SEC Filing | Impel Pharmaceuticals Inc.

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10-Q

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 June 30, 2022


☐	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 PHARMACEUTICALS 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 August 10, 2022 was 23,738,813.

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 execute 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 other 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 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	6
	Notes to the Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	32

	PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	69
Item 3.	Defaults Upon Senior Securities	70
Item 4.	Mine Safety Disclosures	70
Item 5.	Other Information	70
Item 6.	Exhibits	71
EXHIBIT INDEX		71
SIGNATURES		72

In this Quarterly Report on Form 10-Q, “we,” “our,” “us,” “Impel” and the “Company” refer to Impel Pharmaceuticals Inc. and its consolidated subsidiary. Impel, Impel Pharmaceuticals Inc., the Impel logo and other trade names, trademarks or service marks of Impel are the property of Impel Pharmaceuticals 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 PHARMACEUTICALS INC.

Condensed Consolidated Balance Sheet

(In thousands, except share and per share data)

(Unaudited)


	June 30, 2022			December 31, 2021

Assets
Current assets:
Cash and cash equivalents	$	97,827		$	88,212
Trade receivables, net		4,794			1,352
Inventory		6,929			2,824
Prepaid expenses and other current assets		4,882			2,188
Total current assets		114,432			94,576
Property and equipment, net		2,769			3,149
Operating lease right-of-use assets		3,046			—
Other assets		187			187
Total assets	$	120,434		$	97,912
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	4,747		$	6,367
Accrued liabilities		9,043			8,950
Current portion of deferred royalty obligation		2,518			—
Current portion of operating lease liability		1,276			—
Common stock warrant liability		711			637
Total current liabilities		18,295			15,954
Operating lease liability, net of current portion		1,787			—
Derivative liability		863			—
Deferred royalty obligation, net of current portion		48,370			—
Long-term debt		47,209			29,450
Total liabilities		116,524			45,404
Commitments and contingencies (Note 5)
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000,000 shares authorized: none issued		—			—
Common stock, $0.001 par value; 300,000,000 shares authorized; 23,196,313 and 23,037,298 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively		23			23
Additional paid-in capital		270,859			267,283
Accumulated deficit		(266,972	)		(214,798	)
Total stockholders’ equity		3,910			52,508
Total liabilities and stockholders’ equity	$	120,434		$	97,912

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

IMPEL PHARMACEUTICALS INC.

Condensed Consolidated Statement of Operations and Comprehensive Loss

(In thousands, except share and per share data)

(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Product revenue, net	$	2,803		$	—		$	4,562		$	—
Cost of goods sold		1,737			—			2,770			—
Gross profit		1,066			—			1,792			—
Operating expenses:
Research and development		3,951			6,076			7,601			10,174
Selling, general and administrative		18,095			8,862			37,894			14,633
Total operating expenses		22,046			14,938			45,495			24,807
Loss from operations		(20,980	)		(14,938	)		(43,703	)		(24,807	)
Other income (expense), net :
Interest income (expense), net		(3,450	)		(534	)		(7,877	)		(1,051	)
Other income (expense), net		(774	)		(10	)		(594	)		(915	)
Total other income (expense), net		(4,224	)		(544	)		(8,471	)		(1,966	)
Loss before income taxes		(25,204	)		(15,482	)		(52,174	)		(26,773	)
Provision (benefit) for income taxes		—			—			—			—
Net loss and comprehensive loss	$	(25,204	)	$	(15,482	)	$	(52,174	)	$	(26,773	)
Accretion on redeemable convertible preferred stock		—			—			—			129
Net loss attributable to common stockholders	$	(25,204	)	$	(15,482	)	$	(52,174	)	$	(26,902	)
Net loss per share attributable to common stockholders, basic and diluted	$	(1.09	)	$	(1.10	)	$	(2.25	)	$	(3.60	)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted		23,178,302			14,119,672			23,161,133			7,475,242

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

IMPEL PHARMACEUTICALS INC.

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

(In thousands, except share data)

(Unaudited)


	Common Stock				Additional Paid-In		Accumulated			Total Stockholders’
	Shares		Amount		Capital		Deficit			Equity
Balance — December 31, 2021		23,123,062	$	23	$	267,283	$	(214,798	)	$	52,508
Stock-based compensation expense		—		—		1,795		—			1,795
Issuance of common stock upon the exercise of stock options		50,235		—		149		—			149
Net loss and comprehensive loss		—		—		—		(26,970	)		(26,970	)
Balance — March 31, 2022		23,173,297	$	23	$	269,227	$	(241,768	)	$	27,482
Stock-based compensation expense		—		—		1,579		—			1,579
Issuance of common stock upon the exercise of stock options		23,016		—		53		—			53
Net loss and comprehensive loss		—		—		—		(25,204	)		(25,204	)
Balance — June 30, 2022		23,196,313	$	23	$	270,859	$	(266,972	)	$	3,910


	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

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

IMPEL PHARMACEUTICALS INC.

Condensed Consolidated Statement of Cash Flows

(In thousands)

(Unaudited)


	Six Months Ended June 30,
	2022			2021
Cash flows from operating activities:
Net loss	$	(52,174	)	$	(26,773	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		599			493
Non-cash lease expense		537			—
Stock-based compensation		3,374			1,049
Change in fair value of warrant liabilities		74			54
Change in fair value of convertible notes		—			839
Change in fair value of derivatives		558			—
Loss on early extinguishment of debt		3,251			—
Non-cash interest expense and amortization of debt discount and issuance costs		2,696			501
Changes in operating assets and liabilities:
Accounts receivable		(3,442	)		—
Inventory		(2,622	)		—
Prepaid expenses and other current assets		(2,295	)		(3,542	)
Accounts payable		(1,620	)		1,070
Accrued liabilities		(1,394	)		365
Operating lease		(520	)		—
Net cash used in operating activities	$	(52,978	)	$	(25,944	)
Cash flows from investing activities:
Purchases of property and equipment		(215	)		(116	)
Net cash used in investing activities	$	(215	)	$	(116	)
Cash flows from financing activities:
Proceeds from deferred royalty obligation, net of issuance costs		48,418			—
Proceeds from issuance of long-term debt, net of issuance costs		47,440			—
Payments on long-term debt, including final payment		(32,853	)		—
Proceeds from initial public offering, net of issuance costs		—			71,997
Proceeds from issuance of convertible notes		—			7,500
Proceeds from exercise of redeemable convertible preferred stock warrants		—			197
Proceeds from issuance of common stock upon exercise of stock options		198