UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2022~~2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39580

Immunome, ~~Inc.~~Inc.

(Exact name of registrant as specified in its charter)

Delaware	77-0694340
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

665 Stockton Drive, Suite 300 Exton, PA	19341
(Address of principal executive offices)	(Zip Code)

(610) 321-3700

(Registrant’s telephone number, including area code)

Not applicable.

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading symbol(s)		Name of each exchange on which registered
Common Stock, $0.0001 par value		IMNM		The Nasdaq Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒	Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were ~~12,127,385~~12,202,516 shares of the registrant’s common stock outstanding as of August ~~2, 2022.~~7, 2023.

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IMMUNOME, INC.

Quarterly Report on Form 10-Q for the Quarterly Period ended June 30, ~~2022~~2023

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		Page

	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	- Condensed Balance Sheets as of June 30, ~~2022~~2023 and December 31, ~~2021~~2022	3
	- Condensed Statements of Operations for the Three and Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022	4
	- Condensed Statements of Changes in Stockholders’ Equity for the Three and Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022	5
	- Condensed Statements of Cash Flows for the Six Months Ended June 30, ~~2022~~2023 and ~~2021~~2022	6
	- Notes to Condensed Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	1821
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	2934
Item 4.	Controls and Procedures.	3035

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings.	3035
Item 1A.	Risk Factors.	3035
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	3035
Item 3.	Defaults Upon Senior Securities.	3035
Item 4.	Mine Safety Disclosures.	3035
Item 5.	Other Information.	3035
Item 6.	Exhibits.	3136

	SIGNATURES

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

IMMUNOME, INC.

Condensed Balance Sheets

(In thousands, except share data)

(unaudited)

June 30, 2022

December 31, 2021
Assets



Current assets:




Cash and cash equivalents

$
34,649

$
49,229
Prepaid expenses and other current assets

2,949

7,409
Total current assets

37,598

56,638
Property and equipment, net

807

855
Operating right-of-use asset, net

182

—
Restricted cash

100

100
Deferred offering costs

332

332
Total assets

$
39,019

$
57,925
Liabilities and stockholders’ equity


Current liabilities:


Accounts payable

$
5,259

$
3,077
Accrued expenses and other current liabilities

3,359

6,651
Total current liabilities

8,618

9,728
Other long-term liabilities

124

12
Total liabilities

8,742

9,740
Commitments and contingencies (Note 7)


Stockholders’ equity:


Preferred stock, $0.0001 par value; 10,000,000 shares authorized; 0 shares issued or outstanding at June 30, 2022 and December 31, 2021, respectively

—

—
Common stock, $0.0001 par value; 200,000,000 shares authorized; 12,127,385 and 12,110,373 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

1

1
Additional paid-in capital

129,958

127,289
Accumulated deficit

(99,682)

(79,105)
Total stockholders’ equity

30,277

48,185
Total liabilities and stockholders’ equity

$
39,019

$
57,925


	June 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	38,416	$	20,323
Prepaid expenses and other current assets		1,110		2,326
Total current assets		39,526		22,649
Property and equipment, net		1,203		681
Operating right-of-use asset, net		174		284
Restricted cash		100		100
Deferred offering costs		432		332
Total assets	$	41,435	$	24,046
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	3,699	$	2,400
Accrued expenses and other current liabilities		5,025		4,931
Deferred revenue, current		17,668		—
Total current liabilities		26,392		7,331
Deferred revenue, non-current		5,705		—
Other long-term liabilities		—		62
Total liabilities		32,097		7,393
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; no shares issued or outstanding at June 30, 2023 and December 31, 2022, respectively		—		—
Common stock, $0.0001 par value; 200,000,000 shares authorized; 12,200,433 and 12,128,843 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively		1		1
Additional paid-in capital		135,165		132,653
Accumulated deficit		(125,828)		(116,001)
Total stockholders’ equity		9,338		16,653
Total liabilities and stockholders’ equity	$	41,435	$	24,046

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

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IMMUNOME, INC.

Condensed Statements of Operations

(In thousands, except share and per share data)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021		2023		2022		2023		2022
Collaboration revenue									$	4,263	$	—	$	6,627	$	—
Operating expenses:
Research and development	$	5,717	$	3,233	$	13,795	$	5,212		5,716		5,717		9,629		13,795
General and administrative		3,209		2,507		6,785		4,425		4,320		3,209		7,242		6,785
Total operating expenses		8,926		5,740		20,580		9,637		10,036		8,926		16,871		20,580
Loss from operations		(8,926)		(5,740)		(20,580)		(9,637)		(5,773)		(8,926)		(10,244)		(20,580)
Other income		—		500		—		500
Interest income (expense), net		2		(1)		3		(2)
Interest income										216		2		417		3
Net loss	$	(8,924)	$	(5,241)	$	(20,577)	$	(9,139)	$	(5,557)	$	(8,924)	$	(9,827)	$	(20,577)
Per share information:
Net loss per share of common stock, basic and diluted	$	(0.74)	$	(0.46)	$	(1.70)	$	(0.83)	$	(0.46)	$	(0.74)	$	(0.81)	$	(1.70)
Weighted-average common shares outstanding, basic and diluted		12,127,385		11,456,991		12,125,156		11,051,185		12,197,801		12,127,385		12,190,182		12,125,156

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

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IMMUNOME, INC.

Condensed Statements of Changes in Stockholders’ Equity

(In thousands, except share data)

(unaudited)


										Stockholders’ equity
										Common stock			Additional
													paid-in		Accumulated
										Shares	Amount		capital		deficit		Total
Balance at March 31, 2023										12,194,184	$	1	$	134,132	$	(120,271)	$	13,862
Share-based compensation expense										—		—		998		—		998
Vesting of restricted stock awards										6,249		—		35		—		35
Net loss										—		—		—		(5,557)		(5,557)
Balance at June 30, 2023										12,200,433	$	1	$	135,165	$	(125,828)	$	9,338

										Stockholders’ equity
										Common stock			Additional
													paid-in		Accumulated
										Shares	Amount		capital		deficit		Total
Balance at January 1, 2023										12,128,843	$	1	$	132,653	$	(116,001)	$	16,653
Share-based compensation expense										—		—		2,198		—		2,198
Issuance of common stock under ATM, net of $1 of issuance costs										5,925		—		34		—		34
Issuance of common stock										55,250		—		221		—		221
Vesting of restricted stock awards										10,415		—		59		—		59
Net loss										—		—		—		(9,827)		(9,827)
Balance at June 30, 2023										12,200,433	$	1	$	135,165	$	(125,828)	$	9,338

	Stockholders’ equity									Stockholders’ equity
	Common stock			Additional						Common stock			Additional
				paid-in		Accumulated							paid-in		Accumulated
	Shares	Amount		capital		deficit		Total		Shares	Amount		capital		deficit		Total
Balance at March 31, 2022	12,127,385	$	1	$	128,631	$	(90,758)	$	37,874	12,127,385	$	1	$	128,631	$	(90,758)	$	37,874
Share-based compensation expense	—		—		1,327		—		1,327	—		—		1,327		—		1,327
Net loss	—		—		—		(8,924)		(8,924)	—		—		—		(8,924)		(8,924)
Balance at June 30, 2022	12,127,385	$	1	$	129,958	$	(99,682)	$	30,277	12,127,385	$	1	$	129,958	$	(99,682)	$	30,277

	Stockholders’ equity									Stockholders’ equity
	Common stock			Additional						Common stock			Additional
				paid-in		Accumulated							paid-in		Accumulated
	Shares	Amount		capital		deficit		Total		Shares	Amount		capital		deficit		Total
Balance at January 1, 2022	12,110,373	$	1	$	127,289	$	(79,105)	$	48,185	12,110,373	$	1	$	127,289	$	(79,105)	$	48,185
Share-based compensation expense	—		—		2,637		—		2,637	—		—		2,637		—		2,637
Exercise of stock options	17,012		—		32		—		32	17,012		—		32		—		32
Net loss	—		—		—		(20,577)		(20,577)	—		—		—		(20,577)		(20,577)
Balance at June 30, 2022	12,127,385	$	1	$	129,958	$	(99,682)	$	30,277	12,127,385	$	1	$	129,958	$	(99,682)	$	30,277

	Stockholders’ equity
	Common stock			Additional
				paid-in		Accumulated
	Shares	Amount		capital		deficit		Total
Balance at March 31, 2021	10,660,181	$	1	$	96,174	$	(58,292)	$	37,883
Sale of common stock and common stock warrants, net of $596 in offering costs	1,000,000		—		26,404		—		26,404
Share-based compensation expense	—		—		749		—		749
Exercise of common stock warrants	134,351		—		801		—		801
Exercise of stock options	18,260		—		21		—		21
Net loss	—		—		—		(5,241)		(5,241)
Balance at June 30, 2021	11,812,792	$	1	$	124,149	$	(63,533)	$	60,617

	Stockholders’ equity
	Common stock			Additional
				paid-in		Accumulated
	Shares	Amount		capital		deficit		Total
Balance at January 1, 2021	10,634,245	$	1	$	95,738	$	(54,394)	$	41,345
Sale of common stock and common stock warrants, net of $596 in offering costs	1,000,000		—		26,404		—		26,404
Share-based compensation expense	—		—		1,074		—		1,074
Exercise of common stock warrants	146,017		—		906		—		906
Exercise of stock options	32,530		—		27		—		27
Net loss	—		—		—		(9,139)		(9,139)
Balance at June 30, 2021	11,812,792	$	1	$	124,149	$	(63,533)	$	60,617

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

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IMMUNOME, INC.

Condensed Statements of Cash Flows

(In thousands)

(unaudited)


	Six Months ended June 30,				Six Months ended June 30,
	2022		2021		2023		2022
Cash flows from operating activities:
Net loss	$	(20,577)	$	(9,139)	$	(9,827)	$	(20,577)
Adjustments to reconcile net loss to net cash used in operating activities:
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		224		351		195		224
Amortization of right-of-use asset		33		—		110		33
Share-based compensation		2,637		1,074		2,257		2,637
Deferred rent		(12)		(3)
Forgiveness of PPP Loan		—		(500)
Changes in operating assets and liabilities:
Prepaid expenses and other assets		4,460		142		1,216		4,448
Accounts payable		2,182		486		1,276		2,182
Accrued expenses and other current liabilities		(3,342)		313		(33)		(3,342)
Deferred revenue						23,373		—
Other long-term liabilities		(41)		-		(62)		(41)
Net cash used in operating activities		(14,436)		(7,276)
Net cash provided by (used in) operating activities						18,505		(14,436)
Cash flows from investing activities:
Purchases of property and equipment		(176)		(39)		(446)		(176)
Net cash used in investing activities		(176)		(39)		(446)		(176)
Cash flows from financing activities:
Proceeds from sale of common stock and common stock warrants		—		27,000
Payment from issuance costs related to the sale of common stock and common stock warrants		—		(486)
Proceeds from exercise of stock options		32		27		—		32
Proceeds from exercise of common stock warrants		—		906
Payment of equipment loan payable		—		(69)
Proceeds from issuance of common stock under ATM, net						34		—
Net cash provided by financing activities		32		27,378		34		32
Net increase (decrease) in cash and cash equivalents and restricted cash		(14,580)		20,063		18,093		(14,580)
Cash and cash equivalents and restricted cash at beginning of period		49,329		39,866		20,423		49,329
Cash and cash equivalents and restricted cash at end of period	$	34,749	$	59,929	$	38,516	$	34,749

Supplemental disclosures of cash flow information:
Operating lease right-of-use asset and lease liability recorded upon adoption of ASC 842	$	215	$	—
Offering costs included in accounts payable	$	—	$	110
Purchases of property plant and equipment included in accounts payable	$	—	$	7
Issuance of common stock to certain board of directors in lieu of accrued compensation					$	221	$	—
Deferred offering costs in accrued expenses and other current liabilities					$	100	$	—
Property and equipment included in accounts payable					$	23	$	—
Property and equipment included in accrued expenses and other current liabilities					$	248	$	—

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

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IMMUNOME, INC.

Notes to Condensed Financial Statements

(Unaudited)

1. Nature of the business ~~and basis of presentation~~

Organization

Immunome, Inc. (“, the ~~Company”~~Company or ~~“Immunome”)~~Immunome, is a biopharmaceutical company. The Company was incorporated as a Pennsylvania corporation on March 2, 2006 and was converted to a Delaware corporation on December 2, 2015. The Company is ~~a biopharmaceutical company~~ utilizing ~~our~~a proprietary human memory B cell platform to discover and develop ~~first-in-class~~ antibody therapeutics ~~designed~~ to ~~change the way diseases are currently being treated.~~improve patient care. The Company’s primary focus ~~areas are oncology and infectious disease, including COVID-19.~~area is oncology.

Since its inception, the Company has devoted substantially all its resources to research and development, raising capital, building its management team and extending its intellectual property ~~portfolio.~~portfolio, and executing strategic partnerships. The Company is subject to risks and uncertainties common to early-stage companies in the biotechnology industry including, but not limited to, risks associated with ~~the successful~~ research, development, and manufacturing ~~of product candidates,~~activities, uncertain results of preclinical and clinical testing, development of new technological innovations and products by competitors, dependence on key personnel, partners and third-party vendors, protection of proprietary technology, compliance with government regulations, regulatory approval of ~~product candidates~~products and the ability to secure additional capital to fund operations.

On June 29, 2023, the Company entered into an Agreement and Plan of Merger and Reorganization, or the Merger Agreement, with Morphimmune Inc., a Delaware corporation, or Morphimmune, a biotechnology company focused on developing targeted oncology therapeutics, and Ibiza Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of the Company, or Merger Sub. Upon the terms and subject to the satisfaction of the conditions described in the Merger Agreement, Merger Sub will be merged with and into Morphimmune, with Morphimmune surviving as a wholly owned subsidiary of Immunome, or the Merger. The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes and is expected to close by the end of 2023. See “The Merger”.

Liquidity

The Company has incurred net losses since inception, including net losses of ~~$20.6~~$9.8 million and ~~$9.1~~$20.6 million for the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively, and it expects to generate losses from operations ~~and negative operating cash flows~~ for the foreseeable future primarily due to research and development costs for its ~~potential product~~programs and development candidates. As of June 30, ~~2022,~~2023, the Company had an accumulated deficit of ~~$99.7~~$125.8 million.

Through June 30, 2023, the Company raised an aggregate of $155.2 million in gross proceeds from sales of common stock, Series A convertible preferred stock and warrants, warrant and stock option exercises, the issuance of convertible promissory notes, the Paycheck Protection Program, or PPP, loan that was forgiven in May 2021, and strategic partnerships with AbbVie Global Enterprises Ltd, or AbbVie. In January 2023, the Company received a $30.0 million non-refundable upfront payment from AbbVie under the collaboration and option agreement, or the Collaboration Agreement. In addition, the Company received $17.6 million in expense reimbursement from the Department of Defense, or DoD under the Other Transaction Authority for Prototype Agreement, or the OTA Agreement, from inception through 2022.

On January 4, 2023, the Company entered into the Collaboration Agreement with AbbVie, or the Collaboration Agreement, directed to the discovery of up to 10 novel target-antibody pairs leveraging our discovery engine. The Company is potentially eligible to receive up to approximately $2.8 billion from AbbVie under the Collaboration Agreement from the sources described in Note 3. There are no assurances that the Company will receive additional payments from AbbVie beyond the $30.0 million upfront payment.

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On October 1, 2021, the Company entered into an Open Market Sale Agreement, (“or the ATM ~~Agreement”)~~Agreement, with Jefferies Group LLC, which provides that, upon the terms and subject to the conditions and limitations in the ATM Agreement, the Company may elect, from time to time, to offer and sell shares of common stock under the registration statement having an aggregate offering price of up to $75.0 million through Jefferies Group LLC acting as sales agent. The Company ~~has not yet~~filed a shelf registration statement on Form S-3, which was declared effective by the Securities and Exchange Commission, or the SEC, on October 14, 2021, pursuant to which the Company may issue from time-to-time securities with an aggregate value of up to $200.0 million. Through June 30, 2023, the Company sold ~~any~~5,925 shares of common stock under the ATM Agreement resulting in net proceeds of approximately $34,000. The Company can elect to sell additional shares under the ATM ~~Agreement.~~Agreement or shelf registration statement.

The Company had cash and cash equivalents of ~~$34.6~~$38.4 million at June 30, ~~2022.~~2023. The Company expects that its cash, exclusive of any potential proceeds received in connections with the potential closing of the Merger and concurrent Private Investment in Public Equity, or PIPE transaction, will enable it to fund its operating expenses and capital expenditure requirements for at least 12 months from the filing date of this Quarterly Report on Form 10-Q; however; more funding will be necessary ~~beyond this point~~ to fund additional research and ~~development, clinical~~ development and operations in order to pursue the Company’s growth strategy.

If the Company cannot obtain the necessary funding, it will need to delay, scale back or eliminate some or all of its research and development programs or enter into collaborations with third parties relative to ~~commercialize~~ potential programs, products or technologies that it might otherwise seek to ~~develop or commercialize~~progress independently (or enter into these collaborations sooner than it might otherwise have intended ~~to do);~~to), reduce or cease operations. Further, as a part of our strategy, the Company may consider ~~other~~ various ~~strategic~~other alternatives, including a merger or sale of the ~~Company; or reduce or cease operations.~~Company. If the Company engages in R&D collaborations under these circumstances, it may receive lower consideration ~~upon commercialization of such products or technologies~~ than if it had not entered into such arrangements or if it entered into such arrangements at later stages in the research and development process. Additionally, volatility in the capital markets generally and the biotechnology sector specifically, as well as general economic conditions in the United States may be a significant obstacle to raising the required ~~funds.~~funds on satisfactory terms, if at all.

Operations of the Company are subject to certain risks and uncertainties including various internal and external factors that will affect whether and when the Company’s ~~product~~programs and development candidates become approved drugs and how significant

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their market share will be, ~~some~~many of which are outside of the Company’s control. The length of time and cost of developing and commercializing these ~~product~~programs and development candidates and/or failure of them at any stage of the drug approval process will materially affect the Company’s financial condition and future operations.

Merger Agreement

On ~~March 11, 2020,~~June 29, 2023, the ~~World Health Organization characterized~~Company entered into the ~~novel COVID-19 virus~~Merger Agreement with Morphimmune Inc., a biotechnology company focused on developing targeted oncology therapeutics, and Merger Sub. Upon the terms and subject to the satisfaction of the conditions described in the Merger Agreement, Merger Sub will be merged with and into Morphimmune, with Morphimmune surviving as a ~~global pandemic. Although there~~wholly owned subsidiary of the Company. The Merger is ~~significant uncertainty~~intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.

At the Effective time, each share of Morphimmune capital stock outstanding immediately prior to the ~~likely effects this disease may have~~Effective Time will be automatically converted solely into the right to receive 0.3042 shares of the Company’s common stock, or the Exchange Ratio, and, if applicable, an amount in cash, rounded to the nearest whole cent, in lieu of any fractional share interest in the ~~future, there has not~~Company’s common stock to which such holder otherwise would have been entitled (after aggregating all fractional shares issuable to such holder). Each option to purchase shares of Morphimmune capital stock, or a ~~significant impact~~Morphimmune Option, that is outstanding and unexercised immediately prior to the Effective Time under Morphimmune’s 2020 Equity Incentive Plan, or the Morphimmune Plan, whether or not vested, will be converted into and become an option to purchase the Company’s common stock using the Exchange Ratio, and the Company will assume the Morphimmune Plan and each such Morphimmune Option in accordance with the terms of the Morphimmune Plan and the terms of the stock option agreement by which such Morphimmune Option is evidenced.

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Immediately following the Merger, the pre-Merger equityholders of the Company are expected to own approximately 55% of the shares of the Company’s common stock and the pre-Merger equityholders of Morphimmune are expected to own approximately 45% of the Company’s common stock, in each case, on a fully diluted basis, excluding out-of-the-money securities of the Company as of June 28, 2023, unallocated shares of the Company’s common stock available for issuance under the Company’s 2020 Equity Incentive Plan and employee stock purchase plan, and the grant of a stock option to Dr. Clay Siegall, Ph.D., in connection with his employment agreement to become Chief Executive Officer of the Company upon consummation of the Merger, and prior to giving effect to the PIPE financing as described below.

Anticipated Accounting Treatment

The Merger is expected to be treated as an asset acquisition by Immunome of Morphimmune in accordance with U.S. GAAP. Upon completion of the Merger, Immunome will obtain control of Morphimmune’s assets consisting primarily of cash and in-process research and development (IPR&D) associated with Morphimmune’s potential primary product candidate, Mi-1001, and development program, ¹⁷⁷Lu-FAP.

In accordance with U.S. GAAP, Immunome must first assess whether an integrated set of assets and activities should be accounted for as an acquisition of a business or an asset acquisition. An initial screen test is completed to determine if substantially all of the fair value of the gross assets acquired of Morphimmune is concentrated in a single asset or group of similar assets. If that screen is met, the set is not considered a business and is accounted for as an asset acquisition. Immunome will account for the acquisition of Morphimmune as an asset acquisition as substantially all of the fair value of the gross assets being acquired of Morphimmune is concentrated within the FA-TLR7a and ¹⁷⁷Lu-FAP development programs which are considered a group of similar assets. These programs are deemed to be similar IPR&D assets being acquired based on the similarity of: (i) their current preclinical stage of development, (ii) solid tumor therapeutic indications, (iii) risks for development, (iv) regulatory pathway, and (v) economics of commercialization.

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

Subscription Agreements

In connection with the execution of the Merger Agreement, on June 29, 2023, the Company entered into subscription agreements, each, a Subscription Agreement, with certain investors, or ~~financial statements~~the PIPE Investors, pursuant to ~~date.~~which, among other things, the PIPE Investors have agreed to subscribe for and purchase, and the Company has agreed to issue and sell to the PIPE Investors, an aggregate of 21,690,871 shares of the Company’s common stock for an aggregate purchase price of approximately $125.0 million, on the terms and subject to the conditions set forth therein. The shares of the Company’s common stock were sold to the PIPE Investors at a price per share equal to $5.75 and, in the case of affiliate investors, $5.91 per share, the consolidated closing bid price per share immediately preceding the entry into the Subscription Agreement. The closing of the PIPE financing is expected to occur in connection with and immediately following the consummation of the Merger.

2. Summary of significant accounting policies

Basis of presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted, ~~(“GAAP”)~~or GAAP, in the United States. Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification, ~~(“ASC”)~~or ASC, and Accounting Standards Updates, ~~(“ASU”)~~or ASU, promulgated by the Financial Accounting Standards Board, ~~(“FASB”).~~or FASB.

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Unaudited interim results

These unaudited condensed financial statements and accompanying notes should be read in conjunction with the Company’s annual financial statements and the notes thereto included in the Company’s Form 10-K filed with the Securities and Exchange Commission on March ~~28, 2022.~~16, 2023. The accompanying condensed financial statements as of June 30, ~~2022~~2023 and for the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022 are unaudited but have been prepared on the same basis as the annual audited financial statements and include all adjustments that management believes to be necessary for a fair presentation of the periods presented. Interim results are not necessarily indicative of results for a full year. ~~Balance~~Condensed balance sheet amounts as of December 31, ~~2021~~2022 have been derived from the audited financial statements as of that date.

Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses. The Company bases its estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances. Significant estimates and assumptions reflected in these condensed financial statements include, but are not limited to, the expected volatility used to estimate fair value of stock options, ~~and~~ accrued research and development ~~expenses.~~expenses, and the estimated costs which drive the revenue recognition for the Collaboration Agreement with AbbVie. Estimates and assumptions are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from these estimates.

Segment and geographic information

Operating segments are defined as components of an entity about which separate discrete information is available for evaluation by the chief operating decision maker, ~~(“CODM”),~~or the CODM, or decision-making group, in deciding how to allocate resources and in assessing performance. The CODM is the Company’s Chief Executive Officer. The Company views its operations as, and manages its business in, 1one operating segment operating exclusively in the United ~~States.~~States of America.

Fair value of financial instruments

ASC Topic 820, Fair Value Measurement (“, or ASC ~~820”),~~820, establishes a fair value hierarchy for instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the assets or liability and are developed based on the best information available in the circumstances. ASC 820 identifies fair value as the price that would be received to sell an asset or paid to transfer a liability, in an orderly transaction between market

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participants at the measurement date. As a basis for considering market participant assumptions in fair value measurements, ASC 820 establishes a three-tiered value hierarchy that distinguishes between the following:

Level 1 — Quoted market prices in active markets for identical assets or liabilities.

Level 2 — Inputs other than Level 1 inputs that are either directly or indirectly observable, such as quoted market prices, interest rates and yield curves.

Level 3 — Unobservable inputs for the asset or liability (i.e.; supported by little or no market activity). Level 3 inputs include management’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).

To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgement. Accordingly, the degree of judgement exercised by the Company

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in determining fair value is greatest for instruments categorized as Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Cash and cash equivalents and restricted cash are Level 1 assets as of June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

Restricted cash

Restricted cash represents collateral provided for a letter of credit issued as a security deposit in connection with the Company’s lease of its corporate facilities. ~~This lease expires in 2024 at which time the cash~~Cash will be released from ~~restriction.~~restriction upon termination of the lease. Restricted cash was ~~$100,000~~$0.1 million at both June 30, ~~2022~~2023 and ~~2021,~~2022, respectively. The following table provides a reconciliation of the components of cash and cash equivalents and restricted cash ~~reported in the Company’s condensed balance sheets to the total of the amount~~ presented in the condensed statements of cash flows:


(in thousands)	June 30, 2022		June 30, 2021		June 30, 2023		June 30, 2022
Cash and cash equivalents	$	34,649	$	59,829	$	38,416	$	34,649
Restricted cash		100		100		100		100
	$	34,749	$	59,929	$	38,516	$	34,749

Concentration of credit risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents. The Company maintains deposits in a financial institution in excess of government insured limits. Management believes that the Company is not exposed to significant credit risk as the Company’s deposits are held at a financial institution that management believes to be of high credit quality, and the Company has not experienced any losses on these deposits.

Equity issuance costs

The Company ~~capitalizes~~capitalized costs that ~~are~~were directly associated with establishing the ATM Agreement and shelf registration statement in 2021. These costs will remain capitalized until such financings are consummated, at which time such costs ~~are~~will be recorded against the gross proceeds from the applicable financing. If a financing is abandoned, deferred offering costs are expensed. Ongoing costs that are directly associated with the ATM Agreement are expensed as incurred. The Company also capitalized costs that were directly associated with the PIPE transaction. These costs will remain capitalized until such transaction is consummated, at which time such costs will be recorded against the gross proceeds from the applicable financing.

Deferred offering costs were ~~$0.3~~$0.4 million as of June 30, 2023 and $0.3 million as of ~~June 30, 2022 and~~ December 31, ~~2021, respectively,~~2022 on the condensed balance ~~sheet.~~sheets.

Government assistance programs

The Company accounts for amounts received under its ~~U.S. Department of Defense (“DoD”)~~DoD expense reimbursement contract as contra-research and development expenses in the condensed statements of operations. The Company accounts for the employee retention credit received under the U.S. Department of Treasury Coronavirus Aid, Relief, and Economic Security Act, (“or CARES ~~Act”)~~Act, as contra-expense to personnel related costs within research and development and general ~~and~~ administrative expenses in the condensed statements of operations.

Collaboration revenue

The Company evaluates its collaborative arrangements pursuant to ASC 808, Collaborative Arrangements, or ASC 808, and ASC 606, Revenue from Contracts with Customers, or ASC 606. The Company considers the nature and contractual terms of collaborative arrangements and assesses whether the arrangement involves a joint operating activity pursuant to which the Company is an active participant and is exposed to significant risks and rewards with respect to the arrangement. If the Company is an active participant and is exposed to significant risks and rewards with respect to the arrangement, the Company accounts for the arrangement as a collaboration under ASC 808. If it is not exposed to

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significant risks and rewards and the contract is with a customer, the Company accounts for the collaboration under ASC 606.

Payments pursuant to collaborative arrangements may include non-refundable upfront payments, research option and license option payments, milestone payments upon the achievement of significant regulatory and development events, commercial sales milestones, and royalties on product sales. The amount of variable consideration is constrained until it is probable that the revenue is not at a significant risk of reversal in a future period.

In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under a collaboration arrangement, the Company applies the five-step model of ASC 606: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract, including whether they are capable of being distinct; (iii) determine the transaction price, including the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company applies significant judgment when evaluating whether contractual obligations represent distinct performance obligations, allocating transaction price to performance obligations within a contract, determining when performance obligations have been met, and assessing the recognition of variable consideration. When consideration is received prior to the Company completing its performance obligation under the terms of a contract, a contract liability is recorded as deferred revenue. Deferred revenue expected to be recognized as revenue within the twelve months following the balance sheet date is classified as a current liability.

In January 2023, the Company entered into the Collaboration Agreement with AbbVie, which was determined to be within the scope of ASC 606. Please see Note 3 for further information related to the accounting for the Collaboration Agreement.

Research and development costs

Research and development costs are charged to expense as incurred. Research and development costs consist of costs incurred in performing research and development activities, including salaries and bonuses, share-based

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compensation, employee benefits, facilities costs, laboratory supplies, depreciation and amortization, preclinical and clinical development expenses, including manufacture and testing of clinical supplies, consulting and other contracted services. Additionally, under the terms of the license agreements described in Note 7, the Company is obligated to make future payments should certain development and regulatory milestones be achieved. Costs for certain research and development activities are recognized based on the terms of the individual arrangements, which may differ from the timing of receipt of invoices and payment of invoices and are reflected in the condensed financial statements as a prepaid or accrued expense.

Share-based compensation

The Company’s share-based compensation program allows for grants of stock options and restricted stock awards. Grants are awarded to employees and non-employees, including directors.

The Company accounts for its share-based compensation awards granted to employees and nonemployees based on the estimated fair value on the date of grant and recognized compensation expense of those awards over the requisite service period, which is the vesting period of the respective award. The Company accounts for forfeitures as they occur. For share-based awards with service-based vesting conditions, the Company recognized compensation expense on a straight-line basis over the service period. The Company classified share-based compensation expense in its statements of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.

The Company estimates the fair value of options granted using the Black-Scholes option pricing model for stock option grants to both employees and non-employees. The Black-Scholes option pricing model requires inputs based on certain subjective assumptions, including (i) the expected stock price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) expected dividends. Due to the lack of Company-specific historical and implied

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volatility data, the Company has based its computation of expected volatility on the historical volatility of a representative group of public companies with similar characteristics to the Company, including stage of product development and biopharmaceutical industry focus. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The Company uses the simplified method to calculate the expected term for options granted to employees and non-employees whereby, the expected term equals the arithmetic average of the vesting term and the original contractual term of the options due to its lack of sufficient historical data. The risk-free interest rate is based on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. The exercise price is the fair value of the common stock as of the measurement date.

Net loss per share

Basic net loss per share of common stock is computed by dividing the net loss attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net loss per share of common stock is computed by adjusting net loss attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share of common stock is computed by dividing the diluted net loss by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of common stock equivalents.

The following potentially dilutive securities outstanding as of June 30, ~~2022~~2023 and ~~2021~~2022 have been excluded from the computation of diluted weighted-average shares of common stock outstanding, as they would be anti-dilutive:

June 30,


2022

2021

Stock options⁽¹⁾

2,532,644

2,016,036

Common stock warrants⁽¹⁾

1,303,112

1,362,181

3,835,756

3,378,217


	June 30,
	2023	2022
Stock options⁽¹⁾	3,038,080	2,532,644
Common stock warrants⁽¹⁾	500,000	1,303,112
Unvested restricted stock awards ⁽¹⁾	2,083	—
	3,540,163	3,835,756

(1)	Represents common stock equivalents.

In periods in which the Company reports a net loss per share of common stock, diluted net loss per share of common stock is the same as basic net loss per share of common stock since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss per share of common stock for the three and six months ended June 30, ~~2022~~2023 and ~~2021.~~2022.

Leases

~~Effective January 1, 2022, the~~The Company ~~adopted ASU No. 2016-02,~~ ~~Leases~~ ~~(“ASC 842”) using the modified retrospective approach by applying the new standard to all~~accounts for leases ~~existing on the adoption date. The results for reporting periods beginning after January 1, 2022 are presented~~ in accordance with ASC 842, ~~while prior period amounts are not adjusted and continue to be reported under the accounting standards that were in effect prior to January 1, 2022.~~

Leases. At the inception of an arrangement, the Company determines whether an arrangement contains a lease based on facts and circumstances present in the arrangement. An arrangement is or contains a lease if the arrangement conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Typically, lessees are required to recognize leases with a term greater than one year on the condensed balance ~~sheet~~sheets as an operating or finance lease liability and right-of-use asset. Right-of-use assets represent the Company’s right to use an underlying asset during the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. The Company has elected the practical expedient to not to recognize leases with a term of 12 months or less. The Company does not have any financing leases as of June 30, ~~2022.~~2023.

Operating lease liabilities and their corresponding right-of-use assets are recorded based on their present value of lease payments over the remaining lease term. Options to extend the lease term are included in the Company’s assessment of the lease term only if there is a reasonable assessment that the Company will renew. Leases are discounted to its present value using either the interest rate implicit in the Company’s lease or its incremental borrowing rate, which

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reflects the fixed rate in which the Company could borrow on a collateralized basis the amount of lease payments in the same currency, for a similar term, in a similar economic environment.

Recently adopted accounting ~~standards~~

standard

On January 1, ~~2022,~~2023, the Company adopted ~~ASC 842, which establishes ASC 842 and supersedes the lease accounting~~ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments. This standard amended its guidance ~~under ASC 840. The standard generally requires lessees to recognize operating and finance lease liabilities and corresponding right-of-use (ROU) assets~~ on the balance sheet and provide enhanced disclosures on the amount, timing, and uncertainty of cash flows arising from lease arrangements. The Company adopted ASC 842 using the modified retrospective approach. The Company elected the package of practical expedients available for existing contracts, which allowed the Company to carry forward our historical assessments of lease identification, lease classification, and initial direct costs. The Company also elected a policy to not apply the recognition requirements of ASC 842 for short-term leases with a term of 12 months of less.

As of January 1, 2022, the effective date, the Company identified one operating lease arrangement relating to the Company’s headquarters facility and one short-term lease relating to laboratory equipment. The adoption of ASC 842 resulted in a recognition of ~~an ROU asset and~~ ~~lease~~ ~~liability~~impairment losses of ~~$0.2 million~~certain financial instruments. The ASU established the current expected credit loss model, which is based on ~~the Company’s balance sheet relating to the leases as~~expected losses rather than incurred losses. Adoption of ~~January 1, 2022. The adoption of the~~this standard ~~did not have a material effect~~had no impact on the Company’s condensed ~~statements~~financial statements.

3. Collaboration Agreement with AbbVie

In January 2023, the Company entered into the Collaboration Agreement with AbbVie, pursuant to which the Company will use its proprietary discovery engine to discover and validate targets derived from patients with three specified tumor types, and antibodies that bind to such targets, which may be the subject of ~~operations~~further development and ~~condensed statements~~commercialization by AbbVie. Pursuant to the terms of ~~cash flows (Note 8).~~the Collaboration Agreement, the Company granted to AbbVie an exclusive option to purchase all rights to each novel target-antibody pair, or a Validated Target Pair or VTP, that the Company generates that meets certain mutually agreed criteria, up to a maximum of 10 in total, for all human and non-human diagnostic, prophylactic and therapeutic uses throughout the world, including the development and commercialization of certain products, or Products, derived from the assigned VTP.

~~Recently issued~~AbbVie paid the Company a nonrefundable upfront payment of $30.0 million in January 2023 and will pay certain additional platform access payments in the aggregate amount of up to $70.0 million based on the Company’s use of its discovery engine in connection with activities under each stage of the research plan, and delivery of VTPs to AbbVie. AbbVie will also pay an option exercise fee in the low single digit millions for each of up to 10 VTPs for which it exercises an option. If AbbVie progresses development and commercialization of a Product, AbbVie will pay the Company development and commercial sale milestones of up to $120.0 million per target, and sales milestones based on achievement of specified levels of net sales of Products of up to $150.0 million in the aggregate per Product, subject to specified deductions in certain circumstances. On a Product-by-Product basis, AbbVie will pay the Company tiered royalties on net sales of Products at a percentage in the low single digits, subject to specified reductions and offsets in certain circumstances. AbbVie’s royalty payment obligation will commence, on a Product-by-Product and country-by-country basis, on the first commercial sale of such Product in such country and will expire on the earlier of (a) the later of (i) the ten-year anniversary of the first commercial sale for such Product in such country, or (ii) solely with respect to a Product that incorporates an antibody comprising a VTP (or certain other antibodies derived from such delivered antibody), the expiration of all valid claims of patent rights covering the composition of matter of any such antibody and (b) the expiration of regulatory exclusivity for such Product in such country.

The Collaboration Agreement will expire upon the expiration of the last to expire royalty payment obligation with respect to all Products in all countries, subject to earlier expiration if all option exercise periods for all VTPs expire without AbbVie exercising any option, if AbbVie does not elect to make certain platform access payments at specified points during the research term, or upon the uncured material breach or any insolvency event of either party. AbbVie may also terminate the Collaboration Agreement for convenience upon a specified period prior written notice, or upon the Company’s breach of representations and warranties with respect to debarment or compliance with anti-bribery and anti-corruption laws.

The Company assessed the Collaboration Agreement under ASC 808 and ASC 606 and concluded that it represents a contract with a customer. The Company applied the relevant guidance of ASC 606 to evaluate the accounting ~~pronouncements~~under the Collaboration Agreement and identified one performance obligation under the arrangement: a promise to provide research and development services to AbbVie, or R&D Services. The Company evaluated the options to continue the R&D services and options to purchase licenses to each VTP and concluded that these options did not represent material rights.

The Company determined the initial transaction price of the single performance obligation to be $30.0 million, as the variable consideration for additional R&D services, option exercise payments, and development milestone payments

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are all subject to constraint at contract inception. At each reporting period, the Company will reevaluate the variable consideration subject to constraint and, if necessary, will adjust its estimate of the overall transaction price. For the sales-based royalties, the Company will recognize revenue when the related sales occur.

Collaboration revenue from the single performance obligation will be recognized over the estimated performance of the R&D services using the cost-to-cost input method which the Company believes best depicts the transfer of control to the customer. Under the cost-to-cost input method, the extent of progress towards completion is measured based on the ratio of actual costs incurred to the total estimated costs expected upon satisfying the performance obligation. The Company recognized $4.3 million and $6.6 million of collaboration revenue for the three and six months ended June 30, 2023, respectively.

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


	Three Months Ended June 30, 2023		Six Months Ended June 30, 2023
Balance at the beginning of the period	$	27,636	$	—
Deferral of revenue		—		30,000
Recognition of unearned revenue		(4,263)		(6,627)
Balance at the end of the period	$	23,373	$	23,373

~~In November 2021,~~As of June 30, 2023, the ~~FASB issued ASU Topic 832,~~ ~~Disclosures by Business Entities about Government Assistance~~ ~~(“ASC 832”). This standard requires annual disclosures about transactions~~Company expects to recognize the deferred revenue associated with ~~a government that have been accounted for by analogizing to a grant or contribution accounting model to increase transparency about~~ the ~~types~~non-refundable upfront fee over the estimated research and development period of transactions, the accounting for the transactions, and the effect of the transactions on an entity’s financial statements. The effective date of ASC 832 is for financial statements issued for annual periods beginning after December 15, 2021. The Company is currently evaluating the effect ASC 832 will have on its financial statements and related disclosures.approximately 1.5 years.

3.4. Government assistance programs

DoD expense reimbursement contract

In July 2020, the Company entered into ~~an Other Transaction Authority for Prototype~~the OTA Agreement ~~(the “OTA Agreement”)~~ with the ~~DoD~~U.S. Department of Defense’s Joint Program Executive Office for Chemical, Biological, Radiological and Nuclear Defense, or JPEO-CBRND, in collaboration with the Defense Health Agency, to fund the Company’s efforts in developing an antibody cocktail therapeutic to treat COVID-19. The amount of funding originally made available to the Company under ~~this expense reimbursement contract~~the OTA Agreement was $13.3 million. In May 2021, the Company and the DoD amended the OTA Agreement, pursuant to which the DoD award was increased from $13.3 million to $17.6 million. In January 2023, the Company and the DoD modified the OTA Agreement to extend the termination date of the OTA Agreement to July 2023, at no additional cost to the government. All other terms and conditions remain the same and are in full force and effect.

Under the OTA Agreement, the DoD is required to pay the Company, upon submission of ~~proper~~ invoices for approved budgeted supplies delivered and services rendered in carrying out the prototype project, within 30 calendar days of receipt of request for payment. The Company received the maximum $17.6 million in expense reimbursement from the DoD under the OTA Agreement from inception through 2022.

The Company recorded contra-research and development expense related to the OTA Agreement of ~~$0.01 million~~$11,000 and $0.6 million for the three and six months ended June 30, 2022 ~~respectively,~~ in the condensed statements of operations. ~~The Company recorded~~No contra-research and development expense related to the OTA Agreement ~~of $4.1 million and $8.1 million for~~was recorded during the three and six months ended June 30, 2021, respectively, in the condensed statements of operations. The Company had an expense reimbursement receivable balance of $0.2 million and $2.7 million due from the DoD in prepaid expenses and other current assets as of June 30, 2022 and December 31, 2021, respectively, in the accompanying condensed balance sheets.

Costs that have been reimbursed by the DoD but not yet expensed by the Company are recorded as a deferred research obligation liability for the period. The Company has a deferred research obligation liability of $0.01 million and $2.0 million as of June 30, 2022 and December 31, 2021, respectively. This amount is included in accrued expenses and other liabilities in the accompanying condensed balance sheets. DoD reimbursable services that have been performed but not yet billed are recorded as an unbilled receivable in prepaid expenses and other current assets in the accompanying

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~~condensed balance sheets. The Company had an unbilled receivable from the DoD of $0 and $1.6 million as of June 30, 2022 and December 31, 2021, respectively.~~

~~As of June 30, 2022, the Company has received $17.4 million in expense reimbursement from the DoD under the OTA Agreement.~~2023.

~~U.S. Department of Treasury~~ CARES Act employee retention credit

Under the provisions of the CARES Act, the Company met eligibility criteria for a $0.8 million refundable employee retention credit. The Company recorded contra-expense to personnel related costs within research and development expense of $0.6 million and contra-general and administrative expense of $0.2 million for the three and six months ended June 30, 2022, ~~respectively, in the condensed statements of operations. NaN~~respectively. No such ~~amounts~~costs were ~~recognized~~recorded for the three and six months ended June 30, ~~2021.~~2023. The Company had an employee retention credit receivable balance due from the U.S. Department of Treasury of

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$0.2 million and $0.8 million ~~and $0~~ in prepaid expenses and other current assets as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively, in the accompanying condensed balance sheets.

4.5. Prepaid expenses and other assets

Prepaid expenses and other assets consisted of the following:


(in thousands)	June 30, 2022		December 31, 2021		June 30, 2023		December 31, 2022
Prepaid subscriptions and service contracts					$	497	$	876
Prepaid insurance						271		158
CARES Act employee retention credit receivable	$	847	$	—		208		847
Prepaid insurance		830		2,019
Research and development advance payments		501		586		134		445
Other prepaids and short-term deposits		528		492
Reimbursement receivable from DoD		243		2,674
Unbilled reimbursement receivable from DoD		—		1,638
	$	2,949	$	7,409	$	1,110	$	2,326

5.6. Accrued expenses and other liabilities

Accrued expenses and other liabilities consisted of the following:


(in thousands)	June 30, 2022		December 31, 2021		June 30, 2023		December 31, 2022
Research and development	$	2,205	$	2,840	$	1,980	$	2,261
Professional fees						1,649		481
Compensation and related benefits		932		1,246		907		1,874
Professional fees		134		227
Short-term operating lease liability and other liabilities		66		317		489		293
Deferred research obligations		22		2,021		—		22
	$	3,359	$	6,651	$	5,025	$	4,931

~~6. Long-term debt~~

On April 30, 2020, the Company entered into a loan agreement with Silicon Valley Bank as the lender (“Lender”) for a loan in an aggregate principal amount of $0.5 million (“PPP Loan”) pursuant to the Paycheck Protection Program (“PPP”) under the CARES Act and implemented by the U.S. Small Business Administration (“SBA”). The Company used the proceeds of the PPP Loan for payroll and other qualifying expenses. The entire PPP Loan was forgiven on May 21, 2021 and recognized as other income in the condensed statements of operations.

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7. Commitments and contingencies

Employment agreements

The Company entered into employment agreements, ~~(the “Employment Agreements”)~~or the Employment Agreements, with certain key personnel providing for compensation and severance in certain circumstances, as defined in the respective Employment Agreements. The Employment Agreements may be terminated by either the Company or the employees in accordance with the respective Employment Agreements (subject to the payment of severance upon certain terminations) and provide for annual pay adjustments and bonuses at the discretion of the Board of Directors.

Employee benefit plan

The Company maintains a defined-contribution plan under Section 401(k) of the Internal Revenue Code, ~~(the “401(k) Plan”).~~or the 401(k) Plan. The 401(k) Plan covers all employees who meet defined minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. The Company assumes all administrative costs of the 401(k) Plan and makes matching contributions as defined in the 401(k) Plan document. The Company made matching contributions of $0.1 million to the 401(k) Plan for each of the three and six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

Legal proceedings

The Company is not a party to any material litigation and does not have contingency reserves established for any litigation liabilities. At each reporting date, the Company evaluates whether a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies.

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License ~~Agreements~~agreements

The Company entered into various license agreements to further discover, develop and commercialize certain technologies and treatments. The Company may need to pay developmental and regulatory milestone payments of up to approximately $2.6 million. In addition, the Company may need to pay royalty rates on net product sales, a portion of certain sublicense and collaboration payments, and certain commercial milestone payments of up to approximately $1.5 million, if any.

The Company recorded $0.1 million of development, regulatory, or commercial milestone payments during the three and six months ended June 30, 2022, respectively, in research and development expenses in the condensed statements of operations. ~~NaN~~No such costs were recorded during the three and six months ended June 30, ~~2021,~~2023, respectively.

Whitehead Letter Agreement

~~8. Leases~~

~~Effective January 1,~~On November 17, 2022, the Company adopted ASC 842 using the modified retrospective approach by applying the new standard to all leases existing on the adoption date. The results for reporting periods beginning after January 1, 2022 are presented in accordance with ASC 842, while prior period amounts are not adjusted and continue to be reported under the accounting standards that were in effect prior to January 1, 2022. The Company elected the practical expedient to recognize short-term leases under ASC 840.

~~In May 2017,~~ the Company entered into a ~~62-month office~~Letter Agreement, or the Letter Agreement, with the Whitehead Institute of Biomedical Research, or Whitehead, which became effective on January 4, 2023 upon the satisfaction of the conditions described therein. The Letter Agreement supplements the Exclusive Patent License Agreement entered into between the Company and ~~laboratory space lease commencing~~Whitehead on June 25, 2009 (as amended on December 17, 2009, March 21, 2013, August 21, 2017 and July ~~1, 2017 for approximately 11,000 square feet of space~~21, 2020, the License Agreement). Pursuant to the Letter Agreement, Whitehead and the Company agreed that certain payments received by the Company from the Collaborator (as defined in ~~Exton, Pennsylvania.~~the Letter Agreement) (i.e., a corporate partner, as defined in the License Agreement) would be excluded from the Company’s payment obligations to Whitehead. The Company ~~has an option to extend the lease for up to 2 additional five-year terms. In December 2021,~~and Whitehead further agreed, among other things, that the Company ~~extended~~will make certain payments to Whitehead (i) as Net Sales (as defined in the ~~lease for an additional eighteen-month term ending in March 2024.~~

~~Beginning July 2021,~~License Agreement) as long as the Company ~~leased laboratory equipment~~receives those payments from the Collaborator on a ~~month-to-month basis. In April 2022,~~specified number of products purchased by the Collaborator and (ii) upon the achievement of certain milestones whether by the Company ~~terminated~~or the ~~agreement through exercising the option to purchase the leased laboratory equipment under the lease agreement.~~Collaborator.

~~Table of Contents~~

8. Leases

The Company leases office and laboratory space for approximately 11,000 square feet of space in Exton, Pennsylvania that currently extends until March 2024. The Company has an option to extend the lease for up to two additional five-year terms.

Supplemental condensed balance sheet information related to leases ascomprised of ~~June 30, 2022 was as follows~~the following (in thousands):

Operating leases:

Operating lease right-of-use assets
$
182

Operating lease liability
$
64
Operating lease liability, net of current portion

124
Total operating lease liability
$
188


		June 30, 2023		December 31, 2022
Operating lease right-of-use assets	$	174	$	284

Operating lease liability	$	180	$	229
Operating lease liability, net of current portion		—		62
Total operating lease liability	$	180	$	291

Operating lease liability and operating lease liability, net of current portion is included in accrued expenses and other current liabilities and other long-term liabilities, respectively, in the accompanying condensed balance sheets.

~~Supplemental~~Operating lease expense ~~related to leases~~recorded as research and development and general and administrative expenses in the condensed statements of operations was as ~~follows:~~follows (in thousands):

Lease Cost (in thousands)

Statements of Operations Classification

Three Months Ended June 30, 2022
Six Months Ended June 30, 2022
Operating lease cost

General and administrative
Research and development
$
60
121
Short-term lease cost

General and administrative
Research and development

-
53
Total lease expense

$
60
174


	Three Months Ended June 30,				Six Months Ended June 30,
		2023		2022		2023		2022
General and administrative	$	18	$	19	$	38	$	37
Research and development		42		41		83		84
Total lease expense	$	60	$	60	$	121	$	121

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~~Under ASC 840, rent expense was $0.1 million for each~~Other operating lease information as of ~~the three and six months ended~~ June 30, ~~2021, respectively.~~

~~Other information related to the operating lease where the Company is the lessee~~2023 was as follows:


		~~Six Months Ended June 30, 2022~~
Weighted-average remaining lease term (in years)		~~1.75~~0.8
Weighted-average discount rate		9.0%

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

Six Months Ended June 30, 2022
Cash paid for operating lease liability
$
114


	Six Months Ended June 30,
		2023		2022
Cash paid for operating lease liability	$	122	$	114

As of June 30, ~~2022,~~2023, minimum rental commitments under the operating lease were as follows (in thousands):


Years ending December 31,	Amount		Amount
2022 (represents remaining six months in 2022)	$	120
2023		246
2023 (represents remaining six months in 2023)			$	124
2024		63		63
Total lease payments		429		187
Less imputed interest		(241)		(7)
Present value of lease liability	$	188	$	180

~~Table of Contents~~

9. Common stock

Common stock

The holders of common stock are entitled to 1one vote for each share of common stock. Subject to the approval of the holders of a majority in interest of the Company’s stockholders entitled to vote thereon, the holders of common stock ~~shall be~~are entitled to receive dividends out of legally available funds. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the Company, the holders of common stock are entitled to share ratably in the remaining assets of the Company available for distribution.

~~On April 28, 2021,~~In January 2023, the Company sold 1,000,000 units, each unit comprising 1 share of the Company’s common stock and 1 Series B Warrant (each, a “Series B Warrant”) to purchase one-half of a share of common stock. The units were issued in a private placement at a price of $27.00 per unit for gross proceeds of $27.0 million. The Series B Warrants are equity-classified, exercisable at any time, have an exercise price of $45.00 per share and will terminate at three years from the date of issuance. The fair value of the warrants on the date of issuance was $6.0 million. The fair value of the warrants was estimated using a Black-Scholes Option Pricing Model. The significant assumptions used in preparing the option pricing model for valuing the Company's warrants to purchase5,925 shares of common stock asunder the ATM Agreement resulting in net proceeds of ~~April 28, 2021 included (i) volatility of 82.7%, (ii) risk free interest rate of 0.35%, (iii) strike price of $45.00 per share, (iv) fair value~~approximately $34,000.

On January 15, 2023, the Company issued 55,250 shares of common stock in the aggregate to certain non-employee board of ~~$28.70 per share,~~directors pursuant to the 2020 Equity Incentive Plan in lieu of the non-employee director board and ~~(v) expected life~~committee cash retainers owed for service on the board of ~~three years. The Series B Warrants are callable by the Company~~directors in ~~certain circumstances.~~2022.

Warrants to acquire shares of common stock

At June 30, ~~2022,~~2023, common stock warrants outstanding were as follows:

Warrants

Exercise Price per Share

Expiration Date
803,112

$ 9.00

June 2, 2023
500,000

$ 45.00

April 28, 2024


Warrants	Warrants Outstanding	Exercise Price per Share	Expiration Date
Series B	500,000	$ 10.00	April 28, 2024

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

No warrants were exercised during the three and six months ended June 30, 2023 and 2022, 0 warrants were exercised. During the six months ended June 30, 2021, 100,695 warrants were exercised, and the Company received proceeds of $0.9 million and 100,695 shares of the Company’s common stock were issued. Additionally, 72,320 warrants were cashless exercised during the six months ended June 30, 2021 and 45,322 shares of the Company’s common stock were issued.respectively.

~~10. Share-based compensation~~

In July 2008, the Board of Directors adopted the 2008 Equity Incentive Plan (the “2008 Plan”) which provided for the grant of qualified incentive stock options and non-qualified stock options, restricted stock or other awards to the Company’s employees, officers, directors, advisors, and outside consultants for the issuance or purchase of shares of the Company’s common stock. The 2008 Plan was replaced in July 2018 with the 2018 Equity Incentive Plan (2018 Plan and collectively with the 2008 Plan, the “Prior Plans”). At the time that the 2008 Plan was terminated, there were 388,748 shares available for grant that were transferred to the 2018 Plan. On September 24, 2020, the 2018 Plan was terminated and replaced with the 2020 Equity Incentive Plan (the “2020 Plan”). Additionally, the number of shares of our common stock reserved for issuance under the 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 the Company’s Board of Directors. As of June 30, 2022, there were 1,313,412 shares available for future issuance under the 2020 Plan.

The Company also adopted the 2020 Employee Stock Purchase Plan (“ESPP”) on September 18, 2020 which provides for the grant of purchase rights to purchase shares of the Company’s common stock to eligible employees, as

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10. Share-based compensation

On September 18, 2020, the Company adopted the 2020 Equity Incentive Plan, or the 2020 Plan, which supersedes all prior equity incentive plans. Under the 2020 Plan, the number of shares of common stock reserved for issuance under the 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 the Company’s capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the Company’s Board of Directors. On January 1, 2023, the number of shares available for future issuance under the 2020 Plan increased by 485,153 shares. As of June 30, 2023, there were 1,236,420 shares available for future issuance under the 2020 Plan.

The Company also adopted the 2020 Employee Stock Purchase Plan, or the ESPP, on September 18, 2020 which provides for the grant of purchase rights to purchase shares of the Company’s common stock to eligible employees, as defined by the ESPP. The maximum number of shares of common stock that may be issued under the ESPP will not exceed 125,000 shares of common stock, plus the number of shares of common stock that are automatically added on January 1 of each calendar year for a period of up to ten years, commencing on the first January 1 following the year in which an IPO occurs and ending on, and including, January 1, 2030, in an amount equal to the lesser of (i) 1% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, and (ii) 1,000,000 shares of common stock. ~~NaN~~On January 1, 2023, the number of shares available for future issuance under the ESPP increased by 121,288 shares. As of June 30, 2023, there were 473,733 shares available under the ESPP. No shares of common stock have been issued under the ESPP as of June 30, ~~2022.~~2023.

The 2020 Plan and the ESPP are administered by the Board of Directors subject to the Board’s right to delegate to a committee. The exercise prices, vesting and other restrictions are determined at the discretion of the Board of Directors. Stock options awarded under the ~~Prior Plans and the~~ 2020 Plan generally expire 10 years after the grant date unless the Board of Directors sets a shorter term. Vesting periods for awards under ~~the Prior Plans and~~ the 2020 Plan are determined at the discretion of the Board of Directors. Stock options granted to employees, officers, members of the Board of Directors and consultants of the Company typically vest over one to four years. Certain options provide for accelerated vesting if there is a change in control, as defined in the ~~Prior Plans and the~~ 2020 Plan.

Share-based compensation expense recorded for stock options and restricted stock awards as research and development and general and administrative expenses in the condensed statements of operations is as follows (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,


2022

2021

2022

2021
Research and development

$
462

$
368

$
907

$
522
General and administrative

865

381

1,730

552

$
1,327

$
749

$
2,637

$
1,074


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Research and development	$	427	$	462	$	857	$	907
General and administrative		606		865		1,400		1,730
	$	1,033	$	1,327	$	2,257	$	2,637

Unrecognized compensation cost related to unvested options and restricted stock awards was ~~$12.1~~$8.4 million as of June 30, ~~2022~~2023 and will be recognized over an estimated weighted average period of ~~3.5~~3.1 years.

Stock options

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

Six Months Ended June 30,


2022

2021


Expected volatility

85.6
%

83.1
%

Risk-free interest rate

2.7
%

1.1
%

Expected term (in years)

5.97

6.04

Expected dividend yield

—

—

Fair value of common stock

$
3.64

$
25.60


	Six Months Ended June 30,
	2023			2022
Expected volatility		88.5	%		85.6	%
Risk-free interest rate		3.8	%		2.7	%
Expected term (in years)		6.03			5.97
Expected dividend yield		—			—
Fair value of common stock	$	4.87		$	3.64

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A summary of option activity under the ~~Plans~~2020 Plan and ~~2020 Plan~~prior Plans during the six months ended June 30, ~~2022 is~~2023 was as follows:

Weighted

Weighted

average

average

remaining

Number of

exercise price

contractual

shares

per share

term (years)
Outstanding at January 1, 2022

2,005,756

$
11.26

8.50
Granted

543,900

3.64

9.90
Forfeited

—

—

—
Exercised

(17,012)

1.87

7.86
Outstanding at June 30, 2022

2,532,644

9.69

8.41
Exercisable at June 30, 2022

980,061

7.84

7.59
Vested or expected to vest at June 30, 2022

2,532,644

9.69

8.41


				Weighted
		Weighted		average
		average		remaining
	Number of	exercise price		contractual
	shares	per share		term (years)
Outstanding at January 1, 2023	2,519,405		9.60	7.90
Granted	658,900		4.87	9.70
Forfeited	(98,216)		11.56	—
Expired	(42,009)		16.25	—
Exercised	—		—	—
Outstanding at June 30, 2023	3,038,080		8.42	7.88
Exercisable at June 30, 2023	1,563,646		8.66	7.02

The weighted-average grant date fair value per share of stock options granted during the six months ended June 30, 2023 and 2022 was $3.67 and ~~2021 was~~ $2.65, ~~and $18.00,~~ respectively. The aggregate intrinsic value ~~of stock~~for options ~~exercised during the six months ended~~exercisable at June 30, ~~2022~~2023 was ~~$0.1~~$6.0 million. The aggregate intrinsic value of stock options outstanding at June 30, ~~2022 is $1.8~~2023 was $10.3 million.

~~11. Related party transactions~~Restricted stock awards

~~License agreements~~

The Company has entered into license agreements with certain stockholders of the Company. Expenses with these related parties were de minimis for the three and six months ended June 30, 2022 and 2021, respectively. In addition, amounts owed to these related parties were de minimis as of June 30, 2022 and December 31, 2021.

~~Broadband services agreement~~

~~In November 2015,~~During February 2023, the Company ~~entered into~~granted 25,000 shares of restricted stock awards to a management services agreement (the “Broadband MSA”) with BCM Advisory Partners LLC and Broadband Capital Partners LLC (collectively “Broadband Capital”). Certain directors of the Company are principals of Broadband Capital. Under the Broadband MSA, the Company engages Broadband Capital as a consultant ~~for advice in connection with senior management matters related to the Company’s business, administration and policies~~ in exchange for services that vest evenly over twelve months with a ~~cash fee to Broadband Capital~~vesting start date in January 2023. The weighted average grant fair value was $5.62 per share.

In July 2023, the consulting agreement was terminated which ceased the continuation of $20,000 per month. The Broadband MSA was amended and/or restated in July 2016, January 2017, June 2018, March 2020 and August 2020. In June 2021, the Company extended the Broadband MSA to continue through June 2022. The Company recorded $0.1 million during eachvesting of the three and six months ended June 30, 2022 and 2021, respectively, related to the Broadband MSA, which is included in general and administrative expenses in the condensed statements of operations. Amounts due to Broadband Capital were $0.1 million and $0 as of June 30, 2022 and December 31, 2021, respectively.restricted stock awards.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations, as well as other sections in this Quarterly Report on Form 10-Q, should be read in conjunction with (i) our unaudited interim financial statements and related notes thereto included elsewhere herein, (ii) Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, ~~2021,~~2022, as filed with the United States Securities and Exchange Commission (“SEC”) on March ~~28, 2022~~16, 2023 and (iii) our other public reports filed with the SEC. In addition to historical financial information, some of the information contained in the following discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts, including express or implied statements regarding Immunome’s beliefs and expectations regarding the advancement of its platform and programs, execution of its regulatory, research, clinical and strategic plans and anticipated upcoming milestones for its platform and programs, including expectations regarding, among other things, the timing and results of its preclinical studies and clinical trials, clinical plans, general regulatory actions, the translation of preclinical data into clinical safety and efficacy, the therapeutic potential and benefits of ~~our product~~its programs and development candidates, the possible need and demand for its ~~product~~programs and development candidates, are forward-looking statements. These statements involve known and unknown risks, uncertainties, assumptions and other important factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplates,” “believes,” “estimates,” ~~”should,~~“should,” ”seek,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events, financial trends and other matters that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions that are difficult to predict. Factors that could cause actual results to differ include, but are not limited to, those risks and uncertainties associated with: our expectations regarding the ~~impact of the COVID-19 pandemic on Immunome’s business, operations, strategy, goals and anticipated milestones;~~announced merger transaction with Morphimmune; the fact that research and development data are subject to differing interpretations and assessments; Immunome’s ability to execute on its strategy, including with respect to its R&D efforts, IND submissions and other regulatory filings, timing of these filings and the timing and nature of governmental authority feedback regarding the same, initiation, continuation and completion of any clinical studies, confirmatory testing and other anticipated milestones as and when anticipated; the effectiveness of Immunome’s ~~product~~programs and development candidates, including the possibility that further preclinical data and any clinical trial data may be inconsistent with the data used for advancing the ~~product~~programs and development candidates and that further variants of concern could emerge; Immunome’s ability to fund operations and raise capital; Immunome’s reliance on vendors; the competitive landscape; and the additional risks and uncertainties set forth more fully under the caption “Risk Factors” in Immunome’s Annual Report on Form 10-K filed with the SEC on March ~~28, 2022,~~16, 2023, and elsewhere in Immunome’s filings and reports with the SEC. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for us to predict all risk factors and uncertainties. In addition, we may discuss our ~~current~~programs and ~~potential future product~~development candidates that have not yet undergone clinical trials or been approved for marketing by the U.S. Food and Drug Administration or other governmental authority, including expectations about their therapeutic potential and benefits thereof. No representation is made as to the safety or effectiveness of these ~~current or potential future product~~programs and development candidates for the use for which such ~~product~~programs and development candidates are being studied. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Overview

Since our inception in 2006, we have devoted substantially all our resources to research and development, raising capital, building our management team and building our intellectual property ~~portfolio. To date, we have financed our~~portfolio and entering and executing on

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collaborations. To date, we have financed our operations primarily through sales of our common stock, Series A convertible preferred stock and warrants, warrant exercises, the issuance of convertible promissory notes, ~~and~~ the Paycheck Protection Program loan, (“or the PPP ~~loan”)~~loan, that was forgiven in May ~~2021. In addition, in July 2020, the Company entered into an Other Transaction Authority for Prototype Agreement (“OTA Agreement”)~~2021, and strategic partnerships with AbbVie Global Enterprises Ltd., ~~with~~or AbbVie, and the Department of Defense, ~~(“DoD”) to fund~~or the Company’s efforts in developing an antibody cocktail therapeutic to treat COVID-19. The amount of funding available to the Company under this expense reimbursement contract was $13.3 million. In May 2021, the Company and the DoD amended the OTA Agreement, pursuant to which the DoD award was increased from $13.3 million to $17.6 million. As of June 30, 2022, the Company has received $17.4 million in expense reimbursement from the DoD under the OTA Agreement.DoD.

~~As of June 2022, the Company has transitioned into a clinical stage biopharmaceutical company as our Phase 1b study of IMM-BCP-01 in patients infected with SARS-CoV-2 is underway.~~ To date, we have not generated any revenue from ~~product~~commercial sales and do not expect to generate revenue from ~~the~~commercial sale of products for the foreseeable future. Since inception we have incurred significant operating losses. Our net losses for the three months ended June 30, 2023 and 2022 ~~and 2021~~ were ~~$8.9~~$5.6 million and ~~$5.2~~$8.9 million, respectively, and ~~$20.6~~$9.8 million and ~~$9.1~~$20.6 million for the six months ended June ~~30,~~2023 and 2022, ~~and 2021,~~ respectively.

As of June 30, ~~2022,~~2023, we had a cash ~~balance~~and cash equivalents of ~~$34.6~~$38.4 million. ~~We expect to continue to incur losses for the foreseeable future.~~ We expect to continue to incur significant expenses and ~~increasing~~ operating losses ~~in connection with ongoing research and development activities related to our portfolio of programs~~for the foreseeable future as we continue ~~our preclinical and clinical development~~advancement of our programs and develop product ~~candidates for IMM-ONC-01 and IMM-BCP-01, respectively.~~candidates. We also plan to perform research activities as we seek to discover and develop additional product candidates; carry out maintenance, expansion, enforcement, defense, and protection of our intellectual property portfolio; and hire research and development, clinical and administrative personnel. If we cannot obtain the necessary funding to support these activities on favorable terms, if at all, we will need to delay, scale back or eliminate some or all of our research and development ~~programs.~~efforts. We may also need to consider ~~other~~ various strategic alternatives, including a merger or sale of the Company; or reduce or cease operations. If we engage in collaborations, we may receive lower consideration upon commercialization of such products or technologies than if we had not entered into such arrangements or if we entered into such arrangements at later stages in the research and development process. WeOther than the current and potential future sources of funding under the Collaboration Agreement with AbbVie, we currently have no other sources of revenue, and our ability to continue to fund our future business plans is dependent on our ability to raise capital to fund our present and future business plans. Additionally, volatility in the capital markets, the competitive landscape and general economic conditions in the United States may be a significant obstacle to raising the required funds.

We expect to continue to incur significant expenses ~~and increasing operating losses~~ in connection with ongoing ~~development~~ activities, particularly if and as we:

●

continue research and development ~~activities, including pre-clinical and clinical development;~~activities;

●

pursue regulatory approvals and implement other regulatory strategies for our ~~current and future product candidates;~~programs;

●

take additional steps to advance our discovery engine and our existing and future pipeline;

●

obtain, maintain, expand and protect our intellectual property portfolio;

●

hire additional research and development, clinical and administrative personnel;

●

scale up and expand our clinical and regulatory capabilities; ~~and~~

●

add operational, financial and management information systems and infrastructure to support our research and development programs, and any future commercialization ~~efforts.~~efforts;

●

complete the Merger with Morphimmune

As a result of these anticipated expenditures and potential unanticipated expenditures, we will need substantial additional financing to support our continuing operations and pursue our growth strategy. Until such time as we generate

~~Table of Contents~~

significant revenue from product sales, if ever, we expect to finance our operations through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of any stockholder will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic

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alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market ~~product~~programs and development candidates that we would otherwise prefer to develop and market ourselves. We may be unable to raise additional funds or enter into such other agreements when needed on favorable terms or at all. The inability to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy.

Through June 30, 2022, we raised an aggregate of $125.1 million in gross proceeds from sales of our common stock, Series A convertible preferred stock and warrants, warrant and stock option exercises, the issuance of convertible promissory notes, and the PPP loan. On October 1, 2021, we entered into an Open Market Sale Agreement (“ATM Agreement”) with Jefferies Group LLC, which provides that, upon the terms and subject to the conditions and limitations in the ATM Agreement, the Company may elect, from time to time, to offer and sell common shares having an aggregate offering price of up to $75.0 million through Jefferies Group LLC acting as sales agent. The Company has not yet sold any shares under the ATM Agreement.

We expect that our cash as of June 30, ~~2022~~2023, exclusive of any potential proceeds received in connection with the potential closing of the Merger and concurrent PIPE transaction, will be sufficient to fund our operations at least 12 months from the filing date of this Quarterly Report on Form ~~10-Q, including our planned Phase 1b studies for IMM-BCP-01 and IMM-ONC-01.~~10-Q. We have based these estimates on assumptions that may prove to be imprecise, and we may exhaust our available capital resources sooner than we currently expect. See ~~“— Liquidity~~“Liquidity and capital resources.” Due to the numerous risks and uncertainties associated with the research and development of our programs, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with completing the research and development of our ~~product~~programs and development candidates.

~~Our Lead Discovery Programs~~Merger Agreement

~~SARS-CoV-2 (“IMM-BCP-01”)~~

~~We are actively~~On June 29, 2023, we entered into an Agreement and Plan of Merger and Reorganization, or the Merger Agreement, with Morphimmune Inc., a Delaware corporation, or Morphimmune, a biotechnology company focused on developing ~~an antibody cocktail, comprising~~targeted oncology therapeutics, and Ibiza Merger Sub, Inc., a ~~combination~~Delaware corporation and wholly owned subsidiary of ~~three effective anti-viral antibodies derived from~~Immunome, or Merger Sub. Upon the ~~B cells of COVID-19 patients that exhibit high neutralizing titers. IMM-BCP-01 targets non-overlapping regions~~terms and subject to the satisfaction of the ~~Spike protein of SARS-CoV-2 which include highly conserved, subdominant epitopes.~~conditions described in the Merger Agreement, Merger Sub will be merged with and into Morphimmune, with Morphimmune surviving as our wholly owned subsidiary, or the Merger. The cocktail promotes both ACE2 and non-ACE2 dependent neutralization and induces natural viral clearance mechanisms such as antibody dependent cellular cytotoxicity, complement activation and phagocytosis in pre-clinical testing. If successful in clinical testing, we expect that our antibody cocktail product candidate could be used bothMerger is intended to qualify as a ~~treatment~~tax-free reorganization for ~~individuals who~~U.S. federal income tax purposes and is expected to close by the end of 2023.

At the Effective time, each share of Morphimmune capital stock outstanding immediately prior to the Effective Time will be automatically converted solely into the right to receive 0.3042 shares of the Company’s common stock, or the Exchange Ratio, and, if applicable, an amount in cash, rounded to the nearest whole cent, in lieu of any fractional share interest in the Company’s common stock to which such holder otherwise would have ~~contracted SARS-CoV-2~~been entitled (after aggregating all fractional shares issuable to such holder). Each option to purchase shares of Morphimmune capital stock, or a Morphimmune Option, that is outstanding and ~~as a prophylactic~~unexercised immediately prior to ~~offer protection against~~ the ~~virus for individuals who are at risk of contracting SARS-CoV-2. We are conducting this program~~Effective Time under Morphimmune’s 2020 Equity Incentive Plan, or the Morphimmune Plan, whether or not vested, will be converted into and become an option to purchase the Company’s common stock using the Exchange Ratio, and the Company will assume the Morphimmune Plan and each such Morphimmune Option in ~~collaboration~~accordance with the ~~DoD,~~terms of the Morphimmune Plan and the terms of the stock option agreement by which ~~has asserted that this platform may be~~such Morphimmune Option is evidenced.

Immediately following the Merger, the pre-Merger equityholders of ~~strategic importance, due~~the Company are expected to ~~its potential use~~own approximately 55% of the shares of the Company’s common stock and the pre-Merger equityholders of Morphimmune are expected to own approximately 45% of the Company’s common stock, in each case, on a fully diluted basis, excluding out-of-the-money securities of the ~~current COVID-19 pandemic~~Company as ~~well as~~of June 28, 2023, unallocated shares of the Company’s common stock available for issuance under the Company’s 2020 Equity Incentive Plan and employee stock purchase plan, and the grant of a stock option to Dr. Clay Siegall, Ph.D., in ~~future viral outbreaks. The IMM-BCP-01 program is broadly focused on~~connection with his employment agreement to become Chief Executive Officer of the ~~emerging variants~~Company upon consummation of ~~SARS-CoV-2. IMM-BCP-01 retains neutralization activity, in preclinical testing, against~~ the ~~Omicron variant~~Merger, and ~~its sub-lineages, including the BA.4/.5 variants, which account for the majority of current cases. We submitted an IND application for the IMM-BCP-01 program~~prior to giving effect to the U.S. FDA in November 2021. Following a brief clinical hold, the U.S. FDA communicated that the clinical study can be initiated for our antibody cocktail for the treatment of SARS-CoV-2. Our Phase 1b study of IMM-BCP-01 in patients infected with SARS-CoV-2 is underway with topline data expected in the second half of 2022.PIPE financing as described below.

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~~Oncology (“IMM-ONC-01”)~~Anticipated Accounting Treatment

Subscription Agreements

In connection with the execution of the Merger Agreement, on June 29, 2023, the Company entered into subscription agreements, each, a Subscription Agreement, with certain investors, or the PIPE Investors, pursuant to which, among other things, the PIPE Investors have agreed to subscribe for and purchase, and the Company has agreed to issue and sell to the PIPE Investors, an aggregate of 21,690,871 shares of the Company’s common stock for an aggregate purchase price of approximately $125.0 million, on the terms and subject to the conditions set forth therein. The shares of the Company’s common stock were sold to the PIPE Investors at a price per share equal to $5.75 and, in the case of affiliate investors, $5.91 per share, the consolidated closing bid price per share immediately preceding the entry into the Subscription Agreement. The closing of the PIPE financing is expected to occur in connection with and immediately following the consummation of the Merger.

Our current programs and strategic collaboration

Oncology (IMM-ONC-01)

Our lead oncology program ~~is focused on~~targets IL-38, which we believe is a novel, negative regulator of inflammation capable of promoting tumor evasion of the immune system. IL-38 was identified as the target of an antibody isolated from a hybridoma library generated from the memory B cells of a patient with squamous head and neck cancer. Query of public and proprietary (Tempus) databases of cancer gene expression revealed over-expression of IL-38 in multiple solid tumors. Further, a correlation with low levels of tumor-infiltrating immune effector cells, a hallmark of immune suppression in some of these patients’ tumors, and high IL-38 expression was also observed, suggesting a role for IL-38 as an immune ~~checkpoint.~~modulator. Data obtained from preclinical testing indicated that blocking IL-38 function using inhibitory antibodies increased the immune response to the tumor and resulted in anti-tumor activity in select animal models, suggesting that anti-IL-38 antibodies could have therapeutic utility as single agents or in combination with other therapeutic modalities. Our recent analysis further confirms IL-38 expression is frequently elevated in samples of select patient tumor subtypes, in cancers such as head and neck, lung and gastroesophageal. We believe that this information could potentially guide patient selection for early clinical testing and may improve the overall probability of demonstrating clinical utility, thereby improving the probability of clinical success. We plan to submit our IND application for the IMM-ONC-01 program in the ~~second half~~first quarter of ~~2022.~~2024.

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SARS-CoV-2 (IMM-BCP-01)

We developed an antibody cocktail derived from the B cells of COVID-19 patients who exhibited high neutralizing titers. IMM-BCP-01 targets non-overlapping regions of the Spike protein of SARS-CoV-2 which include highly conserved, subdominant epitopes. The cocktail promotes both ACE2 and non-ACE2 dependent neutralization and induces natural viral clearance mechanisms such as antibody dependent cellular cytotoxicity, complement activation and phagocytosis in pre-clinical testing. We are conducting this program in collaboration with the DoD. The IMM-BCP-01 program is broadly focused on the emerging variants of SARS-CoV-2. We submitted an IND application for the IMM-BCP-01 program to the U.S. FDA in November 2021 and initiated the Phase 1b study of IMM-BCP-01 in patients infected with SARS-CoV-2 in June 2022. On January 6, 2023, we announced that it successfully completed dosing of the first cohort of patients in a Phase 1b study with no significant treatment-related adverse events. We have decided to seek a partner in order to continue the trial and for any further development activities.

Other Programs and ~~Platform~~Platforms

In addition to the already described ~~lead discovery~~current programs, we will continue to invest in our proprietary discovery engine to expand our pipeline. The high output of antibody-target pairs resulting from our discovery engine may provide us with additional insights into the immune response against cancer and ~~infectious~~other diseases. We intend to continue to invest in this platform, to evaluate novel antibody-target pairs and to develop a pipeline of antibody therapeutics as single agents or in combination with other therapeutics or utilize technologies to yield ~~product~~development candidates with therapeutic modalities, such as Antibody-Drug Conjugates, ~~(“ADCs”). We believe our discovery engine has the ability to advance one to two programs into IND-enabling studies per year.~~

We also intend to continue to explore additional strategic partnerships and collaborations to expand our opportunities and capabilities. We intend to continue to form strategic partnerships with government agencies and with other third parties to accelerate our research and development efforts, as exemplified by our other transaction authority for prototype agreement with the DoD related to COVID-19. The insights we obtain may also enable strategic partnerships with other entities, including pharmaceutical and biotechnology companies. We also intend to continue collaborating with various vendors, manufacturers, and other service providers to complement the capabilities needed to continue to develop and commercialize our products.or ADCs.

Additionally, we plan to expand our intellectual property estate and infrastructure needed to discover and advance our platform and ~~product candidates.~~programs. We may in-license or acquire complementary intellectual property as needed or required, and we may continue to build our know-how and trade secrets. WeAs an example, we may pursue both therapeutic and diagnostic applications of our antibodies through composition of matter and/or method of use patents. While the focus area of our ~~initial focus areas are in~~current programs is oncology, ~~and infectious disease,~~ we may invest in intellectual property in other therapeutic areas as well.

~~COVID-19 Pandemic~~We believe that our technology has broad utility and could enable the formation of attractive strategic partnerships, as exemplified by our OTA Agreement with the DoD and the Collaboration Agreement with AbbVie. Therefore, to maximize the value of our platform we may, from time to time, contemplate and enter into various forms of collaborative agreements related to our platform, our programs and/or development candidates with third parties, including other companies, government agencies, academic institutions and non-profit groups.

~~In response~~Collaboration Agreement with AbbVie

On January 4, 2023, we entered into a collaboration and option agreement, or the Collaboration Agreement with AbbVie. As part of the agreement, we will use our proprietary discovery engine to discover and validate targets derived from patients with three specified tumor types, and antibodies that bind to such targets, which may be the subject of further development and commercialization by AbbVie. The research term is at least 66 months, subject to extension in certain circumstances by specified extension periods. Pursuant to the ~~COVID-19 pandemic,~~terms of the Collaboration Agreement, with respect to each novel target-antibody pair we ~~have taken,~~generate that meets certain mutually agreed criteria (each, a Validated Target Pair or VTP), we granted to AbbVie an exclusive option (up to a maximum of 10 in total) to purchase all rights in and ~~continue~~ to ~~take, proactive measures~~such Validated Target Pair, for all human and non-human diagnostic, prophylactic and therapeutic uses throughout the world, including without limitation the development and commercialization of certain products derived from the assigned Validated Target Pair and directed to ~~prioritize health and safety, including~~the target comprising such VTP (Products). No rights are granted by us to AbbVie under any of our ~~employees and~~platform technology covering our discovery engine. Until the expiration of the research term, we are not permitted to conduct any activities in connection with targets or antibodies derived from patients with the specified tumor types, whether independently or with other personnel. These measures included establishing a work-from-home policy for our employees, other than those performing or supporting business-critical operations and implementing stringent safety measures designedthird parties, except in limited circumstances with respect to ~~comply with applicable federal, state and local guidelines. We have successfully implemented a back-to-work policy; our approach to transitioning back~~certain target-antibody pairs that are no longer subject to the ~~office was tailored to~~collaboration with AbbVie. In addition, during the role of each team member and evolves as the specific conditions associated with the COVID-19 pandemic continue to evolve. We will continue to monitor guidance and regulations from the Centers for Disease Control and local health authorities and will adjust our onsite rules and policies in accordance with this guidance and regulations.

~~We have also taken, and continue to take, proactive measures to maintain business continuity in the face~~term of the ~~COVID-19 pandemic. Communication throughout our organization~~Collaboration Agreement, we are not permitted to develop products directed to targets that are included in VTPs purchased by AbbVie, or to which AbbVie still has ~~remained active during~~rights under the ~~pandemic. In~~Collaboration Agreement, whether independently or with other third parties.

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~~addition, as part~~Under the Collaboration Agreement, AbbVie paid us an upfront payment of $30.0 million in January 2023 and may pay us certain additional platform access payments in the aggregate amount of up to $70.0 million based on our use of our ~~vendor management processes, we have ongoing dialogues~~discovery engine in connection with ~~third-party service providers,~~activities under each stage of the research plan, and delivery of VTPs to AbbVie. AbbVie will also pay an option exercise fee in the low single digit millions for each of the up to 10 VTPs for which it exercises an option. If AbbVie progresses development and commercialization of a Product, AbbVie will pay us development and first commercial sale milestones of up to $120.0 million per target, and sales milestones based on achievement of specified levels of net sales of Products of up to $150.0 million in the aggregate per target, in each case, subject to specified deductions in certain circumstances. On a Product-by-Product basis, AbbVie will pay us tiered royalties on net sales of Products at a percentage in the low single digits, subject to specified reductions and offsets in certain circumstances. AbbVie’s royalty payment obligation will commence, on a Product-by-Product and country-by-country basis, on the first commercial sale of such Product in such country and will expire on the earlier of (a) (i) the ten (10)-year anniversary of such first commercial sale for such Product in such country, or (ii) solely with respect to a Product that incorporates an antibody comprising a VTP (or certain other antibodies derived from such delivered antibody), the expiration of all valid claims of patent rights covering the composition of matter of any such antibody (whichever out of (i) or (ii) is later), and (b) the expiration of regulatory exclusivity for such Product in such country. We are ~~intended~~potentially eligible to ~~ensure that they continue~~receive up to ~~meet our criteria for business continuity.~~approximately $2.8 billion from AbbVie under the Collaboration Agreement from the sources described above.

The ~~effect~~Collaboration Agreement will expire upon the expiration of the ~~ongoing COVID-19 pandemic on our projected~~last to expire royalty payment obligation with respect to all Products in all countries, subject to earlier expiration if all option exercise periods for all Validated Target Pairs expire without AbbVie exercising any option. In addition, the research ~~and development timelines and~~term will terminate if AbbVie does not elect to make certain platform access payments at specified points during the research term, in order for us to continue the target discovery activities ~~is uncertain. Notwithstanding~~under the ~~measures taken,~~collaboration. The Collaboration Agreement may be terminated by (a) either party upon the future impact of COVID-19, including its variants, on our industry, the healthcare system and our current and future operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and durationother party’s uncured material breach, or upon any insolvency event of the ~~pandemic,~~other party, (b) AbbVie for convenience upon a specified period prior written notice, or (c) AbbVie for our breach of representations and warranties with respect to debarment or compliance with anti-bribery and anti-corruption laws. If AbbVie has the ~~actions taken~~right to ~~contain~~terminate the ~~pandemic~~Collaboration Agreement for our uncured material breach or ~~mitigate its impact,~~a breach of representations and warranties with respect to debarment or compliance with anti-bribery and anti-corruption laws, AbbVie may elect to continue the ~~direct and indirect economic effects~~Collaboration Agreement, subject to certain specified reductions applicable to certain of ~~the pandemic and containment measures, including increases in inflation, supply chain disruption, labor shortage and shifting demand, among others. See “Risk Factors” in our Annual Report~~AbbVie’s payment obligations (with a specified floor on Form 10-K filed with the SEC on March 28, 2022 and elsewhere in our filings with the SEC for a discussion of the potential adverse impact of COVID-19 on our business, results of operations and financial condition.such reductions).

Components of our results of operations

Collaboration revenue

We have not generated any revenue from product sales and do not expect to generate any revenue from the sale of products for the foreseeable future. To date, we have generated our revenue through the Collaboration Agreement with AbbVie. We recognize revenue over the expected performance period under this agreement. We expect that revenues for the foreseeable future will be derived primarily from this agreement and any additional collaborations that we may enter into. We have not received any royalties under the Collaboration Agreement with AbbVie to date.

Research and development expenses

Research and development expenses consist of costs incurred in performing research and development activities, which include:

●

personnel-related expenses, including salaries, bonuses, benefits and share-based compensation for employees engaged in research and development functions;

●

expenses incurred in connection with the advancement of our programs, including under agreements with consultants, contractors, contract research organizations and other third-party vendors and suppliers;

●

expenses to conduct clinical trials including regulatory and quality assurance;

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●

the cost of developing and validating our manufacturing process for use in our preclinical studies and clinical trials;

●

laboratory supplies and research materials and other infrastructure-related expenses; and

●

facilities, depreciation and amortization and other expenses which include direct and allocated expenses.

We expense research and development costs as incurred. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the benefits are consumed.

Research and development activities are central to our business model. We expect that our research and development expenses will increase substantially in connection with our planned preclinical and clinical development activities.

In July 2020, we entered into the OTA Agreement with the DoD to fund ~~our efforts in developing Biosynthetic Convalescent Plasma (“BCP”)~~the development of IMM-BCP-01 to treat COVID-19. The OTA Agreement was modified in May 2021 to increase such funding. In connection with the OTA Agreement, we record expense reimbursements received from the DoD as contra-research and development expenses in the same period the underlying expenses are incurred.

Under the provisions of the CARES Act signed into law on March 27, 2020 and the subsequent extension of the CARES Act, the Company was deemed eligible to receive the employee retention credit subject to certain criteria. The Company recognized the employee retention credit as contra-expense to personnel related costs in research and development expenses in the condensed statements of operations.

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General and administrative expenses

General and administrative expenses consist primarily of salaries and other related costs, including share-based compensation for personnel in our executive, business development, and administrative functions. General and administrative expenses also include legal fees relating to intellectual property and corporate matters, professional fees for accounting, auditing, tax and consulting services, insurance costs, travel, direct and allocated facility related expenses and other operating costs.

~~We anticipate that our general and administrative expenses will increase in the future to support increased and progressed research and development activities.~~

Under the provisions of the CARES Act signed into law on March 27, 2020 and the subsequent extension of the CARES Act, the Company was deemed eligible ~~for a refundable~~to receive the employee retention credit subject to certain criteria. The Company recognized the employee retention credit as contra-expense to personnel related costs in general and administrative expenses in the condensed statements of operations.

Interest income ~~(expense), net~~

Interest income ~~(expense), net~~ consists of interest ~~expense related to loans payable, offset by interest income~~ earned on our ~~cash.~~cash balances held with a financial institution.

Results of operations

The ultimate extent of the impact of any epidemic, pandemic, outbreak, or other public health crisis on our results of operations will depend on future developments, which are highly uncertain, including ~~new information that may emerge concerning the severity of COVID-19 and its variants or other~~ public health ~~crisis~~crises and actions taken to contain or prevent the further spread, among others. Accordingly, we cannot fully predict the extent to which our business and results of operations will be affected by the pandemic.

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Comparison of the three and six months ended June 30, ~~2022~~2023 and ~~2021~~2022

Three Months Ended June 30,

Six Months Ended June 30,

2022

2021

Change

2022

2021

Change

Operating expenses:

(in thousands)

(in thousands)
Research and development

$
5,717

$
3,233

$
2,484

$
13,795

$
5,212

$
8,583
General and administrative

3,209

2,507

702

6,785

4,425

2,360
Total operating expenses

8,926

5,740

3,186

20,580

9,637

10,943
Loss from operations

(8,926)

(5,740)

(3,186)

(20,580)

(9,637)

(10,943)
Other income

—

500

(500)

—

500

(500)
Interest income (expense), net

2

(1)

3

3

(2)

5
Net loss

$
(8,924)

$
(5,241)

$
(3,683)

$
(20,577)

$
(9,139)

$
(11,438)


	Three Months Ended June 30,						Six Months Ended June 30,
	2023		2022		Change		2023		2022		Change

	(in thousands)						(in thousands)
Collaboration revenue	$	4,263	$	—	$	4,263	$	6,627	$	—	$	6,627
Operating expenses:
Research and development		5,716		5,717		(1)		9,629		13,795		(4,166)
General and administrative		4,320		3,209		1,111		7,242		6,785		457
Total operating expenses		10,036		8,926		1,110		16,871		20,580		(3,709)
Loss from operations		(5,773)		(8,926)		3,153		(10,244)		(20,580)		10,336
Interest income		216		2		214		417		3		414
Net loss	$	(5,557)	$	(8,924)	$	3,367	$	(9,827)	$	(20,577)	$	10,750

Three months ended June 30, ~~2022~~2023 and ~~2021~~2022

Collaboration revenue

In January 2023, we entered into the Collaboration Agreement with AbbVie and recognized collaboration revenue of $4.3 million for the three months ended June 30, 2023. No collaboration revenue was recognized for the three months ended June 30, 2022.

Research and development expenses

Research and development expenses were $5.7 million for both the three months ended June 30, 2023 and ~~$3.2 million, net of DoD reimbursement~~2022.

Research and development expenses were flat for the three months ended June 30, ~~2022~~2023. ONC-01 external program related expenses decreased by $1.2 million as a result of a decrease in product development activities. BCP-01 external program related expenses decreased by $1.0 million, net of contra expense, as a result of our decision to seek a partner in order to continue the BCP-01 trial and ~~2021, respectively.~~

~~Research~~further development activities. These decreases were offset by an increase of $1.3 million in outsourced research and ~~development expenses~~materials relating to the AbbVie collaboration. In addition, personnel related costs increased by ~~$2.5~~$0.9 million for the three months ended June 30, ~~2022. This increase is~~2023 primarily ~~due to a $4.1 million reduction of contra-research and development expense~~ as a result of a reduction in BCP-01 program spending and reimbursable related expenses under the DoD agreement during the three months ended June 30, 2022. Contra-research and development expenses offsets the expenses recognized in the period

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~~for the DoD Agreement. Personnel-related costs increased by $0.2 million due to an increase in headcount and stock-based compensation. These increases in personnel-related costs were offset by~~ $0.6 million in contra-expense to personnel related costs relating to the CARES Act employee retention ~~credit. In addition, outsourced research and raw materials decreased by $1.1 million and facility related costs decreased by $0.1 million for~~credit recorded during the three months ended June 30, ~~2022.~~

~~Research~~2022 and ~~development expenses are expected to~~a $0.3 million increase in the future as we continue our current research programs, initiate new research programs, continue our preclinical development of product candidates and conduct current and future clinical trials for our programs and product candidates.fringe benefits.

General and administrative expenses

General and administrative expenses ~~increased by $0.7~~were $4.3 million toand $3.2 million for the three months ended June 30, 2023 and 2022, ~~from $2.5~~respectively.

General and administrative expenses increased by $1.1 million for the three months ended June 30, ~~2021.~~2023. The increase was primarily a result of ~~$0.9~~a $1.6 million increase in professional fees including consulting and legal related costs associated with the Merger offset by a $0.4 million decrease in general expenses including insurance, and a $0.1 million decrease in personnel-related costs. Personnel-related costs ~~due to an increase~~decreased as a result of a $0.3 million decrease in ~~headcount and stock-based~~share-based compensation offset by $0.2 million in contra-expense to personnel related costs relating to the CARES Act employee retention ~~credit.~~credit recorded during the three months ended June 30, 2023.

Interest income

Interest income ~~(expense), net~~

~~Interest expense consists of interest related to equipment loan payables. Interest income consists of interest earned on our cash balances held with financial institutions.~~

~~Other income~~

~~Other income~~was $0.2 million and $2,000 for the three months ended June 30, ~~2021 consists~~2023 and 2022, respectively.

Interest income increased by $0.2 million for the three months ended June 30, 2023 as a result of ~~forgiveness~~increased interest rates on our cash balances held with a financial institution.

Table of ~~the PPP Loan.~~Contents

Six months ended June 30, ~~2022~~2023 and ~~2021~~2022

Collaboration revenue

In January 2023, we entered into the Collaboration Agreement with AbbVie and recognized collaboration revenue of $6.6 million for the six months ended June 30, 2023. No collaboration revenue was recognized for the six months ended June 30, 2022.

Research and development expenses

Research and development expenses were ~~$13.8~~$9.6 million and ~~$5.2 million, net of DoD reimbursement for the six months ended June 30, 2022 and 2021, respectively.~~

~~Research and development expenses increased by $8.6~~$13.8 million for the six months ended June 30, ~~2022. This increase is primarily due to~~2023 and 2022, respectively.

Research and development expenses decreased by $4.2 million for the six months ended June 30, 2023. Of the $4.2 million decrease in research and development expenses, ONC-01 external program related expenses decreased by $3.4 million as a ~~$7.4~~result of a decrease in product development activities. BCP-01 external program related expenses decreased by $3.2 million, ~~reduction~~net of ~~contra-research and development~~contra expense, as a result of our decision to seek a ~~reduction~~partner in order to continue the BCP-01 ~~program spending~~trial and ~~reimbursable~~further development activities. These decreases were offset by an increase of $1.7 million in outsourced research and materials relating to the AbbVie collaboration. In addition, personnel related ~~expenses under~~costs increased by $0.7 million for the ~~DoD agreement during the three~~six months ended June 30, 2022. Contra-research and development expenses offsets the expenses recognized in the period for the DoD Agreement. Personnel-related costs increased by $1.2 million due to an increase in headcount and stock-based compensation. These increases in personnel-related costs were offset by2023 primarily as a result of $0.6 million in contra-expense to personnel related costs relating to the CARES Act employee retention ~~credit. In addition, outsourced research and raw materials increased by $0.8 million offset by $0.2 million decrease in facility related costs.~~

~~Research and development expenses are expected to increase in~~credit recorded during the future as we continue our current research programs, initiate new research programs, continue our preclinical development of product candidates and conduct current and future clinical trials for our programs and product candidates.six months ended June 30, 2023.

General and administrative expenses

General and administrative expenses ~~increased by $2.4~~were $7.2 million toand $6.8 million for the six months ended June 30, 2023 and 2022, ~~from $4.4~~respectively.

General and administrative expenses increased by $0.4 million for the three months ended June 30, ~~2021.~~2023. The increase was primarily a result of a ~~$2.3~~$1.2 million increase in ~~personnel-related~~professional fees, including consulting and legal related costs ~~due to an increase in headcount and stock-based compensation~~associated with the Merger, offset by ~~$0.2~~a $0.8 million decrease in ~~contra-expense to personnel related costs relating to the CARES Act employee retention credit. In addition, professional fees and other~~ general expenses including insurance.

Interest income

Interest income was $0.4 million and $3,000 for the six months ended June 30, 2023 and 2022, respectively.

Interest income increased by ~~$0.3~~$0.4 million for the six months ended June 30, ~~2022.~~

~~Table~~2023 as a result of ~~Contents~~

~~Interest income (expense), net~~

~~Interest expense consists of~~increased interest ~~related to equipment loan payables. Interest income consists of interest earned~~rates on our cash balances held with a financial ~~institutions.~~

~~Other income~~

~~Other income for the six months ended June 30, 2021 consists of forgiveness of the PPP Loan.~~institution.

Liquidity and capital resources

Since our inception, we have incurred significant operating losses. We expect to incur significant expenses and operating losses for the foreseeable future as we continue advancement of our ~~preclinical~~programs and development ~~of product candidates and conduct current and future clinical trials for our product~~ candidates. Through June 30, ~~2022,~~2023, we raised an aggregate of ~~$125.1~~$155.2 million in gross proceeds from sales of our common stock, Series A convertible preferred stock and warrants, warrant and stock option exercises, the issuance of convertible promissory notes, ~~and~~ the Paycheck Protection Program, or PPP, loan that was forgiven in May ~~2021. As of June 30, 2022,~~2021, and strategic partnerships with AbbVie Global Enterprises Ltd, or AbbVie. In January 2023, we ~~had $34.6~~received a $30.0 million upfront payment from AbbVie under the collaboration and option agreement, or the Collaboration Agreement. In addition, we received $17.6 million in ~~cash. We filed a shelf registration statement on Form S-3, which was declared effective by~~expense reimbursement from the ~~SEC on~~Department of Defense, or DoD under the Other Transaction Authority for Prototype Agreement, or the OTA Agreement, from inception through 2022.

On October ~~14, 2021, pursuant to which we may issue from time-to-time securities with an aggregate value of up to $200.0 million. In October~~1, 2021, we entered into an Open Market Sale Agreement, (“or the ATM ~~Agreement”)~~Agreement, with Jefferies Group LLC, which provides that, upon the terms and subject to the conditions and limitations in the ATM Agreement, we may elect, from time to time, to offer and sell shares of common ~~shares~~stock under the registration statement having an aggregate offering price of up to $75.0 million through Jefferies Group LLC acting as sales agent. We ~~have not yet~~filed a shelf registration

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statement on Form S-3, which was declared effective by the Securities and Exchange Commission, or the SEC, on October 14, 2021, pursuant to which we may issue from time-to-time securities with an aggregate value of up to $200.0 million. Through June 30, 2023, we sold ~~any~~5,925 shares of common stock under the ATM Agreement resulting in net proceeds of approximately $34,000. We can elect to sell additional shares under the ATM Agreement or shelf registration statement.

In addition, on January 4, 2023, we entered into the Collaboration Agreement with AbbVie directed to the discovery of up to 10 novel target-antibody pairs leveraging our discovery engine. We are potentially eligible to receive up to approximately $2.8 billion from AbbVie under the Collaboration Agreement from the sources described in the section “Our current programs and strategic collaboration”. There are no assurances that we will receive additional payments from AbbVie beyond the $30.0 million upfront payment.

In connection with the execution of the Merger Agreement, on June 29, 2023, the Company entered into subscription agreements, each, a Subscription Agreement, with certain investors, or the PIPE Investors, pursuant to which, among other things, the PIPE Investors have agreed to subscribe for and purchase, and the Company has agreed to issue and sell to the PIPE Investors, an aggregate of 21,690,871 shares of the Company’s common stock for an aggregate purchase price of approximately $125.0 million, on the terms and subject to the conditions set forth therein. The shares of the Company’s common stock were sold to the PIPE Investors at a price per share equal to $5.75 and, in the case of affiliate investors, $5.91 per share, the consolidated closing bid price per share immediately preceding the entry into the Subscription Agreement. The closing of the PIPE financing is expected to occur in connection with and immediately following the consummation of the Merger.

We will need to raise additional capital before we exhaust our current cash to continue to fund our research and development, including our plans ~~for clinical~~to continue advancement of our programs and ~~preclinical trials~~development candidates and new product development, as well as to fund operations. As and if necessary, we will seek to raise additional funds through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements. We can give no assurances that we will be able to secure such additional sources of funds to support our operations, or, if such funds are available to us, that such additional financing will be sufficient to meet our needs.

Cash flows

The following table summarizes our sources and uses of cash for the six months ended June 30, ~~2022~~2023 and ~~2021:~~2022:

Six Months Ended June 30,


2022

2021


(in thousands)

Cash used in operating activities

$
(14,436)

$
(7,276)

Cash used in investing activities

(176)

(39)

Cash provided by financing activities

32

27,378

Net increase (decrease) in cash and restricted cash

$
(14,580)

$
20,063


	Six Months Ended June 30,
	2023		2022

	(in thousands)
Cash provided by (used in) operating activities	$	18,505	$	(14,436)
Cash used in investing activities		(446)		(176)
Cash provided by financing activities		34		32
Net increase (decrease) in cash and cash equivalents and restricted cash	$	18,093	$	(14,580)

Operating activities

Net cash provided by operating activities for the six months ended June 30, 2023 was $18.5 million, consisting primarily of increases in deferred revenue of $23.4 million, noncash charges of $2.6 million for share-based compensation expense, depreciation and amortization of right-of-use asset, increases in accounts payable of $1.3 million, and decreases in prepaid expenses and other assets of $1.2 million, offset by our net loss of $9.8 million.

Net cash used in operating activities for the six months ended June 30, 2022 was $14.4 million, consisting primarily of our net loss of $20.6 million and decreases ofin accrued expenses and other liabilities of $3.3 million, offset by ~~net~~ noncash charges of ~~$2.8~~$2.9 million for stock compensation expense, depreciation and amortization of right-of-use asset, decreases in prepaid expenses and other assets of ~~$4.5~~$4.4 million, and increases in accounts payable of $2.2 million.

Net cash used in operating activities for the six months ended June 30, 2021 was $7.3 million, consisting primarily of our net loss of $9.1 million and forgiveness of the PPP loan of $0.5 million, offset by noncash charges of $1.4 million for stock compensation expense and depreciation and amortization, increases in accrued expenses and other liabilities of

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~~$0.3 million, increases in accounts payable of $0.5 million, and decreases in prepaid expenses and other assets of $0.1 million.~~

Investing activities

During the six months ended June 30, ~~2022~~2023 and ~~2021,~~2022, we used ~~$0.2~~$0.4 million and ~~$0.1~~$0.2 million, respectively, for the purchase of property and equipment.

Financing activities

During the six months ended June 30, ~~2022,~~2023, financing activities provided ~~$0.1 million~~approximately $34,000 in net proceeds from ~~exercise~~the sales of common stock ~~options.~~under the ATM agreement.

During the six months ended June 30, ~~2021,~~2022, financing activities provided ~~$27.3 million~~$32,000 from ~~proceeds from the sale of common stock and common stock warrants, the~~ exercise of ~~common~~ stock ~~warrants and stock options, offset by the payment of issuance costs, and for payments related to our equipment loan.~~options.

Funding requirements

Our operating expenses are expected to increase substantially as we continue to advance our discovery engine and programs.

Specifically, our expenses will increase if and as we:

●

further develop our discovery engine;

●

continue our research and development programs for our ~~current~~programs and ~~any future product candidates from our current programs;~~development candidates;

●

seek to identify additional ~~research~~ programs and ~~additional product candidates;~~

●

~~continue non-clinical testing and clinical testing for our product~~development candidates;

●

maintain, expand, enforce, defend, and protect our intellectual property portfolio and provide reimbursement of third-party expenses related to our patent portfolio;

●

seek marketing approvals for any of our ~~product~~programs and development candidates that successfully complete clinical trials;

●

establish a sales, marketing, and distribution infrastructure to commercialize any medicines for which we may obtain marketing approval;

●

hire additional personnel including research and development, clinical and administrative personnel;

●

add operational, financial, and management information systems and personnel, including personnel to support our product development;

●

acquire or in-license products, intellectual property, and technologies;

●

complete the Merger with Morphimmune; and

●

continue to operate as a public company.

We expect that our existing cash at June 30, ~~2022~~2023, exclusive of any potential proceeds received in connection with the potential closing of the merger and concurrent PIPE transaction, will enable us to fund our current and planned operating expenses and capital expenditures at least 12 months from the filing date of this Quarterly Report on Form 10-Q. ~~The Company~~We will need additional financing to support its continuing operations and pursue its research and development strategy. We have based

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these estimates on assumptions that may prove to be imprecise, and we may exhaust our available capital resources sooner ~~that~~than we currently expect. Because of the numerous risks and uncertainties associated with the development of our programs, we are unable to estimate the amounts of increased capital outlays and operating expenses associated with completing the research and development of our ~~product~~programs and development candidates.

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Our future funding requirements will depend on many factors including:

●

the costs of continuing to develop our discovery engine;

●

the costs of acquiring licenses, should we choose to do so, for the expansion of product development;

●

the scope, progress, results, and costs of discovery, preclinical development, laboratory testing, manufacturing and clinical trials for ~~current~~programs and ~~future product~~development candidates;

●

the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property and proprietary rights, and defending intellectual property-related claims and the success of our intellectual property portfolio;

●

the costs, timing, and outcome of regulatory review of the ~~product~~programs and development candidates we may develop;

●

the costs of future activities, including product sales, medical affairs, marketing, manufacturing, distribution, coverage and reimbursement for any ~~product~~programs or development candidates for which we receive regulatory approval;

●

the success of our license agreements and our collaborations;

●

our ability to establish and maintain additional collaborations on favorable terms, if at all;

●

the achievement of milestones or occurrence of other developments that trigger payments under any additional collaboration agreements we obtain;

●

the extent to which we acquire or in-license products, intellectual property, and technologies; and

●

the costs of operating as a public company.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, and licensing arrangements. WeOther than in connection with the possible PIPE, we do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of any purchaser will be or could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or drug candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research, product development or future commercialization efforts, or grant rights to develop and market ~~product~~programs and development candidates that we would otherwise prefer to develop and market ourselves. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

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Critical accounting policies and use of estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other

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factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in Note 2 to our audited financial statements appearing in our Annual Report filed on Form 10-K with the SEC on March ~~28, 2022,~~16, 2023, we believe that the following accounting policies are the most critical to the judgments and estimates used in the preparation of our financial statements.

Collaboration revenue

In January 2023, we entered into the Collaboration Agreement with AbbVie, which was determined to be within the scope of ASC 606.

We evaluate our collaborative arrangements pursuant to ASC 808, Collaborative Arrangements, or ASC 808, and ASC 606, Revenue from Contracts with Customers, or ASC 606. We consider the nature and contractual terms of collaborative arrangements and assesses whether the arrangement involves a joint operating activity pursuant to which we are an active participant and is exposed to significant risks and rewards with respect to the arrangement. If we are an active participant and are exposed to significant risks and rewards with respect to the arrangement, the we account for the arrangement as a collaboration under ASC 808. If we are not exposed to significant risks and rewards and the contract is with a customer, we account for the collaboration under ASC 606.

In determining the appropriate amount of revenue to be recognized as we fulfill our obligations under a collaboration arrangement, we apply the five-step model of ASC 606: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract, including whether they are capable of being distinct; (iii) determine the transaction price, including the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

We apply significant judgment when evaluating whether contractual obligations represent distinct performance obligations, allocating transaction price to performance obligations within a contract, determining when performance obligations have been met, and assessing the recognition of variable consideration. When consideration is received prior to us completing our performance obligation under the terms of a contract, a contract liability is recorded as deferred revenue. Deferred revenue expected to be recognized as revenue within the twelve months following the balance sheet date is classified as a current liability.

Share-based compensation

We recognize the grant-date fair value of share-based awards issued as compensation expense on a straight-line basis over the requisite service period, which is generally the vesting period of the award. The fair value of stock options is estimated at the time of grant using the Black-Scholes option pricing model, which requires the use of inputs and assumptions such as the fair value of the underlying common stock, exercise price of the option, expected term, risk-free interest rate, expected volatility and dividend yield.

The inputs and assumptions used to estimate the fair value of share-based payment awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different inputs and assumptions, our share-based compensation expense could be materially different for future awards.

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Expected volatility is a subjective assumption ~~that is estimated. The expected volatility was~~ based on the historical stock volatility of several of our comparable publicly traded companies over a period of time equal to the expected ~~term of the options, as we do not have sufficient trading history to use the volatility of our own common stock.~~term.

Accrued research and development expenses

As part of the process of preparing our financial statements, we are required to estimate our accrued research and development expenses. This process involves reviewing open contracts and purchase orders and communicating with personnel to identify services that have been performed on our behalf and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs. The majority of our service providers invoice us on a pre-determined schedule or when contractual milestones are met. We make estimates of our accrued expenses as of each balance sheet date in the financial statements based on facts and circumstances known to us at that time. We periodically confirm the accuracy of these estimates with the service providers and make adjustments, if necessary. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses.

Recently ~~Adopted Accounting Standards~~

adopted accounting standard

On January 1, ~~2022, the Company~~2023, we adopted ~~Accounting Standards Update~~ASU No. 2016-02, Leases (“Topic 842”) (“ASU 2016-02”), which establishes ASC 842 and supersedes the lease accounting guidance under ASC 840. The standard generally requires lessees to recognize operating and finance lease liabilities and corresponding right-of-use

~~Table~~2016-13, Measurement of ~~Contents~~

~~(“ROU”) assets~~Credit Losses on the balance sheet and provide enhanced disclosures on the amount, timing, and uncertainty of cash flows arising from lease arrangements. The Company adopted ASC 842 using the modified retrospective approach. The Company elected the package of practical expedients available for existing contracts, which allowed the Company to carry forward our historical assessments of lease identification, lease classification, and initial direct costs. The Company also elected a policy to not apply the recognition requirements of ASC 842 for short-term leases with a term of 12 months of less.

As of January 1, 2022, the effective date, the Company identified one operating lease arrangement relating to the Company’s headquarter facility and a short-term lease relating to laboratory equipment. The adoption of ASC 842 resulted in a recognition of an ROU asset and lease liability of $0.2 million on the Company’s balance sheet relating to the leases as of January 1, 2022. The adoption of the standard did not have a material effect on the Company’s condensed statements of operations and condensed statements of cash flows.

~~Recently Issued Accounting Pronouncements~~

~~In November 2021, the FASB issued ASU Topic 832, Disclosures by Business Entities about Government Assistance (“Topic 832”)~~Financial Instruments. This standard ~~requires annual disclosures about transactions with a government that have been accounted for by analogizing to a grant or contribution accounting~~amended its guidance on the recognition of impairment losses of certain financial instruments. The ASU established the current expected credit loss model, ~~to increase transparency about the types~~which is based on expected losses rather than incurred losses. Adoption of ~~transactions, the accounting for the transactions, and the effect of the transactions~~this standard had no impact on ~~an entity’s~~our condensed financial statements. The effective date of Topic 832 is for financial statements issued for annual periods beginning after December 15, 2021. The Company is currently evaluating the effect Topic 832 will have on its financial statements and related disclosures.

JOBS Act

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, ~~(the “JOBS Act”).~~or the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies, including reduced disclosure about our executive compensation arrangements, exemption from the requirements to hold non-binding advisory votes on executive compensation and golden parachute payments and exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting.

We may take advantage of these exemptions until the last day of the fiscal year following the fifth anniversary of our initial public offering or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company earlier if we have more than $1.07 billion in annual revenue, we have more than $700.0 million in market value of our stock held by non-affiliates (and we have been a public company for at least 12 months and have filed one annual report on Form 10-K) or we issue more than $1.0 billion of non-convertible debt securities over a three-year period. For so long as we remain an emerging growth company, we are permitted, and intend, to rely on exemptions from certain disclosure requirements that are applicable to other public companies that are not emerging growth companies. We may choose to take advantage of some, but not all, of the available exemptions. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected not to “opt out” of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time private companies adopt the new or revised standard and will do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company. Therefore, the reported results of operations contained in our financial statements may not be directly comparable to those of other public companies.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information under this item is not required to be provided by smaller reporting companies.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, ~~2022,~~2023, our disclosure controls and procedures were effective to ensure the timely disclosure of required information in our SEC filings.

Changes in Internal Control Over Financial Reporting

No changes in our internal control over financial reporting occurred during the quarter ended June 30, ~~2022~~2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently a party to any material legal proceedings. From time to time, we may become involved in legal proceedings arising in the ordinary course of our business.

Item 1A. Risk Factors

The information under this item is not required to be provided by smaller reporting companies.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

EXHIBIT INDEX

Exhibit No.		Description of Exhibit

2.1		Agreement and Plan of Merger and Reorganization, dated July 29, 2023, by and among Immunome, Inc., Ibiza Merger Sub, Inc. and Morphimmune, Inc. (incorporated by reference to Exhibit 2.1 to our Current Report on Form 8-K filed June 29, 2023).

3.1		Amended and Restated Certificate of Incorporation of Immunome, Inc. (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed October 6, 2020).

3.2 10.1*		Amended and Restated Bylaws of Immunome, Inc. (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed October 6, 2020).

10.1		~~Second Amended~~Form of Immunome, Inc. Stockholder Support Agreement, dated June 29, 2023 (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed June 29, 2023).

10.2		Form of Morphimmume, Inc. Stockholder Support Agreement, dated June 29, 2023 (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed June 29, 2023).

10.3		Form of Lock-Up Agreement, dated June 29, 2023 (incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed June 29, 2023).

10.4		Form of Subscription Agreement, dated June 29, 2023 (incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K filed June 29, 2023).

10.5		Employment Agreement, dated June 28, 2023, by and ~~Restated Non-Employee Director Compensation Policy, effective as of~~between Immunome, Inc. and Clay B. Siegall, Ph.D. (incorporated by reference to Exhibit 10.5 to our Current Report on Form 8-K filed June ~~15, 2022~~29, 2023)..

31.1*		Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		Interactive Data File (Form 10-Q for the Quarterly Period ended June 30, ~~2022~~2023 filed in XBRL). The financial information contained in the XBRL-related documents is "unaudited" and "unreviewed." The instance document does not appear in the interactive file because its XBRL tags are embedded within the Inline XBRL document.

104		Cover Page Interactive File (embedded within the Inline XBRL document).

*	Filed or furnished herewith.

# Management contracts or compensatory plans or arrangements

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	IMMUNOME, INC.
	(Registrant)

Date: August ~~5, 2022~~9, 2023	By:	/s/ Purnanand D. Sarma
	Name:	Purnanand D. Sarma, Ph. D.
	Title:	President and Chief Executive Officer
		(Principal Executive Officer)

Date: August ~~5, 2022~~9, 2023	By:	/s/ Corleen M. Roche
	Name:	Corleen M. Roche
	Title:	Chief Financial Officer
		(Principal Financial Officer)

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Operating leases:
Operating lease right-of-use assets	$	182

Operating lease liability	$	64
Operating lease liability, net of current portion		124
Total operating lease liability	$	188


Lease Cost (in thousands)	Statements of Operations Classification		Three Months Ended June 30, 2022	Six Months Ended June 30, 2022
Operating lease cost	General and administrative Research and development	$	60	121
Short-term lease cost	General and administrative Research and development		-	53
Total lease expense		$	60	174