What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-05 compared with 2022-05-12 · 104 added, 72 removed, 207 unchanged (46% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations, as well as other sections in this Quarterly Report on Form 10 - Q, should be read in conjunction with (i) our unaudited interim financial statements and related notes thereto included elsewhere herein, (ii) Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the United States Securities and Exchange Commission (“SEC”) on March 28, 2022 and (iii) our other public reports filed with the SEC.

In addition to historical financial information, some of the information contained in the following discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

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the fact that research and development data are subject to differing interpretations and assessments;

Immunome’s ability to execute on its strategy, including with respect to its R&D efforts, IND submissions and other regulatory filings, timing of these filings and the timing and nature of governmental authority feedback regarding the same, initiation and completion of any clinical studies, confirmatory testing and other anticipated milestones as and when anticipated;

Immunome’s ability to execute on its strategy, including with respect to its R&D efforts, IND submissions and other regulatory filings, timing of these filings and the timing and nature of governmental authority feedback regarding the same, initiation, continuation and completion of any clinical studies, confirmatory testing and other anticipated milestones as and when anticipated;

the effectiveness of Immunome’s product candidates, including the possibility that further preclinical data and any clinical trial data may be inconsistent with the data used for advancing the product candidates and that further variants of concern could emerge;

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the competitive landscape;

and the additional risks and uncertainties set forth more fully under the caption “Risk Factors” in Immunome’s Annual Report on Form 10-K filed with the United States Securities and Exchange Commission (“SEC”) on March 28, 2022, and elsewhere in Immunome’s filings and reports with the SEC.

and the additional risks and uncertainties set forth more fully under the caption “Risk Factors” in Immunome’s Annual Report on Form 10-K filed with the SEC on March 28, 2022, and elsewhere in Immunome’s filings and reports with the SEC.

The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements.

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Since our inception in 2006, we have devoted substantially all our resources to research and development, raising capital, building our management team and building our intellectual property portfolio.

To date, we have financed our operations primarily through sales of our common stock, Series A convertible preferred stock and warrants, warrant exercises, the issuance of convertible promissory notes, and the Paycheck Protection Program loan (“PPP loan”) that was forgiven in May 2021.

In addition, in July 2020, the Company entered into an Other Transaction Authority for Prototype

Agreement (OTA Agreement), with the Department of Defense (DoD) to fund the Company’s efforts in developing an antibody cocktail therapeutic to treat COVID-19.

To date, we have financed our

operations primarily through sales of our common stock, Series A convertible preferred stock and warrants, warrant exercises, the issuance of convertible promissory notes, and the Paycheck Protection Program loan (“PPP loan”) that was forgiven in May 2021.

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

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

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

As of June 30, 2022, the Company has received $17.4 million in expense reimbursement from the DoD under the OTA Agreement.

As of June 2022, the Company has transitioned into a clinical stage biopharmaceutical company as our Phase 1b study of IMM-BCP-01 in patients infected with SARS-CoV-2 is underway.

To date, we have not generated any revenue from product sales and do not expect to generate revenue from the sale of products for the foreseeable future.

Since inception we have incurred significant operating losses.

Our net losses for the three months ended March 31, 2022 and 2021 were $11.7 million and $3.9 million, respectively.

The remaining available expense reimbursement under the OTA Agreement is $0.2 million as of March 31, 2022.

As of March 31, 2022, we had a cash balance of $42.9 million.

Our net losses for the three months ended June 30, 2022 and 2021 were $8.9 million and $5.2 million, respectively, and $20.6 million and $9.1 million for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022, we had a cash balance of $34.6 million.

We expect to continue to incur losses for the foreseeable future.

We expect to continue to incur significant expenses and increasing operating losses in connection with ongoing research and development activities related to our portfolio of programs as we continue our IMM-BCP-01 clinical development and IMM-ONC-01 preclinical development of product candidates, and plan to file an IND for ONC-01 later in 2022.

We expect to continue to incur significant expenses and increasing operating losses in connection with ongoing research and development activities related to our portfolio of programs as we continue our preclinical and clinical development of our product candidates for IMM-ONC-01 and IMM-BCP-01, respectively.

We also plan to perform research activities as we seek to discover and develop additional product candidates;

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We may also need to consider other various strategic alternatives, including a merger or sale of the Company;

or cease operations.

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

or reduce or cease operations.

If we engage in collaborations, we may receive lower consideration upon commercialization of such products or technologies than if we had not entered into such arrangements or if we entered into such arrangements at later stages in the research and development process.

We currently have no sources of revenue, and our ability to continue to fund our future business plans is dependent on our ability to raise capital to fund our present and future business plans.

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As a result of these anticipated expenditures and potential unanticipated expenditures, we will need substantial additional financing to support our continuing operations and pursue our growth strategy.

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

Until such time as we generate

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

To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of any stockholder will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our stockholders.

Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making

acquisitions or capital expenditures or declaring dividends.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates, or grant licenses on terms that may not be favorable to us.

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The inability to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy.

Through March 31, 2022, we raised an aggregate of $125.1 million in gross proceeds from sales of our common stock, Series A convertible preferred stock and warrants, warrant and stock option exercises, the issuance of convertible promissory notes, and the PPP loan.

Through June 30, 2022, we raised an aggregate of $125.1 million in gross proceeds from sales of our common stock, Series A convertible preferred stock and warrants, warrant and stock option exercises, the issuance of convertible promissory notes, and the PPP loan.

On October 1, 2021, we 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 common shares 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.

We expect that our cash as of March 31, 2022 will be sufficient to fund our operations at least 12 months from the filing date of this Quarterly Report on Form 10-Q, including our planned Phase 1b studies for IMM-BCP-01 and IMM-ONC-01.

We expect that our cash as of June 30, 2022 will be sufficient to fund our operations at least 12 months from the filing date of this Quarterly Report on Form 10-Q, including our planned Phase 1b studies for IMM-BCP-01 and IMM-ONC-01.

We have based these estimates on assumptions that may prove to be imprecise, and we may exhaust our available capital resources sooner than we currently expect.

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The IMM-BCP-01 program is broadly focused on the emerging variants of SARS-CoV-2.

We submitted an IND application for the IMM-BCP-01 program to the US FDA, and following a clinical hold which was resolved in Q1 2022, we received clearance to proceed with our Ph1b clinical trial for the treatment of SARS-CoV-2.

Patient recruitment efforts are underway.

IMM-BCP-01 retains neutralization activity, in preclinical testing, against the Omicron variant and its sub-lineages, including the BA.4/.5 variants, which account for the majority of current cases.

We submitted an IND application for the IMM-BCP-01 program to the U.S.

FDA in November 2021.

Following a brief clinical hold, the U.S.

FDA communicated that the clinical study can be initiated for our antibody cocktail for the treatment of SARS-CoV-2.

Our Phase 1b study of IMM-BCP-01 in patients infected with SARS-CoV-2 is underway with topline data expected in the second half of 2022.

Oncology (“IMM-ONC-01”)

Our lead oncology program is focused on IL-38, which we believe is a novel, tumor-derived immune checkpoint capable of promoting evasion of the immune system.

Our lead oncology program is focused on IL-38, which we believe is a novel, negative regulator of inflammation capable of promoting tumor evasion of the immune system.

IL-38 was identified as the target of an antibody isolated from a hybridoma library generated from the memory B cells of a patient with squamous head and neck cancer.

Query of public and proprietary databases of cancer gene expression revealed over-expression of IL-38 in multiple solid tumors.

Further, a correlation with low levels of tumor-infiltrating T cells, a hallmark of immune suppression in some of these patients’ tumors, and high IL-38 expression was also observed, suggesting a role for IL-38 as an immune checkpoint.

antibodies could have therapeutic utility as single agents or in combination with other therapeutic modalities.

Our recent analysis further confirms IL-38 expression is frequently elevated in samples of specific patient tumor subtypes, such as head and neck and gastroesophogeal cancers.

We believe that this information will help guide the selection of patient cohorts for clinical testing, thereby improving the probability of clinical success.

We plan to submit our IND application for the IMM-ONC-01 program with the FDA in the second half of 2022.

Further, a correlation with low levels of tumor-infiltrating immune effector cells, a hallmark of immune suppression in some of these patients’ tumors, and high IL-38 expression was also observed, suggesting a role for IL-38 as an immune checkpoint.

Data obtained from preclinical testing indicated that blocking IL-38 function using inhibitory antibodies increased the immune response to the tumor and resulted in anti-tumor activity in select animal models, suggesting that anti-IL-38 antibodies could have therapeutic utility as single agents or in combination with other therapeutic modalities.

Our recent analysis further confirms IL-38 expression is frequently elevated in samples of select patient tumor subtypes, in cancers such as head and neck, lung and gastroesophageal.

We believe that this information could potentially guide patient selection for early clinical testing and may improve overall probability of demonstrating clinical utility, thereby improving the probability of clinical success.

We plan to submit our IND application for the IMM-ONC-01 program in the second half of 2022.

Other Programs and Platform

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We intend to continue to invest in this platform, to evaluate novel antibody-target pairs and to develop a pipeline of antibody therapeutics as single agents or in combination with other therapeutics or technologies to yield product candidates, such as Antibody-Drug Conjugates (“ADCs”).

We anticipate that our discovery engine has the ability to advance one to two programs into IND-enabling studies per year.

We believe our discovery engine has the ability to advance one to two programs into IND-enabling studies per year.

We also intend to continue to explore additional strategic partnerships and collaborations to expand our opportunities and capabilities.

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These measures included establishing a work-from-home policy for our employees, other than those performing or supporting business-critical operations and implementing stringent safety measures designed to comply with applicable federal, state and local guidelines.

We have begun to implement a back-to-work policy;

our approach to transitioning back to the office is tailored to the role of each team member and evolves as the specific conditions associated with the COVID-19 pandemic continue to evolve.

We have successfully implemented a back-to-work policy;

our approach to transitioning back to the office was tailored to the role of each team member and evolves as the specific conditions associated with the COVID-19 pandemic continue to evolve.

We will continue to monitor guidance and regulations from the Centers for Disease Control and local health authorities and will adjust our onsite rules and policies in accordance with this guidance and regulations.

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Communication throughout our organization has remained active during the pandemic.

In addition, as part of our vendor management processes, we have ongoing dialogues with third-party service providers, which are intended to ensure that they continue to meet our criteria for business continuity.

addition, as part of our vendor management processes, we have ongoing dialogues with third-party service providers, which are intended to ensure that they continue to meet our criteria for business continuity.

The effect of the ongoing COVID-19 pandemic on our projected research and development timelines and activities is uncertain.

Notwithstanding the measures taken, the future impact of COVID-19, including its variants, on our industry, the healthcare system and our current and future operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others.

See “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on March 28, 2022 and elsewhere in our filings with the SEC for a discussion of the potential adverse impact of COVID-19 on our business, results of operations and financial condition.

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● expenses incurred in connection with the advancement of our programs, including under agreements with consultants, contractors, contract research organizations and other third-party vendors and suppliers;

● expenses to conduct future clinical trials including regulatory and quality assurance;

● the cost of developing and validating our manufacturing process for use in our preclinical studies and future clinical trials;

● expenses to conduct clinical trials including regulatory and quality assurance;

● the cost of developing and validating our manufacturing process for use in our preclinical studies and clinical trials;

● laboratory supplies and research materials and other infrastructure-related expenses;

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Research and development activities are central to our business model.

We expect that our research and development expenses will increase substantially in connection with our planned preclinical and future clinical development activities.

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

We expect that our research and development expenses will increase substantially in connection with our planned preclinical and clinical development activities.

In July 2020, we entered into the OTA Agreement with the DoD to fund our efforts in developing Biosynthetic Convalescent Plasma (“BCP”) to treat COVID-19.

The OTA Agreement was modified in May 2021 to increase such funding.

In connection with the OTA Agreement, we record expense reimbursements received from the DoD as contra-research and development expenses in the same period the underlying expenses are incurred.

Under the provisions of the CARES Act signed into law on March 27, 2020 and the subsequent extension of the CARES Act, the Company was deemed eligible to receive the employee retention credit subject to certain criteria.

The Company recognized the employee retention credit as contra-expense to personnel related costs in research and development expenses in the condensed statements of operations.

General and administrative expenses

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We anticipate that our general and administrative expenses will increase in the future to support increased and progressed research and development activities.

Under the provisions of the CARES Act signed into law on March 27, 2020 and the subsequent extension of the CARES Act, the Company was eligible for a refundable employee retention credit subject to certain criteria.

The Company recognized the employee retention credit as contra-expense to personnel related costs in general and administrative expenses in the condensed statements of operations.

Interest income (expense), net

Interest income (expense), net consists of interest expense related to our capital lease obligations and equipment loans payable, offset by interest income earned on our cash.

Interest income (expense), net consists of interest expense related to loans payable, offset by interest income earned on our cash.

Results of operations

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Accordingly, we cannot fully predict the extent to which our business and results of operations will be affected by the pandemic.

Comparison of the three months ended March 31, 2022 and 2021

Three Months Ended March 31,

(in thousands)

Comparison of the three and six months ended June 30, 2022 and 2021

Three Months Ended June 30,

Six Months Ended June 30,

Operating expenses:

(in thousands)

Research and development

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Interest income (expense), net

Three months ended June 30, 2022 and 2021

Research and development expenses

Research and development expenses were $8.1 million and $2.0 million, net of DoD reimbursement for the three months ended March 31, 2022 and 2021, respectively.

Research and development expenses increased by $6.1 million for the three months ended March 31, 2022.

This increase is primarily as a result of $1.8 million increase in outsourced research and raw materials relating to the oncology program.

Personnel-related costs increased by $0.9 million due to incremental headcount.

In addition, contra-research and development expense reduced by $3.4 million for the three months ended March 31, 2022 as a result of a decrease in reimbursable BCP-01 related expenses through the DoD agreement.

Research and development expenses were $5.7 million and $3.2 million, net of DoD reimbursement for the three months ended June 30, 2022 and 2021, respectively.

Research and development expenses increased by $2.5 million for the three months ended June 30, 2022.

This increase is primarily due to a $4.1 million reduction of contra-research and development expense as a result of a reduction in BCP-01 program spending and reimbursable related expenses under the DoD agreement during the three months ended June 30, 2022.

Contra-research and development expenses offsets the expenses recognized in the period

for the DoD Agreement.

Personnel-related costs increased by $0.2 million due to an increase in headcount and stock-based compensation.

These increases in personnel-related costs were offset by $0.6 million in contra-expense to personnel related costs relating to the CARES Act employee retention credit.

In addition, outsourced research and raw materials decreased by $1.1 million and facility related costs decreased by $0.1 million for the three months ended June 30, 2022.

Research and development expenses are expected to increase in the future as we continue our current research programs, initiate new research programs, continue our preclinical development of product candidates and conduct current and future clinical trials for our programs and product candidates.

General and administrative expenses

General and administrative expenses increased by $0.7 million to $3.2 million for the three months ended June 30, 2022 from $2.5 million for the three months ended June 30, 2021.

The increase was primarily a result of $0.9 million increase in personnel-related costs due to an increase in headcount and stock-based compensation offset by $0.2 million in contra-expense to personnel related costs relating to the CARES Act employee retention credit.

Interest income (expense), net

Interest expense consists of interest related to equipment loan payables.

Interest income consists of interest earned on our cash balances held with financial institutions.

Other income for the three months ended June 30, 2021 consists of forgiveness of the PPP Loan.

Six months ended June 30, 2022 and 2021

Research and development expenses

Research and development expenses were $13.8 million and $5.2 million, net of DoD reimbursement for the six months ended June 30, 2022 and 2021, respectively.

Research and development expenses increased by $8.6 million for the six months ended June 30, 2022.

This increase is primarily due to a $7.4 million reduction of contra-research and development expense as a result of a reduction in BCP-01 program spending and reimbursable related expenses under the DoD agreement during the three months ended June 30, 2022.

Contra-research and development expenses offsets the expenses recognized in the period for the DoD Agreement.

Research and development expenses are expected to increase in the future as we continue our current research programs, initiate new research programs, continue our preclinical development of product candidates and conduct future clinical trials for our programs and product candidates.

Personnel-related costs increased by $1.2 million due to an increase in headcount and stock-based compensation.

These increases in personnel-related costs were offset by $0.6 million in contra-expense to personnel related costs relating to the CARES Act employee retention credit.

In addition, outsourced research and raw materials increased by $0.8 million offset by $0.2 million decrease in facility related costs.

General and administrative expenses

General and administrative expenses increased by $1.7 million to $3.6 million for the three months ended March 31, 2022 from $1.9 million for the three months ended March 31, 2021.

The increase was primarily a result of a $1.3 million increase in personnel-related costs due to an increase in headcount and stock-based compensation and a $0.3 million increase in professional fees and insurance.

General and administrative expenses increased by $2.4 million to $6.8 million for the six months ended June 30, 2022 from $4.4 million for the three months ended June 30, 2021.

The increase was primarily a result of a $2.3 million increase in personnel-related costs due to an increase in headcount and stock-based compensation offset by $0.2 million in contra-expense to personnel related costs relating to the CARES Act employee retention credit.

In addition, professional fees and other general expenses increased by $0.3 million for the six months ended June 30, 2022.

Interest income (expense), net

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Interest income consists of interest earned on our cash balances held with financial institutions.

Other income for the six months ended June 30, 2021 consists of forgiveness of the PPP Loan.

Liquidity and capital resources

Since our inception, we have incurred significant operating losses.

We expect to incur significant expenses and operating losses for the foreseeable future as continue our preclinical development of product candidates and conduct future clinical trials for our product candidates.

Through March 31, 2022, we raised an aggregate of $125.1 million in

gross proceeds from sales of our common stock, Series A convertible preferred stock and warrants, warrant and stock option exercises, the issuance of convertible promissory notes, and the PPP loan that was forgiven in May 2021.

As of March 31, 2022, we had $42.9 million in cash.

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 value of up to $200.0 million.

In October 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 common shares 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.

We will need to raise additional capital before we exhaust our current cash to continue to fund our research and development, including our plans for clinical and preclinical trials and new product development, as well as to fund operations generally.

We expect to incur significant expenses and operating losses for the foreseeable future as continue our preclinical development of product candidates and conduct current and future clinical trials for our product candidates.

As of June 30, 2022, we had $34.6 million in cash.

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

In October 2021, we 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, we 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 Group LLC acting as sales agent.

We have not yet sold any shares under the ATM Agreement.

As and if necessary, we will seek to raise additional funds through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements.

We can give no assurances that we will be able to secure such additional sources of funds to support our operations, or, if such funds are available to us, that such additional financing will be sufficient to meet our needs.

The following table summarizes our sources and uses of cash for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

The following table summarizes our sources and uses of cash for the six months ended June 30, 2022 and 2021:

Six Months Ended June 30,

(in thousands)

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Cash provided by financing activities

Net decrease in cash and restricted cash

Net increase (decrease) in cash and restricted cash

Operating activities

Net cash used in operating activities for the three months ended March 31, 2022 was $6.4 million, consisting primarily of our net loss of $11.7 million and decreases of accrued expenses and other liabilities of $0.9 million, offset by net noncash charges of $1.4 million for stock compensation expense, depreciation and amortization of right-of-use asset, decreases in prepaid expenses and other assets of $4.0 million, and increases in accounts payable of $0.8 million.

Net cash used in operating activities for the three months ended March 31, 2021 was $3.5 million, consisting primarily of our net loss of $3.9 million, an increase in prepaid expenses and other assets of $1.7 million and a decrease in accrued expenses and other liabilities of $0.2 million.

These uses of cash were offset by noncash charges of depreciation and amortization expense $0.2 million and share-based compensation expense of $0.3 million and an increase in accounts payable of $1.8 million due to our growth in expenditures.

Net cash used in operating activities for the six months ended June 30, 2022 was $14.4 million, consisting primarily of our net loss of $20.6 million and decreases of accrued expenses and other liabilities of $3.3 million, offset by net noncash charges of $2.8 million for stock compensation expense, depreciation and amortization of right-of-use asset, decreases in prepaid expenses and other assets of $4.5 million, and increases in accounts payable of $2.2 million.

Net cash used in operating activities for the six months ended June 30, 2021 was $7.3 million, consisting primarily of our net loss of $9.1 million and forgiveness of the PPP loan of $0.5 million, offset by noncash charges of $1.4 million for stock compensation expense and depreciation and amortization, increases in accrued expenses and other liabilities of

$0.3 million, increases in accounts payable of $0.5 million, and decreases in prepaid expenses and other assets of $0.1 million.

Investing activities

During the three months ended March 31, 2022 and 2021, we used $6,000 and $31,000, respectively, for the purchase of property and equipment.

During the six months ended June 30, 2022 and 2021, we used $0.2 million and $0.1 million, respectively, for the purchase of property and equipment.

Financing activities

During the three months ended March 31, 2022, financing activities provided $32,000 from exercise of stock options.

During the three months ended March 31, 2021, financing activities provided $0.1 million from the exercise of common stock warrants and stock options, offset by $35,000 for payments related to our equipment loan.

During the six months ended June 30, 2022, financing activities provided $0.1 million from exercise of stock options.

During the six months ended June 30, 2021, financing activities provided $27.3 million from proceeds from the sale of common stock and common stock warrants, the exercise of common stock warrants and stock options, offset by the payment of issuance costs, and for payments related to our equipment loan.

Funding requirements

Our operating expenses are expected to increase substantially as we continue to advance our portfolio of programs.

Our operating expenses are expected to increase substantially as we continue to advance our discovery engine and programs.

Specifically, our expenses will increase if and as we:

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● seek to identify additional research programs and additional product candidates;

● initiate non-clinical testing and clinical trials for our product candidates;

● continue non-clinical testing and clinical testing for our product candidates;

● maintain, expand, enforce, defend, and protect our intellectual property portfolio and provide reimbursement of third-party expenses related to our patent portfolio;

● seek marketing approvals for any of our product candidates that successfully complete clinical trials;

● ultimately establish a sales, marketing, and distribution infrastructure to commercialize any medicines for which we may obtain marketing approval;

● establish a sales, marketing, and distribution infrastructure to commercialize any medicines for which we may obtain marketing approval;

● hire additional personnel including research and development, clinical and administrative personnel;

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● continue to operate as a public company.

We expect that our existing cash at March 31, 2022 will enable us to fund our current and planned operating expenses and capital expenditures at least 12 months from the filing date of this Quarterly Report on Form 10-Q.

We expect that our existing cash at June 30, 2022 will enable us to fund our current and planned operating expenses and capital expenditures at least 12 months from the filing date of this Quarterly Report on Form 10-Q.

The Company will need additional financing to support its continuing operations and pursue its development strategy.

We have based these estimates on assumptions that may prove to be imprecise, and we may exhaust our available capital resources sooner that we currently expect.

We have based

these estimates on assumptions that may prove to be imprecise, and we may exhaust our available capital resources sooner that we currently expect.

Because of the numerous risks and uncertainties associated with the development of our programs, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates.

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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 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.

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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.

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.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis