What changed in this filing

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Item 9A. Controls and Procedures

2022-03-28 compared with 2021-03-25 · 249 added, 296 removed, 463 unchanged (54% of the section changed)

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Evaluation of Disclosure Controls and Procedures.

Our management, with the participation of our Chief Executive Officer and Interim Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Annual Report.

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures.

Based on such evaluation, our Chief Executive Officer and Interim Chief Financial Officer have concluded that, as of the end of December 31, 2020, our disclosure controls and procedures are not designed at a reasonable assurance level and are not effective due to the material weaknesses described below.

Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of December 31, 2021, our disclosure controls and procedures were effective as of December 31, 2021 to ensure the timely disclosure of required information in our SEC filings.

Management’s Report on Internal Control Over Financial Reporting

This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.

Discussion of Material Weaknesses

In connection with our preparation and the audits of our financial statements as of and for the years ended December 31, 2020 and 2019, we identified material weaknesses as defined under the Exchange Act and by the Public Company Accounting Oversight Board (United States) in our internal control over financial reporting.

The material weaknesses relate to the design of our internal control over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.

The material weaknesses that we identified related to the lack of review of journal entries, lack of timely and effective review of financial statement account balances and our lack of maintaining a sufficient complement of personnel commensurate with our accounting and reporting requirements.

Remediation Activities

We are currently in the process of remediating the material weaknesses and have taken and will continue to take steps that we believe will address the underlying causes of the material weaknesses.

The remediation efforts include (i) implementing a monthly financial statement close process that includes formal review of financial statement account balances and journal entries, (ii) creating a disclosure committee consisting of key executives and accounting personnel who review the Company’s financial statements and related disclosures and (iii) actively recruiting for open positions and anticipate hiring additional qualified accounting and financial reporting personnel in 2021.

While significant progress has been made to enhance our internal control over financial reporting, we are still in the process of implementing, documenting and testing these processes, procedures and controls.

We will continue to devote significant

time and attention to these remediation efforts.

However, the material weaknesses cannot be considered remediated until the applicable remedial controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Notwithstanding the material weaknesses, management has concluded that the financial statements included elsewhere in this Annual Report present fairly, in all material respects, our financial position, results of operations and cash flows in conformity with GAAP.

Management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting.

The Company’s internal control over financial reporting is a process designed, as defined in Rule 13a-15(f) under the Exchange Act, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

The Company’s internal control over financial reporting is supported by written policies and procedures that:

- Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets;

- Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors;

- Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

In connection with the preparation of the Company’s annual financial statements, management of the Company has undertaken an assessment of the effectiveness of the Company’s internal control over financial reporting based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework).

Management’s assessment included an evaluation of the design of the Company’s internal control over financial reporting and testing of the operational effectiveness of the Company’s internal control over financial reporting.

Based on this assessment, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2021.

Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements prepared for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Changes in Internal Control Over Financial Reporting

Other than as described above under “Remediation Activities,” there was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(f) of the Exchange Act that occurred during the quarter ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)) under the Exchange Act) that occurred during the year ended December 31, 2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, except as follows:

Material Weakness Remediation

As previously reported, management recognized that the Company had material weaknesses in its internal control over financial reporting as of December 31, 2020.

Management determined that the deficiencies could have potentially resulted in a material misstatement of the financial statements in a future annual or interim period that would not be prevented or detected.

Therefore, the deficiencies constituted material weaknesses in internal control.

We initiated several steps to evaluate and implement measures designed to improve our internal control over financial reporting in order to remediate the control deficiencies noted above.

These steps include hiring a Chief Financial Officer, a Corporate Controller, and a Finance Manager who are responsible for the preparation and review of the Company’s financial statements and related disclosures.

In addition, we enhanced our reporting process thereby reducing the risk of undetected errors by (i) implementing a monthly financial statement close process that includes formal review of financial statement account balances and journal entries, and (ii) creating a disclosure committee consisting of key executives and accounting personnel who review the Company’s financial statements and related disclosures on a quarterly basis.

As a result of these efforts, the Company determined that the material weaknesses were remediated and our internal control over financial reporting was effective as of December 31, 2021.

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers, and Corporate Governance

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(a)(1) Financial Statements

See Index to the Consolidated Financial Statements on page 105 of this Annual Report.

See Index to the Financial Statements on page 90 of this Annual Report.

(a)(2) Financial Statement Schedules

None, as all information required in these schedules is included in the Notes to the Consolidated Financial Statements.

None, as all information required in these schedules is included in the Notes to the Financial Statements.

(a)(3) Exhibits

See Exhibit Index or Page 111 of this Annual Report.

Immunome, Inc.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Balance Sheets as of December 31, 2021 and 2020

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We have audited the accompanying balance sheets of Immunome, Inc.

(the “Company”) as of December 31, 2020 and 2019, the related statements of operations, changes in convertible preferred stock and stockholders’ equity (deficit), and cash flows, for each of the two years ended December 31, 2020 and 2019 and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the two years ended December 31, 2020 and 2019, in conformity with accounting principles generally accepted in the United States of America.

(the “Company”) as of December 31, 2021 and 2020, the related statements of operations, changes in convertible preferred stock and stockholders’ equity (deficit), and cash flows, for each of the two years in the period ended December 31, 2021 and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

Basis for opinion

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Current assets:

Cash and cash equivalents

Prepaid expenses and other current assets

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Restricted cash

Deferred offering costs

Liabilities, convertible preferred stock, and stockholders’ equity (deficit)

Current liabilities:

Current portion of capital lease obligations

Current portion of long-term debt

Current portion of equipment loan payable

Accounts payable

Accrued expenses and other current liabilities

Current portion of long-term debt

Current portion of equipment loan payable

Total current liabilities

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Commitments and contingencies (Note 8)

Series A convertible preferred stock, $ 0.0001 par value;

No shares authorized, issued or outstanding at December 31, 2020;

30,000,000 shares authorized and 4,443,259 shares issued and outstanding at December 31, 2019 (liquidation value of $ 39,990 at December 31, 2019)

Stockholders’ equity (deficit):

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized;

no shares issued or outstanding at December 31, 2021 and December 31, 2020

Common stock, $ 0.0001 par value;

200,000,000 and 50,000,000 shares authorized at December 31, 2020 and 2019, respectively;

200,000,000 shares authorized;

12,110,373 shares issued and outstanding at December 31, 2021 and 10,634,245 shares issued and outstanding at December 31, 2020

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Loss from operations

Other expenses:

Other income (expenses):

Change in fair value of warrant liability

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Per share information:

Net loss per share of common stock, basic and diluted

Net loss per common share, basic and diluted

Weighted-average common shares outstanding, basic and diluted

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Balance at January 1, 2020

Issuance of Series A convertible preferred stock upon conversion of debt

Sale of Series A convertible preferred stock, net of $ 35 of issuance costs

Share-based compensation expense

Exercise of stock options

Balance at December 31, 2019

Sale of Series A convertible preferred stock and warrants with a fair value of $ 1,522 , net of $ 49 of issuance costs

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Balance at December 31, 2020

Sale of common stock and common stock warrants, net of $ 559 in offering costs

Share-based compensation expense

Exercise of common stock warrants

Exercise of stock options and vesting of restricted stock

Balance at December 31, 2021

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

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Deferred rent

Forgiveness of PPP Loan

Changes in operating assets and liabilities:

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Cash flows from financing activities:

Proceeds from convertible promissory notes

Proceeds from exercise of stock options

Proceeds from exercise of common stock warrants

Proceeds from long-term debt

Proceeds from the sale of common stock in connection with IPO

Payment of IPO costs

Proceeds from sale of common stock and common stock warrants

Payment of issuance costs related to the sale of common stock and common stock warrants

Proceeds from the sale of Series A convertible preferred stock

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Payment of capital lease obligations

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and restricted cash

Cash and restricted cash at beginning of year

Cash and restricted cash at end of year

Payment of offering costs

Net cash provided by financing activities

Net increase in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of year

Cash and cash equivalents and restricted cash at end of year

Supplemental disclosures of cash flow information:

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Conversion of Series A convertible preferred stock upon IPO

IPO costs included in accounts payable

Offering costs included in accounts payable

Fair value of liability-classified warrants issued in connection with Series A convertible preferred stock

Conversion of liability-classified warrants upon IPO

Issuance of Series A convertible preferred stock upon conversion of convertible promissory notes

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

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(the Company or Immunome) was incorporated as a Pennsylvania corporation on March 2, 2006 and was converted to a Delaware corporation on December 2, 2015.

The Company is a biotechnology company focused on identifying novel cancer immunotherapies utilizing a patented process to immortalize human B cells.

Since its inception, the Company has devoted substantially all of its resources to research and development, raising capital, building its management team and building its intellectual property portfolio.

The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry including, but not limited to;

technical risks associated with the successful research, development and manufacturing of product candidates, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations.

Current and future programs will require significant research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization.

These efforts require significant amounts of additional capital, adequate personnel and infrastructure.

Even if the Company’s development efforts are successful, it is uncertain when, if ever, the Company will realize significant revenues from product sales.

The Company is a biopharmaceutical company utilizing our proprietary human memory B cell platform to discover and develop first-in-class antibody therapeutics designed to change the way diseases are currently being treated.

The Company’s primary focus areas are oncology and infectious disease, including COVID-19.

Since its inception, the Company has devoted substantially all its resources to research and development, raising capital, building its management team and building its intellectual property portfolio.

The Company is subject to risks and uncertainties common to early-stage companies in the biopharmaceutical industry including, but not limited to, risks associated with the successful research, development and manufacturing of product candidates, uncertain results of preclinical and clinical testing, development by competitors of new technological innovations, dependence on key personnel and third-party vendors, protection of proprietary technology, compliance with government regulations, regulatory approval of product candidates and the ability to secure additional capital to fund operations.

The Company has incurred net losses since inception, including net losses of $ 24.7 million and $ 17.8 million for the years ended December 31, 2021 and 2020, respectively, and it expects to generate losses from operations for the foreseeable future primarily due to research and development costs for its potential product candidates.

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The Company received net proceeds of $ 41.7 million after deducting underwriting discounts and commissions of $ 3.1 million but before deducting other offering expenses.

The Company expects that its cash as of December 31, 2020 will be sufficient to fund its operations through the second fiscal quarter of 2022.

On April 28, 2021, the Company sold 1,000,000 units, each consisting of one share of the Company’s common stock and one warrant to purchase one-half a share of common stock in a private placement at a price of $ 27.00 per unit for net proceeds of $ 26.4 million.

The Company filed a shelf registration statement on Form S-3, which was declared effective by the SEC on October 14, 2021, pursuant to which the Company may issue from time-to-time securities with an aggregate price of up to $ 200.0 million.

On October 1, 2021 the Company entered into a new Open Market Sale Agreement (“ATM Agreement”) with Jefferies Group LLC, which provides that, upon the terms and subject to the conditions and limitations in the ATM Agreement, the Company may elect, from time to time, to offer and sell shares of common stock under the registration statement having an aggregate offering price of up to $ 75.0 million through Jefferies Group LLC acting as sales agent.

The Company has not yet sold any shares under the ATM Agreement.

The Company expects that its cash as of December 31, 2021 will be sufficient to fund its operations for at least 12 months from the filing date of this Annual Report on Form 10-K.

Beyond that date, the Company will need additional financing to support its continuing operations and pursue its growth strategy.

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If the Company engages in collaborations, it may receive lower consideration upon commercialization of such products than if it had not entered into such arrangements or if it entered into such arrangements at later stages in the product development process.

Additionally, volatility in the capital markets and general economic conditions in the United States may be a significant obstacle to raising the required funds.

Additionally,

volatility in the capital markets and general economic conditions in the United States may be a significant obstacle to raising the required funds.

Operations of the Company are subject to certain risks and uncertainties including various internal and external factors that will affect whether and when the Company’s product candidates become approved drugs and how significant their market share will be, some of which are outside of the Company’s control.

The length of time and cost of developing and commercializing these product candidates and/or failure of them at any stage of the drug approval process will materially affect the Company’s financial condition and future operations.

On March 11, 2020, the World

Health Organization characterized the novel COVID-19 virus as a global pandemic.

On March 11, 2020, the World Health Organization characterized the novel COVID-19 virus as a global pandemic.

Although there is significant uncertainty as to the likely effects this disease may have in the future, to date, there has not yet been a significant impact to the Company’s operations or financial statements.

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Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (ASC) and Accounting Standards Updates (ASU) promulgated by the Financial Accounting Standards Board (FASB).

Reverse stock split

The Company’s board of directors approved a one-for- six reverse stock split of its issued and outstanding common stock, stock options, convertible preferred stock and convertible preferred stock warrants legally effective as of September 22, 2020.

Accordingly, all convertible preferred shares and common stock shares, common stock warrants, per share amounts, and additional paid-in capital amounts for all periods presented in the accompanying financial statements and notes thereto have been retroactively adjusted, where applicable, to reflect the reverse stock split.

Use of estimates

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The Company bases its estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances.

Significant estimates and assumptions reflected in these financial statements include, but are not limited to, the fair value of the Company’s common stock in connection with share-based compensation arrangements and the fair value of the warrant liability.

Significant estimates and assumptions reflected in these financial statements include, but are not limited to, the fair value of the Company’s common stock prior to its IPO, in connection with share-based compensation arrangements, the expected volatility used to estimate fair value of common stock, services performed but not billed relating to research and development contracts, and services performed on research and development advanced payments.

Estimates and assumptions are periodically reviewed in-light of changes in circumstances, facts and experience.

Changes in estimates are recorded in the period in which they become known.

Actual results could differ from these estimates.

Cash consists of standard checking accounts and a money market account.

Segment and geographic information

Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker (CODM), or decision-making group, in deciding how to allocate resources and in assessing performance.

The CODM is the Company’s Chief Executive Officer.

The Company views its operations as and manages its business in one operating segment operating exclusively in the United States.

Cash and Cash Equivalents

Cash and cash equivalents consist of standard checking accounts and a money market account.

The Company considers all highly liquid investments with an original maturity of three months or less at the date of purchase to be cash equivalents.

There are no cash equivalents as of December 31, 2020 and 2019.

Restricted cash

Restricted cash represents collateral provided for a letter of credit issued as a security deposit in connection with the Company’s lease of its corporate facilities.

This lease expires in 2022 at which time the cash will be released from restriction.

This lease expires in 2024;

at which time, the cash will be released from restriction.

Restricted cash was $ 100,000 at both December 31, 2021 and 2020.

For purposes of the cash flow statements, this restricted cash is combined with cash at December 31, 2020 and 2019.

The following table provides a reconciliation of the components of cash and cash equivalents and restricted cash reported in the Company’s balance sheets to the total of the amount presented in the statements of cash flows:

(in thousands)

December 31, 2021

December 31, 2020

Cash and cash equivalents

Restricted cash

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and restricted cash.

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents.

Periodically, the Company may maintain deposits in financial institutions in excess of government insured limits.

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Equity issuance costs

The Company capitalized incremental legal, professional, accounting and other third-party fees that were directly associated with the IPO as other noncurrent assets until the IPO was consummated.

After consummation of the IPO in October 2020, these costs were recorded in stockholders’ deficit as a reduction of additional paid-in-capital generated as a result of the IPO.

As of December 31, 2020, there were no deferred offering costs.

Preferred stock

The Company had classified the Series A Preferred as temporary equity in the accompanying balance sheet at December 31, 2019 because it became redeemable due to certain deemed liquidation events, as defined in the Company’s articles of incorporation, that were outside of the Company’s control.

The Company accreted the Series A Preferred to redemption when such deemed liquidation events were probable.

No accretion has been recognized during the years ended December 31, 2020 and 2019 as redemption was not probable.

The Series A Preferred converted into common stock in connection with the IPO (see Note 1) and was reclassified to stockholders’ equity in October 2020.

The Company capitalizes costs that are directly associated with in-process equity financings until such financings are consummated, at which time such costs are recorded against the gross proceeds from the applicable financing.

If a financing is abandoned, deferred offering costs are expensed.

As of December 31, 2021, there was $ 0.3 million of deferred offering costs in connection with the Company’s shelf registration statement, and there were no deferred offering costs as of December 31, 2020.

Government contract funding

The Company accounts for amounts received under its U.S.

Department of Defense expense reimbursement contract as contra-research and development expenses in the statements of operations.

Department of Defense (DoD) expense reimbursement contract as contra-research and development expenses in the statements of operations.

Warrant liability

The Company issued warrants to purchase shares of Series A convertible preferred stock in connection with the June 2020 Series A convertible preferred stock sale.

The warrants were initially classified as a liability on the balance sheet at September 30, 2020 as the underlying Series A convertible preferred stock is contingently redeemable and outside of the Company’s control (see Note 12, Common stock and convertible preferred stock).

The warrants were initially classified as a liability on the balance sheet at September 30, 2020 as the underlying Series A convertible preferred stock was contingently redeemable and outside of the Company’s control (see Note 10, Common stock and convertible preferred stock).

The fair value of the warrants on the date of issuance was recorded as a reduction of the carrying value of the Series A convertible preferred stock and as a long-term liability in the balance sheets.

The warrants were subsequently remeasured to fair value at each

balance sheet date with changes in the fair value of the warrants recognized as other income or expense in the statements of operations.

The warrants were subsequently remeasured to fair value at each balance sheet date with changes in the fair value of the warrants recognized as other income or expense in the statements of operations.

The change in fair value of the warrants during the year ended December 31, 2020 was $ 5.5 million.

Upon completion of the IPO on October 6, 2020, the warrants became exercisable for shares of the Company’s common stock and were reclassified to additional paid-in capital in October 2020 upon the consummation of the IPO.

Upon completion of the IPO on October 6, 2020, the warrants became exercisable for shares of the Company’s common stock and were reclassified to additional paid-in capital upon the consummation of the IPO.

The Company used the Black-Scholes option pricing model, which incorporated assumptions and estimates, to value the Series A convertible preferred stock warrants until the conversion of the Series A Preferred to stockholders’ equity in October 2020.

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Research and development costs consist of costs incurred in performing research and development activities, including salaries and bonuses, share-based compensation, employee benefits, facilities costs, laboratory supplies, depreciation and amortization, preclinical expenses, consulting and other contracted services.

Additionally, under the terms of the license agreements (see Note 10, License Agreements), the Company is obligated to make future payments should certain development and regulatory milestones be achieved.

Additionally, under the terms of the license agreements, the Company is obligated to make future payments should certain development and regulatory milestones be achieved.

No such costs have been incurred for the years ended December 31, 2021 and 2020.

Costs for certain research and development activities are recognized based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected in the financial statements as a prepaid or accrued expense.

Costs for certain research and development activities are recognized based on the terms of the individual arrangements, which may differ from the timing of receipt of invoices and payment of invoices, and are reflected in the financial statements as a prepaid or accrued expense.

Share-based compensation

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Grants are awarded to employees and non-employees, including directors.

The Company accounts for its share-based compensation in using the fair value method and all share-based payments to employees, non-employees and directors, are recognized as expense in the statements of operations based on their fair values.

The Company accounts for its share-based compensation awards granted to employees and nonemployees based on the estimated fair value on the date of grant and recognized compensation expense of those awards over the requisite service period, which is the vesting period of the respective award.

The Company accounts for forfeitures as they occur.

For share-based awards with service-based vesting conditions, the Company recognized compensation expense on a straight-line basis over the service period.

The Company classified share-based compensation expense in its statements of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.

The Company estimates the fair value of options granted using the Black-Scholes option pricing model for stock option grants to both employees and non-employees.

The Company’s share-based compensation awards are subject to service-based vesting conditions.

Compensation expense related to awards to employees, directors and non-employees with service-based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term.

The Black-Scholes option pricing model requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends.

Due to the lack of Company-specific historical and implied volatility data, the Company has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to the Company, including stage of product development and life science industry focus.

The historical volatility is calculated based on a period of time commensurate with expected term assumption.

The Company uses the simplified method to calculate the expected term for options granted to employees and non-employees whereby, the expected term equals the arithmetic average of the vesting term and the original contractual term of the options due to its

lack of sufficient historical data.

The historical volatility is calculated based on a period of time commensurate with the expected term assumption.

The risk-free interest rate is based on U.S.

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The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock.

Prior to the adoption of Compensation — Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting (ASU 2018-07), the measurement date for non-employee awards was generally the date the services are completed, resulting in financial reporting period adjustments to share-based compensation during the vesting terms for changes in the fair value of the awards.

After the adoption of ASU 2018-07 on January 1, 2018, the measurement date for non-employee awards is the date of grant without changes in the fair value of the award.

In determining the exercise prices for options granted, the Company has considered the estimated fair value of the common stock as of the measurement date.

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The Company determines whether it is more likely than not that a tax position will be sustained upon examination.

If it is not more likely than not that a position will be sustained, none of the benefit attributable to the position is recognized.

If it is not more likely than not that a position will be sustained, none of

the benefit attributable to the position is recognized.

The tax benefit to be recognized for any tax position that meets the more-likely-than-not recognition threshold is calculated as the largest amount that is more than 50% likely of being realized upon resolution of the contingency.

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Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company.

Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the assets or

liability and are developed based on the best information available in the circumstances.

Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the assets or liability and are developed based on the best information available in the circumstances.

ASC 820 identifies fair value as the price that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.

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Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted market prices, interest rates and yield curves.

Unobservable inputs for the asset or liability (i.e.

supported by little or no market activity).

Unobservable inputs for the asset or liability (i.e., supported by little or no market activity).

Level 3 inputs include management’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).

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A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Cash and cash equivalents are Level 1 assets for the years ended December 31, 2021 and 2020.

Net loss per share

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Diluted net loss per share of common stock is computed by dividing the diluted net loss by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of common stock equivalents.

The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:

The following potentially dilutive securities as of December 31, 2021 and 2020 have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:

Year ended December 31,

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Common stock warrants (1)

Convertible preferred stock (1)

(1) Represents common stock equivalents

The Company’s Series A Preferred had contractually entitled the holders of such shares to participate in dividends but did not contractually require the holders of such shares to participate in losses of the Company.

Accordingly, in periods in which the Company reports a net loss, such losses were not allocated to participating securities.

Prior to its conversion, the Company’s Series A convertible preferred stock contractually entitled the holders of such shares to participate in dividends but did not contractually require the holders of such shares to participate in losses of the Company.

Accordingly, in periods in which the Company reported a net loss, such losses were not allocated to participating securities.

In periods in which the Company reports a net loss per share of common stock, diluted net loss per share of common stock is the same as basic net loss per share of common stock since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

The Company reported a net loss per share of common stock for the years ended December 31, 2021 and 2020.

Segment and geographic information

The CODM is the Company’s Chief Executive Officer.

The Company views its operations as and manages its business in one operating segment operating exclusively in the United States.

Recent accounting pronouncements

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As an emerging growth company, the Company has elected to take advantage of this extended transition period.

In February 2016, the FASB issued ASU No.

2016-02, Leases (ASC 842) which requires a lessee to record a right-of-use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months.

A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available.

In February 2016, the FASB issued ASC Topic 842, Leases, (Topic 842).

This standard requires all entities that lease assets with terms of more than 12 months to capitalize the assets and related liabilities on the balance sheet.

As the Company has elected to use the extended transition period for complying with new or revised accounting standards as available under the JOBS Act, the standard is effective for the Company beginning January 1, 2022, with early adoption permitted.

The Company is currently evaluating the expected impact that the standard could have on its financial statements and related disclosures.

Fair value measurement

A reconciliation of the change in the fair value of the warrant liability for the year ended December 31, 2020 is as follows (in thousands).

Using Significant

Balance, December 31, 2019

Issuance of warrants on June 2, 2020

Change in fair value of warrant liability

Reclass of warrant liability to additional paid-in capital upon IPO

Warrant liability, December 31, 2020

A summary of the inputs used in the Black-Scholes pricing model to fair value the warrants are disclosed in Note 12.

The Company expects to adopt ASC 842 effective January 1, 2022 using the modified retrospective approach.

The Company expects to elect the package of practical expedients available for existing contracts, which will allow us to carry forward our historical assessments of lease identification, lease classification, and initial direct costs.

The Company also expects to elect a policy to not apply the recognition requirements of ASC 842 for short-term leases.

The Company expects to recognize a right-of-use asset and lease liability of $ 0.2 million, respectively, on January 1, 2022 , which is related to our facility operating lease (Note 8).

In November 2021, the FASB issued ASU Topic 832, Disclosures by Business Entities about Government Assistance (“Topic 832”).

This standard requires disclosures about transactions with a government that have been accounted for by analogizing to a grant or contribution accounting model to increase transparency about the types of transactions, the accounting for the transactions, and the effect of the transactions on an entity’s financial statements.

The effective date of Topic 832 is for financial statements issued for annual periods beginning after December, 15 2021.

The Company is currently evaluating the effect Topic 832 will have on its consolidated financial statements and related disclosures.

Prepaid expenses and other current assets

Prepaid expenses and other current assets consisted of the following:

(in thousands)

Reimbursement receivable from DoD

Prepaid insurance

Unbilled reimbursement receivable from DoD

Research and development advance payments

Other prepaids and short term deposits

Property and equipment, net

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Property and equipment, net

Depreciation and amortization expense for the years ended December 31, 2020 and 2019 was $ 0.8 million and $ 0.6 million , respectively.

There were no assets under capital leases as of December 31, 2020.

At December 31, 2019, the Company had $ 1.1 million of laboratory equipment under capital leases.

Department of Defense (DoD) expense reimbursement contract

In July 2020, the Company entered into an Other Transaction Authority for Prototype Agreement (the DoD Agreement) with the DoD to fund the Company’s efforts in developing Biosynthetic Convalescent Plasma (BCP) to treat COVID-19.

Under the DoD Agreement, the Company intends to develop BCP for use in the U.S.

military population and the U.S.

population as a whole, subject to approval by the U.S.

Food and Drug Administration (FDA).

The amount of funding being made available to the Company under this expense reimbursement contract is $ 13.3 million which, based on the Company’s anticipated expenditures, is expected to be received through mid-2021.

The Company recorded contra-research and development expense of $ 1.7 million for the year ended December 31, 2020 in the statements of operations.

As of December 31, 2020, the Company had an expense reimbursement receivable balance of $ 0.9 million due from the DoD in prepaid expenses and other current assets on the balance sheet.

Accrued expenses

Accrued expenses consisted of the following:

Depreciation and amortization expense was $ 0.8 million for the years ended December 31, 2021 and December 31, 2020, respectively.

There were no assets under capital leases as of December 31, 2021 and 2020.

DoD expense reimbursement contract

In July 2020, the Company entered into an Other Transaction Authority for Prototype Agreement (the OTA Agreement) with the DoD to fund the Company’s efforts in developing an antibody cocktail therapeutic to treat COVID-19.

The amount of funding being made available to the Company under this expense reimbursement contract was $ 13.3 million.

In May 2021, the Company and the DoD amended the OTA Agreement, pursuant to which the DoD award was increased from $ 13.3 million to $ 17.6 million.

Under the agreement, the DoD shall pay the Company, upon submission of proper invoices, within 30 calendar days of receipt of request for payment.

The Company recorded contra-research and development expense of $ 15.2 million and $ 1.7 million for the years ended December 31, 2021 and 2020, respectively, in the statements of operations.

The Company had an expense reimbursement receivable balance of $ 2.7 million and $ 0.9 million due from the DoD in prepaid expenses and other current assets for the years ended December 31, 2021 and 2020, respectively, on the balance sheet.

Costs that have been reimbursed by the DoD but not yet expensed by the Company are recorded as a deferred research obligation liability for the period.

The Company has a deferred research obligation liability of $ 2.0 million and $ 0 million for the years ended December 31, 2021 and 2020, respectively.

This amount is included in accrued expenses and other liabilities in the accompanying balance sheet.

DoD reimbursable services that have been performed but not yet billed are recorded as an unbilled receivable in prepaid expenses and other current assets on the balance sheet.

The Company had an unbilled receivable from the DoD of $ 1.6 million and $ 0 million for the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2021, the Company has the potential for $ 0.2 million of expense reimbursement under the OTA Agreement.

Accrued expenses and other liabilities

Accrued expenses and other liabilities consisted of the following:

(in thousands)

Research and development

Deferred research obligations

Compensation and related benefits

Professional fees, contractors and other

Convertible promissory notes

From January 2019 through July 2019, the Company issued $ 6.8 million of non-interest bearing convertible promissory notes to several existing Series A Preferred shareholders and new investors.

The notes were to mature on February 2, 2020, if not converted or otherwise settled prior to maturity.

Upon completion of a qualified equity financing event, as defined in the note agreement, the notes were to automatically convert into shares of the stock sold in such a qualified financing and at a price equal to 80 % of the subscription price.

In the event that the Company were to sell additional shares of Series A Preferred prior to a qualified financing event, the notes were to automatically convert into shares of Series A Preferred at a discount to the $ 9.00 per share subscription price.

The discount was equal to 1 % for each month that has lapsed from the initial note issuance date to the date in which the extended sale of Series A Preferred is consummated.

In November 2019, the Company completed the sale of its Series A Preferred and the notes automatically converted into 821,657 shares of Series A Preferred.

The effective conversion price of the notes was less than the fair value of the Series A Preferred and therefore, no beneficial conversion feature was recorded for the discount.

The Company accounted for the conversion upon a qualified financing event as a bifurcated redemption feature as settlement under this feature would be in a variable number of shares and at a substantial discount.

At issuance and over the term of the note, the Company determined the probability of settlement pursuant to the qualified financing event to be remote.

As such, the estimated fair value of the redemption feature was de minimis.

Equipment loan payables

The Company entered into various equipment financing agreements (the Agreements) to purchase laboratory equipment.

The Agreements provide for 36 to 38 monthly payments ranging from $ 1,000 to $ 8,000 .

Interest rates for the Agreements range from 9.03 % to 12.08 %, and interest expense related to the equipment financing agreements was $ 21,000 and $ 46,000 for the years ended December 31, 2020 and 2019, respectively.

Future payments for the Company’s Agreements are as follows (in thousands):

Year ending December 31,

Less amounts representing interest

Total equipment loan payable

Professional fees

Long-term debt

On April 30, 2020, the Company entered into a loan agreement with Silicon Valley Bank as the lender (Lender) for a loan in an aggregate principal amount of $ 0.5 million (the Loan) pursuant to the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and implemented by the U.S.

Small Business Administration (“SBA”).

The Company is using the proceeds of the Loan for payroll and other qualifying expenses.

The Company may apply for forgiveness of amounts due under the Loan, with the amount of potential loan forgiveness to be calculated in accordance with the requirements of the PPP based on payroll costs, any mortgage interest payments, any covered rent payments and any covered utilities payments during the 8 or 24-week period after the origination date of the Loan.

The Loan matures in two years and bears interest at a rate of 1 % per year, with all payments deferred through the six-month anniversary of the date of the Loan or until a conclusion has been reached as to whether the Loan will be forgiven.

In January 2021, the Company applied to the SBA for forgiveness and is awaiting a decision.

While the Company believes that its use of the Loan proceeds will meet the conditions of forgiveness of the Loan, it cannot be assured that actions taken could cause the Company to be ineligible for forgiveness of the Loan, in whole or in part.

Proceeds received are recorded as long-term debt.

In the event the debt is forgiven in a future period, the Company will recognize a gain on extinguishment in the statement of operations.

Interest expense for the year ended December 31, 2020 was de minimis.

Years ending December 31,

Less current portion of long-term debt

Long-term debt, net of current portion

On April 30, 2020, the Company entered into a loan agreement with Silicon Valley Bank as the lender (Lender) for a loan in an aggregate principal amount of $ 0.5 million (PPP Loan) pursuant to the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief, and Economic Security Act and implemented by the U.S.

Small Business Administration.

The Company used the proceeds of the PPP Loan for payroll and other qualifying expenses.

The entire PPP Loan was forgiven on May 21, 2021 and recognized as other income in the statement of operations.

Commitments and contingencies

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In May 2017, the Company entered into a 62-month office and laboratory space lease commencing on July 1, 2017 for approximately 11,000 square feet of space in Exton, Pennsylvania.

The Company has an option to extend the lease for two additional five-year terms.

The Company has an option to extend the lease for up to two additional five-year terms.

In December 2021, the Company extended the lease for an additional eighteen-month term.

The lease is subject to fixed rate escalation increases and the landlord waived the Company’s rent obligation for the first two months of the lease.

Deferred rent is $ 16,000 and $ 18,000 as of December 31, 2020 and 2019, respectively, and is being amortized as a reduction in rent expense over the term of the lease.

Deferred rent is de minimis as of December 31, 2021 and 2020, respectively, and is being amortized as a reduction in rent expense over the term of the lease.

The Company recognizes rent expense on a straight-line basis over the expected lease term.

In August 2020, the Company entered into a one-year operating lease for laboratory equipment that expires in July 2021 and has fixed monthly payments of $ 18,000 .

In August 2020, the Company entered into a one-year operating lease for laboratory equipment that expired in July 2021 and has fixed monthly payments of $ 18,000 .

Future minimum lease payments for the Company’s operating leases are as follows (in thousands):

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Rent expense for the years ended December 31, 2021 and 2020 was $ 0.5 million and $ 0.4 million, respectively.

Capital leases

During 2016 and 2017, the Company entered into multiple capital leases (the leases) for laboratory equipment.

All of the leases expired during 2020.

Interest expense related to the leases was $ 7,000 and $ 60,000 for the years ended December 31, 2020 and 2019, respectively.

Employment agreements

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The Company assumes all administrative costs of the 401(k) Plan and makes matching contributions as defined in the 401(k) Plan document.

The Company made matching contributions of $ 74,000 and $ 61,000 to the 401(k) Plan for the years ended December 31, 2020 and 2019, respectively.

The Company made matching contributions of $ 0.1 million to the 401(k) Plan for the years ended December 31, 2021 and 2020, respectively.

Legal proceedings

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Licensing arrangements

2009 license agreement

In June 2009, the Company entered into and subsequently amended a license agreement (the 2009 License Agreement) with two research institutions (the 2009 Licensors) for certain base editing technology pursuant to which the Company received an exclusive, worldwide, sublicensable, royalty-bearing license under specified patent rights to develop and commercialize licensed products and a nonexclusive, worldwide, sublicensable, royalty-bearing license under certain patent rights to research and develop licensed products.

The Company agreed to use commercially reasonable efforts to develop licensed products in accordance with the development plan, to introduce any licensed products that gain regulatory approval into the commercial market, to market licensed products that have gained regulatory approval following such introduction into the market, and to make licensed products that have gained regulatory approval reasonably available to the public.

The license term extends until the later of the expiration of (i) the last to expire licensed patent covering a licensed product, (ii) the period of exclusivity associated with a licensed product or (iii) a certain period after the first commercial sale of a licensed product, unless terminated earlier by either party under certain provisions.

The 2009 License Agreement was subsequently amended in December 2009, March 2013, August 2017 and July 2020.

The Company agreed to pay to the 2009 Licensors an annual license maintenance fee in the mid five figures.

The Company is responsible for the payment of certain patent prosecution and maintenance costs incurred by the 2009 Licensors related to licensed patents.

To the extent achieved, the Company is obligated to pay $ 0.7 million in the aggregate for certain development, regulatory and commercial milestones and $ 0.3 million for each product or derivative that the Company discovers using the licensed product or processes.

To the extent there are sales of a licensed product, the Company is required to pay low single digit royalties on net sales.

If the Company sublicenses its rights to develop or commercialize a licensed product under the 2009 License Agreement to a third party and the Company receives non-royalty sublicense income, then the 2009 Licensors are entitled to a percentage of such consideration, ranging from the high single digits to low double digits depending on the date in which such sublicense agreement is executed and the stage of development of the Company’s licensed products at such time.

The Company concluded that the licensing rights acquired from the 2009 Licensors did not meet the accounting definition of a business as inputs, but no processes or outputs were acquired with the license.

As the inputs that were acquired along with the license do not constitute a “business,” the transaction has been accounted for as an asset acquisition.

As of the date of the 2009 License Agreement, the assets acquired had no alternative future use as the assets had not reached a stage of technological feasibility.

As a result, all share-based and cash payment obligations have been recorded as research and development expense in the statements of operations.

The Company is monitoring the development and regulatory milestone payments for this arrangement on an ongoing basis.

The achievement of these milestone payments was not considered probable as of the acquisition date through December 31, 2020, as such, no expense has been recorded for these milestones for the years ended December 31, 2020 and 2019.

To the extent products are commercialized under the 2009 License Agreement, the Company will accrue royalty expense and sublicense nonroyalty payments, as applicable, for the amount it is obligated to pay, with adjustments as sales are made.

2012 license agreement

In June 2012, the Company entered into a license agreement (the 2012 License Agreement) with a medical institution (the 2012 Licensor) for certain patent rights, know-how, and materials pursuant to which the Company received an exclusive, worldwide, sublicensable (with certain restrictions), royalty-bearing license under specified patent rights to develop and commercialize licensed products.

The license term extends until the last patent or patent application has expired or been abandoned or unless terminated earlier by either party under certain provisions.

The 2012 License Agreement was

amended in October 2017 to change the terms of the royalty and milestone payments and was further amended in July 2020.

The Company is responsible for the payment of certain patent prosecution and maintenance costs incurred by the 2012 Licensor related to licensed patents.

To the extent achieved, the Company is obligated to pay up to an aggregate of $ 1.0 million in product development and regulatory approval milestones.

To the extent there are sales of a licensed product, the Company is required to pay low single digit royalties on net sales.

If the Company sublicenses its rights to develop or commercialize a licensed product under the 2012 License Agreement to a third party and the Company receives non-royalty sublicense income, then the 2012 Licensor is entitled to a percentage of such consideration.

The Company concluded that the licensing rights acquired from the 2012 Licensor did not meet the accounting definition of a business as inputs, but no processes or outputs were acquired with the license.

As the inputs that were acquired along with the license do not constitute a “business,” the transaction has been accounted for as an asset acquisition.

As of the date of the 2012 License Agreement, the assets acquired had no alternative future use as the assets had not reached a stage of technological feasibility.

The Company is monitoring the development and regulatory milestone payments for this arrangement on an ongoing basis.

The achievement of these milestone payments was not considered probable as of the acquisition date through December 31, 2020, and as such, no expense has been recorded for these milestones for the years ended December 31, 2020 and 2019.

To the extent products are commercialized under the 2012 License Agreement, the Company will accrue royalty expense and sublicense nonroyalty payments, as applicable, for the amount it is obligated to pay, with adjustments as sales are made.

2019 license agreement

In June 2019, the Company entered into an exclusive license agreement (the 2019 License Agreement) with a company (the 2019 Licensor) for certain methods and apparatus for substrate handling and printing technology pursuant to which the Company received an exclusive, worldwide, sublicensable, royalty-bearing license under specified patent rights and know-how to research, develop, make, have made, use, sell, offer for sale, market, and otherwise commercialize licensed products.

The license term extends until the last patent or patent application has expired or been abandoned or unless terminated earlier by either party under certain provisions.

As part of the 2019 License Agreement, the Company is required to pay an exclusivity fee in the low six figures.

The Company is also responsible for the payment of certain patent prosecution and maintenance costs incurred by the 2019 Licensor related to licensed patents.

To the extent there are sales of a licensed product, the Company is required to pay low single digit royalties on net sales.

If the Company sublicenses its rights to develop or commercialize a licensed product under the 2019 License Agreement to a third party and the Company receives non-royalty sublicense income, then the 2019 Licensor is entitled to a percentage of such consideration.

The Company concluded that the licensing rights acquired from the 2019 Licensor did not meet the accounting definition of a business as inputs, but no processes or outputs were acquired with the license.

As the inputs that were acquired along with the license do not constitute a “business,” the transaction has been accounted for as an asset acquisition.

As of the date of the 2019 License Agreement, the assets acquired had no alternative future use as the assets had not reached a stage of technological feasibility.

As a result, all cash payment obligations have been recorded as research and development expense in the statement of operations.

The Company pays an annual exclusivity fee related to the 2019 License Agreement and recognized $ 175,000 and $ 63,000 as license fee expense in research and development for the years ended December 31, 2020 and 2019, respectively.

Annual patent costs will be expensed as incurred.

To the extent products are commercialized under the 2019 License Agreement, the Company will accrue royalty expense and sublicense nonroyalty payments, as applicable, for the amount it is obligated to pay, with adjustments as sales are made.

The Company has entered into various licensing agreements to further discover, develop and commercialize certain technologies and treatments.

The Company may need to pay developmental and regulatory milestone payments up to approximately $ 2.6 million.

In addition, the Company may need to pay royalty rates on net product sales and certain commercial milestone payments up to approximately $ 1.5 million, if any.

2021 Patent License Agreement

In June 2021, the Company entered into an exclusive worldwide patent license agreement with several Philadelphia based universities and hospitals (the Licensors) to further discover, develop and commercialize human antibodies, identified using Immunome’s human hybridoma technology, for the treatment of diseases associated with the formation of bacterial biofilms.

The Licensors are eligible to receive up to $ 1.5 million in regulatory and developmental milestone payments and up to $ 0.7 million in commercial milestone payments.

In addition, the Licensors are eligible to receive low single digit royalty rates for net product sales, which are subject to adjustment in the event the Company sublicenses the approved technology.

Beginning in June 2022, the Company is subject to annual minimum payments to the Licensors of $ 20,000 , which increases to $ 30,000 annually in June 2023 and thereafter.

For the year ended December 31, 2021, the Company recorded a $ 0.1 million non-refundable license initiation fee that covers the attorney’s fees and all other charges associated with the preparation, filing, prosecution, and maintenance of the Patent Rights.

This non-refundable license initiation fee was recorded as an operating expense on the income statement.

Common stock and convertible preferred stock

1 unchanged sentence

Subject to the approval of the majority of shareholders, the holders of common stock shall be entitled to receive dividends out of funds legally available.

In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, the holders of common stock shall be entitled to share ratably in the remaining assets of the Company available for distribution.

In October 2020, the Company closed its IPO in which the Company issued and sold 3,757,500 shares of its common stock at a public offering price of $ 12.00 per share, including 487,500 shares of the Company’s common stock sold pursuant to the underwriters’ option to purchase additional shares.

In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, the

holders of common stock shall be entitled to share ratably in the remaining assets of the Company available for distribution.

On October 14, 2021, the Company filed a shelf registration statement on Form S-3, which was declared effective by the SEC, pursuant to which the Company may issue from time-to-time securities with an aggregate price of up to $ 200.0 million.

On October 1, 2021 the Company entered into a new Open Market Sale Agreement ("ATM Agreement”) with Jefferies LLC, which provides that, upon the terms and subject to the conditions and limitations in the ATM Agreement, the Company may elect, from time to time, to offer and sell shares of common stock under the registration statement having an aggregate offering price of up to $ 75.0 million through Jefferies acting as sales agent.

The Company has not yet sold any shares under the ATM Agreement.

On August 4, 2021, the Company entered into a consulting agreement that included a cash retainer and an equity grant.

In addition, the consultant purchased 14,115 shares of common stock from the Company for $ 15.94 per share.

On April 28, 2021, the Company sold 1,000,000 units, each unit comprising one share of the Company’s common stock and one Series B Warrant (each, a Series B Warrant) to purchase one-half a share of common stock.

The units were issued in a private placement at a price of $ 27.00 per unit for gross proceeds of $ 27.0 million.

The Series B Warrants are equity-classified, exercisable at any time, have an exercise price of $ 45.00 per share and will terminate at three years from the date of issuance.

The fair value of the warrants on the date of issuance was $ 6.0 million.

The fair value of the warrants was estimated using a Black-Scholes Option Pricing Model.

The significant assumptions used in preparing the option pricing model for valuing the Company's warrants to purchase shares of common stock as of April 28, 2021 included (i) volatility of 82.7 %, (ii) risk free interest rate of 0.35 %, (iii) strike price of $ 45.00 per share, (iv) fair value of common stock of $ 28.70 per share, and (v) expected life of three years.

The Series B Warrants are callable by the Company in certain circumstances.

On October 6, 2020, the Company closed the IPO in which the Company issued and sold 3,737,500 shares of its common stock at a public offering price of $ 12.00 per share, including 487,500 shares of the Company’s common stock sold pursuant to the underwriters’ option to purchase additional shares.

The Company received net proceeds of $ 41.7 million after deducting underwriting discounts and commissions of $ 3.1 million but before deducting other offering expenses.

1 unchanged sentence

Series A convertible preferred stock

Prior to the IPO, all of the Company’s convertible preferred stock was classified outside of stockholders’ deficit because the shares contained certain redemption features that were not solely within the control of the Company.

Prior to the IPO, all of the Company’s convertible preferred stock was classified outside of stockholders’ equity (deficit) because the shares contained certain redemption features that were not solely within the control of the Company.

At the time of issuance, the redeemable convertible preferred stock was recorded at its issuance price, less issuance costs.

During the year ended December 31, 2019, the Company sold 512,826 shares of its Series A Preferred at $ 9.00 per share in exchange for $ 4.6 million in gross proceeds and incurred $ 35,000 of related issuance costs.

In November 2019, the Company issued 821,657 shares of Series A Preferred in connection with the conversion of the promissory notes of $ 6.8 million (see Note 7, Convertible Promissory Notes).

In June 2020, the Company completed the sale of an additional 1,226,925 shares of Series A Preferred at $ 9.00 per share, resulting in gross cash proceeds of $ 11.0 million.

In addition to the shares of Series A Preferred, the Company issued 1,035,196 warrants to purchase shares of the Company’s Series A Preferred with a fair value of $ 1.5 million.

The warrants were exercisable at any time and had an exercise price of $ 9.00 per share and were to terminate at the earlier of (i) three years from the date of issuance, (ii) upon liquidation of the Company and (iii) upon the Company’s securities trading at $ 27.00 per share for at least 10 days out of a consecutive 20 -day trading period beginning after the first anniversary of the IPO.

In connection with the Company’s sale of its Series A Preferred in 2015, a future milestone closing provision (the Future Milestone) was included requiring the Company to sell, on the same terms and conditions as the initial offering, an aggregate of $ 3.5 million of additional Series A Preferred upon achievement of certain development and strategic milestones, as defined in the purchase agreement and at $ 9.00 per share, or 388,888 shares of Series A Preferred.

The Future Milestone was not achieved and the Company’s obligations under this right terminated upon completion of the Company’s IPO.

The Company determined that the future tranche right related to the Future Milestone did not meet the definition of a freestanding financial instrument as it was not legally detachable.

The future tranche right was also evaluated as an embedded derivative and the Company determined it did not meet the definition of a derivative instrument for which bifurcation would be required.

In connection with the IPO, all of the Series A Preferred converted into 5,670,184 shares of common stock and all of the outstanding warrants to purchase convertible preferred stock converted into warrants to purchase common stock.

Warrants to acquire shares of common stock

At December 31, 2020 there are 1,035,196 warrants outstanding to acquire shares of the Company’s common stock.

The warrants were issued in connection with the June 2020 sale of the Company’s Series A convertible preferred stock and originally entitled the holders to acquire shares of the Company’s Series A Preferred.

These warrants were originally liability-classified as the underlying Series A convertible preferred stock was contingently redeemable and outside of the Company’s control.

The warrants had a grant date fair value of $ 1.5 million and a warrant liability was recorded in the balance sheet upon issuance.

Upon completion of the IPO on October 6, 2020, the warrants became exercisable for shares of the Company’s common stock and the $ 7.1 million warrant liability was reclassified to additional paid-in capital (see Note 3).

The fair value of the warrants was estimated using a Black-Scholes pricing model with the following inputs:

October 6, 2020

Volatility rate

Risk-free interest rate

Expected term (in years)

Strike price (per share)

Fair value of Series A convertible preferred stock

At December 31, 2021 common stock warrants outstanding were as follows:

Exercise Price per Share

Expiration Date

April 28, 2024

For the year ended December 31, 2021, 148,653 warrants exercisable for $ 9.00 per share were exercised, and the Company received proceeds of $ 1.3 million and 148,653 shares of the Company’s common stock were issued.

Additionally, 83,431 warrants were exercisable for $ 9.00 per share were exercised in cashless transactions for the year ended December 31, 2021 and 52,326 shares of the Company’s common stock were issued.

Share-based compensation

In July 2008 the board of directors adopted the 2008 Equity Incentive Plan (the 2008 Plan) which provided for the grant of qualified incentive stock options and nonqualified stock options, restricted stock or other awards to the Company’s employees, officers, directors, advisors, and outside consultants for the issuance or purchase of shares of the Company’s common stock.

The 2008 Plan was replaced in July 2018 with the Immunome, Inc.

2018 Equity Incentive Plan (the 2018 Plan and collectively with the 2008 Plan, the Plans).

In July 2008, the Board of Directors adopted the 2008 Equity Incentive Plan ("the 2008 Plan”) which provided for the grant of qualified incentive stock options and non-qualified stock options, restricted stock or other awards to the Company’s employees, officers, directors, advisors, and outside consultants for the issuance or purchase of shares of the Company’s common stock.

The 2008 Plan was replaced in July 2018 with the 2018 Equity Incentive Plan (the 2018 Plan and collectively with the 2008 Plan, the Plans).

At the time that the 2008 Plan was terminated, there were 388,748 shares available for grant that were transferred to the 2018 Plan.

Any additional shares that become available for grant under the 2008 Plan are automatically transferred to and made available for grant under the 2018 Plan.

On September 24, 2020, the Plans were terminated and replaced with the 2020 Equity Incentive Plan (the 2020 Plan).

The remaining 298,277 shares available for grant under the Plans are available for issuance under the 2020 Plan and an additional 1,701,723 shares were authorized under the 2020 Plan.

The Company also adopted the 2020 Employee Stock Purchase Plan (the ESPP Plan) on September 18, 2020 which provides for the grant of purchase rights to purchase shares of the Company’s common stock to eligible employees, as defined by the ESPP Plan.

The maximum number of shares of common stock that may be issued under the ESPP Plan will not exceed 125,000 shares of common stock, plus the number of shares of common stock that are automatically added on January 1st of each calendar year for a period of up to ten years , commencing on the first January 1 following the year in which an IPO occurs and ending on, and including, January 1, 2030, in an amount equal to the lesser of (i) 1 % of the total number of shares of common stock outstanding on December 31st of the preceding calendar year, and (ii) 1,000,000 shares of common stock.

No awards have been granted under the ESPP Plan as of December 31, 2020.

The 2020 Plan and the ESPP Plan are administered by the board of directors.

On September 24, 2020, the 2018 Plan was terminated and replaced with the 2020 Equity Incentive Plan (2020 Plan).

Additionally, the number of shares of our common stock reserved for issuance under the 2020 Plan will automatically increase on January 1 of each year, beginning on January 1, 2021 and continuing through and including January 1, 2030, by 4 % of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the Company’s Board of Directors.

As of December 31, 2021, there were 1,372,897 shares available for future issuance under the 2020 Plan.

The Company also adopted the 2020 Employee Stock Purchase Plan (ESPP Plan) on September 18, 2020 which provides for the grant of purchase rights to purchase shares of the Company’s common stock to eligible employees, as defined by the ESPP Plan.

The maximum number of shares of common stock that may be issued under the ESPP Plan will not exceed 125,000 shares of common stock, plus the number of shares of common stock that are automatically added on January 1 of each calendar year for a period of up to ten years , commencing on the first January 1 following the year in which an IPO occurs and ending on, and including, January 1, 2030, in an amount equal to the lesser of (i) 1 % of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, and (ii) 1,000,000 shares of common stock.

No shares of common stock have been issued under the ESPP Plan as of December 31, 2021.

The 2020 Plan and the ESPP Plan are administered by the Board of Directors subject to the Board’s right to delegate to a committee.

The exercise prices, vesting and other restrictions are determined at the discretion of the Board of Directors.

Stock options awarded under the Plans generally expire 10 years after the grant date unless the board of directors sets a shorter term.

Stock options awarded under the Plans and the 2020 Plan generally expire 10 years after the grant date unless the Board of Directors sets a shorter term.

Vesting periods for awards under the Plans and the 2020 Plan are determined at the discretion of the Board of Directors.

Incentive stock options and non-statutory stock options granted to employees, officers, members of the board of directors and consultants of the Company typically vest over two to four years .

Stock options granted to employees, officers, members of the Board of Directors and consultants of the Company typically vest over one to four years .

Certain options provide for accelerated vesting if there is a change in control, as defined in the Plans and the 2020 Plan.

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Fair value of common stock

A summary of option activity under the Plans during the year ended December 31, 2020 is as follows:

A summary of option activity under the Plans and the 2020 Plan during the year ended December 31, 2021 is as follows:

exercise price

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The weighted-average grant date fair value per share of stock options granted during the years ended December 31, 2021 and 2020 was $ 16.49 and $ 3.71 , respectively.

The aggregate intrinsic value of stock options exercised during the year ended December 31, 2020 was $ 1.2 million and for the year ended December 31, 2019 was de minimis.

The aggregate intrinsic value of stock options exercised during the year ended December 31, 2021 and 2020 was $ 4.0 million and $ 1.2 million, respectively.

The aggregate intrinsic value of stock options outstanding at December 31, 2021 and 2020 is $ 11.3 million and $ 10.1 million, respectively.

5 unchanged sentences

At the time of the modification, the fair value of these options awards was recalculated at $ 8.69 per option.

Restricted Stock Awards

During August 2021, the Company granted 13,500 fully vested shares of common stock to a consultant in exchange for various strategic and advisory services.

The Company recorded stock-based compensation expense of $ 0.2 million for the year ended December 31, 2021 related to shares granted.

No such transaction occurred for the year ended December 31, 2020.

As of December 31, 2021, there was no unvested portion of the restricted stock award as all shares were fully vested upon grant.

A reconciliation of the federal income tax rate to the Company’s effective tax rate is as follows:

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To the extent an ownership change occurs in the future, the net operating loss and credit carryforwards may be subject to limitation.

Further, until a study is completed and any limitation is known, no amounts are being presented as an uncertain tax position.

As a result, the Company is not able to estimate the effect of the change

in control, if any, on the Company’s ability to utilize net operating loss and research and development credit carryforwards in the future.

Further, until a study is completed and any limitation is known, no amounts

are being presented as an uncertain tax position.

As a result, the Company is not able to estimate the effect of the change in control, if any, on the Company’s ability to utilize net operating loss and research and development credit carryforwards in the future.

The Company has not yet conducted a study of its research and development credit carryforwards.

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If not utilized, the federal and state net operating loss carryforwards expire starting in 2027.

Included in the federal net operating loss carryforwards is $ 18.3 million of net operating loss generated in 2018 and 2019 that will not expire.

Federal net operating loss carryforwards of $ 12.3 million and $ 10.0 million generated in 2020 and 2019, respectively, will be limited to offset 80 % of our taxable income for taxable years beginning after December 31, 2020.

Included in the federal net operating loss carryforwards are $ 51.8 million of net operating loss generated from 2018 to 2021 that will not expire and are limited to offset 80 % of our taxable income for years beginning after December 31, 2020.

Certain federal and state net operating loss carryforwards expire at various dates through 2040.

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The Company recognizes both interest and penalties associated with unrecognized tax benefits as a component of income tax expense.

The Company has not recorded any interest or penalties for unrecognized tax benefits since its inception.

The Company has no t recorded any interest or penalties for unrecognized tax benefits since its inception.

The Company filed income tax returns in the United States and Pennsylvania in all tax years since inception.

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The Company is not currently under examination by the Internal Revenue Service or any other jurisdiction for these years.

Interest expense, net

Interest expense, net consisted of the following:

Year Ended December 31,

(in thousands)

Capital lease obligations interest expense

Equipment loan payable interest expense

Interest income

Related party transactions

2 unchanged sentences

Expenses with these related parties during the years ended December 31, 2021 and 2020 were approximately $ 0.4 million and $ 0.1 million, respectively.

There were no amounts owed to these related parties as of December 31, 2020 and 2019.

Convertible promissory notes

During the year ended December 31, 2019, the Company received $ 6.8 million upon issuing convertible promissory notes, of which $ 3.8 million was from several of its existing preferred stock investors.

All of the convertible promissory notes were converted into shares of Series A Preferred (see Note 7, Convertible Promissory Notes).

Amounts owed to these related parties were approximately $ 0.1 million and $ 0 as of December 31, 2021 and 2020, respectively.

Broadband services agreement

During November 2015, the Company entered into a Master Services Agreement (MSA) with BCM Advisory Partners LLC, Broadband Capital Partners LLC and Broadband Advisory (collectively, Broadband) pursuant to which Broadband will provide corporate finance, strategic planning, and management recruiting services to the Company.

The Company is required to pay Broadband a cash fee of $ 20,000 per month, retroactive to May 1, 2016, for Broadband’s advisory services.

In November 2015, the Company entered into a management services agreement (MSA) with BCM Advisory Partners LLC and Broadband Capital Partners LLC (collectively Broadband Capital).

Certain directors of the Company are principals of Broadband Capital.

Under the Broadband MSA, the Company engages Broadband Capital as a consultant for advice in connection with senior management matters related to the Company’s business, administration and policies in exchange for a cash fee to Broadband Capital of $ 20,000 per month.

The Broadband MSA was amended and/or restated in July 2016, January 2017, June 2018, March 2020 and August 2020.

In June 2021, the Company extended the Broadband MSA to continue through June 2022.

The Company recorded $ 0.2 million and $ 0.2 million during the years ended December 31, 2021 and 2020, respectively, related to the Broadband MSA, which is included in general and administrative expenses in the statements of operations.

There were no amounts due to Broadband Capital as of December 31, 2021 and 2020.

EXHIBIT INDEX

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1 to our Registration Statement on Form S-1/A filed on September 24, 2020).

Form of Series B Warrant (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed on April 26, 2021).

Description of Securities

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1 to our Registration Statement on Form S-1/A filed on September 24, 2020).

Offer Letter Agreement by and between the registrant and Purnanand D.

Sarma, dated as of May 30, 2019 (incorporated by reference to Exhibit 10.9 to our Registration Statement on Form S-1 filed on September 9, 2020).

Amendment to Offer Letter Agreement by and between the registrant and Purnanand D.

Sarma, dated as of August 5, 2020 (incorporated by reference to Exhibit 10.10 to our Registration Statement on Form S-1 filed on September 9, 2020).

Amended and Restated Offer Letter Agreement by and between the registrant and Michael J.

Morin, dated as of August 5, 2020 (incorporated by reference to Exhibit 10.11 to our Registration Statement on Form S-1 filed on September 9, 2020).

Consulting Agreement by and between the registrant and Diane Marcou, dated as of May 1, 2020 (incorporated by reference to Exhibit 10.12 to our Registration Statement on Form S-1 filed on September 9, 2020).

Consulting Agreement by and between the registrant and Michael Lefenfeld, dated as of April 15, 2020 (incorporated by reference to Exhibit 10.13 to our Registration Statement on Form S-1 filed on September 9, 2020).

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Second Amended and Restated Management Services Agreement, by and among the registrant, BCM Advisory Partners LLC and Broadband Capital Partners LLC, dated as of January 17, 2017, as amended by the Amendment to Second Amended and Restated Management Services Agreement dated June 12, 2018, the Second Amendment to Second Amended and Restated Management Services Agreement dated March 3, 2020 and the Third Amendment to Second Amended and Restated Management Services Agreement dated August 4, 2020 (incorporated by reference to Exhibit 10.19 to our Registration Statement on Form S-1 filed on September 9, 2020).

Non-Employee Director Compensation Policy (incorporated by reference to Exhibit 10.22 to Amendment No.

1 to our Registration Statement on Form S-1/A filed on September 24, 2020).

Amended and Restated Employment Agreement by and between the registrant and Purnanand D.

4 unchanged sentences

1 to our Registration Statement on Form S-1/A filed on September 24, 2020)

Separation Agreement and General Release between the Company and Richard Fitzgerald, dated December 1, 2020 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on November 30, 2020)

Employment Agreement between the Company and Sandra G.

Stoneman effective October 19, 2020.

Master Services Agreement, between the Company and Abzena (San Diego) Inc dated December 14, 2020.

(incorporated by reference to Exhibit 10.26 to our Annual Report on Form 10-K filed on March 25, 2021).

Master Services Agreement, between the Company and Abzena (San Diego) Inc dated December 14, 2020 (incorporated by reference to Exhibit 10.27 to our Annual Report on Form 10-K filed on March 25, 2021).

Employment Letter Agreement between the Company and Corleen M.

Roche, effective April 19, 2021 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on April 20, 2021).

Securities Purchase Agreement by and among the Company and the Purchasers signatory thereto, dated April 26, 2021 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on April 26, 2021).

Engagement Letter, by and between the Company and Ladenburg Thalmann & Co.

Inc., dated April 9, 2021, as amended by the Amendment No.

1 thereto, dated April 25, 2021 (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed on April 26, 2021).

Modification of Contract between the Company and the Department of Defense, United States of America, dated May 19, 2021 (portions of this exhibit (indicated by asterisks) have been redacted in compliance with Regulation S-K Item 601(b)(10)(iv)) (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on May 20, 2021).

Fourth Amendment to Second Amended and Restated Management Services Agreement, dated June 1, 2021, by and between the Company and Broadband Capital Partners LLC (incorporated by reference to Exhibit 10.5 to our Quarterly Report on Form 10-Q filed on August 16, 2021).

Second Amended and Restated Employment Agreement, dated August 1, 2021, by and between the Company and Dr.

(incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on August 5, 2021).

Amended and Restated Non-Employee Director Compensation Policy (incorporated by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q filed on November 15, 2021).

Open Market Sale Agreement, dated October 1, 2021, by and between Immunome, Inc.

and Jefferies LLC (incorporated by reference to Exhibit 1.2 to our Registration Statement on Form S-3 filed on October 1, 2021).

Immunome, Inc.

Annual Employee Bonus Plan.

Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm.

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Interim Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Certification of Chief Executive Officer Pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Certification of Interim Chief Financial Officer Pursuant to 18 U.S.C.

Certification of Chief Financial Officer Pursuant to 18 U.S.C.

Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Purnanand D.

and Diane Marcou, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him in his name, place and stead, in any and all capacities, to sign this report, and file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof.

and Corleen M.

Roche, and each of them, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him in his name, place and stead, in any and all capacities, to sign this report, and file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, full power and authority to do and perform each and every act and thing requisite and necessary to be done as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons in the capacities and on the dates indicated on behalf of the Registrant.

3 unchanged sentences

( Principal Executive Officer )

/s/ Diane Marcou

Interim Chief Financial Officer

/s/ Corleen M.

Chief Financial Officer

March 28, 2022

(Principal Financial Officer and Principal Accounting Officer)

(Principal Financial Officer)

/s/ Michael Rapp

12 unchanged sentences

Philip Wagenheim

/s/ Michael Widlitz

/s/ Frank Prendergast

March 28, 2022

Michael Widlitz

Frank Prendergast

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 9A. Controls and Procedures