100010005281800000000000529240000000861838--12-312022Q1falseP36MP270DP36M0000861838idra:PreFundedCommonStockWarrantMemberidra:PrivatePlacement4Member2020-07-132020-07-130000861838us-gaap:CommonStockMember2022-01-012022-03-310000861838us-gaap:RetainedEarningsMember2022-03-310000861838us-gaap:AdditionalPaidInCapitalMember2022-03-310000861838us-gaap:RetainedEarningsMember2021-12-310000861838us-gaap:AdditionalPaidInCapitalMember2021-12-310000861838us-gaap:RetainedEarningsMember2021-03-310000861838us-gaap:AdditionalPaidInCapitalMember2021-03-310000861838us-gaap:RetainedEarningsMember2020-12-310000861838us-gaap:AdditionalPaidInCapitalMember2020-12-310000861838idra:PreFundedCommonStockWarrantMemberidra:PrivatePlacement4Member2020-07-130000861838idra:EmployeeStockPurchasePlan2017Member2022-01-012022-03-310000861838idra:EmployeeStockPurchasePlan2017Member2021-01-012021-03-3100008618382021-01-012021-12-310000861838idra:EmployeeStockPurchasePlan2017Member2022-03-310000861838idra:TwoThousandThirteenStockIncentivePlanMember2013-07-260000861838idra:EmployeeStockPurchasePlan2017Member2017-06-070000861838idra:TwoThousandThirteenStockIncentivePlanMember2022-03-310000861838us-gaap:RestrictedStockMember2021-12-310000861838us-gaap:PerformanceSharesMember2021-12-310000861838us-gaap:PerformanceSharesMember2020-07-012020-07-310000861838us-gaap:RestrictedStockMember2021-01-012021-03-310000861838us-gaap:ResearchAndDevelopmentExpenseMemberidra:StockIncentivePlanMember2022-01-012022-03-310000861838us-gaap:ResearchAndDevelopmentExpenseMemberidra:EmployeeStockPurchasePlanMember2022-01-012022-03-310000861838us-gaap:GeneralAndAdministrativeExpenseMemberidra:StockIncentivePlanMember2022-01-012022-03-310000861838us-gaap:GeneralAndAdministrativeExpenseMemberidra:EmployeeStockPurchasePlanMember2022-01-012022-03-310000861838us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-03-310000861838us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-03-310000861838us-gaap:ResearchAndDevelopmentExpenseMemberidra:StockIncentivePlanMember2021-01-012021-03-310000861838us-gaap:ResearchAndDevelopmentExpenseMemberidra:EmployeeStockPurchasePlanMember2021-01-012021-03-310000861838us-gaap:GeneralAndAdministrativeExpenseMemberidra:StockIncentivePlanMember2021-01-012021-03-310000861838us-gaap:GeneralAndAdministrativeExpenseMemberidra:EmployeeStockPurchasePlanMember2021-01-012021-03-310000861838us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-03-310000861838us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-03-310000861838idra:ScriptrGlobalInc.Memberidra:ResearchAndDevelopmentPlansAndDesignationOfDevelopmentCandidatesMember2022-01-012022-03-310000861838idra:ScriptrGlobalInc.Memberidra:ResearchAndDevelopmentPlansAndDesignationOfDevelopmentCandidatesMember2021-01-012021-03-310000861838us-gaap:LeaseholdImprovementsMember2022-03-310000861838idra:EquipmentAndOtherMember2022-03-310000861838us-gaap:LeaseholdImprovementsMember2021-12-310000861838idra:EquipmentAndOtherMember2021-12-310000861838srt:MaximumMemberidra:PillarInvestmentEntitiesMember2021-01-012021-03-310000861838idra:SeriesB3RedeemableConvertiblePreferredStockMember2019-12-232019-12-230000861838idra:SeriesB2RedeemableConvertiblePreferredStockMember2019-12-232019-12-2300008618382019-12-232019-12-230000861838us-gaap:RetainedEarningsMember2022-01-012022-03-310000861838us-gaap:RetainedEarningsMember2021-01-012021-03-310000861838idra:WarrantLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310000861838idra:FutureTrancheRightLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310000861838idra:WarrantLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2021-01-012021-03-310000861838idra:FutureTrancheRightLiabilityMemberus-gaap:FairValueMeasurementsRecurringMember2021-01-012021-03-310000861838srt:DirectorMember2022-03-310000861838idra:BakerBrosAdvisorsLpMember2022-03-310000861838srt:DirectorMember2020-12-310000861838us-gaap:PerformanceSharesMember2022-03-310000861838us-gaap:PerformanceSharesMember2022-01-012022-03-310000861838us-gaap:RestrictedStockMember2022-03-310000861838srt:MaximumMemberidra:EmployeeStockPurchasePlan2017Member2022-01-012022-03-310000861838srt:MaximumMemberidra:EmployeeStockPurchasePlan2017Member2021-01-012021-03-310000861838idra:SeriesB1RedeemableConvertiblePreferredStockMember2021-01-012021-12-310000861838idra:BakerBrosAdvisorsLpMemberidra:SeriesB1RedeemableConvertiblePreferredStockMember2021-01-012021-03-310000861838idra:SeriesB1RedeemableConvertiblePreferredStockMember2021-01-012021-03-310000861838idra:LincolnParkCapitalFundLLCInvestorMember2019-03-040000861838us-gaap:CommonStockMember2022-03-310000861838us-gaap:CommonStockMember2021-12-310000861838us-gaap:CommonStockMember2021-03-310000861838idra:SeriesB1RedeemableConvertiblePreferredStockMember2021-03-310000861838us-gaap:CommonStockMember2020-12-310000861838idra:SeriesB1RedeemableConvertiblePreferredStockMember2020-12-3100008618382019-12-310000861838idra:EquityClassifiedWarrantsMember2022-03-310000861838idra:September2013WarrantsMember2021-12-310000861838idra:May2013WarrantsMember2021-12-310000861838idra:July2020PrivatePlacementFirstClosingWarrantsMember2021-12-310000861838idra:July2020PrivatePlacementFirstClosingWarrants2Member2021-12-310000861838idra:February2014WarrantsMember2021-12-310000861838idra:EquityClassifiedWarrantsMember2021-12-310000861838idra:April2020PrivatePlacementSecondClosingWarrantsMember2021-12-310000861838idra:April2020PrivatePlacementSecondClosingWarrants2Member2021-12-310000861838idra:April2020PrivatePlacementFirstClosingWarrantsMember2021-12-310000861838idra:WarrantTrancheTwoMemberidra:PillarInvestmentEntitiesMember2022-03-310000861838idra:WarrantTrancheThreeMemberidra:PillarInvestmentEntitiesMember2022-03-310000861838idra:WarrantTrancheOneMemberidra:PillarInvestmentEntitiesMember2022-03-310000861838idra:PreFundedWarrantTrancheOneMemberidra:PillarInvestmentEntitiesMember2022-03-310000861838idra:September2013WarrantsMember2022-03-310000861838idra:May2013WarrantsMember2022-03-310000861838idra:July2020PrivatePlacementFirstClosingWarrantsMember2022-03-310000861838idra:July2020PrivatePlacementFirstClosingWarrants2Member2022-03-310000861838idra:February2014WarrantsMember2022-03-310000861838idra:April2020PrivatePlacementSecondClosingWarrantsMember2022-03-310000861838idra:April2020PrivatePlacementSecondClosingWarrants2Member2022-03-310000861838idra:April2020PrivatePlacementFirstClosingWarrantsMember2022-03-310000861838idra:PillarInvestmentEntitiesMember2021-03-310000861838idra:BakerBrosAdvisorsLpMember2021-03-310000861838us-gaap:WarrantMemberidra:PrivatePlacement4Member2020-07-130000861838idra:PreferredStockWarrantMemberidra:SeriesB4RedeemableConvertiblePreferredStockMember2019-12-230000861838idra:PreferredStockWarrantMemberidra:SeriesB3RedeemableConvertiblePreferredStockMember2019-12-230000861838idra:PreferredStockWarrantMemberidra:SeriesB2RedeemableConvertiblePreferredStockMember2019-12-230000861838idra:PreferredStockWarrantMemberidra:SeriesB1RedeemableConvertiblePreferredStockMember2019-12-230000861838idra:CommonStockWarrantMemberidra:SeriesB4RedeemableConvertiblePreferredStockMember2019-12-230000861838idra:CommonStockWarrantMemberidra:SeriesB3RedeemableConvertiblePreferredStockMember2019-12-230000861838idra:CommonStockWarrantMemberidra:SeriesB2RedeemableConvertiblePreferredStockMember2019-12-230000861838idra:CommonStockWarrantMemberidra:SeriesB1RedeemableConvertiblePreferredStockMember2019-12-2300008618382021-03-3100008618382020-12-310000861838us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2022-03-310000861838us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashMember2022-03-310000861838us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2022-03-310000861838us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashMember2022-03-310000861838us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2021-12-310000861838us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashMember2021-12-310000861838us-gaap:FairValueMeasurementsRecurringMemberus-gaap:MoneyMarketFundsMember2021-12-310000861838us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CashMember2021-12-310000861838us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2022-03-310000861838us-gaap:FairValueMeasurementsRecurringMember2022-03-310000861838us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-12-310000861838us-gaap:FairValueMeasurementsRecurringMember2021-12-310000861838us-gaap:RestrictedStockMember2022-01-012022-03-310000861838us-gaap:EmployeeStockOptionMember2022-01-012022-03-310000861838idra:CommonStockWarrantMember2022-01-012022-03-310000861838us-gaap:RestrictedStockMember2021-01-012021-03-310000861838us-gaap:RedeemableConvertiblePreferredStockMember2021-01-012021-03-310000861838us-gaap:EmployeeStockOptionMember2021-01-012021-03-310000861838idra:CommonStockWarrantMember2021-01-012021-03-310000861838us-gaap:RestrictedStockMember2022-01-012022-03-310000861838us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310000861838srt:MaximumMember2022-01-012022-03-310000861838srt:MaximumMember2021-01-012021-03-310000861838idra:PillarInvestmentEntitiesMember2021-01-012021-03-310000861838idra:BakerBrosAdvisorsLpMember2021-01-012021-03-310000861838idra:BakerBrosAdvisorsLpMemberus-gaap:CommonClassAMember2021-04-012021-04-300000861838idra:BakerBrosAdvisorsLpMemberus-gaap:CommonClassAMember2021-01-012021-03-310000861838idra:TwoThousandThirteenStockIncentivePlanMember2013-07-262013-07-260000861838idra:SeriesB1RedeemableConvertiblePreferredStockMember2019-12-232019-12-2300008618382019-12-012019-12-310000861838us-gaap:ConvertiblePreferredStockMember2022-03-310000861838us-gaap:ConvertiblePreferredStockMember2021-12-310000861838idra:AtMarketEquityProgramMember2018-11-012018-11-300000861838idra:LincolnParkCapitalFundLLCInvestorMember2021-01-012021-03-310000861838idra:AtMarketEquityProgramMember2021-01-012021-03-310000861838idra:AtMarketEquityProgramMemberus-gaap:CommonStockMember2018-11-012018-11-300000861838idra:AtMarketEquityProgramMember2022-01-012022-03-310000861838idra:PrivatePlacement4Member2020-07-132020-07-130000861838idra:SeriesB4RedeemableConvertiblePreferredStockMember2019-12-232019-12-230000861838idra:SeriesB4RedeemableConvertiblePreferredStockMember2019-12-230000861838idra:SeriesB3RedeemableConvertiblePreferredStockMember2019-12-230000861838idra:SeriesB2RedeemableConvertiblePreferredStockMember2019-12-230000861838us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-310000861838us-gaap:CommonStockMember2021-01-012021-03-310000861838idra:PillarInvestmentEntitiesMember2022-03-310000861838idra:ScriptrGlobalInc.Membersrt:MaximumMemberidra:ResearchAndDevelopmentPlansAndDesignationOfDevelopmentCandidatesMember2021-02-012021-02-280000861838idra:LincolnParkCapitalFundLLCInvestorMember2019-03-042019-03-040000861838idra:BakerBrosAdvisorsLpMember2022-01-012022-03-310000861838idra:BakerBrosAdvisorsLpMemberidra:SeriesB1RedeemableConvertiblePreferredStockMember2021-04-012021-04-300000861838srt:DirectorMember2020-01-012020-12-3100008618382021-01-012021-03-3100008618382022-03-3100008618382021-12-3100008618382022-05-0500008618382022-01-012022-03-31xbrli:sharesiso4217:USDxbrli:pureidra:Institutioniso4217:USDxbrli:shares

Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2022

OR

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

For transition period from                      to                     .

Commission File Number: 001-31918

Graphic

IDERA PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware

    

04-3072298

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

505 Eagleview Blvd., Suite 212

Exton, Pennsylvania

(Address of principal executive offices)

19341

(Zip code)

(484) 348-1600

(Registrant’s telephone number, including area code)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

IDRA

Nasdaq Capital 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, 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  

Common Stock, par value $.001 per share

    

52,966,025

Class

Outstanding as of May 5, 2022

Table of Contents

IDERA PHARMACEUTICALS, INC.

FORM 10-Q

TABLE OF CONTENTS

    

Page

PART I — FINANCIAL INFORMATION

Item 1.

Financial Statements

1

Condensed Balance Sheets as of March 31, 2022 and December 31, 2021

1

Condensed Statements of Operations for the Three Months Ended March 31, 2022 and 2021

2

Condensed Statements of Cash Flows for the Three Months Ended March 31, 2022 and 2021

3

Condensed Statements of Redeemable Preferred Stock and Stockholders’ Equity (Deficit) for the Three Months Ended March 31, 2022 and 2021

4

Notes to Condensed Financial Statements

5

Item 2.

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

23

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

33

Item 4.

Controls and Procedures

33

PART II — OTHER INFORMATION

Item 1A.

Risk Factors

34

Item 6.

Exhibits

35

Signatures

36

Unless the context otherwise indicates, references in this Quarterly Report on Form 10-Q to “Idera,” the “Company,” “we,” “us,” and “our” refer to Idera Pharmaceuticals, Inc.

IMO® and Idera® are our trademarks. All other trademarks and service marks appearing in this Quarterly Report on Form 10-Q are the property of their respective owners.

i

Table of Contents

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Form 10-Q”) 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”). All statements, other than statements of historical fact, included or incorporated in this report regarding our strategy, future operations, clinical trials, collaborations, intellectual property, cash resources, financial position, future revenues, projected costs, prospects, plans and objectives of management are forward-looking statements. The words “believes,” “anticipates,” “estimates,” “plans,” “expects,” “intends,” “may,” “could,” “should,” “potential,” “likely,” “projects,” “continue,” “will,” “schedule,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We cannot guarantee that we will achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties, and other factors, which may be beyond our control, and which may cause the actual results, performance, or achievements of the Company to be materially different from future results, performance, or achievements expressed or implied by such forward-looking statements.

There are a number of important factors that could cause our actual results to differ materially from those indicated or implied by forward-looking statements. These important factors include those set forth under Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 which was filed with the Securities and Exchange Commission (“SEC”) on March 31, 2022 (the “2021 Form 10-K), in this Quarterly Report on Form 10-Q, and in our other disclosures and filings with the SEC. These factors and the other cautionary statements made in this Quarterly Report on Form 10-Q should be read as being applicable to all related forward-looking statements whenever they appear in this Quarterly Report on Form 10-Q.

In addition, any forward-looking statements represent our estimates only as of the date that this Quarterly Report on Form 10-Q is filed with the SEC and should not be relied upon as representing our estimates as of any subsequent date. All forward-looking statements included in this Quarterly Report on Form 10-Q are made as of the date hereof and are expressly qualified in their entirety by this cautionary notice. We disclaim any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by law.

ii

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1.

Financial Statements.

IDERA PHARMACEUTICALS, INC.

CONDENSED BALANCE SHEETS

(UNAUDITED)

    

March 31, 

    

December 31, 

 

(In thousands)

2022

2021*

 

ASSETS

Current assets:

Cash and cash equivalents

$

27,993

$

32,545

Prepaid expenses and other current assets

 

1,369

 

1,493

Total current assets

 

29,362

 

34,038

Property and equipment, net

 

18

 

22

Operating lease right-of-use assets

683

734

Other assets

 

70

 

70

Total assets

$

30,133

$

34,864

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities:

Accounts payable

$

240

$

565

Accrued expenses

 

3,342

 

4,088

Operating lease liability

214

209

Total current liabilities

 

3,796

 

4,862

Operating lease liability, net of current portion

494

549

Total liabilities

 

4,290

 

5,411

Commitments and contingencies (Note 12)

Preferred stock, $0.01 par value, Authorized — 5,000 shares:

Stockholders’ equity (deficit):

Preferred stock, $0.01 par value, Authorized — 5,000 shares:

Series A convertible preferred stock; Designated — 1,500 shares, Issued and outstanding — 1 share

 

 

Common stock, $0.001 par value, Authorized — 140,000 shares; Issued and outstanding — 52,924 and 52,818 at March 31, 2022 and December 31, 2021, respectively

 

53

 

53

Additional paid-in capital

 

765,429

 

764,861

Accumulated deficit

 

(739,639)

 

(735,461)

Total stockholders’ equity (deficit)

 

25,843

 

29,453

Total liabilities and stockholders’ equity (deficit)

$

30,133

$

34,864

*

The condensed balance sheet at December 31, 2021 has been derived from the audited financial statements at that date.

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

1

Table of Contents

IDERA PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three Months Ended

March 31, 

(In thousands, except per share amounts)

    

2022

    

2021

 

Operating expenses:

Research and development

$

1,784

$

6,871

General and administrative

 

2,398

 

3,156

Total operating expenses

 

4,182

 

10,027

Loss from operations

 

(4,182)

 

(10,027)

Other income (expense):

Interest income

 

3

 

3

Interest expense

 

 

(3)

Warrant revaluation gain

6,983

Future tranche right revaluation gain

118,803

Foreign currency exchange gain (loss)

 

1

 

(21)

Net income (loss)

$

(4,178)

$

115,738

Undistributed earnings to preferred stockholders

(6,132)

Net income (loss) applicable to common stockholders

$

(4,178)

$

109,606

Net income (loss) applicable to common stockholders (Note 11)

— Basic

$

(4,178)

$

109,606

— Diluted

$

(4,178)

$

(10,048)

Net income (loss) per share applicable to common stockholders (Note 11)

— Basic

$

(0.08)

$

2.66

— Diluted

$

(0.08)

$

(0.14)

Weighted-average number of common shares used in computing net income (loss) per share applicable to common stockholders

— Basic

 

52,893

 

41,193

— Diluted

 

52,893

 

70,980

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

2

Table of Contents

IDERA PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Three Months Ended

March 31, 

(In thousands)

    

2022

    

2021

 

Cash Flows from Operating Activities:

Net income / (loss)

$

(4,178)

$

115,738

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Stock-based compensation

 

545

 

1,111

Warrant liability revaluation gain

(6,983)

Future tranche right liability revaluation gain

(118,803)

Issuance of common stock for services rendered

22

 

67

Accretion of discounts on short-term investments

 

(1)

Depreciation and amortization expense

 

4

 

6

Changes in operating assets and liabilities:

 

Prepaid expenses and other assets

124

 

1,150

Accounts payable, accrued expenses, and other liabilities

(1,086)

 

(1,879)

Other

1

3

Net cash used in operating activities

 

(4,568)

 

(9,591)

Cash Flows from Investing Activities:

Proceeds from maturity of available-for-sale securities

 

 

4,500

Net cash provided by investing activities

 

 

4,500

Cash Flows from Financing Activities:

Proceeds from common stock financings, net

 

16,322

Proceeds from employee stock purchases

 

16

 

28

Proceeds from exercise of common stock options and warrants

 

271

Payments on seller-financed purchases

 

(218)

Net cash provided by financing activities

 

16

 

16,403

Net increase (decrease) in cash and cash equivalents

 

(4,552)

 

11,312

Cash and cash equivalent, beginning of period

 

32,545

 

33,229

Cash and cash equivalents, end of period

$

27,993

$

44,541

Supplemental disclosure of cash flow information:

Cash paid for interest

$

$

3

Supplemental disclosure of non-cash financing and investing activities:

Offering costs in accounts payable and accrued expenses

$

15

$

61

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

3

Table of Contents

IDERA PHARMACEUTICALS, INC.

CONDENSED STATEMENTS OF REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(UNAUDITED)

For the Three Months Ended March 31, 2021

Series B1 Preferred

Common Stock

Additional

Total

Number of

$0.01 Par

Number of

$0.001 Par

Paid-In

Accumulated

Stockholders’

(In thousands)

Shares

 

Value

 

Shares

 

Value

 

Capital

 

Deficit

 

Deficit

Balance, December 31, 2020

 

24

$

38,291

$

38

$

742,342

$

(833,552)

$

(91,172)

Sale of common stock, net of issuance costs

 

 

3,195

3

16,258

16,261

Conversion of Series B1 preferred stock

(14)

1,415

1

(1)

Issuance of common stock under employee stock purchase plan

 

 

8

28

 

28

Issuance of common stock under equity incentive plan (vesting of restricted stock units)

237

 

Issuance of common stock upon exercise of common stock options and warrants

 

3,375

4

267

271

Issuance of common stock for services rendered

 

 

16

67

 

67

Stock-based compensation

 

 

1,111

 

1,111

Net income

 

115,738

 

115,738

Balance, March 31, 2021

 

10

$

46,537

$

46

$

760,072

$

(717,814)

$

42,304

For the Three Months Ended March 31, 2022

Series B1 Preferred

Common Stock

Additional

Total

Number of

$0.01 Par

Number of

$0.001 Par

Paid-In

Accumulated

Stockholders’

(In thousands)

Shares

 

Value

 

Shares

 

Value

 

Capital

 

Deficit

 

Equity (Deficit)

Balance, December 31, 2021

 

$

52,818

$

53

$

764,861

$

(735,461)

$

29,453

Sale of common stock, net of issuance costs

 

 

(15)

(15)

Issuance of common stock under employee stock purchase plan

 

 

42

 

 

16

 

 

16

Issuance of common stock under equity incentive plan (vesting of restricted stock units)

 

27

 

 

 

 

Issuance of common stock for services rendered

 

 

37

 

 

22

 

 

22

Stock-based compensation

 

 

 

 

545

 

 

545

Net loss

 

 

 

 

(4,178)

 

(4,178)

Balance, March 31, 2022

$

52,924

$

53

$

765,429

$

(739,639)

$

25,843

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

4

Table of Contents

IDERA PHARMACEUTICALS, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

March 31, 2022

Note 1. Business and Organization

Business Overview

Idera Pharmaceuticals, Inc. (“Idera” or the “Company”), a Delaware corporation, is a biopharmaceutical company with a business strategy focused on the clinical development, and ultimately the commercialization, of drug candidates for rare disease indications characterized by small, well-defined patient populations with serious unmet medical needs. The Company’s current focus is to identify and potentially acquire rights to novel development and commercial stage rare disease programs through new business development opportunities, including additional strategic alternatives. The Company has in the past and may in the future explore collaborative alliances to support development and commercialization of any of our drug candidates.

Until December 2021, the Company was developing tilsotolimod, via intratumoral injection, for the treatment of solid tumors in combination with nivolumab, an anti-PD1 antibody marketed as Opdivo® by Bristol Myers Squibb Company (“BMS”), and/or ipilimumab, an anti-CTLA4 antibody marketed as Yervoy® by BMS. Due to Phase 3 results in anti-PD-1 refractory advanced melanoma, reported in March 2021, which showed the study failed to meet its primary endpoint, as well as a decision in December 2021 to discontinue enrollment in ILLUMINATE-206, the Company’s Phase 2 study in solid tumors, Company-sponsored development of tilsotolimod has been discontinued.

Although clinical trials with tilsotolimod have not yet translated into a new treatment alternative for patients, the Company believes that data supporting tilsotolimod’s mechanism of action and encouraging safety profile from across the array of pre-clinical and clinical work to date, together with its intellectual property protection, are noteworthy. As a result, in December 2021, the Company announced it would consider an out-licensing arrangement so that tilsotolimod’s full potential might continue to be explored on behalf of patients who did not respond to traditional immunotherapy.

Nasdaq Compliance

As previously disclosed, on November 26, 2021, Idera received a deficiency letter (the “Nasdaq Letter”) from the Nasdaq Listing Qualifications Department, notifying it that the Company is not in compliance with Nasdaq Listing Rule 5550(a)(2), which requires the Company to maintain a minimum bid price of at least $1 per share for continued listing on The Nasdaq Capital Market (the “Minimum Bid Requirement”). The Company’s failure to comply with the Minimum Bid Requirement was based on the Company’s common stock per share price being below the $1 threshold for a period of 30 consecutive business days. In accordance with Nasdaq Listing Rule 5810(c)(3)(A) (the “Compliance Period Rule”), the Company has been provided an initial period of 180 calendar days, or by May 25, 2022 (the “Compliance Date”), to regain compliance with the Minimum Bid Requirement. If, at any time before the Compliance Date, the bid price for the Company’s common stock closes at $1.00 or more per share for a minimum of 10 consecutive business days, as required under Nasdaq requirements, the Staff will provide written notification to the Company that it complies with the Minimum Bid Requirement, unless the Staff exercises its discretion to extend this 10-day period pursuant to Nasdaq Listing Rule 5810(c)(3)(H).

If the Company does not regain compliance with the Minimum Bid Requirement by the Compliance Date, the Company may be eligible for an additional 180 calendar day compliance period (the “Second Compliance Period”). To qualify, the Company would need to meet the continued listing requirement for the market value of publicly held shares and all other initial listing standards of the Nasdaq Capital Market, with the exception of the Minimum Bid Requirement, and provide written notice to the Staff of its intention to cure the deficiency during the Second Compliance Period.

Neither the Nasdaq Letter nor the Company’s noncompliance with the Minimum Bid Requirement have an immediate effect on the listing or trading of the Company’s common stock, which continue to trade on The Nasdaq Capital Market under the symbol “IDRA.”

5

Table of Contents

Liquidity and Financial Condition

As of March 31, 2022 the Company had an accumulated deficit of $739.6 million and a cash and cash equivalents balance of $28.0 million. The Company expects to incur substantial operating losses in future periods and will require additional capital as it seeks to advance any future drug candidates through development to commercialization. The Company does not expect to generate product revenue, sales-based milestones, or royalties until the Company successfully completes development of and obtains marketing approval for any future drug candidates, either alone or in collaboration with third parties, which the Company expects will take a number of years, if at all. To commercialize any future drug candidates, the Company needs to complete clinical development and comply with comprehensive regulatory requirements. The Company is subject to a number of risks and uncertainties similar to those of other companies of the same size within the biotechnology industry, such as uncertainty of clinical trial outcomes, uncertainty of additional funding, and history of operating losses.

The Company follows the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 205-40, Presentation of Financial Statements—Going Concern, which requires management to assess the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Management currently anticipates that the Company’s balance of cash and cash equivalents on hand as of March 31, 2022 is sufficient to enable the Company to continue as a going concern through the one-year period subsequent to the filing date of this Form 10-Q. The Company has and will continue to evaluate available alternatives to extend its operations beyond this date, which include the ATM Agreement (Note 7) or additional financing or strategic transactions. Additionally, management’s plans may include the possible deferral of certain operating expenses unless additional capital is received. Management’s operating plan, which underlies the analysis of the Company’s ability to continue as a going concern, involves the estimation of the amount and timing of future cash inflows and outflows. Actual results could vary from the operating plan.

6

Table of Contents

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited financial statements included herein have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and pursuant to the rules and regulations of the SEC. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments, consisting of normal recurring adjustments, and disclosures considered necessary for a fair presentation of interim period results have been included. Interim results for the three months ended March 31, 2022 are not necessarily indicative of results that may be expected for the year ending December 31, 2022. For further information, refer to the financial statements and footnotes thereto included in the Company’s 2021 Form 10-K.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of 90 days or less when purchased to be “cash equivalents.” Cash and cash equivalents at March 31, 2022 and December 31, 2021 consisted of cash and money market funds.

Financial Instruments

The fair value of the Company’s financial instruments is determined and disclosed in accordance with the three-tier fair value hierarchy specified in Note 3. The Company is required to disclose the estimated fair values of its financial instruments. As of March 31, 2022 and December 31, 2021, the Company’s financial instruments consisted of cash and cash equivalents. The estimated fair values of these financial instruments approximate their carrying values. As of March 31, 2022, the Company did not have any derivatives, hedging instruments or other similar financial instruments.

Concentration of Credit Risk

Financial instruments that subject the Company to credit risk primarily consist of cash and cash equivalents. The Company’s credit risk is managed by investing in highly rated money market instruments, U.S. treasury bills, corporate bonds, commercial paper and/or other debt securities. Due to these factors, no significant additional credit risk is believed by management to be inherent in the Company’s assets. As of March 31, 2022, all of the Company’s cash and cash equivalents were held at two financial institutions.

Operating Lease Right-of-use Asset and Lease Liability

The Company accounts for leases under ASC 842, Leases. Operating leases are included in “Operating lease right-of-use assets” within the Company’s balance sheets and represent the Company’s right to use an underlying asset for the lease term. The Company’s related obligation to make lease payments are included in “Operating lease liability” and “Operating lease liability, net of current portion” within the Company’s balance sheets. Operating lease right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term, an amount equal to the lease payments in a similar economic environment. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The ROU assets are tested for impairment according to ASC 360, Property, Plant, and Equipment (“ASC 360”). Leases with an initial term of 12 months or less are not recorded on the balance sheet and are recognized as lease expense on a straight-line basis over the lease term.

As of March 31, 2022 and December 31, 2021, the Company’s operating lease ROU assets and corresponding short-term and long-term lease liabilities primarily relate to its existing Exton, PA facility operating lease which expires on May 31, 2025.

7

Table of Contents

Note 2. Summary of Significant Accounting Policies (Continued)

Warrant Liability

The Company accounts for stock warrants as either equity instruments, liabilities or derivative liabilities in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”) and/or ASC 815, Derivatives and Hedging (“ASC 815”), depending on the specific terms of the warrant agreement. Freestanding warrants for shares that are potentially redeemable, whereby the Company may be required to transfer assets (e.g. cash or other assets) outside of its control, are classified as liabilities. Liability-classified warrants are recorded at their estimated fair values at each reporting period until they are exercised, terminated, reclassified or otherwise settled. Changes in the estimated fair value of liability-classified warrants are recorded in Warrant Revaluation Gain (Loss) in the Company’s condensed statements of operations. Equity classified warrants are recorded within additional paid-in capital at the time of issuance and not subject to remeasurement. During the three months ended March 31, 2021, all of the Company’s liability-classified warrants terminated and, accordingly, the liability balance was derecognized.

Future Tranche Right Liability

On December 23, 2019, the Company entered into a Securities Purchase Agreement (the “December 2019 Securities Purchase Agreement”) with institutional investors affiliated with Baker Brothers, an existing stockholder (see Note 10). As more fully described in Note 6, the December 2019 Securities Purchase Agreement contained call options on redeemable preferred shares with warrants (conditionally exercisable for shares that are puttable). The Company determined that these call options represented freestanding financial instruments and accounted for the options as liabilities (“Future Tranche Right Liability”) under ASC 480, which requires the measurement and recognition of the fair value of the liability at the time of issuance and at each reporting period. Any change in fair value was recognized in Future Tranche Right Liability Revaluation Gain (Loss) in the Company’s condensed statements of operations. During the three months ended March 31, 2021, the liability-classified call options provided for under the December 2019 Securities Purchase Agreement terminated and, accordingly, the liability balance was derecognized.

Preferred Stock

The Company applies ASC 480 when determining the classification and measurement of its preferred stock. Preferred shares subject to mandatory redemption are classified as liability instruments and are measured at fair value. Conditionally redeemable preferred shares (including preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, preferred shares are classified as stockholders’ equity.

Income Taxes

In accordance with ASC 270, Interim Reporting, and ASC 740, Income Taxes, the Company is required at the end of each interim period to determine the best estimate of its annual effective tax rate and then apply that rate in providing for income taxes on a current year-to-date (interim period) basis.  For the three months ended March 31, 2022 and 2021, the Company recorded no tax expense or benefit due to the expected current year loss and its historical losses. The Company has not recorded its net deferred tax asset as of either March 31, 2022 or December 31, 2021 because it maintained a full valuation allowance against all deferred tax assets as of these dates as management has determined that it is not more likely than not that the Company will realize these future tax benefits. As of March 31, 2022 and December 31, 2021, the Company had no uncertain tax positions.

New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB and rules are issued by the SEC that the Company has or will adopt as of a specified date. Unless otherwise noted, management does not believe that any other recently issued accounting pronouncements issued by the FASB or guidance issued by the SEC had, or is expected to have, a material impact on the Company’s present or future financial statements.

8

Table of Contents

Note 2. Summary of Significant Accounting Policies (Continued)

Recently Adopted Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the guidance on an issuer’s accounting for convertible instruments and contracts in its own equity. The Company adopted ASU 2020-06 in the first quarter of 2021. The adoption of this ASU did not have a material effect on the Company’s financial statements.

COVID-19

While the Company is not aware of a material impact from the continuation of the coronavirus ("COVID-19") pandemic through March 31, 2022, the full extent to which COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, depends on future developments.

Note 3. Fair Value Measurements

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company applies the guidance in ASC 820, Fair Value Measurement, to account for financial assets and liabilities measured on a recurring basis.  Fair value is measured at the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability.

The Company uses a fair value hierarchy, which distinguishes between assumptions based on market data (observable inputs) and an entity's own assumptions (unobservable inputs). The guidance requires that fair value measurements be classified and disclosed in one of the following three categories:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2: Quoted prices in markets that are not active or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability
Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each reporting period. There were no transfers between Level 1, 2 and 3 during the three months ended March 31, 2022.

9

Table of Contents

Note 3. Fair Value Measurements (Continued)

The table below presents the assets and liabilities measured and recorded in the financial statements at fair value on a recurring basis at March 31, 2022 and December 31, 2021 categorized by the level of inputs used in the valuation of each asset and liability.

 

March 31, 2022

 

(In thousands)

Total

Level 1

Level 2

Level 3

 

Assets

Cash

$

250

$

250

$

$

Cash equivalents – money market funds

27,743

27,743

Total assets

$

27,993

$

27,993

$

$

December 31, 2021

(In thousands)

Total

Level 1

Level 2

Level 3

Assets

Cash

$

250

$

250

$

$

Cash equivalents – money market funds

32,295

32,295

Total assets

$

32,545

$

32,545

$

$

The Level 1 assets consist of money market funds, which are actively traded daily.

Changes in Level 3 Liabilities Measured at Fair Value on a Recurring Basis

Warrant Liability and Future Tranche Right Liability

The reconciliation of the Company's warrant and future tranche right liability measured at fair value on a recurring basis using unobservable inputs (Level 3) is as follows:

Future

Warrant

Tranche Right

(In thousands)

Liability

Liability

Balance, December 31, 2020

 

$

6,983

$

118,803

Change in the fair value of liability (1)

 

 

(6,983)

 

(118,803)

Balance, March 31, 2021

 

$

$

(1)During the three months ended March 31, 2021, the Company’s liability-classified warrants and future tranche rights terminated, and accordingly, the liabilities were derecognized.

10

Table of Contents

Note 4. Property and Equipment

At March 31, 2022 and December 31, 2021, property and equipment, at cost, consisted of the following:

March 31, 

December 31, 

(In thousands)

    

2022

    

2021

 

Leasehold improvements

$

107

$

107

Equipment and other

 

712

 

712

Total property and equipment, at cost

$

819

$

819

Less: Accumulated depreciation and amortization

 

801

 

797

Property and equipment, net

$

18

$

22

Depreciation and amortization expense on property and equipment was less than $0.1 million for the three months ended March 31, 2022 and 2021. Additionally, there were no non-cash property additions or impairment-related charges recognized during each of the three months ended March 31, 2022 and 2021.

Note 5. Accrued Expenses

At March 31, 2022 and December 31, 2021, accrued expenses consisted of the following:

    

March 31, 

December 31, 

 

(In thousands)

2022

    

2021

 

Payroll and related costs

$

381

$

477

Clinical and nonclinical trial expenses

 

2,436

 

2,909

Professional and consulting fees

 

430

 

591

Other

 

95

 

111

Total accrued expenses

$

3,342

$

4,088

11

Table of Contents

Note 6. Redeemable Convertible Preferred Stock

December 2019 Private Placement

On December 23, 2019, the Company entered into the December 2019 Securities Purchase Agreement under which the Company sold 23,684 shares of Series B1 convertible preferred stock (“Series B1 Preferred Stock”) and warrants to purchase 2,368,400 shares of the Company’s common stock at an exercise price of $1.52 per share (or, if the holder elects to exercise the warrants for shares of Series B1 Preferred Stock, 23,684 shares of Series B1 Preferred Stock at an exercise price of $152 per share) for aggregate gross proceeds of $3.9 million (the “Initial Closing”).

In addition, the Company agreed to sell to the purchasers, at their option and subject to certain conditions, (i) 98,685 shares of Series B2 convertible preferred stock (“Series B2 Preferred Stock”) and 9,868,500 warrants to purchase common stock at an exercise price of $1.52 per share (or, at the election of the holder, 98,685 shares of Series B2 Preferred Stock at an price of $152 per share), for aggregate gross proceeds of $15 million (the “Series B2 Tranche”), (ii) 82,418 shares of Series B3 convertible preferred stock (“Series B3 Preferred Stock”) and 6,593,440 warrants to purchase common stock at an exercise price of $1.82 per share (or, at the election of the holder, 65,934 shares of Series B3 Preferred Stock at a price of $182 per share), for aggregate gross proceeds of $15 million (the “Series B3 Tranche”), and (iii) 82,418 shares of Series B4 convertible preferred stock (“Series B4 Preferred Stock”) and 6,593,440 warrants to purchase common stock at an exercise price of $1.82 per share (or, at the election of the holder, 65,934 shares of Series B3 Preferred Stock at a price of $182 per share), for aggregate gross proceeds of $15 million (the “Series B4 Tranche”) over a period of up to 21-months following the Company’s 2020 Annual Meeting of Stockholders held on May 12, 2020, where stockholders of the Company voted to approve an amendment to the Company’s Restated Certificate of Incorporation to increase the authorized number of shares of the Company’s common stock to 140,000,000. As consideration for the future tranche rights, the Company received aggregate gross proceeds of $6.2 million in December 2019. 

The purchase and sale of the securities issuable under the Series B2, B3, and B4 tranches described above were subject to three separate closings, each to be conducted at the purchasers’ discretion. The right of the purchasers to purchase Series B2, Series B3 and Series B4 Preferred Stock was set to expire on the 10th business day following the Company’s ORR Data Announcement, as defined in the December 2019 Securities Purchase Agreement, for its ILLUMINATE-301 study. As a result of the purchasers not exercising the Series B2 Tranche prior to expiration, all future tranche rights and outstanding warrants previously issued pursuant to the December 2019 Securities Purchase Agreement were terminated during the three months ended March 31, 2021. Accordingly, the Company is no longer eligible to receive additional proceeds pursuant to the December 2019 Securities Purchase Agreement and the related warrant liability and future tranche right liability were derecognized during the three months ended March 31, 2021.

Accounting Considerations

The Company determined that the Series B1 Preferred Stock, the accompanying Series B1 warrants, and each of the future tranche rights represent freestanding financial instruments. The Series B1 warrants and the future tranche rights were classified as liabilities until their termination in March 2021 as the underlying shares were potentially redeemable and such redemption was deemed to be outside of the Company’s control.

Due to the redeemable nature of the Series B1 Preferred Stock, the Series B1 Preferred Stock was classified as temporary equity and the carrying value was being accreted to its redemption value while the Series B1 Preferred Stock was outstanding during 2021. During 2021, all the Company’s 23,684 shares of Series B1 Preferred Stock outstanding were converted into shares of the Company’s common stock. For the three months ended March 31, 2021, accretion was de minimis.

12

Table of Contents

Note 7. Stockholders’ Equity

Common Stock Purchase Agreement

On March 4, 2019, the Company entered into a Purchase Agreement with Lincoln Park Capital Fund, LLC (“Lincoln Park”), which was amended on September 2, 2020 (as amended to date, the “LPC Purchase Agreement”), pursuant to which, upon the terms and subject to the conditions and limitations set forth therein, Lincoln Park committed to purchase an aggregate of $35.0 million of shares of Company common stock from time to time at the Company’s sole discretion over a 36-month period. As consideration for entering into the LPC Purchase Agreement, the Company issued 269,749 shares of Company common stock to Lincoln Park as a commitment fee (the “Commitment Shares”). The closing price of the Company’s common stock on March 4, 2019 was $2.84 and the Company did not receive any cash proceeds from the issuance of the Commitment Shares.

During the three months ended March 31, 2022, the Company did not sell any shares under the LPC Purchase Agreement. The 36-month period noted above for the LPC Purchase Agreement expired on March 4, 2022; accordingly, the Company no longer has access to additional capital under the LPC Purchase Agreement subsequent to this date.

During the three months ended March 31, 2021, the Company sold 800,000 shares, pursuant to the LPC Purchase Agreement, resulting in net proceeds of $4.2 million.

"At-The-Market" Equity Program

In November 2018, the Company entered into an Equity Distribution Agreement (the “ATM Agreement”) with JMP Securities LLC (“JMP”) pursuant to which the Company may issue and sell shares of its common stock having an aggregate offering price of up to $50.0 million (the “Shares”) through JMP as its agent. Subject to the terms and conditions of the ATM Agreement, JMP will use its commercially reasonable efforts to sell the Shares from time to time, based upon the Company’s instructions, by methods deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933, as amended, or if specified by the Company, by any other method permitted by law, including but not limited to in negotiated transactions. The Company has no obligation to sell any of the Shares, and the Company or JMP may at any time suspend sales under the ATM Agreement or terminate the ATM Agreement. JMP is entitled to a fixed commission of 3.0% of the gross proceeds from Shares sold.

During the three months ended March 31, 2022, the Company sold no shares of common stock pursuant to the ATM Agreement.

During the three months ended March 31, 2021, the Company sold 2,394,956 shares of common stock, pursuant to the ATM Agreement resulting in net proceeds, after deduction of commissions and other offering expenses, of $12.1 million. As of March 31, 2022, the Company may sell up to an additional $19.5 million of shares under the ATM Agreement, subject to applicable securities laws and related rules and regulations.

13

Table of Contents

Note 7. Stockholders’ Equity (Continued)

July 2020 Private Placement

On July 13, 2020, the Company entered into a Securities Purchase Agreement (the “July 2020 Securities Purchase Agreement”) with Pillar Partners Foundation, L.P. (“Pillar Partners”), Pillar Pharmaceuticals 6, L.P. (“Pillar 6”), and Pillar Pharmaceuticals 7 L.P. (“Pillar 7”) (collectively, the “July 2020 Purchasers”), each a related party as more fully described in Note 10, pursuant to which, among other things, provided the July Purchasers the option to purchase, at their sole discretion, pre-funded warrants to purchase up to 784,615 shares of the Company’s common stock, at an exercise price of $0.01 per share, and warrants to purchase up to 274,615 shares of the Company’s common stock, at an exercise price of $9.75, for aggregate gross proceeds of $5.1 million (the “July 2020 Private Placement Second Closing”). During the three months ended March 31, 2021, the option to purchase securities in the July 2020 Private Placement Second Closing terminated. As a result, the Company is no longer eligible to receive additional proceeds from the sale of additional securities pursuant to the July 2020 Securities Purchase Agreement. However, the July 2020 Purchasers still hold outstanding warrants previously issued under the July 2020 Securities Purchase Agreement, as detailed below under the heading “Common Stock Warrants”.

Common Stock Warrants

In connection with various financing transactions, the Company has issued warrants to purchase shares of the Company’s common stock and preferred stock. The Company accounts for common and preferred stock warrants as equity instruments or liabilities, depending on the specific terms of the warrant agreement.

The following table summarizes outstanding warrants to purchase shares of the Company’s common stock and/or preferred stock as of March 31, 2022 and December 31, 2021:

Number of Shares

March 31, 

December 31,

Weighted-Average

Description

2022

2021

Exercise Price

Expiration Date

 

Equity-classified Warrants

May 2013 warrants

 

15,437

15,437

$ 0.08

None

September 2013 warrants

 

4,096

4,096

$ 0.08

None

February 2014 warrants

 

2,171

2,171

$ 0.08

None

April 2020 Private Placement first closing warrants

3,039,514

3,039,514

$ 2.28

Apr 2023

April 2020 Private Placement second closing warrants

1,373,626

1,373,626

$ 2.71

Dec 2023

April 2020 Private Placement second closing warrants

1,143,428

1,143,428

$ 0.01

None

July 2020 Private Placement first closing warrants

389,731

389,731

$ 0.01

None

July 2020 Private Placement first closing warrants

2,764,227

2,764,227

$ 2.58

Jul 2023

8,732,230

8,732,230

Total outstanding

 

8,732,230

8,732,230

14

Table of Contents

Note 8. Collaboration and License Agreements

Scriptr Collaboration and Option Agreement

In February 2021, the Company entered into a collaboration and option agreement with Scriptr Global, Inc. (“Scriptr”), pursuant to which (i) the Company and Scriptr will conduct a research collaboration utilizing Scriptr Platform Technology (“SPT”) to identify, research and develop gene therapy candidates (each, a “Collaboration Candidate”) for the treatment, palliation, diagnosis or prevention of (a) myotonic dystrophy type 1 (“DM1 Field”) and (b) Friedreich’s Ataxia (“FA Field”) on a Research Program-by-Research Program basis, as applicable, and (ii) the Company was granted an exclusive option, in its sole discretion, to make effective the Scriptr License Agreement, as defined below, for a given Research Program, as defined below, to make use of Collaboration Candidates and related intellectual property (collectively, the “Scriptr Agreement”).

Pursuant to the Scriptr Agreement, Scriptr will use commercially reasonable efforts to carry out research activities set forth in accordance with the applicable DM1 Field and FA Field research plans, including certain pre-clinical proof of concept studies, to identify research Collaboration Candidates utilizing SPT (each, a “Research Program”). Following the completion of activities under a given Research Program, Scriptr will prepare and submit to Idera a comprehensive data package (each, a “Data Package”) that summarizes, on a Program-by-Program basis, any Collaboration Candidates researched under the Research Program, including any data and results. Upon receipt of a Data Package, the Company has, in its sole discretion, up to two-hundred seventy (270) calendar days to make effective the exclusive license agreement entered into by and between the Company and Scriptr, pursuant to which, among other things, Scriptr grants Idera exclusive rights and licenses with respect to the development, manufacture and commercialization of licensed candidates and products, subject to certain conditions and limitations (the “Scriptr License Agreement”), for a given Research Program (each licensed Research Program, a “Licensed Program”). The Scriptr License Agreement provides for customary development milestones on candidates developed under a Licensed Program and royalties on licensed products, if any.

In partial consideration of the rights granted by Scriptr to the Company under the Scriptr Agreement, the Company made a one-time, non-creditable and non-refundable payment to Scriptr during the first quarter of 2021. The Company shall also reimburse Scriptr for costs incurred by or on behalf of Scriptr in connection with the conduct of each Research Program during the Research Term in accordance with the applicable Research Program budget and payment schedule. The Company incurred approximately $0.3 million and $0.7 million in research and development expenses under the Scriptr Agreement during the three months ended March 31, 2022 and March 31, 2021, respectively.

15

Table of Contents

Note 9. Stock-Based Compensation

As of March 31, 2022, the only equity compensation plans from which the Company may currently issue new awards are the Company’s 2013 Stock Incentive Plan (as amended to date, the “2013 Plan”) and 2017 Employee Stock Purchase Plan (the “2017 ESPP”), each as more fully described below.

Equity Incentive and Employee Stock Purchase Plans

2013 Stock Incentive Plan

The 2013 Plan allows for the issuance of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”), other stock-based awards and performance awards. The total number of shares of common stock authorized for issuance under the 2013 Plan is 5,653,057 shares of the Company’s common stock, plus such additional number of shares of common stock (up to 868,372 shares) as is equal to the number of shares of common stock subject to awards granted under the Company’s 2005 Stock Incentive Plan or 2008 Stock Incentive Plan (the “2008 Plan”), to the extent such awards expire, terminate or are otherwise surrendered, canceled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right.

As of March 31, 2022, options to purchase a total of 4,341,200 shares of common stock and 548,491 restricted stock units were outstanding and up to 542,649 shares of common stock remained available for grant under the 2013 Plan.

Other Awards and Inducement Grants

The Company has not made any awards pursuant to other equity incentive plans, including the 2008 Plan, since the Company’s stockholders approved the 2013 Plan. As of March 31, 2022, options to purchase a total of 155,968 shares of common stock were outstanding under the 2008 Plan. In addition, as of March 31, 2022, non-statutory stock options to purchase an aggregate of 325,000 shares of common stock were outstanding that were issued outside of the 2013 Plan to certain employees in 2015 and 2014 pursuant to the Nasdaq inducement grant exception as a material component of new hires’ employment compensation.

2017 Employee Stock Purchase Plan

The 2017 ESPP is intended to qualify as an "employee stock purchase plan" as defined in Section 423 of the Internal Revenue Code, and is intended to encourage our employees to become stockholders of ours, to stimulate increased interest in our affairs and success, to afford employees the opportunity to share in our earnings and growth and to promote systematic savings by them. The total number of shares of common stock authorized for issuance under the 2017 ESPP is 412,500 shares of common stock, subject to adjustment as described in the 2017 ESPP. As of March 31, 2022, 154,025 shares remained available for issuance under the 2017 ESPP.

For the three months ended March 31, 2022 and 2021, the Company issued 42,200 and 7,648 shares of common stock, respectively, under the 2017 ESPP and received proceeds of less than $0.1 million during each period, as a result of employee stock purchases.

16

Table of Contents

Note 9. Stock-Based Compensation (Continued)

Accounting for Stock-based Compensation

The Company recognizes non-cash compensation expense for stock-based awards under the Company’s equity incentive plans and employee stock purchases under the Company’s 2017 ESPP as follows:

Stock Options: Compensation cost is recognized over an award’s requisite service period, or vesting period, using the straight-line attribution method, based on the grant date fair value determined using the Black-Scholes option-pricing model.

RSUs: Compensation cost for time-based RSUs, which vest over time based only on continued service, is recognized on a straight-line basis over the requisite service period based on the fair value of the Company’s common stock on the date of grant. Compensation cost for awards that are subject to market considerations is recognized on a straight-line basis over the implied requisite service period, based on the grant date fair value estimated using a Monte Carlo simulation. Compensation cost for awards that are subject to performance conditions is recognized over the period of time commencing when the performance condition is deemed probable of achievement based on the fair value of the Company’s common stock on the date of grant.

Employee Stock Purchases: Compensation cost is recognized over each plan period based on the fair value of the look-back provision, calculated using the Black-Scholes option-pricing model, considering the 15% discount on shares purchased.

Total stock-based compensation expense attributable to stock-based awards made to employees and directors and employee stock purchases included in operating expenses in the Company's condensed statements of operations for the three months ended March 31, 2022 and 2021 were as follows:

Three Months Ended

    

March 31, 

(in thousands)

2022

    

2021

Stock-based compensation:

    

Research and development

Employee Stock Purchase Plan

$

6

    

$

12

Equity Incentive Plan

89

    

368

$

95

    

$

380

General and administrative

 

Employee Stock Purchase Plan

$

2

    

$

2

Equity Incentive Plan

448

    

729

$

450

    

$

731

Total stock-based compensation expense

$

545

    

$

1,111

During the three months ended March 31, 2022 and 2021, the weighted average fair market value of stock options granted was $0.42 and $2.53, respectively.

17

Table of Contents

Note 9. Stock-Based Compensation (Continued)

The following weighted average assumptions apply to the options to purchase 198,200 and 643,629 shares of common stock granted to employees during the three months ended March 31, 2022 and 2021, respectively:

    

2022

    

2021

 

Average risk-free interest rate

 

1.3%

0.3%

Expected dividend yield

 

Expected lives (years)

 

3.8

3.9

Expected volatility

 

105%

85%

Weighted average exercise price (per share)

$

0.60

$

4.20

All options granted during the three months ended March 31, 2022 and 2021 were granted at exercise prices equal to the fair market value of the Company’s common stock on the date of grant. As further described below, the vesting of certain options granted to employees during the three months ended March 31, 2021 were accelerated during the period.

Stock Option Activity

The following table summarizes stock option activity for the three months ended March 31, 2022:

($ in thousands, except per share data)

Stock
Options

Weighted-Average
Exercise Price

Weighted-Average
Remaining
Contractual Life
(in years)

 

Outstanding at December 31, 2021

 

5,202,006

$

8.06

 

5.9

Granted

 

198,200

0.60

Exercised

 

Forfeited

 

Expired

 

(578,038)

2.79

Outstanding at March 31, 2022 (1)

 

4,822,168

$

8.39

6.5

Exercisable at March 31, 2022

 

3,610,716

$

10.63

5.7

(1)Includes both vested stock options as well as unvested stock options for which the requisite service period has not been rendered but that are expected to vest based on achievement of a service condition.

As of March 31, 2022, there was $1.1 million of unrecognized compensation cost related to unvested options, which the Company expects to recognize over a weighted average period of 2.2 years.

During the three months ended March 31, 2021, the Company accelerated the vesting of 1,535,578 options, which were previously granted from 2019 through 2021. The modification resulted in an incremental stock-based compensation charge that was not significant. In January 2022, for members of the Company’s Leadership team, the compensation committee of the Board implemented a post-exercise holding period prohibiting the sale of shares associated with the 2021 Acceleration on any schedule more favourable than the original vesting schedule (i.e., 6.25% of the total option grant every quarter and 25% of the total RSU grant every year). This post-exercise holding period has no financial statement impact.

Restricted Stock Activity

The following table summarizes restricted stock activity for the three months ended March 31, 2022:

Time-based Awards

 

Market/Performance-based Awards

($ in thousands, except per share data)

Number of Shares

Weighted-Average
Grant Date
Fair Value

 

Number of Shares

Weighted-Average
Grant Date
Fair Value

Nonvested shares at December 31, 2021

 

68,675

$

2.30

 

507,028

$

1.54

Granted

 

 

 

 

Cancelled

 

 

 

Vested

 

(27,212)

2.43

 

 

Nonvested shares at March 31, 2022

 

41,463

$

2.21

 

507,028

$

1.54

18

Table of Contents

Note 9. Stock-Based Compensation (Continued)

Time-based Restricted Stock Units

During the three months ended March 31, 2021, the Company accelerated the vesting of 137,872 unvested time-based restricted stock units which were previously granted in 2019 and 2020. The modification resulted in an incremental stock-based compensation charge that was not significant.

During the three months ended March 31, 2022, the Company recognized $0.1 million of compensation expense related to these awards. As of March 31, 2022, there was $0.1 million of unrecognized compensation expense related to the Company’s time-based RSUs, which is expected to be recognized over a weighted-average period of 1.4 years.

Market/Performance-based Restricted Stock Units

In July 2020, the Company granted RSUs to certain employees, including executive officers, under the 2013 Plan, with vesting that may occur upon a combination of specific performance and/or market conditions. Accordingly, the Company views these RSUs as two separate awards: (i) an award that vests if the market condition is achieved, and (ii) an award that vests whether or not the market condition is achieved, so long as the performance condition is achieved. The Company is currently recognizing compensation expense for these awards over the estimated requisite service period of 2.36 years based on the estimated fair value when considering the market condition of the award, which was determined using a Monte Carlo simulation. During the three months ended March 31, 2022, the Company recognized $0.1 million of compensation expense related to these awards. As of March 31, 2022, the remaining unrecognized compensation cost for the market-based component of these awards, which is expected to be recognized over a weighted-average period of 0.7 years, is $0.2 million. In addition, should the performance condition be achieved, the Company would recognize an additional $0.3 million of compensation expense.

Note 10.  Related Party Transactions

Baker Brothers

Julian C. Baker, a member of the Company’s Board until his resignation in September 2018, is a principal of Baker Bros. Advisors, LP.  Additionally, Kelvin M. Neu, a member of Company’s Board until his resignation in June 2019, is an employee of Baker Bros. Advisors, LP. At December 31, 2020, Baker Bros. Advisors, LP and certain of its affiliated funds (collectively, “Baker Brothers”) held sole voting power with respect to an aggregate of 4,608,786 shares of the Company’s common stock, representing approximately 12% of the Company's then outstanding common stock.

During the three months ended March 31, 2021, Baker Brothers exercised warrants to purchase 2,708,812 shares of the Company’s common stock at an exercise price of $0.08 per share for a total exercise price of approximately $0.2 million. Additionally, during the three months ended March 31, 2021, Baker Brothers converted 14,150 shares Series B1 Preferred Stock into 1,415,000 shares of the Company’s common stock. As of March 31, 2022, Baker Brokers held approximately 4% of the Company’s outstanding stock.

As of March 31, 2021, Baker Brothers held 9,534 shares of the Company’s Series B1 Preferred Stock, which were subsequently converted into 953,400 shares of the Company’s common stock in April 2021.

At March 31, 2022, Baker Brothers held sole voting power with respect to an aggregate of 2,047,180 shares of the Company’s common stock, representing approximately 4% of the Company's outstanding common stock.

19

Table of Contents

Note 10.  Related Party Transactions (Continued)

Pillar Investment Entities

Youssef El Zein, a member of the Company’s board of directors until his resignation in October 2017, is a director and controlling stockholder of Pillar Invest Corporation (“Pillar Invest”), which is the general partner of Pillar Pharmaceuticals I, L.P., Pillar Pharmaceuticals II, L.P., Pillar Pharmaceuticals III, L.P., Pillar Pharmaceuticals IV, L.P., Pillar Pharmaceuticals V, L.P., Pillar 6, Pillar 7, and Pillar Partners (collectively, the “Pillar Investment Entities”). As of March 31, 2022, the Pillar Investment Entities owned approximately 16% of the Company's common stock and beneficially owned approximately 19.99% of the Company's common stock.

As of March 31, 2022, the Pillar Investment Entities held (i) prefunded warrants to purchase up to 1,533,159 shares of the Company’s common stock at an exercise price of $0.01 per share, (ii) warrants to purchase up to 3,039,514 shares of the Company’s common stock at an exercise price of $2.28 per share, (iii) warrants to purchase up to 2,764,227 shares of the Company’s common stock at an exercise price of $2.58 per share, and (iv) warrants to purchase up to 1,373,626 shares of the Company’s common stock at an exercise price of $2.71 per share.

During the three months ended March 31, 2021, Pillar 6 exercised warrants to purchase 643,525 shares of the Company’s common stock at an exercise price of $0.01 per share for a total exercise price of less than $0.1 million.

Board Fees Paid in Stock

Pursuant to the Company’s director compensation program, in lieu of director board and committee fees of less than $0.1 million during each of the three months ended March 31, 2022 and 2021, the Company issued 41,155 and 47,400 shares of common stock, respectively, to certain of its directors. Director board and committee fees are paid in arrears and the number of shares issued was calculated based on the market closing price of the Company’s common stock on the issuance date.

Note 11. Net Income (Loss) per Common Share

During periods the Company realizes net income, it uses the two-class method to compute net income per common share and has securities outstanding (redeemable convertible preferred stock) that entitle the holder to participate in dividends and earnings of the Company. In addition, the Company analyzes the potential dilutive effect of outstanding redeemable convertible preferred stock under the "if-converted" method when calculating diluted earnings per share and reports the more dilutive of the approaches (two class or "if-converted"). The two-class method is not applicable during periods with a net loss, as the holders of the redeemable convertible preferred stock have no obligation to fund losses.

The Company also analyzes the potential dilutive effect of stock options, restricted stock units, warrants and shares underlying future tranche rights under the treasury stock method (as applicable), during periods of income, or during periods in which income is recognized related to changes in fair value of its liability-classified securities.

For the three months ended March 31, 2021, the Company used the two-class method to compute net income per common share. Under this method, net income is reduced by the amount of any dividends earned and the accretion of redeemable convertible preferred stock to its redemption value, if any, during the period. The remaining earnings (undistributed earnings) are allocated to common stock and each series of redeemable convertible preferred stock to the extent that each preferred security may share in earnings as if all of the earnings for the period had been distributed. The total earnings allocated to common stock is then divided by the number of outstanding shares to which the earnings are allocated to determine the earnings per share.

20

Table of Contents

Note 11. Net Income (Loss) per Common Share (Continued)

However, during periods the Company realizes net loss, basic and diluted net loss per common share applicable to common stockholders is calculated by dividing net loss applicable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration of common stock equivalents. The Company’s potentially dilutive shares, which include outstanding stock option awards, common stock warrants and convertible preferred stock, are considered to be common stock equivalents and are only included in the calculation of diluted net loss per share when their effect is dilutive.

For the three months ended March 31, 2022, diluted net loss per common share applicable to common stockholders was the same as basic net loss per common share applicable to common stockholders as the effects of the Company’s potential common stock equivalents were antidilutive.

Details in the computation of basic and diluted net income (loss) per common share were as follows:

Three Months Ended

March 31, 

($ in thousands except per share data)

2022

2021

Net income (loss) per share — Basic:

Net income (loss)

$

(4,178)

$

115,738

Less: Undistributed earnings to preferred stockholders

(6,132)

Net income (loss) applicable to common stockholders - basic

$

(4,178)

$

109,606

Numerator for basic net income (loss) applicable to common stockholders

$

(4,178)

$

109,606

Denominator for basic net income (loss) applicable to common stockholders

52,893

41,193

Net income (loss) applicable to common stockholders - basic

$

(0.08)

$

2.66

Net income (loss) per share — Diluted:

Net income (loss)

$

(4,178)

$

115,738

Less: Warrant revaluation gain applicable to dilutive liability-classified warrants