Inhibikase Therapeutics, Inc. - Quarter Report: 2022 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

For the quarterly period ended June 30, 2022

OR

For the transition period from to

Commission File Number: 001-39676

INHIBIKASE THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in its Charter)

Registrant’s telephone number, including area code: (678) 392-3419

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 1, 2022, the registrant had 25,227,051 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

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PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited).

Inhibikase Therapeutics, Inc.

Condensed Consolidated Balance Sheets

See accompanying notes to condensed consolidated financial statements.

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Inhibikase Therapeutics, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

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Inhibikase Therapeutics, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

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Inhibikase Therapeutics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

See accompanying notes to condensed consolidated financial statements.

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Inhibikase Therapeutics, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

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11. Income Taxes

13. Subsequent Events

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

Forward-Looking Statements

You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes to those statements included elsewhere in this Quarterly Report on Form 10-Q (“Report”). This discussion and analysis and other parts of this Report contain forward-looking statements based upon current beliefs, plans and expectations related to future events and our future financial performance that involve risks, uncertainties and assumptions, such as statements regarding our intentions, plans, objectives, expectations, forecasts and projections. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors.

All statements included or incorporated by reference in this Report, other than statements or characterizations of historical fact, are forward-looking statements. These forward-looking statements are based on our current expectations, estimates, approximations and projections about our industry and business, management’s beliefs, and certain assumptions made by us, all of which are subject to change. Forward-looking statements can often be identified by words such as “anticipates,” “expects,” “intends,” “plans,” “predicts,” “believes,” “seeks,” “estimates,” “may,” “will,” “should,” “would,” “could,” “potential,” “continue,” “ongoing,” and similar expressions and variations or negatives of these words. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, our actual results could differ materially and adversely from those expressed in any forward-looking statements as a result of various factors. These forward-looking statements speak only as of the date of this Report. We undertake no obligation to revise or update publicly any forward-looking statement for any reason, except as otherwise required by law.

Overview

Inhibikase Therapeutics, Inc. (the “Company,” “we” or “our”) is a clinical-stage pharmaceutical company developing therapeutics for Parkinson’s Disease, or PD, and related disorders that arise inside and outside of the brain. In 2021, we commenced clinical development of IkT-148009, a small molecule Abelson Tyrosine Kinase inhibitor we believe can modify the course of Parkinson’s disease including its manifestation in the gastrointestinal tract, or GI. Results to date of our completed Phase 1 Single and Multiple Ascending Dose escalation study (SAD and MAD, respectively) in older and elderly healthy volunteers have revealed important insights into the safety, tolerability and pharmacokinetics of IkT-148009 in human subjects. Results from the 88 older and elderly healthy Phase 1 subjects have shown that IkT-148009 has a half-life of greater than 24 hours and just a 25 mg once-daily oral dose reached exposures that are consistent with the exposures to the drug that resulted in therapeutic efficacy in animal models of progressive Parkinson’s disease. In July 2021, the U.S. Food and Drug Administration (FDA"), agreed with the Company’s plan to initiate its Phase 1b study in Parkinson’s patients which commenced dosing October 19, 2021 and was closed June 2022 after two dosing cohorts. FDA review of the Phase 1/1b data and the protocol for the follow-on Phase 2a three-month dosing study resulted in the FDA agreeing with the Company’s view that it was appropriate for the Phase 2a study to begin, prompting the Company to close the Phase 1b study after two dosing cohorts. The Phase 2a ‘201 study’ began May 23, 2022 with the opening of the first site; we have opened 11 of 40 planned sites as of August 12, 2022. 120 treatment naïve patients are planned to be enrolled in this study which will dose patients with one of three planned doses of IkT-148009 or placebo once daily for three months. In addition to primary endpoints of safety/tolerability/pharmacokinetics, a hierarchy of 15 secondary endpoints measuring drug impact on motor and non-motor features of Parkinson’s disease in the brain or GI tract will be evaluated with descriptive statistics. Patients meeting the enrollment criteria are presently being scheduled for screening visits across open sites, with clinical readouts expected sometime in the second half of 2023.

Our efforts in Parkinson’s disease are being extended into other Parkinson’s-related indications, such as the orphan disease Multiple Systems Atrophy ("MSA"). Consistent with our efforts in Parkinson’s disease, our clinical pursuit of MSA depends on the outcome of animal studies modeling human MSA. In November 2020, the Company, along with its collaborators at Arizona State University, published evidence that the post-mortem MSA patient brain displayed evidence that the c-Abl kinase may play an important role in MSA, a role that mirrors the role of c-Abl in Parkinson’s. This observation prompted the initiation of two animal model studies to explore the ability of IkT-148009 to therapeutically treat MSA in animals. These model studies are ongoing and will be used to "gate" entry into clinical trials both in the U.S. and in the EU27 countries. The Company continues to prepare regulatory filings in the US and EU27 to enable the planned Phase 2 MSA trial if IkT-148009 is validated to be active in MSA in model studies. Our advancement of the pre-clinical and clinical development program for MSA received a grant from the National Institute of Neurological Diseases and Stroke, or NINDS, an Institute of the National Institutes of Health, for $385,888 to fund animal model

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studies of IkT-148009 as a therapy for MSA. The Phase 2a study proposed in MSA is planned as a safety and tolerability study in up to 19 sites in the EU27, and up to six sites in the U.S. involving 60 patients. Primary endpoints in safety and tolerability with secondary and exploratory endpoints in MSA efficacy parameters will be measured and assessed with descriptive statistics following six-month daily dosing at one of two doses. Execution of this trial will require the Company to raise additional working capital.

On June 29, 2022, Inhibikase filed its Investigational New Drug Application ("IND") with the FDA in preparation to initiate clinical development of IkT-001Pro, the Company's prodrug of imatinib mesylate to treat Stable-phase Chronic Myelogenous Leukemia (SP-CML). Due to a clerical error in the submission, the review of the IND was delayed by more than 20 days, but the Division of Hematological Malignancies confirmed that FDA review of the IND should be completed no later than August 26, 2022. IkT-001Pro will be evaluated in a two-part dose finding/dose equivalence study in up to 62 healthy volunteers. The study is designed to evaluate the steady-state pharmacokinetics of IkT-011Pro and determine the dose of IkT-001Pro equivalent to 400 mg imatinib mesylate, the standard of care dose for SP-CML. Assuming FDA permits the IND to proceed, Inhibikase expects to initiate this two-part bioequivalence study in the third or fourth quarter of 2022. Following this study, Inhibikase will confer with the FDA to begin the New Drug Application, ("NDA") process following the proposed approval path for IkT-001Pro under the 505(b)(2) statute. The Company will simultaneously pursue a superiority study comparing the selected dose of IkT-001Pro to standard-of-car 400 mg imainib mesylate in SP-CML patients using a novel two-period wait list crossover switching study.

In the ensuing 12 months, the Company anticipates reporting the full outcomes of its completed Phase 1/1b study of IkT-148009 in older and elderly healthy subjects and in Parkinson’s patients at the Movement Disorder Society Congress in September, 2022, reporting the outcomes of the completed chronic toxicology studies in rats and monkeys for IkT-148009 to enable chronic drug administration in Parkinson’s patients in September 2022, the initiation of the effect of food on the pharmacology of IkT-148009 and the initiation of an open-label safety extension study of IkT-148009 that would be initiated in patients who completed three-month dosing in the ‘201 study’ and possibly the initiation of a Phase 2a trial in MSA. These additional clinical studies to support clinical development of IkT-148009 will require additional capital for their completion.

Our programs utilize small molecule, oral protein kinase inhibitors to treat PD and its GI complications. We have shown in animal models of progressive PD that our lead clinical candidate, IkT-148009, is a brain penetrant Abelson tyrosine kinase, or c-Abl inhibitor, that halts disease progression and reverses functional loss in the brain and reverses neurological dysfunction in the GI tract in animal models of human disease. We have not yet observed reversal of functional loss in humans with IkT-148009. The ability to halt progression and restore function was shown in animal models of progressive disease that mimic the rate of disease progression and the extent of functional loss in the brain and/or the GI tract as found in patients with PD. We believe our therapeutic approach would be disease-modifying. Our understanding of how and why PD progresses has led us to believe that functional loss in Parkinson’s patients may be at least partially reversed although this has not been shown clinically. Based on the measurements in animal models, it is possible that patients treated with IkT-148009 may have their disease progression slowed or halted, we may see a progressive reduction in the need for symptomatic or supportive therapy and/or we may ultimately eliminate the need for symptomatic therapy. However, as of the date of this Quarterly Report on Form 10-Q ("Report"), it is unknown whether any of the outcomes seen in the animal models will occur in patients following treatment with IkT-148009.

Impact of the ongoing military conflict between Russia and Ukraine

In late February 2022, Russia invaded Ukraine, significantly amplifying already existing geopolitical tensions among Russia and other countries in the region and in the west, including the U.S. Russia’s invasion, the responses of countries and political bodies to Russia’s actions, the larger overarching tensions, and Ukraine’s military response and the potential for wider conflict have resulted in financial market volatility and capital markets disruption and inflation, potentially increasing in magnitude, and could have severe adverse effects on regional and global economic markets and international relations. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial.

Following Russia’s actions, various countries, including the U.S., Canada and the United Kingdom, as well as the European Union, issued broad-ranging economic sanctions against Russia. Such sanctions included, among other things, a prohibition on doing business with certain Russian companies, officials and oligarchs; a commitment by certain countries and the European Union to remove selected Russian banks from the Society for Worldwide Interbank Financial Telecommunications (SWIFT) electronic banking network that connects banks globally; a ban on Russian oil and gas imports to the U.S.; and restrictive measures to prevent the Russian Central Bank from undermining the impact of the sanctions. The current sanctions (and potential further sanctions in response to continued Russian military activity) and other actions may have adverse effects on regional and global economic markets and lead to

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instability and lack of liquidity in capital markets, potentially making it more difficult for us to obtain additional funds and increasing the volatility of our stock price. Any of the abovementioned factors could affect our business, prospects, financial condition, and operating results.

Components of Operating Results

Operating Expenses

Research and Development

Research and development activities account for a significant portion of our operating expenses. We record research and development expenses as incurred. Research and development expenses incurred by us for the discovery and development of our product candidates and prodrug technologies include:

A portion of our research and development expenses are direct external expenses, which we track on a program-specific basis from inception of the program.

Program expenses include expenses associated with our most advanced product candidates and the discovery and development of compounds that are potential future candidates. We also track external expenses associated with our third-party research and development efforts. All external costs are tracked by therapeutic indication. We do not track personnel or other operating expenses incurred for our research and development programs on a program-specific basis. These expenses primarily relate to salaries and benefits and stock-based compensation and office consumables.

At this time, we can only estimate the nature, timing and costs of the efforts that will be necessary to complete the development of, and obtain regulatory approval for, any of our product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from sales or licensing of our product candidates. This is due to the numerous risks and uncertainties associated with drug development, including the uncertainty of:

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A change in any of these variables with respect to the development of any of our product candidates would significantly change the costs, timing and viability associated with the development of that product candidate. We expect our research and development expenses to increase for the next several years as we continue to implement our business strategy, advance our current programs, expand our research and development efforts, seek regulatory approvals for any product candidates that successfully complete clinical trials, access and develop additional product candidates and incur expenses associated with hiring additional personnel to support our research and development efforts. In addition, product candidates in later stages of clinical development generally incur higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

Selling, General and Administrative

Selling, general and administrative expenses include personnel related expenses, such as salaries, benefits, travel and non-cash stock-based compensation expense, expenses for outside professional services and allocated expenses. Outside professional services consist of legal, accounting and audit services, investor relations services and other consulting fees. Allocated expenses consist of rent expenses related to our offices in Cambridge, Massachusetts and Atlanta, Georgia not otherwise included in research and development expenses.

We are incurring additional expenses as compared to when we were a private company, including expenses related to compliance with the rules and regulations of the SEC and those of Nasdaq, additional insurance expenses, investor relations activities and other administrative and professional services. We also are increasing our administrative headcount as a public company and as we advance our product candidates through clinical development, which will also likely require us to increase our selling, general and administrative expenses.

Results of Operations

Comparison of the Three Months Ended June 30, 2022 and 2021

The following table sets forth the significant components of our results of operations:

Grant Revenue

Grant revenue for the three months ended June 30, 2022, decreased by $1,356,485 or (99.5)% to $6,552 from $1,363,037 in the prior year comparable period. During 2022, the Company’s focus was shifted toward advancing its PD clinical trials which did not

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result in significant grant revenue. The Company is utilizing its increased working capital and personnel resources in 2022 to carry on its PD clinical trials in addition to its grant research activity.

Research and Development

Research and development expenses increased by $599,750 or 25.2% to $2,982,183 from $2,382,433 in the prior year comparable period. The increase was driven by a $2.08 million increase in non-grant related research offset by a decrease of $1.4 million in grant related research expenditures and a decrease of $0.08 million in non-cash stock compensation expense. The non-grant related research was expended primarily in connection with the Company’s PD clinical trial.

Selling, General and Administrative

Selling, general and administrative expenses increased by $55,336 or 3.4% to $1,664,308 from $1,608,972 in the prior year comparable period. The increase was primarily from increased headcount resulting in increased compensation expense of $0.1 million, increased legal fees, board fees, investor relation and consulting fees of $0.3 million and a net increase of $0.05 million for other normal operating expenses offset by decreased non-cash stock-based compensation expense of $0.35 million.

Interest Expense

Interest expense decreased by $7,811 or (100)% to $0 from $7,811 in the prior year comparable period. The decrease was driven by the full settlement of the CEO Note on January 3, 2022.

Comparison of the Six Months Ended June 30, 2022 and 2021

The following table sets forth the significant components of our results of operations:

Grant Revenue

Grant revenue for the six months ended June 30, 2022 decreased by $2,717,619 or (98.1)% to $52,583 from $2,770,202 in the prior year comparable period. During 2022, the Company’s focus was shifted toward advancing its PD clinical trials which did not result in significant grant revenue. The Company is utilizing its increased working capital and personnel resources in 2022 to carry on its PD clinical trials in addition to its grant research activity.

Research and Development

Research and development expenses increased by $1,184,881 or 24.6% to $5,999,174 from $4,814,293 in the prior year comparable period. The increase was driven by a $4.3 million increase in non-grant related research offset by a decrease of $2.7 million in grant related research expenditures and a decrease of $0.4 million in non-cash stock compensation expense. The non-grant related research was expended primarily in connection with the Company’s PD clinical trial.

Selling, General and Administrative

Selling, general and administrative expenses increased by $124,396 or 3.9% to $3,333,944 from $3,209,548 in the prior year comparable period. The increase was primarily from increased headcount resulting in increased compensation expense of $0.3 million,

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increased legal fees, board fees, investor relation and consulting fees of $0.6 million and a net decrease of $0.1 million for other normal operating expenses offset by decreased non-cash stock-based compensation expense of $0.7 million.

Interest Expense

Interest expense decreased by $19,603 or (100)% to $5 from $19,608 in the prior year comparable period. The decrease was driven by the full settlement of the CEO Note on January 3, 2022.

Liquidity and Capital Resources

Sources of Liquidity

From our inception up until our December 2020 Initial Public Offering, we funded our operations primarily through private, state and federal contracts and grants. From our inception through June 30, 2022, we generated aggregate cash proceeds of approximately $23.5 million from private, state and federal contracts and grants. In June 2021 and December 2020, the Company raised approximately $41.1 million and $14.6 million in working capital from its underwritten public offering (the "June 2021 Offering") and its initial public offering in December 2020 (the "IPO"), respectively.

We are able to sell securities on a shelf registration statement pursuant to the ATM Agreement with Piper Sandler & Co. Under current Securities and Exchange Commission regulations, because our public float was less than $75 million at the relevant measurement period pursuant to General Instruction I.B.6. to Form S-3, the amount we can raise through primary public offerings of securities in any subsequent 12-month period under our shelf registration statement is limited to an aggregate of one-third of our public float until such time, if any, as our public float is $75 million or more.

Our ability to issue securities is subject to market conditions.

No securities have been sold under the ATM during the six months ended June 30, 2022.

At June 30, 2022, the Company had working capital of $29,459,058, an accumulated deficit of $39,098,227, cash of $32,212,276, and accounts payable and accrued expenses of $4,490,305 The Company had active grants in the amount of $385,888, of which $314,228 remained available in accounts held by the U.S. Treasury as of August 1, 2022.

Future Funding Requirements

To date, we have not generated any revenue from the sale of commercial products. We do not expect to generate any significant revenue from product sales unless and until we obtain regulatory approval of and successfully commercialize any of our product candidates and we do not know when, or if, this will occur. We expect to continue to incur significant losses for the foreseeable future, and we expect the losses to increase as we continue the development of, and seek regulatory approvals for, our product candidates, and begin to commercialize any future approved products. We are subject to all of the risks typically related to the development of new product candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. Moreover, following the completion of the IPO, we incurred additional costs associated with operating as a public company. We anticipate that we will need substantial additional funding in connection with our continuing operations through December 31, 2023.

Until we can generate a sufficient amount of revenue from the commercialization of our product candidates, if ever, we expect to finance our incremental cash needs through a combination of equity offerings, debt financings, working capital lines of credit, grant funding and potential licenses and collaboration agreements. Additional working capital may not be available on commercially reasonable terms, if at all. If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may have to significantly delay, reduce or discontinue the development or commercialization of one or more of our product candidates. If we raise additional funds through the issuance of additional debt or equity securities, it could result in dilution to our existing stockholders, increased fixed payment obligations and the existence of securities with rights that may be senior to those of our common stock. If we incur indebtedness, we could become subject to covenants that would restrict our operations and potentially impair our competitiveness, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. Additionally, any future collaborations we enter into with third parties may provide capital in the near term but limit our potential cash

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flow and revenue in the future. Any of the foregoing could have a material adverse effect on our business, financial condition and results of operations.

Since our inception, we have incurred significant losses and negative cash flows from operations. We have an accumulated deficit of $39,098,227 at June 30, 2022. We expect to incur substantial additional losses in the future as we conduct and expand our research and development activities.

We may seek to fund our operations through public equity or private equity or debt financings, as well as other sources. However, we may be unable to raise additional working capital, or if we are able to raise additional working capital, we may be unable to do so on commercially favorable terms. Our failure to raise capital or enter into such other arrangements if and when needed would have a negative impact on our business, results of operations and financial condition and our ability to continue to develop our product candidates.

The Company had working capital of $29,459,058 at June 30, 2022 and active grants in the amount of $385,888, of which $314,228 remained available in accounts held by the U.S. Treasury as of August 1, 2022. The Company estimates that its working capital at August 11, 2022 is sufficient to fund its normal operations through December 31, 2023.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.

The expected use of the net proceeds from our June 2021 Offering and IPO represents our intentions based upon our current plans and business conditions. However, we have based these estimates on assumptions that may prove to be wrong, and we could deplete our working capital sooner than planned.

The timing and amount of our operating expenditures will depend largely on:

A change in the outcome of any of these or other variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. Furthermore, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.

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Cash Flows

The following table sets forth a summary of the primary sources and uses of cash for each of the periods presented below:

Net Cash Flows Used in Operating Activities

Net cash flows used in operating activities for the six months ended June 30, 2022, totaled $8,289,999, and consisted primarily of a net loss of $9,280,540 adjusted for non-cash stock compensation of $255,996, non-cash consulting fees of $67,000, a decrease of $812,053 in prepaid research and development, an increase in prepaid expenses and other assets of $691,243, an increase in accrued expenses and other current liabilities of $890,416, a decrease in accounts payable of $229,334, and an increase in grants receivable of $103,589.

Net cash flows used in operating activities for the six months ended June 30, 2021, totaled $8,180,736, and consisted primarily of a net loss of $5,273,247 adjusted for non-cash stock compensation of  $913,607, non-cash warrant expense of $477,183, non-cash consulting fees of $60,391, non-cash PPP loan forgiveness of $27,550, a decrease in grants receivable of $586,581, a decrease in prepaid expenses of $779,126, a decrease of $184,423 in prepaid research and development, a decrease in accounts payable of $837,705, an increase in accrued expenses of $239,837, and a decrease in deferred revenue of $2,183,122.

Cash Used in Investing Activities

Net cash flows used in investing activities for the six months ended June 30, 2022, totaled $43,089, which was from the purchase of furniture and technology equipment.

Cash Provided by Financing Activities

Net cash flows used in financing activities for the six months ended June 30, 2022, totaled $204,769, which primarily was from the full settlement of the CEO Note on January 3, 2022 offset by proceeds from a stock option exercise.

Net cash flows provided by financing activities for the six months ended June 30, 2021, totaled $41,063,779, which primarily consisted of cash flows from capital raises of $41,149,608.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements.

Contractual Obligations and Commitments

In June 2018, the Company entered into a one-year, non-cancelable operating lease for space in Boston, Massachusetts. The total lease obligation was $54,000, payable in 12 equal monthly installments commencing August 1, 2018. On April 18, 2022, the Company entered into an operating lease agreement for its office space in Lexington, Massachusetts to replace the office space in Boston, Massachusetts through July 31, 2025. The Company plans to vacate the Boston office during the third quarter of 2022 without further contractual obligation. The Lexington space is expected to be ready for use and occupancy during the third quarter 2022. The Lexington lease contains escalating payments during the lease period. Upon execution of this lease agreement, the Company prepaid one month of rent, applied to the first month's rent, and a security deposit, which will be held in escrow and credited at the termination of the lease. Our total lease obligation is $447,090, consisting of minimum annual rental obligations of $60,322 for fiscal year 2022, $146,546 for fiscal year 2023, $150,804 for fiscal year 2024 and $89,418 for fiscal year 2025.

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Critical Accounting Policies and Significant Judgments and Estimates

This discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States, or US GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. While our significant accounting policies are described in more detail in the notes to our financial statements included elsewhere in this Report, we believe that the following accounting policies are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Research and Development Expenses

We record research and development expenses to operations as incurred. Research and development expenses represent costs incurred by us for the discovery and development of our product candidates and the development of our RAMP™ drug discovery program and prodrug technologies and include: employee-related expenses, such as salaries, benefits, travel and non-cash stock-based compensation expense; external research and development expenses incurred under arrangements with third parties, such as CROs, preclinical testing organizations, clinical testing organizations, CMOs, academic and non-profit institutions and consultants; costs to acquire technologies to be used in research and development that have not reached technological feasibility and have no alternative future use; license fees; and other expenses, which include direct and allocated expenses for laboratory, facilities and other costs.

As part of the process of preparing financial statements, we are required to estimate and accrue expenses. A portion of our research and development expenses is external costs, which we track on a program-specific basis. We record the estimated expenses of research and development activities conducted by third-party service providers as they are incurred and provided within research and development expense in the statements of operations. These services include the conduct of clinical studies, preclinical studies and consulting services. These costs are a significant component of our research and development expenses.

Costs for research and development activities are recognized based on costs incurred. We make significant judgments and estimates in determining the accrued balance in each reporting period. As actual costs become known, we adjust our accrued estimates. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed may vary from our estimates and could result in us reporting amounts that are too high or too low in any particular period. Our accrued expenses are dependent, in part, upon the receipt of timely and accurate reporting from external clinical research organizations and other third-party service providers. Due to the nature of estimates, we cannot assure you that we will not make changes to our estimates in the future as we become aware of additional information about the status or conduct of our clinical trials and other research activities.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a smaller reporting company, we are not required to provide disclosure regarding quantitative and qualitative market risk.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(b) and 15d-15(b) under the Exchange Act as of the end of the period covered by this report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2022.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) under the Exchange Act) during the three months ended June 30, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K of the Company filed with the SEC on March 31, 2022. These risk factors could materially harm our business, operating results and financial condition. Additional factors and uncertainties not currently known to us or that we currently consider immaterial also may materially adversely affect our business, financial condition or future results.

If we fail to comply with the continuing listing standards of Nasdaq, our securities could be delisted, which could limit investors’ ability to make transactions in our common stock and subject us to additional trading restrictions

Our common stock is listed on Nasdaq under the symbol “IKT”. For our common stock to continue to be listed on Nasdaq, we must meet the current continued listing requirements, which provide, among other things, that a company may be delisted if the bid price of its stock drops below $1.00 for a period of 30 consecutive business days. As of July 22, 2022, the closing price of our common stock was $0.91 per share, and the minimum bid price fell below $1.00 for a period of thirty (30) consecutive trading days as of July 22, 2022.

The Company has a compliance period of 180 days, in which to regain compliance. The 180-day period expires on January 23, 2023. If at any time during this 180-day period the closing bid price of the Company’s common stock is at least $1.00 for a minimum of ten consecutive business days, the Company will regain compliance with the rule for minimum bid price. In the event the Company does not regain compliance, the Company may be eligible for additional time under certain Nasdaq rules. If we were unable to meet these requirements, our common stock could be delisted from Nasdaq.

If our common stock were to be delisted from Nasdaq, our common stock could begin to trade on one of the markets operated by OTC Markets Group, including OTCQX, OTCQB or OTC Pink, as the case may be. In such event, our common stock could be subject to the “penny stock” rules which among other things require brokers or dealers to approve investors’ accounts, receive written agreements and determine investor suitability for transactions and disclose risks relating to investing in the penny stock market. Any such delisting of our common stock could have an adverse effect on the market price of, and the efficiency of the trading market for our common stock, not only in terms of the number of shares that can be bought and sold at a given price, but also through delays in the timing of transactions and less coverage of us by securities analysts, if any. Also, if in the future we were to determine that we need to seek additional equity capital, it could have an adverse effect on our ability to raise capital in the public or private equity markets.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.