Item 1. Financial Statements
Item 1. Financial Statements.
IMMUNOME, INC.
Condensed Balance Sheets
(In thousands, except share data)
(unaudited)
March 31, 2022
December 31, 2021
Assets
Current assets:
Cash and cash equivalents
$
42,879
$
49,229
Prepaid expenses and other current assets
3,424
7,409
Total current assets
46,303
56,638
Property and equipment, net
753
855
Operating right-of-use asset, net
190
—
Restricted cash
100
100
Deferred offering costs
382
332
Total assets
$
47,728
$
57,925
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$
3,890
$
3,077
Accrued expenses and other current liabilities
5,817
6,651
Total current liabilities
9,707
9,728
Other long-term liabilities
147
12
Total liabilities
9,854
9,740
Commitments and contingencies (Note 6)
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; 12,127,385 and 12,110,373 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively
1
1
Additional paid-in capital
128,631
127,289
Accumulated deficit
( 90,758 )
( 79,105 )
Total stockholders’ equity
37,874
48,185
Total liabilities and stockholders’ equity
$
47,728
$
57,925
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
Table of Contents
IMMUNOME, INC.
Condensed Statements of Operations
(In thousands, except share and per share data)
(unaudited)
Three Months Ended March 31,
2022
2021
Operating expenses:
Research and development
$
8,078
$
1,979
General and administrative
3,576
1,918
Total operating expenses
11,654
3,897
Loss from operations
( 11,654 )
( 3,897 )
Interest income (expense), net
1
( 1 )
Net loss
$
( 11,653 )
$
( 3,898 )
Per share information:
Net loss per share of common stock, basic and diluted
$
( 0.96 )
$
( 0.37 )
Weighted-average common shares outstanding, basic and diluted
12,122,903
10,640,870
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
Table of Contents
IMMUNOME, INC.
Condensed Statements of Changes in Stockholders’ Equity
(In thousands, except share data)
(unaudited)
Stockholders’ equity
Common stock
Additional
paid-in
Accumulated
Shares
Amount
capital
deficit
Total
Balance at January 1, 2022
12,110,373
$
1
$
127,289
$
( 79,105 )
$
48,185
Share-based compensation expense
—
—
1,310
—
1,310
Exercise of stock options
17,012
—
32
—
32
Net loss
—
—
—
( 11,653 )
( 11,653 )
Balance at March 31, 2022
12,127,385
$
1
$
128,631
$
( 90,758 )
$
37,874
Stockholders’ equity
Common stock
Additional
paid-in
Accumulated
Shares
Amount
capital
deficit
Total
Balance at January 1, 2021
10,634,245
$
1
$
95,738
$
( 54,394 )
$
41,345
Share-based compensation expense
—
—
325
—
325
Exercise of common stock warrants
11,666
—
105
—
105
Exercise of stock options
14,270
—
6
—
6
Net loss
—
—
—
( 3,898 )
( 3,898 )
Balance at March 31, 2021
10,660,181
$
1
$
96,174
$
( 58,292 )
$
37,883
The accompanying notes are an integral part of these unaudited condensed financial statements.
5
Table of Contents
IMMUNOME, INC.
Condensed Statements of Cash Flows
(In thousands)
(unaudited)
Three Months ended March 31,
2022
2021
Cash flows from operating activities:
Net loss
$
( 11,653 )
$
( 3,898 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
111
176
Amortization of right-of-use asset
25
—
Share-based compensation
1,310
325
Deferred rent
( 12 )
( 1 )
Changes in operating assets and liabilities:
Prepaid expenses and other assets
3,985
( 1,703 )
Accounts payable
788
1,771
Accrued expenses and other current liabilities
( 912 )
( 205 )
Other long term liabilities
( 18 )
Net cash used in operating activities
( 6,376 )
( 3,535 )
Cash flows from investing activities:
Purchases of property and equipment
( 6 )
( 31 )
Net cash used in investing activities
( 6 )
( 31 )
Cash flows from financing activities:
Proceeds from exercise of stock options
32
6
Proceeds from exercise of common stock warrants
—
105
Payment of equipment loan payable
—
( 35 )
Net cash provided by financing activities
32
76
Net decrease in cash and cash equivalents and restricted cash
( 6,350 )
( 3,490 )
Cash and cash equivalents and restricted cash at beginning of period
49,329
39,866
Cash and cash equivalents and restricted cash at end of period
$
42,979
$
36,376
Supplemental disclosures of cash flow information:
Operating lease right-of-use asset and lease liability recorded upon adoption of ASC 842
$
215
$
—
Offering costs included in accrued expenses and other liabilities
$
25
$
—
Offering costs included in accounts payable
$
25
$
—
Fixed assets included in accrued expenses and other current liabilities
$
3
$
—
Cash paid for interest
$
—
$
2
The accompanying notes are an integral part of these unaudited condensed financial statements.
6
Table of Contents
IMMUNOME, INC.
Notes to Condensed Financial Statements
(Unaudited)
1. Nature of the business and basis of presentation
Organization
Immunome, Inc. (“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 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 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.
Liquidity
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 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; 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.
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 (or enter into these collaborations sooner than it might otherwise have intended to do); consider other various strategic alternatives, including a merger or sale of the Company; or cease operations. 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 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
7
Table of Contents
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, there has not been a significant impact to the Company’s operations or financial statements to date.
2. Summary of significant accounting policies
Basis of presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted (“GAAP”) in the United States. 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”).
Unaudited interim results
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 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.
Use of estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses. 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 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
ASC Topic 820, Fair Value Measurement (“ASC 820”), establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). 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. 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
8
Table of Contents
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:
Level 1 — Quoted market prices in active markets for identical assets or liabilities.
Level 2 — Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted market prices, interest rates and yield curves.
Level 3 — 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).
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
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 2024 at which time the cash will be released from restriction. 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)
March 31, 2022
December 31, 2021
Cash and cash equivalents
$
42,879
$
49,229
Restricted cash
100
100
$
42,979
$
49,329
Equity issuance costs
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.
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
The Company accounts for amounts received under its U.S. Department of Defense expense reimbursement contract as contra-research and development expenses in the condensed statements of operations.
Research and development costs
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 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
9
Table of Contents
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
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. Diluted net loss per share of common stock is computed by adjusting net loss to reallocate undistributed earnings based on the potential impact of dilutive securities. 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 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:
March 31,
2022
2021
Stock options (1)
2,009,844
1,636,069
Common stock warrants (1)
1,303,112
1,023,530
3,312,956
2,659,599
(1) Represents common stock equivalents.
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 months ended March 31, 2022 and 2021.
Leases
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.
10
Table of Contents
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.
3. U.S. Department of Defense (“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, 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 $ 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. 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 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.
11
Table of Contents
4. Prepaid expenses and other assets
Prepaid expenses and other assets consisted of the following:
(in thousands)
March 31, 2022
December 31, 2021
Prepaid insurance
$
1,422
$
2,019
Research and development advance payments
636
586
Unbilled reimbursement receivable from DoD
795
1,638
Other prepaids and short-term deposits
571
492
Reimbursement receivable from DoD
—
2,674
$
3,424
$
7,409
5. 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
$
3,972
$
2,840
Compensation and related benefits
842
1,246
Professional fees
357
227
Deferred research obligations
585
2,021
Short-term operating lease liability and other liabilities
61
317
$
5,817
$
6,651
6. Commitments and contingencies
Employment agreements
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
The Company maintains a defined-contribution plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”). The 401(k) Plan covers all employees who meet defined minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. 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 $ 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 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.
12
Table of Contents
License Agreements
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.
7. Leases
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.
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
$
190
Operating lease liability
$
46
Operating lease liability, net of current portion
147
Total operating lease liability
$
193
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
$
60
Short-term lease cost
General and administrative
Research and development
53
Total lease expense
$
113
Under ASC 840, rent expense for the three months ended March 31, 2021 was approximately $ 0.1 million.
13
Table of Contents
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
2.0 years
Weighted-average discount rate
9.0 %
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
$
57
As of March 31, 2022, minimum rental commitments under the operating lease were as follows (in thousands):
Years ending December 31,
Amount
2022 (represents remaining nine months in 2022)
$
177
2023
246
2024
63
Total lease payments
486
Less imputed interest
( 293 )
Present value of lease liability
$
193
8. Common stock
Common stock
The holders of common stock are entitled to one vote for each share of common stock. Subject to the approval of the holders of a majority in interest of the Company’s stockholders entitled to vote thereon, the holders of common stock shall be entitled to receive dividends out of legally available funds. 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.
Warrants to acquire shares of common stock
At March 31, 2022, common stock warrants outstanding were as follows:
Warrants
Exercise Price per Share
Expiration Date
803,112
$ 9.00
June 2, 2023
500,000
$ 45.00
April 28, 2024
9. 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 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
14
Table of Contents
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). 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 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 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)
2022
2021
Research and development
$
445
$
171
General and administrative
865
154
$
1,310
$
325
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:
Three Months Ended March 31,
2022
2021
Expected volatility
83.5
%
83.5
%
Risk-free interest rate
1.7
%
1.1
%
Expected term (in years)
6.08
6.10
Expected dividend yield
—
—
Fair value of common stock
$
10.58
$
31.83
15
Table of Contents
A summary of option activity under the Plans and 2020 Plan during the three months ended March 31, 2022 is as follows:
Weighted
Weighted
average
average
remaining
Number of
exercise price
contractual
shares
per share
term (years)
Outstanding at January 1, 2022
2,005,756
$
11.26
8.50
Granted
21,100
10.58
9.82
Forfeited
—
—
—
Exercised
( 17,012 )
1.87
8.11
Outstanding at March 31, 2022
2,009,844
11.33
8.27
Exercisable at March 31, 2022
779,707
5.40
7.57
Vested or expected to vest at March 31, 2022
2,009,844
11.33
8.27
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.
10. Related party transactions
License agreements
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 (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 $ 0.1 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.
16
Table of Contents
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.