What changed in this filing

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Item 1. Financial Statements

2023-08-09 compared with 2023-05-05 · 133 added, 76 removed, 339 unchanged (38% of the section changed)

3 unchanged sentences

(In thousands, except share data)

March 31, 2023

June 30, 2023

December 31, 2022

20 unchanged sentences

10,000,000 shares authorized;

no shares issued or outstanding at March 31, 2023 and December 31, 2022, respectively

no shares issued or outstanding at June 30, 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

12,200,433 and 12,128,843 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

6 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Collaboration revenue

13 unchanged sentences

Stockholders’ equity

Balance at March 31, 2023

Share-based compensation expense

Vesting of restricted stock awards

Balance at June 30, 2023

Stockholders’ equity

Balance at January 1, 2023

3 unchanged sentences

Vesting of restricted stock awards

Balance at June 30, 2023

Stockholders’ equity

Balance at March 31, 2022

Share-based compensation expense

Balance at June 30, 2022

Stockholders’ equity

2 unchanged sentences

Exercise of stock options

Balance at March 31, 2022

Balance at June 30, 2022

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

2 unchanged sentences

(In thousands)

Three Months ended March 31,

Six Months ended June 30,

Cash flows from operating activities:

4 unchanged sentences

Changes in operating assets and liabilities:

Prepaid expenses and other current assets

Prepaid expenses and other assets

Accounts payable

15 unchanged sentences

Issuance of common stock to certain board of directors in lieu of accrued compensation

Deferred offering costs in accrued expenses and other current liabilities

Property and equipment included in accounts payable

Offering costs included in accrued expenses and other liabilities

Offering costs included in accounts payable

Property and equipment included in accrued expenses and other current liabilities

9 unchanged sentences

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.

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.

On June 29, 2023, the Company entered into an Agreement and Plan of Merger and Reorganization, or the Merger Agreement, with Morphimmune Inc., a Delaware corporation, or Morphimmune, a biotechnology company focused on developing targeted oncology therapeutics, and Ibiza Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company, or Merger Sub.

Upon the terms and subject to the satisfaction of the conditions described in the Merger Agreement, Merger Sub will be merged with and into Morphimmune, with Morphimmune surviving as a wholly owned subsidiary of Immunome, or the Merger.

The Merger is intended to qualify as a tax-free reorganization for U.S.

federal income tax purposes and is expected to close by the end of 2023.

See “The Merger”.

The Company has incurred net losses since inception, including net losses of $ 9.8 million and $ 20.6 million for the six months ended June 30, 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 June 30, 2023, the Company had an accumulated deficit of $ 125.8 million.

Through June 30, 2023, the Company raised an aggregate of $ 155.2 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.

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.

In addition, the Company received $ 17.6 million in expense reimbursement from the Department of Defense, or 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.

3 unchanged sentences

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 .

Through June 30, 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.

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;

The Company had cash and cash equivalents of $ 38.4 million at June 30, 2023.

The Company expects that its cash, exclusive of any potential proceeds received in connections with the potential closing of the Merger and concurrent Private Investment in Public Equity, or PIPE transaction, 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;

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.

Further, as a part of our strategy, the Company may consider various other alternatives, including a merger or sale of the Company.

If the Company engages in R&D 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.

1 unchanged sentence

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.

Merger Agreement

On June 29, 2023, the Company entered into the Merger Agreement with Morphimmune Inc., a biotechnology company focused on developing targeted oncology therapeutics, and Merger Sub.

The Merger is intended to qualify as a tax-free reorganization for U.S.

federal income tax purposes.

At the Effective time, each share of Morphimmune capital stock outstanding immediately prior to the Effective Time will be automatically converted solely into the right to receive 0.3042 shares of the Company’s common stock, or the Exchange Ratio, and, if applicable, an amount in cash, rounded to the nearest whole cent, in lieu of any fractional share interest in the Company’s common stock to which such holder otherwise would have been entitled (after aggregating all fractional shares issuable to such holder).

Each option to purchase shares of Morphimmune capital stock, or a Morphimmune Option, that is outstanding and unexercised immediately prior to the Effective Time under Morphimmune’s 2020 Equity Incentive Plan, or the Morphimmune Plan, whether or not vested, will be converted into and become an option to purchase the Company’s common stock using the Exchange Ratio, and the Company will assume the Morphimmune Plan and each such Morphimmune Option in accordance with the terms of the Morphimmune Plan and the terms of the stock option agreement by which such Morphimmune Option is evidenced.

Immediately following the Merger, the pre-Merger equityholders of the Company are expected to own approximately 55 % of the shares of the Company’s common stock and the pre-Merger equityholders of Morphimmune are expected to own approximately 45 % of the Company’s common stock, in each case, on a fully diluted basis, excluding out-of-the-money securities of the Company as of June 28, 2023, unallocated shares of the Company’s common stock available for issuance under the Company’s 2020 Equity Incentive Plan and employee stock purchase plan, and the grant of a stock option to Dr.

Clay Siegall, Ph.D., in connection with his employment agreement to become Chief Executive Officer of the Company upon consummation of the Merger, and prior to giving effect to the PIPE financing as described below.

Anticipated Accounting Treatment

The Merger is expected to be treated as an asset acquisition by Immunome of Morphimmune in accordance with U.S.

Upon completion of the Merger, Immunome will obtain control of Morphimmune’s assets consisting primarily of cash and in-process research and development (IPR&D) associated with Morphimmune’s potential primary product candidate, Mi-1001, and development program, 177 Lu-FAP.

In accordance with U.S.

GAAP, Immunome must first assess whether an integrated set of assets and activities should be accounted for as an acquisition of a business or an asset acquisition.

An initial screen test is completed to determine if substantially all of the fair value of the gross assets acquired of Morphimmune is concentrated in a single asset or group of similar assets.

If that screen is met, the set is not considered a business and is accounted for as an asset acquisition.

Immunome will account for the acquisition of Morphimmune as an asset acquisition as substantially all of the fair value of the gross assets being acquired of Morphimmune is concentrated within the FA-TLR7a and 177 Lu-FAP development programs which are considered a group of similar assets.

These programs are deemed to be similar IPR&D assets being acquired based on the similarity of:

(i) their current preclinical stage of development, (ii) solid tumor therapeutic indications, (iii) risks for development, (iv) regulatory pathway, and (v) economics of commercialization.

Since the IPR&D being acquired has no alternative future use, Immunome expects to record the amount of consideration allocated to the IPR&D assets as research and development expense in its statement of operations on the date of acquisition.

Subscription Agreements

In connection with the execution of the Merger Agreement, on June 29, 2023, the Company entered into subscription agreements, each, a Subscription Agreement, with certain investors, or the PIPE Investors, pursuant to which, among other things, the PIPE Investors have agreed to subscribe for and purchase, and the Company has agreed to issue and sell to the PIPE Investors, an aggregate of 21,690,871 shares of the Company’s common stock for an aggregate purchase price of approximately $ 125.0 million, on the terms and subject to the conditions set forth therein.

The shares of the Company’s common stock were sold to the PIPE Investors at a price per share equal to $ 5.75 and, in the case of affiliate investors, $ 5.91 per share, the consolidated closing bid price per share immediately preceding the entry into the Subscription Agreement.

The closing of the PIPE financing is expected to occur in connection with and immediately following the consummation of the Merger.

Summary of significant accounting policies

4 unchanged sentences

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

The accompanying condensed financial statements as of June 30, 2023 and for the three and six months ended June 30, 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.

23 unchanged sentences

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.

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.

Cash and cash equivalents and restricted cash are Level 1 assets as of June 30, 2023 and December 31, 2022.

Restricted cash

1 unchanged sentence

Cash will be released from restriction upon termination of the lease.

Restricted cash was $ 100,000 at both March 31, 2023 and 2022, respectively.

Restricted cash was $ 0.1 million at both June 30, 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

June 30, 2023

June 30, 2022

Cash and cash equivalents

9 unchanged sentences

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.

The Company also capitalized costs that were directly associated with the PIPE transaction.

These costs will remain capitalized until such transaction is consummated, at which time such costs will be recorded against the gross proceeds from the applicable financing.

Deferred offering costs were $ 0.4 million as of June 30, 2023 and $ 0.3 million as of December 31, 2022 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.

The Company accounts for the employee retention credit received under the U.S.

Department of Treasury Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, as contra-expense to personnel related costs within research and development and general administrative expenses in the condensed statements of operations.

Collaboration revenue

2 unchanged sentences

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.

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.

15 unchanged sentences

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.

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 condensed financial statements as a prepaid or accrued expense.

Share-based compensation

7 unchanged sentences

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.

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.

8 unchanged sentences

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, 2023 and 2022 have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:

The following potentially dilutive securities outstanding as of June 30, 2023 and 2022 have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:

Stock options (1)

3 unchanged sentences

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.

The Company reported a net loss per share of common stock for the three and six months ended June 30, 2023 and 2022.

The Company accounts for leases in accordance with ASC 842, Leases .

4 unchanged sentences

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.

The Company does not have any financing leases as of June 30, 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.

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

7 unchanged sentences

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.

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 paid the Company a nonrefundable upfront payment of $ 30.0 million in January 2023 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.

8 unchanged sentences

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.

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.

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 the Company 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.

The Company recognized $ 4.3 million and $ 6.6 million of collaboration revenue for the three and six months ended June 30, 2023, respectively.

The following table summarizes the change in deferred revenue (in thousands):

Three Months Ended June 30, 2023

Six Months Ended June 30, 2023

Balance at the beginning of the period

Deferral of revenue

Recognition of unearned revenue

Balance at the end of the period

As of June 30, 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.

Government assistance programs

1 unchanged sentence

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.

Department of Defense’s Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense, or 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.

4 unchanged sentences

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.

The Company recorded contra-research and development expense related to the OTA Agreement of $ 11,000 and $ 0.6 million for the three and six months ended June 30, 2022 in the condensed statements of operations.

No contra-research and development expense related to the OTA Agreement was recorded during the three and six months ended June 30, 2023.

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 recorded contra-expense to personnel related costs within research and development expense of $ 0.6 million and contra-general and administrative expense of $ 0.2 million for the three and six months ended June 30, 2022, respectively.

No such costs were recorded for the three and six months ended June 30, 2023.

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.

Department of Treasury of

$ 0.2 million and $ 0.8 million in prepaid expenses and other current assets as of June 30, 2023 and December 31, 2022, respectively, in the accompanying condensed balance sheets.

Prepaid expenses and other assets

1 unchanged sentence

(in thousands)

March 31, 2023

June 30, 2023

December 31, 2022

CARES Act employee retention credit receivable

Prepaid subscriptions and service contracts

Research and development advance payments

Prepaid insurance

Other prepaids and current assets

CARES Act employee retention credit receivable

Research and development advance payments

Accrued expenses and other liabilities

1 unchanged sentence

(in thousands)

March 31, 2023

June 30, 2023

December 31, 2022

Research and development

Professional fees

Compensation and related benefits

Short-term operating lease liability and other liabilities

Professional fees

Deferred research obligations

7 unchanged sentences

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

The Company made matching contributions of $ 0.1 million to the 401(k) Plan for each of the three months ended March 31, 2023 and 2022, respectively.

The Company made matching contributions of $ 0.1 million to the 401(k) Plan for each of the three and six months ended June 30, 2023 and 2022, respectively.

Legal proceedings

5 unchanged sentences

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.

The Company recorded $ 0.1 million of development, regulatory, or commercial milestone payments during the three and six months ended June 30, 2022, respectively, in research and development expenses in the condensed statements of operations.

No such costs were recorded during the three and six months ended June 30, 2023, respectively.

Whitehead Letter Agreement

6 unchanged sentences

Supplemental condensed balance sheet information related to leases comprised of the following (in thousands):

March 31, 2023

June 30, 2023

December 31, 2022

5 unchanged sentences

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,

Three Months Ended June 30,

Six Months Ended June 30,

General and administrative

1 unchanged sentence

Total lease expense

Other operating lease information as of March 31, 2023 was as follows:

Other operating lease information as of June 30, 2023 was as follows:

Weighted-average remaining lease term (in years)

1 unchanged sentence

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

Three Months Ended March 31,

Six Months Ended June 30,

Cash paid for operating lease liability

As of March 31, 2023, minimum rental commitments under the operating lease were as follows (in thousands):

As of June 30, 2023, minimum rental commitments under the operating lease were as follows (in thousands):

Years ending December 31,

2023 (represents remaining nine months in 2023)

2023 (represents remaining six months in 2023)

Total lease payments

4 unchanged sentences

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.

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 .

In January 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:

At June 30, 2023, common stock warrants outstanding were as follows:

Warrants Outstanding

2 unchanged sentences

April 28, 2024

No warrants were exercised during the three months ended March 31, 2023 and 2022, respectively.

On June 2, 2023, 803,112 Series A warrants with an exercise price of $ 9.00 expired.

No warrants were exercised during the three and six months ended June 30, 2023 and 2022, respectively.

Share-based compensation

2 unchanged sentences

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.

As of June 30, 2023, there were 1,236,420 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.

1 unchanged sentence

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.

As of June 30, 2023, there were 473,733 shares available under the ESPP.

No shares of common stock have been issued under the ESPP as of June 30, 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.

5 unchanged sentences

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,

Three Months Ended June 30,

Six Months Ended June 30,

Research and development

General and administrative

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.

Unrecognized compensation cost related to unvested options and restricted stock awards was $ 8.4 million as of June 30, 2023 and will be recognized over an estimated weighted average period of 3.1 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,

Six Months Ended June 30,

Expected volatility

3 unchanged sentences

Fair value of common stock

A summary of option activity under the 2020 Plan and prior Plans during the three months ended March 31, 2023 was as follows:

A summary of option activity under the 2020 Plan and prior Plans during the six months ended June 30, 2023 was as follows:

exercise price

Outstanding at January 1, 2023

Outstanding at March 31, 2023

Exercisable at March 31, 2023

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.

Outstanding at June 30, 2023

Exercisable at June 30, 2023

The weighted-average grant date fair value per share of stock options granted during the six months ended June 30, 2023 and 2022 was $ 3.67 and $ 2.65 , respectively.

The aggregate intrinsic value for options exercisable at June 30, 2023 was $ 6.0 million.

The aggregate intrinsic value of stock options outstanding at June 30, 2023 was $ 10.3 million.

Restricted stock awards

During February 2023, the Company granted 25,000 shares of restricted stock awards to a consultant in exchange for services.

During February 2023, the Company granted 25,000 shares of restricted stock awards to a consultant in exchange for services that vest evenly over twelve months with a vesting start date in January 2023.

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.

In July 2023, the consulting agreement was terminated which ceased the continuation of vesting of the restricted stock awards.

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

What changed 10-Q

Item 1. Financial Statements