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Item 2. Management’s Discussion and Analysis

2021-11-09 compared with 2021-08-06 · 121 added, 101 removed, 195 unchanged (53% of the section changed)

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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, and other serious diseases.

Our pipeline is built on the differentiated therapeutic potential of our initial product candidate, IMR-687 ( t ovinontrine), which is an oral, once-a-day, potentially disease-modifying treatment for sickle cell disease, or SCD, and ß-thalassemia.

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 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.

We have completed enrollment in the Ardent clinical trial as well as in the transfusion dependent cohort from the Forte clinical trial.

For the Ardent clinical trial, we expect to report interim data in the fourth quarter of 2021, data from the primary analysis in the first quarter of 2022 and data from the final analysis in the second half of 2022.

For the Forte clinical trial, we expect to report interim data for transfusion dependent cohort in the fourth quarter of 2021, data from an additional efficacy analysis of the entire transfusion dependent patient cohort in the first quarter of 2022 and data from the final analysis in the second half of 2022.

At the 2021 European Hematology Association, or EHA, Annual Congress in June 2021, we reported final data from all 93 patients in our completed Phase 2a clinical trial in SCD, including analyses that compared patients who received IMR-687 as part of the trial with those who received placebo.

The data from the Phase 2a clinical trial demonstrated that IMR-687 was well tolerated as a monotherapy and in combination with HU at all dose levels.

The pooled results further showed that when compared to placebo, patients on IMR-687 had:

• a 40% lower mean annualized rate of vaso-occlusive crises, or VOCs, as part of the safety analysis;

• a 38% lower mean annualized rate of VOC-related hospitalizations;

• an increase in time to first VOC of 169 days for patients treated with IMR-687 versus 87 days for placebo groups;

• improvements in the patient-reported VOC pain severity score.

Changes in SCD-related biomarkers were variable across the trial, including small but directional increases in f etal hemoglobin, or HbF .

At the 2021 EHA Annual Congress in June 2021, we also reported additional preliminary data from patients with evaluable data on the open label extension, or OLE, clinical trial in patients with SCD.

The OLE clinical trial 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.

The data from the OLE clinical trial demonstrated that IMR-687 was well tolerated as a monotherapy and in combination with HU.

The results further showed that the improvement in the rate of VOCs observed in the Phase 2a clinical trial were maintained through eight months of treatment on the OLE clinical trial (n=18).

The data also demonstrated improvements in HbF and F-cells, with 36% (4/11) of patients having an absolute increase in HbF of greater than or equal to 3% after eight months of treatment on the OLE clinical trial (mean absolute increase of 1.7%) and 47% (7/15) having an absolute increase in F-cells of greater than or equal to 6% after eight months of treatment on the OLE clinical trial (mean absolute increase of 6.8%).

Changes in other SCD-related biomarkers were variable across the trial.

Lastly, we recently completed preclinical research of IMR-687 in heart failure with preserved ejection fraction, or HFpEF, and are developing a protocol for a Phase 2 proof-of-concept study for IMR-687 in this indication and expect to interact with the United States Food and Drug Administration in late 2021 .

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.

Our lead product candidate, t ovinontrine (IMR-687), is an oral, potentially disease-modifying treatment that is currently in clinical development for that treatment of patients with sickle cell disease, or SCD, and ß-thalassemia.

A summary of our pipeline of product candidates is set forth below:

Tovinontrine (IMR-687)

Tovinontrine is a highly selective, potent small molecule inhibitor of phosphodiesterase-9, or PDE9.

Sickle Cell Disease

We are currently conducting the Ardent clinical trial of tovinontrine, a randomized, double-blind, placebo-controlled Phase 2b clinical trial in adult patients with SCD.

We have completed enrollment in the Ardent clinical trial and expect to report interim data in the fourth quarter of 2021, data from the primary analysis in the first quarter of 2022 and data from the final analysis in the second half of 2022.

We are also conducting an open label extension, or OLE, clinical trial of tovinontrine in patients with SCD.

The OLE clinical trial allows patients from our completed Phase 2a clinical trial of tovinontrine in SCD to continue into a long-term four-year trial to test safety and measure tolerability of tovinontrine.

We expect to present 12-month data from the OLE clinical trial at the American Society of Hematology, or ASH, Annual Meeting in December 2021.

At the 2021 European Hematology Association, or EHA, Annual Congress in June 2021, we presented final data from our completed Phase 2a clinical trial in SCD as well as incremental data from the OLE clinical trial in SCD.

The data from these trials showed a well-tolerated safety profile for tovinontrine and potential benefits from tovinontrine with respect to vaso-occlusive crises, or VOCs.

Changes in SCD-related biomarkers were variable and included directional increases in fetal hemoglobin, or HbF.

ß-thalassemia

We are currently conducting the Forte clinical trial of tovinontrine, a randomized, double-blind, placebo-controlled Phase 2b clinical trial in transfusion dependent patients and non-transfusion dependent patients with ß-thalassemia.

We have completed enrollment in the transfusion dependent arm of the Forte clinical trial and enrollment in the non-transfusion dependent arm is ongoing.

We expect to report interim data for transfusion dependent patients in the fourth quarter of 2021 , data from a key efficacy analysis of the Forte clinical trial for transfusion dependent patients in the first quarter of 2022 and data from the final analysis of the Forte clinical trial in the second half of 2022.

We expect to report preliminary data from the non-transfusion dependent arm of the Forte trial in the first half of 2022.

Heart Failure with Preserved Ejection Fraction

We are advancing development of tovinontrine to target additional indications, including heart failure with preserved ejection fraction, or HFpEF, for which we completed preclinical research in the first half of 2021.

In three distinct mouse models of HFpEF, compared with control mice, tovinontrine was shown to reduce the median size of cardiomyocytes and lower plasma B-type and atrial natriuretic peptide levels.

Moreover, markers of renal dysfunction, including blood urea nitrogen and urine albumin-to-creatinine ratio, were lower in mice treated with tovinontrine compared with vehicle treated mice in all models.

Additionally, tovinontrine did not

significantly change heart rate or blood pressure .

We expect to report preclinical data on tovinontrine in HFpEF at the American Heart Association’s Scientific Sessions 2021 in November 2021.

We are engaging with the United States Food and Drug Administration with respect to our clinical development plan for tovinontrine in HFpEF and expect to begin a Phase 2 clinical trial of tovinontrine in HFpEF in 2022.

We have commenced research activities for IMR-261 (formerly CXA-10), an activator of nuclear factor erythroid 2–related factor 2, or Nrf2.

In pre-clinical models of SCD, IMR-261 was observed to reactivate fetal hemoglobin and reduce VOCs.

Furthermore, in a preclinical model of ß-thalassemia, IMR-261 was observed to increase hemoglobin and enhance red blood cell maturation.

We expect to present results from our preliminary preclinical studies of IMR-261 in SCD and ß-thalassemia at the ASH Annual Meeting in December 2021.

We have initiated work on drug product manufacturing for IMR-261 as we explore potential clinical development paths.

Prior to its acquisition by Imara, IMR-261 was evaluated by Complexa, Inc.

in Phase 2 clinical trials in focal segmental glomerulosclerosis, or FSGS, and pulmonary arterial hypertension, or PAH, and independent medical literature suggests potential promise in a broad array of red blood cell diseases, including disorders of hemoglobin.

Financial Overview

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

To date, we have funded our operations primarily through the sale of common stock and the sale of convertible preferred stock.

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We also simultaneously entered into a sales agreement, or Sales Agreement, with Cantor Fitzgerald & Co, LLC, or Cantor, 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 June 30, 2021, we have 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, we have 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, we completed a public offering of shares of our common stock and 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.

We have incurred significant operating losses since inception.

Our losses from operations were $13.1 million and $23.4 million for the three and six months ended June 30, 2021, respectively, and $10.3 million and $17.7 million for the three and six months ended June 30, 2020, respectively.

As of June 30, 2021, we had an accumulated deficit of approximately $119.5 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.

Our losses from operations were $13.7 million and $37.1 million for the three and nine months ended September 30, 2021, respectively, and $12.5 million and $30.1 million for the three and nine months ended September 30, 2020, respectively.

As of September 30, 2021, we had an accumulated deficit of approximately $133.2 million.

We expect to continue to incur significant operating losses for the foreseeable future, as we advance tovinontrine 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.

We expect to incur significant expenses related to maintaining and expanding our intellectual property portfolio, hiring additional research and development and business personnel and operating as a public company.

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We do not have any products approved for sale.

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

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

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

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

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

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

As of June 30, 2021 we had $ 66.8 million in cash, cash equivalents and investments.

We believe that our cash, cash equivalents and investments as of June 30, 2021, as well as the $4 6 .

8 million in net proceeds from our public offering of shares of common stock in July 2021 , will enable us to fund our operating expenses and capital expenditure requirements through the end of 2022 .

As of September 30, 2021 we had $102.8 million in cash, cash equivalents and investments.

We believe that our cash, cash equivalents and investments as of September 30, 2021 will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2023 .

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

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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 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.

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 completed Phase 2a clinical trial of tovinontrine 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 tovinontrine in SCD and ß-thalassemia.

In addition, many of our employees are currently working remotely.

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 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.

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 variants 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.

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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.

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.

Financial Operations Overview

We have not generated any revenue since our inception and do not expect to generate any revenue from the sale of products in the near future, if at all.

If our development efforts for IMR-687 or additional product candidates that we may develop in the future are successful and result in marketing approval or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from such collaboration or license agreements.

If our development efforts for tovinontrine or additional product candidates that we may develop in the future are successful and result in marketing approval or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from such collaboration or license agreements.

Operating Expenses

Research and Development.

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

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

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

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

Our research and development expenses to-date have been incurred in connection with our development of IMR-687 in SCD and β-thalassemia.

Our research and development expenses to-date have been incurred in connection with our development of tovinontrine in SCD and β-thalassemia.

We do not intend to track our internal research and development expenses on a program-by-program basis as our personnel are deployed across multiple projects under development.

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Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials.

We expect research and development costs to increase significantly for the foreseeable future as we continue the development of IMR-687 and any product candidates we may develop in the future.

We expect research and development costs to increase significantly for the foreseeable future as we continue the development of tovinontrine and any product candidates we may develop in the future.

However, we do not believe that it is possible at this time to accurately project total program-specific expenses through commercialization.

There are numerous factors associated with the successful commercialization of IMR-687 and any product candidates we may develop in the future, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development.

There are numerous factors associated with the successful commercialization of tovinontrine and any product candidates we may develop in the future, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development.

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 six months ended June 30, 2021 and 2020:

The following table summarizes our research and development expenses for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

(in thousands)

Tovinontrine (IMR-687)

Personnel expenses (including stock-based compensation)

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Total research and development expenses

The successful development of IMR-687 and any product candidates we may develop in the future is highly uncertain.

Therefore, we cannot reasonably estimate or know the nature, timing and estimated costs of the efforts that will be necessary to complete the development and commercialization of IMR-687 or any future product candidates.

We are also unable to predict when, if ever, material net cash inflows will commence from the sale of IMR-687 or potential future product candidates, if approved.

The successful development of tovinontrine and any product candidates we may develop in the future is highly uncertain.

We are also unable to predict when, if ever, material net cash inflows will commence from the sale of tovinontrine or potential future product candidates, if approved.

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

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maintaining a continued acceptable safety profile of the product candidates following approval.

Any changes in the outcome of any of these variables with respect to the development of IMR-687 or any future product candidates could mean a significant change in the costs and timing associated with the development of these product candidates.

For example, if the FDA or another regulatory authority were to delay our planned start of clinical trials or require us to conduct clinical trials or other testing beyond those that we currently expect, or if we experience significant delays in enrollment in any of our planned clinical trials, we could be required to expend significant additional financial resources and time to complete clinical development of that product candidate.

Any changes in the outcome of any of these variables with respect to the development of tovinontrine or any future product candidates could mean a significant change in the costs and timing associated with the development of these product candidates.

that product candidate.

We may never obtain regulatory approval for any of our product candidates.

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

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.

In addition, if we obtain regulatory approval for tovinontrine 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

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Results of Operations

Comparison of the Three Months Ended June 30, 2021 and 2020

The following table summarizes our results of operations for the three months ended June 30, 2021 and 2020:

Comparison of the Three Months Ended September 30, 2021 and 2020

The following table summarizes our results of operations for the three months ended September 30, 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 $2.2 million from $7.9 million for the three months ended June 30, 2020, to $10.1 million for the three months ended June 30, 2021.

Research and development expenses increased by approximately $0.9 million from $9.5 million for the three months ended September 30, 2020, to $10.4 million for the three months ended September 30, 2021.

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

a $2.2 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 $0.1 million increase in other research and development operational costs, including facilities, professional services, supplies, and travel;

a $0.1 million decrease in personnel-related costs.

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

a $0.3 million increase in costs related to the development and manufacturing of clinical materials, clinical research and oversight of our clinical trials and investigative fees for tovinontrine;

2 million increase in other research and development operational costs, including professional services, supplies, and travel .

General and Administrative Expenses

General and administrative expenses increased by approximately $0.7 million from $2.4 million for the three months ended June 30, 2020, to $3.1 million for the three months ended June 30, 2021.

General and administrative expenses increased by approximately $0.3 million from $3.0 million for the three months ended September 30, 2020, to $3.3 million for the three months ended September 30, 2021.

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

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

a $0.2 million increase in cost associated with directors and officers insurance premiums;

a $0.1 million increase in other general and administrative operational costs, including facilities and professional services.

a $0.2 million increase in costs associated with directors and officers insurance premiums;

a $0.1 million increase in other general and administrative operational costs, including travel, corporate taxes, and supplies;

a $0.4 million decrease in legal and professional services.

Total Other Income, Net

Total other income, net was de minimis for the three months ended June 30, 2021 and $0.1 million for the three months ended June 30, 2020, in each case consisting primarily of interest earned on our cash, cash equivalents and investments.

Comparison of the Six Months Ended June 30, 2021 and 2020

The following table summarizes our results of operations for the six months ended June 30, 2021 and 2020:

Six Months Ended

Total other income, net was less than $0.1 million for the three months ended September 30, 2021 and $0.1 million for the three months ended September 30, 2020, in each case consisting primarily of interest earned on our cash, cash equivalents and investments.

Comparison of the Nine Months Ended September 30, 2021 and 2020

The following table summarizes our results of operations for the nine months ended September 30, 2021 and 2020:

Nine 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 $13.7 million for the six months ended June 30, 2020 to $17.2 million for the six months ended June 30, 2021.

Research and development expenses increased by approximately $4.4 million from $23.2 million for the nine months ended September 30, 2020 to $27.6 million for the nine months ended September 30, 2021.

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

a $2.6 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 $2.9 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 tovinontrine;

a $1.2 million increase in personnel-related costs, including a $0.5 million increase in stock-based compensation expense, primarily due to an increase in headcount to support the growth of our research and development efforts;

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

a $0.3 million increase in other research and development operational costs, including professional services, supplies, and travel.

General and Administrative Expenses

General and administrative expenses increased by approximately $2.3 million from $4.0 million for the six months ended June 30, 2020 to $6.3 million for the six months ended June 30, 2021.

General and administrative expenses increased by approximately $2.6 million from $7.0 million for the nine months ended September 30, 2020 to $9.5 million for the nine months ended September 30, 2021.

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

a $1.5 million increase in personnel-related costs, including a $0.8 million increase in stock-based compensation expense, primarily due to an increase headcount;

a $0.8 increase in cost associated with directors and officers insurance premiums;

a $0.4 million increase in other general and administrative operational costs, including facilities, public relations, and corporate taxes;

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

a $1.0 million increase in cost associated with directors and officers insurance premiums;

a $0.4 million increase in other general and administrative operational costs, including public relations and corporate taxes;

a $0.3 million decrease in consulting and professional fees, including legal, business development, and accounting fees.

Total Other Income, Net

Total other income, net was de minimis for the six months ended June 30, 2021 and $0.2 million for the six months ended June 30, 2020, in each case consisting primarily of interest earned on our cash, cash equivalents and investments.

Total other income, net was less than $0.1 million for the nine months ended September 30, 2021 and $0.3 million for the nine months ended September 30, 2020, in each case consisting primarily of interest earned on our cash, cash equivalents and investments.

Liquidity and Capital Resources

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Since our inception, we have incurred significant losses in each period and on an aggregate basis.

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, 2021, we have funded our operations primarily through the issuance of common stock 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 p referred s tock upon a waiver of specified milestone conditions from the holders of a majority of the shares then held by the holders of Series B p referred s tock.

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

Through September 30, 2021, we have funded our operations primarily through the issuance of common stock 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 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.

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The Shelf was declared effective on April 8, 2021.We also simultaneously entered into the Sales Agreement with Cantor, 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 June 30, 2021, we have 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 June 30, 2021, we had $66.8 million in cash, cash equivalents and investments.

As of September 30, 2021, we have 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.

As of September 30, 2021, we had $102.8 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, 2021 and 2020:

Six Months Ended

The following table provides information regarding our cash flows for the nine months ended September 30, 2021 and 2020:

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, 2021 was $23.4 million primarily due to our net loss of $23.4 million and net cash outflow from a change in working capital of $2.0 million, partially offset by stock-based compensation expense of $1.9 million and depreciation expense of $0.1 million.

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 nine months ended September 30, 2021 was $34.3 million primarily due to our net loss of $37.1 million and net cash outflow from a change in working capital of $0.2 million, partially offset by stock-based compensation expense of $2.9 million and depreciation expense of $0.1 million.

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 Provided by Investing Activities

Net cash provided by investing activities for the six months ended June 30, 2021 was $21.7 million due to proceeds from maturities of short-term investments of $29.2 million, partially offset by purchases of short-term investments of $7.5 million.

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 provided by investing activities for the nine months ended September 30, 2021 was $12.9 million due to proceeds from maturities of short-term investments of $42.6 million, partially offset by purchases of short-term investments of $29.8 million.

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 million.

Net Cash Provided by Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2021 was $2.1 million, primarily due to $1.7 million of net proceeds received from the sale of common stock under our Sales Agreement with Cantor and $0.7 million of net proceeds received from the exercise of stock options, partially offset by payment of $0.3 million of issuance costs under the Sales Agreement.

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, 2021 was $49.1 million, primarily due to $47.0 million of net proceeds after deducting underwriting discounts and commissions from our July 2021 offering, $1.8 million of net proceeds after deducting underwriting discounts and commissions from the sale of common stock under our Sales Agreement with Cantor, and $0.9 million of proceeds received from the exercise of stock options.

The financing cash inflows were partially offset by payment of $0.6 million of issuance costs.

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.

Funding Requirements

We expect our expenses to increase substantially in connection with our ongoing research and development activities, particularly as we continue research and development, initiate clinical trials, and seek marketing approval for IMR-687 and any of our future product candidates.

In addition, we expect to incur additional costs associated with operating as a public company.

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

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

expand our planned research and development efforts for IMR-687 and 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;

seek regulatory and marketing approvals for IMR-687;

establish a sales, marketing and distribution infrastructure to commercialize IMR-687, if approved;

commence development activities for any additional product candidates we may identify;

continue to advance clinical development of tovinontrine, including our ongoing Ardent and Forte Phase 2b clinical trials of tovinontrine in patients with SCD and β-thalassemia and our OLE clinical trial in patients with SCD;

expand our planned research and development efforts for tovinontrine and pursue clinical activities for tovinontrine in HFpEF;

continue to incur third-party manufacturing costs to support our clinical trials of tovinontrine and any other product candidates we may develop and , if approved, commercialization of such product candidates ;

seek regulatory and marketing approvals for tovinontrine and any other product candidates we may develop;

establish a sales, marketing and distribution infrastructure to commercialize tovinontrine and any other product candidates we may develop, in each case if approved;

commence development activities for any additional product candidates we may develop, including IMR-261;

acquire or in-license products, product candidates, technologies and/or data referencing rights;

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make any milestone payments to Lundbeck under our exclusive license agreement with Lundbeck, upon the achievement of specified clinical or regulatory milestones.

Based on our current operating plan, we expect our existing cash, cash equivalents and investments, along with the net proceeds from our public offering of shares of common stock in July 2021, will enable us to fund our operating expenses and capital expenditure requirements through the end of 2022.

Based on our current operating plan, we expect our existing cash, cash equivalents and investments will enable us to fund our operating expenses and capital expenditure requirements into the first quarter of 2023.

However, we have based this estimate on assumptions that may prove to be wrong and we could exhaust our capital resources sooner than we expect.

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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 Ardent and OLE 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;

our ability to successfully commercialize IMR-687 and any other product candidates we may identify and develop;

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

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

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

our ability to advance tovinontrine 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 tovinontrine and any other product candidates we may develop;

our ability to successfully commercialize tovinontrine and any other product candidates we may develop;

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

the amount and timing of sales and other revenues from tovinontrine and any other product candidates we may 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 candidate we may develop in the future could significantly change the costs and timing associated with the development of that product candidate.

A change in the outcome of any of these or other variables with respect to the development of tovinontrine 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.

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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.

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 declaring dividends, that could adversely impact our ability to conduct our business.

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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, 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.

During the three and nine months ended September 30, 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.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis