What changed in this filing

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Item 1A. Risk Factors

2024-11-13 compared with 2024-08-12 · 37 added, 55 removed, 1328 unchanged (6% of the section changed)

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Since our inception, we have devoted substantially all of our resources to research and development, raising capital, pursuing strategic transactions, building our management team and building our intellectual property portfolio, and we have incurred significant operating losses.

As of June 30, 2024, we had an accumulated deficit of $388.4 million.

Our net loss for the year ended December 31, 2023 was $106.8 million and $165.6 million for the six months ended June 30, 2024.

As of September 30, 2024, we had an accumulated deficit of $435.5 million.

Our net loss for the year ended December 31, 2023 was $106.8 million and $212.7 million for the nine months ended September 30, 2024.

To date, we have not generated any revenue from product sales, and we have not identified or sought or obtained regulatory approval for the marketing or sale of any product.

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In addition, we incur additional costs associated with operating as a public company.

Based on our current operating plan, we expect that our existing cash, cash equivalents and marketable securities as of June 30, 2024 will enable us to fund our current and planned operating expenses and capital expenditures for at least 12 months from the filing date of this Quarterly Report on Form 10-Q.

Based on our current operating plan, we expect that our existing cash, cash equivalents and marketable securities as of September 30, 2024 will enable us to fund our current and planned operating expenses and capital expenditures for at least 12 months from the filing date of this Quarterly Report on Form 10-Q.

Our future capital requirements and the period for which we expect our existing resources to support our operations may vary significantly from what we expect.

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The IM-3050 program is subject to risks described above as well as others that may include:

● interruptions to our ability to obtain sufficient supply of Lu-177 for our preclinical needs and potential future clinical and commercial needs;

● we may not be able to find suitable vendors, including contract research organizations, or CROs and clinical manufacturing organizations, for our development due to the limited number of suppliers qualified to work with radioactive material, or we may develop sole-source relationships with vendors, which may present additional risks inherent to a sole-source relationship;

● interruptions to our ability to obtain and deliver on a timely basis sufficient supply of raw materials, isotopes and clinical trial materials for our preclinical needs and potential future clinical and commercial needs;

● we may not be able to find and retain suitable vendors, including contract research organizations, or CROs and clinical manufacturing organizations, for our development due to the limited number of suppliers qualified to work with radioactive material, or we may develop sole-source relationships with vendors, which may present additional risks inherent to a sole-source relationship;

● if we initiate a clinical trial, our ability to recruit patients may be negatively impacted by the limited number of sites that can administer radioligand therapies;

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A number of pharmaceutical companies have suffered significant setbacks in advanced clinical trials due to lack of efficacy or safety profiles, notwithstanding promising results in earlier trials.

In addition, AL102's prior development was not conducted by us, and we did not conduct any of the preclinical studies for the ROR1 ADC that we in-licensed from Zentalis.

In addition, AL102's prior development was not conducted by us, and we did not conduct any of the preclinical studies for the ROR1 ADC that we initially in-licensed from Zentalis and subsequently acquired from Zentalis in October 2024.

As a result, our assumptions about the potential of these programs are based in large part on the data generated in preclinical studies and clinical trials conducted by these third parties.

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In December 2023, Eli Lilly and Company acquired POINT Biopharma, which is developing a FAP-targeted radioligand therapy (PNT2004) that is currently in Phase 1.

Yantai LNC Biotechnology has also initiated a Phase 1 trial for another FAP-targeted radioligand therapy (LNC1004.) Additionally, our IM-3050 program faces competition from competitors who may have superior access to a consistent supply of radioactive isotopes.

In January 2023, we exclusively licensed a preclinical ROR1 ADC program from Zentalis with the potential to address hematologic and solid tumor indications.

Yantai LNC Biotechnology has also initiated a Phase 1 trial for another FAP-targeted radioligand therapy (LNC1004.) Perspective Therapeutics lead pre-clinical candidate is a FAP- targeted radiopharmaceutical (RPT), PSV 359, with a Phase I expected in 2025.

Additionally, our IM-3050 program faces competition from competitors who may have superior access to a consistent supply of radioactive isotopes.

In January 2023, we exclusively licensed a preclinical ROR1 ADC program from Zentalis with the potential to address hematologic and solid tumor indications, and acquired this program in October 2024.

There are several other companies developing antibodies, ADCs, and CAR-T therapies targeting ROR1, and they may represent the most direct competition to our ROR1 ADC program.

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has an ADC program in a Phase I trial.

Companies advancing clinical ROR1-CAR T therapy programs include Octernal Therapeutics (ONCT-808) in a Phase 1/2 in B-cell malignancies, and Lyell Immunopharma (LYL797) in a Phase 1 trial.

Lyell Immunopharma has a pre-clinical CAR-T program (LYL119).

Many of our competitors have significantly greater financial resources and expertise in research and development, manufacturing, performing preclinical studies, conducting clinical studies, integrating assets into their portfolio, obtaining regulatory approvals and marketing approved products than we have.

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If such post-approval studies fail to confirm the drug’s clinical benefit or are not completed in a timely manner, the FDA may withdraw its approval of the drug on an expedited basis.

In addition, in December 2022, President Biden signed an omnibus appropriations bill to fund the U.S.

government through fiscal year 2023.

Included in the omnibus bill is the Food and Drug Omnibus Reform Act of 2022, which among other things, provided FDA new statutory authority to mitigate potential risks to patients from continued marketing of ineffective drugs previously granted accelerated approval.

Under these provisions, the FDA may require a sponsor of a product seeking accelerated approval to have a confirmatory trial underway prior to such approval being granted.

In addition, the FDA may require a sponsor of a product seeking accelerated approval to have a confirmatory trial underway prior to such approval being granted.

Prior to seeking accelerated approval for any of our product candidates, we intend to seek feedback from the FDA and will otherwise evaluate our ability to seek and receive accelerated approval.

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Additionally, starting in payment year 2026, CMS will begin to reimburse negotiated drug prices annually for a select number of single source Part D drugs without generic or biosimilar competition.

On August 29, 2023, the list of the first 10 drugs that will be subject to price negotiations was published, although the Medicare drug price negotiation program is currently subject to legal challenges.

On August 15, 2024, CMS announced the agreed-upon reimbursement prices of the first ten drugs that were subject to price negotiations, although the Medicare drug price negotiation program is currently subject to legal challenges.

CMS will select up to fifteen additional drugs covered under Part D for price negotiation in 2025.

CMS will also negotiate drug prices for a select number of Part B drugs starting for payment year 2028.

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Under the BPCIA, an application for a biosimilar biological product cannot be approved by the FDA until 12 years after the original reference biological product was approved under a BLA.

The law is complex and is still being interpreted and implemented by the FDA.

As a result, its ultimate impact, implementation, and meaning are subject to uncertainty.

While it is uncertain when such processes intended to implement BPCIA may be fully adopted by the FDA, any such processes could have a material adverse effect on the future commercial prospects for our programs and development candidates.

We believe that any of our development candidates approved as a biological product under a BLA should qualify for the 12-year period of exclusivity available to reference biological products.

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government, which could potentially impact services available for our research and development or our ability to secure the materials we need for our development candidates.

For example, the recently proposed BIOSECURE Act introduced in the U.S.

For example, the BIOSECURE Act recently passed in the U.S.

House of Representatives, as well as a substantially similar bill in the U.S.

Senate, target U.S.

government contracts, grants, and loans for entities that use equipment and services from certain named Chinese biotech companies, and authorize the U.S.

government contracts, grants, and loans for entities that use equipment and services from certain named Chinese biotech companies, and would authorize the U.S.

government to name additional Chinese biotechnology companies of concern.

If these bills become law, or similar laws are passed, they would have the potential to severely restrict the ability of companies to work with certain Chinese biotechnology companies of concern without losing the ability to contract with, or otherwise receive funding from, the U.S.

The current version of the BIOSECURE Act includes a grandfathering provision allowing biotechnology equipment and services provided or produced by named biotechnology companies of concern under a contract or agreement entered into before the effective date until January 1, 2032.

Depending on whether the BIOSECURE Act becomes law, what the final language of the BIOSECURE Act includes, and how the law is interpreted by U.S.

federal agencies, we could be potentially restricted from pursuing U.S.

federal government business or funding if we use suppliers or partners identified as “biotechnology companies of concern” beyond the grandfathering period.

Such disruption could have adverse effects on our research and development activities.

In addition to the BIOSECURE Act, any additional U.S.

executive action, legislative action, or potential sanctions with China could materially impact our business and activities.

executive agencies have the ability to designate entities and individuals on various governmental prohibited and restricted parties lists.

Depending on the designation, potential consequences can range from a comprehensive prohibition on all transactions or dealings with designated parties, or a limited prohibition on certain types of activities, such as exports and financing activities, with designated parties.

If we are unable to obtain or maintain third-party manufacturing for any program or development candidate, or to do so on commercially reasonable terms, we may not be able to complete our development and commercialization efforts successfully.

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Additionally, sensitive data of the Company could be leaked, disclosed, or revealed as a result of or in connection with the use of generative AI technologies by our employees, our personnel, or third parties with whom we work.

Our current laboratory operations are concentrated in two locations, and we or the third parties upon whom we depend may be adversely affected by natural or other disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.

Our current business operations are concentrated in the greater Seattle and Philadelphia areas.

Our current laboratory operations are concentrated in one location, and we or the third parties upon whom we depend may be adversely affected by natural or other disasters and our business continuity and disaster recovery plans may not adequately protect us from a serious disaster.*

Our current business operations are concentrated in the greater Seattle area.

Any unplanned event, such as flood, fire, explosion, extreme weather condition, medical epidemics, including any potential effects from a pandemic, such as power shortage, telecommunication failure or other natural or manmade accidents or incidents that result in us being unable to fully utilize our facilities or the manufacturing facilities of our third-party contract manufacturers, or lose our repository of blood-based and other valuable laboratory samples, may have a material and adverse effect on our ability to operate our business, particularly on a daily basis, and have significant negative consequences on our financial and operating conditions.

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If a natural disaster, power outage or other event occurred that prevented us from using all or a significant portion of our locations, that damaged critical infrastructure, such as our research facilities or the manufacturing facilities of our third-party contract manufacturers, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time.

In addition, terrorist acts or acts of war targeted at the United States, and specifically the greater Seattle and Philadelphia areas, could cause damage or disruption to us, our employees, facilities, partners and suppliers.

In addition, terrorist acts or acts of war targeted at the United States, and specifically the greater Seattle area, could cause damage or disruption to us, our employees, facilities, partners and suppliers.

The disaster recovery and business continuity plan we have in place may prove inadequate in the event of a serious disaster or similar event.

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It is difficult and costly to protect our intellectual property and our proprietary technologies, and we may not be able to ensure their protection.*

Our success will depend in part on obtaining and maintaining patent protection and trade secret protection for our discovery and ADC platforms and targeted therapeutics, as well as on successfully defending these patents against potential third-party challenges.

Our success will depend in part on obtaining and maintaining patent protection and trade secret protection for our discovery and ADC platforms and/or targeted therapeutics, as well as on successfully defending these patents against potential third-party challenges.

Our ability to protect our technologies from unauthorized making, using, selling, offering to sell or importing by third parties is dependent on the extent to which we have rights under valid and enforceable patents that cover these activities.

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The risks described elsewhere pertaining to our intellectual property rights also apply to the intellectual property rights that we may own or in-license now or in the future, and any failure by us or our licensors to obtain, maintain, defend and enforce these rights could have an adverse effect on our business.

In some cases we may not have control over the prosecution, maintenance or enforcement of the patents that we license, and may not have sufficient ability to provide input into the patent prosecution, maintenance and defense process with respect to such patents, and potential future licensors may fail to take the steps that we believe are necessary or desirable in order to obtain, maintain, defend and enforce the licensed patents.

In some cases we may not have control over the prosecution, maintenance, defense or enforcement of the patents that we license, and may not have sufficient ability to provide input into the patent prosecution, maintenance and defense process with respect to such patents, and potential future licensors may fail to take the steps that we believe are necessary or desirable in order to obtain, maintain, defend and enforce the licensed patents.

If we fail to comply with our obligations under any license, collaboration or other intellectual property-related agreements, we may be required to pay damages and could lose intellectual property rights that may be necessary for developing, commercializing and protecting our current or future targeted therapeutics, or we could lose certain rights to grant sublicenses.*

We are reliant upon in-licenses to certain patent rights and proprietary technologies from third parties that are or may become important or necessary to our discovery and ADC platforms or targeted therapeutics pipeline.

Our current license agreements impose, and any future license agreements we enter into are likely to impose, various development, commercialization, funding, milestone, royalty, diligence, sublicensing, insurance, patent prosecution, and enforcement or other obligations on us.

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Risks Related to Our Business Operations and Industry

We may be unable to successfully integrate the Immunome and Morphimmune businesses and realize the anticipated benefits of the Merger.

The completed transaction involved the merger of two companies which previously operated as independent companies.

We will be required to devote significant management attention and resources to integrating our business practices and operations with those of Morphimmune in order to effectively realize synergies as a combined company, including leveraging anticipated synergies across technology platforms.

Potential difficulties we may encounter in the integration process include the following:

● the inability to successfully combine the two businesses in a manner that permits us to realize the technology platform synergies anticipated to result from the Merger, which would result in the anticipated benefits of the Merger not being realized in the time frame currently anticipated or at all;

● the complexities associated with managing the larger combined businesses and integrating personnel from the two companies, while at the same time attempting to (i) continue pursuing preclinical and clinical development of existing development candidates, (ii) researching and developing new development candidates based on each company’s respective platforms, and (iii) identifying and pursuing other potential strategic transactions or collaborations;

● the additional complexities of combining two companies with different histories, operating structures and technology foundations;

● the complexities associated with and integration issues relating to reconstituting our board of directors and changing our management team;

● the failure to successfully manage relationships with the combined supplier and vendor bases of the two companies;

● the failure to retain key employees of either of the two companies;

● potential unknown liabilities and unforeseen increased expenses, delays or regulatory conditions associated with the Merger;

● performance shortfalls at one or both of the two companies as a result of the diversion of management’s attention caused by completing the Merger and integrating the companies’ operations.

For all these reasons, it is possible that the integration process could result in the distraction of our management, the disruption of our ongoing business or inconsistencies in our standards, controls, procedures and policies, any of which could adversely affect our ability to maintain relationships with current and potential future vendors, regulators, collaboration partners, and employees or to achieve the anticipated benefits of the Merger, or could otherwise adversely affect our business and financial results.

Any inability to attract and retain qualified key management, technical personnel and employees would impair our ability to implement our business plan.*

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We face competition for personnel from other companies, universities, public and private research institutions, government entities and other organizations.

As of June 30, 2024, we had 78 full-time employees.

As of September 30, 2024, we had 105 full-time employees.

The continued operation of our business and execution of our plans will require material additional staffing within the next twelve months.

We cannot provide assurance that we will be able to hire or retain adequate staffing levels to advance our discovery and ADC platforms, develop our programs or development candidates or run our operations or to accomplish our objectives.

We expect to continue to incur substantial expenses related to the completed Merger.

We expect to continue to incur substantial expenses in connection with the completed Merger and the related integration of businesses, operations, networks, systems, technologies, policies and procedures.

While we have assumed that a certain level of transaction and integration expenses would be incurred, there are a number of factors beyond our control that could affect the total amount or the timing of our integration expenses.

Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time.

Due to these factors, the transaction and integration expenses could be greater or could be incurred over a longer period of time than we currently expect.

We may experience difficulties in managing our growth and expanding our operations.

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In connection with the closing of the public offering, we issued and sold 11,500,000 shares of our common stock.

We issued 2,298,586 shares to Zentalis in connection with the Zentalis License Agreement and 2,175,489 shares to Ayala in connection with the Ayala Asset Purchase Agreement, both of which are registered for resale on a Form S-3 filed with the SEC in April 2024.

The shares issued to Zentalis and Ayala are subject a to (i) a six-month lock-up with respect to half of the shares and (ii) an orderly market disposition.

We issued 2,298,586 shares to Zentalis in connection with the Zentalis License Agreement, 2,175,489 shares to Ayala in connection with the Ayala Asset Purchase Agreement and 230,415 shares to BMS in connection with the BMS License Agreement Amendment, all of which are registered for resale on Forms S-3 filed with the SEC in April 2024 and October 2024.

In October 2024, we also issued 1,805,502 shares to Zentalis as consideration for the Zentalis Asset Purchase, and we agreed to use commercially reasonable efforts to register the shares for resale within 30 days of the closing of the Zentalis Asset Purchase, The shares issued to Zentalis and Ayala are subject a to (i) a six-month lock-up with respect to half of the shares and (ii) an orderly market disposition.

Notwithstanding these contractual protections, any sales of these shares may cause our stock price to fall.

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Such sales may also result in material dilution to our existing stockholders, and new investors could gain rights, preferences and privileges senior to the holders of our common stock.

Pursuant to our 2020 Equity Incentive Plan, or 2020 Plan, our management is authorized to grant stock options to our employees, directors and consultants.

The aggregate number of shares of our common stock that may be issued pursuant to stock awards under our 2020 Plan shall not exceed 8,080,286 shares.

Pursuant to our 2020 Equity Incentive Plan, or 2020 Plan, our board of directors or committee thereof or, in accordance with applicable law, designated members of management are authorized to grant stock options to our employees, directors and consultants.

In addition, pursuant to our 2024 Inducement Plan, our board of directors, or a committee thereof, is authorized to grant inducement awards to new hires as a material inducement to their employment with us.

The aggregate number of shares of our common stock that may be issued pursuant to stock awards under our 2020 Plan shall not exceed 8,080,286 shares, and the aggregate number of shares of our common stock that may be issued pursuant to stock awards under our 2024 Inducement Plan shall not exceed 2,000,000 shares.

Additionally, the number of shares of our common stock reserved for issuance under our 2020 Plan will automatically increase on January 1 of each year, beginning on January 1, 2021 and continuing through and including January 1, 2030, by 4% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by our board of directors.

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Additionally, pursuant to Morphimmune Inc.’s 2020 Equity Incentive Plan, or the Morphimmune Plan, the aggregate number of shares that may be issued pursuant to stock awards under the Morphimmune Plan is 2,429,630 shares.

We do not currently intend to issue any further awards under the Morphimmune Plan.

Although we did not initially anticipate issuing awards under the Morphimmune Plan, depending on our needs, we may in the future issue awards under the Morphimmune Plan.

We are an “emerging growth company” and our election of reduced reporting requirements applicable to emerging growth companies may make our common stock less attractive to investors.

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The United States and global economies are facing growing inflation, higher interest rates and potential recession.

Furthermore, a severe or prolonged economic downturn, including a recession or depression or political disruption such as the war between Ukraine and Russia and the conflicts in the Middle East, including the war between the State of Israel and Hamas, could result in a variety of risks to our business, including weakened demand for our development candidates, if approved, relationships with any vendors or business partners located in affected geographies and our ability to raise additional capital when needed on acceptable terms, if at all.

Furthermore, uncertainties associated with a severe or prolonged economic downturn, recessions or depressions, or political disruption such as the war between Ukraine and Russia and the conflicts in the Middle East, and other macroeconomic developments could result in a variety of risks to our business, including weakened demand for our development candidates, if approved, relationships with any vendors or business partners located in affected geographies and our ability to raise additional capital when needed on acceptable terms, if at all.

A weak or declining economy or political disruption, including any international trade disputes, could also strain our manufacturers or suppliers, possibly resulting in supply disruption, or cause our customers to delay making payments for our potential products.

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We may incur substantial costs to comply with, and substantial fines or penalties if we violate, any of these laws or regulations.

Unregistered Sales of Equity Securities and Use of Proceeds

Defaults Upon Senior Securities

Mine and Safety Disclosures

Not applicable.

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 1A. Risk Factors