InMed Pharmaceuticals: Navigating the Evolving Pharmaceutical Landscape

Overview InMed Pharmaceuticals is a biopharmaceutical company focused on developing a pipeline of proprietary small molecule drug candidates that target the endocannabinoid system. The company’s research efforts are aimed at addressing diseases with high unmet medical needs, including Alzheimer’s disease, dry age-related macular degeneration, and Epidermolysis Bullosa.

In addition to its pharmaceutical programs, InMed, through its wholly-owned subsidiary BayMedica, has significant expertise in developing proprietary manufacturing approaches to produce and sell bulk rare cannabinoids as ingredients for various market sectors. This dual focus on both drug development and commercial cannabinoid production provides InMed with a diversified business model.

Recent Developments InMed has faced some challenges in maintaining its NASDAQ listing, but was ultimately able to regain compliance with the minimum bid price requirement through a 20-to-1 reverse stock split. The company also renewed its at-the-market (ATM) equity offering program and entered into a $10 million standby equity purchase agreement (SEPA) to provide additional financing flexibility.

On the operational front, InMed reported positive results from a long-term preclinical study of its Alzheimer’s disease drug candidate INM-901, which demonstrated reductions in markers of neuroinflammation. The company also selected an intravitreal formulation for its INM-089 drug candidate targeting age-related macular degeneration and completed dose-ranging studies to guide the next stages of preclinical development.

Financial Performance InMed has two operating segments: the InMed Pharma segment, which focuses on drug development, and the BayMedica Commercial segment, which handles the production and sale of bulk rare cannabinoids.

For the three months ended December 31, 2024, the InMed Pharma segment reported:

• Research and development expenses increased by 86% to $1.06 million, primarily due to increased external contractor costs related to the INM-901 and INM-089 programs.
• General and administrative expenses increased by 15% to $1.33 million, driven by higher consulting, legal, and personnel costs.
• Net loss increased by 80% to $2.81 million, largely due to the increase in R&D and G&A expenses as well as $352,000 in finance expenses related to the SEPA.

The BayMedica Commercial segment reported:

• Sales decreased by 10% to $1.11 million, primarily due to lower product pricing in response to increased competition.
• Cost of sales decreased by 29% to $651,000, reflecting a reduction in inventory write-downs.
• Gross profit increased by 42% to $461,000, and net income increased by 189% to $234,000.

For the six-month period, the InMed Pharma segment saw a 24% increase in net loss to $4.79 million, while the BayMedica Commercial segment reported a 450% increase in net income to $536,000.

Liquidity and Capital Resources As of December 31, 2024, InMed had $3.5 million in cash, cash equivalents, and short-term investments. The company used $4.3 million in cash for operating activities during the six-month period, primarily due to its net loss.

InMed has concluded that there is substantial doubt about its ability to continue as a going concern within the next year, as it expects to continue generating operating losses and negative cash flows for the foreseeable future. The company plans to seek additional funding through equity or debt financings, collaborations, or other strategic transactions to support its ongoing operations and drug development efforts.

Strengths and Weaknesses Strengths:

• Diversified business model with both pharmaceutical and commercial cannabinoid operations
• Promising drug candidates targeting areas of high unmet medical need
• Proprietary manufacturing capabilities for rare cannabinoids
• Experienced management team with expertise in drug development and commercialization

Weaknesses:

• Recurring operating losses and negative cash flows
• Challenges in maintaining NASDAQ listing
• Reliance on external financing to fund operations and development
• Competitive pressures in the commercial cannabinoid market

Outlook InMed faces significant challenges in the near term as it works to secure additional financing to support its ongoing operations and drug development programs. The company’s ability to advance its pharmaceutical pipeline, particularly the INM-901 and INM-089 programs, will be crucial in driving long-term value.

In the commercial segment, BayMedica will need to navigate the increasingly competitive rare cannabinoid market and find ways to maintain its competitive edge and profitability. Successful partnerships or collaborations could provide additional revenue streams and help offset the costs of the pharmaceutical R&D efforts.

Overall, InMed’s future success will depend on its ability to effectively manage its limited resources, prioritize its development programs, and explore strategic options to strengthen its financial position and advance its drug candidates through the clinical pipeline. Investors will be closely watching the company’s progress in the coming quarters as it works to overcome its current challenges and position itself for long-term growth.