10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended September 30, 2021

OR

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

For the transition period from to

Commission File Number 001-40353

 

IMPEL NEUROPHARMA, INC.

(Exact name of Registrant as specified in its Charter)

 

 

Delaware

 

26-3058238

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

201 Elliott Avenue West, Suite 260

Seattle, WA 98119

(Address of principal executive offices including zip code)

Registrant’s telephone number, including area code: (206) 568-1466

 

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

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

IMPL

The Nasdaq Stock Market

 

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

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

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

 

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 ☒

The number of shares of Registrant’s Common Stock outstanding as of November 10, 2021 was 23,039,393.

 

 

 


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical facts, including statements concerning our business strategy and plans, future operating results and financial position, as well as our objectives and expectations for our future operations, are forward-looking statements.

 

In some cases, you can identify forward-looking statements by such terminology as “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect” and similar expressions that convey uncertainty of future events or outcomes, although not all forward-looking statements contain these words. Forward-looking statements include, but are not limited to, statements about:

 

our ability to successfully formulate and execute on our commercialization strategy for Trudhesa;
our ability to obtain and maintain regulatory approval of our product candidates, and any related restrictions, limitations or warnings in the label of any approved product;
the timing or likelihood of regulatory filings and approvals;
the size and growth potential of the market for Trudhesa and the markets for our product candidates, if approved for commercial use, and our ability to serve those markets;
the success, cost and timing of our development activities, preclinical studies and clinical trials;
the number, size and design of clinical trials that regulatory authorities may require to obtain marketing approval;
our plans relating to the future development and manufacturing of our product candidates, including plans for future development of our POD devices and plans to address additional indications for which we may pursue regulatory approval;
future agreements with third parties in connection with preclinical and clinical development as well as the manufacture and commercialization of our product candidates, if approved for commercial use;
our ability to attract customers for any approved products;
the effect of litigation, complaints or adverse publicity on our business;
our ability to establish and expand our sales force to address effectively the new indications, geographies and types of organizations we intend to target;
our ability to forecast and maintain an adequate rate of revenue growth and appropriately plan our expenses;
our liquidity and working capital requirements;
our ability to attract and retain qualified employees and key personnel;
our ability to protect and enhance our brand and intellectual property;
the costs related to defending intellectual property infringement and other claims;
privacy, data security, and data protection laws, actual or perceived privacy or data breaches or other data security incidents, or the loss of data;
future regulatory, judicial, and legislative changes in our industry;
future arrangements with, or investments in, other entities or associations, products, services or technologies;
our estimates regarding expenses, future revenues, capital requirements and needs for additional financing; and the increased expenses and administrative workload associated with being a public company.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, and financial needs. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. We disclaim any intention or obligation to publicly update or revise any forward-looking statements for any reason or to conform such statements to actual results or revised expectations, except as required by law.

 


 

Table of Contents

 

 

 

 

Page

 

 

PART I—FINANCIAL INFORMATION

 

Item 1.

 

Condensed Consolidated Financial Statements (unaudited)

3

 

 

Condensed Consolidated Balance Sheets

3

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

4

 

 

Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

5

 

 

Condensed Consolidated Statements of Cash Flows

7

 

 

Notes to the Condensed Consolidated Financial Statements

8

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

24

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

 

Controls and Procedures

35

 

 

 

 

 

 

PART II—OTHER INFORMATION

 

Item 1.

 

Legal Proceedings

36

Item 1A.

 

Risk Factors

36

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

74

Item 3.

 

Defaults Upon Senior Securities

74

Item 4.

 

Mine Safety Disclosures

74

Item 5.

 

Other Information

74

Item 6.

 

Exhibits

75

EXHIBIT INDEX

75

SIGNATURES

77

 

In this Quarterly Report on Form 10-Q, “we,” “our,” “us,” “Impel” and the “Company” refer to Impel Neuropharma, Inc. and its consolidated subsidiary. Impel, Impel Neuropharma, Inc., the Impel logo and other trade names, trademarks or service marks of Impel are the property of Impel Neuropharma, Inc. This report contains references to our trademarks and to trademarks belonging to other entities. Trade names, trademarks and service marks of other companies appearing in this report are the property of their respective holders. We do not intend our use or display of other companies’ trade names or trademarks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.

 

 


 

PART I. FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Statements (unaudited)

 

 

IMPEL NEUROPHARMA, INC.

Condensed Consolidated Balance Sheet

(In thousands, except share and per share data)

(Unaudited)

 

 

September 30,
2021

 

 

December 31,
2020

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

111,289

 

 

$

7,095

 

Trade receivables, net

 

 

981

 

 

 

 

Inventory

 

 

1,548

 

 

 

 

Prepaid expenses and other current assets

 

 

4,385

 

 

 

1,077

 

Total current assets

 

 

118,203

 

 

 

8,172

 

Property and equipment, net

 

 

3,278

 

 

 

3,700

 

Other assets

 

 

 

 

 

187

 

Total assets

 

$

121,481

 

 

$

12,059

 

Liabilities, redeemable convertible preferred stock and
   stockholders’ equity (deficit)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

8,700

 

 

$

4,314

 

Accrued liabilities

 

 

6,692

 

 

 

3,173

 

Current portion of term debt

 

 

 

 

 

417

 

Common stock warrant liabilities

 

 

918

 

 

 

 

Redeemable convertible preferred stock warrant liabilities

 

 

 

 

 

2,622

 

Total current liabilities

 

 

16,310

 

 

 

10,526

 

Convertible notes at fair value

 

 

 

 

 

 

Long-term debt

 

 

29,285

 

 

 

7,994

 

Total liabilities

 

 

45,595

 

 

 

18,520

 

Commitments and contingencies (Note 5)

 

 

 

 

 

 

Redeemable convertible preferred stock, $0.001 par value; — and 204,198,489 shares authorized at September 30, 2021 and December 31, 2020 respectively; — and 202,009,981 shares issued and outstanding at September 30, 2021 and December 31, 2020 respectively; aggregate liquidation preference of $128,922 at December 31, 2020

 

 

 

 

 

127,039

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 and — shares authorized at September 30, 2021 and December 31, 2020, respectively

 

 

 

 

 

 

Common stock, $0.001 par value; 300,000,000 and 266,833,885 shares authorized at September 30, 2021 and December 31, 2020, respectively; 23,037,298 and 755,478 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

 

 

23

 

 

 

 

Additional paid-in capital

 

 

265,919

 

 

 

4,762

 

Accumulated deficit

 

 

(190,056

)

 

 

(138,262

)

Total stockholders’ equity (deficit)

 

 

75,886

 

 

 

(133,500

)

Total liabilities, redeemable convertible preferred stock and
   stockholders’ equity (deficit)

 

$

121,481

 

 

$

12,059

 

 

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

3


 

IMPEL NEUROPHARMA, INC.

Condensed Consolidated Statement of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(Unaudited)

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Product revenue, net

 

$

91

 

 

$

 

 

$

91

 

 

$

 

Cost of goods sold

 

250

 

 

 

 

 

250

 

 

 

 

    Gross profit

 

 

(159

)

 

 

 

 

 

(159

)

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

5,929

 

 

 

6,133

 

 

 

16,103

 

 

 

19,524

 

Selling, general and administrative

 

 

16,338

 

 

 

2,866

 

 

 

30,971

 

 

 

12,240

 

Total operating expenses

 

 

22,267

 

 

 

8,999

 

 

 

47,074

 

 

 

31,764

 

Loss from operations

 

 

(22,426

)

 

 

(8,999

)

 

 

(47,233

)

 

 

(31,764

)

Other (expense) income, net

 

 

(2,595

)

 

 

(93

)

 

 

(4,561

)

 

 

(9

)

Loss before income taxes

 

 

(25,021

)

 

 

(9,092

)

 

 

(51,794

)

 

 

(31,773

)

Provision (benefit) for income taxes

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Net loss and comprehensive loss

 

$

(25,021

)

 

$

(9,093

)

 

$

(51,794

)

 

$

(31,774

)

Accretion on redeemable convertible preferred stock

 

 

 

 

 

130

 

 

 

129

 

 

 

386

 

Net loss attributable to common stockholders

 

$

(25,021

)

 

$

(9,223

)

 

$

(51,923

)

 

$

(32,160

)

Net loss per share attributable to common stockholders, basic and diluted

 

$

(1.24

)

 

$

(15.56

)

 

$

(4.42

)

 

$

(73.16

)

Weighted-average shares used in computing net loss per share attributable to common
   stockholders, basic and diluted

 

 

20,150,990

 

 

 

592,550

 

 

 

11,746,923

 

 

 

439,575

 

 

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

4


 

IMPEL NEUROPHARMA, INC.

Condensed Consolidated Statement of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(In thousands, except share data)

(Unaudited)

 

 

Redeemable Convertible
Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity (Deficit)

 

Balance — December 31, 2020

 

 

202,009,981

 

 

$

127,039

 

 

 

 

755,478

 

 

$

 

 

$

4,762

 

 

$

(138,262

)

 

$

(133,500

)

Accretion to redemption value on redeemable convertible preferred stock

 

 

 

 

 

129

 

 

 

 

 

 

 

 

 

 

(129

)

 

 

 

 

 

(129

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

493

 

 

 

 

 

 

493

 

Issuance of common stock upon the exercise of stock options

 

 

 

 

 

 

 

 

 

8,095

 

 

 

 

 

 

18

 

 

 

 

 

 

18

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,291

)

 

 

(11,291

)

Balance — March 31, 2021

 

 

202,009,981

 

 

$

127,168

 

 

 

 

763,573

 

 

$

 

 

$

5,144

 

 

$

(149,553

)

 

$

(144,409

)

Proceeds from initial public offering, net of underwriters' discounts and commissions of $5.6 million and issuance costs of $2.4 million

 

 

 

 

 

 

 

 

 

5,333,334

 

 

 

5

 

 

 

71,992

 

 

 

 

 

 

71,997

 

Issuance of common stock upon exercise of warrants for cash

 

 

 

 

 

 

 

 

 

23,887

 

 

 

 

 

 

377

 

 

 

 

 

 

377

 

Issuance of common stock upon net exercise of warrants upon initial public offering

 

 

 

 

 

 

 

 

 

37,628

 

 

 

 

 

 

734

 

 

 

 

 

 

734

 

Issuance of common stock upon exchange of Avenue warrant

 

 

 

 

 

 

 

 

 

107,663

 

 

 

 

 

 

1,763

 

 

 

 

 

 

1,763

 

Conversion of redeemable convertible preferred stock to common stock upon initial public offering

 

 

(202,009,981

)

 

 

(127,168

)

 

 

 

12,605,800

 

 

 

13

 

 

 

127,155

 

 

 

 

 

 

127,168

 

Conversion of convertible notes into common stock at initial public offering

 

 

 

 

 

 

 

 

 

559,585

 

 

 

1

 

 

 

8,392

 

 

 

 

 

 

8,393

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 —

 

 

 

 

 

 

556

 

 

 

 

 

 

556

 

Issuance of common stock upon the exercise of stock options

 

 

 

 

 

 

 

 

 

39,444

 

 

 

 

 

 

201

 

 

 

 

 

 

201

 

Net loss and comprehensive loss

 

 

 

 

 

-

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(15,482

)

 

 

(15,482

)

Balance — June 30, 2021

 

 

 

 

$

 

 

 

 

19,470,914

 

 

$

19

 

 

$

216,314

 

 

$

(165,035

)

 

$

51,298

 

Proceeds from follow-on public offering, net of underwriters' discounts and commissions of $2.8 million and issuance costs of $0.6 million

 

 

 

 

 

 

 

 

 

3,450,000

 

 

 

4

 

 

 

48,312

 

 

 

 

 

 

48,316

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 —

 

 

 

 

 

 

978

 

 

 

 

 

 

978

 

Issuance of common stock upon the exercise of stock options

 

 

 

 

 

 

 

 

 

116,384

 

 

 

 

 

 

315

 

 

 

 

 

 

315

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25,021

)

 

 

(25,021

)

Balance — September 30, 2021

 

 

 

 

$

 

 

 

 

23,037,298

 

 

$

23

 

 

$

265,919

 

 

$

(190,056

)

 

$

75,886

 

 

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

 

 

5


 

IMPEL NEUROPHARMA, INC.

Condensed Consolidated Statement of Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(In thousands, except share data)

(Unaudited)

 

 

Redeemable Convertible
Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity (Deficit)

 

Balance — December 31, 2019

 

 

201,335,862

 

 

$

125,647

 

 

 

 

360,115

 

 

$

 

 

$

760

 

 

$

(92,464

)

 

$

(91,704

)

Accretion to redemption value on redeemable
   convertible preferred stock

 

 

 

 

 

129

 

 

 

 

 

 

 

 

 

 

(128

)

 

 

 

 

 

(128

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

298

 

 

 

 

 

 

298

 

Issuance of common stock upon the exercise of stock
   options

 

 

 

 

 

 

 

 

 

3,569

 

 

 

 

 

 

8

 

 

 

 

 

 

8

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,759

)

 

 

(9,759

)

Balance — March 31, 2020

 

 

201,335,862

 

 

$

125,776

 

 

 

 

363,684

 

 

$

 

 

$

938

 

 

$

(102,223

)

 

 

(101,285

)

Accretion to redemption value on redeemable
   convertible preferred stock

 

 

 

 

 

127

 

 

 

 

 

 

 

 

 

 

(128

)

 

 

 

 

 

(128

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,485

 

 

 

 

 

 

2,485

 

Issuance of Series A-2 redeemable convertible preferred stock upon the exercise of preferred warrants

 

 

36,029

 

 

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,922

)

 

 

(12,922

)

Balance —June 30, 2020

 

 

201,371,891

 

 

$

125,921

 

 

 

 

363,684

 

 

$

 

 

$

3,295

 

 

$

(115,145

)

 

$

(111,850

)

Accretion to redemption value on redeemable
   convertible preferred stock

 

 

 

 

 

130

 

 

 

 

 

 

 

 

 

 

(130

)

 

 

 

 

 

(130

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

432

 

 

 

 

 

 

432

 

Issuance of common stock upon the exercise of stock
   options

 

 

 

 

 

 

 

 

 

326,117

 

 

 

 

 

 

687

 

 

 

 

 

 

687

 

Issuance of Series A-2 redeemable convertible preferred stock upon the exercise of preferred warrants

 

 

46,769

 

 

 

58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of Series B redeemable convertible preferred stock upon the exercise of preferred warrants

 

 

378,111

 

 

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss and comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,093

)

 

 

(9,093

)

Balance —September 30, 2020

 

 

201,796,771

 

 

$

126,127

 

 

 

 

689,801

 

 

$

 

 

$

4,284

 

 

$

(124,238

)

 

$

(119,954

)

 

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

6


 

IMPEL NEUROPHARMA, INC.

Condensed Consolidated Statement of Cash Flows

(In thousands)

(Unaudited)

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(51,794

)

 

$

(31,774

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization