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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
OR
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)

Delaware83-2771572
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
320 West 37th Street10018
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 classTrading
Symbol(s)
Name of each exchange
on which registered
Common Stock, $0.0001 par value per shareIMVTThe 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 filerAccelerated filer
Non-accelerated FilerSmaller 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 October 28, 2022, there were 129,182,451 shares of the Registrant’s common stock, $0.0001 par value per share, outstanding.
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IMMUNOVANT, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2022

Table of Contents
 
  Page
PART I.
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.

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.

All trademarks, trade names, service marks, and copyrights appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.
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SUMMARY RISK FACTORS

You should consider carefully the risks described under “Risk Factors” in Part II, Item 1A 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 business is currently dependent on the successful development, regulatory approval and commercialization of our product candidates, batoclimab and IMVT-1402.

Our product candidates may cause adverse events or undesirable side effects or have other properties that could delay or prevent their regulatory approval, cause us to further suspend or discontinue clinical trials, abandon further development or limit the scope of any approved label or market acceptance.

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

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

The results of our nonclinical and clinical trials may not support our proposed claims for our product candidates, 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.

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.

Our business could be adversely affected by economic downturns, inflation, increases in interest rates, natural disasters, political crises, geopolitical events, such as the crisis in Ukraine, or other macroeconomic conditions, which may in the future negatively impact our business and financial performance.

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.

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

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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 batoclimab or IMVT-1402 if approved.

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

We will require additional capital to fund our operations. If we fail to obtain necessary financing, we may not be able to complete the development and commercialization of batoclimab or IMVT-1402.

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 the license agreement with HanAll Biopharma Co., Ltd., or the HanAll Agreement, to provide us rights to the core intellectual property relating to batoclimab and IMVT-1402. Any termination or loss of significant rights under the HanAll Agreement would adversely affect our development or commercialization of batoclimab and IMVT-1402.

The HanAll Agreement obligates us to make milestone payments, some of which may be triggered prior to our potential commercialization of batoclimab or IMV-1402.

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

International expansion of our business exposes us to business, legal, regulatory, political, operational, financial and economic risks associated with conducting business outside of the U.S.

We are subject to stringent and changing privacy, data protection, 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)
September 30, 2022March 31, 2022
Assets
Current assets:
Cash and cash equivalents$405,773 $493,817 
Accounts receivable3,782 12,229 
Prepaid expenses and other current assets16,536 6,885 
Total current assets426,091 512,931 
Operating lease right-of-use assets1,743 2,303 
Property and equipment, net312 330 
Total assets$428,146 $515,564 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$7,461 $18,629 
Accrued expenses23,138 24,746 
Current portion of operating lease liabilities1,185 1,145 
Total current liabilities31,784 44,520 
Operating lease liabilities, net of current portion614 1,219 
Total liabilities32,398 45,739 
Commitments and contingencies (Note 9)
Stockholders’ equity:
Series A preferred stock, par value $0.0001 per share, 10,000 shares authorized, issued and outstanding at September 30, 2022 and March 31, 2022
  
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized, no shares issued and outstanding at September 30, 2022 and March 31, 2022
  
Common stock, par value $0.0001 per share, 500,000,000 shares authorized, 116,614,088 shares issued and outstanding at September 30, 2022 and 500,000,000 shares authorized, 116,482,899 shares issued and outstanding at March 31, 2022
12 12 
Additional paid-in capital840,661 824,796 
Accumulated other comprehensive (loss) income(1,237)404 
Accumulated deficit(443,688)(355,387)
Total stockholders’ equity395,748 469,825 
Total liabilities and stockholders’ equity$428,146 $515,564 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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IMMUNOVANT, INC.
Condensed Consolidated Statements of Operations
(Unaudited, in thousands, except share and per share data)
 
 Three Months Ended
September 30,
Six Months Ended
September 30,
 2022202120222021
Operating expenses:
Research and development
$37,739 $21,361 $66,168 $40,066 
General and administrative
11,875 16,289 23,821 27,469 
Total operating expenses49,614 37,650 89,989 67,535 
Interest income, net(1,154) (1,154) 
Other (income) expense(793)84 (1,147)711 
Loss before provision (benefit) for income taxes(47,667)(37,734)(87,688)(68,246)
Provision (benefit) for income taxes261 (31)613 (72)
Net loss$(47,928)$(37,703)$(88,301)$(68,174)
Net loss per common share – basic and diluted
$(0.41)$(0.35)$(0.76)$(0.66)
Weighted-average common shares outstanding – basic and diluted
116,572,820 109,078,427 116,630,076 103,558,036 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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IMMUNOVANT, INC.
Condensed Consolidated Statements of Comprehensive Loss
(Unaudited, in thousands)
 
 Three Months Ended
September 30,
Six Months Ended
September 30,
 2022
2021
2022
2021
Net loss$(47,928)$(37,703)$(88,301)$(68,174)
Other comprehensive (loss) income:
Foreign currency translation adjustments(974)169 (1,641)740 
Total other comprehensive (loss) income(974)169 (1,641)740 
Comprehensive loss$(48,902)$(37,534)$(89,942)$(67,434)

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 deficitTotal
stockholders’ equity
 SharesAmountSharesAmount
Balance at March 31, 202210,000 $ 116,482,899 $12 $824,796 $404 $(355,387)$469,825 
Stock options exercised and restricted stock units vested and settled— — 41,259 — 21 — — 21 
Capital contribution – stock-based compensation— — — — 132 — — 132 
Stock-based compensation— — — — 7,555 — — 7,555 
Foreign currency translation adjustments— — — — — (667)— (667)
Net loss— — — — — — (40,373)(40,373)
Balance at June 30, 202210,000 $ 116,524,158 $12 $832,504 $(263)$(395,760)$436,493 
Restricted stock units vested and settled— — 89,930 — — — — — 
Capital contribution – stock-based compensation— — — — 106 — — 106 
Stock-based compensation— — — — 8,051 — — 8,051 
Foreign currency translation adjustments— — — — — (974)— (974)
Net loss— — — — — — (47,928)(47,928)
Balance at September 30, 202210,000 $ 116,614,088 $12 $840,661 $(1,237)$(443,688)$395,748 
 Series A 
preferred stock
Common
stock
Additional
paid-in capital
Accumulated
other
comprehensive income (loss)
Accumulated deficitTotal
stockholders’ equity
 SharesAmountSharesAmount
Balance at March 31, 202110,000 $ 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, 202110,000 $ 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, 202110,000 $  114,998,871  $12  $802,774  $442  $(266,831) $536,397 
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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IMMUNOVANT, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, in thousands)
 Six Months Ended September 30,
 20222021
Cash flows from operating activities
Net loss$(88,301)$(68,174)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation15,844 12,222 
Depreciation on property and equipment
90 54 
Non-cash lease expense560 551 
Other non-cash items 740 
Changes in operating assets and liabilities:
Accounts receivable8,817 (387)
Prepaid expenses and other current assets(10,126)4,408 
Accounts payable(10,967)1,810 
Accrued expenses(1,357)7,898 
Operating lease liabilities(565)(383)
Net cash used in operating activities(86,005)(41,261)
Cash flows from investing activities
Purchase of property and equipment(73)(62)
Net cash used in investing activities(73)(62)
Cash flows from financing activities
Capital contributions 129 
Proceeds from stock options exercised21  
Proceeds from investment by Roivant Sciences Ltd. 200,000 
Net cash provided by financing activities21 200,129 
Effect of exchange rate changes on cash and cash equivalents(1,987) 
Net change in cash and cash equivalents(88,044)158,806 
Cash and cash equivalents – beginning of period493,817 400,146 
Cash and cash equivalents – end of period$405,773 $558,952 


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 dedicated to enabling normal lives for people with autoimmune diseases. The Company’s innovative product pipeline includes two compounds that target the neonatal fragment crystallizable receptor (“FcRn”). The Company’s first compound, batoclimab, formerly referred to as IMVT-1401, and its second compound, IMVT-1402, are both novel, fully human, monoclonal antibodies. Designed to be optimized as a simple, subcutaneous injection with dosing that the Company believes can be tailored based on disease severity and stage, batoclimab has been observed to reduce immunoglobulin G (“IgG”) antibodies that cause inflammation and disease. IMVT-1402 has also demonstrated deep IgG antibody reduction in animal studies.

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

[B] Liquidity

The Company has incurred significant losses and negative cash flows from operations since its inception. As of September 30, 2022, the Company’s cash and cash equivalents totaled $405.8 million and its accumulated deficit was $443.7 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, IMVT-1402 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 candidates. The Company currently expects that its existing cash and cash equivalents as of September 30, 2022 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.

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. Certain amounts in the consolidated financial statements of the prior year have been reclassified to conform to current year presentation. 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”).


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In the opinion of management, the unaudited condensed consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair statement of results for the interim periods. The results for the three and six months ended September 30, 2022 are not necessarily indicative of those expected for the year ending March 31, 2023 or for any future period. The condensed consolidated balance sheet as of March 31, 2022 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 8, 2022.

[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, geopolitical tensions and resulting global slowdown of economic activity, decades-high inflation, rising interest rates and a potential recession in the U.S. has had on its operations and financial results as of September 30, 2022 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 these uncertainties 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 and cash equivalents. As of September 30, 2022, the cash and cash equivalents 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 and cash equivalents 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 and cash equivalents.

[E] Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. At September 30, 2022, cash and cash equivalents included $316.1 million of money market funds invested in high-quality, short-term securities that are issued and guaranteed by the U.S. government and its agencies that are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices. There were no cash equivalents as of March 31, 2022.

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[F] Research and Development Expense

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

The Company participates in cost-sharing arrangements with third parties whereas the third parties have agreed to share a portion of the costs incurred by the Company, related to batoclimab drug manufacturing and clinical trials. The Company records the third parties’ share of the costs as a reduction of research and development expenses and an increase to accounts receivable in the accompanying unaudited condensed consolidated financial statements based on actual amounts incurred by the Company and billable to the third parties. These cost-sharing arrangements do not contemplate any future revenue-generating activity or global commercialization efforts of batoclimab benefiting any of the parties.

[G] 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. When determining the grant-date fair value of stock-based awards, management further considers whether an adjustment is required to the observable market price or volatility of the Company’s common stock that is used in the valuation as a result of material non-public information, if that information is expected to result in a material increase in share price.

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.

[H] 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.
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The following potentially dilutive securities have been excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:
 Six Months Ended September 30,
 20222021
Preferred stock as converted10,000 10,000 
Options11,185,963 6,156,944 
Restricted stock units4,587,727 3,394,097 
Total15,783,690 9,561,041 

[I] 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 Roivant Sciences Ltd. (“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 (including IMVT-1402), 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 percentage of net sales of licensed products, subject to standard offsets and reductions, 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.

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 and IMVT-1402 from RSG in the Licensed Territory, for an aggregate purchase price of $37.8 million.

As of September 30, 2022, the Company does not have any amounts payable to HanAll for research and development costs incurred and reported to the Company pursuant to the HanAll Agreement.


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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, if approved, 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.

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 September 30, 2022, 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):
September 30, 2022March 31, 2022
Research and development expenses$17,174 $18,196 
Accrued bonuses3,607 4,456 
Legal and other professional fees835 679 
Other expenses1,522 1,415 
Total accrued expenses$23,138 $24,746 
Note 5 — Related Party Transactions

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

In August 2018, the Company entered into amended and restated 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. 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. Employee compensation expense, inclusive of base salary and fringe benefits, is determined based upon the relative percentage of time utilized on Company matters. All other costs will be billed back at cost. The term of the Services Agreements will continue until terminated by the Company, RSI or RSG, as applicable, upon 90 days’ written notice.

For the three and six months ended September 30, 2022, the Company was charged $0.4 million under the Services Agreements, which are included in the accompanying unaudited condensed consolidated statements of operations. For the three and six months ended September 30, 2021, the Company was charged $0.8 million and $0.9 million, respectively, under the Services Agreements, which were treated as capital contributions in the accompanying unaudited condensed consolidated financial statements.


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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.

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

RSI Subleases

In June 2020, the Company entered into two sublease agreements with RSI for two floors of the building the Company currently occupies as its headquarters in New York. The subleases will expire on February 27, 2024 and April 29, 2024, respectively, and have scheduled rent increases each year. During the three months ended September 30, 2022 and 2021, the Company incurred $0.3 million in each period in rent expense under these operating leases. During the six months ended September 30, 2022 and 2021, the Company incurred $0.6 million in each period 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 three and six months ended September 30, 2021.

Note 6 — Income Taxes

The Company’s effective tax rates were (0.55)% and 0.08% for the three months ended September 30, 2022 and 2021, respectively, and (0.70)% and 0.11% for the six months ended September 30, 2022 and 2021, 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

As of September 30, 2022, 10,000 shares of Series A preferred stock, par value $0.0001 per share, were outstanding and held by RSL.


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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

As of September 30, 2022, the Company has authorized 10,010,000 shares of preferred stock, par value $0.0001 per share. Other than the 10,000 shares of preferred stock designated as Series A preferred stock, there were no issued and outstanding shares of preferred stock as of September 30, 2022.

Common Stock

As of September 30, 2022, the Company authorized 500,000,000 shares of common stock, par value $0.0001 per share and has 116,614,088 shares of common stock issued and outstanding. See Note 10 - Subsequent Event regarding the Company’s completion of an underwritten public offering in October 2022.

The Company has reserved the following shares of common stock for issuance:
September 30, 2022March 31, 2022
Conversion of Series A preferred stock10,000 10,000 
Options outstanding11,185,963 8,018,731 
Restricted stock units outstanding4,850,221 2,816,197 
Equity awards available for future grants1,510,167 2,188,860 
Total17,556,351 13,033,788 

The reserved shares underlying restricted stock units above include 262,494 restricted stock units that vested but were not settled as of September 30, 2022.

Note 8 — Stock-Based Compensation

2019 Equity Incentive Plan

In December 2019, 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 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. The number of shares of common stock reserved for issuance under the 2019 Plan will automatically increase on April 1 of each year, continuing through April 1, 2029, by 4.0% of the total number of shares of common stock outstanding on the last day of the preceding month. On April 1, 2022, 4,659,315 shares of common stock were added to the 2019 Plan pool in accordance with the evergreen provision of the 2019 Plan. As of September 30, 2022, options to purchase 8,254,348 shares of common stock and 4,587,727 restricted stock units (“RSUs”) were outstanding under the 2019 Plan and 1,510,167 shares of common stock remained available for future grant under the 2019 Plan.

2018 Equity Incentive Plan

As of the effective date of the 2019 Plan, no further stock awards have been or will be made under 2018 Equity Incentive Plan (the “2018 Plan”). As of September 30, 2022, 2,931,615 stock options were outstanding under the 2018 Plan.

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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, 20228,018,731 $8.48 8.52$60 
Granted3,375,223 4.91 
Exercised(11,004)1.91 
Forfeited(171,872)7.09 
Expired(25,115)8.62 
Balance - September 30, 202211,185,963 $7.43 8.54$2,321 
Exercisable - September 30, 20224,002,738 $8.98 7.37$17 

The aggregate intrinsic value is calculated as the difference between the exercise price of all outstanding and exercisable stock options and the fair value of the Company’s common stock as of September 30, 2022. The intrinsic value of stock options exercised for the six months ended September 30, 2022 was de minimis. There were no stock options exercised during the six months ended September 30, 2021. The stock options granted during the six months ended September 30, 2022 had a weighted-average grant date fair value per share of $3.69.

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

 Three Months Ended September 30,Six Months Ended September 30,
 2022202120222021
Risk-free interest rate
2.89% - 4.11%
0.80% - 1.12%
2.74% - 4.11%
0.80% - 1.12%
Expected term, in years
6.11
6.11
6.11
6.03 - 6.11
Expected volatility
88.53% - 88.78%
88.72% - 91.15%
87.12% - 88.78%
82.92% - 91.15%
Expected dividend yield%%%%

Restricted Stock Unit Awards

A summary of RSUs activity under the Company’s equity incentive plans is as follows:
Number of RSUsWeighted- Average Grant Date Fair Value
Nonvested as of March 31, 2022
2,670,864 $9.12 
Issued2,329,293 4.88 
Vested(238,354)13.04 
Forfeited(174,076)8.61 
Nonvested as of September 30, 2022
4,587,727 $6.78 

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Stock-based Compensation Expense

For the three and six months ended September 30, 2022 and 2021, stock-based compensation expense under the Company’s equity incentive plans was as follows (in thousands):

 Three Months Ended
September 30,
Six Months Ended September 30,
 2022202120222021
Research and development expenses$3,813 $3,768 $7,419 $3,805 
General and administrative expenses4,238 3,901 8,187 7,684 
Total stock-based compensation$8,051 $7,669 $15,606 $11,489 
As of September 30, 2022, total unrecognized compensation expense related to non-vested stock options and RSUs was $40.6 million and $22.9 million, respectively, which is expected to be recognized over the remaining weighted-average service period of 2.82 years and 2.46 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 Roivant and the Company, stock-based compensation expense of $0.1 million and $0.2 million was recorded for the three months ended September 30, 2022 and 2021, respectively, and $0.2 million and $0.3 million for the six months ended September 30, 2022 and 2021, respectively, in the accompanying unaudited condensed consolidated statements of operations.

RSL RSUs

The Company’s Chief Executive Officer was granted 73,155 RSUs of RSL in January 2021, which are vesting over a period of four years. For the three months ended September 30, 2022 and 2021, the Company recorded $0.1 million and $0.4 million, respectively, and for the six months ended September 30, 2022 and 2021, the Company recorded $0.2 million and $0.4 million, respectively, of stock-based compensation expense related to these RSUs. As of September 30, 2022, there was $0.2 million of unrecognized compensation expense related to unvested RSL RSUs.

Note 9 — Commitments and Contingencies

Litigation

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

In February 2021, a putative securities class action complaint was filed against the Company and certain of its current and former officers in the U.S. District Court for the Eastern District of New York on behalf of a class consisting of those who acquired the Company’s securities between 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 RSL and 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 on behalf of a putative class consisting of those who purchased or otherwise acquired the Company’s securities pursuant and/or traceable to the Company’s follow-on public offering on or about September 2, 2020. On March 15, 2022, the lead plaintiff filed a further amended complaint. The Company and other defendants served motions to dismiss the amended complaint on May 27, 2022. The fully briefed motion to dismiss, including defendants’ opening briefs, lead plaintiff’s opposition, and defendants’ replies were filed with the court on September 9, 2022. No hearing date has been set. The Company intends to continue 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.


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Commitments

During the year ended March 31, 2022, ISG entered into the PSA 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. Of the amount expected to be paid in fiscal year 2023, $1.7 million was included in research and development expenses and accrued expenses in the accompanying unaudited condensed consolidated financial statements as of, and for the three and six months ended September 30, 2022. See Note 3 - Material Agreements for additional details.

As of September 30, 2022, 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

The extent of the impact of COVID-19, geopolitical tensions and resulting global slowdown of economic activity, decades-high inflation, rising interest rates and a potential recession in the U.S. 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 these events may impact the Company’s future financial condition or results of operations is uncertain.

Note 10 — Subsequent Event

In October 2022, the Company completed an underwritten public offering of 12,500,000 shares of its common stock (including 416,667 shares of common stock purchased by RSL) at a price to the public of $6.00 per share, for net proceeds to the Company of approximately $70.2 million after deducting underwriting discounts and commissions and offering expenses.

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, 2022, included in our Annual Report on Form 10-K (“Annual Report”), filed with the Securities and Exchange Commission (the “SEC”) on June 8, 2022. 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.

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.


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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 dedicated to enabling normal lives for people with autoimmune diseases. Our innovative product pipeline includes two compounds that target the neonatal fragment crystallizable receptor (“FcRn”). Our first compound, batoclimab, formerly referred to as IMVT-1401, and our second compound, IMVT-1402, are both novel, fully human, monoclonal antibodies. Batoclimab and IMVT-1402 are the result of a multi-step, multi-year research program conducted by HanAll Biopharma Co., Ltd., to design highly potent anti-FcRn antibodies that may be optimized as a simple, subcutaneous injection with dosing that we believe can be tailored based on disease severity and stage.

Our first product candidate, batoclimab, has been dosed in small volumes (e.g., 2 mL) and with a 27-gauge needle, while still generating therapeutically relevant pharmacodynamic activity, important attributes that we believe will drive patient preference and market adoption. In nonclinical studies and in clinical trials conducted to date, batoclimab has been observed to reduce immunoglobulin G (“IgG”) antibody levels. High levels of pathogenic IgG antibodies drive a variety of autoimmune diseases and, as a result, we believe batoclimab has the potential for broad application in these disease areas. We intend to develop batoclimab in autoimmune diseases for which there is robust evidence that pathogenic IgG antibodies drive disease manifestation and for which reduction of IgG antibodies should lead to clinical benefit.

We are currently developing batoclimab for Myasthenia Gravis (“MG”), Thyroid Eye Disease (“TED”), Chronic Inflammatory Demyelinating Polyneuropathy (“CIDP”) and Graves’ Disease. The trial design and lead asset for Warm Autoimmune Hemolytic Anemia (“WAIHA”) will be determined based on an expected engagement with the U.S. Food and Drug Administration (“FDA”) Division of Hematology in calendar year 2022.

Our second product candidate, IMVT-1402, has been observed in animal studies to reduce IgG antibody levels with minimal or no impact on levels of albumin and low-density lipoprotein (“LDL”) at doses well above the anticipated human effective dose; similar doses of batoclimab in animals were clearly associated with declines in albumin. We plan to initiate a Phase 1 trial of IMVT-1402 in early calendar year 2023 contingent on clearance of our Investigational New Drug (“IND”) application, with initial data results from this Phase 1 trial expected to be available in mid-calendar year 2023.

As a result of our rational design and current outlook on potential opportunities, we believe that batoclimab and IMVT-1402, if developed and approved for commercial sale, would be differentiated from currently available, more invasive treatments for advanced IgG-mediated autoimmune diseases. Based on third-party patient prevalence estimates for the more than 15 indications that have been announced by multiple companies for clinical development with anti-FcRn assets, including our planned development of batoclimab in MG, TED, CIDP and Graves’ Disease, we estimate the total potential opportunity for our FcRn franchise to be greater than two million patients in the United States (the “U.S.”) and Europe (Europe includes all European Union countries (the “E.U.”), Norway, Lichtenstein and Iceland (together with the E.U. countries the “EEA”), the United Kingdom (the “U.K.”) and Switzerland).

To the extent we choose to develop batoclimab and IMVT-1402 as potential treatments 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 FDA for batoclimab for the potential treatment of MG and, in July 2022, we received a positive opinion from the Committee for Orphan Medicinal Products (“COMP”) on our application for orphan drug designation by the European Medicines Agency (“EMA”) for batoclimab for the potential treatment of MG. We plan to seek orphan drug designation from the FDA for batoclimab and/or IMVT-1402 where there is a medically plausible basis for batoclimab and/or IMVT-1402’s use. We may seek orphan drug designation for batoclimab and/or IMVT-1402 in other indications in Europe.
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Recent Developments in Our Clinical Programs

In June 2022, we initiated our Phase 3 pivotal trial of batoclimab as a treatment for MG. We expect top-line data from this Phase 3 trial to be available in the second half of calendar year 2024.

For TED, we plan to initiate two Phase 3 clinical trials to evaluate batoclimab in this indication by the end of calendar year 2022. We expect top-line results from both Phase 3 trials to be available in the first half of calendar year 2025.

In September 2022, we announced plans to initiate a pivotal Phase 2b trial of batoclimab as a treatment for CIDP by the end of calendar year 2022, with initial data expected to be available in the first half of calendar year 2024. In addition, we also announced plans to initiate a Phase 2 trial of batoclimab as a treatment for Graves’ Disease in early calendar year 2023 and expect initial data from this trial to be available in the second half of calendar year 2023.

Following our recent unveiling of our second product candidate, IMVT-1402, we plan to initiate a Phase 1 trial of our next generation FcRn inhibitor in early calendar year 2023, contingent on clearance of our IND application. Initial data from this trial are expected to be available in mid-calendar year 2023.

COVID-19 Business Update

The COVID-19 pandemic continues to disrupt supply chains and affect production and sales across a range of industries. Currently, we have not suffered significant adverse consequences as a result of the COVID-19 pandemic. The extent of the impact of COVID-19, including the resulting adverse macroeconomic conditions, on our 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 and macroeconomic conditions may impact our future financial condition or results of operations is uncertain.

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 (including IMVT-1402), 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 and IMVT-1402 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 September 30, 2022, no amounts were payable to HanAll for research and development costs incurred and reported to us pursuant to the HanAll Agreement.


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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 percentage of 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.

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, if approved, 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 as of September 30, 2022, of which $1.7 million was accrued as of September 30, 2022.

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, IMVT-1402 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, IMVT-1402 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, and are net of costs reimbursable to us pursuant to cost-sharing arrangements with third parties.

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Program-specific costs include direct third-party costs, which include expenses incurred under agreements with contract research organizations and the cost of consultants who assist with the development of our product candidates on a program-specific basis, investigator grants, sponsored research, and any other third-party expenses directly attributable to the development of the product candidates. Program-specific costs also include contract manufacturing costs in connection with producing materials for use in conducting preclinical and clinical studies, including under our agreement with Samsung, to the extent they can be allocated to a specific program.

Unallocated costs include:

personnel-related expenses for research and development personnel, which includes employee-related expenses such as salaries, benefits and other staff-related costs;
stock-based compensation expenses for research and development personnel;
payments upon the achievement of certain development and regulatory milestones under the HanAll Agreement;
costs allocated to us under our services agreements with RSI and RSG (the “Services Agreements”); and
other expenses, which include the cost of consultants who assist with our research and development and costs related to contract manufacturing, 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 initiated a Phase 3 trial of batoclimab as a treatment for MG in June 2022 and plan to initiate two Phase 3 clinical trials to evaluate batoclimab for the treatment of TED by the end of calendar year 2022. In addition, we recently announced plans to initiate a Phase 2b trial of batoclimab as a treatment for CIDP by the end of calendar year 2022 and a Phase 2 trial for Graves’ Disease in early calendar year 2023, as well as a Phase 1 trial of IMVT-1402 in early calendar year 2023 contingent on clearance of our IND application. 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, increase manufacturing of batoclimab and IMVT-1402 substance and prepare to seek regulatory approval for our product candidates. 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, IMVT-1402 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 and IMVT-1402 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, stock-based compensation for general and administrative personnel, legal and accounting fees, consulting services, costs allocated under the Services Agreements 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. These increases will likely include patent-related costs, including legal and professional fees for filing, prosecution and maintenance of our product candidates, increased costs related to the hiring of additional personnel and fees to outside consultants for professional services. In addition, if either batoclimab or IMVT-1402 obtains regulatory approval, we expect that we would incur significant additional expenses associated with further building medical affairs and commercial teams.

Results of Operations for the Three Months Ended September 30, 2022 and 2021

The following table sets forth our results of operations for the three months ended September 30, 2022 and 2021 (in thousands):

 Three Months Ended September 30,
 20222021Change
Operating expenses:
Research and development$37,739 $21,361 $16,378 
General and administrative11,875 16,289 (4,414)
Total operating expenses49,614 37,650 11,964 
Interest income, net(1,154)— (1,154)
Other (income) expense(793)84 (877)
Loss before provision (benefit) for income taxes(47,667)(37,734)(9,933)
Provision (benefit) for income taxes261 (31)292 
Net loss$(47,928)$(37,703)$(10,225)
Research and Development Expenses for the Three Months Ended September 30, 2022 and 2021

The following table summarizes the period-over-period changes in research and development expenses for the three months ended September 30, 2022 and 2021 (in thousands):

Three Months Ended September 30,
Change
20222021*$
Batoclimab - Program-specific costs:
Neurology diseases$10,161 $1,421 $8,740 
Endocrine diseases5,049 6,622 (1,573)
Hematology diseases38 1,738 (1,700)
           Total Batoclimab - Program-specific costs15,248 9,781 5,467 
IMVT-14024,254 — 4,254 
Unallocated costs:
Personnel-related expenses including stock-based compensation12,112 7,762 4,350 
Other6,125 3,818 2,307 
Total research and development expenses$37,739 $21,361 $16,378 
___________
*Certain prior year amounts have been reclassified to conform to current year presentation.

Research and development expenses increased by $16.3 million, from $21.4 million for the three months ended September 30, 2021 to $37.7 million for the three months ended September 30, 2022.


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Batoclimab program-specific research and development costs increased by $5.5 million, from $9.8 million for the three months ended September 30, 2021 to $15.3 million for the three months ended September 30, 2022. This increase reflected $5.8 million of upfront and start-up costs related to our Phase 3 trial for batoclimab in MG, as well as higher contract manufacturing costs for process development and drug substance manufacturing. Also contributing to the increase were $2.9 million of upfront costs related to our planned Phase 2 trial of batoclimab as a treatment for CIDP. Partially offsetting these increases were lower contract manufacturing costs and clinical activities of $3.2 million in TED and WAIHA, primarily reflecting higher costs in the prior-year period from analyzing data and the program-wide data review following the voluntary pause in our clinical trials in February 2021.

For the three months ended September 30, 2022, we incurred $4.3 million of research and development costs related to the development of IMVT-1402, primarily related to pre-clinical studies and contract manufacturing costs.

Unallocated research and development costs increased by $6.6 million, from $11.6 million for the three months ended September 30, 2021 to $18.2 million for the three months ended September 30, 2022. This increase reflected higher personnel-related expenses of $4.3 million, primarily reflecting the enhancement of our capabilities to support our strategic objectives as we resumed our clinical activities and evaluated potential new indications. Also contributing to the increase were higher costs related to cross-indication clinical studies and clinical research costs of $2.3 million, primarily reflecting activities to advance the clinical development of batoclimab and IMVT-1402 in current and potentially new indications.

General and Administrative Expenses for the Three Months Ended September 30, 2022 and 2021

General and administrative expenses decreased by $4.4 million, from $16.3 million for the three months ended September 30, 2021 to $11.9 million for the three months ended September 30, 2022. Lower financial advisory, legal and other professional fees were partially offset by higher personnel-related expenses and information technology costs.

Results of Operations for the Six Months Ended September 30, 2022 and 2021

The following table sets forth our results of operations for the six months ended September 30, 2022 and 2021 (in thousands):

 Six Months Ended September 30,
 20222021Change
Operating expenses:
Research and development$66,168 $40,066 $26,102 
General and administrative23,821 27,469 (3,648)
Total operating expenses89,989 67,535 22,454 
Interest income, net(1,154)— (1,154)
Other (income) expense(1,147)711 (1,858)
Loss before provision (benefit) for income taxes(87,688)(68,246)(19,442)
Provision (benefit) for income taxes613 (72)685 
Net loss$(88,301)$(68,174)$(20,127)

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Research and Development Expenses for the Six Months Ended September 30, 2022 and 2021

The following table summarizes the period-over-period changes in research and development expenses for the six months ended September 30, 2022 and 2021 (in thousands):

Six Months Ended September 30,Change
20222021*$
Batoclimab - Program-specific costs:
Neurology diseases$18,592 $2,184 $16,408 
Endocrine diseases6,824 14,240 (7,416)
Hematology diseases(39)3,885 (3,924)
           Total Batoclimab - Program-specific costs25,377 20,309 5,068 
IMVT-14024,720 — 4,720 
Unallocated costs:
Personnel-related expenses including stock-based compensation23,056 12,559 10,497 
Other13,015 7,198 5,817 
Total research and development expenses$66,168 $40,066 $26,102 
___________
*Certain prior year amounts have been reclassified to conform to current year presentation.

Research and development expenses increased by $26.1 million, from $40.1 million for the six months ended September 30, 2021 to $66.2 million for the six months ended September 30, 2022.

Batoclimab program-specific research and development costs increased by $5.1 million, from $20.3 million for the six months ended September 30, 2021 to $25.4 million for the six months ended September 30, 2022. This increase reflected $13.4 million of upfront and start-up costs related to our Phase 3 trial for batoclimab in MG, as well as higher contract manufacturing costs for process development and drug substance manufacturing. Also contributing to the increase were $3.0 million of upfront costs related to our planned Phase 2 trial of batoclimab as a treatment for CIDP. Partially offsetting these increases were lower contract manufacturing costs and clinical activities of $11.3 million in TED and WAIHA, primarily reflecting higher costs in the prior-year period from analyzing data and the program-wide data review following the voluntary pause in our clinical trials in February 2021.

For the six months ended September 30, 2022, we incurred $4.7 million of research and development costs related to the development of IMVT-1402, primarily related to pre-clinical studies and contract manufacturing costs.

Unallocated research and development costs increased by $16.3 million, from $19.8 million for the six months ended September 30, 2021 to $36.1 million for the six months ended September 30, 2022. This increase reflected higher personnel-related expenses of $10.5 million, primarily reflecting the enhancement of our capabilities to support our strategic objectives as we resumed our clinical activities and evaluated potential new indications. Also contributing to the increase were higher costs related to cross-indication clinical studies and clinical research costs of $5.8 million, primarily reflecting activities to advance the clinical development of batoclimab and IMVT-1402 in current and potentially new indications.

General and Administrative Expenses for the Six Months Ended September 30, 2022 and 2021

General and administrative expenses decreased by $3.7 million, from $27.5 million for the six months ended September 30, 2021 to $23.8 million for the six months ended September 30, 2022. Lower financial advisory, legal and other professional fees were partially offset by higher personnel-related expenses and information technology costs.


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Liquidity and Capital Resources

Sources of Liquidity

We had cash and cash equivalents of $405.8 million and $493.8 million as of September 30, 2022 and March 31, 2022, respectively. For the three months ended September 30, 2022 and 2021, we had net losses of $47.9 million and $37.7 million, respectively, and for the six months ended September 30, 2022 and 2021, we had net losses of $88.3 million and $68.2 million, respectively. 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, IMVT-1402 or any future product candidate.

To date, we have financed our operations primarily from equity offerings and the sale of convertible promissory notes. Until such time, if ever, as we can generate substantial product revenue from sales of batoclimab, IMVT-1402 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 worsening global economic conditions and the continuing disruptions to, and volatility in, the credit and financial markets in the United States and worldwide, including disruptions resulting from the ongoing military conflict between Russia and Ukraine, the COVID-19 pandemic, decades-high inflation and rising interest rates.

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.

In January 2021, we filed a shelf registration statement on Form S-3 with the SEC which permits the offering, issuance and sale by us of up to a maximum aggregate offering price of $900.0 million of our common stock, of which $150.0 million may be issued and sold pursuant to an at-the-market (“ATM”) offering program for sales of our common stock under a sales agreement with SVB Leerink LLC, subject to certain conditions as specified in the sales agreement. We agreed to pay SVB Leerink up to 3% of the gross proceeds sold through the sale agreement. Our common stock would be sold at prevailing market prices at the time of the sale and, as a result, prices may vary. We have not issued or sold any securities pursuant to the ATM offering program.

In October 2022, we completed an underwritten public offering of 12,500,000 shares of our common stock (including 416,667 shares of common stock purchased by RSL) at a price to the public of $6.00 per share, for net proceeds to us of approximately $70.2 million after deducting underwriting discounts and commissions and offering expenses.

If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. Adequate additional funding may not be available to us on acceptable terms, or at all. If we are unable to raise capital in sufficient amounts or on terms acceptable to us, we may be required to delay, limit, reduce or terminate our drug development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves or potentially discontinue operations.

Cash Flows

The following table sets forth a summary of our cash flows for the six months ended September 30, 2022 and 2021 (in thousands):

 Six Months Ended September 30,
 20222021
Net cash used in operating activities$(86,005)$(41,261)
Net cash used in investing activities(73)(62)
Net cash provided by financing activities21 200,129 
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Operating Activities

For the six months ended September 30, 2022, $86.0 million of cash was used in operating activities, primarily reflecting a net loss from operations for the year of $88.3 million and a net change in operating assets and liabilities of $14.2 million, partially offset by non-cash charges of $16.5 million. The non-cash charges consisted mainly of stock-based compensation of $15.8 million, reflecting the higher headcount and incentive equity awards as compared with the prior year. The change in our operating assets and liabilities was primarily due to a decrease of $12.3 million in accounts payable and accrued expenses, driven by the timing and level of payments related to contract manufacturing and upfront and start-up research and development costs related to our clinical trials. The change in operating assets and liabilities also reflected $10.1 million of higher prepaid expenses and other current assets, driven primarily by payments related to clinical research activities in advance of ongoing and planned Phase 3 trials, partially offset by a decrease in accounts receivable of $8.8 million reflecting the collection of amounts owed to us under research and development cost-sharing arrangements with third parties.

For the six months ended September 30, 2021, $41.3 million of cash was used in operating activities. This was primarily attributable to a net loss from operations for the year of $68.2 million, partially offset by non-cash charges of $13.6 million and a net change in operating assets and liabilities of $13.3 million. The non-cash charges consisted mainly of stock-based compensation of $12.2 million, reflecting the higher headcount and incentive equity awards as compared with the prior-year period. The change in our operating assets and liabilities was primarily due to an increase of $9.7 million in accounts payable and accrued expenses, driven by accrued financial advisory fees, as well as the timing and level of payments related to contract manufacturing and other research and development costs. The change in operating assets and liabilities also reflected $4.4 million of lower prepaid expenses and other current assets, driven by the timing of payments related to clinical research and contract manufacturing activities.

Investing Activities

For the six months ended September 30, 2022 and 2021, cash used in investing activities was related to the purchase of property and equipment.

Financing Activities

For the six months ended September 30, 2022, cash provided by financing activities consisted of proceeds from the exercise of stock options. For the six months ended September 30, 2021, $200.1 million of cash provided by financing activities primarily consisted of $200.0 million in proceeds from a share purchase agreement with RSL.

Funding Requirements

Our primary uses of capital have been, and we expect will continue to be, for advancing our clinical and preclinical development programs. We have based our estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Our net losses and operating cash flows may fluctuate significantly from quarter-to-quarter and year-to-year, depending on the timing of our planned clinical trials, timing of batoclimab or IMVT-1402 manufacturing, HanAll milestone payments and our expenditures on other research and development activities.

Because of the numerous risks and uncertainties associated with the development and commercialization of product candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures necessary to complete the development of product candidates.

Our short-term and long-term material cash requirements as of September 30, 2022 primarily consisted of those related to our clinical trials and clinical development activities, which we expect to fund primarily with our existing cash balance. Our most significant cash requirements are described below:


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Product Service Agreement and Master Services Agreement

During the year ended March 31, 2022, we 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, we have a minimum long-term 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” in our unaudited condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report for additional details.

HanAll Agreement

Potential future payments due under the HanAll Agreement are contingent upon future events. As of September 30, 2022, the aggregate maximum amount of milestone payments we could be required to make under the HanAll Agreement is $442.5 million upon the achievement of certain development, regulatory and sales milestone events. We are also required to reimburse HanAll for half of budgeted research and development costs incurred by HanAll with respect to batoclimab and IMVT-1402, up to an aggregate of $20.0 million.

Lease Agreements

In June 2020, we entered into two sublease agreements with RSI for the two floors of the building that serves as our headquarters in New York. The subleases will expire on February 27, 2024 and April 29, 2024, respectively, and have scheduled rent increases each year.

In March 2022, we entered into a lease agreement with an unrelated party for office space in a building in North Carolina. The lease will expire on March 31, 2024 and has scheduled rent increases each year. The lease agreement includes an option at the Company’s election to renew for an additional two years.

Our future minimum lease payments as of September 30, 2022 totaled $1.2 million related to short-term lease liabilities, and $0.6 million related to long-term lease liabilities.

Outlook

Based on our existing cash and cash equivalents balance as of September 30, 2022 of $405.8 million together with the proceeds of our underwritten public offering in October 2022, our research and development plans and our timing expectations related to our development programs for batoclimab and IMVT-1402, we expect to be able to fund our operating expenses and capital expenditure requirements into the second half of calendar year 2025. However, we have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect.

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

We anticipate that our short-term and long-term future capital requirements will increase substantially as we:

fund our clinical development programs;
launch any potential Phase 2 proof-of-concept studies of batoclimab or IMVT-1402 in additional indications;
increase manufacturing of batoclimab and IMVT-1402 substance to support clinical trials;
achieve milestones under our agreements with third parties, including the HanAll Agreement, that will require us to make substantial payments to those parties;
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;
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add operational, financial and management information systems and personnel, including personnel to support our drug development efforts;
commence the number of clinical trials required for approval;
seek regulatory approvals for any product candidates that successfully complete clinical trials;
seek to identify, acquire, develop and commercialize additional product candidates;
ultimately establish a sales, marketing and distribution infrastructure and scale up external manufacturing capabilities to commercialize any drug candidates for which we may obtain regulatory approval; and
incur insurance, legal and other regulatory compliance expenses to operate as a public company.

Our primary use of cash is to fund our clinical trials and clinical development activities. Our current funds will not be sufficient to enable us to complete all necessary development and commercially launch batoclimab or IMVT-1402. We anticipate that we will continue to incur net losses for the foreseeable future.

Critical Accounting Estimates

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

We define our critical accounting estimates as those under U.S. GAAP that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations, as well as the specific manner in which we apply those principles. During the three and six months ended September 30, 2022, there were no material changes to our critical accounting estimates from those disclosed in the audited consolidated financial statements for the year ended March 31, 2022 included in our Annual Report.

Recent Accounting Pronouncements

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

Item 3. Quantitative and Qualitative Disclosures about Market Risk
Under SEC rules and regulations, because we are considered to be a “smaller reporting company”, we are not required to provide the information required by this item in this report.
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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures.

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

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

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2022, the end of the period covered by this Quarterly Report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of September 30, 2022 at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting.

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended September 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitation on the Effectiveness of Internal Control.

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

Item 1. Legal Proceedings

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

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

Item 1A. Risk Factors

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

Risks Related to Development, Regulatory Approval and Commercialization

Our business is currently dependent on the successful development, regulatory approval and commercialization of our product candidates, batoclimab, formerly referred to as IMVT-1401, and IMVT-1402.

We currently have no products that are approved for commercial sale and may never be able to develop marketable products. We expect that our primary efforts and expenditures over the next few years will be devoted to the advancement of batoclimab and IMVT-1402. Accordingly, our business currently depends on the successful completion of our clinical trials for batoclimab and IMVT-1402 and subsequent regulatory approval and commercialization of these product candidates. We have in the past and may in the future experience delays in the clinical trials for our product candidates, and any additional delays or failures in the clinical trials for our product candidates could significantly impact and harm our business. See “Risks Related to Development, Regulatory Approval and Commercialization – Clinical trials are very expensive, time-consuming, difficult to design and implement, and involve uncertain outcomes.”

We cannot be certain that batoclimab or IMVT-1402 will receive regulatory approval or be successfully commercialized even if we receive regulatory approval. The research, testing, manufacturing, labeling, approval, sale, marketing and distribution of pharmaceutical products, including antibody-based products, are, and will remain, subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries that each have differing regulations. We are not permitted to market our product candidates in the United States until we receive approval of a BLA or in any foreign country until we receive the requisite approvals from the appropriate authorities in such countries for marketing authorization. In addition, we have not yet demonstrated our ability to complete later-stage or pivotal clinical trials for our product candidates.

We have not submitted a BLA for batoclimab or IMVT-1402 to the FDA or any comparable application to any other foreign regulatory authority. Obtaining approval of a BLA or similar regulatory approval is an extensive, lengthy, expensive and inherently uncertain process, and the FDA or other foreign regulatory authorities may delay, limit or deny approval of batoclimab or IMVT-1402 for many reasons.

Even if we do receive regulatory approval to market batoclimab or IMVT-1402, any such approval may be subject to limitations on the indicated uses or patient populations for which we can market these product candidates. Accordingly, even if we are able to obtain the requisite financing to continue to fund our development programs, we cannot assure you that our product candidates will be successfully developed or commercialized.


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In addition, if our product candidates encounter safety or efficacy problems, developmental delays, regulatory issues, supply issues, or other problems in one of our target indications, our development plans for our product candidates could be significantly harmed in other indications, which would have a material adverse effect on our business. Further, competitors who are developing product candidates in the autoimmune disease field, including IgG-mediated autoimmune indications, or that target the same indications or use the same mechanism of action as us, may experience problems with their product candidates that could suggest problems with our product candidates that would potentially harm our business.

Our product candidates may cause adverse events or undesirable side effects or have other properties that could delay or prevent their 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.

Adverse events (“AEs”) or undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the FDA, European Commission, or other authorities. Results of our clinical trials could reveal a high and unacceptable severity and prevalence of side effects, toxicities or unexpected characteristics.

If unacceptable AEs or side effects arise in the development of our product candidates, we, other reviewing entities, clinical trial sites or regulatory authorities could suspend or terminate our clinical trials or the regulatory authorities could order us to cease clinical trials or deny approval of our product candidates for any or all targeted indications. We have not yet begun clinical development of IMVT-1402, but it may also cause injection site reactions and, even though it has not affected lipid or albumin levels in current completed nonclinical studies, it may do so in human clinical trials. If an unacceptable frequency or severity of AEs or new safety signals are reported in our clinical trials, our ability to obtain regulatory approval may be negatively impacted. Treatment-related side effects arising from, or those potentially arising from, our product candidates or those from other companies targeting similar autoimmune indications or using the same mechanism of action could affect the design of clinical studies, target patient population, enrollment and conduct of the studies, patient recruitment or the ability of enrolled patients to complete our clinical trials, eventual labeling and risk management, or result in potential product liability claims. In addition, these side effects may not be appropriately recognized or managed by the treating medical staff.

For example, AEs associated with batoclimab in our clinical trials previously caused us to pause dosing in our clinical trials of batoclimab. The most commonly reported AE in our Phase 1 clinical trial was mild erythema and swelling at the injection site, which typically resolved within hours. As previously disclosed, we voluntarily paused dosing in our early phase clinical studies of batoclimab to evaluate treatment-induced elevations in total cholesterol and LDL levels observed in some trial subjects. After evaluation of the available safety data and following discussions with multiple regulatory agencies, we are continuing our clinical development of batoclimab. While we do not expect that increases in LDL over a short-term treatment duration would pose a safety concern for patients, the risk-benefit profile of long-term administration of batoclimab at higher doses will need to incorporate any unfavorable effects on lipid profiles. In addition, protocols that contain long-term treatment extensions will likely include protocol-directed guidelines for the management of any observed lipid abnormalities. These occurrences have harmed, and any reoccurrences may continue to harm, our business, financial condition and prospects.

Furthermore, it is possible we will not be able to agree upon sufficient risk mitigation with all regulatory authorities and that our development of our product candidates will not continue in certain countries or for certain indications. Even if we are able to continue clinical development of our product candidates with such risk mitigations, any future approval and marketing would suffer from the risks of potential AEs or side effects and potential impact of mitigating measures, including, among others, limited indication, monitoring, a REMS, potential additional safety studies and other adverse labeling.

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

regulatory authorities may withdraw, suspend or limit their approval of the product or require a REMS (or equivalent outside the U.S.) to impose restrictions on the product’s distribution or require other risk management measures;
we may be required to recall a product;
additional restrictions may be imposed on the distribution or marketing of the particular product or the manufacturing processes for the product or any component thereof, including a “black box” warning or contraindication on the product label or communications containing warnings or other safety information about the product;
regulatory authorities may require the addition of labeling statements, such as warnings or contraindications, require other labeling changes or require field alerts or other communications to physicians, pharmacies or the public;
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we may be required to change the way the product is administered or distributed, conduct additional clinical trials, change the labeling of a product or be required to conduct additional post-marketing studies or surveillance;
we may be required to repeat a nonclinical study or clinical trial or terminate a program, even if other studies or trials related to the program are ongoing or have been successfully completed;
we may be sued and held liable for harm caused to patients, or may be subject to fines, restitution or disgorgement of profits or revenues;
physicians may stop prescribing the product;
reimbursement may not be available for the product;
we may elect to discontinue the sale of our product;
the product may become less competitive; and
our reputation may suffer.

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

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

Batoclimab and IMVT-1402 are still in clinical development and will require extensive clinical testing before we are prepared to submit a biologics license application (“BLA”) or other similar application for regulatory marketing approval. We cannot provide you any assurance that we will submit a BLA for regulatory approval for our product candidates within our projected timeframes or whether any such application will be approved by the relevant regulatory authorities. Clinical trials are very expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. For instance, the FDA or other foreign regulatory authorities may not agree with our proposed analysis plans or trial design for any clinical trials for our product candidates; during any such review, may identify unexpected efficacy or safety concerns, which may delay the approval of a BLA or similar application. The FDA or a foreign regulatory authority may also find that the benefits of our product candidates in any of our target indications do not outweigh its risks, including the risks associated with elevated lipid levels and lower albumin levels, in a manner sufficient to grant regulatory approval. The clinical trial process is also time-consuming and costly and relies on the collaboration with many contract research organizations (“CROs”) and clinical trial sites.

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

If we fail to successfully complete our clinical trials of our product candidates and demonstrate the efficacy and safety necessary to obtain regulatory approval to market our product candidates our business, financial condition and prospects would be harmed. The commencement and completion of clinical trials may be delayed by several factors, including:

failure to obtain regulatory authorization to commence a clinical trial or reach a consensus with regulatory authorities regarding the design or implementation of our studies;
unforeseen safety issues or subjects experiencing severe or unexpected AEs;
continuation of previously identified safety issues, despite our program-wide safety strategy to characterize the safety profile of batoclimab in response to the previously reported change in albumin and lipids;
occurrence of AEs in trials of the same class of agents conducted by other sponsors;
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lack of effectiveness during clinical trials;
resolving any dosing issues or limitations, including those raised by the FDA or other foreign regulatory authorities;
inability to reach agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
slower than expected rates of patient recruitment or failure to recruit suitable patients to participate in a trial;
failure to add a sufficient number of clinical trial sites;
unanticipated impact from changes in or modifications to protocols or clinical trial design, including those that may be required by the FDA or other foreign regulatory authorities;
inability or unwillingness of clinical investigators or study participants to follow our clinical and other applicable protocols or applicable regulatory requirements;
an institutional review board (“IRB”), refusing to approve, suspending, or terminating the trial at an investigational site, precluding enrollment of additional subjects, or withdrawing their approval of the trial;
premature discontinuation of study participants from clinical trials or missing data at a level that impacts study integrity;
failure to manufacture or release sufficient quantities of our product candidates or placebo or failure to obtain sufficient quantities of active comparator medications for our clinical trials, if applicable, that in each case meet our and global quality standards for use in clinical trials;
inability to monitor patients adequately during or after treatment; or
inappropriate unblinding of trial results.

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

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


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

In addition, the FDA’s, the competent authorities of the EU Member States’, the EMA’s, the European Commission’s and other comparable regulatory authorities’ policies with respect to clinical trials may change and additional government regulations may be enacted. For instance, the regulatory landscape related to clinical trials in the EU recently evolved. The EU Clinical Trials Regulation, or CTR, which was adopted in April 2014 and repeals the EU Clinical Trials Directive, became applicable on January 31, 2022. The CTR allows sponsors to make a single submission to both the competent authority and an ethics committee in each EU Member State, leading to a single decision for each EU Member State. The assessment procedure of the CTA has been harmonized as well, including a joint assessment by all EU Member States concerned, and a separate assessment by each EU Member State with respect to specific requirements related to its own territory, including ethics rules. Each EU Member State’s decision is communicated to the sponsor via the centralized EU portal. Once the CTA is approved, clinical study development may proceed. The CTR foresees a three-year transition period. The extent to which ongoing and new clinical trials will be governed by the CTR varies. For clinical trials whose CTA was made under the Clinical Trials Directive before January 31, 2022, the Clinical Trials Directive will continue to apply on a transitional basis for three years. Additionally, sponsors may still choose to submit a CTA under either the Clinical Trials Directive or the CTR until January 31, 2023 and, if authorized, those will be governed by the Clinical Trials Directive until January 31, 2025. By that date, all ongoing trials will become subject to the provisions of the CTR. Compliance with the CTR requirements by us and our third-party service providers, such as CROs, may impact our developments plans.

It is currently unclear to what extent the United Kingdom, or UK, will seek to align its regulations with the E.U. The UK regulatory framework in relation to clinical trials is derived from existing E.U. legislation (as implemented into UK law, through secondary legislation).

On January 17, 2022, the UK Medicines and Healthcare products Regulatory Agency, or MHRA, launched an eight-week consultation on reframing the UK legislation for clinical trials. The consultation closed on March 14, 2022 and aims to streamline clinical trials approvals, enable innovation, enhance clinical trials transparency, enable greater risk proportionality, and promote patient and public involvement in clinical trials. The outcome of the consultation will be closely watched and will determine whether the UK chooses to align with the regulation or diverge from it to maintain regulatory flexibility. A decision by the UK not to closely align its regulations with the new approach that will be adopted in the EU may have an effect on the cost of conducting clinical trials in the UK as opposed to other countries and/or make it harder to seek a marketing authorization in the EU for our product candidates on the basis of clinical trials conducted in the UK.

If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies governing clinical trials, our development plans may be impacted.

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

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


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

Furthermore, any negative results or new safety signals we may report in clinical trials of our product candidates may make it difficult or impossible to recruit and retain patients in other clinical trials we are conducting or to resume enrolling patients once a paused clinical trial has been resumed. For example, in February 2021, we reported that we voluntarily paused dosing in our clinical trials for batoclimab due to elevated total cholesterol and LDL levels observed in some patients treated with batoclimab. These results may make it more difficult to recruit and retain patients for clinical trials in the future, including our ongoing and planned Phase 3 trials in MG and TED. Similarly, negative results reported by our competitors about their drug candidates may negatively affect patient recruitment in our clinical trials. Also, marketing authorization of competitors in this same class of drugs may impair our ability to enroll patients into our clinical trials, delaying or potentially preventing us from completing recruitment of one or more of our trials.

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

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

Success in nonclinical testing and early clinical trials does not ensure that later clinical trials will be successful, and we cannot be sure that the results of later clinical trials will replicate the results of prior nonclinical testing and clinical trials. In addition, preclinical testing may not adequately uncover drug side effects. In particular, we cannot assure you that the reductions in IgG antibodies that we have observed to date in our Phase 1 and Phase 2 clinical trials of batoclimab will be observed in any future clinical trials. Likewise, promising results in interim analyses or other preliminary analyses do not ensure that the clinical trial as a whole will be successful and lack statistical significance, which further limits the reliability of such data. A number of companies in the pharmaceutical industry, including biotechnology companies, have suffered significant setbacks in, or the discontinuation of, clinical trials, even after promising results in earlier nonclinical studies or clinical trials. These setbacks have been caused by, among other things, nonclinical findings observed while clinical trials were underway and safety or efficacy observations in clinical trials.

As previously disclosed, we voluntarily paused dosing in our early phase clinical studies of batoclimab to evaluate treatment-induced elevations in total cholesterol and LDL levels observed in some trial subjects. Our failure to successfully complete our clinical trials of batoclimab and to demonstrate the efficacy and safety necessary to obtain regulatory approval to market batoclimab would significantly harm our business.

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

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

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

Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the approvability or commercialization of the particular product candidate or product and our business in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular drug, product candidate or our business. If the top-line data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for and commercialize batoclimab, IMVT-1402 or any future product candidate, our business, operating results, prospects or financial condition may be harmed.

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

Our product candidates, batoclimab and IMVT-1402, are novel therapeutic antibodies and their potential therapeutic benefits are unproven. While results from animal studies of IMVT-1402 show potentially clinically meaningful reductions in IgG with minimal or no impact on levels of albumin and LDL and early clinical trials of batoclimab have shown meaningful reductions in IgG antibody levels in healthy volunteers and patients, batoclimab and/or IMVT-1402 may not demonstrate in patients any or all of the pharmacologic or clinical benefits we believe they may possess. IMVT-1402 has shown promising data in an exploratory study in cynomolgus monkeys, but these results may not translate to people. We have not yet succeeded and may never succeed in demonstrating efficacy and safety for our product candidates in large-scale, pivotal clinical trials or in obtaining marketing approval thereafter for any indication. Results from our early-stage clinical trials are not necessarily predictive of the results of our planned clinical trials. If results from our Phase 1 and Phase 2 clinical trials cannot be replicated, or if the increase in total cholesterol and LDL levels or total albumin reductions observed in our Phase 2 clinical trial of batoclimab cannot be mitigated, we may be unable to successfully develop, obtain regulatory approval for and commercialize batoclimab for the treatment of MG, TED, CIDP, Graves’ Disease and WAIHA or any other autoimmune indication. If we are unsuccessful in our development efforts, we may not be able to advance the development of or commercialize our product candidates, raise capital, expand our business or continue our operations.

If we are not able to obtain required regulatory approvals, we will not be able to commercialize batoclimab, IMVT-1402 or any future product candidate, and our ability to generate product revenue will be impaired.

Batoclimab, IMVT-1402 and any future product candidate that we may develop, as well as the activities associated with their development and commercialization, including their design, research, testing, manufacture, safety, efficacy, recordkeeping, labeling, packaging, storage, approval, advertising, promotion, sale and distribution are subject to comprehensive regulation by the FDA and other regulatory agencies in the U.S. and by similar regulatory authorities outside the U.S. Failure to obtain marketing approval for, and thus commercialize any product candidate, could negatively impact our ability to generate any revenue from product sales.

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

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

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

Batoclimab and IMVT-1402 are antibody proteins that could cause an immune response in patients, resulting in the creation of harmful or neutralizing antibodies against these therapeutic proteins, preventing or limiting regulatory approval or our ability to commercialize our product candidates.

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

We have in-licensed the rights to batoclimab and IMVT-1402 in limited territories. Any adverse developments that occur during any clinical trials or manufacturing conducted by third parties, including HanAll, in other jurisdictions may affect our ability to obtain regulatory approval or commercialize our product candidates.

We have in-licensed the right to develop, manufacture and commercialize batoclimab and certain back-up and next-generation antibodies (including IMVT-1402) in the Licensed Territory. HanAll or any of its sublicensees or collaborators, over which we have no control, has the right to develop, manufacture and commercialize these product candidates in geographies outside of our Licensed Territory. If an impact to the characterization of the safety profile occurs in studies conducted by HanAll or third parties in other jurisdictions outside of our Licensed Territory, the FDA or other foreign regulatory authorities may delay, limit or deny approval of these product candidates or require us to conduct additional clinical trials as a condition to marketing approval, which would increase our costs and time to market. If we receive FDA or foreign regulatory authority approval for batoclimab or IMVT-1402 and a new or serious safety issue is identified in connection with clinical trials conducted by third parties in other jurisdictions outside of our Licensed Territory, the FDA or foreign regulatory authority may withdraw their approval or restrict our ability to market and sell our products or may require additional testing or evaluation. In addition, treating physicians may be less willing to administer our product candidates due to concerns over such AEs, which would limit our ability to successfully commercialize these product candidates. In addition, issues may arise in connection with the manufacturing process for batoclimab or IMVT-1402 utilized by HanAll or any of its sublicensees or collaborators, which could affect our ability to obtain regulatory approval for or commercialize these product candidates.

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

The markets for autoimmune disease therapies are competitive and are characterized by significant technological development and new product introduction. For example, there are several large and small pharmaceutical companies focused on delivering therapeutics for our targeted autoimmune disease indications, including MG, TED, CIDP, Graves’ Disease and WAIHA. We anticipate that, if we obtain regulatory approval of any of our product candidates, we will face significant competition from other approved therapies or drugs that become available in the future for the treatment of our target indications. If approved, our product candidates may also compete with unregulated, unapproved and off-label treatments. Even if a biosimilar product is less effective than our product candidates, a less effective biosimilar may be more quickly adopted by physicians and patients than our competing product candidates based upon cost or convenience. Our product candidates, if approved, are expected to present a novel therapeutic approach for MG, TED, CIDP, Graves’ Disease and WAIHA and other targeted indications and will have to compete with existing therapies, some of which are widely known and accepted by physicians and patients. To compete successfully in this market, we will have to demonstrate that the relative cost, safety and efficacy of our product, if approved, provide an attractive alternative to existing and other new therapies to gain a share of some patients’ discretionary budgets and to gain physicians’ attention within their clinical practices. Some of the companies that may offer competing products also have a broad range of other product offerings, large direct sales forces and long-term customer relationships with our target physicians, which could inhibit our market penetration efforts. Such competition could lead to reduced market share for our product candidates and contribute to downward pressure on the pricing of our product candidates, which could harm our business, financial condition, operating results and prospects.

We expect to face intense competition from other biopharmaceutical companies who are developing agents for the treatment of autoimmune diseases, including multiple agents which are in the same class as batoclimab or IMVT-1402. We are aware of several FcRn inhibitors that are in clinical development. These include, efgartigimod (argenx SE), nipocalimab (Johnson & Johnson) and rozanolixizumab (UCB). In December 2021, the FDA approved VYVGART™ (efgartigimod alfa-fcab) for the treatment of gMG in adults who test positive for the anti-acetylcholine receptor (AChR) antibody. VYVGART™ represents the first-and-only FDA-approved neonatal Fc receptor blocker, and the first approved therapy designed to reduce pathogenic IgGs, an underlying driver of gMG.

We also expect to face competition from agents with different mechanisms of action. In January 2020, the FDA approved Horizon Therapeutics’ Tepezza (teprotumumab), an anti-IGF-1R antibody, for the treatment of TED. The most commonly prescribed first-line agents for the treatment of MG are acetylcholinesterase inhibitors, such as pyridostigmine, which are marketed by several manufacturers of generic medicines. Intravenous immunoglobulin (“IVIg”) is also routinely used for patients with MG and CIDP. Eculizumab (marketed by AstraZeneca), an antibody inhibitor of the C5 protein, was approved in 2017 for the treatment of generalized MG in patients who are positive for anti-acetylcholine receptor antibodies. The first line of treatment for patients with TED or WAIHA is generally immunosuppressive therapy, including high doses of corticosteroids. Other broad immunosuppressive drugs, such as cyclosporine, cyclophosphamide, mycophenolate mofetil and azathioprine, are used when patients do not respond adequately to corticosteroids. Rituximab (Roche), a monoclonal antibody that binds to an antigen specific to antibody-producing B cells, may also be used as a treatment for TED, WAIHA and other IgG-mediated autoimmune diseases. Johnson & Johnson is developing its hypersialylated IVIg, M254, in a variety of autoimmune indications. Other product candidates in development for the treatment of MG include zilucoplan (UCB), a peptide inhibitor of C5, and inebilizumab (Horizon Therapeutics), a CD19-targeted humanized monoclonal antibody, both of which are currently in Phase 3 trials. In April 2022, AstraZeneca announced that Ultomiris (Ravulizumab-cwvz), a complement inhibitor indicated for the treatment of adult patients with paroxysmal nocturnal hemoglobinuria, had been approved in the U.S. for the treatment of adult patients with gMG who are AChR antibody-positive.

A Phase 2 investigator-initiated study of ibrutinib (AbbVie), a BTK inhibitor, in steroid-refractory WAIHA is ongoing. Annexon Biosciences initiated a Phase 2 trial for WAIHA in 2021 for ANX005, an antibody inhibitor of the C1q protein.

Many of our existing or potential competitors have substantially greater financial, technical and human resources than we do and significantly greater experience in the discovery and development of product candidates, as well as in obtaining regulatory approvals of those product candidates in the U.S. and in foreign countries. Many of our current and potential future competitors also have significantly more experience commercializing drugs that have been approved for marketing. Mergers and acquisitions in the pharmaceutical and biotechnology industries could result in even more resources being concentrated among a smaller number of our competitors. Competition may reduce the number and types of patients available to us to participate in clinical trials because some patients who might have opted to enroll in our trials may instead opt to enroll in a trial being conducted by one of our competitors.

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Due to varying regulatory requirements in certain foreign countries, there are many more products and procedures available for use to treat autoimmune diseases in some international markets than are approved for use in the U.S. In certain international markets, there are also fewer limitations on the claims that our competitors can make about the effectiveness of their products and the manner in which they can market their products. As a result, we expect to face more competition in these markets than in the U.S.

Our ability to compete successfully will depend largely on our ability to:

develop and commercialize therapies in our target indications that are superior to other products in the market;
demonstrate through our clinical trials that batoclimab, IMVT-1402 or any future product candidate is differentiated from existing and future therapies;
attract qualified scientific, product development, manufacturing and commercial personnel;
obtain patent or other proprietary protection for batoclimab, IMVT-1402 and any future product candidates;
obtain required regulatory approvals, including approvals to market batoclimab, IMVT-1402 or any future product candidate we develop, in ways that are differentiated from existing and future products and treatments;
have commercial quantities of any approved product manufactured at acceptable cost and quality levels and in compliance with FDA and other regulatory requirements;
successfully commercialize batoclimab, IMVT-1402 or any future product candidate, if approved;
obtain coverage and adequate reimbursement from, and negotiate competitive pricing with, third-party payors and/or competent authorities;
successfully collaborate with pharmaceutical companies in the discovery, development and commercialization of new therapies; and
avoid regulatory exclusivities or patents held by competitors that may inhibit our products’ entry to the market.

The availability of our competitors’ products could limit the demand and the price we are able to charge for any product candidate we develop. The inability to compete with existing or subsequently introduced treatments would have an adverse impact on our business, financial condition and prospects.

Additional time may be required to obtain marketing authorizations for pre-filled syringe presentations of batoclimab or IMVT-1402 because it would be subject to regulation as a combination product.

Combination products are therapeutic and diagnostic products that combine drugs, devices and/or biological products. A pre-filled syringe or auto injector presentation of our product candidates would be considered a combination product that requires coordination within the FDA and in similar foreign regulatory agencies for review of its device and biologic components. Although the FDA and similar foreign regulatory agencies have systems in place for the review and approval of combination products such as ours, we may experience delays in the development and commercialization of these product candidates due to uncertainties in the product development and approval process.


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The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable, and even if we obtain approval for a product candidate in one country or jurisdiction, we may never obtain approval for or commercialize it in any other jurisdiction, which would limit our ability to realize our full market potential.

Prior to obtaining approval to commercialize a product candidate in any jurisdiction, we or our collaborators must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA or comparable foreign regulatory agencies, that such product candidate is safe and effective for its intended use. Results from nonclinical studies and clinical trials can be interpreted in different ways. Even if we believe the nonclinical or clinical data for a product candidate are promising, such data may not be sufficient to support approval by the FDA and other regulatory authorities. In order to market any products in any particular jurisdiction, we must establish and comply with numerous and varying regulatory requirements on a country-by-country basis regarding safety and efficacy. Approval by the FDA does not ensure approval by regulatory authorities in any other country or jurisdiction outside the U.S. In addition, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries, and regulatory approval in one country does not guarantee regulatory approval in any other country. Approval processes vary among countries and can involve additional product testing and validation, as well as additional administrative review periods. Seeking regulatory approval could result in difficulties and costs for us and require additional nonclinical studies or clinical trials, which could be costly and time consuming. We do not have any product candidates approved for sale in any jurisdiction, including in international markets. If we fail to comply with regulatory requirements in international markets or to obtain and maintain required approvals, or if regulatory approvals in international markets are delayed, our target market will be reduced and our ability to realize the full market potential of any product we develop will be unrealized.

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.

Quality management plays an essential role in contract manufacturing of drugs or drug products, conducting clinical trials, preventing defects, improving our product candidates and services and assuring the safety and efficacy of our product candidates. Our goal is to maintain a robust quality management program which includes the following broad pillars of quality:

monitoring and assuring regulatory compliance for clinical trials, manufacturing and testing of good practice (“GxP”) products;
monitoring and providing oversight of all GxP suppliers (e.g., contract development manufacturing organizations and CROs);
establishing and maintaining an integrated, robust quality management system for clinical, manufacturing, supply chain and distribution operations; and
cultivating a proactive, preventative quality culture and employee and supplier training to ensure quality.

Our future success depends on our ability to maintain and continuously improve our quality management program. A quality or safety issue may result in adverse inspection reports, warning letters, monetary sanctions, injunction to halt manufacture and distribution of drugs or drug products, civil or criminal sanctions, costly litigation, refusal of a government to grant approvals and licenses, restrictions on operations or withdrawal of existing approvals and licenses. An inability to address a quality or safety issue in an effective and timely manner may also cause negative publicity or a loss of patient confidence in us or our future products, which may result in difficulty in successfully launching product candidates and the loss of potential future sales, which could have an adverse effect on our business, financial condition and results of operations.


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Even if we obtain regulatory approval for a product candidate, we will still face extensive ongoing quality and regulatory compliance requirements and our product may face future development and quality or regulatory compliance difficulties.

Any product candidate for which we obtain marketing approval will be subject to extensive and ongoing regulatory requirements, including for the manufacturing processes, post-approval clinical data, labeling, packaging, distribution, AE reporting, storage, recordkeeping, conduct of potential post-market studies and post-market commitment and requirements, export, import and advertising and promotional activities for such product, among other things, by the FDA and other regulatory authorities. These requirements include submissions of safety and other post-marketing information and reports, establishment of registration and drug listing requirements, continued compliance with current good manufacturing practice (“cGMP”) requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of drug product samples to physicians, recordkeeping and GCP requirements for any clinical trials that we conduct post-approval. Even if marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses for which the product may be marketed or to the conditions of approval or the FDA or other foreign regulatory authorities may require that contraindications, warnings or precautions, including in some cases, a boxed warning be included in the product labeling, which could limit sales of the product. Regulatory authorities closely regulate the post-approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the provisions of the approved labeling. Although the FDA and other regulatory agencies do not regulate a physician’s choice of drug treatment made in the physician’s independent medical judgment, regulatory authorities impose stringent restrictions on manufacturers’ communications regarding off-label use, and if we do not market our products for their approved indications, we may be subject to enforcement action for off-label marketing. Violations of the Federal Food, Drug, and Cosmetic Act in the U.S. and other comparable regulations in foreign jurisdictions relating to the promotion of prescription drugs may lead to enforcement actions and investigations by the FDA, U.S. Department of Justice, State Attorneys General and other foreign regulatory agencies alleging violations of U.S. federal and state health care fraud and abuse laws, as well as state consumer protection laws and comparable laws in foreign jurisdictions.

In addition, later discovery of previously unknown AEs or other problems with our product, manufacturers or manufacturing processes, or failure to comply with regulatory requirements may yield various results, including:

restrictions on the manufacture of such product;
restrictions on the labeling or marketing of such product, including a “black box” warning or contraindication on the product label or communications containing warnings or other safety information about the product;
restrictions on product distribution or use;
requirements to conduct post-marketing studies or clinical trials, or any regulatory holds on our clinical trials;
requirement of a REMS or additional risk management plans (or equivalent outside the U.S.);
Warning or Untitled Letters;
withdrawal of the product from the market;
recall of a product;
fines, restitution or disgorgement of profits or revenues;
suspension or withdrawal of marketing approvals;
refusal to permit the import or export of such product;
product seizure; or
lawsuits, injunctions or the imposition of civil or criminal penalties.

The FDA and other foreign regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of batoclimab, IMVT-1402 or any future product candidate. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action, either in the U.S. or abroad. If we are slow or unable to adapt to changes in existing requirements or to the adoption of new requirements or policies or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained.

For example, certain policies of the current U.S. administration may impact our business and industry. It is difficult to predict how these policies will be implemented and the extent to which they will impact the FDA’s ability to exercise its regulatory authority. If these policies impose constraints on the FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted.
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Non-compliance by us or any future collaborator with regulatory requirements, including safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population can also result in significant financial penalties.

Even if we receive marketing approval for batoclimab, IMVT-1402 or any future product candidate, it may fail to achieve market acceptance by physicians, patients, third-party payors or others in the medical community necessary for commercial success.

Even if we receive marketing approval for a product candidate, it may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical community. If it does not achieve an adequate level of acceptance, we may not generate significant product revenue or become profitable. The degree of market acceptance of any product candidate, if approved for commercial sale, will depend on a number of factors, including but not limited to:

the safety, efficacy, risk-benefit profile and potential advantages, including in the case of batoclimab subcutaneous delivery method, compared to alternative, competing or existing treatments, which physicians may perceive to be adequately effective for some or all patients;
limitations or warnings contained in the labeling approved for our product candidates by the FDA or other applicable foreign regulatory authorities;
any restrictions on the use of the product candidate and the prevalence and severity of any side effects;
the content of the approved product label;
the effectiveness of sales and marketing efforts;
the cost of treatment in relation to alternative treatments, including any biosimilar treatments;
our ability to offer our products for sale at competitive prices;