S-1/A: InMed Pharma Files S-1/A for Share Resale & Updates Pipeline

InMed Pharmaceuticals Inc. filed an S-1/A registration statement for the resale of common shares by a selling shareholder, while detailing its drug development pipeline, financial results, and ongoing capital needs.

Summary

• The filing is a pre-effective amendment to a Form S-1 registration statement for the resale of up to 3,904,726 common shares by a selling shareholder.
• InMed Pharmaceuticals will not receive proceeds from the sale of common shares by the selling shareholder, but expects to receive approximately $195 from cash exercise of pre-funded warrants and $4.76 million from cash exercise of preferred investment options.
• The company reported a net loss of $6.4 million for the nine months ended March 31, 2025, compared to $5.7 million for the same period in 2024.
• Accumulated deficit reached $115.5 million as of March 31, 2025, up from $109.1 million as of June 30, 2024.
• Cash, cash equivalents, and short-term investments totaled $4.7 million as of March 31, 2025, which is expected to fund operations into the third quarter of calendar 2025.
• Preclinical data for INM-901 (Alzheimer's disease) demonstrated significant reduction in neuroinflammation markers (NLRP3, IL-1, IL-6, IL-2, KC/Gro) and neurodegeneration biomarker (NfL).
• Preclinical data for INM-089 (dry Age-Related Macular Degeneration) showed neuroprotective effects, improved retinal pigment epithelium integrity, and reduction in autofluorescent deposits.
• A Phase 2 clinical trial for INM-755 (Epidermolysis Bullosa) showed a positive indication of enhanced anti-itch activity, with 66.7% of assessed patients experiencing clinically meaningful improvement in non-wound itch.
• BayMedica, the company's commercial segment, saw sales increase by 10% to $3.638 million for the nine months ended March 31, 2025, compared to $3.315 million in the prior year period.
• The company effected a 20-to-1 reverse stock split on November 14, 2024, to regain compliance with Nasdaq's minimum bid price rule.
• A Standby Equity Purchase Agreement (SEPA) with YA II PN, LTD allows the company to sell up to $10 million in common shares over 36 months, subject to limitations and shareholder approval for issuances exceeding 19.99% of outstanding shares.
• A special meeting of shareholders on June 13, 2025, to approve the potential issuance of 20% or more of common shares under the SEPA lacked a quorum, preventing a vote.

Sentiment

Score: 3

Explanation: The company faces significant financial challenges, including recurring losses, a large accumulated deficit, and substantial doubt about its ability to continue as a going concern. While there are positive preclinical results for drug candidates and some commercial sales growth, these are early-stage and insufficient to offset the immediate and critical need for further capital, which has faced delays (lack of quorum for SEPA approval). The overall financial health and high-risk nature of drug development at this stage weigh heavily on the sentiment.

Positives

• INM-901 preclinical data showed significant reduction in neuroinflammation markers (NLRP3, IL-1, IL-6, IL-2, KC/Gro) and neurodegeneration biomarker (NfL), supporting its potential for Alzheimer's disease.
• INM-089 preclinical studies demonstrated promising neuroprotective effects in dry Age-Related Macular Degeneration (AMD), including preservation of retinal function and reduction of extracellular autofluorescent deposits.
• The INM-755 Phase 2 clinical trial for Epidermolysis Bullosa (EB) indicated enhanced anti-itch activity, with 66.7% of patients showing clinically meaningful improvement in non-wound itch.
• BayMedica's commercial segment experienced a 10% increase in sales to $3.638 million for the nine months ended March 31, 2025, driven by expanded marketing and increased demand for certain cannabinoid products.
• The company successfully regained compliance with Nasdaq's minimum bid price rule through a 20-to-1 reverse stock split.
• The company has a diverse portfolio of patent applications covering novel methods for treating diseases, cannabinoid delivery technology, and manufacturing processes.

Negatives

• The company incurred significant operating losses, with a net loss of $6.4 million for the nine months ended March 31, 2025, and an accumulated deficit of $115.5 million.
• There is substantial doubt about the company's ability to continue as a going concern, as stated by its independent registered public accounting firm.
• Current cash, cash equivalents, and short-term investments of $4.7 million are expected to fund operations only into the third quarter of calendar 2025, indicating a need for further capital.
• The special meeting of shareholders to approve a significant share issuance under the SEPA lacked a quorum, delaying a crucial vote for future financing.
• The company will not receive any proceeds from the current resale of common shares by the selling shareholder.
• The Phase 2 results for INM-755's non-wound itch were not statistically significant in the small trial, partly due to the control cream's anti-itch effect.
• BayMedica's increased sales were impacted by the need to remain price competitive, affecting overall profitability for the period.

Risks

• Prospects depend on the success of Product Candidates, which are in early stages of development with a high probability of failure and lengthy, unpredictable regulatory processes.
• Clinical trials of Product Candidates may fail to demonstrate safety and efficacy, leading to additional costs, delays, or inability to complete development and commercialization.
• Limited resources are expended on certain Product Candidates and indications, potentially missing more profitable opportunities.
• Product Candidates containing compounds classified as controlled substances may face public controversy and development/commercialization restrictions.
• Actual or threatened delisting from Nasdaq due to inability to satisfy listing standards could adversely affect business, operations, financial condition, and liquidity.
• Research restrictions, product shipment delays, or prohibitions due to controlled substance regulations could materially affect business.
• Relationships with customers and third-party payors are subject to anti-kickback, fraud and abuse, and other healthcare laws, potentially leading to sanctions and reputational harm.
• Insurance may be insufficient to cover losses from operations, and future increases in costs or reduced coverage could impact the company.
• Changes in laws, regulations, and guidelines detrimental to the business may occur, requiring substantial compliance costs or business plan alterations.
• Controlled substance legislation differing in other jurisdictions could restrict international marketing.
• Failure to protect information technology infrastructure against cyber-attacks, breaches, or data corruption could disrupt operations.
• Non-compliance with data protection laws and regulations could lead to government enforcement actions and penalties.
• Market prices for common shares are volatile and anticipated to fluctuate, potentially causing investment losses.
• Raising additional capital may cause dilution to existing shareholders, restrict operations, or require relinquishing rights to technologies.
• Future offerings of debt or equity securities may rank senior to common shares.
• Taking advantage of reduced disclosure and governance requirements as an emerging growth company could make common shares less attractive to investors and hinder capital raising.
• Failure to maintain effective internal control over financial reporting could affect financial reporting accuracy and investor confidence.
• Disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
• Deficiencies in internal control over financial reporting could result in material misstatements.
• A material weakness in internal control over financial reporting was identified for the year ended June 30, 2023, and additional weaknesses may be identified.
• Future sales and issuances of common shares, including by officers and directors and the selling shareholder, could dilute ownership and cause share price to fall.
• Significant operating losses and accumulated deficit raise substantial doubt about the ability to continue as a going concern.
• Additional capital is required to fund operations, and failure to obtain financing could delay or discontinue development and commercialization.
• Limited commercial revenue means the company may never become profitable.
• Success is largely dependent on patents, proprietary technology, and other intellectual property, which may not provide adequate protection or be successfully defended.
• Obtaining and maintaining patent protection depends on compliance with various requirements, and non-compliance could reduce or eliminate protection.
• Potential claims or lawsuits related to intellectual property, including misappropriation or infringement, could be expensive and time-consuming.
• Inability to adequately prevent disclosure of trade secrets could diminish technology value.
• Inability to protect intellectual property rights globally.
• Patent terms may be inadequate to protect competitive position for an adequate time.
• Intellectual property rights may not address all potential threats to competitive advantage.
• Heavy reliance on contract manufacturers poses risks related to quality, cost, and delivery issues.
• Existing and future collaboration agreements may not be successful.
• Marketing in multiple international jurisdictions with limited operating experience may lead to increased business and economic risks.
• Product liability lawsuits could cause substantial liabilities.
• Macroeconomic and geopolitical conditions (e.g., inflation, recession, wars, tariffs) could adversely affect business, financial condition, and liquidity.
• Material adverse developments in the financial services industry could impact the company's business and financial condition.

Future Outlook

The company expects to continue incurring significant operating losses and negative cash flows for the foreseeable future as it advances its drug candidates through clinical development, expands R&D efforts, seeks regulatory approvals, and scales manufacturing. Future funding requirements are substantial and will depend on the progress and costs of preclinical and clinical trials, regulatory outcomes, manufacturing capabilities, and commercialization efforts. The company aims to finance operations through product sales, equity/debt financings, and strategic collaborations, but cannot assure additional funding will be available on favorable terms or at all. Profitability is uncertain and depends on successful commercialization of Product Candidates and manufacturing technologies.

Management Comments

• Management believes that the combined manufacturing technologies from InMed and BayMedica provide a competitive advantage to utilize the most cost-efficient methodology for the development and commercialization of new Products and Product Candidates.
• Management believes that the INM-089 and INM-901 preclinical programs offer a differentiated treatment approach using proprietary, disease-modifying small molecules that target the CB1 and CB2 receptors, which is a key strength of the Company.
• Management is encouraged by and satisfied with the INM-755 clinical data for non-wound itch treatment, noting that the majority of assessed patients showed clinically meaningful improvement.
• The company intends to pursue a strategy of investigating as many therapeutic uses as possible for its new chemical entities with a co-development partner.
• The company expects its cash, cash equivalents and short-term investments of $4.7 million as of March 31, 2025, to be sufficient to fund its operating expenses and capital expenditure requirements into the third quarter of calendar 2025.

Industry Context

InMed Pharmaceuticals operates in the highly competitive and rapidly evolving biopharmaceutical industry, focusing on cannabinoid-based small molecule drug candidates. Its pipeline targets diseases with high unmet medical needs like Alzheimer's disease (AD), dry Age-Related Macular Degeneration (AMD), and Epidermolysis Bullosa (EB). The AD and AMD markets are seeing increasing emphasis on disease-modifying treatments, with recent FDA approvals for complement inhibitors in advanced dry AMD. InMed's approach with CB1/CB2 agonists and PPAR pathway impact offers a multi-factorial mechanism, potentially differentiating it from current amyloid-beta focused AD therapies and intravitreal injections for AMD. The company also leverages its BayMedica subsidiary in the B2B health and wellness sector for rare cannabinoids, a growing market. The industry faces challenges including lengthy regulatory processes, high development costs, intense competition from larger pharmaceutical companies, and evolving data protection and ESG regulations.

Comparison to Industry Standards

• For Alzheimer's disease, INM-901's multi-factorial approach targeting neuroinflammation, neuroprotection, and synaptic dysfunction differentiates it from currently approved antibody therapies like Biogen's Aducanumab (Aduhelm) and Lecanemab (Leqembi), and Eli Lilly's Donanemab (Kisunla), which primarily focus on amyloid-beta plaque reduction. Unlike these, INM-901 is a small molecule, potentially allowing for oral administration, which offers a significant convenience advantage over intravenous infusions required for current large molecule antibody therapies.
• For dry Age-Related Macular Degeneration (AMD), INM-089's neuroprotective effects and potential for intravitreal injection or topical eye drop delivery offer an alternative to the recently FDA-approved complement inhibitors like Apellis Pharmaceuticals' Syforvre (pegcetacoplan) and Iveric's Izervay (avacincaptad pegol). While these new treatments slow geographic atrophy progression by 14%-20%, they do not improve eyesight or restore lost vision and carry side effects like inflammation and increased risk of wet AMD. INM-089 aims for neuroprotection and retinal function preservation, addressing a different aspect of the disease.
• In the Epidermolysis Bullosa (EB) space, INM-755 (cannabinol) cream's positive anti-itch activity in Phase 2 is notable, as current EB treatments are mainly for symptom relief. While not statistically significant in this small trial, the clinically meaningful improvement in non-wound itch suggests potential, especially if expanded to broader chronic itch indications, which would target much larger patient populations than the orphan-disease status of EB alone. This positions it against a landscape where gene therapies are also being explored for a cure.
• The company's IntegraSyn manufacturing approach for cannabinoids aims for commercial-scale readiness after Phase 2 trials, potentially reducing reliance on third-party API manufacturers and offering cost-effectiveness compared to traditional chemical synthesis or biosynthesis, which is a competitive advantage in the cannabinoid market.

Management Changes

Corporate Governance

Legal Proceedings

• BayMedica received a letter on April 29, 2025, from a third party indicating an intention to commence arbitration proceedings pursuant to a patent license agreement (the Patent License Matter).
• The arbitration proceedings will be subject to final, binding, and non-appealable arbitration under the Arbitration Act, 1991 (Ontario) and determined pursuant to Ontario law.
• BayMedica intends to vigorously defend its position in the Patent License Matter.
• It is not possible to reasonably estimate a potential loss from the Patent License Matter due to the terms of the agreement and the legal theory advanced.
• The company is not currently involved in any other material pending legal or governmental proceedings.

Related Party Transactions

• Norton Rose Fulbright Canada LLP (NRFC) and Norton Rose Fulbright US LLP (NRF) rendered legal services to the company. Ms. Janet Grove, a former director (until Feb 10, 2025), is a Partner of NRFC.
• During the year ended June 30, 2024, NRFC rendered $226,793 in legal services.
• During the period from July 1, 2024, to February 10, 2025, NRFC and NRF rendered $316,977 in legal services.
• These transactions were in the normal course of operations and measured at agreed-upon exchange amounts.
• No legal services were provided directly by Ms. Grove.
• The company has an indemnification agreement with each of its directors, requiring indemnification to the fullest extent permitted by law.
• The company has a written policy requiring Board or Audit Committee approval/ratification for related party transactions exceeding $120,000, ensuring terms are no less favorable than those with unaffiliated third parties.

Stakeholder Impact

• **Shareholders**: Face significant dilution risk from future equity financings and the current resale of shares. The going concern doubt and recurring losses pose a high risk to investment value. The failure to achieve a quorum for the SEPA vote creates uncertainty regarding future capital access, potentially impacting development timelines and share price. However, positive preclinical data for drug candidates could offer long-term value if successful.
• **Employees**: The company's financial instability and going concern doubt could impact job security and morale. Compensation programs include competitive salaries, stock options, and bonuses, aiming to attract and retain talent, but the ability to pay bonuses is contingent on financial position and corporate goals.
• **Customers (BayMedica)**: Increased sales in the BayMedica segment indicate continued demand for rare cannabinoids, suggesting positive relationships. However, pricing pressures to remain competitive could affect product offerings or margins.
• **Suppliers/Creditors**: The going concern doubt may make it more difficult for the company to obtain financing or favorable terms from suppliers and creditors, potentially impacting operational continuity.
• **Patients**: The development of drug candidates for high unmet medical needs (Alzheimer's, dry AMD, EB) offers potential future benefits, but the early stage of development and financial risks mean these therapies are far from market availability.

Next Steps

• Seek partnership(s) to advance the INM-755 program for dermatological conditions, including chronic itch.
• Continue research with proprietary drug candidates, including the INM-901 program for Alzheimer's and INM-089 program for dry AMD.
• Investigate Product Candidates for additional uses beyond their initial target indications.
• Pursue discovery of additional small molecule drug candidates for other diseases with high unmet medical needs.
• Seek regulatory approvals for any Product Candidates that successfully complete clinical trials.
• Scale-up manufacturing processes and capabilities, or arrange for third-party scale-up.
• Continue to support commercial operations and revenue-generating Products at BayMedica.
• Execute on business development initiatives, including strategic transactions, mergers, acquisitions, divestitures, and in/out-licensing.
• Maintain, expand, enforce, defend, and protect intellectual property.
• Continue advancing research and development of various manufacturing technologies.
• Build internal infrastructure, including personnel, to meet target milestones.
• Add operational, financial, and management information systems and personnel.
• Conduct additional PoC studies, CMC activities, receptor interaction studies, DMPK studies, dose-ranging studies, and GLP studies for INM-901 and INM-089.
• The board of directors will assess whether to hold a subsequent special meeting or include the Share Issuance Proposal in the 2025 annual general meeting proxy statement.
• BayMedica intends to vigorously defend its position in the upcoming arbitration proceedings related to the patent license agreement.

Key Dates

Recommendation

The company faces severe financial distress, evidenced by recurring and increasing net losses, a substantial accumulated deficit of $115.5 million, and a critically low cash balance of $4.7 million, which is projected to last only into Q3 2025. The independent auditor has raised 'substantial doubt' about the company's ability to continue as a going concern. A crucial shareholder vote for a significant capital raise failed due to lack of quorum, highlighting immediate and significant funding challenges. While there are some positive preclinical data for drug candidates, these are very early-stage and highly speculative, offering no near-term revenue. The risks of further dilution, inability to secure necessary financing, and potential operational curtailment or termination are extremely high, making the stock a 'strong sell' for any seasoned investor or institution.

Keywords

Pharmaceuticals, Biotechnology, Drug Development, Cannabinoids, Alzheimer's Disease, Dry Age-Related Macular Degeneration, Epidermolysis Bullosa, Neuroinflammation, Neuroprotection, Clinical Trials, Preclinical Studies, SEC Filing, S-1/A, Nasdaq, Capital Raise, Going Concern, Intellectual Property, BayMedica, Rare Cannabinoids, IntegraSyn, INM-901, INM-089, INM-755