What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-10 compared with 2022-05-10 · 90 added, 39 removed, 210 unchanged (38% of the section changed)

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As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

We aim to improve patient outcomes by advancing a unique pipeline of oncology and neuroscience product candidates developed using our translational bioinformatics platform.

We aim to improve patient outcomes by advancing a pipeline of product candidates designed to benefit large populations of patients with cancer and other diseases, developed using our translational bioinformatics platform.

We have more than a decade of experience applying translational bioinformatics to generate insights into drug mechanism of action and patient treatment response.

Building on this experience, our disease-agnostic discovery platform enables us to create product candidates based on 1) biological insights that are both counterintuitive and deeply rooted in data, and 2) novel chemistry.

Our lead product candidate IMM-1-104 is designed to be a highly selective dual-MEK inhibitor that further disrupts KSR to modulate the signaling dynamics of the MAPK pathway.

Specifically, it is designed to drive deep cyclic inhibition that deprives tumor cells of the sustained proliferative signaling required for rapid growth, while providing a cadenced, moderate level of signaling sufficient to spare healthy cells.

Our lead product candidate IMM-1-104 aims to achieve pan-KRAS/NRAS activity that selectively impacts cancer cells to a greater extent than healthy cells.

IMM 1-104 is designed to be a highly selective dual-MEK inhibitor that further disrupts KSR to modulate the signaling dynamics of the MAPK pathway by driving deep cyclic inhibition that deprives tumor cells of the sustained proliferative signaling required for rapid growth, while providing a cadenced, moderate level of signaling sufficient to spare healthy cells.

IMM-1-104 is being developed to treat advanced solid tumors in patients harboring RAS mutations, and is translationally guided by our proprietary, human-aligned 3D tumor modeling platform combined with patient-aligned bioinformatics.

In addition to IMM-1-104, IMM-6-415, our MEK-io product candidate, is in IND-enabling studies, and we have five other oncology programs in the discovery stage that are designed to target components of the MAPK or mTOR pathway, as well as two discovery stage neuroscience programs.

We plan to submit an Investigational New Drug application, or IND, for IMM-1-104 to the U.S.

In addition to IMM-1-104, we are evaluating our MEK-io product candidate, IMM-6-415, in IND enabling studies, and we have five other oncology programs in the discovery stage that are designed to target components of the MAPK or mTOR pathway, as well as two discovery stage neuroscience programs.

We plan to submit an IND, for IMM-1-104 to the U.S.

Food and Drug Administration, or the FDA, in the third quarter of 2022.

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BioArkive is a San Diego based contract research organization that has previously provided preclinical research services and biosample storage to us and other biotechnology companies.

BioArkive is in the process of being fully integrated into our operations so as to exclusively support our internal preclinical research activities for its oncology pipeline.

In connection with the acquisition, we has assumed the obligations under BioArkive’s three lease agreements.

BioArkive was fully integrated into our operations and exclusively supports our internal preclinical research activities for our oncology pipeline.

In connection with the acquisition, we have assumed the obligations under BioArkive’s three lease agreements.

The purchase price was paid by us through the issuance of an aggregate of 379,635 shares of our Class A common stock.

The number of shares of Class A common stock issued was calculated using a value based on the average of the daily volume weighted average prices of our Class A common stock on the Nasdaq Stock Exchange for the 30-trading day period ending on and including the trading day immediately prior to the closing date.

The sellers of BioArkive are restricted from selling these shares for a six month period from the date of the acquisition.

The sellers of BioArkive were restricted from selling these shares for a six month period from the date of the acquisition.

As such, we estimated that there was an approximate 10% discount for the lack of marketability of the shares.

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Since inception, we have had significant annual operating losses.

Our net loss was approximately $12.9 million, for the three months ended March 31, 2022 and $33.5 million for the year ended December 31, 2021.

As of March 31, 2022, we had an accumulated deficit of approximately $72.2 million and approximately $137.8 million in cash and cash equivalents and marketable securities.

Our net loss was approximately $24.4 million, for the six months ended June 30, 2022 and $33.5 million for the year ended December 31, 2021.

As of June 30, 2022, we had an accumulated deficit of approximately $83.7 million and approximately $128.1 million in cash and cash equivalents and marketable securities.

Cash used to fund operating expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our accounts payable and accrued expenses.

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If we are unable to raise capital, we will need to delay, reduce or terminate planned activities to reduce costs.

In March 2020, the World Health Organization declared the coronavirus (“COVID-19”) outbreak a pandemic and we are monitoring the ongoing impacts of the COVID-19 pandemic.

In March 2020, the World Health Organization declared the coronavirus (“COVID-19”) outbreak a pandemic and we continue to monitor the ongoing impacts of the COVID-19 pandemic.

We cannot presently predict the scope and severity of any future potential business shutdowns or disruptions, but if we or any of the third parties with whom we engage, including personnel at third-party manufacturing facilities and other third parties with whom we conduct business, were to experience shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timeline presently planned could be materially and adversely impacted.

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Results of Operations

Comparison of the Three Months Ended March 31, 2022 and 2021

Comparison of the Three Months Ended June 30, 2022 and 2021

The following table summarizes our results of operations for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands, except percentages)

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The following table summarizes the revenue recognized for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands, except percentages)

Revenue decreased by approximately $0.6 million, or 75.4%, to approximately $0.2 million for the three months ended March 31, 2022 compared to approximately $0.7 million for the three months ended March 31, 2021.

The decrease in revenue was due to approximately $0.6 million decrease in customers in the three months ended March 31, 2022 compared to March 31, 2021.

Revenue decreased by approximately $0.6 million, or 85.8%, to approximately $0.1 million for the three months ended June 30, 2022 compared to approximately $0.7 million for the three months ended June 30, 2021.

The decrease in revenue was due to approximately $0.6 million decrease in existing customers in the three months ended June 30, 2022 compared to June 30, 2021.

Cost of Revenue

Cost of revenue decreased by approximately $0.3 million, or 77.8%, to approximately $0.1 million for the three months ended March 31, 2022 compared to approximately $0.4 million for the three months March 31, 2021.

The decrease was primarily due to decreased employee-related costs of approximately $0.3 million.

Cost of revenue decreased by approximately $0.3 million, or 85.0%, to approximately $50 thousand for the three months ended June 30, 2022 compared to approximately $0.3 million for the three months June 30, 2021.

The decrease was primarily due to decreased employee-related costs of approximately $0.3 million related to services contracts.

Research and Development

The following table summarizes the components of our research and development expenses for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands, except percentages)

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Total research and development

Research and development expenses increased by approximately $3.7 million, or 68.0%, to approximately $9.1 million for the three months ended March 31, 2022 compared to approximately $5.4 million for the three months ended March 31, 2021.

The increase of approximately $3.7 million was primarily due to approximately $0.1 million of outside contract research services for our preclinical candidates resulting from an increased number of discovery programs and increased spending on later stage preclinical efforts.

The increase also includes approximately $1.7 million of additional employee-related costs, primarily due to an increase in headcount and approximately $0.3 million increase for equity-based compensation expense and an increase of $1.5 million for depreciation and facilities and other allocated expenses.

Research and development expenses increased by approximately $1.0 million, or 14.1%, to approximately $8.0 million for the three months ended June 30, 2022 compared to approximately $7.0 million for the three months ended June 30, 2021.

The increase of approximately $1.0 million was primarily due to approximately $1.2 million of additional employee-related costs, approximately $0.3 million increase for equity-based compensation expense, an increase of $1.0 million for facilities, depreciation and other allocated expenses offset by approximately $1.5 million decrease in outside contract research services for preclinical candidates due to savings in outside consultant costs that were related to BioArkive which are now incorporated in the employee and facility related costs.

General and Administrative

The following table summarizes the components of our general and administrative expenses for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands, except percentages)

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Professional fees

Public relations

Outside consultants

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Total general and administrative

General and administrative expenses increased by approximately $2.8 million, or 233.8%, to approximately $4.0 million for the three months ended March 31, 2022 compared to approximately $1.2 million for the three months ended March 31, 2021.

The increase of approximately $2.8 million was primarily due to increased employee-related costs of approximately $1.6 million, increased professional fees incurred for accounting, auditing, legal, public relations and tax services of approximately $0.4 million, increased facilities expenses of approximately $0.1 million, approximately $0.4 million increase in equity-based compensation expense and approximately $0.2 million in other expenses.

General and administrative expenses increased by approximately $2.4 million, or 176.3%, to approximately $3.7 million for the three months ended June 30, 2022 compared to approximately $1.3 million for the three months ended June 30, 2021.

The increase of approximately $2.4 million was primarily due to an increase in employee-related costs and equity-based compensation expense of approximately $1.9 million, increased facilities and allocated expenses of approximately $0.3 million, increased professional fees for accounting, auditing and legal of $0.1 million and approximately $0.1 million in other expenses as a result of the Company becoming a public company in the third quarter of 2021.

Amortization of Intangible Asset

Amortization of intangible asset of $8,103 in the three months ended March 31, 2022 related to the technology acquired in the BioArkive acquisition completed in December 2021.

Amortization of intangible asset of $7,317 in the three months ended June 30, 2022 is related to the technology acquired for the BioArkive acquisition completed in December 2021.

Other Income (expense)

Interest income increased by approximately $0.1 million due to the interest earned on our cash and cash equivalents and marketable securities balances due to the higher balances as a result of the IPO proceeds.

Other expense increased by $0.1 million as a result of the amortization of premiums related to our marketable securities.

Other expense increased by $127,000 as a result of the increase in the amortization of premiums related to our marketable securities.

Comparison of the Six Months June 30, 2022 and 2021

The following table summarizes our results of operations for the periods indicated:

Six Months Ended June 30,

(in thousands, except percentages)

Cost of revenue

Operating expenses

Research and development

General and administrative

Amortization of intangible asset

Total operating expenses

Loss from operations

Other income (expense)

Interest income

Other income (expense)

The following table summarizes the revenue recognized for the periods indicated:

Six Months Ended June 30,

(in thousands, except percentages)

Revenue decreased by approximately $1.1 million, or 80.3%, to approximately $0.3 million for the six months ended June 30, 2022 compared to approximately $1.4 million for the six months ended June 30, 2021.

The decrease in revenue was due to the decrease and wind down of the numbers and scope of customer agreements in 2022 compared to 2021.

Costs of Revenue

Cost of revenue decreased by approximately $0.6 million, or 80.9%, to approximately $0.1 million for the six months ended June 30, 2022 compared to approximately $0.7 million for the six months ended June 30, 2021.

The decrease was primarily due to decreased employee related costs as a result of the wind down of the customer agreements in 2022 compared to 2021.

Research and Development

The following table summarizes the components of research and development expenses for the periods indicated:

Six Months Ended June 30,

(in thousands, except percentages)

Employee related costs

Equity-based compensation expense

Outside contract research services

Facilities and other allocated expenses

Total research and development

Research and development expenses increased by approximately $4.6 million, or 37.5%, to approximately $17.0 million for the six months ended June 30, 2022 as compared to approximately $12.4 million for the year ended June 30, 2021.

The increase of approximately $4.6 million was primarily due to an increase of approximately $3.6 million related to additional employee related costs, primarily due to higher headcount and increased equity-based compensation, facilities and other allocated expense of approximately $2.5 million.

Increases in research and development are partially offset by a decrease of $1.5 million in outside contract research services for preclinical candidates which is due to savings in outside consultant costs that were related to BioArkive which are now incorporated in the employee and facility related costs.

General and Administrative

The following table summarizes the components of general and administrative expenses for the periods indicated:

Six Months Ended June 30,

(in thousands, except percentages)

Employee related costs

Equity-based compensation expense

Professional fees

Outside consultants

Facilities and other allocated expenses

Total general and administrative

General and administrative expenses increased by approximately $5.1 million, or 203.6%, to approximately $7.6 million for the six months ended June 30, 2022 compared to approximately $2.5 million for the six months ended June 30, 2021 as a result of the Company becoming a public company in third quarter of 2021.

The increase of approximately $5.1 million was primarily due to increased employee related costs and equity-based compensation expense of approximately

$3.9 million, increased professional fees incurred for accounting, auditing, legal, and tax services of approximately $0.3 million, increase of $0.7 million for facilities and other allocated expense, increase of $0.2 million in other expenses.

Amortization of Intangible Asset

Amortization of intangible asset of $15,420 in the six months ended June 30, 2022 is related to the technology acquired for the BioArkive acquisition completed in December 2021.

Other Income (Expense), Net

Interest income increased by approximately $0.3 million due to the interest earned on our cash and cash equivalents and marketable securities balances due to the higher balances as a result of the IPO proceeds.

Other expense increased by $0.1 million as a result of the increase in the amortization of premiums related to our marketable securities.

Liquidity and Capital Resources

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Since our inception, we have financed our operations through service revenues, the issuance of convertible notes payable, convertible preferred stock, common stock, and the exercise of stock options.

As of March 31, 2022, we had an accumulated deficit of $72.2 million and $137.8 million in cash and cash equivalents and marketable securities.

As of June 30, 2022, we had an accumulated deficit of $83.7 million and $128.1 million in cash and cash equivalents and marketable securities.

Cash and cash equivalents are comprised of deposits at major financial banking institutions and highly liquid investments with an original maturity of three months or less at the date of purchase.

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We received aggregate net proceeds of approximately $120.3 million from the IPO, after deducting underwriting discounts and commissions, but before deducting offering costs payable by us, which were $2.1 million.

As of March 31, 2022, we have contractual obligations related to various leases of $0.5 million for 2022, $0.8 million for 2023, $0.7 million for 2024, $0.7 million for 2025, $0.8 million for 2026 and $4.5 million for the periods thereafter.

As of June 30, 2022, we have contractual obligations related to various leases of $0.3 million for 2022, $0.8 million for 2023, $0.7 million for 2024, $0.7 million for 2025, $0.8 million for 2026 and $4.5 million for the periods thereafter.

We have no off-balance sheet arrangements that have a material current effect or that are reasonably likely to have a material future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

The following table summarizes our sources and uses of cash for the periods indicated:

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands)

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Financing activities

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Net Cash Used in Operating Activities

During the three months ended March 31, 2022, operating activities used approximately $12.3 million of cash, primarily resulting from our net loss of approximately $12.9 million and cash provided by changes in our operating assets and liabilities of approximately $0.4 million, partially offset by equity-based compensation expense of approximately $0.6 million.

During the three months ended March 31, 2021, operating activities used approximately $6.1 million of cash, primarily resulting from our net loss of approximately $6.2 million and cash used by changes in our operating assets and liabilities of approximately $0.1 million, partially offset by equity-based compensation expense of approximately $0.2 million.

During the six months ended June 30, 2022, operating activities used approximately $21.7 million of cash, primarily resulting from our net loss of approximately $24.4 million, partially offset by right-of-use asset amortization of $0.3 million and equity-based compensation expense of approximately $2.0 million.

During the six months ended June 30, 2021, operating activities used approximately $12.6 million of cash, primarily resulting from our net loss of approximately $14.2 million partially offset by cash provided by changes in our operating assets and liabilities of approximately $1.0 million, and equity-based compensation expense of approximately $0.5 million.

Net Cash Provided by (Used in) Investing Activities

During the three months ended March 31, 2022, investing activities provided approximately $12.4 million of cash, primarily resulting from the maturities of marketable securities of approximately $20.5 million, offset by purchases of marketable securities for $8.0 million and purchases of property and equipment of $0.1 million.

During the three months ended March 31, 2021, investing activities used is the $16,564, resulting from purchases of property and equipment.

During the six months ended June 30, 2022, investing activities provided approximately $34.6 million of cash, primarily resulting from the maturities of marketable securities of approximately $52.8 million, partially offset by purchases of marketable securities for $18.0 million and purchases of property and equipment of $0.3 million.

During the six months ended June 30, 2021, cash used in investing was $36,388, resulting from purchases of property and equipment.

Net Cash Provided by Financing Activities

During the three months ended March 31, 2022, net cash provided by financing activities was approximately $0.2 million, consisting of approximately $0.2 million from the exercise of stock options.

During the three months ended March 31, 2021, there was no net cash provided by financing activities.

During the six months ended June 30, 2022, net cash provided by financing activities was approximately $0.2 million, consisting of approximately $0.2 million from the exercise of stock options.

During the six months ended June 30, 2021, net cash provided by financing activities was approximately $25.8 million, consisting primarily of approximately $24.8 million in net proceeds received from the issuance of Series B preferred stock and approximately $1.0 million in net proceeds from the exercise of warrants and approximately $52,627 from the exercise of stock options.

Future Funding Requirements

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This provision allows an EGC to delay the adoption of some accounting standards until those standards would otherwise apply to private companies.

We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.

We have elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies

until the earlier of the date we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act.

As a result, our condensed consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis