SEC Filing - Imara

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imra-10q_20220331.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 March 31, 2022

☐	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: 001-39247

IMARA INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	81-1523849
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
116 Huntington Avenue, 6^th Floor Boston, Massachusetts	02116
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (617) 206-2020

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, par value $0.001 per share

IMRA

The Nasdaq Stock Market LLC

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 (§232.405 of this chapter) 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.

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 ☒

As of April 30, 2022, the registrant had 26,275,722 shares of common stock, $0.001 par value per share, outstanding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this Quarterly Report on Form 10-Q, including statements regarding our plans to discontinue the Ardent and Forte clinical trials of tovinontrine and our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

The forward-looking statements in this Quarterly Report on Form 10-Q include, among other things:

•

our assessment of strategic options and our ability to identify and implement any strategic transaction;

•

anticipated cost savings in connection with our discontinuation of tovinontrine (IMR-687) and our April 2022 workforce reduction;

•

the impact of the ongoing COVID-19 pandemic and our response to it;

•

our estimates regarding expenses, future revenue, timing of any future revenue, capital requirements and need for additional financing if we decide to pursue any future product development efforts;

•

if we decide to pursue any future product development efforts, our plans to develop and, if approved, subsequently commercialize any product candidates;

•

the timing of and our ability to submit applications for, obtain and maintain regulatory approvals for any product candidates we may develop if we decide to pursue any future product development efforts;

•

our expectations regarding our ability to fund our operating expenses and capital expenditure requirements with our cash, cash equivalents and investments;

•

our commercialization, marketing and manufacturing capabilities and strategy if we decide to pursue any future product development and commercialization efforts;

•

our expectations regarding our ability to obtain and maintain intellectual property protection for any product candidates we may develop if we decide to pursue any future product development efforts;

•

our ability to identify products, product candidates or technologies with significant commercial potential that are consistent with our commercial objectives if we decide to pursue any future product development efforts;

•

the impact of government laws and regulations;

•

our competitive position and expectations regarding developments and projections relating to our competitors and any competing therapies that are or become available if we decide to pursue any future product development efforts;

•

our ability to maintain and establish collaborations or obtain additional funding if we decide to pursue any future product development efforts; and

•

our expectations regarding the time during which we will be an emerging growth company under the JOBS Act if we decide to pursue any future product development efforts.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make.

We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the "Risk Factors" section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make.

You should read this Quarterly Report on Form 10-Q and the documents that we have filed as exhibits to Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. The forward-looking statements contained in this Quarterly Report on Form 10-Q are made as of the date of this Quarterly Report on Form 10-Q, and we do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

RISK FACTOR SUMMARY

Our business is subject to a number of risks that if realized could materially affect our business, financial condition, results of operations, cash flows and access to liquidity. These risks are discussed more fully in Part II, Item 1A. “Risk Factors” of this Quarterly Report on Form 10-Q. Our principal risks include the following:

•

We may not be successful in identifying and implementing any strategic transaction and any strategic transactions that we may consummate in the future may not be successful.

•

Our decision to discontinue development of tovinontrine and the related reduction in our workforce may not result in the anticipated savings and could disrupt our business.

•

We have incurred significant losses since our inception, and we expect to incur losses over the next several years.

•

If we decide to pursue any future product development efforts, we will need substantial additional funding. If we are unable to raise capital when and as needed, we could be forced to delay, reduce or eliminate our product development programs or commercialization efforts and it may impede our ability to maximize or monetize any value associated with our assets.

•

Our limited operating history may make it difficult for you to evaluate the success and operations of our business to date and to assess our future viability or strategy with respect to conducting ongoing operations or liquidations.

•

Our business and operations have been and may continue to be adversely affected by the ongoing COVID-19 pandemic as may the operations of our suppliers and manufacturers and other third-party service providers.

•

Clinical drug development involves a lengthy and expensive process, with an uncertain outcome. If we decide to pursue any future product development efforts, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of any product candidates.

•

If we decide to pursue any future product development efforts, we expect to face substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than we do.

•

If we fail to comply with our obligations under our existing license agreements, or under any future intellectual property licenses, or otherwise experience disruptions to our business relationships with our current or any future licensors, we could lose intellectual property rights that are important to our business.

•

If we are unable to obtain, maintain, enforce and protect patent protection for our technology and any product candidates we may seek to develop or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to product candidates we may seek to develop, and our ability to successfully develop and commercialize our technology and any product candidates we may seek to develop may be adversely affected.

•

Our executive officers, directors and principal stockholders, if they choose to act together, have the ability to significantly influence all matters submitted to stockholders for approval.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	1
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three months ended March 31, 2022 and 2021	2
	Condensed Consolidated Statements of Stockholders’ Equity for the Three months ended March 31, 2022 and 2021	3
	Condensed Consolidated Statements of Cash Flows for the Three months Ended March 31, 2022 and 2021	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24
PART II.	OTHER INFORMATION	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 5.	Other Items	65
Item 6.	Exhibits	67
Signatures		68

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

IMARA INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)
(Unaudited)

	March 31, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	36,484		$	48,309
Short-term investments		36,416			41,969
Prepaid expenses and other current assets		5,628			2,418
Total current assets		78,528			92,696
Property and equipment, net	588				250
Right of use assets - operating leases		2,311			525
Other assets	175				175
Total assets	$	81,602		$	93,646
LIABILITIES & STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,884		$	2,360
Accrued expenses and other current liabilities		4,831			4,604
Operating lease liability, current		508			246
Total current liabilities		7,223			7,210
Operating lease liability, non-current		1,967			406
Total liabilities		9,190			7,616
Commitments and contingencies (Note 7)
Common stock, $0.001 par value per share; 200,000,000 shares authorized as of March 31, 2022 and December 31, 2021, respectively; 26,287,264 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively	27				27
Additional paid-in capital		234,572			233,516
Accumulated other comprehensive income		(51	)		(16	)
Accumulated deficit		(162,136	)		(147,497	)
Total stockholders’ equity		72,412			86,030
Total liabilities and stockholders’ equity	$	81,602		$	93,646

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

IMARA INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share data)
(Unaudited)

	Three Months Ended March 31,
	2022			2021
Operating expenses:
Research and development	$	11,169		$	7,115
General and administrative		3,492			3,165
Total operating expenses		14,661			10,280
Loss from operations		(14,661	)		(10,280	)
Total other income, (net):
Interest income		78			83
Other expense		(56	)		(60	)
Total other income, (net)		22			23
Net loss	$	(14,639	)	$	(10,257	)
Net loss attributable to common stockholders—basic and diluted	$	(14,639	)	$	(10,257	)
Weighted-average common shares outstanding—basic and diluted		26,287,264			17,577,454
Net loss per share attributable to common stockholders—basic and diluted	$	(0.56	)	$	(0.58	)
Comprehensive loss:
Net loss	$	(14,639	)	$	(10,257	)
Other comprehensive income:
Unrealized loss on investments		(35	)		(3	)
Comprehensive loss	$	(14,674	)	$	(10,260	)

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

IMARA INC.

CONDENSED CONSOLIDATED STATEMENTS OF AND STOCKHOLDERS’ EQUITY

(in thousands, except share and per share data)
(Unaudited)


	COMMON STOCK $0.001 PAR VALUE				ADDITIONAL PAID-IN		ACCUMULATED OTHER COMPREHENSIVE			ACCUMULATED			TOTAL STOCKHOLDERS’
	SHARES		AMOUNT		CAPITAL		INCOME (LOSS)			DEFICIT			EQUITY
Balance at December 31, 2020		17,548,263	$	18	$	180,526	$	4		$	(96,113	)	$	84,435
Stock-based compensation expense		—		—		947		—			—			947
Exercise of stock options		68,279		—		472		—			—			472
Unrealized loss on investments		—		—		—		(3	)		—			(3	)
Net loss		—		—		—		—			(10,257	)		(10,257	)
Balance at March 31, 2021		17,616,542	$	18	$	181,945	$	1		$	(106,370	)	$	75,594


	COMMON STOCK $0.001 PAR VALUE				ADDITIONAL PAID-IN		ACCUMULATED OTHER COMPREHENSIVE			ACCUMULATED			TOTAL STOCKHOLDERS’
	SHARES		AMOUNT		CAPITAL		INCOME (LOSS)			DEFICIT			EQUITY
Balance at December 31, 2021		26,287,264	$	27	$	233,516	$	(16	)	$	(147,497	)	$	86,030
Stock-based compensation expense		—		—		1,056		—			—			1,056
Unrealized loss on investments		—		—		—		(35	)		—			(35	)
Net loss		—		—		—		—			(14,639	)		(14,639	)
Balance at March 31, 2022		26,287,264	$	27	$	234,572	$	(51	)	$	(162,136	)	$	72,412

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Three Months Ended March 31,
	2022			2021
Cash flows from operating activities:
Net loss	$	(14,639	)	$	(10,257	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		1,056			947
Depreciation expense		25			25
Amortization and accretion on investments		48			55
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(3,210	)		(2,586	)
Accounts payable		(476	)		1,030
Accrued expenses and other current liabilities		(1	)		(2,226	)
Operating lease assets and liabilities, net		37			(8	)
Net cash used in operating activities		(17,160	)		(13,020	)
Cash flows from investing activities:
Proceeds from maturities and sales of short-term investments		5,470			22,037
Purchases of short-term investments		—			(3,722	)
Purchases of property and equipment		(135	)		(12	)
Net cash provided by investing activities		5,335			18,303
Cash flows from financing activities:
Payment of issuance costs		—			(12	)
Proceeds from exercise of options		—			472
Net cash provided by financing activities		—			460
Net increase (decrease) in cash, cash equivalents and restricted cash	$	(11,825	)	$	5,743
Cash, cash equivalents and restricted cash, beginning of period	$	48,484		$	47,786
Cash, cash equivalents and restricted cash, end of period	$	36,659		$	53,529
Supplemental disclosure of non-cash investing and financing activities:
Deferred offering costs included in accounts payable and accrued expenses	$	—		$	208
Right of use asset obtained in exchange for lease liabilities	$	1,886		$	—
Purchases of property and equipment included in accrued expenses	$	228		$	12
Unrealized loss on investments	$	(35	)	$	(2	)

The following table provides a reconciliation of the cash, cash equivalents, and restricted cash balances as of each of the periods shown above:

	Three Months Ended March 31,
	2022		2021
Cash and cash equivalents	$	36,484	$	53,441
Restricted cash (included in other assets)		175		88
Total cash, cash equivalents and restricted cash	$	36,659	$	53,529

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

IMARA INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of the Business

IMARA Inc. (“IMARA” or the “Company”) is a biopharmaceutical company that has been dedicated to developing and commercializing novel therapeutics to treat patients suffering from serious diseases. The Company was incorporated in January 2016 under the laws of the State of Delaware, and its principal offices are in Boston, Massachusetts.

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 completing preclinical studies and clinical trials, receiving regulatory approvals for product candidates, development by competitors of new biopharmaceutical products, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. If the Company decides to pursue any future product development efforts, any product candidates will require significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will realize revenue from product sales.

In April 2022, the Company announced the results from interim analyses of its Ardent Phase 2b clinical trial of tovinontrine (IMR-687) in patients with sickle cell disease (“SCD”) and Forte Phase 2b clinical trial of tovinontrine in patients with ß-thalassemia. Based on the data generated by these interim analyses, the Company decided to discontinue the Ardent and Forte trials as well as the further development of tovinontrine in SCD and ß-thalassemia. The Company also decided to discontinue development of tovinontrine in heart failure with preserved ejection fraction, as well as its development plans with respect to IMR-261. In connection with these events, the Company’s Board of Directors approved a reduction in workforce designed to substantially reduce the Company’s operating expenses while it undertakes a comprehensive assessment of its strategic options to maximize stockholder value.

To date, the Company has funded its operations primarily through the sale of common stock and the sale of convertible preferred stock.

On April 1, 2021, the Company filed a Registration Statement on Form S-3 (the “Shelf”) with the SEC in relation to the registration and potential future issuance of common stock, preferred stock, debt securities, warrants and/or units of any combination thereof in the aggregate amount of up to $200.0 million. The Shelf was declared effective on April 8, 2021. The Company also simultaneously entered into a sales agreement with Cantor Fitzgerald & Co, LLC, as sales agent, providing for the offering, issuance and sale by the Company of up to an aggregate $75.0 million of its common stock from time to time in “at-the-market” offerings under the Shelf. As of March 31, 2022, the Company had issued and sold 231,291 shares of common stock under the sales agreement, resulting in net proceeds of $1.4 million after deducting commissions and offering expenses.

On July 16, 2021, the Company completed a public offering of shares of its common stock. In connection with the offering, the Company issued and sold 8,333,333 shares of common stock at a public offering price of $6.00 per share, resulting in net proceeds of $46.8 million after deducting underwriting discounts and commissions and offering expenses.

Liquidity

The Company has incurred recurring negative cash flows since inception and has funded its operations primarily from the sale of convertible preferred stock and proceeds from the IPO and subsequent common stock offerings. As of March 31, 2022 the Company had cash, cash equivalents and investments of $72.9 million and an accumulated deficit of approximately $162.1 million. The Company expects its operating losses and negative operating cash flows to continue into the foreseeable future.

The Company previously identified conditions and events that raise substantial doubt about its ability to continue as a going concern. As described above, the Company made the decision to discontinue development of tovinontrine in sickle cell disease, β-thalassemia and heart failure with preserved ejection fraction, as well to discontinue its development plans with respect to IMR-261. As a result, the Company believes its cash, cash equivalents and investments as of March 31, 2022 will be sufficient to fund its operating expenses and capital expenditure requirements for at least twelve months from the date of filing this Quarterly Report on Form 10-Q.

If the Company decides to pursue any future product development efforts, it will need additional funding to support its planned operating activities. There can be no assurances, however, that the current operating plan will be achieved or that additional funding

will be available on terms acceptable to the Company, or at all. If the Company is unable to obtain sufficient funding, it could be required to delay its development efforts, limit activities and reduce research and development costs, which could adversely affect its business prospects.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and as amended by Accounting Standards Updates of the Financial Accounting Standards Board (“FASB”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2021 and notes thereto, included in the Company’s Annual Report on Form 10-K (the “Annual Report”), filed with the SEC on March 15, 2022. The unaudited condensed consolidated interim financial statements have been prepared on the same basis as the audited financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated interim financial statements contain all adjustments which are necessary to present fairly the Company’s financial position as of March 31, 2022, the results of its operations for the three months ended March 31, 2022 and 2021 and cash flows for the three months ended March 31, 2022 and 2021. Such adjustments are of a normal and recurring nature. The results for the three months ended March 31, 2022 are not necessarily indicative of the results for the year ending December 31, 2022, or for any future period.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements of the Company include the accounts of its wholly owned subsidiaries, IMARA Security Corporation and IMARA E.U. Limited, the latter of which was dissolved in July 2021. All intercompany transactions and balances have been eliminated in consolidation.

Summary of Significant Accounting Policies

The significant accounting policies and estimates used in the preparation of the accompanying unaudited condensed consolidated financial statements are described in the Company’s audited consolidated financial statements for the year ended December 31, 2021 included in the Company’s Annual Report. There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2022.

Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, accrued research and development expenses, and stock-based compensation expense. Actual results could differ materially from those estimates.

Segments

Operating segments are defined as components of an enterprise for which separate and discrete information is available for evaluation by the chief operating decision-maker in deciding how to allocate resources and assess performance. The Company has one operating segment. The Company’s chief operating decision maker, its Chief Executive Officer, manages the Company’s operations on a consolidated basis for the purpose of allocating resources. All of the Company’s long-lived assets are held in the United States.

Comprehensive Loss

Comprehensive loss includes net loss and certain changes in stockholders’ equity that are excluded from net loss. The Company’s comprehensive loss includes unrealized losses on available-for-sale debt securities for the three months ended March 31, 2022 and 2021.

Recently Issued Accounting Pronouncements

In March 2020, the FASB issued “ASU 2020-03”, Codification Improvements to Financial Instruments (“ASU 2020-03”) which addressed, among other topics, Amendments related to ASU 2016-13 Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13”). The amendments align the contractual term under Topic 326 and Topic 842 (Leases) to be consistent, and also clarifies when an entity should record an allowance for credit losses in accordance with Topic 326. The standard is effective for the Company on January 1, 2023, with early adoption permitted. The Company is currently evaluating the impact of this new guidance on the Company’s consolidated financial statements and related disclosures, but does not expect the adoption of ASU 2020-03 or ASU 2016-13 to be material.

3. Fair Value of Financial Assets and Liabilities

The following table presents information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicates the level of the fair value hierarchy utilized to determine such fair values (in thousands):

	March 31, 2022
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Observable Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Money market funds, included in cash and cash equivalents	$	30,338	$	30,338	$	—	$	—
Marketable securities:
Commerical paper		22,745		—		22,745		—
Corporate debt securities		13,671		—		13,671		—
Total	$	66,754	$	30,338	$	36,416	$	—

	December 31, 2021
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Other Observable Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Money market funds, included in cash and cash equivalents	$	24,798	$	24,798	$	—	$	—
Marketable securities:
Commercial paper		26,131		—		26,131		—
Corporate debt securities		15,838		—		15,838		—
Total	$	66,767	$	24,798	$	41,969	$	—

As of March 31, 2022 and December 31, 2021, the Company’s Level 1 financial assets consisted of cash equivalents held in money market funds, which are valued using quoted market prices in active markets without any valuation adjustment. The financial assets valued based on Level 2 inputs consist of corporate debt securities and commercial paper, which consist of investments in highly-rated investment-grade securities. The Company estimates the fair values of these marketable securities by taking into consideration valuations obtained from third-party pricing sources. These pricing sources utilize industry standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include market pricing based on real-time trade data for the same or similar securities, issuer credit spreads, benchmark yields, and other observable inputs. The Company validates the prices provided by its third-party pricing sources by understanding the models used, obtaining market values from other pricing sources and analyzing pricing data in certain instances.

During the three months ended March 31, 2022 and the year ended December 31, 2021, there were no transfers between fair value measurement levels.

The carrying values of other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities.

4. Investments

As of March 31, 2022 and December 31, 2021, the Company had short-term investments consisting of corporate debt securities and commercial paper, which are considered to be available-for-sale investments. These are included in short-term investments on the condensed consolidated balance sheets, even though the stated maturity date may be one year or more beyond the current balance sheet date, as the Company views those securities as available for use in current operations, if needed. The following table summarizes the Company’s investments (in thousands):

	March 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss			Fair Value
Current:
Commercial paper	$	22,745	$	—	$	—		$	22,745
Corporate debt securities		13,722		—		(51	)	$	13,671
Total	$	36,467	$	—	$	(51	)	$	36,416

	December 31, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss			Fair Value
Current:
Commercial paper	$	26,131	$	—	$	—		$	26,131
Corporate debt securities		15,854	$	—		(16	)		15,838
Total	$	41,985	$	—	$	(16	)	$	41,969

As of March 31, 2022, the Company held six available-for-sale securities with an aggregate value of approximately $13.7 million in an unrealized loss position for less than twelve months. As of December 31, 2021, the Company held seven available-for-sale securities with an aggregate value of approximately $15.8 million in an unrealized loss position for less than twelve months. The Company has the intent and ability to hold such securities until recovery. The Company determined that there was no material change in the credit risk of these investments. As a result, the Company determined it did not hold any investments with an other-than-temporary impairment as of March 31, 2022 and December 31, 2021.

5. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

	March 31, 2022		December 31, 2021
Accrued research and development expenses	$	3,172	$	2,288
Accrued compensation and benefits		1,127		2,024
Accrued professional services		272		249
Accrued other		260		43
Total accrued expenses	$	4,831	$	4,604

6. License Agreements

Agreement with Lundbeck

In April 2016, the Company entered into a license agreement with Lundbeck A/S (“Lundbeck” and the “Lundbeck Agreement”) pursuant to which Lundbeck granted the Company the following licenses within the field of prevention, treatment or diagnosis of hemoglobinopathy disorders and/or other diseases or disorders, including those directly or indirectly related to hemoglobinopathies: (1) an exclusive, royalty-bearing license to certain patent rights and certain know-how owned or otherwise controlled by Lundbeck (“Licensed Technology”) to research, develop, make, use, sell, and commercialize products (“Licensed Products”) from PDE9 inhibitors, which included tovinontrine (“Licensed Compounds”); (2) a non-exclusive license to the Licensed Technology to make, research, develop, and use such Licensed Technology to enable research and development, with certain restrictions; and (3) a sublicensing right that allows the Company to grant sublicenses to third parties to use the Licensed Technology subject to the certain terms detailed in the Lundbeck Agreement. Under the Lundbeck Agreement, the Company is subject to certain achievement dates for

development milestones as defined in the agreement. The regulatory milestones due under the Lundbeck Agreement depend on the products being developed. Development milestones due under the Lundbeck Agreement with respect to the Licensed Compounds total up to $23.5 million, and, for any products that contain PDE9 inhibitors other than Licensed Compounds, total up to $11.8 million. The Company also agreed to pay tiered royalties based on net sales of all products licensed under the agreement in the low single-digit percentages.

To date, pursuant to the Lundbeck Agreement, the Company has made cash payments to Lundbeck of $1.8 million consisting of an upfront payment and ongoing milestone payments, which were recorded as research and development expenses. No payments were made during the year ended December 31, 2021, or for the three months ended March 31, 2022. As partial consideration for the license, the Company issued 167,523 shares of common stock to Lundbeck, which represented 8.0% of the Company’s then outstanding equity pursuant to a restricted stock agreement. The shares were fully vested on the date of issuance. The Company also allowed Lundbeck to participate in the fourth tranche of its Series A preferred stock financing in November 2018 at $1.00 per share.

The Lundbeck Agreement can be terminated by the Company at any time with 180 days’ written notice. The Company or Lundbeck may terminate the agreement by written notice within a specified period of time in the event of a material breach.

7. Commitments and Contingencies

Lease Agreements

In May 2019, the Company entered into an operating lease agreement (the “May 2019 Lease Agreement”) for office space totaling 4,210 square feet, located in Boston, Massachusetts with a 62-month term. The lease includes a rent escalation clause which results in cash rental payments of approximately $0.3 million annually. Rent expense is being recognized on a straight-line basis over the lease term. In addition to the base rent, the Company is also responsible for its share of operating expenses, electricity and real estate taxes, in accordance with the terms of the May 2019 Lease Agreement. The Company provided a security deposit of approximately $0.1 million in May 2019, which is included as a component of other assets on the Company’s unaudited condensed consolidated balance sheets as of March 31, 2022 and consolidated balance sheet as of December 31, 2021. The Company occupied the space in August 2019 and commenced recognition of rent expense.

In June 2021, the Company entered into an amendment to the May 2019 Lease Agreement (the “June 2021 Amended Lease Agreement”). Under the terms of the June 2021 Amended Lease Agreement, the Company expanded its current premises in Boston, Massachusetts by an additional 5,026 square feet, bringing the total office space to 9,236 square feet. The term of the June 2021 Amended Lease Agreement commenced in February 2022 and expires on March 31, 2027. The Company has the option to extend the term for one additional five-year period upon the Company’s written notice to the landlord at least 12 months and no more than 15 months in advance of the extension period. Upon commencement of the term of the June 2021 Amended Lease Agreement, the annual base rent obligation increased to approximately $0.6 million, with a total cash obligation for base rent over the initial five-year term of the lease of approximately $3.1 million. In addition to the base rent, the Company is also responsible for its share of operating expenses, electricity and real estate taxes. Upon execution of the June 2021 Amended Lease Agreement, the Company provided an additional security deposit in the amount of $0.1 million, with security deposits under the May 2019 Lease Agreement and June 2021 Amended Lease Agreement totaling $0.2 million.

The Company recorded rent expense of approximately $0.1 million during both the three months ended March 31, 2021 and March 31, 2022.

The following table summarizes the future lease payments due under the June 2021 Amended Lease Agreement (in thousands):

	March 31, 2022
2022		410
2023		622
2024		634
2025		647
2026		660
2027		167
Total Lease Payments	$	3,140
Less Imputed Interest		(663	)
Present value of operating lease liabilities	$	2,477

Operating cash flows used for operating leases	$	69
Weighted-average remaining lease term (years)		5.00
Weighted-average discount rate		8	%

Legal Proceedings

The Company may from time to time be party to litigation arising in the ordinary course of business. The Company was not subject to any material legal proceedings during the three months ended March 31, 2022 and year ended December 31, 2021, and no material legal proceedings are currently pending or, to the best of its knowledge, threatened.

Indemnification Obligations

The Company agrees to standard indemnification obligations as part of entering into agreements in the ordinary course of business. Pursuant to the indemnification provisions, the Company agrees to indemnify, hold harmless, and to reimburse the indemnified party for losses suffered or incurred by the indemnified party, generally the Company’s business partners, in connection with matters specified in the applicable provision, which may include any U.S. patent or any copyright or other intellectual property infringement claim by any third-party with respect to the Company’s products or product liability claims by any third-party with respect to the Company’s products. The term of these indemnification obligations is generally perpetual any time after execution of the agreement. The potential amount of future payments the Company could be required to make under these indemnification obligations is unlimited. The Company has never incurred costs to defend lawsuits or settle claims related to these indemnification obligations.

8. Stockholders’ Equity

On August 13, 2019, the Company’s board of directors, and on February 26, 2020, the Company’s stockholders, approved the Company’s restated certificate of incorporation, which became effective upon closing of the IPO on March 16, 2020, to authorize 10,000,000 shares of undesignated preferred stock, $0.001 per share par value, and to increase the number of authorized shares of common stock from 100,000,000 to 200,000,000 shares, $0.001 per share par value.

Common stockholders are entitled to receive dividends, as may be declared by the Board, if any, subject to the preferential dividend rights of any preferred stock then outstanding. Through March 31, 2022, no cash dividends have been declared or paid.

As of March 31, 2022, 10,000,000 shares of preferred stock were authorized and no shares of preferred stock were issued or outstanding.

As of March 31, 2022 and December 31, 2021, the Company has reserved for future issuance the following shares of common stock:

	March 31, 2022		December 31, 2021
Shares reserved for future issuance under the 2020 Equity Incentive Plan		1,431,045		1,216,532
Shares reserved for future issuance under the 2020 Employee Stock Purchase Plan		438,539		175,667
		1,869,584		1,392,199

9. Stock-Based Compensation

2016 Stock Incentive Plan

The Company’s 2016 Stock Incentive Plan, (the “2016 Plan”) provided for the grant of restricted stock, restricted stock units, stock appreciation rights, incentive stock options, non-statutory stock options and other stock-based awards to employees, officers, members of the Board, consultants and advisors of the Company.

As of the effective date of the 2020 Equity Incentive Plan (the “2020 Plan”) on March 11, 2020, and as of March 31, 2022, no shares remained available for future issuance under the 2016 Plan. Any options or awards outstanding under the 2016 Plan remain outstanding and effective.

2020 Equity Incentive Plan

On October 1, 2019, the Company’s board of directors adopted, and on February 26, 2020 the Company’s stockholders approved, the 2020 Plan, which became effective on March 11, 2020. The 2020 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. The number of shares reserved for issuance under the 2020 Plan is the sum of: (1) 1,220,283 shares of the Company’s common stock; plus (2) the number of shares (up to a maximum of 2,091,969 shares) equal to the sum of (x) 228,852 shares, which represents the Company’s common stock reserved for issuance under the 2016 Plan that remained available for grant under the 2016 Plan as of March 11, 2020 and (y) the number of shares of the Company’s common stock subject to outstanding awards granted under the 2016 Plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right. The number of shares reserved will be annually increased on the first day of each fiscal year, beginning with the fiscal year ending December 31, 2021 and continuing until, and including, the fiscal year ending December 31, 2030, equal to the lesser of (i) 4% of the number of shares of the Company’s common stock outstanding on the first day of such fiscal year and (ii) an amount determined by the Company’s board of directors. On January 1, 2021, 701,930 additional shares were reserved for issuance under the 2020 Plan pursuant to this provision. On January 1, 2022, a further 1,051,490 shares were reserved for future under the 2020 Plan pursuant to this provision. No more than 8,541,982 shares of common stock may be issued as incentive stock options under the 2020 Plan. The shares of common stock underlying any awards that expire, terminate, or are otherwise surrendered, cancelled, forfeited or repurchased by the Company under the 2016 Plan or the 2020 Plan will be added back to the shares of common stock available for issuance under the 2020 Plan.

As of March 31, 2022, there were 1,431,045 shares available for future issuance under the 2020 Plan.

The following table summarizes the Company’s stock option activity:

	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2021		2,373,024		$	9.63		8.19	$	—
Granted		442,339			1.38
Exercised		—			—
Forfeited		(30,651	)		8.12