What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-03-06 compared with 2022-03-10 · 100 added, 100 removed, 189 unchanged (51% of the section changed)

4 unchanged sentences

‘‘Risk Factors’’ of this Annual Report on Form 10-K, 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 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.

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, we have six 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.

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

In addition, we plan to submit an IND for IMM-6-415 to the FDA in 2023.

We anticipate filing at least one additional IND for our other oncology programs in 2024.

We are a clinical-stage oncology company developing medicines for broad populations of cancer patients.

Our initial aim is to develop a universal-RAS therapy, an approach designed to include patients with solid tumors driven by any mutation in KRAS, NRAS, or HRAS.

Our inclusive approach differentiates us from narrowly targeted precision therapies, which are limited to patients with tumors harboring select mutations.

We are currently evaluating our lead product candidate, IMM-1-104, in a Phase 1/2a clinical trial in patients with advanced solid tumors harboring RAS mutations.

IMM-1-104 is being developed as a once-daily oral monotherapy that aims to achieve universal-RAS activity through deep cyclic inhibition of the MAPK pathway.

Deep cyclic inhibition is a novel approach that aims to deprive tumor cells of the sustained proliferative signaling required for rapid growth, while sparing healthy cells through a cadenced, normalized level of signaling.

This cyclic inhibition was engineered using our proprietary informatics-based discovery platform.

The development of our pipeline is translationally guided by our

proprietary, human-aligned 3D tumor modeling platform that we combine with bioinformatics-driven patient profiling, which we believe has the potential to increase the probability of success in clinical development versus traditional drug development approaches.

Our second product candidate, IMM-6-415, aims to achieve universal-MAPK activity with an accelerated twice-daily oral dosing cadence, also through deep cyclic inhibition of the MAPK pathway.

IMM-6-415 is currently in Investigational New Drug application, or IND, enabling studies.

Our pipeline also includes Trifecta MEK, RAS modulators, and other small molecule drug discovery programs.

In November 2022, we commenced dosing in our Phase 1/2a clinical trial of IMM-1-104 for the treatment of advanced RAS mutant solid tumors.

The Phase 1/2a clinical trial is designed to assess the safety, tolerability, pharmacokinetics, or PK, pharmacodynamics, or PD, and preliminary anti-tumor activity of IMM-1-104.

The Phase 1 portion of the clinical trial includes a dose escalation and expansion portion and will evaluate IMM-1-104 using a Bayesian modified toxicity probability interval, or mTPI-2, statistical design to establish an optimized recomm ended Phase 2 dose in solid tumor patients with evidence of any RAS mutation.

The planned Phase 2a portion will evaluate IMM-1-104 at the recommended Phase 2 dose in an expanded cohort of solid tumor patients with certain RAS mutated cancers, including potentially pancreatic, melanoma, colorectal and lung.

IMM-1-104 is currently in the dose escalation portion of the trial.

We anticipate reporting initial PK and safety data from Phase 1 portion of the clinical trial in mid-2023, and additional safety and PK and initial PD modeling data in the second half of 2023.

Subject to results from the Phase 1 portion of the trial, including safety and tolerability data, we anticipate initiating the Phase 2a portion of the trial in mid-2024.

In addition, we plan to submit an IND, for IMM-6-415 to the U.S.

Food and Drug Administration, or FDA, in the fourth quarter of 2023.

In February 2023, we suspended our neuroscience programs, which was in the early stages of drug discovery, in order to focus on advancing our core oncology pipeline.

For the period from inception through 2017, we devoted substantially all of our efforts to business planning, service revenue generation, developing tools to aid in drug discovery, and recruiting management and technical staff.

1 unchanged sentence

We have financed our operations through service revenues, the issuance of convertible debt and the sale of convertible preferred stock and common stock.

On December 22, 2021, the Company completed the acquisition of all outstanding shares of capital stock of BioArkive, Inc., a California corporation (“BioArkive”) for a market value of $8.75 million.

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

BioArkive is in the process of being fully integrated into the Company to exclusively support the Company's internal preclinical research activities for its oncology pipeline.

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

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

The number of shares of common stock issued was calculated using a value based on the average of the daily volume weighted average prices of the 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 6 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.

The fair value of the purchase price in the acquisition has been preliminarily estimated to be $7.88 million.

Our operations have been financed primarily by service revenues and aggregate net proceeds of approximately $81.4 million from the issuance of convertible notes payable, convertible preferred stock (Series A and B) including gross proceeds of approximately $24.8 million from the issuance of shares in the second tranche of Series B Preferred in April and May 2021, common stock, exercise of stock options.

On December 22, 2021, we completed the acquisition of all outstanding shares of capital stock of BioArkive, Inc., a California corporation (“BioArkive”) for a market value of $8.75 million.

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

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

On August 3, 2021, we completed our IPO pursuant to which we issued and sold 8,625,000 shares of Class A common stock, inclusive of 1,125,000 shares sold by us pursuant to the full exercise of the underwriters’ option to purchase additional shares.

1 unchanged sentence

Since inception, we have had significant annual operating losses.

Our net loss was approximately $33.5 million, for the year ended December 31, 2021 and $17.0 million for the year ended December 31, 2020.

Our net loss was approximately $50.5 million and $33.5 million for the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, we had an accumulated deficit of approximately $109.8 million and approximately $105.5 million in cash and cash equivalents and marketable securities.

1 unchanged sentence

We expect to continue to incur net losses for the foreseeable future, and we expect our research and development expenses, general and administrative expenses, and capital expenditures will continue to increase.

In particular, we expect our expenses to increase as we continue our development of, and seek regulatory approvals for, our internally developed product candidates as well as add operational, financial and management informational systems and personnel to support our product development.

In particular, we expect our expenses to increase as we continue our development of, and seek

regulatory approvals for, our internally developed product candidates as well as add operational, financial and management informational systems and personnel to support our product development.

In addition, if and when we seek and obtain regulatory approval to commercialize any product candidate, we will also incur increased expenses in connection with commercialization and marketing of any such product.

Our net losses may fluctuate significantly from quarter-to-quarter

and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.

Based upon our current business plans, we believe that our existing cash and cash equivalents and marketable securities will be sufficient to fund our development activities and other operations into the third quarter of 2024.

Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our clinical trials and our expenditures on other research and development activities.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

3 unchanged sentences

If we obtain regulatory approval for any of our internally developed product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.

As a result, until such time, if ever, that we can generate substantial product revenue, we expect to finance our cash needs through service revenue, equity offerings, debt financings or other capital sources, including collaborations, licenses or similar arrangements.

As a result, until such time, if ever, that we can generate substantial product revenue, we expect to finance our cash needs through equity offerings, debt financings or other capital sources, including collaborations, licenses or similar arrangements.

However, we may be unable to raise additional funds or enter into such other arrangements when needed or on favorable terms, if at all.

1 unchanged sentence

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 COVID-19 outbreak a pandemic.

In particular, the ongoing pandemic related to COVID-19 and its variants has resulted in federal, state and local governments and private entities mandating various restrictions, including travel restrictions, access restrictions, restrictions on public gatherings, and stay at home orders.

The effect of these orders, government imposed quarantines and measures we have taken, such as implementing work-at-home policies, may negatively impact productivity, disrupt our business and/or could adversely affect our development plans and results.

We cannot presently predict the scope and severity of any 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.

It is unknown how long these conditions will last and what the complete effect will be on us.

While to date we have been able to continue to execute our overall business plan, some of our business activities have been slowed and taken longer to complete, particularly with respect to our process for recruiting new employees, and we continue to adjust to the challenges of operating in a largely remote setting with our employees.

Overall, we recognize the challenges the pandemic may pose to our business, will continue to closely monitor events as they develop and plan for alternative and mitigating measures that we can implement if needed.

Components of Our Results of Operations

Our revenue is generated by providing computational biology professional services to pharmaceutical and biotechnology companies.

We charge an agreed upon rate per hour based on the aggregate level of personnel assigned to work on the project or a fixed fee for a defined scope of work.

Our contracts specify the period of time over which these professional services will be provided.

We recognize revenue over time by measuring the progress toward complete satisfaction of the performance obligation using a single method of measuring progress, which depicts the performance in transferring control of the associated services to the customer.

We use input methods to measure the progress toward the complete satisfaction of performance obligations and evaluate the measure of progress each reporting period and, if necessary, adjust the measure of performance and related revenue recognition.

Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenue and net loss in the period of adjustment.

We expect revenue to continue to decrease as we have deprioritized new services work in order to focus on developing our wholly owned pipeline.

We expect that, by the end of 2022, revenue associated with this computational biology professional services business will be eliminated.

We are in the process of discontinuing biosample storage, which was acquired through the BioArkive transaction, to external parties and expect it to complete in the second half of 2022.

The revenue earned associated with this is immaterial to the financial statements and is expected to continue decrease until these external services are discontinued.

Our revenue has historically been generated by providing computational biology professional services to pharmaceutical and biotechnology companies.

We charged an agreed upon rate per hour based on the aggregate level of personnel assigned to work on the project or a fixed fee for a defined scope of work.

Our contracts specified the period of time over which these professional services would be provided.

We recognized revenue over time by measuring the progress toward complete satisfaction of the performance obligation using a single method of measuring progress, which depicts the performance in transferring control of the associated services to the customer.

We used input methods to measure the progress toward the complete satisfaction of performance obligations and evaluate the measure of progress each reporting period and, if necessary, adjusted the measure of performance and related revenue recognition.

Any such adjustments were recorded on a cumulative catch-up basis, which would affect revenue and net loss in the period of adjustment.

We have ceased accepting new services contracts in order to focus on developing our wholly-owned internal pipeline.

In September 2022, we completed our last remaining services contract associated with the computational biology professional services business.

At this time, we do not anticipate entering into any new service contracts or agreements.

We have also discontinued our biosample storage business, which was acquired through the BioArkive transaction, to external parties.

In December 2022, we completed our last remaining contract.

The revenue earned associated with the biosample storage business for the year ended December 31, 2022 is immaterial to the financial statements.

Cost of Revenue

Our cost of revenue expenses consists primarily of costs related to providing professional services to our customers.

These costs include salaries, bonuses, benefits, and stock-based compensation expense, depreciation, facilities, and other outside services.

Historically, our cost of revenue has primarily consisted of expenses related to providing professional services to our customers.

These costs include salaries, bonuses, benefits, stock-based compensation expense, depreciation, facilities, and other outside services.

Operating Expenses

1 unchanged sentence

Research and Development

Research and development expenses account for a significant portion of our operating expenses.

Our research and development expenses consist primarily of direct and indirect costs incurred in connection with the development of our research platform, product candidates, discovery efforts and preclinical studies related to our program pipeline.

Research and development expenses account for a significant portion of our total operating expenses.

Our direct costs include:

● expenses incurred under agreements with CROs and other vendors that conduct our preclinical activities on our behalf;

including laboratory expenses related to the execution of preclinical studies on our behalf;

● expenses associated with the manufacturing of our product candidates and preclinical material, including fees paid to contract manufacturers;

● expenses incurred under agreements with third-party contract research organizations, or CROs, and other vendors that conduct our preclinical and clinical activities on our behalf;

including clinical trial sites that conduct research and development activities on our behalf;

● laboratory expenses related to the execution of discovery programs, preclinical studies and clinical trials;

● costs related to production of clinical and preclinical materials, including fees paid to contract manufacturers;

● consulting fees and expenses related to preparation of initiation of clinical trials.

2 unchanged sentences

● facility and equipment related expenses, consisting of indirect and allocated expenses for rent, depreciation, maintenance of facilities, insurance, and other supplies.

We expense research and development costs as incurred.

Our direct research and development expenses are not currently tracked on a program-by-program basis, but we anticipate tracking costs on a program-by-program basis at the time IMM-1-104 enters clinical trials, which we expect to occur in the fourth quarter of 2022, assuming our IND application is accepted.

We use our personnel and infrastructure resources across multiple research and development programs directed toward identifying and developing product candidates.

We expense research and development costs in the periods in which they are incurred.

Our direct research and development expenses are tracked on a program-by-program basis once they are in Phase 1 and consist of external costs and fees paid to consultants, contractors, contract manufacturing organizations, or CMOs, and CROs in connection with our preclinical and clinical development and manufacturing activities.

Such program costs also include the external costs of laboratory and consumable materials and costs of raw materials that are directly attributable to and incurred for any single program.

We do not allocate employee costs, costs associated with our platform development and discovery efforts, payments made under third-party licensing agreements, costs of laboratory supplies and consumable materials that are not directly attributable to any single program, and facilities expenses, including rent, depreciation and other indirect costs, to specific product development programs because these costs are deployed across multiple programs and our platform technology and, as such, are not separately classified.

Due to the inherently unpredictable nature and numerous risks and uncertainties associated with product development and the current stage of development of our product candidates and programs, we cannot reasonably estimate or know the nature, timing and estimated costs necessary to complete the remainder of the development of our product candidates or programs.

32 unchanged sentences

Our general and administrative expenses consist primarily of personnel-related expenses, including employee salaries, bonuses, benefits, stock-based compensation, and recruiting costs for personnel in executive, finance, and other administrative functions.

Other significant general and administrative expenses include legal fees relating to intellectual property and corporate matters, professional fees for accounting, tax and consulting services, insurance costs, travel expenses and facility related expenses not otherwise included in research and development expenses.

Other significant general and administrative expenses include legal fees relating to intellectual

property and corporate matters, professional fees for accounting, tax and consulting services, insurance costs, travel expenses and facility related expenses not otherwise included in research and development expenses.

We expect our general and administrative expenses will substantially increase for the foreseeable future as we continue to increase our general and administrative headcount to support our continued research and development activities and, if any product candidates receive marketing approval, commercialization activities, as well as to support our operations generally.

As we expand our operations, we also expect to incur increased expenses associated with operating as a public company, including costs related to accounting, audit, legal, regulatory, and tax-related services associated with maintaining compliance with exchange listing and rules and regulations of the SEC, Sarbanes-Oxley Act, director and officer insurance costs, and investor and public relations costs.

As we expand our operations, we also expect to incur increased expenses associated with operating as a public company, including costs related to accounting, audit, legal, regulatory, and tax-related services associated with maintaining compliance with exchange listing and rules and regulations of the Securities and Exchange Commission (“SEC”), Sarbanes-Oxley Act, director and officer insurance costs, and investor and public relations costs.

Amortization of intangible asset

Amortization of intangible asset relates to the technology acquired in the BioArkive acquisition.

Other Income (Expense)

2 unchanged sentences

The primary objective of our investment policy is capital preservation.

Other expense

Other expense consists of the amortization of premiums or accretion of discounts related to our marketable securities.

Other income (expense)

Other income (expense) consists of the amortization of premiums or accretion of discounts related to our marketable securities.

Income tax benefit

Income tax benefit is due to a release of a valuation reserve during 2021 as a result of the business combination.

Income tax benefit in 2021 is due to a release of a valuation reserve because of the business combination.

Results of Operations

7 unchanged sentences

General and administrative

Amortization of intangible asset

Total operating expenses

2 unchanged sentences

Interest income

Other expense

Other income (expense)

Loss before income taxes

5 unchanged sentences

Revenue decreased by approximately $1.8 million, or 84.8% to approximately $0.3 million for the year ended December 31, 2022 compared to approximately $2.1 million for the year ended December 31, 2021.

The decrease in revenue was due to approximately $0.3 million related to customer agreements that were completed in 2020, offset by a $0.1 million increase in new customers in the year ended December 31, 2021.

The decrease in revenue was due to the wind down of our computational biology professional services and completion of existing customer services contracts during the year compared to the year ended December 31, 2021.

Cost of Revenue

The following table summarizes the components of cost of revenue expenses for the periods indicated:

Year Ended December 31,

(in thousands, except percentages)

Employee related costs

Stock-based compensation expense

Outside contract research services

Facilities and other allocated expenses

Total cost of revenue

Cost of revenue decreased by approximately $1.0 million, or 86.3%, to approximately $0.2 million for the year ended December 31, 2022 compared to approximately $1.2 million for the year ended December 31, 2021.

The decrease was primarily due to decreased employee-related costs of approximately $0.2 million offset by an increase in facilities and other allocated expenses.

The decrease was primarily due to decreased employee-related costs of approximately $1.0 million related to services contracts that were completed during this year.

Research and Development

2 unchanged sentences

(in thousands, except percentages)

Direct research and development expenses by program:

Other Programs

Unallocated research and development expenses:

Employee related costs

Stock-based compensation expense

Outside contract research services

Facilities and other allocated expenses

Total research and development

Research and development expenses increased by approximately $11.5 million, or 76.9%, to approximately $26.5 million for the year ended December 31, 2021 compared to approximately $15.0 million for the year ended December 31, 2020.

The increase of approximately $11.5 million was primarily due to approximately $8.7 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 $2.5 million of additional employee-related costs, primarily due to an increase in headcount, approximately $0.3 million increase for stock-based compensation expense and $0.1 million increase for facilities and other allocated expenses.

Research and development expenses increased by approximately $9.7 million, or 36.6%, to approximately $36.3 million for the year ended December 31, 2022 as compared to approximately $26.5 million for the year-ended December 31, 2021.

The increase of approximately $9.7 million was primarily due to an increase of approximately $2.5 million related to direct research and development expenses, of which $1.4 million related to IMM-1-104 and $1.1 million for earlier stage programs.

The remaining increase was driven by unallocated research and development costs of approximately $7.2 million, of which $6.0 million related to additional employee-related costs and $1.2 million related to stock-based compensation expense.

Depreciation, facilities and other allocated expense also increased by approximately $0.1 million in the aggregate.

General and Administrative

10 unchanged sentences

General and administrative expenses increased by approximately $7.3 million, or 88.7%, to approximately $15.6 million for the year ended December 31, 2022 compared to approximately $8.3 million for the year ended December 31, 2021.

The increase of approximately $5.2 million was primarily due to increased employee-related costs of approximately $3.1 million as a result of increased headcount, increased professional fees incurred for accounting, auditing, legal, public relations and tax services of approximately $1.0 million, increased facilities expenses of approximately $0.1 million, approximately $0.5 million increase in stock-based compensation expense and $0.5 million increase in other, which is primarily related to franchise tax expense.

The increase of approximately $7.3 million was primarily due to increased employee-related costs of approximately $3.6

million as a result of increased headcount, increased professional fees incurred for accounting, auditing, legal, public relations and tax services of approximately $1.0 million, increased facilities expenses of approximately $1.4 million, approximately $1.1 million increase in stock-based compensation expense.

Amortization of Intangible Asset

Amortization of intangible asset of $30 thousand in the year ended December 31, 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.

Interest income increased by approximately $0.8 million due to the interest earned on our cash and cash equivalents and marketable securities balances due to the increased in the interest rates during 2022 as compared to 2021.

Other income (expense) increased by $0.3 million, primarily driven by the amortization of premiums related to our marketable securities.

Liquidity and Capital Resources

7 unchanged sentences

We have not yet commercialized any of our product candidates, and we do not expect to generate revenue from sales of any product candidates for the next several years, if at all.

To date, our operations have been financed primarily by service revenues and aggregate net proceeds of approximately $81.4 million from the issuance of convertible notes payable, convertible preferred stock including gross proceeds of approximately $24.8 million from the issuance of shares in the second tranche of Series B Preferred in April and May 2021, common stock, the exercise of stock options.

In August 2021, we completed our IPO pursuant to which we issued and sold 8,625,000 shares of Class A common stock, inclusive of 1,150,000 shares sold by us pursuant to the full exercise of the underwriters’ option to purchase additional shares.

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.

To date, our operations have been financed primarily by service revenues and proceeds from sales of our debt and equity securities.

On August 10, 2022, we entered into an Equity Distribution Agreement, or the Sales Agreement, with Piper Sandler & Co, or the Sales Agent, to sell shares of our common stock with aggregate gross proceeds of up to $50 million, from time to time, through an “at the market” equity offering program.

For the year ended December 31, 2022, we did not sell any shares of common stock under the Sales Agreement.

As of December 31, 2022, we have contractual obligations related to various leases of $0.8 million for 2023, $0.7 million for 2024, $0.7 million for 2025, $0.8 million for 2026, $0.8 million for 2027 and $3.7 million for the periods thereafter.

7 unchanged sentences

Financing activities

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Net Cash Used in Operating Activities

During the year ended December 31, 2021, operating activities used approximately $30.9 million of cash, primarily resulting from our net loss of approximately $33.5 million, deferred tax benefit of $0.3 million, and cash provided by changes in our operating assets and liabilities of approximately $0.9 million, partially offset by stock-based compensation expense of approximately $1.8 million, net amortization of premium (accretion of discount) on marketable securities of $0.1 million, and $0.2 million right of use amortization and depreciation.

During the year ended December 31, 2020, operating activities used approximately $14.6 million of cash, primarily resulting from our net loss of approximately $17.0 million, partially offset by stock-based compensation expense of approximately $1.1 million and cash provided by changes in our operating assets and liabilities of approximately $1.3 million.

During the year ended December 31, 2022, operating activities used approximately $44.1 million of cash, primarily resulting from our net loss of approximately $50.5 million and net amortization of premium (accretion of discount) on marketable securities of $0.2 million, partially offset by stock-based compensation expense of approximately $4.1 million, cash provided by changes in our operating assets and liabilities of approximately $1.7 million, and $0.8 million for right of use amortization and depreciation.

Net Cash Used in Investing Activities

During the year ended December 31, 2021 and 2020, investing activities used approximately $75.6 million, and approximately $0.1 million respectively.

For the year 2021, cash used from investing was primarily related to purchases of marketable securities of approximately $75.6 million, approximately $0.1 million for the purchases of property and equipment, and cash acquired in business combination of approximately $0.1 million.

For 2020 cash used in investing was a result of purchases of property and equipment of approximately $0.1 million.

During the year ended December 31, 2022, cash provided from investing activities was approximately $41.8 million, primarily related to maturities of marketable securities of $92.7 million, offset by purchases of marketable securities of $50.1 million and $0.7 million for purchases of property and equipment.

During the year end December 31, 2021, cash used from investing was approximately $75.6 million, primarily related to purchases of marketable securities of approximately $75.6 million, $0.1 million for the purchases of property and equipment offset by cash acquired in business combination of approximately $0.1 million.

Net Cash Provided by Financing Activities

During the year ended December 31, 2022, net cash provided by financing activities was approximately $19 thousand, consisting primarily of approximately $0.3 million in net proceeds from the exercise of stock options, offset by approximately $0.3 million from the payment of deferred offering costs.

During the year ended December 31, 2021, net cash provided by financing activities was approximately $144.3 million, consisting primarily of approximately $24.8 million in net proceeds received from the issuance of Series B preferred stock, approximately $118.2 million from the net proceeds from our initial public offering, approximately $0.9 million in net proceeds from the exercise of warrants and approximately $0.4 million from the exercise of stock options.

During the year ended December 31, 2020, net cash provided by financing activities was approximately $38.0 million, consisting primarily of approximately $37.0 million in net proceeds received from the issuance of Series B preferred stock and approximately $1.0 million in net proceeds from the issuance of Series A preferred stock.

Future Funding Requirements

1 unchanged sentence

The timing and amount of our operating and capital expenditures will depend largely on:

● the impacts of the pandemic related to COVID-19 and its variants and potential future pandemics;

● the costs and results of our potential future clinical trials for our other product candidates;

● the costs and results of our ongoing clinical trial for IMM-1-104 and potential future clinical trials for our other product candidates;

● the scope, progress, results and costs of discovery research, preclinical development, laboratory testing and clinical trials for our other product candidates;

10 unchanged sentences

● the costs of operating as a public company;

We believe that our existing cash, cash equivalents and marketable securities, will enable us to fund our operating expenses and capital expenditure requirements into the third quarter of 2024.

● the impacts of the pandemic related to COVID-19 and its variants and potential future pandemics.

We believe that our existing cash, cash equivalents and marketable securities, will enable us to fund our operating expenses and capital expenditure requirements for at least the next twelve months and into the fourth quarter of 2024.

We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.

8 unchanged sentences

We incur substantial expenses associated with manufacturing and clinical trials.

Accounting for clinical trials relating to activities performed by contract research organizations, or CROs, and other external vendors requires management to

exercise significant estimates in regard to the timing and accounting for these expenses.

Accounting for clinical trials relating to activities performed by contract research organizations, or CROs, and other external vendors requires management to exercise significant estimates in regard to the timing and accounting for these expenses.

We estimate costs of research and development activities conducted by service providers, which include the conduct of sponsored research, preclinical studies and contract manufacturing activities.

6 unchanged sentences

We have not experienced any material differences between accrued costs and actual costs incurred since our inception.

Our expenses related to clinical trials will be based on estimates of patient enrollment and related expenses at clinical investigator sites as well as estimates for the services received and efforts expended pursuant to contracts with multiple research institutions and CROs that may be used to conduct and manage clinical trials on our behalf.

We will accrue expenses related to clinical trials based on contracted amounts applied to the level of patient enrollment and activity.

If timelines or contracts are modified based upon changes in the clinical trial protocol or scope of work to be performed, we will modify our estimates of accrued expenses accordingly on a prospective basis.

Our expenses related to clinical trials are based on estimates of patient enrollment and related expenses at clinical investigator sites as well as estimates for the services received and efforts expended pursuant to contracts with multiple research institutions and CROs that are used to conduct and manage clinical trials on our behalf.

We accrue expenses related to clinical trials based on contracted amounts applied to the level of patient enrollment and activity.

If timelines or contracts are modified based upon changes in the clinical trial protocol or scope of work to be performed, we modify our estimates of accrued expenses accordingly on a prospective basis.

Stock-Based Compensation

We measure stock-based awards granted to employees, non-employees and directors based on their fair value on the date of the grant using the Black-Scholes option-pricing model for options or the difference between the purchase price per share of the award, if any, and the fair value of our common stock for restricted common stock awards.

Compensation expense for those awards is recognized over the requisite service period, which is generally the vesting period of the award for employees and directors and the period during which services are performed for non-employees.

7 unchanged sentences

As an emerging growth company, or EGC, under the Jumpstart Our Business Startups Act of 2012, or JOBS Act, we may delay the adoption of certain accounting standards until such time as those standards apply to private companies.

controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act, an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board, and less extensive disclosure about our executive compensation arrangements.

Other exemptions and reduced reporting requirements under the JOBS Act for EGCs include presentation of only two years of audited consolidated financial statements, an exemption from the requirement to provide an auditor’s report on internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act, an exemption from any requirement that may be adopted by the Public Company Accounting Oversight Board, and less extensive disclosure about our executive compensation arrangements.

In addition, the JOBS Act provides that an EGC can take advantage of an extended transition period for complying with new or revised accounting standards.

7 unchanged sentences

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-K

Item 7. Management’s Discussion and Analysis