THE TEN BILLION DOLLAR UNICORN IN INMUNE BIO, PART I

Introduction

I believe INmune Bio, a company with a market cap of just 200 million dollars at the time of writing, will end up being worth at least ten billion dollars in some years time, if it will not be bought out beforehand, at least in part, which I believe is a reasonable possibility. INmune Bio is, in fact, shifting the paradigm on many fronts.

That is a bold stance to take, yet I am far from the first one to think it, from what I have inferred from the many professional and private investors I have corresponded with over the past months. I did want to be the first one to put it on paper, and I believe I have many insights to share in that respect.

The matter is complex, however, both in the field of neurodegenerative diseases as in the field of immuno-oncology, and I would like to explain in detail how I believe INmune Bio is revolutionizing the field in both domains. That will take time and requires more text than the average investment article. Those who will bear with me along the way will hopefully see what I see, if they have not already.

I will set out the reasons as to why the case for INmune Bio is so compelling in several blogs and articles, either on this website designed to that and other purposes or on other websites, either alone or in collaboration with other authors, in the months and perhaps years to come. I plan to set out my investment thesis more profoundly, insofar as possible with a view to the everchanging competitive landscape. I initially hope to release a publication once every few days or at the most once a week, and these publications will become more in-depth as they progress.

I have made my valuation and assessment of the chances of success, with the competitive landscape in mind for each and every disease INmune Bio is pursuing or will be pursuing in the years to come, and that is quite the panoply. The task would have been less daunting if this small biotech company were a one-trick pony, even though it seems to be perceived as such in the market still, yet it is everything but that.

I have been an investor in INmune Bio since around May 2021. My style of investing is based on thorough prior due diligence; I do not purchase a share if I am not particularly convinced that it is substantially undervalued compared to its peers and holds at least equal or more potential. In the case of INmune Bio, there are however only partial peers to compare to, i.e. typical biotech companies who occupy themselves with the development of one drug platform or the treatment of one disease. INmune Bio is far from the average biotech company, in that respect.

Some excerpts from the KOL webinar of 21 January 2021

My initial enlightenment has come not from looking at INmune Bio’s website, but from listening to the Key Opinion Leaders (KOL) webinar that INmune Bio had been giving on 21 January 2021 on the Expanded Phase 1B data in Patients with Alzheimer’s disease. During these so-called KOL webinars, INmune Bio discusses its recent data and invites highly respected names in the relevant field to discuss these data with them, and the way forward.

In minutes 17 to 22 of that webinar, CJ Barnum, head of neuroscience of INmune Bio, shared the following three slides:

Source

He mentioned the following in their regard.

With regards to the first slide, which relates mostly to the rather novel non-invasive biomarkers INmune Bio will be using to assess improvements in brain quality:

So let me start here. On the left, with white matter, what you can see with white matter in this healthy column here is that the white matter has all these wonderful axons with these little coverings called myelin which helps insulate and propagate signals. They also have immune cells and other cells that provide support and in a healthy system you've got wonderfully connected axons, great myelin, good quality and supportive immune cells. In a diseased patient, these things can change. It could be fewer axons, it could be fewer myelin. You could have different types of cells, and of course there's pathways going back and forth that are taken into account.

As it relates to gray matter not only looking at volume which is a traditional metric of assessing the amount of brain tissue that you have, you can also look at the quality of gray matter and you can see here on the far right in this healthy column. What you would expect is have all these neurons that are nicely organized together, that are connected together, and in a diseased patient you have these disconnections and sometimes it's loss of cells. Sometimes it's just loss of neurons, and so this cortical disarray measurement that Oxford Brain Diagnostics, and the apparent fiber density that Imeka has come up with gives us the ability to do this.

So why is this important? Well, traditional volumetric measures of brain tissue are quite insensitive to change over time. In fact, it can take years to see meaningful changes, and so the extent to which we can see changes in the quality of the brain, despite not seeing changes in volume, I think is potentially very important and relates back to some of the proteomic data.

With regards to the second slide, which relates to the novel biomarker of cortical disarray measurement:

So, as an attempt to explore the potential of this technology, what we have done is, we have taken the patient that we thought had the best clinical response to see if these specific metrics held any promise. And so what I'm going to start here is with the gray matter from Oxford Diagnostics. Again, the metric is called cortical disarray measurement, and what you're seeing is the bit from the baseline brain. The colors are the changes over the course of time. The green color reflects improvement, and the yellow represents no change, and what you can see is that within three months, this patient shows improvement in multiple areas of the brain that continues over the course of nine months.

What I think is really important about this is that, if you look at this nine-month scan, the regions that are implicated or that are changing include the temporal lobe which is this circled part here, and the temporal lobe is the lobe critical for dementia and Alzheimer's disease, and this change over nine months was about six percent, and the suggested clinical meaningful change is believed to be about five percent.

So, this suggests that this metric may have utility in understanding quality of gray matter, and the biomarker may be useful in a very short period of time.

With regards to the third slide:

So, if we go back to white matter, looking at how those neurons, those gray matters, connect to each other, we see a very similar pattern. So again, if we start in the top left, we look at the baseline. You can see this is the fiber tracts, the white matter tracts, all in purple. And by the time you get to three months, you have improvement, and this is all color, that's not purple is an improvement in the quality of white matter tracts that peaks at six months. Now, this is a little bit different, but what they've done is, they've looked at the number of fiber tracts, and there's 33 fiber tracts that Imeka has identified as important to Alzheimer's disease. And this increase is about 13% on average for 31 of the 33 fiber pathways, which is extremely exciting to us. So we now think we have two non-invasive visual biomarkers that can be used in the same scan. By the way, the free water, the white matter, and the cortical disarray measurement, gray matter, can all be done in a single scan with patients that will potentially allow us to see changes that we believe were reflected in the CSF in a very short period of time. So, I want to take this back to try to put this in context of how inflammation may be affecting clinical change and I just want to put the caveat out there that this is not a slide about cognition and I'll get to that in just a moment.

If one would have explained these images as the evolution of a baby’s brain some time in between its first and second year, nobody would have been surprised. However, they are taken from a brain that’s supposed to be decaying at fast pace due to neurodegenerative disease. To have a drug do this in a decaying brain – again, not even a mild-to-moderate AD patient – is beyond comprehension.

What INmune Bio proved here is a visual, physical, improvement in brain quality, both in gray as well as in white matter, merely as a result of the use of the drug XPro™, which is supposed to (just) bring down neuroinflammation. Obviously, with such visual results, cognition will follow, the question will just be how much so (and I believe those cognition results, the first of which we will be seeing at the end of 2022 in mild cognitive impairment, may be the most impressive ever seen).

Improvement occurred both in gray as in white matter, what does that mean? The gray matter is essentially where the memories are stored. The white matter, consisting of myelinated axons, connects the different parts of the brain where these memories are located. The drug’s effect was hence omnipresent in the brain. As it will turn out, Alzheimer’s should probably be seen more as a white matter than as a grey matter disease, i.e. more as a disease of loss of (qualitative) connections than as a disease of loss of neurons.

In that white matter, XPro showed an improvement of not less than 13% in 31 of the 33 investigated white matter bundles. Remember, we are dealing with a severely impaired Alzheimer’s patient here, not a mild-to-moderate Alzheimer’s patient, but a patient who had actually already progressed quite far in the disease. Once patients get to that stage, the Alzheimer’s processes in the brain, that have already started 10 to 15 years before diagnosis, have gotten to such a fast-progressing and destructive phase that there is very little chance of still stabilizing such progress, which is why most trials in Alzheimer’s treat patients in their mild-to-moderate disease state.

However, even in such a patient, XPro was able to show a continued 6% improvement in grey matter over the course of 9 months – the furthest datapoint collected at that time – and a 13% improvement in 31 out of 33 white matter bundles over that same time period. Remember: this Alzheimer’s patients’ disease state would under normal circumstances have been worsening at fast pace, yet here it was proven that he improved, and not just over a short period of time, but over the course of 9 months.

As it will turn out, that patient was not unique at all. As a matter of fact, the same effects would later be detected in the other patients on XPro with the same disease state, as INmune Bio would be using further visual and other biomarkers to assess their state.

Biomarkers do not lie.

That’s the phrase often used by the CEO of another promising player in neurodegenerative diseases, and for good reason. They don’t. They are living proof of what’s happening under the hood. They cannot be disregarded.

INmune Bio’s use of these biomarkers is nothing less than revolutionary. No other player in neurodegenerative diseases that I am aware of has had even the courage to do this, let alone the results to show what is going on.

The team at INmune Bio is so sure they are on to something, as shown in plentiful animal tests in different diseases and backed by an abundance of literature, that they have been – if I may say - cocky enough to have run a Phase 1 trial using these biomarkers.

On 21 January 2021, INmune Bio was the first to show proof of a disease-modifying state and physical improvement in both white and grey matter as a result of the use of XPro. No other biotech company in the neurodegenerative space that I am aware of has done so.

XPro addresses neuroinflammation as a hallmark of Alzheimer’s disease and neurodegenerative diseases in general

This is neither the time nor the place to discuss how exactly XPro has been designed, how it functions, what its exact effects are, and why INmune Bio believes it holds the key to offering a solution to so many neurodegenerative diseases. Those subjects will be discussed in later publications.

However, what is important here is that XPro tackles neuroinflammation. Inflammation is a response triggered by damage to living tissues. An inflammatory response can be either acute (seconds to hours) or a response of longer duration referred to as chronic inflammation. Neuroinflammation then is a response triggered by damage to living neuronal tissues. In the case of chronic (neuro)inflammation, it becomes a permanent response to permanent damage. And that occurs slowly with time in each human’s body, and therein lies a further paradigm shift which will be the object of future discourse.

Contrary to many other biotech companies who believe they have seen the light and have come up with something entirely new, which makes investing in them a huge risk, the thesis of neuroinflammation as a hallmark of Alzheimer’s disease is fully established in scientific literature over the past ten years or more, as it is in many other neurodegenerative diseases. For many years before, however, the central nervous system was considered to be ‘immune privileged', neither susceptible to nor contributing to inflammation. That idea has proven to be entirely mistaken. Since the acceptance of neuroinflammation as a hallmark of Alzheimer’s disease and neurodegenerative disease, the question was: how to tackle it without doing any damage to the brain or other functions of the human body?

However, what has not been established in literature is where this hallmark of disease should be placed in the totality of disease. I believe that INmune Bio is on the verge of creating a paradigm shift there, too, as it may become obvious over the course of the results generated in the years to come that neuroinflammation should probably be seen as the number one cause of disease across all neurodegenerative diseases. Combination therapies may hold must promise, but kill the neuroinflammation, and you immediately tackle the disease at its heart.

The hallmark of CNS inflammation is the detrimental activation of microglial cells, which initiates the release of a diverse array of downstream mediators, including cytokines and other substances. Microglia are the principal immune effector cells of the brain, constantly surveying their environment in preparation for insult or injury (“immunosurveillance”). However, their working is both magnificent and beneficial – under the right circumstances – but detrimental under the wrong circumstances. In neurodegenerative diseases, it has been shown that the detrimental phenotype of microglial cells is activated, leading to neuronal and synaptic loss instead of recovery and regeneration.

Source

The hypothesis of INmune Bio was that soluble TNF, a potent pro-inflammatory cytokine that seems to be upregulated the first whenever a cytokine reaction occurs, would be the key driver of neuroinflammation, and that with XPro as a selective TNF-inhibitor, only inhibiting soluble TNF (the bad form of TNF), neuroinflammation would go down.

That thesis has been proven correct in January 2021, when INmune Bio had proven a reduction of the entirety of a set of biomarkers of neuroinflammation that OLink, a third party, had pre-specified.

Olink states the following regarding this set of biomarkers:

“Why choose Olink Target 48 Cytokine for your inflammation-related studies?

Olink® Target 48 Cytokine is the ultimate solution for cytokine studies and inflammation-related diseases. The thorough selection of biomarkers ensures that the most important proteins covering key pathways related to cytokine signaling and inflammatory processes are well covered. Inflammation is of central importance for biomedical research and is now believed to be a key underlying factor for the pathophysiology of a wide range of diseases, such as:

• Autoimmune diseases (e.g. rheumatoid arthritis, Crohn’s disease, IBS, multiple sclerosis, ulcerative colitis, systemic lupus erythematosus)

• Neurological diseases or neuro inflammation (e.g. Alzheimer’s)

• Cardiovascular diseases

• Cancer

• Asthma and respiratory diseases, obesity, diabetes, psoriasis, etc

• Infectious diseases such as Covid-19.

Olink Target 48 Cytokine enables analysis of 45 carefully selected proteins across 40 samples simultaneously from just 1 µL sample. In comparison to other products for multiple cytokine analysis, this panels offers superior sensitivity, specificity and dynamic range.”

XPro has been proven to reduce whole brain neuroinflammation by not less than 15% over the course of three months.

That basically means that, irrespective of the neurological disease, the drug is exactly doing what INmune Bio had hoped it would do.

Why is that important? Because neuroinflammation as such has become the center of attention of the more recent studies in Alzheimer’s disease and many other neurodegenerative diseases over the course of recent years.

These diseases are plentiful, and many of them have no disease-modifying drug that allows patients to improve. Neuroinflammation has been proven to play an essential role in Alzheimer’s disease, Parkinson’s disease, Multiple Sclerosis, Amyotrophic Lateral Sclerosis (ALS), Cerebral Ischemia, Traumatic Brain Injury, certain types of Depression, Autism Spectrum Disorder, Bipolar disorder, etcetera. This is abundantly established in scientific literature at this point.

Altering the course of a panoply of neurodegenerative diseases with one drug

One now understands why INmune Bio’s CEO, RJ Tesi, in the September 2021 webinar on Results of XPro in AD Showing Improvements in White Matter Pathology and Decrease in PTau, stated the following, respectively in the beginning and at the end of the KOL webinar:

“Some have wondered why immune bio has focused on white matter in patients with Alzheimer's disease. INmune bio believes that in Alzheimer's disease, white matter matters.

That is, white matter pathology occurs early, can be quantified, and XPro can repair the pathology.

The importance of white matter pathology, along the focus of therapeutic intervention in MS, has been ignored in other CNS diseases where it occurs, and it occurs in many.

It will be ignored no longer.”

“But I really want to emphasize that you really can't know enough about how your drug works. It prevents problems in phase two, and as you know, if you fail a phase two, you're done. So we wanted to make sure we designed the most perfect phase two we could.

The other thing is, everything we have learned can be applied to diseases of the brain where neuroinflammation plays a role, and that is a very wide net.

You've heard of MS, ALS, Parkinson's disease. Today you know we're interested in treatment resistant depression. There are other neurologic diseases like PTSD. Someone mentioned TBI.

I mean, the list goes on and on.

So, in fact, we are laying a foundation of biomarkers and development strategies that we're going to be able to play and utilize over and over again.

The only thing that's going to change is the disease. The biomarkers will be the same, but the diseases will be different.”

For the record, this is not saying neuroinflammation is the only cause of all of these diseases. But it appears an absolutely crucial element, so crucial that chronic neuroinflammation as such should perhaps one day be considered as a disease, like obesity.

Last but not least,don’t forget to look at INKmune, it’s equally big, but you’ll soon read me on that too.

That’s it, for now. Much more to come.