Immunovant(IMVT) - 2023 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) This section presents Immunovant's unaudited condensed consolidated financial statements, highlighting changes in cash, net loss, and R&D expenses Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | September 30, 2022 | March 31, 2022 | Change | | :-------------------------------- | :----------------- | :------------- | :----- | | Cash and cash equivalents | $405,773 | $493,817 | $(88,044) | | Total assets | $428,146 | $515,564 | $(87,418) | | Total liabilities | $32,398 | $45,739 | $(13,341) | | Total stockholders' equity | $395,748 | $469,825 | $(74,077) | Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Six Months Ended Sep 30, 2022 | Six Months Ended Sep 30, 2021 | | :-------------------------------- | :------------------------------ | :------------------------------ | :---------------------------- | :---------------------------- | | Research and development | $37,739 | $21,361 | $66,168 | $40,066 | | General and administrative | $11,875 | $16,289 | $23,821 | $27,469 | | Total operating expenses | $49,614 | $37,650 | $89,989 | $67,535 | | Net loss | $(47,928) | $(37,703) | $(88,301) | $(68,174) | | Net loss per common share (basic and diluted) | $(0.41) | $(0.35) | $(0.76) | $(0.66) | Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended September 30, in thousands) | Metric | 2022 | 2021 | | :-------------------------------- | :--------- | :--------- | | Net cash used in operating activities | $(86,005) | $(41,261) | | Net cash used in investing activities | $(73) | $(62) | | Net cash provided by financing activities | $21 | $200,129 | | Net change in cash and cash equivalents | $(88,044) | $158,806 | | Cash and cash equivalents – end of period | $405,773 | $558,952 | Condensed Consolidated Balance Sheets Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Comprehensive Loss Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Cash Flows Notes to Condensed Consolidated Financial Statements Detailed notes cover business, liquidity, accounting policies, agreements, and financial position, highlighting significant losses and capital needs - Immunovant is a clinical-stage biopharmaceutical company focused on autoimmune diseases, with product candidates batoclimab and IMVT-1402 targeting the neonatal fragment crystallizable receptor (FcRn)[32] - The company has incurred significant losses and negative cash flows since inception, with an accumulated deficit of $443.7 million as of September 30, 2022. It does not anticipate generating revenue until successful development and regulatory approval of its product candidates[34][35] - The company expects its existing cash and cash equivalents of $405.8 million as of September 30, 2022, to fund operations for at least the next 12 months[34][36] - Immunovant has a license agreement with HanAll Biopharma for batoclimab and IMVT-1402, involving potential milestone payments up to $442.5 million and tiered royalties[52][54] - A Product Service Agreement with Samsung Biologics commits the company to minimum purchases of batoclimab drug substance, estimated at approximately $36.0 million as of September 30, 2022[55][57] - In October 2022, the company completed a public offering, raising approximately $70.2 million in net proceeds[86] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial condition and operations, detailing clinical pipeline advancements, increased R&D, decreased G&A, and liquidity - Immunovant is a clinical-stage biopharmaceutical company developing batoclimab and IMVT-1402, novel FcRn-targeting monoclonal antibodies for autoimmune diseases[90] - Batoclimab is currently in Phase 3 trials for Myasthenia Gravis (MG) and Thyroid Eye Disease (TED), with plans for Phase 2b in Chronic Inflammatory Demyelinating Polyneuropathy (CIDP) and Phase 2 in Graves' Disease[96][97] - IMVT-1402, a second product candidate, is expected to initiate a Phase 1 trial in early calendar year 2023, contingent on IND clearance, with initial data anticipated in mid-2023[93][98] - Research and development expenses increased significantly by $16.3 million (three months) and $26.1 million (six months) due to advancing batoclimab trials (MG, CIDP) and IMVT-1402 development[119][120][121][126][127][128] - General and administrative expenses decreased by $4.4 million (three months) and $3.7 million (six months), primarily due to lower financial advisory, legal, and other professional fees, partially offset by higher personnel and IT costs[123][130] - The company expects its existing cash and cash equivalents, combined with proceeds from the October 2022 public offering, to fund operations into the second half of calendar year 2025[149] Overview Recent Developments in Our Clinical Programs COVID-19 Business Update Our Key Agreements Financial Operations Overview Results of Operations for the Three Months Ended September 30, 2022 and 2021 Research and Development Expenses for the Three Months Ended September 30, 2022 and 2021 General and Administrative Expenses for the Three Months Ended September 30, 2022 and 2021 Results of Operations for the Six Months Ended September 30, 2022 and 2021 Research and Development Expenses for the Six Months Ended September 30, 2022 and 2021 General and Administrative Expenses for the Six Months Ended September 30, 2022 and 2021 Liquidity and Capital Resources Critical Accounting Estimates Recent Accounting Pronouncements Item 3. Quantitative and Qualitative Disclosures About Market Risk As a 'smaller reporting company,' Immunovant is exempt from detailed market risk disclosures - Immunovant, as a 'smaller reporting company,' is not required to provide detailed quantitative and qualitative disclosures about market risk[158] Item 4. Controls and Procedures Management evaluated disclosure controls and procedures as effective, with no material changes in internal control over financial reporting - Disclosure controls and procedures were evaluated as effective at a reasonable assurance level as of September 30, 2022[162] - No material changes in internal control over financial reporting occurred during the fiscal quarter ended September 30, 2022[163] - Management acknowledges that control systems provide only reasonable, not absolute, assurance and have inherent limitations[164] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various lawsuits, including a securities class action, which it intends to vigorously defend - A putative securities class action complaint was filed against the company and certain officers in February 2021, alleging false and misleading statements regarding batoclimab's safety[82] - The company is vigorously defending the lawsuit and has not recorded a liability, as it cannot reasonably estimate possible losses or determine the probability of an unfavorable outcome[82] Item 1A. Risk Factors Significant risks include product development, regulatory approval, clinical trials, competition, third-party reliance, intellectual property, and financial position - The business is highly dependent on the successful development, regulatory approval, and commercialization of product candidates batoclimab and IMVT-1402, with no guarantee of market approval or commercial viability[169][255][256] - Product candidates may cause adverse events or undesirable side effects, such as the previously observed elevations in total cholesterol and LDL levels with batoclimab, which could delay or prevent regulatory approval or limit market acceptance[173][175] - Clinical trials are expensive, time-consuming, difficult to design, and involve uncertain outcomes, with potential for delays due to patient enrollment, safety issues, or regulatory disagreements[180][182][185] - The company faces significant competition from other biotechnology and pharmaceutical companies in autoimmune disease indications, including other FcRn inhibitors and therapies with different mechanisms of action[209][210][211] - Immunovant expects to incur significant losses for the foreseeable future and has a limited operating history with no product revenue to date, requiring additional capital to fund operations[264][267][275] - Reliance on third parties for manufacturing and clinical trials poses risks, including production difficulties, quality issues, and compliance failures, which could delay development or commercialization[324][325][330][331] - The company's ability to compete effectively depends on obtaining and maintaining broad patent protection for its product candidates, which is uncertain due to complex legal processes, potential challenges, and limited patent lifespans[338][340][346][351] - Roivant Sciences Ltd. (RSL) owns a significant percentage of the company's common stock (57.1% as of October 28, 2022), allowing it to exert significant control over stockholder approval matters and potentially creating conflicts of interest[394][396] Risks Related to Development, Regulatory Approval and Commercialization Risks Related to Our Business, Financial Position and Capital Requirements Risks Related to Our Dependence on Third Parties Risks Related to Our Intellectual Property General Risks Related to an Investment in Our Securities Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[422] Item 3. Defaults Upon Senior Securities No defaults upon senior securities during the reporting period - No defaults upon senior securities[423] Item 4. Mine Safety Disclosures This item is not applicable to the company - Mine Safety Disclosures are not applicable to Immunovant, Inc[423] Item 5. Other Information No other information to report for the period - No other information to report[423] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report, including corporate documents and certifications - The exhibits include key corporate documents such as the Share Exchange Agreement, Certificate of Incorporation, Bylaws, and certifications from the CEO and CFO[428] - Certifications under Section 302 of Sarbanes-Oxley Act are filed herewith, while those under Section 906 are deemed to accompany the report and are not 'filed' for Section 18 purposes[427][428] SIGNATURES The report is duly signed by the Chief Executive Officer and Chief Financial Officer on November 4, 2022 - The report was signed by Peter Salzmann, M.D., Chief Executive Officer, and Eva Renee Barnett, Chief Financial Officer, on November 4, 2022[432]