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Item 2. Management’s Discussion and Analysis

2020-11-05 compared with 2020-08-14 · 71 added, 119 removed, 222 unchanged (46% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis of Fi nancial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and the prospectus for our initial public offering filed pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, or the Securities Act, with the Securities and Exchange Commission, or SEC, on March 12, 2020.

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As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis.

Business Overview

We are a clinical-stage biopharmaceutical company dedicated to developing and commercializing novel therapeutics to treat patients suffering from rare inherited genetic disorders of hemoglobin, known as hemoglobinopathies.

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In pre-specified interim analyses from this trial, we observed proof of concept clinical activity and IMR-687 was reported to be well tolerated.

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

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.

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

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 four-year trial to test safety and measure tolerability of IMR- 687.

We reported preliminary data with respect to two patients in the OLE clinical trial in August 2020 and expect to report additional data from the OLE clinical trial in the first quarter of 2021.

We have also 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 and are currently enrolling patients in each trial.

Due to delays resulting from the COVID-19 pandemic, we currently expect to report interim data from each of the Phase 2b clinical trials in the second half of 2021.

We continue to evaluate the impact of the COVID-19 pandemic on all of our clinical trials, as discussed below, and therefore, our estimated timelines for these clinical trials could be delayed further .

In October 2020, the results of an exploratory analysis conducted by Vanderbilt University Medical Center, or VUMC, on data from the second interim analysis from our Phase 2a clinical trial of IMR-687 in adult patients with SCD were presented at the 15th Annual Sickle Cell and Thalassemia, or ASCAT, Conference.

The exploratory analysis reviewed the potential of IMR-687 to reduce cardiovascular risk in SCD patients.

The analysis found that patients treated with IMR-687 in combination with hydroxyurea, or HU, saw a mean decrease of 27.3% from baseline in levels of N-terminal pro-hormone B-type natriuretic peptide, or NT-ProBNP, a well-established marker of cardiovascular risk.

Patients on background HU alone saw a mean increase in NT-ProBNP levels of 27% from baseline.

Furthermore, among patients with baseline NT-ProBNP values greater than 400pg/ml, patients who received IMR-687 in combination with HU showed a mean reduction of 67.9% in NT-ProBNP values from baseline, as compared to a mean increase of 28.0% from baseline in patients who received HU alone.

The exploratory analysis by VUMC supports the published literature, which suggests that the inhibition of PDE9 can serve as an attractive target for the prevention and treatment of vascular disease.

To this end, 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.

Preliminary data from this preclinical research presented at the ASCAT Conference suggested potential benefits of IMR-687 across several relevant cardiac biomarkers.

Financial Overview

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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 $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.

Our losses from operations were $12.5 million and $30.1 million for the three and nine months ended September 30, 2020, respectively, and $6.9 million and $16.6 million for the three and nine months ended September 30, 2019, respectively.

As of September 30, 2020, we had an accumulated deficit of approximately $84.6 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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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 June 30, 2020, we had $106.3 million in cash, cash equivalents and investments.

As of September 30, 2020, we had $96.1 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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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.

We have been and continue to actively monitor 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 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.

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The capitalized amounts are expensed as the related goods are delivered or the services are performed.

A significant portion of our research and development costs have been external costs, which we track after a clinical product candidate has been identified.

A significant portion of our research and development costs have been external costs, which we track after a clinical product candidate has been iden tified.

Our internal research and development costs are primarily personnel-related costs and other indirect costs.

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

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

The following table summarizes our research and development expenses for the three and nine months ended September 30, 2020 and 2019:

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands)

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General and Administrative.

General and administrative expenses consist primarily of personnel-related expenses, including salaries, benefits, and stock-based compensation expenses for personnel in executive, finance, accounting, human resources and other administrative functions.

Other significant general and administrative expenses include legal fees relating to patent, intellectual property and corporate matters, and fees paid for accounting, consulting and other professional services.

General and administrative expenses consist primarily of personnel-related expenses, including salaries, benefits, and stock-based compensation expenses for personnel in executive, fina nce, accounting, human resources and other administrative functions.

We anticipate that our general and administrative expenses will increase in the future as our business expands to support our continued research and development activities, including our future clinical programs.

These increases will likely include increased costs related to the hiring of additional personnel and fees to outside consultants, among other expenses.

We also anticipate increased expenses associated with being a public company, including costs for audit, legal, regulatory, and tax-related services related to compliance with the rules and regulations of the Securities and Exchange Commission, or SEC, listing standards applicable to companies listed on a national securities exchange, director and officer insurance premiums and investor relations costs.

We also anticipate increased expenses associated with being a public company, including costs for audit, legal, regulatory, and tax-related services related to compliance with the rules and regulations of the SEC, listing standards applicable to companies listed on a national securities exchange, director and officer insurance premiums and investor relations costs.

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, N et

Total Other Income, Net

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 June 30, 2020 and 2019

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

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

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

Three Months Ended

September 30,

(in thousands)

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Research and Development Expenses

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.

Research and development expenses increased by approximately $4.4 million from $5.1 million for the three months ended September 30, 2019 to $9.5 million for the three months ended September 30, 2020.

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

a $4.2 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 $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 $0.5 million increase in personnel-related costs, including less than $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 $0.3 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 $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.

General and administrative expenses increased by approximately $1.2 million from $1.7 million for the three months ended September 30, 2019 to $3.0 million for the three months ended September 30, 2020.

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

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 $0.8 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;

4 million increase in personnel costs, including a $ 0.

3 million increase in stock-based compensation expense, primarily due to an increase headcount .

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

Total other income, net was $0.1 million and $0.3 million for the three months ended September 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, net for the three months ended September 30, 2020 and 2019, respectively, consisted primarily of interest earned on our cash, cash equivalents and investments.

Comparison of the Nine Months Ended September 30, 2020 and 2019

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

Nine Months Ended

September 30,

(in thousands)

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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.

Research and development expenses increased by approximately $10.1 million from $13.1 million for the nine months ended September 30, 2019 to $23.2 million for the nine months ended September 30, 2020.

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

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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.

General and administrative expenses increased by approximately $3.4 million from $3.6 million for the nine months ended September 30, 2019 to $7.0 million for the nine months ended September 30, 2020.

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

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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.

Total other income, net was $0.3 million and $0.4 million for the nine months ended September 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, net for the nine months ended September 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 June 30, 2020, we have funded our operations primarily through the sale of common stock in our IPO and sale of convertible preferred stock.

Through September 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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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.

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

As of September 30, 2020, we had $96.1 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

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

Nine Months Ended

September 30,

(in thousands)

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Net Cash Used in Operating Activities

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 in operating activities for the nine months ended September 30, 2020 was $29.1 million primarily due to our net loss of $29.8 million and net cash outflow from a change in working capital of $0.9 million, partially offset by stock-based compensation expense of $1.6 million.

Net cash used in operating activities for the nine months ended September 30, 2019 was $13.8 million primarily due to our net loss of $16.2 million, partially offset by an increase in stock-based compensation expense of $0.6 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 used in investing activities for the nine months ended September 30, 2020 was $37.9 million due to purchases of marketable securities of $55.8 million and purchases of property and equipment of less than $0.1 million, partially offset by proceeds from sales and maturities of short-term investments of $17.9.

Net cash used in investing activities for the nine months ended September 30, 2019 was $21.9 million primarily due to purchases of marketable securities of $21.8 million in the third quarter of 2019, and purchases of property and equipment of $0.1 million related to our operating lease, under which we commenced occupancy in August 2019.

Net Cash Provided by Financing Activities

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.

Net cash provided by financing activities for the nine months ended September 30, 2020 was $96.3 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 $0.4 million of proceeds from stock option exercises.

The proceeds from our IPO were partially offset by payments of $1.7 million of issuance costs.

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.

Net cash provided by financing activities for the nine months ended September 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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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;

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

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

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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;

the time and cost necessary to complete our ongoing Phase 2a, OLE and Phase 2b clinical trials 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, and the costs of post-marketing studies that could be required by regulatory authorities;

the time and cost necessary to complete our Phase 2b clinical trial of IMR-687 in patients with β-thalassemia, to initiate and complete one or more pivotal clinical trials of IMR-687 in β-thalassemia, and to pursue regulatory approvals for IMR-687 in β-thalassemia, 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;

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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 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.

A change in the outcome of any of these or other variables with respect to the development of IMR-687 or any product candid ate we may 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 an d capital 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, strategi c alliances and licensing arrangements.

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

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.

To the extent that we raise 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 affect the rights of such stockholders.

Additional debt financing, if available, may involve agreements that include restrictiv e covenants 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.

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 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.

During the three and nine months ended September 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

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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.

During the three and nine months ended September 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

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis