Immunome(IMNM) - 2020 Q4 - Annual Report

PART I Business Immunome, Inc. is a preclinical-stage biopharmaceutical company focused on discovering and developing first-in-class antibody therapeutics for oncology and infectious diseases, leveraging its proprietary human memory B cell platform - Immunome is a biopharmaceutical company utilizing a proprietary human memory B cell platform to discover and develop first-in-class antibody therapeutics for oncology and infectious diseases[20] - The lead oncology program, IMM-ONC-01, targets IL-38, a novel immune checkpoint inhibitor, and is expected to file an IND application in the second half of 2021[22][25][28][32] - The lead infectious disease program, IMM-BCP-01, is developing an antibody cocktail against SARS-CoV-2 from 'super-responders' and aims for an IND filing in late Q2 or early Q3 2021[24][29][34] - The company's discovery engine is characterized by an unbiased, broad, deep, and efficient approach to identifying novel antibody-target pairs[25][26][36] Overview Immunome leverages human memory B cells from patients who have successfully fought off diseases to discover novel therapeutic antibodies and their targets[20] - The company has processed over 150 cancer patient samples, generated 300,000+ hybridomas, and identified ~1,300 'hit' antibodies, leading to over 50 potentially novel cancer targets[22] - The IMM-BCP-01 program, in collaboration with the DoD, focuses on identifying a cocktail of anti-viral antibodies from COVID-19 'super-responders' to combat SARS-CoV-2 and its variants[24] Key Attributes of Our Discovery Engine - The discovery engine captures and expands patient-derived memory B cells, converts them into stable human hybridomas, and interrogates produced antibodies against disease-related antigens using high-throughput screening[26] - It simultaneously identifies relevant, potentially novel target antigens and high-affinity antibodies, aiming to advance one to two antibodies into IND-enabling development studies per year[26] Our Lead Discovery Programs - IMM-ONC-01 targets IL-38, a novel tumor-derived immune checkpoint, with preclinical data showing restoration of immune response and anti-tumor activity in animal models, with an IND filing planned for H2 2021[25][28] - IMM-BCP-01 is developing an antibody cocktail from COVID-19 'super-responders' to target multiple viral antigens, including against emerging SARS-CoV-2 variants, with an IND filing planned for late Q2 or early Q3 2021[29] Management - The management team possesses broad expertise in therapeutic discovery and development, including world-class immunologists and biologists[30] Sources of Capital - Since 2015, Immunome has raised over $95.8 million through private financings and its IPO (October 6, 2020)[31] - In 2020, the company was awarded a contract for up to $13.3 million in expense reimbursement from the DoD for its IMM-BCP-01 program[31] Our Strategy - Immunome's strategy includes advancing IMM-ONC-01 and IMM-BCP-01 into clinical development, investing in its discovery engine to expand the pipeline, forming strategic partnerships, and expanding its intellectual property estate[32][34][36] - The company aims to advance one to two programs into IND-enabling studies per year[36] Our Strengths - The company's discovery engine is unbiased, broad, deep, and efficient, enabling the discovery of novel antibody-antigen pairs[36] The Challenges Faced by Existing Antibody Therapies for Cancer - Existing cancer therapeutics, including biologics, have limited success in advanced malignancies (e.g., <10% five-year survival rate for certain organs), partly due to a limited understanding of tumor diversity and complexity[35][38] Our Solution: Immunome's Discovery Engine - The discovery process involves patient sampling (lymph node, tumor, or blood), fusing and immortalizing memory B cells into hybridomas, and high-throughput antibody screening against disease-related antigens[40][41][42] - Antibody validation identifies specific antigens using protein microarrays or immunoprecipitation/mass spectrometry, followed by functional assays to assess therapeutic potential[44] - The engine has screened over 300,000 hybridomas, identified 1,300 'hit' antibodies, and over 50 cancer targets, with a focus on unmodified antibodies for simpler development[45][46] - A key output is 'functional clustering' of targets, providing insights into cancer biology and guiding future pipeline development[47][48] Our Multiple Product Development Opportunities in Cancer - Immunome's platform supports various therapeutic modalities: unmodified immunoglobulins for direct anti-tumor effects or immune activation, Antibody-Drug Conjugates (ADCs) for targets with dense cell surface expression and rapid internalization, and Engineered Patient Derived Immunoglobulins to enhance T cell effector activities[50][52] Our Lead Oncology Discovery Program (IMM-ONC-01) - IMM-ONC-01 targets IL-38, an IL-1 family cytokine, which appears to promote immune evasion in tumors, with TCGA data showing an inverse relationship between high IL-38 expression and immune effector cell presence in multiple tumors[53][54][55] - Preclinical testing with anti-IL-38 antibody CD1-M3 demonstrated high specificity for IL-38, blocked its activity in vitro, and restored innate and adaptive anti-tumor immune responses in mouse models, leading to anti-tumor efficacy comparable to existing immune-oncology agents[58][60][61][62][64][65][66] - An IND filing for IMM-ONC-01 is expected in the second half of 2021[28][32][66] Our Lead Infectious Disease Discovery Program (IMM-BCP-01) - IMM-BCP-01 aims to develop an antibody cocktail from COVID-19 'super-responders' targeting multiple SARS-CoV-2 viral antigens (spike, nucleocapsid, membrane, ORF proteins) to achieve broad anti-viral activity and address emerging variants[68][69][70][72][75][76] - Research identified over 400 antibodies, with more than half directed at non-spike proteins, and antibodies targeting conserved spike epitopes showed neutralization against B.1.351 (South African) and B.1.1.7 (UK) variants[70][75] - An IND application for IMM-BCP-01 is expected in late Q2 or early Q3 2021 for testing in COVID-19 patients[29][75] Strategic Collaborations and License Agreements - Immunome collaborates with the U.S. Department of Defense (DoD) for the IMM-BCP-01 program, receiving up to $13.3 million in expense reimbursement for SARS-CoV-2 antibody cocktail development[78][81] - The company holds exclusive license agreements with Arrayjet Limited (for screening technology), Whitehead Institute for Biomedical Research and MIT (for antibody screening platform), and Thomas Jefferson University (for patent rights, know-how, and materials related to its platform)[83][87][94] - A collaboration with pH Pharma for Antibody-Drug Conjugates (ADCs) in oncology expired in January 2021 without developed ADCs[99] Manufacturing - Immunome relies on third-party manufacturers, such as Abzena, for preclinical and future clinical trial product materials, as it does not possess internal cGMP manufacturing capabilities[100] Competition - Immunome faces competition in oncology from companies like AbCellera, Adaptive Biotechnologies, and large pharmaceutical companies (e.g., AstraZeneca, Merck)[101][102][103] - In infectious diseases (COVID-19), competitors include Regeneron, GlaxoSmithKline, Vir Biotechnology, Eli Lilly, and vaccine developers like Moderna and Pfizer[104] Intellectual Property - Immunome protects its technology through patents (compositions of matter, methods of use, diagnostics) and trade secrets, with national phase patent applications in 11 countries and pending PCT/US provisional applications[105][106][107][117] - Patent applications for lead antibodies (IMM-ONC-01, IMM-BCP-01) and identified antigens are expected to expire between 2039 and 2042 if issued[107] - The company also relies on regulatory protections like orphan drug designations and patent term extensions[105][110] Government Regulation - Biologics development is extensively regulated by the FDA under the FDCA and PHSA, involving preclinical studies (GLP), IND submission, and multi-phase clinical trials (GCP)[119][120][122][123][124][125][127] - BLA submission and review require demonstrating safety, purity, and potency, compliance with cGMP, and may involve advisory committee review and facility inspections[130][131][133] - Expedited programs (Fast Track, Breakthrough Therapy, Priority Review, Accelerated Approval) are available for qualifying product candidates, but do not change approval standards[136][139][140][142] - Post-approval, products are subject to continuous regulation, including adverse event reporting, periodic reporting, and cGMP compliance, with potential for withdrawal of approval or REMS imposition[148][149][152] - The BPCIA provides an abbreviated approval pathway for biosimilars, granting 12 years of exclusivity to reference biological products, but its ultimate impact is uncertain[153][155][159] - The company's operations are subject to various U.S. healthcare laws (Anti-Kickback Statute, False Claims Act, HIPAA, Sunshine Act) and foreign anti-corruption laws (FCPA), with non-compliance leading to significant penalties[160][161][162][163][165][167][169][172][194] - Coverage and adequate reimbursement from third-party payors (government, private insurers) are crucial for product commercialization, but are uncertain and subject to cost-containment pressures and varying policies[174][175][179][180][181][182] - Healthcare reform measures, including the ACA and subsequent legislative changes, aim to control costs and impact drug pricing, potentially affecting future product revenues[184][185][187][188][189][190][192][193] Employees and Human Capital Resources - As of December 31, 2020, Immunome had 23 full-time employees, with 19 in R&D and 4 in G&A, and offers competitive compensation, annual bonuses, and equity incentive plans[197][199] Facilities - The company leases 11,000 square feet of office and laboratory space in Exton, Pennsylvania, with the lease expiring on August 31, 2022[200] Risk Factors Immunome faces significant risks as a preclinical-stage biopharmaceutical company, including a history of losses and the need for substantial additional funding - Immunome is a preclinical-stage company with an accumulated deficit of $54.4 million as of December 31, 2020, and expects to incur significant losses for the foreseeable future[202] - The company's lead programs, IMM-BCP-01 and IMM-ONC-01, are in preclinical development and have never been tested in humans, carrying high risks of failure in clinical development and regulatory approval[215][217] - The COVID-19 pandemic has impacted operations, including decreased laboratory productivity and potential delays in clinical trials, and could negatively affect the IMM-BCP-01 program's development and market potential[227][230][231][233][235][237][243] - The company's success depends on obtaining and maintaining intellectual property protection, which is uncertain due to the complex and evolving nature of patent law in biotechnology[340][349][350] Risks Related to Our Business - Immunome has a history of financial losses, with a net loss of $17.8 million in 2020, and expects continued significant losses, requiring substantial additional funds beyond its current cash of $39.9 million (as of Dec 31, 2020) to fund operations through Q2 2022[202][208][209] - The company's preclinical-stage product candidates (IMM-BCP-01, IMM-ONC-01) have not been tested in humans, and there's no guarantee of successful clinical development, regulatory approval, or commercialization[215][217] - The novel and unproven nature of Immunome's discovery engine means it may not successfully build a pipeline of marketable product candidates[224][225] - The COVID-19 pandemic has caused decreased laboratory productivity, potential delays in IND filings and clinical trials, and increased competition for COVID-19 treatments, potentially impacting the IMM-BCP-01 program[227][230][231][233][237][242][243] - Reliance on third-party CROs and manufacturers for preclinical and clinical studies, and manufacturing, poses risks of delays, quality issues, and supply interruptions[305][308][309][310][311][313] - The company's success is highly dependent on attracting and retaining key management and technical personnel, and difficulties in managing growth could impair operations[315][319][320][321] Risks Related to Our Intellectual Property - Immunome's success depends on obtaining and maintaining patent protection for its technology and product candidates, but there's no guarantee that pending applications will issue or provide adequate protection[340][341][342][344][346][347] - In-licensed patent rights from academic institutions may be subject to government 'march-in rights' or non-exclusive licenses, potentially harming competitive position[354] - Failure to comply with license obligations could lead to loss of intellectual property rights or increased financial burdens[355][356][358][359][361] - Patent terms may not adequately protect competitive position due to the lengthy development process and potential limitations on extensions[362][363][364][365] - Changes in U.S. or foreign patent law (e.g., Leahy-Smith Act) or their interpretation could diminish patent value and increase prosecution/enforcement costs[366][367] - Third parties may challenge Immunome's patent rights or assert their own, potentially leading to costly litigation, licensing requirements, or inability to commercialize products[368][371][372][377][378][379][380][383][384][385] - Inability to protect trade secrets or claims of wrongful use of former employers' proprietary information could harm business and competitive position[388][389] Risks Related to Government Regulation - Healthcare legislative reforms (e.g., ACA, Tax Act, BBA) aim to contain costs and impact drug pricing, potentially reducing demand or increasing pricing pressures for Immunome's future products[396][397][398][400][401][403][404] - Non-compliance with healthcare fraud and abuse laws (Anti-Kickback Statute, False Claims Act, HIPAA) can lead to severe penalties, including fines, imprisonment, and exclusion from government programs[405][406][407][408][409][410] - Future biologic products may face earlier competition from biosimilars due to the BPCIA, potentially shortening exclusivity periods and impacting commercial prospects[411][412][413] - Disruptions at regulatory agencies (FDA, SEC) due to funding shortages or global health concerns (e.g., COVID-19) could delay product development, approval, and commercialization[415][416][417][418] - Post-approval, products remain subject to continuous regulatory requirements, and non-compliance can lead to fines, withdrawal of approval, or market restrictions[419][420][421] - Unfavorable pricing regulations or inadequate third-party coverage and reimbursement policies could significantly harm the commercial viability of approved products[422][423][424][425][427] - Non-compliance with U.S. and foreign anti-corruption and anti-money laundering laws (e.g., FCPA) can result in criminal or civil liability and reputational damage[428][429][431][432] Risks Related to Our Common Stock - The trading price of Immunome's common stock has been volatile since its IPO and may continue to fluctuate due to various factors, including preclinical/clinical trial results, regulatory developments, competition, and market conditions[433][434][436] - Principal stockholders and management beneficially owned approximately 34.7% of common stock as of December 31, 2020, allowing them to exert significant control over corporate actions[438][439][440] - Future sales of common stock by existing stockholders after lock-up periods, or issuances of new equity, could cause stock price dilution and decline[441][442][443][444] - As an 'emerging growth company,' Immunome benefits from reduced reporting requirements, which may make its stock less attractive to some investors and increase volatility[445][446][447][448] - Operating as a public company incurs increased costs and management time for compliance, and identified material weaknesses in internal control over financial reporting could adversely affect investor confidence and stock value[449][453][457][458][460] - Anti-takeover provisions in charter documents and Delaware law could make acquisitions more difficult and prevent changes in management[462][463] Unresolved Staff Comments The company has no unresolved staff comments from the SEC - There are no unresolved staff comments[468] Properties Immunome leases 11,000 square feet of office and laboratory space in Exton, Pennsylvania, under a lease expiring on August 31, 2022, which is considered sufficient for immediate needs - Immunome leases 11,000 square feet of office and laboratory space in Exton, Pennsylvania[469] - The current lease expires on August 31, 2022, and the space is deemed sufficient for immediate facility needs[469] Legal Proceedings Immunome is not currently involved in any material legal proceedings, though it may encounter litigation in the ordinary course of business, which could adversely impact the company - Immunome is not currently a party to any material legal proceedings[470] - Litigation, regardless of outcome, can have an adverse impact due to defense costs, diversion of management resources, and reputational harm[470] Mine Safety Disclosures This item is not applicable to Immunome, Inc. - Not applicable[471] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Immunome's common stock began trading on the Nasdaq Global Market under 'IMNM' on October 2, 2020, with approximately 10,659,626 outstanding shares as of March 22, 2021, and no dividends paid - Immunome's common stock has been publicly traded on the Nasdaq Global Market under the symbol 'IMNM' since October 2, 2020[472] - As of March 22, 2021, there were 10,659,626 shares of common stock outstanding[7][473] - The company has not declared or paid any dividends since its inception and does not expect to in the foreseeable future[474][461] - In 2020, the company issued 1,226,925 shares of Series A convertible preferred stock to 51 investors for $11 million, 127,291 shares of common stock upon option exercise for $20,849, granted 1,168,618 stock options, and issued 1,035,196 warrants to purchase Series A preferred stock[477][478][479][480] - The IPO, completed in October 2020, involved the sale of 3,737,500 shares of common stock at $12.00 per share, generating net proceeds of approximately $38.7 million after deducting underwriting discounts and offering costs[482][484][485] Selected Financial Data This item is not required for Immunome, Inc. as an emerging growth company - Selected Financial Data is not required[488] Management's Discussion and Analysis of Financial Condition and Results of Operations Immunome, Inc. is a development-stage company with all programs in preclinical stages, having incurred significant operating losses since inception, with IPO proceeds funding operations through Q2 2022, requiring future capital - Immunome is a development-stage company with all programs in preclinical stages, having incurred significant operating losses since inception[493] Net Loss (in millions) | Year Ended December 31, | Net Loss | | :---------------------- | :------- | | 2020 | $(17.8) | | 2019 | $(10.4) | - The company closed its IPO in October 2020, receiving net proceeds of $41.7 million[492] - As of December 31, 2020, Immunome had a cash balance of $39.8 million, expected to fund operations through the second fiscal quarter of 2022[494][500] - Future funding will be required to support increasing R&D expenses, preclinical and clinical development, intellectual property protection, and public company operating costs[494][495][497][499][529][530][531] - The COVID-19 pandemic has caused significant disruptions, including work-from-home policies and potential delays in development timelines, with uncertain future economic impact[501][504][505][506][507][515] Overview - Since inception in 2006, Immunome has focused resources on R&D, capital raising, team building, and IP portfolio development, financing operations primarily through equity sales and convertible notes[491] - The company received $0.5 million from the Paycheck Protection Program (PPP) in April 2020[491] - Immunome expects to incur significant expenses and increasing operating losses as it advances preclinical and clinical development, expands R&D, protects IP, and hires personnel[494][495][497] COVID-19 Pandemic - Immunome implemented work-from-home policies and stringent safety measures for laboratory staff to mitigate COVID-19 risks, which has resulted in decreased productivity[505] - The pandemic's impact on development timelines, preclinical R&D, global financial markets, and liquidity remains uncertain[505][506][507] Components of our results of operations - Research and development expenses include personnel, discovery/preclinical costs, manufacturing process development, lab supplies, and facilities expenses, expensed as incurred[508] - Expense reimbursements from the DoD Agreement are recorded as contra-research and development expenses[510] - General and administrative expenses cover executive, IP, business development, and administrative personnel costs, legal fees, professional fees, and public company operating costs[511][512] - Change in fair value of warrant liability reflects non-cash charges from remeasuring preferred stock warrants, which were reclassified to equity upon IPO[513] - Interest expense, net, includes interest on capital leases and equipment loans, offset by interest income on cash[514] Results of operations Comparison of Operating Results (in thousands) | Operating Expenses (in thousands) | 2020 | 2019 | Change | | :-------------------------------- | :--- | :--- | :----- | | Research and development | $7,486 | $8,823 | $(1,337) | | General and administrative | $4,775 | $1,525 | $3,250 | | Total operating expenses | $12,261 | $10,348 | $1,913 | | Loss from operations | $(12,261) | $(10,348) | $(1,913) | | Other expenses: | | | | | Change in fair value of warrant liability | $(5,538) | $— | $(5,538) | | Interest expense, net | $(38) | $(96) | $58 | | Total other expenses | $(5,576) | $(96) | $(5,480) | | Net loss | $(17,837) | $(10,444) | $(7,393) | - Research and development expenses decreased by $1.3 million in 2020, primarily due to $1.7 million in DoD expense reimbursements, offset by increases in personnel and facility costs[517] - General and administrative expenses increased by $3.3 million in 2020, driven by higher personnel costs (including share-based compensation) and professional fees related to public company operations[519] - A non-cash charge of $5.5 million was recognized in 2020 for the change in fair value of convertible preferred stock warrant liability, which increased due to the rise in Series A preferred stock fair value[520] Liquidity and capital resources - Immunome had $39.8 million in cash as of December 31, 2020, following $95.3 million in gross proceeds from equity sales and convertible notes since inception, and $0.5 million from the PPP loan[522] - Existing cash is expected to fund operations through Q2 2022, but substantial additional financing will be required thereafter for R&D, clinical trials, and growth[522][530] Cash Flows (in thousands) | Cash Flow Activity (in thousands) | 2020 | 2019 | | :-------------------------------- | :--- | :--- | | Cash used in operating activities | $(12,134) | $(9,600) | | Cash used in investing activities | $(586) | $(233) | | Cash provided by financing activities | $49,943 | $10,774 | | Net increase in cash and restricted cash | $37,223 | $941 | - Net cash used in operating activities was $12.1 million in 2020, primarily due to net loss, offset by noncash charges and increases in payables[524] - Net cash provided by financing activities was $49.9 million in 2020, mainly from IPO proceeds ($38.9 million net), Series A preferred stock issuance ($11.0 million net), and the PPP loan ($0.5 million)[527] Critical accounting policies and significant judgements - Critical accounting policies include share-based compensation and warrant liability, requiring significant management estimates and judgments[536][537] - Share-based compensation fair value is estimated using the Black-Scholes model, with key assumptions including common stock fair value (IPO price post-October 2020, prior valuations based on net asset/PWERM), expected volatility, term, and risk-free rate[538][539][540][541][542][543] - Warrants to purchase Series A preferred stock were classified as a liability and remeasured at fair value until the IPO, when they converted to common stock warrants and were reclassified to additional paid-in capital[545] Quantitative and Qualitative Disclosures About Market Risk This item is not required for Immunome, Inc. - Not required[547] Financial Statements and Supplementary Data The required financial statements and supplementary data are presented on pages 105 through 128 of this Annual Report - The information required by this Item is set forth on pages 105 through 128[548] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There have been no changes in or disagreements with accountants on accounting and financial disclosure - None[549] Controls and Procedures Immunome's management concluded that its disclosure controls and procedures were not effective as of December 31, 2020, due to identified material weaknesses, with remediation efforts underway but not yet fully effective - As of December 31, 2020, Immunome's disclosure controls and procedures were not designed at a reasonable assurance level and were not effective[550] - Material weaknesses identified include lack of review of journal entries, insufficient review of financial statement account balances, and inadequate accounting and financial reporting personnel[552][553] - Remediation activities include implementing a monthly financial statement close process with formal reviews, creating a disclosure committee, and actively recruiting qualified accounting personnel[554] - The material weaknesses are not yet considered remediated as the remedial controls are still being implemented, documented, and tested[556] Other Information There is no other information to report under this item - None[559] PART III Directors, Executive Officers and Corporate Governance Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's definitive proxy statement for the 2021 annual meeting of stockholders - Information is incorporated by reference to the definitive proxy statement for the 2021 annual meeting of stockholders[560] Executive Compensation Information regarding executive compensation is incorporated by reference from the company's definitive proxy statement for the 2021 annual meeting of stockholders - Information is incorporated by reference to the definitive proxy statement for the 2021 annual meeting of stockholders[561] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Information regarding security ownership of certain beneficial owners and management, and related stockholder matters, is incorporated by reference from the company's definitive proxy statement for the 2021 annual meeting of stockholders - Information is incorporated by reference to the definitive proxy statement for the 2021 annual meeting of stockholders[562] Certain Relationships and Related Transactions, and Director Independence Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's definitive proxy statement for the 2021 annual meeting of stockholders - Information is incorporated by reference to the definitive proxy statement for the 2021 annual meeting of stockholders[563] Principal Accounting Fees and Services Information regarding principal accounting fees and services is incorporated by reference from the company's definitive proxy statement for the 2021 annual meeting of stockholders - Information is incorporated by reference to the definitive proxy statement for the 2021 annual meeting of stockholders[564] PART IV Exhibits and Financial Statement Schedules This section lists the financial statements, financial statement schedules, and exhibits filed as part of this Annual Report on Form 10-K - This section includes the Index to Consolidated Financial Statements on page 105[565] - No separate financial statement schedules are provided as all required information is in the Notes to the Consolidated Financial Statements[566] - A comprehensive exhibit index is provided, detailing various agreements, plans, and certifications[567][698][700][702] Financial Statements Report of Independent Registered Public Accounting Firm Deloitte & Touche LLP, as the independent registered public accounting firm, audited Immunome, Inc.'s financial statements for the years ended December 31, 2020 and 2019, and issued an unqualified opinion, stating that the financial statements present fairly, in all material respects, the company's financial position, results of operations, and cash flows in conformity with GAAP - Deloitte & Touche LLP audited Immunome, Inc.'s financial statements for 2020 and 2019[572] - The firm issued an unqualified opinion, stating the financial statements present fairly the company's financial position, results of operations, and cash flows in conformity with GAAP[572] - The audit did not include an opinion on the effectiveness of the company's internal control over financial reporting[574] Balance Sheets as of December 31, 2020 and 2019 The balance sheets show a significant increase in total assets and stockholders' equity from 2019 to 2020, primarily driven by the IPO proceeds, with cash increasing substantially and convertible preferred stock eliminated due to conversion into common stock Balance Sheet Summary (in thousands) | Item | December 31, 2020 | December 31, 2019 | | :---------------------------------------- | :---------------- | :---------------- | | Assets | | | | Cash | $39,766 | $2,543 | | Total current assets | $42,894 | $3,122 | | Property and equipment, net | $1,531 | $1,700 | | Total assets | $44,525 | $5,060 | | Liabilities | | | | Total current liabilities | $3,038 | $1,665 | | Total liabilities | $3,180 | $1,796 | | Equity | | | | Series A convertible preferred stock | $— | $38,894 | | Common stock | $1 | $— | | Additional paid-in capital | $95,738 | $927 | | Accumulated deficit | $(54,394) | $(36,557) | | Total stockholders' equity (deficit) | $41,345 | $(35,630) | - Cash increased significantly from $2.5 million in 2019 to $39.8 million in 2020, primarily due to IPO proceeds[578] - Series A convertible preferred stock was eliminated in 2020, converting to common stock upon the IPO, leading to a substantial increase in additional paid-in capital and a shift from stockholders' deficit to equity[578] Statements of Operations for the years ended December 31, 2020 and 2019 Immunome reported a net loss of $17.8 million in 2020, an increase from $10.4 million in 2019, primarily driven by a significant non-cash charge for the change in fair value of warrant liability and increased general and administrative expenses, partially offset by a decrease in R&D expenses due to DoD reimbursements Statements of Operations Summary (in thousands, except per share amounts) | Item | Year ended December 31, 2020 | Year ended December 31, 2019 | | :---------------------------------------- | :--------------------------- | :--------------------------- | | Research and development | $7,486 | $8,823 | | General and administrative | $4,775 | $1,525 | | Total operating expenses | $12,261 | $10,348 | | Loss from operations | $(12,261) | $(10,348) | | Change in fair value of warrant liability | $(5,538) | $— | | Interest expense, net | $(38) | $(96) | | Net loss | $(17,837) | $(10,444) | | Net loss per share, basic and diluted | $(5.26) | $(9.55) | | Weighted-average common shares outstanding | 3,389,592 | 1,093,959 | - Net loss increased by $7.4 million from 2019 to 2020, primarily due to a $5.5 million non-cash charge for warrant liability and a $3.3 million increase in G&A expenses[516][519][520] - Research and development expenses decreased by $1.3 million in 2020, largely due to $1.7 million in DoD expense reimbursements[517] Statements of Changes in Convertible Preferred Stock and Stockholders' Equity (Deficit) for the years ended December 31, 2020 and 2019 The statements reflect a significant transformation in Immunome's equity structure in 2020, moving from a substantial accumulated deficit to positive stockholders' equity, primarily driven by the conversion of all Series A convertible preferred stock into common stock and the reclassification of liability-classified warrants to additional paid-in capital upon the IPO, alongside the proceeds from the common stock offering Changes in Equity (in thousands, except share amounts) | Item | Balance at Jan 1, 2019 | 2019 Activity | Balance at Dec 31, 2019 | 2020 Activity | Balance at Dec 31, 2020 | | :---------------------------------------- | :--------------------- | :------------ | :---------------------- | :------------ | :---------------------- | | Series A convertible preferred stock (shares) | 3,108,776 | 1,334,483 | 4,443,259 | (5,670,184) | — | | Series A convertible preferred stock (amount) | $27,513 | $11,381 | $38,894 | $(48,369) | $— | | Common stock (shares) | 1,087,821 | 11,449 | 1,099,270 | 9,534,975 | 10,634,245 | | Common stock (amount) | $— | $— | $— | $1 | $1 | | Additional paid-in capital | $908 | $19 | $927 | $94,811 | $95,738 | | Accumulated deficit | $(26,113) | $(10,444) | $(36,557) | $(17,837) | $(54,394) | | Total stockholders' equity (deficit) | $(25,205) | $(10,430) | $(35,630) | $76,975 | $41,345 | - In 2020, 5,670,184 shares of Series A convertible preferred stock were converted into common stock upon the IPO, and 1,035,196 liability-classified warrants were converted to common stock warrants and reclassified to additional paid-in capital ($7.06 million)[582][676][677] - The sale of 3,737,500 common stock shares in connection with the IPO contributed $38.7 million to additional paid-in capital[582] - Accumulated deficit increased by $17.8 million in 2020, reflecting the net loss for the year[582] Statements of Cash Flows for the years ended December 31, 2020 and 2019 Immunome's cash and restricted cash significantly increased in 2020, primarily driven by substantial cash provided by financing activities, including IPO proceeds and Series A preferred stock sales, despite continued cash usage in operating and investing activities Cash Flow Summary (in thousands) | Cash Flow Activity (in thousands) | Year ended December 31, 2020 | Year ended December 31, 2019 | | :-------------------------------- | :--------------------------- | :--------------------------- | | Net cash used in operating activities | $(12,134) | $(9,600) | | Net cash used in investing activities | $(586) | $(233) | | Net cash provided by financing activities | $49,943 | $10,774 | | Net increase in cash and restricted cash | $37,223 | $941 | | Cash and restricted cash at end of year | $39,866 | $2,643 | - Operating activities used $12.1 million in 2020, primarily due to the net loss, partially offset by noncash adjustments like depreciation, share-based compensation, and warrant liability changes[524][585] - Investing activities used $0.6 million in 2020 for property and equipment purchases[526][585] - Financing activities provided $49.9 million in 2020, mainly from $38.9 million net IPO proceeds, $11.0 million from Series A preferred stock, and $0.5 million from the PPP loan[527][585] Notes to Financial Statements The notes provide detailed information on Immunome's business, significant accounting policies, and financial instruments, covering the company's early-stage nature, ongoing operating losses, reliance on external funding, and the impact of the IPO on equity - Immunome is an early-stage biotechnology company with a history of net losses, expecting continued losses due to R&D costs for preclinical and clinical development[587][588] - The company's IPO in October 2020 generated $41.7 million in net proceeds, and its cash balance of $39.8 million (as of Dec 31, 2020) is expected to fund operations through Q2 2022, necessitating additional future financing[589][590][591] - Significant accounting policies include expensing R&D costs as incurred, recognizing DoD expense reimbursements as contra-R&D, classifying preferred stock as temporary equity (converted to common stock upon IPO), and valuing warrants as liabilities (reclassified to equity upon IPO)[595][604][605][606][608][610] - Share-based compensation is recognized at fair value using the Black-Scholes model, with the fair value of common stock estimated based on various factors prior to the IPO and market price thereafter[612][614][615][618] - The company has various commitments, including operating leases for facilities and equipment, employment agreements, and a 401(k) plan, and is not currently party to any material legal proceedings[648][649][650][652][653][654] - Immunome holds multiple licensing agreements (2009, 2012, 2019) for its base editing, patent rights, know-how, and screening technologies, involving annual fees, milestone payments, and low single-digit royalties on net sales[655][656][659][662][665][666] - As of December 31, 2020, the company had $47.3 million in federal and $47.7 million in state net operating loss carryforwards, subject to potential limitations under Sections 382 and 383 of the Internal Revenue Code[689] 1. Nature of the business and basis of presentation - Immunome, Inc. was incorporated in 2006 (Delaware in 2015) and is a biotechnology company focused on novel cancer immunotherapies using a patented human B cell process[586] - The company has incurred net losses since inception ($17.8M in 2020, $10.4M in 2019) and expects future losses due to R&D costs for preclinical and clinical development[588] - The IPO in October 2020 generated $41.7 million in net proceeds, with $39.8 million cash as of Dec 31, 2020, expected to fund operations through Q2 2022, requiring additional financing thereafter[589][590] 2. Summary of significant accounting policies - Financial statements are prepared in accordance with GAAP, and the company uses estimates and assumptions for fair value measurements (e.g., common stock, warrant liability)[595][597] - A one-for-six reverse stock split was legally effective on September 22, 2020, retroactively adjusting all share and per-share amounts[596] - Cash includes standard checking and money market accounts; restricted cash ($100k) serves as collateral for a lease security deposit[598][599] - Property and equipment are depreciated straight-line over estimated useful lives (3-5 years); long-lived assets are evaluated for impairment[601][602] - IPO costs were capitalized and then recorded as a reduction of additional paid-in capital upon IPO consummation[603] - Series A Preferred stock was classified as temporary equity due to contingent redeemability and converted to common stock upon IPO[604] - DoD expense reimbursements are recorded as contra-research and development expenses[605] - Warrants to purchase Series A preferred stock were liability-classified and remeasured at fair value until IPO, then reclassified to additional paid-in capital[606][608][609] - R&D costs are expensed as incurred; share-based compensation is recognized at fair value using the Black-Scholes model over the vesting period[610][612][613][614][615][616][617][618] - The company uses the two-class method for net loss per share calculation, excluding dilutive securities when anti-dilutive[626][627][628][629] - As an emerging growth company, Immunome elected the extended transition period for new accounting standards, with ASC 842 (Leases) effective January 1, 2022[633][634] 3. Fair value measurement Change in Fair Value of Warrant Liability (in thousands) | Item | Amount | | :---------------------------------------------- | :----- | | Balance, December 31, 2019 | $— | | Issuance of warrants on June 2, 2020 | $1,522 | | Change in fair value of warrant liability | $5,538 | | Reclass of warrant liability to additional paid-in capital upon IPO | $(7,060) | | Warrant liability, December 31, 2020 | $— | - The warrant liability was valued using Level 3 unobservable inputs in a Black-Scholes model, reflecting changes in the fair value of Series A preferred stock[636] 4. Property and equipment, net Property and Equipment, Net (in thousands) | Asset Category | December 31, 2020 | December 31, 2019 | | :---------------------------------- | :---------------- | :---------------- | | Lab equipment | $3,506 | $2,942 | | Leasehold improvements | $185 | $184 | | Computer equipment | $96 | $76 | | Office equipment and furniture and fixtures | $18 | $17 | | Total gross property and equipment | $3,805 | $3,219 | | Less accumulated depreciation and amortization | $(2,274) | $(1,519) | | Property and equipment, net | $1,531 | $1,700 | - Depreciation and amortization expense was $0.8 million in 2020 and $0.6 million in 2019[638] 5. Department of Defense (DoD) expense reimbursement contract - In July 2020, Immunome entered a DoD Agreement for up to $13.3 million to develop Biosynthetic Convalescent Plasma (BCP) for COVID-19[639] - The company recorded $1.7 million as contra-research and development expense in 2020[639] - As of December 31, 2020, a $0.9 million expense reimbursement receivable was due from the DoD[639] 6. Accrued expenses Accrued Expenses (in thousands) | Item | December 31, 2020 | December 31, 2019 | | :---------------------------------- | :---------------- | :---------------- | | Compensation and related benefits | $845 | $426 | | Professional fees, contractors and other | $527 | $240 | | Total accrued expenses | $1,372 | $666 | 7. Convertible promissory notes - In 2019, Immunome issued $6.8 million in non-interest bearing convertible promissory notes, which automatically converted into 821,657 shares of Series A Preferred stock in November 2019[641][642] 8. Equipment loan payables - Immunome has equipment financing agreements with interest rates ranging from 9.03% to 12.08%[644] Future Equipment Loan Payments (in thousands) | Year ending December 31, | Amount | | :----------------------- | :----- | | 2021 | $117 | | Less amounts representing interest | $(4) | | Total equipment loan payable | $113 | 9. Long-term debt - On April 30, 2020, Immunome received a $0.5 million PPP loan from Silicon Valley Bank, bearing 1% interest, with potential for forgiveness based on qualifying expenses[646] - The company applied for loan forgiveness in January 2021 and is awaiting a decision[646] Long-Term Debt Payments (in thousands) | Years ending December 31, | Amount | | :------------------------ | :----- | | 2021 | $366 | | 2022 | $134 | | Total | $500 | | Less current portion of long-term debt | $(366) | | Long-term debt, net of current portion | $134 | 10. Commitments and contingencies - Immunome leases office and laboratory space in Exton, PA, with a lease term of 62 months commencing July 1, 2017, and an option for two additional five-year terms[648] Future Minimum Operating Lease Payments (in thousands) | Years ending December 31, | Amount | | :------------------------ | :----- | | 2021 | $349 | | 2022 | $153 | | Total | $502 | - Rent expense was $0.4 million in 2020 and $0.3 million in 2019[650] - All capital leases for laboratory equipment expired during 2020, with interest expense of $7,000 in 2020[651] - The company maintains a 401(k) Plan, making matching contributions of $74,000 in 2020 and $61,000 in 2019[653] 11. Licensing arrangements - Immunome has a 2009 exclusive, royalty-bearing license agreement with two research institutions for base editing technology, requiring annual maintenance fees and potential milestone/royalty payments[655][656] - A 2012 exclusive, royalty-bearing license agreement with a medical institution covers patent rights, know-how, and materials, with potential aggregate milestone payments of $1.0 million[659][662] - A 2019 exclusive, royalty-bearing license agreement with Arrayjet Limited covers substrate handling and printing technology, requiring an annual exclusivity fee (expensed as R&D) and potential royalties[665][666][668] - All licensing rights were accounted for as asset acquisitions, with cash/share-based payment obligations recorded as R&D expense, as assets had not reached technological feasibility[657][663][667] 12. Common stock and convertible preferred stock - Upon IPO in October 2020, Immunome issued 3,757,500 common shares at $12.00/share, generating $41.7 million net proceeds, and increased authorized common stock to 200,000,000 shares[671] - All Series A Preferred stock (5,670,184 shares) converted into common stock upon the IPO[676] - In 2020, 1,226,925 Series A Preferred shares were sold for $11.0 million, and 1,035,196 warrants to purchase Series A Preferred (fair value $1.5 million) were issued[673] - Outstanding warrants (1,035,196) to acquire common stock were reclassified from liability to additional paid-in capital ($7.1 million) upon IPO[677] Warrant Fair Value Inputs (Black-Scholes Model) | Input | June 2, 2020 | October 6, 2020 | | :------------------------ | :----------- | :-------------- | | Volatility rate | 79.0% | 82.0% | | Risk-free interest rate | 0.2% | 0.2% | | Expected term (in years) | 3.0 | 2.7 | | Strike price (per share) | $9.00 | $9.00 | | Fair value of Series A convertible preferred stock | $4.44 | $12.00 | 13. Share-based compensation - Immunome replaced its 2008 and 2018 Equity Incentive Plans with the 2020 Equity Incentive Plan and adopted the 2020 Employee Stock Purchase Plan (ESPP) in September 2020[679][680] Share-Based Compensation Expense (in thousands) | Expense Category | Year Ended December 31, 2020 | Year Ended December 31, 2019 | | :------------------------- | :--------------------------- | :--------------------------- | | General and administrative | $441 | $5 | | Research and development | $180 | $9 | | Total | $621 | $14 | - Unrecognized compensation cost for unvested options was $3.6 million as of December 31, 2020, to be recognized over 3.88 years[682] Stock Option Activity Summary (2020) | Item | Number of shares | Weighted average exercise price per share | | :------------------------------------ | :--------------- | :---------------------------------------- | | Outstanding at January 1, 2020 | 583,622 | $0.47 | | Granted | 1,168,618 | $4.90 | | Forfeited | (152,109) | $8.90 | | Exercised | (127,291) | $0.16 | | Outstanding at December 31, 2020 | 1,472,840 | $3.14 | | Exercisable at December 31, 2020 | 632,524 | $0.89 | - The weighted-average grant date fair value of stock options granted was $3.71 in 2020 and $0.24 in 2019[683] 14. Income taxes Deferred Tax Assets and Liabilities (in thousands) | Item | December 31, 2020 | December 31, 2019 | | :---------------------------------- | :---------------- | :---------------- | | Net operating loss carryforwards | $13,693 | $10,202 | | Research and development credits | $1,560 | $1,355 | | Gross deferred tax assets | $15,538 | $11,874 | | Less: valuation allowance | $(15,435) | $(11,711) | | Net deferred tax asset | $103 | $163 | | Deferred tax liability (Depreciation) | $(103) | $(163) | | Total deferred tax liabilities | $— | $— | - Immunome had no income tax expense in 2020 and 2019 due to operating losses and recorded a full valuation allowance against net deferred tax assets[685] - As of December 31, 2020, the company had $47.3 million federal and $47.7 million state NOL carryforwards, and $1.4 million federal R&D tax credits, with various expiration dates through 2039[689] - NOLs generated in 2018 and 2019 ($18.3 million) do not expire, but federal NOLs from 2020 and 2019 are limited to offsetting 80% of taxable income after December 31, 2020[689] 15. Interest expense, net Interest Expense, Net (in thousands) | Item | Year Ended December 31, 2020 | Year Ended December 31, 2019 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Capital lease obligations interest expense | $(18) | $(60) | | Equipment loan payable interest expense | $(21) | $(46) | | Interest income | $1 | $10 | | Total interest expense, net | $(38) | $(96) | 16. Related party transactions - Immunome has license agreements with shareholders, incurring approximately $0.1 million in expenses in 2020 and $0.2 million in 2019[693] - In 2019, $3.8 million of convertible promissory notes were issued to existing preferred stock investors, which later converted to Series A Preferred shares[694] - The company has a Master Services Agreement with Broadband Advisory for corporate finance, strategic planning, and management recruiting services, incurring $0.2 million annually in 2020 and 2019[696]