Business Overview and History
InMed Pharmaceuticals is a clinical-stage pharmaceutical company at the forefront of developing a diverse pipeline of innovative, proprietary small molecule drug candidates targeting a range of diseases with high unmet medical needs. The company's focus spans across the treatment of neurological, ocular, and dermatological disorders, leveraging its deep expertise in cannabinoid science and proprietary drug discovery platforms.
InMed Pharmaceuticals Inc. was incorporated in the Province of British Columbia, Canada on May 19, 1981 under the Business Corporations Act of British Columbia. The company initially focused on the research and development of small molecule pharmaceuticals and proprietary manufacturing technologies to produce rare cannabinoids.
In 2014 and 2015, InMed made significant strides by acquiring intellectual property and trade secrets related to the development of pharmaceutical drug candidates. This strategic move expanded the company's pipeline to include the development of rare cannabinoid-based pharmaceutical products targeting diseases with high unmet medical needs.
A notable milestone occurred in 2017 when InMed's shareholders approved the adoption of a new stock option plan. This plan was applied to all outstanding stock options of the company that were granted prior to March 2017 under the terms of the company's previous stock option plan. This decision provided InMed with a crucial mechanism to incentivize and retain employees, directors, and consultants through equity-based compensation.
In 2021, InMed significantly expanded its capabilities through the acquisition of BayMedica, LLC, a company specializing in the commercial manufacturing and distribution of rare, naturally occurring cannabinoids. This strategic acquisition allowed InMed to leverage BayMedica's expertise in cannabinoid manufacturing to support the development and commercialization of InMed's pharmaceutical drug candidates.
InMed's lead programs target Alzheimer's disease, dry age-related macular degeneration (dry AMD), and Epidermolysis Bullosa (EB), all of which are areas with significant unmet medical needs.
InMed's INM-901 is a proprietary small molecule, disease-modifying drug candidate being developed as a potential treatment for Alzheimer's disease. INM-901 has demonstrated promising preclinical results, exhibiting multiple mechanisms of action that may offer a unique approach to targeting the various biological pathways associated with Alzheimer's disease.
In the ocular space, InMed's INM-089 has shown potential neuroprotective effects in the back of the eye, which could lead to the preservation of retinal function in patients with dry AMD, a leading cause of vision loss in the elderly population.
InMed has also completed a Phase 2 clinical trial of INM-755 cannabinol cream, studying its safety and efficacy in treating symptoms related to Epidermolysis Bullosa (EB), a rare and debilitating genetic skin disorder. The results from this trial have shown a positive indication of enhanced anti-itch activity for INM-755 cream versus the control cream alone in an exploratory clinical evaluation.
In addition to its pharmaceutical pipeline, InMed has a thriving commercial segment through its wholly-owned subsidiary, BayMedica. BayMedica specializes in the business-to-business (B2B) commercialization of bulk rare, non-intoxicating cannabinoids as raw materials for the health and wellness sector. These cannabinoids are bioidentical to those found in nature, providing a reliable source of high-quality ingredients for various applications.
Financial Performance and Liquidity
InMed has a history of funding its operations primarily through the sale of its common shares. As of September 30, 2024, the company had cash, cash equivalents, and short-term investments of $5.6 million. While the company has incurred recurring losses and negative cash flows from operations since its inception, it has been able to raise additional capital through equity financings to support its ongoing research and development efforts.
For the fiscal year ended June 30, 2024, InMed reported total revenues of $4.6 million, representing an 11% increase over the previous fiscal year. The company's net loss for the same period was $7.7 million, with an annual operating cash flow of -$6.99 million and an annual free cash flow of -$6.99 million.
In the first quarter of fiscal year 2025, which ended on September 30, 2024, InMed reported total revenues of $2.04 billion, a significant increase from the previous quarter. This substantial growth was primarily driven by expanded marketing efforts and increased demand for certain cannabinoid products from BayMedica. However, the company also reported a net loss of $1.68 billion for the quarter, with an operating cash flow of -$1.83 billion and a free cash flow of -$1.83 billion. The increase in net loss, operating cash flow, and free cash flow was primarily due to higher research and development expenses as the company advanced its pharmaceutical drug candidates.
InMed's financial structure shows a debt-to-equity ratio of 0.075, indicating a relatively low level of debt compared to equity. The company's current ratio of 5.07 and quick ratio of 4.22 suggest a strong short-term liquidity position, with the ability to cover its current liabilities multiple times over with its current assets.
It's important to note that InMed's financial performance and liquidity position have been impacted by the ongoing research and development activities, as well as the investment required to advance its drug candidates through the various stages of clinical development. The company's future success will depend on its ability to generate sufficient revenue from its pharmaceutical programs and commercial operations to fund its operations and achieve profitability.
Operational Structure and Segment Performance
InMed Pharmaceuticals operates through two main segments: the InMed Pharma segment and the BayMedica Commercial segment.
The InMed Pharma segment focuses on the research and development of small molecule pharmaceutical drug candidates. This segment encompasses InMed's pipeline of proprietary drug candidates that are preferential signaling ligands of the endogenous CB1 and CB2 receptors, as well as other receptor targets linked to human disease. For the three months ended September 30, 2024, this segment incurred research and development and patents expenses of $763,000 and general and administrative expenses of $1.24 million.
The BayMedica Commercial segment is centered around manufacturing technologies to produce and commercialize bulk rare cannabinoids for sale as ingredients in the health and wellness industry. For the three months ended September 30, 2024, this segment reported sales of $1.26 million, cost of sales of $771,000, and a net income of $301,000.
The company's operations are currently concentrated in the United States, which is the primary market for its product sales.
Regulatory and Operational Challenges
InMed has faced certain regulatory and operational challenges in recent years, which have impacted the company's financial performance and market valuation.
In March 2024, InMed received a notification from the Nasdaq Stock Market that the company had fallen out of compliance with the minimum bid price requirement for continued listing on the Nasdaq Capital Market. The company was granted an additional 180-day compliance period to regain compliance with the $1.00 minimum bid price requirement.
Despite the company's efforts, InMed was unable to regain compliance during the extended period. On September 17, 2024, the company received a delisting notice from Nasdaq, indicating that its securities would be delisted on September 26, 2024, unless the company appealed the decision.
InMed promptly submitted an appeal request and obtained a hearing before the Nasdaq Listing Qualifications Panel. On November 1, 2024, the Panel issued a determination granting the company's request for continued listing on Nasdaq, subject to the condition that InMed must demonstrate compliance with the minimum bid price requirement for ten consecutive trading days by December 2, 2024.
To regain compliance, InMed implemented a reverse stock split of its common shares at a ratio of 20-to-1 on November 14, 2024. This action was taken to increase the per-share trading price of the company's common stock and satisfy the Nasdaq listing requirements.
While the reverse stock split has been effective, there can be no assurances that InMed will be able to maintain its Nasdaq listing in the long term. The delisting of the company's securities could have a material and adverse impact on its ability to raise additional financing, the trading liquidity of its shares, and investor confidence.
Conclusion
InMed Pharmaceuticals is a pharmaceutical company with a rich history of innovation in the field of cannabinoid-based therapies. The company's diverse pipeline of drug candidates, targeting a range of diseases with high unmet medical needs, holds significant promise. However, InMed has faced regulatory and operational challenges that have impacted its financial performance and market valuation.
As the company navigates these obstacles, its ability to successfully advance its drug candidates through clinical development, secure regulatory approvals, and generate sustainable revenue will be crucial to its long-term success. The recent significant increase in revenue from the BayMedica segment demonstrates the potential for growth in the commercial cannabinoid market. However, the concurrent increase in net loss highlights the ongoing challenges of balancing research and development investments with commercial operations.
Investors will closely monitor InMed's progress in regaining and maintaining its Nasdaq listing, as well as the company's ability to execute on its strategic initiatives and deliver value to shareholders. The company's strong liquidity position provides some financial flexibility, but continued focus on cost management and revenue growth will be essential for long-term sustainability and success in the competitive pharmaceutical and cannabinoid markets.