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Item 7. Management’s Discussion and Analysis

2023-02-10 compared with 2022-03-15 · 176 added, 193 removed, 148 unchanged (71% of the section changed)

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Business Overview

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

Our pipeline is built on the differentiated therapeutic potential of our lead product candidate, tovinontrine (IMR-687), which is an oral, highly selective, potent small molecule inhibitor of phosphodiesterase-9, or PDE9.

Tovinontrine is currently in Phase 2b clinical development for the treatment of sickle cell disease, or SCD, and β-thalassemia and we expect to begin clinical development of tovinontrine in heart failure with preserved ejection fraction, or HFpEF, in the second quarter of 2022.

We are also advancing IMR-261, an oral activator of nuclear factor erythroid 2–related factor 2, or Nrf2.

Tovinontrine (IMR-687 )

Our lead candidate, tovinontrine, is a highly selective and potent small molecule inhibitor of PDE9.

We are currently conducting the Ardent Phase 2b clinical trial of tovinontrine, a randomized, double-blind, placebo-controlled trial in approximately 115 adult patients with SCD.

We have completed enrollment in the Ardent clinical trial and expect to report interim data from this trial in the first week of April 2022 and final data in the second half of 2022.

In November 2021, we made the decision to change the primary endpoint of the Ardent trial to annualized rate of vaso-occlusive crises, or VOCs , following a written recommendation from the FDA.

Fetal hemoglobin, or HbF, response, which was previously the primary endpoint, will continue to be evaluated as a key secondary endpoint.

The Ardent trial follows completion of our Phase 2a clinical trial of tovinontrine in SCD, which demonstrated a well-tolerated safety profile for tovinontrine and potential benefits from tovinontrine with respect to VOCs.

Changes in SCD-related biomarkers were variable.

We are also conducting a long-term open label extension, or OLE, clinical trial of tovinontrine, which is comprised of patients who completed our Phase 2a clinical trial of tovinontrine.

Data from the OLE trial presented at the American Society of Hematology (ASH) Annual Meeting in December 2021 demonstrated a well-tolerated safety profile for tovinontrine, potential benefits from tovinontrine with respect to VOCs and improvements in certain SCD-related biomarkers, including HbF and F-cells, through 12 months of treatment on the OLE trial.

In the second quarter of 2022, we expect to initiate a new, long-term OLE trial of tovinontrine for patients who complete the Ardent Phase 2b clinical trial in SCD.

In addition to patients from the Ardent trial, we expect patients from the ongoing Phase 2a OLE trial to roll over into this new OLE trial, resulting in one OLE trial with patients from both the Phase 2a clinical trial and the Ardent Phase 2b clinical trial.

ß-thalassemia Program

We are also conducting the Forte Phase 2b clinical trial of tovinontrine, a randomized, double-blind, placebo-controlled trial in approximately 120 transfusion dependent, or TDT, and non-transfusion dependent, or NTDT, patients with ß-thalassemia.

In November 2021, we presented data from a pre-specified interim analysis from the Forte trial in TDT patients.

The interim analysis data demonstrated a well-tolerated safety profile for tovinontrine and a trend for reduced transfusion burden in the higher dose cohort.

We expect to report additional interim data for TDT and NTDT patients from the Forte trial in the first week of April 2022 and data from the final analysis of the Forte clinical trial in the second half of 2022.

HFpEF Program

In the second quarter of 2022, we expect to dose the first patient in the SP 9 IN Phase 2 clinical trial of tovinontrine in HFpEF.

The SP 9 IN trial will be a randomized, placebo-controlled trial of approximately 170 patients 45 years of age or older with enriched PDE9 expression and persistent symptoms of HFpEF.

The primary endpoint of the trial will be the change in N-terminal pro b-type natriuretic peptide, or NT-proBNP, levels.

We have commenced research activities for IMR-261 (formerly CXA-10), an oral, clinic-ready activator Nrf2 .

In pre-clinical models of SCD, IMR-261 was observed to activate expression of HbF and reduce VOCs.

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

We have initiated work on drug product manufacturing for IMR-261 as we explore potential clinical development paths in hemoglobinopathies, iron disorders and potentially other areas.

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 in a broad array of RBC diseases, including disorders of hemoglobin, and iron overload diseases.

We are a biopharmaceutical company that has been dedicated to developing and commercializing novel therapeutics to treat patients suffering from serious diseases.

In April 2022, we announced the results from interim analyses of our Ardent Phase 2b clinical trial of tovinontrine (IMR-687) in patients with sickle cell disease, or SCD, and Forte Phase 2b clinical trial of tovinontrine in patients with ß-thalassemia.

Based on the data generated by these interim analyses, we decided to discontinue the Ardent and Forte trials as well as the further development of tovinontrine in SCD and ß-thalassemia.

We also decided to discontinue development of tovinontrine in heart failure with preserved ejection fraction, as well as our development plans with respect to IMR-261.

In connection with these events, our board of directors approved a reduction in workforce designed to substantially reduce our operating expenses while we undertake a comprehensive assessment of our strategic options to maximize stockholder value.

Following an extensive process of evaluating strategic alternatives, including identifying and reviewing potential candidates for a strategic acquisition or other transaction, on September 6, 2022, we entered into an Asset Purchase Agreement, or the Asset Purchase Agreement, with Cardurion Pharmaceuticals, Inc., or Cardurion, providing for the sale of tovinontrine (IMR-687) and all of our other assets related to our PDE9 program, or the Asset Sale.

On November 10, 2022, we announced the closing of the Asset Sale.

On October 13, 2022, we, Iguana Merger Sub, Inc., a Delaware corporation and our wholly-owned subsidiary, or the Merger Sub, and Enliven Therapeutics, Inc., a Delaware corporation, or Enliven, entered into an Agreement and Plan of Merger, or the Merger Agreement, pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into Enliven, with Enliven continuing as our wholly owned subsidiary and the surviving corporation of the merger, or Merger.

If the Merger is completed, the business of Enliven will continue as the business of the combined organization.

We expect to devote significant time and resources to the completion of the Merger.

However, there can be no assurances that such activities will result in the completion of the Merger.

Further, the completion of the Merger may ultimately not deliver the anticipated benefits or enhance shareholder value.

If the Merger is not completed, we will reconsider our strategic alternatives.

We consider one of the following courses of action to be the most likely alternatives if the Merger is not completed:

Dissolve and liquidate our assets .

If, for any reason, the Merger does not close, our board of directors may conclude that it is in the best interest of stockholders to dissolve the Company and liquidate our assets.

In that event, we would be required to pay all of our debts and contractual obligations, and to set aside certain reserves for potential future claims.

There would be no assurances as to the amount or timing of available cash remaining to distribute to stockholders after paying our obligations and setting aside funds for reserves.

Pursue another strategic transaction .

We may resume the process of evaluating a potential strategic transaction in order to attempt another strategic transaction like the Merger.

Operate our business .

Our board of directors may elect to seek new product candidates for development.

Asset Purchase Agreement

Pursuant to the terms of the Asset Purchase Agreement, we agreed to sell tovinontrine and all of our other assets related to our PDE9 program to Cardurion.

As consideration for the Asset Sale, in addition to $250,000 previously paid by Cardurion to us upon execution of a non-binding term sheet, the aggregate purchase price consisted of an upfront cash

payment of $34,750,000 upon closing of the transaction and a $10,000,000 potential future payment that may become payable if Cardurion achieves a proof of concept milestone or other specified clinical milestones and a $50,000,000 potential future payment that may become payable if Cardurion achieves specified regulatory and/or commercial milestone events, in each case as described in the Asset Purchase Agreement and subject to the terms of the Asset Purchase Agreement.

The Asset Purchase Agreement contains certain customary representations, warranties and covenants.

The Asset Purchase Agreement also contains customary indemnification provisions pursuant to which the parties agree to indemnify each other for certain matters , including, among other things, breaches of certain representations, warranties and covenants in connection with the Asset Sale.

At a special meeting of our stockholders held on November 9, 2022, our stockholders voted to approve the Asset Sale.

On November 10, 2022, we announced the closing of the Asset Sale.

Merger Agreement

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, or the Effective Time, (a) each then-outstanding share of Enliven common stock (including shares of Enliven common stock issued upon conversion of Enliven preferred stock, which conversion will occur immediately prior to the Effective Time and shares of Enliven common stock issued in the Financing Transaction (as defined below)) will be converted into the right to receive a number of shares of our common stock (subject to the payment of cash in lieu of fractional shares and after giving effect to the Reverse Stock Split (as defined below)) calculated in accordance with the Merger Agreement (the ratio of such conversion, the Exchange Ratio);

and (b) each then-outstanding Enliven stock option to purchase Enliven common stock will be assumed by us, subject to adjustment as set forth in the Merger Agreement.

Subject to the terms and conditions of, and the calculation of the Exchange Ratio pursuant to, the Merger Agreement, it is currently anticipated that upon the closing of the Merger, our pre-Merger stockholders will own approximately 16% of the combined company and pre-Merger Enliven stockholders (including those purchasing Enliven shares in the Financing Transaction) will own approximately 84.1% of the combined company on a pro forma basis, based on the number of shares of our common stock expected to be issued in connection with the Merger.

The provisions for calculating the Exchange Ratio are set forth in the Merger Agreement, and assume a valuation for Enliven equal to $324.6 million, plus the proceeds of the Financing Transaction, and a valuation for us equal to our net cash as of the business day immediately prior to the closing date of the Merger, plus $10 million, in each case as further described in the Merger Agreement.

The Exchange Ratio is also based on the relative capitalizations of the companies.

For purposes of calculating the Exchange Ratio, shares of our common stock underlying our stock options outstanding immediately prior to the Effective Time with an exercise price per share of less than or equal to $10.00 (as adjusted for the Reverse Stock Split) will be deemed to be outstanding, and all shares of Enliven common stock underlying outstanding Enliven stock options, warrants and other derivative securities will be deemed to be outstanding.

In connection with the Merger, we will seek the approval of our stockholders at a special meeting expected to be held on February 22, 2023 to, among other things, (a) issue the shares of our common stock issuable in connection with the Merger under the rules of The Nasdaq Stock Market LLC, or Nasdaq, pursuant to the terms of the Merger Agreement, or the Required Voting Proposal, (b) amend our certificate of incorporation to (i) increase the number of authorized shares of our common stock from 200,000,000 shares to 400,000,000 shares and (ii) effect a reverse split of our common stock, at a ratio of not less than 1-for-3 and not more than 1-for-7 and to be determined prior to the Effective Time in accordance with the Merger Agreement, or the Reverse Stock Split, which is intended to ensure that Nasdaq listing requirements are satisfied and (c) amend certain terms of our equity incentive plans as described in the Merger Agreement.

Each of us and Enliven have agreed to customary representations, warranties and covenants in the Merger Agreement, including, among others, covenants relating to (1) using reasonable best efforts to obtain the requisite approvals of our respective stockholders, (2) non-solicitation of alternative acquisition proposals, (3) the conduct of our respective businesses during the period between the date of signing the Merger Agreement and the closing of the Merger, (4) us using reasonable best efforts to maintain the existing listing of our common stock on Nasdaq and causing the shares of our common stock to be issued in connection with the Merger to be approved for listing on Nasdaq prior to the closing of the Merger, (5) us filing with the U.S.

Securities and Exchange Commission, or the SEC, and causing to become effective a registration statement to register the shares of our common stock to be issued in connection with the Merger, or the Registration Statement, and (6) each of us and Enliven filing a pre-merger notification requirement under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, or the HSR Act.

Consummation of the Merger is subject to certain closing conditions, including, among other things, (1) approval by our stockholders of the Required Voting Proposal, (2) approval by the Enliven stockholders of the adoption of the Merger Agreement, (3) Nasdaq’s approval of the listing of the shares of our common stock to be issued in connection with the Merger, (4) the effectiveness of the Registration Statement, (5) our net cash as determined in accordance with the Merger Agreement being between $75 million and $95 million, (6) the waiting period under the HSR Act having expired or been terminated and (7) our closing of the previously announced Asset Sale.

The closing condition set forth in clause (2) above was satisfied on January 25, 2023, when the Enliven stockholders approved adoption of the Merger Agreement.

The closing condition set forth in clause (4) above was satisfied when the Registration Statement was declared effective by the SEC on January 23, 2023.

The closing condition set forth in clause (6) above was satisfied on November 28, 2022, when the waiting period under the HSR Act expired without extension or a request for additional information or documentary material.

The closing condition set forth in clause (7) above was satisfied on November 10, 2022, when the Asset Sale was completed.

Each party’s obligation to consummate the Merger is also subject to other specified customary conditions, including the representations and warranties of the other party being true and correct as of the date of the Merger Agreement and as of the closing date of the Merger, generally subject to an overall material adverse effect qualification, and the performance in all material respects by the other party of its obligations under the Merger Agreement required to be performed on or prior to the date of the closing of the Merger.

Enliven’s obligation to consummate the Merger is also subject to the completion of the Financing Transaction such that Enliven receives gross proceeds of at least $131.6 million and our obligation to consummate the Merger is subject to the completion of the Financing Transaction such that Enliven receives gross proceeds of at least $75.0 million.

The Merger Agreement contains certain termination rights of each of us and Enliven, including, subject to compliance with the applicable terms of the Merger Agreement, the right of each party to terminate the Merger Agreement to enter into a definitive agreement for a superior proposal.

Upon termination of the Merger Agreement under specified circumstances, we may be required to pay Enliven a termination fee of $3.0 million and Enliven may be required to pay us a termination fee of $9.75 million.

In addition, Enliven will be required to pay us a termination fee of $3.0 million if Enliven or we terminate the Merger Agreement at specified times with all conditions to closing of the Merger satisfied other than completion of the Financing Transaction such that Enliven receives gross proceeds of at least $131.6 million or $75 million, respectively.

At the Effective Time, the board of directors of the combined company is expected to consist of nine members, eight of whom will be designated by Enliven and one of whom will be designated by us.

Enliven’s designees are expected to be the current members of the board of directors of Enliven.

Our designee is expected to be Rahul Ballal, our President and Chief Executive Officer.

Concurrently with the execution and delivery of the Merger Agreement, Enliven entered into a common stock purchase agreement, or the Purchase Agreement with certain new and existing Enliven investors, pursuant to which Enliven agreed to issue and sell to such investors, and such investors agreed to purchase from Enliven, shares of Enliven common stock for an aggregate purchase price of approximately $164.5 million, or the Financing Transaction.

The closing of the Financing Transaction is conditioned on the satisfaction or waiver of the closing conditions to the Merger as set forth in the Merger Agreement and other customary closing conditions, and is expected to occur immediately prior to the closing of the Merger, in accordance with the terms of the Purchase Agreement.

The shares of Enliven common stock to be issued in connection with the Financing Transaction will be converted into the right to receive a number of shares of our common stock in the Merger in accordance with the Exchange Ratio, or the Converted Financing Stock (subject to the payment of cash in lieu of fractional shares and after giving effect to the Reverse Stock Split).

At or prior to the Effective Time, we will enter into a Contingent Value Rights Agreement, or the CVR Agreement, with a rights agent, or the Rights Agent, pursuant to which our pre-Merger common stockholders will receive one contingent value right (each, a CVR) for each outstanding share of our common stock held by such stockholder on such date.

Each CVR will represent the contractual right to receive payments upon the occurrence of certain events related to the Asset Sale, subject to and in accordance with the terms and conditions of, the CVR Agreement.

The contingent payments under the CVR Agreement, if they become payable, will become payable to the Rights Agent for subsequent distribution to the holders of the CVRs.

In the event that no such proceeds are received, holders of the CVRs will not receive any payment pursuant to the CVR Agreement.

There can be no assurance that holders of CVRs will receive any amounts with respect thereto.

The right to the contingent payments contemplated by the CVR Agreement is a contractual right only and will not be transferable, except in the limited circumstances specified in the CVR Agreement.

The CVRs will not be evidenced by a certificate or any other instrument and will not be registered with the SEC.

The CVRs will not have

any voting or dividend rights and will not represent any equity or ownership interest in us or any of our affiliates.

No interest will accrue on any amounts payable in respect of the CVRs.

Financial Overview

Since our inception in 2016, our operations have focused on organizing and staffing our company, business planning, raising capital, developing our technology, undertaking preclinical studies and clinical trials of tovinontrine and acquiring and commencing preclinical studies for IMR-261.

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 tovinontrine.

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

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 December 31, 2022, we have issued and sold 231,291 shares of common stock under the Sales Agreement, resulting in net proceeds of $1.4 million after deducting commissions and offering expenses.

No sales were made under the sales agreement during the twelve months ended December 31, 2022.

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 $51.4 million and $41.7 million for the years ended December 31, 2021, and 2020, respectively.

Excluding the gain on the Asset Sale recognized in the current year, we have incurred significant operating losses since inception.

Our losses from operations were $34.3 million and $51.4 million for years ended December 31, 2022, and 2021, respectively.

As of December 31, 2022, we had an accumulated deficit of approximately $146.0 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.

In addition, our losses from operations may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.

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 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.

Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements.

In April 2022, we discontinued development of tovinontrine and implemented reduction in workforce, each of which was designed to substantially reduce our operating expenses while we undertake a comprehensive assessment of our strategic options.

In September 2022, we entered into the Asset Purchase Agreement and on November 10, 2022, we announced the closing of the Asset Sale.

In October 2022, we entered into the Merger Agreement.

Notwithstanding these events, and subject to the closing of the Merger, w e expect to continue to incur operating losses for the foreseeable future.

In addition, our losses from operations may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the outcome of our strategic process and depending on whether we decide to pursue any future product development efforts.

We are not currently developing any product candidates and we do not have any products approved for sale.

If the Merger does not close, if we decide to pursue any future product development efforts, we will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for any future product candidate.

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

Moreover, if we decide to pursue any future product development efforts, we will need substantial additional funding to support our continuing operations and develop a growth strategy.

Until such time as we can generate significant revenue from product sales, if ever, we would expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements.

We may be unable to raise additional funds or enter into other arrangements when needed on acceptable terms, or at all.

Our failure to raise capital or enter into such agreements as, and when, needed, could have a material adverse effect on our business, results of operations, and financial condition.

We will need to generate significant revenue to achieve profitability, and we may never do so.

Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability.

Even if we are able to generate product sales, we may not become profitable.

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 December 31, 2021 we had $90.3 million in cash, cash equivalents and investments.

We believe that though our cash, cash equivalents and investments as of December 31, 2021 will enable us to fund our operating expenses and capital expenditure requirements substantially through the first quarter of 2023, there is substantial doubt about our ability to continue as a going concern within one year after the issuance date of the consolidated financial statements .

We will need to generate significant revenue to achieve profitability, and may never do so.

As of December 31, 2022 we had $88.2 million in cash and cash equivalents.

We believe that our cash and cash equivalents as of December 31, 2022 will enable us to fund our operating expenses and capital expenditure requirements at least twelve months from the date of filing this Annual Report on Form 10-K .

See “—Liquidity and Capital Resources.”

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In December 2019, a novel strain of coronavirus, called COVID-19, emerged and has now spread globally .

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

The impact continues to evolve as of the date of this Annual Report on Form 10-K.

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 Annual Report on Form 10-K, 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.

More recently, we have also experienced some disruptions with the supply chain of third-party vendors who assist us in the conduct of our clinical trials.

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.

In addition, our employees are currently working remotely.

Our financial condition, results of operations and liquidity could be negatively impacted by the impact of 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 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.

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

In April 2016, we entered into an agreement with H.

Lundbeck A/S, or Lundbeck, for a worldwide license under certain patent rights and certain know-how owned or otherwise controlled by Lundbeck 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, which we refer to as the field.

The agreement grants us an exclusive license under the licensed technology, including the right to grant sublicenses with certain restrictions, to research, develop, make, have made, use, sell, have sold, offer to sell, import, export and commercialize any product comprising or containing certain PDE9 inhibitors, in the field.

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

Under the agreement, we have made cash payments totaling $1.8 million to date, consisting of an upfront payment and ongoing milestone

payments, and also issued shares of our common stock as described in Note 14 of the notes to our consolidated financial statements in this Annual Report on Form 10-K.

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 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.

See “Business—License and Acquisition Agreements” for a further description of the license agreement with Lundbeck .

As the impact of 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 primary impact of 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.

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 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.

If we decide to pursue any future product development efforts and such efforts 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 tovinontrine, and include:

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

Research and development expenses consist primarily of costs incurred in connection with the preclinical and clinical development and manufacture of our products.

We expect our future research and development expenses to decrease significantly as compared to research and development expenses in 2021 and the first half of 2022, as a result of our April 2022 decision to discontinue development of tovinontrine and our related reduction in workforce.

For the year ended December 31, 2022, research and development expenses include:

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;

external research and development expenses incurred under agreements with contract research organizations, or CROs, investigative sites, and consultants that conduct our preclinical studies and clinical trials and other scientific development services;

costs incurred under agreements with contract manufacturing organizations, or CMOs, for developing and manufacturing material for our preclinical studies and clinical trials;

external research and development expenses incurred under agreements with contract research organizations, or CROs, investigative sites, and consultants that conducted our preclinical studies and clinical trials and other scientific development services;

costs incurred under agreements with contract manufacturing organizations, or CMOs, who developed and manufactured material for our preclinical studies and clinical trials;

costs related to compliance with regulatory requirements;

milestone fees incurred in connection with our current license agreement with Lundbeck;

facilities and other allocated expenses, which include direct and allocated expenses for rent, insurance and other operating costs.

We expense research and development costs as incurred.

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

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

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

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

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

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

Our research and development expenses to-date have primarily 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.

Research and development activities are central to our business model.

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 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 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.

milestone fees incurred in connection with our license agreement with Lundbeck.

Historically, we expensed research and development costs as incurred.

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

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

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

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

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

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 tovinontrine in SCD and β-thalassemia.

The following table summarizes our research and development expenses for the periods indicated:

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(in thousands)

Tovinontrine (IMR-687)

Personnel expenses (including stock-based compensation)

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Total research and development expenses

The successful development of tovinontrine 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 tovinontrine or any future product candidates.

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.

If we were to decide to pursue any future product development efforts, the successful development of any product candidates is highly uncertain.

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

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

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

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

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

the timing and progress of preclinical and clinical development activities;

the number and scope of preclinical and clinical programs we decide to pursue;

our ability to maintain our current research and development programs and to establish new ones;

our ability to maintain research and development programs or to establish new ones;

establishing an appropriate safety profile with investigational new drug application, or IND, enabling studies;

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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 tovinontrine 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.

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

Drug commercialization will take several years and millions of dollars in development costs .

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

If we were to decide to pursue any future product development efforts, we may never obtain regulatory approval for any product candidates.

Drug commercialization takes several years and millions of dollars in development costs and the potential success of such programs is difficult to predict and are often not successful .

General and Administrative.

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

resources and other administrative functions.

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

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.

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 .

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 .

Our future general and administrative expenses will be significantly dependent on the outcome of our strategic process, including whether or not we successfully consummate the Merger, and on whether we decide to pursue any future product development efforts .

Total Other Income, Net

Total Other Income, Net.

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

Total other income, net primarily consists of interest earned on our cash, cash equivalents and investments during the years ended December 31, 2022 and 2021 .

Results of Operations

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Total operating expenses

Loss from operations

Gain on Asset Sale

Income (loss) from operations

Total other income, net

Income Tax Provision

Net income (loss)

Research and Development Expenses

Research and development expenses increased by approximately $6.2 million from $32.2 million for the year ended December 31, 2020 to $38.4 million for the year ended December 31, 2021.

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

a $3.3 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;

a $2.2 million increase in personnel-related costs, including a $0.7 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 $0.7 million increase in other research and development operational costs, including professional services, supplies, and travel.

Research and development expenses decreased by approximately $19.5 million from $38.4 million for the year ended December 31, 2021 to $18.9 million for the year ended December 31, 2022.

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

a $15.6 million decrease in costs related to the development and manufacturing of clinical materials, clinical research and oversight of our clinical trials and investigative fees for tovinontrine following discontinuation of clinical development;

a $3.3 million decrease in personnel-related costs;

a $0.6 million decrease in other research and development operational costs, including professional services, supplies, travel, and facilities.

General and Administrative Expenses

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

a $2.1 million increase in personnel-related costs, including a $1.0 million increase in stock-based compensation expense, primarily due to an increase headcount;

a $1.1 million increase in cost associated with directors and officers’ insurance premiums due to market conditions and a full year of coverage in 2021;

a $0.6 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 and accounting fees, due to the hiring of additional full-time employees.

a $2.2 million increase in consulting and professional fees, including legal fees incurred in connection with the Asset Sale, business development, accounting and audit fees;

a $0.1 million increase in stock-based compensation expense.

Total Other Income, Net

Total other income, net was $0.3 million for the year ended December 31, 2020, compared to total other income, net of $0.1 million for the year ended December 31, 2021, in each case consisting primarily of interest earned on our cash, cash equivalents and investments.

Total other income, net was $0.1 million for the year ended December 31, 2021, compared to total other income, net of $0.8 million for the year ended December 31, 2022.

The increase during the year ended December 31, 2022 was primarily due to interest earned on our cash, cash equivalents and investments.

Liquidity and Capital Resources

Sources of Liquidity

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

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.

Since our inception, we have incurred significant losses on an aggregate basis.

We have not yet commercialized or generated revenue from sales of any product candidate.

Through December 3 1 , 2022, 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.

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.

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.

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.

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As of December 31, 2022, we have issued and sold 231,291 shares of common stock under the Sales Agreement, resulting in net proceeds of $1.4 million after deducting commissions and offering expenses.

The extent to which we utilize the Sales Agreement as a source of funding will depend on a number of factors, including the prevailing market price of our common stock, general market conditions, the extent to which we are able to secure funds from other sources, and restrictions on our ability to sell common stock pursuant to the Sales Agreement to the extent we are then subject to restrictions on our ability to utilize the Form S-3 shelf registration statement to sell more than one-third of the market value of our public float, meaning the aggregate market value of voting and non-voting common stock held by non-affiliates, in any trailing 12-month period.

Accordingly, we may not be able to sell shares under the Sales Agreement at prices or amounts that we deem acceptable, and there can be no assurance that we will sell any further common stock pursuant to the Sales Agreement.

As of December 31, 2021, we had $90.3 million in cash, cash equivalents and investments.

Based on our recurring losses and negative cash flows from operations since inception, expectation of continuing operating losses and negative cash flows from operations for the foreseeable future, and the need to raise additional capital to finance our future operations, we have concluded that there is substantial doubt about our ability to continue as a going concern for at least twelve months from the date of filing this Annual Report on Form 10-K.

See Note 1 of the notes to our annual consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a further discussion of our liquidity and the conditions and events that raise substantial doubt regarding our ability to continue as a going concern.

As of December 31, 2022, we had $88.2 million in cash and cash equivalents.

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.

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Net cash used in operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net increase (decrease) in cash, cash equivalents, and restricted cash

Net cash provided by (used in) investing activities

Net cash provided by (used in) financing activities

Net increase in cash, cash equivalents, and restricted cash

Net Cash Used in Operating Activities

Net cash used in operating activities for the year ended December 31, 2021 was $46.8 million primarily due to our net loss of $51.4 million, partially offset by stock-based compensation expense of $3.8 million, depreciation expense of $0.1 million, amortization of $0.2 million on our short-term investments, and net cash inflows from the change in operating assets and liabilities of $0.5 million.

Net cash used in operating activities for the year ended December 31, 2022 was $35.6 million primarily due to realized gain on the Asset Sale of $35.0 million and net cash outflows from the change in operating assets and liabilities of $5.4 million, partially offset by net income of $1.5 million, stock-based compensation expense of $2.6 million, depreciation expense of $0.6 million, and amortization of $0.1 million on our short-term investments.

Net Cash Used in Investing Activities

Net cash used in investing activities for the year ended December 31, 2021 was $1.6 million primarily due to purchases of marketable securities of $47.6 million, partially offset by proceeds from sales and maturities of short-term investments of $45.9 million.

Net Cash Provided by and Used in Investing Activities

Net cash provided by investing activities for the year ended December 31, 2022 was $76.5 million primarily due to proceeds of $35.0 million from the Asset Sale, proceeds of $41.9 million from maturities and sales, which were partially offset by purchases of property and equipment of $0.4 million.

Net Cash Provided by Financing Activities

Net Cash Used in and Provided by Financing Activities

Net cash used in financing activities for the year ended December 31, 2022 was $1.2 million, primarily due to payment of transaction costs.

Net cash provided by financing activities for the year ended December 31, 2021 was $49.1 million, primarily due to $46.8 million of net proceeds after deducting underwriting discounts and commissions and payment of issuance costs from our July 2021 offering, $1.4 million of net proceeds after deducting underwriting discounts and commissions and payment of issuance costs from the sale of common stock under the Sales Agreement with Cantor, and $0.9 million of proceeds received from the exercise of stock options.

Net cash provided by financing activities for the year ended December 31, 2020 was $96.9 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 $1.0 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 tovinontrine and any of our future product candidates.

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

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 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 t ovinontrine and any other product candidates we may develop, in each case if approved ;

commence development activities for any additional product candidates we may identify, including IMR-681;

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

maintain, expand, enforce, defend and protect our intellectual property;

hire additional clinical, quality control, manufacturing and other scientific personnel;

add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts and our operations as a public company;

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 that our existing cash, cash equivalents and investments will enable us to fund our operating expenses and capital expenditure requirements substantially through the first quarter of 2023.

We have concluded that there is substantial doubt about our ability to continue as a going concern for at least twelve months from the date of filing this Annual Report on Form 10-K.

Based on our current operating plan, we expect that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements for at least twelve months from the date of filing of this Annual Report on Form 10-K .

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.

Because of the numerous risks and uncertainties associated with research, development and commercialization of product candidates, we are unable to estimate the exact amount of our working capital requirements.

Our future funding requirements will depend on many factors, including:

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 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 identify and develop;

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

the manufacturing, selling and marketing costs associated with tovinontrine 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 tovinontrine and any other product candidates we may identify and develop, including the sales price and the availability of coverage and adequate third-party reimbursement;

Our future capital requirements will depend on the results of our ongoing strategic evaluation, including whether we complete the Merger.

If the Merger is not completed, we will reconsider our strategic alternatives which may include a dissolution of the company, pursuit of another strategic transaction or the pursuit of future product development.

If the Merger does not close, or if we decide to pursue any future product development efforts, our future funding requirements would depend on, and could increase significantly as a result of, many factors, including :

our ability to consummate an alternative strategic transaction and the nature and type of such transaction ;

our ability to bring any product candidates through preclinical and clinical development, and the timing and scope of these research and development activities ;

the costs of obtaining clinical and commercial supplies of any product candidates we may seek to develop ;

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

the manufacturing, selling and marketing costs associated with any 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 any product candidates we may identify and develop, including the sales price and the availability of coverage and adequate third-party reimbursement;

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

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our ability to attract, hire and retain qualified personnel;

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

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 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.

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

the costs associated with operating as a public company and maintaining compliance with exchange listing and SEC requirements.

A change in the outcome of any of these or other variables with respect to the development of 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 need for additional funds is heavily dependent on the outcome of our ability to complete a strategic transaction, including the Merger.

Moreover, if we decide to pursue future product development, until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of cash-on-hand, equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements.

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

Based on our available cash resources, there is substantial doubt about our ability to continue as a going concern within one year after the date of filing this Annual Report on Form 10-K, and we expect that we will need to raise additional capital in the near term.

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 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.

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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Contractual Obligations

In the normal course of business , we enter into agreements that contain contractual obligations, of which the most significant to date include our facility lease and our licensing agreement with Lundbeck.

In May 2019, we entered into a lease agreement for 4,210 square feet of office space located in Boston, Massachusetts.

In June 2021, we entered into an amendment to the lease agreement pursuant to which we will lease an additional 5,026 square feet of office space, brining our total leased space to 9,236 square feet.

We expect the lease for this additional space to commence by the end of March 2022.

As of commencement of the additional lease space, the remaining required payments for our operating lease, not including the optional extension period, will be approximately $3.2 million.

For further information regarding our operating lease agreement, please see Note 8 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

Our license agreement with Lundbeck, as well as certain other agreements, requires us to pay third parties upon achievement of certain development, regulatory or commercial milestones.

In the normal course of business , we enter into agreements that contain contractual obligations, of which the most significant to date included our former licensing agreement with Lundbeck.

In connection with the Asset Sale, our license agreement with Lundbeck was assigned to Cardurion.

Our license agreement with Lundbeck, as well as certain other agreements, required us to pay third parties upon achievement of certain development, regulatory or commercial milestones.

Amounts related to contingent payments are not considered contractual obligations as they are contingent on the successful achievement of certain development, regulatory and commercial milestones that may not be achieved.

We have not included payments contingent upon the achievement of certain development, regulatory or commercial milestones on our consolidated balance sheets.

For further information regarding certain of our license agreements and amounts that could become payable in the future under those agreements, please see Note 7 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

In addition, we are party to certain agreements with contract research organizations for clinical trials and clinical supply manufacturing and with vendors for preclinical research studies and other services and products for operating purposes.

Such contracts are generally cancellable

by us for convenience with a specified amount of notice.

We may be subject to certain termination fees or wind-down costs upon termination of these agreements.

The exact amount of such costs are generally not fixed or estimable.

For further information regarding our former license agreement with Lundbeck, please see Note 7 to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

Further, on October 13, 2022, we entered into the Merger Agreement with Enliven.

The closing of the Merger is subject to approval by our stockholders and the stockholders of Enliven and other customary closing conditions.

If we are unable to satisfy certain closing conditions under the Merger Agreement, or if other mutual closing conditions are not satisfied, Enliven will not be obligated to complete the Merger.

The Merger Agreement contains certain termination rights of each of us and Enliven.

Under certain circumstances detailed in the Merger Agreement, we could be required to pay Enliven a termination fee of $3.0 million or Enliven could be required to pay us a termination fee of $9.75 million.

In addition, Enliven will be required to pay us a termination fee of $3.0 million if Enliven or we terminate the Merger Agreement at specified times with all conditions to closing of the Merger satisfied other than the conditions related to the completion of the Enliven pre-closing financing such that, in the case of Enliven’s condition, Enliven receives gross proceeds of at least $131.6 million, and in the case of our condition, Enliven receives gross proceeds of at least $75 million.

Critical Accounting Policies and Estimates

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generally accepted accounting principles.

The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets and liabilities, the

disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reported periods.

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

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

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As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued third-party research and development expenses as of each balance sheet date.

This process involves reviewing open contracts and purchase orders, communicating with our personnel to identify services that have been performed on our behalf, and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of the actual cost.

or otherwise notified of the actual cost.

The majority of our service providers invoice us monthly in arrears for services performed or when contractual milestones are met.

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We determine the fair value of stock-based awards based on the fair value of our common stock on the date of grant.

term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and our expected dividend yield.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the expected stock price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and our expected dividend yield.

Given our limited trading history as a public company, we determine the volatility for awards granted based on an analysis of reported data for a group of guideline companies that issued options with substantially similar terms.

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Prior to our IPO, the expected term of our stock options granted to non-employees also used the “simplified” method.

Following our IPO, the expected term of options granted to non-employee s is determined by contractual term.

Following our IPO, the expected term of options granted to non-employees is determined by contractual term.

The risk-free interest rate is determined by reference to the U.S.

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therefore, the expected dividend yield is assumed to be zero.

As there was no public market for our common stock prior to our IPO, the estimated fair value of our common stock for awards made prior to the IPO was approved by our board of directors, with input from management, as of the date of each award grant, considering our most recently available independent third-party valuations of common stock and utilizing the valuation of our company’s enterprise value determined utilizing various methods including the back-solve method, option pricing model, or OPM, or a hybrid of the probability-weighted expected return method, or PWERM, and the OPM.

The total enterprise value was then allocated to the various outstanding equity instruments, including the underlying common stock, utilizing the option-pricing model.

We believed the assumptions underlying these valuations represented our best estimates.

The independent third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation .

Following our IPO, we have determined the fair value of our common stock based on the quoted market price of our common stock on the Nasdaq Global Select Market.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis