imvt-20211231

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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 December 31, 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 February 1, 2022, there were 116,395,727 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 DECEMBER 31, 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 December 31 , 2021 and March 31, 2021	4
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31 , 2021 and 2020	5
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended Dec ember 3 1 , 2021 and 2020	6
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended Dec ember 3 1 , 2021 and 2020	7
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended Dec ember 3 1 , 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	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	85
Item 3.	Defaults Upon Senior Securities	85
Item 4.	Mine Safety Disclosures	85
Item 5.	Other Information	85
Item 6.	Exhibits	86
SIGNATURES		87

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 sole product candidate, batoclimab, formerly referred to as IMVT-1401 or RVT-1401. In February 2021, we paused all clinical development of batoclimab after elevated lipid levels were observed in some patients dosed with the drug. In December 2021, we announced that we recently achieved alignment with the U.S. Food and Drug Administration’s Division of Neurology 1 to move forward with batoclimab in patients suffering from Myasthenia Gravis. Unless we can continue to 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.

•Batoclimab has caused and may cause adverse events 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 batoclimab, 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.

•Our business is heavily dependent on the successful and timely 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, suppliers, 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 rely 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 will 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 upon downgrades 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)


	December 31, 2021		March 31, 2021
Assets
Current assets:
Cash	$	527,003	$	400,146
Prepaid expenses and other current assets	13,477		8,860


Total current assets	540,480		409,006
Operating lease right-of-use assets	2,452		3,282
Property and equipment, net	250		201

Total assets	$	543,182	$	412,489
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	3,827	$	2,432
Accrued expenses	31,448		15,160
Current portion of operating lease liabilities	1,079		1,179

Total current liabilities	36,354		18,771
Operating lease liabilities, net of current portion, and other noncurrent liabilities	1,680		2,238
Total liabilities	38,034		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 December 31, 2021 and March 31, 2021	—		—
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized, no shares issued and outstanding at December 31, 2021 and March 31, 2021	—		—
Common stock, par value $0.0001 per share, 500,000,000 shares authorized, 115,109,833 shares issued and outstanding at December 31, 2021 and 500,000,000 shares authorized, 97,971,243 shares issued and outstanding at March 31, 2021	12		10
Additional paid-in capital	812,933		590,425
Accumulated other comprehensive income (loss)	419		(298)
Accumulated deficit	(308,216)		(198,657)
Total stockholders’ equity	505,148		391,480
Total liabilities and stockholders’ equity	$	543,182	$	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 December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Operating expenses:
Research and development	$	29,756	$	21,091	$	69,822	$	49,989
General and administrative	11,515		10,549		38,984		29,211
Total operating expenses	41,271		31,640		108,806		79,200

Other expense	114		503		825		352
Loss before benefit for income taxes	(41,385)		(32,143)		(109,631)		(79,552)
Benefit for income taxes	—		(367)		(72)		(279)
Net loss	$	(41,385)	$	(31,776)	$	(109,559)	$	(79,273)
Net loss per common share – basic and diluted	$	(0.36)	$	(0.32)	$	(1.02)	$	(0.94)
Weighted-average common shares outstanding – basic and diluted	115,025,191		97,920,460		107,447,745		84,413,511

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 December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Net loss	$	(41,385)	$	(31,776)	$	(109,559)	$	(79,273)
Other comprehensive income (loss):
Foreign currency translation adjustments	(23)		689		717		483
Total other comprehensive income (loss)	(23)		689		717		483
Comprehensive loss	$	(41,408)	$	(31,087)	$	(108,842)	$	(78,790)

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
Restricted stock units vested and settled	—	—		110,962	—		—		—		—		—
Capital contribution – stock-based compensation	—	—		—	—		205		—		—		205
Stock-based compensation	—	—		—	—		9,954		—		—		9,954
Foreign currency translation adjustments	—	—		—	—		—		(23)		—		(23)
Net loss	—	—		—	—		—		—		(41,385)		(41,385)
Balance at December 31, 2021	10,000	$	—	115,109,833	$	12	$	812,933	$	419	$	(308,216)	$	505,148


	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
Stock options exercised and vesting of restricted stock units	—	—		80,538	—		725		—		—		725
Capital contribution – expenses allocated from Roivant Sciences Ltd.	—	—		—	—		116		—		—		116
Stock-based compensation	—	—		—	—		5,992		—		—		5,992
Foreign currency translation adjustments	—	—		—	—		—		689		—		689
Net loss	—	—		—	—		—		—		(31,776)		(31,776)
Balance at December 31, 2020	10,000	$	—	97,971,243	$	10	$	584,174	$	467	$	(170,499)	$	414,152

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)


	Nine Months Ended December 31,
	2021		2020
Cash flows from operating activities
Net loss	$	(109,559)	$	(79,273)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	22,381		13,334
Depreciation on property and equipment	87		43
Non-cash lease expense	831		714
Other non-cash items	—		483



Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(3,809)		1,051


Accounts payable	1,383		914
Accrued expenses	16,188		2,590


Operating lease and other noncurrent liabilities	(658)		(687)
Net cash used in operating activities	(73,156)		(60,831)
Cash flows from investing activities
Purchase of property and equipment	(136)		(115)
Net cash used in investing activities	(136)		(115)
Cash flows from financing activities
Capital contributions	129		333
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	—		907
Payment of deferred offering costs	—		(1,236)
Repayment of note payable to Roivant Sciences Ltd.	—		(3,190)
Net cash provided by financing activities	200,129		382,349
Effect of exchange rate changes on cash	20		—
Net change in cash	126,857		321,403
Cash – beginning of period	400,146		100,571
Cash – end of period	$	527,003	$	421,974

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, batoclimab, formerly referred to as IMVT-1401 or RVT-1401, 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 December 31, 2021, the Company’s cash totaled $527.0 million and its accumulated deficit was $308.2 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 December 31, 2021 will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next 12 months from the date these 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 nine months ended December 31, 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 December 31, 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 December 31, 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 the 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:


	Nine Months Ended December 31,
	2021	2020
Preferred stock as converted	10,000	10,000
Options	6,703,576	5,757,732
Restricted stock units	3,536,809	214,980
Total	10,250,385	5,982,712

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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 $10.0 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.

As of December 31, 2021, $0.3 million was payable to HanAll for research and development costs incurred and reported to the Company pursuant to the HanAll Agreement.

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.

Product Service Agreement and Master Services Agreement

On November 17, 2021, ISG entered into a Product Service Agreement, (“PSA”), with Samsung Biologics Co., Ltd., (“Samsung”), pursuant to which Samsung will manufacture and supply the Company with batoclimab drug substance for commercial sale and perform other manufacturing-related services with respect to batoclimab. The Company previously entered in a Master Services Agreement, (“MSA”), with Samsung, dated April 30, 2021, which governs certain terms of the Company’s relationship with Samsung. Upon execution of the PSA, the Company committed to purchase process performance qualification batches of batoclimab and pre-approval inspection batches of batoclimab which may be used for regulatory submissions and, pending regulatory approval, commercial sale. In addition to these, the Company is obligated to purchase additional batches of batoclimab in the four-year period of 2026 through 2029.

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The PSA will continue until the later of December 31, 2029 or the completion of the services thereunder, unless the PSA is terminated earlier. If the Company makes a final decision to stop all development of batoclimab and all attempts to obtain regulatory approval for batoclimab, then the Company will have the right to terminate the PSA with 30 days’ written notice to Samsung as long as such notice is provided no later than January 2024. Upon such termination of the PSA, the Company will pay Samsung for non-cancellable service fees and costs that Samsung incurs and for all batches of batoclimab scheduled to be manufactured during the two-year period following such termination. In addition, either party may terminate the PSA on account of (i) the other party’s material breach of the PSA that is not cured within a specified period after the termination notice, (ii) the other party’s insolvency or bankruptcy, or (iii) certain force majeure events.

As of December 31, 2021, the minimum purchase commitment related to this agreement is estimated to be approximately $36.0 million.

Note 4 — Accrued Expenses

Accrued expenses consist of the following (in thousands):


	December 31, 2021		March 31, 2021
Research and development expenses	$	28,038	$	10,147

Accrued bonuses	2,513		3,138
Legal and other professional fees	310		1,196
Other expenses	587		679
Total accrued expenses	$	31,448	$	15,160

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 nine months ended December 31, 2021, the Company was charged $0.4 million and $1.3 million, respectively, by RSI, RSG and RSL, of which $0.2 million and $1.1 million, respectively, were treated as capital contributions and $0.2 million and $0.2 million, respectively, were treated as amounts due to RSL in accrued expenses in the accompanying unaudited condensed consolidated financial statements.

For the three and nine months ended December 31, 2020, the Company was charged $0.2 million and $0.7 million, respectively, by RSI, RSG and RSL, of which $0.1 million and $0.4 million, respectively, were treated as capital contributions and $0.1 million and $0.3 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.

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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 December 31, 2021 and 2020, the Company incurred $0.3 million and $0.2 million, respectively, in rent expense under these operating leases. During the nine months ended December 31, 2021 and 2020, the Company incurred $0.9 million and $0.7 million, respectively, in rent expense under these operating leases.

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 in the accompanying unaudited condensed consolidated financial statements for the nine months ended December 31, 2021.

Note 6 — Income Taxes

The Company’s effective tax rates were 0% and 0.07% for the three and nine months ended December 31, 2021, respectively, and 1.14% and 0.35% for the three and nine months ended December 31, 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 December 31, 2021.

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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 December 31, 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 December 31, 2021, the Company has 115,109,833 shares of common stock issued and outstanding.

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


	December 31, 2021	March 31, 2021
Conversion of Series A preferred stock	10,000	10,000
Options outstanding	6,703,576	7,988,999
Restricted stock units outstanding	3,696,838	1,095,676
Equity awards available for future grants	4,002,861	1,781,043
Total	14,413,275	10,875,718

The reserved shares underlying restricted stock units above include 160,029 restricted stock units that vested but were not settled as of December 31, 2021.

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, 3,918,849 shares of common stock were added to the 2019 Plan pool in accordance with the evergreen provision of the 2019 Plan. As of December 31, 2021, options to purchase 3,756,402 shares of common stock and 3,696,838 restricted stock units (“RSUs”) were outstanding under the 2019 Plan and 4,002,861 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.

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2018 Equity Incentive Plan

Pursuant to the Share Exchange Agreement, upon the closing of the Business Combination, all vested and 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 December 31, 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	1,369,823	9.33
Forfeited	(2,510,089)	23.45
Expired	(145,157)	18.37
Balance - December 31, 2021	6,703,576	$	8.79	8.49	$	1,638
Exercisable - December 31, 2021	2,613,059	$	8.70	7.74	$	1,074

The weighted-average exercise price, remaining contractual term and aggregate intrinsic value as of December 31, 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 December 31, 2021. There were no stock options exercised during the nine months ended December 31, 2021. The stock options granted during the nine months ended December 31, 2021 had a weighted-average grant date fair value per share of $6.75.

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 December 31,		Nine Months Ended December 31,
	2021	2020	2021	2020
Risk-free interest rate	1.17% - 1.36%	0.38% - 0.56%	0.80% - 1.36%	0.30% - 0.56%
Expected term, in years	6.11	6.08 - 6.11	6.03 - 6.11	5.56 - 6.11
Expected volatility	86.74% - 87.78%	83.40% - 83.80%	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
Nonvested as of March 31, 2021	1,095,676	$	20.43
Issued	3,212,767	7.53
Vested	(277,343)	17.44
Forfeited	(494,291)	18.58
Nonvested as of December 31, 2021	3,536,809	$	9.21

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Stock-based Compensation Expense

For the three and nine months ended December 31, 2021 and 2020, stock-based compensation expense under the Company’s equity incentive plans was as follows (in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2021		2020		2021		2020
Research and development expenses	$	4,797	$	2,549	$	8,602	$	3,919
General and administrative expenses	5,157		3,443		12,841		9,298
Total stock-based compensation	$	9,954	$	5,992	$	21,443	$	13,217

As of December 31, 2021, total unrecognized compensation expense related to non-vested stock options and RSUs was $36.8 million and $24.1 million, respectively, which is expected to be recognized over the remaining weighted-average service period of 2.66 years and 1.62 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 $0.1 million and $0 was recorded for the three months ended December 31, 2021 and 2020, respectively, and $0.4 million and $0.1 million for the nine months ended December 31, 2021 and 2020, respectively, in the accompanying unaudited condensed consolidated statements of operations.

RSL RSUs

The Company’s Chief 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 nine months ended December 31, 2021, the Company recorded $0.1 million and $0.5 million, respectively, of stock-based compensation expense related to these RSUs. As of December 31, 2021, there was $0.5 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.

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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 December 29, 2021, the U.S. District Court appointed a lead plaintiff. On February 1, 2022, the lead plaintiff filed an amended complaint adding the Company’s directors and underwriters as defendants, and asserting additional claims under Section 11, 12(a)(2), and 15 of the Securities Act of 1933. Pending court approval of the parties’ stipulation, defendants are not required to respond to this amended complaint. The deadline for lead plaintiff to file the operative amended complaint is March 15, 2022. The Company expects defendants, including the Company, to file a motion to dismiss that amended complaint. The Company intends to vigorously defend the case 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

During the three months ended December 31, 2021, ISG entered into an agreement with Samsung to manufacture a certain quantity of batoclimab drug substance for, among other things, commercial sale, if approved. In connection with this agreement, the Company has a minimum obligation to Samsung of approximately $36.0 million, of which is $17.7 million is expected to be paid during the fiscal year ending March 31, 2023 and $18.3 million is expected to be paid during the fiscal year ending March 31, 2026. See Note 3 - Material Agreements for additional details.

As of December 31, 2021, the Company did not have any other ongoing material contractual obligations for which cash flows were fixed and determinable. 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 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, and impact on clinical trial sites and patients, 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, batoclimab, formerly referred to as IMVT-1401 or RVT-1401, 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 are developing 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 and 1,530,000 patients in Europe. To the extent we choose to develop batoclimab as a potential treatment for certain of these rare diseases, we plan to seek orphan drug designation in the United States 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 were granted orphan drug designation by the U.S. Food and Drug Administration (“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 number 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.

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.

During the three months ended December 31, 2021, we achieved alignment with the FDA Division of Neurology 1 to move forward in MG. We plan to start our Phase 3 study for batoclimab in MG in the first half of calendar year 2022. The trial will include an induction (primary efficacy) period during which we plan to study doses of 680mg and 340mg of batoclimab delivered weekly by subcutaneous injection. The primary efficacy analysis will be based on MG-ADL measured in Acetylcholine Receptor Antibody Positive subjects through 12 weeks of blinded, placebo-controlled therapy. Follow-on treatment with alternative dosing regimens (including potential lower maintenance and higher rescue doses) will be explored in subsequent study periods. The safety and monitoring plan and size of the safety database are expected to be in accordance with FDA guidance and generally consistent with those being used in other similar programs.

For WAIHA, we intend to initiate a randomized, controlled study with a long-term extension in this indication, following expected discussions with the hematology division of the FDA. For TED, we intend to reinitiate a placebo-controlled trial, following expected discussions with the ophthalmology division of the FDA.

We continue to evaluate potential new indications for batoclimab and we remain on track to announce two new indications by August 2022. We expect two of our 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. 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 our 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. As of December 31, 2021, $0.3 million was payable to HanAll for research and development costs incurred and reported to us pursuant to the HanAll Agreement.

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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Product Service Agreement and Master Services Agreement

On November 17, 2021, Immunovant, Inc.’s wholly owned subsidiary, ISG, entered into a Product Service Agreement, (“PSA”), with Samsung Biologics Co., Ltd., (“Samsung”), pursuant to which Samsung will manufacture and supply us with batoclimab drug substance for commercial sale and perform other manufacturing-related services with respect to batoclimab. We previously entered in a Master Services Agreement, (“MSA”), with Samsung, dated April 30, 2021, which governs certain terms of our relationship with Samsung. Upon execution of the PSA, we committed to purchase process performance qualification batches of batoclimab and pre-approval inspection batches of batoclimab which may be used for regulatory submissions and, pending regulatory approval, commercial sale. In addition to these, we are obligated to purchase additional batches of batoclimab in the four-year period of 2026 through 2029.

The PSA will continue until the later of December 31, 2029 or the completion of the services thereunder, unless the PSA is terminated earlier. If we make a final decision to stop all development of batoclimab and all attempts to obtain regulatory approval for batoclimab, then we will have the right to terminate the PSA with 30 days’ written notice to Samsung as long as such notice is provided no later than January 2024. Upon such termination of the PSA, we will pay Samsung for non-cancellable service fees and costs that Samsung incurs and for all batches of batoclimab scheduled to be manufactured during the two-year period following such termination. In addition, either party may terminate the PSA on account of (i) the other party’s material breach of the PSA that is not cured within a specified period after the termination notice, (ii) the other party’s insolvency or bankruptcy, or (iii) certain force majeure events.

The minimum purchase commitment related to this agreement is estimated to be approximately $36.0 million.

Related Party Transactions

For a description of our transactions under agreements with related parties, refer to “Note 5 - Related Party Transactions” in our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report.

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, including under our agreement with Samsung;

•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 Roivant Sciences, Inc. (“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 in the short term as we plan to start our Phase 3 study for batoclimab in MG and for two other planned pivotal trials in 2022. Our research and development expenses are expected to continue to increase over the next several years as we hire personnel and our compensation costs increase, commence additional clinical trials for batoclimab, expand manufacturing of batoclimab substance and prepare to seek regulatory approval for batoclimab. 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 for the Three Months Ended December 31, 2021 and 2020

The following table sets forth our results of operations for the three months ended December 31, 2021 and 2020 (in thousands):


	Three Months Ended December 31,
	2021		2020		Change
Operating expenses:
Research and development	$	29,756	$	21,091	$	8,665
General and administrative	11,515		10,549		966
Total operating expenses	41,271		31,640		9,631
Other expense	114		503		(389)
Loss before benefit for income taxes	(41,385)		(32,143)		(9,242)
Benefit for income taxes	—		(367)		367
Net loss	$	(41,385)	$	(31,776)	$	(9,609)

Research and Development Expenses for the Three Months Ended December 31, 2021 and 2020

The following table summarizes the period-over-period changes in research and development expenses for the three months ended December 31, 2021 and 2020 (in thousands):


	Three Months Ended December 31,				Change
	2021		2020		$
Program-specific costs:
Neurology diseases	$	468	$	970	$	(502)
Endocrine diseases	(25)		2,880		(2,905)
Hematology diseases	264		1,817		(1,553)
Unallocated costs:
Contract manufacturing costs	11,338		8,062		3,276
Personnel-related expenses including stock-based compensation	9,362		5,686		3,676
Other	8,349		1,676		6,673
Total research and development expenses	$	29,756	$	21,091	$	8,665

Research and development expenses increased by $8.7 million, from $21.1 million for the three months ended December 31, 2020 to $29.8 million for the three months ended December 31, 2021.

Program-specific research and development costs decreased by $5.0 million, from $5.7 million for the three months ended December 31, 2020 to $0.7 million for the three months ended December 31, 2021, primarily reflecting lower clinical activities due to the continued voluntary pause in our clinical trials and adjustments to previously accrued estimated costs related to the conclusion of certain Phase 2 studies.

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Unallocated research and development costs increased by $13.6 million, from $15.4 million for the three months ended December 31, 2020 to $29.0 million for the three months ended December 31, 2021. This increase reflected higher costs related to cross-indication clinical studies and clinical research of $6.7 million, higher personnel-related expenses of $3.7 million and an increase in contract manufacturing costs of $3.3 million. The increases in clinical studies and clinical research costs primarily reflected costs to advance the clinical development of batoclimab in current and potential new indications. 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 resume our clinical activities.

General and Administrative Expenses for the Three Months Ended December 31, 2021 and 2020

General and administrative expenses increased by $1.0 million, from $10.5 million for the three months ended December 31, 2020 to $11.5 million for the three months ended December 31, 2021. This increase was primarily due to higher personnel-related costs (including stock-based compensation) of $1.5 million, partially offset by lower legal and other professional costs of $0.6 million.

Results of Operations for the Nine Months Ended December 31, 2021 and 2020

The following table sets forth our results of operations for the nine months ended December 31, 2021 and 2020 (in thousands):


	Nine Months Ended December 31,
	2021		2020		Change
Operating expenses:
Research and development	$	69,822	$	49,989	$	19,833
General and administrative	38,984		29,211		9,773
Total operating expenses	108,806		79,200		29,606
Other expense	825		352		473
Loss before benefit for income taxes	(109,631)		(79,552)		(30,079)
Benefit for income taxes	(72)		(279)		207
Net loss	$	(109,559)	$	(79,273)	$	(30,286)

Research and Development Expenses for the Nine Months Ended December 31, 2021 and 2020

The following table summarizes the period-over-period changes in research and development expenses for the nine months ended December 31, 2021 and 2020 (in thousands):


	Nine Months Ended December 31,				Change
	2021		2020		$
Program-specific costs:
Neurology diseases	$	1,016	$	2,546	$	(1,530)
Endocrine diseases	3,549		5,904		(2,355)
Hematology diseases	1,239		3,572		(2,333)
Unallocated costs:
Contract manufacturing costs	26,550		20,954		5,596
Personnel-related expenses including stock-based compensation	21,921		11,402		10,519
Other	15,547		5,611		9,936
Total research and development expenses	$	69,822	$	49,989	$	19,833

Research and development expenses increased by $19.8 million, from $50.0 million for the nine months ended December 31, 2020 to $69.8 million for the nine months ended December 31, 2021.

Program-specific research and development costs decreased by $6.2 million, from $12.0 million for the nine months ended December 31, 2020 to $5.8 million for the nine months ended December 31, 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 $26.0 million, from $38.0 million for the nine months ended December 31, 2020 to $64.0 million for the nine months ended December 31, 2021. This increase was primarily due to higher personnel-related expenses of $10.5 million, increases related to cross-indication clinical studies and clinical research of $9.9 million and higher contract manufacturing costs of $5.6 million, primarily due to drug substance manufacturing. The increases in personnel and contract manufacturing costs primarily reflected investment spending to support our strategic objectives as we prepare to resume our clinical activities. The increases in clinical studies and clinical research costs primarily reflected costs to advance the clinical development of batoclimab in current and potential new indications.

General and Administrative Expenses for the Nine Months Ended December 31, 2021 and 2020

General and administrative expenses increased by $9.8 million, from $29.2 million for the nine months ended December 31, 2020 to $39.0 million for the nine months ended December 31, 2021. This increase was primarily due to higher personnel-related costs (including stock-based compensation) of $5.2 million, and financial advisory, legal and other professional costs of $4.1 million.

Liquidity and Capital Resources

Overview

As of December 31, 2021, we had cash of $527.0 million. For the nine months ended December 31, 2021 and 2020, we had net losses of $109.6 million and $79.3 million, respectively, and 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;

•expand manufacturing of batoclimab substance to support clinical trials;

•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;

•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

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•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. 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 nine months ended December 31, 2021 and 2020 (in thousands):


			Nine Months Ended December 31,
			2021