imvt-20221231

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended December 31, 2022


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

Commission File Number 001-38906

IMMUNOVANT, INC.

(Exact name of Registrant as specified in its Charter)


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

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

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

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange
on which registered

Common Stock, $0.0001 par value per share

IMVT

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of January 27, 2023, there were 130,245,335 shares of the Registrant’s common stock, $0.0001 par value per share, outstanding.

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IMMUNOVANT, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2022

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		Page

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	4
	Condensed Consolidated Balance Sheets as of December 31 , 2022 and March 31, 2022	4
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31 , 2022 and 2021	5
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended December 31 , 2022 and 2021	6
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Ni ne Months Ended December 31 , 2022 and 2021	7
	Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31 , 2022 and 2021	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	87
Item 3.	Defaults Upon Senior Securities	87
Item 4.	Mine Safety Disclosures	87
Item 5.	Other Information	87
Item 6.	Exhibits	88
SIGNATURES		89

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)


	December 31, 2022		March 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	432,608	$	493,817
Accounts receivable	704		12,229
Prepaid expenses and other current assets	21,110		6,885


Total current assets	454,422		512,931
Operating lease right-of-use assets	1,459		2,303
Property and equipment, net	362		330

Total assets	$	456,243	$	515,564
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	14,004	$	18,629
Accrued expenses	26,050		24,746
Current portion of operating lease liabilities	1,205		1,145


Total current liabilities	41,259		44,520
Operating lease liabilities, net of current portion	306		1,219
Total liabilities	41,565		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 December 31, 2022 and March 31, 2022	—		—
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized, no shares issued and outstanding at December 31, 2022 and March 31, 2022	—		—
Common stock, par value $0.0001 per share, 500,000,000 shares authorized, 129,260,254 shares issued and outstanding at December 31, 2022 and 500,000,000 shares authorized, 116,482,899 shares issued and outstanding at March 31, 2022	13		12
Additional paid-in capital	920,197		824,796
Accumulated other comprehensive income	1,383		404
Accumulated deficit	(506,915)		(355,387)
Total stockholders’ equity	414,678		469,825
Total liabilities and stockholders’ equity	$	456,243	$	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 December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Operating expenses:
Research and development	$	42,252	$	29,756	$	108,420	$	69,822
Acquired in-process research and development	10,000		—		10,000		—
General and administrative	11,775		11,515		35,597		38,984
Total operating expenses	64,027		41,271		154,017		108,806

Interest income, net	(2,944)		—		(4,098)		—
Other expense	1,757		114		609		825
Loss before provision (benefit) for income taxes	(62,840)		(41,385)		(150,528)		(109,631)
Provision (benefit) for income taxes	387		—		1,000		(72)
Net loss	$	(63,227)	$	(41,385)	$	(151,528)	$	(109,559)
Net loss per common share – basic and diluted	$	(0.49)	$	(0.36)	$	(1.26)	$	(1.02)
Weighted-average common shares outstanding – basic and diluted	128,574,190		115,025,191		120,665,299		107,447,745

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

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IMMUNOVANT, INC.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited, in thousands)


	Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Net loss	$	(63,227)	$	(41,385)	$	(151,528)	$	(109,559)
Other comprehensive (loss) income:
Foreign currency translation adjustments	2,620		(23)		979		717
Total other comprehensive (loss) income	2,620		(23)		979		717
Comprehensive loss	$	(60,607)	$	(41,408)	$	(150,549)	$	(108,842)

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

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IMMUNOVANT, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited, in thousands except share data)


	Series A preferred stock			Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Total stockholders’ equity
	Shares	Amount		Shares	Amount
Balance at March 31, 2022	10,000	$	—	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, 2022	10,000	$	—	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, 2022	10,000	$	—	116,614,088	$	12	$	840,661	$	(1,237)	$	(443,688)	$	395,748
Issuance of common stock upon underwritten offering	—	—		12,500,000	1		70,227		—		—		70,228

Stock options exercised and restricted stock units vested and settled	—	—		146,166	—		403		—		—		403
Capital contribution – stock-based compensation	—	—		—	—		50		—		—		50
Stock-based compensation	—	—		—	—		8,856		—		—		8,856
Foreign currency translation adjustments	—	—		—	—		—		2,620		—		2,620
Net loss	—	—		—	—		—		—		(63,227)		(63,227)
Balance at December 31, 2022	10,000	$	—	129,260,254	$	13	$	920,197	$	1,383	$	(506,915)	$	414,678


	Series A preferred stock			Common stock			Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Total stockholders’ equity
	Shares	Amount		Shares	Amount
Balance at March 31, 2021	10,000	$	—	97,971,243	$	10	$	590,425	$	(298)	$	(198,657)	$	391,480
Restricted stock units vested and settled	—	—		6,352	—		—		—		—		—
Capital contribution – stock-based compensation	—	—		—	—		41		—		—		41
Capital contribution – expenses allocated from Roivant Sciences Ltd.	—	—		—	—		91		—		—		91
Stock-based compensation	—	—		—	—		3,820		—		—		3,820
Foreign currency translation adjustments	—	—		—	—		—		571		—		571
Net loss	—	—		—	—		—		—		(30,471)		(30,471)
Balance at June 30, 2021	10,000	$	—	97,977,595	$	10	$	594,377	$	273	$	(229,128)	$	365,532
Issuance of common stock upon investment by Roivant Sciences Ltd.	—	—		17,021,276	2		199,998		—		—		200,000
Capital contribution – stock-based compensation	—	—		—	—		692		—		—		692
Capital contribution – expenses allocated from Roivant Sciences Ltd.	—	—		—	—		38		—		—		38
Stock-based compensation	—	—		—	—		7,669		—		—		7,669
Foreign currency translation adjustments	—	—		—	—		—		169		—		169
Net loss	—	—		—	—		—		—		(37,703)		(37,703)
Balance at September 30, 2021	10,000	$	—	114,998,871	$	12	$	802,774	$	442	$	(266,831)	$	536,397
Restricted stock units vested and settled	—	—		110,962	—		—		—		—		—
Capital contribution – stock-based compensation	—	—		—	—		205		—		—		205
Stock-based compensation	—	—		—	—		9,954		—		—		9,954
Foreign currency translation adjustments	—	—		—	—		—		(23)		—		(23)
Net loss	—	—		—	—		—		—		(41,385)		(41,385)
Balance at December 31, 2021	10,000	$	—	115,109,833	$	12	$	812,933	$	419	$	(308,216)	$	505,148

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

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IMMUNOVANT, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)


	Nine Months Ended December 31,
	2022		2021
Cash flows from operating activities
Net loss	$	(151,528)	$	(109,559)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	24,750		22,381
Depreciation on property and equipment	139		87
Non-cash lease expense	844		831




Changes in operating assets and liabilities:
Accounts receivable	11,762		(7,918)
Prepaid expenses and other current assets	(14,297)		4,109


Accounts payable	(4,495)		1,383
Accrued expenses	1,278		16,188


Operating lease liabilities	(853)		(658)
Net cash used in operating activities	(132,400)		(73,156)
Cash flows from investing activities
Purchase of property and equipment	(171)		(136)
Net cash used in investing activities	(171)		(136)
Cash flows from financing activities
Proceeds from issuance of common stock upon underwritten offering	70,500		—
Payment of offering costs	(272)		—
Proceeds from stock options exercised	424		—
Proceeds from investment by Roivant Sciences Ltd.	—		200,000
Capital contributions	—		129
Net cash provided by financing activities	70,652		200,129
Effect of exchange rate changes on cash and cash equivalents	710		20
Net change in cash and cash equivalents	(61,209)		126,857
Cash and cash equivalents – beginning of period	493,817		400,146
Cash and cash equivalents – end of period	$	432,608	$	527,003

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 batoclimab, formerly referred to as IMVT-1401, and IMVT-1402, both of which are novel, fully human, monoclonal antibodies that target the neonatal fragment crystallizable receptor (“FcRn”). 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 December 31, 2022, the Company’s cash and cash equivalents totaled $432.6 million and its accumulated deficit was $506.9 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 December 31, 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, respectively. 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”).

In the opinion of management, the unaudited condensed consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair statement of results for the interim periods. The results for the three and nine months ended December 31, 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.

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[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 December 31, 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 December 31, 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 accredited financial institutions 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 December 31, 2022, cash and cash equivalents included $339.7 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.

[F] Research and Development Expenses

Research and development costs with no alternative future use are expensed as incurred. Research and development expenses primarily consist of employee-related costs 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.

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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] Acquired In-Process Research and Development Expenses

Acquired in-process research and development (“IPR&D”) expenses include payments made or due in connection with license agreements upon the achievement of development and regulatory milestones.

The Company evaluates in-licensed agreements for IPR&D projects to determine if it meets the definition of a business and thus should be accounted for as a business combination. If the in-licensed agreement for IPR&D does not meet the definition of a business and the assets have not reached technological feasibility and therefore have no alternative future use, the Company expenses payments made under such license agreements as acquired in-process research and development expenses in its condensed consolidated statements of operations. Payments for milestones achieved and payments for a product license prior to regulatory approval of the product are expensed in the period incurred. Payments made in connection with regulatory and sales-based milestones will be capitalized and amortized to cost of product sales over the remaining useful life of the asset.

[H] 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.

[I] 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:


	Nine Months Ended December 31,
	2022	2021
Preferred stock as converted	10,000	10,000
Options	11,277,282	6,703,576
Restricted stock units	4,528,774	3,536,809
Total	15,816,056	10,250,385

[J] 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 $432.5 million (after an aggregate amount of $20.0 million of milestone achievements as of December 31, 2022) 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.

In the fiscal 2023 third quarter, the Company achieved its second development and regulatory milestone under the HanAll Agreement of $10.0 million, which was recorded as acquired in-process research and development expenses and accounts payable in the accompanying unaudited condensed consolidated statements of operations and balance sheet, respectively, as of, and for the three and nine months ended December 31, 2022.

As of December 31, 2022, the Company does not have any additional 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 December 31, 2022, the remaining minimum purchase commitment related to this agreement is estimated to be approximately $33.1 million.

Note 4 — Accrued Expenses

Accrued expenses consist of the following (in thousands):


	December 31, 2022		March 31, 2022
Research and development expenses	$	18,220	$	18,196

Accrued bonuses	5,345		4,456
Legal and other professional fees	283		679
Other expenses	2,202		1,415
Total accrued expenses	$	26,050	$	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 nine months ended December 31, 2022, the Company was charged $0 and $0.4 million, respectively, under the Services Agreements, which are included in the accompanying unaudited condensed consolidated statements of operations. For the three and nine months ended December 31, 2021, the Company was charged $0.2 million and $0.3 million, respectively, under the Services Agreements, of which $0 and $0.1 million, respectively, 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 December 31, 2022 and 2021, the Company incurred $0.3 million in each period in rent expense under these operating leases. During the nine months ended December 31, 2022 and 2021, the Company incurred $0.9 million in each period in rent expense under these operating leases.

RSL Share Purchases

In October 2022, RSL purchased 416,667 shares of the Company’s common stock pursuant to an underwritten offering on the same terms as other investors in the offering. See Note 7 – Stockholders’ Equity.

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 statement of operations for the nine months ended December 31, 2021.

Note 6 — Income Taxes

The Company’s effective tax rates were (0.62)% and 0% for the three months ended December 31, 2022 and 2021, respectively, and (0.66)% and 0.07% for the nine months ended December 31, 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 December 31, 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 December 31, 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 December 31, 2022.

Common Stock

As of December 31, 2022, the Company authorized 500,000,000 shares of common stock, par value $0.0001 per share and has 129,260,254 shares of common stock issued and outstanding. In October 2022, the Company completed an underwritten offering of 12,500,000 shares of its common stock (including 416,667 shares of common stock purchased by RSL) at an offering price 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.

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


	December 31, 2022	March 31, 2022
Conversion of Series A preferred stock	10,000	10,000
Options outstanding	11,277,282	8,018,731
Restricted stock units outstanding	4,836,535	2,816,197
Equity awards available for future grants	1,286,372	2,188,860
Total	17,410,189	13,033,788

The reserved shares underlying restricted stock units above include 307,761 restricted stock units that vested but were not settled as of December 31, 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 December 31, 2022, options to purchase 8,355,667 shares of common stock and 4,528,774 restricted stock units (“RSUs”) were outstanding under the 2019 Plan and 1,286,372 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 December 31, 2022, 2,921,615 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, 2022	8,018,731	$	8.48	8.52	$	60
Granted	3,622,676	5.60
Exercised	(57,678)	7.35
Forfeited	(275,038)	6.31
Expired	(31,409)	8.69
Balance - December 31, 2022	11,277,282	$	7.61	8.34	$	114,573
Exercisable - December 31, 2022	4,607,462	$	8.86	7.28	$	41,192

The aggregate intrinsic value is calculated as the difference between the exercise price of all outstanding and exercisable stock options and the fair value of the Company’s common stock as of December 31, 2022. The intrinsic value of stock options exercised for the nine months ended December 31, 2022 was $0.2 million. There were no stock options exercised during the nine months ended December 31, 2021. The stock options granted during the nine months ended December 31, 2022 had a weighted-average grant date fair value per share of $4.22.

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


	Three Months Ended December 31,		Nine Months Ended December 31,
	2022	2021	2022	2021
Risk-free interest rate	3.85% - 4.21%	1.17% - 1.36%	2.74% - 4.21%	0.80% - 1.36%
Expected term, in years	6.11	6.11	6.11	6.03 - 6.11
Expected volatility	89.37% - 92.43%	86.74% - 87.78%	87.12% - 92.43%	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 RSUs	Weighted- Average Grant Date Fair Value
Nonvested as of March 31, 2022	2,670,864	$	9.12
Issued	2,473,469	5.46
Vested	(383,109)	12.24
Forfeited	(232,450)	7.74
Nonvested as of December 31, 2022	4,528,774	$	6.92

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Stock-based Compensation Expense

For the three and nine months ended December 31, 2022 and 2021, stock-based compensation expense under the Company’s equity incentive plans was as follows (in thousands):


	Three Months Ended December 31,				Nine Months Ended December 31,
	2022		2021		2022		2021
Research and development expenses	$	4,137	$	4,797	$	11,556	$	8,602
General and administrative expenses	4,719		5,157		12,906		12,841
Total stock-based compensation	$	8,856	$	9,954	$	24,462	$	21,443

As of December 31, 2022, total unrecognized compensation expense related to non-vested stock options and RSUs was $38.2 million and $20.7 million, respectively, which is expected to be recognized over the remaining weighted-average service period of 2.71 years and 2.83 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 and $0.1 million was recorded for the three months ended December 31, 2022 and 2021, respectively, and $0.1 million and $0.4 million for the nine months ended December 31, 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 December 31, 2022 and 2021, the Company recorded $0.1 million and $0.1 million, respectively, and for the nine months ended December 31, 2022 and 2021, the Company recorded $0.3 million and $0.5 million, respectively, of stock-based compensation expense related to these RSUs. As of December 31, 2022, there was $0.1 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. As of December 31, 2022, in connection with this agreement, the Company has a remaining minimum obligation to Samsung of approximately $33.1 million, of which $1.1 million is expected to be paid during the fiscal year ending March 31, 2023, $13.7 million is expected to be paid during the fiscal year ending March 31, 2024 and $18.3 million is expected to be paid during the fiscal year ending March 31, 2026. During the three and nine months ended December 31, 2022, the Company recorded $1.2 million and $2.9 million, respectively, of research and development expenses related to the PSA, of which $1.8 million was paid as of December 31, 2022. See Note 3 - Material Agreements for additional details.

As of December 31, 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

2023 Inducement Plan

On February 1, 2023, the Company's Board of Directors approved the adoption of the 2023 Inducement Plan (the “Inducement Plan”), which is to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company (or following a bona fide period of non-employment) as a material inducement to such individuals’ entry into employment with the Company, pursuant to Nasdaq Listing Rule 5635(c)(4). The Company has reserved 5,000,000 shares of its common stock that may be issued under the Inducement Plan. The terms and conditions of the Inducement Plan are substantially similar to those of the 2019 Plan.

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 batoclimab, formerly referred to as IMVT-1401, and IMVT-1402, both of which are novel, fully human monoclonal antibodies that target the neonatal fragment crystallizable receptor (“FcRn”). 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 (“GD”). Based on strategic portfolio considerations, we have decided to preserve warm autoimmune hemolytic anemia (“WAIHA”) as a potential indication for IMVT-1402 and not pursue a WAIHA indication for batoclimab.

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 GD, 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 U.S. Food and Drug Administration (“FDA”) for batoclimab for the treatment of MG and, in August 2022, we received orphan drug designation from the European Commission for batoclimab for the 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

For IMVT-1402, our next generation FcRn inhibitor, we plan to initiate a Phase 1 trial 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.

In the fiscal 2023 first quarter, we initiated our Phase 3 pivotal trial of batoclimab as a treatment for MG. We expect top-line data from this trial to be available in the second half of calendar year 2024.

In the fiscal 2023 third quarter, we initiated our Phase 3 clinical program to evaluate batoclimab as a treatment for TED. We expect top-line results from this program to be available in the first half of calendar year 2025.

In the fiscal 2023 third quarter, we initiated a pivotal Phase 2b trial of batoclimab as a treatment for CIDP. We expect initial data from this trial to be available in the first half of calendar year 2024.

For GD, we plan to initiate a Phase 2 clinical trial to evaluate batoclimab in this indication in early calendar year 2023. We expect initial results from this trial to be available in the second half of calendar year 2023.

Based on strategic portfolio considerations, we have decided to preserve WAIHA as a potential indication for IMVT-1402 and not pursue a WAIHA indication for batoclimab.

COVID-19 Business Update

The COVID-19 pandemic continues to present global public health and economic challenges that may impact our business. Currently, we have not suffered significant adverse consequences as a result of the COVID-19 pandemic. However, the impact on our future operations and financial results will largely depend on future developments related to COVID-19, which are highly uncertain and cannot be accurately predicted, such as the continued emergence of new variants of COVID-19, the ultimate duration of the pandemic, the continuing impact of the pandemic on financial markets and the global economy, clinical trial sites and patients, travel restrictions and other preventative measures implemented in the United States and other countries, business closures or business disruptions and the effectiveness of actions taken in the United States and other countries to manage the pandemic, including the availability and effectiveness of vaccines, and vaccine booster shots.

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 in the Licensed Territory, pursuant to an assignment and assumption agreement between RSG and our wholly owned subsidiary, Immunovant Sciences GmbH (“ISG”), for an aggregate purchase price of $37.8 million.

Under the HanAll Agreement, the parties may choose to collaborate on a research program directed to the research and development of next generation FcRn inhibitors in accordance with an agreed plan and budget. We are obligated to reimburse HanAll for half of such research and development expenses incurred by HanAll, up to an aggregate reimbursement amount of $20.0 million. Intellectual property created by HanAll pursuant to this research program will be included in our license; intellectual property created by us pursuant to this research program will be included in HanAll’s license. As of December 31, 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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In the fiscal 2023 third quarter, we achieved our second development and regulatory milestone under the HanAll Agreement of $10.0 million, which was recorded as acquired in-process research and development expenses and accounts payable in the accompanying unaudited condensed consolidated statements of operations and balance sheet, respectively, as of, and for the three and nine months ended December 31, 2022. We will be responsible for future contingent payments and royalties, including up to an aggregate of $432.5 million (after an aggregate amount of $20.0 million of milestone achievements as of December 31, 2022) 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 remaining minimum purchase commitment related to this agreement is estimated to be approximately $33.1 million as of December 31, 2022. During the three and nine months ended December 31, 2022, we recorded $1.2 million and $2.9 million, respectively, of research and development expenses related to the PSA, of which $1.8 million was paid as of December 31, 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.

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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.

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;

•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 continue our ongoing Phase 3 trial of batoclimab as a treatment for MG, our Phase 3 clinical program to evaluate batoclimab for the treatment of TED and a pivotal Phase 2b trial of batoclimab as a treatment for CIDP. In addition, we recently announced plans to initiate a Phase 2 trial for GD 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.

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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.

Acquired In-Process Research and Development Expenses

Acquired in-process research and development expenses include payments made or due upon the achievement of certain development and regulatory milestones under the HanAll Agreement.

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 December 31, 2022 and 2021

The following table sets forth our results of operations for the three months ended December 31, 2022 and 2021 (in thousands):


	Three Months Ended December 31,
	2022		2021		Change
Operating expenses:
Research and development	$	42,252	$	29,756	$	12,496
Acquired in-process research and development	10,000		—		10,000
General and administrative	11,775		11,515		260
Total operating expenses	64,027		41,271		22,756
Interest income, net	(2,944)		—		(2,944)
Other expense	1,757		114		1,643
Loss before provision for income taxes	(62,840)		(41,385)		(21,455)
Provision for income taxes	387		—		387
Net loss	$	(63,227)	$	(41,385)	$	(21,842)

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Research and Development Expenses for the Three Months Ended December 31, 2022 and 2021

The following table summarizes the period-over-period changes in research and development expenses for the three months ended December 31, 2022 and 2021 (in thousands):


	Three Months Ended December 31,				Change
	2022		2021*		$
Batoclimab - Program-specific costs:
Neurology diseases	$	12,360	$	3,480	$	8,880
Endocrine diseases	10,388		5,544		4,844
Hematology diseases	116		3,021		(2,905)
Total Batoclimab - Program-specific costs	22,864		12,045		10,819
IMVT-1402	2,317		—		2,317
Unallocated costs:
Personnel-related expenses including stock-based compensation	12,552		9,362		3,190
Other	4,519		8,349		(3,830)
Total research and development expenses	$	42,252	$	29,756	$	12,496

___________

*Certain prior year amounts have been reclassified to conform to current year presentation.

Research and development expenses increased by $12.5 million, from $29.8 million for the three months ended December 31, 2021 to $42.3 million for the three months ended December 31, 2022.

Batoclimab program-specific research and development costs increased by $10.8 million, from $12.0 million for the three months ended December 31, 2021 to $22.9 million for the three months ended December 31, 2022. This increase reflected $6.3 million of upfront and start-up costs related to our Phase 2b trial for batoclimab as a treatment for CIDP, as well as contract manufacturing costs for process development and drug substance manufacturing in preparation for process performance qualification activities. Also contributing to the increase were $4.6 million of start-up costs for TED due to the initiation of our Phase 3 clinical program, and $2.5 million of ongoing Phase 3 clinical trial costs for MG. Partially offsetting these increases were lower contract manufacturing costs and clinical activities of $2.9 million in 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 December 31, 2022, we incurred $2.3 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 decreased by $0.6 million, from $17.7 million for the three months ended December 31, 2021 to $17.1 million for the three months ended December 31, 2022. This decrease reflected lower costs related to cross-indication clinical studies and clinical research costs of $3.8 million, primarily reflecting the Company’s shift to project-related activities to advance the clinical development of batoclimab and IMVT-1402 following the recent initiation of clinical trials in MG, TED and CIDP. These lower costs were offset by higher personnel-related expenses of $3.2 million, primarily reflecting higher headcount to support our strategic objectives as we resumed our clinical activities.

Acquired In-Process Research and Development Expenses for the Three Months Ended December 31, 2022 and 2021

During the three months ended December 31, 2022, acquired in-process research and development expenses were $10.0 million related to the achievement of a development and regulatory milestone for batoclimab in MG as specified in the HanAll Agreement. There were no acquired in-process research and development expenses for the three months ended December 31, 2021.

General and Administrative Expenses for the Three Months Ended December 31, 2022 and 2021

General and administrative expenses increased by $0.3 million, from $11.5 million for the three months ended December 31, 2021 to $11.8 million for the three months ended December 31, 2022. The increase was primarily related to higher personnel-related expenses and information technology costs, partially offset by lower legal and other professional fees.

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Results of Operations for the Nine Months Ended December 31, 2022 and 2021

The following table sets forth our results of operations for the nine months ended December 31, 2022 and 2021 (in thousands):


	Nine Months Ended December 31,
	2022		2021		Change
Operating expenses:
Research and development	$	108,420	$	69,822	$	38,598
Acquired in-process research and development	10,000		—		10,000
General and administrative	35,597		38,984		(3,387)
Total operating expenses	154,017		108,806		45,211
Interest income, net	(4,098)		—		(4,098)
Other expense	609		825		(216)
Loss before provision (benefit) for income taxes	(150,528)		(109,631)		(40,897)
Provision (benefit) for income taxes	1,000		(72)		1,072
Net loss	$	(151,528)	$	(109,559)	$	(41,969)

Research and Development Expenses for the Nine Months Ended December 31, 2022 and 2021

The following table summarizes the period-over-period changes in research and development expenses for the nine months ended December 31, 2022 and 2021 (in thousands):


	Nine Months Ended December 31,				Change
	2022		2021*		$
Batoclimab - Program-specific costs:
Neurology diseases	$	30,952	$	5,664	$	25,288
Endocrine diseases	17,212		19,784		(2,572)
Hematology diseases	77		6,906		(6,829)
Total Batoclimab - Program-specific costs	48,241		32,354		15,887
IMVT-1402	7,037		—		7,037
Unallocated costs:
Personnel-related expenses including stock-based compensation	35,608		21,921		13,687
Other	17,534		15,547		1,987
Total research and development expenses	$	108,420	$	69,822	$	38,598

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*Certain prior year amounts have been reclassified to conform to current year presentation.

Research and development expenses increased by $38.6 million, from $69.8 million for the nine months ended December 31, 2021 to $108.4 million for the nine months ended December 31, 2022.

Batoclimab program-specific research and development costs increased by $15.9 million, from $32.4 million for the nine months ended December 31, 2021 to $48.2 million for the nine months ended December 31, 2022. This increase reflected $16.0 million of upfront and start-up costs related to our Phase 3 trial for batoclimab as a treatment for MG and $9.3 million of upfront and start-up costs related to our Phase 2b trial of batoclimab as a treatment for CIDP, as well as higher contract manufacturing costs for process development and drug substance manufacturing in preparation for process performance qualification activities. Partially offsetting these increases were lower expenses in TED and WAIHA of $9.7 million, reflecting higher costs in the prior-year period from contract manufacturing, analyzing data and the program-wide data review following the voluntary pause in our clinical trials in February 2021, partially offset by costs related to the current-year period initiation of our Phase 3 clinical program for batoclimab as a treatment for TED.

For the nine months ended December 31, 2022, we incurred $7.0 million of research and development costs related to the development of IMVT-1402, primarily related to pre-clinical studies and contract manufacturing costs.

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Unallocated research and development costs increased by $15.7 million, from $37.4 million for the nine months ended December 31, 2021 to $53.1 million for the nine months ended December 31, 2022. This increase reflected higher personnel-related expenses of $13.7 million, primarily reflecting higher headcount and 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 $2.0 million, primarily reflecting activities to advance the clinical development of batoclimab and IMVT-1402 in current and potentially new indications.

Acquired In-Process Research and Development Expenses for the Nine Months Ended December 31, 2022 and 2021

During the nine months ended December 31, 2022, acquired in-process research and development expenses were $10.0 million related to the achievement of a development and regulatory milestone for batoclimab in MG as specified in the HanAll Agreement. There were no acquired in-process research and development expenses for the nine months ended December 31, 2021.

General and Administrative Expenses for the Nine Months Ended December 31, 2022 and 2021

General and administrative expenses decreased by $3.4 million, from $39.0 million for the nine months ended December 31, 2021 to $35.6 million for the nine months ended December 31, 2022. Lower financial advisory, legal and other professional fees were partially offset by higher personnel-related expenses and information technology costs.

Liquidity and Capital Resources

Sources of Liquidity

We had cash and cash equivalents of $432.6 million and $493.8 million as of December 31, 2022 and March 31, 2022, respectively. For the three months ended December 31, 2022 and 2021, we had net losses of $63.2 million and $41.4 million, respectively, and for the nine months ended December 31, 2022 and 2021, we had net losses of $151.5 million and $109.6 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 offering of 12,500,000 shares of our common stock (including 416,667 shares of common stock purchased by RSL) at an offering price of $6.00 per share, for net proceeds to us of approximately $70.2 million after deducting underwriting discounts and commissions and offering expenses.

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

Cash Flows

The following table sets forth a summary of our cash flows for the nine months ended December 31, 2022 and 2021 (in thousands):


	Nine Months Ended December 31,
	2022		2021
Net cash used in operating activities	$	(132,400)	$	(73,156)
Net cash used in investing activities	(171)		(136)
Net cash provided by financing activities	70,652		200,129

Operating Activities

For the nine months ended December 31, 2022, $132.4 million of cash was used in operating activities, primarily reflecting a net loss from operations for the year of $151.5 million and a net change in operating assets and liabilities of $6.6 million, partially offset by non-cash charges of $25.7 million. The non-cash charges consisted mainly of stock-based compensation of $24.8 million, reflecting the higher headcount and incentive equity awards as compared with the prior year. The change in operating assets and liabilities reflected $14.3 million of higher prepaid expenses and other current assets, driven primarily by payments related to clinical research activities in advance of ongoing and planned clinical trials. Accounts payable decreased $4.5 million, primarily reflecting the timing and level of payments related to contract manufacturing and upfront and start-up research and development costs related to our clinical trials of $14.5 million, partially offset by the $10.0 million payable as a result of the achievement of our second development and regulatory milestone under the HanAll Agreement, which is expected to be paid in the fiscal 2023 fourth quarter. These changes were partially offset by a decrease in accounts receivable of $11.8 million reflecting the collection of amounts owed to us under research and development cost-sharing arrangements with third parties.

For the nine months ended December 31, 2021, $73.2 million of cash was used in operating activities. This was primarily attributable to a net loss from operations for the year of $109.6 million, partially offset by non-cash charges of $23.3 million and a net change in operating assets and liabilities of $13.1 million. The non-cash charges consisted mainly of stock-based compensation of $22.4 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 $17.6 million in accounts payable and accrued expenses, driven by 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 $3.8 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 nine months ended December 31, 2022 and 2021, cash used in investing activities was related to the purchase of property and equipment.

Financing Activities

For the nine months ended December 31, 2022, $70.7 million of cash provided by financing activities primarily consisted of proceeds from our October 2022 underwritten offering of $70.2 million, after deducting underwriting discounts and commissions and offering expenses. Cash provided by financing activities also reflected $0.4 million of proceeds from the exercise of stock options. For the nine months ended December 31, 2021, $200.1 million of cash provided by financing activities primarily consisted of $200.0 million in proceeds from the sale of 17,021,276 shares of common stock to RSL, at a per share price of $11.75 in August 2021.

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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 December 31, 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:

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 remaining minimum long-term obligation to Samsung of approximately $33.1 million, of which $1.1 million is expected to be paid during the fiscal year ending March 31, 2023, $13.7 million is expected to be paid during the fiscal year ending March 31, 2024 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 December 31, 2022, the aggregate maximum amount of milestone payments we could be required to make under the HanAll Agreement is $432.5 million (after an aggregate amount of $20.0 million of milestone achievements as of December 31, 2022) upon the achievement of certain development, regulatory and sales milestone events. In the fiscal 2023 third quarter, we achieved our second development and regulatory milestone under the HanAll Agreement and expect to make a $10.0 million milestone payment in the fiscal 2023 fourth quarter in accordance with the terms of the agreement.

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 December 31, 2022 totaled $1.2 million related to short-term lease liabilities, and $0.3 million related to long-term lease liabilities.

Outlook

Based on our existing cash and cash equivalents balance as of December 31, 2022 of $432.6 million, 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.

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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;

•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 nine months ended December 31, 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.

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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.

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 December 31, 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 December 31, 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 December 31, 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 succ