Immunome(IMNM) - 2021 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section details the company's unaudited financial statements and management's analysis of its financial condition Item 1. Financial Statements Unaudited condensed financial statements show increased cash and assets from financing, with continued net losses and rising operating expenses Condensed Balance Sheets Highlights from the condensed balance sheets show significant increases in cash and total assets Balance Sheet Highlights (In thousands) | Balance Sheet Highlights (In thousands) | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash | $59,829 | $39,766 | | Total current assets | $62,815 | $42,894 | | Total assets | $64,141 | $44,525 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $3,521 | $3,038 | | Total liabilities | $3,524 | $3,180 | | Total stockholders' equity | $60,617 | $41,345 | Condensed Statements of Operations The condensed statements of operations reflect increased operating expenses and net losses for both three and six-month periods Statement of Operations (In thousands) | Statement of Operations (In thousands) | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $3,233 | $1,892 | $5,212 | $4,007 | | General and administrative | $2,507 | $823 | $4,425 | $1,363 | | Total operating expenses | $5,740 | $2,715 | $9,637 | $5,370 | | Loss from operations | ($5,740) | ($2,715) | ($9,637) | ($5,370) | | Net loss | ($5,241) | ($2,710) | ($9,139) | ($5,387) | | Net loss per share, basic and diluted | ($0.46) | ($2.45) | ($0.83) | ($4.89) | Condensed Statements of Cash Flows Cash flow statements indicate a significant net increase in cash, primarily driven by financing activities Cash Flow Summary (In thousands) | Cash Flow Summary (In thousands) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($7,276) | ($3,544) | | Net cash used in investing activities | ($39) | ($416) | | Net cash provided by financing activities | $27,378 | $11,206 | | Net increase in cash and restricted cash | $20,063 | $7,246 | | Cash and restricted cash at end of period | $59,929 | $9,889 | Notes to Condensed Financial Statements Notes detail the company's biopharmaceutical focus, financial condition, and key events including recent financing and contract amendments - The company is a biopharmaceutical firm focusing on oncology and infectious diseases, including COVID-19, utilizing a proprietary human memory B cell platform[23] - As of June 30, 2021, the company had an accumulated deficit of $63.5 million and expects its cash of $59.8 million to fund operations and capital expenditures for at least the next twelve months[25][27] - In July 2020, the company entered into an agreement with the U.S. Department of Defense (DoD) for COVID-19 therapeutic development, which was later amended in May 2021, increasing the total award from $13.3 million to $17.6 million[51][53] - The company's $0.5 million Paycheck Protection Program (PPP) loan, received in April 2020, was fully forgiven on May 21, 2021, and recognized as other income[56] - On April 28, 2021, the company raised net proceeds of $26.4 million through a private placement of 1,000,000 units at $27.00 per unit[26][65] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses increased operating losses from higher R&D and G&A expenses, with liquidity boosted by recent financing Overview The company, a development-stage biopharmaceutical firm, has primarily financed operations through equity sales, incurring significant net losses - The company received net proceeds of $41.7 million from its IPO in October 2020 and $26.4 million from a private placement in April 2021[91] - Net losses were $5.2 million for Q2 2021 and $9.1 million for the six months ended June 30, 2021[92] - As of June 30, 2021, the company had a cash balance of $59.8 million, which is expected to fund operations through fiscal year 2022[93][97] Results of Operations Operating expenses significantly increased due to higher R&D and G&A costs, partially offset by DoD contract reimbursement Operating Results (In thousands) | Operating Results (In thousands) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | Change | | :--- | :--- | :--- | :--- | | Research and development | $5,212 | $4,007 | $1,205 | | General and administrative | $4,425 | $1,363 | $3,062 | | Total operating expenses | $9,637 | $5,370 | $4,267 | | Net loss | ($9,139) | ($5,387) | ($3,752) | - For the six months ended June 30, 2021, R&D expenses increased by $1.2 million, reflecting a $9.3 million increase in non-DoD related activities, partially offset by $8.0 million in contra-R&D expenses from the DoD agreement[121] - G&A expenses for the six months ended June 30, 2021, increased by $3.1 million, primarily due to a $1.0 million increase in personnel costs and a $1.7 million increase in professional fees and other expenses related to operating as a public company[123] - The company recognized $0.5 million in other income during the first half of 2021 due to the forgiveness of its PPP Loan[125] Liquidity and Capital Resources The company's liquidity was significantly boosted by recent financing, with existing cash expected to fund operations through fiscal year 2022 - As of June 30, 2021, the company had $59.8 million in cash and has raised an aggregate of $122.9 million in gross proceeds since inception[127] Cash Flow Summary (In thousands) | Cash Flow Summary (In thousands) | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :--- | :--- | :--- | | Cash used in operating activities | ($7,276) | ($3,544) | | Cash used in investing activities | ($39) | ($416) | | Cash provided by financing activities | $27,378 | $11,206 | - Financing activities in the first six months of 2021 provided $27.3 million, mainly from the sale of common stock and warrants and the exercise of existing warrants and options[132] - Existing cash as of June 30, 2021, is expected to fund operating expenses and capital expenditures through fiscal year 2022[135] Critical Accounting Policies and Use of Estimates Share-based compensation is identified as a critical accounting policy requiring significant estimates, particularly in valuing common stock - Share-based compensation is a critical accounting policy, with fair value estimated using the Black-Scholes model, which requires subjective assumptions[144] - Prior to May 2020, the company valued its common stock using a net asset approach and the Option Pricing Method (OPM); it switched to the probability-weighted expected return method (PWERM) in May 2020[146][149] Quantitative and Qualitative Disclosures about Market Risk As a smaller reporting company, the company is not required to provide market risk disclosures - The company is a smaller reporting company and is not required to provide information for this item[157] Controls and Procedures Disclosure controls and procedures were ineffective due to material weaknesses in internal control, with remediation efforts underway - Management concluded that as of June 30, 2021, the company's disclosure controls and procedures were not effective[158] - Material weaknesses were identified related to: lack of review of journal entries, lack of timely and effective review of financial statement account balances, and lack of sufficient accounting personnel[160] - Remediation activities are in progress, including implementing a formal monthly financial close process, creating a disclosure committee, and hiring a full-time CFO, Controller, and other accounting staff[161] PART II – OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and a list of exhibits filed with the report Legal Proceedings The company is not currently a party to any material legal proceedings - As of the reporting date, the company is not involved in any material legal proceedings[167] Risk Factors As a smaller reporting company, the company is not required to provide risk factor information - The company is a smaller reporting company and is not required to provide information for this item[168] Unregistered Sales of Equity Securities and Use of Proceeds Details on unregistered equity sales and use of proceeds are referenced in the April 2021 Form 8-K filing - Details regarding the unregistered sale of common stock are available in the Form 8-K filed on April 20, 2021[169] Exhibits This section lists all exhibits filed, including corporate governance documents, material contracts, and certifications - The exhibits include key agreements such as the Securities Purchase Agreement from April 2021 and a modification to the Department of Defense contract from May 2021[175] - Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to the Sarbanes-Oxley Act of 2002 are included as exhibits[175]