imvt-20210930

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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 September 30, 2021


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

Commission File Number 001-38906

IMMUNOVANT, INC.

(Exact name of Registrant as specified in its Charter)


Delaware		83-2771572
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

320 West 37th Street		10018
New York,	NY
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (917) 580-3099

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 per share

IMVT

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.


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 ☒

As of November 1, 2021, there were 115,000,246 shares of the Registrant’s common stock, $0.0001 par value per share, outstanding.

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IMMUNOVANT, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2021

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		Page
Summary Risk Factors		2
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	4
	Condensed Consolidated Balance Sheets as of September 30, 2021 and March 31, 2021	4
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended September 30, 2021 and 2020	5
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended September 30, 2021 and 2020	6
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended September 30, 2021 and 2020	7
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended September 30, 2021 and 2020	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	84
Item 3.	Defaults Upon Senior Securities	84
Item 4.	Mine Safety Disclosures	84
Item 5.	Other Information	84
Item 6.	Exhibits	85
SIGNATURES		86

Where You Can Find More Information

Investors and others should note that we may announce material business and financial information to our investors using our investor relations website (www.immunovant.com), filings we make with the Securities and Exchange Commission, webcasts, press releases, and conference calls. We use these mediums, including our website, to communicate with our stockholders and the public about our company, our product candidate, and other matters. It is possible that the information that we make available may be deemed to be material information. We therefore encourage investors and others interested in our company to review the information that we make available on our website.

The information contained on the website referenced in this Quarterly Report on Form 10-Q is not incorporated by reference into this filing, and the website address is provided only as an inactive textual reference.

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SUMMARY RISK FACTORS

You should consider carefully the risks described under “Risk Factors” in Part II, Item 1.A of this Quarterly Report on Form 10-Q. References to “we,” “us,” and “our” in this section titled “Summary Risk Factors” refer to Immunovant, Inc. and its wholly owned subsidiaries. A summary of the risks that could materially and adversely affect our business, financial condition, operating results and prospects include the following:

•Our success relies upon a singular product candidate, IMVT-1401, formerly referred to as RVT-1401 (“batoclimab”) for which all clinical development by the Company has paused after elevated lipid levels were observed in some patients dosed with the drug. Unless we can determine a dosing regimen, target patient population, safety monitoring and risk management for batoclimab in autoimmune diseases for which the risks of lipid elevations and albumin reductions can be mitigated, we will not be able to show adequate benefit to risk ratio and will not be able to continue clinical development or seek or obtain marketing authorization in any jurisdiction.

•Our product candidate has caused and may cause adverse events (including but not limited to elevated total cholesterol and low-density lipoprotein levels and reductions in albumin) or have other properties that could delay or prevent its regulatory approval, cause us to further suspend or discontinue clinical trials, abandon further development or limit the scope of any approved label or market acceptance.

•Clinical trials are very expensive, time-consuming, difficult to design and implement, and involve uncertain outcomes.

•Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be made more difficult or rendered impossible by multiple factors outside our control.

•The results of our nonclinical and clinical trials may not support our proposed claims for our product candidate, or regulatory approval on a timely basis or at all, and the results of earlier studies and trials may not be predictive of future trial results.

•Interim, “top-line” or preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

•We may not be able to successfully develop and commercialize our product candidate batoclimab on a timely basis or at all.

•Our business is heavily dependent on the successful development, regulatory approval and commercialization of our sole product candidate, batoclimab.

•Roivant Sciences Ltd. owns a significant percentage of shares of our common stock and may exert significant control over matters subject to stockholder approval.

•Our business, operations, clinical development plans and timelines and supply chain could be adversely affected by the effects of health epidemics and pandemics, including the ongoing global Novel Coronavirus Disease 2019 (“COVID-19”) pandemic, on the manufacturing, clinical trials and other business activities performed by us or by third parties with whom we conduct business, including our contract manufacturers, contract research organizations, shippers and others.

•We expect to incur significant losses for the foreseeable future and may never achieve or maintain profitability.

•Our failure to maintain or continuously improve our quality management program could have an adverse effect upon our business, subject us to regulatory actions and cause a loss of patient confidence in us or our products, among other negative consequences.

•We are reliant on third parties to conduct, supervise and monitor our clinical trials and if those third parties perform in an unsatisfactory manner or fail to comply with applicable requirements or our quality management program fails to detect such events in a timely manner, it may harm our business.

•We may not be able to manage our business effectively if we are unable to attract and retain key personnel.

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•We plan to expand our organization and we may experience difficulties in managing this growth, which could disrupt our operations.

•Our third-party manufacturers may encounter difficulties in production or our quality management program may fail to detect quality issues at our third-party manufacturers which may delay or prevent our ability to obtain marketing approval or commercialize our product candidate if approved.

•We have a limited operating history and have never generated any product revenue.

•We will require additional capital to fund our operations and if we fail to obtain necessary financing, we may not be able to complete the development and commercialization of batoclimab.

•Raising additional funds by issuing equity securities may cause dilution to existing stockholders, raising additional funds through debt financings may involve restrictive covenants and raising funds through lending and licensing arrangements may restrict our operations or require us to relinquish proprietary rights.

•We rely on our license agreement with HanAll Biopharma Co., Ltd. (the “HanAll Agreement”) to provide us rights to the core intellectual property relating to batoclimab. Any termination or loss of significant rights under the HanAll Agreement would adversely affect our development and commercialization of batoclimab.

•The HanAll Agreement obligates us to make certain milestone payments, some of which may be triggered prior to our potential commercialization of batoclimab.

•We face significant competition from other biotechnology and pharmaceutical companies targeting autoimmune disease indications, and our operating results will suffer if we fail to compete effectively.

•We are subject to stringent and changing privacy, data security, and information security laws, contractual obligations, self-regulatory schemes, government regulation and standards related to data privacy and security. Further, if our security measures are compromised now or in the future, or the security, confidentiality, integrity or availability of our information technology, software, services, communications or data is compromised, limited or fails, this could result in a material adverse effect on our business.

•If securities or industry analysts do not publish research or reports about our business or publish negative reports about our business, our share price and trading volume could decline and has declined in the past as a result of Credit Suisse downgrading its rating for shares of our common stock.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

IMMUNOVANT, INC.

Condensed Consolidated Balance Sheets

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


	September 30, 2021		March 31, 2021
Assets
Current assets:
Cash	$	558,952	$	400,146
Prepaid expenses and other current assets	4,840		8,860


Total current assets	563,792		409,006
Operating lease right-of-use assets	2,731		3,282
Property and equipment, net	209		201

Total assets	$	566,732	$	412,489
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	4,243	$	2,432
Accrued expenses	23,058		15,160
Current portion of operating lease liabilities	1,082		1,179

Total current liabilities	28,383		18,771
Operating lease liabilities, net of current portion, and other noncurrent liabilities	1,952		2,238
Total liabilities	30,335		21,009
Commitments and contingencies (Note 9)
Stockholders’ equity:
Series A preferred stock, par value $0.0001 per share, 10,000 shares authorized, issued and outstanding at September 30, 2021 and March 31, 2021	—		—
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized, no shares issued and outstanding at September 30, 2021 and March 31, 2021	—		—
Common stock, par value $0.0001 per share, 500,000,000 shares authorized, 114,998,871 shares issued and outstanding at September 30, 2021 and 500,000,000 shares authorized, 97,971,243 shares issued and outstanding at March 31, 2021	12		10
Additional paid-in capital	802,774		590,425
Accumulated other comprehensive income (loss)	442		(298)
Accumulated deficit	(266,831)		(198,657)
Total stockholders’ equity	536,397		391,480
Total liabilities and stockholders’ equity	$	566,732	$	412,489

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

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IMMUNOVANT, INC.

Condensed Consolidated Statements of Operations

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


	Three Months Ended September 30,				Six Months Ended September 30,
	2021		2020		2021		2020
Operating expenses:
Research and development	$	21,361	$	11,976	$	40,066	$	28,898
General and administrative	16,289		8,998		27,469		18,662
Total operating expenses	37,650		20,974		67,535		47,560

Other expense (income), net	84		(225)		711		(151)
Loss before (benefit) provision for income taxes	(37,734)		(20,749)		(68,246)		(47,409)
(Benefit) provision for income taxes	(31)		40		(72)		88
Net loss	$	(37,703)	$	(20,789)	$	(68,174)	$	(47,497)
Net loss per common share – basic and diluted	$	(0.35)	$	(0.25)	$	(0.66)	$	(0.61)
Weighted-average common shares outstanding – basic and diluted	109,078,427		84,353,438		103,558,036		77,623,132

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

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IMMUNOVANT, INC.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited, in thousands)


	Three Months Ended September 30,				Six Months Ended September 30,
	2021		2020		2021		2020
Net loss	$	(37,703)	$	(20,789)	$	(68,174)	$	(47,497)
Other comprehensive income (loss):
Foreign currency translation adjustments	169		(232)		740		(206)
Total other comprehensive income (loss)	169		(232)		740		(206)
Comprehensive loss	$	(37,534)	$	(21,021)	$	(67,434)	$	(47,703)

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

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IMMUNOVANT, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited, in thousands except share data)


	Series A preferred stock			Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Total stockholders’ equity
	Shares	Amount		Shares	Amount
Balance at March 31, 2021	10,000	$	—	97,971,243	$	10	$	590,425	$	(298)	$	(198,657)	$	391,480
Restricted stock units vested and settled	—	—		6,352	—		—		—		—		—
Capital contribution – stock-based compensation	—	—		—	—		41		—		—		41
Capital contribution – expenses allocated from Roivant Sciences Ltd.	—	—		—	—		91		—		—		91
Stock-based compensation	—	—		—	—		3,820		—		—		3,820
Foreign currency translation adjustments	—	—		—	—		—		571		—		571
Net loss	—	—		—	—		—		—		(30,471)		(30,471)
Balance at June 30, 2021	10,000	$	—	97,977,595	$	10	$	594,377	$	273	$	(229,128)	$	365,532
Issuance of common stock upon investment by Roivant Sciences Ltd.	—	—		17,021,276	2		199,998		—		—		200,000
Capital contribution – stock-based compensation	—	—		—	—		692		—		—		692
Capital contribution – expenses allocated from Roivant Sciences Ltd.	—	—		—	—		38		—		—		38
Stock-based compensation	—	—		—	—		7,669		—		—		7,669
Foreign currency translation adjustments	—	—		—	—		—		169		—		169
Net loss	—	—		—	—		—		—		(37,703)		(37,703)
Balance at September 30, 2021	10,000	$	—	114,998,871	$	12	$	802,774	$	442	$	(266,831)	$	536,397


	Series A preferred stock			Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Total stockholders’ equity
	Shares	Amount		Shares	Amount
Balance at March 31, 2020	10,000	$	—	54,655,376	$	5	$	185,306	$	(16)	$	(91,226)	$	94,069
Issuance of common stock upon underwritten public offering	—	—		9,613,365	1		130,427		—		—		130,428
Issuance of common stock upon achievement of earnout shares milestone	—	—		10,000,000	1		(1)		—		—		—
Vesting of sponsor restricted shares	—	—		900,000	—		—		—		—		—
Issuance of common stock upon warrant redemption	—	—		5,719,145	1		65,751		—		—		65,752
Stock options exercised	—	—		23,841	—		63		—		—		63
Capital contribution – stock-based compensation	—	—		—	—		63		—		—		63
Capital contribution – expenses allocated from Roivant Sciences Ltd.	—	—		—	—		164		—		—		164
Stock-based compensation	—	—		—	—		3,918		—		—		3,918
Foreign currency translation adjustments	—	—		—	—		—		26		—		26
Net loss	—	—		—	—		—		—		(26,708)		(26,708)
Balance at June 30, 2020	10,000	$	—	80,911,727	$	8	$	385,691	$	10	$	(117,934)	$	267,775
Issuance of common stock upon underwritten public offering	—	—		6,060,606	1		188,118		—		—		188,119
Issuance of common stock upon achievement of earnout shares milestone	—	—		10,000,000	1		(1)		—		—		—
Vesting of sponsor restricted shares	—	—		900,000	—		—		—		—		—
Stock options exercised	—	—		18,372	—		119		—		—		119
Capital contribution – stock-based compensation	—	—		—	—		54		—		—		54
Capital contribution – expenses allocated from Roivant Sciences Ltd.	—	—		—	—		53		—		—		53
Stock-based compensation	—	—		—	—		3,307		—		—		3,307
Foreign currency translation adjustments	—	—		—	—		—		(232)		—		(232)
Net loss	—	—		—	—		—		—		(20,789)		(20,789)
Balance at September 30, 2020	10,000	$	—	97,890,705	$	10	$	577,341	$	(222)	$	(138,723)	$	438,406

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

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IMMUNOVANT, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)


	Six Months Ended September 30,
	2021		2020
Cash flows from operating activities
Net loss	$	(68,174)	$	(47,497)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	12,222		7,342
Depreciation on property and equipment	54		24
Non-cash lease expense	551		431
Other non-cash items	740		(206)



Changes in operating assets and liabilities:
Prepaid expenses and other current assets	4,021		2,611


Accounts payable	1,810		4,737
Accrued expenses	7,898		(5,315)


Operating lease and other noncurrent liabilities	(383)		(143)
Net cash used in operating activities	(41,261)		(38,016)
Cash flows from investing activities
Purchase of property and equipment	(62)		(86)
Net cash used in investing activities	(62)		(86)
Cash flows from financing activities
Capital contributions	129		217
Proceeds from investment by Roivant Sciences Ltd.	200,000		—
Proceeds from issuance of common stock upon underwritten public offering	—		319,783
Proceeds from issuance of common stock upon warrant redemption	—		65,752
Proceeds from stock options exercised	—		182
Payment of deferred offering costs	—		(975)
Repayment of note payable to Roivant Sciences Ltd.	—		(3,056)
Net cash provided by financing activities	200,129		381,903
Net change in cash	158,806		343,801
Cash – beginning of period	400,146		100,571
Cash – end of period	$	558,952	$	444,372

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

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IMMUNOVANT, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 — Description of Business and Liquidity

[A] Description of Business

Immunovant, Inc. together with its wholly owned subsidiaries (the “Company” or “Immunovant”) is a clinical-stage biopharmaceutical company focused on enabling normal lives for people with autoimmune diseases. The Company is developing a novel, fully human monoclonal antibody, IMVT-1401, formerly referred to as RVT-1401 (“batoclimab”) that selectively binds to and inhibits the neonatal fragment crystallizable receptor. The Company intends to develop batoclimab for indications in which there is robust evidence that pathogenic immunoglobulin G antibodies drive disease manifestation and for which reduction of these antibodies should lead to clinical benefit for patients with autoimmune diseases.

The Company has determined that it has one operating and reporting segment.

Reverse Recapitalization

On December 18, 2019, Health Sciences Acquisitions Corporation (“HSAC”) completed the acquisition of Immunovant Sciences Ltd. (“ISL”) pursuant to the share exchange agreement dated as of September 29, 2019 (the “Share Exchange Agreement”), by and among HSAC, ISL, the stockholders of ISL (the “Sellers”), and Roivant Sciences Ltd. (“RSL”), as representative of the Sellers (the “Business Combination”). As of immediately prior to the closing of the Business Combination, the Sellers owned 100% of the issued and outstanding common shares of ISL (“ISL Shares”). At the closing of the Business Combination, HSAC acquired 100% of the issued and outstanding ISL Shares, in exchange for 42,080,376 shares of HSAC’s common stock issued to the Sellers and 10,000 shares of HSAC Series A preferred stock issued to RSL. Upon the closing of the Business Combination, ISL became a wholly owned subsidiary of HSAC and HSAC was renamed “Immunovant, Inc.”.

[B] Liquidity

The Company has incurred significant losses and negative cash flows from operations since its inception. As of September 30, 2021, the Company’s cash totaled $559.0 million and its accumulated deficit was $266.8 million.

The Company has not generated any revenues to date and does not anticipate generating any revenues unless and until it successfully completes development and obtains regulatory approval for batoclimab or any future product candidate. Management expects to incur additional losses in the future to fund its operations and conduct product research and development and recognizes the need to raise additional capital to fully implement its business plan.

The Company intends to raise such additional capital through the issuance of equity securities, debt financings or other sources in order to further implement its business plan. However, if such financing is not available at adequate levels, the Company will need to reevaluate its operating plan and may be required to delay the development of its product candidate. The Company currently expects that its existing cash as of September 30, 2021 will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next 12 months from the date the unaudited condensed consolidated financial statements are issued.

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Note 2 — Summary of Significant Accounting Policies

[A] Basis of Presentation

The Company’s fiscal year ends on March 31 and its first three fiscal quarters end on June 30, September 30, and December 31. The accompanying condensed consolidated financial statements are unaudited. The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and follow the requirements of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements as certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The Company has no unconsolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

In the opinion of management, the unaudited condensed consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair statement of results for the interim periods. The results for the three and six months ended September 30, 2021 are not necessarily indicative of those expected for the year ending March 31, 2022 or for any future period. The condensed consolidated balance sheet as of March 31, 2021 included herein was derived from the audited consolidated financial statements as of that date. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on June 1, 2021.

[B] Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to assets, liabilities, stock-based compensation, litigation accruals, clinical trial accruals, operating leases, research and development costs and income taxes. The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be 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. Actual results could differ from those estimates.

Additionally, the Company assessed the impact that the COVID-19 pandemic has had on its operations and financial results as of September 30, 2021 and through the issuance of these unaudited condensed consolidated financial statements. The Company’s analysis was informed by the facts and circumstances as they were known to the Company. This assessment considered the impact that the COVID-19 pandemic may have on financial estimates and assumptions that affect the reported amounts of assets and liabilities and expenses.

[C] Risks and Uncertainties

The Company is subject to risks common to early-stage companies in the biopharmaceutical industry including, but not limited to, uncertainties related to clinical effectiveness of the product, commercialization of products, regulatory approvals, dependence on key products, key personnel and third-party service providers such as contract research organizations (“CROs”), protection of intellectual property rights and the ability to make milestone, royalty or other payments due under any license, collaboration or supply agreements.

[D] Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk include cash. As of September 30, 2021, the cash balance is kept in banking institutions that the Company believes are of high credit quality and are in excess of federally insured levels. The Company maintains its cash with an accredited financial institution and accordingly, such funds are subject to minimal credit risk. The Company has not experienced any losses on its cash.

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[E] Research and Development Expense

Research and development costs with no alternative future use are expensed as incurred. Payments for a product license prior to regulatory approval of the product and payments for milestones achieved prior to regulatory approval of the product are expensed in the period incurred as research and development. Milestone payments made in connection with regulatory approvals are capitalized and amortized to cost of product sales over the remaining useful life of the asset. Research and development expenses primarily consist of employee-related costs, milestone payments under the HanAll Agreement and expenses from third parties who conduct research and development activities (including manufacturing) on behalf of the Company. The Company accrues costs for clinical trial activities based upon estimates of the services received and related expenses incurred that have yet to be invoiced by CROs. In making these estimates, the Company considers various factors, including status and timing of services performed, the number of patients enrolled and the rate of patient enrollment. The Company accrues costs for non-clinical studies and contract manufacturing activities over the service periods specified in the contracts and are adjusted as necessary based upon an ongoing review of the level of effort and costs actually incurred. The estimate of the work completed is developed through discussions with internal personnel and external services providers as to the progress toward completion of the services and the agreed-upon fee to be paid for such services. As actual costs become known, the accrued estimates are adjusted. Such estimates are not expected to be materially different from amounts actually incurred.

[F] Stock-based Compensation

Stock-based awards to employees and directors are valued at fair value on the date of the grant and that fair value is recognized as stock-based compensation expense over the requisite service period. The grant date fair value of the stock-based awards with graded vesting is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards. The Company values its stock options that only have service vesting requirements using the Black-Scholes option pricing model. Stock-based compensation related to restricted stock awards is based on the fair value of the Company’s common stock on the grant date.

Certain assumptions need to be made with respect to utilizing the Black-Scholes option pricing model, including the expected life of the award, volatility of the underlying shares, the risk-free interest rate, expected dividend yield and the fair value of the Company’s common stock. Since the Company has limited option exercise history, it has generally elected to estimate the expected life of an award based upon the “simplified method” with the continued use of this method extended until such time the Company has sufficient exercise history. The expected share price volatility for the Company’s common stock is estimated by taking the average historical price volatility for the Company’s peers. The risk-free interest rate is based on the rates paid on securities issued by the U.S. Treasury with a term approximating the expected life of the equity award. As the Company has never paid and does not anticipate paying cash dividends on its common stock, the expected dividend yield is assumed to be zero. The Company accounts for pre-vesting award forfeitures when they occur.

[G] Net Loss per Common Share

Basic net loss per common share is computed by dividing net loss applicable to common stockholders by the weighted-average number of common stock outstanding during the period. Diluted net loss per common share is computed by dividing the net loss applicable to common stockholders by the diluted weighted-average number of common stock outstanding during the period. In periods in which the Company reports a net loss, all common stock equivalents are deemed anti-dilutive such that basic net loss per common share and diluted net loss per common share are equivalent. Potentially dilutive common stock has been excluded from the diluted net loss per common share computations in all periods presented because such securities have an anti-dilutive effect on net loss per common share due to the Company’s net loss. There are no reconciling items used to calculate the weighted-average number of total common stock outstanding for basic and diluted net loss per common share data.

The following potentially dilutive securities have been excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:


	Six Months Ended September 30,
	2021	2020
Preferred stock as converted	10,000	10,000
Options	6,156,944	5,834,682
Restricted stock units	3,394,097	127,200
Total	9,561,041	5,971,882

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[H] Recent Accounting Pronouncements

Recent authoritative guidance issued by the FASB (including technical corrections to the ASC), the American Institute of Certified Public Accountants, and the SEC did not, or are not expected to, have a material impact on the Company’s unaudited condensed consolidated financial statements and related disclosures.

Note 3 — Material Agreements

License Agreement

On December 19, 2017, Roivant Sciences GmbH (“RSG”), a wholly owned subsidiary of RSL, entered into a license agreement (the “HanAll Agreement”) with HanAll Biopharma Co., Ltd. (“HanAll”). Under the HanAll Agreement, RSG received (1) the non-exclusive right to manufacture and (2) the exclusive, royalty-bearing right to develop, import, use and commercialize the antibody referred to as batoclimab and certain back-up and next-generation antibodies, and products containing such antibodies, in the United States of America (the “U.S.”), Canada, Mexico, the European Union, the United Kingdom, Switzerland, the Middle East, North Africa and Latin America (the “Licensed Territory”).

In exchange for this license, RSG provided or agreed to provide the following consideration:

•Upfront, non-refundable payment of $30.0 million;

•Up to $20.0 million in shared (50%) research, development, and out-of-pocket costs incurred by HanAll;

•Up to an aggregate of $442.5 million (after a $10 million milestone payment in August 2019) upon the achievement of certain development, regulatory and sales milestones; and

•Tiered royalties ranging from the mid-single digits to mid-teens on net product sales subject to reduction on a product-by-product and country-by-country basis, until the later of (1) expiration of patent and regulatory exclusivity or (2) the 11th anniversary of the first commercial sale of such product in such country.

Since the acquisition of batoclimab, RSL and the Company have performed all the development associated with batoclimab and no amounts were incurred by HanAll and reported to the Company, to research or develop the technology for the three and six months ended September 30, 2021 and 2020, respectively.

On August 18, 2018, RSG entered into a sublicense agreement (the “Sublicense Agreement”) with Immunovant Sciences GmbH (“ISG”), a wholly-owned subsidiary of the Company, to sublicense this technology, as well as RSG’s know-how and patents necessary for the development, manufacture or commercialization of any compound or product that pertains to immunology. On December 7, 2018, RSG issued a notice to terminate the Sublicense Agreement with ISG and entered into an assignment and assumption agreement to assign to ISG all the rights, title, interest, and future obligations under the HanAll Agreement from RSG, including all rights to batoclimab from RSG in the Licensed Territory, for an aggregate purchase price of $37.8 million.

Note 4 — Accrued Expenses

Accrued expenses consist of the following (in thousands):


	September 30, 2021		March 31, 2021
Research and development expenses	$	14,778	$	10,147
Accrued financial advisory fees	5,000		—
Accrued bonuses	1,792		3,138
Legal and other professional fees	761		1,196
Other expenses	727		679
Total accrued expenses	$	23,058	$	15,160

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Note 5 — Related Party Transactions

Roivant Sciences, Inc. (“RSI”) and RSG Services Agreements

In addition to the agreements discussed in Note 3, in August 2018, the Company entered into services agreements (the “Services Agreements”) with RSI and RSG, under which RSI and RSG agreed to provide services related to development, administrative and financial activities to the Company during its formative period. Under each Services Agreement, the Company will pay or reimburse RSI or RSG, as applicable, for any expenses it, or third parties acting on its behalf, incurs for the Company. For any general and administrative and research and development activities performed by RSI or RSG employees, RSI or RSG, as applicable, will charge back the employee compensation expense plus a pre-determined mark-up. RSI and RSG also provided such services prior to the formalization of the Services Agreements, and such costs have been recognized by the Company in the period in which the services were rendered. Employee compensation expense, inclusive of base salary and fringe benefits, is determined based upon the relative percentage of time utilized on Company matters. All other costs will be billed back at cost. The term of the Services Agreements will continue until terminated by the Company, RSI or RSG, as applicable, upon 90 days’ written notice.

For the three and six months ended September 30, 2021, the Company was charged $0.8 million and $0.9 million, respectively, by RSI, RSG and RSL, which were treated as capital contributions in the accompanying unaudited condensed consolidated financial statements.

For the three and six months ended September 30, 2020, the Company was charged $0.2 million and $0.5 million, respectively, by RSI, RSG and RSL, of which $0.1 million and $0.3 million, respectively, were treated as capital contributions and $0.1 million and $0.2 million, respectively, were treated as amounts due to RSL in accrued expenses in the accompanying unaudited condensed consolidated financial statements.

RSL Promissory Note

In July 2019, the Company entered into an interest-free promissory note payable to RSL in the amount of $2.9 million (the “July Promissory Note”). The July Promissory Note had a 180-day term and was payable on demand upon the expiration of the term. In May 2020, the Company paid and settled the July Promissory Note.

RSL Information Sharing and Cooperation Agreement

In December 2018, the Company entered into an amended and restated information sharing and cooperation agreement (the “Cooperation Agreement”) with RSL. The Cooperation Agreement, among other things: (1) obligates the Company to deliver to RSL periodic financial statements and other information upon reasonable request and to comply with other specified financial reporting requirements; (2) requires the Company to supply certain material information to RSL to assist it in preparing any future SEC filings; and (3) requires the Company to implement and observe certain policies and procedures related to applicable laws and regulations. The Company has agreed to indemnify RSL and its affiliates and their respective officers, employees and directors against all losses arising out of, due to or in connection with RSL’s status as a stockholder under the Cooperation Agreement and the operations of or services provided by RSL or its affiliates or their respective officers, employees or directors to the Company or any of its subsidiaries, subject to certain limitations set forth in the Cooperation Agreement. No amounts have been paid or received under this agreement; however, the Company believes this agreement is material to its business and operations.

Subject to specified exceptions, the Cooperation Agreement will terminate upon the earlier of (1) the mutual written consent of the parties or (2) the later of when RSL no longer (a) is required by U.S. GAAP to consolidate the Company’s results of operations and financial position, account for its investment in the Company under the equity method of accounting or, by any rule of the SEC, include the Company’s separate financial statements in any filings it may make with the SEC and (b) has the right to elect directors constituting a majority of the Company’s board of directors.

RSI Subleases

In June 2020, the Company entered into two sublease agreements with RSI for two floors of the building the Company currently occupies as its headquarters in New York. The subleases will expire on February 27, 2024 and April 29, 2024, respectively, and have scheduled rent increases each year. During the three months ended September 30, 2021 and 2020, the Company incurred $0.3 million and $0.3 million, respectively, in rent expense under these operating leases. During the six months ended September 30, 2021 and 2020, the Company incurred $0.6 million and $0.5 million, respectively, in rent expense under these operating leases.

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RSL Share Purchase Agreement

On August 2, 2021, the Company and RSL entered into a share purchase agreement pursuant to which the Company issued 17,021,276 shares of the Company’s common stock, par value $0.0001 per share, to RSL at a per share price of $11.75 and received aggregate net proceeds of $200.0 million. Prior to the share issuance, the Company and RSL explored alternative potential transactions whereby the Company incurred additional costs, including $5.0 million in financial advisory fees, which are included in general and administrative expenses and accrued expenses in the accompanying unaudited condensed consolidated financial statements as of, and for the three and six months ended September 30, 2021.

Note 6 — Income Taxes

The Company’s effective tax rates were 0.08% and 0.11% for the three and six months ended September 30, 2021, respectively, and (0.19)% and (0.18)% for the three and six months ended September 30, 2020, respectively. The Company's effective rate is primarily driven by its jurisdictional earnings by location and a valuation allowance that eliminates the Company’s global net deferred tax assets.

The Company assesses the realizability of its deferred tax assets at each balance sheet date based on available positive and negative evidence in order to determine the amount which is more likely than not to be realized and records a valuation allowance as necessary.

Note 7 — Stockholders’ Equity

Series A Preferred Stock

In connection with the closing of the Business Combination, the Company designated and issued 10,000 shares of Series A preferred stock, par value $0.0001 per share, to RSL, all of which shares are outstanding as of September 30, 2021.

Each share of Series A preferred stock will automatically convert into one share of common stock at such time as the holder(s) of Series A preferred stock hold less than 25% of the total voting power of the Company’s outstanding shares. In the event of the Company’s liquidation, dissolution, or winding up, the holder(s) of the Series A preferred stock will receive first an amount per share equal to $0.01 and then will be entitled to share ratably in the assets legally available for distribution to all stockholders.

Preferred Stock

In connection with the closing of the Business Combination, the Company authorized 10,010,000 shares of preferred stock, par value $0.0001 per share. Other than the 10,000 shares of preferred stock designated as Series A preferred stock, there were no issued and outstanding shares of preferred stock as of September 30, 2021.

Common Stock

In connection with the closing of the Business Combination, the Company authorized 500,000,000 shares of common stock, par value $0.0001 per share. As of September 30, 2021, the Company has 114,998,871 shares of common stock issued and outstanding.

The Company has reserved the following shares of common stock for issuance:


	September 30, 2021	March 31, 2021
Conversion of Series A preferred stock	10,000	10,000
Options outstanding	6,156,944	7,988,999
Restricted stock units outstanding	3,394,097	1,095,676
Equity awards available for future grants	4,963,197	1,781,043
Total	14,524,238	10,875,718

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Note 8 — Stock-Based Compensation

2019 Equity Incentive Plan

In December 2019, in connection with the Business Combination, the Company’s stockholders approved the 2019 Equity Incentive Plan (the “2019 Plan”) and reserved 5,500,000 shares of common stock for issuance thereunder. The 2019 Plan became effective immediately upon the closing of the Business Combination. The maximum number of shares of common stock that may be issued pursuant to the exercise of incentive options under the 2019 Plan is 16,500,000. Each year on April 1, the number of common shares reserved for issuance increased automatically by 4.0% of the total number of shares of common stock outstanding on the last day of the preceding month. On April 1, 2021, 3,918,850 shares of common stock were added to the 2019 Plan pool in accordance with the evergreen provision of the 2019 Plan. As of September 30, 2021, options to purchase 3,209,770 shares of common stock and 3,394,097 restricted stock units (“RSUs”) were outstanding under the 2019 Plan and 4,963,197 shares of common stock remained available for future grant under the 2019 Plan.

Stock Option Repricing

Effective September 11, 2021, the Company’s board of directors repriced certain previously granted and still outstanding vested and unvested stock option awards under the 2019 Plan held by eligible employees and executive officers. As a result, the exercise price for these awards was lowered to $8.62 per share, which was the closing price of the Company’s common stock as reported on the Nasdaq Global Select Market on September 10, 2021. No other terms of the repriced stock options were modified, and the repriced stock options will continue to vest according to their original vesting schedules and will retain their original expiration dates. As a result of the repricing, 2,548,636 vested and unvested stock options outstanding as of September 11, 2021 with original exercise prices ranging from $10.71 to $50.67, were repriced.

The repricing on September 11, 2021 resulted in incremental stock-based compensation expense of $2.6 million, of which $0.4 million related to vested stock option awards and was expensed on the repricing date, and $2.2 million related to unvested stock option awards is being amortized on a straight-line basis over the remaining weighted-average vesting period of those awards of approximately 3.2 years.

2018 Equity Incentive Plan

Pursuant to the Share Exchange Agreement, upon the closing of the Business Combination, all vested or unvested outstanding options to purchase common shares of ISL under its 2018 Equity Incentive Plan (the “2018 Plan”) were automatically assumed by the Company and converted into options to purchase 4,408,287 shares of the Company’s common stock with no changes to the terms of the awards. As of the effective date of the 2019 Plan, no further stock awards have been or will be made under 2018 Plan. As of September 30, 2021, 2,947,174 stock options were outstanding under the 2018 Plan.

Stock Option Activity

A summary of the stock option activity under the Company’s equity incentive plans is as follows:


	Number of options	Weighted- Average Exercise Price		Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Balance - March 31, 2021	7,988,999	$	16.97	9.04	$	25,958
Granted	680,310	10.05
Forfeited	(2,471,739)	23.68
Expired	(40,626)	19.26
Balance - September 30, 2021	6,156,944	$	8.96	8.38	$	2,316
Exercisable - September 30, 2021	2,372,363	$	9.06	7.65	$	1,318

The weighted-average exercise price, remaining contractual term and aggregate intrinsic value as of September 30, 2021 reflect the impact of the stock option repricing discussed above. The aggregate intrinsic value is calculated as the difference between the exercise price of all outstanding and exercisable stock options and the fair value of the Company’s common stock as of September 30, 2021. There were no stock options exercised during the six months ended September 30, 2021. The stock options granted during the six months ended September 30, 2021 had a weighted-average grant date fair value per share of $7.21.

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The Company estimated the fair value of each option on the date of grant using the Black-Scholes option pricing model applying the weighted-average assumptions in the following table:


	Three Months Ended September 30,		Six Months Ended September 30,
	2021	2020	2021	2020
Risk-free interest rate	0.80% - 1.12%	0.30% - 0.40%	0.80% - 1.12%	0.30% - 0.44%
Expected term, in years	6.11	5.81 - 6.11	6.03 - 6.11	5.56 - 6.11
Expected volatility	88.72% - 91.15%	83.31% - 84.05%	82.92% - 91.15%	78.16% - 84.05%
Expected dividend yield	—%	—%	—%	—%

Restricted Stock Unit Awards

A summary of RSUs activity under the Company’s equity incentive plans is as follows:


	Number of RSUs	Weighted- Average Grant Date Fair Value
Outstanding as of March 31, 2021	1,095,676	$	20.43
Issued	2,747,794	7.34
Vested and settled	(6,352)	24.86
Forfeited	(443,021)	19.59
Outstanding as of September 30, 2021	3,394,097	$	9.94

Of the 3,394,097 RSUs outstanding as of September 30, 2021, 63,600 RSUs are vested and have not been settled, and the remaining 3,330,497 RSUs are not vested.

Stock-based Compensation Expense

For the three and six months ended September 30, 2021 and 2020, stock-based compensation expense under the Company’s equity incentive plans was as follows (in thousands):


	Three Months Ended September 30,				Six Months Ended September 30,
	2021		2020		2021		2020
Research and development expenses	$	3,768	$	951	$	3,805	$	1,370
General and administrative expenses	3,901		2,356		7,684		5,855
Total stock-based compensation	$	7,669	$	3,307	$	11,489	$	7,225

As of September 30, 2021, total unrecognized compensation expense related to non-vested stock options and RSUs was $37.1 million and $26.4 million, respectively, which is expected to be recognized over the remaining weighted-average service period of 2.60 years and 1.65 years, respectively.

Stock-based Compensation Allocated to the Company by RSL

In relation to the RSL common share awards and options issued by RSL to employees of RSL, RSI, RSG and the Company, stock-based compensation expense of $0.2 million and $0.1 million was recorded for the three months ended September 30, 2021 and 2020, respectively, and $0.3 million and $0.1 million for the six months ended September 30, 2021 and 2020, respectively, in the accompanying unaudited condensed consolidated statements of operations.

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RSL RSUs

The Company’s Principal Executive Officer was granted 25,000 RSUs of RSL in January 2021. These RSUs have a requisite service period of eight years. These RSUs will vest upon the achievement of both a time-based service requirement and RSL liquidity event requirement on or before the grant expiration date.

In September 2021, as a result of the closing of RSL’s business combination with Montes Archimedes Acquisition Corp. and the subsequent public listing of RSL’s common shares, the liquidity event of these RSL RSUs was achieved. Accordingly, the Company commenced recognition of stock-based compensation expense for the RSL RSUs in September 2021. For the three and six months ended September 30, 2021, the Company recorded $0.4 million of stock-based compensation expense related to these RSUs. As of September 30, 2021, there was $0.6 million of unrecognized compensation expense related to unvested RSL RSUs. The Company will recognize this stock-based compensation expense over the remaining requisite service period.

Note 9 — Commitments and Contingencies

Litigation

The Company is involved in various lawsuits, claims and other legal matters from time to time that arise in the ordinary course of conducting business. The Company records a liability when a particular contingency is probable and estimable.

In February 2021, a putative securities class action complaint was filed against the Company and certain of its current and former officers in the U.S. District Court for the Eastern District of New York on behalf of a class consisting of those who acquired the Company’s securities from October 2, 2019 and February 1, 2021. The complaint alleges that the Company and certain of its officers violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, by making false and misleading statements regarding the safety of batoclimab and seeks unspecified monetary damages on behalf of the putative class and an award of costs and expenses, including reasonable attorneys’ fees. On April 20, 2021, three movants filed motions for appointment as lead plaintiff, one of which was subsequently withdrawn on April 23, 2021. No hearing date has been set for the lead plaintiff motions. Following appointment of lead plaintiff, defendants, including the Company, expect the lead plaintiff to file an amended complaint and defendants, including the Company, to file a motion to dismiss the amended complaint. The Company intends to defend the case vigorously and has not recorded a liability related to this lawsuit because, at this time, the Company is unable to reasonably estimate possible losses or determine whether an unfavorable outcome is either probable or remote.

Commitments

In the normal course of business, the Company enters into agreements with CROs for clinical trials and with vendors for nonclinical studies, manufacturing and other services and products for operating purposes, which agreements are generally cancellable by the Company at any time, subject to payment of remaining obligations under binding purchase orders and, in certain cases, nominal early-termination fees. These commitments are not deemed significant. There are certain contracts wherein the Company has a minimum purchase commitment, however, most of it is due and payable within one year.

Contingencies

In March 2020, COVID-19 disease was declared a pandemic by the World Health Organization. The COVID-19 pandemic continues to and is disrupting supply chains and affecting production and sales across a range of industries. Currently, the Company has not suffered significant adverse consequences as a result of the COVID-19 pandemic, though it did slow enrollment of its clinical trials prior to the Company’s voluntary pause of clinical dosing in February 2021. The extent of the impact of COVID-19 on the Company’s future operational and financial performance will depend on certain developments, including the duration and spread of the pandemic, including its variants, impact on employees and vendors all of which are uncertain and cannot be predicted. At this point, the extent to which COVID-19 may impact the Company’s future financial condition or results of operations is uncertain.

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

You should read the following discussion and analysis of our financial condition and results of operations together with our (1) unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q (“Quarterly Report”), and (2) audited consolidated financial statements and the related notes thereto and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended March 31, 2021, included in our Annual Report on Form 10-K (“Annual Report”), filed with the Securities and Exchange Commission (the “SEC”) on June 1, 2021. Unless the context requires otherwise, references in this Quarterly Report to “Immunovant,” the “Company,” “we,” “us,” and “our” refer to Immunovant, Inc. and its wholly owned subsidiaries.

Prior to December 18, 2019, we were known as Health Sciences Acquisitions Corporation (“HSAC”). On December 18, 2019, we completed the Business Combination (as defined in “Note 1 – Description of Business and Liquidity” in our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report) with Immunovant Sciences Ltd. (“ISL”), a private company. For accounting purposes, HSAC was deemed to be the acquired entity.

Forward-Looking Statements

This Quarterly Report contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements are often identified by the use of words such as “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “hope,” “intend,” “likely,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “to be,” “will,” “would,” or the negative or plural of these words, or similar expressions or variations, although not all forward-looking statements contain these words. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur and actual results could differ materially from those expressed or implied by these forward-looking statements.

Factors that could cause or contribute to such differences include, but are not limited to, those identified herein, and those discussed in the section titled “Risk Factors” set forth in Part II, Item 1A. of this Quarterly Report and in our other filings with the SEC. These risks are not exhaustive. New risk factors emerge from time to time and it is not possible for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any 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, 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. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. Except as required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

Overview

We are a clinical-stage biopharmaceutical company focused on enabling normal lives for people with autoimmune diseases. We are developing a novel, fully human monoclonal antibody, IMVT-1401, formerly referred to as RVT-1401 (“batoclimab”) that selectively binds to and inhibits the neonatal fragment crystallizable receptor (“FcRn”). Batoclimab is the product of a multi-step, multi-year research program conducted by HanAll Biopharma Co., Ltd. (“HanAll”), to design a highly potent anti-FcRn antibody optimized for subcutaneous delivery. Our product candidate has been dosed in small volumes (e.g., 2 mL) and with a 27-gauge needle, while still generating therapeutically relevant pharmacodynamic activity, important attributes that we believe will drive patient preference and market adoption. In nonclinical studies and in clinical trials conducted to date, batoclimab has been observed to reduce immunoglobulin G (“IgG”) antibody levels. High levels of pathogenic IgG antibodies drive a variety of autoimmune diseases and, as a result, we believe batoclimab has the potential for broad application in these disease areas. We intend to develop batoclimab in autoimmune diseases for which there is robust evidence that pathogenic IgG antibodies drive disease manifestation and for which reduction of IgG antibodies should lead to clinical benefit.

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We are developing batoclimab as a fixed-dose, self-administered subcutaneous injection on a convenient weekly, or less frequent, dosing schedule as discussed below. As a result of our rational design and current outlook on potential opportunities, we believe that batoclimab, if developed and approved for commercial sale, would be differentiated from currently available, more invasive treatments for advanced IgG-mediated autoimmune diseases. Examples of indications for which trials for anti-FcRn assets have been announced are: Myasthenia Gravis (“MG”), Warm Autoimmune Hemolytic Anemia (“WAIHA”), Thyroid Eye Disease (“TED”, formerly referred to as Graves’ Ophthalmopathy, or “GO”), Idiopathic Thrombocytopenic Purpura, Pemphigus Vulgaris, Chronic Inflammatory Demyelinating Polyneuropathy, Bullous Pemphigoid, Pemphigus Foliaceus, Myositis, Autoimmune Encephalitis (LGI1+), Myelin Oligodendrocyte Glycoprotein Antibody Disorders, moderate-to-severe Primary Sjögrens Syndrome, Lupus Nephritis, Systemic Lupus Erythematosus, refractory Rheumatoid Arthritis, Hemolytic Disease of the Fetus and Newborn and moderate-to-severe Cutaneous Lupus Erythematosus. In 2021, we estimate these diseases had an aggregate prevalence of approximately 1,200,000 patients in the United States of America (the “U.S.”) and 1,530,000 patients in Europe. To the extent we choose to develop batoclimab as a treatment for certain of these rare diseases, we plan to seek orphan drug designation in the U.S. and Europe, where applicable. Such designations would primarily provide financial and exclusivity incentives intended to make the development of orphan drugs financially viable. In July 2021, we have been granted orphan drug designation by the FDA for batoclimab for the potential treatment of MG and we plan to seek orphan drug designation from the FDA for batoclimab for the treatment of WAIHA and TED and potentially in other orphan indications in which there is a medically plausible basis for its use, and we may seek orphan drug designation for batoclimab in Europe.

We are developing batoclimab as a fixed-dose subcutaneous injection, and have focused our initial development efforts on the treatment of MG, WAIHA and TED. We are also pursuing a series of other indications. MG is an autoimmune disease associated with muscle weakness. WAIHA is a rare hematologic disease in which autoantibodies mediate hemolysis, or the destruction of red blood cells. TED is an autoimmune inflammatory disorder that affects the muscles and other tissues around the eyes, which can be sight-threatening.

As previously disclosed in our Annual Report, in February 2021, we voluntarily paused dosing in our clinical trials for batoclimab due to elevated total cholesterol and low-density lipoprotein (“LDL”) levels observed in some trial subjects treated with batoclimab. No major adverse cardiovascular events have been reported to date in batoclimab clinical trials. In order to better characterize the observed lipid findings, we conducted from February 2021 through May 2021 a program-wide data review with input from external scientific and medical experts.

It is our intent to resume clinical studies with batoclimab and we are currently drafting study protocols across multiple indications. Utilizing pharmacokinetic (“PK”) and pharmacodynamic (“PD”) data obtained from our Phase 1 and Phase 2 studies, we are selecting dosing regimens for batoclimab which optimize reductions in total IgG levels while minimizing the impact on albumin and LDL cholesterol levels. Protocols that contain long-term treatment extensions will likely include protocol-directed guidelines for the management of any observed lipid abnormalities. While increases in LDL over a short-term treatment duration would not be expected to pose a safety concern for patients, the risk-benefit profile of long-term administration of batoclimab will need to incorporate any unfavorable effects on lipid profiles.

We have initiated discussions with the FDA and plan to initiate discussions with other regulatory agencies during the remainder of the calendar year 2021. Specifically, we have communicated with the FDA regarding a meeting in the fourth quarter of the calendar year 2021 to review modifications to our pivotal Phase 3 study in MG. These modifications are based on the FDA’s advice obtained during our previous end of Phase 2 meeting. Contingent upon feedback from the neurology division of the FDA, we plan to initiate a pivotal study in MG in the early part of the calendar year 2022. We recently closed the ASCEND WAIHA study, our open-label trial in warm autoimmune hemolytic anemia, in order to initiate planning for a randomized, controlled study with a long-term extension in this indication, contingent upon achieving alignment with the hematology division of the FDA. For TED, we also intend to re-initiate a placebo-controlled trial contingent upon achieving alignment with the ophthalmology division of the FDA.

We continue to evaluate potential new indications for batoclimab and we remain on track to announce at least two new indications by August 2022. For competitive reasons, we will likely announce these indications only after we have agreement with the FDA that we may proceed with a planned protocol. We expect at least one of the four indications beyond MG to be initiated as a pivotal trial in the calendar year 2022.

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COVID-19 Business Update

We have been actively monitoring the impact of the COVID-19 pandemic on our employees and our business. Based on guidance issued by federal, state and local authorities, we transitioned to a remote work model for our employees in mid-March 2020 and our workforce has continued to work remotely. Our operations continue as we seek to comply with guidance from governmental authorities and adjust our activities as appropriate. To date, the COVID-19 pandemic has not had significant effects on the progression of our clinical trials, though it did slow enrollment of our clinical trials prior to our voluntary pause of clinical dosing in February 2021, as previously disclosed. Further, the COVID-19 pandemic has not had significant manufacturing supply interruptions of batoclimab, and we intend to continue to advance the research and development of batoclimab.

We have not experienced material financial impacts as a result of the COVID-19 pandemic. However, the impact of the COVID-19 pandemic on our future results will largely depend on future developments related to the COVID-19 pandemic, which are highly uncertain and cannot be predicted with confidence, such as the ultimate duration of the pandemic, the spread of its variants and the full impact on our enrolling clinical sites, financial markets and the global economy, travel restrictions and social distancing in the U.S. and other countries, and business closures or business disruptions, as well as the effectiveness of actions taken in the U.S. and other countries to contain and treat the disease, including the effectiveness of vaccines and vaccine distribution efforts.

For additional information about risks and uncertainties related to the COVID-19 pandemic that may impact our business, financial condition and results of operations, see the section titled “Risk Factors” under Part II, Item 1A in this Quarterly Report.

Our Key Agreements

License Agreement with HanAll (“HanAll Agreement”)

In December 2017, Roivant Sciences GmbH (“RSG”) entered into the HanAll Agreement. Under the HanAll Agreement, RSG, a wholly owned subsidiary of Roivant Sciences Ltd. (“RSL”), received (1) the non-exclusive right to manufacture and (2) the exclusive, royalty-bearing right to develop, import and use the antibody referred to as batoclimab and certain back-up and next-generation antibodies, and products containing such antibodies, and to commercialize such products, in the U.S., Canada, Mexico, the E.U., the U.K., Switzerland, the Middle East, North Africa and Latin America (the "Licensed Territory"), for all human and animal uses, during the term of the agreement.

In December 2018, we obtained and assumed all rights, title, interest and obligations under the HanAll Agreement from RSG, including all rights to batoclimab from RSG in the Licensed Territory, pursuant to an assignment and assumption agreement between RSG and its wholly owned subsidiary, Immunovant Sciences GmbH (“ISG”), for an aggregate purchase price of $37.8 million.

Under the HanAll Agreement, the parties may choose to collaborate on a research program directed to the research and development of next generation FcRn inhibitors in accordance with an agreed plan and budget. We are obligated to reimburse HanAll for half of such research and development expenses incurred by HanAll, up to an aggregate reimbursement amount of $20.0 million. Intellectual property created by HanAll pursuant to this research program will be included in our license; intellectual property created by us pursuant to this research program will be included in HanAll’s license. Since the acquisition of batoclimab, we, along with RSL, have performed all the development associated with batoclimab and no amounts were incurred by HanAll and reported to the Company for further research or development of the technology for the three and six months ended September 30, 2021 and 2020.

Pursuant to the HanAll Agreement, RSG made an upfront payment of $30.0 million to HanAll. In May 2019, we achieved our first development and regulatory milestone which resulted in a $10.0 million milestone payment that we subsequently paid in August 2019. We will be responsible for future contingent payments and royalties, including up to an aggregate of $442.5 million upon the achievement of certain development, regulatory and sales milestone events. We are also obligated to pay HanAll tiered royalties ranging from the mid-single digits to mid-teens on net sales of licensed products, subject to standard offsets and reductions as set forth in the HanAll Agreement. These royalty obligations apply on a product-by-product and country-by-country basis and end upon the latest of: (A) the date on which the last valid claim of the licensed patents expire, (B) the date on which the data or market exclusivity expires or (C) 11 years after the first commercial sale of the licensed product, in each case, with respect to a given product in a given country.

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Services Agreements with Roivant Sciences, Inc. (“RSI”) and RSG

In August 2018, we entered into Services Agreements with RSI and RSG, under which RSI and RSG agreed to provide services related to development, administrative and financial activities to us during our formative period. Under each Services Agreement, we will pay or reimburse RSI or RSG, as applicable, for any expenses they, or third parties acting on our behalf, incur. For any general and administrative and research and development activities performed by RSI or RSG employees, RSI or RSG, as applicable, will charge back the employee compensation expense plus a pre-determined markup. RSI and RSG also provided such services prior to the formalization of the Services Agreements, and such costs have been recognized by us in the period in which the services were rendered. Employee compensation expense, inclusive of base salary and fringe benefits, is determined based upon the relative percentage of time utilized on our matters. All other costs will be billed back at cost. The term of the Services Agreements will continue until terminated by us, RSI or RSG, as applicable, upon 90 days’ written notice.

RSL Information Sharing and Cooperation Agreement

In December 2018, we entered into an amended and restated information sharing and cooperation agreement (the "Cooperation Agreement") with RSL, which, among other things: (1) obligates us to deliver to RSL periodic financial statements and other information upon reasonable request and to comply with other specified financial reporting requirements; (2) requires us to supply certain material information to RSL to assist it in preparing any future SEC filings; and (3) requires us to implement and observe certain policies and procedures related to applicable laws and regulations. We have agreed to indemnify RSL and its affiliates and their respective officers, employees and directors against all losses arising out of, due to or in connection with RSL’s status as a stockholder under the Cooperation Agreement and the operations of or services provided by RSL or its affiliates or their respective officers, employees or directors to us or any of our subsidiaries, subject to certain limitations set forth in the Cooperation Agreement. No amounts have been paid or received under this agreement; however, we believe this agreement is material to our business and operations.

Subject to specified exceptions, the Cooperation Agreement will terminate upon the earlier of (1) the mutual written consent of the parties or (2) the later of when RSL no longer (a) is required by generally accepted accounting principles in the United States ("U.S. GAAP") to consolidate our results of operations and financial position, account for its investment in us under the equity method of accounting or, by any rule of the SEC, include our separate financial statements in any filings it may make with the SEC and (b) has the right to elect directors constituting a majority of our board of directors.

RSL Share Purchase Agreement

On August 2, 2021, we entered into a share purchase agreement with RSL pursuant to which we issued 17,021,276 shares of our common stock, par value $0.0001 per share, to RSL at a per share price of $11.75 (the “Equity Investment”) and received aggregate net proceeds of $200.0 million.

Financial Operations Overview

Revenue

We have not generated any revenue and have incurred significant operating losses since inception, and we do not expect to generate any revenue from the sale of any products unless or until we obtain regulatory approval of and commercialize batoclimab or any future product candidates. Our ability to generate revenue sufficient to achieve profitability will depend completely on the successful development and eventual commercialization of batoclimab and any future product candidates.

Research and Development Expenses

We have been primarily engaged in preparing for and conducting clinical trials. Research and development expenses include program-specific costs, as well as unallocated costs.

Program-specific costs include direct third-party costs, which include expenses incurred under agreements with contract research organizations (“CROs”) and the cost of consultants who assist with the development of the Company’s product candidate on a program-specific basis, investigator grants, sponsored research, and any other third-party expenses directly attributable to the development of the product candidate.

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Unallocated costs include:

•costs related to contract manufacturing operations including manufacturing costs in connection with producing materials for use in conducting preclinical and clinical studies;

•personnel-related expenses for research and development personnel, which includes employee-related expenses such as salaries, benefits and other staff-related costs;

•stock-based compensation expenses for research and development personnel;

•payments upon the achievement of certain development and regulatory milestones under the HanAll Agreement;

•costs allocated to us under our services agreements with RSI and RSG (the “Services Agreements”); and

•other expenses, which include the cost of consultants who assist with our research and development, but are not allocated to a specific program.

Research and development activities will continue to be central to our business model. We expect our research and development expenses to increase significantly over the next several years as we increase personnel and compensation costs, commence additional clinical trials for batoclimab and prepare to seek regulatory approval for our product candidate. It is not possible to determine with certainty the duration and completion costs of any clinical trial we may conduct.

The duration, costs and timing of clinical trials of batoclimab and any future product candidates will depend on a variety of factors that include, but are not limited to:

•the number of trials required for approval;

•the per patient trial costs;

•the number of patients that participate in the trials;

•the number of sites included in the trials;

•the countries in which the trial is conducted;

•the length of time required to enroll eligible patients;

•the number of doses that patients receive;

•the drop-out or discontinuation rates of patients;

•the potential additional safety monitoring or other studies requested by regulatory agencies;

•the duration of patient follow-up;

•the timing and receipt of regulatory approvals;

•the potential impact of the ongoing COVID-19 pandemic;

•the efficacy and safety profile of the product candidate; and

•the cost of manufacturing.

In addition, the probability of success for batoclimab will depend on numerous factors, including our product's efficacy, safety, ease of use, competition, manufacturing capability and commercial viability.

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General and Administrative Expenses

General and administrative expenses consist primarily of employee salaries and related benefits, costs allocated under the Services Agreements and stock-based compensation for general and administrative personnel, legal and accounting fees, consulting services and other operating costs relating to corporate matters and daily operations.

We anticipate that our general and administrative expenses will continue to increase in the future to support our continued research and development activities and increased costs of operating as a public company. These increases will likely include patent-related costs, including legal and professional fees for filing, prosecution and maintenance of our product candidate, increased costs related to the hiring of additional personnel and fees to outside consultants for professional services. In addition, whenever batoclimab obtains regulatory approval, we expect that we would incur significant additional expenses associated with building medical affairs and commercial teams.

Results of Operations

The following table sets forth our results of operations for the three months ended September 30, 2021 and 2020 (in thousands):


	Three Months Ended September 30,
	2021		2020		Change
Operating expenses:
Research and development	$	21,361	$	11,976	$	9,385
General and administrative	16,289		8,998		7,291
Total operating expenses	37,650		20,974		16,676
Other expense (income), net	84		(225)		309
Loss before (benefit) provision for income taxes	(37,734)		(20,749)		(16,985)
(Benefit) provision for income taxes	(31)		40		(71)
Net loss	$	(37,703)	$	(20,789)	$	(16,914)

Research and Development Expenses for the Three Months Ended September 30, 2021 and 2020

The following table summarizes the period-over-period changes in research and development expenses for the three months ended September 30, 2021 and 2020 (in thousands):


	Three Months Ended September 30,				Change
	2021		2020		$
Program-specific costs:
Neurology diseases	$	303	$	569	$	(266)
Endocrine diseases	1,125		1,400		(275)
Hematology diseases	286		1,094		(808)
Unallocated costs:
Contract manufacturing costs	8,067		3,005		5,062
Personnel-related expenses including stock-based compensation	7,762		3,387		4,375
Other	3,818		2,521		1,297
Total research and development expenses	$	21,361	$	11,976	$	9,385

Research and development expenses increased by $9.4 million, from $12.0 million for the three months ended September 30, 2020 to $21.4 million for the three months ended September 30, 2021.

Program-specific research and development costs decreased by $1.3 million, from $3.1 million for the three months ended September 30, 2020 to $1.7 million for the three months ended September 30, 2021, primarily reflecting lower clinical activities due to the continued voluntary pause in our clinical trials.

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Unallocated research and development costs increased by $10.7 million, from $8.9 million for the three months ended September 30, 2020 to $19.7 million for the three months ended September 30, 2021. This increase reflected higher contract manufacturing costs of $5.1 million, higher personnel-related expenses of $4.4 million and other increases related to clinical studies and clinical research of $1.3 million. The increases in contract manufacturing for process development and drug substance manufacturing combined with personnel costs primarily reflected investment spending to support our strategic objectives as we prepare to re-initiate our clinical activities.

General and Administrative Expenses for the Three Months Ended September 30, 2021 and 2020

General and administrative expenses increased by $7.3 million, from $9.0 million for the three months ended September 30, 2020 to $16.3 million for the three months ended September 30, 2021. This increase was primarily due to financial advisory, legal and other professional costs of $4.8 million, and higher personnel-related costs (including stock-based compensation) of $2.4 million.

The following table sets forth our results of operations for the six months ended September 30, 2021 and 2020 (in thousands):


	Six Months Ended September 30,
	2021		2020		Change
Operating expenses:
Research and development	$	40,066	$	28,898	$	11,168
General and administrative	27,469		18,662		8,807
Total operating expenses	67,535		47,560		19,975
Other expense (income), net	711		(151)		862
Loss before (benefit) provision for income taxes	(68,246)		(47,409)		(20,837)
(Benefit) provision for income taxes	(72)		88		(160)
Net loss	$	(68,174)	$	(47,497)	$	(20,677)

Research and Development Expenses for the Six Months Ended September 30, 2021 and 2020

The following table summarizes the period-over-period changes in research and development expenses for the six months ended September 30, 2021 and 2020 (in thousands):


	Six Months Ended September 30,				Change
	2021		2020		$
Program-specific costs:
Neurology diseases	$	548	$	1,575	$	(1,027)
Endocrine diseases	3,574		3,024		550
Hematology diseases	975		1,755		(780)
Unallocated costs:					—
Contract manufacturing costs	15,212		12,892		2,320
Personnel-related expenses including stock-based compensation	12,559		5,716		6,843
Other	7,198		3,936		3,262
Total research and development expenses	$	40,066	$	28,898	$	11,168

Research and development expenses increased by $11.2 million, from $28.9 million for the six months ended September 30, 2020 to $40.1 million for the six months ended September 30, 2021.

Program-specific research and development costs decreased by $1.3 million, from $6.4 million for the six months ended September 30, 2020 to $5.1 million for the six months ended September 30, 2021, primarily reflecting lower clinical activities due to the continued voluntary pause in our clinical trials, partially offset by costs related to clinical activities for analyzing data and the program-wide data review.

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Unallocated research and development costs increased by $12.5 million, from $22.5 million for the six months ended September 30, 2020 to $35.0 million for the six months ended September 30, 2021. This increase was primarily due to higher personnel-related expenses of $6.8 million, increases related to clinical studies and clinical research of $3.3 million and higher contract manufacturing costs of $2.3 million, primarily due to drug substance manufacturing. The increases in contract manufacturing and personnel costs primarily reflected investment spending to support our strategic objectives as we prepare to re-initiate our clinical activities.

General and Administrative Expenses for the Six Months Ended September 30, 2021 and 2020

General and administrative expenses increased by $8.8 million, from $18.7 million for the six months ended September 30, 2020 to $27.5 million for the six months ended September 30, 2021. This increase was primarily due to financial advisory, legal and other professional costs of $4.7 million, and higher personnel-related costs (including stock-based compensation) of $3.7 million.

Liquidity and Capital Resources

Overview

We had cash of $559.0 million and $400.1 million as of September 30, 2021 and March 31, 2021, respectively. For the three months ended September 30, 2021 and 2020, we had net losses of $37.7 million and $20.8 million, respectively. For the six months ended September 30, 2021 and 2020, we had net losses of $68.2 million and $47.5 million, respectively.

On August 2, 2021, we received aggregate net proceeds of $200.0 million from RSL pursuant to the Equity Investment. We are using the proceeds from the Equity Investment to advance the development of batoclimab in multiple indications and for general corporate purposes.

We expect to continue to incur significant expenses and increasing operating losses at least for the next several years. We have never generated any revenue and we do not expect to generate product revenue unless and until we successfully complete development and obtain regulatory approval for batoclimab or any future product candidate. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our planned clinical trials, timing of batoclimab manufacturing, HanAll milestone payments and our expenditures on other research and development activities. We anticipate that our expenses will increase substantially as we:

•fund our clinical trials of batoclimab;

•fund our clinical development programs;

•launch any potential Phase 2 proof-of-concept studies of batoclimab in additional indications;

•incur costs associated with the pause, analysis and safety review of the clinical trials of batoclimab;

•achieve milestones under our agreements with third parties, including the HanAll Agreement, that will require us to make substantial payments to those parties;

•seek to identify, acquire, develop and commercialize additional product candidates;

•integrate acquired technologies into a comprehensive regulatory and product development strategy;

•maintain, expand and protect our intellectual property portfolio;

•hire scientific, clinical, quality control and administrative personnel;

•add operational, financial and management information systems and personnel, including personnel to support our drug development efforts;

•commence the number of trials required for approval;

•seek regulatory approvals for any product candidates that successfully complete clinical trials;

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•ultimately establish a sales, marketing and distribution infrastructure and scale up external manufacturing capabilities to commercialize any drug candidates for which we may obtain regulatory approval; and

•incur insurance, legal and other regulatory compliance expenses to operate as a public company.

Our primary use of cash is to fund our clinical trials and clinical development activities. Our current funds will not be sufficient to enable us to complete all necessary development and commercially launch batoclimab. We anticipate that we will continue to incur net losses for the foreseeable future.

Until such time, if ever, as we can generate substantial product revenue from sales of batoclimab or any future product candidate, we expect to finance our cash needs through a combination of equity offerings, debt financings and potential collaboration, license or development agreements. Our ability to raise additional capital may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the U.S. and worldwide resulting from the ongoing COVID-19 pandemic. We do not currently have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. 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 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 be required to relinquish valuable rights to future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. Adequate additional funding may not be available to us on acceptable terms, or at all. If we are unable to raise capital in sufficient amounts or on terms acceptable to us, we may be required to delay, limit, reduce or terminate our drug development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves or potentially discontinue operations.

Cash Flows

The following table sets forth a summary of our cash flows for the six months ended September 30, 2021 and 2020 (in thousands):


	Six Months Ended September 30,
	2021		2020
Net cash used in operating activities	$	(41,261)	$	(38,016)
Net cash used in investing activities	(62)		(86)
Net cash provided by financing activities	200,129		381,903

Operating Activities

For the six months ended September 30, 2021, $41.3 million of cash was used in operating activities. This was primarily attributable to a net loss from operations for the year of $68.2 million, partially offset by non-cash charges of $13.6 million and a net change in operating assets and liabilities of $13.3 million. The non-cash charges consisted mainly of stock-based compensation of $12.2 million, reflecting the higher headcount and incentive equity awards as compared with the prior-year period. The change in our operating assets and liabilities was primarily due to an increase of $9.7 million in accounts payable and accrued expenses, driven by accrued financial advisory fees, as well as the timing and level of payments related to contract manufacturing and other research and development costs. The change in operating assets and liabilities also reflected $4.0 million of lower prepaid expenses and other current assets, driven by the timing of payments related to clinical research and contract manufacturing activities.

For the six months ended September 30, 2020, $38.0 million of cash was used in operating activities. This was primarily attributable to a net loss from operations of $47.5 million, non-cash charges of $7.6 million and a net change in operating assets and liabilities of $1.9 million. The non-cash charges consisted mainly of stock-based compensation of $7.3 million. The change in our operating assets and liabilities was primarily due to a decrease of $3.0 million in prepaid expenses and other current assets due to the settlement of a value-added tax receivable in April 2020.

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Investing Activities

For the six months ended September 30, 2021 and 2020, cash used in investing activities was related to the purchase of property and equipment.

Financing Activities

For the six months ended September 30, 2021, $200.1 million of cash provided by financing activities primarily consisted of $200.0 million in proceeds from the Equity Investment.

For the six months ended September 30, 2020, $381.9 million of cash provided by financing activities consisted of $319.8 million in proceeds from the two issuances of common stock in an underwritten public offering, $65.8 million in proceeds from the issuance of common stock upon warrant redemptions, partially offset by repayment of the note payable to RSL of $3.1 million and the payment of offering costs for two issuances of $1.0 million.

Outlook

Based on our existing cash balance as of September 30, 2021 of $559.0 million, our research and development plans and our timing expectations related to our development programs for batoclimab, we expect to be able to fund our operating expenses and capital expenditure requirements for at least the next 12 months from the date of this Quarterly Report. However, we have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect.

Contractual Obligations and Commitments

As of September 30, 2021, other than contingent payments pursuant to the HanAll Agreement and sublease agreements (as discussed below), we did not have any ongoing material financial commitments, such as lines of credit or guarantees, that we expect to affect our liquidity over the next several years.

In the normal course of business, we enter into agreements with CROs for clinical trials and with vendors for nonclinical studies, manufacturing and other services and products for operating purposes, which agreements are generally cancellable by us at any time, subject to payment of remaining obligations under binding purchase orders and, in certain cases, nominal early-termination fees. These commitments are not deemed significant. There are certain contracts wherein we have a minimum purchase commitment, however, most of it is due and payable within one year.

We have not included potential future payments due under the HanAll Agreement in a table of contractual obligations because the payment obligations under this agreement are contingent upon future events. As of September 30, 2021, the aggregate maximum amount of milestone payments we could be required to make under the HanAll Agreement is $442.5 million upon the achievement of certain development, regulatory and sales milestone events. We are also required to reimburse HanAll for half of budgeted research and development costs incurred by HanAll with respect to batoclimab, up to an aggregate of $20.0 million.

Sublease Agreements

In June 2020, we entered into two sublease agreements with RSI, for the two floors of the building that serves as our headquarters in New York. The subleases will expire on February 27, 2024 and April 29, 2024, respectively, and have scheduled rent increases each year. The future fixed operating lease payments under both sublease agreements are $2.9 million over a lease period of approximately 2.5 years.

In April 2020, we entered into a sublease agreement with an unrelated party for one floor of a building in North Carolina. The sublease will expire on February 28, 2022 and has no scheduled rent increases. The future fixed operating lease payments under the sublease agreement are less than $0.1 million over the remaining lease period of 5 months.

Off-Balance Sheet Arrangements

During the periods presented, we did not have any off-balance sheet arrangements, as defined under SEC rules.

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Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the balance sheet, and the reported amounts of expenses during the reporting period. In accordance with U.S. GAAP, we evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We define our critical accounting policies as those under U.S. GAAP that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles. During the three and six months ended September 30, 2021, there were no material changes to our critical accounting policies and use of estimates from those disclosed in the audited consolidated financial statements for the year ended March 31, 2021 included in our Annual Report.

Recent Accounting Pronouncements

For information with respect to recently issued accounting standards and the impact of these standards on our unaudited condensed consolidated financial statements, refer to “Note 2 – Summary of Significant Accounting Policies” in our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

As of September 30, 2021, we had cash of $559.0 million. Interest income is sensitive to changes in the general level of interest rates; however, due to the nature of our account portfolio, an immediate hypothetical 10% change in interest rates would not have a material effect on our liquidity.

Foreign Currency Exchange Rate Risk

Our employees and our operations are currently primarily located in the U.S. and our expenses are generally denominated in U.S. dollars. We therefore are not currently exposed to significant market risk related to changes in foreign currency exchange rates. However, we are exposed to fluctuations in foreign currency exchange rate risk as a result of entering into transactions denominated in currencies other than U.S. dollars as we have contracted with and may continue to contract with foreign vendors. We believe an immediate hypothetical 10% change in exchange rates during any of the periods presented would not have a material effect on our liquidity or our consolidated financial statements.

Effects of Risk

Inflation generally affects us by increasing our research and development and contract manufacturing costs. We do not believe that inflation had a material effect on our business, financial condition or results of operations as of September 30, 2021.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

We maintain “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2021, the end of the period covered by this Quarterly Report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2021 at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting.

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended September 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitation on the Effectiveness of Internal Control.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures, or our internal controls, will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we may become involved in legal or regulatory proceedings arising in the ordinary course of our business. We do not currently, however, expect such legal proceedings to have a material adverse effect on our business, operating results or financial condition. However, depending on the nature and timing of a given dispute, an unfavorable resolution could materially affect our current or future results of operations or cash flows.

For a description of our legal proceedings, refer to “Note 9 - Commitments and Contingencies” in our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report.

Item 1A. Risk Factors

Our business involves a high degree of risk. You should carefully consider the risks described below, together with the other information contained in this Quarterly Report, including our unaudited condensed consolidated financial statements and the related notes appearing elsewhere in this Quarterly Report. We cannot assure you that any of the events discussed in the risk factors below will not occur. These risks could have a material and adverse impact on our business, results of operations, financial condition and cash flows and, if so, our future prospects would likely be materially and adversely affected. If any of such events were to happen, the trading price of shares of our common stock could decline, and you could lose all or part of your investment.

Risks Related to Development, Regulatory Approval and Commercialization

Our success relies upon a singular product candidate, batoclimab, for which all clinical development by the Company has paused after elevated lipid levels were observed in some patients dosed with the drug. Unless we can determine a dosing regimen, target patient population, safety monitoring and risk management for batoclimab in autoimmune diseases for which the risks of lipid elevations and albumin reductions can be mitigated, we will not be able to show adequate benefit to risk ratio and will not be able to continue clinical development or seek or obtain marketing authorization in any jurisdiction.

In February 2021, we voluntarily paused dosing in our clinical trials for batoclimab due to elevated total cholesterol and LDL levels observed in some trial subjects treated with batoclimab. In our ASCEND GO-2 trial, lipid parameters were assessed at baseline, at week 12, and at week 20 following eight weeks off drug. Based on preliminary, unblinded data, median LDL cholesterol at week 12 was increased by approximately 12 mg/dL in the 255 mg dose group (corresponding to an increase from baseline of approximately 15%), by approximately 33 mg/dL in the 340 mg dose group (corresponding to an increase from baseline of approximately 37%), by approximately 62 mg/dL in the 680 mg dose group (corresponding to an increase from baseline of approximately 52%) and did not increase in the control group. The data analysis indicates a dose-dependent increase in lipids. Average high-density lipoprotein (“HDL”) and triglyceride levels also increased but to a much lesser degree. We also observed correlated decreases in albumin levels and the rate and extent of albumin reductions were dose-dependent. Subjects receiving the 255 mg weekly dose (“QW”) experienced the smallest reductions in albumin through week 12, with a median reduction of about 16% from baseline, while subjects receiving the 340 mg or 680 mg QW experienced median reductions of albumin of 26% or 40%, respectively. At week 20, both lipids and albumin returned to baseline.

In our open label ASCEND WAIHA trial, only two subjects completed 12 weeks of dosing prior to the program-wide pause in dosing, with three additional subjects partially completing the dosing period. Pre-specified and post-hoc lipid test results from these five subjects were analyzed along with post-hoc lipid test results performed on frozen samples from ASCEND MG subjects (where available) and post-hoc lipid test results from our Phase 1 Injection Site study. LDL elevations observed in the ASCEND WAIHA and ASCEND MG subject populations and in healthy subjects in the Phase 1 Injection Site study also appeared to be dose-dependent and were generally consistent in magnitude with the elevations observed in ASCEND GO-2 subjects. For more information about our ASCEND GO-2, ASCEND WAIHA, ASCEND MG and Phase 1 Injection Site studies, please refer to “Part I, Item 1. Business” of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on June 1, 2021.

No major adverse cardiovascular events have been reported to date in batoclimab clinical trials.

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In order to better characterize the observed lipid findings, we conducted from February 2021 through May 2021 a program-wide data review with input from external scientific and medical experts. Based upon our review and expert input, we intend to resume clinical studies with batoclimab and we are currently drafting study protocols across multiple indications. Utilizing PK and PD data obtained from our Phase 1 and Phase 2 studies, we are selecting dosing regimens for batoclimab which optimize reductions in total IgG levels while minimizing the impact on albumin and LDL cholesterol levels. Protocols that contain long-term treatment extensions will likely include protocol-directed guidelines for the management of any observed lipid abnormalities. While increases in LDL over a short-term treatment duration would not be expected to pose a safety concern for patients, the risk-benefit profile of long-term administration of batoclimab will need to incorporate any unfavorable effects on lipid profiles. We have initiated discussions with the FDA and plan to initiate discussions with other regulatory agencies during the remainder of the calendar year 2021.

It is possible we will not be able to agree upon sufficient risk mitigation with regulatory authorities and that our development of batoclimab will not continue. Even if we are able to continue clinical development of batoclimab with such risk mitigations, any future approval and marketing would suffer from the risks of potential long-term lipid and albumin changes and potential impact of mitigating measures, including, among others, limited indication, monitoring, a risk evaluation and mitigation strategy (“REMS”), potential additional safety studies and other adverse labeling.

Our product candidate has caused and may cause adverse events (“AEs”) (including but not limited to elevated total cholesterol and LDL levels and reductions in albumin) or have other properties that could delay or prevent its regulatory approval, cause us to further suspend or discontinue clinical trials, abandon further development or limit the scope of any approved label or market acceptance.

AEs associated with our product candidate in our clinical trials could cause us, other reviewing entities, clinical trial sites or regulatory authorities to interrupt, delay or halt clinical trials and could result in the denial of regulatory approval. The most commonly reported AE in our Phase 1 clinical trial was mild erythema and swelling at the injection site, which typically resolved within hours; as previously disclosed, lipid levels were not measured contemporaneously during these Phase 1, ASCEND MG and ASCEND GO-1 clinical trials of batoclimab. If an unacceptable frequency or severity of AEs or new safety signals are reported in our clinical trials for our product candidate, our ability to obtain regulatory approval for such product candidate may be negatively impacted. Treatment-related side effects arising from, or those potentially arising from, our product candidate or those from other companies targeting similar autoimmune indications could affect the design of clinical studies, target patient population, enrollment and conduct of the studies, patient recruitment or the ability of enrolled patients to complete the trial, eventual labeling and risk management, or result in potential product liability claims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff.

For example, in February 2021, we voluntarily paused dosing in our clinical trials for batoclimab due to elevated total cholesterol and LDL levels observed in some trial subjects treated with batoclimab. Based on our program-wide data review, in our ASCEND GO-2 trial, data analysis indicates a dose-dependent increase in lipids and our ASCEND WAIHA initial preliminary data indicated a similar trend in lipid parameters as compared to those in the ASCEND GO-2 trial. We also observed a decrease in albumin levels and the rate and extent of albumin reductions were dose-dependent. We are progressing discussions with the FDA and are planning to progress discussions with other regulatory authorities to align on the next steps in the continued development of batoclimab. These occurrences have harmed, and any reoccurrences may continue to harm, our business, financial condition and prospects.

If our product candidate is approved and then causes serious or unexpected side effects, a number of potentially significant negative consequences could result, including:

•regulatory authorities may withdraw, suspend or limit their approval of the product or require a REMS (or equivalent outside the U.S. to impose restrictions on the product’s distribution or require other risk management measures;

•we may be required to recall a product;

•additional restrictions may be imposed on the marketing of the particular product or the manufacturing processes for the product or any component thereof;

•regulatory authorities may require the addition of labeling statements, such as warnings or contraindications, require other labeling changes or require field alerts or other communications to physicians, pharmacies or the public;

•we may be required to change the way the product is administered or distributed, conduct additional clinical trials, change the labeling of a product or be required to conduct additional post-marketing studies or surveillance;

•we may be required to repeat a nonclinical study or clinical trial or terminate a program, even if other studies or trials related to the program are ongoing or have been successfully completed;

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•we may be sued and held liable for harm caused to patients;

•physicians may stop prescribing the product;

•reimbursement may not be available for the product;

•we may elect to discontinue the sale of our product;

•the product may become less competitive; and

•our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the affected product candidate and could substantially increase the costs of commercializing our product candidate, if approved.

Clinical trials are very expensive, time-consuming, difficult to design and implement, and involve uncertain outcomes.

Our product candidate is still in clinical development and will require extensive clinical testing before we are prepared to submit a biologics license application (“BLA”) or other similar application for regulatory marketing approval. We cannot provide you any assurance that we will submit a BLA for regulatory approval for our product candidate within our projected timeframes or whether any such application will be approved by the relevant regulatory authorities. Clinical trials are very expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. For instance, the FDA or other regulatory authorities may not agree with our proposed analysis plans or trial design for any clinical trials for batoclimab; during any such review, may identify unexpected efficacy or safety concerns, which may delay the approval of a BLA or similar application. The FDA may also find that the benefits of batoclimab in any of our target indications do not outweigh its risks, including the risks associated with elevated lipid levels and lower albumin levels, in a manner sufficient to grant regulatory approval. The clinical trial process is also time-consuming and costly and relies on the collaboration with many CROs and clinical trial sites.

Failures can occur at any stage of clinical trials, and we could encounter problems that cause us to abandon or repeat clinical trials. In addition, results from clinical trials may require further evaluation delaying the next stage of clinical development or submission of a BLA. Further, product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through nonclinical studies and initial clinical trials, and such product candidates may exhibit negative safety signals in later stage clinical trials that they did not exhibit in nonclinical or earlier-stage clinical trials. A number of companies in the pharmaceutical industry, including biotechnology and biopharmaceutical companies, have suffered significant setbacks in or the discontinuation of clinical trials due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier trials. Likewise, the results of early nonclinical studies and clinical trials of batoclimab, some of which were not conducted by us, may not be predictive of the results of our planned development programs and there can be no assurance that the results of studies conducted by collaborators or other third parties will be viewed favorably or are indicative of our own future trial results.

In February 2021, we voluntarily paused dosing in our clinical trials for batoclimab due to elevated total cholesterol and LDL levels observed in some trial subjects treated with batoclimab. If we fail to successfully complete our clinical trials of batoclimab and demonstrate the efficacy and safety necessary to obtain regulatory approval to market batoclimab our business, financial condition and prospects would be harmed.

The commencement and completion of clinical trials may be delayed by several factors, including:

•failure to obtain regulatory authorization to commence a trial or reach a consensus with regulatory authorities regarding the design or implementation of our studies;

•unforeseen safety issues or subjects experiencing severe or unexpected AEs;

•continuation of previously identified safety issues, despite our program-wide safety strategy to characterize the safety profile of batoclimab in response to the previously reported change in albumin and lipids;

•occurrence of AEs in trials of the same class of agents conducted by other sponsors;

•lack of effectiveness during clinical trials;

•resolving any dosing issues or limitations, including those raised by the FDA or other regulatory authorities;

•inability to reach agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;

•slower than expected rates of patient recruitment or failure to recruit suitable patients to participate in a trial;

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•failure to add a sufficient number of clinical trial sites;

•unanticipated impact from changes in or modifications to protocols or clinical trial design, including those that may be required by the FDA or other regulatory authorities;

•inability or unwillingness of clinical investigators or study participants to follow our clinical and other applicable protocols or applicable regulatory requirements;

•an institutional review board or IRB, refusing to approve, suspending, or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial;

•premature discontinuation of study participants from clinical trials or missing data at a level that impacts study integrity;

•failure to manufacture or release sufficient quantities of our product candidate or placebo or failure to obtain sufficient quantities of active comparator medications for our clinical trials, if applicable, that in each case meet our and global quality standards for use in clinical trials;

•inability to monitor patients adequately during or after treatment; or

•inappropriate unblinding of trial results.

In addition, disruptions caused by the COVID-19 pandemic increase the likelihood that we encounter such difficulties or delays in initiating, enrolling, conducting or completing our planned and ongoing clinical trials. Further, we, the FDA or another regulatory authority may suspend our clinical trials in an entire country at any time, or an IRB may suspend its clinical trial sites within any country, if it appears that we or our collaborators are failing to conduct a trial in accordance with regulatory requirements, including good clinical practice (“GCP”), that we are exposing participants to unacceptable health risks, or if the FDA or other regulatory authority, as the case may be, finds deficiencies in our investigational new drug application (“IND”) or equivalent applications for other countries or the manner in which the clinical trials are conducted. Therefore, we cannot predict with any certainty the schedule for commencement and completion of future clinical trials. If we experience delays in the commencement or completion of our clinical trials, or if we terminate a clinical trial prior to completion, the commercial prospects of our product candidate could be harmed, and our ability to generate product revenue from our product candidate, if approved, may be delayed. In addition, any delays in our clinical trials could increase our costs, cause a decline in our share price, slow down the approval process, and jeopardize our ability to commence product sales and generate revenue. Any of these occurrences may harm our business, financial condition and results of operations. In addition, many of the factors that cause or lead to a termination or suspension of, or delay in, the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our product candidate. We may make formulation or manufacturing changes to our product candidate, in which case we may need to conduct additional nonclinical or clinical studies to bridge our modified product candidate to earlier versions. Any delays to our clinical trials that occur as a result could shorten any period during which we may have the exclusive right to commercialize our product candidate and our competitors may be able to bring products to market before we do, and the commercial viability of our product candidate could be significantly reduced.

Moreover, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA or other regulatory authorities. The FDA or other regulatory authorities may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected the integrity of the study. The FDA or other regulatory authority may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval, or rejection, of our marketing applications by the FDA or other regulatory authority, as the case may be, and may ultimately lead to the denial of marketing approval of our product candidate.

In addition, we had no involvement with or control over the nonclinical or clinical development of batoclimab prior to its in-license from HanAll. We are dependent on HanAll having conducted such research and development in accordance with the applicable protocols and legal, regulatory and scientific standards, accurately reported the results of all nonclinical studies and clinical trials and other research they conducted prior to our acquisition of the rights to our product candidate, correctly collected and interpreted the data from these studies, trials and other research, and supplied us with complete information, data sets and reports required to adequately demonstrate the results reported through the date of our acquisition of this asset. Problems related to our predecessor could result in increased costs and delays in the development of our product candidate, which could adversely affect our ability to generate any future revenue from sales of our product candidate, if approved.

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Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be made more difficult or rendered impossible by multiple factors outside our control.

We may encounter delays or difficulties in enrolling or be unable to enroll a sufficient number of patients to complete any of our clinical trials on our current timelines, or at all, and even once enrolled, we may be unable to retain a sufficient number of patients to complete any of our trials. Enrollment in our clinical trials may be slower than we anticipate or be stopped, leading to delays in our development timelines. For example, we may face difficulty enrolling or maintaining a sufficient number of patients in our clinical trials for MG, TED and WAIHA due to the existing alternative treatments available for the treatment of MG, TED and WAIHA, as patients may decline to enroll or decide to withdraw from our clinical trials due to the risk of receiving placebo.

Patient enrollment and retention in clinical trials depends on many factors, including the size of the patient population, the nature of the trial protocol, our ability to recruit clinical trial investigators with the appropriate competencies and experience, delays in enrollment due to travel or quarantine policies or other factors related to COVID-19, the existing body of safety and efficacy data with respect to the study drug, the number and nature of competing treatments and ongoing clinical trials of competing drugs for the same indication, the proximity of patients to clinical sites, the eligibility criteria for the trial and the proportion of patients screened that meets those criteria, our ability to obtain and maintain patient consents and our ability to successfully complete prerequisite studies before enrolling certain patient populations. Our product candidate is focused in part on addressing rare autoimmune indications, and we have focused our initial development efforts on the treatment of MG, TED and WAIHA with limited patient pools from which to draw in order to complete our clinical trials in a timely and cost-effective manner. We are also pursuing a series of other indications.

Furthermore, any negative results or new safety signals we may report in clinical trials of our product candidate may make it difficult or impossible to recruit and retain patients in other clinical trials we are conducting or to resume enrolling patients once a paused clinical trial has been resumed. For example, in February 2021, we reported that we voluntarily paused dosing in our clinical trials for batoclimab due to elevated total cholesterol and LDL levels observed in some patients treated with batoclimab. While we completed an in-depth review of the preliminary data and are updating our comprehensive strategy to address the relative benefits and risks, it may be more difficult to recruit and retain patients for clinical trials in the future due to the voluntary pause. Similarly, negative results reported by our competitors about their drug candidates may negatively affect patient recruitment in our clinical trials. Also, marketing authorization of competitors in this same class of drugs may impair our ability to enroll patients into our clinical trials, delaying or potentially preventing us from completing recruitment of one or more of our trials.

Delays or failures in planned patient enrollment or retention may result in increased costs, program delays or both, which could have a harmful effect on our ability to develop our product candidate or could render further development impossible. In addition, we expect to rely on CROs and clinical trial sites to ensure proper and timely conduct of our future clinical trials, and, while we intend to enter into agreements governing their services, we will be limited in our ability to compel their actual performance.

The results of our nonclinical and clinical trials may not support our proposed claims for our product candidate, or regulatory approval on a timely basis or at all, and the results of earlier studies and trials may not be predictive of future trial results.

Success in nonclinical testing and early clinical trials does not ensure that later clinical trials will be successful, and we cannot be sure that the results of later clinical trials will replicate the results of prior nonclinical testing and clinical trials. In particular, we cannot assure you that the reductions in IgG antibodies that we have observed to date in our Phase 1 clinical trial of batoclimab will be observed in any future clinical trials. Likewise, promising results in interim analyses or other preliminary analyses do not ensure that the clinical trial as a whole will be successful. A number of companies in the pharmaceutical industry, including biotechnology companies, have suffered significant setbacks in, or the discontinuation of, clinical trials, even after promising results in earlier nonclinical studies or clinical trials. These setbacks have been caused by, among other things, nonclinical findings observed while clinical trials were underway and safety or efficacy observations in clinical trials.

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We are progressing discussions with the FDA and are planning to progress discussions with other regulatory authorities, with the intent to continue development of batoclimab. For example, while the ASCEND GO-2 trial was terminated and the efficacy results, based on approximately half the anticipated number of subjects who had reached the week 13 primary efficacy analysis at the time of the termination of the trial, were inconclusive, further discussions with external experts are ongoing to determine whether a specific population can be identified to optimize the clinical performance of batoclimab. Based on these analyses, we intend to re-initiate a placebo-controlled trial contingent upon achieving alignment with the ophthalmology division of the FDA. Our failure to successfully complete our clinical trials of batoclimab and to demonstrate the efficacy and safety necessary to obtain regulatory approval to market batoclimab would significantly harm our business.

Further, product candidates in later stages of clinical trials may fail to show the desired safety and efficacy traits despite having progressed through nonclinical and initial clinical trials. A future failure of a clinical trial to meet its pre-specified endpoints would likely cause us to abandon the indication. Any delay in, or termination of, our clinical trials will delay the submission of a BLA to the FDA or other similar applications with other relevant foreign regulatory authorities and, ultimately, our ability to commercialize our product candidate, if approved, and generate product revenue. Even if our clinical trials are completed as planned, we cannot be certain that their results will support our expectations for differentiation or the effectiveness or safety of our product candidate. The FDA has substantial discretion in the review and approval process and may disagree that our data support the differentiated claims we propose. In addition, only a small percentage of biologics under development result in the submission of a BLA to the FDA and even fewer are approved for commercialization.

Interim, “top-line” or preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

From time to time, we may publicly disclose preliminary or “top-line” data from our clinical trials, which is based on a preliminary analysis of then-available top-line data, and the results and related findings and conclusions are subject to change following a full analysis of all data related to the particular trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the top-line results that we report may differ from future results of the same trials, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Top-line data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, top-line data should be viewed with caution until the final data are available. We may also disclose interim data from our clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects. Further, disclosure of preliminary or interim data by us or by our competitors could result in volatility in the price of shares of our common stock.

Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our business in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular drug, product candidate or our business. If the top-line data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for and commercialize batoclimab or any future product candidate, our business, operating results, prospects or financial condition may be harmed.

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We may not be able to successfully develop and commercialize our product candidate batoclimab on a timely basis or at all.

Batoclimab is a novel therapeutic antibody and its potential therapeutic benefit is unproven. While several FcRn inhibitor candidates are under development by other companies, there is currently no approved therapy inhibiting FcRn for the treatment of autoimmune diseases, and, as a result, the regulatory pathway for batoclimab may present novel issues that could cause delays in development or approval. While results from early clinical trials of batoclimab have shown meaningful reductions in IgG antibody levels in healthy volunteers, batoclimab may not demonstrate in patients any or all of the pharmacological benefits we believe it may possess. We have not yet succeeded and may never succeed in demonstrating efficacy and safety for batoclimab in pivotal clinical trials or in obtaining marketing approval thereafter. For example, although we and our licensing partner have evaluated batoclimab nonclinical studies and in early-stage clinical trials, we have not yet advanced batoclimab into a large-scale, pivotal clinical trial for any indication. Positive results from our early-stage clinical trials are not necessarily predictive of the results of our planned clinical trials of batoclimab. For example, in February 2021, we voluntarily paused dosing in our clinical trials for batoclimab due to elevated total cholesterol and LDL levels observed in some trial subjects treated with batoclimab. In order to better characterize the observed lipid findings, we conducted from February 2021 through May 2021 a program-wide data review (including both clinical and nonclinical data) with input from external scientific and medical experts. We are progressing discussions with the FDA and are planning to progress discussions with other regulatory authorities to align on the next steps in the continued development of batoclimab. If expectations from our Phase 1 and Phase 2 clinical trials cannot be replicated, we may be unable to successfully develop, obtain regulatory approval for and commercialize batoclimab for the treatment of MG, WAIHA and TED or any other autoimmune indication. As a result, our focus on exploring FcRn inhibition may fail to result in the identification of viable additional indications for batoclimab. If we are unsuccessful in our development efforts, we may not be able to advance the development of or commercialize batoclimab, raise capital, expand our business or continue our operations.

If we are not able to obtain required regulatory approvals, we will not be able to commercialize batoclimab or any future product candidate, and our ability to generate product revenue will be impaired.

batoclimab and any future product candidate that we may develop, as well as the activities associated with their development and commercialization, including their design, research, testing, manufacture, safety, efficacy, recordkeeping, labeling, packaging, storage, approval, advertising, promotion, sale and distribution are subject to comprehensive regulation by the FDA and other regulatory agencies in the U.S. and by similar regulatory authorities outside the U.S. Failure to obtain marketing approval for, and thus commercialize any product candidate, could negatively impact our ability to generate any revenue from product sales.

We have not received approval from regulatory authorities to market any product candidate in any jurisdiction, and it is possible that our product candidate will never obtain the appropriate regulatory approvals necessary for us to commence product sales. Neither we nor any collaborator is permitted to market our product candidate in the U.S. or any other jurisdiction until we receive regulatory approval of a BLA from the FDA or similar regulatory authorities outside of the U.S.

The time required to obtain approval of a BLA by the FDA or similar regulatory authorities outside of the U.S. is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authority. Prior to submitting a BLA to the FDA or any comparable application to any other foreign regulatory authorities for approval of any product candidate, we will need to complete pivotal Phase 3 clinical trials to demonstrate favorable results with respect to safety, tolerability and efficacy. In addition, approval policies, regulations, or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions.

Securing marketing approvals requires the submission of extensive manufacturing, nonclinical and clinical data and supporting information to regulatory authorities for each therapeutic indication to establish the safety and efficacy of our product candidate for the specified indications. We expect to rely on third-party CROs, consultants and our collaborators to assist us in filing and supporting the applications necessary to gain marketing approvals. Securing marketing approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities. Errors in the submission of applications for marketing approval or issues, including those related to gathering the appropriate data and the inspection process, may ultimately delay or affect our ability to obtain regulatory approval, commercialize our product candidate and generate product revenue.

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Batoclimab is an antibody protein that could cause an immune response in patients, resulting in the creation of harmful or neutralizing antibodies against these therapeutic proteins, preventing or limiting regulatory approval or our ability to commercialize batoclimab.

In addition to the safety, efficacy, manufacturing, and regulatory hurdles faced by our product candidate, batoclimab, the administration of proteins such as monoclonal antibodies, even those that are fully human in nature including our product candidate, can cause an immune response, resulting in the creation of antibodies against the therapeutic protein. These anti-drug antibodies can have no effect or can neutralize the effectiveness of the protein or require that higher doses be used to obtain a therapeutic effect. Whether anti-drug antibodies will be created and how they react can often not be predicted from nonclinical or even clinical studies and their detection or appearance is often delayed. As a result, neutralizing antibodies may be detected at a later date or upon longer exposure of patients with our product candidate, such as following more chronic administration in longer lasting clinical trials. In some cases, detection of such neutralizing antibodies can even occur after pivotal clinical trials have been completed. Therefore, there can be no assurance that neutralizing antibodies will not be detected in future clinical trials or at a later date upon longer exposure (including after commercialization). If anti-drug antibodies reduce or neutralize the effectiveness of our product candidate, the continued clinical development or receipt of marketing approval for our product candidate could be delayed or prevented and, even if our product candidate is approved, its commercial success could be limited, any of which would impair our ability to generate revenue and continue operations.

We have licensed the rights to batoclimab in limited territories. Any adverse developments that occur during any clinical trials or manufacturing conducted by third parties, including HanAll, in other jurisdictions may affect our ability to obtain regulatory approval or commercialize batoclimab.

We have licensed the right to develop, manufacture and commercialize batoclimab in the Licensed Territory. HanAll or any of its sublicensees or collaborators, over which we have no control, has the right to develop, manufacture and commercialize batoclimab in geographies outside of our Licensed Territory. If an impact to the characterization of the safety profile occurs in studies conducted by HanAll or third parties in other jurisdictions outside of our Licensed Territory, the FDA may delay, limit or deny approval of batoclimab or require us to conduct additional clinical trials as a condition to marketing approval, which would increase our costs and time to market. If we receive FDA approval for batoclimab and a new and/or serious safety issue is identified in connection with clinical trials of batoclimab conducted by third parties in other jurisdictions outside of our Licensed Territory, the FDA may withdraw their approval of the product or otherwise restrict our ability to market and sell batoclimab or may require additional testing or evaluation. In addition, treating physicians may be less willing to administer our product candidate due to concerns over such AEs, which would limit our ability to commercialize batoclimab. In addition, issues may arise in connection with the manufacturing process for batoclimab utilized by HanAll or any of its sublicensees or collaborators, which could affect our ability to obtain regulatory approval for or commercialize batoclimab.

We face significant competition from other biotechnology and pharmaceutical companies targeting autoimmune disease indications, and our operating results will suffer if we fail to compete effectively.