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Item 2. Management’s Discussion and Analysis

2021-05-11 compared with 2020-11-05 · 91 added, 112 removed, 181 unchanged (53% of the section changed)

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.

Management’s Discussion and Analysis of Financial 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 condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on March 5, 2021.

Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties.

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.

As a result of many factors, including those factors set forth in “Risk Factor Summary” in the forepart of this Quarterly Report on Form 10-Q and “Risk Factors” in Part II, Item 1A.

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

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IMR-687 is a highly selective, potent small molecule inhibitor of phosphodiesterase-9, or PDE9, that has a multimodal mechanism of action that acts primarily on red blood cells, and has the potential to act on white blood cells, adhesion mediators and other cell types that are implicated in these disorders.

We are conducting a randomized, double-blinded, placebo-controlled Phase 2a clinical trial of IMR-687 in adult patients with SCD.

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 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.

We are currently conducting two randomized, double-blind, placebo-controlled Phase 2b clinical trials of IMR-687.

The Ardent trial is a Phase 2b clinical trial of IMR-687 in approximately 99 adult patients with SCD and the Forte trial is a Phase 2b clinical trial in approximately 60 transfusion dependent patients and 60 non-transfusion dependent patients with ß-thalassemia.

In the first quarter of 2021, separate independent data monitoring committees for the Ardent and Forte Phase 2b clinical trials recommended opening of the higher dose IMR-687 treatment arm in each of these clinical trials following review of available safety and tolerability data.

These additional arms were pre-specified in the two protocols and enrollment is proceeding in each clinical trial at the IMR-687 higher dose (once daily dose of 300 mg or 400 mg based on patient weight), IMR-687 lower dose (once daily dose of 200 mg or 300 mg based on patient weight) or placebo.

We remain on track to complete the respective protocol-driven interim analyses for the Ardent and Forte Phase 2b clinical trials and to report interim data from each of these trials in the second half of 2021.

In addition, we expect to report data from the primary analysis from each of these trials in the first half of 2022 and data from the final analysis from each of these trials in the second half of 2022.

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

Similar to the Ardent and Forte Phase 2b clinical trials, in the first quarter of 2021, a safety review committee reviewed the available safety and tolerability data from patients in the OLE clinical trial and following this review recommended increasing the daily dose from 200mg to either 300 mg or 400 mg, based on patient weight.

We expect that patients will begin dose escalation to the higher dose under an amended protocol in mid-2021.

We expect to report additional data on the 200 mg daily dose from the OLE clinical trial at the European Hematology Association 2021 Virtual Congress in June 2021.

In addition, in the first half of 2021 we expect to initiate a single ascending dose, or SAD, followed by a multiple dose clinical trial of IMR-687 to further explore the safety, tolerability, and pharmacokinetics, or PK, of higher doses of IMR-687.

This short duration clinical trial in healthy volunteers under fed conditions will sequentially assess doses of IMR-687 up to 800 mg per day administered once daily or twice daily.

Based on the safety, tolerability and PK profile observed in the SAD portion of the trial, the multi-dose portion of the trial will evaluate multiple doses of IMR-687 over seven days at the maximum tolerated dose observed for the once daily and/or twice daily administrations from the SAD portion of the trial.

In part due to the ongoing exploration of higher adult doses of IMR-687, as well as expected data readouts from higher dose IMR-687 administration from the Ardent, Forte and OLE clinical trials in the second half of 2021, we currently anticipate initiating our pediatric clinical program of IMR-687 in SCD in 2022.

Lastly, we recently completed preclinical research of IMR-687 in heart failure with preserved ejection fraction, or HFpEF, and are formulating a clinical development plan for IMR-687 in this indication.

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

Financial Overview

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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.

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 th e revers e stock split .

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

On April 1, 2021, we filed a shelf registration statement on Form S-3, or the Shelf, with the SEC in relation to the registration and potential future issuance of common stock, preferred stock, debt securities, warrants and/or units of any combination thereof in the aggregate amount of up to $200.0 million.

The Shelf was declared effective on April 8, 2021.

We also simultaneously entered into a sales agreement with Cantor Fitzgerald & Co, LLC, as sales agent, providing for the offering, issuance and sale by us of up to an aggregate $75.0 million of our common stock from time to time in “at-the-market” offerings under the Shelf.

We have incurred significant operating losses since inception.

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.

Our losses from operations were $10.3 million and $7.4 million for the three months ended March 31, 2021 and 2020, respectively.

As of March 31, 2021, we had an accumulated deficit of approximately $106.4 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 September 30, 2020, we had $96.1 million in cash, cash equivalents and investments.

As of March 31, 2021 and December 31, 2020, we had $75.6 million and $88.2 million, respectively, 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 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.

We 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 as of the date of this Quarterly Report on Form 10-Q , the COVID-19 pandemic has resulted in disruptions to our clinical trial operations, including some missed and incomplete patient visits in our recently completed Phase 2a clinical trial of IMR-687 in SCD , delays to some patient visits in our OLE clinical trial in SCD, as well as site activation and enrollment delays and delays in review of our regulatory submissions with respect to our Ardent and Forte 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.

The extent to which the COVID-19 pandemic impacts our business will depend on future developments, which remain 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 on our ability to access capital.

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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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.

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 , of which we have paid $1.8 million to date, 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, of which we have made no payments to date.

We are obligated to pay tiered royalties of low-to-mid single-digit percentages to Lundbeck based on our, and any of our affiliates’ and sublicensees’, net sales of licensed products, and tiered royalties of low single-digit percentages to Lundbeck based on our, and any of our affiliates’ and sublicensees’, net sales of PDE9 products, 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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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 iden tified.

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

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

The following table summarizes our research and development expenses for the three months ended March 31, 2021 and 2020:

Three 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, fina nce, 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 othe r professional services .

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, legal and other administrative functions.

Other significant general and administrative expenses include the cost of director and officer insurance premiums, legal fees relating to patent, intellectual property and corporate matters, and fees paid for accounting, consulting and other professional services.

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 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 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.

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, 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.

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

Results of Operations

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:

Comparison of the Three Months Ended March 31, 2021 and 2020

The following table summarizes our results of operations for the three months ended March 31, 2021 and 2020:

Three Months Ended

September 30,

(in thousands)

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Research and Development Expenses

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.

Research and development expenses increased by approximately $1.3 million from $5.8 million for the three months ended March 31, 2020 to $7.1 million for the three months ended March 31, 2021.

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

a $0.9 million increase in personnel-related costs, including a $0.2 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 $0.4 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 $0.5 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 $1.7 million for the three months ended September 30, 2019 to $3.0 million for the three months ended September 30, 2020.

General and administrative expenses increased by approximately $1.6 million from $1.6 million for the three months ended March 31, 2020 to $3.2 million for the three months ended March 31, 2021.

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 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 $0.3 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)

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 $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:

a $8.5 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 $2.0 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 $0.4 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 $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:

a $2.0 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 $0.7 million increase in personnel costs, including a $0.4 million increase in stock-based compensation expense, primarily due to an increase headcount;

a $0.6 million increase in cost associated with directors and officers insurance premiums;

a $0.2 million increase in other general and administrative operational costs, including facilities, rent and franchise tax;

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 $0.3 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.

Total other income, net was approximately $0.1 million in each of the three months ended March 31, 2021 and 2020, consisting 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 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.

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.

Through March 31, 2021, we have funded our operations primarily through the issuance of common stock in our IPO and convertible preferred stock.

In February 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.

In April 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.

As of September 30, 2020, we had $96.1 million in cash, cash equivalents and investments.

On April 1, 2021, we filed the Shelf with the SEC in relation to the registration and potential future issuance of common stock, preferred stock, debt securities, warrants and/or units of any combination thereof in the aggregate amount of up to $200.0 million.

The Shelf was declared effective on April 8, 2021.We also simultaneously entered into a sales agreement with Cantor Fitzgerald & Co, LLC, as sales agent, providing for the offering, issuance and sale by us of up to an aggregate $75.0 million of our common stock from time to time in “at-the-market” offerings under the Shelf.

As of March 31, 2021, we had $75.6 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 nine months ended September 30, 2020 and 2019:

Nine Months Ended

September 30,

The following table provides information regarding our cash flows for the three months ended March 31, 2021 and 2020:

Three Months Ended

(in thousands)

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by 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 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 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 used in operating activities for the three months ended March 31, 2021 was $13.0 million, primarily due to our net loss of $10.3 million and net cash outflow from the change in working capital of $3.8 million, partially offset by stock-based compensation expense of $0.9 million and amortization of $0.1 million on our short-term investments.

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 Provided by Investing Activities

Net cash provided by investing activities for the three months ended March 31, 2021 was $18.3 million due to proceeds from sales and maturities of short-term investments of $22.0 million, partially offset by purchases of marketable securities of $3.7 million.

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.

Net Cash Provided by Financing Activities

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.

Net cash provided by financing activities for the nine months ended March 31, 2021 was $0.5 million, primarily due to $0.5 million of net proceeds received from the exercise of stock options.

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.

The proceeds from our IPO were partially offset by payments of $0.5 million of issuance costs.

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

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

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;

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

continue to advance clinical development of IMR-687, including our OLE clinical trial in patients with SCD and our ongoing Ardent and Forte 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 potentially pursue clinical activities for IMR-687 in HFpEF;

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

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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, 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;

the time and cost necessary to complete our ongoing OLE and Ardent clinical trials of IMR-687 in patients with SCD, to initiate and complete one or more pivotal clinical trials of IMR-687 in SCD, 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 time and cost necessary to complete our Forte 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 into and through clinical development, and the timing and scope of these 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 coverage and 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 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 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.

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 candidate.

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.

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 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.

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 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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We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.

Contractual Obligations

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 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.

During the three months ended March 31, 2021, 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, 2020 included in our Annual Report on Form 10-K filed with the SEC on March 5, 2021, with the exception of the modified retrospective adoption of ASC 842 Leases.

For more information on the adoption of ASC 842 Leases, see Note 2, Summary of Significant Accounting Policies – Leases, to the unaudited condensed consolidated financial statements in this Quarterly Report on Form 10-Q.

Recent Accounting Pronouncements

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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 an d reduced reporting requirements under the JOBS Act.

As an EGC, we may take advantage of certain exemptions and 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) 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.

Quantitative and Qualitati ve 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, 2021, we had cash, cash equivalents and investments of $75.6 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.

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