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InMed Pharmaceuticals: Can Cannabis-Derived Therapies Justify the Biotech Gamble?

Edwin FosterMonday, May 12, 2025 6:19 pm ET

20min read

INM --

InMed Pharmaceuticals (NASDAQ: INM) stands at a pivotal crossroads. With a market cap of just $390,200 as of May 9, 2025—a 14% drop from March—the company’s survival hinges on its ability to translate experimental cannabis-derived therapies into commercial success. Investors must ask: Does the promise of its clinical pipeline outweigh its current losses, or is InMed a high-risk bet with little margin for error?

The Financial Snapshot: Losses Loom, but Cash Reserves Thin

InMed’s Q3 2025 (ended March 31, 2025) financials paint a stark picture. The company reported a net loss of $2.12 million, with a Non-GAAP EPS of -$1.94, reflecting ongoing R&D investments. While its wholly owned subsidiary BayMedica delivered $1.26 million in revenue—up 8% year-over-year—the core issue remains: cash burn.

As of March 31, InMed’s cash reserves totaled $4.68 million, down sharply from $6.57 million in June 2024. Management claims this is sufficient to fund operations through Q1 2025, but the clock is ticking. The company’s liquidity is further strained by a five-year market cap decline of 49%, underscoring investor skepticism about its path to profitability.

The Pipeline’s Potential: High-Risk, High-Reward Bets

InMed’s valuation rests entirely on its clinical pipeline. Two programs dominate its focus:

INM-901 (Alzheimer’s Disease):
Demonstrated statistically significant behavioral improvements in preclinical studies.
Achieved oral bioavailability, critical for patient compliance.
Key milestone: Expected IND-enabling studies in 2025, with FDA feedback anticipated by 2026.
INM-089 (Dry AMD):
In vivo dose-ranging studies completed; GLP toxicology trials underway.
A first-in-class therapy addressing a $4.6 billion market.

These programs are undeniably ambitious. If successful, INM-901 and INM-089 could generate billions in revenue. However, the biotech graveyard is littered with failed therapies: the risk of clinical setbacks or regulatory rejection is ever-present.

Catalysts to Watch: The Tipping Points

Investors should monitor three critical catalysts in 2025-2026:

FDA IND Approval for INM-901 (Q1 2026):
A “go/no-go” moment. A positive decision would unlock human trials and attract partnerships.
BayMedica Revenue Growth:
BayMedica’s $1.26 million Q3 revenue represents a stable cash flow base. Expanding its cannabinoid-based API business could extend InMed’s runway.
Strategic Partnerships or Financing:
With a $4.68 million cash balance, InMed may need to raise capital or secure a licensing deal by mid-2026.

The Risks: A Fragile Balance

Cash Burn vs. Milestones: If trials slip or BayMedica’s growth stalls, InMed could face a liquidity crisis.
Regulatory Hurdles: Cannabis-derived therapies face heightened scrutiny. A failed IND application for INM-901 would be devastating.
Dilution: The recent reverse stock split (0.05:1) reduced shares from 1.21 million to 60,500, but further dilution via equity raises is possible.

Is the Bet Worth Taking?

The case for InMed hinges on asymmetric risk-reward:
- The Downside: A $2.28 stock price (May 12 close) offers little margin for error. A failed trial or delayed IND approval could erase the remaining market cap.
- The Upside: If INM-901 secures IND approval and BayMedica’s revenue doubles to $2.5 million annually, InMed’s valuation could skyrocket. Even a modest $20 million valuation would imply a 500%+ return.

Conclusion: A High-Stakes Gamble for the Aggressive Investor

InMed is not for the faint-hearted. Its razor-thin cash reserves, reliance on unproven therapies, and volatile stock price ($3.09 high to $2.28 low in May 2025) demand a high-risk tolerance. Yet, for investors willing to bet on its pipeline’s potential, the reward could be extraordinary.

The critical question remains: Can InMed deliver FDA milestones and secure partnerships fast enough to outpace its cash burn? The next 12–18 months will decide whether this biotech’s gamble pays off—or becomes another cautionary tale.

Final Take: InMed’s stock offers a high-risk, high-reward opportunity for investors with a long-term horizon and appetite for clinical trial volatility. Monitor FDA updates closely; a positive INM-901 IND decision could be the catalyst to unlock this stock’s full potential.

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