10-Q: InMed Pharmaceuticals Reports Q2 2025 Financial Results, Highlights Progress in Alzheimer's and AMD Programs

InMed Pharmaceuticals announces its financial results for the quarter ended December 31, 2024, and provides updates on its pharmaceutical development programs and commercial operations.

Summary

• InMed Pharmaceuticals reported a net loss of $2.58 million for the three months ended December 31, 2024, compared to a net loss of $1.48 million for the same period in 2023.
• Sales for the quarter were $1.11 million, down from $1.24 million in the prior year.
• Research and development expenses increased to $1.06 million from $0.61 million year-over-year.
• The company effected a 20-to-1 reverse stock split on November 14, 2024, to regain compliance with Nasdaq's minimum bid price rule.
• InMed entered into a Standby Equity Purchase Agreement (SEPA) with YA II PN, LTD to sell up to $10 million in common shares.
• The company's cash, cash equivalents, and short-term investments totaled $3.42 million as of December 31, 2024.
• Subsequent to the quarter, InMed announced positive preclinical results for its INM-901 Alzheimer's program and selected an intravitreal formulation for its INM-089 AMD program.
• The company expects its current funds and recent financing activities to be sufficient to fund operations through the end of the second quarter of calendar 2025.
• The company's future viability is dependent on its ability to raise additional capital to finance its operations.

Sentiment

Score: 4

Explanation: The sentiment is slightly negative due to the increased net loss, reliance on external funding, and dispute with a licensor. However, positive preclinical results and progress in the AMD program provide some optimism.

Positives

• BayMedica Commercial segment sales increased by $234,000, or 11%, for the six months ended December 31, 2024, compared to the six months ended December 31, 2023.
• Gross profit in the BayMedica Commercial segment increased by $609,000, or 177%, for the six months ended December 31, 2024, compared to the six months ended December 31, 2023.
• Net income in the BayMedica Commercial segment increased by $689,000, or 450%, for the six months ended December 31, 2024, compared to the six months ended December 31, 2023.
• Positive preclinical results were announced for the INM-901 Alzheimer's program, showing a reduction in neuroinflammation markers.
• An intravitreal formulation was selected for the INM-089 AMD program, with successful delivery to the targeted area of the eye in preclinical studies.

Negatives

• The company reported a net loss of $2.58 million for the three months ended December 31, 2024, which is higher than the $1.48 million loss for the same period in 2023.
• Sales for the quarter decreased by 10% compared to the same period last year.
• The company's auditors have raised substantial doubt about its ability to continue as a going concern.
• The company's Registration Statement on Form S-3 which was previously filed with the SEC in connection with the transactions contemplated by the Amended ATM Agreement expired on February 10, 2025.

Risks

• The company's future viability is dependent on its ability to raise additional capital.
• The terms of any financing may adversely affect the holdings or rights of existing shareholders.
• The company may not be able to obtain financing on acceptable terms, or at all.
• The company is subject to risks associated with the development of pharmaceutical products, including clinical trial outcomes and regulatory approvals.
• The company is involved in a dispute with a licensor regarding a patent license agreement, which could result in financial losses.
• The transition to a new presidential administration in the United States, including the potential use and effects of tariffs to address the administrations policy goals, could materially impact the macroeconomic framework in which we operate.

Future Outlook

The company expects its current funds and recent financing activities to be sufficient to fund operations through the end of the second quarter of calendar 2025, depending on the level and timing of realizing BayMedica revenues and operating expenses. The future viability of the Company is dependent on its ability to raise additional capital to finance its operations.

Management Comments

• InMed has sought to focus on the research and development of preferential signaling ligands of CB1 and CB2, and has produced a library of novel, proprietary drug candidates (Product Candidates).
• With multiple manufacturing approaches, InMed has sought to maintain enhanced flexibility to select the most cost-effective method to deliver high quality, high purity Products and Product Candidates fit for their intended use.
• BayMedica will continue to evaluate opportunities for potential structured supply arrangements and collaborations for the commercial business.
• Sales and marketing efforts will remain focused on products that contribute the highest margins, where BayMedica continues to hold a strong competitive position.

Industry Context

InMed's focus on cannabinoid-based pharmaceuticals aligns with a growing interest in the therapeutic potential of these compounds. The company's pipeline targets significant unmet medical needs in areas such as Alzheimer's disease and age-related macular degeneration, which are major areas of research and development in the pharmaceutical industry. The commercialization of rare cannabinoids for the health and wellness sector also reflects a broader trend towards natural and alternative health products.

Comparison to Industry Standards

• InMed's research and development expenses as a percentage of revenue are high, which is typical for early-stage pharmaceutical companies.
• The company's reliance on external funding is also common in the biotech industry, where drug development is capital-intensive.
• Compared to larger pharmaceutical companies, InMed's revenue is relatively small, reflecting its focus on early-stage development and commercialization of rare cannabinoids.
• Other companies in the cannabinoid-based pharmaceutical space include GW Pharmaceuticals (acquired by Jazz Pharmaceuticals), Cara Therapeutics, and Arena Pharmaceuticals (acquired by Pfizer).
• These companies have also faced challenges in clinical development and regulatory approval, highlighting the risks and uncertainties associated with this emerging field.

Management Changes

Legal Proceedings

• BayMedica is involved in a dispute with a licensor regarding a patent license agreement, with the licensor alleging a breach of the agreement and asserting monies due.

Related Party Transactions

• Norton Rose Fulbright Canada LLP (NRFC) and Norton Rose Fulbright US LLP (NRFUS) rendered legal services to the Company, with Janet Grove, a former director of the Company, being a Partner of NRFC.

Stakeholder Impact

• Shareholders face potential dilution from future equity financings.
• Employees may be affected by the company's ability to secure funding and continue operations.
• Customers of BayMedica may be impacted by changes in product pricing and supply arrangements.
• Suppliers and creditors are subject to risks associated with the company's financial condition and ability to meet its obligations.

Next Steps

• Continue research and development efforts for INM-901 and INM-089.
• Pursue strategic partnership opportunities for INM-755 in epidermolysis bullosa and other itch-related skin conditions.
• Evaluate opportunities for potential structured supply arrangements and collaborations for the BayMedica commercial business.
• Seek additional funding through equity financings, debt financings, or other capital sources.
• Initiate a search for an independent director to replace Ms. Grove.

Key Dates

Keywords

pharmaceuticals, cannabinoids, INM-901, INM-089, Alzheimer's, AMD, BayMedica, financial results, research and development, reverse stock split, SEPA, financing