [Fehneger 2016] or by INKmune priming with INB16 (TpNK – tumor primed NK cells). Although the
intracellular biology of these two strategies has yet to be worked out, they do not appear to be identical. In summary, INKmune converts resting NK cells
into tumor killing memory like NK cells that function well in the hostile environment of the TME. (Figure 1 below).

The ability of NK cells to kill tumor cells depends on the strength and duration of the cell-cell interaction. This is called avidity. The higher the
avidity the greater the tumor cell killing. Cytokine stimulation may increase avidity of NK binding to some cancer cells whereas, in all experiments to date,
INKmune priming enhances NK binding to all cancer cells tested. The relative increase in avidity to speciﬁc cancer cells is cytokine speciﬁc; as shown
below, IL15 increases NK avidity for the ovarian cancer line SKOV-3 whereas IL2 has a limited eﬀect. IL15 primed NK cells lyse SKOV-3 cells whereas
IL2 primed NK do not. INKmune primed NK (TpNK) showed the highest avidity for the tumor cells and the highest level of cytotoxicity. It is likely that the
use of multiple cytokines will achieve the same level of avidity and cytotoxicity as INKmune but studies with multiple cytokines have not yet been
performed (Figure below).

We have demonstrated TpNK killing of many tumor types in laboratory studies. Tumor priming is eﬀective regardless of the source of the NK
cells (normal volunteers or patients with cancer) and in many types of tumors – both cell lines and primary tumors from patients. The principle of TpNK

killing has also been demonstrated in two Phase I trials in patient with acute myelogenous leukemia (“AML”). These trials were not supported by us and
used a ﬁrst-generation personalized cell therapy product and treatment strategy that is diﬀerent from the INKmune product and treatment strategy. In
these trials, haplo-identical NK cells obtained from a ﬁrst degree relative by leukapheresis were primed ex-vivo using a lysate of the parent cell line from
which we derived INB16 - INKmune. Once the TpNK therapy has been produced and passed quality testing, the patient received conditioning therapy
with chemotherapy (cyclophosphamide and ﬂudarabine), the primed haplo-identical NK cells were given to patients by intravenous infusion. Two Phase I
clinical trials have been performed using that first-generation adoptive cell therapy treatment strategy. An investigator-initiated trial performed at the Royal
Free Hospital in London 2009 was funded by a UK charity. Fifteen patients with relapsed, high-risk AML were enrolled in the trial. Because of drop-out
due to disease progression, delays in product production and complications of conditioning therapy, only 7 of the ﬁfteen patients were treated with the
TpNK cell product. Four of seven patients showed clear beneﬁt from the treatment with the TpNK product with prolonged relapse free remission and, in
one patient, conversion of a partial remission to full remission. None of the remissions were durable; all patients ultimately died from disease progression.
The safety of the product was found to be a combination of toxicity from the chemotherapy/radiotherapy conditioning regimen and the TpNK therapy. In
general, the complications were well tolerated although did require medical intervention including prolonged periods of aplasia in two heavily pretreated
patients that resolved with supportive care. The results of this study have been published in a medical journal (PLoS One. 2015 Jun 10;10(6):e0123416.
doi: 10.1371/journal.pone.0123416. eCollection 2015). In 2013, a second open label, multi-center trial was performed in the US using the same product
and procedures but targeting a slightly diﬀerent patient population. In the second trial, 12 patients in ﬁrst remission with AML were treated with the haplo-
identical TpNK product produced using the ﬁrst generation ex-vivo priming process. After conditioning with chemotherapy alone, the patients received
TpNK in three dosing cohorts – 3x10^5, 1x10^6 or 3x10^6 TpNK per kilogram. Patients were followed for safety and relapse free survival. This trial
conﬁrmed the safety of the TpNK treatment in patients with AML and reinforced many of the eﬃcacy ﬁndings seen in the ﬁrst trial with none of the
previously experienced side eﬀects. Patients beneﬁted from haplo-identical TpNK therapy with prolonged relapse free survival including two patients that
remain in remission more than 42 months after treatment. This trial has been published. (Biol Blood Marrow Transplant. 2018 Mar 26. pii: S1083-
8791(18)30132-0. doi: 10.1016/j.bbmt.2018.03.019.) The results of the laboratory and Phase I studies provide evidence that our strategy for treating
residual disease is sensible but unproven.

Because INKmune primes NK cells to target naturally occurring antigens, we believe INKmune can be used in to treat a wide variety of cancers
including hematologic malignancy (AML, MM, CML, high risk MDS) and solid tumors (renal, prostate, breast, ovarian, pancreas and lung). We expect the
list of INKmune sensitive tumors to continue to expand.

The primary role for INKmune will be an immunotherapy targeting residual disease in patients after debulking cancer therapies such as cytotoxic
chemotherapy and surgery. At this time, we plan to give INKmune as monotherapy. We do not rule out the possibility of using INKmune as part of
combination therapy in the future. We do not expect to need to modify INKmune to treat these additional types of cancer, because we believe INKmune is
a universal cancer therapy where “one size ﬁts all”. We believe for INKmune to receive regulatory approval for each cancer indication, clinical trials will
need to be performed which demonstrate its safety and eﬀectiveness as a treatment for each such cancer. We believe the diﬃculty and cost of achieving
these labels extensions will decline with each successive approval, if and when achieved. For example, if INKmune is proven to be eﬀective therapy in
patients with castration resistant prostate cancer, we will need to perform separate pivotal trials for approval in lung, prostate or renal cancer.

Three step process to preparation for INKmune human clinical trials:

INKmune GMP scale-up for Phase I/II clinical material

The working cell banks and individual INKmune product to be used in the patients for the clinical trial have been produced at the Centre for Cell,
Gene & Tissue Therapeutics at Royal Free Hospital / University College London to full cGMP (MHRA MIA(IMP)11149). All manufacturing has been under
the direction of Professor Mark Lowdell. The Company can produce enough INKmune to complete its Phase I clinical trial in men with metastatic castrate
resistant prostate cancer (mCRPC).. We have validated storage of INKmune for up over 3 years in vapor phase nitrogen and have a fully scalable,
closed system manufacturing process in validation which can produce up to 6 patient doses per week during phase I and II trials. At intermediate scale
we can manufacture 40 doses per week in a single 15-liter bioreactor. Importantly, we have validated the storage of INKmune at -80 oC for up to 27 days
which greatly facilitates the delivery and local storage of the drug for clinical trials and post commercialization use. In contrast, as far as we know all other
NK cell therapies and T cell therapies require complex shipping of drug products in vapor phase nitrogen below -150oC and specialized arrangements for
ongoing storage at the clinical sites. We may need additional INKmune for future clinical trials.

Interaction with Regulatory Authorities Regarding INKmune Development

The INKmune Phase I studies in high-risk MDS are being performed in the UK and Greece. We met with the Medicines and Healthcare Products
Regulatory Agency (“MHRA”), the UK version of the FDA as part of a Scientiﬁc Advice Meetings in preparation for submitting the CTA for our ﬁrst
planned program.

INKmune Product Development Path Proposed Phase I Study in patients with high-risk MDS

During 2021, we initiated an open label Phase I cancer study in patients with high-risk myelodysplastic syndrome (“MDS”). Patients are being
enrolled who have a low burden of disease after completion of conventional therapy. The ﬁrst patients were enrolled in the ﬁrst quarter of 2021. In the
Phase I trial, patients with detectable residual disease in bone marrow and/or peripheral blood (<15% blasts by conventional tests) will be treated with
intravenous infusions of INKmune and monitored for changes in peripheral blood NK activation, NK function and changes in residual blast counts in blood
and bone marrow. We and others have previously shown that MDS patients with inadequate NK function have statistically signiﬁcantly poorer prognosis
than matched patients with normal levels of NK function (Tsirogianni et al 2019) and we have shown in laboratory experiments that the functional activity
of NK cells from MDS patients can be enhanced by exposure to INKmune. Moreover, INKmune-primed NK cells are not inhibited by the hypoxic
conditions of the diseased bone marrow microenvironment.

The ﬁrst patient was treated in the second quarter of 2021. The patient is now more than 12 months out from therapy with INKmune. The patient,
part of the ﬁrst cohort, received 1x10^8 INKmune cells on day 1,8 and 15 as an in-patient. The patient did not require any type of conditioning therapy or
cytokine support. The patient tolerated the three infusions without any problems. The patient underwent intensive monitoring over 120 days. There are 4
observations from this ﬁrst patient. The patient has dramatically increased the number of activated, “memory-like” NK cells in circulation. Memory-like NK
cells (mlNK) are activated NK cells with a unique cell surface protein phenotype and which show enhanced lysis of tumor cell in vitro. Post treatment with
INKmune, elevated levels of mlNK cells were present in the patients in the peripheral blood for more than 119 days when trial follow-up ceased. The
patient mlNK actively kill NK resistant cancer targets in vitro. Finally, the patient has had a signiﬁcant clinical improvement with a reduction of his ECOG
score from 2 to 0 and a significant reduction in blood product support.

Three compassionate use cases have also been treated. Two were young patients with AML who had failed previous hematopoietic stem cell
transplants (“HSCT”). The ﬁrst compassionate-treatment patient showed such improved neutrophil and platelet counts that she was discharged from
hospital for the ﬁrst time in six months. The second patient treated compassionately had failed two high risk HSCT and entered the course of INKmune
therapy with high percentage of blasts in his bone marrow. His blood NK cells responded in diﬀerentiation into mlNK as hoped but it is too early to
determine if INKmune has provide any clinical beneﬁt. Due to market opportunities, the Company has closed the high-risk MDS trial to focus on solid
tumors. The Company plans to put all of its INKmune development efforts into the on-going US Phase I/II trial in men with mCRPC.

INKmune Registration Studies and/or Partnering

During March 2023 the Company opened an Investigational New Drug (“IND”) application for a Phase I/II trial of INKmune in metastatic castrate
resistant prostate cancer (mCPRC). The clinical trial is an open label Phase I/II trial in men with metastatic castrate resistant prostate cancer. The trial
has a modiﬁed Baysian design that allows for a 3 patient Phase I for each dose level followed by a 6 patient Phase II trial. All patients will receive 3
infusions of INKmune on days 1, 8 and 15. The three doses of INKmune at low, medium and high dose of INKmune is 1x10^8, 3x10^8 or 5 x10^8 cells
per infusion respectively. INKmune infusions are given as an out-patient with the use of pre-medication or additional cytokines. Patients are carefully
monitored for 6 months after the ﬁrst dose of INKmune. There are four goals of the trial – determine safety in the target population; immunologic eﬃcacy,
anti-tumor eﬀects and select a dose for the pivotal trial. Immunologic eﬃcacy is determined by an increase in the numbers of memory like NK cells in the
circulation of the patient and how long that increase lasts. In general, we are expecting the number of mlNK to double and to persist in the circulation of
the patient for more than 120 days. Anti-tumor eﬀects will be monitored by serial testing of blood prostatic surface antigen level (blood PSA), prostate-
speciﬁc membrane antigen nuclear medicine scan (PMSA scan with piﬂufolastat F18; Pylarify®) and circulating tumor DNA. The Company enrolled the
ﬁrst patient in the open label low dose Phase I cohorts of December 27, 2023. A second patient was enrolled in February 2024. The ﬁnal patient in the
low dose cohort was enrolled in March 2024. The trial will enroll patients during all of 2024. The last patient in the Phase II cohorts is expected to be
enrolled in 1H25 with data lock 2H25. As an open label trial, there may be opportunities to see patient data during 2024. Other solid cancers are of
interest including nasopharyngeal cancer (“NPC”) which is a known target for NK cells and an important unmet clinical need in emerging markets such
as mainland China. Renal cell carcinoma is also a known target for INKmune. We may seek to partner or sell INKmune. Although our development
strategy is focused on North America and Europe, we believe INKmune will also be attractive for markets on the Paciﬁc Rim, South Asia and South
America, but will wait for partners to help with the development in those regions, however, at this time, we are not negotiating with any potential partners.

Importantly, we have published data demonstrating INKmune eﬃcacy at priming allogeneic NK cells ex-vivo (described above) and this includes

priming of NK cells diﬀerentiated from cord-blood derived hematopoietic stem cells (Domogala et al Cytotherapy 2017: 19:710-720). Numerous
companies are developing therapeutic strategies using cord blood derived NK cell products and one or more may wish to partner with us to potentiate
their product by co-incubation or co-administration with INKmune. We are also aware of companies developing cytokine primed NK cells (CIML) for the
treatment of cancer. We believe tumor primed NK cells are superior to ex vivo or in vivo cytokine strategies.

Challenges in the Market for Our Product Candidates

The market for new oncology therapies is competitive, complicated, and rapidly evolving. We will be competing with companies that are older,
larger, better ﬁnanced and have greater experience. There are two types of drug companies – development companies and commercial companies.
Development companies take the risk of developing new products to proof-of-concept. Once proof-of-concept has been achieved, if the drug provides
clinical beneﬁt, the product is usually acquired by a commercial company, which completes the drug’s clinical development and markets the product. We
are a development company which will seek to develop products such as INKmune from the bench to the bedside to demonstrate proof-of-concept. The
goal for us is to successfully develop such products to the point where they are attractive targets for potential partners/acquirers.

According to a recent Markets and Markets report, the immunotherapy market is growing rapidly at an annual rate of over 13%. Recently, the
market is biased towards T cell-based immunotherapies including bi-speciﬁc antibody therapies, checkpoint inhibitors and CAR-T cell-based therapies.
There are substantial numbers of clinical trials that are focused on the adaptive immune system versus clinical trials that are focused on the innate
immune system for the treatment of cancer. Our challenge will be to educate partners on the value of NK cell-based therapeutic strategies. The need to
educate people of the importance of INB03 is equally challenging. At the academic and investor level, there is little recognition of the role MUC4 plays in
causing resistance to immunotherapy. The concept of adding a drug to modify the immunosuppressive environment of the TME to allow immunotherapy
to be eﬀective is also new. We will be responsible for educating them on the importance of MUC4 expression, TAM, MDSC and why INB03 may be an
important addition to the oncologist’s armamentarium. We believe educating investors and partners about new therapeutic opportunities is an easier task
than trying to diﬀerentiate our company from the many other cancer immunotherapy companies. We plan to use a combination of publication,
presentation and investor relations to discuss INKmune and INB03 and to educate the clinical, biopharma and investor community on the value of these
novel therapeutic approaches.

DN-TNF Competition

To our knowledge, there are no other companies developing a therapy to treat patients with MUC4+HER2+ tumors. This set of biomarkers
predicts a tumor that will be resistant to therapy. We believe MUC4 expression means that patient will be resistant to ﬁrst line trastuzumab based
immunotherapy and will be resistant to CPI. INB03 is a unique category of cancer therapies. It is does not kill cancer cells. INB03 modulates the
immunology of the TME to make existing therapies more eﬀective. The advantage of this strategy is that it can be used prospectively, and it does not add
toxicity to existing therapy.

INKmune Competition

Our industry is highly competitive and subject to rapid and signiﬁcant technological change. Our potential competitors include large
pharmaceutical and biotechnology companies, specialty pharmaceutical and generic drug companies, academic institutions, government agencies and
research institutions. We believe that key competitive factors that will aﬀect the development and commercial success of our product candidates are
eﬃcacy, safety, tolerability, reliability, price, and reimbursement level. Many of our potential competitors, including many of the organizations named
below, have substantially greater ﬁnancial, technical, and human resources than we do and signiﬁcantly greater experience in the discovery and
development of product candidates, obtaining FDA and other regulatory approvals of products and the commercialization of those products. Accordingly,
our competitors may be more successful than us in obtaining FDA approval for and achieving widespread market acceptance of their drugs. Our
competitors’ drugs may be more eﬀective, or more eﬀectively marketed and sold, than any drug we may commercialize and may render our product
candidates obsolete or non-competitive before we can recover the expenses of developing and commercializing any of our product candidates. We
anticipate that we will face intense and increasing competition as new drugs enter the market and advanced technologies become available. Further, the
development of new treatment methods for the conditions we are targeting could render our drugs non-competitive or obsolete.

INKmune is an immunotherapy that harnesses the biology of NK cells for the treatment of cancer. There is a long list of immunotherapy
strategies for the treatment of cancer and the immunotherapy for cancer market is growing rapidly. There are at least three ways to classify
immunotherapy for cancer. The list below classifies immunotherapy strategies beginning with those that are most closely related to INKmune:

1. Companies in the NK cell therapy business;

2. Companies in the personalized immune-oncology business; and

3. Companies in the precision immuno-oncology business.

We are not aware of any approved treatments that are classiﬁed as NK cell therapies. We are aware of public companies in the NK cell therapy
business such as Century Therapeutics, Immunity Bio, Nkarta, Fate Therapeutics, Glycostem and others. These companies are developing products that
involve replacing or supplementing NK cells of the patient for the treatment cancer. Their product requires extensive ex-vivo cell manipulations which,
with respect to Century Therapeutics and Fate Therapeutics, may include gene therapy. The next larger group of companies are in the personalized
immuno-oncology business with products focused on T cell activation strategies. The most popular are the CAR-T cell therapies which are a patient
speciﬁc ex-vivo gene therapy approach to a single disease (for example: pediatric ALL). CAR-T therapy has become wildly popular of late and includes
many private companies, newer public companies such as Bluebird, Juno Therapeutics and Mustang Bio as well as established companies such as
Novartis and Gilead. For many of the companies, CAR-T cell therapies is their only business. For the latter two, CAR-T cell therapies is a newly in-
licensed program with marketing authorization in the US. Finally, the precision immune-oncology category also includes companies with anti-cancer
antibody products and the newer “check-point” inhibitors. Antibody therapies are all about “illuminating” the cancer to the innate immune system (NK
cells). Monoclonal antibodies were the original immunotherapy that drove the growth of well-known biopharma companies including Genentech/Roche,
Amgen, Merck and others. Each of these products is disease specific (ie: treat only HER2+ breast cancer). Modern therapeutic antibodies are much more
complicated bi-speciﬁc and tri-speciﬁc antibodies that attempt to connect the cancer with activated T-cells of the adaptive immune system. Check-point
inhibitors are currently the most rapidly expanding product category in immuno-oncology. These CTLA-4 (ipilimumab) and PD-1 inhibitors
(pembrolizumab and nivolumab) speciﬁcally block a mechanism that shields cancers from T-cell killing. The two companies in this business are Merck
(pembrolizumab) and GSK (ipilimumab and nivolumab). There are many others trying to join this promising therapeutic area including large companies
such as BMS and Roche.

There are several FDA approved drugs that improve the ability of the innate immune system (NK-cells) to treat cancer including mono-clonal
antibody therapies (for example: Rituximab®; Avastin® and Herceptin® marketed by Roche/Genentech); and “check-point” inhibitors (Yervoy® and
Opdivo®, BMS, Keytruda®, Merck and others). There is a large amount of development activity in the immune checkpoint inhibitor ﬁeld from both
pharmaceutical giants including AstraZeneca, Merck & Co, Pﬁzer, Merck KGaA, Roche, GSK, Novartis and Amgen and many start-ups, small companies
and university spin-oﬀs which have emerged in the past two years. Examples (in alphabetical order) include Agenus, Alligator Bioscience, Ambrx,
AnaptysBio, argenx, Bioceros, BioNovion, Cellerant Therapeutics, Checkpoint Therapeutics, Compugen, CureTech, Enumeral, Five Prime Therapeutics,
Genmab, GITR, ImmuNext, IOmet Pharma, iTeos Therapeutics, Jounce Therapeutics, KAHR Medical, Multimeric Biotherapeutics, Nativis, Orega
Biotech, Pelican Therapeutics, Pieris Pharmaceuticals, Prima BioMed, Redx Pharma, Sorrento Therapeutics, Tesaro, TG Therapeutics, Theravectys and
ToleroTech active in the ﬁeld. The list of companies with poly-speciﬁc antibodies that attempt to link the cancer with a cytotoxic T cell is long, includes
both private and public companies (Amgen, Xencor, F-Star, Merus and many others). Finally, two CAR-T cell therapies were recently approved for the
treatment of ALL – Kymriah™ (Novartis) and Yescarta™ (Gilead). We expect additional drugs to gain marketing authorization in the immune-oncology
space.

To our knowledge, there are no innate immune check-point inhibitors in development that have the unique characteristics of INB03 that
neutralize sTNF to: i) decreases the proliferation of MDSC; ii) decreasing local and systemic immunosuppression caused by MDSC by stopping
production of immunosuppressive cytokines and iii) improving NK/DC cross-talk to recruit the adaptive immune system to fight the cancer.

Intellectual Property

We seek to protect our therapeutic programs by continuously developing patent properties covering novel compositions, formulations, purpose-
limited compositions, combination treatments, methods of medical treatment, and other inventions, whether created internally or in-licensed, in the United
States Patent & Trademark Oﬃce (the “USPTO”), the World Intellectual Property Organization (“WIPO”) under the Patent Cooperation Treaty (“PCT”),
and in patent oﬃces for various foreign jurisdictions. While each invention is unique and territories for protection are decided on a case-by-case basis, we
generally pursue patents in Australia, Canada, Europe, Japan, and the United States, and sometimes in Brazil, China and/or Korea. We currently have in
our portfolio ﬁfteen (15) issued patents and twenty-three (23) pending patent applications, including both company-owned and in-licensed properties. The
following sections and corresponding tables summarize, for each of our current therapeutic programs, our pending and granted patent positions, to the
extent publicly available, as of the time of preparing this document:

DN-TNF Platform Technology (Oncology, Central Nervous System Disorders, Acute and Chronic Peripheral Diseases)

The DN-TNF Platform Technology covers a variety of dominant negative tumor necrosis factor (“DN-TNF”) variant proteins, including the
pegylated DN-TNF protein variants known as XPro and INB03. These DN-TNF protein variants can be considered a platform technology for treating the
underlying immune dysfunction associated with many disease manifestations. Unlike approved anti-TNF therapeutics, DNTNF selectively targets and
neutralizes soluble TNF, and is therefore not immunosuppressive. Additionally, XPro has been shown to cross the blood brain barrier after peripheral
administration, making it attractive for use in treating CNS disorders. The following table summarizes current IP covering our DN-TNF Platform
Technology:

Subject Matter / Compound
DNTNF compositions and formulations
Use of DNTNF for treating disease

INB-16 / INKmune (Oncology)

# Pending

Applications
2
39

# Issued
Patents

0
9

Geographical
Scope
global
global

Nominal Patent
Term
2024-2044
2033-2041

INKmune is a replication-incompetent derivative of our proprietary INB-16 cell line. One commercial application of INKmune includes use as a
therapeutic composition designed to enhance the ability of a patient’s own NK cells to seek, recognize and eliminate cancer. Another commercial
application of INKmune includes use as a cytokine-like (“pseudokine”) agent for enhancing NK cell killing speciﬁcity, potency, and eﬃcacy of NK cell -
based therapeutics. INKmune, as a therapeutic, is intended for provision as an I.V. -infused product containing replication-incompetent bio substrate
units, each of which is adapted to present an aggregate of protein ligands and/or receptors to a patient’s own NK cells, in vivo. Upon contacting the

patient’s NK cells, INKmune converts resting NK cells into what we call “primed” NK cells (“pNKs”). Data suggests that pNKs demonstrate enhanced
killing of tumor cells, thus INKmune may indirectly improve a patient’s own immune response to cancer. As a pseudokine agent, INKmune can be used to
contact the NK cells of an NK cell therapeutic product in vitro, e.g., during manufacturing, for enhancing characteristics of the NK cell therapeutic and
rendering an improved product. The following table summarizes current IP covering INB-16 / INKmune:

Subject Matter / Compound
INB-16 / INKmune compositions
Use of INKmune for treating disease

# Pending

Applications
1
2

# Issued
Patents

0
6

Geographical
Scope
global
global

Nominal Patent
Term
2036-2043
2036-2043

General IP Disclosures

Our commercial success depends in part on obtaining and maintaining patent and trade secret protections, where applicable, of our current and

future product candidates and the methods used to manufacture them, as well as successfully defending our patents against third-party challenges.

Our ability to stop third parties from making, using, selling, oﬀering to sell or importing our products depends on the extent to which we have
rights under valid and enforceable patents or trade secrets that cover these activities, and whether we are able to enforce such rights. We cannot assure
you that our pending patent applications will result in issued patents, or that any or all rights will be enforceable in every jurisdiction whether or not patent
rights are sought.

International PCT patent applications cover all 152 nations which are signatories of the PCT. However, our global IP strategy generally targets
Australia, Canada, Europe, Japan, and the United States, and sometimes Brazil, China and/or Korea, as targets for extending patent protection under
the PCT. Decisions regarding which countries to extend patent coverage under the PCT is taken on a case-by-case basis, subject to normal business
considerations such as value and return on investment. Given the markets for products we are developing, we consider the foregoing jurisdictions to
amount to “global” coverage as used herein as it relates to IP.

The above disclosures related to patents and patent applications are subject to change based on strategic patent portfolio building decisions,
which may include reﬁling and reissue, certain abandonments, including those in favor of continuing patent applications, maturations from provisional to
non-provisional filings, and other regular patent prosecution activities.

Trademarks

The designations INMUNE BIOTM, INB16TM, INKmuneTM, PSEUDOKINETM, and XPro TM are trademarks of INmune Bio, Inc. Some or all these
trademarks may be protected by applications pending at the USPTO and other trademark registration authorities globally. As part of the trademark
registration process, we may be required to submit a statement of use evidencing bona ﬁde use of each mark in commerce. By nature of being in the
biopharmaceutical business, certain regulatory requirements must be met in connection with certain products and/or services prior to receiving marketing
authorization from a regulatory agency, and thus it may take some time before products and/or services are oﬀered for sale and a statement of use can
be submitted for perfecting trademark registration. For these reasons, we may be required to obtain extensions of time, or to reﬁle applications, seeking
registration of trademarks. We cannot guarantee that a given trademark application will be allowed or issued in a respective office for each jurisdiction.

IP License Agreements

Immune Ventures, LLC License Agreement

On October 29, 2015, the Company entered into an exclusive license agreement (the “INKmune License Agreement”) with Immune Ventures,
LLC (“Immune Ventures”). Pursuant to the INKmune License Agreement, we were granted an exclusive worldwide, sub-licensable, royalty-bearing
license to commercialize INKmune (the “INKmune License”). In consideration for the INKmune License, we are obligated to pay Immune Ventures
certain milestone and royalty payments.

The term of the Immune Ventures Agreement began on October 29, 2015, and, if not terminated sooner pursuant to the agreement, ends on a
country-by-country basis on the date of the expiration of the last to expire patent rights where patent rights exist. Subject to granting, prosecution-related
patent term adjustments, and requirements for maintenance and renewals, the latest to expire patent is scheduled to expire on March 15, 2038 (“Natural
Expiration”). Upon Natural Expiration of the Immune Ventures Agreement, we shall have a fully paid up, perpetual, royalty-free license without further
obligation to Immune Ventures. The Immune Ventures Agreement can be terminated by Immune Ventures if, after 60 days from our receipt of notice that
we have not made a payment under the Immune Ventures Agreement we still do not make this payment. On July 18, 2018, the parties amended the
agreement under which the Company was required to achieve milestones pursuant to the agreement. On October 30, 2020, the parties executed an
additional amendment to the agreement under which the Company is required to achieve the following milestones:

Initiation of Phase II clinical trials or equivalent by October 29, 2023;
Initiation of Phase III clinical trials or equivalent by October 29, 2025; and
Filing of NDA or equivalent by October 29, 2026 or equivalent.

If we don’t achieve the above milestones, we are required to negotiate in good faith with Immune Ventures to determine how we can either
remedy the failure or achieve an alternate development. If we fail to make any required eﬀorts or if the eﬀorts do not remedy the situation within 60 days
of written notice by Immune Ventures, then Immune Ventures may provide notice to terminate the license or convert it to a non-exclusive license.

University of Pittsburg License Agreement

assigned all its rights, obligations and liabilities under an Exclusive License Agreement between the University of Pittsburgh – Of the Commonwealth
System of Higher Education (“Licensor”) and Immune Ventures to INmune Bio (“Licensee”), (the “PITT Agreement”).

As consideration under the PITT Agreement, we are obligated to pay: (i) annual maintenance fees, (ii) royalty payments based on the sale of

products making use of the licensed technology, and (iii) milestone payments.

In 2022, the Company paid $5,000 according to the PITT Agreement as an annual maintenance fee.

The PITT Agreement expires upon the earlier of: (i) expiration of the last claim of the Patent Rights forming the subject matter of the PITT

Agreement; or (ii) the date that is 20 years from the effective date of the agreement (June 26, 2037).

The Company may terminate the PITT Agreement upon 3 months prior written notice provided all payments under the license are current.
Licensor may terminate the PITT Agreement upon written notice if: (i) the Company defaults as to performance of material obligations which have not
been cured within 60 days after receiving written notice; or (ii) the Company ceases to carry out its business, becomes bankrupt or insolvent, applies for
or consents to the appointment of a trustee, receiver or liquidator of its assets or seeks relief under any law for the aid of debtors.

Xencor License Agreement

On October 3, 2017, the Company entered into a license agreement with Xencor, Inc. (“Xencor”), which has discovered and developed a
proprietary biological molecule that inhibits soluble tumor necrosis factor (the “Xencor Agreement”). During June 2021, the Company entered into the
First Amendment to License Agreement with Xencor. Pursuant to the Xencor Agreement, Xencor granted the Company an exclusive worldwide, royalty-
bearing license in licensed patent rights, licensed know-how and licensed materials (as deﬁned in the Xencor Agreement) to make, develop, use, sell and
import any pharmaceutical product that comprises, contains, or incorporates Xencor’s proprietary protein known as “XPro” that inhibits soluble tumor
necrosis factor (or all modiﬁcations, formulations and variants of the licensed protein that speciﬁcally bind soluble tumor necrosis factor) alone or in
combination with one or more active ingredients, in any dosage or formulation. The Xencor Agreement expires upon the later of: (a) the expiration of the
last to expire valid claim covering any pharmaceutical product that contains, comprises, or incorporates Xencor’s proprietary protein known as XPro alone
or in combination with one or more active ingredients, in any dosage or formulation. (“Licensed Product”) in such country or (b) ten years following the
ﬁrst sale to a third party of the licensed product in such country. Net Sales with respect to any Licensed Product is the gross amounts invoiced by us for
sales of the Licensed Products less deductions actually incurred. A valid claim is an issued, unexpired or pending claim with the patent rights that Xencor
controls as of October 3, 2017 which patent rights are necessary to make, develop, use, sell, have sold, oﬀer for sale and import a Licensed Product in
the Field (the Field means all applications for the treatment of diseases in humans) or the Product Patent Rights, which claim has not lapsed, been
abandoned, been revoked or been held to be unpatentable, invalid or unenforceable by a ﬁnal judgment of a court or other governmental agency or
competent jurisdiction from which no appeal can be or is taken within the time allowed for appeal and which has not been admitted to be invalid or
unenforceable through reissue, re-examination, disclaimer or otherwise. Product Patent Rights shall mean any and all our patent rights that are
necessary to make, develop, use, sell, have sold, oﬀer for sale and import a Licensed Product in the Field, including any improvements or patent rights
directed to the Licensed Product. Either party may terminate the Xencor Agreement upon 60 days’ (10 days for any payment default) prior written notice
to the other party after the breach of any material provision of the agreement by the other party if the breaching party has not cured the breach within the
60-day period (10-day period for any payment default) following written notice of termination by the non-breaching party. We can terminate the Xencor
Agreement upon 180 days prior written notice to Xencor. Xencor may terminate the Xencor Agreement in its entirety or with respect to any speciﬁc
Licensed Product upon written notice in the event that we contest, oppose or challenge or assist any party in contesting, opposing or challenging,
Xencor’s ownership of, or the enforceability or validity of the Patent Rights that Xencor controls as of October 3, 2017 which Patent Rights are necessary
to make develop, use, sell, have sold, oﬀered for sale and import a Licensed Product in the Field. Either party may terminate the Xencor Agreement upon
written notice to the other party upon or after the insolvency, bankruptcy, dissolution or winding up of such other party or the making or seeking to make or
arrange an assignment for the beneﬁt of creditors of such other party or the initiation of proceedings in voluntary or involuntary bankruptcy which
proceeding, or action remains undismissed or unstayed for a period of more than 60 days.

In consideration of the Xencor Agreement, we agreed to royalty payments and a percentage of any payments received in exchange for a sub-

license.

INKmune Research and Development

We expect to use third parties to conduct our preclinical and clinical trials under the direct supervision of management.

INKmune Manufacturing

We intend to contract with third parties for the manufacture of our compounds for investigational purposes, for preclinical and clinical testing and
for any FDA approved products for commercial sale. Pre-clinical and clinical material for the early clinical trials with INKmune has been manufactured
under the direction of Mark Lowdell at a licensed Good Manufacturing Practice (“GMP”) facility. The master cell bank, working cell bank and individual
product doses were completed in July 2018. This clinical material is planned for use in the Phase I/II clinical trials. As we progress in our clinical
programs, additional working cell banks and therapeutic product will be produced from the existing master cell bank. This process takes approximately 6
months and is not anticipated to delay the initiation or enrollment of the Phase I/II trials. We may transfer the manufacturing to a diﬀerent commercial
contract manufacturing organization after completion of these Phase II studies.

Human Mesenchymal Stem Cells

In November 2017 (amended in October 2022), we entered into a Material Transfer and License Agreement with the Anthony Nolan Cord Blood
Bank (“AN”), the oldest and largest non-directed cord blood bank in the United Kingdom for the supply the starting material for the mesenchymal stem
cells - umbilical cords not used after cord blood harvest. Mark Lowdell’s research group developed and validated a methodology for producing large
numbers of clinical-grade pooled human umbilical cord derived mesenchymal stem cells (“HucMSC”). We believe we are well positioned to become a
preferred manufacturing partner for companies who need MSC for clinical programs. Manufacture of HucMSC is performed under the direction of Mark

Lowdell in a licensed GMP facility that is contracted to the Company as part of existing research and development agreements. The starting material for
the HucMSC product is provided by the AN. The HucMSC product produced in this facility are fully qualiﬁed to be used for either research or clinical
trials. We have developed a validated manufacturing process that reliably produces contract manufacturer of the clinical grade (“cGMP”) quality
mesenchymal stem cells that we call CORDstrom. To date, we are supporting two academic clinical trials with CORDstrom. One program is a in the UK
treating children with erythematous bullousa, a disﬁguring skin disease in children that is similar to a second degree burn and treatment of system lupus
in adults. Both these studies are ongoing. INmune Bio is supplying the clinical product for treatment of these patients. The Company does not know the
results of these trials until they are announced by the principal investigators at the clinical sites. Currently, we plan to supply HucMSC to third parties for
their research use and in clinical trials as part of the development process for commercial pro/ducts. We may decide to expand this agreement in the
future if the commercial and/or development opportunities warrant such expansion. At the current time, we expect this program to be funded by revenues
from commercial sales. The agreement with AN terminates on November 29, 2027. AN may terminate the license on written notice to us, if a donor
withdraws consent to the continued use of umbilical cord tissue samples that were obtained by AN. Additionally, either party may terminate the
agreement on 30 days prior written notice to the other if that other party materially breach any term of the agreement and such breaches (to the extent it
is remediable) is not remedied within 30 days of the written request to the other party to do so.

Challenges in the Market for Immunotherapy Products

Government Regulation

The FDA and other federal, state, local and foreign regulatory agencies impose substantial requirements upon the clinical development,
approval, labeling, manufacture, marketing, and distribution of drug products. These agencies regulate, among other things, research and development
activities and the testing, approval, manufacture, quality control, safety, eﬀectiveness, labeling, storage, record keeping, advertising and promotion of our
product candidates. The regulatory approval process is generally lengthy and expensive, with no guarantee of a positive result. Moreover, failure to
comply with applicable FDA or other requirements may result in civil or criminal penalties, recall or seizure of products, injunctive relief including partial or
total suspension of production, or withdrawal of a product from the market.

Various regulatory authorities regulate, among other things, the research, manufacture, promotion, and distribution of drugs in the United States
under the FDA and other statutes and implementing regulations. The process required by the FDA before prescription drug product candidates may be
marketed in the United States generally involves the following:

●

completion of extensive nonclinical laboratory tests, animal studies and formulation studies, all performed in accordance with the FDA’s
Good Laboratory Practice regulations;

submission to the FDA of an investigational new drug application, or IND, which must become eﬀective before human clinical trials may
begin;

for some products, performance of adequate and well-controlled human clinical trials in accordance with the FDA’s regulations, including
Good Clinical Practices, to establish the safety and efficacy of the product candidate for each proposed indication;

submission to the FDA of a new drug application or NDA;

satisfactory completion of an FDA preapproval inspection of the manufacturing facilities at which the product is produced to assess
compliance with current Good Manufacturing Practice, or cGMP, regulations; and

●

FDA review and approval of the NDA prior to any commercial marketing, sale or shipment of the drug.

The testing and approval process requires substantial time, eﬀort and ﬁnancial resources, and we cannot be certain that any approvals for our

product candidates will be granted on a timely basis, if at all.

Preclinical tests include laboratory evaluations of product chemistry, formulation and stability, as well as studies to evaluate toxicity in animals
and other animal studies. The results of preclinical tests, together with manufacturing information and analytical data, are submitted as part of an IND to
the FDA. Some preclinical testing may continue even after an IND is submitted. The IND also includes one or more protocols for the initial clinical trial or
trials and an investigator’s brochure. An IND automatically becomes eﬀective 30 days after receipt by the FDA, unless the FDA, within the 30-day time
period, raises concerns or questions relating to the proposed clinical trials as outlined in the IND and places the clinical trial on a clinical hold. In such
cases, the IND sponsor and the FDA must resolve any outstanding concerns or questions before any clinical trials can begin. Clinical trial holds also may
be imposed at any time before or during studies due to safety concerns or non-compliance with regulatory requirements. An independent institutional
review board, or IRB, at each of the clinical centers proposing to conduct the clinical trial must review and approve the plan for any clinical trial before it
commences at that center. An IRB considers, among other things, whether the risks to individuals participating in the trials are minimized and are
reasonable in relation to anticipated beneﬁts. The IRB also approves the consent form signed by the trial participants and must monitor the study until
completed.

The FDA oﬀers several regulatory mechanisms that provide expedited or accelerated approval procedures for selected drugs in the indications
on which we are focusing our eﬀorts. These include accelerated approval under Subpart H of the agency’s NDA approval regulations, fast track drug
development procedures and priority review.

The United States, European Union and other jurisdictions may grant orphan drug designation to drugs intended to treat a “rare disease or
condition,” which, in the United States, is generally a disease or condition that aﬀects no more than 200,000 individuals. In the European Union, orphan
drug designation can be granted if: the disease is life threatening or chronically debilitating and aﬀects no more than 50 in 100,000 persons in the
European Union; without incentive it is unlikely that the drug would generate suﬃcient return to justify the necessary investment; and no satisfactory
method of treatment for the condition exists or, if it does, the new drug will provide a signiﬁcant beneﬁt to those aﬀected by the condition. If a product that
has an orphan drug designation subsequently receives the ﬁrst regulatory approval for the indication for which it has such designation, the product is

entitled to orphan exclusivity, meaning that the applicable regulatory authority may not approve any other applications to market the same drug for the
same indication, except in limited circumstances, for a period of seven years in the United States and 10 years in the European Union Orphan drug
designation does not prevent competitors from developing or marketing diﬀerent drugs for the same indication or the same drug for diﬀerent indications.
Orphan drug designation must be requested before submitting an NDA. After orphan drug designation is granted, the identity of the therapeutic agent
and its potential orphan use are publicly disclosed. Orphan drug designation does not convey an advantage in, or shorten the duration of, the review and
approval process. However, this designation provides an exemption from marketing and authorization (NDA) fees. We plan to follow a similar path with
INB03 or XPro, although the precise indication cannot be determined until we are farther along in the development process.

Clinical Trials

Phase 1 clinical trials typically involve the initial introduction of the product candidate into healthy human volunteers. In Phase 1 clinical trials, the

product candidate is typically tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and pharmacodynamics.

Phase 2 clinical trials are conducted in a limited patient population to gather evidence about the eﬃcacy of the product candidate for speciﬁc,

targeted indications; to determine dosage tolerance and optimal dosage; and to identify possible adverse effects and safety risks.

Phase 3 clinical trials are undertaken to evaluate clinical eﬃcacy and to test for safety in an expanded patient population at geographically
dispersed clinical trial sites. The size of Phase 3 clinical trials depends upon clinical and statistical considerations for the product candidate and disease,
but sometimes can include several thousand patients. Phase 3 clinical trials are intended to establish the overall risk-beneﬁt ratio of the product
candidate and provide an adequate basis for product labeling.

Clinical trials involve the administration of the product candidate to human subjects under the supervision of qualiﬁed medical investigators
according to approved protocols that detail the objectives of the study, dosing procedures, subject selection and exclusion criteria, and the parameters to
be used to monitor participant safety. Regulatory procedures diﬀer in each country we will be working in. For example, in the US, each protocol is
submitted to the FDA as part of the IND for their review and consent before enrolling patients in the clinical trial. The US is not the only place to perform
clinical trials. Most countries have systems in place to allow academics and companies to sponsor clinical trials of novel therapies in patients. For
ﬁnancial and technical reasons, the Company will perform the Phase I clinical trials of our programs in the United Kingdom and Australia. The US will be
included in the Phase II and//or Phase III programs. Other venues such as Europe, Canada, Japan and other Paciﬁc Rim countries may be included in
the development program in the future.

The INB03 Phase I trial has been completed and provided evidence of safety and a pharmacodynamic drug aﬀect, decrease of inﬂammatory
biomarkers, needed to move the program to a Phase II clinical trial in cancer. The Phase II clinical trial will combine INB03 with approved second line
therapy in patients with HER2+ breast cancer with or without brain metastasis that have progressed after treatment with TDxd. This is a combination trial
where the addition of INB03 to approved second line therapy may provide a therapeutic alternative in a disease without any drugs approved. The
Company has not lost interest in combining INB03 with immune checkpoint inhibitors (CPI), but competition for patients is ﬁerce in this arena. Our plan is
to pursue treatment of tumors that express MUC4 as our lead indication. Tumors that express MUC4 are resistant to all forms of immunotherapy due to a
combination of increased MDSC in the tumor, decrease tumor macrophage (TAM) phagocytosis, decreased inﬂammation in the tumor (a “cold” tumor)
and direct eﬀects of MUC4 and soluble TNF on HER2 function. If combination therapy with INB03 decreases MUC4 expression and changes the TME to
make the “cold” tumor “hot”, then addition of a CPI will be warranted. At this time, the combination trial to treat MUC4+ TDxd resistant HER2+ expressing
cancer is our most probable registration strategy for INB03. This includes the combination of INB03 with trastuzumab antibody drug conjugate therapy
TDxd in combination with a TKI and/or CPI. Current therapies for TDxd resistant cancers are used on a trial by error approach. Using MUC4 expression
as a biomarker for to predict resistance may bring a precision medicine approach to this diﬃcult clinical scenario. Addition of INB03 to the treatment
regimen for treating MUC4+ cancers may convert “cold” tumors to “hot” tumors making the eligible for treatment with CPI. The design and successful
completion of a Phase II trial is not guarantee of clinical relevance or commercial viability. There are multiple therapies on the market or in development
for the treatment of resistant breast cancer. The introduction of TDxd to the clinician’s armamentarium is new and evolving. The future standard-of-care is
not known. The registration and development strategy for INB03 is multinational. The Phase II program may enroll patients in other countries, including
the United States after submitting an Investigational New Drug application, or IND, to the U.S. Food and Drug Administration, or FDA. If partnering is
successful at any stage of INB03 development, we expect the partner to inﬂuence the development and regulatory decisions needed with moving the
drug to commercialization. Finally, combination therapy to treat patients resistant to trastuzumab or CPI are not the only oncology application for INB03.
INB03 can be combined with other immune-oncology therapy to improve eﬃcacy, safety or both. INB03 can be used as part of combination therapy with
immuno-oncology drugs, paired with tradition therapies such as cytotoxic chemotherapy, kinase inhibitors, cell therapies or radiation therapy. The
company is pursuing pre-clinical data in some of these areas. When and if positive developments occur, we will communicate them to our shareholders.
There are other regulatory venues that will be important for both our products – the largest and most important is Europe. In Europe, the European
Medicines Agencies (“EMA”) is responsible for authorization of clinical trials in member states. In EU, there may be a requirement to get individual
country authorization at the same time as EMA authorization. The initial development of INB03 and XPro occurred in AUS followed by trials in other
regulatory jurisdictions including the US. The development of INKmune will start in the United Kingdom followed by trials in the US. XPro is being
developed for the treatment of Alzheimer’s disease under a Part-the-Cloud Award received Feb 2019. The biomarker directed Phase I trial was
performed in AUS using a regulatory strategy identical to that used for INB03 in cancer. Regulatory approval to initiate the trial was received on February
8, 2019. XPro treats microglial activation and innate immune dysregulation may be the cause with Alzheimer’s disease in some patients. To our
knowledge, there are few companies using an anti-inﬂammatory strategy for the treatment of Alzheimer’s disease. Those companies include Denali
Therapeutics (NASDAQ: DNLI); developing DNL747 that targets critical signaling proteins in the TNF pathway that regulate inﬂammation and cell death.
Alector (NASDAQ: ALEC) in partnership with Abbvie is developing AL002 that targets TREM2 on microglial cells. Gliacure is targeting microglial cells in
Alzheimer’s disease with a small molecule candidate GC021109.

Lecanemab (Leqembi™; Eisai) was approved for the treatment of patients with Early AD in January 2023 This is this the second anti-amyloid
drug for the treatment of early AD to be approved. Donanemab (Lilly), a third drug anti-amyloid therapy for early AD is expected to be approved 2Q24.
These two drugs have similar eﬃcacy and safety proﬁles. One of the common safety problems is the development of ARIA (Alzheimer’s Related Imaging
Abnormality) that causes a delay or discontinuation of therapy. ARIA is neuroinﬂammation related side-eﬀect more common in patients expressing
ApoE4. The modest eﬃcacy, sub-optimal safety and diﬃculty of use makes combination therapy for the treatment of early AD an attractive development
and therapeutic strategy. The Company is following the developments in this area closely. The Company believes the anti-amyloid therapies will slowly
develop market share, but due to their safety and eﬃcacy proﬁle, there will be demand for safer and more eﬃcacious therapies that do not target
amyloid.

Clinical testing must satisfy extensive FDA regulations. Reports detailing the results of the clinical trials must be submitted at least annually to
the FDA and safety reports must be submitted for serious and unexpected adverse events. Success in early-stage clinical trials does not assure success
in later stage clinical trials. The FDA, an IRB or we may suspend a clinical trial at any time on various grounds, including a ﬁnding that the research
subjects or patients are being exposed to an unacceptable health risk.

New Drug Applications

Assuming successful completion of the required clinical trials, the results of product development, preclinical studies and clinical trials are
submitted to the FDA as part of an NDA. An NDA also must contain extensive manufacturing information, as well as proposed labeling for the ﬁnished
product. An NDA applicant must develop information about the chemistry and physical characteristics of the drug and ﬁnalize a process for
manufacturing the product in accordance with cGMP. The manufacturing process must be capable of consistently producing quality product within
speciﬁcations approved by the FDA. The manufacturer must develop methods for testing the quality, purity and potency of the ﬁnal product. In addition,
appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the product does not undergo
unacceptable deterioration over its shelf life. Prior to approval, the FDA will conduct an inspection of the manufacturing facilities to assess compliance
with cGMP.

The FDA reviews all NDAs submitted before it accepts them for ﬁling. The FDA may request additional information rather than accept an NDA
for ﬁling. In this event, the NDA must be resubmitted with the additional information and is subject to review before the FDA accepts it for ﬁling. After an
application is ﬁled, the FDA may refer the NDA to an advisory committee for review, evaluation and recommendation as to whether the application should
be approved and under what conditions. The FDA is not bound by the recommendation of an advisory committee, but it considers them carefully when
making decisions. The FDA may deny approval of an NDA if the applicable regulatory criteria are not satisﬁed. Data obtained from clinical trials are not
always conclusive and the FDA may interpret data diﬀerently than we interpret the same data. The FDA may issue a complete response letter, which
may require additional clinical or other data or impose other conditions that must be met in order to secure final approval of the NDA. If a product receives
regulatory approval, the approval may be signiﬁcantly limited to speciﬁc diseases and dosages or the indications for use may otherwise be limited, which
could restrict the commercial value of the product. In addition, the FDA may require us to conduct Phase 4 testing which involves clinical trials designed
to further assess a drug’s safety and eﬀectiveness after NDA approval and may require surveillance programs to monitor the safety of approved products
which have been commercialized. Once issued, the FDA may withdraw product approval if ongoing regulatory requirements are not met or if safety or
efficacy questions are raised after the product reaches the market.

Post-Approval Requirements

Any products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA,
including, among other things, requirements relating to record-keeping, reporting of adverse experiences, periodic reporting, distribution, and advertising
and promotion of the product. After approval, most changes to the approved product, such as adding new indications or other labeling claims, are subject
to prior FDA review and approval. There also are continuing, annual user fee requirements for any marketed products and the establishments at which
such products are manufactured, as well as new application fees for supplemental applications with clinical data. Pharmaceutical manufacturers and their
subcontractors are required to register their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections
by the FDA and certain state agencies for compliance with GMP, which impose certain procedural and documentation requirements upon us and our
third-party manufacturers. Changes to the manufacturing process are strictly regulated, and, depending on the signiﬁcance of the change, may require
prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose
reporting requirements upon us and any third-party manufacturers that we may decide to use. Accordingly, manufacturers must continue to expend time,
money and eﬀort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance. If our future
suppliers are not able to comply with these requirements, the FDA may, among other things, halt our clinical trials, require us to recall a product from
distribution, or withdraw approval of the product.

The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the
product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or
frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the approved labeling to add new
safety information; imposition of post-market studies or clinical studies to assess new safety risks; or imposition of distribution restrictions or other
restrictions under a REMS program.

The FDA closely regulates the marketing, labeling, advertising and promotion of pharmaceutical products. A company can make only those
claims relating to safety and eﬃcacy, purity and potency that are approved by the FDA and in accordance with the provisions of the approved label. The
FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of oﬀ-label uses. Failure to comply with these requirements
can result in, among other things, adverse publicity, warning letters, corrective advertising and potential civil and criminal penalties. Physicians may
prescribe legally available products for uses that are not described in the product’s labeling and that diﬀer from those tested by us and approved by the
FDA. Such oﬀ-label uses are common across medical specialties. Physicians may believe that such oﬀ-label uses are the best treatment for many
patients in varied circumstances. The FDA does not regulate the behavior of physicians in their choice of treatments. The FDA does, however, restrict
manufacturer’s communications on the subject of off-label use of their products.

Other Healthcare Laws and Compliance Requirements

Our sales, promotion, medical education, clinical research and other activities following product approval will be subject to regulation by
numerous regulatory and law enforcement authorities in the United States in addition to FDA, including potentially the Federal Trade Commission, the
Department of Justice, the Centers for Medicare and Medicaid Services, or CMS, other divisions of the U.S. Department of Health and Human Services
and state and local governments. Our promotional and scientiﬁc/educational programs must comply with the federal Anti-Kickback Statute, the civil False
Claims Act, physician payment transparency laws, privacy laws, security laws, and additional federal and state laws similar to the foregoing.

The federal Anti-Kickback Statute prohibits, among other things, the knowing and willing, direct or indirect oﬀer, receipt, solicitation or payment of
remuneration in exchange for or to induce the referral of patients, including the purchase, order or lease of any good, facility, item or service that would
be paid for in whole or part by Medicare, Medicaid or other federal health care programs. Remuneration has been broadly deﬁned to include anything of
value, including cash, improper discounts, and free or reduced-price items and services. The federal Anti-Kickback Statute has been interpreted to apply
to arrangements between pharmaceutical manufacturers on one hand and prescribers, purchasers, formulary managers, and beneﬁciaries on the other.

Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and
safe harbors are drawn narrowly. Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or
recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular
applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the federal Anti-Kickback Statute. Instead, the
legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its facts and circumstances. Several courts
have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of
federal healthcare covered business, the federal Anti-Kickback Statute has been violated. The government has enforced the federal Anti-Kickback
Statute to reach large settlements with healthcare companies based on sham research or consulting and other ﬁnancial arrangements with physicians.
Further, a person or entity does not need to have actual knowledge of the statute or speciﬁc intent to violate it to have committed a violation. In addition,
the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or
fraudulent claim for purposes of the False Claims Act. Many states have similar laws that apply to their state health care programs as well as private
payors.

Federal false claims and false statement laws, including the federal civil False Claims Act, or FCA, imposes liability on persons or entities that,
among other things, knowingly present or cause to be presented claims that are false or fraudulent or not provided as claimed for payment or approval by
a federal health care program. The FCA has been used to prosecute persons or entities that “cause” the submission of claims for payment that are
inaccurate or fraudulent, by, for example, providing inaccurate billing or coding information to customers, promoting a product oﬀ-label, submitting claims
for services not provided as claimed, or submitting claims for services that were provided but not medically necessary. Actions under the FCA may be
brought by the Attorney General or as a qui tam action by a private individual in the name of the government. Violations of the FCA can result in
signiﬁcant monetary penalties and treble damages. The federal government is using the FCA, and the accompanying threat of signiﬁcant liability, in its
investigation and prosecution of pharmaceutical and biotechnology companies throughout the country, for example, in connection with the promotion of
products for unapproved uses and other illegal sales and marketing practices. The government has obtained multi-million and multibillion dollar
settlements under the FCA in addition to individual criminal convictions under applicable criminal statutes. In addition, certain companies that were found
to be in violation of the FCA have been forced to implement extensive corrective action plans, and have often become subject to consent decrees or
corporate integrity agreements, restricting the manner in which they conduct their business.

The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additional federal criminal statutes that prohibit,
among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare beneﬁt program, including private
third-party payors; knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, ﬁctitious or fraudulent
statement in connection with the delivery of or payment for healthcare beneﬁts, items or services; and willfully obstructing a criminal investigation of a
healthcare oﬀense. Like the federal Anti-Kickback Statute, the Aﬀordable Care Act amended the intent standard for certain healthcare fraud statutes
under HIPAA such that a person or entity no longer needs to have actual knowledge of the statute or speciﬁc intent to violate it in order to have
committed a violation.

Given the signiﬁcant size of actual and potential settlements, we expect that the government will continue to devote substantial resources to
investigating healthcare providers’ and manufacturers’ compliance with applicable fraud and abuse laws. Also, many states have similar fraud and abuse
statutes or regulations that may be broader in scope and may apply regardless of payor, in addition to items and services reimbursed under Medicaid and
other state programs. Additionally, to the extent that our products, once commercialized, are sold in a foreign country, we may be subject to similar
foreign laws.

In addition, there has been a recent trend of increased federal and state regulation of payments made to physicians and other healthcare
providers. The Patient Protection and Aﬀordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the
Affordable Care Act, among other things, imposed new reporting requirements on certain manufacturers of drugs, devices, biologics and medical supplies
for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with speciﬁc exceptions, for payments or other
transfers of value made by them to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their
immediate family members. Covered manufacturers are required to collect and report detailed payment data and submit legal attestation to the accuracy
of such data to the government each year. Failure to submit required information may result in civil monetary penalties of up to an aggregate of $150,000
per year (or up to an aggregate of $1 million per year for “knowing failures”), for all payments, transfers of value or ownership or investment interests that
are not timely, accurately, and completely reported in an annual submission. Additionally, entities that do not comply with mandatory reporting
requirements may be subject to a corporate integrity agreement. Certain states also mandate implementation of commercial compliance programs,
impose restrictions on covered manufacturers’ marketing practices and/or require the tracking and reporting of gifts, compensation and other
remuneration to physicians and other healthcare professionals.

We may also be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business.
HIPAA, as amended by the Health Information Technology and Clinical Health Act, or HITECH, and their respective implementing regulations, imposes
speciﬁed requirements on certain health care providers, plans and clearinghouses (collectively, “covered entities”) and their “business associates,”
relating to the privacy, security and transmission of individually identiﬁable health information. Among other things, HITECH makes HIPAA’s security
standards directly applicable to “business associates,” deﬁned as independent contractors or agents of covered entities that create, receive, maintain or
transmit protected health information in connection with providing a service for or on behalf of a covered entity. HITECH also increased the civil and
criminal penalties that may be imposed against covered entities, business associates and possibly other persons, and gave state attorneys general new
authority to ﬁle civil actions for damages or injunctions in federal courts to enforce HIPAA and seek attorney’s fees and costs associated with pursuing
federal civil actions. In addition, certain states have their own laws that govern the privacy and security of health information in certain circumstances,
many of which differ from each other and/or HIPAA in significant ways and may not have the same effect, thus complicating compliance efforts.

Coverage and Reimbursement

Sales of pharmaceutical products depend signiﬁcantly on the extent to which coverage and adequate reimbursement are provided by third-party
payors. Third-party payors include state and federal government health care programs, managed care providers, private health insurers and other
organizations. Although we currently believe that third-party payors will provide coverage and reimbursement for our product candidates, if approved, we
cannot be certain of this. Third-party payors are increasingly challenging the price, examining the cost-eﬀectiveness, and reducing reimbursement for

medical products and services. In addition, signiﬁcant uncertainty exists as to the reimbursement status of newly approved healthcare products. The U.S.
government, state legislatures and foreign governments have continued implementing cost containment programs, including price controls, restrictions on
coverage and reimbursement and requirements for substitution of generic products. Adoption of price controls and cost containment measures, and
adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. We may need to
conduct expensive clinical studies to demonstrate the comparative cost-eﬀectiveness of our products. The product candidates that we develop may not
be considered cost-eﬀective and thus may not be covered or suﬃciently reimbursed. It is time consuming and expensive for us to seek coverage and
reimbursement from third-party payors, as each payor will make its own determination as to whether to cover a product and at what level of
reimbursement. Thus, one payor’s decision to provide coverage and adequate reimbursement for a product does not assure that another payor will
provide coverage or that the reimbursement levels will be adequate. Moreover, a payor’s decision to provide coverage for a drug product does not imply
that an adequate reimbursement rate will be approved. Reimbursement may not be available or suﬃcient to allow us to sell our products on a competitive
and profitable basis.

Healthcare Reform

The United States and some foreign jurisdictions are considering or have enacted a number of legislative and regulatory proposals to change the
healthcare system in ways that could aﬀect our ability to sell our products proﬁtably. Among policy makers and payors in the United States and
elsewhere, there is signiﬁcant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality
and/or expanding access. In the United States, the pharmaceutical industry has been a particular focus of these eﬀorts and has been signiﬁcantly
affected by major legislative initiatives.

By way of example, in March 2010, the Aﬀordable Care Act (“ACA”) was signed into law, intended to broaden access to health insurance, reduce
or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and
health insurance industries, impose new taxes and fees on the health industry and impose additional health policy reforms. Among the provisions of the
ACA of importance to our potential drug candidates are:

●

a n annual, nondeductible fee on any entity that manufactures, or imports speciﬁed branded prescription drugs and biologic agents,
apportioned among these entities according to their market share in certain government healthcare programs;

an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13.0% of the
average manufacturer price for branded and generic drugs, respectively;

a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are
inhaled, infused, instilled, implanted or injected;

a new Medicare Part D coverage gap discount program, in which manufacturers must agree to oﬀer 50% point-of-sale discounts oﬀ
negotiated prices of applicable brand drugs to eligible beneﬁciaries during their coverage gap period, as a condition for a manufacturer’s
outpatient drugs to be covered under Medicare Part D;

extension of a manufacturer’s Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care
organizations;

expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to oﬀer Medicaid coverage to additional
individuals and by adding new mandatory eligibility categories for certain individuals with income at or below 133% of the federal poverty
level, thereby potentially increasing a manufacturer’s Medicaid rebate liability;

expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; and

a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical eﬀectiveness
research, along with funding for such research.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. These changes include, among others, the
Budget Control Act of 2011, which mandates aggregate reductions to Medicare payments to providers of up to 2% per ﬁscal year eﬀective April 1, 2013,
and, due to subsequent legislative amendments, will remain in eﬀect through 2024 unless additional Congressional action is taken. In January 2013,
President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, further reduced Medicare payments to several
providers, including hospitals and cancer treatment centers, increased the statute of limitations period for the government to recover overpayments to
providers from three to ﬁve years. These new laws may result in additional reductions in Medicare and other healthcare funding, which could have a
material adverse effect on customers for our product candidates, if approved, and, accordingly, our financial operations.

Since its enactment, there have been judicial, administrative, executive and legislative challenges to certain aspects of the ACA. On June 17,
2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without speciﬁcally ruling on the
constitutionality of the ACA. Thus, the ACA will remain in eﬀect in its current form. Further, prior to the U.S. Supreme Court ruling, President Biden issued
an executive order to, among other things, instruct certain governmental agencies to review and reconsider their existing policies and rules that limit
access to health care, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and
policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA.

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which eliminates the statutory Medicaid drug rebate
cap, currently set at 100% of a drug’s average manufacturer price, for single source and innovator multiple source drugs, beginning January 1,
2024. Payment methodologies may also be subject to changes in healthcare legislation and regulatory initiatives. For example, Centers for Medicare and
Medicaid Services may develop new payment and delivery models, such as bundled payment models. There also has been heightened governmental
scrutiny in the United States of pharmaceutical pricing practices in light of the rising cost of prescription drugs and biologics. Such scrutiny has resulted in
several recent U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more
transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient
programs and reform government program reimbursement methodologies for drugs. By way of example, in August 2022, the Inﬂation Reduction Act of
2022, or the IRA, was signed into law. Among other things, the IRA requires manufacturers of certain drugs to engage in price negotiations with
Medicare (beginning in 2026), with prices that can be negotiated subject to a cap; imposes rebates under Medicare Part B and Medicare Part D to
penalize price increases that outpace inﬂation (ﬁrst due in 2023); and replaces the Part D coverage gap discount program with a new discounting
program (beginning in 2025). The IRA permits the Secretary of the Department of Health and Human Services to implement many of these provisions

through guidance, as opposed to regulation, for the initial years. For that and other reasons, it is currently unclear how the IRA will be eﬀectuated, or the
impact of the IRA on our business.

At the state level, legislatures in the United States have also increasingly passed legislation and implemented regulations designed to control
pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost
disclosure and transparency measures and, in some cases, designed to encourage importation from other countries and bulk purchasing. In addition,
regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine what pharmaceutical products and which
suppliers will be included in their prescription drug and other healthcare programs.

We expect that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage
criteria and lower reimbursement, and in additional downward pressure on the price that we receive for any approved product. Any reduction in
reimbursement from Medicare or other government-funded programs may result in a similar reduction in payments from private payors. The
implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain proﬁtability or
commercialize our drugs.

Human Capital Resources

As of December 31, 2023, we had 11 full-time employees and 6 part-time employees. We consider the intellectual capital of our employees to be
an important driver of our business and key to our future prospects. We monitor our compensation programs closely and provide what we consider to be a
very competitive mix of compensation and insurance beneﬁts for all our employees, as well as participation in our equity programs. None of our
employees is subject to a collective bargaining agreement or represented by a trade or labor union. We consider our relations with our employees to be
good.

Corporate Information

We were incorporated under the laws of the State of Nevada on September 25, 2015. Our principal executive oﬃce is located at 225 NE Mizner

Blvd, Suite 640, Boca Raton FL 33432 and our telephone number is (858) 964-3720.

Item 1a. Risk Factors

Summary of Risk Factors

Below is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not address
all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found below
under the heading “Risk Factors” and should be carefully considered, together with other information in this Form 10-K and our other ﬁlings with the SEC,
before making an investment decision regarding our common stock.

● We will require additional capital to ﬁnance our operations to continue as a going concern, which may not be available to us on acceptable
terms, if at all. As a result, we may not complete the development and commercialization of our product candidates or develop new product
candidates and have substantial doubt about our ability to continue as a going concern.

● Our ability to successfully engage with, and satisfactorily respond to, requests for information from the FDA in the future.

● We will require additional capital to fund our operations and if we fail to obtain necessary ﬁnancing, we will not be able to complete the

development and commercialization of our product candidates.

● We have a substantial amount of debt, and we may be unable to make required payments of interest and principal as they become due.

● We are signiﬁcantly dependent on the success of our DN-TNF product platform and Natural Killer Cell Priming Platform (INKmune) and our

product candidates based on these platforms.

● We need to attract and retain highly skilled personnel; we may be unable to effectively manage growth with our limited resources.

● We depend upon our senior management and key consultants and their loss or unavailability could put us at a competitive disadvantage.

●

The biotechnology and immunotherapy industries are characterized by rapid technological developments and a high degree of competition.
We may be unable to compete with more substantial enterprises.

● We can provide no assurance that our clinical product candidates will obtain regulatory approval or that the results of clinical studies will be

favorable.

● Drug discovery and development is a complex, time-consuming and expensive process with a high rate of failure.

● We may face legal claims; legal disputes are expensive, and we may not be able to afford the costs.

● We can provide no assurance of the successful and timely development of new products.

● We must comply with significant government regulations.

● We rely upon patents to protect our technology. We may be unable to protect our intellectual property rights.

●

The price of our common stock may be volatile.

●

The market prices for our common stock may be adversely impacted by future events.

● A limited public trading market may cause volatility in the price of our common stock.

● Our Rights Agreement contains anti-takeover provisions that could discourage, delay or prevent a change in control, which may cause our

stock price to decline.

You should carefully consider the risks described below as well as other information provided to you in this document, including information in
the section of this document entitled “Information Regarding Forward Looking Statements.” If any of the following risks actually occur, the Company’s
business, ﬁnancial condition or results of operations could be materially adversely aﬀected, the value of the Company’s Common Stock could decline,
and you may lose all or part of your investment.

RISKS RELATED TO OUR BUSINESS

There is doubt about our ability to continue as a going concern.

As of December 31, 2023, the Company had an accumulated deﬁcit of $121,022,000. Losses have principally occurred as a result of the
substantial resources required for research and development of the Company’s product candidates which included the general and administrative
expenses associated with its organization and product development as well as the lack of sources of revenues until such time as the Company’s products
are commercialized. These factors raise substantial doubt about the Company’s ability to continue as a going concern for the 12 months from the
issuance date of these ﬁnancial statements. These ﬁnancial statements do not include any adjustments to reﬂect the possible future eﬀect on the
recoverability and classiﬁcation of assets or the amounts and classiﬁcations of liabilities that may result from the outcome of these uncertainties.
Management intends to pursue additional funding and implement its strategic plan to allow the opportunity for the Company to continue as a going
concern, however, there cannot be any assurance that we will be successful in doing so. The opinion of our independent registered public accounts on
our audited ﬁnancial statements for the year ended December 31, 2023, contains an explanatory paragraph regarding substantial doubt about our ability
to continue as a going concern.

There is no assurance that we will be successful in raising the additional funds needed to fund our business plan. If we are not able to raise
suﬃcient capital in the near future, our continued operations will be in jeopardy and we may be forced to cease operations and sell or otherwise transfer
all or substantially all of our remaining assets.

To fund our operations and service our debt, we will be required to generate a signiﬁcant amount of cash. Our ability to generate cash
depends on a number of factors, some of which are beyond our control, and any failure to meet our debt obligations would have a material
adverse eﬀect on our business, ﬁnancial condition, cash ﬂows and results of operations and could cause the market value of our common
stock to decline.

Prevailing economic conditions and ﬁnancial, business and other factors, many of which are beyond our control, may aﬀect our ability to make
payments on our debt. If we do not generate suﬃcient cash ﬂow to satisfy our debt obligations, we may have to undertake alternative ﬁnancing plans,
such as reﬁnancing or restructuring our debt, selling assets, reducing or delaying capital investments or seeking to raise additional capital. Alternatively,
we may also attempt to reﬁnance certain of our debt, for example, to extend maturities. Our ability to restructure or reﬁnance our debt will depend on the
capital markets and our ﬁnancial condition at such time. If we are unable to access the capital markets, whether because of the condition of those capital
markets or our own ﬁnancial condition or reputation within such capital markets, we may be unable to reﬁnance our debt. In addition, any reﬁnancing of
our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business
operations. Our inability to generate suﬃcient cash ﬂow to satisfy our debt obligations or to reﬁnance our obligations on commercially reasonable terms,
or at all, could have a material adverse eﬀect on our business, ﬁnancial condition, cash ﬂows and results of operations and could cause the market value
of our common stock and/or debt securities to decline.

Our ability to continue to reduce our indebtedness will depend upon factors including our future operating performance, our ability to access the
capital markets to reﬁnance existing debt and prevailing economic conditions and ﬁnancial, business and other factors, many of which are beyond our
control. We can provide no assurance of the amount by which we will reduce our debt, if at all. In addition, servicing our debt will result in a reduction in
the amount of our cash flow available for other purposes, including operating costs and research and development costs.

Our debt agreement contains covenant restrictions that may limit our ability to operate our business.

The terms of our debt agreement contains, and any of our other future debt agreements may contain, covenant restrictions that limit our ability to
operate our business, including restrictions on our ability to, among other things, incur additional debt or issue guarantees, create liens, repurchase stock,
or make other restricted payments, and make certain voluntary prepayments of speciﬁed debt. As a result of these covenants, our ability to respond to
changes in business and economic conditions and engage in beneﬁcial transactions, including to obtain additional ﬁnancing as needed, may be
restricted. Furthermore, our failure to comply with our debt covenants could result in a default under our debt agreements, which could permit the holders
to accelerate our obligation to repay the debt. If any of our debt is accelerated, we may not have sufficient funds available to repay it.

We face intense competition in the markets targeted by our lead product candidates. Many of our competitors have substantially greater
resources than we do, and we expect that all of our product candidates under development will face intense competition from existing or
future drugs.

We expect that our product candidates under development, if approved, will face intense competition from existing and future drugs marketed by
large companies. These competitors may successfully market products that compete with our products, successfully identify drug candidates or develop
products earlier than we do, or develop products that are more effective, have fewer side effects or cost less than our products, if any.

Additionally, if a competitor receives FDA approval before we do for a drug that is similar to one of our product candidates, FDA approval for our
product candidate may be precluded or delayed due to periods of non-patent exclusivity and/or the listing with the FDA by the competitor of patents
covering its newly-approved drug product. Periods of non-patent exclusivity for new versions of existing drugs such as our current product candidates
can extend up to three and one-half years. See “Business — Government Regulation.”

These competitive factors could require us to conduct substantial new research and development activities to establish new product targets,
which would be costly and time-consuming. These activities would adversely affect our ability to commercialize products and achieve revenue and profits.

Competition and technological change may make our product candidates and technologies less attractive or obsolete.

We compete with established pharmaceutical and biotechnology companies that are pursuing other forms of treatment for the same indications
we are pursuing and that have greater ﬁnancial and other resources. Other companies may succeed in developing products earlier than us, obtaining
FDA approval for products more rapidly, or developing products that are more eﬀective than our product candidates. Research and development by
others may render our technology or product candidates obsolete or noncompetitive or result in treatments or cures superior to any therapy we develop.
We face competition from companies that internally develop competing technology or acquire competing technology from universities and other research
institutions. As these companies develop their technologies, they may develop competitive positions that may prevent, make futile, or limit our product
commercialization efforts, which would result in a decrease in the revenue we would be able to derive from the sale of any products.

There can be no assurance that any of our product candidates will be accepted by the marketplace as readily as these or other competing
treatments. Furthermore, if our competitors’ products are approved before ours, it could be more diﬃcult for us to obtain approval from the FDA. Even if
our products are successfully developed and approved for use by all governing regulatory bodies, there can be no assurance that physicians and
patients will accept our product(s) as a treatment of choice.

Furthermore, the pharmaceutical research industry is diverse, complex, and rapidly changing. By its nature, the business risks associated
therewith are numerous and signiﬁcant. The eﬀects of competition, intellectual property disputes, market acceptance, and FDA regulations preclude us
from forecasting revenues or income with certainty or even confidence.

If we fail to protect our intellectual property rights, our ability to pursue the development of our technologies and products would be
negatively affected.

Our success will depend, in part, on our ability to obtain patents and maintain adequate protection of our technologies and products. If we do not
adequately protect our intellectual property, competitors may be able to use our technologies to produce and market drugs in direct competition with us
and erode our competitive advantage. Some foreign countries lack rules and methods for defending intellectual property rights and do not protect
proprietary rights to the same extent as the United States. Many companies have had diﬃculty protecting their proprietary rights in these foreign
countries. We may not be able to prevent misappropriation of our proprietary rights.

We have received, and are currently seeking, patent protection for numerous compounds and methods of treating diseases. However, the patent
process is subject to numerous risks and uncertainties, and there can be no assurance that we will be successful in protecting our products by obtaining
and defending patents. These risks and uncertainties include the following: patents that may be issued or licensed may be challenged, invalidated, or
circumvented, or otherwise may not provide any competitive advantage; our competitors, many of which have substantially greater resources than us and
many of which have made signiﬁcant investments in competing technologies, may seek, or may already have obtained, patents that will limit, interfere
with, or eliminate our ability to make, use, and sell our potential products either in the United States or in international markets; there may be signiﬁcant
pressure on the United States government and other international governmental bodies to limit the scope of patent protection both inside and outside the
United States for treatments that prove successful as a matter of public policy regarding worldwide health concerns; countries other than the United
States may have less restrictive patent laws than those upheld by United States courts, allowing foreign competitors the ability to exploit these laws to
create, develop, and market competing products.

Moreover, any patents issued to us may not provide us with meaningful protection, or others may challenge, circumvent or narrow our patents.
Third parties may also independently develop products similar to our products, duplicate our unpatented products or design around any patents on
products we develop. Additionally, extensive time is required for development, testing and regulatory review of a potential product. While extensions of
patent term due to regulatory delays may be available, it is possible that, before any of our product candidates can be commercialized, any related patent,
even with an extension, may expire or remain in force for only a short period following commercialization, thereby reducing any advantages of the patent.

In addition, the United States Patent and Trademark Oﬃce (the “USPTO”) and patent oﬃces in other jurisdictions have often required that patent
applications concerning pharmaceutical and/or biotechnology-related inventions be limited or narrowed substantially to cover only the specific innovations
exempliﬁed in the patent application, thereby limiting the scope of protection against competitive challenges. Thus, even if we or our licensors are able to
obtain patents, the patents may be substantially narrower than anticipated.

Our success depends on patent applications that are licensed exclusively to us and other patents to which we may obtain assignment or licenses.
We may not be aware, however, of all patents, published applications or published literature that may aﬀect our business either by blocking our ability to
commercialize our product candidates, by preventing the patentability of our product candidates to us or our licensors, or by covering the same or similar
technologies that may invalidate our patents, limit the scope of our future patent claims or adversely affect our ability to market our product candidates.

In addition to patents, we rely on a combination of trade secrets, conﬁdentiality, nondisclosure and other contractual provisions, and security
measures to protect our conﬁdential and proprietary information. These measures may not adequately protect our trade secrets or other proprietary
information. If they do not adequately protect our rights, third parties could use our technology, and we could lose any competitive advantage we may
have. In addition, others may independently develop similar proprietary information or techniques or otherwise gain access to our trade secrets, which
could impair any competitive advantage we may have.

Patent protection and other intellectual property protection is crucial to the success of our business and prospects, and there is a substantial risk

that such protections will prove inadequate.

By working with research collaborators patent rights may be jointly owned by different parties.

Certain of our licensors may have relied on third-party consultants or collaborators such that our licensors are not the sole and exclusive owners

of the patents we in-licensed. If other third parties have ownership rights to our in-licensed patents, the license granted to us for such jointly owned
patents may not be valid. Absent an agreement, each joint owner can independently sell, license, or otherwise exploit the jointly owned patent without
the approval of the other joint owner(s) and without having to account to each other for their revenues. Without the cooperation of all joint owners, none
can grant an exclusive license to a third party. Further, a jointly owned patent cannot be enforced unless all of the owners join in the lawsuit. If a co-
owner refuses to participate, the lawsuit cannot proceed. Certain of our in-licensed patents from Xencor show joint ownership between Xencor and a third
party. Xencor provided representations and warrants as to its ability to grant the rights provided in the license. In addition, Xencor is required to indemnify
us as to any breach of its representations, warranties and covenants made in the agreement.

Further, our rights to current or future in-licensed patents and patent applications may be dependent, in part, on inter-institutional or other
operating agreements between the joint owners of such in-licensed patents and patent applications. If one or more of such joint owners breaches such
inter-institutional or operating agreements, our rights to such in-licensed patents and patent applications may be adversely aﬀected. Any of these events
could have a material adverse effect on our competitive position, business, financial conditions, results of operations, and prospects.

Intellectual property discovered through government funded programs may be subject to federal regulations such as “march-in” rights,
certain reporting requirements and a preference for U.S.-based companies. Compliance with such regulations may limit our exclusive rights
and limit our ability to contract with non-U.S. manufacturers.

Certain in-licensed patents (i.e. those from the University of Pittsburgh) were supported through the use of U.S. government funding. Pursuant to
the Bayh-Dole Act of 1980, the U.S. government has certain rights in inventions developed with government funding. These U.S. government rights
include a non-exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose. In addition, the U.S.
government has the right, under certain limited circumstances, to require us to grant exclusive, partially exclusive, or non-exclusive licenses to any of
these inventions to a third party if it determines that: (1) adequate steps have not been taken to commercialize the invention; (2) government action is
necessary to meet public health or safety needs; or (3) government action is necessary to meet requirements for public use under federal regulations
(also referred to as march-in rights). If the U.S. government exercised its march-in rights in our current or future intellectual property rights that are
generated through the use of U.S. government funding or grants, we could be forced to license or sublicense intellectual property developed by us or that
we license on terms unfavorable to us, and there can be no assurance that we would receive compensation from the U.S. government for the exercise of
such rights. The U.S. government also has the right to take title to these inventions if the grant recipient fails to disclose the invention to the government
or fails to ﬁle an application to register the intellectual property within speciﬁed time limits. Intellectual property generated under a government funded
program is also subject to certain reporting requirements, compliance with which may require us to expend substantial resources. In addition, the U.S.
government requires that any products embodying any of these inventions or produced through the use of any of these inventions be manufactured
substantially in the United States. This preference for U.S. industry may be waived by the federal agency that provided the funding if the owner or
assignee of the intellectual property can show that reasonable but unsuccessful eﬀorts have been made to grant licenses on similar terms to potential
licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not
commercially feasible. This preference for U.S. industry may limit our ability to contract with non-U.S. product manufacturers for products covered by
such intellectual property.

We license our patents from others. If such owners do not properly maintain or enforce the intellectual property underlying such licenses, our
competitive position and business prospects could be harmed. Our licensors may also seek to terminate our license.

We are a party to a number of licenses that give us rights to third-party intellectual property that is necessary or useful to our business. To this
end, we are dependent on our licenses with Xencor, Inc., Immune Ventures, LLC and the University of Pittsburgh. Our success will depend in part on the
ability of our licensors to obtain, maintain and enforce our licensed intellectual property. Our licensors may not successfully prosecute any applications for
or maintain intellectual property to which we have licenses, may determine not to pursue litigation against other companies that are infringing such
intellectual property, or may pursue such litigation less aggressively than we would. Without protection for the intellectual property we license, other
companies might be able to oﬀer similar products for sale, which could adversely aﬀect our competitive business position and harm our business
prospects. If we lose any of our right to use third-party intellectual property, it could adversely aﬀect our ability to commercialize our technologies,
products or services, as well as harm our competitive business position and our business prospects.

We are dependent on our licensing agreement with Xencor, and the termination of this agreement could have an adverse eﬀect on our
business.

On October 3, 2017, the Company entered into a license agreement with Xencor, Inc., which has discovered and developed a proprietary
biological molecule that inhibits soluble tumor necrosis factor. Pursuant to the license agreement, Xencor granted the Company an exclusive worldwide,
royalty-bearing license in licensed patent rights, licensed know-how and licensed materials to make, develop, use, sell and import any pharmaceutical
product that comprises, contains, or incorporates Xencor’s proprietary protein known as XPro that inhibits soluble tumor necrosis factor (or all
modiﬁcations, formulations and variants of the licensed protein that speciﬁcally bind soluble tumor necrosis factor) alone or in combination with one or
more active ingredients, in any dosage or formulation. If we breach this Agreement, Xencor may be able to terminate it, which could be negatively impact
our business.

Our officers and Directors own the company that we license our INKmune patent from.

On October 29, 2015, we entered into an exclusive license agreement with Immune Ventures, LLC (Immune Ventures). The license agreement
relates to our natural killer program, INKmune. Immune Ventures is owned by our RJ Tesi, our CEO and Chairman of the Board of Directors, David Moss,
our Chief Financial Oﬃcer and Treasurer and Mark Lowdell, our Chief Scientiﬁc Oﬃcer. Because our oﬃcers and directors also own Immune Ventures
there may be an inherent conflict of interest which could result in unanticipated actions that adversely affect us.

We have a limited operating history and expect to incur significant additional operating losses.

We are an early-stage company formed in September 2015 and have only a limited operating history. Therefore, there is limited historical
ﬁnancial information upon which to base an evaluation of our performance. Our prospects must be considered in light of the uncertainties, risks,
expenses, and diﬃculties frequently encountered by companies in their early stages of operations. We expect to incur substantial additional operating
expenses over the next several years as our research, development, and commercial activities increase. The amount of future losses and when, if ever,
we will achieve proﬁtability are uncertain. Our ability to generate material revenue and achieve proﬁtability will depend on, among other things, successful
completion of the preclinical and clinical development of our product candidate(s); obtaining necessary regulatory approvals from the FDA and
international regulatory agencies; implementing successful manufacturing, sales, and marketing arrangements; and raising suﬃcient funds to ﬁnance our
activities. If we are unsuccessful at some or all of these undertakings, our business, prospects, and results of operations may be materially adversely

affected.

INKmune represents a novel approach to cancer treatment that creates significant challenges for us.

We believe INKmune represents a novel approach to cancer treatment. Advancing this novel therapy creates signiﬁcant challenges for us,

including:

● Educating medical personnel regarding the potential side effect profile of INKmune;

● Sourcing clinical and, if approved, commercial supplies for the materials used to manufacture and process our product candidates;

● Obtaining regulatory approval, as the FDA and other regulatory authorities have limited experience with commercial development of

immunotherapies for cancer; and

● Establishing sales and marketing capabilities upon obtaining any regulatory approval to gain market acceptance of a novel therapy.

Even if we are able to commercialize any product candidate that we develop, the product may become subject to unfavorable pricing
regulations, third-party payor reimbursement practices or healthcare reform initiatives that could harm our business.

The commercial success of our product candidates will depend substantially, both domestically and abroad, on the extent to which the costs of
our product candidates will be paid by health maintenance, managed care, pharmacy beneﬁt and similar healthcare management organizations, or
reimbursed by government health administration authorities (such as Medicare and Medicaid), private health coverage insurers and other third-party
payors. If reimbursement is not available, or is available only to limited levels, we may not be able to successfully commercialize our product candidates.
Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish and maintain pricing suﬃcient to
realize a meaningful return on our investment.

There is signiﬁcant uncertainty related to third-party payor coverage and reimbursement of newly approved drugs. Marketing approvals, pricing
and reimbursement for new drug products vary widely from country to country. Some countries require approval of the sale price of a drug before it can
be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In some non-U.S. markets,
prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, we might obtain
marketing approval for a product in a particular country, but then be subject to price regulations that delay commercial launch of the product, possibly for
lengthy time periods, which may negatively impact the revenues we are able to generate from the sale of the product in that country. Adverse pricing
limitations may hinder our ability to recoup our investment in one or more product candidates, even if our product candidates obtain marketing approval.

We depend on obtaining certain patents and protecting our proprietary rights.

Our success will depend, in part, on our ability to obtain patents, maintain trade secret protection and operate without infringing on the
proprietary rights of third parties or having third parties circumvent our rights. We have ﬁled and are actively pursuing a patent application for our product
candidates. The patent positions of biotechnology, biopharmaceutical and pharmaceutical companies can be highly uncertain and involve complex legal
and factual questions. Thus, there can be no assurance that our patent application will result in the issuance of a patent, that we will develop additional
proprietary products that are patentable, that any patents issued to us will provide us with any competitive advantages or will not be challenged by any
third parties, that the patents of others will not impede our ability to do business or that third parties will not be able to circumvent our patents.
Furthermore, there can be no assurance that others will not independently develop similar products, duplicate any of our products not under patent
protection, or, if patents are issued to us, design around the patented products we developed or will develop.

We may be required to obtain licenses from third parties to avoid infringing patents or other proprietary rights. No assurance can be given that
any licenses required under any such patents or proprietary rights would be made available, if at all, on terms we ﬁnd acceptable. If we do not obtain
such licenses, we could encounter delays in the introduction of products or could ﬁnd that the development, manufacture or sale of products requiring
such licenses could be prohibited.

A number of pharmaceutical, biopharmaceutical and biotechnology companies and research and academic institutions have developed
technologies, ﬁled patent applications or received patents on various technologies that may be related to or aﬀect our business. Some of these
technologies, applications or patents may conﬂict with our technologies or patent applications. Such conﬂict could limit the scope of the patents, if any,
that we may be able to obtain or result in the denial of our patent applications. In addition, if patents that cover our activities are issued to other
companies, there can be no assurance that we would be able to obtain licenses to these patents at a reasonable cost or be able to develop or obtain
alternative technology. If we do not obtain such licenses, we could encounter delays in the introduction of products, or could ﬁnd that the development,
manufacture or sale of products requiring such licenses could be prohibited. In addition, we could incur substantial costs in defending ourselves in suits
brought against us on patents it might infringe or in filing suits against others to have such patents declared invalid.

Much of our know-how and technology may not be patentable. To protect our rights, we plan to require employees, consultants, advisors and
collaborators to enter into conﬁdentiality agreements. There can be no assurance, however, that these agreements will provide meaningful protection for
our trade secrets, know-how or other proprietary information in the event of any unauthorized use or disclosure. Further, our business may be adversely
affected by competitors who independently develop competing technologies, especially if we obtain no, or only narrow, patent protection.

We are subject to various government regulations.

The manufacture and sale of human therapeutic products in the U.S. and foreign jurisdictions are governed by a variety of statutes and
regulations. These laws require approval of manufacturing facilities, controlled research and testing of products and government review and approval of a
submission containing manufacturing, preclinical and clinical data in order to obtain marketing approval based on establishing the safety and eﬃcacy of
the product for each use sought, including adherence to current cGMP during production and storage, and control of marketing activities, including

advertising and labeling.

The products we are currently developing will require signiﬁcant development, preclinical and clinical testing and investment of substantial funds
prior to its commercialization. The process of obtaining required approvals can be costly and time-consuming, and there can be no assurance that we
develop successfully this product or any future products, or that this product or any future products we develop will prove to be safe and eﬀective in
clinical trials or receive applicable regulatory approvals. Potential investors and shareholders should be aware of the risks, problems, delays, expenses
and difficulties which we may encounter in view of the extensive regulatory environment which controls our business.

If we are unable to keep up with rapid technological changes in our field or compete effectively, we will be unable to operate profitably.

We are engaged in a rapidly changing ﬁeld. Other products and therapies that will compete directly with the product that we are seeking to
develop and market currently exist or are being developed. Competition from fully integrated pharmaceutical companies and more established
biotechnology companies is intense and is expected to increase. Most of these companies have signiﬁcantly greater ﬁnancial resources and expertise in
discovery and development, manufacturing, preclinical and clinical testing, obtaining regulatory approvals and marketing than us. Smaller companies
may also prove to be signiﬁcant competitors, particularly through collaborative arrangements with large pharmaceutical and established
biopharmaceutical or biotechnology companies. Many of these competitors have signiﬁcant products that have been approved or are in development and
operate large, well-funded discovery and development programs. Academic institutions, governmental agencies and other public and private research
organizations also conduct research, seek patent protection and establish collaborative arrangements for therapeutic products and clinical development
and marketing. These companies and institutions compete with us in recruiting and retaining highly qualiﬁed scientiﬁc and management personnel. In
addition to the above factors, we will face competition based on product eﬃcacy and safety, the timing and scope of regulatory approvals, availability of
supply, marketing and sales capability, reimbursement coverage, price and patent position. There is no assurance that our competitors will not develop
more effective or more affordable products, or achieve earlier patent protection or product commercialization, than our own.

Other companies may succeed in developing products earlier than ourselves, obtaining FDA and European Medicines Agency (“EMA”) approvals
for such products more rapidly than we will, or in developing products that are more eﬀective than products we propose to develop. While we will seek to
expand our technological capabilities in order to remain competitive, there can be no assurance that research and development by others will not render
our technology or products obsolete or non-competitive or result in treatments or cures superior to any therapy we develop, or that any therapy we
develop will be preferred to any existing or newly developed technologies.

We may request priority review for our product candidate in the future. The FDA may not grant priority review for our product candidate.
Moreover, even if the FDA designates such product for priority review, that designation may not lead to a faster regulatory review or approval
process and, in any event, would not assure FDA approval.

We may be eligible for priority review designation for our product candidate if the FDA determines such product candidate oﬀers major advances
in treatment or provides a treatment where no adequate therapy exists. A priority review designation means that the goal for the FDA is to take action on
an application in six months, rather than the standard review period of ten months. The FDA has broad discretion with respect to whether or not to grant
priority review status to a product candidate, so even if we believe a particular product candidate is eligible for such designation or status, the FDA may
decide not to grant it. Thus, while the FDA has granted priority review to other oncology disease products, our product candidate, should we determine to
seek priority review, may not receive similar designation. Moreover, even if our product candidate is designated for priority review, such a designation
does not necessarily mean a faster regulatory review process or necessarily confer any advantage with respect to approval compared to conventional
FDA procedures. Receiving priority review from the FDA does not guarantee approval within an accelerated timeline or thereafter.

We believe we may in some instances be able to secure approval from the FDA or comparable non-U.S. regulatory authorities to use
accelerated development pathways. If we are unable to obtain such approval, we may be required to conduct additional preclinical studies or
clinical trials beyond those that we contemplate, which could increase the expense of obtaining, and delay the receipt of, necessary marketing
approvals.

We anticipate that we may seek an accelerated approval pathway for our product candidates. Under the accelerated approval provisions in the
Federal Food, Drug, and Cosmetic Act, or FDCA, and the FDA’s implementing regulations, the FDA may grant accelerated approval to a product
designed to treat a serious or life-threatening condition that provides meaningful therapeutic beneﬁt over available therapies upon a determination that
the product has an eﬀect on a surrogate endpoint or intermediate clinical endpoint that is reasonably likely to predict clinical beneﬁt. The FDA considers a
clinical beneﬁt to be a positive therapeutic eﬀect that is clinically meaningful in the context of a given disease, such as irreversible morbidity or mortality.
For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign, or
other measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit. An intermediate clinical endpoint is a clinical endpoint
that can be measured earlier than an eﬀect on irreversible morbidity or mortality that is reasonably likely to predict an eﬀect on irreversible morbidity or
mortality or other clinical beneﬁt. The accelerated approval pathway may be used in cases in which the advantage of a new drug over available therapy
may not be a direct therapeutic advantage but is a clinically important improvement from a patient and public health perspective. If granted, accelerated
approval is usually contingent on the sponsor’s agreement to conduct, in a diligent manner, additional post-approval conﬁrmatory studies to verify and
describe the drug’s clinical benefit. If such post-approval studies fail to confirm the drug’s clinical benefit, the FDA may withdraw its approval of the drug.

Prior to seeking such accelerated approval, we will seek feedback from the FDA and will otherwise evaluate our ability to seek and receive such
accelerated approval. There can be no assurance that after our evaluation of the feedback and other factors we will decide to pursue or submit a New
Drug Application, or NDA, for accelerated approval or any other form of expedited development, review or approval. Similarly, there can be no assurance
that after subsequent FDA feedback we will continue to pursue or apply for accelerated approval or any other form of expedited development, review or
approval, even if we initially decide to do so. Furthermore, if we decide to submit an application for accelerated approval or under another expedited
regulatory designation (e.g., breakthrough therapy designation), there can be no assurance that such submission or application will be accepted or that
any expedited development, review or approval will be granted on a timely basis, or at all. The FDA or other non-U.S. authorities could also require us to
conduct further studies prior to considering our application or granting approval of any type. A failure to obtain accelerated approval or any other form of
expedited development, review or approval for our product candidate would result in a longer time period to commercialization of such product candidate,
could increase the cost of development of such product candidate and could harm our competitive position in the marketplace.

Clinical drug development involves a lengthy and expensive process with an uncertain outcome. We may incur additional costs or experience
delays in completing, or ultimately be unable to complete the development and commercialization of our product candidate.

Our product candidates are either in early clinical development or have not entered into clinical trials and are in development stage. Therefore,
the risk of failure of our product candidates is high. It is impossible to predict when or if our product candidates will prove eﬀective or safe in humans or

will receive regulatory approval. Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must complete
preclinical development and then conduct extensive clinical trials to demonstrate the safety and eﬃcacy of our product candidate in humans. Clinical
testing is expensive, diﬃcult to design and implement, can take many years to complete and is uncertain as to outcome. A failure of one or more clinical
trials can occur at any stage of testing. The clinical development of our product candidates is susceptible to the risk of failure inherent at any stage of drug
development, including failure to demonstrate eﬃcacy in a clinical trial or across a broad population of patients, the occurrence of severe or medically or
commercially unacceptable adverse events, failure to comply with protocols or applicable regulatory requirements and determination by the FDA or any
comparable non-U.S. regulatory authority that a drug product is not safe or eﬀective for its intended uses. It is possible that even if our product candidate
has a beneﬁcial eﬀect, that eﬀect will not be detected during clinical evaluation as a result of one or more of a variety of factors, including the size,
duration, design, measurements, conduct or analysis of our clinical trials. Conversely, as a result of the same factors, our clinical trials may indicate an
apparent positive eﬀect of a product candidate that is greater than the actual positive eﬀect, if any. Similarly, in our clinical trials we may fail to detect
toxicity of, or intolerability caused by our product candidates, or mistakenly believe that our product candidates are toxic or not well tolerated when that is
not in fact the case.

The outcome of preclinical studies and early clinical trials may not be predictive of the success of later clinical trials, and interim results of a
clinical trial do not necessarily predict ﬁnal results. Many companies in the pharmaceutical and biotechnology industries have suﬀered signiﬁcant
setbacks in late-stage clinical trials after achieving positive results in earlier development, and we cannot be certain that we will not face additional
setbacks.

The design of a clinical trial can determine whether its results will support approval of a product; however, ﬂaws in the design of a clinical trial
may not become apparent until the clinical trial is well advanced or completed. In addition, preclinical and clinical data are often susceptible to varying
interpretations and analyses. Many companies that believed their product candidates performed satisfactorily in preclinical studies and clinical trials have
nonetheless failed to obtain marketing approval for the product candidates. Even if we believe that the results of clinical trials for our product candidate
warrant marketing approval, the FDA or comparable non-U.S. regulatory authorities may disagree and may not grant marketing approval of our product
candidate.

In some instances, there can be signiﬁcant variability in safety or eﬃcacy results between diﬀerent clinical trials of the same product candidate
due to numerous factors, including changes in trial procedures set forth in protocols, diﬀerences in the size and type of the patient populations, changes
in and adherence to the clinical trial protocols and the rate of dropout among clinical trial participants. Any clinical trials that we may conduct may not
demonstrate the efficacy and safety necessary to obtain regulatory approval to market our product candidate.

The results of preclinical studies and early-stage clinical trials may not be predictive of future results. Initial success in clinical trials may not
be indicative of results obtained when these trials are completed or in later-stage trials.

The results of preclinical studies may not be predictive of the results of clinical trials, and the results of any early-stage clinical trials we
commence may not be predictive of the results of the later-stage clinical trials. In addition, initial success in clinical trials may not be indicative of results
obtained when such trials are completed. In particular, the small number of patients in our planned early clinical trials may make the results of these trials
less predictive of the outcome of later clinical trials. For example, even if successful, the results of our initial clinical trials for XPro may not be predictive of
the results of further clinical trials of this drug candidate or any of our other drug candidates. Moreover, preclinical and clinical data often are susceptible
to varying interpretations and analyses, and many companies that have believed their drug candidates performed satisfactorily in preclinical studies and
clinical trials nonetheless have failed to obtain marketing approval of their products. Our future clinical trials may not ultimately be successful or support
further clinical development of any of our drug candidates. There is a high failure rate for drug candidates proceeding through clinical trials. A number of
companies in the pharmaceutical and biotechnology industries have suﬀered signiﬁcant setbacks in clinical development even after achieving
encouraging results in earlier studies. Any such setbacks in our clinical development could materially harm our business, results of operations, ﬁnancial
condition and prospects.

Interim top-line and preliminary data from our planned 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.

From time to time, we may publish interim top-line or preliminary data from our planned clinical trials. Interim data from clinical trials that we may
complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data
becomes available. Preliminary or top-line data also remain subject to audit and veriﬁcation procedures that may result in the ﬁnal data being materially
diﬀerent from the preliminary data we previously published. As a result, interim and preliminary data should be viewed with caution until the ﬁnal data is
available. Adverse differences between preliminary or interim data and final data could significantly harm our reputation and business prospects.

If clinical trials of our product candidates fail to demonstrate safety and eﬃcacy to the satisfaction of the FDA and comparable non-U.S.
regulators, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and
commercialization of our product candidates.

We are not permitted to commercialize, market, promote or sell any product candidate in the United States without obtaining marketing approval
from the FDA. Comparable non-U.S. regulatory authorities, such as the EMA, impose similar restrictions. We may never receive such approvals. We
must complete extensive preclinical development and clinical trials to demonstrate the safety and eﬃcacy of our product candidate in humans before we
will be able to obtain these approvals.

Clinical testing is expensive, diﬃcult to design and implement, can take many years to complete and is inherently uncertain as to outcome. We
have not previously submitted an NDA to the FDA or similar drug approval ﬁlings to comparable non-U.S. regulatory authorities for any product
candidate.

Any inability to successfully complete preclinical and clinical development could result in additional costs to us and impair our ability to generate
revenues from product sales, regulatory and commercialization milestones and royalties. In addition, if (1) we are required to conduct additional clinical
trials or other testing of our product candidate beyond the trials and testing than we contemplate, (2) we are unable to successfully complete clinical trials

of our product candidate or other testing, (3) the results of these trials or tests are unfavorable, uncertain or are only modestly favorable, or (4) there are
unacceptable safety concerns associated with our product candidate, we, in addition to incurring additional costs, may:

●

be delayed in obtaining marketing approval for our product candidate;

not obtain marketing approval at all;

obtain approval for indications or patient populations that are not as broad as we intended or desired;

obtain approval with labeling that includes significant use or distribution restrictions or significant safety warnings, including boxed warnings;

be subject to additional post-marketing testing or other requirements; or

be required to remove the product from the market after obtaining marketing approval.

If we experience any of a number of possible unforeseen events in connection with clinical trials of any of our product candidates, potential
marketing approval or commercialization of that product candidate could be delayed or prevented.

We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent marketing approval of any of

our product candidates, including:

●

clinical trials of our product candidate may produce unfavorable or inconclusive results;

● we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs;

●

the number of patients required for clinical trials of our product candidate may be larger than we anticipate, patient enrollment in these
clinical trials may be slower than we anticipate, or participants may drop out of these clinical trials at a higher rate than we anticipate;

data safety monitoring committees may recommend suspension, termination or a clinical hold for various reasons, including concerns about
patient safety;

regulators or institutional review boards, or IRBs, may suspend or terminate the trial or impose a clinical hold for various reasons, including
noncompliance with regulatory requirements or concerns about patient safety;

patients with serious, life-threatening diseases included in our clinical trials may die or suﬀer other adverse medical events for reasons that
may not be related to our product candidate;

participating patients may be subject to unacceptable health risks;

patients may not complete clinical trials due to safety issues, side effects, or other reasons;

changes in regulatory requirements and guidance may occur, which require us to amend clinical trial protocols to reflect these changes;

our third-party contractors, including those manufacturing our product candidate or components or ingredients thereof or conducting clinical
trials on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner or at all;

●

regulators or IRBs may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site;

● w e may experience delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with

prospective trial sites;

●

patients who enroll in a clinical trial may misrepresent their eligibility to do so or may otherwise not comply with the clinical trial protocol,
resulting in the need to drop the patients from the clinical trial, increase the needed enrollment size for the clinical trial or extend the clinical
trial’s duration;

● we may have to suspend or terminate clinical trials of our product candidate for various reasons, including a ﬁnding that the participants are

being exposed to unacceptable health risks, undesirable side effects or other unexpected characteristics of a product candidate;

●

the FDA or comparable non-U.S. regulatory authorities may disagree with our clinical trial design or our interpretation of data from preclinical
studies and clinical trials;

the FDA or comparable non-U.S. regulatory authorities may fail to approve or subsequently ﬁnd fault with the manufacturing processes or
facilities of third-party manufacturers with which we enter into agreements for clinical and commercial supplies;

the supply or quality of raw materials or manufactured product candidate or other materials necessary to conduct clinical trials of our product
candidate may be insufficient, inadequate, delayed, or not available at an acceptable cost, or we may experience interruptions in supply; and

t h e approval policies or regulations of the FDA or comparable non-U.S. regulatory authorities may signiﬁcantly change in a manner
rendering our clinical data insufficient to obtain marketing approval.

Product development costs for us will increase if we experience delays in testing or pursuing marketing approvals and we may be required to
obtain additional funds to complete clinical trials and prepare for possible commercialization of our product candidates. We do not know whether any
preclinical tests or clinical trials will begin as planned, will need to be restructured or will be completed on schedule, or at all. Signiﬁcant preclinical or
clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our
competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates and may harm our
business and results of operations. In addition, many of the factors that cause, or lead to, clinical trial delays may ultimately lead to the denial of

marketing approval of our product candidates.

If we experience delays or diﬃculties in the enrollment of patients in clinical trials, we may not achieve our clinical development on our
anticipated timeline, or at all, and our receipt of necessary regulatory approvals could be delayed or prevented.

We may not be able to initiate or continue clinical trials for INKmune our DN-TNF product platform or any other product candidate if we are
unable to locate and enroll a suﬃcient number of eligible patients to participate in clinical trials. Patient enrollment is a signiﬁcant factor in the timing of
clinical trials, and is affected by many factors, including:

●

the size and nature of the patient population;

the severity of the disease under investigation;

the proximity of patients to clinical sites;

the eligibility criteria for the trial;

the design of the clinical trial;

efforts to facilitate timely enrollment;

competing clinical trials; and

clinicians’ and patients’ perceptions as to the potential advantages and risks of the drug being studied in relation to other available therapies,
including any new drugs that may be approved for the indications we are investigating.

Our inability to enroll a suﬃcient number of patients for our clinical trials could result in signiﬁcant delays or may require us to abandon one or
more clinical trials altogether. Enrollment delays in our clinical trials may result in increased development costs for our product candidates, delay or halt
the development of and approval processes for our product candidates and jeopardize our ability to achieve our clinical development timeline and goals,
including the dates by which we will commence, complete and receive results from clinical trials. Enrollment delays may also delay or jeopardize our
ability to commence sales and generate revenues from our product candidates. Any of the foregoing could cause the value of the Company to decline
and limit our ability to obtain additional financing, if needed.

We will need to obtain FDA approval of any proposed product brand names, and any failure or delay associated with such approval may
adversely impact our business.

A pharmaceutical product cannot be marketed in the U.S. or other countries until we have completed rigorous and extensive regulatory review
processes, including approval of a brand name. Any brand names we intend to use for our product candidates will require approval from the FDA
regardless of whether we have secured a formal trademark registration from the U.S. Patent and Trademark Oﬃce, or the USPTO. The FDA typically
conducts a review of proposed product brand names, including an evaluation of potential for confusion with other product names. The FDA may also
object to a product brand name if it believes the name inappropriately implies medical claims. If the FDA objects to any of our proposed product brand
names, we may be required to adopt an alternative brand name for our product candidates. If we adopt an alternative brand name, we will lose the
beneﬁt of our existing trademark applications for such product candidate and may be required to expend signiﬁcant additional resources in an eﬀort to
identify a suitable product brand name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be
acceptable to the FDA. We may be unable to build a successful brand identity for a new trademark in a timely manner or at all, which would limit our
ability to commercialize our product candidates.

We may rely on orphan drug status to develop and commercialize our product candidates, but orphan drug designation, if obtained, may not
confer marketing exclusivity or other expected commercial benefits as anticipated.

Market exclusivity aﬀorded by orphan drug designation is generally oﬀered as an incentive to drug developers to invest in developing and
commercializing products for unique diseases that impact a limited number of patients. The FDA may grant orphan drug designation to drugs intended to
treat a rare disease or condition, which is generally a disease or condition that aﬀects fewer than 200,000 individuals in the United States. Qualiﬁcation to
maintain orphan drug status is generally monitored by the regulatory authorities during the orphan drug exclusivity period, currently seven years from the
date of approval in the United States.

We intend to seek orphan drug designation in the United States for our product candidate for the treatment of AML and ovarian cancer and we
expect to rely on orphan drug exclusivity for our product candidate. Even if granted, orphan drug designation, and related market exclusivity, in the United
States could be lost. Further, even if we are granted orphan drug status, the FDA can still approve diﬀerent drugs for use in treating the same indication
or disease, which would create a more competitive market for us, and our revenues will be diminished.

Further, for our product candidate, it is possible that another company also holding orphan drug designation for the same product candidate will
receive marketing approval for the same indication before we do. If that were to happen, our applications for that indication may not be approved until the
competing company’s period of exclusivity expires. Even if we are the ﬁrst to obtain marketing authorization for an orphan drug indication, there are
circumstances under which a competing product may be approved for the same indication during the seven-year period of marketing exclusivity, such as
if the later product is shown to be clinically superior to the orphan product, or if the later product is deemed a diﬀerent product than ours. Further, the
seven-year marketing exclusivity would not prevent competitors from obtaining approval of the same product candidate as ours for indications other than
those in which we have been granted orphan drug designation, or for the use of other types of products in the same indications as our orphan product.

If the market opportunities for our product candidates are smaller than we believe they are, our revenues may be adversely aﬀected, and our

business may suﬀer. Because the target patient populations of our product candidates are small, we must be able to successfully identify
patients and capture a significant market share to achieve and maintain profitability.

We focus our research and product development on treatments for certain cancer indications. Our projections of both the number of people who
have failed other therapies or have limited medical options for such indications, are based on estimates. These estimates may prove to be incorrect and
new studies may change the estimated incidence or prevalence. The number of patients with such diseases in the United States, Europe and elsewhere
may turn out to be lower than expected or may not be otherwise amenable to treatment with our products, or new patients may become increasingly
difficult to identify or gain access to, all of which would adversely affect our results of operations and our business. Additionally, because our target patient
populations are small, we will be required to capture a significant market share to achieve and maintain profitability.

We may fail to comply with regulatory requirements .

Our success will be dependent upon our ability, and our collaborative partners’ abilities, to maintain compliance with regulatory requirements,
including cGMP, and safety reporting obligations. The failure to comply with applicable regulatory requirements can result in, among other things, ﬁnes,
injunctions, civil penalties, total or partial suspension of regulatory approvals, refusal to approve pending applications, recalls or seizures of products,
operating and production restrictions and criminal prosecutions.

Even if our product candidates receive marketing approval, they may fail to achieve the degree of market acceptance by physicians, patients,
third-party payors and others in the medical community necessary for commercial success and the market opportunity for the product
candidates may be smaller than we estimate.

We have never commercialized a product. Even if INKmune, our DN-TNF product platform (INB03 or XPro), or any other product candidate we
develop is approved by the appropriate regulatory authorities for marketing and sale, it may nonetheless fail to gain suﬃcient market acceptance by
physicians, patients, third-party payors and others in the medical community. For example, physicians are often reluctant to switch their patients from
existing therapies even when new and potentially more eﬀective or convenient treatments enter the market. Further, patients often acclimate to the
therapy that they are currently taking and do not want to switch unless their physicians recommend switching products or they are required to switch
therapies due to lack of reimbursement for existing therapies.

Eﬀorts to educate the medical community and third-party payors on the beneﬁts of our product candidate may require signiﬁcant resources and
may not be successful. If our product candidate is approved but does not achieve an adequate level of market acceptance, we may not generate
signiﬁcant revenues and we may not become proﬁtable. The degree of market acceptance of INmune or any other product candidate we develop, if
approved for commercial sale, will depend on a number of factors, including:

●

the efficacy and safety of the product;

the potential advantages of the product compared to alternative treatments;

the prevalence and severity of any side effects;

the clinical indications for which the product is approved;

● whether the product is designated under physician treatment guidelines as a first-line therapy or as a second- or third-line therapy;

●

limitations or warnings, including distribution or use restrictions, contained in the product’s approved labeling;

our ability to offer the product for sale at competitive prices;

our ability to establish and maintain pricing sufficient to realize a meaningful return on our investment;

the product’s convenience and ease of administration compared to alternative treatments;

the willingness of the target patient population to try, and of physicians to prescribe, the product;

the strength of sales, marketing and distribution support;

the approval of other new products for the same indications;

changes in the standard of care for the targeted indications for the product;

the timing of market introduction of our approved products as well as competitive products and other therapies;

availability and amount of reimbursement from government payors, managed care plans and other third-party payors;

adverse publicity about the product or favorable publicity about competitive products; and

potential product liability claims.

The potential market opportunities for our product candidate are diﬃcult to estimate precisely. Our estimates of the potential market opportunities
are predicated on many assumptions, including industry knowledge and publications, third-party research reports and other surveys. While we believe
that our internal assumptions are reasonable, these assumptions involve the exercise of signiﬁcant judgment on the part of our management, are
inherently uncertain and the reasonableness of these assumptions has not been assessed by an independent source. If any of the assumptions prove to
be inaccurate, the actual markets for our product candidate could be smaller than our estimates of the potential market opportunities.

Even if we obtain regulatory approvals for INKmune and/or any product from our DN-TNF platform (INB03, XPro) those approvals and ongoing
regulation of our products may limit how we manufacture and market our products, which could prevent us from realizing the full beneﬁt of
our efforts.

If we obtain regulatory approvals, INKmune and/or the DN-TNF product platform, and the manufacturing facilities used for its production will be
subject to continual review, including periodic inspections, by the FDA and other United States and foreign regulatory authorities. In addition, regulatory
authorities may impose signiﬁcant restrictions on the indicated uses or marketing of INKmune or other products that we may develop. These and other
factors may significantly restrict our ability to successfully commercialize INKmune.

We and many of our vendors and suppliers will be required to comply with current Good Manufacturing Practices, or GMP, which include
requirements relating to quality control and quality assurance as well as to the corresponding maintenance of records and documentation. Furthermore,
any manufacturing facilities will need to be approved by regulatory agencies before these facilities can be used to manufacture, and they will also be
subject to additional regulatory inspections. Any material changes we may make to our manufacturing process may require approval by the FDA and
state or foreign regulatory authorities. Failure to comply with FDA or other applicable regulatory requirements may result in criminal prosecution, civil
penalties, recall or seizure of products, partial or total suspension of production or withdrawal of a product from the market.

We must also report adverse events that occur when our products are used. The discovery of previously unknown problems with INKmune, the
DN-TNF product platform or manufacturing facilities used to manufacture INKmune, or the DN-TNF product platform may result in restrictions or
sanctions on our products or manufacturing facilities, including withdrawal of our products from the market. Regulatory agencies may also require us to
reformulate our products, conduct additional clinical trials, make changes in the labeling of our product or obtain re-approvals. This may cause our
reputation in the marketplace to suffer or subject us to lawsuits, including class action suits.

If our product candidates receive marketing approval and we, or others, later discover that the drug is less eﬀective than previously believed
or causes undesirable side effects that were not previously identified, our ability to market the drugs could be compromised.

Clinical trials of our product candidates will be conducted in carefully deﬁned subsets of patients who have agreed to enter into clinical trials.
Consequently, it is possible that our clinical trials may indicate an apparent positive eﬀect of a product candidate that is greater than the actual positive
eﬀect, if any, or alternatively fail to identify undesirable side eﬀects. If, following approval of our product candidate, we, or others, discover that the drug is
less eﬀective than previously believed or causes undesirable side eﬀects that were not previously identiﬁed, any of the following adverse events could
occur:

●

regulatory authorities may withdraw their approval of the drug or seize the drug;

● we may be required to recall the drug or change the way the drug is administered;

●

additional restrictions may be imposed on the marketing of, or the manufacturing processes for, the particular drug;

● we may be subject to fines, injunctions or the imposition of civil or criminal penalties;

●

regulatory authorities may require the addition of labeling statements, such as a “black box” warning or a contraindication;

● we may be required to create a Medication Guide outlining the risks of the previously unidentified side effects for distribution to patients;

● we could be sued and held liable for harm caused to patients;

●

the drug may become less competitive; and

our reputation may suffer.

Any of these events could have a material and adverse effect on our operations and business.

Any product candidate for which we obtain marketing approval, along with the manufacturing processes, qualiﬁcation testing, post-approval
clinical data, labeling and promotional activities for such product, will be subject to continual and additional requirements of the FDA and
other regulatory authorities.

These requirements include submissions of safety and other post-marketing information, reports, registration and listing requirements, good
manufacturing practices, or GMP requirements relating to quality control, quality assurance and corresponding maintenance of records and documents,
and recordkeeping. Even if marketing approval of our product candidate is granted, the approval may be subject to limitations on the indicated uses for
which the product may be marketed or to conditions of approval or contain requirements for costly post-marketing testing and surveillance to monitor the
safety or eﬃcacy of the product. The FDA closely regulates the post-approval marketing and promotion of pharmaceutical products to ensure such
products are marketed only for the approved indications and in accordance with the provisions of the approved labeling.

In addition, later discovery of previously unknown problems with our products, manufacturing processes, or failure to comply with regulatory

requirements, may lead to various adverse results, including:

●

restrictions on such products, manufacturers or manufacturing processes;

restrictions on the labeling or marketing of a product;

restrictions on product distribution or use;

●

requirements to conduct post-marketing clinical trials;

●

requirements to institute a risk evaluation mitigation strategy, or REMS, to monitor safety of the product post-approval;

● warning letters issued by the FDA or other regulatory authorities;

● withdrawal of the products from the market;

●

refusal to approve pending applications or supplements to approved applications that we submit;

recall of products, fines, restitution or disgorgement of profits or revenue;

suspension, revocation or withdrawal of marketing approvals;

refusal to permit the import or export of our products; and

injunctions or the imposition of civil or criminal penalties.

We currently have no marketing and sales organization and have no experience in marketing products. If we are unable to establish marketing
and sales capabilities or enter into agreements with third parties to market and sell our product candidates, we may not be able to generate
product revenue.

We currently have no sales, marketing or distribution capabilities and have no experience as a company in marketing products. If we develop
internal sales, marketing and distribution organization, this will require signiﬁcant capital expenditures, management resources and time, and we would
have to compete with other pharmaceutical and biotechnology companies to recruit, hire, train and retain marketing and sales personnel.

If we are unable or decide not to establish internal sales, marketing and distribution capabilities, we expect to pursue collaborative arrangements
regarding the sales, marketing and distribution of our products. However, we may not be able to establish or maintain such collaborative arrangements, or
if we are able to do so, their sales forces may not be successful in marketing our products. Any revenue we receive would depend upon the eﬀorts of
such third parties, which may not be successful. We may have little or no control over the sales, marketing and distribution eﬀorts of such third parties
and our revenue from product sales may be lower than if we had commercialized our product candidates ourselves. We also face competition in our
search for third parties to assist us with the sales, marketing and distribution eﬀorts of our product candidates. There can be no assurance that we will be
able to develop internal sales, marketing distribution capabilities or establish or maintain relationships with third-party collaborators to commercialize any
product in the United States or overseas.

We face substantial competition from other pharmaceutical and biotechnology companies and our operating results may suﬀer if we fail to
compete effectively.

The development and commercialization of new drug products is highly competitive. We expect that we will face signiﬁcant competition from
major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide with respect to INKmune, our DN-TNF
product platform, and any other of our product candidates that we may seek to develop or commercialize in the future. Specifically, due to the large unmet
medical need, global demographics and relatively attractive reimbursement dynamics, the oncology market is fiercely competitive and there are a number
of large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of product candidates for
the treatment of cancer. Our competitors may succeed in developing, acquiring or licensing technologies and drug products that are more eﬀective, have
fewer or more tolerable side eﬀects or are less costly than any product candidates that we are currently developing or that we may develop, which could
render our product candidates obsolete and noncompetitive.

We rely on key personnel and, if we are unable to retain or motivate key personnel or hire qualiﬁed personnel, we may not be able to grow
effectively.

We are dependent on certain members of our management, the loss of services of one or more of whom could materially adversely aﬀect us. In
particular, our success depends to a signiﬁcant extent upon the continued services of Dr. Raymond J. Tesi, our President and CEO. Dr. Tesi has
overseen INmune Bio since inception and provides leadership for our growth and operations strategy as well as being an inventor of our patents.
Although we have entered into an employment agreement with Dr. Tesi, if he were to nevertheless terminate his employment with us, the loss of the
services of Dr. Tesi, would have a material adverse eﬀect on our growth, revenues, and prospective business. We are also highly dependent on the other
principal members of our management and scientiﬁc team. We are not aware of any present intention of any of our key personnel to leave our company
or to retire. The loss of any of our key personnel, or the inability to attract and retain qualiﬁed personnel, may signiﬁcantly delay or prevent the
achievement of our research, development or business objectives and could materially adversely aﬀect our business, ﬁnancial condition and results of
operations.

Our ability to manage growth eﬀectively will require us to continue to implement and improve our management systems and to recruit and train

new employees. There can be no assurance that we will be able to successfully attract and retain skilled and experienced personnel.

Product liability lawsuits against us could divert our resources, cause us to incur substantial liabilities and limit commercialization of any
products that we may develop.

We face an inherent risk of product liability claims as a result of the clinical testing of our product candidate despite obtaining appropriate
informed consent from our clinical trial participants. We will face an even greater risk if we commercially sell any product that we may develop. For
example, we may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during clinical testing, manufacturing,
marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers
inherent in the product, negligence, strict liability or a breach of warranties. Claims could also be asserted under state consumer protection acts. If we
cannot successfully defend ourselves against product liability claims, we may incur substantial liabilities or be required to limit commercialization of our
product candidate. Regardless of the merits or eventual outcome, liability claims may result in:

●

decreased demand for our product candidate or products that we may develop;

injury to our reputation and significant negative media attention;

● withdrawal of clinical trial participants;

●

significant costs to defend resulting litigation;

substantial monetary awards to trial participants or patients;

loss of revenue;

reduced resources of our management to pursue our business strategy; and

the inability to commercialize any products that we may develop.

Although we plan to maintain general liability insurance, this insurance may not fully cover potential liabilities that we may incur. The cost of any
product liability litigation or other proceeding, even if resolved in our favor, could be substantial. In addition, insurance coverage is becoming increasingly
expensive. If we are unable to obtain or maintain suﬃcient insurance coverage at an acceptable cost or to otherwise protect against potential product
liability claims, it could prevent or inhibit the development and commercial production and sale of our product candidate, which could adversely aﬀect our
business, financial condition, results of operations and prospects.

We will need to increase the size and capabilities of our organization, and we may experience difficulties in managing this growth.

To execute our business plan, we will need to rapidly add other management, accounting, regulatory, manufacturing and scientiﬁc staﬀ. We
currently have 11 full-time employees, 6 part-time employees and retain the services of additional personnel on an independent contractor basis. We will
need to attract, retain and motivate a signiﬁcant number of new additional managerial, operational, sales, marketing, ﬁnancial, and other personnel, as
well as highly skilled scientiﬁc and medical personnel, and to expand our capabilities to successfully pursue our research, development, manufacturing
and commercialization eﬀorts and secure collaborations to market and distribute our products. This growth may strain our existing managerial,
operational, ﬁnancial and other resources. We also intend to add personnel in our research and development and manufacturing departments as we
expand our clinical trial and research capabilities. Any inability to attract and retain qualiﬁed employees to enable our planned growth and establish
additional capabilities or our failure to manage our growth eﬀectively could delay or curtail our product development and commercialization eﬀorts and
harm our business.

If we or any of our third-party manufacturers do not maintain high standards of manufacturing, our ability to develop and commercialize our
product candidate could be delayed or curtailed.

We and any third parties that we may use in the future to manufacture our products must continuously adhere to cGMP regulations rigorously
enforced by the FDA through its facilities inspection program. If our facilities or the facilities of third parties who produce our products do not pass a pre-
approval inspection, the FDA will not grant market approval for our product candidates. In complying with cGMP, we and any third-party manufacturers
will need to expend signiﬁcant time, money and eﬀort in production, record-keeping and quality control to assure that each component of our product
candidates meets applicable speciﬁcations and other requirements. We or any of these third-party manufacturers may also be subject to comparable or
more stringent regulations of foreign regulatory authorities. If we or any of our third-party manufacturers fail to comply with these requirements, we may
be subject to regulatory action, which could delay or curtail our ability to develop, obtain regulatory approval of, and commercialize our product
candidates. If our component part manufacturers and suppliers fail to provide components of suﬃcient quality, and that meet our required speciﬁcations,
our clinical trials or commercialization of our product candidates could be delayed or halted, and we could face product liability claims. There can be no
assurance we can manufacture a scalable quantity of our product for clinical trials or commercialization.

If we or our third-party manufacturers use hazardous and biological materials in a manner that causes injury or violates applicable law, we
may be liable for damages.

Our research and development activities involve the controlled use of potentially hazardous substances, including chemical and biological
materials, by us and any third-party manufacturers. We and such manufacturers will be subject to federal, state and local laws and regulations in the
United States governing the use, manufacture, storage, handling and disposal of medical and hazardous materials. Although we will seek to ensure that
our procedures for using, storing and disposing of these materials comply with legally prescribed standards, we cannot completely eliminate the risk of
contamination or injury resulting from medical or hazardous materials. As a result of any such contamination or injury, we may incur liability or local, city,
state or federal authorities may curtail the use of these materials and interrupt our business operations. In the event of an accident, we could be held
liable for damages or penalized with ﬁnes, and the liability could exceed our resources. We do not have any insurance for liabilities arising from medical
or hazardous materials. Compliance with applicable environmental laws and regulations is expensive, and current or future environmental regulations
may impair our research, development and production efforts, which could harm our business, prospects, financial condition or results of operations.

We plan to rely on third parties to conduct clinical trials for our product candidates. Any failure by a third party to meet its obligations with
respect to the clinical development of our product candidate may delay or impair our ability to obtain regulatory approval for our product
candidates.

We plan to rely on academic institutions and private oncology centers to conduct clinical trials relating to our product candidates. Our reliance on
third parties to conduct clinical trials could, depending on the actions of such third parties, jeopardize the validity of the clinical data generated and
adversely affect our ability to obtain marketing approval from the FDA or other applicable regulatory authorities.

Such clinical trial arrangements will provide us with information rights with respect to the clinical data, including access to and the ability to use
and reference the data, including for our own regulatory ﬁlings, resulting from the clinical trials. If investigators or institutions breach their obligations with
respect to the clinical trials of our product candidate, or if the data proves to be inadequate, then our ability to design and conduct any future clinical trials
may be adversely affected.

Our reliance on these third parties for research and development activities will reduce our control over these activities but will not relieve us of
our responsibilities. For example, we will design our clinical trials and will remain responsible for ensuring that each of our clinical trials is conducted in
accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires us to comply with standards, commonly referred
to as good clinical practices, or GCPs, for conducting, recording and reporting the results of clinical trials to assure that data and reported results are
credible and accurate and that the rights, integrity and conﬁdentiality of trial participants are protected. Our reliance on third parties that we do not control
will not relieve us of these responsibilities and requirements. We also are required to register ongoing clinical trials and post the results of completed
clinical trials on a government-sponsored database, ClinicalTrials.gov, within speciﬁed timeframes. Failure to do so can result in ﬁnes, adverse publicity
and civil and criminal sanctions.

Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. If these third parties do
not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical trials in accordance with regulatory requirements or our
stated protocols, we will not be able to obtain, or may be delayed in obtaining, marketing approvals for our product candidate and will not be able to, or
may be delayed in our efforts to, successfully commercialize our product candidate.

We also expect to rely on other third parties to store and distribute drug supplies for our clinical trials. Any performance failure on the part of our
distributors could delay clinical development or marketing approval of our product candidate or commercialization of our products, producing additional
losses and depriving us of potential product revenue.

Recent legislative and regulatory activity may exert downward pressure on potential pricing and reimbursement for our products, if approved,
could materially affect our opportunity to commercialize such products.

The United States and several other jurisdictions are considering, or have already enacted, a number of legislative and regulatory proposals to
change the healthcare system in ways that could aﬀect our ability to sell any of our products proﬁtably, if approved. Among policy-makers and payors in
the United States and elsewhere, there is signiﬁcant interest in promoting changes in healthcare systems with the stated goals of containing healthcare
costs, improving quality and/or expanding access to healthcare. In the United States, the pharmaceutical industry has been a particular focus of these
eﬀorts and has been signiﬁcantly aﬀected by major legislative initiatives. There have been, and likely will continue to be, legislative and regulatory
proposals at the federal and state levels directed at broadening the availability of healthcare and containing or lowering the cost of healthcare. We cannot
predict the initiatives that may be adopted in the future. The continuing eﬀorts of the government, insurance companies, managed care organizations and
other payors of healthcare services to contain or reduce costs of healthcare may adversely affect:

●

the demand for any of our products, if approved;

our ability to set a price that we believe is fair for any of our products, if approved;

our ability to generate revenues and achieve or maintain profitability;

the level of taxes that we are required to pay; and

the availability of capital.

In March 2010, the Aﬀordable Care Act, or the ACA, became law in the United States (see “Business — Government Regulation”). The goal of
ACA is to reduce the cost of healthcare, broaden access to health insurance, constrain healthcare spending, enhance remedies against fraud and abuse,
add transparency requirements for the healthcare and health insurance industries, impose taxes and fees on the health industry, impose additional health
policy reforms, and substantially change the way healthcare is ﬁnanced by both governmental and private insurers. While we cannot predict what impact
on federal reimbursement policies this legislation will have in general or on our business speciﬁcally, ACA may result in downward pressure on
pharmaceutical reimbursement, which could negatively affect market acceptance of any of our products, if they are approved.

We cannot predict what healthcare reform initiatives may be adopted in the future. Further federal, state and foreign legislative and regulatory
developments are likely, and we expect ongoing initiatives to increase pressure on drug pricing. Such reforms could have an adverse eﬀect on
anticipated revenues from product candidates that we may successfully develop and for which we may obtain regulatory approval and may aﬀect our
overall financial condition and ability to develop product candidates.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.

As is the case with other pharmaceutical companies, our success is heavily dependent on intellectual property, particularly on obtaining and
enforcing patents. Obtaining and enforcing patents in the pharmaceutical industry involves both technological and legal complexity, and therefore, is
costly, time-consuming and inherently uncertain. In addition, the United States has recently enacted and is currently implementing wide-ranging patent
reform legislation. Further, recent U.S. Supreme Court rulings have either narrowed the scope of patent protection available in certain circumstances or
weakened the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future,
this combination of events has created uncertainty with respect to the value of patents, once obtained.

In September 2011, the Leahy-Smith America Invents Act, or the American Invents Act, or AIA, was signed into law. The AIA includes a number
of signiﬁcant changes to U.S. patent law, including provisions that aﬀect the way patent applications will be prosecuted and may also aﬀect patent
litigation. The USPTO is currently developing regulations and procedures to govern the administration of the AIA, and many of the substantive changes to
patent law associated with the AIA. It is not clear what other, if any, impact the AIA will have on the operation of our business. Moreover, the AIA and its
implementation could increase the uncertainties and costs surrounding the prosecution of our patent application, which could have a material adverse
effect on our business and financial condition.

An important change introduced by the AIA is that, as of March 16, 2013, the United States transitioned to a “ﬁrst-to-ﬁle” system for deciding
which party should be granted a patent when two or more patent applications are ﬁled by diﬀerent parties claiming the same invention. A third party that
ﬁles a patent application in the USPTO after that date but before us could therefore be awarded a patent covering an invention of ours even if we had
made the invention before it was made by the third party. This will require us to be cognizant going forward of the time from invention to ﬁling of a patent
application. Furthermore, our ability to obtain and maintain valid and enforceable patents depends on whether the diﬀerences between our technology
and the prior art allow our technology to be patentable over the prior art. Since patent applications in the United States and most other countries are
conﬁdential for a period of time after ﬁling, we cannot be certain that we were the ﬁrst to either (1) ﬁle any patent application related to our product
candidates or (2) invent any of the inventions claimed in our patents or patent applications.

Among some of the other changes introduced by the AIA are changes that limit where a patentee may ﬁle a patent infringement suit and provide
opportunities for third parties to challenge any issued patent in the USPTO. This applies to all of our U.S. patents, even those issued before March 16,
2013. Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal court necessary to
invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding suﬃcient for the USPTO to hold a claim invalid even
though the same evidence would be insuﬃcient to invalidate the claim if ﬁrst presented in a district court action. Accordingly, a third party may attempt to
use the USPTO procedures to invalidate our patent claims that would not have been invalidated if ﬁrst challenged by the third party as a defendant in a
district court action.

Government regulations could impact our ability to price our products

U.S. and international governmental regulations that mandate price controls or limitations on patient access to our drugs under development,
create coverage criteria or establish prices paid by government entities or programs for our potential products could impact our business, and our future
results could be adversely aﬀected by changes in such regulations or policies. In addition to the recent expansion of price controls in the U.S. in the IRA,
the adoption of restrictive coverage policies and price controls in new jurisdictions, more restrictive controls in existing jurisdictions or the failure to obtain
or maintain timely or adequate coverage and pricing could also adversely impact future revenue. We expect pricing pressures and other cost
containment measures for drugs and vaccines will continue globally.

In the U.S., pharmaceutical product pricing is subject to government and public scrutiny and calls for reform, and many of our products are
subject to increasing pricing pressures as a result. We expect to see continued focus by the U.S. Congress and the Biden Administration on regulating
pricing and access to medicine. For example, in August 2022, the drug pricing provisions of the IRA were signed into law, which, among other things,
require manufacturers of certain drugs to engage in price negotiations with Medicare which will permit the CMS to set a maximum fair price for selected
drugs, impose rebates under Medicare Part B and Medicare Part D to penalize price increases that outpace inﬂation, and replace the Part D coverage
gap discount program with a new discounting program. The drug pricing provisions of the IRA began to be implemented in 2022 and implementation
eﬀorts are expected to continue over the next several years. In August 2023, the Biden Administration unveiled the ﬁrst round of medicines subject to the
Medicare Drug Pricing Negotiation Program. Health plans may also require rebates in addition to the maximum fair price for preferred placement on a
Medicare plan formulary. The Medicare Drug Price Negotiation Program is currently subject to legal challenges and therefore, the outcome of the 340B
Program remains uncertain.

Payors may promote generic drugs and biosimilars more aggressively to generate savings and attempt to stimulate additional price competition.
In addition, we expect that consolidation and integration among pharmacy chains, wholesalers and PBMs will increase pricing pressures in the industry.
Some states have implemented, and others are considering, patient access constraints or cost cutting under state regulated programs including the
Medicaid program. State legislatures also have continued to focus on addressing drug costs, generally by increasing price transparency or attempting to
limit drug price increases for state regulated insurance. Measures to regulate prices or payment for pharmaceutical products, including legislation on
drug importation, such as Florida’s drug importation program which was recently approved by the FDA, could adversely affect our business.

We may encounter similar regulatory and legislative issues in other countries in which we may operate. In certain markets, such as in EU
member states, the U.K., Japan, China, Canada and South Korea, governments have signiﬁcant power as large single payors to regulate prices, access
criteria, or impose other means of cost control, particularly as a result of recent global financing pressures.

Deterioration in general economic conditions in the United States, Canada and globally, including the eﬀect of prolonged periods
of inflation on our suppliers, third-party service providers and potential partners, could harm our business and results of operations.

Our business and results of operations could be adversely aﬀected by changes in national or global economic conditions. These conditions
include but are not limited to inﬂation, rising interest rates, availability of capital markets, energy availability and costs, the negative impacts caused by
pandemics and public health crises, negative impacts resulting from the military conﬂict between Russia and the Ukraine, and the eﬀects of
governmental initiatives to manage economic conditions. Impacts of such conditions could be passed on to our business in the form of higher costs for
labor and materials, higher investigator fees, possible reductions in pharmaceutical industry-wide spending on research and development and
acquisitions and higher costs of capital.

Public health threats could have an adverse effect on our operations and financial results.

Public health threats, such as the novel coronavirus (COVID-19), inﬂuenza and other highly communicable diseases or viruses could adversely
impact our operations and disrupt our ongoing or planned research and development activities. We cannot presently predict the scope and severity of any
potential future business shutdowns or disruptions, but if we or any of the third parties with whom we engage, including the suppliers, clinical trial sites,
regulators and other third parties with whom we conduct business, were to experience shutdowns or other business disruptions, our ability to conduct our
business in the manner and on the timelines presently planned could be materially and negatively impacted.

We are exposed to risks related to currency exchange rates.

We conduct a signiﬁcant portion of our operations outside of the United States. Because our ﬁnancial statements are presented in U.S. dollars,
changes in currency exchange rates have had and could have in the future a signiﬁcant eﬀect on our operating results when our operating results are
translated into U.S. dollars.

Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities,
including noncompliance with regulatory standards and requirements and insider trading, which could cause signiﬁcant liability for us and
harm our reputation.

We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants and collaborators, including
intentional failures to comply with FDA or Oﬃce of Inspector General regulations or similar regulations of comparable non-U.S. regulatory authorities,
provide accurate information to the FDA or comparable non-U.S. regulatory authorities, comply with manufacturing standards we have established,
comply with federal and state healthcare fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable
non-U.S. regulatory authorities, report ﬁnancial information or data accurately or disclose unauthorized activities to us. Misconduct by these parties could
also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our
reputation. It is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may not be eﬀective
in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a

failure to be in compliance with such laws, standards or regulations. Such actions could have a signiﬁcant impact on our business and results of
operations, including the imposition of significant fines or other sanctions.

A cybersecurity incident and other technological disruptions could negatively affect our business and our relationships with customers.

We use technology in substantially all aspects of our business operations. The widespread use of technology, including mobile devices, cloud
computing, and the internet, gives rise to cybersecurity risks, including security breach, espionage, system disruption, theft and inadvertent release of
information. Our business involves the storage and transmission of numerous classes of sensitive and/or conﬁdential information and intellectual
property, including information relating to suppliers, private information about employees, and ﬁnancial and strategic information about us and our
business partners. If we fail to eﬀectively assess and identify cybersecurity risks associated with the use of technology in our business operations, we
may become increasingly vulnerable to such risks. Additionally, while we have implemented measures to prevent security breaches and cyber incidents,
our preventative measures and incident response eﬀorts may not be entirely eﬀective. The theft, destruction, loss, misappropriation, or release of
sensitive and/or conﬁdential information or intellectual property, or interference with our information technology systems or the technology systems of
third parties on which we rely, could result in business disruption, negative publicity, brand damage, violation of privacy laws, loss of customers, potential
liability and competitive disadvantage.

Use of social media platforms presents new risks.

We believe that our potential patient population is active on social media. Social media practices in the pharmaceutical and biotechnology
industries are evolving, which creates uncertainty and risk of noncompliance with regulations applicable to our business. For example, patients may use
social media platforms to comment on the eﬀectiveness of, or adverse experiences with, a product candidate, which could result in reporting obligations.
In addition, there is a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us or our product
candidates on any social networking website. In addition, our employees or third parties with whom we contract, such as our CROs or CMOs, may
knowingly or inadvertently make use of social media in a manner that may give rise to liability, lead to the loss of trade secrets or other intellectual
property or result in public exposure of personal information of our employees, clinical trial patients, customers and others or information regarding our
product candidates or clinical trials. Any of these events could have a material adverse eﬀect on our business, prospects, operating results and ﬁnancial
condition and could adversely affect the price of our common shares.

Certain shares previously sold under our Sales Agreement with BTIG LLC with respect to our At-the-Market Oﬀering may have been sold in
violation of federal and state securities laws and may be subject to rescission rights and other penalties, requiring us to repurchase shares
sold thereunder.

In connection with our Sales Agreement, we became aware that our shelf registration statement on Form S-3 (ﬁle number 333-237368) (the
“Prior Registration Statement”) expired on April 2, 2023. Prior to becoming aware of the expiration, we sold an aggregate of 75,697 shares of our common
stock following the expiration of the Prior Registration Statement and through July 17, 2023 at an average price of approximately $10.56 per share for an
aggregate of approximately $799,212 under the Prior Registration Statement pursuant to the Sales Agreement (the “Sales”). Because the Prior
Registration Statement had already expired, the Sales could be determined to be unregistered sales of securities and, in accordance with Section 5 of
the Securities Act, direct purchasers in the Sales may have rescission rights pursuant to which they may be entitled to recover the amount paid for such
shares, plus statutory interest, upon returning the shares to us within one year from the transaction date. In addition, we could be subject to enforcement
actions or penalties and ﬁnes by federal and/or state regulatory authorities. We cannot predict the likelihood of any claims or actions being brought
against us or the amount of any penalties or fines in connection with the Sales.

Risks Related to our Common Stock

We do not intend to pay dividends for the foreseeable future.

We have paid no dividends on our common stock to date, and we do not anticipate paying any dividends to holders of our common stock in the
foreseeable future. While our future dividend policy will be based on the operating results and capital needs of the business, we anticipate that we will
retain any earnings to ﬁnance our future expansion and for the implementation of our business plan. As an investor, you should take note of the fact that
a lack of a dividend can further affect the market value of our common stock and could significantly affect the value of any investment in our Company.

We are subject to the reporting requirements of federal securities laws, which can be expensive and may divert resources from other projects,
thus impairing our ability grow.

We are a public reporting company and, accordingly, subject to the information and reporting requirements of the Exchange Act and other federal
securities laws, including compliance with the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). The costs of preparing and ﬁling annual and
quarterly reports, proxy statements and other information with the SEC and furnishing audited reports to stockholders would cause our expenses to be
higher than they would be if we remained privately held.

It may be time consuming, diﬃcult and costly for us to develop and implement the internal controls and reporting procedures required by the
Sarbanes-Oxley Act. We may need to hire additional ﬁnancial reporting, internal controls and other ﬁnance personnel in order to develop and implement
appropriate internal controls and reporting procedures.

We are an “emerging growth company” within the meaning of the Securities Act of 1933, as amended, or the Securities Act, and if we decide
to take advantage of certain exemptions from various reporting requirements applicable to emerging growth companies, our common stock
could be less attractive to investors.

We will remain an emerging growth company until the earliest of (1) the last day of the ﬁscal year during which we have total annual gross
revenues of $1.235 billion or more, (2) December 31, 2024 (the last day of the ﬁscal year following the ﬁfth anniversary of the completion of our initial

public oﬀering), (3) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt, and (4) the
date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, or the Exchange Act (i.e., the first
day of the ﬁscal year after we have (a) more than $700.0 million in outstanding common equity held by our non-aﬃliates, measured each year on the last
day of our second fiscal quarter, and (b) been public for at least 12 months).

Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” which would allow us to
take advantage of many of the same exemptions from disclosure requirements including exemption from compliance with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and
proxy statements. We cannot predict if investors will ﬁnd our common stock less attractive because we may rely on these exemptions. If some investors
ﬁnd our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more
volatile.

Our stock price may be volatile.

The market price of our common stock is likely to be highly volatile and could ﬂuctuate widely in price in response to various factors, many of

which are beyond our control, including the following:

●

changes in our industry;

competitive pricing pressures;

our ability to obtain working capital financing;

additions or departures of key personnel;

limited “public ﬂoat” in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing
pressure on the market price for our common stock;

sales of our common stock;

our ability to execute our business plan;

operating results that fall below expectations;

loss of any strategic relationship;

regulatory developments;

economic and other external factors;

period-to-period fluctuations in our financial results; and

inability to develop or acquire new or needed technology or products.

In addition, the securities markets have from time-to-time experienced signiﬁcant price and volume ﬂuctuations that are unrelated to the
operating performance of particular companies. These market ﬂuctuations may also materially and adversely aﬀect the market price of our Common
Stock.

You may have difficulty trading and obtaining quotations for our common stock.

Our securities are not actively traded, and the bid and asked prices for our common stock may ﬂuctuate widely. As a result, investors may ﬁnd it
diﬃcult to dispose of, or to obtain accurate quotations of the price of, our securities. This severely limits the liquidity of the common stock and would likely
reduce the market price of our common stock and hamper our ability to raise additional capital. There is a limited market for our securities. Accordingly,
investors may therefore bear the economic risk of an investment in our securities for an indefinite period of time.

Additional stock offerings in the future may dilute your percentage ownership of our company.

Given our plans and expectations that we may need additional capital and personnel, we may need to issue additional shares of common stock
or securities convertible or exercisable for shares of common stock, including convertible preferred stock, convertible notes, stock options or warrants.
The issuance of additional securities in the future will dilute the percentage ownership of then current stockholders.

Anti-takeover provisions in our stockholder rights plan could make a third-party acquisition of us difficult.

We have a stockholder rights plan that may have the eﬀect of discouraging unsolicited takeover proposals. Speciﬁcally, the rights issued under
the stockholder rights plan could cause signiﬁcant dilution to a person or group that attempts to acquire us on terms not approved in advance by our
board of directors. The rights plan is not intended to prevent a takeover, and we believe it will enable all our stockholders to realize the full potential value
of their investment in the Company and protect the Company and its stockholders from eﬀorts to obtain control of the Company that are inconsistent with
the best interests of the Company and its stockholders. The rights under the plan will expire on December 30, 2024, subject to a possible earlier
expiration to the extent provided in the stockholder rights plan, unless extended.

Sales of our common shares by our employees, including our executive oﬃcers, could cause the trading price of our common shares to fall
or prevent it from increasing for numerous reasons, and sales by such persons could be viewed negatively by other investors.

In accordance with the guidelines speciﬁed under Rule 10b5-1 under the Exchange Act, as amended, equivalent legislation in applicable
jurisdictions, and our policies regarding equity transactions, a number of our employees, including executive oﬃcers, may adopt share trading plans
pursuant to which they have arranged to sell common shares from time to time in the future. Generally, sales of common shares, including sales under

such plans, by our executive oﬃcers and directors require public ﬁlings. Sales of our common shares by such persons could cause the price of our
common shares to fall or prevent it from increasing. If sales by employees, executive oﬃcers, or directors cause a substantial number of our common
shares to become available for purchase in the public market, the price of our common shares could fall or may not increase. Also, sales by such
personnel could be viewed negatively by holders and potential purchasers of our common shares.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 1C. CYBERSECURITY

Risk Management and Strategy

We have processes for assessing, identifying and managing cybersecurity risks, which are built into our information technology function and are
designed to help protect our Company from cyber threats as well as secure our networks and systems. Such processes include safeguards, response
plan, and review of our policies and procedures to identify risks. We engage an external party to enhance our cybersecurity oversight.

Governance

Our Audit Committee of the Board of Directors, or the Audit Committee, is responsible for overseeing cybersecurity risk and periodically updates
our Board of Directors on such matters. The Audit Committee receives periodic updates from management regarding cybersecurity matters, and is
notified between such updates regarding any significant new cybersecurity threats or incidents. We do not believe that there are currently any known risks
from cybersecurity threats that are reasonably likely to materially affect us or our business strategy, results of operations or financial condition.

Our Chief Financial Oﬃcer is responsible for the operational oversight of company-wide cybersecurity strategy, policy, and standards across

relevant departments to assess and help prepare us to address cybersecurity risks.

ITEM 2. PROPERTIES

The Company leases approximately 5,000 square feet of oﬃce space in Boca Raton, Florida from a third-party, which serves as the

headquarters of the Company. We currently pay approximately $16,000 per month for this lease which expires in March 2027.

We believe our current facilities are suitable and adequate to meet our current needs.

ITEM 3. LEGAL PROCEEDINGS

We currently are not a party to any material litigation or other material legal proceedings. We may, from time to time, be subject to legal

proceedings and claims arising in the normal course of business.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES

Common Stock

Our common stock trades under the symbol “INMB” on the Nasdaq and has been publicly traded since February 4, 2019. Prior to this time, there

was no public market for our common stock.

As of December 31, 2023, there were 26 holders of record of our common stock. Because shares of our common stock are held by depositories,

brokers and other nominees, the number of beneficial holders of our shares is substantially larger than the number of record holders.

Dividend Policy

We have not declared any cash dividends on our common stock since inception and do not anticipate paying such dividends in the foreseeable
future. We plan to retain any future earnings for use in our business operations. Any decisions as to future payment of cash dividends will depend on our
earnings and financial position and such other factors as the Board of Directors deems relevant.

ITEM 6. [RESERVED]

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

elsewhere in this Form 10-K, including those set forth under “Risk Factors” and “Forward-Looking Statements.”

Overview

We are a clinical-stage immunology company focused on developing drugs that may reprogram the patient’s innate immune system to treat
disease. We believe this may be done by targeting cells of the innate immune system that cause acute and chronic inﬂammation and are involved in
immune dysfunction associated with chronic diseases such as cancer and neurodegenerative diseases. The Company’s drugs are in clinical trials and
have not been approved by a regulatory authority. The Company has two therapeutic platforms – a dominant-negative TNF platform (“DN-TNF”,
“XPro™”, “XPro1595™” or “pegipanermin”) and a Natural Killer (“NK”, or “INKmune™”) platform. The DN-TNF platform neutralizes soluble TNF (“sTNF”)
without aﬀecting trans-membrane TNF (“tmTNF”) or TNF receptors -TNFR1 and TNFR2. This unique biologic mechanism diﬀerentiates the DN-TNF
drugs from currently approved non-selective TNF inhibitors that inhibit both sTNF and tmTNF. Protecting the function of tmTNF and TNF receptors while
neutralizing the function of sTNF is a potent anti-inﬂammatory strategy that does not cause immunosuppression or demyelination which occur in the
currently approved non-selective TNF inhibitors. Currently approved non-selective TNF inhibitors treat autoimmune disease, but are contraindicated in
patients with infection, cancer and neurologic diseases because they increase the risk of infection, cancer and demyelinating neurologic diseases,
respectively; these safety problems are due to oﬀ-target eﬀects on inhibiting tmTNF. The NK platform targets the dysfunctional natural killer cells in
patients with cancer. NK cells are part of the normal immunologic response to cancer with important roles in immunosurveillance to prevent cancer and in
preventing relapse by eliminating residual disease. Residual disease is the cancer left behind after therapy is ﬁnished. Residual disease can grow to
cause relapse. The mechanism by which INKmune improves the ability of the patient’s NK cells to kill their cancer is complex. The NK cells of cancer
patients lose the ability to bind and kill cancer cells. A measure of NK cell binding to cancer cells is avidity. The higher the avidity, the greater the bond
between the NK cell to cancer cell and thus the greater NK killing of cancer cells. INKmune increases NK avidity and further improves mitochondrial
function and upregulates nutrient receptors. These metabolic changes may help the INKmune primed NK cell to function in the hostile tumor
microenvironment and persist much longer. These mechanisms improve the ability of INKmune primed NK cells to overcome the immune evasion of the
patient’s cancer cells. We believe INKmune is best used to eliminate residual disease after the patient has completed other cancer therapies. Both the
DN-TNF platform and the INKmune platform can be used to treat multiple diseases. The DN-TNF platform will be used as an immunotherapy for the
treatment of cancer and neurodegenerative disease. INKmune is being developed to treat NK sensitive hematologic malignancies and solid tumors.

We believe our DN-TNF platform can be used as a CNS (“central nervous system”) therapy to target glial activation to prevent progression of
Alzheimer’s disease (“AD”); to target neuroinﬂammation in treatment resistant depression (“TRD”); as a drug to prevent muscle degeneration, prevent
ﬁbrosis and promote muscle regeneration in Duchene muscular dystrophy (“DMD”); and as a cancer therapy to reduce resistance in immunotherapy. The
primary focus of the company’s development eﬀorts for XPro is AD. The next indication to be developed with XPro will be TRD. Treatment of DMD and
cancer will occur when partners for the programs are found. The drug is named diﬀerently for the oncology and CNS indications; INB03™ or XPro,
respectively, but it is the same drug product. For DMD, the company is exploring DN-TNF compounds that is optimized for the treatment of DMD. This
novel compound has the same mechanism of action but has novel IP protection. In each case, we believe neutralizing sTNF is a cornerstone to the
treatment of these diseases. As an immunotherapy for cancer, we are using INB03 to neutralize sTNF produced by HER2+ trastuzumab resistant breast
cancers to reverse resistance to targeted therapy. sTNF produced by the tumor causes an up-regulation of MUC4 express causing steric hindrance of
trastuzumab binding to the HER receptor on HER2+ breast cancer cells. Without binding, trastuzumab based therapies are not eﬀective. Neutralizing
sTNF reverses MUC4 expression converting a trastuzumab resistant breast cancer cell into a trastuzumab sensitive breast cancer cell. In addition,
INB03 may change the immunobiology of the tumor microenvironment by decreasing the number of immunosuppressive myeloid cells, both myeloid
derived suppressor cells and tumor active macrophages, and increasing the number of cytotoxic lymphocytes and phagocytic macrophages in the TME.
The Company has completed an open label dose escalation trial in cancer patients with metastatic solid tumors that have failed multiple lines of therapy.
The pre-clinical data in MUC4+ expressing tumors and the clinical trial informs the design of a future Phase II trial by demonstrating that INB03 was safe
and well tolerated, deﬁned the dose of INB03 to carry into Phase II trials, and demonstrated a pharmacodynamic end-point. The company does not plan
to commence a Phase II trial in patients with advanced MUC4+ expressing cancer until a partner can be found.

Likewise, we believe the DN-TNF platform can be used to treat selected neurodegenerative diseases by modifying the brain microenvironment
(“BME”). The Company believes the core pathology of cognitive decline is a combination of neurodegeneration and synaptic dysfunction.
Neurodegeneration is nerve cell death that may include demyelination. Synaptic dysfunction means the connections between nerve cells stop working
eﬃciently and may decrease in number. The combination of neurodegeneration and synaptic dysfunction causes cognitive decline and behavioral
changes associated with Alzheimer’s disease (“AD”). XPro completed a Phase I trial treating patients with Alzheimer’s disease that was partially funded
by a Part-the-Clouds Award from the Alzheimer’s Association. We believe XPro targets activated microglia and astrocytes of the brain that produce sTNF
that promotes nerve cell loss, synaptic dysfunction and prevents myelin repair - key elements in the development of dementia. In animal models,
elimination of sTNF prevents nerve cell dysfunction, reverses synaptic pruning and promotes myelin repair. The Phase I trial in patients with biomarkers
of inﬂammation with AD has been completed. The open label, dose escalation trial was designed to demonstrate that XPro can safely decrease
neuroinﬂammation in patients with ADi. ADi is the term used to delineate patients with AD with biomarkers of inﬂammation. The endpoints of the trial
were measures of neuroinﬂammation and neurodegeneration in blood and cerebral spinal ﬂuid by measuring changes in inﬂammatory cytokine levels in
the CNS and using MRI-DTI to measure brain microstructural changes. XPro, at the 1mg/kg/week dose, decreased inﬂammatory cytokines in the CSF in
the brain demonstrating that XPro can decrease neuroinﬂammation in patients with AD. We also studied downstream beneﬁts of decreasing
neuroinﬂammation by measuring changes in the CSF proteome and quantifying changes in novel white matter MRI biomarkers. XPro signiﬁcantly
decreases biomarkers of neurodegeneration as measured by changes in the CSF proteome including neuroﬁlament light chain, phospho Tau 217 and
VILIP-1; decreases of 84%, 46% and 91% respectively after 3 months of therapy. Three months of XPro therapy improved measures of synaptic function,
as measured in the CSF proteome including a 222% increase in Contactin 2 and a 56% decrease neurogranin, changes that contribute to improved
synaptic function.

The successful completion of the Phase I trial in AD has informed the design of a blinded randomized, placebo-controlled Phase II trial in patients
with early ADi. Early ADi includes patients with AD and MCI who have at least one biomarker of inﬂammation (ADi and MCI2 respectively). The early ADi
trial is a blinded randomized trial to test if treatment of early AD patients with neuroinﬂammation with XPro will aﬀect cognitive decline. The Phase II trial
in early ADi has six important elements. Two hundred and one patients are being enrolled in a 2:1 ratio (XPro vs placebo). The patients will receive
1mg/kg/week as a subcutaneous injection for six months. An enrichment strategy identical to the successful strategy used in the Phase I trial will be used
to ensure patients have neuroinﬂammation. Patients will need to have one or more enrichment criteria: elevated blood level of at least one of C-reactive
protein, hemoglobin A1c, erythrocyte sedimentation and at least one allele of ApoE4. The primary end-point will be Early/mild Alzheimer’s Cognitive
Composite (“EMACC”), a validated cognitive measure that is more sensitive than traditional end-points used in many studies of patients with early AD.
The AD program is open in the United States, Australia, Canada, the United Kingdom, France, Germany, Spain, Czech Republic and Slovakia. All
patients will be oﬀered to stay on therapy for at least 12 months in an extension trial. Clinical and biomarker data will be collected during the extension
trial.

There are at least 4 clinical milestones associated with the Phase II trial in AD. Enrollment of 201 patients in the Phase II AD trial should be
complete by mid-year. Six months after the last patient is enrolled, top line cognition data with EMACC will be available. Secondary end-points which
include blood biomarker, neuroimaging and additional neuropsychiatric end-points will be available after data base lock 2-3 months after top line data.
Finally, several months after all the data are analyzed, the Company plans an end-of-phase II meeting with the FDA to ﬁnalize plans for the pivotal Phase
III trial. The Company plans to apply for an accelerated pathway during 2024. XPro for treatment of AD may be eligible for one or both accelerated
approval pathways. The Company plans to submit of Fast Track status in 2024. We expect to be eligible for Break Through status after completion of the
Phase II in 2025.

Eﬀective therapy for TRD is a large unmet need. Twenty percent of patients with a Major Depressive Disorder have TRD. Once third of TRD
patients have peripheral biomarkers to inﬂammation (elevated CRP). This is a large patient population. The role of TNF and anti-TNF therapeutics was
explored in a small open label clinical trial by Prof. Andrew Miller, MD of Emory University demonstrated the patients have elevated TNF levels and
treatment with inﬂiximab treated their depression (Miller, 2011). The Company received a $2.9M USD award from the National Institute of Mental Health
(“NIMH”) to treat TRD with XPro. The blinded, randomized Phase II trial will use biomarkers of peripheral inﬂammation to select patients with TRD for
enrollment. Patients will be treated for 6 weeks. Primary end-points include both clinical and neuroimaging measures. The ﬁnal trial design is ongoing
and discussions with the FDA are not complete. The Company received authorization to initiate a clinical trial in AD in the US during January 2024. The
TRD trial is expected to start enrollment after the AD Phase II trial finishes patient enrollment.

We believe that INKmune improves the ability of the patient’s own NK cells to attack their tumor. INKmune interacts with the patient’s NK cells to
convert them from inert resting NK cells into memory-like NK cells that kill the patient’s cancer cells. INKmune is a replication incompetent proprietary
cell line that is given to the patient after determining that i) the patient has adequate NK cells in their circulation and ii) those NK cells are functional when
exposed to INKmune in vitro. INKmune is designed to be given to patients after their immune system has recovered after cytotoxic chemotherapy to
target the residual disease that remains after treatment with cytotoxic therapy. We believe INKmune can be used to treat numerous hematologic
malignancies and solid tumors including leukemia, multiple myeloma, lymphoma, lung, ovary, breast, renal and prostate cancer. The Company had a
Phase I trial using INKmune to treat patients with high risk MDS/AML, a form of leukemia. Two patients were treated in the Phase I trial for MDS, three
patients have been treated compassionately in AML and another MDS patient is expected to be treated shortly. During March 2024, the Company
decided to terminate further enrollment in the MDS/AML trial. In the patients, INKmune therapy is safe, produces memory-like NK cells that kill cancer in
vitro, and promotes development of cancer killing memory-like NK cells that can be found in the patient’s circulation of 4 months. The Company initiated
a separate Phase I/2 trial of INKmune in a metastatic castrate resistant prostate cancer. The open label trial enrolled the first patient in December 2023.

The Phase I/II trial using INKmune to treat patients with metastatic castrate resistant prostate cancer (mCPRC) is an open label trial. Biomarker
data from the patients will be visible as patients are treated. The Company will report data from each cohort as it becomes available. In addition to clinical
data, the Company will communicate when the Phase I portion of the trial has completely enrolled. This is expected in September 2024. Because of the
modiﬁed Bayesian design, the Company estimates the trial will be completely enrolled 1H25 with top-line data available 6 months later. Topline data is
divided into immunologic and tumor response variables. The most important immunologic response variable is related to memory like NK cell
persistence. This is how long are the number of mlNK cells in patients blood compared to baseline. There are 3 important variables to tumor response: i)
blood PSA changes; ii) change in PMSA scan and iii) change in circulating tumor DNA (ctDNA). Ideally, the levels of all three variables decrease with
treatment. We do not expect this 6 month trial to provide survival data.

We continue to incur signiﬁcant development and other expenses related to our ongoing operations. As a result, we are not and have never been
proﬁtable and have incurred losses in each period since our inception, resulting in substantial doubt in our ability to continue as a going concern. We
reported a net loss of $30.0 million and $27.3 million for the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and
2022, we had cash and cash equivalents of $35.8 million and $52.2 million, respectively. We expect to continue to incur signiﬁcant losses for the
foreseeable future, and we expect these losses to increase as we continue our research and development of, and seek regulatory approvals for, our
product candidates. The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate
revenues, if any.

Our recurring net losses and negative cash ﬂows from operations raised substantial doubt regarding our ability to continue as a going concern
within one year after the issuance of our consolidated ﬁnancial statements for the year ended December 31, 2023. Until we can generate suﬃcient
revenue from the commercialization of our product candidates, we expect to ﬁnance our operations through the public or private sale of equity, debt
ﬁnancings or other capital sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets, or licensing
arrangements with third parties. To date, the Company has relied on equity and debt financing to fund its operations.

As a company with less than $1.235 billion in revenue during our last ﬁscal year, we qualify as an “emerging growth company” under the JOBS
Act. As an emerging growth company, we may take advantage of speciﬁed reduced disclosure and other requirements that are otherwise applicable
generally to public companies. These provisions include:

●

only two years of audited ﬁnancial statements in addition to any required unaudited interim ﬁnancial statements with correspondingly
reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;

●

reduced disclosure about our executive compensation arrangements;

●

no non-binding advisory votes on executive compensation or golden parachute arrangements;

exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting; and

delaying the adoption of new or revised accounting standards that have diﬀerent eﬀective dates for public and private companies until those
standards apply to private companies.

We have elected to take advantage of the above-referenced exemptions and we may take advantage of these exemptions for up to ﬁve years or
such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.235
billion in annual revenues, we have more than $700 million in market value of our stock held by non-aﬃliates, or we issue more than $1 billion of non-

convertible debt over a three-year period. We may choose to take advantage of some but not all of these reduced burdens.

Components of Operating Results

Operating Expenses

Research and Development

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

●

clinical trial and regulatory-related costs;

expenses incurred under agreements with investigative sites and consultants that conduct our clinical trials;

● manufacturing and testing costs and related supplies and materials; and

●

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

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

External Costs

DN-TNF – Alzheimer’s disease
INKmune – High Risk MDS/AML & Prostate Cancer
Preclinical and other programs
Accrued research and development rebate

Total external costs

Internal Costs

Year Ended
December 31,

2023

2022

13,817 $
3,296
921
(3,040)
14,994
5,279
20,273 $

12,573
1,495
1,903
(3,531)
12,440
4,627
17,067

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

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

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

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

●

per patient trial costs;

the number of sites included in the clinical trials;

the countries in which the clinical trials are conducted;

the length of time required to enroll eligible patients;

the number of patients that participate in the clinical trials;

the number of doses that patients receive;

the cost of comparative agents used in clinical trials;

the drop-out or discontinuation rates of patients;

potential additional safety monitoring or other studies requested by regulatory agencies;

the duration of patient follow-up;

the efficacy and safety profile of the product candidate; and

●

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

We do not expect any of our product candidates to be commercially available for at least the next several years, if ever. We expect to continue to
incur signiﬁcant expenses and increasing operating losses for the foreseeable future, which may ﬂuctuate signiﬁcantly from quarter-to-quarter and year-
to-year. We anticipate that our expenses will increase substantially as we:

●

continue research and development, including preclinical and clinical development of our existing product candidates;

potentially seek regulatory approval for our product candidates;

seek to discover and develop additional product candidates;

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

●

seek to comply with regulatory standards and laws;

● maintain, leverage and expand our intellectual property portfolio;

●

hire clinical, manufacturing, scientiﬁc and other personnel to support our product candidate’s development and future commercialization
efforts;

add operational, financial and management information systems and personnel; and

incur additional legal, accounting and other expenses in operating as a public company.

General and Administrative Expenses

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

Other income, net

Other expense consists primarily of interest expense incurred on debt, partially offset by interest income from a money market investment.

Critical Accounting Policies and Significant Judgments and Estimates

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

In-Process Research and Development

The Company evaluates the carrying value of indeﬁnite-lived intangible assets, which consists of in-process research and development
(“IPR&D”), on an annual basis or more frequently when indicators of impairment exist. An impairment of indeﬁnite-lived intangible assets would occur if
the fair value of the intangible asset is less than the carrying value. Intangible assets with ﬁnite lives are tested for impairment when events or changes in
circumstances indicate that the carrying amount of such assets may not be recoverable. If these facts and circumstances exist, the Company assesses
for recovery by comparing the carrying values of the assets with their future undiscounted net cash flows. Significant management judgment is required in
the forecast of future operating results that are used in the preparation of expected undiscounted cash flows.

IPR&D assets are considered to be indeﬁnite-lived until the completion or abandonment of the associated research and development projects.
During the period the assets are considered indeﬁnite-lived, they are tested for impairment. If the related project is terminated or abandoned, the
Company may have a full or partial impairment related to the IPR&D assets, calculated as the excess of their carrying value over fair value. The valuation
process is very complex and requires signiﬁcant input and judgment using internal and external sources with respect to the Company’s future revenue
and expense growth rates, changes in working capital use, the selection of an appropriate discount rate, and other assumptions and estimates.

Research and Development (“R&D”)

R&D expenses consist primarily of costs related to clinical studies and outside services, personnel expenses, and other R&D expenses. Clinical
studies and outside services costs relate primarily to services performed by clinical research organizations and related clinical or development
manufacturing costs, materials and supplies, ﬁling fees, regulatory support, and other third-party fees. Personnel expenses relate primarily to salaries,
benefits and share-based compensation. R&D expenditures are charged to operations as incurred.

We recognize R&D tax credits receivable from the Australian government for spending on R&D as a reduction of R&D expenses.

Stock-Based Compensation

We measure and recognize compensation expense for all stock-based awards granted to service providers, employees, and directors based on
the estimated fair value of the award on the grant date. We calculate the estimated fair value of stock options on the date of grant using the Black-
Scholes option-pricing model, which is impacted by the fair value of our common stock, as well as changes in assumptions regarding a number of highly
complex and subjective variables. These variables include, but are not limited to, the market value of common stock on the grant date, the expected
dividend yield, the expected term of the awards, the risk-free interest rates and the expected common stock price volatility over the term of the option
awards. The expected volatility is based on the historical volatility of a few unrelated public companies within our industry over the most recent period
commensurate with the estimated expected term of our stock options as we have insuﬃcient historical information regarding the volatility of the share
price of our common stock. We use the simpliﬁed approach to determine the expected term as we do not have suﬃcient data related to stock option
exercises. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield in eﬀect at the time of grant.
We have never declared or paid dividends and have no plans to do so in the foreseeable future.

We recognize the fair value of stock options on a straight-line basis over the period during which a service provider is required to provide

services in exchange for the award (generally the vesting period). We account for forfeitures as they occur.

Off-Balance Sheet Arrangements

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

Licensing and Collaboration Agreements

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

Xencor

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

Results of Operations

Comparison of the Years Ended December 31, 2023 and December 31, 2022

(in thousands)
Revenues

General and Administrative
Research and Development
Other Expense, net
Net loss

Revenues

December 31,
2023

Year Ended
December 31,
2022

Change

(155) $

(374) $

219

9,623
20,273
267
30,008 $

9,258
17,067
1,348
27,299 $

365
3,206
(1,081)
2,709

During 2023 and 2022, the Company sold MSC’s to one customer and recognized $155,000 and $374,000 of revenues, respectively.

General and Administrative

General and administrative expenses were $9.6 million for the year ended December 31, 2023, compared to $9.3 million for the year ended
December 31, 2022. The increase in general and administrative expenses is due to higher stock-based compensation ($0.1 million higher during the year
ended December 31, 2023), higher travel expense ($0.1 million higher during the year ended December 31, 2023) and higher professional fees ($0.1
million higher during the year ended December 31, 2023).

Research and Development

Research and development expenses increased to $20.3 million for the year ended December 31, 2023 from $17.1 million for the year ended
December 31, 2022. The increase in research and development expenses during the year ended December 31, 2023 compared to 2022 is mainly due to
the Company incurring $1.8 million of higher costs in connection with our INKmune clinical trials, $1.2 million higher costs with our Alzheimer’s clinical
trial, $0.7 million higher internal costs and $0.5 million lower accrued R&D rebate, partially offset by $1.0 million lower of preclinical and other expenses.

Other Expense, net

Other expense, net decreased to $0.3 million during the year ending December 31, 2023, compared to $1.3 million during the year ending
December 31, 2022. The decrease in other expense is due to the Company earning higher interest income from money market investments in 2023 ($1.3
million higher) partially offset by higher interest expense on the Company’s debt in 2023 ($0.3 million higher).

Liquidity and Capital Resources

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

an ongoing basis.

We incurred a net loss of $30,008,000 and $27,299,000 for the years ended December 31, 2023 and 2022, respectively. Net cash used in
operating activities was $11,980,000 and $22,686,000 for the years ended December 31, 2023 and 2022, respectively. Since inception, we have funded
our operations primarily with proceeds from the sales of our common stock. As of December 31, 2023, we had cash and cash equivalents of
$35,848,000. We anticipate that operating losses and net cash used in operating activities will increase over the next few years as we advance our
products under development.

Our primary uses of capital are, and we expect will continue to be, third-party clinical and preclinical research and development services, costs
incurred to manufacture our drugs under development, compensation and related expenses, legal, patent and other regulatory expenses and general
overhead costs. We believe our use of CROs provides us with flexibility in managing our spending.

The Company incurs signiﬁcant research and development expenses in Australia and the United Kingdom. Fluctuations in the rate of exchange
between the United States dollar and the pound sterling as well as the Australian dollar could adversely affect our financial results, including our expenses
as well as assets and liabilities. We currently do not hedge foreign currencies but will continue to assess whether that strategy is appropriate. As of
December 31, 2023, the cash balance held by our foreign subsidiaries with currencies other than the United States dollar was approximately $0.5 million.

Our recurring net losses and negative cash ﬂows from operations, as well as forecast of continued losses and negative cash ﬂows from
operations, raised substantial doubt regarding our ability to continue as a going concern within one year after the issuance of our consolidated ﬁnancial
statements for the year ended December 31, 2023. Until we can generate suﬃcient revenue from the commercialization of our product candidates, we
expect to ﬁnance our operations through the public or private sale of equity, debt ﬁnancing or other capital sources, such as government funding,
collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties. Our cash and cash equivalents were $35.8
million and total current assets were $21.5 million at December 31, 2023, which the Company is projecting will be insuﬃcient to sustain its operations
through one year following the date that the financial statements are issued.

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

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

ATM Sales Agreement

During July 2023, the Company sold 75,697 shares of its common stock at an average price of $ 10.56 per share under the ATM program. The

aggregate net proceeds were approximately $775,000 after offering expenses.

Term Loan

On June 10, 2021, we entered into a Loan and Security Agreement with SVB and an aﬃliate of SVB, providing for a $15.0 million term loan. The
Term Loan provides for an annual interest rate equal to the greater of (i) the prime rate then in eﬀect as reported in The Wall Street Journal plus 4.50%
and (ii) 7.75% and also includes a ﬁnal payment fee equal to 6.5% of the original principal amount borrowed payable on the earlier of the repayment of
the loan in full and the maturity date. The Term loan is payable in 2024.

Cash Flows

The following table provides information regarding our cash flows for the years ended December 31, 2023 and 2022:

Net cash used in operating activities

Net cash provided by financing activities
Impact on cash from foreign currency translation

Net decrease in cash and cash equivalents

Net Cash Used in Operating Activities

Year Ended
December 31,

2023

2022

(11,980) $
(4,225)

(22,686)
729

(100)

(700)

(16,305) $

(22,657)

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

Operating activities used $12.0 million of cash for the year ended December 31, 2023, primarily resulting from our net loss of $30.0 million,
partially oﬀset by a net cash inﬂow of $10.4 million for changes in our net operating assets and liabilities, and non-cash stock-based compensation
charges of $7.4 million. The change in our net operating assets and liabilities was primarily due to a decrease in research and development tax credit
receivable of $6.2 million, a decrease in prepaid expenses and other current assets of $2.5 million and an increase in accounts payable and accrued
liabilities of $2.7 million, partially offset by a decrease in accrued liability – long term of $0.6 million.

Operating activities used $22.7 million of cash for the year ended December 31, 2022, primarily resulting from our net loss of $27.3 million, a net
cash outﬂow of $2.9 million for changes in our net operating assets and liabilities, and non-cash stock-based compensation charges of $7.1 million. The
change in our net operating assets and liabilities was primarily due to an increase in research and development tax credit receivable of $3.2 million and
an increase in prepaid expenses and other current assets of $1.7 million, partially oﬀset by an increase in accounts payable and accrued liabilities of $1.5
million.

Net Cash Provided by Financing Activities

During the year ended December 31, 2023, the Company sold 75,697 shares of its common stock for net proceeds of $0.8 million under the

Company’s ATM program with BTIG.

During the year ended December 31, 2023, the Company repaid $5 million of its debt.

During the year ended December 31, 2022, the Company sold 82,900 shares of its common stock to certain oﬃcers and directors for

approximately $0.7 million.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk from changes in foreign currency rates.

Item 8. Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AUDITED FINANCIAL STATEMENTS:

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID Number 688)

CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 2023 AND 2022

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS FOR THE YEARS ENDED DECEMBER 31, 2023

AND 2022

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE YEARS ENDED DECEMBER 31, 2023 AND

2022

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Page

F-2

F-3

F-4

F-5

F-6

F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of
INmune Bio Inc.
Boca Raton, Florida

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of INmune Bio Inc. (the “Company”) as of December 31, 2023 and 2022, the related
consolidated statements of operations and comprehensive loss, changes in stockholders’ equity and cash ﬂows for each of the two years in the period
ended December 31, 2023, and the related notes (collectively referred to as the “ﬁnancial statements”). In our opinion, the ﬁnancial statements present
fairly, in all material respects, the ﬁnancial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash
ﬂows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States
of America

Explanatory Paragraph – Going Concern

The accompanying consolidated ﬁnancial statements have been prepared assuming that the Company will continue as a going concern. As more fully
described in Note 2, the Company has incurred signiﬁcant net losses, negative cash ﬂows from its operating activities and requires additional funds to
sustain its operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in

regard to these matters are also described in Note 2. The consolidated ﬁnancial statements do not include any adjustments that might result from the
outcome of this uncertainty.

Basis for Opinion

These ﬁnancial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s ﬁnancial
statements based on our audits. We are a public accounting ﬁrm registered with the Public Company Accounting Oversight Board (United States)
(“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules
and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the ﬁnancial statements are free of material misstatement, whether due to error or fraud. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over ﬁnancial reporting. As part of our audits, we are required to obtain
an understanding of internal control over ﬁnancial reporting but not for the purpose of expressing an opinion on the eﬀectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the ﬁnancial statements, whether due to error or fraud, and
performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the ﬁnancial statements. Our audits also included evaluating the accounting principles used and signiﬁcant estimates made by
management, as well as evaluating the overall presentation of the ﬁnancial statements. We believe that our audits provide a reasonable basis for our
opinion.

/s/ Marcum LLP

Marcum LLP

We have served as the Company’s auditor since 2017.

Houston, Texas

March 28, 2024

F-2

INMUNE BIO INC.

CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)

ASSETS

CURRENT ASSETS
Cash and cash equivalents
Research and development tax credit receivable
Other tax receivable
Prepaid expenses and other current assets
Prepaid expenses – related party
TOTAL CURRENT ASSETS

Operating lease – right of use asset
Other assets
Acquired in-process research and development intangible assets

TOTAL ASSETS

LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable and accrued liabilities
Accounts payable and accrued liabilities – related parties
Deferred liabilities
Current portion of long-term debt, net
Operating lease, current liability
TOTAL CURRENT LIABILITIES

Long-term debt, net
Long-term operating lease liability
Accrued liability – long-term
TOTAL LIABILITIES

COMMITMENTS AND CONTINGENCIES

December 31,
2023

December 31,
2022

35,848 $
1,905
537
1,510
142
39,942

414
131
16,514

52,153
8,099
362
4,027
34
64,675

507
99
16,514

57,001 $

81,795

7,901 $
35
489
9,921
119
18,465

-
397
-
18,862

5,206
9
616
5,000
87
10,918

9,697
526
550
21,691

Redeemable common stock, $ 0.001 par value; 75,697 and 0 shares issued and outstanding, respectively (Note 9)

799

STOCKHOLDERS’ EQUITY

Preferred stock, $0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding
Common stock, $0.001 par value, 200,000,000 shares authorized,17,950,776 and 17,945,995 shares issued and

outstanding, respectively

Additional paid-in capital
Accumulated other comprehensive loss
Accumulated deficit
TOTAL STOCKHOLDERS’ EQUITY

18
159,143
(799)
(121,022)
37,340

18
151,799
(699)
(91,014)
60,104

TOTAL LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS’ EQUITY

57,001 $

81,795

See accompanying notes to these consolidated financial statements.

F-3

INMUNE BIO INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(In thousands, except share and per share amounts)

REVENUE

OPERATING EXPENSES
General and administrative
Research and development
Total operating expenses

LOSS FROM OPERATIONS

OTHER EXPENSE, NET
Other expense, net
Total other expense, net

NET LOSS

Net loss per common share – basic and diluted

Weighted average number of common shares outstanding – basic and diluted

COMPREHENSIVE LOSS
Net loss
Other comprehensive loss – foreign currency translation
Total comprehensive loss

See accompanying notes to these consolidated financial statements.

F-4

INMUNE BIO INC.

2023

2022

155 $

374

9,623
20,273
29,896

9,258
17,067
26,325

(29,741)

(25,951)

(267)
(267)

(1,348)
(1,348)

(30,008) $

(27,299)

(1.67) $

(1.52)

17,980,791

17,927,327

(30,008) $
(100)
(30,108) $

(27,299)
(700)
(27,999)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(In thousands, except share amounts)

Common Stock

Amount

Balance as of January 1, 2022
Issuance of common stock for cash, net
Exercise of warrants for cash
Stock-based compensation
Loss on foreign currency translation
Net loss
Balance as of December 31, 2022
Issuance of common stock for cash
Reclassification to redeemable common

stock

Cashless exercise of warrants

Shares
17,843,303 $
82,900
19,792
-
-
-
17,945,995
75,697

(75,697)
4,781

Additional
Paid-In

Capital

Accumulated
Other

Comprehensive Accumulated
Income (loss)

Deficit

Total
Stockholders’

Equity

18 $
-
-
-
-
-
18
-

-
-

143,921 $
699
30
7,149
-
-
151,799
775

(799)
-

1 $
-
-
-
(700)
-
(699)
-

-
-

(63,715) $
-
-
-
-
(27,299)
(91,014)
-

-
-

80,225
699
30
7,149
(700)
(27,299)
60,104
775

(799)
-

Stock-based compensation
Loss on foreign currency translation
Net loss
Balance as of December 31, 2023

-
-
-
17,950,776 $

-
-
-
18 $

7,368
-
-
159,143 $

-
(100)
-
(799) $

-
-
(30,008)
(121,022) $

7,368
(100)
(30,008)
37,340

See accompanying notes to these consolidated financial statements.

F-5

INMUNE BIO INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(In thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:

Stock-based compensation
Impairment of right of use asset
Accretion of debt discount

Changes in operating assets and liabilities:

Research and development tax credit receivable
Other tax receivable
Prepaid expenses and other current assets
Prepaid expenses – related party
Other assets
Accounts payable and accrued liabilities
Accounts payable and accrued liabilities – related parties
Deferred liabilities
Accrued liability – long-term
Operating lease liability

Net cash used in operating activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from sale of common stock
Repayment of debt
Net proceeds from the exercise of warrants
Net cash (used in) provided by financing activities

Impact on cash from foreign currency translation

NET DECREASE IN CASH

CASH AT BEGINNING OF YEAR
CASH AT END OF YEAR

SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:

Cash paid for income taxes
Cash paid for interest expense

See accompanying notes to these consolidated financial statements.

F-6

INMUNE BIO INC.

2023

2022

(30,008) $

(27,299)

7,368
-
224

6,194
(175)
2,517
(108)
(32)
2,695
26
(127)
(550)
(4)
(11,980)

775
(5,000)
-
(4,225)

7,149
89
239

(3,186)
229
(1,749)
(20)
-
1,473
(71)
142
351
(33)
(22,686)

699
-
30
729

(100)

(700)

(16,305)
52,153
35,848 $

(22,657)
74,810
52,153

- $
1,778 $

-
1,372

$
$

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – ORGANIZATION AND BASIS OF PRESENTATION

Organization and Business Overview

INmune Bio Inc. (the “Company” or “INmune Bio”) was organized in the State of Nevada on September 25, 2015 and is a clinical stage biotechnology
pharmaceutical company focused on developing and commercializing its product candidates to treat diseases where the innate immune system is not
functioning normally and contributing to the patient’s disease. INmune Bio has two product platforms. The DN-TNF product platform utilizes dominant-
negative technology to selectively neutralize soluble TNF, a key driver of innate immune dysfunction and mechanistic target of many diseases. DN-TNF is
currently being developed for Alzheimer’s and treatment resistant depression (“XPro”) and cancer (“INB03”) and an out-licensing strategy. The Natural
Killer Cell Priming Platform includes INKmune aimed at priming the patient’s NK cells to eliminate minimal residual disease in patients with cancer.
INmune Bio’s product platforms utilize a precision medicine approach for the treatment of a wide variety of hematologic malignancies, solid tumors and
chronic inflammation.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated ﬁnancial statements of the Company have been prepared in accordance with Generally Accepted Accounting Principles
(“US GAAP”) in the United States of America and the rules of the Securities and Exchange Commission (“SEC”).

The consolidated ﬁnancial statements herein have been prepared in accordance with US GAAP and include the accounts of INmune Bio, its wholly-
owned UK subsidiary, and its wholly-owned Australia subsidiary (collectively, the “Company”). All signiﬁcant intercompany accounts and transactions
have been eliminated.

NOTE 2 – GOING CONCERN

These consolidated ﬁnancial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern,
which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

The Company has incurred signiﬁcant losses and negative cash ﬂows from operations since inception and expects to incur additional losses until such
time that it can generate signiﬁcant revenue from the commercialization of its product candidates. The Company had net losses of approximately $30.0
million and $27.3 million and negative cash flows from operating activities of approximately $ 12.0 million and $ 22.7 million for the years ended December
31, 2023 and 2022, respectively, and an accumulated deﬁcit of approximately $121.0 million and $ 91.0 million as of December 31, 2023 and 2022,
respectively. Given the Company’s projected operating requirements and its existing cash and cash equivalents, the Company is projecting insuﬃcient
liquidity to sustain its operations through one year following the date that the ﬁnancial statements are issued. These conditions and events raise
substantial doubt about the Company’s ability to continue as a going concern.

In response to these conditions, management is currently evaluating diﬀerent strategies to obtain the required funding of future operations. Financing
strategies may include, but are not limited to, the public or private sale of equity, debt ﬁnancings or funds from other capital sources, such as government
funding, collaborations, strategic alliances, divestment of non-core assets, or licensing arrangements with third parties. There can be no assurances that
the Company will be able to secure additional ﬁnancing, or if available, that it will be suﬃcient to meet its needs or on favorable terms. Because
management’s plans have not yet been ﬁnalized and are not within the Company’s control, the implementation of such plans cannot be considered
probable. As a result, the Company has concluded that management’s plans do not alleviate substantial doubt about the Company’s ability to continue
as a going concern.

The consolidated ﬁnancial statements do not include any adjustments relating to the recoverability and classiﬁcation of recorded asset amounts or the
amounts and classification of liabilities that might result from the outcome of this uncertainty.

F-7

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

Preparing ﬁnancial statements in conformity with US GAAP requires management to make estimates and assumptions that aﬀect the reported amounts
of assets, liabilities, revenue, and expenses. Actual results and outcomes may differ from management’s estimates and assumptions.

Fair Value of Financial Instruments

The Company measures certain assets and liabilities in accordance with authoritative guidance which requires fair value measurements to be classiﬁed
and disclosed in one of the following three categories:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities.

Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available.

Assets and liabilities are classiﬁed based on the lowest level of input that is signiﬁcant to the fair value measurements. The Company reviews the fair
value hierarchy classiﬁcation on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassiﬁcation of levels for certain
assets or liabilities within the fair value hierarchy. The Company did not have any transfers of assets and liabilities between the levels of the fair value
measurement hierarchy during the years presented.

The carrying amounts of ﬁnancial instruments such as cash and cash equivalents, research and development tax credit receivable, other receivable,
prepaid expenses, and accounts payable and accrued liabilities approximate the related fair values due to the short-term maturities of these instruments.

Risks and Uncertainties

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including, but not limited to,
development by competitors of new technological innovations, protection of proprietary technology, dependence on key personnel, compliance with
government regulations and the need to obtain additional ﬁnancing to fund operations. Product candidates currently under development will require
signiﬁcant additional research and development eﬀorts, including extensive preclinical studies, clinical trials and regulatory approval prior to
commercialization. These eﬀorts require signiﬁcant amounts of additional resources, adequate personnel, infrastructure and extensive compliance and
reporting.

The Company’s product candidates are still in development and, to date, none of the Company’s product candidates have been approved for sale.

There can be no assurance that the Company’s research and development will be successfully completed, that adequate protection for the Company’s
intellectual property will be obtained or maintained, that any products developed will obtain necessary government regulatory approval or that any
approved products will be commercially viable. Even if the Company’s product development eﬀorts are successful, it is uncertain when, if ever, the
Company will generate any revenue from any of its products. The Company operates in an environment of rapid change in technology and substantial
competition from other pharmaceutical and biotechnology companies.

The Company relies and expects to continue to rely on a small number of vendors to manufacture supplies and materials for its use in the clinical trial
programs. These programs could be adversely affected by a significant interruption in these manufacturing services.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with an original maturity of three months or less to be cash equivalents. The Company
holds cash in banks in excess of Federal Deposit Insurance Corporation insurance limits. However, the Company believes risk of loss is minimal as the
cash is held by large, highly-rated financial institutions.

F-8

Research and Development Tax Incentive Receivable

The Company, through its wholly-owned subsidiary in Australia, participates in the Australian research and development tax incentive program, such that
a percentage of our qualifying research and development expenditures are reimbursed by the Australian government, and such incentives are reﬂected
as a reduction of research and development expense. The Australian research and development tax incentive is recognized when there is reasonable
assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the consideration can be reliably measured.
At each period end, management estimates the reimbursement available to the Company based on available information at the time.

The Company, through its wholly-owned subsidiary in the United Kingdom, participates in the research and development program provided by the United
Kingdom tax relief program, such that a percentage of our qualifying research and development expenditures are reimbursed by the United Kingdom
government, and such incentives are reﬂected as a reduction of research and development expense. The United Kingdom research and development tax
incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the
amount of the consideration can be reliably measured. At each period end, management estimates the reimbursement available to the Company based
on available information at the time.

Intangible Assets

The Company capitalizes costs incurred in connection with in-process research and development purchased from others if the asset has alternative uses
and such uses are not restricted under applicable license agreements; patent applications (principally legal fees), patent purchases, and trademarks
related to its cell line as intangible assets. Acquired in-process research and development costs that do not have alternative uses are expensed as
incurred. When the assets are determined to have a ﬁnite life (upon completion of the development of the in-process research and development for its
DN-TNF platform), the useful life will be determined, and the in-process research and development intangible assets will be amortized.

During the fourth quarter and if business factors indicate more frequently, the Company performs an assessment of the qualitative factors aﬀecting the
fair value of our in-process research and development. If the qualitative assessment suggests that impairment is more likely than not, a quantitative
analysis is performed. The quantitative analysis involves a comparison of the fair value of the in-process research and development with the carrying
amount. If the carrying amount of the in-process research and development exceeds its fair value, an impairment loss is recognized in an amount equal
to that excess. During the years ended December 31, 2023 and 2022, the Company performed a qualitative assessment of its in-process research and
development and determined that there were no indicators of impairment.

Basic and Diluted Loss per Share

Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of outstanding common
shares during the period. Diluted loss per share gives eﬀect to all dilutive potential common shares outstanding during the period. Dilutive loss per share
excludes all potential common shares if their eﬀect is anti-dilutive. For all periods presented, there is no diﬀerence in the number of shares used to
calculate basic and diluted shares outstanding due to the Company’s net loss position.

At December 31, 2023, the Company had 5,496,000 potentially issuable shares of common stock upon the exercise of stock options and 45,386
potentially issuable shares of common stock upon the exercise of warrants.

At December 31, 2022, the Company had 4,841,417 potentially issuable shares of common stock upon the exercise of stock options and 74,074
potentially issuable shares of common stock upon the exercise of warrants.

F-9

Revenue Recognition

The Company recognizes revenue when the customer obtains control of promised goods or services, in an amount that reﬂects the consideration the
Company expects to receive in exchange for those goods or services. The Company recognizes revenue following the ﬁve-step model prescribed under
ASC Topic 606: (1) identify contract(s) with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4)
allocate the transaction price to the performance obligations in the contract; and (5) recognize revenues when (or as) the Company satisﬁes the
performance obligations. The Company records the expenses related to revenue in research and development expense, in the periods such expenses
were incurred.

The Company records deferred revenues when cash payments are received or due in advance of performance, including amounts which are refundable.

The Company’s 2023 and 2022 revenue was from the sale of MSC’s to one customer and was recognized when the MSC’s were delivered to the
customers.

Stock-Based Compensation

The Company utilizes the Black-Scholes option pricing model to estimate the fair value of stock option awards at the date of grant, which requires the
input of highly subjective assumptions, including expected volatility and expected life. Changes in these inputs and assumptions can materially aﬀect the

measure of estimated fair value of our share-based compensation. These assumptions are subjective and generally require signiﬁcant analysis and
judgment to develop. When estimating fair value, some of the assumptions will be based on, or determined from, external data and other assumptions
may be derived from our historical experience with stock-based payment arrangements. The appropriate weight to place on historical experience is a
matter of judgment, based on relevant facts and circumstances. The Company accounts for forfeitures of stock options as they occur.

Research and Development

Research and development (“R&D”) costs are expensed as incurred. Research and development credits are recorded by the Company as a reduction of
research and development costs. Major components of research and development costs include cash compensation, stock-based compensation, clinical
trials and related clinical manufacturing, costs of drug development, costs of materials and supplies, facilities cost, overhead costs, costs of pre-clinical
trials, regulatory and compliance costs, and fees paid to consultants and other entities that conduct certain research and development activities on the
Company’s behalf.

The Company recognizes grants as contra research and development expense in the consolidated statement of operations on a systematic basis over
the periods in which the entity recognizes as expenses the related costs for which the grants are intended to compensate.

Income Taxes

The Company follows the liability method of accounting for income taxes. Under this method, deferred income tax assets and liabilities are recognized for
the estimated tax consequences attributable to diﬀerences between the ﬁnancial statement carrying values and their respective income tax basis
(temporary diﬀerences). The eﬀect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date.

Foreign Currency Translation

The Company’s ﬁnancial statements are presented in the U.S. dollar (“$”), which is the Company’s reporting currency, while its functional currencies are
the U.S. Dollar for its U.S. based operations, British Pound (“GBP”) for its United Kingdom-based operations and Australian Dollars (“AUD”) for its
Australian-based operations. All assets and liabilities are translated at the exchange rate on the balance sheet date, stockholders’ equity is translated at
historical rates and statement of operations items are translated at the weighted average exchange rate for the period. The resulting translation
adjustments are reported under other comprehensive income. Gains and losses resulting from the translations of foreign currency transactions and
balances are reflected in the statement of operations and comprehensive loss.

Recent Accounting Pronouncements

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The
guidance in ASU 2023-09 improves the transparency of income tax disclosures by greater disaggregation of information in the rate reconciliation and
income taxes paid disaggregated by jurisdiction. The standard is eﬀective for public companies for ﬁscal years beginning after December 15, 2024, with
early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2023-09 may have on its consolidated ﬁnancial
statements.

F-10

Subsequent Events

The Company has evaluated all transactions through the financial statement issuance date for subsequent disclosure consideration.

NOTE 4 – RESEARCH AND DEVELOPMENT ACTIVITY

According to UK tax law, the Company is allowed an R&D tax credit that reduces a company’s tax bill in the UK for expenses incurred in R&D subject to
certain requirements. The Company’s UK subsidiary submits R&D tax credit requests annually for research and development expenses incurred. At
December 31, 2023 and 2022, the Company had a research and development tax credit receivable of $0 and $2,690,000, respectively for R&D expenses
incurred in the UK. During the years ended December 31, 2023 and 2022, the Company received $2,710,000 and $0 of R&D tax credit reimbursements,
respectively from the UK.

According to AUS tax law, the Company is allowed an R&D tax credit that reduces a company’s tax bill in AUS for expenses incurred in R&D subject to
certain requirements. The Company’s Australian subsidiary submits R&D tax credit requests annually for research and development expenses incurred.
At December 31, 2023 and 2022, the Company had a research and development tax credit receivable of $1,905,000 and $5,409,000, respectively, for
R&D expenses incurred in Australia. During the years ended December 31, 2023 and 2022, the Company received $6,557,000 and $0 of R&D tax credit
reimbursements, respectively from Australia.

Xencor, Inc. License Agreement

On October 3, 2017, the Company entered into a license agreement (“Xencor License Agreement”) with Xencor, Inc. (“Xencor”), which discovered and
developed a proprietary biological molecule that inhibits soluble tumor necrosis factor. On June 10, 2021, the Company and Xencor entered into a First
Amendment to License Agreement pursuant to which, among other things, Section 3.2 of the Xencor License Agreement was amended to change the
due diligence milestones. Pursuant to the Xencor License Agreement, Xencor granted the Company an exclusive worldwide, royalty-bearing license in
licensed patent rights, licensed know-how and licensed materials (as deﬁned in the license agreement) to make, develop, use, sell and import any
pharmaceutical product that comprises, contains, or incorporates Xencor’s proprietary protein known as “XPro” that inhibits soluble tumor necrosis factor
(or all modiﬁcations, formulations and variants of the licensed protein that speciﬁcally bind soluble tumor necrosis factor) alone or in combination with one
or more active ingredients, in any dosage or formulation (“Licensed Products”). The Company believes the protein has numerous medical applications.
Such additional alternative applications of the technology are available under the Xencor License Agreement.

The Company also agreed to pay Xencor a 5% royalty on Net Sales of all Licensed Products in a given calendar year, which are payable on a country-
by- country and licensed product by licensed product basis until the date that is the later of (a) the expiration of the last to expire valid claim covering such
Licensed Product in such country or (b) ten years following the first sale to a third party of the licensed product in such country.

F-11

INKmune License Agreement

On October 29, 2015, the Company entered into an exclusive license agreement (the “INKmune License Agreement”) with Immune Ventures, LLC
(“Immune Ventures”). Pursuant to the INKmune License Agreement, the Company was granted exclusive worldwide rights to the patents, including rights
to incorporate any improvements or additions to the patents that may be developed in the future. In consideration for the patent rights, the Company
agreed to the following milestone payments:

(in thousands)
Each Phase I initiation
Each Phase II initiation
Each Phase III initiation
Each NDA/EMA filing
Each NDA/EMA awarded

$
$
$
$
$

25
250
350
1,000
9,000

In addition, the Company agreed to pay the licensor a royalty of 1% of net sales during the life of each patent granted to the Company. The License is
owned by Immune Ventures. RJ Tesi, the Company’s President and a member of our Board of Directors, David Moss, its Chief Financial Oﬃcer and
Treasurer and Mark Lowdell, its Chief Scientiﬁc Oﬃcer, are the owners of Immune Ventures. No sales have occurred under this license. During
December 2023, the Company initiated a Phase I trial with INKmune in patients with metastatic castration-resistant prostate cancer and has recorded a
$25,000 payable to Immune Ventures as of December 31, 2023.

The term of the agreement began on October 29, 2015 and ends on a country-by-country basis on the date of the expiration of the last to expire patent
rights where patent rights exists, unless terminated earlier in accordance with the agreement. Upon the termination of the agreement, we shall have a
fully paid up, perpetual, royalty-free license without further obligation to Immune Ventures. The agreement can be terminated by Immune Ventures if,
after 60 days from the Company’s receipt of notice that the Company has not made a payment under the agreement, and the Company still does not
make this payment. On July 20, 2018 and October 30, 2020, the parties amended the agreement under which the Company was required achieve
milestones pursuant to the agreement.

On April 17, 2023, the parties executed an additional amendment to the agreement under which the Company removed the due diligence requirements
to achieve reasonable commercial eﬀorts to bring INKmune to market. This removed all requirements of clinical trial timelines and the ﬁling timelines of
an NDA or equivalent. All other provisions in the INKmune License Agreement shall continue in full force and effect.

University of Pittsburg License Agreement

On October 3, 2017, the Company entered into an Assignment and Assumption Agreement with Immune Ventures related to intellectual property
licensed from the University of Pittsburgh. Pursuant to the Assignment and Assumption Agreement (“Assignment Agreement”), Immune Ventures
assigned all of its rights, obligations and liabilities under an Exclusive License Agreement between the University of Pittsburgh – Of the Commonwealth
System of Higher Education (“Licensor”) and Immune Ventures to INmune Bio (“Licensee”), (the “PITT Agreement”).

F-12

Consideration under the PITT Agreement includes: (i) annual maintenance fees, (ii) royalty payments based on the sale of products making use of the
licensed technology, and (iii) milestone payments.

Annual maintenance fees under the PITT Agreement include: $ 10,000 due on June 26 of each year 2023-2024; and $ 25,000 due on June 26 of each
year 2025 and annually thereafter until ﬁrst commercial sale. The Company had no amounts owed pursuant to the PITT Agreement as of December 31,
2023.

Upon ﬁrst commercial sale of a product making use of the licensed technology under the PITT Agreement, the Licensee is required to pay royalties equal
to 2.5% of Net Sales each calendar quarter. As of December 31, 2023, there have been no commercial sales of product making use of the licensed
technology under the PITT Agreement.

Moreover, under the PITT Agreement the Licensee is required to make milestone payments as follows:

(in thousands)
Each Phase I initiation
Each Phase III initiation
First commercial sale of product making use of licensed technology

$
$
$

50
500
1,250

The PITT Agreement expires upon the earlier of: (i) expiration of the last claim of the Patent Rights forming the subject matter of the PITT Agreement; or
(ii) the date that is 20 years from the effective date of the agreement (June 26, 2037).

The Licensee may terminate the PITT Agreement upon 3 months prior written notice provided all payments under the license are current. The Licensor
may terminate the PITT Agreement upon written notice if: (i) Licensee defaults as to performance of material obligations which have not been cured
within 60 days after receiving written notice; or (ii) Licensee ceases to carry out its business, becomes bankrupt or insolvent, applies for or consents to
the appointment of a trustee, receiver or liquidator of its assets or seeks relief under any law for the aid of debtors.

NOTE 5 – FAIR VALUE MEASUREMENTS

The following table presents the hierarchy for assets and liabilities measured at fair value on a recurring basis:

(in thousands)

December 31, 2023:
Cash equivalents
Money market fund
Total cash equivalents

(in thousands)
December 31, 2022:
Cash equivalents
Money market fund
Total cash equivalents

NOTE 6 – LEASE

Quoted
Price in
Active Market
(Level 1)

Total

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

$
$

35,162 $
35,162 $

- $
- $

-
-

Quoted
Price in
Active Market
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Total

$
$

51,058 $
51,058 $

- $
- $

-
-

F-13

In September 2021, the Company signed a lease with a third party for office space in Boca Raton, Florida. The lease agreement has a 64-month term
and commenced during the fourth quarter of 2021.

Below is a summary of the Company’s right-of-use assets and liabilities:

(in thousands, except years and rate)

Right-of-use asset

Operating lease, current liability

Long-term operating lease liability
Total lease liability

Weighted-average remaining lease term

Weighted-average discount rate

NOTE 7 – RELATED PARTY TRANSACTIONS

UCL

December 31,
2023

December 31,
2022

414

119

397
516

507

526
613

3.3 years

4.3 years

12.0%

During the years ended December 31, 2023 and 2022, the Company paid UCL $ 573,000 and $586,000, respectively, for medical research performed on
behalf of the Company. UCL is a wholly owned subsidiary of the University of London. The Company’s Chief Scientiﬁc and Manufacturing Oﬃcer is a
professor at the University of London.

CTI

During 2022, the Company paid CTI $ 153,000 pursuant to its former sublease agreement with CTI and $ 5,000 for research and development performed
on behalf of the Company. The Company had no transactions with CTI in 2023.

AmplifyBio

During the years ended December 31, 2023 and 2022, the Company paid AmplifyBio $ 77,000 and $230,000, respectively, to perform certain research
and development on behalf of the Company. The CEO of AmplifyBio is on the Board of Directors of the Company.

NOTE 8 – DEBT

On June 10, 2021, the Company entered into a Loan and Security Agreement (the “Term Loan”) with Silicon Valley Bank and SVB Innovation Credit
Fund VIII, L.P., together (the “Lenders”). The Term Loan provides for a $ 15.0 million term loan, of which the Company borrowed the entire amount on
June 10, 2021 and is secured by the Company’s assets. The Term Loan also provides for the Company to request an additional $5.0 million term loan
from the Lenders, which may be granted or denied at the sole discretion of the Lenders.

F-14

The term loan and debt discount are as follows as of December 31, 2023:

(in thousands)
Current portion of debt
Less: debt discount

Current portion of debt, net

10,000
(79)
9,921

For the years ended December 31, 2023 and 2022, the Company recognized interest expense of $ 2,278,000 and $2,014,000, respectively, related to the
Term Loan.

The Term Loan provides for an annual interest rate equal to the greater of (i) the prime rate then in eﬀect as reported in The Wall Street Journal
plus 4.50% and (ii) 7.75%. At December 31, 2023, the interest rate was 13.0%.

The Term Loan includes a ﬁnal payment fee equal to 6.5% of the original principal amount borrowed payable on the earlier of the repayment of the loan
in full and the maturity date. The Company has the option to prepay the outstanding balance of the term loan in full, subject to a prepayment premium
of 1% of the original principal amount borrowed for any prepayment before the maturity date.

Upon the occurrence of certain events, including but not limited to the Company’s failure to satisfy its payment obligations under the Term Loan, the
breach of certain of its other covenants under the Term Loan, or the occurrence of a material adverse change, the Lenders will have the right, among
other remedies, to declare all principal and interest immediately due and payable, and will have the right to receive the ﬁnal payment fee and, if the
payment of principal and interest is due prior to maturity, the applicable prepayment fee.

NOTE 9 – STOCKHOLDERS’ EQUITY

Common Stock – At the Market Offering

During March 2021, the Company entered into a sales agreement (“Sales Agreement”) with BTIG, LLC (“BTIG”), as sales agent, to establish an At-The-
Market (“ATM”) oﬀering program of up to $ 45 million of common stock, subject to certain limitations on the amount of common stock that may be oﬀered
and sold by the Company set forth in the sales agreement. During August 2023, the Company and BTIG entered into Amendment No. 1 to the Sales
Agreement. The Company is required to pay BTIG a commission of 3% of the gross proceeds from the sale of shares.

During July 2023, the Company sold 75,697 shares of its common stock at an average price of $ 10.56 per share under the ATM program. The aggregate
net proceeds were approximately $775,000 after oﬀering expenses. These shares were inadvertently sold under a registration statement ﬁled with the
SEC that had in fact expired prior to the time the shares were sold. Consequently, the Company may be subject to claims for rescission by purchasers
who purchased shares of common stock under the ATM program. Under Section 12(a)(1) of the Securities Act, a purchaser of security in a transaction
made in violation of Section 5 of the Securities Act may obtain recovery of the consideration paid in connection with its purchase, plus statutory interest,
or, if it had already sold the shares, recover damages resulting from its purchase. While the Company believes, it is unlikely that a successful claim will
be asserted against the Company by any purchasers who purchased shares of common stock under the ATM Agreement in July 2023, the Company
cannot guarantee that no such legal claims will be asserted against the Company by any purchasers. In addition, the Company could become subject to
enforcement actions and/or penalties and ﬁnes by federal authorities, and the Company is unable to predict the likelihood of any such enforcement
actions being brought, or the amount of any such potential penalties or ﬁnes. As of December 31, 2023, there have been no claims or demands to
exercise such rights. As a result of these potential rescission rights, the Company reclassiﬁed 75,697 shares, with an aggregate purchase price of
$799,000 of its common stock as temporary equity presented outside stockholders’ equity. The reclassification of these shares shall remain for a period of
one year from transaction date. These shares have been treated as issued and outstanding for financial reporting purposes.

At December 31, 2023, the Company has $ 28.7 million of common stock available under the ATM program.

F-15

Common Stock – Issuance to Directors and Officers

During the year ended December 31, 2022, directors and oﬃcers of the Company purchased 82,900 shares of the Company’s common stock from the
Company at $8.43 per share (which was the closing price of the Company’s common stock on March 22, 2022) for gross proceeds of $ 699,000.

Stock options

On June 1, 2023, the Company’s shareholders approved an amendment to the 2021 Incentive Stock Plan (“2021 Amended and Restated Incentive Stock
Plan”) to increase the shares of the Company’s common stock available for issuance thereunder to 4,000,000 shares.

During 2023, the Company granted certain employees and directors options to purchase 665,000 shares of its common stock pursuant to the 2017 and
2019 Incentive Stock Plans and 2021 Amended and Restated Incentive Stock Plan. The stock options had a fair value of approximately $4.9 million that
was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate
of 3.84% – 3.99% based on the applicable US Treasury bill rate (2) expected life of 6.0 – 6.25 years, (3) expected volatility of approximately 91% based
on the trading history of similar companies, and (4) zero expected dividends.

During 2022, the Company granted certain employees and directors options to purchase 819,000 shares of its common stock pursuant to the 2021
Incentive Stock Plan. The stock options had a fair value of approximately $5.5 million that was calculated using the Black-Scholes option-pricing model.
Variables used in the Black-Scholes option-pricing model include: (1) discount rate of 1.60% - 3.06% based on the applicable US Treasury bill rate (2)
expected life of 6.0 – 10.0 years, (3) expected volatility of approximately 105% - 108% based on the trading history of similar companies, and
(4) zero expected dividends.

At December 31, 2023, the Company had 1,952,525 shares reserved for issuance pursuant to the 2021 Amended and Restated Incentive Stock Plan.

The following table summarizes stock option activity:

(in thousands, except share and per share amounts)
Outstanding at December 31, 2021
Options granted
Options exercised
Options cancelled
Outstanding at December 31, 2022
Options granted
Options cancelled
Outstanding at December 31, 2023

Exercisable at December 31, 2023

Weighted-
average
Exercise
Price

Weighted-
average
Remaining
Contractual
Term
(years)

Aggregate
Intrinsic
Value

8.67
8.01
-
11.68
8.60
9.69
12.44
8.73

8.16

7.21
10.0
-
-
6.28
10.0
-
6.18 $

5.67 $

-
-
-
-
-
-
-
21,509

19,354

Number of
Shares

4,097,000 $
819,000 $
- $
(74,583) $
4,841,417 $
665,000 $
(10,417) $
5,496,000 $
4,319,605 $

F-16

During the years ended December 31, 2023 and 2022, the Company recognized stock-based compensation expense of $ 7,368,000 and $7,149,000,
respectively, related to stock options. As of December 31, 2023, there was $8,592,000 of total unrecognized compensation cost related to non-vested
stock options which is expected to be recognized over a weighted-average period of 2.05 years.

Warrants

The Company issued warrants to the Company’s lenders upon obtaining its loan in June 2021. The warrants have a 10-year term and an exercise price
of $14.05. At December 31, 2023 and 2022, respectively, 45,386 of these warrants are outstanding and the intrinsic value of these warrants is $ 0.

During the year ended December 31, 2023, a third party exercised 28,688 warrants on a cashless basis in exchange for 4,781 shares of common stock.

During the year ended December 31, 2022, a third party exercised 19,792 warrants in exchange for 19,792 shares of common stock for cash proceeds
of approximately $30,000.

Stock-based Compensation by Class of Expense

The following summarizes the components of stock-based compensation expense in the consolidated statements of operations for the years ended
December 31, 2023 and 2022, respectively:

Research and development
General and administrative
Total

Shareholder Rights Agreement

Year Ended
December 31,
2023
2,743,000 $
4,625,000
7,368,000 $

Year Ended
December 31,
2022
2,645,000
4,504,000
7,149,000

On December 30, 2020, the Board of Directors (the “Board”) of the Company approved and adopted a Rights Agreement, dated as of December 30,
2020, by and between the Company and VStock Transfer, LLC, as rights agent, pursuant to which the Board declared a dividend of one preferred share
purchase right (each, a “Right”) for each outstanding share of the Company’s common stock held by stockholders as of the close of business on January
11, 2021. When exercisable, each right initially would represent the right to purchase from the Company one one-thousandth of a share of a newly
designated series of preferred stock, Series A Junior Participating Preferred Stock, par value $0.001 per share, of the Company, at an exercise price of
$300.00 per one one-thousandth of a Series A Junior Participating Preferred Share, subject to adjustment. Subject to various exceptions, the Rights
become exercisable in the event any person (excluding certain exempted or grandfathered persons) becomes the beneﬁcial owner of twenty percent or
more of the Company’s common stock without the approval of the Board. The Rights Agreement was amended in 2021, 2022 and 2023 to extend the
expiration date and shall expire on December 30, 2024.

F-17

Preferred Stock

In 2020, the Company designated 45,000 shares of its preferred stock with par value of $ 0.001 per share as Series A Junior Participating Preferred
Stock. The remaining 9,955,000 shares of preferred stock with par value of $ 0.001 remain undesignated. None of the preferred shares were issued and
outstanding at December 31, 2023 and 2022.

NOTE 10 – INCOME TAXES

The provision for income taxes consists of the following components :

Current expense (benefit)

December 31,
2023

December 31,
2022

- $

Federal
State
Foreign

Current income tax expense

Deferred expense (benefit)
Federal
State
Foreign
Deferred income tax

Net deferred taxes

-
-
-
-

-
-
-
-
-
- $

-
-
-
-

-
-
-
-
-
-

A reconciliation of income tax benefit computed using the federal statutory income tax rate to the Company’s tax expense is as follows:

(in thousands, except percentage)
Federal tax benefit at statutory rate (21%)
Stock-based compensation
State income tax benefit, net of federal tax effect
Foreign tax differential
Research credits
Other
Return to provision adjustment
Change in valuation allowance
Income tax benefit

F-18

December 31,
2023

December 31,
2022

(6,302) $
1,143
(222)
(241)
266
3
335
5,018
- $

(5,733)
1,049
(269)
(237)
18
3
(1,774)
6,943
-

The principal components of deferred tax assets and liabilities consist of the following at December 31, 2023 and 2022, respectively:

(in thousands)
Deferred tax assets
Stock-based compensation
Research and development
Federal NOL carryforwards
State NOL carryforwards
Foreign NOL carryforwards
Total deferred tax assets
Less valuation allowance
Net deferred tax assets

December 31,
2023

December 31,
2022

2,208 $
2,900
6,849
1,685
5,965
19,607
(19,607)
- $

1,386
1,114
5,441
1,487
4,307
13,735
(13,735)
-

At December 31, 2023, the Company had a federal net operating loss carryforward of approximately $ 32.6 million. The net operating loss carryforwards
for 2017 will begin to expire in the year ending December 31, 2037. The net operating loss carryforwards starting in 2018 have no expiration.

The Company’s gross deferred tax assets of $ 19.6 million and $ 13.7 million at December 31, 2023 and 2022, respectively, primarily consist of net
operating loss carryforwards for income tax purposes. A valuation allowance is required to be recorded when it is not more likely than not that some
portion or all of the net deferred tax assets will be realized. Since the Company cannot be assured of generating taxable income and thereby realizing the
net deferred tax assets, a full valuation allowance has been recorded. The change in the valuation allowance was $5,872,000 during the year ended
December 31, 2023.

The Company recognizes uncertain tax positions in accordance with ASC 740 on the basis of evaluating whether it is more likely than not that the tax
positions will be sustained upon examination by tax authorities. For those tax positions that meet the more-likely-than not recognition threshold, we
recognize the largest amount of tax beneﬁt that is more than 50 percent likely to be realized upon ultimate settlement. As of December 31, 2023, and
2022, the Company has no signiﬁcant uncertain tax positions. There are no unrecognized tax beneﬁts included on the balance sheet that would, if
recognized, impact the eﬀective tax rate. The Company does not anticipate there will be a signiﬁcant change in unrecognized tax beneﬁts within the next
12 months.

NOTE 11 – COLLABORATIVE AGREEMENTS

During September 2020, the Company was awarded a grant of up to $ 2.9 million from the National Institutes of Health (“NIH”). The grant will support a
Phase 2 study of XPro in patients with treatment resistant depression. As of December 31, 2023, the Company has not received any proceeds pursuant
to this grant.

F-19

NOTE 12 – COMMITMENTS AND CONTINGENCIES

Lease

During September 2021, the Company signed a lease agreement with a third party for oﬃce space in Boca Raton, Florida. The operating lease has a 64-

month term and commenced during the fourth quarter of 2021.

Future minimum payments pursuant to the leases are as follows:

(in thousands, except years)
2024
2025
2026
2027
Total lease payments
Less: imputed interest
Present value of future lease payments
Less: operating lease, current liabilities
Long-term operating lease liabilities

186
193
198
51
628
(112)
516
(119)
397

During the years ended December 31, 2023 and 2022, the Company recognized $ 163,000 and $209,000, respectively, in operating lease expense,
which is included in general and administrative expenses in the Company’s consolidated statement of operations.

Litigation

The Company is subject to claims and suits that arise from time to time in the ordinary course of our business. Although management currently believes
that resolving claims against the Company, individually or in aggregate, will not have a material adverse impact in the Company’s consolidated ﬁnancial
statements, these matters are subject to inherent uncertainties and management’s view of these matters may change in the future.

F-20

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Disclosure Controls and Procedures

Evaluation of Disclosure 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 of December 31, 2023. The term “disclosure controls and procedures,” as deﬁned in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), means controls and other procedures of a company that are designed to ensure that
information required to be disclosed by a company in the reports that it ﬁles or submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods speciﬁed in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by a company in the reports that it ﬁles or submits under the Exchange Act is
accumulated and communicated to the company’s management, including its principal executive and principal ﬁnancial oﬃcers, as appropriate 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. Based on the evaluation, our Chief Executive Oﬃcer and Chief Financial Oﬃcer concluded that our
disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2023.

Attestation Report of the Registered Public Accounting Firm

This annual report does not include an attestation report of our registered public accounting ﬁrm regarding internal control over ﬁnancial reporting.
Management’s report was not subject to attestation by our registered public accounting ﬁrm pursuant to rules of the Securities and Exchange
Commission that permit smaller reporting companies to provide only management’s report in this annual report.

Management’s Report on Internal Control Over Financial Reporting

Our CEO and our CFO are responsible for establishing and maintaining adequate internal control over ﬁnancial reporting, as such term is deﬁned in
Exchange Act Rules 13a-15(f). Management conducted an assessment of the eﬀectiveness of our internal control over ﬁnancial reporting as of
December 31, 2023. In making this assessment, management used the criteria described in Internal Control-Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Our management concluded that our internal controls over ﬁnancial
reporting were effective based on those criteria, as of December 31, 2023.

Changes in Internal Control over Financial Reporting

None.

Item 9B. Other Information

(b) Director and Officer Trading Arrangements

None of our directors or oﬃcers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as such terms are
defined in Item 408 of Regulation S-K) during the three months ended December 31, 2023.

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

PART III

Certain information required by Part III is omitted from this report because the Company will ﬁle a deﬁnitive proxy statement within 120 days after the end
of its ﬁscal year pursuant to Regulation 14A (the Proxy Statement) for its annual meeting of stockholders, and certain information included in the Proxy
Statement is incorporated herein by reference.

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this Item 10 will be set forth in the Proxy Statement and is incorporated in this report by reference.

Item 11. Executive Compensation

The information required by this item will be set forth in the Proxy Statement and is incorporated in this report by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Equity Compensation Plan Information

The following table provides certain information with respect to all of our compensation plans in effect as of December 31, 2023:

(A)
Number of
Securities to
be Issued
Upon
Exercise of
Outstanding
Options,
Warrants
and Rights

(B)
Weighted
Average
Exercise
Price of
Outstanding
Options,
Warrants
and Rights

(C)
Number of
Securities
Remaining
Available for
Future
Issuance
Under Equity
Compensation
Plans
(excluding
securities
reflected in
column(A))

5,496,000(1) $

—
5,496,000

8.73
—
8.73

1,952,525(2)

—
1,952,525

Plan Category
Equity Compensation Plans approved by stockholders
Equity Compensation Plans not approved by stockholders

Total

(1) Consists of shares subject to outstanding stock options, under the Amended and Restated INmune Bio Inc. 2021 Stock Incentive Plan (the “2021
Plan”), the 2019 Stock Incentive Plan (the “2019 Plan”) and INmune Bio Inc. 2017 Stock Incentive Plan (the “2017 Plan) some of which are vested
and some of which remain subject to the vesting of the respective equity award.

(2) Consists of shares available for future issuance under the 2021 Plan.

Other

The other information required by this item will be set forth in the Proxy Statement and is incorporated in this report by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this item will be set forth in the Proxy Statement and is incorporated in this report by reference.

Item 14. Principal Accounting Fees and Services

The information required by this item will be set forth in the Proxy Statement and is incorporated in this report by reference.

PART IV

Item 15. Exhibits.

Exhibit No.
1.1

1.2

3.1

Description of Exhibit

Form of Placement Agent Agreement (Incorporated by reference to Exhibit 1.1 to the Registration Statement on Form S-1/A ﬁled with
the SEC on November 20, 2018).

Underwriting Agreement dated July 16, 2020 (Incorporated by reference to Exhibit 1.1 to the Current Report on Form 8-K ﬁled with the
SEC on July 16, 2020).

Articles of Incorporation (Incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 ﬁled with the SEC on
August 30, 2018).

3.2

3.3

4.1

4.2

4.3

4.4

4.5

4.6

4.7

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

10.12

10.13

10.14

10.15

10.16

Bylaws (Incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-1 filed with the SEC on August 30, 2018).

Certiﬁcate of Designations of Series A Junior Participating Preferred Stock of INmune Bio Inc. (Incorporated by reference to Exhibit 3.1
to the Company’s Current Report on Form 8-K Filed with the SEC on December 30, 2020).

Description of Securities of INmune Bio Inc. (Incorporated by reference to Exhibit 4.1 to our Annual Report on Form 10-K ﬁled with the
SEC on March 3, 2022).

Form of Registrant’s common stock certiﬁcate (Incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-1/A
filed with the SEC on September 26, 2018).

Form of Placement Agent Common Stock Warrant (Incorporated by reference to Exhibit 4.2 to the Registration Statement on Form S-
1/A filed with the SEC on September 26, 2018).

Rights Agreement, dated as of December 30, 2020 (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on
Form 8-K filed with the SEC on December 30, 2020).

Amendment No. 1 to the Rights Agreement between INmune Bio Inc. and VStock Transfer, LLC (Incorporated by reference to Exhibit
4.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 21, 2021).

Amendment No. 2 to the Rights Agreement between INmune Bio Inc. and VStock Transfer, LLC (Incorporated by reference to Exhibit
4.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 12, 2022).

Amendment No. 3 to the Rights Agreement between INmune Bio Inc. and VStock Transfer, LLC (Incorporated by reference to Exhibit
4.1 to the Company’s Current Report on Form 8-K filed with the SEC on December 18, 2023).

Form of Subscription Agreement (Incorporated by reference to Exhibit 10.1 to the Registration Statement on Form S-1 ﬁled with the
SEC on August 30, 2018).

License Agreement between INmune Bio Inc. and Immune Ventures LLC (Incorporated by reference to Exhibit 10.2 to the Registration
Statement on Form S-1 filed with the SEC on August 30, 2018).

Assignment and Assumption Agreement with Immune Ventures LLC (Incorporated by reference to Exhibit 10.3 to the Registration
Statement on Form S-1 filed with the SEC on August 30, 2018).

Exclusive License Agreement by the University of Pittsburgh of the Common Wealth system of Higher Education and Immune
Ventures LLC (Incorporated by reference to Exhibit 10.4 to the Registration Statement on Form S-1 ﬁled with the SEC on August 30,
2018).

First Amendment to Exclusive License Agreement by and between the University of Pittsburgh of the Commonwealth system of Higher
Education and Immune Ventures, LLC (Incorporated by reference to Exhibit 10.5 to the Registration Statement on Form S-1 ﬁled with
the SEC on August 30, 2018).

Material Transfer and License Agreement between Anthony Nolan Cord Blood Bank and Immune Bio International LTD. (Incorporated
by reference to Exhibit 10.7 to the Registration Statement on Form S-1 filed with the SEC on August 30, 2018).

Employment Agreement between INmune Bio Inc. and Raymond Tesi (Incorporated by reference to Exhibit 10.8 to the Registration
Statement on Form S-1 filed with the SEC on August 30, 2018).

Employment Agreement between INmune Bio Inc. and David Moss (Incorporated by reference to Exhibit 10.9 to the Registration
Statement on Form S-1 filed with the SEC on August 30, 2018).

Consulting Agreement between INmune Bio Inc. and Mark Lowdell (Incorporated by reference to Exhibit 10.10 to the Registration
Statement on Form S-1 filed with the SEC on August 30, 2018).

INmune Bio Inc. 2017 Stock Incentive Plan (Incorporated by reference to Exhibit 10.11 to the Registration Statement on Form S-1 ﬁled
with the SEC on August 30, 2018).

Form of Incentive Option Agreement with employees (Incorporated by reference to Exhibit 10.12 to the Registration Statement on
Form S-1 filed with the SEC on August 30, 2018).

Form of Incentive Option Agreement with non-employee directors (Incorporated by reference to Exhibit 10.13 to the Registration
Statement on Form S-1 filed with the SEC on August 30, 2018).

License Agreement between INmune Bio Inc. and Xencor, Inc. (Incorporated by reference to Exhibit 10.15 to the Registration
Statement on Form S-1 filed with the SEC on August 30, 2018).

Amendment to the Consultancy Agreement between INmune Bio Inc. and Mark Lowdell (Incorporated by reference to Exhibit 10.17 to
the Registration Statement on Form S-1 filed with the SEC on August 30, 2018).

First Amendment to Stock Issuance Agreement (Incorporated by reference to Exhibit 10.20 to the Registration Statement on Form S-1
filed with the SEC on August 30, 2018).

Form of Waiver of Registration Rights. (Incorporated by reference to Exhibit 10.21 to the Registration Statement on Form S-1/A ﬁled
with the SEC on September 26, 2018).

10.17

10.18

10.19

10.20

10.21

10.22

10.23

10.24

10.25

10.26

10.27

10.28

10.29

10.30

10.31

10.32

10.33

10.34

10.35

10.36

10.37

10.38

10.39

Form of Subscription Agreement to be used in connection with the Best Eﬀorts Oﬀering (Incorporated by reference to the Registration
Statement on Form S-1/A filed with the SEC on September 26, 2018).

Purchase Agreement between INmune Bio Inc. and Lincoln Park Capital Fund, LLC, dated May 15, 2019 (Incorporated by reference to
Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on May 16, 2019).

Registration Rights Agreement between INmune Bio Inc. and Lincoln Park Capital Fund, LLC, dated May 15, 2019 (Incorporated by
reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on May 16, 2019).

Amendment to Securities Purchase Agreement between INmune Bio Inc. and Raymond J. Tesi (Incorporated by reference to Exhibit
10.1 to the Current Report on Form 8-K filed with the SEC on May 17, 2019).

Amendment to Securities Purchase Agreement between INmune Bio Inc. and David J. Moss (Incorporated by reference to Exhibit 10.2
to the Current Report on Form 8-K filed with the SEC on May 17, 2019).

Sublease between INmune Bio Inc. and CTI-Clinical Trial Services, Inc. (Incorporated by reference to Exhibit 99.1 to the Current
Report on Form 8-K filed with the SEC on May 24, 2019).

Amendment No. 2 to Securities Purchase Agreement between INmune Bio Inc. and Raymond J. Tesi (Incorporated by reference to
Exhibit 10.3 to the Current Report on Form 8-K filed with the SEC on May 24, 2019).

INmune Bio Inc. 2019 Stock Incentive Plan (Incorporated by reference to Exhibit 10.29 to the Form 10-K ﬁled with the SEC on March
11, 2020).

At-the-Market Sales Agreement, dated April 16, 2020 (Incorporated by reference to Exhibit 1.1 to the Current Report on Form 8-K ﬁled
with the SEC on April 17, 2020).

Amendment No. 1 to At-the-Market Sales Agreement 2020 (Incorporated by reference to Exhibit 1.1 to the Current Report on Form 8-K
filed with the SEC on August 19, 2020).

Employment Agreement eﬀective as of January 1, 2021 between INmune Bio Inc. and Raymond J. Tesi (incorporated by reference to
our Annual Report on Form 10-K filed with the SEC on March 4, 2021).

Employment Agreement eﬀective as of January 1, 2021 between INmune Bio Inc. and David Moss (incorporated by reference to our
Annual Report on Form 10-K filed with the SEC on March 4, 2021).

Form of Securities Purchase Agreement (incorporated by reference to the Current Report on 8-K filed with the SEC on July 15, 2021).

Form of Placement Agency Agreement (incorporated by reference to the Current Report on Form 8-K ﬁled with the SEC on July 15,
2021).

Lease Agreement dated September 13, 2021 (incorporated by reference to the Current Report on Form 8-K ﬁled with the SEC on
September 15, 2021).

At-the-Market Sales Agreement, dated March 10, 2021 between the Company and BTIG, LLC (incorporated by reference to the
Current Report on Form 8-K filed with the SEC on March 11, 2021).

Financial Advisory Agreement dated March 29, 2021 between the Company and National Securities Corp. (incorporated by reference
to the Current Report on Form 8-K filed with the SEC on March 29, 2021).

INmune Bio Inc. 2021 Stock Incentive Plan (incorporated by reference to the Current Report on Form 8-K filed with the SEC on June 3,
2021).

Option Cancellation Agreement between the Company and Xencor, Inc. (incorporated by reference to the Current Report on Form 8-K
filed with the SEC on June 15, 2021).

First Amendment to License Agreement (incorporated by reference to the Current Report on Form 8-K ﬁled with the SEC on June 15,
2021).

Loan and Security Agreement (incorporated by reference to the Current Report on Form 8-K filed with the SEC on June 15, 2021).

Warrant to purchase common stock issued to SVB Innovation Credit Fund VIII, L.P. (incorporated by reference to the Current Report
on Form 8-K filed with the SEC on June 15, 2021).

Warrant to purchase common stock issued to Silicon Valley Bank (incorporated by reference to the Current Report on Form 8-K ﬁled
with the SEC on June 15, 2021).

10.40

Form of nonqualiﬁed stock option agreement option agreement between the Company and non-employee directors (incorporated by
reference to the Current Report on Form 8-K filed with the SEC on June 24, 2021).

10.41

10.42

10.43

10.44

10.45

10.46

10.47

10.48

10.49

21.1

23.1

31.1

31.2

32.1

32.2

97.1

Form of incentive stock option agreement between the Company and employees (incorporated by reference to the Current Report on
Form 8-K filed with the SEC on June 24, 2021).

Securities Purchase Agreement (incorporated by reference to the Current Report on Form 8-K filed with the SEC on July 15, 2021).

Placement Agency Agreement (incorporated by reference to the Current Report on Form 8-K filed with the SEC on July 15, 2021).

Lease Agreement dated September 13, 2021 (incorporated by reference to the Current Report on Form 8-K ﬁled with the SEC on
September 15, 2021).

Form of Securities Purchase Agreement (incorporated by reference to the Current Report on Form 8-K filed with the SEC on March 24,
2022).

Amended and Restated INmune Bio Inc. 2021 Stock Incentive Plan (incorporated by reference to the Current Report on Form 8-K ﬁled
with the SEC on June 1, 2023).

Amendment No. 1 to At-the-Market Sales Agreement, dated August 16, 2023, between INmune Bio Inc., and BTIG, LLC (incorporated
by reference to the Current Report on Form 8-K filed with the SEC on August 16, 2023).

First Amendment to Exclusive License Agreement between INmune Bio Inc. and Immune Ventures LLC dated April 17, 2023
(incorporated by reference to the Current Report on Form 8-K filed with the SEC on April 20, 2023).

Second Amendment to Exclusive License Agreement by and between the University of Pittsburgh of the Commonwealth system of
Higher Education and Immune Ventures, LLC dated April 17, 2023 (incorporated by reference to the Current Report on Form 8-K ﬁled
with the SEC on April 20, 2023).

Subsidiaries.*

Consent of Marcum LLP, independent registered public accounting firm.*

Certification of principal executive officer pursuant to Section 3.02 of the Sarbanes-Oxley Act of 2002.*

Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

Certification of principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

Certification of principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

INmune Bio Policy for recovery of erroneously awarded compensation*

101.INS

Inline XBRL Instance Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*
Filed herewith.
** Furnished herewith.

Item 16. Form 10-K Summary

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated: March 28, 2024

INMUNE BIO INC.

/s/ Raymond J. Tesi
Raymond J. Tesi, M.D.
Chief Executive Officer

(Principal Executive Officer)

/s/ David J. Moss
David J. Moss

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

Chief Financial Officer
(Principal Financial and Accounting Officer)

Signature

/s/ Raymond J. Tesi
Raymond J. Tesi, M.D.

/s/ David J. Moss
David J. Moss

/s/ Timothy Schroeder
Timothy Schroeder

/s/ J. Kelly Ganjei
J. Kelly Ganjei

/s/ Scott Juda
Scott Juda, JD

/s/ Edgardo Baracchini
Edgardo Baracchini

/s/ Marcia Allen
Marcia Allen

Title

Date

President, Chief Executive Officer and Director
(Principal Executive Officer)

March 28, 2024

Chief Financial Officer, Treasurer, Secretary
(Principal Financial and Accounting Officer)

March 28, 2024

Director

March 28, 2024