Immunome Inc. 10-Q

Item 1. Financial Statements. IMMUNOME, INC. Condensed Balance Sheets (In thousands, except share data) (unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2023 December 31, 2022 Assets ​ ​ ​ ​ ​ Current assets: ​ ​ ​ Cash and cash equivalents ​ $ 44,424 ​ $ 20,323 Prepaid expenses and other current assets ​ 2,112 ​ 2,326 Total current assets ​ 46,536 ​ 22,649 Property and equipment, net ​ 916 ​ 681 Operating right-of-use asset, net ​ ​ 230 ​ ​ 284 Restricted cash ​ 100 ​ 100 Deferred offering costs ​ ​ 332 ​ ​ 332 Total assets ​ $ 48,114 ​ $ 24,046 Liabilities and stockholders’ equity ​ ​ ​ Current liabilities: ​ ​ ​ Accounts payable ​ $ 3,310 ​ $ 2,400 Accrued expenses and other current liabilities ​ 3,306 ​ 4,931 Deferred revenue, current ​ ​ 18,215 ​ ​ — Total current liabilities ​ 24,831 ​ 7,331 Deferred revenue, non-current ​ ​ 9,421 ​ ​ — Other long-term liabilities ​ ​ — ​ ​ 62 Total liabilities ​ 34,252 ​ 7,393 Commitments and contingencies (Note 7) ​ ​ ​ Stockholders’ equity: ​ ​ ​ Preferred stock, $ 0.0001 par value; 10,000,000 shares authorized; no shares issued or outstanding at March 31, 2023 and December 31, 2022, respectively ​ ​ — ​ ​ — Common stock, $ 0.0001 par value; 200,000,000 shares authorized; 12,194,184 and 12,128,843 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively ​ ​ 1 ​ ​ 1 Additional paid-in capital ​ 134,132 ​ 132,653 Accumulated deficit ​ ( 120,271 ) ​ ( 116,001 ) Total stockholders’ equity ​ 13,862 ​ 16,653 Total liabilities and stockholders’ equity ​ $ 48,114 ​ $ 24,046 ​ 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, ​ 2023 2022 Collaboration revenue ​ $ 2,364 ​ $ — Operating expenses: ​ ​ ​ ​ ​ ​ Research and development ​ ​ 3,913 ​ ​ 8,078 General and administrative ​ 2,922 ​ 3,576 Total operating expenses ​ 6,835 ​ 11,654 Loss from operations ​ ( 4,471 ) ​ ( 11,654 ) Interest income ​ 201 ​ 1 Net loss ​ $ ( 4,270 ) ​ $ ( 11,653 ) Per share information: ​ ​ ​ ​ Net loss per share of common stock, basic and diluted ​ $ ( 0.35 ) ​ $ ( 0.96 ) Weighted-average common shares outstanding, basic and diluted ​ 12,182,478 ​ 12,122,903 ​ 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, 2023 12,128,843 ​ $ 1 ​ $ 132,653 ​ $ ( 116,001 ) ​ $ 16,653 Share-based compensation expense — ​ ​ — ​ ​ 1,200 ​ ​ — ​ ​ 1,200 Issuance of common stock under ATM, net of $ 1 of issuance costs ​ 5,925 ​ ​ — ​ ​ 34 ​ ​ — ​ ​ 34 Issuance of common stock ​ 55,250 ​ ​ — ​ ​ 221 ​ ​ — ​ ​ 221 Vesting of restricted stock awards ​ 4,166 ​ ​ — ​ ​ 24 ​ ​ — ​ ​ 24 Net loss — ​ ​ — ​ ​ — ​ ​ ( 4,270 ) ​ ​ ( 4,270 ) Balance at March 31, 2023 12,194,184 ​ $ 1 ​ $ 134,132 ​ $ ( 120,271 ) ​ $ 13,862 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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, ​ 2023 2022 Cash flows from operating activities: ​ ​ ​ Net loss ​ $ ( 4,270 ) ​ $ ( 11,653 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: ​ ​ ​ ​ Depreciation and amortization ​ 94 ​ 111 Amortization of right-of-use asset ​ ​ 54 ​ ​ 25 Share-based compensation ​ 1,224 ​ 1,310 Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Prepaid expenses and other current assets ​ 214 ​ 3,973 Accounts payable ​ 687 ​ 788 Accrued expenses and other current liabilities ​ ( 1,404 ) ​ ( 912 ) Deferred revenue ​ ​ 27,636 ​ ​ — Other long-term liabilities ​ ​ ( 62 ) ​ ​ ( 18 ) Net cash provided by (used in) operating activities ​ 24,173 ​ ( 6,376 ) Cash flows from investing activities: ​ ​ ​ Purchases of property and equipment ​ ( 106 ) ​ ( 6 ) Net cash used in investing activities ​ ( 106 ) ​ ( 6 ) Cash flows from financing activities: ​ ​ ​ Proceeds from exercise of stock options ​ ​ — ​ ​ 32 Proceeds from issuance of common stock under ATM, net ​ 34 ​ — Net cash provided by financing activities ​ 34 ​ 32 Net increase (decrease) in cash and cash equivalents and restricted cash ​ 24,101 ​ ( 6,350 ) Cash and cash equivalents and restricted cash at beginning of period ​ 20,423 ​ 49,329 Cash and cash equivalents and restricted cash at end of period ​ $ 44,524 ​ $ 42,979 ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures of cash flow information: ​ ​ ​ Issuance of common stock to certain board of directors in lieu of accrued compensation ​ $ 221 ​ $ — Property and equipment included in accounts payable ​ $ 223 ​ $ — Offering costs included in accrued expenses and other liabilities ​ $ — ​ $ 25 Offering costs included in accounts payable ​ $ — ​ $ 25 Property and equipment included in accrued expenses and other current liabilities ​ $ — ​ $ 3 ​ 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 Organization Immunome, Inc., the Company or Immunome, is a biopharmaceutical company. The Company was incorporated as a Pennsylvania corporation on March 2, 2006 and was converted to a Delaware corporation on December 2, 2015. The Company is utilizing a proprietary human memory B cell platform to discover and develop antibody therapeutics to improve patient care. The Company’s primary focus area is oncology. 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, and executing strategic partnerships. 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 research, development, and manufacturing activities, uncertain results of preclinical and clinical testing, development of new technological innovations and products by competitors, dependence on key personnel, partners and third-party vendors, protection of proprietary technology, compliance with government regulations, regulatory approval of products and the ability to secure additional capital to fund operations. Liquidity The Company has incurred net losses since inception, including net losses of $ 4.3 million and $ 11.7 million for the three months ended March 31, 2023 and 2022, respectively, and it expects to generate losses from operations for the foreseeable future primarily due to research and development costs for its programs and development candidates. As of March 31, 2023, the Company had an accumulated deficit of $ 120.3 million. Through March 31, 2023, the Company raised an aggregate of $ 155.1 million in gross proceeds from sales of common stock, Series A convertible preferred stock and warrants, warrant and stock option exercises, the issuance of convertible promissory notes, the Paycheck Protection Program, or PPP, loan that was forgiven in May 2021, and strategic partnerships with AbbVie Global Enterprises Ltd, or AbbVie, and the Department of Defense, or the DoD. In January 2023, the Company received a $ 30.0 million non-refundable upfront payment from AbbVie under the collaboration and option agreement, or the Collaboration Agreement. In addition, the Company received $ 17.6 million in expense reimbursement from the DoD under the Other Transaction Authority for Prototype Agreement, or the OTA Agreement, from inception through 2022. On January 4, 2023, the Company entered into the Collaboration Agreement with AbbVie, or the Collaboration Agreement, directed to the discovery of up to 10 novel target-antibody pairs leveraging our discovery engine. The Company is potentially eligible to receive up to approximately $ 2.8 billion from AbbVie under the Collaboration Agreement from the sources described in Note 3. There are no assurances that the Company will receive additional payments from AbbVie beyond the $ 30.0 million upfront payment. On October 1, 2021, the Company entered into an Open Market Sale Agreement, or the 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 filed a shelf registration statement on Form S-3, which was declared effective by the Securities and Exchange Commission, or 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. Through March 31, 2023, the Company sold 5,925 shares of common stock under the ATM Agreement resulting in net proceeds of approximately $ 34,000 . The Company can elect to sell additional shares under the ATM Agreement or shelf registration statement. 7 Table of Contents The Company had cash and cash equivalents of $ 44.4 million at March 31, 2023. 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 to fund additional research and 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 relative to potential programs, products or technologies that it might otherwise seek to progress independently (or enter into these collaborations sooner than it might otherwise have intended to); consider various other strategic alternatives, including a possible merger or sale of the Company; or reduce or cease operations. If the Company engages in collaborations under these circumstances, it may receive lower consideration than if it had not entered into such arrangements or if it entered into such arrangements at later stages in the research and development process. Additionally, volatility in the capital markets generally and the biotechnology sector specifically, as well as general economic conditions in the United States may be a significant obstacle to raising the required funds on satisfactory terms, if at all. 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 programs and development candidates become approved drugs and how significant their market share will be, many of which are outside of the Company’s control. The length of time and cost of developing and commercializing these programs and development 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. The Company is also subject to risks and uncertainties as a result of the ongoing COVID-19 pandemic. Although there is uncertainty as to the extent of the continued impact of the COVID-19 pandemic, including the continued impact to capital markets and economies worldwide in the form of economic slowdowns or recession, 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, or 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, or ASC, and Accounting Standards Updates, or ASU, promulgated by the Financial Accounting Standards Board, or 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 16, 2023. The accompanying condensed financial statements as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 are unaudited but have been prepared on the same basis as the annual audited financial statements and 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. Condensed balance sheet amounts as of December 31, 2022 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, accrued research and development expenses, and the estimated costs which drive the revenue recognition for the Collaboration Agreement with AbbVie. 8 Table of Contents 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, or the 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 of America. Fair value of financial instruments ASC Topic 820, Fair Value Measurement , or 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 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 and restricted cash are Level 1 assets as of March 31, 2023 and December 31, 2022. 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. Cash will be released from restriction upon termination of the lease. Restricted cash was $ 100,000 at both March 31, 2023 and 2022, respectively. The following table provides a reconciliation of the components of cash and cash equivalents and restricted cash presented in the condensed statements of cash flows: ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ March 31, 2023 ​ March 31, 2022 Cash and cash equivalents ​ $ 44,424 ​ $ 42,879 Restricted cash ​ ​ 100 ​ ​ 100 ​ ​ $ 44,524 ​ $ 42,979 ​ 9 Table of Contents Concentration of credit risk Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents. The Company maintains deposits in a financial institution in excess of government insured limits. Management believes that the Company is not exposed to significant credit risk as the Company’s deposits are held at a financial institution that management believes to be of high credit quality, and the Company has not experienced any losses on these deposits. Equity issuance costs The Company capitalized costs that were directly associated with establishing the ATM Agreement and shelf registration statement in 2021. These costs will remain capitalized until such financings are consummated, at which time such costs will be recorded against the gross proceeds from the applicable financing. If a financing is abandoned, deferred offering costs are expensed. Ongoing costs that are directly associated with the ATM Agreement are expensed as incurred. Deferred offering costs were $ 0.3 million as of each of March 31, 2023 and December 31, 2022, respectively, on the condensed balance sheets. Government assistance programs The Company accounts for amounts received under its DoD expense reimbursement contract as contra-research and development expenses in the condensed statements of operations. Collaboration revenue The Company evaluates its collaborative arrangements pursuant to ASC 808, Collaborative Arrangements, or ASC 808, and ASC 606, Revenue from Contracts with Customers, or ASC 606. The Company considers the nature and contractual terms of collaborative arrangements and assesses whether the arrangement involves a joint operating activity pursuant to which the Company is an active participant and is exposed to significant risks and rewards with respect to the arrangement. If the Company is an active participant and is exposed to significant risks and rewards with respect to the arrangement, the Company accounts for the arrangement as a collaboration under ASC 808. If it is not exposed to significant risks and rewards and the contract is with a customer, the Company accounts for the collaboration under ASC 606. Payments pursuant to collaborative arrangements may include non-refundable upfront payments, research option and license option payments, milestone payments upon the achievement of significant regulatory and development events, commercial sales milestones, and royalties on product sales. The amount of variable consideration is constrained until it is probable that the revenue is not at a significant risk of reversal in a future period. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under a collaboration arrangement, the Company applies the five-step model of ASC 606: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract, including whether they are capable of being distinct; (iii) determine the transaction price, including the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company applies significant judgment when evaluating whether contractual obligations represent distinct performance obligations, allocating transaction price to performance obligations within a contract, determining when performance obligations have been met, and assessing the recognition of variable consideration. When consideration is received prior to the Company completing its performance obligation under the terms of a contract, a contract liability is recorded as deferred revenue. Deferred revenue expected to be recognized as revenue within the twelve months following the balance sheet date is classified as a current liability. 10 Table of Contents In January 2023, the Company entered into the Collaboration Agreement with AbbVie, which was determined to be within the scope of ASC 606. Please see Note 3 for further information related to the accounting for the Collaboration Agreement. 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 7, the Company is obligated to make future payments should certain development and regulatory milestones be achieved. Costs for certain research and development activities are recognized based on the terms of the individual arrangements, which may differ from the timing of receipt of invoices and payment of invoices and are reflected in the financial statements as a prepaid or accrued expense. Share-based compensation The Company’s share-based compensation program allows for grants of stock options and restricted stock awards. Grants are awarded to employees and non-employees, including directors. The Company accounts for its share-based compensation awards granted to employees and nonemployees based on the estimated fair value on the date of grant and recognized compensation expense of those awards over the requisite service period, which is the vesting period of the respective award. The Company accounts for forfeitures as they occur. For share-based awards with service-based vesting conditions, the Company recognized compensation expense on a straight-line basis over the service period. The Company classified share-based compensation expense in its statements of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified. The Company estimates the fair value of options granted using the Black-Scholes option pricing model for stock option grants to both employees and non-employees. The Black-Scholes option pricing model requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. Due to the lack of Company-specific historical and implied volatility data, the Company has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to the Company, including stage of product development and biopharmaceutical industry focus. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The Company uses the simplified method to calculate the expected term for options granted to employees and non-employees whereby, the expected term equals the arithmetic average of the vesting term and the original contractual term of the options due to its lack of sufficient historical data. The risk-free interest rate is based on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. The exercise price is the fair value of the common stock as of the measurement date. Net loss per share Basic net loss per share of common stock is computed by dividing the net loss attributable to common stockholders 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 attributable to common stockholders 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. 11 Table of Contents The following potentially dilutive securities outstanding as of March 31, 2023 and 2022 have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ 2023 ​ 2022 Stock options (1) ​ 2,493,410 ​ 2,009,844 Common stock warrants (1) ​ 1,303,112 ​ 1,303,112 Unvested restricted stock awards (1) ​ 20,834 ​ — ​ ​ 3,817,356 ​ 3,312,956 (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, 2023 and 2022. Leases The Company accounts for leases in accordance with ASC 842, Leases . 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 condensed balance sheets 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 recognize leases with a term of 12 months or less. The Company does not have any financing leases as of March 31, 2023. 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 standard On January 1, 2023, the Company adopted ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments . This standard amended its guidance on the recognition of impairment losses of certain financial instruments. The ASU established the current expected credit loss model, which is based on expected losses rather than incurred losses. Adoption of this standard had no impact on the Company’s condensed financial statements. 3. Collaboration Agreement with AbbVie In January 2023, the Company entered into the Collaboration Agreement with AbbVie, pursuant to which the Company will use its proprietary discovery engine to discover and validate targets derived from patients with three specified tumor types, and antibodies that bind to such targets, which may be the subject of further development and commercialization by AbbVie. Pursuant to the terms of the Collaboration Agreement, the Company granted to AbbVie an exclusive option to purchase all rights to each novel target-antibody pair, or a Validated Target Pair or VTP, that the Company generates that meets certain mutually agreed criteria, up to a maximum of 10 in total, for all human and non-human diagnostic, prophylactic and therapeutic uses throughout the world, including the development and commercialization of certain products, or Products, derived from the assigned VTP. 12 Table of Contents AbbVie paid the Company a nonrefundable upfront payment of $ 30.0 million and will pay certain additional platform access payments in the aggregate amount of up to $ 70.0 million based on the Company’s use of its discovery engine in connection with activities under each stage of the research plan, and delivery of VTPs to AbbVie. AbbVie will also pay an option exercise fee in the low single digit millions for each of up to 10 VTPs for which it exercises an option. If AbbVie progresses development and commercialization of a Product, AbbVie will pay the Company development and commercial sale milestones of up to $ 120.0 million per target, and sales milestones based on achievement of specified levels of net sales of Products of up to $ 150.0 million in the aggregate per Product, subject to specified deductions in certain circumstances. On a Product-by-Product basis, AbbVie will pay the Company tiered royalties on net sales of Products at a percentage in the low single digits, subject to specified reductions and offsets in certain circumstances. AbbVie’s royalty payment obligation will commence, on a Product-by-Product and country-by-country basis, on the first commercial sale of such Product in such country and will expire on the earlier of (a) the later of (i) the ten-year anniversary of the first commercial sale for such Product in such country, or (ii) solely with respect to a Product that incorporates an antibody comprising a VTP (or certain other antibodies derived from such delivered antibody), the expiration of all valid claims of patent rights covering the composition of matter of any such antibody and (b) the expiration of regulatory exclusivity for such Product in such country. The Collaboration Agreement will expire upon the expiration of the last to expire royalty payment obligation with respect to all Products in all countries, subject to earlier expiration if all option exercise periods for all VTPs expire without AbbVie exercising any option, if AbbVie does not elect to make certain platform access payments at specified points during the research term, or upon the uncured material breach or any insolvency event of either party. AbbVie may also terminate the Collaboration Agreement for convenience upon a specified period prior written notice, or upon the Company’s breach of representations and warranties with respect to debarment or compliance with anti-bribery and anti-corruption laws. The Company assessed the Collaboration Agreement under ASC 808 and ASC 606 and concluded that it represents a contract with a customer. The Company applied the relevant guidance of ASC 606 to evaluate the accounting under the Collaboration Agreement and identified one performance obligation under the arrangement: a promise to provide research and development services to AbbVie, or R&D Services. The Company evaluated the options to continue the R&D services and options to purchase licenses to each VTP and concluded that these options did not represent material rights. The Company determined the initial transaction price of the single performance obligation to be $ 30.0 million, as the variable consideration for additional R&D services, option exercise payments, and development milestone payments are all subject to constraint at contract inception. At each reporting period, the Company will reevaluate the variable consideration subject to constraint and, if necessary, will adjust its estimate of the overall transaction price. For the sales-based royalties, the Company will recognize revenue when the related sales occur. Collaboration revenue from the single performance obligation will be recognized over the estimated performance of the R&D services using the cost-to-cost input method which it believes best depicts the transfer of control to the customer. Under the cost-to-cost input method, the extent of progress towards completion is measured based on the ratio of actual costs incurred to the total estimated costs expected upon satisfying the performance obligation. The Company recognized $ 2.4 million of collaboration revenue for the three months ended March 31, 2023 and has recorded $ 27.6 million of deferred revenue as of March 31, 2023. As of March 31, 2023, the Company expects to recognize the deferred revenue associated with the non-refundable upfront fee over the estimated research and development period of approximately 1.5 years. ​ ​ 13 Table of Contents 4. Government assistance programs DoD expense reimbursement contract In July 2020, the Company entered into the OTA Agreement with the U.S. Department of Defense’s Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense (JPEO-CBRND), in collaboration with the Defense Health Agency, to fund the Company’s efforts in developing an antibody cocktail therapeutic to treat COVID-19. The amount of funding originally made available to the Company under the OTA Agreement 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. In January 2023, the Company and the DoD modified the OTA Agreement to extend the termination date of the OTA Agreement to July 2023, at no additional cost to the government. All other terms and conditions remain the same and are in full force and effect. Under the OTA Agreement, the DoD is required to pay the Company, upon submission of invoices for approved budgeted supplies delivered and services rendered in carrying out the prototype project, within 30 calendar days of receipt of request for payment. The Company received the maximum $ 17.6 million in expense reimbursement from the DoD under the OTA Agreement from inception through 2022. The Company recorded contra-research and development expense related to the OTA Agreement of $ 0.6 million for the three months ended March 31, 2022 in the condensed statements of operations. CARES Act employee retention credit Under the provisions of the CARES Act, the Company met eligibility criteria for a $ 0.8 million refundable employee retention credit. The Company had an employee retention credit receivable balance due from the U.S. Department of Treasury of $ 0.8 million in prepaid expenses and other current assets as of March 31, 2023 and December 31, 2022, respectively, in the accompanying condensed balance sheets. 5. Prepaid expenses and other assets Prepaid expenses and other assets consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) March 31, 2023 December 31, 2022 CARES Act employee retention credit receivable ​ $ 821 ​ $ 847 Prepaid subscriptions and service contracts ​ ​ 696 ​ ​ 876 Research and development advance payments ​ ​ 271 ​ ​ 445 Prepaid insurance ​ ​ 253 ​ ​ 158 Other prepaids and current assets ​ ​ 71 ​ ​ — ​ ​ $ 2,112 ​ $ 2,326 ​ ​ 6. Accrued expenses and other liabilities Accrued expenses and other liabilities consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) March 31, 2023 December 31, 2022 Research and development ​ $ 1,993 ​ $ 2,261 Compensation and related benefits ​ ​ 827 ​ ​ 1,874 Short-term operating lease liability and other liabilities ​ ​ 236 ​ ​ 293 Professional fees ​ 250 ​ 481 Deferred research obligations ​ ​ — ​ ​ 22 ​ ​ $ 3,306 ​ $ 4,931 ​ ​ 14 Table of Contents 7. Commitments and contingencies Employment agreements The Company entered into employment agreements, or the Employment Agreements, with certain 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, or 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 each of the three months ended March 31, 2023 and 2022, 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. 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. In addition, the Company may need to pay royalty rates on net product sales, a portion of certain sublicense and collaboration payments, and certain commercial milestone payments of up to approximately $ 1.5 million, if any. The Company did not make any development, regulatory, or commercial milestone payments during the three months ended March 31, 2023 and 2022, respectively. Whitehead Letter Agreement On November 17, 2022, the Company entered into a Letter Agreement, or the Letter Agreement, with the Whitehead Institute of Biomedical Research, or Whitehead, which became effective on January 4, 2023 upon the satisfaction of the conditions described therein. The Letter Agreement supplements the Exclusive Patent License Agreement entered into between the Company and Whitehead on June 25, 2009 (as amended on December 17, 2009, March 21, 2013, August 21, 2017 and July 21, 2020, the License Agreement). Pursuant to the Letter Agreement, Whitehead and the Company agreed that certain payments received by the Company from the Collaborator (as defined in the Letter Agreement) (i.e., a corporate partner, as defined in the License Agreement) would be excluded from the Company’s payment obligations to Whitehead. The Company and Whitehead further agreed, among other things, that the Company will make certain payments to Whitehead (i) as Net Sales (as defined in the License Agreement) as long as the Company receives those payments from the Collaborator on a specified number of products purchased by the Collaborator and (ii) upon the achievement of certain milestones whether by the Company or the Collaborator. 8. Leases The Company leases office and laboratory space for approximately 11,000 square feet of space in Exton, Pennsylvania that currently extends until March 2024. The Company has an option to extend the lease for up to two additional five-year terms. 15 Table of Contents Supplemental condensed balance sheet information related to leases comprised of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2023 ​ ​ December 31, 2022 Operating lease right-of-use assets $ 230 ​ $ 284 ​ ​ ​ ​ ​ ​ Operating lease liability $ 236 ​ $ 229 Operating lease liability, net of current portion ​ — ​ ​ 62 Total operating lease liability $ 236 ​ $ 291 ​ 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 sheets. Operating lease expense recorded as research and development and general and administrative expenses in the condensed statements of operations was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ 2023 ​ ​ 2022 General and administrative $ 19 ​ $ 19 Research and development ​ 41 ​ ​ 41 Total lease expense $ 60 ​ $ 60 ​ Other operating lease information as of March 31, 2023 was as follows: ​ ​ ​ ​ Weighted-average remaining lease term (in years) ​ 1.0 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, ​ ​ 2023 ​ ​ 2022 Cash paid for operating lease liability $ 61 ​ $ 57 ​ As of March 31, 2023, minimum rental commitments under the operating lease were as follows (in thousands): ​ ​ ​ ​ ​ Years ending December 31, Amount 2023 (represents remaining nine months in 2023) ​ $ 185 2024 ​ 63 Total lease payments ​ ​ 248 Less imputed interest ​ ​ ( 12 ) Present value of lease liability ​ $ 236 ​ ​ 9. 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 are 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. 16 Table of Contents During the three months ended March 31, 2023, the Company sold 5,925 shares of common stock under the ATM Agreement resulting in net proceeds of approximately $ 34,000 . On January 15, 2023, the Company issued 55,250 shares of common stock in the aggregate to certain non-employee board of directors pursuant to the 2020 Equity Incentive Plan in lieu of the non-employee director board and committee cash retainers owed for service on the board of directors in 2022. Warrants to acquire shares of common stock At March 31, 2023, common stock warrants outstanding were as follows: ​ ​ ​ ​ ​ ​ ​ ​ Warrants ​ Warrants Outstanding Exercise Price per Share ​ Expiration Date Series A ​ 803,112 ​ $ 9.00 ​ June 2, 2023 Series B ​ 500,000 ​ $ 10.00 ​ April 28, 2024 ​ ​ 1,303,112 ​ ​ ​ ​ ​ No warrants were exercised during the three months ended March 31, 2023 and 2022, respectively. ​ 10. Share-based compensation On September 18, 2020, the Company adopted the 2020 Equity Incentive Plan, or the 2020 Plan, which supersedes all prior equity incentive plans. Under the 2020 Plan, the number of shares of 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 the Company’s 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. On January 1, 2023, the number of shares available for future issuance under the 2020 Plan increased by 485,153 shares. As of March 31, 2023, there were 1,781,090 shares available for future issuance under the 2020 Plan. The Company also adopted the 2020 Employee Stock Purchase Plan, or the 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 years , commencing on the first January 1 following the year in which an IPO occurs and ending on, and including, January 1, 2030, in an amount equal to the lesser of (i) 1 % of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, and (ii) 1,000,000 shares of common stock. On January 1, 2023, the number of shares available for future issuance under the ESPP increased by 121,288 shares. As of March 31, 2023, there were 473,733 shares available under the ESPP. No shares of common stock have been issued under the ESPP as of March 31, 2023. 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 2020 Plan generally expire 10 years after the grant date unless the Board of Directors sets a shorter term. Vesting periods for awards under the 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 2020 Plan. 17 Table of Contents Share-based compensation expense recorded for stock options and restricted stock awards 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, ​ 2023 2022 Research and development ​ $ 430 ​ $ 445 General and administrative ​ 794 ​ 865 ​ ​ $ 1,224 ​ $ 1,310 ​ Unrecognized compensation cost related to unvested options and restricted stock awards was $ 7.6 million as of March 31, 2023 and will be recognized over an estimated weighted average period of 2.7 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, ​ 2023 2022 Expected volatility ​ 87.9 % ​ 83.5 % Risk-free interest rate ​ 3.9 % ​ 1.7 % Expected term (in years) ​ 5.96 ​ 6.08 ​ Expected dividend yield ​ — ​ — ​ Fair value of common stock ​ $ 5.39 ​ $ 10.58 ​ ​ A summary of option activity under the 2020 Plan and prior Plans during the three months ended March 31, 2023 was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Weighted ​ average ​ ​ ​ ​ average ​ remaining ​ ​ Number of ​ exercise price ​ contractual ​ ​ shares ​ per share ​ term (years) Outstanding at January 1, 2023 2,519,405 ​ ​ 9.60 ​ 7.90 Granted 29,100 ​ ​ 5.39 ​ 9.88 Forfeited ( 54,293 ) ​ ​ 12.03 ​ — Expired ​ ( 802 ) ​ ​ 13.79 ​ — Exercised — ​ ​ — ​ — Outstanding at March 31, 2023 2,493,410 ​ ​ 9.50 ​ 7.55 Exercisable at March 31, 2023 1,368,315 ​ ​ 9.19 ​ 6.91 ​ The weighted-average grant date fair value per share of stock options granted during the three months ended March 31, 2023 and 2022 was $ 4.18 and $ 7.52 , respectively. The aggregate intrinsic value for options exercisable at March 31, 2023 was $ 2.9 million. The aggregate intrinsic value of stock options outstanding at March 31, 2023 is $ 4.2 million. Restricted stock awards During February 2023, the Company granted 25,000 shares of restricted stock awards to a consultant in exchange for services. The weighted average grant fair value was $ 5.62 per share. The restricted stock awards vest over twelve months . As of March 31, 2023, there were 20,834 unvested restricted stock awards. ​ ​ 18 Table of Contents