InMed Pharmaceuticals (INM) Q1 2027 earnings review
InMed nears Mentari merger vote, but cash lasts until mid-November
InMed has paused most of its own drug research as it waits for shareholders to approve a rescue merger. The pre-revenue drug developer cut laboratory spending by nearly two-thirds from a year ago, but corporate overhead rose 46% to $1.8 million and pushed the total net loss up to $2.3 million. Cash dropped by half over the quarter to $1.1 million, which chief executive Eric A. Adams's team says will last only into mid-November.
| Cash and cash equivalents | $1.09M -50% from last quarter; funds operations into mid-November |
|---|---|
| Net loss | $2.33M +35% from a year ago ($0.42 loss per share) |
| Research and development spend | $0.21M -64% from a year ago as merger nears |
| Merger closing outlook | Unchanged Q4 calendar 2026, bringing ~$490M financing |
⚖️ Verdict: 🔴 Bearish
The standalone balance sheet got worse because cash is nearly gone and shareholders' equity fell to negative $1.2 million, triggering a Nasdaq compliance warning. On the positive side, Nasdaq granted a deadline extension to March 2027, and InMed reached alignment with the FDA on next steps for its INM-901 Alzheimer's drug, which could help sell the asset for contingent value right holders.
The question now is whether InMed can close the Mentari Therapeutics merger and its $490 million financing before standalone cash runs out in mid-November. If the deal closes on time, the combined company is funded into 2029; if regulatory or closing steps slip into December, InMed faces an immediate cash shortfall. The November 4 shareholder vote and final closing notice will settle it.
🐂 Bull Case
Mentari Merger Brings $490 Million and 2029 Runway
"Our focus remains on completing the transaction, which we believe provides shareholders with an opportunity to participate in the development of Mentari's migraine prevention pipeline," chief executive Eric A. Adams said. InMed is a pre-revenue drug developer merging with Mentari Therapeutics, a private biotechnology firm.
Mentari arranged private placements totaling about $490 million in gross proceeds tied to the deal, and InMed scheduled its shareholder vote for November 4, 2026. The combined business will take the Mentari name and expects the funding to support operations into 2029, covering Phase 2a clinical trial readouts for two migraine programs targeting PACAP, a protein linked to headache pain.
What to watch: effectiveness of the Form S-4 registration statement and final closing in the fourth quarter of calendar 2026. Completing the deal replaces InMed's depleted balance sheet with multi-year clinical funding.
FDA Meeting Clears Path for Alzheimer's Drug Sale
InMed has three legacy small-molecule drug candidates: INM-901 for Alzheimer's disease, INM-089 for dry age-related macular degeneration (an eye disease), and INM-755 for skin conditions. During the quarter, the drugmaker completed a pre-IND meeting with the US Food and Drug Administration, a preliminary review before human testing, and "reached alignment on the next steps in the development of INM-901 in the treatment of Alzheimer's disease".
The company is not funding those next steps itself because it is handing operations to Mentari. Instead, the merger includes contingent value rights (CVRs), which "allow eligible InMed shareholders to participate in potential proceeds from the future monetization of these assets" through a sale or license.
What to watch: any licensing or divestiture agreement for INM-901, INM-089, or INM-755 after the merger closes. A signed deal is the only way the CVRs pay cash to existing shareholders.
🐻 Bear Case
Standalone Cash Runs Out in Mid-November
InMed is weeks away from exhausting its cash reserves as a standalone company. The Vancouver-based group burned $1.10 million of cash during the first quarter, cutting its cash and cash equivalents in half over three months. Meanwhile, unpaid bills piled up on the balance sheet.
- Cash and cash equivalents: $1.09 million on September 30, down 50.1% from $2.19 million on June 30
- Accounts payable and accrued liabilities: $2.49 million, up 35.3% from $1.84 million on June 30
- Working capital deficit: $1.24 million, as current liabilities of $2.51 million exceed current assets of $1.26 million
InMed said it expects available cash to "fund planned operating expenses and capital expenditures into mid-November". Because the shareholder vote takes place on November 4 and the Form S-4 registration statement is not yet effective, any closing delay beyond mid-November leaves the company without operating funds.
What to watch: the exact closing date of the Mentari transaction in November or December 2026. A delay past mid-November forces InMed to seek emergency bridge financing or halt payments to creditors.
Overhead Jumps 46% While Drug Research Stalls
InMed said it continues to closely monitor expenses while working toward the merger and pursuing deals for its legacy drugs. The income statement shows the opposite: total operating expenses rose 4.4% from a year ago to $2.01 million, because higher corporate overhead more than offset deep cuts to laboratory work.
Research and development spending fell 64.2% from a year ago to $0.21 million, which the drug developer said was "primarily due to a reduction in operating activity resulting from the pending Merger". General and administrative expenses—legal, transaction, and corporate overhead—went up 45.6% to $1.80 million, consuming 89.8% of total operating spend compared with 64.4% a year ago by our math.
What to watch: general and administrative cash outflows at closing. High transaction bills reduce net cash left over and keep pressure on the mid-November liquidity limit.
Shareholders' Equity Turns Negative Under Nasdaq Notice
On September 16, 2026, Nasdaq notified InMed that its June 30 shareholders' equity of $1.08 million fell below the $2.5 million minimum required to stay listed. Nasdaq accepted the firm's compliance plan on October 30 and granted an extension until March 15, 2027.
During the first quarter, the $2.33 million net loss pushed shareholders' equity down to negative $1.20 million, leaving a $3.70 million gap to the requirement by our math. InMed expects the Mentari merger and $490 million financing to "enable it to regain compliance with the minimum shareholders' equity requirement", so retaining the Nasdaq listing depends on closing the deal.
What to watch: Nasdaq approval of the combined company's new listing application under the ticker MTRI. Without the merger, InMed has no standalone path to rebuild $3.70 million of equity by March.
👓 Other Themes
Wound-Down Commercial Unit Still Records Losses
InMed exited its only revenue-generating business, cannabinoid supplier BayMedica, at the end of June 2026 ahead of US federal rules restricting non-intoxicating cannabinoids. Even after completing the operational wind-down, discontinued operations recorded a net loss of $335,766 and used $69,593 of operating cash this quarter, compared with a $103,449 profit a year ago. Remaining assets and liabilities of discontinued operations stood at $11,355 each on September 30.
💲 Other KPIs
Cash used in operating activities dropped 40.8% from $1.93 million a year ago, even though the total net loss widened by 35.0% to $2.33 million. The firm conserved cash mainly by delaying payments: accounts payable and accrued liabilities increased by $0.65 million during the quarter, compared with a $0.39 million paydown in the prior-year period.
Average shares outstanding rose 38.3% from 3.95 million a year ago following prior equity financings and warrant exercises. During the quarter, investors exercised warrants for $40,000, lifting ending shares by 2.9% from June 30 to 5.49 million. Because the share count grew faster than the net loss, loss per share narrowed from $0.44 to $0.42.
🔮 Guidance
Unchanged in calendar quarter, narrowed to weeks. The drug developer expects its $1.09 million cash balance to fund planned spending into mid-November 2026. That aligns with earlier statements pointing to the fourth calendar quarter of 2026, but leaves less than two weeks of liquidity after the November 3 release date.
Unchanged. Management still plans to close the merger with Mentari Therapeutics in the fourth quarter of calendar 2026. Shareholders vote at the annual and special meeting on November 4, 2026, though the company noted its Form S-4 registration statement with the SEC had not yet been declared effective.
Unchanged. Mentari's private placements of about $490 million in gross proceeds are still expected to fund the combined company into 2029. The plan covers operations through Phase 2a clinical readouts for both of Mentari's lead migraine prevention drug programs.
New. Nasdaq accepted InMed's compliance plan on October 30, 2026, giving the company until March 15, 2027, to restore shareholders' equity above the $2.5 million minimum under Listing Rule 5550(b)(1). Management expects the Mentari merger and pre-closing financing to satisfy the requirement.
❓ Key Questions
When will the SEC declare the Form S-4 effective?
The press release notes the Form S-4 registration statement is not yet effective, even with the shareholder meeting set for November 4. Any gap between the vote and SEC effectiveness delays closing past mid-November, when standalone cash runs out.
How will InMed fund operations if closing slips past mid-November?
Cash stood at $1.09 million on September 30 against $2.49 million in payables, and management says cash lasts only into mid-November. Investors need to know if Mentari will provide a bridge loan if closing conditions take until December.
Is there active buyer interest in the INM-901 Alzheimer's asset?
InMed completed its FDA pre-IND meeting for INM-901 and cut quarterly research spending to $0.21 million. Because legacy shareholders only benefit if the drugs are sold or licensed under the CVR, management should clarify whether partner talks are underway.
What drove the $335,766 loss in discontinued operations?
InMed reported in its annual filing that BayMedica was fully wound down as of June 30, 2026, with the lease ending in August. Shareholders need clarity on whether any further wind-down charges remain.