IGM Biosciences(IGMS) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The company's financial statements for the period ended June 30, 2025, reflect a significant strategic shift, with a one-time recognition of $143.6 million in collaboration revenue from the terminated Sanofi agreement resulting in net income of $97.6 million for the quarter, contrasting with a net loss in the prior year period Condensed Balance Sheets Condensed Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash, cash equivalents, and marketable securities | $104,306 | $183,787 | | Total current assets | $106,990 | $193,620 | | Total assets | $106,990 | $265,712 | | Total current liabilities | $6,060 | $37,638 | | Total liabilities | $6,060 | $217,540 | | Total stockholders' equity | $100,930 | $48,172 | - Total assets decreased significantly from $265.7 million at year-end 2024 to $107.0 million as of June 30, 2025, primarily due to the disposal of property, plant & equipment and the derecognition of operating lease right-of-use assets[14] - Total liabilities saw a dramatic reduction from $217.5 million to $6.1 million, mainly driven by the derecognition of non-current lease liabilities and deferred revenue following the termination of the Sanofi agreement and all facility leases[14] Condensed Statements of Operations Statement of Operations Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Collaboration revenue | $143,623 | $1,254 | $144,122 | $1,751 | | Research and development | $5,863 | $41,962 | $28,200 | $85,777 | | General and administrative | $9,581 | $10,649 | $20,630 | $21,187 | | Impairment and disposal of long-lived assets | $31,917 | $— | $53,806 | $— | | Net income (loss) | $97,584 | $(47,902) | $44,692 | $(97,718) | | Diluted EPS | $1.58 | $(0.79) | $0.72 | $(1.62) | - The company reported a net income of $97.6 million in Q2 2025, a stark reversal from a $47.9 million net loss in Q2 2024, primarily driven by the one-time recognition of $143.6 million in collaboration revenue from the terminated Sanofi agreement[16][111] - Operating expenses reflect the company's restructuring, with R&D expenses decreasing by 86% YoY in Q2 2025, though the company recorded a significant $31.9 million charge for impairment and disposal of long-lived assets during the quarter[16][53] Condensed Statements of Cash Flows Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(83,308) | $(79,791) | | Net cash provided by investing activities | $87,278 | $33,175 | | Net cash provided by financing activities | $17 | $767 | | Net increase (decrease) in cash | $3,987 | $(45,849) | | Cash, cash equivalents, and restricted cash at end of period | $30,649 | $67,263 | - Net cash used in operating activities was $83.3 million for the first six months of 2025, slightly higher than the $79.8 million used in the same period of 2024, despite a significant net income, due to non-cash revenue recognition and changes in working capital like lease liability payments[27][184] - Investing activities provided $87.3 million in cash, primarily from $101.1 million in proceeds from maturities and sales of marketable securities, which significantly outpaced purchases[27][186] Notes to Unaudited Condensed Financial Statements - On July 1, 2025, the company entered into a merger agreement with Concentra Biosciences, LLC for the acquisition of all outstanding shares, with the deal expected to close in August 2025, subject to conditions[33][141] - The collaboration agreement with Sanofi was terminated effective June 5, 2025, leading to the recognition of the entire remaining deferred revenue balance of $143.6 million in the second quarter of 2025[70][111] - The company implemented significant restructuring plans in January and April 2025, reducing its workforce by approximately 73% and then by an additional 80%, resulting in restructuring charges of $4.0 million for the first six months of 2025[119] - Due to restructuring, the company recorded impairment and disposal charges for long-lived assets totaling $53.8 million in the first six months of 2025, related to terminating all building leases and disposing of equipment[53][121][132] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's dramatic strategic shift, including halting all product development, significant workforce reductions, and the termination of the Sanofi collaboration, with the key event being the pending merger with Concentra Biosciences expected to close in August 2025 Overview - The company has ceased all product development, halting programs for imvotamab and IGM-2644, and is not currently developing any product candidates[145][147] - Major restructuring occurred in January and April 2025, reducing the workforce by approximately 73% and then by a further 80%, and all lab and office facilities were closed[145] - On July 1, 2025, the company entered into a definitive merger agreement with Concentra Biosciences, LLC, which is expected to close in August 2025[146] - The collaboration agreement with Sanofi was terminated in its entirety, effective June 5, 2025, resulting in the recognition of all remaining deferred revenue[145] Results of Operations Comparison of Operating Results (in thousands) | Item | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Collaboration Revenue | $143,623 | $1,254 | $142,369 | | R&D Expenses | $5,863 | $41,962 | $(36,099) | | G&A Expenses | $9,581 | $10,649 | $(1,068) | | Impairment/Disposal of Assets | $31,917 | $— | $31,917 | | Net Income (Loss) | $97,584 | $(47,902) | $145,486 | - The $142.4 million increase in collaboration revenue for Q2 2025 is due to the full non-cash recognition of remaining deferred revenue upon the termination of the Sanofi Agreement[163] - R&D expenses decreased by $36.1 million in Q2 2025 compared to Q2 2024, driven by lower personnel costs, the wind-down of all clinical programs, and reduced preclinical activities following restructuring[164][170] Liquidity and Capital Resources - As of June 30, 2025, the company had cash, cash equivalents, and marketable securities of $104.3 million and an accumulated deficit of $972.3 million[178] - Management believes that existing cash resources are sufficient to fund planned operations for at least one year past the issuance date of the financial statements, which includes the period through the expected merger closing[179] - The company has terminated all office, laboratory, and manufacturing facility leases and paid $32.7 million in termination fees, eliminating future minimum lease commitments[190] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company," IGM Biosciences, Inc. is not required to provide quantitative and qualitative disclosures about market risk - The company is exempt from providing market risk disclosures as it qualifies as a "smaller reporting company" under SEC rules[198] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[199] - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls[200] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is facing a lawsuit filed on July 21, 2025, in relation to the pending merger with Concentra, alleging that the Solicitation/Recommendation Statement (Schedule 14D-9) is materially incomplete and misleading, which the company believes is without merit - A complaint was filed on July 21, 2025, alleging that the company's Schedule 14D-9 filing for the merger is materially incomplete and misleading, in violation of the Securities Exchange Act of 1934[205] - The lawsuit names the company and its board members as defendants and seeks corrective disclosures and an injunction of the merger, among other relief, which the defendants deny[205] Item 1A. Risk Factors The company's risk factors are heavily focused on the potential failure to complete the merger with Concentra, the Contingent Value Rights (CVRs) expiring worthless, and potential stockholder litigation, alongside risks related to its current status of not currently developing any product candidates, financial position, intellectual property, and Nasdaq listing compliance - The primary risk is the potential failure to complete the merger with Concentra, which is subject to various conditions, including a minimum cash balance of $82.0 million at closing[208][211][213] - Stockholders may not receive any payment from the Contingent Value Rights (CVRs) if certain asset dispositions do not occur within one year of the merger closing, causing the CVRs to expire valueless[208][215] - The company received a notice from Nasdaq on June 6, 2025, for failing to meet the minimum Market Value of Listed Securities (MVLS) requirement of $50 million, and it has until December 3, 2025, to regain compliance or face delisting[428][429][430] - The company is not currently developing any product candidates; if the merger fails and it decides to resume R&D, it would face significant risks related to clinical development, regulatory approval, and competition[209][230][231] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period - The company reported no unregistered sales of equity securities during the period[464] Item 5. Other Information During the quarter ended June 30, 2025, no directors or officers adopted or terminated any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements - No directors or officers adopted or terminated any Rule 10b5-1 trading plans during the quarter[467] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including the Agreement and Plan of Merger, corporate governance documents, amendments to leases, the form of the Contingent Value Rights Agreement, and officer certifications