SEC Filing - IGM Biosciences

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igms-10q_20190930.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 September 30, 2019

☐	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: 001-39045

IGM Biosciences, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	77-0349194
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
325 E. Middlefield Road Mountain View, CA	94043
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (650) 965-7873

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 $0.01 per share

IGMS

The Nasdaq Global Select 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 (§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, 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 November 1, 2019, the registrant had 24,104,694 shares of common stock, $0.01 par value per share, and 6,431,205 shares of non-voting common stock, $0.01 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Financial Statements (Unaudited)	1
	Condensed Balance Sheets	1
	Condensed Statements of Operations	2
	Condensed Statements of Comprehensive Loss	3
	Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)	4
	Condensed Statements of Cash Flows	6
	Notes to Unaudited Condensed Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67
Item 3.	Defaults Upon Senior Securities	68
Item 4.	Mine Safety Disclosures	68
Item 5.	Other Information	68
Item 6.	Exhibits	69
Signatures		70

Special Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this report are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that are in some cases beyond our control and may cause our 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 “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will” or “would,” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about: the timing of the initiation, progress and potential results of our preclinical studies, clinical trials and our discovery programs; our ability to utilize our IgM antibody platform to generate and advance additional product candidates; our ability to advance product candidates into, and successfully complete, clinical trials; the timing or likelihood of regulatory filings and approvals; our estimates of the number of patients who suffer from the diseases we are targeting and the number of patients that may enroll in our clinical trials; the commercializing of our product candidates, if approved; our ability and the potential to successfully manufacture and supply our product candidates for clinical trials and for commercial use, if approved; future strategic arrangements and/or collaborations and the potential benefits of such arrangements; our anticipated use of our existing resources and the proceeds from this offering; our estimates regarding expenses, future revenue, capital requirements and needs for additional financing and our ability to obtain additional capital; the sufficiency of our existing cash, cash equivalents and investments to fund our future operating expenses and capital expenditure requirements; our ability to retain the continued service of our key personnel and to identify, hire and retain additional qualified professionals; the implementation of our business model, strategic plans for our business and product candidates; the scope of protection we are able to establish and maintain for intellectual property rights, including our IgM platform, product candidates and discovery programs; our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately; the pricing, coverage and reimbursement of our product candidates, if approved; developments relating to our competitors and our industry, including competing product candidates and therapies; and the ability of our clinical trials to demonstrate the safety and efficacy of our product candidates, and other positive results;

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations, and prospects, and these forward-looking statements are not guarantees of future performance or development. 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 described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. 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. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein until after we distribute this Quarterly Report on Form 10-Q, whether as a result of any new information, future events, or otherwise.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

IGM Biosciences, Inc.

Condensed Balance Sheets

(Unaudited)

(in thousands, except share and per share data)

	September 30,			December 31,
	2019			2018
Assets
Current assets:
Cash and cash equivalents	$	193,679		$	1,887
Short-term investments		48,396			—
Prepaid expenses and other current assets		6,005			485
Income tax receivable		35			35
Total current assets		248,115			2,407
Property and equipment, net		2,585			1,472
Long-term investments		9,274			—
Operating lease right-of-use asset		9,882			—
Restricted cash		—			100
Total assets	$	269,856		$	3,979
Liabilities, convertible preferred stock and stockholders’ equity (deficit)
Current liabilities:
Accounts payable		2,778			164
Accrued liabilities		2,082			3,582
Lease liabilities, current		1,564			—
Deferred rent		—			108
Related party loan		—			5,027
Other current liabilities		—			9
Total current liabilities		6,424			8,890
Lease liabilities, non-current		8,810			—
Total liabilities		15,234			8,890
Commitments and contingencies (Note 9)
Convertible preferred stock, $0.01 par value; 0 shares authorized as of September 30, 2019 and 9,501,624 shares authorized as of December 31, 2018; 0 shares issued and outstanding as of September 30, 2019 and 9,501,620 issued and outstanding as of December 31, 2018; liquidation value of $0 as of September 30, 2019 and $61,466 as of December 31, 2018		—			60,917
Stockholder's (deficit) equity;
Preferred stock, $0.01 par value; 200,000,000 shares authorized as of September 30, 2019 and 0 shares authorized as of December 31, 2018; 0 shares issued and outstanding as of September 30, 2019 and December 31, 2018		—			—
Common stock, $0.01 par value; 1,000,000,000 shares authorized as of September 30, 2019 and 30,264,511 shares authorized as of December 31, 2018; 24,046,435 and 438,074 shares issued and outstanding as of September 30, 2019 and December 31, 2018, respectively		240			4
Non-voting common stock, $0.01 par value; 6,431,208 shares authorized as of September 30, 2019 and 0 shares authorized as of December 31, 2018; 6,431,205 shares issued and outstanding as of September 30, 2019 and 0 shares issued and outstanding as of December 31, 2018		64			—
Additional paid-in-capital		346,679			751
Due from related party		—			(2,511	)
Accumulated other comprehensive income		29			—
Accumulated deficit		(92,390	)		(64,072	)
Total stockholders’ equity (deficit)		254,622			(65,828	)
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)	$	269,856		$	3,979

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

IGM Biosciences, Inc.

Condensed Statements of Operations

(Unaudited)

(in thousands, except share and per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Operating expenses:
Research and development	$	8,279		$	5,172		$	22,494		$	11,148
General and administrative		2,394			1,373			6,067			2,597
Total operating expenses		10,673			6,545			28,561			13,745
Loss from operations		(10,673	)		(6,545	)		(28,561	)		(13,745	)
Other income, net		501			28			243			87
Net loss	$	(10,172	)	$	(6,517	)	$	(28,318	)	$	(13,658	)
Net loss per share, basic and diluted	$	(2.41	)	$	(14.88	)	$	(16.13	)	$	(31.18	)
Weighted-average common shares outstanding, basic and diluted		4,222,259			438,074			1,755,526			438,074

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

IGM Biosciences, Inc.

Condensed Statements of Comprehensive Loss

(Unaudited)

(in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
Net loss	$	(10,172	)	$	(6,517	)	$	(28,318	)	$	(13,658	)
Other comprehensive income:
Unrealized gain on investments		29			—			29			—
Comprehensive loss	$	(10,143	)	$	(6,517	)	$	(28,289	)	$	(13,658	)

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

IGM Biosciences, Inc.

Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(Unaudited)

(in thousands, except share and per share data)

	Convertible														Additional			Due To (From)			Accumulated Other					Total
	Preferred Stock						Common Stock				Non-Voting Common Stock				Paid-In-			Related			Comprehensive		Accumulated			Stockholders'
	Share			Amount			Share		Amount		Share		Amount		Capital			Party			Income		Deficit			Equity (Deficit)
Balance—December 31, 2018		9,501,620		$	60,917			438,074	$	4		—	$	—	$	751		$	(2,511	)	$	—	$	(64,072	)	$	(65,828	)
Exercise of stock options		—			—			7,566		—		—		—		10			—			—		—			10
Capital contribution from related party		—			—			—		—		—		—		23			—			—		—			23
Stock-based compensation expense		—			—			—		—		—		—		139			—			—		—			139
Net loss		—			—			—		—		—		—		—			—			—		(7,470	)		(7,470	)
Balance—March 31, 2019		9,501,620			60,917			445,640		4		—		—		923			(2,511	)		—		(71,542	)		(73,126	)
Exercise of stock options		—			—			165,656		2		—		—		152			—			—		—			154
Issuance of common stock		—			—			7,565		—		—		—		11			—			—		—			11
Related party equity transaction		—			—			—		—		—		—		16			2,511			—		—			2,527
Issuance of Series C convertible preferred stock, net of issuance costs of $0.1 million		4,690,997			61,868			—		—		—		—		—			—			—		—			—
Stock-based compensation expense		—			—			—		—		—		—		141			—			—		—			141
Net loss		—			—			—		—		—		—		—			—			—		(10,676	)		(10,676	)
Balance—June 30, 2019		14,192,617			122,785			618,861		6		—		—		1,243			—			—		(82,218	)		(80,969	)
Exercise of stock options		—			—			3,329		—		—		—		5			—			—		—			5
Issuance of Series C convertible preferred stock, net of issuance costs of $0.3 million		3,026,449			39,768			—		—		—		—		—			—			—		—			—
Vesting of restricted stock		—			—			58,259		1		—		—		(1	)		—			—		—			—
Conversion of convertible preferred stock into common stock and non-voting common stock		(17,219,066	)		(162,553	)		10,787,861		108		6,431,205		64		162,381			—			—		—			162,553
Issuance of common stock upon initial public offering, net of issuance costs of $4.3 million		—			—			12,578,125		125		—		—		182,717			—			—		—			182,842
Unrealized gain on investments		—			—			—		—		—		—		—			—			29		—			29
Stock-based compensation expense					—			—		—		—		—		334			—			—		—			334
Net loss		—			—			—		—		—		—		—			—			—		(10,172	)		(10,172	)
Balance—September 30, 2019		—		$	—			24,046,435	$	240		6,431,205	$	64	$	346,679		$	—		$	29	$	(92,390	)	$	254,622

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

IGM Biosciences, Inc.

Condensed Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(Unaudited)

(in thousands, except share and per share data)

	Convertible								Additional			Due To (From)						Total
	Preferred Stock				Common Stock				Paid-In-			Related			Accumulated			Stockholders'
	Share		Amount		Share		Amount		Capital			Party			Deficit			Equity (Deficit)
Balance—December 31, 2017		6,384,797	$	40,783		438,074	$	4	$	35,479		$	(34,625	)	$	(41,361	)	$	(40,503	)
Related party equity transaction		—		—		—		—		415			(387	)					28
Stock-based compensation expense		—		—		—		—		22						—			22
Net loss		—		—		—		—		—			—			(2,926	)		(2,926	)
Balance—March 31, 2018		6,384,797		40,783		438,074		4		35,916			(35,012	)		(44,287	)		(43,379	)
Related party equity transaction		—		—		—		—		420			3,428			—			3,848
Stock-based compensation expense		—		—		—		—		22			—			—			22
Net loss		—		—		—		—		—			—			(4,215	)		(4,215	)
Balance—June 30, 2018		6,384,797		40,783		438,074		4		36,358			(31,584	)		(48,502	)		(43,724	)
Related party equity transaction		—		—		—		—		(34,395	)		42,615			—			8,220
Stock-based compensation expense		—		—		—		—		20			—			—			20
Net loss		—		—		—		—		—			—			(6,517	)		(6,517	)
Balance—September 30, 2018		6,384,797	$	40,783		438,074	$	4	$	1,983		$	11,031		$	(55,019	)	$	(42,001	)

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

IGM Biosciences, Inc.

Condensed Statements of Cash Flows

(Unaudited)

(in thousands)

	Nine Months Ended
	September 30,
	2019			2018
Cash flows from operating activities:
Net loss	$	(28,318	)	$	(13,658	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation		416			191
Stock-based compensation expense		614			64
Net amortization of premiums and accretion of discounts on investments		(52	)		—
Amortization of operating lease right-of-use assets		1,203			—
Changes in assets and liabilities:
Prepaid expenses and other current assets		(5,335	)		(448	)
Other assets		—			8
Income tax receivable		—			(35	)
Accounts payable		655			(192	)
Accrued liabilities		(1,377	)		455
Income tax payable		—			(128	)
Deferred rent		—			(108	)
Lease liabilities		(819	)		—
Other current liabilities		(36	)		9
Other long-term liabilities		—			(9	)
Net cash used in operating activities		(33,049	)		(13,851	)

Cash flows from investing activities:
Purchase of property and equipment		(1,737	)		(431	)
Purchases of investments		(57,774	)		—
Net cash used in investing activities		(59,511	)		(431