Immunome(IMNM) - 2021 Q4 - Annual Report

Part I Business Immunome, Inc. develops antibody therapeutics for oncology and infectious diseases using its proprietary human memory B cell platform - The company utilizes a proprietary human memory B cell platform to discover first-in-class antibody therapeutics[24] - Primary focus areas are oncology and infectious diseases, with two lead programs: IMM-BCP-01 (COVID-19) and IMM-ONC-01 (Oncology)[25] - The company's discovery engine has identified over 70 potential novel cancer targets from screening a fraction of its antibody hits[26] - The company relies on third-party manufacturers for preclinical, clinical, and future commercial production and does not plan to develop its own manufacturing facilities[100] Our Lead Discovery Programs - Oncology (IMM-ONC-01): This program targets IL-38, a novel immune checkpoint, with preclinical data suggesting blocking IL-38 increases anti-tumor immune response, and an IND application to the FDA is planned for the second half of 2022[31][33] - SARS-CoV-2 (IMM-BCP-01): This three-antibody cocktail, developed from COVID-19 "super-responders" and targeting non-overlapping regions of the Spike protein, had an IND submitted in November 2021, with FDA clearance for clinical study initiation in March 2022[34] Strategic Collaborations and License Agreements - Entered into an Other Transaction Authority (OTA) Agreement with the U.S. Department of Defense (DoD) for the development of a COVID-19 antibody cocktail, with total funding increased to $17.6 million in May 2021[88] - Has an exclusive license agreement with Arrayjet Limited for screening human-derived hybridomas against cell lysate libraries, requiring annual license payments in the low six figures[94] - Holds exclusive license agreements with Whitehead Institute/MIT and Thomas Jefferson University (TJU) for patent rights related to its antibody screening platform, involving milestone and royalty payment obligations[96][98] Intellectual Property - As of March 1, 2022, the company owned 65 pending national phase patent applications, two pending PCT applications, and 7 pending U.S. provisional applications[106] - The IP strategy relies on a multi-layered approach including patents for compositions of matter and methods of use, as well as trade secrets and know-how[104][105][113] - The patent term in the U.S. is generally 20 years from filing, with potential for patent term extensions under the Hatch-Waxman Act for FDA-approved drugs[107] Government Regulation - The company's products are subject to extensive regulation by the FDA under the FDCA and PHSA, covering research, development, testing, manufacturing, and marketing[117][118] - The approval process for a Biologics License Application (BLA) involves preclinical studies and three phases of clinical trials (Phase 1, 2, 3) to establish safety and efficacy[119][123][125] - The company may utilize FDA's expedited programs such as Fast Track, Breakthrough Therapy, Priority Review, and Accelerated Approval to speed up development and review[133][134][135] - Operations are also subject to other healthcare laws, including the federal Anti-Kickback Statute, False Claims Act (FCA), and HIPAA, which regulate interactions with healthcare professionals and protect patient data[150][151][154] Risk Factors The company faces significant risks including financial losses, funding needs, early-stage program failures, third-party reliance, intellectual property challenges, and regulatory hurdles Risks Related to Our Business - The company is a preclinical stage biopharmaceutical company with a history of losses, an accumulated deficit of $79.1 million as of December 31, 2021, and expects to incur significant losses for the foreseeable future[188] - Substantial additional funding is required to advance product candidates, with existing cash of $49.2 million (as of Dec 31, 2021) expected to fund operations for at least 12 months from the filing date, but future capital needs are uncertain[190][192] - The company's novel discovery engine approach may not result in marketable products, and its lead programs (IMM-BCP-01 and IMM-ONC-01) are in early stages with high risk of failure[195][200][204] - The company is dependent on a DoD award for its IMM-BCP-01 program, which could be eliminated, reduced, or delayed, and faces competition from numerous vaccines and treatments for COVID-19[212][213] - Reliance on third parties for conducting clinical trials and manufacturing poses risks related to performance, quality, and supply continuity[261][263] Risks Related to Our Intellectual Property - The company's success depends on its ability to obtain and maintain patent protection for its technology and product candidates, but there is no guarantee that pending applications will issue or that issued patents will provide adequate protection[283][284][285] - Failure to comply with obligations under license agreements (e.g., with Whitehead, TJU, Arrayjet) could result in loss of necessary IP rights[299][300] - Third parties may challenge the company's patent rights or assert their own patents, which could lead to costly litigation and prevent the commercialization of products[309][317] - Protecting intellectual property rights globally is prohibitively expensive, and the laws of some foreign jurisdictions may not protect these rights as effectively as U.S. law[312][313] Risks Related to Government Regulation - Failure to comply with complex federal, state, and foreign data protection laws (e.g., HIPAA, GDPR, CCPA) could lead to significant penalties and harm the business[332][333] - Healthcare legislative reforms may adversely affect the business by containing costs, which could reduce demand or pricing for product candidates[338][340] - Future biologic products may face competition from biosimilars sooner than anticipated due to the BPCIA, which provides a 12-year exclusivity period that could be shortened or challenged[344][345] - Disruptions at the FDA and other government agencies due to funding shortages or health crises like COVID-19 could delay product approvals and hinder business operations[347][349] Risks Related to Our Common Stock - The company's stock price has been and may continue to be volatile, and broad market fluctuations could adversely affect the stock price regardless of operating performance[359] - As of December 31, 2021, executive officers, directors, and 5%+ stockholders beneficially owned approximately 35.7% of the common stock, giving them significant influence over corporate actions[360] - Future sales of common stock to raise capital, including through an effective S-3 shelf registration for up to $200 million, could result in significant dilution to existing stockholders[365] - The company's ability to use its net operating loss (NOL) carryforwards ($68.8 million federal, $69.2 million state as of Dec 31, 2021) may be limited by ownership changes under Section 382 of the Code[371][372][373] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Immunome's common stock trades on Nasdaq, has approximately 68 record holders, has never paid dividends, and recently raised $27.0 million through a private placement - The company's common stock has been publicly traded on the Nasdaq Global Market under the symbol "IMNM" since October 2, 2020[394] - The company has not declared or paid any dividends since inception and does not expect to in the foreseeable future[396] - On April 26, 2021, the company issued 1,000,000 shares of common stock and warrants to purchase 500,000 shares in a private placement, generating gross proceeds of $27.0 million[399] Management's Discussion and Analysis of Financial Condition and Results of Operations Immunome, a development-stage company, reported a $24.7 million net loss in 2021 due to increased R&D and G&A expenses, requiring substantial future financing beyond its current $49.2 million cash Results of Operations Comparison of the years ended December 31, 2021 and 2020 | | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | (in thousands) | | | | | Operating expenses: | | | | | Research and development | $14,110 | $7,486 | $6,624 | | General and administrative | $11,094 | $4,775 | $6,319 | | Total operating expenses | $25,204 | $12,261 | $12,943 | | Loss from operations | ($25,204) | ($12,261) | ($12,943) | | Other income (expenses): | | | | | Other income | $503 | $— | $503 | | Change in fair value of warrant liability | $— | ($5,538) | $5,538 | | Interest expense, net | ($10) | ($38) | $28 | | Net loss | ($24,711) | ($17,837) | ($6,874) | - Net R&D expenses increased by $6.6 million in 2021, driven by a $17.0 million increase in supplies and outsourced services and a $3.0 million increase in personnel costs, partially offset by a $13.5 million increase in DoD reimbursement (contra-R&D expense)[436][437] - General and administrative expenses increased by $6.3 million in 2021, primarily due to a $3.2 million increase in personnel-related costs and a $3.0 million increase in professional fees and other costs to support public company operations[439] Liquidity and Capital Resources - As of December 31, 2021, the company had $49.2 million in cash[443] - The company expects existing cash will fund operations for at least 12 months from the filing date of the report, but will need to raise additional capital to continue its research and development plans[444][456] Cash Flow Summary (Years ended December 31) | | 2021 | 2020 | | :--- | :--- | :--- | | (in thousands) | | | | Net cash used in operating activities | ($18,226) | ($12,134) | | Net cash used in investing activities | ($79) | ($586) | | Net cash provided by financing activities | $27,768 | $49,943 | - Financing activities in 2021 included $26.7 million net proceeds from a PIPE funding and $1.4 million from warrant and option exercises, while 2020 activities were dominated by $38.9 million net proceeds from the IPO[451][452] Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2021, having remediated prior material weaknesses through staffing and process improvements - Management concluded that disclosure controls and procedures were effective as of December 31, 2021[482] - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2021[484] - Material weaknesses identified as of December 31, 2020, related to review processes and staffing, were remediated during 2021[488][491] - Remediation efforts included hiring a CFO, Corporate Controller, and Finance Manager, and implementing a formal monthly financial close process and a disclosure committee[490] Part III Directors, Executive Officers and Corporate Governance The information required for this item, covering directors, executive officers, and corporate governance, is incorporated by reference from the company's definitive proxy statement for its 2022 annual meeting of stockholders - Information is incorporated by reference from the definitive proxy statement for the 2022 annual meeting of stockholders[494] Executive Compensation The information required for this item, covering executive compensation, is incorporated by reference from the company's definitive proxy statement for its 2022 annual meeting of stockholders - Information is incorporated by reference from the definitive proxy statement for the 2022 annual meeting of stockholders[495] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required for this item, covering security ownership, is incorporated by reference from the company's definitive proxy statement for its 2022 annual meeting of stockholders - Information is incorporated by reference from the definitive proxy statement for the 2022 annual meeting of stockholders[496] Certain Relationships and Related Transactions, and Director Independence The information required for this item, covering related party transactions and director independence, is incorporated by reference from the company's definitive proxy statement for its 2022 annual meeting of stockholders - Information is incorporated by reference from the definitive proxy statement for the 2022 annual meeting of stockholders[497] Principal Accounting Fees and Services The information required for this item, covering principal accountant fees and services, is incorporated by reference from the company's definitive proxy statement for its 2022 annual meeting of stockholders - Information is incorporated by reference from the definitive proxy statement for the 2022 annual meeting of stockholders[498] Part IV Exhibits and Financial Statement Schedules This section includes the company's financial statements starting on page 90 and a comprehensive index of all exhibits filed with the 10-K report, with no separate financial statement schedules - The company's financial statements are included in the report, starting on page 90[499] - No financial statement schedules are provided, as all required information is included in the Notes to the Financial Statements[500] - A detailed list of exhibits, including charter documents, material contracts, and certifications, is provided in the Exhibit Index[501]