What changed in this filing

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Item 1. Financial Statements

2021-11-09 compared with 2021-08-06 · 84 added, 62 removed, 441 unchanged (25% of the section changed)

2 unchanged sentences

(in thousands, except share and per share data)

September 30,

Current assets:

17 unchanged sentences

10,000,000 shares authorized;

issued or outstanding as of June 30, 2021;

issued or outstanding as of September 30, 2021;

no shares authorized, issued or

2 unchanged sentences

200,000,000 shares

authorized as of June 30, 2021 and December 31, 2020, respectively;

and 17,548,263 shares issued and outstanding as of June 30, 2021 and December 31,

2020, respectively

authorized as of September 30, 2021 and December 31, 2020, respectively;

and 17,548,263 shares issued and outstanding as of September 30, 2021 and

December 31, 2020, respectively

Additional paid-in capital

7 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Operating expenses:

13 unchanged sentences

Other comprehensive income:

Unrealized gain (loss) on investments (net)

Unrealized loss on investments

Comprehensive loss

31 unchanged sentences

Balance at June 30, 2020

Exercise of stock options

Stock-based compensation

Unrealized loss on

Balance at September 30, 2020

COMPREHENSIVE

14 unchanged sentences

Balance at June 30, 2021

Stock-based compensation

Issuance of common stock

under ATM and July 2021 offering, net of issuance

costs of $ 210

Exercise of stock options

Unrealized loss on

Balance at September 30, 2021

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

18 unchanged sentences

Proceeds from initial public offering, net of underwriting discounts and commissions

Proceeds from July 2021 offering, net of underwriting discounts and commissions

Proceeds from ATM offering, net of underwriting discounts and commissions

10 unchanged sentences

Deferred offering costs included in accounts payable and accrued expenses

Offering costs included in accounts payable and accrued expenses

Property and equipment purchases included in accrued expenses

Unrealized gain (loss) on investments

Unrealized loss on investments

The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of each of the periods shown above:

Six Months Ended

Nine Months Ended

September 30,

Cash and cash equivalents

7 unchanged sentences

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry, including but not limited to, risks associated with completing preclinical studies and clinical trials, receiving regulatory approvals for product candidates, development by competitors of new biopharmaceutical products, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations.

The Company’s sole product candidate currently under development, IMR-687 ( t ovinontrine), as well as any other product candidates the Company may develop, will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization.

The Company’s lead product candidate currently under development, t ovinontrine (IMR-687), as well as any other product candidates the Company may develop, will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization.

These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities.

11 unchanged sentences

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

As of June 30, 2021, the Company had issued and sold 231,291 shares of common stock under the sales agreement, resulting in net proceeds of $ 1.3 million after deducting commissions and offering expenses.

As of September 30, 2021, the Company had issued and sold 231,291 shares of common stock under the sales agreement, resulting in net proceeds of $ 1.5 million after deducting commissions and offering expenses.

On July 16, 2021, the Company completed a public offering of shares of its common stock.

In connection with the offering, the Company issued and sold 8,333,333 shares of common stock at a public offering price of $ 6.00 per share, resulting in net proceeds of $ 46.8 million after deducting underwriting discounts and commissions and estimated offering expenses.

The Company has incurred recurring negative cash flows since inception and has funded its operations primarily from the sale of convertible preferred stock and proceeds from the IPO and subsequent common stock offerings.

As of June 30, 2021, the Company

had cash, cash equivalents, and investments of $ 66.8 million and an accumulated deficit of approximately $ 119.5 million.

As of September 30, 2021, the

Company had cash, cash equivalents and investments of $ 102.8 million and an accumulated deficit of approximately $ 133.2 million.

The Company expects its operating losses and negative operating cash flows to continue into the foreseeable future as it continues to expand its research and development efforts .

The Company believes its cash, cash equivalents and investments as of June 30, 2021 along with the net proceeds from its July 2021 public offering of common stock will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the date of filing this Quarterly Report on Form 10-Q.

The Company believes its cash, cash equivalents and investments as of September 30, 2021 will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the date of filing this Quarterly Report on Form 10-Q.

The Company will need additional funding to support its planned operating activities.

9 unchanged sentences

The unaudited condensed consolidated interim financial statements have been prepared on the same basis as the audited financial statements, with the exception of the modified retrospective adoption of ASC 842 Leases.

In the opinion of the Company’s management, the accompanying unaudited condensed consolidated interim financial statements contain all adjustments which are necessary to present fairly the Company’s financial position as of June 30, 2021, the results of its operations for the three and six months ended June 30, 2021 and 2020 and cash flows for the six months ended June 30, 2021 and 2020.

In the opinion of the Company’s management, the accompanying unaudited condensed consolidated interim financial statements contain all adjustments which are necessary to present fairly the Company’s financial position as of September 30, 2021, the results of its operations for the three and nine months ended September 30, 2021 and 2020 and cash flows for the nine months ended September 30, 2021 and 2020.

Such adjustments are of a normal and recurring nature.

The results for the three and six months ended June 30, 2021 are not necessarily indicative of the results for the year ending December 31, 2021, or for any future period.

The results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results for the year ending December 31, 2021, or for any future period.

Principles of Consolidation

1 unchanged sentence

All intercompany transactions and balances have been eliminated in consolidation.

Limited was dissolved in July 2021, however the Company does not expect any material accounting implication related to this dissolution.

Limited was dissolved in July 2021 and the dissolution of the subsidiary did not have any material accounting implications on the Company’s unaudited condensed consolidated financial statements as of and for the three and nine months ended September 30, 2021.

Summary of Significant Accounting Policies

The significant accounting policies and estimates used in the preparation of the accompanying unaudited condensed consolidated financial statements are described in the Company’s audited consolidated financial statements for the year ended December 31, 2020 included in the Company’s Annual Report.

There have been no material changes in the Company’s significant accounting policies during the three and six months ended June 30, 2021, with the exception of the modified retrospective adoption of ASC 842 Leases.

There have been no material changes in the Company’s significant accounting policies during the three and nine months ended September 30, 2021, with the exception of the modified retrospective adoption of ASC 842 Leases.

Use of Estimates

31 unchanged sentences

The Company’s operating leases are reflected in operating lease right-of-use assets and in current operating lease liabilities and long-term operating lease liabilities in its consolidated balance sheets.

The Company’s operating lease right-of-use asset as of June 30, 2021 did not include any material lease incentives.

The Company’s operating lease right-of-use asset as of September 30, 2021 did not include any material lease incentives.

Lease expense for future lease payments is recognized on a straight-line basis over the lease term.

11 unchanged sentences

Should the equity issuance be abandoned, the deferred offering costs will be expensed immediately as a charge to operating expenses in the unaudited condensed consolidated statement of operations and comprehensive loss.

There were no deferred offering costs as of June 30, 2021 and December 31, 2020 .

There were no deferred offering costs as of September 30, 2021 and December 31, 2020 .

Comprehensive Loss

Comprehensive loss includes net loss and certain changes in stockholders’ equity that are excluded from net loss.

The Company’s comprehensive loss includes unrealized gains and losses (net) on available-for-sale debt securities for the three and six months ended June 30, 2021 and 2020.

The Company’s comprehensive loss includes unrealized losses on available-for-sale debt securities for the three and nine months ended September 30, 2021 and 2020.

Recently Issued Accounting Pronouncements

5 unchanged sentences

ASU 2016-02 supersedes the previous leases standard, ASC 840, Leases.

For additional information on the adoption of the new leasing standards, please read the Company’s policy above entitled Leases, and Note 7, Commitments and Contingencies, to these consolidated financial statements.

In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815) I.

17 unchanged sentences

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values (in thousands):

June 30, 2021

September 30, 2021

Quoted Prices in

5 unchanged sentences

Marketable securities:

Commercial paper

Corporate debt securities

Commercial paper

Total financial assets

10 unchanged sentences

Total financial assets

As of June 30, 2021 and December 31, 2020, the Company’s Level 1 financial assets consisted of cash equivalents held in money market funds, which are valued using quoted market prices in active markets without any valuation adjustment.

As of September 30, 2021 and December 31, 2020, the Company’s Level 1 financial assets consisted of cash equivalents held in money market funds, which are valued using quoted market prices in active markets without any valuation adjustment.

The financial assets valued based on Level 2 inputs consist of corporate debt securities and commercial paper, which consist of investments in highly-rated investment-grade securities.

3 unchanged sentences

The Company validates the prices provided by its third-party pricing sources by understanding the models used, obtaining market values from other pricing sources and analyzing pricing data in certain instances.

During the three and six months ended June 30, 2021 and the year ended December 31, 2020, there were no transfers between fair value measurement levels.

During the three and nine months ended September 30, 2021 and the year ended December 31, 2020, there were no transfers between fair value measurement levels.

The carrying values of other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

As of June 30, 2021 and December 31, 2020, the Company had short-term investments consisting of corporate debt securities and commercial paper, which are considered to be available-for-sale investments.

As of September 30, 2021 and December 31, 2020, the Company had short-term investments consisting of corporate debt securities and commercial paper, which are considered to be available-for-sale investments.

These are included in short-term investments on the condensed consolidated balance sheets, even though the stated maturity date may be one year or more beyond the current balance sheet date, as the Company views those securities as available for use in current operations, if needed.

The following table summarizes the Company’s investments (in thousands):

June 30, 2021

September 30, 2021

Amortized Cost

9 unchanged sentences

Corporate debt securities

As of June 30, 2021, the Company held one available-for-sale security with an aggregate value of approximately $ 2.0 million in an immaterial unrealized loss position for less than twelve months.

As of September 30, 2021, the Company held two available-for-sale securities with an aggregate value of approximately $ 4.5 million in an unrealized loss position for less than twelve months.

As of December 31, 2020, the Company had no available-for-sale securities in unrealized loss positions.

1 unchanged sentence

The Company determined that there was no material change in the credit risk of these investments .

As a result, the Company determined it did not hold any investments with an other-than-temporary impairment as of June 30, 2021 and December 31, 2020.

As a result, the Company determined it did not hold any investments with an other-than-temporary impairment as of September 30, 2021 and December 31, 2020.

Accrued Expenses

Accrued expenses consisted of the following (in thousands):

September 30,

Accrued research and development expenses

6 unchanged sentences

In April 2016, the Company entered into a license agreement with Lundbeck A/S (“Lundbeck” and the “Lundbeck Agreement”) pursuant to which Lundbeck granted the Company the following licenses within the field of prevention, treatment or diagnosis of hemoglobinopathy disorders and/or other diseases or disorders, including those directly or indirectly related to hemoglobinopathies:

(1) an exclusive, royalty-bearing license to certain patent rights and certain know-how owned or otherwise controlled by Lundbeck (“Licensed Technology”) to research, develop, make, use, sell, and commercialize products (“Licensed Products”) from PDE9 inhibitors, which included IMR-687 (“Licensed Compounds”);

(2) a non-exclusive license to the Licensed Technology to make, research, develop, and use such Licensed Technology to enable research and development, with certain restrictions;

5 unchanged sentences

To date, pursuant to the Lundbeck Agreement, the Company has made cash payments to Lundbeck of $ 1.8 million consisting of an upfront payment and ongoing milestone payments, which were recorded as research and development expenses.

No payments were made during the year ended December 31, 2020, or for the three and six months ended June 30, 2021.

No payments were made during the year ended December 31, 2020, or for the three and nine months ended September 30, 2021.

As partial consideration for the license, the Company issued 167,523 shares of common stock to Lundbeck, which represented 8.0 % of the Company’s then outstanding equity pursuant to a restricted stock agreement.

11 unchanged sentences

In addition to the base rent, the Company is also responsible for its share of operating expenses, electricity and real estate taxes, in accordance with the terms of the May 2019 Lease Agreement.

The Company provided a security deposit of approximately $ 0.1 million in May 2019, which is included as a component of other assets on the Company’s unaudited condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020.

The Company occupied the space in August 2019 and commenced recognition of rent expense.

The Company recorded rent expense of less than $ 0.1 million during the three months ended June 30, 2021, and approximately $ 0.1 million during the six months ended June 30, 2021.

The Company recorded rent expense of less than $ 0.1 million during the three months ended September 30, 2021, and approximately $ 0.2 million during the nine months ended September 30, 2021.

In June 2021, the Company entered into an amendment to the May 2019 Lease Agreement (the “June 2021 Amended Lease Agreement”).

6 unchanged sentences

The following table summarizes the future lease payments due under the May 2019 Lease Agreement only, as the term of the June 2021 Amended Lease Agreement has not yet commenced (in thousands):

September 30,

Total Lease Payments

8 unchanged sentences

The Company may from time to time be party to litigation arising in the ordinary course of business.

The Company was not subject to any material legal proceedings during the three and six months ended June 30, 2021 and year ended December 31, 2020, and no material legal proceedings are currently pending or, to the best of its knowledge, threatened.

The Company was not subject to any material legal proceedings during the three and nine months ended September 30, 2021 and year ended December 31, 2020, and no material legal proceedings are currently pending or, to the best of its knowledge, threatened.

Indemnification Obligations

18 unchanged sentences

Common stockholders are entitled to receive dividends, as may be declared by the Board, if any, subject to the preferential dividend rights of any preferred stock then outstanding.

Through June 30, 2021, no cash dividends have been declared or paid.

As of June 30, 2021, 10,000,000 shares of preferred stock were authorized and no shares of preferred stock were issued or outstanding.

As of June 30, 2021 and December 31, 2020, the Company has reserved for future issuance the following shares of common stock:

Through September 30, 2021, no cash dividends have been declared or paid.

As of September 30, 2021, 10,000,000 shares of preferred stock were authorized and no shares of preferred stock were issued or outstanding.

As of September 30, 2021 and December 31, 2020, the Company has reserved for future issuance the following shares of common stock:

September 30,

Shares reserved for future issuance under the 2020 Equity Incentive Plan

3 unchanged sentences

The Company’s 2016 Stock Incentive Plan, (the “2016 Plan”) provided for the grant of restricted stock, restricted stock units, stock appreciation rights, incentive stock options, non-statutory stock options and other stock-based awards to employees, officers, members of the Board, consultants and advisors of the Company.

As of the effective date of the 2020 Equity Incentive Plan (the “2020 Plan”) on March 11, 2020, and as of June 30, 2021, no shares remained available for future issuance under the 2016 Plan.

As of the effective date of the 2020 Equity Incentive Plan (the “2020 Plan”) on March 11, 2020, and as of September 30, 2021, no shares remained available for future issuance under the 2016 Plan.

Any options or awards outstanding under the 2016 Plan remain outstanding and effective.

9 unchanged sentences

The shares of common stock underlying any awards that expire, terminate, or are otherwise surrendered, cancelled, forfeited or repurchased by the Company under the 2016 Plan or the 2020 Plan will be added back to the shares of common stock available for issuance under the 2020 Plan.

As of June 30, 2021, there were 1,386,319 shares available for future issuance under the 2020 Plan.

As of September 30, 2021, there were 1,276,472 shares available for future issuance under the 2020 Plan.

For financial reporting purposes, the Company performed common stock valuations with the assistance of a third-party specialist through October 23, 2019 to determine stock-based compensation expense for stock options.

5 unchanged sentences

Outstanding as of December 31, 2020

Outstanding as of June 30, 2021

Options vested and exercisable as of June 30, 2021

Outstanding as of September 30, 2021

Options vested and exercisable as of September 30, 2021

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the common stock as of the end of the period.

The weighted-average grant date fair value of the Company’s stock options granted during the three and six months ended June 30, 2021 was $ 5.32 and $ 8.36 , respectively.

The weighted-average grant date fair value of the Company’s stock options granted during each of the three and six months ended June 30, 2020 was $ 10.36 and $ 10.16 , respectively.

The weighted-average grant date fair value of the Company’s stock options granted during the three and nine months ended September 30, 2021 was $ 3.66 and $ 7.44 , respectively.

The weighted-average grant date fair value of the Company’s stock options granted during each of the three and nine months ended September 30, 2020 was $ 12.99 and $ 11.30 , respectively.

Performance-based awards

The Company granted stock options to purchase an aggregate of 220,928 shares of common stock to certain employees, officers and consultants and advisors of the Company on May 16, 2019, June 5, 2019 and June 21, 2019, which contained performance-based vesting criteria.

The Company granted stock options to purchase an aggregate of 220,928 shares of common stock to certain employees, officers and consultants and advisors of the Company on May 16, 2019, June 5, 2019 and September 21, 2019, which contained performance-based vesting criteria.

Vesting of these options was contingent on the closing of the second tranche of Series B Preferred Stock financing.

1 unchanged sentence

As a result of the performance condition being met on February 25, 2020, these options vested as to 25 % of the shares underlying each option on February 25, 2021 and will vest as to the remainder of the shares in equal quarterly installments for three years thereafter.

The Company recognized stock-based compensation expense of less than $ 0.1 million and $ 0.1 million for these options during the three and six months ended June 30, 2021, respectively.

The Company recognized stock-based compensation expense of less than $ 0.1 million and $ 0.1 million for these options during the three and nine months ended September 30, 2021, respectively.

Stock-Based Compensation

Stock-based compensation expense included in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss is as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

1 unchanged sentence

Total stock-based compensation expense

As of June 30, 2021 and December 31, 2020, total unrecognized compensation cost related to the unvested stock-based awards was $ 11.3 million and $ 9.5 million, respectively, which is expected to be recognized over a weighted-average period of 2.99 and 3.22 years, respectively.

As of September 30, 2021 and December 31, 2020, total unrecognized compensation cost related to the unvested stock-based awards was $ 10.3 million and $ 9.5 million, respectively, which is expected to be recognized over a weighted-average period of 2.79 and 3.22 years, respectively.

2020 Employee Stock Purchase Plan

1 unchanged sentence

The 2020 ESPP initially provides participating employees with the opportunity to purchase up to an aggregate of 193,216 shares of the Company’s common stock.

The number of shares of the Company’s common stock reserved for issuance under the 2020 ESPP will automatically increase on the first day of each fiscal year, beginning with the fiscal year commencing on January 1, 2021 and continuing until, and including, the fiscal year commencing on January 1, 2031, in an amount equal to the lowest of (i) 386,432 shares of the Company’s

common stock, (ii) 1 % of the number of shares of the Company’s common stock outstanding on the first day of such fiscal year and (iii) an amount determined by the Company’s board of directors .

The number of shares of the Company’s common stock reserved for issuance under the 2020 ESPP will automatically

increase on the first day of each fiscal year, beginning with the fiscal year commencing on January 1, 2021 and continuing until, and including, the fiscal year commencing on January 1, 2031, in an amount equal to the lowest of ( i ) 386,432 shares of the Company’s common stock, (ii) 1 % of the number of shares of the Company’s common stock outstanding on the first day of such fiscal year and (iii) an amount determined by the Company’s board of directors .

The Company’s board of directors decided not to increase the number of shares of the Company’s common stock reserved for issuance under the 2020 ESPP for the 2021 fiscal year.

During the six months ended June 30, 2021, less than $ 0.1 million was withheld from employees, on an after-tax basis, in order to purchase 4,154 shares of the Company’s common stock.

During the nine months ended September 30, 2021, $ 0.1 million was withheld from employees, on an after-tax basis, in order to purchase 4,154 shares of the Company’s common stock.

No shares were purchased during the three months ended September 30, 2021.

The Company recorded stock-based compensation expense related to the 2020 ESPP of less than $ 0.1 million.

As of June 30, 2021, 187,209 shares of the Company’s common stock remained available for issuance under the 2020 ESPP.

As of June 31, 2021, there was less than $ 0.1 million of total unrecognized stock-based compensation expense related to the ESPP.

As of September 30, 2021, 187,209 shares of the Company’s common stock remained available for issuance under the 2020 ESPP.

As of September 30, 2021, there was less than $ 0.1 million of total unrecognized stock-based compensation expense related to the ESPP.

The expense is expected to be recognized over a period of 2.5 months.

10 unchanged sentences

Qualified wages are limited to $ 10,000 per employee per calendar quarter in 2021 so the maximum ERTC available is $ 7,000 per employee per calendar quarter.

Based on the Company’s evaluation of this provision and pandemic-related impact on its operations in 2020 and 2021, it was determined that the Company qualified to claim ERC in the second, third and fourth calendar quarters of 2020, as well as in both the first and second calendar quarters of 2021.

Upon filing for the refund in July 2021, the Company recognized an ERC of approximately $ 0.7 million as an offset to payroll tax expenses for the three and six months ended June 30, 2021 in its consolidated statements of operations.

The Company will continue to assess its eligibility to claim ERC for the third and fourth quarters of 2021.

The Company recognized an ERC of approximately $ 0.3 million and $ 1.0 million as an offset to payroll tax expenses for the three and nine months ended September 30, 2021, respectively, in its consolidated statements of operations.

The Company will continue to assess its eligibility to claim ERC for the fourth quarter of 2021.

Net Loss Per Share

7 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Options to purchase common stock

6 unchanged sentences

Lundbeckfond Invest A/S also purchased 187,500 shares of common stock in the IPO.

This reflects a 7.1 % and a 7.4 % ownership interest on a fully diluted basis as of June 30, 2021 and December 31, 2020, respectively.

This reflects a 5.0 % and a 7.4 % ownership interest on a fully diluted basis as of September 30, 2021 and December 31, 2020, respectively.

Mette Kirstine Agger, who was a member of our board of directors until June 29, 2021, is a Managing Partner at Lundbeckfonden Ventures, which is an affiliate of Lundbeckfond Invest A/S.

2 unchanged sentences

All shares of preferred stock converted into shares of common stock upon closing of the IPO.

This reflects a 2.6 % and a 2.7 % ownership interest on a fully diluted basis as of June 30, 2021 and December 31, 2020, respectively.

This reflects a 1.8 % and a 2.7 % ownership interest on a fully diluted basis as of September 30, 2021 and December 31, 2020, respectively.

Lundbeck did not participate in the Series B Preferred Stock financing.

6 unchanged sentences

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 1. Financial Statements