What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-08-14 compared with 2020-05-07 · 166 added, 89 removed, 175 unchanged (59% of the section changed)

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We expect to report top-line data from this trial in the fourth quarter of 2020.

We have also initiated an open label extension trial, which allows patients from the Phase 2a clinical trial to continue into a long-term four-year trial to test safety and measure tolerability of IMR-687.

We plan to commence a Phase 2b clinical trial of IMR-687 for the treatment of patients with SCD and a Phase 2b clinical trial of IMR-687 for the treatment of patients with β-thalassemia.

We currently estimate that we will begin treating patients in each of these Phase 2b trials in first half of 2020, and expect to report interim data from each of these planned trials in the first half of 2021.

We are still evaluating the impact on these Phase 2b trials from the COVID-19 pandemic and therefore, our estimated timelines for these clinical trials could be delayed.

The extent to which the COVID-19 pandemic impacts our business will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others.

The COVID-19 pandemic may have an adverse effect on our ability to conduct these clinical trials, and even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts related to these clinical trials.

We are also conducting an open label extension, or OLE, clinical trial, which allows patients from the Phase 2a clinical trial to continue into a long-term four-year trial to test safety and measure tolerability of IMR- 687.

Details on the study and preliminary data from two patients in the OLE clinical trial is detailed below.

We recently initiated a Phase 2b clinical trial of IMR-687 for the treatment of patients with SCD and a Phase 2b clinical trial of IMR-687 for the treatment of patients with ß-thalassemia.

We recently dosed the first patient in the Phase 2b clinical trial of IMR-687 for the treatment of patients with SCD.

We have commenced site activation and have begun screening patients for the Phase 2b clinical trial of IMR-687 for the treatment of patients with ß-thalassemia and expect to dose the first patient in the near term.

We currently expect to report interim data from each of these trials in the first half of 2021.

We are still evaluating the impact of the COVID-19 pandemic on these Phase 2b trials, as discussed below, and therefore, our estimated timelines for these clinical trials could be delayed .

Recent Developments

Open Label Extension Clinical Trial

We are conducting a four-year OLE clinical trial which allows patients from the Phase 2a clinical trial to enroll in a long-term safety and tolerability study of IMR-687 following completion of the Phase 2a clinical trial of IMR-687 in SCD.

The OLE clinical trial was initially designed so that patients were administered a daily dose of 100 mg of IMR-687, and in the second quarter of 2020, a protocol amendment increased the daily dose to 200 mg.

Patients from the combination sub-study continue to receive the same dose of HU that they received while on the Phase 2a clinical trial throughout the duration of the OLE clinical trial.

As the Phase 2a clinical trial has neared completion, we have seen increased enrollment in the OLE clinical trial, with six of the eight currently enrolled patients having started the OLE clinical trial since the beginning of June 2020.

We plan to analyze data from OLE clinical trial patients at approximately six-month intervals and two patients have crossed that threshold.

Patient #1 completed one year of treatment on the OLE clinical trial in June 2020.

This patient was originally randomized to the 100 mg/200 mg dose group in the monotherapy sub-study of the Phase 2a clinical trial, in which the patient received IMR-687 for six months through May 2019, and then transitioned to the OLE clinical trial in June 2019, after a washout period of approximately one month.

As of June 2020, the patient had been on IMR-687 for 18 months, either as part of the Phase 2a clinical trial (six months) or as part of the OLE clinical trial (additional 12 months).

A comparison of data for the 18-month period while the patient has been on IMR-687 versus information from a retrospective review of the patient’s medical records for the 18 months prior to initiation of IMR-687 indicate potential benefits of IMR-687 for this patient with respect to reported vaso-occlusive crises, or VOCs, trends, healthcare facility use and disease biomarkers.

In the 18-month period on IMR-687, the patient had a 55% (38 to 17) reduction in reported VOCs, as compared to the 18-month period prior to IMR-687 administration.

Furthermore, reported VOCs that resulted in emergency department, or ED, visits and out-patient visits decreased by 55% (22 to 10 visits) and 50% (14 to 7 visits) respectively, in the 18-month period on IMR-687 versus the 18-month period prior to initial IMR-687 administration.

Reported VOCs that resulted in hospitalization decreased from two in the 18-month period prior to IMR-687 administration to zero in the 18-month period on IMR-687.

A review of reported VOCs during the 18-month period on IMR-687 showed a decreased incidence of VOCs with increased time on IMR-687.

In the first six months on IMR-687, the patient repor ted nine VOCs.

In the next six months, the patients reported six VOCs, and in the last six months of the 18-month period, the patient reported two VOCs.

Additionally, reported VOCs that resulted in ED visits dropped from five in the first and second six- month periods to zero in the most recent six-month period (100% reduction).

P atient s are also administered the ASCQ-Me questionnaire, a N ational I nstitutes of H ealth validated SCD questionnaire, for the first time in the OLE clinical trial at the 12 - month OLE visit.

The ASCQ-ME questionnaire reports patient outcomes across seven domains (emotional, social functioning, pain, stiffness, sleep, pain episode frequency and pain episode severity).

Examination of ASCQ-Me scores after 1 8 months of IMR-687 treatme nt for this patient showed improvement in five of the seven domains when compared to ASCQ-Me scores at the start of the Phase 2a clinical trial , including improvement in pain episode frequency and pain episode severity .

The re was no change in score from t he baseline Phase 2a clinical trial measurements with respect to social functioning and the emotional domain score was the only domain score to regress when compared to the baseline Phase 2a clinical trial measurements.

We also observed improvement across key SCD disease biomarkers in the first patient.

A comparison of the patient’s lab values from the most recent OLE clinical trial visit in June 2020 to the patient’s baseline lab values at the start of the Phase 2a clinical trial are summarized in the table below:

Biomarker (Unit)

Pre-Treatment

Baseline in Ph 2a

Last OLE Visit

Absolute Change

Percentage Change

F-cell percentage (%)

HbF percentage (%)

Percent reticulocytes (%)

Absolute reticulocyte count (×10 9 /L)

Indirect bilirubin (µmol/L)

The % unit for F-cells, HbF, and reticulocytes represents percentage points for absolute change values and % for percentage (relative) change values.

Patient #2 completed six months on the OLE clinical trial in August 2020.

This patient entered the Phase 2a clinical trial as part of the HU combination sub-study and was randomized to the placebo dose group, and therefore never received IMR-687 during the Phase 2a clinical trial.

The patient started the OLE clinical trial 14 months after completing the Phase 2a clinical trial in December 2018 but remained on a stable HU dose (3000mg daily) during this period and while on the OLE clinical trial.

A comparison of VOC data for the six-month OLE clinical trial period versus information from a retrospective review of the patient’s medical records for the six month period prior to initiation of the OLE clinical trial indicate potential benefits of IMR-687 being administered in combination with HU.

There were zero VOCs during the six-month period on the OLE clinical trial as compared to 15 reported VOCs in the previous six months while on HU alone.

In addition to the observed reductions in reported VOCs, we saw improvement across SCD disease biomarkers in this second patient.

A comparison of the patient’s lab values from the most recent OLE clinical trial visit in July 2020, to the patient’s baseline lab values at the start of the OLE clinical trial are summarized below:

Biomarker (Unit)

Pre-Treatment

Baseline in OLE

Last OLE Visit

Absolute Change

Percentage Change

F-cell percentage (%)

HbF percentage (%)

Percent reticulocytes (%)

Absolute reticulocyte count (×10 9 /L)

Indirect bilirubin (µmol/L)

The % unit for F-cells, HbF, and reticulocytes represents percentage points for absolute change values and % for percentage (relative) change values

We caution that this data is based upon only two patients at specified intervals in the OLE clinical trial, and reported VOC comparisons involve retrospective reviews of the patients’ medical records, and is therefore not a statistical approach.

As a result , we cannot assure you that future data on these patients will continue to be favorable or that data on other patients in the OLE clinical trial will demonstrate potential benefit of IMR-687 .

Heart Failure

In the second quarter of 2020, we began preclinical research to study IMR-687 in heart failure with preserved ejection fraction, or HFpEF, with the Necker Institute of Paris, France.

Published literature suggests that the inhibition of PDE9, and resulting increases in cyclic guanosine monophosphate, or cyclic GMP, through natriuretic peptide modulation, can serve as an attractive target for the prevention and treatment of vascular disease, including HFpEF.

In connection with this program, we formed an advisory board co-chaired by Thomas Wang, MD (UT Southwestern Medical Center) and Deepak Gupta, MD MSCI (Vanderbilt University Medical Center).

In addition, they have assembled a group of key opinion leaders in heart failure from Vanderbilt University Medical Center (JoAnn Lindenfeld, MD, Anna Hemnes, MD, Sheila Collins, PhD, Frank Harrell Jr., PhD), UT Southwestern Medical Center (Joseph Hill, MD PhD), Mayo Clinic (Maggie Redfield, MD), and Northwestern University (Sanjiv Shah, MD) to further advise about potential development of IMR-687 in this indication.

Financial Overview

Since our inception in 2016, our operations have focused on organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio and performing research and development of IMR-687.

To date, we have funded our operations primarily through the issuance of common stock in our initial public offering, or IPO, and convertible preferred stock.

On February 25, 2020, we raised $17.1 million in gross proceeds from the sale of 1,562,994 shares of Series B Preferred Stock upon a waiver of specified milestone conditions from the holders of a majority of the shares then held by the holders of Series B Preferred Stock.

On March 16, 2020, we completed an IPO of our common stock and issued and sold 4,700,000 shares of common stock at a public offering price of $16.00 per share, resulting in gross proceeds of $75.2 million.

On April 13, 2020, the underwriters exercised their option in full to purchase 705,000 additional shares of common stock for aggregate gross proceeds of $11.3 million.

To date, we have funded our operations primarily through the sale of common stock in our initial public offering, or IPO, and the sale of convertible preferred stock.

In March 2020, we completed an IPO of our common stock and issued and sold 4,700,000 shares of common stock at a public offering price of $16.00 per share, resulting in gross proceeds of $75.2 million.

In April 2020, the underwriters exercised their option to purchase additional shares in full to purchase 705,000 additional shares of common stock for aggregate gross proceeds of $11.3 million.

Inclusive of the underwriters’ option to purchase additional shares, we received approximately $76.5 million in net proceeds from the IPO after deducting $10.0 million of underwriting discounts and commissions and offering expenses.

Upon completion of the IPO, all 70,378,661 shares of outstanding convertible preferred stock automatically converted into 11,172,955 shares of common stock.

On February 28, 2020 we effected a 1-for-6.299 reverse stock split of our common stock.

In February 2020 we effected a 1-for-6.299 reverse stock split of our common stock.

All historical share and per share information shown herein and in our unaudited condensed financial statements and related notes have been retroactively adjusted to give effect to the reverse stock split.

We have incurred significant operating losses since inception.

Our losses from operations were $7.4 million and $4.2 million for the three months ended March 31, 2020 and 2019, respectively.

As of March 31, 2020, we had an accumulated deficit of approximately $62.0 million.

Our losses from operations were $10.3 million and $17.7 million for the three and six months ended June 30, 2020, respectively, and $5.6 million and $9.8 million for the three and six months ended June 30, 2019, respectively.

As of June 30, 2020, we had an accumulated deficit of approximately $72.2 million.

We expect to continue to incur significant operating losses for the foreseeable future, as we advance IMR-687 and any product candidates we may develop in the future from discovery through preclinical development and clinical trials and seek regulatory approval of our product candidates.

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We do not have any products approved for sale.

We will not generate revenue from produc t sales unless and until we successfully complete clinical development and obtain regulatory approval for IMR-687 or any future product candidate.

In addition, if we obtain regulatory approval for IMR-687 or any future product candidate and to the extent t hat we engage in commercialization activities on our own, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing, and distribution activities.

We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for IMR-687 or any future product candidate.

In addition, if we obtain regulatory approval for IMR-687 or any future product candidate and to the extent that we engage in commercialization activities on our own, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing, and distribution activities.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy.

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If we fail to become profitable or are unable to sustain profitability on a continuing basis, then we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations .

As of March 31, 2020, we had $105.9 million in cash, cash equivalents and investments.

As of June 30, 2020, we had $106.3 million in cash, cash equivalents and investments.

We believe that our existing cash, cash equivalents and investments will enable us to fund our operating expenses and capital expenditure requirements into mid-2022.

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On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, and on March 13, 2020, the United States declared a national emergency with respect to COVID-19.

The impact of the COVID-19 pandemic continues to evolve as of the date of this Quarterly Report on Form 10-Q, and we are actively monitoring the impact of the global situation on our financial condition, liquidity, operations, suppliers, industry, and workforce.

Although we did not experience any significant adverse impact from the COVID-19 pandemic on our financial condition, results of operations or liquidity for the quarter ended March 31, 2020, we have no clear visibility on what to expect for the upcoming weeks and months and therefore, our financial condition, results of operations and liquidity could be negatively impacted as a result of the COVID-19 pandemic going forward.

If the COVID-19 pandemic continues, it may have an adverse effect on our results of future operations, financial position, and liquidity, and even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future.

The COVID-19 pandemic is ongoing and its impact continues to evolve as of the date of this Quarterly Report on Form 10-Q.

We are actively monitoring the impact of the COVID-19 pandemic on our financial condition, liquidity, operations, suppliers, industry and workforce.

Although we have not experienced any significant adverse impact from the COVID-19 pandemic on our financial condition, results of operations or liquidity to date and while we have not experienced any noticeable increase in the patient discontinuation rate from our ongoing Phase 2a clinical trial of IMR-687 in SCD, the COVID-19 pandemic has resulted in minor disruptions to our clinical trial operations, including some missed and incomplete patient visits in our ongoing Phase 2a clinical trial of IMR-687 in SCD, as well as site activation and enrollment delays and delays in review of our regulatory submissions with respect to our Phase 2b clinical trials of IMR-687 in SCD and ß-thalassemia.

In addition, most of our employees are currently working remotely, and we are temporarily restricting travel and attendance at industry events by our employees.

The COVID-19 pandemic has also resulted in significant financial market volatility and uncertainty in recent months.

A continuation or worsening of the levels of market disruption and volatility seen in the recent past could have an adverse effect on our ability to access capital, on our business, results of operations and financial condition and on the market price of our common stock

Our financial condition, results of operations and liquidity could be negatively impacted by the COVID-19 pandemic in future periods.

The extent to which the COVID-19 pandemic impacts our business will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the continued severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others.

As the COVID-19 pandemic continues, it may have an adverse effect on our results of future operations, financial position, and liquidity, and even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future.

Lundbeck License Agreement

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The agreement also grants us a non-exclusive license under the licensed technology to research and develop, and make, have made, use, import and export for purposes of enabling such research and development, enhancements, improvements, modifications or derivatives to licensed products, until but not beyond a specified pre-commercialization developmental stage with respect to each such enhancement, improvement, modification or derivative.

Under the agreement, we have made cash payments totaling $1.8 million to date, consisting of an upfront payment and ongoing milestone payments, and also issued shares of our common stock as described in Note 13, Related Party Transactions, to the condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Under the agreement, we have made cash payments totaling $1.8 million to date, consisting of an upfront payment and ongoing milestone payments, and also issued shares of our common stock as described in Note 13, Related Party Transactions, to the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

We are obligated to make milestone payments to Lundbeck aggregating up to $23.5 million upon the achievement of specified clinical, regulatory and first commercial sale milestones by any licensed product and $11.8 million upon the achievement of specified clinical, regulatory and first commercial sale milestones by any IMARA product that is or comprises a PDE9 inhibitor but is not a licensed product, or a PDE9 product, if any.

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Research and development expenses consist primarily of costs incurred in connection with the preclinical and clinical development and manufacture of IMR-687, and include:

potential costs related to the impact of the COVID-19 pandemic;

personnel-related expenses, including salaries, benefits and stock-based compensation expenses, for individuals involved in research and development activities;

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We recognize external development costs based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors and our clinical investigative sites.

Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our condensed consolidated financial statements as prepaid expenses or accrued research and development expenses.

Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our unaudited condensed consolidated financial statements as prepaid expenses or accrued research and development expenses.

Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized, even when there is no alternative future use for the research and development.

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Additionally, future commercial and regulatory factors beyond our control will impact our clinical development program and plans.

The following table summarizes our research and development expenses for the three months ended March 31, 2020 and 2019:

The following table summari zes our research and development expenses for the three and six months ended June 30 , 2020 and 2019:

Three Months Ended

Six Months Ended

(in thousands)

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This is due to the numerous risks and uncertainties associated with developing product candidates, including the uncertainty of:

the impact of the ongoing COVID-19 pandemic and our response to it;

the timing and progress of preclinical and clinical development activities;

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In addition, if we obtain regulatory approval for IMR-687 or any future product candidate and to the extent that we engage in commercialization activities on our own, we expect to incur significant expenses related to building a sales and marketing team to support product sales, marketing and distribution activities.

Total Other Income (Expense), Net

Total Other Income (Expense), Net.

Total other income (expense), net primarily consists of interest earned on our cash, cash equivalents and investments.

Total Other Income, N et

Total Other Income), Net.

Total o ther income, net primarily consists of interest earned on our cash, cash equivalents and investments, offset by amortization and accretion on investments and foreign currency translation adjustments.

Results of Operations

Comparison of the Three Months Ended March 31, 2020 and 2019

The following table summarizes our results of operations for the three months ended March 31, 2020 and 2019:

Comparison of the Three Months Ended June 30, 2020 and 2019

The following table summarizes our results of operations for the three months ended June 30, 2020 and 2019:

Three Months Ended

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Loss from operations

Total other income (expense), net

Total other income, net

Research and Development Expenses

Research and development expenses increased by approximately $2.2 million from $3.6 million for the three months ended March 31, 2019 to $5.8 million for the three months ended March 31, 2020.

Research and development expenses increased by approximately $3.5 million from $4.4 million for the three months ended June 30, 2019 to $7.9 million for the three months ended June 30, 2020.

The increase in research and development expenses was primarily attributable to the following:

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a $0.8 million increase in personnel-related costs, including a $0.1 million increase in stock-based compensation expense, primarily due to an increase in headcount to support the growth of our research and development efforts;

a $0.1 million increase in other research and development operational costs, including facilities, rent, travel and insurance driven by an increase in headcount.

a $0.1 million decrease in other research and development operational costs, including facilities, supplies, and travel.

General and Administrative Expenses

General and administrative expenses increased by approximately $0.9 million from $0.6 million for the three months ended March 31, 2019 to $1.6 million for the three months ended March 31, 2020.

General and administrative expenses increased by approximately $1.2 million from $1.2 million for the three months ended June 30, 2019 to $2.4 million for the three months ended June 30, 2020.

The increase in general and administrative expenses was primarily attributable to the following:

a $0.2 million increase in consulting and professional fees, including legal, business development, accounting and audit fees;

a $0.8 million increase in other general and administrative operational costs, including facilities, rent and increased insurance cots as a result of operating as a public company;

a $0.4 million increase in personnel costs, including a $0.2 million increase in stock-based compensation expense, primarily due to an increase headcount.

a $0.3 million increase in other general and administrative operational costs, including facilities, rent and insurance.

Total Other Income (Expense), Net

Total other income (expense), net was $0.1 million for the three months ended March 31, 2020.

There was no other income (expense), net for the three months ended March 31, 2019.

In June 2019, we invested our cash in money market funds and available-for-sale securities and our total other income (expense), net of $0.1 million for the three months ended March 31, 2020 consisted primarily of interest earned on our cash, cash equivalents and investments.

Total Other Income, Net

Total other income, net was $0.1 million and $0.2 million for the three months ended June 30, 2020 and 2019, respectively.

In June 2019, we invested our cash in money market funds and available-for-sale securities and our total other income (expense), net of $0.1 million and $0.2 million for the three months ended June 30, 2020 and 2019, respectively, consisted primarily of interest earned on our cash, cash equivalents and investments.

Comparison of the Six Months Ended June 30 , 20 20 and 2019

The following table summarizes our results of operations for the six months ended June 30, 2020 and 2019:

Six Months Ended

(in thousands)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Total other income, net

Research and Development Expenses

Research and development expenses increased by approximately $5.7 million from $7.9 million for the six months ended June 30, 2019 to $13.7 million for the six months ended June 30, 2020.

The increase in research and development expenses was primarily attributable to the following:

a $4.3 million increase in costs related to the development and manufacturing of clinical materials, clinical research and oversight of our clinical trials and investigative fees for IMR-687;

a $1.5 million increase in personnel-related costs, including a $0.3 million increase in stock-based compensation expense, primarily due to an increase in headcount to support the growth of our research and development efforts;

a $0.1 million decrease in other research and development operational costs, including facilities, supplies, and travel.

General and Administrative Expenses

General and administrative expenses increased by approximately $2.2 million from $1.8 million for the six months ended June 30, 2019 to $4.0 million for the six months ended June 30, 2020.

The increase in general and administrative expenses was primarily attributable the following:

a $1.2 million increase in other general and administrative operational costs, including facilities, rent and increased insurance costs as a result of operating as a public company;

a $0.9 million increase in personnel costs, including a $0.4 million increase in stock-based compensation expense, primarily due to an increase headcount;

a $0.1 million increase in consulting and professional fees, including legal, business development, accounting and audit fees.

Total Other Income, Net

Total other income, net was $0.2 million and $0.2 million for the six months ended June 30, 2020 and 2019, respectively.

In June 2019, we invested our cash in money market funds and available-for-sale securities and our total other income (expense), net for the six months ended June 30, 2020 and 2019, respectively, consisted primarily of interest earned on our cash, cash equivalents and investments.

Liquidity and Capital Resources

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We have not yet commercialized IMR-687, which is in clinical development, and we do not expect to generate revenue from sales of IMR-687 or any product candidates we may develop in the future for several years, if at all.

Through March 31, 2020, we have funded our operations primarily through the issuance of common stock in our IPO and convertible preferred stock.

Through June 30, 2020, we have funded our operations primarily through the sale of common stock in our IPO and sale of convertible preferred stock.

On February 25, 2020, we raised $17.1 million in gross proceeds from the issuance of 1,562,994 shares of Series B Preferred Stock upon a waiver of specified milestone conditions from the holders of a majority of the shares then held by the holders of Series B Preferred Stock.

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As of December 31, 2019, we had $28.9 million in cash, cash equivalents and investments.

The impact of the COVID-19 pandemic on the global financial markets may reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity.

In particular, the COVID-19 pandemic could adversely impact our operations, including among others, our manufacturing and supply chain, and our ability to conduct our clinical trials.

The COVID-19 pandemic could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could also affect our operations, our ability to conduct our clinical trials, our ability to raise additional funds through public offerings and the volatility of our stock price and trading in our stock.

Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession or depression that has occurred or may occur in the future.

The following table provides information regarding our cash flows for the three months ended March 31, 2020 and 2019:

Three Months Ended

As of June 30, 2020, we had $106.3 million in cash, cash equivalents and investments.

While we do not currently expect that the COVID-19 pandemic will have a material adverse impact on our short-term or long-term liquidity, the impact of the COVID-19 pandemic on the global financial markets may reduce our ability to access capital, which could negatively impact our short-term and long-term liquidity.

See “Impact of COVID-19 Pandemic.”

The following table provides information regarding our cash flows for the six months ended June 30, 2020 and 2019:

Six Months Ended

(in thousands)

Net cash used in operating activities

Net cash provided by investing activities

Net cash used in investing activities

Net cash provided by financing activities

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Net Cash Used in Operating Activities

Net cash used in operating activities for the three months ended March 31, 2020 was $9.5 million primarily due to our net loss of $7.2 million and net cash outflow from the change in working capital of $2.7 million, partially offset by stock-based compensation expense of $0.4 million.

Net cash used in operating activities for the three months ended March 31, 2019 was $2.4 million primarily due to our net loss of $4.2 million, partially offset by stock-based compensation expense of $0.1 million and cash inflows from the change in working capital of $1.7 million.

Net Cash Provided by Investing Activities

Net cash provided by investing activities for the three months ended March 31, 2020 was $4.8 million due to proceeds from sales and maturities of short-term investments.

There were no investing activities during the three months ended March 31, 2019.

Net cash used in operating activities for the six months ended June 30, 2020 was $18.8 million primarily due to our net loss of $17.4 million and net cash outflow from a change in working capital of $2.3 million, partially offset by stock-based compensation expense of $0.9 million.

Net cash used in operating activities for the six months ended June 30, 2019 was $7.6 million primarily due to our net loss of $9.6 million, partially offset by an increase in stock-based compensation expense of $0.3 million, as well as a net cash inflow of $1.7 million related to changes in working capital.

Net Cash Used by Investing Activities

Net cash used in investing activities for the six months ended June 30, 2020 was $27.7 million due to purchases of marketable securities of $41.8 million, partially offset by proceeds from sales and maturities of short-term investments of $14.2 million and purchases of equipment.

Net cash used in investing activities for the six months ended June 30, 2019 was $0.1 million due to purchases of property and equipment related to our new operating lease, which we occupied in August 2019.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2020 was $86.6 million, primarily due to $69.9 million of net proceeds received from our IPO, after deducting underwriting discounts and commissions, and $17.1 million of cash inflow resulting from sale of Series B Preferred Stock in February 2020.

Net cash provided by financing activities for the six months ended June 30, 2020 was $96.1 million, primarily due to $80.4 million of net proceeds received from our IPO, after deducting underwriting discounts and commissions, $17.1 million of cash inflow resulting from sale of Series B Preferred Stock in February 2020, and $0.2 million of proceeds from option exercises.

The proceeds from our IPO were partially offset by payments of $1.6 million of issuance costs.

Net cash provided by financing activities for the three months ended March 31, 2019 was $43.9 million, primarily due to $43.9 million of cash inflow resulting from the issuance of our series B preferred stock in March of 2019.

As of March 31, 2019, $0.1 million of offering expenses were unpaid.

Net cash provided by financing activities for the six months ended June 30, 2019 was $45.6 million resulting primarily from the issuance of our Series B preferred stock in March and May of 2019.

Funding Requirements

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Our expenses will also increase if, and as, we:

navigate the impacts of COVID-19 pandemic and our response to it;

continue to advance clinical development of IMR-687, including our ongoing Phase 2a clinical trial in patients with SCD;

expand our planned development efforts for IMR-687 and pursue a Phase 2b clinical trial of IMR-687 in patients with SCD and a Phase 2b clinical trial of IMR-687 in patients with β-thalassemia;

navigate the impacts of COVID-19 and our response to it;

continue to advance clinical development of IMR-687, including our ongoing Phase 2a and OLE clinical trials in patients with SCD and our recently initiated Phase 2b clinical trials of IMR-687 in patients with SCD and β-thalassemia;

expand our planned research and development efforts for IMR-687 and pursue preclinical and potentially clinical activities for HFpEF;

continue to incur third-party manufacturing costs to support our clinical trials of IMR-687 and, if approved, commercialization;

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Our future funding requirements will depend on, and could increase significantly as a result of, many factors, including:

the severity of the potential impact of the COVID-19 pandemic and our response to it;

the time and cost necessary to complete our ongoing Phase 2a clinical trial of IMR-687 in patients with SCD, to initiate and complete our planned Phase 2b clinical trial of IMR-687 in patients with SCD, to initiate and complete one or more pivotal clinical trials of IMR-687, and to pursue regulatory approvals for IMR-687 in SCD, and the costs of post-marketing studies that could be required by regulatory authorities;

the progress and results of our Phase 2a clinical trial of IMR-687 in patients with SCD;

our ability to advance IMR-687 in β-thalassemia patients through clinical development, and the timing and scope of these development activities;

the impact of the COVID-19 pandemic and our response to it;

the time and cost necessary to complete our ongoing Phase 2a and OLE clinical trials of IMR-687 in patients with SCD, to initiate and complete our Phase 2b clinical trials of IMR-687 in patients with SCD and β-thalassemia, to initiate and complete one or more pivotal clinical trials of IMR-687, and to pursue regulatory approvals for IMR-687, and the costs of post-marketing studies that could be required by regulatory authorities;

our ability to advance IMR-687 in HFpEF through preclinical and, potentially, clinical development, and the timing and scope of these research and development activities;

the costs of obtaining clinical and commercial supplies of IMR-687 and any other product candidates we may identify and develop;

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the manufacturing, selling and marketing costs associated with IMR-687 and any other product candidates we may identify and develop, including the cost and timing of establishing our sales and marketing capabilities;

the amount and timing of sales and other revenues from IMR-687 and any other product candidates we may identify and develop, including the sales price and the availability of adequate third-party reimbursement;

the amount and timing of sales and other revenues from IMR-687 and any other product candidates we may identify and develop, including the sales price and the availability of coverage and adequate third-party reimbursement;

the time and cost necessary to respond to technological and market developments;

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the costs of maintaining, expanding and protecting our intellectual property portfolio.

A change in the outcome of any of these or other variables with respect to the development of IMR-687 or any product candidate we m ay develop in the future could significantly change the costs and timing associated with the development of that product candidate.

Further, our operating plans may change in the future, and we may need additional funds to meet operational needs and capita l requirements associated with such operating plans.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic allian ces and licensing arrangements.

A change in the outcome of any of these or other variables with respect to the development of IMR-687 or any product candidate we may develop in the future could significantly change the costs and timing associated with the development of that product cand idate.

Further, our operating plans may change in the future, and we may need additional funds to meet operational needs and capital requirements associated with such operating plans.

Until such time, if ever, as we can generate substantial product revenue s, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements.

We currently have no credit facility or committed sources of capital.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our existing stockhol ders may be diluted, and the terms of these securities may include liquidation or other preferences that could adversely affect the rights of such stockholders.

Additional debt financing, if available, may involve agreements that include restrictive covena nts that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business.

To the extent that we r aise additional capital through the sale of equity or convertible debt securities, the ownership interests of our existing stockholders may be diluted, and the terms of these securities may include liquidation or other preferences that could adversely affe ct the rights of such stockholders.

Additional debt financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declar ing dividends, that could adversely impact our ability to conduct our business.

If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research program or product candidates, or grant licenses on terms that may not be favorable to us.

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Contractual Obligations

During the three months ended March 31, 2020, there have been no material changes to our contractual obligations outside the ordinary course of business from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Contractual Obligations” in our final prospectus for our IPO filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on March 12, 2020.

During the three and six months ended June 30, 2020, there have been no material changes to our contractual obligations outside the ordinary course of business from those described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Contractual Obligations” in our final prospectus for our IPO filed pursuant to Rule 424(b)(4) under the Securities Act with the SEC on March 12, 2020.

Critical Accounting Policies and Estimates

This management’s discussion and analysis is based on our consolidated financial statements, which have been prepared in accordance with U.S.

This management’s discussion and analysis is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S.

generally accepted accounting principles.

The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reported periods.

The preparation of these unaudited condensed consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the reported periods.

We base our estimates on historical experience, known trends and events, and various other factors that we believe to be reasonable under the circumstances.

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On an ongoing basis, we evaluate our judgments and estimates in light of changes in circumstances, facts, and experience.

The effects of material revisions in estimates, if any, will be reflected in the consolidated financial statements prospectively from the date of change in estimates.

During the three months ended March 31, 2020, there were no material changes to our critical accounting policies from those described in our audited consolidated financial statements for the year ended December 31, 2019 included in our Registration Statement on Form S-1/A, filed with the SEC on March 10, 2020.

The effects of material revisions in estimates, if any, will be reflected in the unaudited condensed consolidated financial statements prospectively from the date of change in estimates.

During the three and six months ended June 30, 2020, there were no material changes to our critical accounting policies from those described in our audited consolidated financial statements for the year ended December 31, 2019 included in our Registration Statement on Form S-1/A, filed with the SEC on March 10, 2020.

Recent Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Emerging Growth Company Status

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We have elected to avail ourselves of delayed adoption of new or revised accounting standards and, therefore, we will be subject to the same requirements to adopt new or revised accounting standards as private entities.

As an EGC, we may take advantage of certain exemptions and reduced reporting requirements under the JOBS Act.

As an EGC, we may take advantage of certain exemptions an d reduced reporting requirements under the JOBS Act.

Subject to certain conditions, as an EGC:

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we may not require nonbinding advisory votes on executive compensation or stockholder approval of any golden parachute payments.

We will remain an EGC until the earliest of (i) the last day of the fiscal year following the fifth anniversary of the completion of our IPO, (ii) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more, (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the previous rolling three-year period, or (iv) the date on which we are deemed to be a large accelerated filer under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

Quan titative and Qualitative Disclosures About Market Risk.

Our primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S.

interest rates, particularly because our cash equivalents are in the form of money market funds that are invested in U.S.

Treasury securities.

We also hold investments in corporate debt securities and commercial paper.

As of March 31, 2020, we had cash, cash equivalents and investments of $105.9 million.

Interest income is sensitive to changes in the general level of interest rates;

however, due to the short-term maturities of our cash equivalents and the low risk profile of our investments, an immediate 10% change in interest rates would not have a material effect on the fair market value of our investment portfolio.

We are not currently exposed to significant market risk related to changes in foreign currency exchange rates;

however, we have contracted with and may continue to contract with foreign vendors that are located in Europe and Asia, who we may pay in local currency.

Our operations may be subject to fluctuations in foreign currency exchange rates in the future.

We will remain an EGC until the earliest of (i) December 31, 2025, (ii) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more, (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the previous rolling three-year period, or (iv) the date on which we are deemed to be a large accelerated filer under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis