What changed in this filing

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Item 1. Financial Statements

2022-05-12 compared with 2021-11-15 · 197 added, 223 removed, 172 unchanged (71% of the section changed)

3 unchanged sentences

(In thousands, except share data)

September 30, 2021

March 31, 2022

December 31, 2021

Current assets:

Cash and cash equivalents

Prepaid expenses and other current assets

1 unchanged sentence

Property and equipment, net

Operating right-of-use asset, net

Restricted cash

4 unchanged sentences

Accrued expenses and other current liabilities

Equipment loan payable

Current portion of long-term debt

Total current liabilities

Long-term debt, net of current portion

Deferred rent

Other long-term liabilities

Total liabilities

1 unchanged sentence

Stockholders’ equity:

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized;

no shares issued or outstanding at March 31, 2022 and December 31, 2021

Common stock, $ 0.0001 par value;

200,000,000 shares authorized;

12,093,333 and 10,634,245 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

12,127,385 and 12,110,373 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

6 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating expenses:

3 unchanged sentences

Loss from operations

Change in fair value of warrant liability

Interest expense, net

Interest income (expense), net

Per share information:

3 unchanged sentences

IMMUNOME, INC.

Condensed Statements of Changes in Convertible Preferred Stock and Stockholders’ Equity (Deficit )

Condensed Statements of Changes in Stockholders’ Equity

(In thousands, except share data)

Convertible preferred stock

Stockholders’ equity

Balance at June 30, 2021

Sale of common stock

Share-based compensation expense

Exercise of common stock warrants

Exercise of stock options and settlement of RSUs

Balance at September 30, 2021

Convertible preferred stock

Stockholders’ equity

Balance at January 1, 2022

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 September 30, 2021

Convertible preferred stock

Stockholders’ deficit

Balance at June 30, 2020

Series A convertible preferred stock issuance cost

Share-based compensation expense

Exercise of stock options

Balance at September 30, 2020

Convertible preferred stock

Stockholders’ deficit

Balance at March 31, 2022

Stockholders’ equity

Balance at January 1, 2021

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

Share-based compensation expense

Exercise of common stock warrants

Exercise of stock options

Balance at September 30, 2020

Balance at March 31, 2021

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

2 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months ended March 31,

Cash flows from operating activities:

1 unchanged sentence

Depreciation and amortization

Amortization of right-of-use asset

Share-based compensation

Change in fair value of warrant liability

Deferred rent

Forgiveness of PPP Loan

Changes in operating assets and liabilities:

2 unchanged sentences

Accrued expenses and other current liabilities

Other long term liabilities

Net cash used in operating activities

3 unchanged sentences

Cash flows from financing activities:

Proceeds from sale of Series A convertible preferred stock

Payment of Series A convertible preferred stock issuance 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 exercise of stock options

Proceeds from exercise of stock warrants

Payment of IPO costs

Payment of offering costs

Proceeds from long-term debt

Proceeds from exercise of common stock warrants

Payment of equipment loan payable

Payment of capital lease obligations

Net cash provided by financing activities

Net increase in cash and restricted cash

Cash and restricted cash at beginning of period

Cash and restricted cash at end of period

Net decrease in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash at end of period

Supplemental disclosures of cash flow information:

Operating lease right-of-use asset and lease liability recorded upon adoption of ASC 842

Offering costs included in accrued expenses and other liabilities

Offering costs included in accounts payable

Fixed assets included in accrued expenses and other current liabilities

Cash paid for interest

Supplemental disclosures of non-cash investing and financing activities:

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

Series A convertible preferred stock warrants issuance costs in accounts payable

IPO costs included in accounts payable and accrued expenses and other current liabilities

Purchases of property and equipment in accounts payable

Offering costs in accrued expenses

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

6 unchanged sentences

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 biotechnology 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 $ 16.9 million and $ 13.8 million for the nine months ended September 30, 2021 and 2020, respectively, and it expects to generate losses from operations and negative operating cash flows for the foreseeable future primarily due to research and development costs for its potential product candidates.

As of September 30, 2021, the Company had an accumulated deficit of $ 71.3 million.

On October 6, 2020, the Company closed its initial public offering (“IPO”), in which the Company issued and sold 3,250,000 shares of its common stock at a public offering price of $ 12.00 per share.

On October 13, 2020, the underwriters exercised their option to purchase an additional 487,500 shares of the Company’s common stock at a purchase price of $ 12.00 per share.

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.

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 recently 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 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.

Since its inception, the Company has devoted substantially all its resources to research and development, raising capital, building its management team and extending 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, risks associated with the successful research, development and manufacturing of product candidates, uncertain results of preclinical and clinical testing, development of new technological innovations and products by competitors, 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 $ 11.7 million and $ 3.9 million for the three months ended March 31, 2022 and 2021, respectively, and it expects to generate losses from operations and negative operating cash flows for the foreseeable future primarily due to research and development costs for its potential product candidates.

As of March 31, 2022, the Company had an accumulated deficit of $ 90.8 million.

On October 1, 2021 the Company entered into an 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 had cash of $ 56.2 million at September 30, 2021.

The Company had cash and cash equivalents of $ 42.9 million at March 31, 2022.

The Company expects that its cash will enable it to fund its operating expenses and capital expenditure requirements for at least 12 months from the filing date of this Quarterly Report on Form 10-Q;

However, additional funding will be necessary beyond this point to fund additional research and development, clinical development and operations in order to pursue the Company’s growth strategy.

If the Company cannot obtain the necessary funding, it will need to delay, scale back or eliminate some or all of its research and development programs or enter into collaborations with third parties to commercialize potential products or technologies that it might otherwise seek to develop or commercialize independently;

consider other various strategic alternatives, sooner than it might otherwise, including a merger or sale of the Company;

more funding will be necessary beyond this point to fund additional research and development, clinical development and operations in order to pursue the Company’s growth strategy.

consider other various strategic alternatives, including a merger or sale of the Company;

or cease operations.

Company engages in collaborations because it is unable to obtain necessary funding through other resources, 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.

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.

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 obtain appropriate regulatory approvals for commercialization 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 regulatory approval process will materially affect the Company’s financial condition and future operations.

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.

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

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

Summary of significant accounting policies

4 unchanged sentences

These unaudited condensed financial statements and accompanying notes should be read in conjunction with the Company’s annual financial statements and the notes thereto included in the Company’s Form 10-K filed with the Securities and Exchange Commission on March 28, 2022.

The accompanying condensed financial statements as of September 30, 2021 and for the three and nine months ended September 30, 2021 and 2020 are unaudited but include all adjustments that management believes to be necessary for a fair presentation of the periods presented.

The accompanying condensed financial statements as of March 31, 2022 and for the three months ended March 31, 2022 and 2021 are unaudited but include all adjustments that management believes to be necessary for a fair presentation of the periods presented.

Interim results are not necessarily indicative of results for a full year.

Balance sheet amounts as of December 31, 2021 have been derived from the audited financial statements as of that date.

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 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

1 unchanged sentence

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 condensed 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.

Significant estimates and assumptions reflected in these condensed financial statements include, but are not limited to, the expected volatility used to estimate fair value of stock options and accrued research and development expenses.

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.

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.

Fair value of financial instruments

2 unchanged sentences

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.

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.

As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tiered value hierarchy that distinguishes between the following:

4 unchanged sentences

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).

To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair values requires more judgement.

To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgement.

Accordingly, the degree of judgement exercised by the Company in determining fair value is greatest for instruments categorized as Level 3.

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 as of March 31, 2022 and December 31, 2021.

Restricted cash

1 unchanged sentence

This lease expires in 2024 at which time the cash will be released from restriction.

Restricted cash was $ 100,000 at both September 30, 2021 and 2020.

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

Restricted cash was $ 100,000 at both March 31, 2022 and December 31, 2021.

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

(in thousands)

September 30, 2021

September 30, 2020

March 31, 2022

December 31, 2021

Cash and cash equivalents

Restricted cash

Equity issuance costs

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.

The Company capitalizes costs that are directly associated with the ATM agreement 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 September 30, 2021, there was $ 0.3 million of deferred offering costs in connection with the Company’s shelf registration statement (Note 10) and there were no deferred offering costs as of December 31, 2020.

Deferred offering costs were $ 0.4 million and $ 0.3 million as of March 31, 2022 and December 31, 2021, respectively, on the condensed balance sheet.

Government contract funding

3 unchanged sentences

Research and development costs are charged to expense as incurred.

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, the Company is obligated to make future payments should certain development and regulatory milestones be achieved.

No such costs have been incurred for the three and nine months ended September 30, 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.

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 and clinical development expenses, including manufacture and testing of clinical supplies, consulting and other contracted services.

Additionally, under the terms of the license agreements described in Note 6, the Company is obligated to make future payments should certain development and regulatory milestones be achieved.

No such costs have been incurred

for the three months ended March 31, 2022 and 2021.

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.

Net loss per share

The Company follows the two-class method when computing net loss per share, as the Company has issued shares that meet the definition of participating securities.

The two-class method determines net loss per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings.

The two-class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed.

Basic net loss per share of common stock is computed by dividing the net loss by the weighted average number of common shares outstanding for the period.

1 unchanged sentence

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 outstanding as of September 30, 2021 and 2020 have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:

September 30,

The following potentially dilutive securities outstanding as of March 31, 2022 and 2021 have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:

Stock options (1)

Common stock warrants (1)

Convertible preferred stock (1)

(1) Represents common stock equivalents.

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 three and nine months ended September 30, 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

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.

In June 2020, the FASB issued ASU 2020-05, which amended the effective date of Topic 842 until January 1, 2022.

Upon adoption, the standard requires the use of a modified retrospective transition approach for its adoption.

The Company is currently evaluating the effect Topic 842 will have on its consolidated financial statements and related disclosures.

The Company reported a net loss per share of common stock for the three months ended March 31, 2022 and 2021.

Effective January 1, 2022, the Company adopted ASC Topic (ASC 842) using the modified retrospective approach by applying the new standard to all leases existing on the adoption date.

The results for reporting periods beginning after January 1, 2022 are presented in accordance with ASC 842, while prior period amounts are not adjusted and continue to be reported under the accounting standards that were in effect prior to January 1, 2022.

At the inception of an arrangement, the Company determines whether an arrangement contains a lease based on facts and circumstances present in the arrangement.

An arrangement is or contains a lease if the arrangement conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Typically, lessees are required to recognize leases with a term greater than one year on the balance sheet as an operating or finance lease liability and right-of-use asset.

Right-of-use assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

The Company has elected the practical expedient to not to recognize leases with a term of 12 months or less.

The Company does not have any financing leases as of March 31, 2022.

Operating lease liabilities and their corresponding right-of-use assets are recorded based on their present value of lease payments over the remaining lease term.

Options to extend the lease term are included in the Company’s assessment of the lease term only if there is a reasonable assessment that the Company will renew.

Leases are discounted to its present value using either the interest rate implicit in the Company’s lease or its incremental borrowing rate, which reflects the fixed rate in which the Company could borrow on a collateralized basis the amount of lease payments in the same currency, for a similar term, in a similar economic environment.

Recently adopted accounting standards

On January 1, 2022, the Company adopted Accounting Standards Update No.

2016-02, Leases (Topic 842) (ASU 2016-02), which establishes ASC 842 and supersedes the lease accounting guidance under ASC 840.

The standard generally requires lessees to recognize operating and finance lease liabilities and corresponding right-of-use (ROU) assets on the balance sheet and provide enhanced disclosures on the amount, timing, and uncertainty of cash flows arising from lease arrangements.

The Company adopted ASC 842 using the modified retrospective approach.

The Company elected the package of practical expedients available for existing contracts, which allowed the Company to carry forward our historical assessments of lease identification, lease classification, and initial direct costs.

The Company also elected a policy to not apply the recognition requirements of ASC 842 for short-term leases with a term of 12 months of less.

As of January 1, 2022, the effective date, the Company identified one operating lease arrangement relating to the Company’s headquarters facility and one short-term lease relating to laboratory equipment.

The adoption of ASC 842 resulted in a recognition of an ROU asset and lease liability of $ 0.2 million on the Company’s balance sheet relating to the leases as of January 1, 2022.

The adoption of the standard did not have a material effect on the Company’s condensed statements of operations and condensed statements of cash flows (Note 7).

Recently issued accounting pronouncements

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

This standard requires annual 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 financial statements and related disclosures.

Department of Defense (“DoD”) expense reimbursement contract

2 unchanged sentences

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

The Company recorded contra-research and development expense of $ 5.3 million and $ 13.4 million for the three and nine months ended September 30, 2021, respectively, in the condensed statements of operations.

The Company recorded contra-research and development expense of $ 0.6 million for the three and nine months ended September 30, 2020 in the condensed statements of operations.

As of September 30, 2021, the Company had an expense reimbursement receivable balance of $ 2.4 million due from the DoD in prepaid expenses and other current assets on the condensed balance sheet.

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 condensed balance sheet.

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 $ 0.6 million and $ 4.0 million for the three months ended March 31, 2022 and 2021, respectively, in the statements of operations.

The Company had an expense reimbursement receivable balance of $ 0 and $ 2.7 million due from the DoD in prepaid expenses and other current assets as of March 31, 2022 and December 31, 2021, respectively, in the accompanying condensed 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.

As of September 30, 2021, the Company has a deferred research obligation liability of $ 0.1 million.

The Company has a deferred research obligation liability of $ 0.6 million and $ 2.0 million as of March 31, 2022 and December 31, 2021, respectively.

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

As of September 30, 2021, the Company has an unbilled receivable from the DoD of $ 1.8 million.

Accrued expenses

Accrued expenses consisted of the following:

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

The Company had an unbilled receivable from the DoD of $ 0.8 million and $ 1.6 million as of March 31, 2022 and December 31, 2021, respectively.

As of March 31, 2022, the Company has the potential for $ 0.2 million of remaining expense reimbursement under the OTA Agreement.

Prepaid expenses and other assets

Prepaid expenses and other assets consisted of the following:

(in thousands)

September 30, 2021

March 31, 2022

December 31, 2021

Deferred research obligations

Compensation and related benefits

Prepaid insurance

Research and development advance payments

Unbilled reimbursement receivable from DoD

Other prepaids and short-term deposits

Reimbursement receivable from DoD

Accrued expenses and other liabilities

Accrued expenses and other liabilities consisted of the following:

(in thousands)

March 31, 2022

December 31, 2021

Research and development

Compensation and related benefits

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 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.

Deferred research obligations

Short-term operating lease liability and other liabilities

Commitments and contingencies

Operating leases

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 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 $ 11,000 and $ 16,000 as of September 30, 2021 and December 31, 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 expired in July 2021 and had fixed monthly payments of $ 18,000 .

Future minimum lease payments for the Company’s operating leases are as follows as of September 30, 2021 (in thousands):

Years ending December 31,

2021 (represents remaining three months in 2021)

Rent expense was $ 0.1 million and $ 0.1 million for each of the three months ended September 30, 2021 and 2020, respectively, and $ 0.2 million and $ 0.2 million for the nine months ended September 30, 2021 and 2020, respectively.

Employment agreements

The Company entered into employment offer letter agreements (“the Employment Agreements”) with key personnel providing for compensation and severance in certain circumstances, as defined in the respective Employment Agreements.

The Employment Agreements may be terminated by either the Company or the employees in accordance with the respective Employment Agreements and provide for annual pay adjustments and bonuses at the discretion of the Board of Directors.

The Company entered into employment agreements (the “Employment Agreements”) with key personnel providing for compensation and severance in certain circumstances, as defined in the respective Employment Agreements.

The Employment Agreements may be terminated by either the Company or the employees in accordance with the respective Employment Agreements (subject to the payment of severance upon certain terminations) and provide for annual pay adjustments and bonuses at the discretion of the Board of Directors.

Employee benefit plan

2 unchanged sentences

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 $ 33,000 and $ 18,000 to the 401(k) Plan for the three months ended September 30, 2021 and 2020, respectively, and $ 0.1 million and $ 50,000 for the nine months ended September 30, 2021 and 2020, respectively.

The Company made matching contributions of $ 0.1 million to the 401(k) Plan for the three months ended March 31, 2022 and 2021, respectively.

Legal proceedings

The Company is not a party to any litigation and does not have contingency reserves established for any litigation liabilities.

The Company is not a party to any material litigation and does not have contingency reserves established for any litigation liabilities.

At each reporting date, the Company evaluates whether a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies.

License Agreements

The Company 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 and commercial milestone payments for net product sales.

Common stock and convertible preferred stock

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

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

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

Effective January 1, 2022, the Company adopted ASC Topic (ASC 842) using the modified retrospective approach by applying the new standard to all leases existing on the adoption date.

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 up to two additional five-year terms.

In December 2021, the Company extended the lease for an additional eighteen-month term ending in March 2024.

Beginning July 2021, the Company leased laboratory equipment on a month-to-month basis.

In April 2022, the Company exercised the purchase option under the lease agreement to purchase the leased laboratory equipment.

The Company elected the practical expedient to recognize short-term leases under ASC 840.

Supplemental balance sheet information related to leases as of March 31, 2022 was as follows (in thousands):

Operating leases:

Operating lease right-of-use assets

Operating lease liability

Operating lease liability, net of current portion

Total operating lease liability

Operating lease liability and operating lease liability, net of current portion is included in accrued expenses and other current liabilities and other long-term liabilities, respectively, in the accompanying condensed balance sheet.

Supplemental lease expense related to leases was as follows:

Lease Cost (in thousands)

Statements of Operations Classification

Three Months Ended March 31, 2022

Operating lease cost

General and administrative

Research and development

Short-term lease cost

General and administrative

Research and development

Total lease expense

Under ASC 840, rent expense for the three months ended March 31, 2021 was approximately $ 0.1 million.

Other information related to the operating lease where the Company is the lessee was as follows:

Three Months Ended March 31, 2022

Weighted-average remaining lease term

Weighted-average discount rate

Supplemental cash flow information related to the operating lease was as follows (in thousands):

Three Months Ended March 31, 2022

Cash paid for operating lease liability

As of March 31, 2022, minimum rental commitments under the operating lease were as follows (in thousands):

Years ending December 31,

2022 (represents remaining nine months in 2022)

Total lease payments

Less imputed interest

Present value of lease liability

The holders of common stock are entitled to one vote for each share of common stock.

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

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 Immunome from the Company.

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.

The Company’s common stock is listed on the Nasdaq Capital Market under the trading symbol “IMNM.” On October 6, 2020, the Company filed an amended and restated certificate of incorporation to, among other things, increase the number of shares of common stock, $ 0.0001 par value per share, authorized for issuance to 200,000,000 and authorize the Company’s board of directors to issue up to 10,000,000 shares of “blank check” preferred stock, $ 0.0001 par value per share.

Series A convertible preferred stock

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

At the time of issuance, the Series A Preferred was recorded at its issuance price, less issuance costs.

During the year ended December 31, 2019, the Company sold 512,826 shares of 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 and issued 821,657 shares of Series A Preferred in connection with the conversion of the promissory notes of $ 6.8 million.

In 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, which includes 4,722 shares issued in January 2020 for gross receipts of $ 45,000 .

During the nine months ended September 30, 2020, the Company sold 1,226,925 shares of Series A Preferred for net

proceeds of $ 9.5 million and 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 unit for at least 10 days out of a consecutive 20 -day trading period beginning after the first anniversary of the IPO.

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

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.

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 did not occur 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 September 30, 2021 common stock warrants outstanding were as follows:

At March 31, 2022, common stock warrants outstanding were as follows:

Exercise Price per Share

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April 28, 2024

During the nine months ended September 30, 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, 72,320 warrants exercisable for $ 9.00 per share were exercised in cashless transactions during the nine months ended September 30, 2021 and 45,322 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 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.

On September 24, 2020, the 2018 Plan was terminated and replaced with the 2020 Equity Incentive Plan (the 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 our board of directors.

As of September 30, 2021, there were 1,452,147 shares available for future issuance 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 1st 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 September 30, 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.

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 Prior 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.

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

As of March 31, 2022, there were 1,836,212 shares available for future issuance under the 2020 Plan.

The Company also adopted the 2020 Employee Stock Purchase Plan (“ESPP”) 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.

The maximum number of shares of common stock that may be issued under the ESPP 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 year s, 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 as of March 31, 2022.

The 2020 Plan and the ESPP 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.

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

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.

Share-based compensation expense recorded as research and development and general and administrative expenses in the condensed statements of operations is as follows:

Three Months Ended September 30,

Nine Months Ended September 30,

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

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

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

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

Share-based compensation expense recorded as research and development and general and administrative expenses in the condensed statements of operations is as follows (in thousands):

Three Months Ended March 31,

(In thousands)

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General and administrative

Unrecognized compensation cost related to unvested options was $ 13.5 million as of September 30, 2021, and will be recognized over an estimated weighted average period of 3.4 years.

Unrecognized compensation cost related to unvested options was $ 12.1 million as of March 31, 2022 and will be recognized over an estimated weighted average period of 3.5 years.

Stock options

The weighted average assumptions used in the Black-Scholes option-pricing model for stock options granted were:

Nine Months Ended September 30,

Three Months Ended March 31,

Expected volatility

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Fair value of common stock

A summary of option activity during the nine months ended September 30, 2021 is as follows:

A summary of option activity under the Plans and 2020 Plan during the three months ended March 31, 2022 is as follows:

exercise price

Outstanding at January 1, 2022

Outstanding at September 30, 2021

Exercisable at September 30, 2021

Vested or expected to vest at September 30, 2021

The weighted-average grant date fair value per share of stock options granted during the nine months ended September 30, 2021 and 2020 was $ 17.77 and $ 0.87 , respectively.

The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2021 was $ 3.9 million.

The aggregate intrinsic value of stock options outstanding at September 30, 2021 is $ 27.7 million.

In August 2020, the Company granted stock options exercisable for a total of up to an aggregate of 92,169 shares of common stock to two of its officers, which option awards included both performance-based and service-based vesting conditions.

These option awards were subsequently modified in September 2020 to eliminate the performance-based criteria.

As a result of the modification, only service-based vesting conditions remained.

All other terms and conditions of these option awards remain unchanged.

Since the performance condition was not considered probable of being achieved prior to the modification, no share-based compensation expense was recorded prior to the modification.

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 three and nine months ended September 30, 2021 related to shares granted.

No such transaction occurred for the three and nine months ended September 30, 2020.

As of September 30, 2021, there was no unvested portion of the restricted stock award as all shares were fully vested upon grant.

Outstanding at March 31, 2022

Exercisable at March 31, 2022

Vested or expected to vest at March 31, 2022

The weighted-average grant date fair value per share of stock options granted during the three months ended March 31, 2022 and 2021 was $ 7.52 and $ 22.46 , respectively.

The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2022 was $ 0.1 million.

The aggregate intrinsic value of stock options outstanding at March 31, 2022 is $ 4.0 million.

Related party transactions

License agreements

The Company has entered into license agreements with certain stockholders of the Company, including an additional license agreement in June 2021 with licensors that include one of these stockholders.

Expenses with these related parties were de minimis for each of the three and nine months ended September 30, 2021 and 2020, respectively.

There were no amounts owed to these related parties as of September 30, 2021 and December 31, 2020.

The Company has entered into license agreements with certain stockholders of the Company.

Expenses with these related parties were de minimis for the three months ended March 31, 2022 and 2021, respectively.

In addition, amounts owed to these related parties were de minimis as of March 31, 2022 and December 31, 2021.

Broadband services agreement

In November 2015, the Company entered into a management services agreement (“MSA”) with BCM Advisory Partners LLC and Broadband Capital Partners LLC (“Broadband Capital”), as subsequently amended and/or restated in July 2016, January 2017, June 2018, March 2020 and August 2020.

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.

Pursuant to the Broadband MSA, the Company previously issued an aggregate of 827,640 shares of its common stock to Broadband Advisory and has no

further obligation to issue additional shares under the Broadband MSA.

The Company recorded $ 0.1 million during each of the three months ended September 30, 2021 and 2020 and $ 0.2 million during the nine months ended September 30, 2021 and 2020, respectively, related to the Broadband MSA, which is included in general and administrative expenses in the condensed statements of operations.

Subsequent events

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.

In October 2021 the Company entered into an 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 common shares 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.

The Company recorded $ 0.1 million during each of the three months ended March 31, 2022 and 2021, respectively, related to the Broadband MSA, which is included in general and administrative expenses in the condensed statements of operations.

There were no amounts due to Broadband Capital as of March 31, 2022 and December 31, 2021.

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

What changed 10-Q

Item 1. Financial Statements