What changed in this filing

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Item 1. Financial Statements

2023-11-09 compared with 2023-08-09 · 149 added, 129 removed, 343 unchanged (45% of the section changed)

3 unchanged sentences

(In thousands, except share data)

June 30, 2023

September 30, 2023

December 31, 2022

14 unchanged sentences

Deferred revenue, non-current

Deposit liability

Other long-term liabilities

4 unchanged sentences

10,000,000 shares authorized;

no shares issued or outstanding at June 30, 2023 and December 31, 2022, respectively

no shares issued or outstanding at September 30, 2023 and December 31, 2022, respectively

Common stock, $ 0.0001 par value;

200,000,000 shares authorized;

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

12,202,516 and 12,128,843 shares issued and outstanding at September 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Collaboration revenue

5 unchanged sentences

Interest income

Deemed dividend arising from warrant modification

Net loss attributable to common stockholders

Per share information:

6 unchanged sentences

Stockholders’ equity

Balance at March 31, 2023

Balance at June 30, 2023

Share-based compensation expense

Vesting of restricted stock awards

Balance at June 30, 2023

Balance at September 30, 2023

Stockholders’ equity

4 unchanged sentences

Vesting of restricted stock awards

Balance at June 30, 2023

Balance at September 30, 2023

Stockholders’ equity

Balance at March 31, 2022

Share-based compensation expense

Balance at June 30, 2022

Share-based compensation expense

Exercise of stock options

Balance at September 30, 2022

Stockholders’ equity

2 unchanged sentences

Exercise of stock options

Balance at June 30, 2022

Balance at September 30, 2022

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

2 unchanged sentences

(In thousands)

Six Months ended June 30,

Nine Months ended September 30,

Cash flows from operating activities:

2 unchanged sentences

Amortization of right-of-use asset

Write-off of deferred offering costs

Share-based compensation

10 unchanged sentences

Cash flows from financing activities:

Payment of offering costs

Prepayments from PIPE transaction recorded as deposit liability

Proceeds from exercise of stock options

5 unchanged sentences

Supplemental disclosures of cash flow information:

Operating lease right-of-use asset and lease liability recorded due to lease extension

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

1 unchanged sentence

Property and equipment included in accounts payable

Property and equipment included in accrued expenses and other current liabilities

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

2 unchanged sentences

Nature of the business

Immunome, Inc., the Company or Immunome, is a biopharmaceutical company.

Immunome, Inc., or the Company, is a biotechnology company dedicated to developing first-in-class and best-in-class targeted cancer therapies.

The Company believes that pursuing underexplored targets with appropriate drug modalities leads to transformative therapies.

The Company’s proprietary memory B cell hybridoma technology allows for the rapid screening and functional characterization of novel antibodies and targets.

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.

Since its inception, the Company has devoted substantially all its resources to research and development, raising capital, building its management team, extending its intellectual property portfolio, and executing strategic partnerships and transactions.

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.

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.

On October 2, 2023, the Company completed its merger with Morphimmune Inc., or Morphimmune.

Under the terms of the Agreement and Plan of Merger and Reorganization dated as of June 28, 2023, or the Merger Agreement, among the Company, Morphimmune and Ibiza Merger Sub, Inc., a wholly owned subsidiary of the Company, or Merger Sub, Morphimmune merged with and into Merger Sub, with Morphimmune surviving as a wholly-owned subsidiary of Immunome, or the Merger.

Morphimmune is a preclinical biotechnology company focused on developing targeted oncology therapeutics.

Morphimmune’s Targeted Effector platform uses small molecule ligands to selectively deliver drug payloads to diseased cells.

Morphimmune believes this approach reduces toxicity and increases the efficacy of effector molecules, thereby improving outcomes for patients.

The Company has incurred net losses since inception, including net losses of $ 14.2 million and $ 29.1 million for the nine months ended September 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 September 30, 2023, the Company had an accumulated deficit of $ 130.2 million.

Through September 30, 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.

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.

In June 2023 in connection with the Merger Agreement, the Company entered into subscription agreements with certain investors pursuant to which the Company would sell shares of its common stock, immediately following the completion of the Merger, in exchange for gross proceeds of $ 125.0 million.

On October 2, 2023, the Company issued and sold 21,690,871 shares of its common stock pursuant to the subscription agreements in a Private Investment in

Public Equity, or PIPE, transaction.

The Company received gross proceeds of $ 125.0 million, $61.0 million of which was received on or prior to September 30, 2023 and recorded as a deposit liability on the September 30, 2023 balance sheet.

The remaining $ 64.0 million of proceeds were received in October 2023.

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 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 $ 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;

There are no assurances that the Company will receive additional payments from AbbVie beyond the $ 30.0 million upfront payment received in January 2023.

Through September 30, 2023, the Company the Company has sold 5,925 shares of common stock under the ATM Agreement resulting in net proceeds of approximately $ 34,000 .

During the three-month period ended September 30, 2023, we did not issue or sell any shares of our common stock under the ATM Agreement.

On November 8, 2023, the Company provided notice of termination of the ATM Agreement to Jefferies.

The Company had cash and cash equivalents of $ 90.6 million at September 30, 2023, which included $ 61.0 million of deposits related to the PIPE transaction.

The Company expects that its cash, including the remaining proceeds received in connection with the closing of the PIPE transaction on October 2, 2023, 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), reduce or cease operations.

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.

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, 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), or reduce or cease operations.

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

If the Company engages in any of these types of transactions 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.

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.

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 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.

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

26 unchanged sentences

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 June 30, 2023 and December 31, 2022.

Cash and cash equivalents and restricted cash are Level 1 assets as of September 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 $ 0.1 million at both June 30, 2023 and 2022, respectively.

Restricted cash was $ 0.1 million at both September 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)

June 30, 2023

June 30, 2022

September 30, 2023

September 30, 2022

Cash and cash equivalents

9 unchanged sentences

Ongoing costs that are directly associated with the ATM Agreement are expensed as incurred.

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.

During the quarter ended September 30, 2023, the Company expensed the remaining $ 0.3 million of deferred offering costs related to the ATM when it decided to abandon any future use of the ATM.

On November 8, 2023, the Company provided notice of termination of the ATM Agreement to Jefferies.

During the quarter ended September 30, 2023, the Company capitalized $ 0.1 million of costs that were directly associated with the PIPE transaction.

These costs will be recorded against the gross proceeds from the PIPE transaction when it closed in October 2023.

Deferred offering costs were $ 0.1 million as of September 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

1 unchanged sentence

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.

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.

24 unchanged sentences

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 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.

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 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:

The following potentially dilutive securities outstanding as of September 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:

September 30,

Stock options (1)

Common stock warrants (1)

Unvested restricted stock awards (1)

(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 and six months ended June 30, 2023 and 2022.

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

The Company does not have any financing leases as of September 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.

28 unchanged sentences

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

The Company recognized $ 3.6 million and $ 10.2 million of collaboration revenue for the three and nine months ended September 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

Three Months Ended September 30, 2023

Nine Months Ended September 30, 2023

Balance at the beginning of the period

2 unchanged sentences

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.

As of September 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 1.25 years.

Government assistance programs

5 unchanged sentences

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.

The Company’s obligations under the OTA agreement with the DoD were completed.

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 $ 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

$ 0.2 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.

The Company recorded contra-research and development expense related to the OTA Agreement of $ 0.0 million and $ 0.6 million for the three and nine months ended September 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 nine months ended September 30, 2023.

Prepaid expenses and other assets

1 unchanged sentence

(in thousands)

June 30, 2023

September 30, 2023

December 31, 2022

Prepaid subscriptions and service contracts

Prepaid insurance

CARES Act employee retention credit receivable

Research and development advance payments

CARES Act employee retention credit receivable

Prepaid insurance

Accrued expenses and other liabilities

1 unchanged sentence

(in thousands)

June 30, 2023

September 30, 2023

December 31, 2022

Research and development

Professional fees

Compensation and related benefits

Professional fees

Short-term operating lease liability and other liabilities

Deferred research obligations

Commitments and contingencies

6 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 and six months ended June 30, 2023 and 2022, respectively.

The Company made matching contributions of $ 0.1 million and $ 0.2 million to the 401(k) Plan for the three and nine months ended September 30, 2023.

The Company made matching contributions of $ 0.1 million and $ 0.2 million to the 401(k) Plan for the three and nine months ended September 30, 2022.

Legal proceedings

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

The Company is not a party to any material litigation and does not have material 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.

3 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 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.

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

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

Whitehead Letter Agreement

3 unchanged sentences

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.

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.

The Company leases office and laboratory space for approximately 11,000 square feet of space in Exton, Pennsylvania.

The lease includes certain options to extend.

In August 2023, the Company extended the existing lease term until March 2025.

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

June 30, 2023

September 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

General and administrative

1 unchanged sentence

Total lease expense

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

Other operating lease information as of September 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):

Six Months Ended June 30,

Nine Months Ended September 30,

Cash paid for operating lease liability

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

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

Years ending December 31,

2023 (represents remaining six months in 2023)

2023 (represents remaining three months in 2023)

Total lease payments

7 unchanged sentences

Warrants to acquire shares of common stock

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

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

Warrants Outstanding

3 unchanged sentences

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.

No warrants were exercised during the three and nine months ended September 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 June 30, 2023, there were 1,236,420 shares available for future issuance under the 2020 Plan.

On September 29, 2023, the number of shares available for future issuance under the 2020 Plan increased by 2,955,280 shares.

As of September 30, 2023, there were 4,205,361 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 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.

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

No shares of common stock have been issued under the ESPP as of September 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.

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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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Research and development

General and administrative

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.

Unrecognized compensation cost related to unvested options and restricted stock awards was $ 7.4 million as of September 30, 2023 and will be recognized over an estimated weighted average period of 1.2 years.

Stock options

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

Six Months Ended June 30,

Nine Months Ended September 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 six months ended June 30, 2023 was as follows:

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

exercise price

Outstanding at January 1, 2023

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.

Outstanding at September 30, 2023

Exercisable at September 30, 2023

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

The aggregate intrinsic value for options exercisable at September 30, 2023 was $ 6.7 million.

The aggregate intrinsic value of stock options outstanding at September 30, 2023 was $ 11.2 million.

The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2023 was $ 0.1 million.

Restricted stock awards

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

Subsequent events

The Merger with Morphimmune

On October 2, 2023 the Company closed the Merger transaction contemplated by the Merger Agreement.

As a result of the Merger, the Company acquired 100 % of the outstanding equity interests of Morphimmune through the issuance of 8,835,710 shares of the Company’s common stock to Morphimmune stockholders, based upon an exchange ratio of 0.3042 shares of the Company’s common stock for each outstanding share of Morphimmune capital stock.

Upon completion of the Merger, 8,128,096 options to purchase shares of Morphimmune capital stock were converted into 2,472,567 options to purchase shares of the Company’s common stock with a weighted average exercise price of

$ 1.29 per share.

All other terms and conditions associated with these options, including vesting and exercisability are governed by the original terms and conditions of Morphimmune’s legacy equity plan.

The Company will account for the acquisition of Morphimmune as an asset acquisition as substantially all of the fair value of the gross assets acquired of Morphimmune is concentrated within two programs that 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.

Under the asset acquisition method of accounting, the assets acquired and liabilities assumed are recognized and measured at fair value and no goodwill is recorded or recognized.

Acquired IPR&D that has no future alternative use is expensed at the time of acquisition.

Sale of Common Stock

On June 28, 2023, in connection with the Merger Agreement, the Company entered into subscription agreements with certain investors pursuant to which the Company would sell shares of its common stock, immediately following the completion of the Merger, in exchange for gross proceeds of $ 125.0 million.

Immediately following the completion of the Merger, the Company sold 21,690,871 shares of its common stock pursuant to the subscription agreements.

The Company recognized net proceeds of $ 125.0 million from this PIPE transaction, $61.0 million of which was received on or prior to September 30, 2023 and recorded as a deposit liability in the accompanying condensed balance sheets as of September 30, 2023.

The deposit liability was subsequently reclassified to stockholders’ equity upon completion of the sale of common stock in October 2023.

Termination of Chief Executive Officer

In accordance with the terms of the Merger Agreement, the Company’s CEO resigned as a board member, officer and employee of the Company.

Upon termination, 162,083 options immediately vested and the related unamortized stock-based compensation expense was immediately recognized.

In addition, the CEO was eligible to receive approximately $ 1.0 million in termination benefits comprised of salary, bonus and related benefits and were recognized at the time of termination.

Stock Options Granted for New Chief Executive Officer

On June 28, 2023 and contingent upon completion of the Merger, the Company entered into an employment agreement with Dr.

Clay Siegall, the President and CEO of Morphimmune, whereby Dr.

Siegall was granted 2,137,080 options to purchase shares of the Company’s common stock at an initial exercise price of $ 5.91 per share.

The options vest over time during Dr.

Siegall’s continued employment, which commenced on October 2, 2023, in connection with the closing of the Merger, to which 25 % of the options granted will vest after one year of employment with Immunome and the remaining 75 % of the options granted will vest monthly over the remaining 36 months following the one year anniversary, subject to acceleration in certain circumstances.

The estimated grant date fair value of Dr.

Siegall’s award was $ 9.6 million or $ 4.49 per share.

New Lease Agreement

In October 2023, the Company entered into a lease in Bothell, Washington.

The lease has a five-year term.

Board of Directors Stock Options Exercise Period Extension

In October 2023, the stock options held by directors who resigned in connection with the Merger were amended so that:

(a) the post-termination exercise period was extended to one year and (b) the vesting of all unvested shares was accelerated.

Open Market Sale Agreement, or the ATM Agreement

On November 8, 2023, the Company provided notice of termination of the ATM Agreement to Jefferies.

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