Inmune Bio, Inc. (INMB)

Item 2. Management’s Discussion and Analysis
of Financial Condition and Results of Operations

Forward-Looking Statements

This Form 10-Q contains certain
forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements
contained in this Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,”
“estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. These
statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety
of factors, many of which are not within our control. These factors include but are not limited to economic conditions generally and in
the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors;
technological advances and failure to successfully develop business relationships.

Description of Business

Overview

INmune
Bio is a clinical-stage biotechnology company dedicated to developing and commercializing a pipeline of product candidates designed to
reprogram the innate immune system. Our mission is to address a broad range of diseases where chronic inflammation and immune dysfunction
are primary drivers of pathology.

Lead
Program: CORDStrom™ for RDEB Our primary focus is the treatment of Recessive Dystrophic Epidermolysis Bullosa (“RDEB”)
using CORDStrom, our proprietary, pooled, human umbilical cord-derived mesenchymal stromal cell platform. RDEB is a devastating pediatric
orphan disease caused by mutations in the COL7A1 gene. This genetic deficiency leads to systemic complications, including
highly debilitating skin blistering, chronic non-healing wounds, dysphagia, and failure to thrive. Over time, the chronic inflammatory
environment associated with RDEB often progresses to fatal squamous cell carcinoma. RDEB is a systemic disease with no approved systemic
treatments. The only approved products to date are topical and do not address the systemic issues of the disease, which is the focus of
CORDStrom.

CORDStrom
has recently completed a pivotal, blinded, randomized cross-over trial. Based on these data, the Company is transitioning toward
regulatory submission and commercialization. We intend to file a Marketing Authorization Application (“MAA”) in the
United Kingdom by the end of Q3 or early Q4 of 2026 and the European Union in early 2027, followed by a Biologics License
Application (“BLA”) with the U.S. Food and Drug Administration (“FDA”).

Neuroinflammation
and Oncology Pipelines In addition to our lead rare disease program, the Company has two other clinical-stage platforms:

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By
targeting the innate immune system across these distinct therapeutic areas, INmune Bio aims to deliver disease-modifying treatments for
patients with high unmet medical needs.

We continue to incur significant
development and other expenses related to our ongoing operations. As a result, we are not and have never been profitable and have incurred
losses in each period since our inception, resulting in substantial doubt in our ability to continue as a going concern. We reported a
net loss of $6.7 million for the six months ended June 30, 2026. As of June 30, 2026 and December 31, 2025, we had cash and cash equivalents
of $18.4 million and $24.8 million, respectively. We expect to continue to incur significant losses for the foreseeable future, and we
expect these losses to increase as we continue our research and development of, and seek regulatory approvals for, our product candidates.
The size of our future net losses will depend, in part, on the rate of future growth of our expenses and our ability to generate revenues,
if any.

Our recurring net losses and
negative cash flows from operations raised substantial doubt regarding our ability to continue as a going concern within one year after
the issuance of our unaudited condensed consolidated financial statements for the six months ended June 30, 2026. Until we can generate
sufficient revenue from the commercialization of our product candidates, we expect to finance our operations through the public or private
sale of equity, debt financings or other capital sources, such as government funding, collaborations, strategic alliances, divestment
of non-core assets, or licensing arrangements with third parties. To date, the Company has relied on equity and debt financing to fund
its operations.

Amendment to Anthony Nolan License Agreement

On April 29, 2026, the Company
entered into an amended and restated material transfer and license agreement with Anthony Nolan, a UK-based organization, which amends
and restates a prior agreement originally entered into in 2017 by the Company’s wholly owned subsidiary. In connection with the
amended agreement, the Company became a direct party and agreed to be jointly and severally liable for certain payment obligations thereunder.
The amended agreement expands the Company’s collaboration with Anthony Nolan and is intended to secure a long-term supply of umbilical
cord tissue to support the development of CORDStrom, which the Company expects will be the initial application of such materials, with
potential use in additional product candidates in the future.

Under the amended agreement,
the Company has obtained exclusive rights, with the ability to sublicense, to use specified donor materials for research, development
and commercialization purposes. The Company is obligated to pay per-sample processing fees and, upon commercialization, royalties on net
sales, each subject to certain adjustments and caps, and such fees may be subject to periodic increases tied to inflation indices. The
agreement continues until terminated in accordance with its terms or for a period extending beyond the first commercial sale of applicable
products.

The Company does not expect
the amended agreement to have a material impact on its near-term results of operations or liquidity; however, it may result in future
payment obligations and become material in the event of successful development and commercialization of product candidates utilizing such
materials. The Company believes this agreement is consistent with its strategy to advance its product candidates through collaborations,
strategic relationships and licensing arrangements.

Research and Development

Research and development expense
consists of expenses incurred while performing research and development activities to discover and develop our product candidates. This
includes conducting preclinical studies and clinical trials, manufacturing development efforts and activities related to regulatory filings
for product candidates. We recognize research and development expenses as they are incurred. Our research and development expense primarily
consist of:

The following table summarizes
our research and development expenses by product candidate for the periods indicated (in thousands):

We typically use our employee
resources across our development programs. We track outsourced development costs by product candidate or development program, but we do
not allocate internal costs personnel costs including salaries and stock-based compensation to specific product candidates or development
programs.

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We
participate, through our wholly owned subsidiary in Australia, in the Australian research and development tax incentive program, such
that a percentage of our qualifying research and development expenditures are reimbursed by the Australian government, and such incentives
are reflected as a reduction of research and development expense. The Australian research and development tax incentive is recognized
when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the
consideration can be reliably measured.

We
participate, through our wholly owned subsidiary in the United Kingdom, in the research and development program provided by the United
Kingdom tax relief program, such that a percentage of our qualifying research and development expenditures are reimbursed by the United
Kingdom government, and such incentives are reflected as a reduction of research and development expense. The United Kingdom research
and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure
has been incurred and the amount of the consideration can be reliably measured.

Substantially all our research
and development expenses to date have been incurred in connection with our current and future product candidates. We expect our research
and development expenses to increase significantly for the foreseeable future as we advance an increased number of our product candidates
through clinical development, including the conduct of our planned clinical trials and manufacturing drug to be used in those clinical
trials. The process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. The successful
development of product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing or costs required
to complete the remaining development of any product candidates. This is due to the numerous risks and uncertainties associated with the
development of product candidates.

The costs of clinical trials
may vary significantly

[Excerpt truncated for page length; source filing is linked above.]

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following
discussion and analysis of our financial condition and results of operations in conjunction with our financial statements and notes thereto
appearing elsewhere in this Annual Report. In addition to historical financial information, the following discussion and analysis contains
forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results could differ materially from those anticipated
by these forward-looking statements as a result of many factors. We discuss factors that we believe could cause or contribute to these
differences below and elsewhere in this Form 10-K, including those set forth under “Risk Factors” and “Forward-Looking
Statements.”

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Overview

INmune
Bio is a clinical-stage biotechnology company dedicated to developing and commercializing a pipeline of product candidates designed to
reprogram the innate immune system. Our mission is to address a broad range of diseases where chronic inflammation and immune dysfunction
are primary drivers of pathology.

Lead
Program: CORDStrom™ for RDEB Our primary focus is the treatment of Recessive Dystrophic Epidermolysis Bullosa (“RDEB”)
using CORDStrom, our proprietary, pooled, human umbilical cord-derived mesenchymal stromal cell platform. RDEB is a devastating pediatric
orphan disease caused by mutations in the COL7A1 gene. This genetic deficiency leads to systemic complications, including highly
debilitating skin blistering, chronic non-healing wounds, dysphagia, and failure to thrive. Over time, the chronic inflammatory environment
associated with RDEB often progresses to fatal squamous cell carcinoma. RDEB is a systemic disease with no approved systemic treatments.
The only approved products to date are topical and do not address the systemic issues of the disease, which is the focus of CORDStrom.

CORDStrom
has recently completed a pivotal, blinded, randomized cross-over trial. Based on these data, the Company is transitioning toward regulatory
submission and commercialization. We intend to file a Marketing Authorization Application (“MAA”) in the United Kingdom and
the European Union, followed by a Biologics License Application (“BLA”) with the U.S. Food and Drug Administration (“FDA”)
targeted for 2026.

Neuroinflammation
and Oncology Pipelines In addition to our lead rare disease program, the Company is advancing two other clinical-stage platforms:

By
targeting the innate immune system across these distinct therapeutic areas, INmune Bio aims to deliver disease-modifying treatments for
patients with high unmet medical needs.

We continue to incur significant
development and other expenses related to our ongoing operations. As a result, we are not and have never been profitable and have incurred
losses in each period since our inception, resulting in substantial doubt in our ability to continue as a going concern. We reported a
net loss of $45.9 million and $42.1 million for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025 and
2024, we had cash and cash equivalents of $24.8 million and $20.9 million, respectively. We expect to continue to incur significant losses
for the foreseeable future, and we expect these losses to increase as we continue our research and development of, and seek regulatory
approvals for, our product candidates. The size of our future net losses will depend, in part, on the rate of future growth of our expenses
and our ability to generate revenues, if any.

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Our recurring net losses and
negative cash flows from operations raise substantial doubt regarding our ability to continue as a going concern within one year after
the issuance of our consolidated financial statements for the year ended December 31, 2025. Until we can generate sufficient revenue from
the commercialization of our product candidates, we expect to finance our operations through the public or private sale of equity, debt
financings or other capital sources, such as government funding, collaborations, strategic alliances, divestment of non-core assets, or
licensing arrangements with third parties. To date, the Company has relied on equity and debt financing to fund its operations.

Components of Operating Results

Operating Expenses

Research and Development

Research and development expense
consists of expenses incurred while performing research and development activities to discover and develop our product candidates. This
includes conducting preclinical studies and clinical trials, manufacturing development efforts and activities related to regulatory filings
for product candidates. We recognize research and development expenses as they are incurred. Our research and development expense primarily
consist of:

The following table summarizes
our research and development expenses by product candidate for the periods indicated (in thousands):

We
typically use our employee resources across our development programs. We track outsourced development costs by product candidate or development
program, but we do not allocate internal personnel costs including salaries and stock-based compensation to specific product candidates
or development programs.

59

We
participate, through our wholly owned subsidiary in Australia, in the Australian research and development tax incentive program, such
that a percentage of our qualifying research and development expenditures are reimbursed by the Australian government, and such incentives
are reflected as a reduction of research and development expense. The Australian research and development tax incentive is recognized
when there is reasonable assurance that the incentive will be received, the relevant expenditure has been incurred and the amount of the
consideration can be reliably measured.

We
participate, through our wholly owned subsidiary in the United Kingdom, in the research and development program provided by the United
Kingdom tax relief program, such that a percentage of our qualifying research and development expenditures are reimbursed by the United
Kingdom government, and such incentives are reflected as a reduction of research and development expense. The United Kingdom research
and development tax incentive is recognized when there is reasonable assurance that the incentive will be received, the relevant expenditure
has been incurred and the amount of the consideration can be reliably measured.

Substantially all of our research
and development expenses to date have been incurred in connection with our current and future product candidates. We expect our research
and development expenses to increase significantly for the foreseeable future as we advance an increased number of our product candidates
through clinical development, including the conduct of our planned clinical trials and manufacturing drug to be used in those clinical
trials. The process of conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. The successful
development of product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing or costs required
to complete the remaining development of any product candidates. This is due to the numerous risks and uncertainties associated with the
development of product candidates.

The costs of clinical trials
may vary significantly over the life of a project owing to, but not limited to, the following:

We intend to file an MAA for
CORDStrom in the United Kingdom and the European Union, followed by a BLA with the FDA targeted for 2026. There can be no assurance that
any such applications will be submitted on our anticipated timeline, accepted for review, approved within any particular timeframe, or
approved at all.

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The regulatory review process
in each jurisdiction is lengthy, complex, and inherently unpredictable. Regulatory authorities may require additional information, analyses,
or clinical data, which could result in delays or prevent approval. Even if approval is obtained in one or more jurisdictions, we may
experience delays in commercial launch, pricing and reimbursement approvals, manufacturing scale-up, distribution, or market acceptance.

Accordingly, we may not generate
any product revenue for the foreseeable future, if ever. We expect to continue to incur significant operating expenses and substantial
losses as we pursue regulatory approvals, prepare for potential commercialization, and continue development of our product candidates.
Our operating results are likely to fluctuate significantly from quarter to quarter and year to year due to the timing and outcome of
regulatory submissions, regulatory review processes in multiple jurisdictions, potential approval decisions, and commercial preparation
activities.

We anticipate that our expenses will increase
substantially as we:

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]