InMed Pharmaceuticals Inc. (INM) Earnings Call Transcript & Summary

That's fantastic. And this is a single cannabinoid treatment, is that correct? I mean, it's an analog that will be a single cannabinoid?

Exactly. And so what's interesting about it from an administration perspective is we believe it may be orally bioavailable, which means you can take it as a tablet. Most of the products that are on the market right now are -- have to be given by an infusion, and so that's less than ideal. And it's also what we call a small molecule. It's something that can be transported in the blood and can get into the brain. So crossing from the blood to the brain is very difficult for a lot of drugs. But for cannabinoids, as we know with THC, for instance, it's very easy to do. So we think there's a lot of advantages in this proprietary molecule that we're developing.

And maybe I'm getting ahead of myself here, Eric, but I know with cannabinoids, one of the benefits can be that there's not a lot of bad side effects as well. Have you found that in the early results?

We haven't seen anything that gives us any concern at this point. But keep in mind, it's very early. We haven't been in humans yet. So we will monitor that as we go as you do with any pharmaceutical drug development program.

Fantastic. Well, let me ask you the same question about your INM-089 candidate for the treatment of age-related macular degeneration. This is the most common cause of irreversible vision loss and potential blindness in people 50 years or older, and is estimated to affect 200 million people worldwide. What are the current treatment options here? And how might cannabinoids be helpful?

Sure. Well, I have another slide that hopefully will help talk about the role of the cannabinoids in ocular disease. So I'm going to start on the left-hand side with glaucoma, and glaucoma is caused by a buildup of fluid at the front of the eye and this buildup puts pressure on the eye to the back of the eye, which is where all of your neurons are, all your nerve cells that give us our vision. And so this constant pressure over time kills these cells and leads to blindness. So there was a lot of anecdotal evidence that smoking marijuana helps relieve this pressure, helps reduce this fluid buildup. So we thought, well, that's interesting. Let's look at other cannabinoids because we don't want to deal with anything that is psychoactive. Let's see if there's other ones that will do it. And indeed, cannabinol, CBN, which is a spin-off molecule from THC, that's non-psychoactive, did have a really good effect. So then there's probably several cannabinoids that will have the same effect at the front of the eye. But what we saw was that CBN helped preserve these neurons at the back of the eye. So whether you have glaucoma or not, it was somehow protecting these neurons from cell death, what we call a neuroprotective effect. And we thought that was really interesting. So we patented that effect. And we continue to look at that. This is actually how we got into Alzheimer's. We said, "Well, if we're protecting neurons with cannabinoids, what other neurons can we protect?" And it turns out, the ones in the brain. But this back-of-the-eye thing is very different from the front of the eye. It's really kind of 2 areas of research. So glaucoma is considered a front-of-the-eye disease. But as you get to the back of the eye, you start to talk about things like diabetic retinopathy and macular degeneration. So we started testing CBN, but then we also started developing other analogs to look at back-of-the-eye disease. Can we change the cannabinoid to give us a better effect? And so this picture on the right is kind of looking at the back, looking through the eye at the back to see where the optical nerve is. And you can see here where there's damage to the macula. And that's going to cause irreversible blindness. So there's a number of drugs on the market. I used to work at QLT, which had the very first drug for macular degeneration. And this can be caused by a number of things, but in particular, in wet AMD, you have too many blood vessels forming and leaking and killing the area there. And so the compounds that are in use today are similar to what they use for oncology, for cancer. And that is if you can stop these blood vessels from forming, you can prevent the damage. And in oncology, if you could stop it from forming, you could stop the tumor from growing. So those tend to work in 1 form called wet AMD, but the bigger form is called dry AMD. And there's not really anything -- there's 1 drug that's approved for that, but its adoption has been very, very limited because the results have not been that great in the general population. So there's a big opportunity to find things that are going to work back here. So this has basically led to having 2 independent drug development compounds. One is for glaucoma, and then the other one, 089, is for age-related macular degeneration. So we're starting to see in early trials, again, not human trials, in vivo trials, we're starting to see an increase in the neuroprotection in these diseases and the ability for cannabinoid to prevent advancing it, and we have to continue down that path to understand fully what the opportunity there is. And we think it's a unique mechanism of action, and it's something that we think will bring benefit to patients in the long run.

Yes. That's really interesting. My uncle suffered from macular degeneration, and he did get benefit from using whole plant cannabis for relief, but he was the sort of guy who wasn't into the side effects that come with that, wasn't "looking to get high," but did really like the relief. So it's exciting. You might be able to do something similar using cannabinoids, but not have the side effect of actually having to use cannabis and get the high if that is not what you're into.

Exactly, yes. And I mean, the anecdotal evidence is nice. There is 1 company that's looking at THC as an eye drop to treat glaucoma. I'm sure they'll be successful. It does work. If you can dose it in the right amount, you can avoid any damage, you can avoid any psychoactive side effects. So I think they're on a good path. From what we've seen, CBN is actually a better compound, but we're not in humans yet. So it's hard to say how they would compare to each other. But we haven't seen any data or research in macular degeneration. So we have to carefully weigh our options here and make sure that we are investing in the right program that has the highest potential for success.

And we'll be speaking with Jerry Griffin, the VP of Sales and Marketing for BayMedica, in a couple of weeks at our podcast called the Water Tower Hour, so everyone, keep an eye out for that. But I'd also like to get your thoughts on that commercial business. Unlike many pre-commercial stage biopharma companies, you have the advantage of generating revenues that can be partially funded -- that can partially fund InMed's pharmaceutical drug development programs. 2023 was a breakout year for BayMedica's commercial business in terms of revenues. How are you seeing the demand for BayMedica's products in 2024?

Yes. Well, it continues to grow. So we're very excited about the BayMedica subsidiary and what Jerry Griffin, who's our VP of Sales and Marketing, is doing there. We have a -- right now, a portfolio of 4 or 5 cannabinoids that we are selling into the health and wellness. Now all of these are non-psychoactive cannabinoids. We don't deal with THC. But there's a lot of demand for these products to be used in combination with other cannabinoids in various formats and in different products. We saw a very stark increase last year in the demand for these products. We have seen some fluctuations. So it's a very early business. There's a lot of fluctuations in revenues. It's very hard to predict where this thing is going to go and how big it can be. But all indications are right now that it's on the right path and will continue to grow. So if you look at this quarter versus the same quarter last year, we see kind of a doubling or tripling every quarter going forward since over the last -- over a year. So we're very excited to hopefully see that trend continue. But again, like I said, it's very hard to provide any guidance or projection on where that's going to land just because it's such a young industry. It has its ups and downs, and we're just trying to catch the right wave and ride it.

Yes, it does feel like there's -- that industry is getting a bit of a tailwind. I'm seeing on buyers' side more people interested in things like -- CBD was obviously the big one. I think that's the most well known, but also CBN, I've seen people that are suffering from sleep problems, CBN is being increasingly used, THCV is another one that's been getting some more attention. Is there any one of those cannabinoids that's been doing best for you or that you're most excited about in the BayMedica suite of products?

Yes. Well, we have 1 called CBC, which has been kind of our biggest product. It's used for a number of different reasons, but people think that it kind of augments the effects of other cannabinoids. And that's probably where it's being used most. But it's doing really well. THCV is also in our portfolio. We've been working hard to really drive down the cost of goods. Because it's such an expensive product to make, it's hard for people to adopt that into their products, right? If the ingredient is massively expensive, you can only charge so much. So they end up using less than they should in their products, and we're trying to drive down the cost of goods so that it can be adapted and adopted into a lot of different products across the board. So a lot of excitement for that. And there's actually human data from a Phase II clinical trial on THCV. It's not a study that we conducted, another company did, GW Pharma. But it looks very interesting for a number of different uses.

And I know 2023 was a big year where you took significant steps forward. When you look out to 2024, Eric, what are the milestone targets you have for your drug development programs?

Yes. Let me just -- let me summarize those. So the 901, we've continued to develop this in the preclinical models and figuring out the manufacturing, which is never easy, but we'll get there. We've got, probably, the best manufacturing group for cannabinoids that there is. So we're going to continue to develop 901. We're going to be reaching out to a number of experts in the field to get their impressions. We've already begun that process. So far, so good. I think we're on the right path, and we're starting to just get external independent opinions on where we are, what we should be doing and how best to develop this drug. So we're very excited about that. The ocular programs, we're going to continue to develop those towards an IND filing and targeting human clinical trials in 2025. It's yet to be determined if we're going to do both programs or just 1. Again, it comes down to a resourcing issue and our ability to access the money or partnerships to help move those forward. As I mentioned already, we've seen some great data out of 755 for itch. It's actually a very big market for chronic itch, and we think we need to find the right partner to be advancing that program. So those activities are ongoing. Beyond that, we're going to continue to develop other proprietary cannabinoid analogs and test them in very early test tube, in vitro tests to see where they might play a role in disease. If we get some more hits, then we'll probably start an outreach program specifically for those early compounds to license those to other people. We're going to continue to support BayMedica, both their revenue and their margin growth. That's a very interesting subsidiary of ours, and they're doing great work. So we want to continue to support that. And across the board, we need to keep our eyes open to strategic partnerships. If you think about the development of an Alzheimer's product, it's a long pathway for instance -- Alzheimer's, it's a long pathway, a very expensive pathway. I mean, we're talking hundreds of millions of dollars. So the capital markets haven't recovered to a point where you can access that capital at this early stage of our development. So we do need to be thinking how are we going to do this in conjunction with some support from other companies.

And that is one of the challenges, Eric, I know, in the drug approvals process that often takes a very long time and can be expensive. Can you talk a little bit about how you think about managing that from a cash perspective to make sure those processes can get across the finish line?

Yes. So we are in a pretty good position. We raised a little bit of money in October, November. Where we sit today, again, it depends greatly on the revenue stream and margin stream from BayMedica as well as how we deploy our resources. But we're looking at upwards of a year cash in the bank right now, which is actually pretty good for biotech companies. A lot of people -- gosh, I mean, I saw a statistic that 100 companies shut down last year that were NASDAQ-listed in biotech because they couldn't access funds. So that hasn't been a big problem for us. We've been able time and time again to access the money we need to keep advancing our programs. But at this valuation, it's very tough to do. So we want to put that off as long as we can. We want to find alternative ways to accessing money, like I said, through partnerships would be ideal because that's typically non-dilutive. So we want to focus on that first. We want to have in our back pocket a plan to access the markets, if we need to, and of course, delay that for as long as possible. But overall, we're in a pretty good position vis-à-vis our other competitors or companies of our size that are NASDAQ-listed. So we just have to be smart about how we invest our money.

And the BayMedica complement works well from that perspective as well?

Absolutely, yes, yes.

Well, great. I know there were a couple of questions that folks submitted in the chat. Eric does need to run and catch a flight. So I will make note of those, and we will follow up separately with you to make sure that theirs do get answered, so we appreciate that. And Eric, this was a fantastic conversation. Really appreciate you taking the time to join us.

Great talking to you, and I look forward to giving an update sometime over the course of the year.

Sounds fantastic. And once again, to find our research on InMed, please visit watertowerresearch.com, click on the companies tab and scroll down to InMed. Keep an eye out for our podcast with Jerry Griffin from BayMedica, that will be out in a couple of weeks, and that podcast is called the Water Tower Hour. You can subscribe on Apple Podcast, Google or Spotify to that. And finally, as a reminder to all listeners, the views expressed in this fireside chat may not necessarily reflect the views of Water Tower Research LLC, and are provided for informational purposes only. This fireside chat may not be distributed or reproduced without the written consent of Water Tower Research and should not be considered research nor recommendation. WTR is an Investor Relations firm, not a license broker, broker dealer, market maker, investment bank, underwriter or investment adviser. Additional disclaimers can be found at watertowerresearch.com.