UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 40-F
(Check One)
[ ] REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2020
Commission File Number: 001-38480
IMV Inc.
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s name into English (if applicable))
Canada
(Province or other jurisdiction of incorporation or organization)
2834
(Primary Standard Industrial Classification Code Number (if applicable))
Not Applicable
(I.R.S. Employer Identification Number (if applicable))
130 Eileen Stubbs Avenue
Suite 19 Dartmouth
Nova ScotiaB3B 2C4
Canada
(902) 492-1819
(Address and telephone number of Registrant’s principal executive offices)
C-T Corporation System
28 Liberty Street
New York, NY
10005
(212)894-8940
(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
Common Shares
Ticker Symbol(s)
IMV
Name of each exchange
on which registered
The NASDAQ Stock Market LLC
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
For annual reports, indicate by check mark the information filed with this Form:
[ X ] Annual information form [ X ] Audited annual financial statements
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 67,093,547.
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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.
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 [ X ] NO [ ]
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.
Emerging growth company [ X ]
YES [ X ] NO [ ]
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, 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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. [ ]
EXPLANATORY NOTE
IMV Inc. (the “Registrant”) is a Canadian corporation eligible to file its Annual Report pursuant to Section 13(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), on Form 40-F. The Registrant is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act. Equity securities of the Registrant are
accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3 thereunder.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Annual Report on Form 40-F are forward-looking statements within the meaning of Section 21E of the Exchange Act and Section 27A of the
Securities Act of 1933, as amended (the “Securities Act”). Additionally, the safe harbor provided in Section 21E of the Exchange Act and Section 27A of the Securities Act
applies to any forward-looking information provided pursuant to “Off-Balance Sheet Arrangements” and “Disclosure of Contractual Obligations” in this Annual Report on
Form 40-F. Please see “Forward-Looking Statements” beginning on page [2] of the Management Discussion and Analysis for the fiscal year ended December 31, 2020 of the
Registrant, attached as Exhibit 99.3 to this Annual Report on Form 40-F, and “Introduction and Forward-Looking Statements” beginning on page 1 of the Annual Information
Form for the fiscal year ended December 31, 2020 of the Registrant, attached as Exhibit 99.1 to this Annual Report on Form 40-F.
DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING PRACTICES
The Registrant is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare this Annual Report on Form 40-F in accordance with
Canadian disclosure requirements, which are different from those of the United States.
The Registrant prepares its consolidated financial statements, which are filed with this Annual Report on Form 40-F, in accordance with International Financial Reporting
Standards, as issued by the International Accounting Standards Board (“IFRS”). Such financial statements may not be comparable to financial statements prepared in
accordance with United States generally accepted accounting principles.
Unless otherwise indicated, all dollar amounts in this Annual Report on Form 40-F are in Canadian dollars. The exchange rate of Canadian dollars into United States dollars,
on December 31, 2020, based upon the Bank of Canada published daily average exchange rate, was U.S.$1.00 = CDN$1.2730.
3
Purchasing, holding, or disposing of securities of the Registrant may have tax consequences under the laws of the United States and Canada that are not described in this
Annual Report on Form 40-F.
Annual Information Form
PRINCIPAL DOCUMENTS
The Registrant’s Annual Information Form for the fiscal year ended December 31, 2020 is filed as Exhibit 99.1 and incorporated by reference in this Annual Report on Form
40-F.
Audited Annual Financial Statements
The audited consolidated financial statements of the Registrant for the fiscal year ended December 31, 2020, including the Independent Auditor’s Report with respect thereto,
are filed as Exhibit 99.2 and incorporated by reference in this Annual Report on Form 40-F.
Management Discussion and Analysis
The Registrant’s Management Discussion and Analysis for the fiscal year ended December 31, 2020 is filed as Exhibit 99.3 and incorporated by reference in this Annual
Report on Form 40-F.
Certifications
The required certifications are included in Exhibits 99.4, 99.5, 99.6 and 99.7 of this Annual Report on Form 40-F.
Disclosure Controls and Procedures
CONTROLS AND PROCEDURES
At the end of the period covered by this report, an evaluation of the effectiveness of the design and operation of the Registrant’s “disclosure controls and procedures” (as such
term is defined in Rules 13a-15(e) under the Exchange Act) was carried out by the Registrant’s principal executive officer (the “ CEO”) and principal financial officer (the
“CFO”). Based upon that evaluation, the Registrant’s CEO and CFO have concluded that, as of the end of the period covered by this report, the design and operation of the
Registrant’s disclosure controls and procedures are effective to ensure that (i) information required to be disclosed in reports that the Registrant files or submits to regulatory
authorities is recorded, processed, summarized and reported within the time periods specified by regulation, and (ii) is accumulated and communicated to management,
including the Registrant’s CEO and CFO, to allow timely decisions regarding required disclosure.
It should be noted that while the Registrant’s CEO and CFO believe that the Registrant’s disclosure controls and procedures provide a reasonable level of assurance that they
are effective, they do not expect that the Registrant’s disclosure controls and procedures will prevent all errors and fraud. A control system, no matter how well conceived or
operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
4
Management Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rule 13a-15(f) and Rule 15d-15(f)
under the Exchange Act) and has designed such internal control over financial reporting to provide reasonable assurance regarding the reliability of financial reporting and
preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards
Board.
In designing and evaluating the Registrant’s internal control over financial reporting, the Registrant’s management recognizes that any controls and procedures, no matter how
well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its reasonable judgment in evaluating the
cost-benefit relationship of possible controls and procedures. Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions,
or that the degree of compliance with the policies and procedures may deteriorate.
Management conducted an evaluation of the effectiveness of the Registrant’s internal control over financial reporting as of December 31, 2020. In making this assessment,
management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013). Based
on this evaluation, management concluded that the Registrant’s internal control over financial reporting was effective as of December 31, 2020, based on those criteria. Also
see “Disclosure Controls and Procedures and Internal Control over Financial Reporting” in the Management’s Discussion and Analysis for the fiscal year ended December 31,
2020, included as Exhibit 99.3 to this Annual Report on Form 40-F.
Attestation Report of Independent Auditor
In accordance with the United States Jumpstart Our Business Startup Act (the “JOBS Act”) enacted on April 5, 2012, the Registrant qualifies as an “emerging growth
company” (an “EGC”), which entitles the Registrant to take advantage of certain exemptions from various reporting requirements that are applicable to other public
companies that are not EGCs. Specifically, the JOBS Act defers the requirement to have the Registrant’s independent auditor assess the Registrant’s internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act. As such, the Registrant is exempted from the requirement to include an auditor attestation report in this
Form 40-F for so long as the Registrant remains an EGC, which may be for as long as five years following its initial registration in the United States.
5
Changes in Internal Control over Financial Reporting
The CEO and CFO have evaluated whether there were changes to ICFR during the year ended December 31, 2020 that have materially affected, or are reasonably likely to
materially affect, ICFR. No such changes were identified through their evaluation. In response to the COVID-19 pandemic, the Corporation asked its employees to work from
home to the extent possible. This change requires certain processes and controls that were previously done or documented manually to be completed and retained in electronic
form. Despite the changes required by the current environment, there have been no significant changes in the Corporation’s internal controls during the year ended December
31, 2020 that have materially affected, or are reasonably likely to materially affect, ICFR
There were no notices required by Rule 104 of Regulation BTR that the Registrant sent during the year ended December 31, 2020 concerning any equity security subject to a
blackout period under Rule 101 of Regulation BTR.
AUDIT COMMITTEE AND AUDIT COMMITTEE FINANCIAL EXPERT
NOTICES PURSUANT TO REGULATION BTR
Audit Committee
The Board of Directors has a separately-designated standing Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act for the purpose of
overseeing the accounting and financial reporting processes of the Registrant and audits of the Registrant’s annual financial statements. As of the date of this Annual Report
on Form 40-F, the members of the Audit Committee are James Hall, Wayne Pisano and Michael P. Bailey.
The Board of Directors of the Registrant has determined that all members of the Audit Committee are “independent,” as such term is defined under the rules of The NASDAQ
Stock Market LLC (“NASDAQ”). Further, the Registrant has determined that all members of the Audit Committee are financially literate, meaning that they must be able to
read and understand fundamental financial statements.
Audit Committee Financial Expert
The Board of Directors of the Registrant has determined that the Chairman of the Audit Committee, James Hall, is an “audit committee financial expert,” as defined in
General Instruction B(8)(b) of Form 40-F. The U.S. Securities and Exchange Commission (the “ Commission”) has indicated that the designation of James Hall as an audit
committee financial expert does not make him an “expert” for any purpose, impose any duties, obligations or liability on him that are greater than those imposed on members
of the audit committee and board of directors who do not carry this designation or affect the duties, obligations or liability of any other member of the audit committee.
CODE OF ETHICS
The Registrant has adopted a written code of ethics for its directors, officers and employees entitled “Code of Business Conduct and Ethics” (the “Code”) that complies with
Section 406 of the Sarbanes-Oxley Act of 2002 and with NASDAQ Listing Rule 5610. The Code includes, among other things, written standards for the Registrant’s CEO,
CFO and principal accounting officer or controller, or persons performing similar functions, which are required by the Commission for a code of ethics applicable to such
officers.
6
A copy of the Code is posted on the Registrant’s website at www.imv-inc.com under “Investors/ Governance/Governance Documents”.
No substantive amendments to the Code were adopted during the year ended December 31, 2020. No “waiver” or “implicit waiver,” as such terms are defined in Note 6 to
General Instruction B(9) of Form 40-F, was granted relating to any provision of the Code during the year ended December 31, 2020.
PricewaterhouseCoopers LLP has served as the Registrant’s auditing firm since 2003. Aggregate fees billed to the Registrant for professional services rendered by
PricewaterhouseCoopers LLP and its affiliates during the fiscal years ended December 31, 2020 and December 31, 2019 are detailed below (stated in Canadian dollars):
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
Audit-Related Fees
Tax Fees
All Other Fees
Total Fees
The nature of each category of fees is as follows:
Audit Fees
Fiscal 2020
Fiscal 2019
116,100
133,110
53,365
12,675
312,250
$
$
$
$
$
95,500
58,300
63,012
-
216,812
$
$
$
$
$
Audit fees were paid for professional services rendered by the auditors for the audit of the Registrant’s annual financial statements (2019 – $60,500 and 2020 – $74,100) and
reviews of the Registrant’s consolidated interim financial statements (2019 – $35,500 and 2020 – $42,000).
Audit-Related Fees
Audit-related fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the
Registrant’s financial statements and are not reported under the Audit Fees item above. This category is comprised of fees billed for the provision of comfort letters and
consents, the consultation concerning financial accounting and reporting of specific issues (2019 – $58,300 and 2020 – $133,110) and the review of documents filed with
regulatory authorities (2019 – $nil and 2020 – $nil).
Tax Fees
Tax fees include fees billed for tax compliance, tax advice and tax planning services, including the preparation of original tax returns and claims for refund (2019 – $41,500
and 2020 – $41,400); tax consultations, such as assistance and representation in connection with tax audits and appeals, tax advice related to mergers and acquisitions, and
requests for rulings or technical
7
advice from taxing authorities (2019 – $21,512 and 2020 – $12,265); tax planning services; and consultation and planning services (2019 – $nil and 2020 – $nil).
All Other Fees
All Other Fees include the aggregate fees billed for products and services provided by the auditors, other than the services reported above.
Pre-Approval Policies and Procedures
All audit and non-audit services performed by the Registrant’s auditor must be pre-approved by the Audit Committee of the Registrant. For the fiscal year ended December
31, 2020, all audit and non-audit services performed by the Registrant’s auditor were pre-approved by the Audit Committee of the Registrant, pursuant to Rule 2-01(c)(7)(i) of
Regulation S-X.
OFF-BALANCE SHEET ARRANGEMENTS
As of December 31, 2020, the Registrant does not have any “off-balance sheet arrangements” (as that term is defined in paragraph 11(ii) of General Instruction B to Form 40-
F) that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to investors.
The following table lists, as of December 31, 2020, information with respect to the Registrant’s known contractual obligations:
DISCLOSURE OF CONTRACTUAL OBLIGATIONS
Contractual Obligations
Accounts payable and accrued liabilities
Short term and low value leases
Long-term leases
Long-term debt
Total
Payments Due by Period (All amounts in thousands of Canadian dollars)
Less than 1
year
9,240
18
282
1,253
10,793
1-3 years
3-5 years
-
21
578
2,372
2,971
-
-
542
2,153
2,695
More than
5 years
-
-
587
10,725
11,312
Total
9,240
39
1,989
16,503
27,771
The Registrant is submitting as Exhibit 101 to this Annual Report on Form 40-F its Interactive Data File.
INTERACTIVE DATA FILE
Not applicable.
MINE SAFETY DISCLOSURE
8
CORPORATE GOVERNANCE
The Registrant is a “foreign private issuer” as defined in Rule 3b-4 under the Exchange Act and its common shares are listed on NASDAQ. NASDAQ Marketplace Rule
5615(a)(3) permits a foreign private issuer to follow its home country practices in lieu of certain requirements in the NASDAQ Listing Rules. A foreign private issuer that
follows home country practices in lieu of certain corporate governance provisions of the NASDAQ Listing Rules must disclose each NASDAQ corporate governance
requirement that it does not follow and include a brief statement of the home country practice the issuer follows in lieu of the NASDAQ corporate governance requirement(s),
either on its website or in its annual filings with the Commission. A description of the significant ways in which the Registrant’s corporate governance practices differ from
those followed by domestic companies pursuant to the applicable NASDAQ Listing Rules is disclosed on the Registrant’s website at www.imv-inc.com under
“Investors/Corporate Governance/Governance Documents/Website Disclosure”.
UNDERTAKING
The Registrant undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when
requested to do so by the Commission staff, information relating to: the securities registered pursuant to Form 40-F; the securities in relation to which the obligation to file an
Annual Report on Form 40-F arises; or transactions in said securities.
CONSENT TO SERVICE OF PROCESS
The Registrant filed an Appointment of Agent for Service of Process and Undertaking on Form F-X with the Commission on May 31, 2018, which was amended on March
26, 2019 with respect to the class of securities in relation to which the obligation to file this Annual Report on Form 40-F arises.
Any change to the name or address of the Registrant’s agent for service of process shall be communicated promptly to the Commission by an amendment to the Form F-X
referencing the file number of the Registrant.
Exhibit No.
99.1
99.2
99.3
99.4
EXHIBIT INDEX
Title of Exhibit
Annual Information Form of the Registrant for the year ended December 31, 2020
Audited Consolidated Financial Statements of the Registrant for the year ended December 31, 2020, together with the Auditors’ Report thereon
Management Discussion and Analysis of the Registrant for the year ended December 31, 2020
Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the United States Securities Exchange Act of 1934
9
99.5
99.6
99.7
99.8
101
104
Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the United States Securities Exchange Act of 1934
Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the United States Sarbanes Oxley
Act of 2002
Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the United States Sarbanes Oxley
Act of 2002
Consent of Independent Registered Public Accounting Firm - PricewaterhouseCoopers LLP
XBRL Document
Cover Page Interactive Data File
10
Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Annual Report
to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: March 16, 2021
IMV Inc.
By:
/s/ Pierre Labbé
Name: Pierre Labbé
Title: Chief Financial Officer
11
Exhibit 99.1
ANNUAL INFORMATION FORM
FOR THE YEAR ENDED DECEMBER 31, 2020
March 16, 2021
CONTENTS
INTRODUCTION AND FORWARD-LOOKING STATEMENTS
CORPORATE STRUCTURE
I.
II.
III. GENERAL DEVELOPMENT OF THE BUSINESS
IV.
Overview
History
Recent Developments
Overview of the Last 3 Years
Year ended December 31, 2020
Year ended December 31, 2019
Year ended December 31, 2018
DESCRIPTION OF THE BUSINESS
Intellectual Property
Manufacturing and Scalability
Facilities
Regulatory Process
Specialized Skill and Knowledge
Scientific and Clinical Advisory Committee
Equipment and components required to conduct activities
Environmental Protection
Employees
RISK FACTORS AND UNCERTAINTIES
DIVIDENDS
V.
VI.
VII. DESCRIPTION OF CAPITAL STRUCTURE
VIII. MARKET FOR SECURITIES
Trading Price and Volume
Prior Sales
DIRECTORS AND OFFICERS
Directors
Executive Officers
Shareholding, Cease Trade Orders, Bankruptcies, Penalties or Sanctions
IX.
1
3
3
3
4
5
5
5
10
16
21
30
34
34
34
35
35
36
36
36
37
65
66
66
66
67
67
67
71
72
X.
Conflicts of Interest
CORPORATE GOVERNANCE
Board of Directors
LEGAL PROCEEDINGS AND REGULATORY ACTIONS
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
XI.
XII.
XIII. TRANSFER AGENT AND REGISTRAR
XIV. MATERIAL CONTRACTS
XV.
INTERESTS OF EXPERTS
XVI. ADDITIONAL INFORMATION
- 2 -
73
73
73
76
77
78
78
78
78
I.
INTRODUCTION AND FORWARD-LOOKING STATEMENTS
The information contained in this Annual Information Form is stated as at December 31, 2020, unless otherwise indicated. Unless otherwise indicated or if the context
otherwise requires, “IMV”, “the Corporation”, “we”, “us” and “our” refer collectively to IMV Inc., 130 Eileen Stubbs Avenue, Suite 19, Dartmouth, Nova Scotia, Canada,
B3B 2C4 and to its subsidiary, Immunovaccine Technologies Inc. (“IVT”).
Unless specified otherwise, all amounts are presented in Canadian dollars.
Certain statements in this Annual Information Form (“AIF”) may constitute “forward-looking” statements which involve known and unknown risks, uncertainties and other
factors that may cause the actual results, performance or achievements of the Corporation, or industry results, to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. When used in this AIF, such statements use such words as “will”, “may”, “could”, “intends”,
“potential”, “plans”, “believes”, “expects”, “projects”, “estimates”, “anticipates”, “continue”, “potential”, “predicts” or “should” and other similar terminology. These
statements reflect current expectations of management regarding future events and operating performance and speak only as of the date of this AIF. Forward looking
statements include, among others:
The Corporation’s business strategy;
Statements with respect to the sufficiency of the Corporation’s financial resources to support its activities;
Potential sources of funding;
The Corporation’s ability to obtain necessary funding on favorable terms or at all;
The Corporation’s expected expenditures and accumulated deficit level;
The Corporation’s ability to obtain necessary regulatory approvals;
The expected outcomes from the Corporation’s pre-clinical assays, studies and clinical trials and the anticipated timing of release of any results therefrom;
The Corporation’s expected outcomes from its pre-clinical studies and trials;
The Corporation’s expected outcomes from its ongoing and future research and research collaborations;
The Corporation’s exploration of opportunities to maximize shareholder value as part of the ordinary course of its business through collaborations, strategic
partnerships, and other transactions with third parties;
The Corporation’s plans for the research and development of certain product candidates;
The Corporation’s progress in developing a vaccine candidate against COVID-19 based on the Corporation’s proprietary drug delivery platform;
The Corporation’s strategy for protecting its intellectual property;
The Corporation’s ability to identify licensable products or research suitable for licensing and commercialization;
The Corporation’s ability to obtain licences on commercially reasonable terms;
The Corporation’s plans for generating revenue;
The Corporation’s plans for future clinical trials; and
The Corporation’s hiring and retention of skilled staff.
Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate
indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-
looking statements, including, but not limited to, the factors discussed under the heading “Risk Factors and Uncertainties”. Although the forward-looking statements
contained in this AIF are based upon what management of the Corporation believes are reasonable assumptions, the Corporation cannot provide any assurance to investors
that actual results will be consistent with these forward-looking statements and should not be unduly relied upon by investors.
Actual results, performance and achievements are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in
this AIF. Such statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to, assumptions about:
the Corporation’s ability to raise sufficient capital and obtain additional funding on reasonable terms when necessary;
Positive results of pre-clinical assays, studies and clinical trials;
The Corporation’s ability to successfully develop existing and new products;
The Corporation’s ability to hire and retain skilled staff;
The products and technology offered by the Corporation’s competitors;
General business and economic conditions, including as a result of the pandemic outbreak of COVID-19;
The Corporation’s ability to accurately assess and anticipate the impact of COVID-19 of the Corporation’s clinical studies and trials and operations generally;
The Corporation’s ability to protect its intellectual property;
The coverage and applicability of the Corporation’s intellectual property rights to any of its products;
The Corporation’s ability to manufacture its products and to meet demand;
The general regulatory environment in which the Corporation operates;
The Corporation’s ability to collaborate with governmental authorities with respect to the clinical development of its products; and
Obtaining necessary regulatory approvals and the timing in respect thereof.
These statements reflect management’s current views and beliefs and are based on estimates, assumptions, and information currently available to, and considered reasonable
by, management. The forward-looking information in this AIF does not include a full assessment or reflection of the unprecedented impacts of the COVID-19 pandemic
occurring in the first quarter of 2020 and the ongoing and developing resulting indirect global and regional economic impacts. The Corporation is currently experiencing
uncertainty related to the rapidly developing COVID-19 situation. It is anticipated that the spread of COVID-19 and global measures to contain it, will have an impact on the
Corporation, however it is challenging to quantify the potential magnitude of such impact at this time. The Corporation is regularly assessing the situation and remains in
contact with its partners, clinical sites and investigators, and suppliers to assess any impacts and risks.
2
Statistical information and other data relating to the pharmaceutical and biotechnology industry included in this AIF are derived from recognized industry reports published by
industry analysts, industry associations and/or independent consulting and data compilation organizations. Market data and industry forecasts used throughout this AIF were
obtained from various publicly available sources. Although the Corporation believes that these independent sources are generally reliable, the accuracy and completeness of
the information from such sources are not guaranteed and have not been independently verified.
II.
CORPORATE STRUCTURE
The Corporation was incorporated on May 18, 2007 under the name of Rhino Resources Inc. pursuant to the Canada Business Corporations Act. In September 2009, the
Corporation changed its name to Immunovaccine Inc. and consolidated its outstanding share capital on a 5 to 1 basis. On May 2, 2018, the Corporation changed its name to
IMV Inc. and consolidated its outstanding share capital on a 3.2 to 1 basis. The Corporation’s head and registered office is located at 130 Eileen Stubbs Avenue, Suite 19,
Dartmouth, Nova Scotia, Canada, B3B 2C4.
The Corporation has one wholly-owned subsidiary, Immunovaccine Technologies Inc., which is incorporated under the laws of the Province of Nova Scotia.
III. GENERAL DEVELOPMENT OF THE BUSINESS
Overview
IMV is a biopharmaceutical company committed to improving the treatment of cancer and giving patients with hard-to-treat cancers a chance to enjoy a long and healthy life.
IMV is using its DPX delivery technology (“DPX platform” or “DPX”), in order to achieve targeted specific, and sustainable immune activation. The Corporation is
developing a portfolio of DPX-based immunotherapies that address unmet medical needs, and its lead product candidate, maveropepimut-S (”DPX-Survivac”) is a pipeline in
a product that generates sustained and targeted immune responses against Survivin, a tumor-associated protein, overexpressed in a high number of tumor types. With the
financial support of the Canadian Government, IMV also initiated the development of DPX-COVID-19, a vaccine candidate against SARS-CoV-2 using the DPX platform.
IMV is headquartered in Dartmouth, Nova Scotia and has an office in Quebec City, Quebec and as at December 31, 2020, had 77 full time employees.
IMV’s lead candidate, maveropepimut-S is a proprietary subcutaneous formulation of our DPX delivery platform with five unique HLA-restricted survivin peptides and is
known to induce a sustained and specific cytotoxic CD8+ T cell response against survivin expressing cancer cells. Survivin, recognized by the National Cancer Institute as a
promising tumor-associated antigen, is broadly over-expressed in most cancer types and plays an essential role in antagonizing cell death, supporting tumor-associated
angiogenesis and promoting resistance to chemotherapies. IMV has identified over 20 cancer indications in which survivin can be targeted by maveropepimut-S.
3
Maveropepimut-S has received Fast Track designation from the U.S. Food and Drug Administration (“FDA”) as maintenance therapy in advanced ovarian cancer, as well as
orphan drug designation status from the U.S. FDA and the European Medicines Agency (“EMA”) in the ovarian cancer indication.
Maveropepimut-S, in association with low-dose cyclophosphamide (“CPA”), used as an immune modulator, is being evaluated in three phase 2 studies across 6 indications,
with and without Merck’s Keytruda® (pembrolizumab):
An IMV-sponsored trial in patients with advanced platinum-sensitive and resistant ovarian cancer;
An investigator-sponsored trial in combination with Merck’s Keytruda® and in patients with recurrent/refractory DLBCL; and
An IMV-sponsored basket trial in combination with Merck’s Keytruda® in patients with select advanced or recurrent solid tumors in muscle invasive bladder, liver
(hepatocellular carcinoma, HCC), ovarian, or non-small-cell lung (NSCLC) cancers, as well as tumors shown to be positive for the microsatellite instability high
(MSI-H) biomarker.
The Corporation expects to continue the evaluation of maveropepimut-S in different cancer indications and to expand its clinical portfolio with other DPX-based
immunotherapies. Our DPX platform is a versatile technology that gives IMV the opportunity to develop new immunotherapies in its portfolio with the goal to address more
unmet medical needs in the future. Also, the Corporation believes that its DPX platform offers a novel way to deliver drugs to the human body. IMV continues to evaluate
business development opportunities in potential new areas of interest.
DPX-COVID-19, IMV’s vaccine candidate against SARS-CoV-2, is an intramuscular DPX-based formulation with multiple peptides of the virus spike. This second-
generation vaccine aims to be complementary to traditional or mRNA vaccines and to potentially offer long lasting protection. DPX-COVID-19 generated strong and long-
lasting immune responses in preclinical assays in animal models.
The common shares of the Corporation (the “Common Shares”) are listed on the Nasdaq Stock Market LLC (“Nasdaq”) and on the Toronto Stock Exchange (“TSX”) under
the symbol “IMV”.
History
The Corporation commenced operations in March 2000, based on animal health research pioneered at Dalhousie University in Halifax, Nova Scotia, when it was contracted by
the Department of Fisheries and Oceans to develop a contraceptive to control the seal population. The Corporation was able to develop a contraceptive and delivery system
that demonstrated effectiveness such that 90% of seals, 10 years after treatment, were still contracepted after a single dose.
From 2000 to 2008, the Corporation concentrated its research efforts on animal contraception for both wildlife and companion animals, while also working on vaccines for
infectious diseases in livestock with CSL Animal Health, a division of CSL Limited, which was subsequently acquired by Pfizer Inc. (“ Pfizer”). The Pfizer Animal Health
division was later spun out into Zoetis.
Over those years the Corporation continued to develop its various technologies and began exploring potential new human applications. This research eventually led to
acquiring survivin cancer targets from Merck KGaA. Using traditional vaccine delivery technology, Merck had been unable to generate optimal T cell activation.
Reformulating survivin cancer targets in its DPX delivery platform, IMV saw different results in preclinical research highlighting the potential for the treatment of human
cancers. Thus, the Corporation’s first clinical candidate, DPX-Survivac, emerged. Since then, several clinical studies have demonstrated the potential of DPX-Survivac in
cancer and today the corporation is continuing its development in 6 different cancer indications across multiple phase 2 studies.
4
Recent Developments
Overview of the Last 3 Years
The following events significantly influenced the general development of the business of the Corporation:
Year ended December 31, 2020
On December 28, 2020, updated progress on its COVID-19 vaccine program including:
Completed safety studies that include GLP toxicology and confirmed a favorable safety profile;
Completed preclinical immunogenicity studies showing potential for long-term protection with antibody titers maintained throughout the duration of studies
(Day 140);
Completed a challenge study in ferrets that demonstrated reductions of viral load in the nasal tissue;
Demonstrated T cell response and “natural” immunity in convalescent plasma against the targeted epitope peptides in the DPX-COVID-19 formulation; and
Demonstrated stability of DPX-COVID-19 at room temperature and 2°C to 8°C for at least 3 months.
In regard to DPX-COVID-19, the Company continues its efforts to:
Perform additional preclinical studies; and
Submit preclinical study results on the selection of the peptides composing DPX-COVID-19 and the data supporting the Phase 1/2 clinical trial to a peer-
reviewed scientific journal.
On December 3, 2020, updated clinical response and translational data from DeCidE1, its Phase 2 study evaluating the safety and efficacy of DPX-Survivac with
intermittent low-dose CPA (CPA) in patients with recurrent, advanced platinum-sensitive and -resistant ovarian cancer. As presented on December 3, 2020, 19
patients were evaluable for efficacy with one patient (5%) still receiving treatment. Notably, the majority of patients had received >3 lines of prior therapy and were
resistant or refractory to their last platinum regimen. Key findings on the safety and efficacy of DPX- Survivac/CPA are outlined below:
79% of patients (5 PR and 10 SD) showed clinical benefits;
Durable clinical benefits over 6 months were observed in 7 patients (37%):
5 patients (26.3%) demonstrated clinical benefit duration of approximately one year (11-16 months) with two patients still benefiting from treatment
Long tail progression free survival (PFS) was observed and consistent with immunotherapies in other cancer indications:
mPFS: 4.47 months
5
6-month PFS of 39%
12-month PFS of 20%
66.1% 12-month overall survival rate. As more than 50% of patients are still alive, the median overall survival (mOS) has not been reached; and
Overall, treatment was well-tolerated. The majority of treatment-related adverse events reported were Grade 1 events and related to reactions at the injection
site.
Extensive translational analyses are ongoing on collected peripheral blood mononuclear cells (PBMC), tumor tissue and plasma. Results obtained so far link the
observed clinical benefit with survivin-specific T cells, supporting DPX-Survivac’s unique mechanism of action.
Treatment generated a survivin-specific CD8+ T cell response in PBMC samples of 14/16 (87%) evaluable patients; and
Treatment-induced infiltration of survivin-specific T cell clones into the tumors as early as day 56 following treatment.
On November 10, 2020, the appointment of Andrew Hall to the newly created role of Chief Business Officer.
On November 9, 2020, that the Corporation’s T cell therapy demonstrates an 86% ORR in combination with Merck’s Keytruda® (pembrolizumab) in patients with
PD-L1 positive r/r DLBCL.
All clinical responses observed so far in the study have been in PD-L1 positive subjects defined as a percentage of PD-L1+ cells scored in the tumor region of 10% or
more. No benefits have been observed in the PD-L1 negative population (n=11) where all subjects experienced PD (n=9) or a SD (n=2).
The difference between the two populations is statistically significant and indicates that PD-L1 has the potential to become a predictive biomarker and a companion
diagnostic for r/r DLBCL treatment with the combination, to identify and recruit the patients that are the most likely to respond.
As of the data cut-off date for the presentation at SITC, 18 pre-treatment samples from patients enrolled in the SPiReL study were available for biomarker analysis.
Thirty-nine percent (7/18) of subjects demonstrated a positive pre-treatment tumor PD-L1 expression. Key findings for this population include:
Observed 100% Disease control rate (SD, PR or CR); and
86% (6/7 subjects) Objective Response Rate (3 CR, and 3 PR).
On October 16, 2020, that it entered into an Equity Distribution Agreement with Piper Sandler & Co. (“Piper Sandler”) authorizing the Corporation to offer and
sell, through “at-the-market” offerings on Nasdaq, Common Shares from time-to-time up to an aggregate offering price of US$50 million through Piper Sandler, as
agent. The Corporation intends to use the net proceeds from this offering for research and development expenditures, clinical trial expenditures, including
expenditures related to a COVID-19 vaccine candidate and general corporate purposes.
6
On October 8, 2020, updated progress on its COVID-19 vaccine program including:
Confirmed an additional $5.4 million in government funding from National Research Council of Canada Industrial Research Assistance Program (“NRC
IRAP”) for the clinical development and manufacturing of DPX-COVID-19;
In consultation with Health Canada, IMV has decided to combine its original phase 1 and 2 studies into a single trial with the potential to accelerate clinical
development and the timeline of the overall project. The design of this larger study will incorporate the same two-age strata cohorts (18-55 years old and over
55 years old) as originally designed; and
IMV has entered into a collaboration with a global manufacturing partner and initiated transfer and scale-up activities of DPX-COVID-19. This collaboration
has the potential to bring two additional production sites in India and Europe with capacity to produce several hundred million doses of DPX-COVID-19.
On August 5, 2020, confirmed $4.75 million of funding from Canadian governmental agencies to advance Phase 1 clinical development of is vaccine candidate,
DPX-COVID-19. The Corporation is receiving $4.15 million in advisory services and funding from the NRC IRAP,/Atlantic Canada Opportunities Agency
(“ACOA”)/and/Next Generation Manufacturing Canada (“NGen”)/to support rapid scale-up of DPX-COVID-19 manufacturing process and its evaluation in a phase
1 clinical trial. In addition to this funding, IMV also received $600,000 from the NRC IRAP
Innovation Assistance Program (“IRAP IAP”).
On July 20, 2020, appointed Michael P. Bailey to its Board of Directors.
On July 14, 2020, updated progress on its COVID-19 vaccine program. Since IMV announced the selection of its vaccine candidate on May 21, 2020, the
Corporation has made significant progress including:
Preclinical studies have demonstrated the capacity of DPX-COVID-19 to induce strong immunogenicity including the binding on target to the spike protein
and viral neutralization;
The Corporation has completed the cGMP formulation and manufacturing process development for DPX-COVID-19; and
Multiple batches have been successfully produced at IMV.
On June 30, 2020, that in order to maintain the remainder of its at-the-market (“ATM”) facility, the Corporation re-entered into an equity-distribution agreement
dated June 30, 2020 with Piper Sandler & Co. (“Piper Sandler”) pursuant to which the Corporation may from time to time sell through “at-the-market” offerings (the
“ATM Offering”), with Piper Sandler acting as sales agent, on the Nasdaq such number of common shares that have an aggregate offering price of up to US$24.5
million under the ATM Prospectus Supplement. This amount reflects the amount which remains unsold following the Corporation entering into the initial equity
distribution agreement with Piper Sandler for an aggregate amount of US$30 million as of such date and was filed as a result of the underlying Canadian final base
shelf prospectus expiring on July 5, 2020.
On May 29, 2020, updated clinical response and translational data from DeCidE1, its Phase 2 study evaluating the safety and efficacy of DPX-Survivac with
intermittent low-dose CPA (CPA) in patients with recurrent, advanced platinum-sensitive and -resistant ovarian cancer.
7
As of data cut-off date, May 2, 2020, 19 patients were evaluable for efficacy with four patients (21%) still receiving treatment. Notably, 18/19 evaluable patients had
stage 3 or 4 disease at time of diagnosis, the majority of whom had received/>3 lines of prior therapy and were platinum resistant. Key findings on the safety and
efficacy of DPX-Survivac/CPA are outlined below:
5/19 patients (26%) achieved a PR with tumor regression >30% on target lesions;
15/19 patients (79%) achieved disease control, defined as Stable Disease (SD) or Partial Response (PR) on target lesions;
Tumor shrinkage of target lesions was observed in 10 patients (53%).
Overall, treatment was well-tolerated. The majority of treatment-related adverse events reported were Grade 1 events and related to reactions at the injection
site;
Durable clinical benefits lasting ≥ 6 months were observed in seven patients (37%);
5/7 patients (71%) have now reached duration of clinical benefit > 10 months including three patients with PR and two patients with SD; and
The two patients with SD are about to reach the 1-year mark.
Translational analyses on longitudinally collected peripheral blood mononuclear cell (PBMC) and tumor tissue samples link observed clinical benefit and survivin-
specific T cells, supporting DPX-Survivac’s unique mechanism of action. Key translational findings are outlined below:
Treatment generated a survivin-specific CD8+ T cell response in PBMC samples of 14/16 (87%) evaluable patients; and
Treatment induced infiltration of survivin-specific T cell clones into the tumors as early as day 56 following treatment, which was shown in an
analysis of the TCR² repertoires in five subjects who achieved stable disease.
These data were presented in a poster session (Abstract Number: 6075) at the ASCO20 Virtual Scientific Program.
On May 21, 2020, that it had selected a vaccine candidate against COVID-19 to advance into human clinical studies and has positive preclinical results
demonstrating robust immunogenic and antibody responses from the majority of peptide epitopes. The antibody responses observed were equivalent or superior to
levels achieved with DPX-RSV, which delivered a robust and sustained immune response in a Phase 1 study. Based on these data, the Corporation has selected
multiple peptide epitopes to be formulated within its DPX platform to form a vaccine candidate against the novel coronavirus, DPX-COVID-19.
On May 7, 2020, the completion of a private placement (the “Private Placement”) of 8,770,005 units of the Corporation (each, a “Unit”) at the market price of $2.86
per Unit. With aggregate gross proceeds of approximately $25.1 million, this non-brokered private placement is being co-led by Fonds de Solidarité FTQ, an
existing investor, and Lumira Ventures, a new investor in the Corporation, along with participation by Altium Capital, also a new investor in IMV, together with
incumbent investors.
8
On March 30, 2020, that it had made significant progress on the development of DPX-COVID-19, a vaccine candidate against the novel coronavirus, including:
The Corporation has used sequences of the virus and immunoinformatics to predict and identify several hundred epitopes, of which 23 were selected for their
biological relevance to the virus and potential to generate neutralizing antibodies against SARS-CoV-2;
Based on this analysis, IMV has begun manufacturing peptide candidates targeting these epitopes as well as planning with IMV’s suppliers and contract
manufacturers to prepare for the cGMP batch required to support a clinical study in humans;
In collaboration with Gary Kobinger, Ph.D., Director of the Research Centre on Infectious Diseases at the University Laval in Quebec City, preclinical assays
in animal models are also planned in April through May of this year to validate the safety and potency of the vaccine candidate before initiating the human
clinical study;
In collaboration with Joanne Langley, M.D. at the Canadian Center for Vaccinology (CCfV) and the Canadian Immunization Research Network (CIRN) the
design of a Phase 1 clinical study in 48 healthy subjects has been completed and clinical sites identified in both Nova Scotia and Quebec;
IMV has initiated discussions with Health Canada in preparation for a CTA. A meeting is being scheduled in the week of April 20, 2020 with the goal to
initiate the clinical study in the summer of 2020; and
The Corporation has submitted several grant applications in Canada in an effort to help support its clinical program.
On March 18, 2020, that it is advancing the clinical development of a DPX-based vaccine candidate against COVID-19. The goal of the development program, in
collaboration with lead investigators for the phase 1 clinical study:/Joanne Langley, M.D. and/Scott Halperin, M.D., of the/ CCfV at/Dalhousie University, the/Izaak
Walton Killam Health Center/and the/Nova Scotia Health Authority/and the CIRN; along with Dr./GaryKobinger, Ph.D., Director of the Research Centre on
Infectious Diseases at the University Laval in/Quebec City/and/ GUARD in/Canada, is to establish the clinical safety and immunogenicity of a vaccine candidate
based on the Corporation’s DPX delivery technology and incorporating peptides targeting novel epitopes from the coronavirus strain.
On February 25, 2020, that updated results from DeCidE1, an ongoing Phase 2 study of its lead candidate, DPX-Survivac, in patients with advanced recurrent
ovarian cancer were reported during a conference call and webcast.
All 22 patients with advanced recurrent ovarian cancer enrolled in this arm of the study were heavily pre-treated, with the median number of prior therapies greater than three.
As of February 24, 2020, 19 patients were evaluable for efficacy with six patients (31%) still receiving treatment. Key preliminary findings are outlined below:
15 patients (79%) achieved disease control, defined as Stable Disease (SD) or Partial Response (PR) on target lesions:
Tumor shrinkage of target lesions was observed in 10 patients (53%).
Durable clinical benefits lasting ≥6 months were observed in seven patients (37%) so far:
Four of these seven patients (21% of evaluable patients) achieved PR with tumor regression >30% on target lesions;
9
Three stable diseases were ongoing for > 6 months (range 7-9) including -29.5% and -12% tumor regressions; and
Median duration not reached yet, with five of these seven (71%) patients still on treatment at > 6 months (range 7-10).
Analysis of Baseline Tumor Burden (BTB) showed durable clinical benefits across a broad range of BTB (1.5-7.7 cm) with a higher number of patients
achieving benefits in BTB < 5 cm as previously observed in other arms of the study:
Six out 11 with BTB < 5 cm (55%) achieved clinical benefits lasting > 6 months.
Durable clinical benefits include platinum-resistant and refractory patients who previously received PARP inhibitors and bevacizumab; and
Treatment was well-tolerated, with most adverse events being Grade 1-2 reactions at the injection site.
On February 14, 2020, that Albert Scardino was to retire from the IMV Board of Directors effective February 28, 2020.
On February 4, 2020, the presentation of clinical translational data supporting the mechanism of action of its lead compound, DPX-Survivac, during the 2020 ASCO-
SITC Clinical Immuno- Oncology Symposium, being held in Orlando, FL.
As part of this analysis, the Corporation measured systemic immune responses, tumor immune infiltrates and clinical tumor response from pre- and post-treatment patient
samples in connection with three Phase 1 and/or Phase 2 clinical studies, each evaluating DPX-Survivac alone or in a combination regimen in patients with platinum-sensitive
or resistant, advanced ovarian cancer. Highlights from these translational data include:
DPX-Survivac generated survivin-specific T cells in the blood of 80% of patients sampled;
Clinical anti-tumor responses were correlated with increased infiltration of T cells into tumors following treatment with DPX-Survivac;
DPX-Survivac induced enrichment in T cell, cytotoxic lymphocytes and B cell-specific signatures which correlate with clinical response; and
Antigen-specific T cells retained their functionality throughout the duration of treatment.
Year ended December 31, 2019
On December 8, 2019, the Corporation announced updated results on the SPiReL study, an ongoing Phase 2 investigator-sponsored study of DPX-Survivac in
combination with pembrolizumab in patients with recurrent/refractory diffuse large B-cell lymphoma (r/r DLBCL) that were presented in a poster session at the 61st
American Society of Hematology (“ASH”) Annual Meeting in Orlando, FL.
In the poster presentation, Dr. Neil Berinstein reported updated clinical results from the ongoing Phase 2 SPiReL study. Highlights of this preliminary data are
outlined below:
7/9 (77.8%) evaluable subjects exhibited clinical benefit, including three (33.3%) complete responses and two (22.2%) partial responses;
10
Reproducible survivin-specific T cell responses observed in all subjects that achieved clinical responses on treatment;
One subject, who received three prior lines of systemic therapies and failed autologous stem cell transplant, reached a complete response at the first on-study
scan following treatment with the DPX-Survivac combination regimen and remains free of disease recurrence after completing the study; and
Clinical benefits and favorable toxicity profile observed in a heterogenous population of r/r DLBCL patients, including patients of advanced age and/or with
comorbidities, who are more susceptible to adverse effects and more difficult to treat.
On October 30, 2019, the Corporation announced the appointment of Dr. Joanne Schindler, M.D., D.V.M. as its new Chief Medical Officer, effective November 4,
2019.
On September 30, 2019, IMV presented preliminary results from its ongoing Phase 2 basket trial, during the Immunotherapy of Cancer poster session at the
European Society for Medical Oncology (ESMO) 2019 Congress in Barcelona, Spain.
Preliminary results from the phase 2 Basket Trial:
At the time of cut-off, 23 patients were enrolled across all five patient cohorts. This includes 19 patients across all cohorts who received DPX-Survivac in
combination with pembrolizumab with CPA, and four patients from the ovarian cancer cohort receiving DPX-Survivac with only pembrolizumab;
Preliminary results from the first on-study scan showed tumor reduction in patients with ovarian cancer (with and without CPA), NSCLC and bladder cancer;
Partial responses observed at first scan in two subjects (bladder cancer, ovarian cancer); 19 out of 23 subjects are still active on study treatment;
T cell infiltration observed in biopsy samples from subjects who achieved tumor reduction on treatment;
Eight ovarian cancer patients were enrolled in the study, randomized 1:1 to treatment with and without CPA; Tumor control and tumor reductions were
observed in both groups; and
Safety evaluation on all evaluable patients demonstrated that treatment was well-tolerated, with no related Grade 3-4 or immune-related adverse events
(“AEs”) reported.
On September 4, 2019, the Corporation announced a collaboration with The Wistar Institute and Meenhard Herlyn, D.V.M., D.Sc., professor in the Molecular and
Cellular Oncogenesis Program and director of Wistar’s Melanoma Research Center.
Under this collaboration, IMV and The Wistar Institute will partner to develop a targeted T cell therapy against the common BRAF cancer mutation, based on
peptides identified by the Herlyn lab. Mutations in this gene are the most frequently identified cancer-causing mutations in melanoma and have been identified in
various other cancers, including non-Hodgkin lymphoma, colorectal cancer, thyroid cancer, and non-small cell lung and ovarian carcinomas.
11
The project scope includes optimizing the DPX formulation with the BRAF peptides and testing the investigational T cell therapy in the pioneering pre-clinical research
models at Wistar. As part of the collaboration agreement, IMV holds an exclusive option to in-license intellectual property related to the program.
On June 12, 2019, IMV provided updated data on the phase 2 combination trial with Merck’s Keytruda® (pembrolizumab) in DLBCL and at the first “on treatment”
assessment, five of the first six patients demonstrated clinical benefit, including four patients with tumor regressions. Two patients reached a complete radiological
response, one a partial response and two had stable disease while on study. In addition, the combination continued to demonstrate an acceptable safety profile.
Updated SPiReL data highlights:
At the time of data cut-off for this analysis, 11 patients were enrolled in the trial. Efficacy data from the first six evaluable patients are based on modified Cheson
criteria:
Two patients achieved a complete radiological response:
These patients have shown the best survivin specific T-cell responses to DPX-Survivac among the analyzed samples; and
One patient with a complete response (“CR”) has completed the one-year study period.
One patient achieved a PR at first on treatment scan;
Two patients have reached stable disease:
Each of these patients has remained progression free for six and eight months while on treatment.
Objective response rate (“ORR”): 3/6 (50%); Disease Control Rate (DCR): 5/6 (83%);
One patient with bulky disease progressed at first scan;
Two subjects are not evaluable, coming off trial at day seven and day 28;
The treatment combination appears to be well tolerated with only two serious adverse events related to treatment (low white blood count and low neutrophil
count); and
Radiological results from three additional patients are pending.
On June 3, 2019, investigators shared new positive data for IMV’s DeCidE1 clinical trial at the 2019 American Society for Clinical Oncology (“ASCO”) annual
meeting.
New data from evaluable patients from the phase 2 monotherapy arm of the trial indicated the potential for DPX-Survivac to impact solid tumor growth in hard-to-
treat ovarian cancer patients. Longer-term follow-up from the phase 1b portion of the trial continued to demonstrate that the levels of survivin-specific T cells in the
blood of patients – a measure of DPX-Survivac’s novel MOA – correlated with durable clinical benefits.
In a poster presentation, Dr. Janos L. Tanyi, MD, PhD, assistant professor of obstetrics and gynecology at the Hospital of the University of Pennsylvania, provided
an update on the clinical results from the first patients enrolled in the phase 2 monotherapy cohort. At the time of the presentation, researchers had enrolled 19 of 28
participants to date:
12
Of seven patients evaluable at data cut-off in the monotherapy arm, five showed signs of treatment benefits, including reduction of target lesions in two
patients, while two patients progressed;
Within the group of four patients with low tumor burden – a potential predictor of response – three showed stable diseases including two reductions in tumor
burden continuing the positive trend seen in earlier results;
All subjects evaluable for T cell responses (five of five) showed survivin specific T cell activation in the blood, four of five showed a robust response. IHC
analysis for tumor infiltration is continuing; and
Treatments have been well tolerated.
The data also highlighted long-lasting responders from the phase 1b portion of the study with key takeaways as follows:
Prolonged duration of clinical benefits reaching up to more than two years, surpassing the progression-free survival to previous treatments, including
platinum-based chemotherapy;
Long-lasting clinical benefits and high levels of survivin specific T cells are associated with long-term treatment;
One subject has received DPX-Survivac for more than 21 months so far. This finding is the longest duration of treatment for DPX-Survivac on record to
date; and
It is supportive of DPX Survivac’s ability to maintain high levels of survivin-specific T cells in the blood over a prolonged period of time.
On April 3, 2019, the Corporation announced that it presented preclinical research at the American Association for Cancer Research (“AACR”) Annual Meeting
2019 that demonstrated how the MOA of IMV’s proprietary DPX technology can enhance a broad spectrum of immune cell infiltration into tumors, which included
T cells, Natural Killer (“NK”) cells, and macrophages. Analysis also revealed the differentiated characteristics of the immune cell responses and the potential
implications for enhanced anti-tumor activity. In the poster titled, T-distributed stochastic neighbor embedding (t-SNE) analysis of tumor infiltrating lymphocytes
after treatment with a T cell activating therapy identifies a unique population of recruited CD8+ T cells and novel options for combination immunotherapy, IMV
researchers used specialized data analytics to examine how DPX-based agents, when combined with CPA, induced T cells to infiltrate tumors and attack cancerous
cells. The study closely examined the types of immune cell responses and how and why they were able to affect disease. The data indicated that this approach
stimulated the infiltration of a broad base of immune cells into tumors, including T cells, NK cells, and macrophages. The specific T cell population that moved into
tumors could be grouped based on the co-expression of different checkpoint molecules such as PD-1 and Tim-3. However, those stimulated to infiltrate tumors
generally did not express CTLA-4 (a protein found on T cells that inhibits the immune response).
13
On March 26, 2019, the Corporation announced preliminary data from the phase 2 cohort of the Decide clinical study. Six patients receiving DPX-Survivac
monotherapy with intermittent low-dose cyclophosphamide (mCPA) have reached the first CT scan assessment with key related findings as follows:
83% of the subjects (5 of 6) show SD, including two tumor regressions
80% (4 of 5) with stable disease are in subjects with a lower BTB, which also includes the two tumor regressions
Importantly, in earlier stages of this trial, durable clinical responses occurred after 140 days, and have now lasted for 20 months or more. Additional data at the 140 days
mark of this cohort will be available by the end of the first half of 2019.
This amended phase 2 study evaluates the safety and efficacy of DPX-Survivac monotherapy with mCPA in patients with advanced recurrent ovarian cancer. As of the
March 25, 2019 data cut-off date, 13 patients have been enrolled in the phase 2 portion of the trial in addition to the 53 enrolled in the phase 1b cohort. Five patients
were randomized into the DPX-Survivac monotherapy cohort. Seven patients had been randomized into DPX-Survivac/mCPA in combination with epacadostat before
the phase 2 protocol was amended to stop enrollment in the combination arm. One of the patients in the combination arm elected to switch to the monotherapy arm of the
trial. Positive data from the phase 1bportion of the trial led IMV to amend the study to monotherapy inpatients with lower tumor burden.
The amended phase 2 cohort of the DECIDE trial is targeting an enrollment of at least additional 16 patients in the population with a lower tumor burden. Enrollment is
ongoing at multiple sites in the U.S. and Canada.
On March 18, 2019, that the Canadian bioresearch consortium CQDM has awarded a grant to a collaboration among IMV Inc., Centre de recherche du CHU de
Quebec-Universite Laval and La Fondation du CHU de Quebec (“FCHUQc”).
Under the leadership of Dr. Yves Fradet, MD, professor of surgery and researcher in cancer immunotherapy, and his team, in collaboration with IMV’s team, this
project will receive a grant of up to $1.2-million from CQDM and $300,000 from the FCHUQc, to develop a novel dual target T cell therapy for an initial clinical
application in bladder cancer.
The work will target immunogenic peptides identified by Dr. Fradet’s team from the MAGE protein family member A9 (“MAGE-A9”). This protein is frequently
expressed in various human cancers including bladder, lung and kidney (1). These peptides will be combined with selected immunogenic peptides from the survivin
protein composing the DPX-Survivac T cell drug candidate.
The researchers believe that MAGE-A9 and survivin peptides presented on the surface of cancer cells can be used to program T cells to destroy tumours and may
represent ideal targets for anti- cancer T cell immunotherapies. The collaborators will combine these peptides with IMV’s proprietary DPX technology to develop a
first-in-class dual target T cell therapy (DPX-SurMAGE).
DPX-SurMAGE will be initially evaluated in preclinical studies. Upon successful completion of these preclinical evaluations, researchers are aiming to test the
candidate in two clinical studies in patients with:
14
Muscle invasive bladder cancer combined with an anti-PD-1 and intermittent low-dose cyclophosphamide (CPA) prior to cystectomy;
Low-grade highly recurrent non muscle invasive bladder cancer combined with CPA prior to transurethral resection.
On March 6, 2019, IMV completed a public offering of Common Shares. An aggregate of 4,900,000 Common Shares was issued at a price of $5.45 per Common
Share, raising gross proceeds of $26.7 million (the “March 2019 Public Offering”) and on March 11, 2019, the underwriters partially exercised their over-allotment
option to purchase additional Common Shares, resulting in the issuance of an additional 504,855 Common Shares at a price of C$5.45 per Common Share for
additional gross proceeds of approximately C$2.75 million. The Corporation raised total gross proceeds of approximately C$29.46 million under the March 2019
Public Offering. The Corporation intends to use the net proceeds of the Offering to accelerate the development of DPX-Survivac in combination with Keytruda as
part of the phase 2 basket trial with Merck in patients with select advanced or recurrent solid tumours in bladder, liver (hepatocellular carcinoma), ovarian or non-
small-cell lung cancers, as well as tumours shown to be positive for the microsatellite instability high biomarker and for general corporate purposes.
On January 30, 2019, the Corporation announced an update on its clinical program for its lead investigational treatment, DPX-Survivac, as a potential monotherapy
in advanced recurrent ovarian cancer. In December 2018, IMV met with the U.S. Food and Drug Administration (“ FDA”) in a Type B meeting to discuss the results
to date of its DeCidE1 (DPX-Survivac with low-dose cyclophosphamide and epacadostat) clinical trial and continuing development plan, as well as to obtain agency
guidance on a potential accelerated regulatory pathway for DPX-Survivac as a T- cell immunotherapy for the treatment of advanced ovarian cancer in patients with
progressing disease.
FDA meeting highlights include:
The purpose of IMV’s Type B meeting with the FDA was to request feedback on the design of the clinical program for DPX-Survivac. This program includes
the continuing DeCidE1 phase 2 clinical study and a potential future registration trial for accelerated approval in a subset of ovarian cancer patients.
The FDA reviewed the Corporation’s proposed clinical development plan and acknowledged the potential for accelerated approvals in advanced ovarian
cancer based on ORR according to Recist 1.1 criteria with reported median duration of response rate (“DOR”). In addition, the FDA provided important
guidance on clinical design considerations for different lines of therapy and platinum-sensitive and resistant patient populations.
In addition, IMV submitted a protocol amendment for a predictive enrichment approach to the phase 2 DeCidE1 trial, and further discussed those details with
the FDA during the Type B meeting. The phase 2 primary end point, based on OOR per Recist 1.1 criteria, is intended to confirm the high response rate and
duration of clinical benefits observed in previously announced results in a patient population defined by a clinical biomarker based BTB.
Multiple clinical sites are now open for enrolment in the DeCidE1 phase 2 trial. Subject to phase 2 results, IMV plans to schedule a follow-up meeting with the FDA to
finalize the design of a potential pivotal trial based on ORR and DOR.
15
On January 17, 2019, treatment of the first patient in its phase 1 trial evaluating neoepitopes formulated in the Corporation’s proprietary DPX delivery platform in
patients with ovarian cancer. The study is part of the Corporation’s DPX-NEO program, which is a continuing collaboration between UConn Health and IMV to
develop neoepitope-based anti-cancer therapies.
Investigators will assess the safety and efficacy of using patient-specific neoepitopes discovered at UConn Health and formulated in IMV’s proprietary DPX-based
delivery technology in women with ovarian cancer. Investigators plan to enroll up to 15 patients in the phase 1 study. UConn Health is financing the trial with IMV
providing materials and counsel.
Year ended December 31, 2018
On December 13, 2018, investigators shared new positive data from IMV’s continuing DeCidE1 clinical trial at the 2018 ESMO Immuno-Oncology Congress. The
phase 1b/2 study is evaluating the safety and efficacy of the combination of IMV’s lead candidate DPX-Survivac, low-dose cyclophosphamide, and 100 milligrams
or 300 mg of Incyte Corporation’s (“Incyte”) IDO1 enzyme inhibitor epacadostat in patients with advanced recurrent ovarian cancer.
In a poster presentation, Dr. Oliver Dorigo, MD, PhD, associate professor of obstetrics and gynecology (oncology), Stanford University Medical Center, who served
as the trial’s lead investigator and author on the poster, shared top-line safety results from 53 enrolled patients and efficacy data from the 32 participants evaluable
for immune-related and clinical responses, as well as blood sample and tumour biopsy analyses;
Key findings included:
Evidence of a clinical marker based on BTB, a measure of tumour size predictive of patient response to DPX-Survivac;
37.5 per cent (12/32) of evaluable study subjects began treatment with a non-bulky disease defined as BTB under five centimetres;
73 per cent (8/11) of tumour regressions and 80 per cent of clinical responses (4/5) observed in subset of patients with BTB less than five centimeters;
Responders thus far showing prolonged duration of clinical benefits reaching up to more than two years, surpassing the progression-free interval from their
previous chemotherapy treatment;
Robust systemic survivin-specific T-cell responses and evidence of survivin-specific T cells tumour infiltration correlated with clinical benefits;
100 per cent of durable clinical responses correlated with T-cell infiltration;
Epacadostat triggered inhibition of the conversion of tryptophan into kynurenine that was dose dependent; and
Cohort demographics were balanced and the combination yielded a tolerable safety profile.
At the time of data cut-off, 53 patients were enrolled in the phase 1b clinical trial, including 14 from the 100 mg epacadostat dosing cohort and 39 from 300 mg
epacadostat cohort. Based on 300 mg cohort results, IMV and Incyte agreed to stop dosing patients with epacadostat before completion of the study. Patients who
completed at least one CT scan, as required per the trial protocol, were evaluable for response analysis.
16
Seventy-one per cent of patients were evaluable for responses in the 100 mg cohort and 56 per cent in the 300 mg dose cohort. At time of data cut-off, eight
participants remained on treatment and were being evaluated for clinical responses.
On November 20, 2018, IMV announced an amendment of its phase 1b/2 clinical trial evaluating the safety and efficacy of IMV’s lead candidate, DPX-Survivac, in
combination with either 100 milligrams or 300 mg of epacadostat in patients with recurrent ovarian cancer.
Review of new data from the phase 1b portion of the clinical trial demonstrate a high response rate and a durable clinical benefit in a subpopulation of patients with a
clinical marker predictive of a response to DPX-Survivac and correlated to its novel MOA. New data included:
Efficacy signals in the subpopulation of patients who received 100 mg dose epacadostat (n = 5) included 100 percent tumour regressions and 100 percent
disease control rate; and 60 percent of these patients (3/5) reached a best response of a PR;
Long duration of clinical benefit observed in responders with a median duration of 590 days, including one patient that has passed the two-year mark without
disease progression;
Clinical benefit correlated to DPX-Survivac’s MOA and clinical study primary end points: survivin-specific T cells in the blood and T cell infiltration into
tumours; and
The safety profile of DPX-Survivac is consistent with the profile observed in the Corporation’s previously reported studies.
Based on 300 mg cohort results, IMV and Incyte have agreed to stop dosing patients with epacadostat. IMV will continue the phase 1b/2 trial as a monotherapy study
evaluating DPX- Survivac in the recurrent ovarian cancer subpopulation. IMV will inform and work with investigators to appropriately modify the study in a manner
consistent with the best interests of each patient;
IMV and Incyte will continue to explore the potential of additional combination studies.
On November 6, 2018, the Corporation announced the appointment of Dr. Markus Warmuth, MD, a seasoned biopharmaceutical executive, to its board of directors.
17
On September 27, 2018, the Corporation announced results of ongoing research to further explore the novel MOA of its RSV vaccine candidate. New data from a
preclinical study highlighted the effects of two potential approaches to preventing RSV, comparing a single dose of the bovine version (“ DPX-bRSV”) of IMV’s
DPX™-based small B cell epitope peptide vaccine candidate for RSV (“DPX-RSV”) to a two-dose conventional investigational bovine RSV vaccine. Researchers
found that IMV’s vaccine candidate yielded strong antigen-specific immune responses and a protective effect on disease pathology. The degree of protection was
comparable between the two vaccine candidates.
In this study, researchers compared the effects of both the IMV and conventional RSV vaccine approaches among bovines with known RSV infections (the bovine
animal model is considered an optimal model of RSV infection). Researchers administered one dose of DPX-bRSV to one cohort; the second received two doses of a
subunit RSV bovine vaccine. Researchers measured immune response with an antibody titer test and assessed disease pathology with a lung lesion score and other
clinical parameters (such as body temperature changes).
They found SH antibodies in 14 of the 15 animals that received DPX-bRSV, and the improvements observed in disease pathology were comparable between the two
cohorts. These were the first bovine animal health data to directly correlate the vaccine-induced immune response against IMV’s novel RSV target - the SH viral
protein– with measures of disease protection.
On September 18, 2018, the Corporation announced details of the initial data from its ongoing investigator-sponsored phase 2 clinical trial in DLBCL. In the study,
investigators are evaluating IMV’s lead candidate, DPX-Survivac, in combination with low dose cyclophosphamide and Merck’s checkpoint inhibitor Keytruda®
(pembrolizumab), in patients with persistent or recurrent/refractory DLBCL.
The preliminary data included assessments of safety and clinical activity (based on modified Cheson criteriai) for the first four evaluable patients who have
completed their first CT scan after the start of treatment. The data showed that:
Two of the first four evaluable participants showed tumour regressions at the first on-treatment CT scan:
The first enrolled participant demonstrated a tumour regression of 48% at first on-treatment scan; and
The second participant demonstrated a partial response (PR) via a tumour regression of 66% at first on-treatment scan.
Preliminary data from the third participant demonstrated stable disease;
The other participant had early disease progression less than two months following treatment initiation and was discontinued from the study; and The
combination therapy appears to demonstrate an acceptable safety profile, with no serious adverse events reported to date.
i Cheson, B.D., Pfistner, B., Juweid, M.E., Gascoyne, R.D., Specht, L., Horning, S.J. and Diehl, V. (2007). Revised Response Criteria for Malignant Lymphoma. Journal of Clinical Oncology, 25(5)
DOI: 10.1200/JCO.2006.09.2403
On September 11, 2018, the Corporation announced an expansion of its clinical program with a phase 2 basket trial in collaboration with Merck evaluating its lead
candidate, DPX-Survivac, in combination with low-dose cyclophosphamide and Merck’s anti-PD-1 therapy, Keytruda ® (pembrolizumab), in patients with select
advanced or recurrent solid tumours across five indications.
18
The open-label, multicentre, phase 2 basket study will evaluate the safety and efficacy of the immunotherapeutic combination agents in patients with bladder, liver
(hepatocellular carcinoma), ovarian or NSCLC cancers, as well as tumours shown to be positive for the microsatellite instability high (MSI-H) biomarker. Investigators
plan to enroll a maximum of 184 patients across five indications at multiple medical centres in Canada and the United States.
On August 9, 2018, IMV reached two important milestones in its continuing clinical trial collaboration with Incyte Investigators completed enrolment for both phase
1b dosing cohorts and treated the first patient in the phase 2 component of the combination trial, which was evaluating the safety and efficacy of IMV’s lead
candidate, DPX-Survivac, and low-dose cyclophosphamide with (and without) epacadostat in patients with advanced ovarian cancer.
Investigators completed enrolment in the phase 1b cohorts of the study, with a total of 50 patients across the two dosing groups. The phase 1b study focused on
evaluating the safety and efficacy of combining DPX-Survivac, 100 milligrams or 300 milligrams of epacadostat, and low-dose cyclophosphamide in individuals
with advanced, platinum-sensitive and resistant ovarian cancer.
On June 7, 2018, the Corporation announced the addition of Julia P. Gregory to the Board of Directors.
On June 3, 2018, that investigators shared new positive data in an oral presentation for its DeCidE1 (DPX-Survivac with low dose Cyclophosphamide and
Epacadostat) clinical study at the 2018 ASCO annual meeting. This data from the ongoing phase 1b/2 trial evaluated the safety and efficacy of the combination of
IMV’s lead candidate, DPX-Survivac, and low dose cyclophosphamide, with Incyte’s IDO1 enzyme inhibitor epacadostat, in patients with advanced recurrent
ovarian cancer.
At the time of data cut-off, 39 patients were enrolled (including 25 new participants in the 300mg cohort with 8 evaluable from day 56 first CT scan). Data from the
first 18 evaluable patients across both dosing cohorts showed:
7 tumour regressions, including 4 PR reported so far (PR, defined as ≥30% decrease in tumour lesion size); and
Study participants were generally tolerating treatments well, with no related serious adverse events (“SAEs”) reported.
Data from the first 8 evaluable participants in the 300mg epacadostat dosing cohort at first CT scan included:
6 patients demonstrated SD at day 56, with 4 of these SDs still on trial at data cut-off; and
2 patients with tumour regressions observed so far, including one PR with a tumour regression ongoing for more than 9 months.
Researchers also analyzed patient data to study the combination’s MOA. They examined blood samples and tumour biopsies for the 10 evaluable patients treated in the
first dosing cohort. This data showed:
19
Survivin-specific T cell responses detected in 100% (10/10) of patients;
Increase in T cell infiltration post treatment in 37% (3/8) of the analyzable tumour biopsies based on two complementary testing methodologies (RNA
sequencing and immunohistochemistry);
2 of the 3 patients with T cell infiltration showed PRs with significant and durable tumour regressions lasting more than one year; and
The third patient with T cell infiltration exhibited Progressive Disease (PD) with evidence of down regulation of the major histocompatibility (MHC)
presentation pathway and significant increases in suppressive markers, both indicative of mechanisms of resistance.
On June 1, 2018, trading of the Common Shares began on Nasdaq under the symbol “IMV” and the Common Shares concurrently ceased to be traded on OTCQX.
On May 2, 2018, the Corporation implemented a consolidation of its outstanding Common Shares on the basis of one new Common Share for every 3.2 outstanding
Common Share and changed the Corporation name to IMV Inc.
On April 24, 2018, the Corporation announced that it entered into an agreement with Incyte to expand their ongoing clinical trial collaboration. The companies plan
to add a phase 2 component to their ongoing phase 1b combination study evaluating the safety and efficacy of IMV’s lead candidate, DPX-Survivac, in combination
with Incyte’s IDO1 enzyme inhibitor epacadostat and low dose cyclophosphamide in advanced ovarian cancer patients.
The phase 2 component is a randomized, open label, efficacy study that would include up to 32 additional evaluable subjects. It aimed to evaluate DPX-Survivac and
low dose cyclophosphamide with, or without, epacadostat in patients with advanced recurrent ovarian cancer. In accordance with regulatory guidelines for
combination trials, the goal of this portion of the program would be to evaluate the clinical contribution of each investigational drug in the combination regimen.
On April 16, 2018, the Corporation announced the presentation of new research on its T cell activating platform at the AACR annual meeting 2018. In collaboration
with Incyte, researchers presented a poster supporting the enhanced anti-cancer immune responses from the combination of IMV’s proprietary T cell activating
technology and Incyte’s IDO1 inhibitor program. A second poster analyzed the novel capability, as compared with other formulation technologies, of IMV’s delivery
technology to combine a large range of anti-cancer peptides into a single formulation.
In the poster titled, “Combination of a T cell activating immunotherapy with immune modulators alters the tumour microenvironment and promotes more effective
tumour control in preclinical models”, researchers presented new preclinical analysis on the combination of IMV’s DPX-based therapies, Incyte’s epacadostat and
low-dose cyclophosphamide, in tumour models. As part of the analysis, researchers also examined the potential for heightened tumour response from T cell
infiltration in the tumour microenvironment. The study indicated that the triple combination immunotherapy demonstrated a significant delay in tumour progression.
Analysis of the T cells suggested that other immune modulating therapies, such as checkpoint inhibitors, could additionally enhance tumour control.
Related to IMV’s neoepitope program, researchers presented the poster, “A novel delivery platform containing up to 25 neoantigens can induce robust immune
responses in a single formulation”. This study investigated the effects on immune response when formulating a broad range of peptides across multiple delivery
technologies, including the Corporation’s proprietary formulation. The study indicated that IMV’s novel technology could incorporate at least 25 neoantigens into a
single formulation, which generated strong CD8 and T cell responses, in excess of those induced by other formulations.
20
On March 28, 2018, the Corporation announced that the first patient was treated in IMV’s phase 2 study combining DPX-Survivac with low-dose cyclophosphamide
administered with pembrolizumab in patients with persistent or recurrent/refractory DLBCL.
On February 15, 2018, IMV closed a bought deal public offering of Common Shares, raising gross proceeds of $14.375 million.
On January 31, 2018, the Corporation announced the publication of a preclinical study using magnetic resource imaging (MRI) to follow cancer peptide uptake in
tumour models, and to correlate this immune activation to the resulting anti-cancer T cell activity. The Journal of Biomedical Science study, titled “Unique Depot
Formed by an Oil Based Vaccine Facilitates Active Antigen Uptake and Provides Effective Tumour Control”, compared the MOA of IMV’s platform for
immunotherapeutic stimulation with other technologies.1
In the study, published on January 27, 2018, researchers tracked how the cancer peptides were trafficked from the injection site to immunogenic activation in the
lymph nodes. Researchers correlated this to both activation of T cells and the ensuing efficacy to control tumour progression. They concluded that IMV’s delivery
technology had a fundamentally unique MOA. This MOA enabled active and prolonged immune stimulation, as well as better tumour control, as compared to other
technologies examined in the study.
On January 18, 2018, the Corporation announced the appointment of Joseph Sullivan to the newly created role of Senior Vice President, Business Development,
effective January 22, 2018.
IV.
DESCRIPTION OF THE BUSINESS
BUSINESS MODEL AND STRATEGY
IMV’s goal is to become a leading biopharmaceutical company that develops and commercializes differentiated cancer immunotherapies that are effective, tolerable, and
easy-to-handle in a clinical setting. Our current efforts are focused on leveraging the unique mechanism of action of the DPX platform to build a portfolio of cancer
immunotherapies that address unmet medical needs. In the context of the current pandemic, the Corporation also initiated the development of DPX-COVID-19, a vaccine
candidate against SARS-CoV-2 based on a modified version of its DPX platform.
Key elements of the Corporation’s strategy are to:
Continue to advance maveropepimut-S (DPX-Survivac) associated with low dose CPA in:
Recurrent, refractory diffuse large B-Cell lymphoma (“r/r DLBCL”)in combination with Merck’s Keytruda®
Advanced ovarian cancer
1 Published online, January 27, 2018. DOI: 10.1186/s12929-018-0413-9
21
Second stage of basket trial in, at least, two indications: non muscle invasive bladder and MSI high tumor cancers – in combination with Merck’s Keytruda®;
Evaluate maveropepimut-S associated with low dose CPA in other cancer indications, with Merck’s Keytruda® checkpoint inhibitor or other cancer therapies;
Develop and investigate new DPX-based immunotherapies in hard-to-treat cancers; and
Continue to explore the potential of DPX-COVID-19 and other DPX-based vaccines against infectious diseases
The Corporation intends to be opportunistic in the development of products by exploring a variety of avenues, including co-development through potential collaborations,
strategic partnerships or other transactions with third parties. The Corporation may seek additional equity and non-dilutive funding and partnerships to advance the
development of its product candidates.
COVID-19 Impact to Clinical Program
The COVID-19 pandemic crisis is still impacting clinical activities across the industry due to the pressure placed on the healthcare systems as well as governmental and
institutional restrictions. IMV’s clinical team is working closely with each clinical site and its CRO’s on contingency plans to ensure that patient safety and the integrity of
data is maintained. IMV is following the guidance issued by the FDA: “FDA Guidance on Conduct of Clinical Trials of Medical Products during COVID-19 Pandemic
Guidance for Industry, Investigators, and Institutional Review Boards”. Additionally, the IMV team continues to monitor updated institutional, regional and national guidance
to fully comply with applicable guidelines as they are issued. It is noted that many clinical sites have reinitiated enrollment in clinical trials, while other sites, less impacted,
have continued activities as planned. Patients are encouraged to comply with directives from public health officials and, subject to such compliance, attend visits as planned or
to discuss alternatives with their physician. The current activities performed at central labs to assess the eligibility of patients and the management of clinical samples is not
impacted to date, and IMV is working with its vendors to ensure continuity of activities. Drug supply is not expected to be impacted at this time. As an added precaution,
IMV has developed contingency plans to ensure proper supply of drugs to all clinical sites in the event of future transportation or other constraints.
PLATFORM AND PRODUCTS IN DEVELOPMENT
The DPX Platform
The DPX platform is a versatile delivery technology that can be formulated with a broad set of antigens to generate targeted and sustained immune response. The DPX
platform does not release the antigens at the site of injection, it forces an active uptake by immune cells (antigen-presenting cells), allowing antigens to continuously interact
with and stimulate the immune system over an extended period of time.
The Corporation is exploiting this unique mechanism of action (“MOA”) to develop a new class of immunotherapies that represent a paradigm shift from current approaches.
The DPX platform can safely increase the immune system’s exposure to a significant number of antigens opening the possibility to mobilize the power of the immune system
to treat a broad range of diseases. The Corporation believes that the unique MOA of DPX makes the platform uniquely suitable for cancer immunotherapies and vaccines
against infectious diseases, such as COVID-19.
22
DPX-based products have important commercial advantages:
Fully synthetic and easy to manufacture;
Can accommodate hydrophilic and hydrophobic compounds;
Lyophilized and reconstituted in lipids in convenient, low microlitre doses;
Subcutaneous injection for simple in-office administration (no hospitalization);
Long-term stability (3 years); and
Low cost of goods and scalable manufacturing.
The DPX platform forms the basis of all the Corporation’s product development programs. DPX-based candidates have demonstrated to date a good safety profile and
sustained immunological activity across all clinical trials, where they have shown efficacy in vulnerable populations, like immune-compromised and older adults. IMV
believes in the significant potential of DPX.
DPX-Survivac – Ongoing Clinical Trials
DPX-based cancer immunotherapies generate a sustained target-specific immune response. The chosen targets are essential components of cancer biology, preventing any
possible evasion from the treatment.
IMV’s differentiated immunotherapies can readily be combined with other immunotherapeutic approaches, including checkpoint inhibitors.
Lead Cancer Immunotherapy: maveropepimut-S (DPX-Survivac)
Our first T cell activating immunotherapy, maveropepimut-S combines the power of the DPX platform and the cancer antigen survivin.
Survivin is a protein that is found in the 60 human tumor cell lines used for the National Cancer Institute’s anti-cancer drug screening program and plays a critical role in
tumor biology as it is associated with tumor resistance to apoptosis, cell differentiation, proliferation, invasion and metastasis. Survivin is an essential component of the
biology of cancer.
Maveropepimut-S is a formulation of IMV’s DPX platform with survivin-based peptides licensed from Merck KGaA, on a worldwide exclusive basis. It is comprised of five
minimal major histocompatibility complex class I peptides to activate naïve T cells against survivin.
By activating survivin-specific killer T cells, maveropepimut-S promotes the destruction of cancer cells and disrupts the fundamental processes of cancer cell survival
reproduction and metastasis.
Maveropepimut-S, in association with low dose CPA, has demonstrated a sustained, survivin-specific immune response with post-treatment T cell infiltration into tumors that
was associated with prolonged duration of clinical benefits up to more than three years in certain cases. Maveropepimut-S has demonstrated a well-tolerated safety profile
with no related immune or serious systemic adverse events reported. Maveropepimut-S is administrated by subcutaneous injection. Compared to other immuno-oncology
therapies, which require intravenous infusions and more extensive safety monitoring, maveropepimut-S may lessen the burden on patients’ quality of life.
In clinical trials, the Corporation is exploring the activity of maveropepimut-S, in association with intermittent low dose oral regimen of CPA used as an immune-modulator.
Conventional chemotherapeutic drugs are traditionally used for their cytotoxic effect on tumors but CPA can also be used at lower doses to potentiate the activity of other
immunotherapies without inducing significant cytotoxicity. Several studies have demonstrated that low-dose regimens of CPA can have multiple beneficial effects for T cell
therapies such as maveropepimut-S, including reduction of T regulatory cell numbers and increase in effector T cells (Hugues et al, Immunology. 2018). In Phase 1 clinical
studies, IMV has demonstrated that intermittent low-dose oral CPA can act as an immune-modulator increasing the number of survivin-specific T cells generated by
maveropepimut-S (Weir et Al, AACR, 2016).
23
Maveropepimut-S, in association with low dose CPA, is being evaluated in three phase 2 clinical trials across 6 different cancer indications with and without Merck’s
Keytruda.
Orphan Drug Status and Fast Track Designation
The Corporation announced, in November 2016, that the EMA had granted orphan drug designation status to IMV’s DPX-Survivac in ovarian cancer. In July 2015, the FDA
also granted orphan drug status to DPX-Survivac for the treatment of ovarian cancer. This designation is valid for all applications of DPX-Survivac in ovarian cancer without
restriction to a specific stage of disease.
IMV had previously received FDA fast track designation for DPX-Survivac. The designation is intended for patients with no measurable disease after their initial surgery and
chemotherapy.
Ongoing maveropepimut-S (DPX Survivac) Clinical Trials
DLBCL – SPiReL Phase 2 clinical trial (investigator-sponsored)
Diffuse large B-Cell lymphoma is the most common and aggressive form of non-Hodgkin lymphoma (NHL) and, with 27,000 new cases per year in the United States, this
blood cancer represents a high unmet medical need. Patients with aggressive NHLs such as DLBCL can generally expect low median survival rates, with the relative 10-year
survival rates reported to be around 46%.2
The SPiReL phase 2 study is a non-randomized, open-label, uncontrolled, efficacy and safety trial in patients with r/r DLBCL led by Dr, Neil Berinstein, MD, FRCP(C),
ABIM, hematologist-oncologist at the Odette Cancer Centre at Sunnybrook Health Sciences Centre in Toronto. This investigator-sponsored trial, is designed to evaluate the
safety and efficacy of maveropepimut-S in combination with Merck’s Keytruda® (pembrolizumab), associated with intermittent low-dose CPA in patients with r/r DLBCL.
The primary objective of this study is to document a response rate to this treatment combination using modified Cheson3 criteria of at least 24% (6/25 patients). Secondary
objectives include duration of response and safety. Exploratory endpoints include T cell response, tumor immune cell infiltration, and gene expression analysis. In May 2020,
the Corporation reported that the study had met its primary efficacy endpoint in the first 11 evaluable patients.
In November 2020, the study's lead investigator, Dr. Neil Berinstein, presented at The Society for Immunotherapy of Cancer(“SITC”), 35th Anniversary Annual Meeting
where he announced the discovery of a potential predictive biomarker. All clinical responses observed (n=6) in the study have been in Program Death Ligand 1 (“PD-L1”)
positive subjects (n=7) defined as a percentage of PD-L1+ cells scored in the tumor region of 10% or more.
2 GlobalData: DLBCL, Competitive Landscape in 2021.
3 Cheson, B.D., Pfistner, B., Juweid, M.E., Gascoyne, R.D., Specht, L., Horning, S.J. and Diehl, V. (2007). Revised Response Criteria for Malignant Lymphoma. Journal of Clinical Oncology, 25(5) DOI:
10.1200/JCO.2006.09.2403.
24
The difference between the two populations is statistically significant and indicates that PD-L1 has the potential to become a predictive biomarker and a companion diagnostic
for r/r DLBCL treatment with the combination, to identify and recruit the patients that are the most likely to respond.
The PD-L1 pathway regulates T-cell responses allowing tumors to escape the immune system. PD-L1 expression has been extensively studied in relation to the prognosis of
various cancers and is approved in multiple tumor types as a predictive biomarker for treatment with checkpoint inhibitors targeting the PD-1/PD-L1 pathway. In DLBCL,
PD-L1 has been shown to be expressed in 26% to 75% of patients4,5 (Xu-Monette et al, 2018). and is generally thought to be associated with a poor prognosis and shorter
survival.
In December 2020, Dr. Berinstein also provided an update during a poster presentation at the American Society of Hematology Annual Meeting (“ASH Meeting”). As of the
data cut-off date for the presentation at ASH, 19 pre-treatment samples from patients enrolled in the SPiReL study were available for biomarker analysis.
Key findings for the PD-L1+ population (n=7) included:
Significantly higher median Progression Free Survival (“PFS”) of 230 days, compared to the PD-L1 negative subjects (70 days) with a p-value of 0.007, suggestive
of a strong predictive biomarker for this treatment combination;
Demonstrated an objective response in six subjects (3 Partial Responses (“PR”), 3 Complete Responses (“CR”)), including three subjects who have completed one-
year of study treatment,
Demonstrated an Objective Response Rate (“ORR”) and a Disease Control Rate (“DCR”) at both 85.7%
Peripheral blood was assessed for survivin-specific ELISpot responses in 15 subjects with available samples. All 3 subjects with a CR, and 3 of 4 subjects with a PR had
positive ELISpot responses while only 1 subject with SD and 1 subject with PD demonstrated survivin-specific ELISpot response, suggestive of an association between the
clinical responses with the mechanism of action of DPX-Survivac. Overall, treatment was well tolerated. The majority of treatment-related adverse events were grade 1 and 2
severity. A majority of these were injection site reactions associated with the subcutaneous administration of DPX-Survivac.
Based on these results, IMV engaged with the FDA which provided productive feedback. The Corporation is working with Merck to finalize the protocol of the Phase 2b
clinical study which is expected to begin in Q2 2021.
4 Y. Suzuki, K. Kohno, K. Matsue, et al. PD-L1 (SP142) expression in neoplastic cells predicts a poor prognosis for patients with intravascular large B-cell lymphoma treated with rituximab-based
multiagent chemotherapy. Cancer Med. 2020;9(13):4768-4776.
doi: 10.1002/ca m4.3104.
5 Xu-Monette, Y. Zijun et al. "PD-1 expression and clinical PD-1 blockade in B-cell lymphomas" Blood vol. 131,1 (2018): 68-83.
doi: 10.1182/blood-2017-07-740993.
25
During the year ended December 31, 2020, the Corporation spent $720,000 on this phase 2 clinical study, which is $47,000 higher than forecasted due to an additional
clinical site being added during the year. The Corporation anticipates that, in addition to general clinical expenses which are distributed amongst the various clinical projects,
its share of the cost to complete this study is currently estimated at $400,000, which is expected to be spent in 2021.
Ovarian Cancer – DeCidE1 phase 2 in patients with recurrent, advanced platinum-sensitive and resistant ovarian cancer (IMV-sponsored)
Globally, ovarian cancer is the seventh most diagnosed cancer among women and a leading cause of mortality among all gynecological cancers. According to Globocan 2020,
on a worldwide basis, 314,000 women are diagnosed and there are 207,000 ovarian cancer related deaths each year. The estimated five-year survival rate for a late-stage
diagnosis of ovarian cancer is around 30% to 40% (Matz et al., 2017). Ovarian cancer has overall poor survival rates, compared with other gynecological cancers (World
Ovarian Cancer Coalition, 2018). Since the introduction of new targeted therapies (PARP inhibitors), advanced ovarian cancer patients have better survival outcomes from
treatment. Nonetheless, the overall prognosis for ovarian cancer still remains poor with multiple areas of high unmet need and no immunotherapy approved yet.6
DeCidE1 is a phase 2 multicenter, open-label study evaluating the safety and effectiveness of maveropepimut-S, with intermittent low-dose cyclophosphamide used as an
immunomodulator to increase the level of survivin-specific T cells. This phase 2 arm enrolled patients with recurrent, advanced platinum-sensitive and –resistant ovarian
cancer. Except for one patient, all patients were in an advanced stage of the disease, and 12 patients had received 3 or more lines of prior therapy.
Primary endpoints of this study are overall response rate, disease control rate and safety. Secondary end points include cell mediated immunity, immune cell infiltration in
paired biopsy samples, duration of response, time to progression, overall survival and biomarker translational analyses on collected peripheral blood mononuclear cells, tumor
tissue and plasma.
Top line data presented in December 2020 on 19 evaluable patients demonstrated clinically meaningful activity with long-lasting clinical benefits and an excellent
safety/tolerability profile:
15/19 (79%, 5 PR and 10 SD) evaluable subjects demonstrated disease control. Clinical responses were observed across platinum-sensitive, platinum-resistant, and
platinum-refractory patients:
7/19 evaluable subjects (37%) achieved clinical benefit with partial/stable responses lasting > 6 months and 5 subjects (26%) achieved clinical benefit with
partial/stable responses lasting > 12 months;
Treatment was well-tolerated with the majority of adverse events being grade 1-2 reactions at the injection site;
12-month overall survival rate was of 66.1%; and
Translational data confirmed survivin-specific CD8+ T cell immune response in 87% subjects.
Enrollment is now complete and one patient remains on study for extended dosing. Biomarker analyses are ongoing for which an update will be given once completed. IMV is
currently analyzing translational data with the goal of better understanding the mechanism of action of maveropepimut-S and identifying potential predictive biomarkers.
Once the analysis of the translational data is completed, the Corporation will request a meeting with the FDA in the second half of the year to finalize the design of a Phase 2b
trial.
6 GlobalData: Ovarian Cancer Opportunity Analysis and Forecasts to 2028
26
During the year ended December 31, 2020, the Corporation spent $1.2 million on this phase 2 clinical study, which is $500,000 higher than forecasted due to increased data
analysis and certain patients staying on study for extended dosing. The Corporation anticipates that, in addition to general clinical expenses which are distributed amongst the
various clinical projects, its share of the cost to complete this study is currently estimated at $300,000, which is expected to be spent in 2021.
Phase 2 basket trial in 5 solid tumor indications (IMV-sponsored)
In September 2018, IMV announced a phase 2 basket trial in collaboration with Merck to explore other solid cancer indications with our lead candidate, maveropepimut-S, in
association with low dose CPA and in combination with Merck’s Keytruda® (pembrolizumab).
This open-label, multicenter, phase 2 basket study evaluates the safety and efficacy of the immunotherapeutic combination in patients with bladder, liver (hepatocellular
carcinoma), ovarian, or non-small cell lung (NSCLC) cancers, as well as tumors shown to be positive for the microsatellite instability high (MSI-H) biomarker. Investigators
plan to enroll up to 184 patients across five indications in 20 medical centers in Canada and the United States.
The objective of this exploratory trial conducted in collaboration with Merck is to identify and select the best solid tumor opportunities for the combination of IMV's T cell
therapy with Merck's anti PD-1 checkpoint inhibitor Keytruda© and CPA. Recruitment in the five indications follows a Simon two-stage design and each indication has
prespecified success thresholds defined by the expected effect of Keytruda© as a monotherapy agent in that indication.
Treatments have been well tolerated with no immune-related adverse events or grade 3-4 events reported and T cell infiltration has been observed in subjects with tumor
reduction.
The combination has proven promising for patients with two hard-to-treat solid tumors. The combination therapy is further evaluated in expanded cohorts in metastatic bladder
and MSI-H tumor cancers.
At the time of this update, 116 subjects were enrolled in the study and sufficient data was available for four of the five indications.
The combination therapy achieved the thresholds in two indications: metastatic bladder and MSI-H tumor cancers. IMV is pleased to announce that the combination
therapy will be further evaluated in these two indications.
The combination therapy did not meet the prespecified criteria to progress to the next stage in NSCLC and ovarian cancer. The Corporation will discuss with its partner
Merck to decide whether these indications should be further explored.
In the Hepatocellular Carcinoma (liver) HCC indication, IMV and its partner Merck have decided to adjust some of the enrollment criteria in order to accelerate
enrollment rates. An update will be provided when the enrollment goal is met.
During the year ended December 31, 2020, the Corporation has spent $7 million on the phase 2 basket trial, which is $1.4 million higher than forecasted due to a spike in
enrollment and additional clinical sites opened in early 2020, prior to the onset of the COVID-19 pandemic. The Corporation anticipates that, in addition to general clinical
expenses, which are distributed amongst the various clinical projects, $29 million is currently estimated to be spent for stage 1 and stage 2 for two indications for this trial, of
which $14.3 million has been spent to date and a total of $6.4 million is estimated to be spent in 2021.
27
Ovarian Cancer Phase 2 clinical trial (investigator-sponsored)
University Health Network’s (“UHN”) Princess Margaret Cancer Centre is conducting a phase 2 non-randomized, open-label trial designed to evaluate the potential anti-
tumor activity of the combination of Merck’s Keytruda ® (pembrolizumab), maveropepimut-S (DPX-Survivac) associated with intermittent low-dose CPA. The study’s
primary objective is to assess overall response rate. Secondary study objectives include progression free survival rate, overall survival rate, and potential side effects, over a
five-year period. At this stage, the Corporation has no specific plan on the next steps after this trial as it will have to be assessed with its partner based on the clinical trial
results. The Corporation will disclose final results once provided by the UHN Princess Margaret Cancer Centre. The Corporation currently anticipates that, in addition to
general clinical expenses, which are distributed amongst the various clinical projects, its share of the costs to complete this study are milestone-based and are estimated at
$200,000, of which $100,000 is expected to spent in 2021.
Our Next Cancer Immunotherapy: DPX-SurMAGE
The Corporation’s second T cell activating immunotherapy, DPX-SurMAGE combines the DPX platform and two cancer antigens: survivin and MAGE-A9. MAGE protein
family member, A9 (MAGE-A9) is frequently expressed in various human cancers including bladder, lung and kidney.
MAGE-A9 peptides will be combined with selected immunogenic peptides from the survivin protein composing maveropepimut-S to form a dual target T cell activating
therapy. The Corporation believes that MAGE-A9 and survivin peptides presented on the surface of cancer cells may represent ideal complementary targets for an enhanced
DPX-based cancer immunotherapy.
In 2021, IMV is aiming to begin a phase 1 clinical study to evaluate DPX-SurMAGE in patients with bladder cancer, another unmet medical need. Despite the entry of
immunotherapy agents into the bladder cancer market, including the promising checkpoint inhibitors, there remains significant unmet need across bladder cancer settings.
There are abundant opportunities for drug development for early-stage disease, as well as for patients who do not respond to or relapse following treatment with an immune
checkpoint inhibitor.
Bladder cancer is a common cancer worldwide that occurs when there is uncontrolled cell growth in the bladder lining, most commonly in urothelial cells (Antoni et al., 2017;
ASCO, 2019).
This project is conducted in collaboration with CQDM, a Canadian bioresearch consortium, that awarded a grant for a collaboration among IMV, Centre de recherche du
CHU de Quebec-Universite Laval (“CHU”) and La Fondation du CHU de Quebec (“FCHUQc”). The collaboration will receive a grant of up to $1.2 million from the CQDM
and $300,000 from the FCHUQc over three years, to develop this novel dual target T cell therapy for an initial clinical application in bladder cancer. IMV currently expects to
contribute $4.5 million over the next three years towards this project of which $1.7 million was contributed in 2019 and $1.1 million has been contributed in 2020. The
Corporation expects to spend an additional $1.3 million toward this project in 2021.
OTHER COLLABORATIONS IN ONCOLOGY
From time to time, IMV enters into collaborations with partners to evaluate the use of the DPX platform with other products in oncology. Such collaborators currently include
UConn Health and Dana-Farber Cancer Institute. These collaborations are exploratory in nature and the Corporation expects to disclose evaluations or other results only when
those are made available to IMV by each of its collaborators.
28
Infectious Diseases
A component of the Corporation’s business strategy is partnering the DPX platform for infectious and other disease applications. The DPX platform has the potential to
generate a rapid and robust immune response, often in a single dose. The unique single-dose capability could prove to be beneficial in targeting difficult infectious and other
disease candidates.
DPX-COVID-19
With the current pandemic caused by the novel coronavirus, the Severe Acute Respiratory Syndrome Coronavirus 2 (“SARS-CoV-2”), there is an urgent need to develop
vaccines to control its spread and help protect vulnerable populations. A potential bottleneck with current conventional vaccine approaches is the duration of protection,
especially in older adults.
DPX-COVID-19 is designed to generate potent and durable protection against SARS-CoV-2 and offers the potential for accelerated development and rapid, large-scale
production.
IMV’s targeted peptide epitope approach has the potential to optimize and exceed the safety and efficacy profile of more conventional vaccines:
Targets non-overlapping functional areas;
Blocks cleavage and fusion with host cell membrane;
Potential for improved safety and efficacy and best-in-class in most at-risk populations; and
Stability of DPX-COVID-19 at room temperature and 2°C to 8°C for at least three months, facilitating stockpiling and distribution.
To date, the Corporation has:
Completed safety studies that include GLP toxicology and confirmed a favourable safety profile;
Completed preclinical immunogenicity studies showing potential for long-term protection with antibody titers maintained throughout the duration of studies (day
140);
Completed a challenge study in ferrets that demonstrated reductions of viral load in the nasal tissue;
Demonstrated T-cell response and natural immunity in convalescent plasma against the targeted epitope peptides in the DPX-COVID-19 formulation;
Qualified for approximately $10 million of non-dilutive funding from different Canadian governmental sources, including up to $5.4 million in milestone-based
payments;
Completed the current good manufacturing practice (cGMP) formulation and manufacturing process development for clinical trials; and
Entered into a collaboration with a global manufacturing partner and initiated transfer and scale-up activities of DPX-COVID-19 in India and Europe with the
anticipated capacity to produce several hundred million doses.
In consideration of the evolution of the regulatory landscape with regulatory approval of vaccines by a number of countires and a recent update to Health Canada guidance, as
well as the emergence of SARS-CoV-2 variants in different countries, the Corporation is conducting complementary preclinical studies including evaluating the impact of new
variants and will provide an update once the preclinical studies are completed.
29
RSV
IMV conducted a phase 1 clinical study has been conducted in Canada in respiratory syncytial virus (RSV). The study was conducted in healthy adults and a DPX-RSV
candidate was developed to protect the elderly population from infection. The results of this phase 1 study, completed in 2017, outlined that more than nine months after the
last vaccination, 15 of 16 participants (93%) who received DPX-RSV demonstrated antigen-specific immune responses. DPX-RSV had a good safety profile and was well
tolerated with no SAEs. One dose was tested out to one year and 100% of older adults (7/7 immune responders) maintained antigen-specific immune responses one year after
receiving the booster dose. After one year, their antibody levels measured were still at peak with no sign of decrease. The Corporation does not plan to continue the
development of this product without a partner.
Other programs
Similar to oncology, IMV from time to time enters into collaborations with partners to evaluate the use of the DPX platform with other products targeting infectious diseases.
Such collaborations include Leidos and Zoetis. These collaborations are exploratory in nature and the Corporation expects to disclose evaluations and other results only when
those are made available to IMV by each of its collaborators.
Licensing Agreements
While the Corporation is focused on developing a pipeline of cancer immunotherapies, it is also pursuing opportunities to license its platform technology to other parties
interested in creating enhanced T cell targeted therapies on an application-by-application basis.
In April 2018, IMV signed a licensing agreement and granted SpayVac-for-Wildlife (SFW Inc.) a license to two of its proprietary delivery platforms. SFW Inc. has global
exclusive rights to use both of these platforms to develop humane, immune-contraceptive compounds for control of overabundant, feral and invasive wildlife populations
against royalties on sales.
Intellectual Property
The Corporation strives to protect its intellectual property in established, as well as emerging, markets around the world. The Corporation’s intellectual property portfolio
relating to its vaccine platform technology includes twenty patent families, the first of which contains eight patents issued in five jurisdictions (United States, Europe, Canada,
Japan, and Australia). The nineteen other families collectively contain forty-six patents issued in eleven jurisdictions (United States, Europe, Canada, Australia, Japan, India,
Israel, Singapore, Brazil, China and separately Hong Kong) and seventy-four pending patent applications in ten jurisdictions. Taking into account the validations of the
European patents, the Corporation’s intellectual property portfolio includes one hundred and seven patents.
U.S. Patent 6,793,923, issued in 2004, contains claims to the Corporation’s platform, covering a vaccine composition comprising any antigen other than a zona-pellucida-
derived antigen, any adjuvant, any liposomes and a carrier, including any oil.
Additional granted patents include:
European Patent 1333858, granted February 8, 2006;
Australian Patent 2002214861, granted January 11, 2007;
30
Japanese Patent 4164361, granted August 1, 2008;
United States Patent 7,824,686, granted November 2, 2010;
Australian Patent 2006301891, granted December 20, 2012;
Chinese Patent 101282742, granted September 18, 2013;
European Patent 1948225, granted December 11, 2013;
United States Patent 8,628,937, granted January 14, 2014;
Australian Patent 2008303023, granted April 24, 2014;
Japanese Patent 5528703, granted April 25, 2014;
Australian Patent 2008307042, granted May 15, 2014;
Singaporean Patent 166901, granted May 27, 2014;
Japanese Patent 5591705, granted August 8, 2014;
European Patent 2296696, granted August 27, 2014;
Australian Patent 2009253780, granted November 27, 2014;
Japanese Patent 5715051, granted March 20, 2015;
Japanese Patent 5731198, granted April 17, 2015;
Indian Patent 266563, granted May 18, 2015;
Canadian Patent 2,428,103, granted June 9, 2015;
Hong Kong Patent 1155642, granted July 24, 2015;
United States Patent 9,114,174, granted August 25, 2015;
Chinese Patent 101815529, granted March 9, 2016;
Chinese Patent 102056622, granted April 6, 2016;
European Patent 2197497, granted June 1, 2016;
Japanese Patent 6016970, granted October 7, 2016;
United States Patent 9,498,493, granted November 22, 2016;
Canadian Patent 2,700,828, granted January 24, 2017;
Japanese Patent 6143731, granted May 19, 2017;
Australian Patent 2012321022, granted July 6, 2017;
Japanese Patent 6240077, granted November 10, 2017;
Canadian Patent 2,700,808, granted November 14, 2017;
Japanese Patent 6254251, granted December 8, 2017;
Canadian Patent 2,723,918, granted January 9, 2018;
United States Patent 9,925,142, granted March 27, 2018;
Israeli Patent 231888, granted May 29, 2018;
31
United States Patent 10,022,441, granted July 17, 2018;
Israeli Patent 209775, granted July 31, 2018;
Singaporean Patent 11201401177W, granted October 10, 2018;
United States Patent 10,105,435, granted October 23, 2018;
European Patent 2978450, granted September 19, 2018;
Australian Patent 2013384879, granted December 13, 2018;
Japanese Patent 6448676, granted December 14, 2018;
United States Patent 10,232,052, granted March 19, 2019;
United States Patent 10,272,042, granted April 30, 2019;
Hong Kong Patent 1220914, granted September 6, 2019;
Canadian Patent 2,622,464, granted September 17, 2019;
Japanese Patent 6625587, granted December 06, 2019;
United States Patent 10,533,033, granted January 14, 2020;
Indian Patent 342041, granted July 20, 2020;
United States Patent 10,729,766, granted August 4, 2020;
Chinese Patent 105324128, granted September 1, 2020;
European Patent 2763698, granted December 2, 2020; and
Brazilian Patent PI0913612-6, granted December 22, 2020.
Since 2008, the Corporation has filed 18 Patent Cooperation Treaty (“PCT”) applications relating to the Corporation’s technologies, some or all of which have now been filed
in the United States, Europe, Japan, Canada, Australia, China, India, Brazil, Israel, Hong Kong and Singapore. These PCT applications cover specific DPX™ compositions
with broad utility for infectious diseases and cancer applications, as well as methods of manufacture and other applications of the platform technology. Some of these
applications have issued to patent as listed above. These patents, together with the other pending applications if allowed, extend patent protection for some or all DPX™ based
compositions, and/or uses thereof, approximately up to the year 2040. The latest published PCT application covers methods of delivering active and immunomodulatory
agents using DPX™.
The Corporation also has a licensing agreement with VIB in relation to patent applications for a Respiratory Syncytial Virus Vaccine (PCT/EP2011/070161) that were filed in
Australia, Canada, China, Europe, Japan, and the United States. The licensing agreement stipulates that the Corporation will assume the cost of prosecuting and maintaining
the fees associated with the patent applications and issued patents. These applications if allowed, could provide patent protection for an RSV vaccine formulated in DPX™,
thereby
Trademark protection is being and has been sought for the platform name in the United States and Canada.
32
Markets and Overview
Cancer Immunotherapies
Cancer is considered one of the most widespread and prevalent diseases globally. According to the 2020 Cancer Facts & Figures released by the American Cancer Society, it
is predicted that the global cancer burden will rise to 27.5 million and the number of cancer deaths to 16.2 million by 2040 solely due to the growth of the aging population.
However, these projections may be underestimates given the adoption of unhealthy behaviors and lifestyles associated with rapid income growth and changes in reproductive
patterns in economically transitioning countries. According to the 2020 Cancer Facts & Figures, cancer usually develops in older people; 80% of all cancers in the United
States are diagnosed in people 55 years of age or older Adults ages 85 and older are the fastest-growing population group in the US and women outnumber men in this age
group because of a longer life expectancy.
Conventional cancer treatment involves surgery to remove the tumor whenever possible, as well as chemotherapy and radiation. Chemotherapies are widely used, despite their
associated toxicities, because they interfere with the ability of cancer cells to grow and spread. However, studies have shown that older patients often receive little or no
treatment because the benefit of prolonged survival does not outweigh potential adverse effects and impact on quality of life. Also, in all groups of patients, tumors often
develop resistance to chemotherapies, thus limiting their efficacy in preventing tumor recurrence. Despite recent advances, independent sources note a high unmet medical
need in cancer therapy, noting the median survival rate remains poor. Cancer immunotherapies may provide new and effective treatments. According to a Market & Markets
report released in September 2016, the global immunotherapy drug market is projected to reach USD$119.39 billion by 2021 from USD$61.97 billion in 2016, growing at a
compound annual growth rate of 14 % during the forecast period of 2016 to 2021. The major players operating in the immunotherapy drug market include F. Hoffmann-La
Roche AG (Switzerland), GlaxoSmithKline (U.K.), AbbVie, Inc. (U.S.), Amgen, Inc. (U.S.), Merck (U.S.), Bristol-Myers Squibb (U.S.), Novartis International AG
(Switzerland), Eli Lilly and Corporation (U.S.), Johnson & Johnson (U.S.), and AstraZeneca plc (U.K.).
Cancer immunotherapy seeks to harness the immune system to assist in the destruction of tumors and to prevent their recurrence. There has been significant interest in the field
of cancer immunotherapy stemming from recent clinical success in prolonging patient survival with novel compounds. The ability to apply these appropriately has resulted
from a greater understanding of the immune dysfunction that is characteristic of cancer. One area in which there have been breakthroughs has been in the area of checkpoint
inhibitors, which are compounds that target key regulatory molecules of the immune system. Yervoy® (anti CTLA 4, or ipilumumab, developed by Bristol Myers Squibb)
was the first compound in this class to be approved for use in advanced metastatic melanoma. In cancer, these regulators (CTLA-4, PD-1 and its ligand PD-L1) act to inhibit
CD8 T cell-mediated anti-tumor immune responses that are crucial for tumor control. Monoclonal antibodies that target PD-1 and PD-L1 have shown unusual efficacy in
cancer patients, with a significant percentage of patients experiencing durable response to these therapies. Several of these compounds have been approved in multiple
indications. Merck’s Keytruda® (pembrolizumab) and Bristol Myers Squibb’s Opdivo® (nivolumab) received FDA approval in 2014 for advanced melanoma patients who
have stopped responding to other therapies. These therapies have subsequently been approved for use in other advanced cancers. These drugs have been shown to be helpful in
treating several types of cancer but with success only in a limited percentage of patients. It is not yet known exactly why, though researchers have noticed that these drugs
seem to work especially well for patients whose cancer cells have a higher number of mutations.
33
Key opinion leaders in the field have indicated that that the solution lies in combining checkpoint inhibitors with other cancer treatments and that the ideal combination is
likely to be a therapy that drives tumor specific immune responses. These include novel activating T cell therapies. Our novel class of immunotherapies fit well with
checkpoint inhibition therapy because they simultaneously activate sustained tumor-specific T cells, while also releasing the brakes on immune suppression. The success of
such combinations should allow pharmaceutical companies to significantly expand the market of their checkpoint inhibitors.
We believe that activating T cell therapies will become an important component of these novel combination immunotherapies, with the potential of synergistic benefits to
become an essential part of a multi-pronged approach for the treatment of cancer. The Corporation believes that targeted T cell therapies will become an important
component of these novel combination immunotherapies, with the potential of synergistic benefits to become an essential part of a multi-pronged approach for the treatment
of cancer.
Manufacturing and Scalability
The Corporation has developed and implemented GMP (Good Manufacturing Practices) manufacturing process for DPX-Survivac. The scale-up methods have been
transferred to, and manufacturing has been contracted out to reputable contract manufacturing organizations to manufacture sterile products for clinical purposes.
Facilities
The Corporation’s laboratory and head office is located at 130 Eileen Stubbs Avenue, Suite 19, Dartmouth, Nova Scotia where the Corporation is currently renting premises
of approximately 14,941 sq. ft. The Corporation is also renting an administrative office in Quebec City of approximately 2,702 sq. ft. located at 2875 Boulevard Laurier, Suite
220, Quebec.
Regulatory Process
The FDA and Health Canada share similar processes by which new products are approved. In both cases, development and approval can be a lengthy process, in some cases
over five to 10 years. The FDA approves products for the United States market and Health Canada does so for the Canadian market. Though the processes are generally
similar, each regulatory body has its own unique requirements for a product. In order to sell a product in each market, it has to be approved by the appropriate governing
body. In most cases, early studies conducted in one jurisdiction will be accepted in the other; however, further and somewhat modified studies may be required in order to
have a product approved in another jurisdiction.
All products typically go through the following steps in order to be approved:
discovery: early laboratory work to show that a compound can have unique chemical medicinal properties;
pre-clinical proof-of-concept studies: studies usually conducted in laboratory animals (mice, etc.) to show that a compound is active in a living creature and retains
its medicinal properties;
Phase 1 clinical trial: a small study in human subjects which looks mainly at safety of the compound in humans. In order to be eligible to do a Phase 1 clinical trial,
an IND application in the United States or a Clinical Trial Application (“CTA”) in Canada must be filed and approved by the regulatory body. This application must
contain information about the safety and efficacy of the compound in laboratory animals, any manufacturing information and chemical analysis. This is a lengthy
process, requiring much involved research, conferences with regulatory authorities, clinicians, etc. At the conclusion of a successful Phase 1 clinical trial, a
compound is shown safe in humans and further studies are warranted to show its efficacy to treat an illness;
34
Phase 2 clinical trial: in a Phase 2 clinical trial, a larger population is used in order to establish appropriate dosing for the compound. This and any other clinical
studies are also approved by the regulatory agencies. At the end of a successful Phase 2 clinical trial, the compound is shown to be active in the correct population
and a relevant dose is chosen to continue its development;
Phase 3 clinical trial: a large and sometimes multi-level trial, involving a statistically significant sample of the population for which the compound is designed.
Stringent Chemistry, Manufacturing and Controls (CMC) are required which may delay the initiation of the trial. Phase 3 trials are designed to establish the efficacy
of the compound and identify potential safety issues that may surface in the general population in order for the regulatory agency to better assess the risk/benefit of
the compound when a registration application is made;
registration application: a New Drug Application (“NDA”) or Biologics Licence Application (“BLA”) has to be filed with the regulatory body describing all of the
clinical trials conducted to date, the relevant population, safety data, the label which will be placed on the pharmaceutical product, the sales/marketing information,
etc. The regulatory body looks at the package and decides whether approval should be granted; and
approval: once received, the pharmaceutical product may be sold to the target population. However, clinical studies may continue for the pharmaceutical product for
a different segment of population (e.g. children vs. adults).
Specialized Skill and Knowledge
The business of the Corporation requires personnel with specialized skills and knowledge in the fields of basic and applied immunology. Researchers must be able to design
and implement studies to assess the efficacy of DPX in generating humoral and cellular responses. Specialized knowledge and skills relating to chemistry and formulation
process development are also needed. Such knowledge and skills are needed to develop product specific analytical methods and formulation processes. The Corporation has
trained scientists with broad experience in these fields.
The Corporation has subcontracted out several key functions to conduct the clinical program for its clinical trials. However, the Corporation has internal resources, such as a
Chief Medical Officer, Vice President of Clinical Research, Vice President of Regulatory Affairs, Clinical and Regulatory Affairs Manager(s) and Clinical Research
Associates and utilizes the services of consultants to ensure proper and timely completion of the required activities.
The Corporation also continues to conduct internal discovery and proof-of-concept work for other potential DPX applications, some of which is anticipated to be done with a
partner organization.
Scientific and Clinical Advisory Committee
The Corporation has retained experienced academic and industry experts to assist its management in dealing with industry-related issues and how these issues may affect the
Corporation’s scientific research and product development.
The Scientific and Clinical Advisory Committee consists of the following members:
35
Grant McFadden, PhD
Director, Biodesign Center for Immunotherapy, Vaccines and Virotherapy
Arizona State University
Michael Aaron Morse,MD
Professor of Medicine and Professor in the Department of Surgery
Duke University Medical Center
Brad Nelson, PhD
Director and Distinguished Scientist, Deeley Research Centre
BC Cancer Agency
Kunle Odunsi, PhD, MD, FRCOG, FACOG
Cancer Center Deputy Director; Chair of the Department of Gynecologic
Oncology; and Executive Director, Center for Immunotherapy
Roswell Park Cancer Institute
Equipment and components required to conduct activities
Standard raw materials, component parts, and products required by the Corporation in pursuing its research and development activities are supplied from reputable companies
active in the biotechnology industry. Pricing is predictable as there are many alternatives of such supplies that are readily available. In the event where a custom product is
required, such materials are obtained from custom synthesis and/or purification manufacturers which operate in accordance with their respective regulations (ISO). These
manufacturers are reputable and have been supplying such materials for the biotechnology/ pharmaceutical industry for a long time. There may be a lead time of
weeks/months for such custom materials which is known and anticipated. The Corporation has identified the necessary providers of raw materials and services required for
producing clinical grade product for its clinical trial activities.
Environmental Protection
The Corporation’s discovery and development processes involve the controlled use of hazardous and radioactive materials and, accordingly, the Corporation is subject to
federal, provincial and local laws and regulations governing the use, manufacture, storage, handling and disposal of such materials and certain waste products. To the
knowledge of the Corporation, compliance with such environmental laws and regulations does not and will not have any significant impact on its capital spending, profits or
competitive position within the normal course of its operating activities. There can be no assurance, however, that the Corporation will not be required to incur significant
costs to comply with environmental laws and regulations in the future or that its operations, business or assets will not be materially adversely affected by current or future
environmental laws or regulations.
Employees
As at December 31, 2020, the Corporation had 77 full-time and part-time, including 16 employees holding PhD degrees, including one MD, and a number of other employees
holding M.Sc. or MBA degrees. The Corporation’s employees are not governed by a collective bargaining agreement. The Corporation depends on certain key members of its
management and scientific staff and the loss of services of one or more of these persons could adversely affect the Corporation. See “Risk Factors and Uncertainties”.
36
V.
RISK FACTORS AND UNCERTAINTIES
Investing in the Corporation’s securities involves a high degree of risk. Prospective investors should carefully consider the risks described below, together with all of the other
information included or referred to in this Annual Information Form. There are numerous and varied risks, known and unknown, that may prevent the Corporation from
achieving its goals. The risks described below are not the only ones that the Corporation will face. If any of these risks actually occur, the Corporation’s business, financial
condition or results of operations may be materially adversely affected. In that case, the trading price of the Corporation’s securities could decline and investors in the
Corporation’s securities could lose all or part of their investment.
Risks Related to the Financial Position and Need for Additional Capital
The Corporation has incurred significant losses since inception and expects to incur losses for the foreseeable future and may never achieve or maintain profitability.
Since inception, the Corporation has incurred significant operating losses. The net loss was $34.9 million for the year ended December 31, 2020, $27.6 million for the year
ended December 31, 2019 and $21.9 million for the year ended December 31, 2018. As of December 31, 2020, the Corporation had an accumulated deficit of $155 million.
To date, the Corporation has financed operations primarily through public offerings in Canada, private placements of securities, grants and license and collaboration
agreements. The Corporation has devoted substantially all efforts to research and development, including clinical trials. IMV expects to continue to incur significant expenses
and increasing operating losses for at least the next several years. The Corporation anticipates that the expenses will increase substantially if and as the Corporation:
initiates or continues the clinical trials of DPX Survivac and other product candidates, such as DPX- SurMAGE, DPX-BRAF and DPX-COVID-19;
seeks regulatory approvals for the product candidates that successfully complete clinical trials;
establishes a sales, marketing and distribution infrastructure to commercialize products for which the Corporation may obtain regulatory approval;
maintains, expands and protects the Corporation’s intellectual property portfolio;
continues other research and development efforts;
hires additional clinical, quality control, scientific and management personnel; and
adds operational, financial and management information systems and personnel, including personnel to support product development and planned commercialization
efforts.
To become and remain profitable, the Corporation must develop and eventually commercialize a product or products with significant market potential. This development and
commercialization will require the Corporation to be successful in a range of challenging activities, including successfully completing preclinical testing and clinical trials of
the product candidates, obtaining regulatory approval for these product candidates and marketing and selling those products that obtain regulatory approval. The Corporation
is only in the preliminary stages of some of these activities. The Corporation may never succeed in these activities and may never generate revenues that are significant or
large enough to achieve profitability. Even if profitability is achieved, the Corporation may not be able to sustain or increase profitability on a quarterly or annual basis.
Failure to become and remain profitable would decrease the value of the Corporation and could impair the Corporation’s ability to raise capital, expand the business, maintain
research and development efforts or continue operations. A decline in the value of the Corporation could also cause shareholders to lose all or part of their investment.
37
The Corporation will need substantial additional funding. If the Corporation is unable to raise capital when needed, the Corporation would be forced to delay, reduce,
terminate or eliminate product development programs, potentially including the ongoing and planned clinical trials of DPX-Survivac or commercialization efforts.
The Corporation expects expenses to increase in connection with the ongoing activities, particularly as the Corporation continues the research, development and clinical trials
of, and seeks regulatory approval for, the product candidates. In addition, if the Corporation obtains regulatory approval of any of the product candidates, the Corporation
expects to incur significant commercialization expenses for product sales, marketing, manufacturing and distribution. Furthermore, the Corporation will need to obtain
additional funding in connection with continuing operations. If the Corporation is unable to raise capital when needed or on attractive terms, the Corporation would be forced
to delay, reduce, terminate or eliminate the product development programs, potentially including the ongoing and planned clinical trials of DPX Survivac.
As of December 31, 2020, the Corporation had cash and cash equivalents of $46.4 million and working capital of $45.5 million.
The Corporation will need to obtain significant financing prior to the commercialization of any of its products, including funding to complete all of the required clinical trials
related to such products. The Corporation does not currently have funds available to enable the Corporation to complete all of the required clinical trials for the
commercialization of DPX Survivac and to fund operating expenses through the completion of these trials. The Corporation expects that it will require more than $100 million
or more to conduct the clinical trials and fund operating expenses through the completion of these ongoing trials.
The Corporation’s future capital requirements will depend on many factors, including:
the progress and results of the clinical trials of DPX Survivac and other product candidates;
the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for other product candidates;
the costs, timing and outcome of regulatory review of any product candidate;
the costs of commercialization activities, including product sales, marketing, manufacturing and distribution, for any of the product candidates for which regulatory
approval is received;
revenue, if any, received from commercial sales of the Corporation’s product candidates, should any of the product candidates be approved by the FDA, Health
Canada or a similar regulatory authority outside the United States and Canada;
the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing the Corporation’s intellectual property rights and defending intellectual
property related claims;
the extent to which the Corporation acquires or invests in other businesses, products and technologies;
38
the Corporation’s ability to obtain government or other third party funding; and
the Corporation’s ability to establish collaborations on favorable terms, if at all, particularly arrangements to market and distribute product candidates on a worldwide
basis.
Conducting preclinical testing and clinical trials is a time consuming, expensive and uncertain process that takes years to complete, and the Corporation may never generate
the necessary data or results required to obtain regulatory approval and achieve product sales. In addition, the Corporation’s product candidates, if approved, may not achieve
commercial success. The Corporation’s commercial revenues, if any, will be derived from sales of products that the Corporation does not expect to be commercially available
for several years, if at all. Accordingly, the Corporation will need to continue to rely on additional financing to achieve the Corporation’s business objectives. Additional
financing may not be available on acceptable terms to the Corporation, or at all.
Raising additional capital may cause dilution to existing shareholders, restrict operations or require the Corporation to relinquish rights to its technologies or product
candidates.
Until such time, if ever, as the Corporation can generate substantial product revenues, the Corporation expects to finance its cash needs through a combination of equity
offerings, debt financings, government or other third party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing
arrangements. Currently, the Corporation does not have any committed external source of funds. The Corporation will require substantial funding to complete the ongoing and
planned clinical trials of DPX Survivac and other product candidates and to fund operating expenses and other activities. To the extent that the Corporation raises additional
capital through the sale of equity or convertible debt securities, the shareholders ownership interest will be diluted, and the terms of these securities may include liquidation or
other preferences that adversely affect the shareholders rights as a stockholder. Debt financing, if available, may involve agreements that include covenants limiting or
restricting the Corporation’s ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If the Corporation raises
additional funds through government or other third party funding, marketing and distribution arrangements or other collaborations, strategic alliances or licensing
arrangements with third parties, the Corporation may have to relinquish valuable rights to its technologies, future revenue streams, research programs or product candidates or
to grant licenses on terms that may not be favorable.
Risks Related to the Development and Commercialization of the Corporation’s Product Candidates
The Corporation depends heavily on the success of DPX-Survivac and other product candidates. All of the product candidates are still in preclinical or clinical
development. Clinical trials of the product candidates may not be successful. If the Corporation is unable to commercialize the product candidates or experiences
significant delays in doing so, the business may be materially harmed.
All of the product candidates of the Corporation are still in preclinical or clinical development. The Corporation may never be able to obtain regulatory approval for any of its
product candidates. The Corporation has committed significant human and financial resources to the development of DPX Survivac, and the DPX Platform. The ability to
generate product revenues, which is not expected to occur for at least the next several years, if ever, will depend heavily on the successful development and eventual
commercialization of these product candidates, especially DPX Survivac, the most advanced product candidate. The success of these product candidates will depend on
several factors, including the following:
successful completion of preclinical studies and clinical trials;
39
receipt of marketing approvals from the FDA, Health Canada and similar regulatory authorities outside the United States and Canada;
establishing commercial manufacturing capabilities by identifying and making arrangements with third party manufacturers for the product candidates;
maintaining patent and trade secret protection and regulatory exclusivity for the product candidates;
launching commercial sales of the products, if and when approved, whether alone or in collaboration with others;
acceptance of the products, if and when approved, by patients, the medical community and third party payors;
effectively competing with other therapies; and
a continued acceptable safety profile of the products following approval.
If the Corporation does not achieve one or more of these factors in a timely manner or at all, the Corporation could experience significant delays or an inability to successfully
commercialize its product candidates, which would materially harm its business.
If clinical trials of the product candidates, such as the ongoing and planned clinical trials of DPX Survivac or for DPX-SurMAGE, DPX-BRAF or DPX-COVID-19, fail
to demonstrate safety and efficacy to the satisfaction of the FDA, Health Canada or similar regulatory authorities outside the United States and Canada or do not
otherwise produce positive results, the Corporation may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development
and commercialization of the product candidates.
Before obtaining regulatory approval for the sale of any product candidate, the Corporation must conduct extensive clinical trials to demonstrate the safety, purity and potency,
or efficacy, of the product candidates in humans. Clinical testing is expensive, difficult to design and implement, can take many years to complete and is uncertain as to
outcome. A failure of one or more of the Corporation’s clinical trials can occur at any stage of testing. The outcome of preclinical testing and early clinical trials may not be
predictive of the success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. Moreover, preclinical and clinical data are often
susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical
trials have nonetheless failed to obtain marketing approval of their products.
The Corporation may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent the Corporation’s ability to receive regulatory
approval or commercialize its product candidates. Unforeseen events that could delay or prevent the Corporation’s ability to receive regulatory approval or commercialize its
product candidates include:
regulators or institutional review boards may not authorize the Corporation or its investigators to commence a clinical trial or conduct a clinical trial at a prospective
trial site;
the Corporation may have delays in reaching or fail to reach agreement on acceptable clinical trial contracts or clinical trial protocols with prospective trial sites;
clinical trials of the product candidates may produce negative or inconclusive results, and the Corporation may decide, or regulators may require, additional clinical
trials be conducted or product development programs be abandoned;
40
the number of patients required for clinical trials of the product candidates may be larger than anticipated, enrollment in these clinical trials may be slower than
anticipated or participants may drop out of these clinical trials at a higher rate than anticipated;
the Corporation’s third party contractors may fail to comply with regulatory requirements or meet their contractual obligations in a timely manner, or at all;
the Corporation might have to suspend or terminate clinical trials of its product candidates for various reasons, including a finding that the participants are being
exposed to unacceptable health risks;
regulators or institutional review boards may require that the Corporation or its investigators suspend or terminate clinical research for various reasons, including
noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks;
the cost of clinical trials of the product candidates may be greater than anticipated;
the supply or quality of the product candidates or other materials necessary to conduct clinical trials of the product candidates may be insufficient or inadequate; and
the Corporation’s product candidates may have undesirable side effects or other unexpected characteristics, causing the Corporation or its investigators, regulators or
institutional review boards to suspend or terminate the trials.
In addition, the patients recruited for clinical trials of the product candidates may have a disease profile or other characteristics that are different than expected and different
than what the clinical trials were designed for, which could adversely impact the results of the clinical trials.
If the Corporation is required to conduct additional clinical trials or other testing of its product candidates beyond those that are currently contemplated, if the Corporation is
unable to successfully complete clinical trials of its product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive or if
there are safety concerns, the Corporation may:
be delayed in obtaining marketing approval for its product candidates;
not obtain marketing approval at all;
obtain approval for indications or patient populations that are not as broad as intended or desired;
obtain approval with labeling that includes significant use restrictions or safety warnings, including boxed warnings;
have the product removed from the market after obtaining marketing approval;
be subject to additional post marketing testing requirements; or
be subject to restrictions on how the product is distributed or used.
The Corporation’s product development costs will also increase if delays in testing or approvals are experienced. The Corporation does not know whether any clinical trials
will begin as planned, will need to be restructured or will be completed on schedule, or at all. Significant clinical trial delays could also shorten any periods during which the
Corporation may have the exclusive right to commercialize its product candidates or allow the Corporation’s competitors to bring products to market before the Corporation
does and impair the Corporation’s ability to commercialize its product candidates and may harm the business and results of operations.
41
If the Corporation experiences delays or difficulties in the enrollment of patients in clinical trials, receipt of necessary regulatory approvals could be delayed or prevented.
The Corporation may not be able to initiate or continue clinical trials for its product candidates, if the Corporation is unable to locate and enroll a sufficient number of eligible
patients to participate in these trials as required by the FDA, Health Canada or similar regulatory authorities outside the United States and Canada. In addition, many of the
Corporation’s competitors have ongoing clinical trials for product candidates that could be competitive with the Corporation’s product candidates, and patients who would
otherwise be eligible for the Corporation’s clinical trials may instead enroll in clinical trials of the Corporation’s competitors’ product candidates.
Patient enrollment is affected by other factors including:
severity of the disease under investigation;
eligibility criteria for the study in question;
perceived risks and benefits of the product candidate under study;
efforts to facilitate timely enrollment in clinical trials;
patient referral practices of physicians;
the ability to monitor patients adequately during and after treatment; and
proximity and availability of clinical trial sites for prospective patients.
The actual amount of time for full enrollment could be longer than planned. Enrollment delays in these ongoing and planned trials or any of the Corporation’s other clinical
trials may result in increased development costs for its product candidates, which would cause the value of the Corporation to decline and limit the Corporation’s ability to
obtain additional financing, including financing needed to complete the ongoing and planned trials of DPX Survivac. The Corporation’s inability to enroll a sufficient number
of patients for these clinical trials or any of the other clinical trials would result in significant delays or may require the Corporation to abandon one or more clinical trials
altogether.
Risks Related to the Development and Commercialization of the Corporation’s Product Candidates
The Corporation does not have governmental authorization to begin clinical testing of DPX-COVID-19, and the process of conducting necessary clinical studies,
manufacturing and clinical organization, as well as obtaining such governmental authorization from Health Canada is not guaranteed.
The Corporation is at the early stages of developing its proposed vaccine candidate DPX-COVID-19. Creating a new vaccine, testing it for toxicity and efficacy, securing
clinical drug supply, scaling production and manufacturing, and establishing supply and distribution logistics are all steps that have significant natural time limitations. We
have not received any authorization from Health Canada or any other governmental regulatory authority, to develop or initiate clinical trials for DPX-COVID-19, and
although we have identified lead clinical investigators, the Corporation has not entered into any agreements for the establishment of clinical sites. Even if Health Canada were
to accelerate the approval processes necessary to permit the Corporation to commence a phase 1 study and subsequent studies and trials to the maximum extent possible, there
is no guarantee that if the development of DPX-COVID-19 is successful, the Corporation will secure the necessary regulatory approval for its commercialization or that DPX-
COVID-19 will receive market acceptance. In addition, a number of other biotechnology companies, academic institutions and governmental entities are also researching and
developing therapies and vaccines to address the COVID-19 pandemic, and many of these competitors have significantly greater financial and scientific resources than the
Corporation. In light of the declaration by the World Health Organization of the pandemic, the third-party clinical investigators and clinical site operators that the Corporation
may seek to collaborate with on the development of DPX-COVID-19, as well as governmental entities, may decide to prioritize or rationalize their resources in favor of
competing therapies and vaccines. In such event, the Corporation’s efforts to develop DPX-COVID-19 could be delayed, which could harm the viability of this development
program.
42
If serious adverse or undesirable side effects are identified during the development of any product candidate, the Corporation may need to abandon or limit the
development of some of its product candidates.
All of the Corporation’s product candidates are still in preclinical or clinical development and their risk of failure is high. It is impossible to predict when or if any of the
Corporation’s product candidates will prove effective or safe in humans or will receive regulatory approval. If the Corporation’s product candidates are associated with
undesirable side effects or have characteristics that are unexpected, the Corporation may need to abandon their development or limit development to certain uses or
subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk benefit perspective.
The design or the Corporation’s execution of clinical trials may not support regulatory approval.
The design or execution of a clinical trial can determine whether its results will support regulatory approval and flaws in the design or execution of a clinical trial may not
become apparent until the clinical trial is well advanced. In some instances, there can be significant variability in safety or efficacy results between different trials of the same
product candidate due to numerous factors, including changes in trial protocols, differences in size and type of the patient populations, adherence to the dosing regimen and
other trial protocols and the rate of dropout among clinical trial participants. The Corporation does not know whether any Phase 2, Phase 3 or other clinical trials the
Corporation may conduct will demonstrate consistent or adequate efficacy and safety to obtain regulatory approval to market the Corporation’s product candidates.
Further, the FDA, Health Canada and comparable foreign regulatory authorities have substantial discretion in the approval process and in determining when or whether
regulatory approval will be obtained for any of the Corporation’s product candidates. The Corporation’s product candidates may not be approved even if they achieve their
primary endpoints in future Phase 3 clinical trials or registration trials. The FDA, Health Canada or other regulatory authorities may disagree with the Corporation’s trial
design and the Corporation’s interpretation of data from preclinical studies and clinical trials. In addition, any of these regulatory authorities may change requirements for the
approval of a product candidate even after reviewing and providing comments or advice on a protocol for a pivotal Phase 3 clinical trial that has the potential to result in FDA,
Health Canada or other agencies’ approval. In addition, any of these regulatory authorities may also approve a product candidate for fewer or more limited indications than the
Corporation requests or may grant approval contingent on the performance of costly post-marketing clinical trials. The FDA, Health Canada or other regulatory authorities
may not approve the labeling claims that the Corporation believes would be necessary or desirable for the successful commercialization of its product candidates.
Even if any of the Corporation’s product candidates, including DPX-Survivac, receive regulatory approval, they may fail to achieve the degree of market acceptance by
physicians, patients, healthcare payors and others in the medical community necessary for commercial success.
43
If DPX Survivac or any other product candidates receive marketing approval, they may nonetheless fail to gain sufficient market acceptance by physicians, patients,
healthcare payors and others in the medical community. Gaining market acceptance for the DPX™ based products may be particularly difficult as, to date, the FDA has only
approved a limited number of cancer immunotherapies and the DPX™ based products are based on a novel technology. If these products do not achieve an adequate level of
acceptance, the Corporation may not generate significant product revenues and may not become profitable. The degree of market acceptance of the Corporation’s product
candidates, if approved for commercial sale, will depend on a number of factors, including:
efficacy and potential advantages compared to alternative treatments;
the ability to offer its product candidates for sale at competitive prices;
convenience and ease of administration compared to alternative treatments;
the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
the strength of marketing and distribution support;
sufficient third party coverage or reimbursement; and
the prevalence and severity of any side effects.
If the Corporation is unable to establish sales and marketing capabilities or enter into agreements with third parties to sell and market its product candidates, the
Corporation may not be successful in commercializing its product candidates if and when they are approved.
The Corporation does not have a sales or marketing infrastructure and has no experience in the sale, marketing or distribution of pharmaceutical products. To achieve
commercial success for any of its product that would be approved in the future, the Corporation must either develop a sales and marketing organization or outsource these
functions to third parties. The Corporation currently intends to establish commercialization arrangements with third parties.
There are risks involved with entering into arrangements with third parties to perform these services. If the Corporation enters into arrangements with third parties to perform
sales, marketing and distribution services, its product revenues or the profitability of these product revenues are likely to be lower than if the Corporation were to market and
sell any products that it develops. In addition, the Corporation may not be successful in entering into arrangements with third parties to sell and market its product candidates
or doing so on terms that are favorable to the Corporation. The Corporation likely will have little control over such third parties, and any of them may fail to devote the
necessary resources and attention to sell and market its products effectively. If the Corporation does not establish sales and marketing capabilities successfully, either on its
own or in collaboration with third parties, it will not be successful in commercializing its product candidates.
The Corporation faces substantial competition, which may result in others discovering, developing or commercializing products before or more successfully than it may.
The development and commercialization of new drug products is highly competitive. The Corporation faces competition with respect to its current or contemplated product
candidates, and will face competition with respect to any products that it may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty
pharmaceutical companies and biotechnology companies worldwide. There are a number of large pharmaceutical and biotechnology companies that currently market and sell
products or are pursuing the development of products for the treatment of the disease indications for which the Corporation is developing its current or contemplated product
candidates. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek
patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.
44
Some of these competitive products and therapies are based on scientific approaches that are the same as or similar to the Corporation’s approaches, and others are based on
entirely different approaches. Many marketed therapies for the indications that the Corporation is currently pursuing, or indications that it may in the future seek to address
using the DPX platform, are widely accepted by physicians, patients and payors, which may make it difficult for the Corporation to replace with any products that the
Corporation successfully develops and are permitted to market.
There are many FDA approved cancer therapies that may provide equivalent or better efficacy compared to DPX Survivac.
In addition, the Corporation estimates that there are numerous cancer immunotherapy products in clinical development by many public and private biotechnology and
pharmaceutical companies targeting numerous different cancer types. A number of these are in late-stage development.
The Corporation’s competitors may develop products that are more effective, safer, more convenient or less costly than any that the Corporation is developing or that would
render its product candidates obsolete or non competitive. The Corporation’s competitors may also obtain FDA, Health Canada or other regulatory approval for their products
more rapidly than the Corporation.
Many of the Corporation’s competitors have significantly greater financial resources and expertise in research and development, manufacturing, preclinical testing, conducting
clinical trials, obtaining regulatory approvals and marketing approved products than the Corporation. Mergers and acquisitions in the pharmaceutical, biotechnology and
device industries may result in even more resources being concentrated among a smaller number of the Corporation’s competitors. Smaller and other early stage companies
may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with the
Corporation in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in
acquiring technologies complementary to, or necessary for, the Corporation’s programs.
Even if the Corporation is able to commercialize any product candidates, the products may become subject to unfavorable pricing regulations, third-party reimbursement
practices or healthcare reform initiatives, which would harm the business.
The regulations that govern marketing approvals, pricing and reimbursement for new drug products vary widely from country to country. In the United States, recently passed
legislation may significantly change the approval requirements in ways that could involve additional costs and cause delays in obtaining approvals. Some countries require
approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing or product licensing approval is granted. In
some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a result, the
Corporation might obtain regulatory approval for a product in a particular country, but then be subject to price regulations that delay the commercial launch of the product,
possibly for lengthy time periods, and negatively impact the revenues the Corporation is able to generate from the sale of the product in that country. Adverse pricing
limitations may hinder the Corporation’s ability to recoup its investment in one or more product candidates, even if its product candidates obtain regulatory approval.
45
The Corporation’s ability to commercialize any products successfully also will depend in part on the extent to which reimbursement for these products and related treatments
will be available from government health administration authorities, private health insurers and other organizations. Government authorities and third party payors, such as
private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels. A primary trend in the United
States healthcare industry and elsewhere is cost containment. Government authorities and third party payors have attempted to control costs by limiting coverage and the
amount of reimbursement for particular medications. Increasingly, third party payors are requiring that drug companies provide them with predetermined discounts from list
prices and are challenging the prices charged for medical products. The Corporation cannot be sure that reimbursement will be available for any product that it commercializes
and, if reimbursement is available, the level of reimbursement. Reimbursement may impact the demand for, or the price of, any product candidate for which the Corporation
obtains marketing approval. Obtaining reimbursement for the Corporation’s products may be particularly difficult because of the higher prices often associated with drugs
administered under the supervision of a physician. If reimbursement is not available or is available only to limited levels, the Corporation may not be able to successfully
commercialize any product candidate for which the Corporation obtained marketing approval.
There may be significant delays in obtaining reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the drug is approved by
the FDA, Health Canada or similar regulatory authorities outside the United States or Canada. Moreover, eligibility for reimbursement does not imply that any drug will be
paid for in all cases or at a rate that covers the Corporation’s costs, including research, development, manufacture, sale and distribution. Interim reimbursement levels for new
drugs, if applicable, may also not be sufficient to cover the Corporation’s costs and may not be made permanent. Reimbursement rates may vary according to the use of the
drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs, and may be incorporated into existing payments for
other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future
relaxation of laws that presently restrict imports of drugs from countries where they may be sold at lower prices than in Canada or the United States. Third party payors often
rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. The Corporation’s inability to promptly obtain coverage and
profitable payment rates from both government funded and private payors for any approved products that the Corporation develops could have a material adverse effect on the
Corporation’s operating results, the Corporation’s ability to raise capital needed to commercialize products and the Corporation’s overall financial condition.
The Corporation’s reliance on government funding adds uncertainty to the Corporation’s research and commercialization efforts of its government-funded product
candidates.
The Corporation has received significant funding from government organizations since its inception totaling over $20 million. There is no assurance the Corporation will
continue to apply for and/or be awarded government funding in the future. If the Corporation is unable to obtain additional government funding, including as it relates to its
DPX-COVID-19 program, it will have to either obtain funds through raising additional capital or arrangements with strategic partners or others, if available, that may require
the Corporation to relinquish material rights to certain technologies or potential markets. There is no certainty that financing will be available in amounts the Corporation
requires to pursue the planned activities or on acceptable terms, if at all.
46
Product liability lawsuits against the Corporation could cause the Corporation to incur substantial liabilities and to limit commercialization of any products that the
Corporation may develop.
The Corporation faces an inherent risk of product liability exposure related to the testing of its product candidates in human clinical trials and will face an even greater risk if
the Corporation commercially sells any products that it may develop. None of the Corporation’s product candidates have been widely used over an extended period of time,
and therefore, safety data is limited.
If the Corporation cannot successfully defend itself against claims that its product candidates or products caused injuries, it will incur substantial liabilities. Regardless of
merit or eventual outcome, liability claims may result in:
decreased demand for any product candidates or products that it may develop;
injury to the Corporation’s reputation and significant negative media attention;
withdrawal of clinical trial participants;
significant costs to defend the related litigation;
substantial monetary awards to trial participants or patients;
loss of revenue; and
the inability to commercialize any products that the Corporation may develop.
The Corporation currently maintains a clinical trial liability insurance coverage in the amount of $10 million, which may not be adequate to cover all liabilities that it may
incur. The Corporation will need to increase its insurance coverage when it begins commercializing its product candidates. Insurance coverage is increasingly expensive. The
Corporation may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.
The Corporation may expend its limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that
may be more profitable or for which there is a greater likelihood of success.
Because the Corporation has limited financial and managerial resources, the Corporation focuses on research programs and product candidates for specific indications. As a
result, the Corporation may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater commercial potential.
The Corporation’s resource allocation decisions may cause the Corporation to fail to capitalize on viable commercial products or profitable market opportunities. The
Corporation’s spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable
products.
The Corporation has based its research and development efforts on its DPX platform. Notwithstanding the large investment to date and anticipated future expenditures in its
DPX platform, the Corporation has not yet developed, and may never successfully develop, any marketed drugs using this approach. As a result of pursuing the development
of product candidates using the DPX platform, the Corporation may fail to develop product candidates or address indications based on other scientific approaches that may
offer greater commercial potential or for which there is a greater likelihood of success.
The Corporation’s long term business plan is to develop DPX™ based products for the treatment of various cancers and infectious diseases. The Corporation may not be
successful in its efforts to identify or discover additional product candidates that may be manufactured using its DPX platform. Research programs to identify new product
candidates require substantial technical, financial and human resources. These research programs may initially show promise in identifying potential product candidates, yet
fail to yield product candidates for clinical development.
47
If the Corporation does not accurately evaluate the commercial potential or target market for a particular product candidate, the Corporation may relinquish valuable rights to
that product candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for the Corporation to retain
sole development and commercialization rights to such product candidate.
Risks Related to the Corporation’s Dependence on Third Parties
If the Corporation is not able to establish collaborations, the Corporation may have to alter its development and commercialization plans.
The Corporation’s drug development programs and the potential commercialization of its product candidates will require substantial additional cash to fund expenses. For
some of the Corporation’s product candidates, the Corporation plans to collaborate with pharmaceutical and biotechnology companies for the development and potential
commercialization of those product candidates.
The Corporation faces significant competition in seeking appropriate collaborators. Whether the Corporation reaches a definitive agreement for a collaboration will depend,
among other things, upon its assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration, and the proposed collaborator’s
evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by the FDA, Health Canada or similar regulatory
authorities outside the United States and Canada, the potential market for the subject product candidate, the costs and complexities of manufacturing and delivering such
product candidate to patients, the potential of competing products, the existence of uncertainty with respect to the Corporation’s ownership of technology, which can exist if
there is a challenge to such ownership without regard to the merits of the challenge and industry and market conditions generally. The collaborator may also consider
alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration could be more attractive than
the one with the Corporation for its product candidate. The Corporation may also be restricted under existing license agreements from entering into agreements on certain
terms with potential collaborators. Collaborations are complex and time consuming to negotiate and document. The Corporation may not be able to negotiate collaborations
on a timely basis, on acceptable terms, or at all.
The Corporation will need to raise capital or develop collaborations with third parties to commercialize its products. If the Corporation is not able to obtain such funding or
enter into collaborations for any such product candidate, the Corporation may have to curtail the development of such product candidate, reduce or delay its development
program or one or more of its other development programs, delay its potential commercialization or reduce the scope of any sales or marketing activities, or increase its
expenditures and undertake development or commercialization activities at the Corporation’s own expense. If the Corporation elects to increase its expenditures to fund
development or commercialization activities on its own, the Corporation may need to obtain additional capital, which may not be available to the Corporation on acceptable
terms or at all. If the Corporation does not have sufficient funds, the Corporation may not be able to further develop these product candidates or bring these product candidates
to market and generate product revenue.
48
The Corporation expects to depend on collaborations with third parties for the development and commercialization of its product candidates. If those collaborations are
not successful, the Corporation may not be able to capitalize on the market potential of these product candidates.
The Corporation intends to establish commercialization arrangements with third parties. The Corporation’s likely collaborators for any development, distribution, marketing,
licensing or broader collaboration arrangements include large and mid size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology
companies.
Potential delays include delays in manufacture or clinical trials, failure to produce sufficient quantities of product to conduct trials, or failure to complete trials. The
Corporation’s collaborators may fail to meet contractual obligations. They could also pursue other technologies or develop alternative products that could compete with the
products the Corporation is developing. If the Corporation does enter into any such arrangements with any third parties, the Corporation will likely have limited control over
the amount and timing of resources that its collaborators dedicate to the development or commercialization of its product candidates. The Corporation’s ability to generate
revenues from these arrangements will depend on its collaborators’ abilities to successfully perform the functions assigned to them in these arrangements.
Collaborations involving the Corporation’s product candidates would pose the following risks to the Corporation:
collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations;
collaborators may not pursue development and commercialization of the Corporation’s product candidates or may elect not to continue or renew development or
commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available funding, or external factors such as an acquisition
that diverts resources or creates competing priorities;
collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a product candidate, repeat or conduct
new clinical trials or require a new formulation of a product candidate for clinical testing;
collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with the Corporation’s products or product
candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more
economically attractive than the Corporation’s;
a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to the marketing and distribution of such product
or products;
collaborators may not properly maintain or defend the Corporation’s intellectual property rights or may use the Corporation’s proprietary information in such a way
as to invite litigation that could jeopardize or invalidate the Corporation’s proprietary information or expose the Corporation to potential litigation;
disputes may arise between the collaborators and the Corporation that result in the delay or termination of the research, development or commercialization of the
Corporation’s products or product candidates or that result in costly litigation or arbitration that diverts management attention and resources; and
49
collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable
product candidates. For example, the Corporation could have to build a sales force.
Collaboration agreements may not lead to development or commercialization of product candidates in the most efficient manner, or at all. In addition, there have been a
significant number of recent business combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators. If a
present or future collaborator of the Corporation were to be involved in a business combination, the continued pursuit and emphasis on the Corporation’s product development
or commercialization program could be delayed, diminished or terminated.
The Corporation relies on third parties to conduct its clinical trials, and those third parties may not perform satisfactorily, including failing to meet deadlines for the
completion of such trials.
The Corporation does not independently conduct clinical trials of its product candidates. The Corporation relies on third parties, such as contract research organizations,
clinical data management organizations, medical institutions and clinical investigators, to perform this function. The Corporation’s reliance on these third parties for clinical
development activities reduces its control over these activities but does not relieve the Corporation of its responsibilities. The Corporation remains responsible for ensuring
that each of its clinical trials is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the FDA requires the Corporation to
comply with standards, commonly referred to as Good Clinical Practices, for conducting, recording and reporting the results of clinical trials to assure that data and reported
results are credible and accurate and that the rights, integrity and confidentiality of trial participants are protected. The Corporation is also required to register ongoing clinical
trials and post the results of completed clinical trials on a government sponsored database, ClinicalTrials.gov, within certain timeframes. Failure to do so can result in fines,
adverse publicity and civil and criminal sanctions. Furthermore, these third parties may also have relationships with other entities, some of which may be the Corporation’s
competitors. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct the Corporation’s clinical trials in accordance with
regulatory requirements or the Corporation’s stated protocols, the Corporation will not be able to obtain, or may be delayed in obtaining, regulatory approvals for its product
candidates and will not be able to, or may be delayed in its efforts to, successfully commercialize its product candidates.
The Corporation also relies on other third parties to store and distribute drug supplies for its clinical trials. Any performance failure on the part of the Corporation’s existing or
future distributors could delay clinical development or regulatory approval of its product candidates or commercialization of its products, producing additional losses and
depriving the Corporation of potential product revenue.
The Corporation depends on third-party suppliers to obtain the Corporation’s raw ingredients and intermediate drug substances, which are necessary for the production
of the Corporation’s products.
The Corporation currently procures ingredients and intermediate drug substances for the manufacturing of the Corporation’s pipeline products from specialized suppliers. For
some components, including raw ingredients, the Corporation has so far identified only one supplier which is qualified for the Corporation’s GMP process. In the event that a
supplier stops supplying the required ingredient(s), the Corporation may need to identify an alternative source of such components and may need to wait until it is qualified
for the Corporation’s GMP process before procuring the components, which may cause substantial delays to one or all of the Corporation’s clinical programs.
50
Risks Related to the Manufacturing of the Corporation’s Product Candidates
Natural disasters, public health crises, political crises, and other catastrophic events outside of our control may damage the facilities or disrupt the operations of our
strategic partners, third party manufacturers, suppliers or other third parties upon which we rely, and could delay or impair our ability to initiate or complete our clinical
trials or commercialize candidate product.
Our strategic partners, third-party manufacturers, suppliers and other third parties upon which we rely have operations around the world and are exposed to a number of global
and regional risks outside of our control. These include, but are not limited to, natural disasters, such as earth quakes, tsunamis, power shortages or outages, floods or
monsoons, public health crises, such as pandemics and epidemics, political crises, such as terrorism, war, political instability or other conflict, or other events outside of our
control.
An outbreak of a novel strain of coronavirus, identified as COVID-19, was declared a global pandemic by the World Health Organization on March 11, 2020. The COVID-19
pandemic crisis is still impacting clinical activities across the industry due to the pressure placed on the healthcare systems as well as governmental and institutional
restrictions. To date, COVID-19 has not had a material impact on the Corporation’s financial condition, liquidity or longer-term strategic development and commercialization
plans. The extent to which COVID-19 may cause more significant disruptions to IMV’s business and greater impacts to results of operations will depend on future
developments, which are highly uncertain and cannot be predicted with confidence, such as the duration and severity of outbreaks, including potential future waves or cycles,
and the effectiveness of actions to contain and treat COVID-19.
IMV’s clinical team is working closely with each clinical site and its CRO’s on contingency plans to ensure that patient safety and the integrity of data is maintained.
Additionally, the IMV team continues to monitor updated institutional, regional and national guidance to fully comply with applicable guidelines as they are issued. It is noted
that many clinical sites have reinitiated enrollment in clinical trials, while other sites, less impacted, have continued activities as planned. Patients are encouraged to comply
with directives from public health officials and, subject to such compliance, attend visits as planned or to discuss alternatives with their physician. The current activities
performed at central labs to assess the eligibility of patients and the management of clinical samples is not impacted to date, and IMV is working with its vendors to ensure
continuity of activities. Drug supply is not expected to be impacted at this time. As added precaution, IMV has developed contingency plans to ensure proper supply of drugs
to all clinical sites in the event of future transportation or other constraints. The COVID-19 pandemic continues to rapidly evolve, and the Corporation will continue to monitor
the effects of COVID-19 on its business. Depending on its severity and duration, the COVID-19 pandemic may also other risks described in this "Risk Factors" section.
If the Corporation is unable to commercially manufacture its products, the Corporation could face delayed trial approvals or sales.
The Corporation has no experience manufacturing commercial quantities of products and does not currently have the resources to commercially manufacture any products
that the Corporation may develop. Accordingly, if the Corporation becomes successful in developing any product with commercial potential, the Corporation would either be
required to develop the facilities to manufacture independently or secure a contract manufacturer or enter into another arrangement with third parties to manufacture such
products. If the Corporation is unable to develop such capabilities or enter into any such arrangement on favourable terms, the Corporation may be unable to compete
effectively in the marketplace. If the Corporation is unable to manufacture or contract for a sufficient supply of product on acceptable terms, or if the Corporation encounters
delays or difficulties in its relationships with manufacturers or collaborators, its preclinical, clinical testing and/or product sales could be delayed, thereby delaying the
submission of products for regulatory approval and/or market introduction and subsequent sales of such products.
51
Currently the Corporation is utilizing the GMP services of a contract manufacturing organization (“CMO”) located in the United States for its clinical drug product
manufacturing and does not have a fully qualified and approved backup facility. The Corporation may need to approve an alternative CMO to avoid delays in planned clinical
programs should there be any issues with the current CMO. The Corporation’s products require a unique manufacturing process and uses specialized equipment manufactured
by another third party to manufacture the Corporation’s clinical candidate vaccines. The specialized equipment used during the manufacturing process is made by only one
manufacturer. In the event of catastrophic equipment failure and in the event that this particular supplier of the equipment ceases its operations and/ or replacement equipment
cannot be procured, alternative suppliers of similar equipment may be sought and additional product development may be required, which may cause significant delays to
some or all of the Corporation’s clinical programs.
Risks Related to the Corporation’s Intellectual Property
If the Corporation fails to comply with its obligations under its intellectual property licenses with third parties, the Corporation could lose license rights that are important
to its business.
The Corporation is a party to a number of intellectual property license agreements with third parties and expects to enter into additional license agreements in the future. The
Corporation’s existing license agreements impose, and the Corporation expects that future license agreements will impose, various diligences, milestone payment, royalty,
insurance, indemnification and other obligations on the Corporation. If the Corporation fails to comply with its obligations under these licenses, its licensors may have the
right to terminate these license agreements, in which event the Corporation might not be able to market any product that is covered by these agreements, or to convert the
license to a non-exclusive license, which could materially adversely affect the value of the product candidate being developed under the license agreement. Termination of
these license agreements or reduction or elimination of the Corporation’s licensed rights may result in the Corporation having to negotiate new or reinstated licenses with less
favorable terms.
If the Corporation is unable to obtain and maintain patent protection for its technology and products, or if the Corporation’s licensors are unable to obtain and maintain
patent protection for the technology or products that the Corporation licenses from them, or if the scope of the patent protection obtained is not sufficiently broad, the
Corporation’s competitors could develop and commercialize technology and products similar or identical to that of the Corporation’s, and its ability to successfully
commercialize its technology and products may be adversely affected.
The Corporation’s success depends in large part on its and its licensors’ ability to obtain and maintain patent protection in the United States and other countries with respect to
its proprietary technology and products. The Corporation and its licensors have sought to protect the Corporation’s proprietary position by filing patent applications in the
United States and abroad related to its novel technologies and products that are important to its business. This process is expensive and time consuming, and the Corporation
may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that the Corporation will fail to
identify patentable aspects of its research and development output before it is too late to obtain patent protection. Moreover, in some circumstances, the Corporation does not
have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology or products that it licenses from third
parties and are reliant on its licensors. Therefore, the Corporation cannot be certain that these patents and applications will be prosecuted and enforced in a manner consistent
with the best interests of its business. If such licensors fail to maintain such patents, or lose rights to those patents, the rights the Corporation has licensed may be reduced or
eliminated.
52
The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been
the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of the Corporation’s and its licensors’ patent rights are highly
uncertain. The Corporation and its licensors’ pending and future patent applications may not result in patents being issued which protect its technology or products or which
effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the United
States and other countries may diminish the value of the Corporation’s patents or narrow the scope of its patent protection.
The laws of foreign countries may not protect the Corporation’s rights to the same extent as the laws of Canada and the United States. Publications of discoveries in the
scientific literature often lag behind the actual discoveries, and patent applications in Canada and the United States and other jurisdictions are typically not published until 18
months after filing, or in some cases not at all. Therefore, the Corporation cannot be certain that itself or its licensors were the first to make the inventions claimed in its
owned or licensed patents or pending patent applications, or that the Corporation or its licensors were the first to file for patent protection of such inventions.
Assuming the other requirements for patentability are met, in the United States, the first to invent the claimed invention is entitled to the patent, while outside the United
States, the first to file a patent application is generally entitled to the patent. Under the America Invents Act, or AIA, enacted in September 2011, the United States moved to a
first inventor to file system in March 2013. The Corporation may become involved in opposition or interference proceedings challenging its patent rights or the patent rights
of others. An adverse determination in any such proceeding or litigation could reduce the scope of, or invalidate, the Corporation’s patent rights, allowing third parties to
commercialize its technology or products and compete directly with the Corporation, without payment to the Corporation, or result in its inability to manufacture or
commercialize products without infringing third party patent rights. For example, Merck has to maintain patents on antigens licensed to the Corporation.
Even if the Corporation’s owned and licensed patent applications issue as patents, they may not issue in a form that will provide the Corporation with any meaningful
protection, prevent competitors from competing with the Corporation or otherwise provide the Corporation with any competitive advantage. The Corporation’s competitors
may be able to circumvent its owned or licensed patents by developing similar or alternative technologies or products in a non infringing manner. The issuance of a patent is
not conclusive as to its scope, validity or enforceability, and the Corporation’s owned and licensed patents may be challenged in the courts or patent offices in Canada, the
United States and abroad. Such challenges may result in patent claims being narrowed, invalidated or held unenforceable, which could limit the Corporation’s ability to or stop
or prevent the Corporation from stopping others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of
its technology and products. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such
candidates might expire before or shortly after such candidates are commercialized. As a result, the Corporation’s owned and licensed patent portfolio may not provide it with
sufficient rights to exclude others from commercializing products similar or identical to the Corporation’s.
53
The Corporation may become involved in lawsuits to protect or enforce its patents, which could be expensive, time consuming and unsuccessful.
Competitors may infringe the Corporation’s patents. To counter infringement or unauthorized use, the Corporation may be required to file infringement claims, which can be
expensive and time consuming. In addition, in an infringement proceeding, a court may decide that a patent of the Corporation’s is invalid or unenforceable or may refuse to
stop the other party from using the technology at issue on the grounds that its patents do not cover the technology in question. An adverse result in any litigation proceeding
could put one or more of the Corporation’s patents at risk of being invalidated or interpreted narrowly. Furthermore, because of the substantial amount of discovery required
in connection with intellectual property litigation, there is a risk that some of the Corporation’s confidential information could be compromised by disclosure during this type
of litigation. In addition, the Corporation’s licensors may have rights to file and prosecute such claims and it is reliant on them.
Third parties may initiate legal proceedings alleging that the Corporation is infringing their intellectual property rights, the outcome of which would be uncertain and
could have a material adverse effect on the success of the Corporation’s business.
The Corporation’s commercial successes depends upon its ability and the ability of its collaborators to develop, manufacture, market and sell its product candidates and use its
proprietary technologies without infringing the proprietary rights of third parties. The Corporation may become party to, or threatened with, future adversarial proceedings or
litigation regarding intellectual property rights with respect to its products and technology, including interference proceedings before the U.S. Patent and Trademark Office or
other similar regulatory authorities. Third parties may assert infringement claims against the Corporation based on existing patents or patents that may be granted in the future.
If the Corporation is found to infringe a third party’s intellectual property rights, it could be required to obtain a license from such third party to continue developing and
marketing its products and technology. However, the Corporation may not be able to obtain any required license on commercially reasonable terms or at all. Even if the
Corporation was able to obtain a license, it could be non-exclusive, thereby giving its competitors access to the same technologies licensed to the Corporation. The
Corporation could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, the Corporation could be found liable for
monetary damages. A finding of infringement could prevent the Corporation from commercializing its product candidates or force the Corporation to cease some of its
business operations, which could materially harm the Corporation’s business. Claims that the Corporation has misappropriated the confidential information or trade secrets of
third parties could have a similar negative impact on its business.
The Corporation has research licenses to certain reagents and their use in the development of its product candidates. The Corporation would need commercial licenses to these
reagents for any of the Corporation’s product candidates that receive approval for sale in the United States or Canada. The Corporation believes that commercial licenses to
these reagents will be available. If the Corporation is unable to obtain any such commercial licenses, it may be unable to commercialize its product candidates without
infringing the patent rights of third parties. If the Corporation did seek to commercialize its product candidates without a license, these third parties could initiate legal
proceedings against the Corporation.
The Corporation may be subject to claims that its employees have wrongfully used or disclosed alleged trade secrets of their former employers.
Many of the Corporation’s employees were previously employed at universities or other biotechnology or pharmaceutical companies. Although the Corporation tries to ensure
that its employees do not use the proprietary information or know how of others in their work for the Corporation, the Corporation may be subject to claims that it or these
employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. Litigation may be
necessary to defend against these claims. If the Corporation fails in defending any such claims, in addition to paying monetary damages, it may lose valuable intellectual
property rights or personnel. Even if the Corporation is successful in defending against such claims, litigation could result in substantial costs and be a distraction to
management.
54
Intellectual property litigation could cause the Corporation to spend substantial resources and distract its personnel from their normal responsibilities.
Even if resolved in the Corporation’s favor, litigation or other legal proceedings relating to intellectual property claims may cause the Corporation to incur significant
expenses, and could distract the Corporation’s technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the
results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results to be negative, it could have a
substantial adverse effect on the price of the Corporation’s Common Shares. Such litigation or proceedings could substantially increase the Corporation’s operating losses and
reduce the resources available for development activities. The Corporation may not have sufficient financial or other resources to adequately conduct such litigation or
proceedings. Some of the Corporation’s competitors may be able to sustain the costs of such litigation or proceedings more effectively than it can because of their greater
financial resources. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on the
Corporation’s ability to compete in the marketplace.
If the Corporation is unable to protect the confidentiality of its trade secrets, the Corporation’s business and competitive position would be harmed.
In addition to seeking patents for some of the Corporation’s technology and products, it also relies on trade secrets, including unpatented know how, technology and other
proprietary information, to maintain its competitive position. The types of protections available for trade secrets are particularly important with respect to the DPX platform’s
manufacturing capabilities, which involve significant unpatented know how. The Corporation seeks to protect these trade secrets, in part, by entering into non disclosure and
confidentiality agreements with parties who have access to them, such as the Corporation’s employees, corporate collaborators, outside scientific collaborators, sponsored
researchers, contract manufacturers, consultants, advisors and other third parties. The Corporation also enters into confidentiality and invention or patent assignment
agreements with its employees and consultants. Despite these efforts, any of these parties may breach the agreements and disclose the Corporation’s proprietary information,
including its trade secrets, and the Corporation may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or
misappropriated a trade secret is difficult, expensive and time consuming, and the outcome is unpredictable. In addition, courts in certain jurisdictions are less willing or
unwilling to protect trade secrets. If any of the Corporation’s trade secrets were to be lawfully obtained or independently developed by a competitor, it would have no right to
prevent them from using that technology or information to compete with the Corporation. If any of the Corporation’s trade secrets were to be disclosed to or independently
developed by a competitor, its competitive position would be harmed.
Cyber security incidents and privacy breaches could result in important remediation costs, increased cyber security costs, litigation and reputational harm.
Cyber security incidents can result from deliberate attacks or unintentional events. Cyber-attacks and security breaches could include unauthorized attempts to access, disable,
improperly modify or degrade the Corporation’s information, systems and networks, the introduction of computer viruses and other malicious codes and fraudulent “phishing”
emails that seek to misappropriate data and information or install malware onto users’ computers. Cyber-attacks in particular vary in technique and sources, are persistent,
frequently change and are increasingly more targeted and difficult to detect and prevent against.
55
Disruptions due to cyber security incidents could adversely affect the Corporation’s business. In particular, a cyber security incident could result in the loss or corruption of
data from the Corporation’s research and development activities, including clinical trials, which may cause significant delays to some or all of the Corporation’s clinical
programs. Also, the Corporation’s trade secrets, including unpatented know how, technology and other proprietary information could be disclosed to competitors further to a
breach, which would harm the Corporation’s business and competitive position. If the Corporation is unable to protect the confidentiality of its trade secrets, the Corporation’s
business and competitive position would be harmed.
The Corporation is subject to privacy and security regulations with respect to the use and disclosure of protected health information. Subject to limited exceptions, the
regulations restrict the Corporation’s ability to use or disclose patient identifiable information without patient consent for purposes other than treatment or health-care
operations. Any breach of the Corporation’s systems that results in personal information being obtained by unauthorized persons could adversely affect the reputation of the
Corporation and lead to litigation, fines and liability for failure to comply with privacy and information security laws.
The Corporation relies on a third-party for its information technology (“IT”) function. The Corporation meets with its third-party IT experts on a bi-annual basis to discuss
matters related to cyber security. An IT risk assessment is performed on an annual basis with oversight by the Audit Committee and the functionality of internal controls
established as a result of this risk assessment are confirmed with the Corporation’s third-party IT experts on a quarterly basis.
The Corporation must successfully upgrade and maintain its information technology systems.
The Corporation relies on various information technology systems to manage its operations. There are inherent costs and risks associated with maintaining, modifying and/or
changing these systems and implementing new systems, including potential disruption of the Corporation’s internal control structure, substantial capital expenditures,
additional administration and operating expenses, retention of sufficiently skilled personnel to implement and operate its systems, demands on management time and other
risks and costs of delays or difficulties in transitioning to new systems or of integrating new systems into the Corporation’s current systems. In addition, the Corporation’s
information technology system implementations may not result in productivity improvements at a level that outweighs the costs of implementation, or at all. The
implementation of new information technology systems may also cause disruptions in the Corporation’s business operations and have an adverse effect on its business,
prospects, financial condition and operating results.
Risks Related to Regulatory Approval of the Corporation’s Product Candidates and Other Legal Compliance Matters
If the Corporation is not able to obtain, or if there are delays in obtaining, required regulatory approvals, the Corporation may not be able to commercialize its product
candidates, and its ability to generate revenue may be materially impaired.
The Corporation’s product candidates, including DPX Survivac, and the activities associated with their development and commercialization, including their design, testing,
manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA,
Health Canada and by comparable authorities in other countries. Failure to obtain regulatory approval for a product candidate will prevent the Corporation from
commercializing the product candidate. The Corporation has not received regulatory approval to market any of its product candidates in any jurisdiction. The Corporation has
only limited experience in filing and supporting the applications necessary to gain regulatory approvals and expect to rely on third party contract research organizations to
assist it in this process. Securing FDA or Health Canada approval requires the submission of extensive preclinical and clinical data and supporting information to the FDA or
Health Canada for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing FDA or Health Canada approval also requires the submission
of information about the product manufacturing process to, and inspection of manufacturing facilities by, the FDA or Health Canada. The Corporation’s product candidates
may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude the
Corporation from obtaining regulatory approval or prevent or limit commercial use.
56
The process of obtaining regulatory approvals, both in the United States and abroad, is expensive, may take many years if additional clinical trials are required, if approval is
obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. To date, the FDA has
only approved one active cellular immunotherapy product. Changes in regulatory approval policies during the development period, changes in or the enactment of additional
statutes or regulations, or changes in regulatory review for each submitted product application, may cause delays in the approval or rejection of an application. The FDA or
Health Canada has substantial discretion in the approval process and may refuse to accept any application or may decide that the Corporation’s data is insufficient for approval
and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or
prevent regulatory approval of a product candidate. Any regulatory approval the Corporation ultimately obtains may be limited or subject to restrictions or post approval
commitments that render the approved product not commercially viable.
Failure to obtain regulatory approval in international jurisdictions would prevent the Corporation’s product candidates from being marketed abroad.
The Corporation intends to enter into arrangements with third parties under which they would market its products outside Canada or the United States. In order to market and
sell the Corporation’s products in the European Union and many other jurisdictions, the Corporation or such third parties must obtain separate regulatory approvals and
comply with numerous and varying regulatory requirements. The approval procedure varies among countries and can involve additional testing. The time required to obtain
approval may differ substantially from that required to obtain FDA or Health Canada approval. The regulatory approval process outside the United States generally includes
all of the risks associated with obtaining FDA or Health Canada approval. In addition, in many countries outside the United States or Canada, it is required that the product be
approved for reimbursement before the product can be approved for sale in that country. The Corporation or these third parties may not obtain approvals from regulatory
authorities outside the United States or Canada on a timely basis, if at all. Approval by the FDA or Health Canada does not ensure approval by regulatory authorities in other
countries or jurisdictions, and approval by one regulatory authority outside the United States or Canada does not ensure approval by regulatory authorities in other countries
or jurisdictions or by the FDA. The Corporation may not be able to file for regulatory approvals and may not receive necessary approvals to commercialize its products in any
market.
If the Corporation fails to comply with environmental, health and safety laws and regulations, it could become subject to fines or penalties or incur costs that could have a
material adverse effect on the success of the Corporation’s business.
The Corporation is subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage,
treatment and disposal of hazardous materials and wastes. The Corporation’s operations involve the use of hazardous and flammable materials, including chemicals and
radioactive and biological materials. The Corporation’s operations also produce hazardous waste products. The Corporation generally contract with third parties for the
disposal of these materials and wastes. The Corporation cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury
resulting from the Corporation’s use of hazardous materials, it could be held liable for any resulting damages, and any liability could exceed its resources. The Corporation
also could incur significant costs associated with civil or criminal fines and penalties.
57
Although the Corporation maintains workers’ compensation insurance to cover it for costs and expenses it may incur due to injuries to its employees resulting from the use of
hazardous materials, this insurance may not provide adequate coverage against potential liabilities. The Corporation does not maintain insurance for environmental liability or
toxic tort claims that may be asserted against the Corporation in connection with its storage or disposal of biological, hazardous or radioactive materials.
In addition, the Corporation may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or
future laws and regulations may impair the Corporation’s research, development or production efforts. Failure to comply with these laws and regulations also may result in
substantial fines, penalties or other sanctions.
Any product candidate for which the Corporation obtains marketing approval could be subject to restrictions or withdrawal from the market and the Corporation may be
subject to penalties if it fails to comply with regulatory requirements or if it experiences unanticipated problems with its products, when and if any of them are approved.
Any product candidate for which the Corporation obtains marketing approval, along with the manufacturing processes, post approval clinical data, labeling, advertising and
promotional activities for such product, will be subject to continual requirements of and review by the FDA and other regulatory authorities. These requirements include,
among others, submissions of safety and other post marketing information and reports, registration and listing requirements, cGMP requirements relating to quality control,
quality assurance and corresponding maintenance of records and documents, cGTP requirements, requirements regarding the distribution of samples to physicians and
recordkeeping. Even if regulatory approval of a product candidate is granted, the approval may be subject to limitations on the indicated uses for which the product may be
marketed or to the conditions of approval, or contain requirements for costly post marketing testing and surveillance to monitor the safety or efficacy of the product. The FDA
closely regulates the post
approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the provisions of the approved label. The
FDA imposes stringent restrictions on manufacturers’ communications regarding off label use and if the Corporation does not market its products for their approved
indications, the Corporation may be subject to enforcement action for off label marketing.
In addition, later discovery of previously unknown problems with the Corporation’s products, manufacturers or manufacturing processes, or failure to comply with regulatory
requirements, may yield various results, including:
restrictions on such products, manufacturers or manufacturing processes;
restrictions on the marketing of a product;
restrictions on product distribution;
requirements to conduct post marketing clinical trials;
warning or untitled letters;
withdrawal of the products from the market;
58
refusal to approve pending applications or supplements to approved applications that it submits;
recall of products;
fines, restitution or disgorgement of profits or revenue;
suspension or withdrawal of regulatory approvals;
refusal to permit the import or export of the Corporation’s products;
product seizure; or
injunctions or the imposition of civil or criminal penalties.
The Corporation’s future relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws and
regulations, which could expose the Corporation to criminal sanctions, civil penalties, program exclusion, contractual damages, reputational harm and diminished profits
and future earnings.
Healthcare providers, physicians and third party payors play a primary role in the recommendation and prescription of any product candidates for which the Corporation
obtains marketing approval. The Corporation’s future arrangements with third party payors and customers may expose the Corporation to broadly applicable fraud and abuse
and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which it markets, sells and distributes its
products for which it obtains marketing approval. Restrictions under applicable United States federal and state healthcare laws and regulations that may impact the
Corporation’s activities, include the following:
the federal healthcare anti kickback statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing
remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any
good or service, for which payment may be made under federal and state healthcare programs such as Medicare and Medicaid;
the federal False Claims Act imposes civil penalties, including civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or
causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an
obligation to pay money to the federal government;
the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act,
imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also imposes obligations, including mandatory contractual
terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;
the federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in
connection with the delivery of, or payment for, healthcare benefits, items or services;
the federal transparency requirements under the Health Care Reform Law will require manufacturers of drugs, devices, biologics and medical supplies to report to the
Department of Health and Human Services information related to physician payments and other transfers of value and physician ownership and investment interests;
and
59
analogous state laws and regulations, such as state anti kickback and false claims laws, may apply to sales or marketing arrangements and claims involving
healthcare items or services reimbursed by non governmental third party payors, including private insurers, and some state laws require pharmaceutical companies to
comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition
to requiring drug manufacturers to report information related to payments to physicians and other health care providers or marketing expenditures.
Efforts to ensure that the Corporation’s business arrangements with third parties will comply with applicable healthcare laws and regulations in each jurisdiction when the
Corporation products will eventually be offered will involve substantial costs. It is possible that governmental authorities will conclude that the Corporation’s business
practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If the
Corporation’s operations are found to be in violation of any of these laws or any other governmental regulations that may apply to it, it may be subject to significant civil,
criminal and administrative penalties, damages, fines, exclusion from government funded healthcare programs, such as Medicare and Medicaid in the United States, and the
curtailment or restructuring of the Corporation’s operations. If any of the physicians or other providers or entities with whom the Corporation expects to do business are found
to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare
programs.
Contemporary and future legislation may increase the difficulty and cost for the Corporation to obtain marketing approval of and commercialize its product candidates
and affect the prices it may obtain.
The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes affecting the healthcare system that may affect the
Corporation's ability to successfully commercialize its product candidates, if approved. The United States government, U.S. state legislatures and foreign governments also
have shown significant interest in implementing cost-containment programs to limit the growth of government-paid healthcare costs, including price controls, restrictions on
reimbursement and requirements for substitution of generic products for branded prescription drugs.
In the United States, the U.S. Affordable Care Act was intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance
remedies against fraud and abuse, add transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry and
impose additional health policy reforms. There have been significant ongoing judicial, administrative, executive and legislative efforts to modify or eliminate the Affordable
Care Act. For example, the U.S. Tax Cuts and Jobs Act enacted on December 22, 2017, repealed the shared responsibility payment for individuals who fail to maintain
minimum essential coverage under section 5000A of the United States Internal Revenue Code, commonly referred to as the individual mandate. The former U.S. Presidential
administration issued executive orders which sought to reduce burdens associated with the Affordable Care Act and modified how it was implemented. Other legislative
changes have been proposed and adopted since passage of the Affordable Care Act. The U.S. Budget Control Act of 2011, among other things, created the Joint Select
Committee on Deficit Reduction to recommend proposals in spending reductions to the U.S. Congress. The Joint Select Committee did not achieve its targeted deficit
reduction of an amount greater than $1.2 trillion for the fiscal years 2012 through 2021, triggering the legislation's automatic reductions to several government programs.
These reductions included aggregate reductions to Medicare payments to healthcare providers of up to 2.0% per fiscal year, which went into effect in April 2013. Subsequent
litigation extended the 2% reduction, on average, to 2030 unless additional Congressional action is taken. However, pursuant to the U.S. Coronavirus Aid, Relief and
Economic Security Act, or CARES Act, the 2% Medicare sequester reductions have been suspended from May 1, 2020 through March 31, 2021 due to the COVID-19
pandemic.
60
The Affordable Care Act has also been subject to challenges in the courts. On December 14, 2018, a Texas U.S. District Court Judge ruled that the Affordable Care Act is
unconstitutional in its entirety because the "individual mandate" was repealed by the U.S. Congress. On December 18, 2019, the Fifth Circuit U.S. Court of Appeals held that
the individual mandate is unconstitutional and remanded the case to the Texas District Court to reconsider its earlier invalidation of the entire Affordable Care Act. An appeal
was taken to the U.S. Supreme Court which heard oral arguments in the case on November 10, 2020. A ruling is expected in 2021.
Further changes to and under the Affordable Care Act remain possible. The new U.S. Presidential administration is advocating for legislation to undo changes to the
Affordable Care Act made by the prior administration and to further increase the benefits available under the Act. It is unknown precisely what form any such changes or any
law would take, and how or whether it may affect the Corporation's business in the future. The Corporation expects that changes or additions to the Affordable Care Act, the
U.S> Medicare and Medicaid programs, changes allowing the U.S. federal government to directly negotiate drug prices and changes stemming from other healthcare reform
measures, especially with regard to healthcare access, financing or other legislation in individual U.S. states, could have a material adverse effect on the healthcare industry.
The Corporation expects that the Affordable Care Act, as well as other healthcare reform measures that have and may be adopted in the future, may result in more
rigorous coverage criteria and in additional downward pressure on the price that the Corporation receives for its product candidates, if approved, and could
seriously harm its future revenues. Any reduction in reimbursement from Medicare, Medicaid, or other U.S. government programs may result in a similar
reduction in payments from private payers. The implementation of cost containment measures or other healthcare reforms may prevent the Corporation from
being able to generate revenue, attain and maintain profitability of its product candidates, if approved.
With the enactment of the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), as part of the Health Care Reform Law, an abbreviated pathway for the
approval of biosimilar and interchangeable biological products was created. The new abbreviated regulatory pathway establishes legal authority for the FDA to review and
approve biosimilar biologics, including the possible designation of a biosimilar as “interchangeable” based on its similarity to an existing brand product. Under the BPCIA, an
application for a biosimilar product cannot be submitted to the FDA until four years, or approved by the FDA until 12 years, after the original brand product identified as the
reference product was approved under a BLA. The BPCIA is complex and is only beginning to be interpreted and implemented by the FDA. As a result, its ultimate impact,
implementation and meaning is subject to uncertainty. While it is uncertain when any such processes may be fully adopted by the FDA, any such processes could have a
material adverse effect on the future commercial prospects for the Corporation’s biological products.
The Corporation believes that if any of its product candidates were to be approved as biological products under a BLA, such approved products should qualify for the four
year and 12 year periods of exclusivity. However, there is a risk that the United States Congress could amend the BPCIA to significantly shorten these exclusivity periods, or
that the FDA will not consider the Corporation’s product candidates to be reference products for competing products, potentially creating the opportunity for generic
competition sooner than anticipated. Moreover, the extent to which a biosimilar, once approved, will be substituted for any one of the Corporation’s reference products in a
way that is similar to traditional generic substitution for non biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are
still developing.
61
General Risks related to the Corporation
The Corporation’s future success depends on its ability to retain its key executives and to attract, retain and motivate qualified personnel.
The Corporation is highly dependent on its executive officers. Although the Corporation has formal employment agreements with each of its executive officers, these
agreements do not prevent the Corporation’s executives from terminating their employment with the Corporation at any time. The loss of the services of any of these persons
could impede the achievement of the Corporation’s research, development and commercialization objectives.
Recruiting and retaining qualified scientific, clinical, manufacturing and sales and marketing personnel will also be critical to the Corporation’s success. The Corporation may
not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar
personnel. The Corporation also experiences competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, the
Corporation relies on consultants and advisors, including scientific and clinical advisors, to assist it in formulating its research and development and commercialization
strategy. The Corporation’s consultants and advisors may be employed by employers other than the Corporation and may have commitments under consulting or advisory
contracts with other entities that may limit their availability to the Corporation.
The Corporation may be unable to obtain scientific research and experimental development tax incentive credits in Canada.
The Corporation is eligible for scientific research and experimental development tax incentive credits in Canada. There is a risk that a Canadian federal or provincial
governmental agency could conclude that: (i) some or all of the expenditures were not incurred on scientific research and experimental development activities, (ii) the rate
applicable to such credit is different from the rate claimed by the Corporation, and (iii) the related entity does not meet specified criteria for refundable tax credits, and
therefore the governmental agency could reduce or disallow claims for such credits, including refundable credits previously funded. Furthermore, if the Canadian taxation
authorities reduce the tax credit either by reducing the rate of the credit or the eligibility of some research and development expenses in the future, our operating results will
be materially adversely affected.
The Corporation expects to expand its development, regulatory, manufacturing and sales and marketing capabilities, and as a result, the Corporation may encounter
difficulties in managing its growth, which could disrupt the Corporation’s operations.
The Corporation expects to experience significant growth in the number of its employees and the scope of its operations, particularly in the areas of drug development,
regulatory affairs, manufacturing and sales and marketing. To manage the Corporation’s anticipated future growth, it must continue to implement and improve its managerial,
operational and financial systems, expand its facilities and continue to recruit and train additional qualified personnel. Due to the Corporation’s limited financial resources, the
Corporation may not be able to effectively manage the expansion of its operations or recruit and train additional qualified personnel. The physical expansion of the
Corporation’s operations may lead to significant costs and may divert its management and business development resources. Any inability to manage growth could delay the
execution of the Corporation’s business plans or disrupt the Corporation’s operations.
62
The Corporation may acquire businesses or products, or form strategic alliances, in the future, and the Corporation may not realize the benefits of such acquisitions.
The Corporation may acquire additional businesses or products, form strategic alliances or create joint ventures with third parties that the Corporation believes will
complement or augment its existing business. If the Corporation acquires businesses with promising products or technologies, the Corporation may not be able to realize the
benefit of acquiring such businesses if the Corporation is unable to successfully integrate them with its existing operations and company culture. The Corporation may
encounter numerous difficulties in developing, manufacturing and marketing any new products resulting from a strategic alliance or acquisition that delay or prevent it from
realizing their expected benefits or enhancing the Corporation’s business. The Corporation cannot assure investors that, following any such acquisition, it will achieve the
expected synergies to justify the transaction.
The Corporation has limited experience operating internationally, is subject to a number of risks associated with its international activities and operations, and may not
be successful in its efforts to expand internationally.
The Corporation currently has very limited operations outside of Canada. In order to meet the Corporation’s long-term goals, the Corporation would need to grow its
international operations significantly. Consequently, the Corporation is and will continue to be subject to additional risks related to operating in foreign countries, including:
the fact that the Corporation has limited experience operating its business internationally;
local, economic and political conditions, including inflation, geopolitical events, such as war and terrorism, foreign currency fluctuations and exchange risks, which
could result in increased or unpredictable operating expenses and reduced revenues and other obligations incident to doing business in, or with a company located in,
another country;
the Corporation’s customers’ ability to obtain reimbursement for any product candidate in foreign markets, and unexpected changes in reimbursement and pricing
requirements, tariffs, trade barriers and regulatory requirements;
different medical practices and customs in foreign countries affecting acceptance in the marketplace;
longer lead times for shipping and longer accounts receivable collection times;
the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute;
reduced protection of intellectual property rights in some foreign countries or the existence of additional potentially relevant third party intellectual property rights;
and
compliance with foreign laws, rules and regulations, including data privacy requirements, labor relations laws, tax laws, accounting requirements, anti-competition
regulations, import, export and trade restrictions, anti-bribery/anti-corruption laws, regulations or rules, which could lead to actions by the Corporation or its
licensees, distributors, manufacturers, other third parties who act on its behalf or with whom the Corporation does business in foreign countries or the Corporation’s
employees who are working abroad that could subject the Corporation to investigation or prosecution under such foreign laws.
63
As a passive foreign investment company (“PFIC”) for United States federal income tax purposes, certain adverse tax rules may apply to U.S. holders of the Common
Shares.
Based on the composition of the Corporation’s income and the value of its assets, the Corporation believes that it was not a PFIC for United States federal income tax
purposes for the 2020 taxable year and, based on estimates of the Corporation’s income and assets for 2021, the Corporation believes that it may be a PFIC for the 2021
taxable year. This determination depends in part on the Corporation's treatment of government grants received by the Corporation (including certain wage subsidies and
funding toward the development of its COVID-19 vaccine candidate, DPX-COVID-19) in years 2020 and 2021 as gross income for U.S. federal income tax purposes, but not
as passive income for PFIC testing purposes.
The Corporation will be classified as a PFIC for any taxable year for United States federal income tax purposes if either (i) 75% or more of its gross income in that taxable
year is passive income or (ii) the average percentage of its assets by value in that taxable year which produce or are held for the production of passive income (which includes
cash) is at least 50%.
PFIC status is determined annually and depends upon the composition of a company’s income and assets and the market value of its stock from time to time. Therefore, there
can be no assurance as to the Corporation’s PFIC status for future taxable years. The value of the Corporation’s assets will be based, in part, on the then market value of its
Common Shares, which is subject to change.
If the Corporation is a PFIC for any taxable year during which a U.S. holder (as defined below) holds Common Shares, such U.S. holders could be subject to adverse United
States federal income tax consequences whether or not the Corporation continues to be a PFIC. For example, U.S. holders of Common Shares may become subject to
increased tax liabilities under United States federal income tax laws and regulations, and will become subject to burdensome reporting requirements. If the Corporation is a
PFIC during a taxable year in which a U.S. holder holds Common Shares, such U.S. holder may be able to make a “mark-to-market” election or a “qualified electing fund”
election that could mitigate the adverse United States federal income tax consequences that would otherwise apply to such U.S. holder. Although upon request of a U.S.
holder of Common Shares, the Corporation will provide the information necessary for a U.S. holder to make the qualified electing fund election with respect to the
Corporation, no assurance can be given that such information will be available for any lower-tier PFIC that the Corporation does not control.
For purposes of this discussion, a "U.S. holder" is a holder who, for U.S. federal income tax purposes, is a beneficial owner of Common Shares and is: (i) An individual who
is a citizen or individual resident of United States; (ii) a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any
state therein or the District of Columbia; (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source; or (iv) a trust if (1) a U.S. court
is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the trust or (2) the
trust has a valid election in effect to be treated as a U.S. person under applicable U.S. Treasury Regulations.
U.S. holders of Common Shares are urged to consult their own tax advisers as to the United State federal income tax consequences related to the Corporation’s classification
as a PFIC.
64
United States investors may not be able to obtain enforcement of civil liabilities against the Corporation.
The enforcement by investors of civil liabilities under the United States federal or state securities laws may be affected adversely by the fact that the Corporation is governed
by the Canada Business Corporations Act, that the majority of the Corporation's officers and directors are residents of Canada, and that all, or a substantial portion of their
assets and a substantial portion of the Corporation's assets, are located outside the United States. It may not be possible for investors to effect service of process within the
United States on certain of its directors and officers or enforce judgments obtained in the United States courts against the Corporation or certain of the Corporation's directors
and officers based upon the civil liability provisions of United States federal securities laws or the securities laws of any state of the United States.
As a foreign private issuer, the Corporation is subject to different U.S. securities laws and rules than a domestic U.S. issuer, which may limit the information publicly
available to its U.S. shareholders.
The Corporation is a foreign private issuer under applicable U.S. federal securities laws and, therefore, is not required to comply with all of the periodic disclosure and current
reporting requirements of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), and related rules and regulations. As a result, the
Corporation does not file the same reports that a U.S. domestic issuer would file with the United States Securities and Exchange Commission (the “SEC”), although it is
required to file with or furnish to the SEC the continuous disclosure documents that the Corporation is required to file in Canada under Canadian securities laws. In addition,
the Corporation’s officers, directors and principal shareholders are exempt from the reporting and “short swing” profit recovery provisions of Section 16 of the Exchange Act.
Therefore, the Corporation’s shareholders may not know on as timely a basis as they would with a domestic U.S. issuer when the Corporation's officers, directors and principal
shareholders purchase or sell securities of IMV as the reporting periods under the corresponding Canadian insider reporting requirements are longer. In addition, as a foreign
private issuer, the Corporation is exempt from the U.S. proxy rules under the Exchange Act.
The Corporation may lose its foreign private issuer status in the future, which could result in significant additional costs and expenses to the Corporation.
In order to maintain its current status as a foreign private issuer, a majority of the Corporation’s Common Shares must be either directly or indirectly owned of record by non-
residents of the United States unless the Corporation also satisfies one of the additional requirements necessary to preserve this status. The Corporation may in the future lose
its foreign private issuer status if a majority of the Common Shares are owned of record in the United States and the Corporation fails to meet the additional requirements
necessary to avoid loss of foreign private issuer status. The regulatory and compliance costs to the Corporation under U.S. federal securities laws as a U.S. domestic issuer
may be significantly more than the costs the Corporation incurs as a Canadian foreign private issuer eligible to use the multijurisdictional disclosure system (“MJDS”). If the
Corporation is not a foreign private issuer, it would not be eligible to use the MJDS or other foreign issuer forms and would be required to file periodic and current reports
and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. In addition,
the Corporation may lose the ability to rely upon exemptions from Nasdaq corporate governance requirements that are available to foreign private issuers.
VI.
DIVIDENDS
The Corporation has not declared or paid any dividends on its Common Shares to date. The payment of dividends in the future will be dependent on the Corporation’s
earnings, financial condition and such other factors as the Corporation’s Board of Directors considers appropriate. However, the Corporation’s current policy is to reinvest
future earnings in order to finance its growth and the development of its business. As a result, the Corporation does not intend to pay dividends in the foreseeable future.
65
VII. DESCRIPTION OF CAPITAL STRUCTURE
The Corporation is authorized to issue an unlimited number of Common Shares, without nominal or par value of which, as at March 16, 2021, 67,711,045 Common Shares
are issued and outstanding as fully-paid and non-assessable Common Shares. The holders of Common Shares are entitled to receive notice of, to attend and to vote at any
meeting of the shareholders of the Corporation and each one Common Share shall carry the right to one vote. Subject to the prior rights of the holders of Preferred Shares (as
defined hereinafter), the holders of Common Shares are entitled to receive dividends as and when declared by the
Board of Directors of the Corporation. The holders of Common Shares have the right, subject to the rights, privileges, restrictions and conditions attaching to any other class
of shares of the Corporation, to receive the remaining property of the Corporation upon dissolution, liquidation or winding-up thereof.
The Corporation is also authorized to issue an unlimited number of preferred shares (the “Preferred Shares”) without nominal or per value in one or more series of which, as
of the date hereof, none are issued and outstanding. The Board of Directors of the Corporation may determine, before issuance, the designation, rights, privileges and
restrictions attached to each series of Preferred Shares provided that the Preferred Shares shall rank senior to the Common Shares.
VIII. MARKET FOR SECURITIES
Trading Price and Volume
The Common Shares are currently listed and posted for trading on the TSX and Nasdaq and are traded under the symbol “IMV”.
The following table provides the price ranges and trading volume of the Common Shares on the TSX for the periods indicated below:
Price Ranges
January 2020
February 2020
March 2020
April 2020
May 2020
June 2020
July 2020
August 2020
September 2020
October 2020
November 2020
December 2020
High
(C$)
C$6.52
C$6.69
C$4.75
C$3.55
C$5.53
C$4.55
C$9.25
C$7.58
C$6.66
C$6.02
C$5.30
C$5.22
Low
(C$)
C$3.70
C$2.87
C$1.98
C$2.11
C$2.94
C$3.50
C$3.79
C$5.19
C$5.03
C$4.01
C$4.15
C$3.61
Total Cumulative Volume(1)
1,255,811
2,630,254
4,080,927
2,032,254
3,690,494
1,886,299
15,987,908
4,424,862
4,063,072
3,522,446
3,752,792
3,025,024
66
The following table provides the price ranges and trading volume of the Common Shares on Nasdaq for the periods indicated below:
Price Ranges
January 2020
February 2020
March 2020
April 2020
May 2020
June 2020
July 2020
August 2020
September 2020
October 2020
November 2020
December 2020
Prior Sales
High
(US$)
US$4.93
US$5.12
US$3.60
US$2.50
US$4.00
US$3.33
US$6.82
US$5.73
US$5.06
US$4.57
US$4.05
US$3.98
Low
(US$)
US$2.85
US$2.13
US$1.35
US$1.50
US$2.06
US$2.55
US$2.80
US$3.92
US$3.84
US$3.03
US$3.13
US$2.82
Total Cumulative Volume
1,158,669
2,055,492
7,742,768
3,765,869
8,713,265
5,428,186
94,863,003
16,837,648
6,623,046
5,950,142
7,438,279
9,020,218
The only securities of IMV that are outstanding but not listed or quoted on a marketplace are stock options, compensation options and deferred stock units.
Stock Options
During the year ended December 31, 2020, the Corporation issued 395,850 stock options, which have an exercise period of 5 years from that date of grant:
Date
January 30, 2020
June 29, 2020
November 11, 2020
IX.
DIRECTORS AND OFFICERS
Directors
Number
245,850
50,000
100,000
Exercise Price
$5.98
$4.10
$5.02
As at March 16, 2021, as a group, the Corporation’s directors and executive officers beneficially owned, directly or indirectly, or exercised control of over an aggregate of
630,806 Common Shares representing 0.93% of the issued and outstanding Common Shares as at such date. The information as to the number of Common Shares beneficially
owned or over which control is exercised, not being within the knowledge of the Corporation, has been obtained from the System for Electronic Disclosure by Insiders (SEDI)
and confirmed with each director or executive officer, as the case may be, individually as at March 16, 2021.
The following table sets forth the name, province or state and country of residence of each director of the Corporation and states the respective positions and offices held with
the Corporation, their principal occupations during the last five years and the periods during which each director has served as a director of the Corporation. Each director will
hold office until the next annual meeting of shareholders or until his successor is duly elected, unless prior thereto the director resigns or the director’s office becomes vacant
by reason of death or other cause.
67
Name and Municipality
of Residence
Andrew Sheldon(1)
(Québec, Québec, Canada)
Position Held
with the
Corporation
Chairman of the Board and Director
Michael Bailey(2)(3)
(Boston, Massachusetts, United States)
Julia P. Gregory(2)
(Scarborough, New York, United States)
James Hall(3)
(Toronto, Ontario, Canada)
Frederic Ors
(Québec, Québec, Canada)
Director
Director
Director
Director
Wayne Pisano(3) (4)
(Lake Ariel, Pennsylvania, United States)
Director
Shermaine Tilley(2)(4)
(Toronto, Ontario, Canada)
Markus Warmuth(4)
(Boston, Massachusetts, United States
Director
Director
Principal Occupation during Past Five
Years
Chairman of Quebec International
Former Chief Executive Officer of
Medicago Inc.
(Biotech company)
Chief Executive Officer and Board
member of AVEO Oncology
Chair and CEO of Isometry Advisors Inc.
(Management and financial consultants)
CEO of ContraFect Corporation
(Biotech company)
President of James Hall Advisors Inc.
(advisory firm)
Former Senior Vice President of Callidus
Capital Corporation
(specialized asset-based lender to
companies in Canada and the United
States)
Chief Executive Officer of IMV Inc.
Former Chief Business Officer of IMV
Inc.
Former Vice President of Business
development and Strategic Planning of
Medicago Inc.
(biotech company)
Former President and Chief Executive
Officer of VaxInnate
(pandemic and influenza vaccine
company)
and
Former President and Chief Executive
Officer of Sanofi Pasteur
(pediatric and adult vaccine manufacturing
company)
Managing Partner of CTI Life Sciences
Fund
(venture capital fund)
Entrepreneur in residence Third Rock
Ventures
(venture fund)
CEO of H3 Biomedicine
Director Since
April 2016
November 2020
June 2018
February 2010
April 2016
October 2011
June 2016
November 2018
(1) Mr. Sheldon is a non-voting member of the Compensation Committee, Corporate Governance Committee and the Audit Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
(4) Member of the Corporate Governance Committee
68
Biographies
Andrew (Andy) Sheldon, Chairman of the Board and Director
Mr. Sheldon has thirty years of experience in the pharmaceutical industry and was named CEO of the Year by the Vaccine Industry Excellence awards at the World Vaccine
Congress in April 2012. He is the chairman of Québec International and was formerly President and Chief Executive Officer of Medicago Inc. Before joining Medicago Inc.
in 2003, Mr. Sheldon served as Vice President, Sales and Marketing, of Shire Biologics and as General Manager of Rhône Merieux Canada. Mr. Sheldon has a Bachelors
degree in agricultural sciences from the Université Laval, Québec City, and a bachelor’s of science degree with honors in biological sciences from the University of East
Anglia, in Norwich, England.
Michael Bailey
Michael has more than 25 years of experience in the pharmaceutical industry. He currently is Chief Executive Officer and Board member of AVEO Oncology which he
joined in 2010 as Chief Commercial Officer, subsequently serving Chief Business Officer and then Chief Executive Officer.
He previously held a variety of leadership roles in commercial operations, sales, business development, and strategic planning across numerous biotech and pharmaceutical
companies, including ImClone Systems (now Eli Lilly), Genentech, Synta Pharmaceuticals, and Smithkline Beecham. Michael holds an MBA in International Marketing
from the Mendoza College of Business at University of Notre Dame and a B.Sc. in Psychology from St. Lawrence University.
Julia P. Gregory
Ms. Gregory is a seasoned biotechnology executive with a proven track record for successfully growing, capitalizing and repositioning private and public biotechnology
companies. She is well-versed in corporate governance and SEC issues and has extensive experience in recruiting outstanding management teams. As a biotechnology
executive, she has raised more than $1.5 billion for biotechnology companies across all types of business cycles and structured creative strategic alliances and transactions for
them with pharmaceutical companies including GlaxoSmithKline, Bristol-Myers Squibb Company, Takeda Pharmaceutical Company, Ltd., Genentech, Inc. (now Roche) and
Human Genome Sciences (now GSK). Most recently, she was CEO and Board member of ContraFect (Nasdaq: CFRX), which focused on new biologics as an alternative to
antibiotics. Prior to ContraFect, she was CEO and Board member of FivePrime Therapeutics (Nasdaq: FXRX), which discovered and developed innovative protein and
antibody therapeutics in the fields of oncology and immunology. She was the EVP Corporate Development and Chief Financial Officer of Lexicon Pharmaceuticals, Inc.
(Nasdaq: LXRX) during its $220 million initial public offering and was involved in the creation of Lexicon’s $500 million private equity investment plan. In addition to her
deep experience in the biopharmaceutical industry, Ms. Gregory has twenty years of investment banking experience, starting at Dillon, Read & Co., Inc. and subsequently at
Punk, Ziegel & Company, where she served as the head of investment banking and head of its life sciences practice. Ms. Gregory has also served on the Board of Directors at
The Global TB Alliance for Drug Development, Clinipace Worldwide, and the Institute for the Study of Aging, a private foundation for Alzheimers. She was formerly the
Executive Chair of Cavion, Inc.(sold to Jazz Pharmaceuticals), Director of the Sosei Group Corporation and currently is a Director at Iconic Therapeutics, Kuur Therapeutics
(formerly Cell Medica, Ltd), Freeline Therapeutics Ltd, Nurix Therapeutics, Inc and Biohaven Pharmaceutical Holding Company Ltd. (NYSE: BHVN). Ms. Gregory attained
a Masters of Business Administration from The Wharton School of The University of Pennsylvania and her B.A. in International Affairs from George Washington
University’s Elliott School of International Affairs where she was elected to Phi Beta Kappa.
69
James W. Hall, Director
Mr. Hall is an experienced, knowledgeable and versatile entrepreneur, business operator, corporate investor, director and advisor with expertise in finance
(accounting/restructurings/special investigations), private equity, banking and media. He is currently President of James Hall Advisors Inc. – financial and management
consultants – and was formerly Senior Vice President of Callidus Capital Corporation (a stressed asset-based lender operating in Canada and the United States). Prior to
Callidus, he served as Chairman and CEO of Journal Register Company (Philadelphia-based newspaper company), and was Senior Vice President and Chief Investment
Officer of Working Ventures Canadian Fund Inc. from 1990 to 2002. Past corporate directorships include Indigo Books & Music Inc., Atomic Energy of Canada Limited,
TerraVest Income Fund, General Donlee Income Fund and International Datacasting Corporation. A Chartered Professional Accountant, Mr. Hall is a graduate of the Richard
Ivey School of Business at Western University in London, Ontario.
Frederic Ors, Chief Executive Officer and Director
Mr. Ors has served as our Chief Executive Officer since April 2016. He brings over 19 years of experience in the biopharmaceutical industry, having served in a number of
management roles encompassing business development, intellectual property, strategic planning, pre-marketing and communication. Before joining IMV, Mr. Ors spent 14
years at Medicago Inc. serving in many roles of increasing responsibility and most recently as Vice President of Business development and Strategic Planning. He also has
served as second Vice-Chair of the Vaccine Industry Committee of Biotech Canada for five years between 2012 and 2016. Prior to Medicago Inc., he was licensing manager
at the University Paris VII-Denis Diderot, one of the largest science and medical university in France. He has a B.Sc. degree in Biology and a Master degree in Management
from the University of Angers (France).
Wayne Pisano, Director
Mr. Pisano has more than 30 years of experience as a pharmaceutical industry executive. He has a depth of experience across the spectrum of commercial operations, public
immunization policies and pipeline development. Mr. Pisano is a former president and CEO of Sanofi Pasteur, one of the largest vaccine companies in the world. He joined
Sanofi Pasteur in 1997 and was promoted to President and CEO in 2007, the position he successfully held until his retirement in 2011. Post his retirement from Sanofi
Pasteur, Mr. Pisano joined VaxInnate, a privately held biotech company, from January 2012 until November 2016 serving as president and CEO. Prior to joining Sanofi
Pasteur, he spent 11 years with Novartis (formerly Sandoz). He has a bachelor’s degree in biology from St. John Fisher College, New York and an MBA from the University
of Dayton, Ohio. He has served as a Board director for AERAS a non-profit organization with a focus on TB vaccine development and is currently a board member of
Oncolytics Biotech Inc, Provention Bio Inc. and Altimmune Inc.
Dr. Shermaine Tilley, Director
Dr. Tilley is a Managing Partner at CTI Life Sciences Fund, a Montreal-based venture capital fund investing across Canada as well as in the U.S. Prior to joining CTI Life
Sciences Fund in 2006, Dr. Tilley was Senior VP at DRI Capital Inc. (formerly Drug Royalty Corporation), the world’s first private equity firm doing royalty transactions in
the biotech/pharma space. Before DRI Capital Inc., Dr. Tilley ran and managed a research laboratory, holding faculty positions at the NYU School of Medicine and Public
Health Research Institute (“PHRI”), NY, and on the PHRI Board of Directors. Concomitantly with her tenure at NYU School of Medicine and PHRI, she consulted for the
NIH Small Business Innovation Research (“SBIR”) program in immunology and infectious disease for 10 years. Dr. Tilley holds a Ph.D. in biochemistry from the Johns
Hopkins University School of Medicine, an MBA from the University of Toronto, and is a member of the CFA Society of Toronto. She currently sits on the boards of
CellAegis Devices, Phemi and BIOTECanada.
70
Dr. Markus Warmuth, Director
As a long-time advocate for industry collaboration and data-driven drug discovery, Dr. Warmuth brings over 20 years of immuno-oncology and precision medicine drug
development expertise to IMV. He currently serves as an Entrepreneur in Residence at Third Rock Ventures, where he plays an integral role in the venture capital firm’s
formation of new anti-cancer biotech companies. Prior to his role at Third Rock, Dr. Warmuth spent seven years as the Chief Executive Officer of H3 Biomedicine, a
biopharmaceutical company that specializes in the discovery and development of genomics-based precision oncology treatments. Dr. Warmuth has also previously served in
multiple roles at the Novartis Institute for Biomedical Research (NIBR) and the Genomics Institute of the Novartis Research Foundation (GNF), including as the Director of
Kinase Biology, Head of Oncology Pharmacology. He earned his MD from Ludwig Maximilian University in Munich, Germany.
Executive Officers
The following table sets forth the name, province or state and country of residence of the other non-director executive officers:
Name and Municipality of
Residence
Pierre Labbé
(Québec City, Québec, Canada)
Joanne Schindler
(Sherborn, Massachusetts, United
States of America)
Andrew Hall
(Gillette, New Jersey, United
States of Amerca))
Position held with the
Corporation
Chief Financial Officer
Chief Medical Officer
Chief Business Officer
Principal Occupation during Past Five Years
Vice President and Chief Financial Officer of
Leddartech Inc.
VP, Clinical Development, Executive Medical
Director for H3 Biomedicine
Clinical Program Lead for Agios Pharmaceuticals
VP, Clinical Development for Constellation
Pharmaceuticals, Inc.
Senior Medical Oncology Consultant for Development
Insights LLP, consulting group
Executive Director, Business Development and Global
Alliances for Celgene
Executive Director, Global Women’s Health for Merck
and Co./Schering-Plough
Pierre Labbé, CPA, CA, ICD.D, Chief Financial Officer
Prior to joining IMV, Mr. Labbé was Vice President and Chief Financial Officer of Leddartech Inc. (April 2015 to February 2017), Vice President and Chief Financial Officer
of the Québec Port Authority (October 2013 to April 2015), and has experience in the life science sector, having served as Chief Financial Officer and Secretary of Medicago
Inc. (2008-2013 and 2004-2007). Mr. Labbé is also a Director of Osisko Gold Royalties Ltd. Mr. Labbé holds a Bachelor’s Degree in Business Administration and a license in
accounting from Université Laval, Québec City. He is a member of Ordre des comptables professionnels agréés du Québec, the Chartered Professional Accountants of Canada
and the Institute of Corporate Directors.
71
Joanne Schindler, MD, Chief Medical Officer
Prior to joining IMV, Dr. Schindler served as Vice President, Clinical Development and Executive Medical Director at H3 Biomedicine, overseeing the company’s clinical
development efforts. Previously, she worked as Vice President, Clinical Development at Constellation Pharmaceuticals, and earlier held various clinical development
leadership roles at SynDevRx, ImmunoGen, Novartis, Fresenius Biotech and GlycoGenesys. Joanne holds an M.D. from the University of Connecticut School of Medicine, a
D.V.M. from Tufts University School of Veterinary Medicine and a B.A. in biology from Brandeis University.
Andrew Hall, Chief Business Officer
Andrew brings more than 20 years of executive experience in biopharmaceuticals and life science. Prior to joining IMV, Mr. Hall served as Executive Director, Business
Development and Global Alliances for Celgene, leading new product analytics and commercial strategy for the Immunology and Inflammation Division. Preceding this
position, Mr. Hall was the Executive Director, Global Women’s Health for Merck and Co. where he was responsible for oversight of the commercial strategy for the Women’s
Health franchise. Mr. Hall holds a Master of Science from RMIT University and a Bachelor of Medical Science with Honors from Melbourne University.
Shareholding, Cease Trade Orders, Bankruptcies, Penalties or Sanctions
Except as disclosed below and to the knowledge of the Corporation, none of the current executive officers or directors of the Corporation or shareholders holding a sufficient
number of securities of the Corporation to affect materially the control thereof is, or within 10 years before the date hereof, has been:
a.
a director, chief executive officer or chief financial officer of any corporation (including the Corporation) that:
i.
ii.
was subject to an order that was issued while the proposed director was acting in the capacity as director, chief executive officer or chief financial officer, or
was subject to an order that was issued after the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted
from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.
b.
c.
a director or executive officer of any corporation (including the Corporation) that, while that person was acting in that capacity, or within a year of that person ceasing
to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings,
arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or
has become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or
compromises with creditors, or had a receiver, manager or trustee appointed to hold the assets of the proposed director.
72
For the purposes of (a) above, “order” means a cease trade order, an order similar to a cease trade order or an order that denied the relevant Corporation access to any
exemption under securities legislation, in each case that was in effect for a period of more than 30 consecutive days.
Except as disclosed below and to the knowledge of the Corporation, none of the current executive officers or directors of the Corporation has been subject to:
a.
b.
any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a
securities regulatory authority; or
any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable security holder in deciding whether to
vote for a proposed director.
Mr. James Hall was the Chairman and Chief Executive Officer of Journal Register Corporation (“JRC”) on February 21, 2009 when JRC filed a voluntary petition for relief
under the U.S. Bankruptcy Code (pre-negotiated joint Chapter 11 plan of reorganization). Mr. Hall left JRC in March 2009.
Conflicts of Interest
There are no existing or potential material conflicts of interest between the Corporation or its subsidiary and any director or officer of the Corporation or its subsidiary.
X.
CORPORATE GOVERNANCE
The Board of Directors is committed to developing, implementing and monitoring good corporate governance practices, and providing full and complete disclosure of its
systems of corporate governance. The following describes the Corporation’s approach to corporate governance.
Board of Directors
The Board is responsible for the supervision of management and for approving the overall direction in a manner which is in the best interests of the Corporation. In order to
provide guidance and advise, the Board participates fully in assessing and approving strategic plans and prospective decisions proposed by management. To ensure that the
principal business risks that are borne by the Corporation are appropriately managed, the Board:
receives periodic reports from management of its assessment and management of such risks;
monitors financial and operating performance. This ongoing regular monitoring function often entails review and comment by the Board on various management
reports; and
monitors through the Audit Committee, internal accounting and control procedures, including those related to cyber security, and reviews detailed financial
information contained in management reports and acts upon the recommendations of the Corporation’s auditors.
As a practice, the Board approves significant corporate communications with shareholders. The Board currently consists of eight members. The Corporation has historically
endeavoured to have a diverse Board with a sufficient number of directors to encourage a variety of opinions on matters which come before the Board, while at the same time
limiting its membership to a number of directors that facilitates effective and efficient decision making. While there are no specific criteria for Board membership, the
Corporation seeks to attract directors with a wealth of business knowledge and a diversity of business experience.
73
Board Functioning
The Board adopted a corporate governance policy which, among other things, sets out those matters, in addition to those required by statute, which must be brought by the
Chief Executive Officer or other senior management to the Board for approval. The Corporate Governance Policy ensures that all major strategic decisions, including any
change in our strategic direction and acquisitions or divestitures of a material nature, will be presented by management to the Board for approval. As part of its ongoing
activity, the Board regularly receives and comments upon reports of management as to the performance of the Corporation’s business and management’s expectations and
planned actions in respect thereto.
Board Committees
The Board has an Audit Committee, a Compensation Committee and a Corporate Governance Committee. Each committee has a formal mandate outlining its responsibilities
and its obligations to report its recommendations and decisions to the Board.
Audit Committee
The primary function of the Audit Committee is to assist the Board of Directors in fulfilling its oversight responsibilities by reviewing: (i) the financial information that will
be provided to the shareholders and others; (ii) the systems of internal controls which management and the Board of Directors have established; and (iii) the Corporation’s
audit and financial reporting process. The external auditors’ ultimate responsibility is to the Board of Directors and the Committee, as representatives of the shareholders. The
text of the Audit Committee Mandate is set forth in Schedule A hereto.
The Audit Committee is currently composed of Mr. James Hall (Chairman), Mr. Wayne Pisano and Mr. Michael Bailey, as well as Mr. Andrew Sheldon, as a non-voting
member, all of whom are financially literate and independent directors within the meaning of National Instrument 52-110 – Audit Committees. The education and related
experience of each current Audit Committee member is described below.
James Hall – Mr. Hall, a Chartered Professional Accountant, previously served as Chair of the audit committee of Atomic Energy of Canada Limited, International
Datacasting Corporation, Terravest Income Fund and General Donlee Income Fund, and was a member of the audit committee of Journal Register Company and Indigo Books
& Music Inc.
Wayne Pisano – Mr. Pisano holds an MBA and is the former Chief Executive Officer of VaxInnate and prior to that the Chief Executive Officer of Sanofi Pasteur.
Michael Bailey – Mr. Bailey holds an MBA and is currently the Chief Executive Officer and Board member of AVEO Oncology.
Andrew Sheldon – Mr. Sheldon has thirty years of experience in the pharmaceutical industry and was formerly the President and Chief Executive Officer of Medicago Inc.
since 2003. He was a member of Medicago’s board of directors until September 18, 2013 and has served on several other boards.
74
Compensation Committee
The Committee’s primary duties and responsibilities are to review and make recommendations to the Board in respect of:
the recruitment, hiring, evaluation, determination of terms of employment and the job description of the CEO;
the Corporation’s compensation strategy, policies and guidelines, taking into account the proposals from the CEO, and to monitor their consistency with the
Corporation’s goals and strategies;
the CEO’s recommendations on the appointment and compensation of Executive Officers and other key employees of the Corporation;
management incentive and perquisite plans and any non-standard remuneration plans;
succession planning of the Corporation’s senior management; and
Board compensation and training matters.
The Compensation Committee is currently composed of four independent board members: Dr. Shermaine Tilley (Chairman), Mr. Michael Bailey, Ms. Julia P. Gregory, and
Mr. Andrew Sheldon, as a non-voting member. The education and related experience (as applicable) of each current member is described below:
Shermaine Tilley – Dr. Tilley is a Managing Partner at CTI Life Sciences Fund. Prior to joining CTI Life Sciences Fund in 2006, Dr. Tilley was Senior VP at DRI Capital Inc.
(formerly Drug Royalty Corporation), the world’s first private equity firm doing royalty transactions in the biotech/pharma space. Before DRI Capital Inc., Dr. Tilley ran and
managed a research laboratory, holding faculty positions at the NYU School of Medicine and Public Health Research Institute (“PHRI”), NY, and on the PHRI Board of
Directors.
Michael Bailey – Mr. Bailey serves as the Chief Executive Officer and Board member of AVEO Oncology. Prior to joining AVEO Oncology, Mr. Bailey held a variety of
leadership roles in commercial operations, sales, business development, and strategic planning across numerous biotech and pharmaceutical companies, including ImClone
Systems (now Eli Lilly), Genentech, Synta Pharmaceuticals, and Smithkline Beecham. Michael holds an MBA from the Mendoza College of Business at University of Notre
Dame.
Julia P. Gregory – Ms. Gregory has an MBA from The Wharton School of The University of Pennsylvania and is the former CEO of ContraFect (Nasdaq: CFRX) and prior to
that she was CEO of FivePrime Therapeutics (Nasdaq: FXRX). She was the EVP Corporate Development and Chief Financial Officer of Lexicon Pharmaceuticals, Inc.
(Nasdaq: LXRX). Ms. Gregory also has twenty years of investment banking experience.
Andrew Sheldon – Mr. Sheldon has thirty years of experience in the pharmaceutical industry and is the head of Medicago New Ventures and was formerly the President and
Chief Executive Officer of Medicago Inc. since 2003. He was a member of Medicago’s board of directors until September 18, 2013 and has served on several other boards.
As Chief Executive Officer of Medicago Inc., Mr. Sheldon was responsible for ensuring compensation levels are competitive and in line with the company’s business strategy.
Corporate Governance Committee
The primary function of the Committee is to assist the Board of Directors in the exercise of certain duties regarding the corporate governance of the Corporation. Among
others, the Committee develops policies regarding corporate governance for the Corporation, for internal governance as well as for the Corporation’s external communications.
75
The Corporate Governance Committee is currently composed of Mr. Wayne Pisano (Chairman), Dr. Shermaine Tilley, Mr. Markus Warmuth as well as Mr. Andrew Sheldon,
as a non-voting member. The education and related experience (as applicable) of each current member is described below:
Wayne Pisano – Mr. Pisano holds an MBA and is the former Chief Executive Officer of VaxInnate and prior to that the Chief Executive Officer of Sanofi Pasteur. He had
direct responsibility in evaluating the compensation levels for other executive officers.
Shermaine Tilley – Dr. Tilley is a Managing Partner at CTI Life Sciences Fund. Prior to joining CTI Life Sciences Fund in 2006, Dr. Tilley was Senior VP at DRI Capital Inc.
(formerly Drug Royalty Corporation), the world’s first private equity firm doing royalty transactions in the biotech/pharma space. Before DRI Capital Inc., Dr. Tilley ran and
managed a research laboratory, holding faculty positions at the NYU School of Medicine and PHRI, NY, and on the PHRI Board of Directors.
Markus Warmuth – Mr. Warmuth currently serves as an Entrepreneur in Residence at Third Rock Ventures, a venture capital firm. Prior to that, he spent seven years as the
Chief Executive Officer of H3 Biomedicine, a biopharmaceutical company that specializes in the discovery and development of genomics-based precision oncology
treatments. Mr. Warmuth earned his MD from Ludwig Maximilian University in Munich, Germany.
Andrew Sheldon – Mr. Sheldon has thirty years of experience in the pharmaceutical industry and is the head of Medicago New Ventures and was formerly the President and
Chief Executive Officer of Medicago Inc. since 2003. He was a member of Medicago’s board of directors until September 18, 2013 and has served on several other boards.
As Chief Executive Officer of Medicago Inc., Mr. Sheldon was responsible for ensuring compensation levels are competitive and in line with the company’s business strategy.
Committees are empowered to engage, or to request that management engage, outside advisors at the Corporation’s expense. The Board would consider any such request by
an individual member of the Board on its merits at the time it was made.
Orientation and Continuing Education
The Board does not have a formal orientation program for new directors, and does not have any formal continuing education for its members.
Ethical Business Conduct
The Board has a written code of business conduct for its directors, officers and employees.
Assessment
The Board, the Board Committees and the Directors are subject to an annual assessment. Each Director is required to complete a self-evaluation and an evaluation of the
performance of the Board, the Board Committees and their respective chairpersons. These evaluations are then reviewed by the Compensation and Corporate Governance
Committee, which presents its recommendations to the Board. The evaluation of the Compensation and Corporate Governance Committee and its Chairperson are reviewed
by the Chairman of the Board who presents his recommendations to the Board.
76
Compensation
The Compensation Committee is responsible for determining appropriate compensation for directors in light of the nature of activities and size of the Corporation, and making
recommendations to the Board of Directors in that respect.
External Auditor Service Fees
The following table summarizes the Audit, Audit Related, Tax Related and Other Fees (excluding expenses and taxes) billed by the Corporation’s auditor,
PricewaterhouseCoopers LLP to the Corporation and its subsidiary IMV Technologies Inc. for the two most recently completed fiscal years.
Fees
Audit Fees (1)
Audit Related Fees (2)
Tax Fees (3)
All Other Fees (4)
Total Fees
December 31, 2020
December 31, 2019
116,100
133,110
53,365
12,675
$312,250
$95,500
$58,300
$63,012
-
$216,812
(1) Audit Fees consist of the aggregate fees billed by the external auditor of the Corporation for audit services.
(2) Audited Related Fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit or review of the issuer’s financial statements and are
not reported under “Audit Fees” above and include the provision of comfort letters and consents, the consultation concerning financial accounting and reporting of specific issues and the review of
documents filed with regulatory authorities.
(3) Tax Fees include fees billed for tax compliance, tax advice and tax planning services, including the preparation of original tax returns and claims for refund; tax consultations, such as assistance and
representation in connection with tax audits and appeals, tax advice related to mergers and acquisitions, and requests for rulings or technical advice from taxing authorities; tax planning services; and
consultation and planning services.
(4) All Other Fees include the aggregate fees billed for products and services provided by the auditors, other than the services reported above.
XI.
LEGAL PROCEEDINGS AND REGULATORY ACTIONS
The Corporation is not a party to any legal proceeding, and its property is not and was not the subject of any material legal proceeding, during the year ended December 31,
2020. The Corporation is not aware of any legal proceeding outstanding, threatened or pending as of the date hereof by or against the Corporation.
The Corporation is not and was not subject to, during the year ended December 31, 2020: (i) penalties or sanctions imposed by a court relating to Canadian securities
legislation or by a Canadian securities legislation or by a Canadian securities regulatory authority; (ii) any other penalties or sanctions imposed by a court or regulatory body
that would likely be considered important to a reasonable investor in making an investment decision; and (iii) settlement agreements entered into with a court relating to
Canadian securities legislation or with a Canadian securities regulatory authority.
XII.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
There are no material interests, direct or indirect, of directors, executive officers, any shareholder who beneficially owns, directly or indirectly, more than 10% of the
outstanding Common Shares, or any known associates or affiliates of such persons, in any transaction within the last three years or in any proposed transaction which has
materially affected or would materially affect the Corporation.
77
XIII. TRANSFER AGENT AND REGISTRAR
The registrar and transfer agent for the Common Shares is Computershare Investor Services Inc., at their principal offices located at 100 University Avenue, 9t h Floor,
Toronto, Ontario, M5J 2Y1 and at 1500 Robert-Bourassa Boulevard, 7th Floor, Montréal, Québec, H3A 3S8.
XIV. MATERIAL CONTRACTS
The following are the material contracts, other than contracts entered into in the ordinary course of business, that the Corporation has entered into since January 1, 2020 or
prior thereto but which are still in effect:
(i) Equity distribution agreement entered into between IMV and Piper Sandler dated March 18, 2020, June 30, 2020 and October 16, 2020 in connection with ATM
Distributions;
(ii) a loan agreement between IMV and the Province of Nova Scotia dated as of July 26, 2013 pursuant to which IMV received a loan of $5 million, available in four equal
instalments to be used to fund a portion of working capital through 2016; and
(iii) a license agreement between IMV and Merck KGaA dated as of July 12, 2010 with regards to the world-wide exclusive licensing of survivin-based peptides.
A copy of these contracts can be found under the profile of the Corporation on SEDAR at www.sedar.com.
XV.
INTERESTS OF EXPERTS
The Company’s independent auditors are PricewaterhouseCoopers LLP, Chartered Professional Accountants, who have issued an independent auditor’s report dated March
16, 2021 in respect of the Corporation’s consolidated financial statements as at December 31, 2020 and December 31, 2019 and for each of the years then ended.
PricewaterhouseCoopers LLP has advised that they are independent with respect to the Corporation within the meaning of the Chartered Professional Accountants of Nova
Scotia CPA Code of Professional Conduct and the rules of the SEC.
XVI. ADDITIONAL INFORMATION
Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of our securities, options and to purchase securities and interests
of insiders in material transactions, if any, is contained in the Management Information Circular of the Corporation dated May 25, 2020 prepared in connection with the
Corporation’s most recent annual shareholders’ meeting and is available on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Additional financial information,
including the Corporation’s audited financial statements and management’s discussion and analysis of financial condition and results of operations, is available on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov. All information incorporated by reference in this Annual Information Form is or will within the prescribed delays be
contained or included in one of the Corporation’s continuous disclosure documents filed with the Canadian securities regulatory authorities, which may be viewed on SEDAR
at www.sedar.com, and with the SEC, which may be viewed on EDGAR at www.sec.gov.
All requests for the above-mentioned documents must be addressed to the Chief Financial Officer of IMV Inc., 130 Eileen Stubbs Avenue, Suite 19, Dartmouth, Nova Scotia,
B3B 2C4, or by fax at (902) 492-0888.
78
SCHEDULE A
MANDATE OF THE AUDIT COMMITTEE
1.
PURPOSE
The primary function of the Audit Committee (the “Committee”) is to assist the Board of Directors in fulfilling its oversight responsibilities by reviewing: (i) the
financial information that will be provided to shareholders and others; (ii) the system of internal controls which management and the Board of Directors have established;
and (iii) the Corporation’s audit and financial reporting process. The external auditors’ ultimate responsibility is to the Board of Directors and the Committee, as
representatives of the shareholders.
These representatives have the ultimate authority to evaluate and, where appropriate, approve the replacement of the external auditors. The Committee will primarily
fulfill these responsibilities by carrying out the activities enumerated in Section 5 of this Mandate of the Committee (the “Mandate”). The Committee will, at all times,
be given full access to the Corporation’s management and records and to the external auditors as necessary to carry out these responsibilities.
2.
INTERPRETATION
An “affiliate” of, or a person affiliated with, a specified person, means a person that directly, or indirectly through one or more intermediaries, controls, or is controlled
by, or is under common control with, the person specified, and includes, without limitation, (a) an Executive Officer of an affiliate; (b) a director who also is an
employee of an affiliate; (c) a general partner of an affiliate; and (d) a managing member of an affiliate.
An “Audit Committee Financial Expert” means a person who has the following attributes: (a) an understanding of generally accepted accounting principles and
financial statements; (b) the ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves; (c)
experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally
comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the Corporation’s financial statements, or experience actively
supervising one or more persons engaged in such activities; (d) an understanding of internal control over financial reporting; and (e) an understanding of audit committee
functions. A person shall have acquired such attributes through: (a) education and experience as a principal financial officer, principal accounting officer, controller,
public accountant or auditor or experience in one or more positions that involve the performance of similar functions; (b) experience actively supervising a principal
financial officer, principal accounting officer, controller, public accountant, auditor or person performing similar functions; (c) experience overseeing or assessing the
performance of companies or public accountants with respect to the preparation, auditing or evaluation of financial statements; or (d) other relevant experience.
“Board of Directors” or “Board” means the Board of Directors of IMV Inc.
“Chairman” means the Chairman of the Committee.
“Committee” means the Audit Committee of IMV Inc.
“Committees” means the Committee and the Compensation and Corporate Governance Committees.
“control” (including the terms controlling, controlled by and under common control with) means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, whether through the ownership of voting securities, by contract, or otherwise.
“Corporation” means collectively, IMV Inc. and any subsidiary, including, without limitation, ImmunoVaccine Technologies Inc.
“Executive Officer” means the president, principal financial officer, principal accounting officer (or, if there is no such accounting officer, the controller), any vice-
president in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy-making function,
or any other person who performs similar policy-making functions for the issuer.
“Family Member” means a person’s spouse, parents, children and siblings, whether by blood, marriage or adoption, or anyone residing in such person’s home.
“Financially Literate” means the ability to read and understand a set of fundamental financial statements that present a breadth and level of complexity of accounting
issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the consolidated financial statements of
the Corporation (including, without limitation, a balance sheet, income statement, and cash flow statement).
“Independent Director” means a director who is not an Executive Officer or employee of the Corporation or any other individual who has a direct or indirect
relationship with the Corporation, which would interfere with the exercise of independent judgment regarding the best interests of the Corporation or in carrying out the
responsibilities of a director. An individual is not an Independent Director if such individual:
(a)
is, or has been within the last three years, an employee or Executive Officer of the Corporation;
(b)
is a Family Member of an individual who is or has been, within the last three years, an Executive Officer of the Corporation;
(c)
is or has been (or whose Family Member is or has been), within the last three years, an Executive Officer, a partner or an employee of a material service
provider of the Corporation (including the external auditors);
(d)
participated in the preparation of the financial statements of the Corporation at any time during the past three years;
(e)
is or has been (or whose Family Member is or has been), within the last three years, an Executive Officer of another entity where at any time within the last
three years any of the Executive Officer’s of the Corporation served on the entity’s Compensation Committee;
2
(f)
(g)
(h)
(i)
(j)
has a relationship with the Corporation under which he or she may directly or indirectly accept any consulting, advisory or other fees from the Corporation or a
related entity, except for any compensation as a member of the Board or as a member of a Committee;
received (or whose Family Member received) more than C$75,000 in compensation from the Corporation (excluding (A) fees as a director or Committee
member, (B) compensation paid to a Family Member who is an employee (other than an Executive Officer) of the Corporation, or (C) benefits under a tax-
qualified retirement plan or non-discretionary compensation) during any consecutive 12 month period within the last three years) during any consecutive 12
month period within the last three years;
is, or has a Family Member who is, a partner in, or a controlling shareholder or an Executive Officer of, any organization to which the Corporation made, or
from which the Corporation received, payments for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient’s
consolidated gross revenues for that year, or US$200,000, whichever is more, other than the following: (i) payments arising solely from investments in the
Corporation’s securities; or (ii) payments under non-discretionary charitable contribution matching programs;
is a natural person who controls the Corporation; or
is an affiliate of the Corporation (or any subsidiary of the Corporation).
3.
COMPOSITION OF COMMITTEE AND COMMITTEE MEETINGS
3.1
3.2
3.3
3.4
The Committee shall be comprised of at least three Directors, all of whom are Independent Directors. All members of the Committee shall be Financially
Literate. The Committee shall also have at least one member who has past employment experience in finance or accounting, requisite professional certification
in accounting, or any other comparable experience or background which results in the individual's financial sophistication, including being or having been a
chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities. Additionally, the Committee shall have at least
one member who is an Audit Committee Financial Expert. The same member may satisfy the foregoing requirements.
The Committee will meet on a quarterly basis and will hold special meetings as circumstances require. The timing of the meetings shall be determined by the
Committee. At all Committee meetings a majority of the members shall constitute a quorum. The Board shall appoint the Chairman of the Committee. If the
Chairman is not present at a Committee meeting, the members present shall choose one of their number to act as Chairman for the purposes of that specific
meeting.
Notice of each meeting shall be given to each Committee member and may, but is not required, to be given to the other directors and to the Corporation’s senior
management. Unless they are expressly called to the meeting, the latter only receive the notice for informational purposes.
The Committee may invite the persons it considers useful to invite, including the Corporation’s senior management, to attend any of the meetings and
participate in discussions concerning the Committee’s business.
3
3.5
The Committee members, whenever possible, shall take all necessary steps to attend Committee meetings and to prepare themselves with respect to the matters
and documents to be discussed thereat.
3.6
The Committee will receive meeting agendas in advance, along with appropriate briefing material.
3.7
The Committee shall appoint a secretary. The secretary shall attend the meetings, during which he or she shall take minutes. The minutes shall be made
available to the directors for consultation and are approved by the Board before being included in the Corporation’s registers or records.
3.8
The Committee shall submit periodically a report to the Board on its activities, including the nature of its deliberations and the related recommendations.
3.9
The Committee, in the performance of its duties, may consult any relevant register or record of the Corporation.
3.10 The Committee members shall receive, in their capacity as Committee members, the compensation that the Board establishes from time to time.
4.
COMMITTEE AUTHORITY AND RELATIONSHIP WITH EXTERNAL AUDITORS
4.1
The external auditors shall report directly to the Committee.
4.2
The Committee reports to the Board of Directors and has the authority:
a)
b)
c)
d)
e)
f)
to engage independent counsel and other advisors as it determines necessary to carry out its duties;
to set and receive appropriate funding from the Corporation to pay the compensation for any advisors (including, without limitation, the external auditors
and independent counsel) employed by the Committee and for ordinary administrative expenses of the Committee that are necessary or appropriate in
carrying out its duties;
resolve any disagreements between the Corporation’s senior management team and the external auditors regarding financial reporting;
pre-approve all auditing and non-audit services;
seek any information it requires from the Corporation’s employees, all of whom are directed to cooperate with the Committee’s requests, or external
parties; and
to communicate directly with the Corporation’s senior management team, external auditors, and outside counsel, as necessary, and separately, as
necessary
5.
RESPONSIBILITIES AND DUTIES
5.1
To fulfill its responsibilities and duties, the Committee shall:
Financial Statements
4
a)
a)
b)
c)
review the accounting principles, policies and practices followed by the Corporation in accounting for and reporting its financial results of operations;
review the Corporation’s audited annual consolidated financial statements and the unaudited quarterly financial statements, including complex or
unusual transactions and areas requiring the exercise of material judgment, and recommend same to the Board for approval prior to publicly disclosing
this information. Also review and recommend to the Board for approval any accompanying related documents such as the Annual Information Form or
similar filings and the Management’s Discussion and Analysis prior to publicly disclosing this information;
review the draft press releases regarding the annual and interim financial statements and recommend to the Board for approval prior to publicly
disclosing this information;
satisfy itself that adequate procedures are in place for the review of the Corporation’s public disclosure of financial information extracted or derived
from the Corporation’s financial statements and periodically assess the adequacy of those procedures;
Internal Control
d)
e)
f)
g)
h)
i)
consider the effectiveness of the Corporation’s internal control system, including information technology security and control;
understand the scope of the external auditors’ review of internal control over financial reporting, and obtain reports on significant findings and
recommendations, together with management’s response;
review the financial risk assessment and management policies followed by the Corporation in operating its business activities and the completeness and
fairness of any disclosure thereof, including, without limitation, review of the use of derivative financial instruments by the Corporation;
review and approve any management decision relating to any potential need for internal auditing, including whether this function should be outsourced
and if such function is outsourced, approve the supplier of such service;
establish procedures for (i) the receipt, retention and treatment of complaints received by the Corporation from employees regarding accounting, internal
accounting controls, or auditing matters; and (ii) the confidential, anonymous submission by directors, officers and other employees of the Corporation
of concerns regarding questionable accounting or auditing matters;
oversee the management of significant and emerging information technology (IT) risks, including cybersecurity, and periodically receive reports form
management on major IT projects and the implementation and effectiveness of related risk management programs. These reports should include any
relevant information to allow the Committee to make informed judgments on trends and significant exposure to IT risks.
5
External Audit
j)
k)
l)
m)
n)
o)
p)
q)
r)
s)
t)
appoint, compensate and retain the external auditors in connection with preparing or issuing an auditor’s report or with performing other audit, review or
attestation services for the Corporation;
oversee the work of the external auditors engaged for the purpose of preparing or issuing an auditor’s report or performing other audit, review or
attestation services for the Corporation, including the resolution of disagreements between management and the external auditors regarding financial
reporting;
obtain, on an annual, basis, a formal written statement from the external auditors delineating the relationship between the external auditors and the
Corporation, actively engaging in a dialogue with the external auditors with respect to any disclosed relationships or services that may impact the
objectivity and independence of the external auditors and for taking, or recommending that the full Board take, appropriate action to oversee the
independence of the external auditors under applicable securities laws and stock exchange rules;
discuss with the external auditors their views about the quality of the implementation of International Financial Reporting Standards (or other generally
accepted accounting principles used by the Corporation to report its financial statements), with a particular focus on the accounting estimates and
judgments made by management and management’s selection of accounting principles. Meet in private with appropriate members of management and
separately with the external auditors on a regular basis to share perceptions on these with the external auditors and their views on the adequacy of the
Corporation’s financial personnel;
review and provide direction regarding the scope of the annual audit, the audit plan, the access granted to the Corporation’s records and the co-operation
of management in any audit and review function;
review the effectiveness of the independent audit effort, including approval of the fees charged in connection with the annual audit, any quarterly reviews
and any permitted non-audit services being provided;
assess the effectiveness of the working relationship of the external auditors with management;
determine the nature of non-audit services the external auditors are prohibited from providing to the Corporation, and pre-approve all permitted non-
audit services provided by the external auditors to the Corporation;
if appropriate, terminate the appointment of the external auditors;
prepare the report required to be prepared by the Committee pursuant to applicable securities laws for inclusion with the annual financial statements;
at least annually, obtain and review an appropriate report by the external auditors describing: (i) the external auditors’ internal quality-control
procedures; (ii) any
6
material issues raised by the most recent internal quality-control review or peer review of the external auditors, or any inquiry or investigation by
governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the external auditors,
and any steps taken to deal with such issues; and (iii) all relationships between the external auditors and the Corporation to enable the assessment of the
external auditors;
Reporting Responsibility
review and reassess annually the Mandate of the Committee for adequacy and recommend any changes to the Board;
report to the Board on the major items covered at each Committee meeting and make recommendations to the Board and management concerning these
matters. Annually report to the Board on the effectiveness of the Committee;
perform any other activities consistent with this Mandate, the Corporation’s bylaws and governing law as the Committee or the Board deems necessary
or appropriate;
u)
v)
w)
Compliance
x)
review the effectiveness of the system for monitoring compliance with laws and regulations and the results of management’s investigation and follow-up,
including disciplinary action of any instances of noncompliance;
v)
review the findings of any examinations by regulatory agencies and any external auditor observations;
w)
review the process for communicating the code of conduct to the Corporation’s employees and for monitoring compliance therewith; and
x)
obtain regular updates from management and Corporation’s legal counsel regarding compliance matters.
Adopted by the Board on April 6, 2010 and amended on March 10, 2016, May 30, 2018 and November 11, 2020.
7
Exhibit 99.2
Consolidated Financial Statements
December 31, 2020
March 16, 2021
Management’s Responsibility for Financial Reporting
The accompanying consolidated financial statements of IMV Inc. (the “Corporation”) are the responsibility of management and have been approved by the Board of
Directors. The consolidated financial statements have been prepared by management in accordance with International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board. The consolidated financial statements include some amounts and assumptions based on management’s best estimates which
have been derived with careful judgment.
In fulfilling its responsibilities, management has developed and maintains a system of internal accounting controls. These controls are designed to ensure that the financial
records are reliable for preparation of the consolidated financial statements. The Audit Committee of the Board of Directors reviewed and approved the Corporation’s
consolidated financial statements and recommended their approval by the Board of Directors.
(signed)
“Frederic Ors”
Chief Executive Officer
(signed) “Pierre Labbé”
Chief Financial Officer
Approved on behalf of the Board of Directors
(signed) “James W. Hall”, Director
(signed) “Wayne Pisano”, Director
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of IMV Inc.
We have audited the accompanying consolidated statements of financial position of IMV Inc. and its subsidiary (together, the Company) as of December 31, 2020 and 2019,
and the related consolidated statements of equity, loss and comprehensive loss and cash flows for the years then ended, including the related notes (collectively referred to as
the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2020 and 2019, and its financial performance and its cash flows for the years then ended in conformity with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of
internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Halifax, Nova Scotia, Canada
March 16, 2021
We have served as the Company's auditor since 2003.
PricewaterhouseCoopers LLP
Cogswell Tower, 2000 Barrington Street, Suite 1101, Halifax, Nova Scotia, Canada B3J 3K1
T: +1 902 491 7400, F: +1 902 422 1166
“PwC” refers to PricewaterhouseCoopers LLP, an Ontario limited liability partnership
IMV Inc.
Consolidated Statements of Financial Position
As at December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
Assets
Current assets
Cash and cash equivalents
Amounts receivable (note 6)
Prepaid expenses
Investment tax credits receivable
Property and equipment (note 8)
Liabilities
Current liabilities
Accounts payable, accrued and other liabilities (note 10)
Current portion of long-term debt (note 9)
Current portion of lease obligation (note 7)
Lease obligation (note 7)
Long-term debt (note 9)
Equity
Commitments (note 17)
The accompanying notes form an integral part of these consolidated financial statements.
2020
$
46,362
2,012
5,645
1,942
55,961
2,839
58,800
9,240
1,094
139
10,473
1,218
7,734
19,425
39,375
58,800
2019
$
14,066
845
3,032
1,661
19,604
2,830
22,434
6,217
88
100
6,405
1,208
8,373
15,986
6,448
22,434
IMV Inc.
Consolidated Statements of Equity
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for per share amounts)
Balance, December 31, 2018
Net loss and comprehensive loss for the year
Issuance of shares in public offering
Share issuance costs
Deferred share units (“DSU”) settled in shares:
Reclassification of units to equity-settled
Value of services recognized
Exercise of warrants
Expiry of warrants
Employee share options:
Value of services recognized
Exercise of options
Balance, December 31, 2019
Net loss and comprehensive loss for the year
Issuance of shares in public equity offering
Share issuance costs in a public equity offering
Issuance of shares and warrants in private placement
Share and warrant issuance costs in private placement
Redemption of DSU’s, net of applicable taxes
Warrants exercised
Warrants expired
DSUs:
Value of services recognized
Employee share options:
Value of services recognized
Exercise of options
Balance, December 31, 2020
Share
Capital
$
(note 11)
90,152
–
29,456
(2,499)
–
–
82
–
–
353
117,544
–
40,824
(2,039)
21,307
(152 )
184
3,029
–
–
–
658
181,355
The accompanying notes form an integral part of these consolidated financial statements.
Contributed
Surplus
$
(note 12)
6,504
Warrants
$
(note 13)
415
Deficit
$
(92,754 )
(27,365 )
–
–
–
–
–
–
–
–
(120,119)
(34,855 )
–
–
–
–
–
–
–
–
–
–
Total
$
4,317
(27,365 )
29,456
(2,499)
955
290
61
–
1,138
95
6,448
(34,855 )
40,824
(2,039)
25,082
(152 )
(5 )
2,276
–
537
1,005
254
–
–
–
–
–
(21)
(62)
–
–
332
–
–
–
3,775
–
–
(753 )
(332 )
–
–
–
3,022
(154,974)
39,375
–
–
–
955
290
–
62
1,138
(258 )
8,691
–
–
–
–
–
(189 )
332
537
1,005
(404 )
9,972
IMV Inc.
Consolidated Statements of Loss and Comprehensive Loss
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for per share amounts)
Revenue
Subcontract revenue
Interest income
Expenses
Research and development
General and administrative
Government assistance (note 5)
Accreted interest and valuation adjustments (note 9)
Net loss and comprehensive loss for the year
Basic and diluted loss per share
Weighted-average shares outstanding
The accompanying notes form an integral part of these consolidated financial statements.
2020
$
3
298
301
26,605
15,205
(6,690)
36
35,156
(34,855 )
(0.58 )
2019
$
59
509
568
18,986
10,140
(2,432)
1,239
27,933
(27,365 )
(0.55 )
60,305,264
49,653,578
IMV Inc.
Consolidated Statements of Cash Flows
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for per share amounts)
Cash provided by (used in)
Operating activities
Net loss and comprehensive loss for the year
Charges to operations not involving cash
Depreciation of property and equipment
Accreted interest and valuation adjustments
Deferred share unit compensation
Stock-based compensation
Loss on disposal of assets
Fair value adjustment on government loan
Net change in non-cash working capital balances related to operations
(Increase) decrease in amounts receivable
Increase in prepaid expenses
Increase in investment tax credits receivable
Increase (decrease) in accounts payable and other liabilities
Financing activities
Proceeds from issuance of share capital and warrants in private placement
Share and warrant issuance costs in private placement
Proceeds from public equity offering
Share Issuance costs in public equity offering
Proceeds from the exercise of stock options
Proceeds from short-term borrowing
Repayment of short-term borrowing
Proceeds from the exercise of warrants
Proceeds from long-term debt
Repayment of long-term debt
Repayment of lease obligation
Investing activities
Acquisition of property and equipment
Net change in cash and cash equivalents during the year
Cash and cash equivalents – Beginning of year
Cash and cash equivalents – End of year
Supplementary cash flow
Interest received
The accompanying notes form an integral part of these consolidated financial statements.
2020
$
2019
$
(34,855 )
(27,365 )
515
36
537
1,005
73
(628 )
528
1,239
(191 )
1,138
1
(840 )
(33,317 )
(25,490 )
(1,067)
(1,859)
(281 )
1,779
492
(333 )
(550 )
(1,407)
(34,745 )
(27,288 )
25,082
(152 )
40,824
(2,039)
254
3,130
(2,645)
2,276
900
(41)
(106 )
67,483
(442 )
32,296
14,066
46,362
–
–
29,456
(2,499)
95
–
–
61
–
(88)
(90)
26,935
(476 )
(829 )
14,895
14,066
298
509
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
1
Nature of operations
IMV Inc. (the “Corporation” or “IMV”) is, through its 100% owned subsidiary, a biopharmaceutical company committed to improving the treatment of cancer and giving
patients with hard-to-treat cancers a chance to enjoy a long and healthy life. IMV is using its DPX delivery technology (“DPX platform” or “DPX”) to generate targeted,
specific and sustainable immune activation. The Corporation is developing a portfolio of DPX-based immunotherapies that address unmet medical needs, and its lead
candidate, maveropepimut-S (DPX-Survivac) is a pipeline in a product that generates sustained and targeted immune responses against survivin, a tumor-associated
protein, overexpressed in a high number of tumor types. Maveropepimut-S, in association with low dose cyclophosphamide used as an immune modulator, is being
evaluated in three phase 2 clinical trials across 6 different cancer indications with and without Merck’s Keytruda ®. With the financial support of the Canadian
Government, IMV initiated the development of DPX-COVID-19, a vaccine candidate against SARS-CoV-2 using the DPX platform. The DPX platform is a versatile
technology that gives IMV the opportunity to develop new immunotherapies in its portfolio with the goal to address more unmet medical needs in the future. Also, the
Corporation believes that its DPX platform offers a novel way to deliver drugs to the human body.
The Corporation has one reportable and geographic segment. Incorporated under the Canada Business Corporations Act and domiciled in Dartmouth, Nova Scotia, the
shares of the Corporation are listed on the Nasdaq Stock Market and the Toronto Stock Exchange under the symbol “IMV”. The address of its principal place of business
is 130 Eileen Stubbs Avenue, Suite 19, Dartmouth, Nova Scotia, Canada.
An outbreak of a novel strain of coronavirus, identified as “COVID-19”, was declared a global pandemic by the World Health Organization on March 11, 2020. To date,
COVID-19 has not had a material impact on the Corporation’s financial condition, liquidity or longer-term strategic development and commercialization plans. The extent
to which COVID-19 may cause more significant disruptions to IMV’s business and greater impacts to results of operations will depend on future developments, which are
highly uncertain and cannot be predicted with confidence, such as the duration and severity of outbreaks, including potential future waves or cycles, and the effectiveness
of actions to contain and treat COVID-19. The Corporation cannot predict the duration, scope and severity of any potential business shutdowns or disruptions, including to
ongoing and planned clinical studies and regulatory approval prospects. Further prolonged shutdowns or other business interruptions could result in material and negative
effects to the Corporation’s ability to conduct its business in the manner and on the timelines currently planned, which could have a material adverse impact on IMV’s
business, results of operations, and financial condition. The COVID-19 pandemic continues to rapidly evolve, and the Corporation will continue to monitor the effects of
COVID-19 on its business.
2
Basis of presentation
The Corporation prepares its consolidated financial statements in accordance with Canadian generally accepted accounting principles as set out in the Chartered
Professional Accountants of Canada Handbook – Accounting Part I, which incorporates International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board (“IASB”).
These consolidated financial statements were approved by the Board of Directors on March 16, 2021.
(1)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
3
New standards and interpretations not yet adopted
In January 2020, the IASB issued amendments to Presentation of financial statements (“IAS 1”) to provide a more general approach to the classification of liabilities
under IAS 1 based on the contractual arrangements in place at the reporting date. The amendments to IAS 1 are effective for annual reporting periods beginning on or
after January 1, 2023.
There are no other standards, interpretations or amendments to existing standards that are not yet effective that are expected to have a material impact on the consolidated
financial statements of the Corporation.
4
Significant accounting policies, judgments and estimation uncertainty
Basis of measurement
The consolidated financial statements have been prepared under the historical cost convention.
Consolidation
The financial statements of the Corporation consolidate the accounts of IMV Inc. and its subsidiary. All intercompany transactions, balances and unrealized gains and
losses from intercompany transactions are eliminated on consolidation. There are no non-controlling interests, therefore, all loss and comprehensive loss is attributable to
the shareholders of the Corporation.
Foreign currency translation
i)
Functional and presentation currency
Items included in the consolidated financial statements of the Corporation are measured using the currency of the primary economic environment in which the entity
operates (the “functional currency”). The consolidated financial statements are presented in Canadian dollars, which is the Corporation’s functional currency.
ii)
Transactions and balances
Foreign currency translation of monetary assets and liabilities, denominated in currencies other than the Corporation’s functional currency, are converted at the rate
of exchange in effect at the consolidated statements of financial position date. Revenue and expense items are translated at the rate of exchange in effect at the
transaction date. Translation gains or losses are included in determining income or loss for the year. Foreign exchange loss of $1,259 for the year ended December
31, 2020 (2019 - $84 gain) is included in general and administrative expenses.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, balances with banks, and highly liquid temporary investments that are readily convertible to known amounts of cash.
(2)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
4
Significant accounting policies, judgments and estimation uncertainty (continued)
Financial instruments
Financial assets and liabilities are recognized when the Corporation becomes a party to the contractual provisions of the instrument. Financial assets are derecognized
when the rights to receive cash flows from the assets have expired or have been transferred and the Corporation has transferred substantially all risks and rewards of
ownership.
Financial assets and liabilities are offset and the net amount is reported in the consolidated statements of financial position when there is a legally enforceable right to
offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.
The Corporation recognizes financial instruments based on their classification. Depending on the financial instruments’ classification, changes in subsequent
measurements are recognized in net loss and comprehensive loss. Financial instruments do not include amounts due to or from government entities.
The Corporation has implemented the following classifications:
•
•
Cash and cash equivalents and amounts receivable are classified as amortized cost (previously loans and receivables). After their initial fair value measurement,
they are measured at amortized cost using the effective interest method; and
Accounts payable, accrued and other liabilities, amounts due to directors and long-term debt are classified as other amortized cost (previously financial liabilities).
After their initial fair value measurement, they are measured at amortized cost using the effective interest method.
Impairment of financial assets
The Corporation applies the simplified method of the expected credit loss model required under IFRS 9, Financial Instruments. Under this method, the Corporation
estimates a lifetime expected loss allowance for all receivables. Receivables are written off when there is no reasonable expectation of recovery.
If there is objective evidence that an impairment loss has incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the
present value of estimated future cash flows. The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate.
Property and equipment
Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to
the acquisition of the asset. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Corporation and the cost can be measured reliably. The carrying amount of a replaced asset is
derecognized when replaced. Repairs and maintenance costs are charged to the consolidated statements of loss and comprehensive loss during the period in which they are
incurred.
(3)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
4
Significant accounting policies, judgments and estimation uncertainty (continued)
Property and equipment (continued)
Depreciation of property and equipment is calculated using the declining-balance method, with the exception of leasehold improvements, right-of-use assets and leased
premises, at the following annual rates:
Computer equipment
Computer software
Furniture and fixtures
Laboratory equipment
Leasehold improvements and right-of-use assets
30%
100%
20%
20%
straight-line
Residual values, method of depreciation and useful lives of the assets are reviewed annually and adjusted if appropriate.
Gains and losses on disposals of property and equipment are determined by comparing the proceeds with the carrying amount of the asset and are included as part of
general and administrative expenses in the consolidated statements of loss and comprehensive loss.
Property and equipment and intangible assets are tested for impairment when events or changes in circumstances indicate that the carrying amount may not be
recoverable. For the purpose of measuring recoverable amounts, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-
generating units or “CGU”s). The recoverable amount is the higher of an asset’s fair value less the costs to sell, and value in use (being the present value of the expected
future cash flows of the relevant asset or CGU).
An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount.
The Corporation evaluates impairment losses for potential reversals when events or circumstances warrant such consideration.
Leases
Under IFRS 16, Leases, the Corporation assesses whether a contract is or contains a lease based on the definition of a lease. A contract is, or contains, a lease if the
contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Corporation assesses whether:
•
•
•
the contract involves the use of an identified asset, specified either explicitly or implicitly, that is physically distinct, and usage represents substantially all of the
capacity of the asset;
the Corporation has the right to obtain substantially all of the economic benefits from use of the asset; and
the Corporation has the right to direct use of the asset, which is evidenced by decision-making rights to direct how and for what purpose the asset is used.
The Corporation recognizes an asset and a lease liability at the lease commencement date.
(4)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
4
Significant accounting policies, judgments and estimation uncertainty (continued)
Leases (continued)
The asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date,
plus any initial direct costs incurred, less any incentives received. The asset is subsequently depreciated using the straight-line method from the commencement date to
the earlier of the end of the useful life of the asset or the end of the lease term. The estimated useful lives of leased assets are determined on the same basis as those of
property and equipment. The carrying amount of the leased asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease
liability, if any.
The lease liability is initially measured at the present value of future lease payments, discounted using the interest rate implicit in the lease, or, if that rate cannot be
readily determined, the Corporation’s incremental borrowing rate. Generally, the Corporation uses its incremental borrowing rate as the discount rate. The lease liability is
subsequently measured at amortized cost using the effective interest method. It is remeasured if the Corporation changes its assessment of whether it will exercise a
purchase, extension, or termination option. If the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the leased asset,
or is recorded in the consolidated statements of loss and comprehensive loss if the carrying value of the leased asset is zero.
The Corporation has elected not to recognize assets and lease liabilities for short-term leases with a term of 12 months or less, and leases of low value assets.
The lease payments associated with these leases are recognized as an expense in the consolidated statements of loss and comprehensive loss over the lease term. Low
value assets consist primarily of computers and information technology equipment.
Income tax
Income tax is comprised of current and deferred income tax. Income tax is recognized in the consolidated statements of loss and comprehensive loss except to the extent
that it relates to items recognized directly in equity, in which case the income tax is also recognized directly in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted, at the end of the reporting period, and any
adjustment to tax payable in respect of previous years.
In general, deferred income tax is recognized in respect of temporary differences including non-refundable investment tax credits, arising between the tax bases of assets
and liabilities and their carrying amounts in the consolidated financial statements.
Deferred income tax is determined on a non-discounted basis using tax rates and laws that have been enacted or substantively enacted at the consolidated statements of
financial position date and are expected to apply when the deferred income tax asset or liability is settled. Deferred income tax assets are recognized to the extent that it is
probable that the assets can be recovered.
(5)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
4
Significant accounting policies, judgments and estimation uncertainty (continued)
Research and development
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except in the case of subsidiaries, where the timing of the
reversal of the temporary difference is controlled by the Corporation and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are presented as non-current.
All research costs are expensed in the period incurred. Development costs are expensed in the period incurred, unless they meet the criteria for capitalization, in which
case, they are capitalized and then amortized over the useful life. Development costs are written off when there is no longer an expectation of future benefits.
Revenue recognition
Revenue is recognized as the Corporation satisfies its performance obligations under the terms of the contract. Performance obligations are considered to be satisfied
when the customer obtains control of the related asset. Current and expected future revenue streams include: (i) milestone payments generated upon entering into potential
contractual partnerships and achieving development and sales milestones; (ii) future royalties generated from the eventual commercialization of the Corporation’s
products; and (iii) amounts generated for providing formulation and research support services related to existing licensing and research agreements with partners.
Revenue resulting from formulation services is recognized in the accounting period in which the formulation is delivered to the customer. Typically, the customer does
not have control of the asset while services are being performed and, therefore, revenues are recognized at the time the Corporation has completed its obligation and the
customer obtains control of the asset.
Revenue resulting from research support services is recognized over time as the services are performed, as the customer benefits simultaneously from the service, and as
the Corporation satisfies its performance obligation.
The Corporation expects to generate upfront payments, milestone and royalty revenues from future licenses for the Corporation’s products. Upfront payments and
milestones will be recognized as revenue when or as the underlying obligations are achieved and are not conditional on any further performance, which could be at a point
in time or over time depending on the contractual terms. Royalty revenue will be recognized in the period in which the Corporation earns the royalty.
The Corporation does not generate licensing or royalty revenues at this time.
Share capital
Common shares are classified as equity. Incremental costs directly attributable to the issuance of shares are recognized as a deduction from share capital.
(6)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
4
Significant accounting policies, judgments and estimation uncertainty (continued)
Loss per share
Basic loss per share (“LPS”) is calculated by dividing the net loss for the year attributable to equity owners of the Corporation by the weighted average number of
common shares outstanding during the year.
Diluted LPS is calculated by adjusting the weighted average number of common shares outstanding for dilutive instruments. The number of shares included with respect
to options, warrants and similar instruments is computed using the treasury stock method. Diluted LPS is equal to the LPS as the Corporation is in a loss position and all
securities, comprised of options and warrants, would be anti-dilutive.
Stock-based compensation plan
The Corporation grants stock options to certain employees and non-employees. Beginning January 1, 2018, stock options vest over three years (33 ⅓% per year) and
expire after five years. Each tranche in an award is considered a separate award with its own vesting period and grant date fair value. Fair value of each tranche is
measured at the date of grant using the Black-Scholes option pricing model. Compensation expense is recognized over the tranche's vesting period by increasing
contributed surplus based on the number of awards expected to vest. The number of awards expected to vest is reviewed at least annually, with any impact being
recognized immediately.
A holder of an option may, rather than exercise such option, elect a cashless exercise of such option payable in common shares equaling the amount by which the value of
an underlying share at that time exceeds the exercise price of such option or warrant to acquire such share.
Deferred share unit plan (“DSU Plan)
The Corporation grants deferred share units (“DSUs”) to members of its Board of Directors (“Board Members”), who are not employees or officers of the Corporation.
DSUs cannot be redeemed until the holder is no longer a director of the Corporation and are considered equity-settled instruments. In accordance with the DSU Plan,
DSUs for ongoing services are granted quarterly and vest immediately. The Board Members can also grant DSUs at its discretion, which may vest over time. The value
attributable to DSUs is based on the market value at the time of grant and a compensation expense is recognized in general and administrative expenses on the
consolidated statements of loss and comprehensive loss in accordance with the vesting terms. At the time of redemption, each DSU may be exchanged for one common
share of IMV Inc.
Government assistance
Government assistance consists of non-repayable government grants, from a number of government agencies and the difference between the fair value and the book value
of repayable low-interest government loans, recorded initially at fair value. Government assistance is recorded in the period earned using the cost reduction method and is
included in government assistance on the consolidated statements of loss and comprehensive loss. As at December 31, 2020, $1,322 (2019 - $nil) of government
assistance is included in amounts receivable.
(7)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
4
Significant accounting policies, judgments and estimation uncertainty (continued)
Research and development tax credits
Refundable investment tax credits relating to scientific research and experimental development expenditures (“SR&ED”) are recorded in the accounts in the fiscal period
in which the qualifying expenditures are incurred provided there is reasonable assurance that the tax credits will be realized. Refundable investment tax credits, in
connection with SR&ED activities, are accounted for using the cost reduction method and included in government assistance on the statements of loss and comprehensive
loss.
Amounts recorded for refundable investment tax credits are calculated based on the expected eligibility and tax treatment of qualifying SR&ED expenditures recorded in
the Corporation’s consolidated financial statements.
Critical accounting estimates and judgments
The Corporation makes estimates and assumptions concerning the future that will, by definition, seldom equal actual results. The following are the estimates and
judgments applied by management that most significantly affect the Corporation’s consolidated financial statements.
The following estimates and judgments have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year.
Calculation of initial fair value and carrying amount of long-term debt
Atlantic Canada Opportunities Agency (“AOCA”) conditionally repayable loans (“Conditional ACOA”) loans
The initial fair value of the Conditional ACOA loans is determined by using a discounted cash flow analysis for each of the loans, which require a number of assumptions.
The difference between the face value and the initial fair value of the Conditional ACOA loans is recorded in the consolidated statements of loss and comprehensive loss
as government assistance. The carrying amount of the Conditional ACOA loans requires management to adjust the long-term debt to reflect actual and revised estimated
cash flows whenever revised cash flow estimates are made or new information related to market conditions is made available. Management recalculates the carrying
amount by computing the present value of the estimated future cash flows at the original effective interest rate. Any adjustments are recognized in the consolidated
statements of loss and comprehensive loss as accreted interest and other adjustments after initial recognition.
The significant assumptions used in determining the discounted cash flows include estimating the amount and timing of future revenue for the Corporation and the
discount rate.
As the Conditional ACOA loans are repayable based on a percentage of gross revenue, if any, the determination of the amount and timing of future revenue significantly
impacts the initial fair value of the loan, as well as the carrying value of the Conditional ACOA loans at each reporting date. The expected revenue streams include i)
estimated royalties generated from the eventual commercialization of the Corporation’s products, and ii) estimated milestone payments generated upon entering into
potential contractual partnerships and achieving development and sales milestones. The amount and timing of estimated milestone payments forecasted are
(8)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
4
Significant accounting policies, judgments and estimation uncertainty (continued)
Critical accounting estimates and judgments (continued)
earlier and less predictable, therefore, changes in the amount and timing of milestone payments could have a significant impact on the fair value of the loans. Further, the
Corporation is in the early stages of research for its product candidates; accordingly, determination of the amount and timing of any revenue streams requires significant
judgment by management.
The discount rate determined on initial recognition of the Conditional ACOA loans is used to determine the present value of estimated future cash flows expected to be
required to settle the debt. In determining the appropriate discount rates, the Corporation considered the interest rates of similar long-term debt arrangements with similar
terms. The Conditional ACOA loans are repayable based on a percentage of gross revenue, if any; accordingly, finding financing arrangements with similar terms is
difficult and management was required to use significant judgment in determining the appropriate discount rates. Management used a discount rate of 35% to discount the
Conditional ACOA loans.
If the weighted average discount rate used in determining the initial fair value and the carrying value at each reporting date of all Conditional ACOA loans, with
repayment terms based on future revenue, had been determined to be higher by 10%, or lower by 10%, the carrying value of the long-term debt as at December 31, 2020
would have been an estimated $834 lower or $1,131 higher, respectively. A 10% increase or decrease in the total forecasted revenue would not have a significant impact
on the amount recorded for the loans. If the total forecasted revenue were reduced to $nil, no amounts would be forecast to be repaid on the Conditional ACOA loans, and
the Conditional ACOA loans payable at December 31, 2020 would be recorded at $ nil, which would be a reduction in the liability of $4,246. If the timing of the receipt
of forecasted future revenue was delayed by two years, the carrying value of the long-term debt at December 31, 2020 would have been an estimated $1,915 lower.
Province of Nova Scotia (“the Province”) loan
The initial fair value of the Province loan is determined by using a discounted cash flow analysis for the loan. The interest rate on the loan is below the market rate for a
commercial loan with similar terms.
The significant assumption used in determining the discounted cash flows is the discount rate. Any changes in the discount rate would impact the amount recorded as
initial fair value of the long-term debt and the carrying value of the long-term debt at each reporting date. In determining the appropriate discount rate, the Corporation
considers the interest rates of similar long-term debt arrangements with similar terms. The Province loan is a government loan with principal payments only beginning
after seven years; accordingly, finding financing arrangements with similar terms is difficult and management was required to use significant judgment in determining the
appropriate discount rates. Management used a discount rate of 11% to discount the Province loan.
If the discount rate used for the Province loan had been determined to be higher or lower by 5% (resulting in discount rates of 16% or 6%, respectively), the carrying
value of the long-term debt at December 31, 2020 would have been an estimated $501 lower or $597 higher, respectively. The difference between the book value and the
initial fair value of the Province loan is recorded in the consolidated statements of loss and comprehensive loss as government assistance on initial recognition.
(9)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
4
Significant accounting policies, judgments and estimation uncertainty (continued)
Critical accounting estimates and judgments (continued)
Province of Nova Scotia (“the Province”) loan (continued)
Any changes in the amounts recorded on the consolidated statements of financial position for the Province loan result in an offsetting charge to accreted interest after
initial recognition in the consolidated statements of loss and comprehensive loss.
5
Government grants and assistance
The Corporation is evaluating all applicable government relief programs. Notably, in response to the negative economic impact of COVID-19, the Government of Canada,
in collaboration with the National Research Council of Canada Industrial Research Assistance Program (“NRC IRAP”), announced the Innovation Assistance Program
(“IAP”) program in April 2020. IAP provides a wage subsidy on eligible remuneration, subject to limits per employee, to eligible employers pursuing technology driven
innovation who are not eligible for funding under the Canada Emergency Wage Subsidy. The Corporation qualified for this subsidy from the April 1, 2020 effective date
through to June 23, 2020, and has, accordingly, recognized $ 601 of IAP during the year ended December 31, 2020, in government assistance on the consolidated
statements of loss and comprehensive loss. As at December 31, 2020, this funding has been fully received.
In May 2020, the Corporation qualified for $378 in NRC IRAP funding toward the development of its COVID-19 vaccine candidate, DPX-COVID-19. Under this
program, NRC IRAP will reimburse up to 80% of eligible project salaries and 50% of eligible contractor costs. In July 2020, the Corporation qualified to receive an
additional $259 in funding under the terms of this contribution agreement, resulting in a maximum contribution of $637. As at December 31, 2020, the Corporation has
recognized $637 of this NRC IRAP funding in government assistance on the consolidated statements of loss and comprehensive loss. As at December 31, 2020, there is
$45 in receivables related to this funding.
In July 2020, the Corporation qualified for $2,500 in project funding from Next Generation Manufacturing Canada (“NGen”) to support the rapid development of DPX-
COVID-19. Under this program, NGen will reimburse up to 50% of eligible project expenses. The Corporation received advances of $2,054 from NGen in 2020 related to
this funding and as at December 31, 2020, $1,568 of the advance has been recognized in government assistance on the consolidated statements of loss and comprehensive
loss and $486 has been recorded as a deferred contribution in accounts payable, accrued and other liabilities on the consolidated statements of financial position. The
deferred contribution will be recognized in the consolidated statements of loss and comprehensive loss on the same basis as eligible project expenses are incurred.
In August 2020, the Corporation qualified for COVID-19 project funding from ACOA. ACOA’s contribution is an interest free government loan with a maximum
contribution of $1 million conditionally repayable based on a percentage of revenue only from resulting COVID-19 vaccine revenue. As at December 31, 2020, there is
$100 in receivables related to this ACOA funding. The loan was initially recorded at its fair value and subsequently measured at amortized cost in long-term debt on the
consolidated statements of financial position.
(10)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
5
Government grants and assistance (continued)
In October 2020, the Corporation qualified for an additional $5.4 million in project funding from NRC IRAP, to support the continuation of clinical development for
IMV’s DPX-COVID-19 vaccine candidate. Under this program, NRC IRAP will reimburse up to 100% of eligible project salaries and 75% of eligible contractor and
materials costs. As at December 31, 2020, the Corporation has recognized $ 1,505 of this NRC IRAP funding in government assistance on the consolidated statements of
loss and comprehensive loss. As at December 31, 2020 there is $1,167 in receivables related to this funding. In March 2021, IMV qualified for an additional $500 in
project funding under this program.
6
Amounts receivable
Amounts due from government assistance and government loans
Sales tax receivable
Revenue from subcontracts
Other
7
Lease obligation
Balance – December 31, 2018
Repayment of lease obligation
Accreted interest
Balance – December 31, 2019
Additions
Repayment of lease obligation
Accreted interest
Balance – December 31, 2020
Less: Current portion
Non-current portion
2020
$
1,322
481
-
209
2,012
2019
$
-
406
45
394
845
Amount
$
1,398
(239 )
149
1,308
155
(252 )
146
1,357
139
1,218
The Corporation recognizes a right-of-use asset and lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises
the initial amount of the liability, discounted at an incremental borrowing rate of 11%, adjusted for any payments made before the commencement date, plus any initial
direct costs, less any lease incentives received. During the year ended December 31, 2020, the Corporation recognized $176 (2019 - $nil) in right-of-use assets in
property and equipment on the statements of financial
(11)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
7
Lease obligation (continued)
position and recognized $20 in expenses related to low-value and short-term leases (2019 - $20) and $170 (2019 - $161) related to variable lease payments not included
in measurement of lease liabilities on the consolidated statements of loss and comprehensive loss.
8
Property, plant and equipment
Year ended December 31, 2019
Opening net book value
Additions
Disposals
Cost
Accumulated depreciation
Depreciation for the year
Closing net book value
As at December 31, 2019
Cost
Accumulated depreciation
Net book value
Year ended December 31, 2020
Opening net book value
Additions
Disposals
Cost
Accumulated depreciation
Depreciation for the year
Closing net book value
As at December 31, 2020
Cost
Accumulated depreciation
Net book value
Computer
equipment
and
software
$
Furniture
and fixtures
$
Laboratory
equipment
$
Right-of-
use assets
$
Leasehold
improve-
ments
$
96
190
(9 )
9
(119 )
167
456
(289 )
167
167
52
(14)
12
(96)
121
495
(374 )
121
163
18
–
–
(34)
147
212
(65)
147
147
26
–
–
(33)
140
238
(98)
140
558
253
(11)
10
(144 )
666
1,588
(922 )
666
666
318
(189 )
118
(139 )
774
1,717
(943 )
774
1,323
–
–
–
(150 )
1,173
1,417
(244 )
1,173
1,173
176
–
–
(166 )
1,183
1,593
(410 )
1,183
743
15
–
–
(81)
677
815
(138 )
677
677
25
–
–
(81)
621
839
(218 )
621
Total
$
2,883
476
(20)
19
(528 )
2,830
4,488
(1,658)
2,830
2,830
597
(203 )
130
(515 )
2,839
4,882
(2,043)
2,839
(12)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
9
Long-term debt
ACOA Atlantic Innovation Fund (“AIF”), interest-free loan1 with a maximum contribution of $3,786. Annual repayments,
commencing December 1, 2008, are calculated as a percentage of gross revenue for the preceding fiscal year, at 2% when
gross revenues are less than $5,000 and 5% when gross revenues are greater than $5,000. As at December 31, 2020, the
amount drawn down on the loan, net of repayments, is $3,744 (2019 - $3,744).
ACOA AIF, interest-free loan1 with a maximum contribution of $3,000. Annual repayments, commencing December 1, 2011,
are calculated as a percentage of gross revenue for the preceding fiscal year, at 2% when gross revenues are less than
$5,000 and 5% when gross revenues are greater than $5,000. As at December 31, 2020, the amount drawn down on the
loan is $2,995 (2019 - $2,995).
ACOA Business Development Program, interest-free loan with a maximum contribution of $395, repayable in monthly
payments commencing October 2015 of $3 until October 2017 and $6 until June 2023. As at December 31, 2020, the
amount drawn down on the loan, net of repayments, is $167 (2019 - $184).
ACOA AIF, interest-free loan1 with a maximum contribution of $2,944, annual repayments commencing September 1, 2014,
are calculated as a percentage of gross revenue from specific product(s) for the preceding fiscal year, at 5% for the first 5
years and 10%, thereafter. As at December 31, 2020, the amount drawn down on the loan is $2,944 (2019 - $2,944).
TNC 120-140 Eileen Stubbs Ltd. (the Landlord) loan, with an original balance of $300, bearing interest at 8% per annum, is
repayable in monthly payments of $4 beginning February 1, 2019 until May 1, 2028. As at December 31, 2020, the
balance on the loan is $255 (2019 - $279).
Province of Nova Scotia (the “Province”), secured loan with a maximum contribution of $5,000, bearing interest at a rate
equal to the Province’s cost of funds plus 1%, compounded semi-annually and payable monthly. The loan is repayable in
monthly payments beginning January 1, 2021 of $83 plus interest until March 2026. The Corporation and its subsidiary
have provided a general security agreement granting a first security interest in favour of the Province of Nova Scotia in
and to all the assets of the Corporation and its subsidiary, including the intellectual property. As at December 31, 2020,
the amount drawn down on the loan is $5,000 (2019 - $5,000).
ACOA Regional Economic Growth through Innovation1 – Business Scale-Up and Productivity Program, interest-free loan
with a maximum contribution of $1,000. Annual repayments, commencing September 1, 2022, are calculated as a
percentage of gross revenue from DPX-COVID-19 product(s) for the preceding fiscal year, at 5% when gross revenues
are less than $5,000 and 10% when gross revenues are greater than $5,000. Subsequent to September 1, 2024, any
outstanding balance is payable in full on December 31, 2024 from DPX-COVID-19 gross revenues. As at December 31,
2020, the amount drawn down on the loan is $900 (2019 - $nil).
Less: Current portion
2020
$
2019
$
1,523
1,404
1,219
1,237
159
180
1,097
1,481
255
279
4,169
3,880
406
8,828
1,094
7,734
-
8,461
88
8,373
1The carrying amount of these loans are reviewed each reporting period and adjusted as required to reflect management’s best estimate of future cashflows, based on a number of assumptions,
discounted at the original effective interest rate.
(13)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
9
Long-term debt (continued)
Total contributions received, less amounts that have been repaid as at December 31, 2020, is $16,005 (2019 -$15,147).
Certain ACOA loans and the Province loan require approval by ACOA or the Minister for the Province before the Corporation can pay management fees, bonuses,
dividends or other distributions, or before there is any change of ownership of the Corporation. The Province loan requires the Corporation to obtain the written consent of
the Province prior to the sale, disposal or abandonment of possession of the intellectual property of the Corporation or its subsidiary. If during the term of the Province
loan, the head office, research and development facilities, or production facilities of the Corporation are moved from the Province, the Corporation is required to repay
40% of the outstanding principal of the loan.
In June 2019, the Corporation amended its loan agreement with the Province. Previously, the maturity date of the loan was August 9, 2020. The Corporation shall now
start repaying the balance of the principal amount on the first day of January 2021, by making 60 monthly principal payments of $83 plus interest from January 2021 to
December 2025. The annual interest rate remains at the Province’s cost of funds plus 1%.
In accounting for this change, the Corporation determined, based on industry risk, its own credit risk and the interest rate environment, that the effective interest rate of
the loan of 11% remains appropriate. The difference between the carrying value of the loan before the amendment and after the amendment of $840 was recorded in the
statements of loss and comprehensive loss as government assistance.
The Province loan requires certain early repayments if the Corporation’s subsidiary, or the Corporation on a consolidated basis, has cash flow from operations in excess of
$1,500. The Province loan also requires repayment of the loan under certain circumstances, such as changes of control, sale or liquidation of the Corporation or the sale of
substantially all of the assets of the Corporation.
The minimum annual principal repayments of long-term debt over the next five years, excluding the repayments of the Conditional ACOA loans for 2021 and beyond
which are not determinable at this time, are as follows:
Year ending December 31, 2021
2022
2023
2024
2025
$
1,094
850
743
642
581
(14)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
9
Long-term debt (continued)
Balance – Beginning of year
Borrowings
Accreted interest and valuation adjustments
Revaluation of long-term debt
Repayment of debt
Balance – End of year
Less: Current portion
Non-current portion
The Corporation is in compliance with its debt covenants.
10 Accounts payable, accrued and other liabilities
Trade payables
Accrued and other liabilities
Payroll taxes
Amounts due to Directors
11
Share capital
Authorized
Unlimited number of common shares and preferred shares, issuable in series, all without par value.
Issued and outstanding
Balance – December 31, 2018
Issued for cash, net of issuance costs
Stock options exercised
Warrants exercised
Balance – December 31, 2019
Issued for cash, net of issuance costs
Stock options exercised
DSUs redeemed
Warrants exercised
Balance – December 31, 2020
2020
$
8,461
1,000
36
(628 )
(41)
8,828
1,094
7,734
2020
$
4,757
4,404
21
58
9,240
2019
$
8,150
–
1,239
(840 )
(88)
8,461
88
8,373
2019
$
3,665
2,477
15
60
6,217
Amount
$
90,152
26,957
353
82
117,544
59,940
658
184
3,029
181,355
(15)
Common shares
#
45,106,401
5,404,855
105,196
14,423
50,630,875
15,611,778
162,086
76,920
611,888
67,093,547
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
11
Share capital (continued)
As at December 31, 2020, a total of 4,523,379 shares (December 31, 2019 – 2,069,142) are reserved to meet outstanding stock options, warrants and DSUs.
On October 16, 2020, the Corporation entered into an Equity Distribution Agreement (“October 2020 ATM”) with Piper Sandler & Co. (“Piper Sandler”) authorizing the
Corporation to offer and sell common shares from time-to-time up to an aggregate offering amount of US$50,000 through Piper Sandler, as agent. The total expenses
associated with the ATM Distribution, excluding compensation and reimbursements payable to Piper Sandler under the terms of the Equity Distribution Agreement, were
approximately $255. There were no shares sold in 2020 under the October 2020 ATM. Subsequent to December 31, 2020, 533,994 common shares were sold for gross
proceeds of US$2,304.
On May 7, 2020, the Corporation completed a private placement of 8,770,005 units at a price of $2.86 per unit, for aggregated proceeds of $25,082. Each unit consisted of
one common share and 0.35 of one common share purchase warrant, with each whole warrant entitling the holder to acquire one common share of the Corporation at an
exercise price of $3.72 for a period of 24 months expiring on May 7, 2022. The value allocated to the common shares issued was $21,307 and the value allocated to the
warrants was $3,775. Total costs associated with the offering were $152, including cash costs for professional and regulatory fees.
On March 17, 2020, the Corporation entered into an Equity Distribution Agreement (“March 2020 ATM”) with Piper Sandler authorizing the Corporation to offer and sell
common shares from time-to-time up to an aggregate offering amount of US$30,000 through Piper Sandler, as agent. The March 2020 ATM was terminated on June 30,
2020 and 2,070,883 common shares were sold under this agreement for total gross proceeds of $7,639. To maintain the remainder of IMV’s March 2020 ATM facility
under its new Canadian base shelf prospectus, IMV entered a second ATM Distribution dated June 30, 2020 (“June 2020 ATM”), with Piper Sandler, to offer and sell
common shares from time-to-time up to an aggregate offering amount of US$24.5 million through Piper Sandler, as agent. An additional 4,770,890 common shares were
sold for gross proceeds of $33,185, concluding the proceeds raised under the June 2020 ATM to the maximum offering amount of US$24.5 million as at December 31,
2020. As at December 31, 2020, a total of 6,841,773 shares have been sold under the two ATM Distribution agreements for total gross proceeds of $40,824. The total
expenses associated with both ATM Distributions including commissions, were approximately $1,784.
On March 6, 2019, the Corporation completed a public offering, issuing an aggregate of 4,900,000 common shares at a price of $5.45 per common share, raising gross
proceeds of $26,705. On March 11, 2019, the underwriters partially exercised their option to purchase common shares, resulting in the issuance of 504,855 common
shares of the Corporation at a price of $5.45 per share for additional gross proceeds of approximately $2,751. As a result of the exercise of this option, the Corporation has
raised total gross proceeds of approximately $29,456 before deducting the underwriting commissions and offering expenses of $2,499.
(16)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
12 Contributed surplus
Contributed surplus
Balance – December 31, 2018
Share-based compensation
Stock options vested
DSUs vested
Reclassification of DSUs
Stock options exercised
Warrants expired
Balance – December 31, 2019
Share-based compensation
Stock options vested
DSUs vested
Stock options exercised
DSUs Redeemed
Warrants expired
Balance – December 31, 2020
Deferred share units
Amount
$
6,504
1,138
290
955
(258 )
62
8,691
1,005
537
(404 )
(189 )
332
9,972
The maximum number of common shares which the Corporation is entitled to issue from Treasury in connection with the redemption of DSUs granted under the DSU
Plan is 968,750 common shares.
DSU activity for the years ended December 31, 2020 and December 31, 2019 are as follows:
Opening balance
Granted
Redeemed
Closing balance
2020
#
360,965
147,671
(79,106 )
429,530
2019
#
223,604
137,361
–
360,965
The compensation expense (recovery) at December 31, 2020 was $537 (2019 – ($191) recovery), recognized over the vesting period. Vested DSUs cannot be redeemed
until the holder is no longer a member of the Board.
On August 8, 2019 (“the reclassification date”), the Corporation resolved to settle all future DSU redemptions in shares, instead of cash. All outstanding DSUs are
accordingly now considered equity-settled instruments. As a result of this change, the fair value of the DSUs at the reclassification date were reclassified from liabilities to
contributed surplus.
(17)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
12 Contributed surplus (continued)
Stock options
The Board of Directors of the Corporation has established a stock option plan (the "Plan") under which options to acquire common shares of the Corporation are granted
to directors, employees and other advisors of the Corporation. The maximum number of common shares issuable under the Plan shall not exceed 4,600,000, inclusive of
all shares presently reserved for issuance pursuant to previously granted stock options. If any option expires or otherwise terminates for any reason without having been
exercised in full, or if any option is exercised in whole or in part, the number of shares in respect of which option expired, terminated or was exercised shall again be
available for the purposes of the Plan.
Stock options are granted with an exercise price determined by the Board of Directors, which is not less than the market price of the shares on the day preceding the
award. The term of the option is determined by the Board of Directors, not to exceed ten years from the date of grant, however, the majority of options expire in five
years.
The vesting of the options is determined by the Board and, beginning January 1, 2018, is typically 33 1/3% every year after the date of grant.
In the event that the option holder should die while he or she is still a director, employee or other advisor of the Corporation, the expiry date shall be 12 months from the
date of death of the option holder, not to exceed the original expiry date of the option. In the event that the option holder ceases to be a director, employee or other advisor
of the Corporation other than by reason of death or termination, the expiry date of the option shall be the 90th day following the date the option holder ceases to be a
director, employee or other advisor of the Corporation, not to exceed the original expiry date of the option.
The fair values of stock options are estimated using the Black-Scholes option pricing model. During the year ended December 31, 2020, 395,850 stock options (2019 –
343,100) with a weighted average exercise price of $5.50 (2019 – $6.39) and a term of five years (2019 – five years), were granted to employees and consultants. The
expected volatility of these stock options was determined using historical volatility rates and the expected life was determined using the weighted average life of past
options issued. The value of these stock options has been estimated at $1,168 (2019 - $1,112), which is a weighted average grant date value per option of $2.95 (2019 -
$3.24), using the Black-Scholes valuation model and the following weighted average assumptions:
Risk-free interest rate
Exercise price
Market price
Expected volatility
Expected dividend yield
Expected life (years)
Forfeiture rate
2020
1.00%
$5.50
$5.50
71%
–
4.2
4%
2019
1.81%
$6.39
$6.39
64%
–
4.2
5%
(18)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
12 Contributed surplus (continued)
Stock options (continued)
Option activity for the years ended December 31, 2020 and 2019 was as follows:
Outstanding - Beginning of year
Granted
Exercised
Forfeited
Cancelled
Expired
Number
#
1,573,411
395,850
(203,595)1
(47,638 )
(81,792 )
–
2020
Weighted
average
exercise price
$
4.63
5.50
2.42
6.69
6.92
–
Number
#
1,474,477
343,100
(139,877)1
(91,789 )
–
(12,500 )
2019
Weighted
average
exercise price
$
4.12
6.39
2.32
6.81
–
2.37
Outstanding - End of year
1 Of the 203,595 (2019 - 139,877) options exercised, 109,845 (2019 - 98,408) elected the cashless exercise, under which 68,336 shares (2019 - 63,727) were issued. These options would have
otherwise been exercisable for proceeds of $241 (2019 - $ 229) on the exercise date.
4.93
4.63
1,573,411
1,636,236
The number and weighted average exercise price of options exercisable as at December 31, 2020 is 938,587 and $4.13, respectively (2019 – 911,732 and $3.29).
At December 31, 2020, the following options were outstanding:
Exercise
price
range
$
1.98 – 2.38
2.39 – 3.89
3.90 – 6.19
6.20 – 6.72
6.73 – 7.39
Number
#
284,188
320,593
382,750
317,188
331,517
1,636,236
Options outstanding
Weighted
average
remaining
contractual life
(years)
0.32
1.94
4.34
2.22
2.71
2.43
Weighted
average
exercise
price
$
2.20
2.80
5.48
6.40
7.28
4.93
Weighted
average
exercise
price
$
2.20
2.69
–
6.40
7.23
4.13
Options exercisable
Weighted
average
remaining
contractual life
(years)
0.32
1.72
–
2.22
2.57
1.55
(19)
Number
#
284,188
287,259
–
211,460
155,680
938,587
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
13 Warrants
Warrant activity for the years ended December 31, 2020 and 2019, was as follows:
Weighted
average
exercise
price
$
6.53
3.72
3.72
6.53
3.72
2020
Amount
$
332
3,775
(753 )
(332 )
3,022
Number
#
134,766
3,069,501
(611,888)
(134,766)
2,457,613
Weighted
average
exercise
price
$
5.84
–
4.22
4.22
6.53
2019
Amount
$
415
–
(21)
(62)
332
Number
#
192,458
–
(14,423 )
(43,269 )
134,766
Opening balance
Granted
Exercised
Expired
Closing balance
The fair values of warrants are estimated using the Black-Scholes option pricing model. The weighted average assumptions used in the Black-Scholes valuation model for
the periods presented were as follows:
Risk-free interest rate
Market price
Expected volatility
Expected dividend yield
Expected life (years)
2020
0.27 %
$3.12
83%
–
2
(20)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
14 Deferred income taxes
a)
Reconciliation of total tax recovery
The effective rate on the Corporation’s loss before income tax differs from the expected amount that would arise using the statutory income tax rates. A
reconciliation of the difference is as follows:
Loss before income taxes
Income tax rate
Effect on income taxes of:
Non-deductible share-based compensation
Unrecognized deductible temporary difference and carry forward amounts and experimental development
expenditures
Other non-deductible items
Income tax recovery
b)
Deferred income tax
The significant components of the Corporation’s deferred income tax are as follows:
Deferred income tax liabilities:
Intangibles
Deferred income tax assets:
Non-capital losses
Net deferred income tax liability
The following reflects the balance of temporary differences for which no deferred income tax asset (liability) has been recognized:
Non-capital losses
SR&ED expenditures
Non-refundable investment tax credits
Deductible share issuance costs
Long-term debt
Lease obligation
Property and equipment
2020
$
104,980
37,659
6,459
4,028
8,574
347
(227 )
2020
$
2019
$
(34,855 )
(27,365 )
28.5 %
(9,934)
439
9,458
37
–
2020
$
–
–
–
30.0 %
(8,210)
284
7,892
34
–
2019
$
–
–
–
2019
$
77,389
29,558
5,536
3,452
7,925
362
(400 )
(21)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
14 Deferred income taxes (continued)
c)
Non-capital losses
As at December 31, 2020, the Corporation had approximately $104,980 in losses available to reduce future taxable income. The benefit of these losses has not been
recorded in the accounts as realization is not considered probable. These losses may be claimed no later than:
For the year ending December 31, 2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
$
1,000
1,100
1,470
1,770
660
2,640
5,090
4,110
4,400
3,680
5,610
5,130
9,510
13,440
17,530
27,840
104,980
d)
Scientific research and experimental development expenditures
The Corporation has approximately $37,659 of unclaimed SR&ED expenditures, which may be carried forward indefinitely and used to reduce taxable income in
future years. The potential income tax benefits associated with the unclaimed SR&ED expenditures have not been recognized in the accounts as realization is not
considered probable.
e)
Non-refundable investment tax credits
The Corporation also has approximately $6,459 in non-refundable federal investment tax credits which may be carried forward to reduce taxes payable. These tax
credits will be fully expired by 2040. The benefit of these tax credits has not been recorded in the accounts as realization is not considered probable.
15 Capital management
The Corporation views capital as the sum of its cash and cash equivalents, long-term debt and equity. The Corporations’ objectives when managing capital is to safeguard
its ability to continue as a going concern in order to provide an adequate return to shareholders and maintain a sufficient level of funds to finance its research and
development activities, general and administrative expenses, working capital and overall capital expenditures, including those associated with patents and trademarks. To
maintain or adjust the capital structure, the
(22)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
15 Capital management (continued)
Corporation may attempt to issue new shares, issue new debt, acquire or dispose of assets, all of which are subject to market conditions and the terms of the underlying
third party agreements. The Corporation is not subject to any regulatory capital requirements imposed.
Total long-term debt
Less: Cash and cash equivalents
Net debt
Equity
Total capital
The Corporation is in compliance with its debt covenants.
16
Financial instruments
Fair value of financial instruments
2020
$
8,828
(46,362 )
(37,534 )
39,375
1,841
2019
$
8,461
(14,066 )
(5,605)
6,448
843
Financial instruments are defined as a contractual right or obligation to receive or deliver cash on another financial asset.
The following table sets out the approximate fair values of financial instruments as at the consolidated statements of financial position date with relevant comparatives:
Cash and cash equivalents
Amounts receivable
Accounts payable, accrued and other liabilities
Long-term debt
Carrying
value
$
46,362
208
8,734
8,828
2020
Fair value
$
46,362
208
8,734
8,828
Carrying
value
$
14,066
439
6,202
8,461
2019
Fair value
$
14,066
439
6,202
8,461
Assets and liabilities, such as commodity taxes, that are not contractual and that arise as a result of statutory requirements imposed by governments, do not meet the
definition of financial assets or financial liabilities and are, therefore, excluded from amounts receivable and accounts payable.
Fair value of items, which are short-term in nature, have been deemed to approximate their carrying value. The above noted fair values, presented for information only,
reflect conditions that existed only as at December 31, 2020, and do not necessarily reflect future value or amounts which the Corporation might receive if it were to sell
some or all of its assets to a willing buyer in a free and open market.
(23)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
16
Financial instruments (continued)
The fair value of long-term debt is estimated based on the expected interest rates for similar borrowings by the Corporation at the consolidated statements of financial
position dates. At December 31, 2020, the fair value is estimated to be equal to the carrying amount.
Risk management
The Corporation, through its financial assets and liabilities, has exposure to the following risks from its use of financial instruments: interest rate risk, credit risk, liquidity
risk and currency risk. Management is responsible for setting acceptable levels of risk and reviewing risk management activities as necessary.
a)
Interest rate risk
The Corporation has limited exposure to interest rate risk on its lending and borrowing activities. The Corporation has a significant loan in which the interest rate is
dependent on the cost of funds from the lender plus 1%. This interest rate is fixed at the time that each loan disbursement is made, resulting in limited variability to
the interest rate. The total amount drawn down on the loan as at December 31, 2020 is $5,000 (2019 - $5,000), the Corporation is required to make interest
payments in fiscal 2021 of $135 and principal repayments of $1,000 on this loan.
The Corporation has an interest-free loan that is repayable over 84 months, resulting in required principal debt payments in fiscal 2020 of $67, and also has a loan
with a fixed interest rate of 8% per annum resulting in interest payments in 2020 of $19. The remaining outstanding debt as at December 31, 2020 is interest-free,
only becoming repayable when revenues are earned. The Corporation is required to make principal debt payments in fiscal 2020 of $5.
b)
Credit risk
Credit risk arises from cash and cash equivalents and amounts receivable. The Corporation invests excess cash in high-interest savings accounts or in highly liquid
temporary investments of Schedule 1 Canadian Banks. The credit risk of cash and cash equivalents is limited because the counterparties are banks with high credit
ratings assigned by international credit rating agencies.
The total of amounts receivable disclosed in the consolidated statements of financial position as at December 31, 2020 of $2,012 (2019 - $845) is comprised mainly
of current period advances due to the Corporation for government assistance programs and sales taxes recoverable. If required, the balance is shown net of
allowances for bad debt, estimated by management based on prior experience and their assessment of the current economic environment. Historically, there have
been no collection issues and the Corporation does not believe it is subject to any significant concentration of credit risk.
c)
Liquidity risk
Liquidity risk represents the possibility that the Corporation may not be able to gather sufficient cash resources when required and under reasonable conditions to
meet its financial obligations.
(24)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
16
Financial instruments (continued)
Risk management (continued)
Since the Corporation’s inception, operations have been financed through the sale of shares, issuance of debt, revenue and cost-recoveries from license agreements,
interest income on funds available for investment, government assistance and income tax credits. The Corporation has incurred significant operating losses and
negative cash flows from operations since inception and has an accumulated deficit of $154,974 as at December 31, 2020.
While the Corporation has $46,362 in cash and cash equivalents at December 31, 2020, it continues to have an ongoing need for substantial capital resources to
research and develop, commercialize and manufacture its products and technologies. The Corporation is currently not yet receiving a significant ongoing revenue
stream from its license agreements, nor can it be certain that it will receive significant revenue from these agreements before additional cash is required. For the
purposes of assessing the Corporation as a going concern, although it is difficult to predict funding requirements, based on the current operating plan, it is
anticipated that existing cash and cash equivalents will fund operations and capital expenditure requirements in excess of 12 months following the date of issuance
of IMV’s 2020 audited annual consolidated financial statements. These estimates are based on assumptions and plans which may change and which could impact
the magnitude and/or timing of operating expenses, capital expenditures and the Corporation’s cash requirements.
The following table outlines the contractual maturities of the Corporation’s liabilities, including most likely timing of repayments of long-term debt that is
repayable based on a percentage of revenues. The long-term debt is comprised of the contributions received described in note 11, less amounts that have been
repaid as at December 31, 2020:
Accounts payable and other liabilities
Short-term and low value leases
Lease obligation
Long-term debt
The above amounts include interest payments, where applicable.
d)
Currency risk
Total
$
9,240
39
1,989
16,503
27,771
Year 1
$
9,240
18
282
1,253
10,793
Years 2 to 3
$
–
21
578
2,372
2,971
Years 4 to 5
$
–
–
542
2,153
2,695
After 5 years
$
–
–
587
10,725
11,312
The Corporation incurs some revenue and expenses and holds on some cash denomintaed in U.S. dollars and, as such, is subject to fluctuations as a result of foreign
exchange rate variation. The Corporation does not have in place any tools to manage its foreign exchange risk.
Foreign exchange loss of $1,259 for the year ended December 31, 2020 (2019, foreign exchange gain - $84) is included in general and administrative expenses. If
the foreign exchange had been 1% higher/lower, with all other variables held constant, it would have had an immaterial impact on the foreign exchange gain/loss.
(25)
IMV Inc.
Notes to the Consolidated Financial Statements
For the years ended December 31, 2020 and 2019
(Expressed in thousands of Canadian dollars except for share and per share amounts)
17 Commitments
On July 12, 2010, the Corporation entered into a License Agreement with Merck KGaA to in-license EMD 640744, an investigational therapeutic survivin-based cancer
antigen designed to target multiple solid tumors and hematological malignancies. Should the Corporation’s research using these antigens continue and prove successful
through clinical trials and on to commercialization, the Corporation would be required to pay certain future milestones and royalty payments along the way. The
likelihood and timing of these payments is not known at this time.
18
Expenses by nature
Salaries, wages and benefits
Research and development expenditures, including clinical costs
Professional and consulting fees
Travel
Office, rent and telecommunications
Insurance
Marketing, communications and investor relations
Depreciation
Stock-based compensation (non-cash)
DSU compensation (non-cash)
Other
Foreign exchange loss (gain)
Accreted interest and valuation adjustments
Research and development tax credits
Government assistance
2020
$
9,371
19,989
2,488
66
760
3,551
1,579
515
1,005
537
690
1,259
36
(1,699)
(4,991)
35,156
2019
$
7,831
13,594
1,779
680
684
800
1,675
527
1,138
(191 )
693
(84)
1,239
(1,571)
(861 )
27,933
19 Compensation of key management
Key management includes the Corporation’s Directors, Chief Executive Officer, Chief Financial Officer, and Chief Medical Officer. Compensation awarded to key
management is summarized as follows:
Salaries and other benefits
Stock-based compensation (non-cash)
2020
$
2,306
1,288
3,594
2019
$
1,970
1,290
3,260
(26)
Exhibit 99.3
Management’s Report on Financial Position and Operating Results
For the year ended December 31, 2020
MANAGEMENT DISCUSSION AND ANALYSIS (“MD&A”)
The following analysis provides a review of the audited annual consolidated results of operations, financial condition, and cash flows for the year ended December 31, 2020
(“Fiscal 2020”), with information compared to the year ended December 31, 2019 (“Fiscal 2019”), for IMV Inc. (“IMV” or the “Corporation”). This analysis should also be
read in conjunction with the information contained in the audited annual consolidated financial statements and related notes for the years ended December 31, 2020 and
December 31, 2019.
The Corporation prepares its audited annual consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board (IASB). Management is responsible for the preparation of the consolidated financial statements and other financial information
relating to the Corporation included in this report. The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting. In
furtherance of the foregoing, the Board of Directors has appointed an Audit Committee comprised of independent directors. The Audit Committee meets with management
and the auditors in order to discuss the results of operations and the financial condition of the Corporation prior to making recommendations and submitting the consolidated
financial statements to the Board of Directors for its consideration and approval for issuance to shareholders. The information included in this MD&A is as of March 16, 2021,
the date when the Board of Directors approved the Corporation’s audited annual consolidated financial statements for the year ended December 31, 2020, on the
recommendation of the Audit Committee.
Amounts presented in this MD&A are approximate and have been rounded to the nearest thousand except for per share data. Unless specified otherwise, all amounts are
presented in Canadian dollars.
Additional information regarding the business of the Corporation, including the Annual Information Form of the Corporation for the year ended December 31, 2020 (the
“AIF”) and included in the Corporation’s registration statement on Form 40-F filed with the U.S. Securities and Exchange Commission, is available on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov/edgar.
FORWARD-LOOKING STATEMENTS
Certain statements in this MD&A may constitute “forward-looking statements” which involve known and unknown risks, uncertainties and other factors that may cause the
actual results, performance, or achievements of the Corporation, or industry results, to be materially different from any future results, performance, or achievements expressed
or implied by such forward-looking statements. When used in this MD&A, such statements use such words as “will”, “may”, “could”, “intends”, “potential”, “plans”,
“believes”, “expects”, “projects”, “estimates”, “anticipates”, “continues”, “potential”, “predicts” or “should” and other similar terminology. These statements reflect current
expectations of management regarding future events and operating performance and speak only as of the date of this MD&A. Forward-looking statements include, among
others:
the Corporation’s business strategy;
statements with respect to the sufficiency of the Corporation’s financial resources to support its activities;
potential sources of funding;
the Corporation’s ability to obtain necessary funding on favorable terms or at all;
the Corporation’s expected expenditures and accumulated deficit level;
the Corporation’s ability to obtain necessary regulatory approvals;
the expected outcomes from the Corporation’s preclinical assays, studies and clinical trials and the anticipated timing of release of any results therefrom;
the Corporation’s expected outcomes from its ongoing and future research and research collaborations;
the Corporation’s exploration of opportunities to maximize shareholder value as part of the ordinary course of its business through collaborations, strategic
partnerships, and other transactions with third parties;
the potential impact of partnerships on the Corporation’s manufacturing capabilities;
the Corporation’s plans for the research and development of certain product candidates;
the Corporation’s progress in developing a vaccine candidate against COVID-19 based on the Corporation’s proprietary drug delivery platform;
the Corporation’s strategy for protecting its intellectual property;
the Corporation’s ability to identify licensable products or research suitable for licensing and commercialization;
2
the Corporation’s ability to obtain licences on commercially reasonable terms;
the Corporation’s plans for generating revenue;
the Corporation’s plans for future clinical trials; and
the Corporation’s hiring and retention of skilled staff.
Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate
indications of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-
looking statements, including, but not limited to, the factors discussed in the AIF, under the heading “Risk Factors and Uncertainties”. Although the forward-looking
statements contained in this MD&A are based upon what management of the Corporation believes are reasonable assumptions, the Corporation cannot provide any assurance
to investors that actual results will be consistent with these forward-looking statements and should not be unduly relied upon by investors.
Actual results, performance and achievements are likely to differ, and may differ materially, from those expressed or implied by the forward-looking statements contained in
this MD&A. Such statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to, assumptions about:
the Corporation’s ability to raise sufficient capital and obtain additional funding on reasonable terms when necessary;
positive results of preclinical assays, studies and clinical trials;
the Corporation’s ability to successfully develop existing and new products;
the Corporation’s ability to hire and retain skilled staff;
the products and technology offered by the Corporation’s competitors;
general business and economic conditions, including as a result of the pandemic outbreak of COVID-19;
the Corporation’s ability to accurately assess and anticipate the impact of COVID-19 on the Corporation’s clinical studies and trials and operations generally;
the Corporation’s ability to protect its intellectual property;
the coverage and applicability of the Corporation’s intellectual property rights to any of its products;
the Corporation’s ability to manufacture its products and to meet demand;
the general regulatory environment in which the Corporation operates;
the Corporation’s ability to collaborate with governmental authorities with respect to the clinical development of its products; and
obtaining necessary regulatory approvals and the timing in respect thereof.
These statements reflect management’s current views and beliefs and are based on estimates, assumptions, and information currently available to, and considered reasonable
by, management. The forward-looking information in this MD&A does not include a full assessment or reflection of the unprecedented impacts of the COVID-19 pandemic
occurring in the first nine months of 2020 and the ongoing and developing resulting indirect global and regional economic impacts. The Corporation is currently experiencing
uncertainty related to the rapidly developing COVID-19 situation. Uncertainties include the scope, severity and duration of the pandemic, the actions taken to contain or
mitigate its impact and the direct and indirect effect of the pandemic and containment measures, among others. It is anticipated that the spread of COVID-19 and global
measures to contain it will have an impact on the Corporation, including its clinical trials and collection and analysis of data, however it is challenging to quantify the potential
magnitude of such impact at this time. The Corporation is regularly assessing the situation and remains in contact with its partners, clinical sites and investigators, and
suppliers to assess any impacts and risks.
The information contained herein is dated as of March 16, 2021, the date of the Board’s approval of the Fiscal 2020 audited annual consolidated financial statements and of
the MD&A. For additional information on risks, uncertainties, and assumptions, including a more detailed assessment of the risks that could cause actual results to materially
differ from current expectations, please refer to the AIF of IMV filed on SEDAR at www.sedar.com and included in the registration statement on Form 40-F filed on EDGAR
at www.sec.gov/edgar.
3
CORPORATE OVERVIEW
For the People, with Robust Science, and Audacity in Our Ambition
IMV is a biopharmaceutical company committed to improving the treatment of cancer and giving patients with hard-to-treat cancers a chance to enjoy a long and healthy life.
IMV is using its DPX delivery technology (“DPX platform” or “DPX”), in order to achieve targeted specific, and sustainable immune activation. The Corporation is
developing a portfolio of DPX-based immunotherapies that address unmet medical needs, and its lead product candidate, maveropepimut-S (“DPX-Survivac”) is a pipeline in
a product that generates sustained and targeted immune responses against Survivin, a tumor-associated protein, overexpressed in a high number of tumor types. With the
financial support of the Canadian Government, IMV also initiated the development of DPX-COVID-19, a vaccine candidate against SARS-CoV-2 using the DPX platform.
IMV’s lead candidate, maveropepimut-S is a proprietary subcutaneous formulation of our DPX delivery platform with five unique HLA-restricted survivin peptides and is
known to induce a sustained and specific cytotoxic CD8+ T cell response against survivin expressing cancer cells. Survivin, recognized by the National Cancer Institute as a
promising tumor-associated antigen, is broadly over-expressed in most cancer types and plays an essential role in antagonizing cell death, supporting tumor-associated
angiogenesis and promoting resistance to chemotherapies. IMV has identified over 20 cancer indications in which survivin can be targeted by maveropepimut-S.
Maveropepimut-S has received Fast Track designation from the U.S. Food and Drug Administration (“FDA”) as maintenance therapy in advanced ovarian cancer, as well as
orphan drug designation status from the U.S. FDA and the European Medicines Agency (“EMA”) in the ovarian cancer indication.
Maveropepimut-S, in association with low-dose cyclophosphamide (“CPA”), used as an immune modulator, is being evaluated in three phase 2 studies across 6 indications,
with and without Merck’s Keytruda® (pembrolizumab):
An IMV-sponsored trial in patients with advanced platinum-sensitive and resistant ovarian cancer;
An investigator-sponsored trial in combination with Merck’s Keytruda® and in patients with recurrent/refractory DLBCL; and
An IMV-sponsored basket trial in combination with Merck’s Keytruda® in patients with select advanced or recurrent solid tumors in muscle invasive bladder, liver
(hepatocellular carcinoma, HCC), ovarian, or non-small-cell lung (NSCLC) cancers, as well as tumors shown to be positive for the microsatellite instability high
(MSI-H) biomarker.
The Corporation expects to continue the evaluation of maveropepimut-S in different cancer indications and to expand its clinical portfolio with other DPX-based
immunotherapies. Our DPX platform is a versatile technology that gives IMV the opportunity to develop new immunotherapies in its portfolio with the goal to address more
unmet medical needs in the future. Also, the Corporation believes that its DPX platform offers a novel way to deliver drugs to the human body. IMV continues to evaluate
business development opportunities in potential new areas of interest.
DPX-COVID-19, IMV’s vaccine candidate against SARS-CoV-2, is an intramuscular DPX-based formulation with multiple peptides of the virus spike. This second-
generation vaccine aims to be complementary to traditional or mRNA vaccines and to potentially offer long lasting protection. DPX-COVID-19 generated strong and long-
lasting immune responses in preclinical assays in animal models.
The common shares of the Corporation (the “Common Shares”) are listed on the Nasdaq Stock Market LLC (“Nasdaq”) and on the Toronto Stock Exchange (“TSX”) under
the symbol “IMV”.
BUSINESS MODEL AND STRATEGY
Everyone deserves a long and healthy life.
IMV’s goal is to become a leading biopharmaceutical company that develops and commercializes differentiated cancer immunotherapies that are effective, tolerable, and
easy-to-handle in a clinical setting. Our current efforts are focused on leveraging the unique mechanism of action of the DPX platform to build a portfolio of cancer
immunotherapies that address unmet medical needs. For other applications of the DPX platform, IMV is pursuing a partnering strategy. With the financial support of the
Canadian Government, the Corporation also initiated the development of DPX-COVID-19, a vaccine candidate against SARS-CoV-2 using the DPX platform.
4
Key elements of the Corporation’s strategy are to:
Continue to advance maveropepimut-S (DPX-Survivac) in:
Recurrent, refractory Diffuse Large B Cell Lymphoma (“r/r DLBCL”) in combination with Merck’s Keytruda®
Advanced ovarian cancer
Second stage of basket trial in, at least, two indications: non muscle invasive bladder and MSI high tumor cancers - in combination with Merck’s Keytruda®;
Evaluate maveropepimut-S in other cancer indications and with other cancer therapies;
Develop and investigate new DPX-based immunotherapies in hard-to-treat cancers;
Evaluate business development opportunities in potential new areas of interest; and
Continue to explore the potential of DPX-COVID-19 and other DPX-based vaccines against infectious diseases.
The Corporation intends to be opportunistic in the development of products by exploring a variety of avenues, including co-development through potential collaborations,
strategic partnerships or other transactions with third parties. The Corporation may seek additional equity and non-dilutive funding and partnerships to advance the
development of its product candidates.
COVID-19 IMPACT
COVID-19 has impacted the Corporation’s research and development activities but has not caused significant disruptions to its business operations to date. In March 2020, the
Corporation transitioned its workforce to remote working, with the exception of essential lab employees, in order to preserve the health and safety of its employees. IMV was
designated as an essential business by the Nova Scotia Department of Business and Nova Scotia Public Health. In June 2020, the Corporation implemented a program to
facilitate the phased return of employees to the lab and office facilities pursuant to enhanced health and safety protocols consistent with guidelines issued by local health
authorities.
Preclinical research activities were supplemented by support from external contract research organizations (“CROs”) to complement the temporarily reduced capacity at
IMV’s lab facilities. Certain clinical trial activities, including patient enrollment and site activations, were delayed or otherwise impacted by COVID-19.
To date, COVID-19 has not had a material impact on the Corporation’s financial condition, liquidity or longer-term strategic development and commercialization plans. The
extent to which COVID-19 may cause more significant disruptions to IMV’s business and greater impacts to results of operations will depend on future developments, which
are highly uncertain and cannot be predicted with confidence, such as the duration and severity of outbreaks, including potential future waves or cycles, and the effectiveness
of actions to contain and treat COVID-19. The Corporation cannot predict the duration, scope and severity of any potential business shutdowns or disruptions, including to
ongoing and planned clinical studies and regulatory approval prospects. Further prolonged shutdowns or other business interruptions could result in material and negative
effects to the Corporation’s ability to conduct its business in the manner and on the timelines currently planned, which could have a material adverse impact on IMV’s
business, results of operations, and financial condition.
The COVID-19 pandemic continues to rapidly evolve, and the Corporation will continue to monitor the effects of COVID-19 on its business.
THE DPX PLATFORM
The DPX platform is a versatile delivery technology that can be formulated with a broad set of antigens to generate targeted and sustained immune response. The DPX
platform does not release the antigens at the site of injection, it forces an active uptake by immune cells (antigen-presenting cells), allowing antigens to continuously interact
with and stimulate the immune system over an extended period of time.
The Corporation is exploiting this unique mechanism of action (“MOA”) to develop a new class of immunotherapies that represent a paradigm shift from current approaches.
The DPX platform can safely increase the immune system’s exposure to a significant number of antigens opening the possibility to mobilize the power of the immune system
to treat a broad range of diseases. The Corporation believes that the unique MOA of DPX makes the platform uniquely suitable for cancer immunotherapies and vaccines
against infectious diseases, such as COVID-19.
5
DPX-based products have important commercial advantages:
Fully synthetic and easy to manufacture;
Can accommodate hydrophilic and hydrophobic compounds;
Lyophilized and reconstituted in lipids in convenient, low microlitre doses;
Subcutaneous injection for simple in-office administration (no hospitalization);
Long-term stability (3 years); and
Low cost of goods and scalable manufacturing.
The DPX platform forms the basis of all the Corporation’s product development programs. DPX-based candidates have demonstrated to date a good safety profile and
sustained immunological activity across all clinical trials, where they have shown efficacy in vulnerable populations, like immune-compromised and older adults. IMV
believes in the significant potential of DPX.
A PIPELINE OF DIFFERENTIATED IMMUNOTHERAPIES AND VACCINES
IMMUNO-ONCOLOGY
DPX-based cancer immunotherapies generate a sustained target-specific immune response. The chosen targets are essential components of cancer biology, preventing any
possible evasion from the treatment.
IMV’s differentiated immunotherapies can readily be combined with other immunotherapeutic approaches, including checkpoint inhibitors.
Lead Cancer Immunotherapy: Maveropepimut-S (DPX-Survivac)
Our first T cell activating immunotherapy, maveropepimut-S, combines the power of the DPX platform and the cancer antigen survivin.
Survivin is a protein that is found in the 60 human tumor cell lines used for the National Cancer Institute’s anti-cancer drug screening program and plays a critical role in
tumor biology as it is associated with tumor resistance to apoptosis, cell differentiation, proliferation, invasion and metastasis. Survivin is an essential component of the
biology of cancer.
6
Maveropepimut-S is a formulation of IMV’s DPX platform with survivin-based peptides licensed from Merck KGaA, on a worldwide exclusive basis. It is comprised of five
minimal major histocompatibility complex class I peptides to activate naïve T cells against survivin.
By activating survivin-specific killer T cells, maveropepimut-S promotes the destruction of cancer cells and disrupts the fundamental processes of cancer cell survival
reproduction and metastasis.
Maveropepimut-S, in association with low dose CPA, has demonstrated a sustained, survivin-specific immune response with post-treatment T cell infiltration into tumors that
was associated with prolonged duration of clinical benefits up to more than three years in certain cases. Maveropepimut-S has demonstrated a well-tolerated safety profile
with no related immune or serious systemic adverse events reported. Maveropepimut-S is administrated by subcutaneous injection. Compared to other immuno-oncology
therapies, which require intravenous infusions and more extensive safety monitoring, maveropepimut-S may lessen the burden on patients’ quality of life.
In clinical trials, the Corporation is exploring the activity of maveropepimut-S, in association with intermittent low dose oral regimen of CPA used as an immune-modulator.
Conventional chemotherapeutic drugs are traditionally used for their cytotoxic effect on tumors but CPA can also be used at lower doses to potentiate the activity of other
immunotherapies without inducing significant cytotoxicity. Several studies have demonstrated that low-dose regimens of CPA can have multiple beneficial effects for T cell
therapies such as maveropepimut-S, including reduction of T regulatory cell numbers and increase in effector T cells (Hugues et al, Immunology. 2018). In Phase 1 clinical
studies, IMV has demonstrated that intermittent low-dose oral CPA can act as an immune-modulator increasing the number of survivin-specific T cells generated by
maveropepimut-S (Weir et Al, AACR, 2016).
Maveropepimut-S, in association with low dose CPA, is being evaluated in three phase 2 clinical trials across 6 different cancer indications with and without Merck’s
Keytruda.
Orphan Drug Status and Fast Track Designation
The Corporation announced, in November 2016, that the EMA had granted orphan drug designation status to IMV’s DPX-Survivac in ovarian cancer. In July 2015, the FDA
also granted orphan drug status to DPX-Survivac for the treatment of ovarian cancer. This designation is valid for all applications of DPX-Survivac in ovarian cancer without
restriction to a specific stage of disease.
IMV had previously received FDA fast track designation for DPX-Survivac. The designation is intended for patients with no measurable disease after their initial surgery and
chemotherapy.
COVID-19 Impact on Clinical Program
The COVID-19 pandemic crisis is still impacting clinical activities across the industry due to the pressure placed on the healthcare systems as well as governmental and
institutional restrictions. IMV’s clinical team is working closely with each clinical site and its CRO’s on contingency plans to ensure that patient safety and the integrity of
data is maintained. IMV is following the guidance issued by the FDA: “FDA Guidance on Conduct of Clinical Trials of Medical Products during COVID-19 Pandemic
Guidance for Industry, Investigators, and Institutional Review Boards”. Additionally, the IMV team continues to monitor updated institutional, regional and national guidance
to fully comply with applicable guidelines as they are issued. It is noted that many clinical sites have reinitiated enrollment in clinical trials, while other sites, less impacted,
have continued activities as planned. Patients are encouraged to comply with directives from public health officials and, subject to such compliance, attend visits as planned or
to discuss alternatives with their physician. The current activities performed at central labs to assess the eligibility of patients and the management of clinical samples is not
impacted to date, and IMV is working with its vendors to ensure continuity of activities. Drug supply is not expected to be impacted at this time. As added precaution, IMV
has developed contingency plans to ensure proper supply of drugs to all clinical sites in the event of future transportation or other constraints.
7
Ongoing Maveropepimut-S (DPX Survivac) Clinical Trials
DLBCL - SPiReL Phase 2 clinical trial (investigator-sponsored)
Diffuse Large B Cell Lymphoma is the most common and aggressive form of Non-Hodgkin Lymphoma (NHL) and, with 27,000 new cases per year in the United States, this
blood cancer represents a high unmet medical need. Patients with aggressive NHLs such as DLBCL can generally expect low median survival rates, with the relative 10-year
survival rates reported to be around 46%.4
The SPiReL phase 2 study is a non-randomized, open-label, uncontrolled, efficacy and safety trial in patients with r/r DLBCL led by Dr, Neil Berinstein, MD, FRCP(C),
ABIM, hematologist-oncologist at the Odette Cancer Centre at Sunnybrook Health Sciences Centre in Toronto. This investigator-sponsored trial is designed to evaluate the
safety and efficacy of maveropepimut-S in combination with Merck’s Keytruda® (pembrolizumab), associated with intermittent low-dose CPA in patients with r/r DLBCL.
The primary objective of this study is to document a response rate to this treatment combination using modified Cheson5 criteria of at least 24% (6/25 patients). Secondary
objectives include duration of response and safety. Exploratory endpoints include T cell response, tumor immune cell infiltration, and gene expression analysis. In May 2020,
the Corporation reported that the study had met its primary efficacy endpoint in the first 11 evaluable patients.
In November 2020, the study's lead investigator, Dr. Neil Berinstein, presented at The Society for Immunotherapy of Cancer (“SITC”), 35th Anniversary Annual Meeting
where he announced the discovery of a porential predictive biomarker. All clinical responses observed (n=6) in the study have been in Program Death Ligand 1 (“PD-L1”)
positive subjects (n=7) defined as a percentage of PD-L1+ cells scored in the tumor region of 10% or more.
The difference between the two populations is statistically significant and indicates that PD-L1 has the potential to become a predictive biomarker and a companion diagnostic
for r/r DLBCL treatment with the combination, to identify and recruit the patients that are the most likely to respond.
The PD-L1 pathway regulates T-cell responses allowing tumors to escape the immune system. PD-L1 expression has been extensively studied in relation to the prognosis of
various cancers and is approved in multiple tumor types as a predictive biomarker for treatment with checkpoint inhibitors targeting the PD-1/PD-L1 pathway. In DLBCL,
PD-L1 has been shown to be expressed in 26% to 75% of patients6,7 (Xu-Monette et al, 2018) and is generally thought to be associated with a poor prognosis and shorter
survival.
Checkpoint inhibitors such as Keytruda® and Opdivo® are not approved in DLBCL and have demonstrated limited activity including in PD-L1 positive patients7,8.
In December 2020, Dr. Berinstein also provided an update during a poster presentation at the American Society of Hematology Annual Meeting (“ASH Meeting”). As of the
data cut-off date for the presentation at ASH, 19 pre-treatment samples from patients enrolled in the SPiReL study were available for biomarker analysis.
Key findings for the PD-L1+ population (n=7) included:
Significantly higher median Progression Free Survival (“PFS”) of 230 days, compared to the PD-L1 negative subjects (70 days) with a p-value of 0.007, suggestive
of a strong predictive biomarker for this treatment combination;
____________________
4 GlobalData: DLBCL, Competitive Landscape in 2021.
5
Cheson, B.D., Pfistner, B., Juweid, M.E., Gascoyne, R.D., Specht, L., Horning, S.J. and Diehl, V. (2007). Revised Response Criteria for Malignant Lymphoma. Journal of Clinical
Oncology, 25(5) DOI: 10.1200/JCO.2006.09.2403.
6 Y. Suzuki, K. Kohno, K. Matsue, et al. PD-L1 (SP142) expression in neoplastic cells predicts a poor prognosis for patients with intravascular large B-cell lymphoma treated with
rituximab-based multiagent chemotherapy. Cancer Med. 2020;9(13):4768-4776. doi:10.1002/cam4.3104.
7 Xu-Monette, Y. Zijun et al. "PD-1 expression and clinical PD-1 blockade in B-cell lymphomas" Blood vol. 131,1 (2018): 68-83. doi:10.1182/blood-2017-07-740993.
8
S.M. Ansell, et al. Nivolumab for Relapsed/Refractory Diffuse Large B-Cell Lymphoma in Patients Ineligible for or Having Failed Autologous Transplantation: A Single-Arm, Phase
II Study. J Clin Oncol. 2019 Feb 20;37(6):481-489. doi: 10.1200/JCO.18.00766.
8
Demonstrated an objective response in six subjects (3 Partial Responses (“PR”), 3 Complete Responses (“CR”)), including three subjects who have completed one-
year of study treatment,
Demonstrated an Objective Response Rate (“ORR”) and a Disease Control Rate (“DCR”) at both 85.7%
Peripheral blood was assessed for survivin-specific ELISpot responses in 15 subjects with available samples. All 3 subjects with a CR, and 3 of 4 subjects with a PR had
positive ELISpot responses while only 1 subject with SD and 1 subject with PD demonstrated survivin-specific ELISpot response, suggestive of an association between the
clinical responses with the mechanism of action of DPX-Survivac. Overall, treatment was well tolerated. The majority of treatment-related adverse events were grade 1 and 2
severity. A majority of these were injection site reactions associated with the subcutaneous administration of DPX-Survivac.
Based on these results, IMV engaged with the FDA which provided productive feedback. The Corporation is working with Merck to finalize the protocol of the Phase 2b
clinical study which is expected to begin in Q2 2021.
During the year ended December 31, 2020, the Corporation has spent $720,000 on this phase 2 clinical study, which is $47,000 higher than forecasted due to an additional
clinical site being added during the year. The Corporation anticipates that, in addition to general clinical expenses which are distributed amongst the various clinical projects,
its share of the cost to complete this study is currently estimated at $400,000, which is expected to be spent in 2021.
Ovarian Cancer - DeCidE1 phase 2 in patients with recurrent, advanced platinum-sensitive and resistant ovarian cancer (IMV-sponsored)
Globally, ovarian cancer is the seventh most diagnosed cancer among women and a leading cause of mortality among all gynecological cancers. According to Globocan 2020,
on a worldwide basis, 314,000 women are diagnosed and there are 207,000 ovarian cancer related deaths each year. The estimated five-year survival rate for a late-stage
diagnosis of ovarian cancer is around 30% to 40% (Matz et al., 2017). Ovarian cancer has overall poor survival rates, compared with other gynecological cancers (World
Ovarian Cancer Coalition, 2018). Since the introduction of new targeted therapies (PARP inhibitors), advanced ovarian cancer patients have better survival outcomes from
treatment. Nonetheless, the overall prognosis for ovarian cancer still remains poor with multiple areas of high unmet need and no immunotherapy approved yet.9
DeCidE1 is a phase 2 multicenter, open-label study evaluating the safety and effectiveness of maveropepimut-S, with intermittent low-dose cyclophosphamide used as an
immunomodulator to increase the level of survivin-specific T cells. This phase 2 arm enrolled patients with recurrent, advanced platinum-sensitive and -resistant ovarian
cancer. Except for one patient, all patients were in an advanced stage of the disease, and 12 patients had received 3 or more lines of prior therapy.
Primary endpoints of this study are overall response rate, disease control rate and safety. Secondary end points include cell mediated immunity, immune cell infiltration in
paired biopsy samples, duration of response, time to progression, overall survival and biomarker translational analyses on collected peripheral blood mononuclear cells, tumor
tissue and plasma.
Top line data presented in December 2020 on 19 evaluable patients demonstrated clinically meaningful activity with long-lasting clinical benefits and an excellent
safety/tolerability profile:
15/19 (79%, 5 PR and 10 SD) evaluable subjects demonstrated disease control. Clinical responses were observed across platinum-sensitive, platinum-resistant, and
platinum-refractory patients:
7/19 evaluable subjects (37%) achieved clinical benefit with partial/stable responses lasting > 6 months and 5 subjects (26%) achieved clinical benefit with
partial/stable responses lasting > 12 months;
Treatment was well-tolerated with the majority of adverse events being grade 1-2 reactions at the injection site;
12-month overall survival rate was of 66.1%; and
Translational data confirmed survivin-specific CD8+ T cell immune response in 87% subjects.
Enrollment is now complete and one patient remains on study for extended dosing. Biomarker analyses are ongoing for which an update will be given once completed. IMV is
currently analyzing translational data with the goal of better understanding the mechanism of action of maveropepimut-S and identifying potential predictive biomarkers.
Once the analysis of the translational data is completed, the Corporation will request a meeting with the FDA in the second half of the year to finalize the design of a Phase 2b
trial.
____________________
9 GlobalData: Ovarian Cancer Opportunity Analysis and Forecasts to 2028
9
During the year ended December 31, 2020, the Corporation has spent $1.2 million on this phase 2 clinical study, which is $500,000 higher than forecasted due to increased
data analysis and certain patients staying on study for extended dosing. The Corporation anticipates that, in addition to general clinical expenses which are distributed amongst
the various clinical projects, its share of the cost to complete this study is currently estimated at $300,000, which is expected to be spent in 2021.
Phase 2 basket trial in 5 solid tumor indications (IMV-sponsored)
In September 2018, IMV announced a phase 2 basket trial in collaboration with Merck to explore other solid cancer indications with our lead candidate, maveropepimut-S, in
association with low dose CPA and in combination with Merck’s Keytruda® (pembrolizumab).
This open-label, multicenter, phase 2 basket study evaluates the safety and efficacy of the immunotherapeutic combination in patients with bladder, liver (hepatocellular
carcinoma), ovarian, or non-small cell lung (NSCLC) cancers, as well as tumors shown to be positive for the microsatellite instability high (MSI-H) biomarker. Investigators
plan to enroll up to 184 patients across five indications in 20 medical centers in Canada and the United States.
The objective of this exploratory trial conducted in collaboration with Merck is to identify and select the best solid tumor opportunities for the combination of IMV's T cell
therapy with Merck's anti PD-1 checkpoint inhibitor Keytruda® and CPA. Recruitment in the five indications follows a Simon two-stage design and each indication has
prespecified success thresholds defined by the expected effect of Keytruda® as a monotherapy agent in that indication.
Treatments have been well tolerated with no immune-related adverse events or grade 3-4 events reported and T cell infiltration has been observed in subjects with tumor
reduction.
The combination has proven promising for patients with two hard-to-treat solid tumors. The combination therapy is further evaluated in expanded cohorts in metastatic
bladder and MSI-H tumor cancers.
At the time of this update, 116 subjects were enrolled in the study and sufficient data was available for four of the five indications.
The combination therapy achieved the thresholds in two indications: metastatic bladder and MSI-H tumor cancers. IMV is pleased to announce that the combination
therapy will be further evaluated in these two indications.
The combination therapy did not meet the prespecified criteria to progress to the next stage in NSCLC and ovarian cancer. The Corporation will discuss with its
partner Merck to decide whether these indications should be further explored.
In the Hepatocellular Carcinoma (liver) HCC indication, IMV and its partner Merck have decided to adjust some of the enrollment criteria in order to accelerate
enrollment rates. An update will be provided when the enrollment goal is met.
During the year ended December 31, 2020, the Corporation has spent $7 million on the phase 2 basket trial, which is $1.4 million higher than forecasted due to a spike in
enrollment and additional clinical sites opened in early 2020, prior to the onset of the COVID-19 pandemic. The Corporation anticipates that, in addition to general clinical
expenses, which are distributed amongst the various clinical projects, $29 million is currently estimated to be spent for stage 1 and stage 2 for two indications for this trial, of
which $14.3 million has been spent to date and a total of $6.4 million is estimated to be spent in 2021.
Ovarian Cancer Phase 2 clinical trial (investigator-sponsored)
University Health Network’s (“UHN”) Princess Margaret Cancer Centre is conducting a phase 2 non-randomized, open-label trial designed to evaluate the potential anti-
tumor activity of the combination of Merck’s Keytruda ® (pembrolizumab), maveropepimut-S (DPX-Survivac) associated with intermittent low-dose CPA. The study’s
primary objective is to assess overall response rate. Secondary study objectives include progression free survival rate, overall survival rate, and potential side effects, over a
five-year period. At this stage, the Corporation has no specific plan on the next steps after this trial as it will have to be assessed with its partner based on the clinical trial
results. The Corporation will disclose final results once provided by the UHN Princess Margaret Cancer Centre. The Corporation currently anticipates that, in addition to
general clinical expenses, which are distributed amongst the various clinical projects, its share of the costs to complete this study are milestone-based and are estimated at
$200,000, of which $100,000 is expected to spent in 2021.
10
Our Next Cancer Immunotherapy: DPX-SurMAGE
The Corporation’s second T cell activating immunotherapy, DPX-SurMAGE combines the DPX platform and two cancer antigens: survivin and MAGE-A9. MAGE protein
family member, A9 (MAGE-A9) is frequently expressed in various human cancers including bladder, lung and kidney.
MAGE-A9 peptides will be combined with selected immunogenic peptides from the survivin protein composing maveropepimut-S to form a dual target T cell activating
therapy. The Corporation believes that MAGE-A9 and survivin peptides presented on the surface of cancer cells may represent ideal complementary targets for an enhanced
DPX-based cancer immunotherapy.
In 2021, IMV is aiming to begin a phase 1 clinical study to evaluate DPX-SurMAGE in patients with bladder cancer, another unmet medical need. Despite the entry of
immunotherapy agents into the bladder cancer market, including the promising checkpoint inhibitors, there remains significant unmet need across bladder cancer settings.
There are abundant opportunities for drug development for early-stage disease, as well as for patients who do not respond to or relapse following treatment with an immune
checkpoint inhibitor.
Bladder cancer is a common cancer worldwide that occurs when there is uncontrolled cell growth in the bladder lining, most commonly in urothelial cells (Antoni et al., 2017;
ASCO, 2019).
This project is conducted in collaboration with CQDM, a Canadian bioresearch consortium, that awarded a grant for a collaboration among IMV, Centre de recherche du
CHU de Quebec-Universite Laval (“CHU”) and La Fondation du CHU de Quebec (“FCHUQc”). The collaboration will receive a grant of up to $1.2 million from the CQDM
and $300,000 from the FCHUQc over three years, to develop this novel dual target T cell therapy for an initial clinical application in bladder cancer. IMV currently expects to
contribute $4.5 million over the next three years towards this project of which $1.7 million was contributed in 2019 and $1.1 million has been contributed in 2020. The
Corporation expects to spend an additional $1.3 million toward this project in 2021.
Other collaborations in oncology
From time to time, IMV enters into collaborations with partners to evaluate the use of the DPX platform with other products in oncology. Such collaborators currently include
UConn Health and Dana Farber. These collaborations are exploratory in nature and the Corporation expects to disclose evaluations or other results only when those are made
available to IMV by each of its collaborators.
INFECTIOUS DISEASE
A component of the Corporation’s business strategy is to partner for other applications of the DPX platform such as infectious diseases. IMV is leveraging the same DPX
MOA to create peptide vaccines that generate a sustained and targeted B cell immune response (antibodies) with the potential to prevent infections by viruses such as SARS-
CoV-2.
DPX-COVID-19, a second-generation vaccine against SARS-CoV-2
With the current pandemic caused by the novel coronavirus, the Severe Acute Respiratory Syndrome Coronavirus 2 (“SARS-CoV-2”), there is an urgent need to develop
vaccines to control its spread and help protect vulnerable populations.
DPX-COVID-19 is designed to generate potent and durable protection against SARS-CoV-2 with the potential for a longer duration of protection, especially in older adults
and immunocompromised individuals.
IMV’s unique targeted peptide epitope approach has the potential to optimize and exceed the safety and efficacy profile of more conventional vaccines:
Targets areas of the spike protein important for infection (attachment to human cells, cleavage and fusion);
11
Potential for improved duration of protection including in most at-risk populations; and
Stability at room temperature and 2°C to 8°C for at least three months, facilitating stockpiling and distribution.
To date, the Corporation has:
Completed safety studies that include GLP toxicology and confirmed a favourable safety profile;
Completed preclinical immunogenicity studies showing potential for long-term protection with antibody titers maintained throughout the duration of studies (day
140);
Completed a challenge study in ferrets that demonstrated reductions of viral load in the nasal tissue;
Demonstrated T-cell response and natural immunity in convalescent plasma against the targeted epitope peptides in the DPX-COVID-19 formulation;
Qualified for approximately $10 million of non-dilutive funding from different Canadian governmental sources, including up to $5.4 million in milestone-based
payments;
Completed the current good manufacturing practice (cGMP) formulation and manufacturing process development for clinical trials; and
Entered into a collaboration with a global manufacturing partner to transfer and scale-up activities of DPX-COVID- 19 in India and Europe with the anticipated
capacity to produce several hundred million doses.
In consideration of the evolution of the regulatory landscape with regulatory approval of vaccines by a number of countries and a recent update to Health Canada guidance, as
well as the emergence of SARS-CoV-2 variants in different countries, the Corporation is conducting complementary preclinical studies including evaluating the impact of new
variants and will provide an update once the preclinical studies are completed.
Other programs in infectious diseases
DPX-RSV
IMV conducted a phase 1 clinical study has been conducted in Canada in respiratory syncytial virus (RSV). The study was conducted in healthy adults and a DPX-RSV
candidate was developed to protect the elderly population from infection. The results of this phase 1 study, completed in 2017, outlined that more than nine months after the
last vaccination, 15 of 16 participants (93%) who received DPX-RSV demonstrated antigen-specific immune responses. DPX-RSV had a good safety profile and was well
tolerated with no SAEs. One dose was tested out to one year and 100% of older adults (7/7 immune responders) maintained antigen-specific immune responses one year after
receiving the booster dose. After one year, their antibody levels measured were still at peak with no sign of decrease. The Corporation does not plan to continue the
development of this product without a partner.
Other collaborations in infectious disease
Similar to oncology, IMV from time to time enters into collaborations with partners to evaluate the use of the DPX platform with other products targeting infectious diseases.
Such collaborations include Leidos and Zoetis. These collaborations are exploratory in nature and the Corporation expects to disclose evaluations or other results only when
those are made available to IMV by each of its collaborators.
MARKET OVERVIEW
Cancer Immunotherapies
Cancer is considered one of the most widespread and prevalent diseases globally. According to the 2020 Cancer Facts & Figures released by the American Cancer Society, it
is predicted that the global cancer burden will rise to 27.5 million and the number of cancer deaths to 16.2 million by 2040 solely due to the growth of the aging population.
However, these projections may be underestimates given the adoption of unhealthy behaviors and lifestyles associated with rapid income growth and changes in reproductive
patterns in economically transitioning countries. According to the 2020 Cancer Facts & Figures, cancer usually develops in older people; 80% of all cancers in the United
States are diagnosed in people 55 years of age or older. Adults ages 85 and older are the fastest-growing population group in the US and women outnumber men in this age
group because of a longer life expectancy.
12
Conventional cancer treatment involves surgery to remove the tumor whenever possible, as well as chemotherapy and radiation. Chemotherapies are widely used, despite their
associated toxicities, because they interfere with the ability of cancer cells to grow and spread. However, studies have shown that older patients often receive little or no
treatment because the benefit of prolonged survival does not outweigh potential adverse effects and impact on quality of life. Also, in all groups of patients, tumors often
develop resistance to chemotherapies, thus limiting their efficacy in preventing tumor recurrence. Despite recent advances, independent sources note a high unmet medical
need in cancer therapy, noting the median survival rate remains poor. Cancer immunotherapies may provide new and effective treatments. According to a Market & Markets
report released in September 2016, the global immunotherapy drug market is projected to reach USD$119.39 billion by 2021 from USD$61.97 billion in 2016, growing at a
compound annual growth rate of 14 % during the forecast period of 2016 to 2021. The major players operating in the immunotherapy drug market include F. Hoffmann-La
Roche AG (Switzerland), GlaxoSmithKline (U.K.), AbbVie, Inc. (U.S.), Amgen, Inc. (U.S.), Merck (U.S.), Bristol-Myers Squibb (U.S.), Novartis International AG
(Switzerland), Eli Lilly and Corporation (U.S.), Johnson & Johnson (U.S.), and AstraZeneca plc (U.K.).
Cancer immunotherapy seeks to harness the immune system to assist in the destruction of tumors and to prevent their recurrence. There has been significant interest in the field
of cancer immunotherapy stemming from recent clinical success in prolonging patient survival with novel compounds. The ability to apply these appropriately has resulted
from a greater understanding of the immune dysfunction that is characteristic of cancer. One area in which there have been breakthroughs has been in the area of checkpoint
inhibitors, which are compounds that target key regulatory molecules of the immune system. Yervoy® (anti CTLA 4, or ipilumumab, developed by Bristol Myers Squibb)
was the first compound in this class to be approved for use in advanced metastatic melanoma. In cancer, these regulators (CTLA-4, PD-1 and its ligand PD-L1) act to inhibit
CD8 T cell-mediated anti-tumor immune responses that are crucial for tumor control. Monoclonal antibodies that target PD-1 and PD-L1 have shown unusual efficacy in
cancer patients, with a significant percentage of patients experiencing durable response to these therapies. Several of these compounds have been approved in multiple
indications. Merck’s Keytruda® (pembrolizumab) and Bristol Myers Squibb’s Opdivo® (nivolumab) received FDA approval in 2014 for advanced melanoma patients who
have stopped responding to other therapies. These therapies have subsequently been approved for use in other advanced cancers. These drugs have been shown to be helpful in
treating several types of cancer but with success only in a limited percentage of patients. It is not yet known exactly why, though researchers have noticed that these drugs
seem to work especially well for patients whose cancer cells have a higher number of mutations.
Key opinion leaders in the field have indicated that that the solution lies in combining checkpoint inhibitors with other cancer treatments and that the ideal combination is
likely to be a therapy that drives tumor specific immune responses. These include novel activating T cell therapies. Our novel class of immunotherapies fit well with
checkpoint inhibition therapy because they simultaneously activate sustained tumor-specific T cells, while also releasing the brakes on immune suppression. The success of
such combinations should allow pharmaceutical companies to significantly expand the market of their checkpoint inhibitors.
We believe that activating T cell therapies will become an important component of these novel combination immunotherapies, with the potential of synergistic benefits to
become an essential part of a multi-pronged approach for the treatment of cancer.
INTELLECTUAL PROPERTY
The Corporation strives to protect its intellectual property in established, as well as emerging, markets around the world. The Corporation’s intellectual property portfolio
relating to its platform technology includes twenty patent families, the first of which contains eight patents issued in five jurisdictions (United States, Europe, Canada, Japan,
and Australia). The 19 other families collectively contain 46 patents issued in 11 jurisdictions (United States, Europe, Canada, Australia, Japan, India, Israel, Singapore,
Brazil, China, and, separately, Hong Kong) and 74 pending patent applications in 10 jurisdictions. Considering the validations of the European patents, the Corporation’s
intellectual property portfolio includes 107 patents. More details on the Corporation’s intellectual property strategy and patents can be found in the AIF filed on SEDAR at
www.sedar.com.
The Corporation owns registered trademarks in the United States, Canada, and Europe.
RECENT AND QUARTERLY DEVELOPMENTS
The Corporation announced:
On December 28, 2020, updated progress on its COVID-19 vaccine program including:
Completed safety studies that include GLP toxicology and confirmed a favorable safety profile;
13
Completed preclinical immunogenicity studies showing potential for long-term protection with antibody titers maintained throughout the duration of studies
(Day 140);
Completed a challenge study in ferrets that demonstrated reductions of viral load in the nasal tissue;
Demonstrated T cell response and “natural” immunity in convalescent plasma against the targeted epitope peptides in the DPX-COVID-19 formulation; and
Demonstrated stability of DPX-COVID-19 at room temperature and 2°C to 8°C for at least 3 months.
In regard to DPX-COVID-19, the Company continues its efforts to:
Perform additional preclinical studies; and
Submit preclinical study results on the selection of the peptides composing DPX-COVID-19 and the data supporting the Phase 1/2 clinical trial to a peer-
reviewed scientific journal.
On December 3, 2020, updated clinical response and translational data from DeCidE1, its Phase 2 study evaluating the safety and efficacy of DPX-Survivac with
intermittent low-dose CPA (CPA) in patients with recurrent, advanced platinum-sensitive and -resistant ovarian cancer. As presented on December 3, 2020, 19
patients were evaluable for efficacy with one patient (5%) still receiving treatment. Notably, the majority of patients had received >3 lines of prior therapy and were
resistant or refractory to their last platinum regimen. Key findings on the safety and efficacy of 19 evaluable patients receiving DPX-Survivac/CPA are outlined
below:
79% of patients (5 PR and 10 SD) showed clinical benefits;
Durable clinical benefits over 6 months were observed in 7 patients (37%):
5 patients (26.3%) demonstrated clinical benefit duration of approximately one year (11-16 months) with two patients still benefiting from treatment.
Long tail progression free survival (PFS) was observed and consistent with immunotherapies in other cancer indications:
mPFS: 4.47 months
6-month PFS of 39%
12-month PFS of 20%.
66.1% 12-month overall survival rate. As more than 50% of patients are still alive, the median overall survival (mOS) has not been reached
Overall, treatment was well-tolerated. The majority of treatment-related adverse events reported were Grade 1 events and related to reactions at the injection
site.
Extensive translational analyses are ongoing on collected peripheral blood mononuclear cells (PBMC), tumor tissue and plasma. Results obtained so far link the
observed clinical benefit with survivin-specific T cells, supporting DPX- Survivac’s unique mechanism of action:
Treatment generated a survivin-specific CD8+ T cell response in PBMC samples of 14/16 (87%) evaluable patients.
Treatment-induced infiltration of survivin-specific T cell clones into the tumors as early as day 56 following treatment.
On November 10, 2020, the appointment of Andrew Hall to the newly created role of Chief Business Officer.
On November 9, 2020, that the Corporation’s T cell therapy demonstrates an 86% ORR in combination with Merck’s Keytruda® (pembrolizumab) in patients with
PD-L1 positive r/r DLBCL.
All clinical responses observed so far in the study have been in PD-L1 positive subjects defined as a percentage of PD-L1+ cells scored in the tumor region of 10% or
more. No benefits have been observed in the PD-L1 negative population (n=11) where all subjects experienced PD (n=9) or a SD (n=2).
The difference between the two populations is statistically significant and indicates that PD-L1 has the potential to become a predictive biomarker and a companion
diagnostic for r/r DLBCL treatment with the combination, to identify and recruit the patients that are the most likely to respond.
14
As of the data cut-off date for the presentation at SITC, 18 pre-treatment samples from patients enrolled in the SPiReL study were available for biomarker analysis.
Thirty-nine percent (7/18) of subjects demonstrated a positive pre- treatment tumor PD-L1 expression. Key findings for this population include:
Observed 100% Disease control rate (SD, PR or CR); and
86% (6/7 subjects) Objective Response Rate (3 CR, and 3 PR).
On October 16, 2020, that it entered into an Equity Distribution Agreement with Piper Sandler & Co. (“Piper Sandler”) authorizing the Corporation to offer and
sell, through “at-the-market” offerings on Nasdaq, Common Shares from time-to-time up to an aggregate offering price of US$50 million through Piper Sandler, as
agent (“October 2020 ATM”). The Corporation intends to use the net proceeds from the October 2020 ATM for research and development expenditures, clinical
trial expenditures, including expenditures related to a COVID-19 vaccine candidate and general corporate purposes.
On October 8, 2020, updated progress on its COVID-19 vaccine program including:
Confirmed an additional $5.4 million in government funding from National Research Council of Canada Industrial Research Assistance Program (“NRC
IRAP”) for the clinical development and manufacturing of DPX-COVID-19;
In consultation with Health Canada, IMV has decided to combine its original phase 1 and 2 studies into a single trial with the potential to accelerate clinical
development and the timeline of the overall project. The design of this larger study will incorporate the same two-age strata cohorts (18-55 years old and over
55 years old) as originally designed; and
IMV has entered into a collaboration with a global manufacturing partner and initiated transfer and scale-up activities of DPX-COVID-19. This collaboration
has the potential to bring two additional production sites in India and Europe with capacity to produce several hundred million doses of DPX-COVID-19.
On August 5, 2020, confirmed $4.75 million of funding from Canadian governmental agencies to advance Phase 1 clinical development of is vaccine candidate,
DPX-COVID-19. The Corporation is receiving $4.15 million in advisory services and funding from the NRC IRAP, Atlantic Canada Opportunities Agency
(“ACOA”) and Next Generation Manufacturing Canada (“NGen”) to support rapid scale-up of DPX-COVID-19 manufacturing process and its evaluation in a phase
1 clinical trial. In addition to this funding, IMV also received $600,000 from the NRC IRAP
Innovation Assistance Program (“IRAP IAP”).
On July 20, 2020, appointed Michael P. Bailey to its Board of Directors.
On July 14, 2020, updated progress on its COVID-19 vaccine program. Since IMV announced the selection of its vaccine candidate on May 21, 2020, the
Corporation has made significant progress including:
Preclinical studies have demonstrated the capacity of DPX-COVID-19 to induce strong immunogenicity including the binding on target to the spike protein
and viral neutralization;
The Corporation has completed the cGMP formulation and manufacturing process development for DPX-COVID-19; and
Multiple batches have been successfully produced at IMV.
On June 30, 2020, that in order to maintain the remainder of its at-the-market (“June 2020 ATM”) facility, the Corporation re-entered into an equity-distribution
agreement dated June 30, 2020 with Piper Sandler pursuant to which the Corporation may from time to time sell through “at-the-market” offerings, with Piper
Sandler acting as sales agent, on the Nasdaq such number of common shares that have an aggregate offering price of up to US$24.5 million under the ATM
Prospectus Supplement. This amount reflects the amount which remains unsold following the Corporation entering into the initial equity distribution agreement with
Piper Sandler for an aggregate amount of US$30 million as of such date and was filed as a result of the underlying Canadian final base shelf prospectus expiring on
July 5, 2020.
On May 29, 2020, updated clinical response and translational data from DeCidE1, its Phase 2 study evaluating the safety and efficacy of DPX-Survivac with
intermittent low-dose CPA in patients with recurrent, advanced platinum- sensitive and -resistant ovarian cancer.
As of data cut-off date, May 2, 2020, 19 patients were evaluable for efficacy with four patients (21%) still receiving treatment. Notably, 18/19 evaluable patients had
stage 3 or 4 disease at time of diagnosis, the majority of whom had received >3 lines of prior therapy and were platinum resistant. Key findings on the safety and
efficacy of DPX- Survivac/CPA are outlined below:
15
5/19 patients (26%) achieved a PR with tumor regression >30% on target lesions;
15/19 patients (79%) achieved disease control, defined as Stable Disease (SD) or Partial Response (PR) on target lesions;
Tumor shrinkage of target lesions was observed in 10 patients (53%).
Overall, treatment was well-tolerated. The majority of treatment-related adverse events reported were Grade 1 events and related to reactions at the injection
site;
Durable clinical benefits lasting ≥ 6 months were observed in seven patients (37%);
5/7 patients (71%) have now reached duration of clinical benefit > 10 months including three patients with PR and two patients with SD; and
The two patients with SD are about to reach the 1-year mark.
Translational analyses on longitudinally collected peripheral blood mononuclear cell (PBMC) and tumor tissue samples link observed clinical benefit and survivin-
specific T cells, supporting DPX-Survivac’s unique mechanism of action. Key translational findings are outlined below:
Treatment generated a survivin-specific CD8+ T cell response in PBMC samples of 14/16 (87%) evaluable patients; and
Treatment induced infiltration of survivin-specific T cell clones into the tumors as early as day 56 following treatment, which was shown in an
analysis of the TCRβ repertoires in five subjects who achieved stable disease.
These data were presented in a poster session (Abstract Number: 6075) at the ASCO20 Virtual Scientific Program.
On May 21, 2020, that it had selected a vaccine candidate against COVID-19 to advance into human clinical studies and has positive preclinical results
demonstrating robust immunogenic and antibody responses from the majority of peptide epitopes. The antibody responses observed were equivalent or superior to
levels achieved with DPX-RSV, which delivered a robust and sustained immune response in a Phase 1 study. Based on these data, the Corporation had selected
multiple peptide epitopes to be formulated within its DPX platform to form a vaccine candidate against the novel coronavirus, DPX-COVID-19.
On May 7, 2020, the completion of a private placement (the “Private Placement”) of 8,770,005 units of the Corporation (each, a “Unit”) at the market price of $2.86
per Unit. With aggregate gross proceeds of approximately $25.1 million, this non-brokered private placement is being co-led by Fonds de Solidarité FTQ, an
existing investor, and Lumira Ventures, a new investor in the Corporation, along with participation by Altium Capital, also a new investor in IMV, together with
incumbent investors.
On March 30, 2020, that it had made significant progress on the development of DPX-COVID-19, a vaccine candidate against the novel coronavirus, including:
The Corporation used sequences of the virus and immunoinformatics to predict and identify several hundred epitopes, of which 23 were selected for their
biological relevance to the virus and potential to generate neutralizing antibodies against SARS-CoV-2;
Based on this analysis, IMV began manufacturing peptide candidates targeting these epitopes as well as planning with IMV’s suppliers and contract
manufacturers to prepare for the cGMP batch required to support a clinical study in humans;
In collaboration with Gary Kobinger, Ph.D., Director of the Research Centre on Infectious Diseases at the University Laval in Quebec City, preclinical
assays in animal models were planned in April through May of this year to validate the safety and potency of the vaccine candidate before initiating the
human clinical study;
In collaboration with Joanne Langley, M.D. at the Canadian Center for Vaccinology (CCfV) and the Canadian Immunization Research Network (CIRN),
the design of a Phase 1 clinical study in 48 healthy subjects has been completed and clinical sites identified in both Nova Scotia and Quebec;
IMV initiated discussions with Health Canada in preparation for a CTA. A meeting was scheduled the week of April 20, 2020 with the goal to initiate the
clinical study in the summer of 2020; and
The Corporation submitted several grant applications in Canada in an effort to help support its clinical program.
16
On March 18, 2020, that it was advancing the clinical development of a DPX-based vaccine candidate against COVID-19. The goal of the development program, in
collaboration with lead investigators for the phase 1 clinical study: Joanne Langley, M.D. and Scott Halperin, M.D., of the CCfV at Dalhousie University, the Izaak
Walton Killam Health Center and the Nova Scotia Health Authority and the CIRN; along with Dr. Gary Kobinger, Ph.D., Director of the Research Centre on
Infectious Diseases at the University Laval in Quebec City and GUARD in Canada, is to establish the clinical safety and immunogenicity of a vaccine candidate
based on the Corporation’s DPX delivery technology and incorporating peptides targeting novel epitopes from the coronavirus strain.
On February 25, 2020, that updated results from DeCidE1, an ongoing Phase 2 study of its lead candidate, DPX- Survivac, in patients with advanced recurrent
ovarian cancer were reported during a conference call and webcast.
All 22 patients with advanced recurrent ovarian cancer enrolled in this arm of the study were heavily pre-treated, with the median number of prior therapies greater
than three.
As of February 24, 2020, 19 patients were evaluable for efficacy with six patients (31%) still receiving treatment. Key preliminary findings are outlined below:
15 patients (79%) achieved disease control, defined as Stable Disease (SD) or Partial Response (PR) on target lesions:
Tumor shrinkage of target lesions was observed in 10 patients (53%).
Durable clinical benefits lasting ≥ 6 months were observed in seven patients (37%) so far:
Four of these seven patients (21% of evaluable patients) achieved PR with tumor regression >30% on target lesions;
Three stable diseases were ongoing for > 6 months (range 7-9) including -29.5% and -12% tumor regressions; and
Median duration not reached yet, with five of these seven (71%) patients still on treatment at > 6 months (range 7-10).
Analysis of Baseline Tumor Burden (BTB) showed durable clinical benefits across a broad range of BTB (1.5-7.7 cm) with a higher number of patients
achieving benefits in BTB < 5 cm as previously observed in other arms of the study:
Six out 11 with BTB < 5 cm (55%) achieved clinical benefits lasting > 6 months.
Durable clinical benefits include platinum-resistant and refractory patients who previously received PARP inhibitors and bevacizumab; and
Treatment was well-tolerated, with most adverse events being Grade 1-2 reactions at the injection site.
On February 14, 2020, that Albert Scardino was to retire from the IMV Board of Directors effective February 28, 2020.
On February 4, 2020, the presentation of clinical translational data supporting the mechanism of action of its lead compound, DPX-Survivac, during the 2020 ASCO-
SITC Clinical Immuno-Oncology Symposium, being held in Orlando, FL.
As part of this analysis, the Corporation measured systemic immune responses, tumor immune infiltrates and clinical tumor response from pre- and post-treatment
patient samples in connection with three Phase 1 and/or Phase 2 clinical studies, each evaluating DPX-Survivac alone or in a combination regimen in patients with
platinum-sensitive or resistant, advanced ovarian cancer. Highlights from these translational data include:
DPX-Survivac generated survivin-specific T cells in the blood of 80% of patients sampled;
Clinical anti-tumor responses were correlated with increased infiltration of T cells into tumors following treatment with DPX-Survivac;
DPX-Survivac induced enrichment in T cell, cytotoxic lymphocytes and B cell-specific signatures which correlate with clinical response; and
Antigen-specific T cells retained their functionality throughout the duration of treatment.
17
SELECTED FINANCIAL INFORMATION
The selected statements of loss and comprehensive loss data for the periods presented and the selected statement of financial position data as of the dates presented are derived
from the audited annual condensed consolidated financial statements. The selected historical financial data below should be read in conjunction with the financial statements
and related notes and the sections titled “Components of Operations Overview” and “Results of Operations” appearing elsewhere in this report.
Statement of financial position data:
Cash and cash equivalents
Working capital (1)
Total assets
Total liabilities
Accumulated deficit
Total shareholder's equity
$
As of December 31,
2020
2019
(in thousands of Canadian dollars)
$
46,362
45,488
58,800
19,425
(154,974 )
39,375
14,066
13,199
22,434
15,986
(120,119 )
6,448
(1) Working capital is defined as current assets less current liabilities. See financial statements for further details regarding current assets and current liabilities.
Statements of loss and comprehensive loss data:
Revenue
Subcontract revenue
Interest revenue
Total revenue
Operating Expenses
Research and development
General and administrative
Government assistance
Accreted interest
Total operating expenses
Net loss and comprehensive loss
Basic and diluted loss per share
Weighted-average shares outstanding
COMPONENTS OF OPERATIONS OVERVIEW
Revenue
Year ended December 31,
2019
(in thousands, except share and per share amounts)
2020
$
$
$
3
298
301
26,605
15,205
(6,690 )
36
35,156
(34,855 )
(0.58 )
$
$
$
59
509
568
18,986
10,140
(2,432 )
1,239
27,933
(27,365 )
(0.55 )
60,305,264
49,653,578
The Corporation has no products approved for commercial sale and has not generated any revenue from product sales. Revenue consists primarily of income earned on cash
balances held at a commercial bank. The Corporation also generates immaterial revenue from providing formulation services under research collaboration agreement with
Leidos for the development of targeted therapies for malaria. Revenue is recognized when the formulation services are performed.
18
Operating Expenses
Research and development expenses
To date, the Corporation’s research and development expenses have related primarily to discovery efforts and preclinical, manufacturing and clinical development of its
product candidates. The most significant research and development expenses for the year relate to costs incurred for the development of the Corporation’s most advanced
product candidates, DPX-Survivac and DPX-SurMAGE, which include:
Expenses incurred under agreements with CROs, as well as investigative sites and consultants that conduct clinical trials, preclinical studies and other scientific
development services;
Costs related to the production and scale-up of clinical materials, including fees paid to contract manufacturers;
Employee-related expenses, including salaries, related benefits, travel and share-based compensation expense for employees engaged in research and development
functions;
Expenses incurred for outsourced professional scientific and regulatory development services;
Laboratory materials and supplies used to support research activities; and
Facilities and other expenses, which includes depreciation on laboratory equipment.
The Corporation expenses all research and development costs in the periods in which they are incurred. The Corporation accrues for costs incurred as the services are being
provided by monitoring the status of the project and the invoices received from its external service providers. Accruals are adjusted as actual costs become known. Where
contingent milestone payments are due to third parties under research and development arrangements or license agreements, the milestone payment obligations are expensed
when the milestone results are achieved.
Research and development activities are central to IMV’s business model. Product candidates in later stages of clinical development generally have higher development costs
than those in earlier stages of clinical development, primarily due to the increased size and duration of later-staged clinical trials. The Corporation expects that research and
development expenses will increase substantially over the next few years as it increases personnel, advances manufacturing processes, initiates and conducts additional clinical
trials and prepares regulatory filings related to its product candidates. The Corporation also expects to incur increased research and development expenses as it selectively
identifies and develops additional product candidates. However, it is difficult to determine with certainty the duration and completion costs of current or future preclinical
programs and clinical trials of product candidates.
The duration and timing of clinical trials and development of the Corporation’s product candidates will depend on a variety of factors that include, but are not limited to, the
following:
The scope, progress, outcome and costs of clinical trials and other research and development activities, including establishing an appropriate safety profile with IND-
directed studies;
Patient enrollment, discontinuation rates, per patient trial costs, and number and location of clinical trial sites in clinical trials;
The ability of the Corporation’s clinical partners and sponsors for investigator-sponsored trials to manage clinical trials;
Establishing commercial manufacturing capabilities or making arrangements with third party manufacturers;
Timing, receipt and terms of any marketing approvals from applicable regulatory authorities;
Obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;
Significant and changing government regulation; and
Significant competition and rapidly changing technologies within the biopharmaceutical industry.
The probability of success for each product candidate is highly uncertain. The Corporation will determine which programs to pursue and what resources to allocate to each
program in response to the scientific and clinical success of each product candidate as well as an assessment of each product candidate’s commercial potential. Further,
because IMV’s product candidates are still in clinical development, the Corporation cannot estimate the actual amounts necessary to successfully complete the development
and commercialization of product candidates or whether, or when, it may achieve profitability.
19
General and administrative
General and administrative expenses consist primarily of salaries and other staff-related costs, including share-based compensation expense for personnel in executive,
finance, human resources, project management, business development, investor relations and administrative functions. General and administrative expenses also include, but
are not limited to, facilities and overhead costs, legal feels related to corporate, securities and patent matters, investor relations costs, insurance and professional fees for
assurance, taxation, information technology communications and human resources matters. General and administrative costs are expensed as incurred and the Corporation
accrues for services provided by third parties related to the above expenses by monitoring the status of services provided and receiving estimates from its service providers,
adjusting accruals as actual costs become known.
The Corporation expects that its general and administration expenses will increase in the future as it increases personnel to support the continued development of its product
candidates. The Corporation has experienced and expects to continue to experience, increased expense associated with being a Nasdaq listed company including increased
accounting, audit, legal, regulatory and compliance costs, director and officer insurance premiums, as well as higher investor relations and public relations costs.
Government Assistance
Government assistance consists primarily of research and development investment tax credits awarded through the Canada Revenue Agency’s Scientific Research and
Economic Development (“SR&ED”) program for research expenditures incurred in Canada. Government assistance also contains other government funding for research
projects and employment funding as well as fair market value adjustments to interest-free and low-interest government loans.
Accreted interest
Accreted interest relates entirely to the valuation of interest-free and low interest-bearing government loans, most of which are repayable based on a percentage of future gross
revenue.
RESULTS OF OPERATIONS
Comparison of the Three Months Ended December 31, 2020 and 2019
The following table summaries the Corporations results of operations for the three months ended December 31, 2020 and 2019 (in thousands of Canadian dollars):
Revenue
Subcontract revenue
Interest revenue
Total revenue
Operating Expenses
Research and development
General and administrative
Government assistance
Accreted interest
Total operating expenses
Net loss and comprehensive loss
Revenue
Revenue did not fluctuate significantly period over period.
20
Three months ended December 31,
2020
2019
Change ($)
$
$
-
90
90
7,977
5,428
(3,041 )
(678 )
9,686
(9,596 )
$
$
32
104
136
5,518
3,362
(339 )
70
8,611
(8,475 )
$
$
(32 )
(14 )
(46 )
2,459
2,066
(2,702 )
(748 )
1,075
(1,121 )
Research and development expenses
Research and development expenses increased to $8 million for the three months ended December 31, 2020 from $5.5 million for the three months ended December 31, 2019.
The increase of $2.5 million is mainly attributable to $2.4 million related to pre-clinical expenses for development of DPX-COVID-19, which is offset by the increase in
government assistance, and a $509,000 increase in personnel and stock-based compensation costs due to an increase in head count. This increase is partly offset by a decrease
of $149,000 in travel due to COVID-19 travel restrictions and a decrease of $324,000 in basket trial costs compared with Q4 2019.
General and administrative expenses
General and administrative expenses increased to $5.4 million for the three months ended December 31, 2020 from $3.4 million for the three months ended December 31,
2019. This $2 million increase can be explained by an increase of $1.1 million in Directors and Officers insurance premium and $919,000 in foreign exchange loss.
Government Assistance
The increase in government assistance for the period ended December 31, 2020 compared with December 31, 2019 is mainly attributable to $2.7 million in government grants
for the development of DPX-COVID-19.
Comparison of the Year Ended December 31, 2020 and 2019
The following table summaries the Corporations results of operations for the years ended December 31, 2020 and 2019 (in thousands of Canadian dollars):
Revenue
Subcontract revenue
Interest revenue
Total revenue
Operating Expenses
Research and development
General and administrative
Government assistance
Accreted interest
Total operating expenses
Net loss and comprehensive loss
Revenue
Years ended December 31,
2020
2019
Change ($)
$
$
3
298
301
26,605
15,205
(6,690 )
36
35,156
(34,855 )
$
$
59
509
568
18,986
10,140
(2,432 )
1,239
27,933
(27,365 )
$
$
(56 )
(211 )
(267 )
7,619
5,065
(4,258 )
(1,203 )
7,223
(7,490 )
The decrease in subcontract revenue in 2020 is attributable to the Leidos collaboration as the project is nearing completion. Interest revenue decreased by $211,000 due to
decreased interest rates in 2020 compared with 2019.
Research and development expenses
Research and development expenses increased to $26.6 million for the year ended December 31, 2020 from $19 million for the year ended December 31, 2019. The increase
of $7.6 million is mainly attributable to $1.5 million in clinical costs related to the basket trial as a result of increased sites and enrollment compared with 2019, $1.6 million in
personnel and stock-based compensation costs due to an increase in head count, and $6.2 million related to pre-clinical expenses for development of DPX-COVID-19 which is
offset by the increase in government assistance. This increase is partly offset by a decrease of $409,000 in travel due to COVID-19 travel restrictions, a decrease of $638,000
in DPX-SurMAGE pre-clinical development costs, and a decrease of $635,000 related to the DeCidE1 Phase 2 study of DPX-Survivac.
21
Direct research and development expenses by program:
DPX-Survivac
DLBCL
Ovarian
Basket Trial
Other
DPX-SurMAGE
DPX-COVID-191
Other programs
Total direct R&D expense
Unallocated research and development expenses:
Personnel (including stock-based compensation)
Indirect research and development expense2
Total research and development expenses
Years ended December 31,
2020
2019
Change ($)
$
$
743
1,176
7,000
2,652
1,086
6,206
557
19,420
6,283
902
26,605
$
$
741
1,923
5,452
2,066
1,724
-
968
12,874
4,724
1,388
18,986
$
$
2
(747 )
1,548
586
(638 )
6,206
(411 )
6,546
1,559
(486 )
7,619
1 DPX-COVID-19 development is government funded
2
Indirect research and development expense includes non-cash amortization of lab equipment, travel and general laboratory utilities and consumables.
General and administrative expenses
General and administrative expenses increased to $15.2 million for the year ended December 31, 2020 from $10.1 million for the year ended December 31, 2019. The
increase of $5.1 million compared with 2019 can be explained by an increase of $2.7 million in Directors and Officers insurance premium, $488,000 in legal and professional
fees, $1.3 million in foreign exchange loss, $207,000 in personnel costs due to an increase in head count, $161,000 in public relations and website design costs, and a
$728,000 increase in non-cash deferred share unit (“DSU”) compensation compared with 2019. These increases are partly offset by a $305,000 decrease in non-cash stock-
based compensation and a $472,000 decrease in travel costs. In 2019, DSU compensation was a $191,000 recovery due to outstanding DSUs being revalued each period and a
lower share price in 2019, compared with 2018. Effective August 8, 2019, the Corporation elected to settle all future DSU redemptions in shares. As a result, DSUs are now
accounted for as equity-settled instruments and will not need to be revalued at each reporting period. The Corporation expects that this will continue to reduce the comparative
volatility in the DSU compensation expense from Q3 2020 onward.
Government Assistance
The increase in government assistance for the year ended December 31, 2020 compared with December 31, 2019 is mainly attributable to $5 million in government grants for
development of DPX-COVID-19 and related wage subsidies, partly offset by a non-cash $840,000 decrease associated with the revaluation of the low interest-bearing
government loan from the Province of Nova Scotia upon receipt of the extension and amended repayment plan in 2019.
CASHFLOWS, LIQUIDITY AND CAPITAL RESOURCES
Liquidity and Capital Resources
Sources of liquidity
IMV is publicly traded and as a result has funded its operations primarily through public and private equity offerings, as well as from upfront and milestone payments, and
research support payments generated from collaborations.
In 2020, IMV completed a private placement of 8,770,005 units of the Corporation for gross proceeds of $25.1 million and net proceeds of $24.9 million. The Corporation
also issued 6,841,773 shares under two ATM Distribution agreements for total gross proceeds of $40.8 million and net proceeds of $38.8 million.
22
Funding requirements
The Corporation has not generated any revenue from approved product sales to date and does not expect to do so until such time as IMV obtains regulatory approval and
commercializes one or more of its product candidates. As the Corporation is currently in the preclinical and clinical stages development, it is uncertain when or if it will
achieve commercialization. IMV expects that operating expenses will continue to increase in connection with ongoing and new, later-staged clinical trials, expanded
preclinical activities and the development of product candidates in the pipeline. The Corporation expects to continue its collaborations and will look for additional
collaborations as well as expanded collaboration opportunities. For the purposes of assessing the Corporation as a going concern, although it is difficult to predict funding
requirements, based on the current operating plan, it is anticipated that existing cash and cash equivalents and identified potential sources of cash, will fund operations and
capital expenditure requirements in excess of 12 months following the date of issuance of IMV’s 2020 audited annual consolidated financial statements. These estimates are
based on assumptions and plans which may change and which could impact the magnitude and/or timing of operating expenses, capital expenditures and the Corporation’s
cash runway. The successful development of product candidates is uncertain, and therefore IMV is unable to estimate the actual funds required to complete the research,
development and commercialization of product candidates.
At December 31, 2020, the Corporation had approximately $50.3 million of existing and identified potential sources of cash including:
cash and equivalents of $46.4 million; and
amounts receivable and investment tax credits receivable of $3.9 million.
In addition, the Corporation entered into the October 2020 ATM allowing the Corporation to offer and sell common shares from time-to-time up to an aggregate offering
amount of US$50 million (CAD$66.9 million) through Piper Sandler, as agent. Subsequent to December 31, 2020, 533,994 shares have been sold under the October 2020
ATM for gross proceeds of US$2.3 million. The Corporation continually reassesses the adequacy of its cash resources, evaluating existing clinical trials, research projects
and/or potential collaboration opportunities, to determine when and how much additional funding is required.
The Corporation continuously monitors its cash position, the status of its development programs including those of its partners, cash forecasts for completing various stages of
development, the potential to license or co-develop each product candidate, and continues to actively pursue alternatives to raise capital, including equity offerings, debt and
non-dilutive funding.
Cash Flows
The following table summarizes the Corporation’s cash flows for the periods indicated (in thousands of Canadian dollars):
Net cash (used in) provided by:
Operating activities
Financing activities
Investing activities
Net increase (decrease) in cash and cash equivalents
Cash flows from operating activities
Years Ended December 31,
2020
(34,745 )
67,483
(442 )
32,296
2019
(27,288 )
26,935
(476 )
(829 )
During Fiscal 2020, $34.7 million was used in operating activities. This included the reported net loss of $34.9 million prior to being decreased by $1.5 million for non-cash
expenses including DSU compensation, depreciation, accretion of long-term debt, fair value adjustments and stock-based compensation. The Corporation had a net decrease
of cash of $1.4 million as a result of changes in working capital balances, which was mainly attributable to a $1.1 million increase in accounts receivable related to
government funding towards the DPX-COVID-19 program, and a $1.9 million increase in prepaid expenses. This decrease was partly offset by an increase of $1.8 million in
accounts payable, accrued and other liabilities.
23
During Fiscal 2019, $27.4 million was used in operating activities. This included the reported net loss of $27.4 million prior to being decreased by $1.9 million for non-cash
expenses including DSU compensation, depreciation, revaluation of long-term debt, accretion of long-term debt, loss on disposal of assets and stock-based compensation. The
Corporation had a net decrease of cash of $1.8 million as a result of changes in working capital balances, which was mainly attributable to a $1.4 million decrease in accounts
payable and accrued liabilities, a $333,000 increase in prepaid expenses, and a $550,000 increase in investment tax credits receivable, partly offset by a decrease of $492,000
in amounts receivable.
Cash flows from financing activities
During Fiscal 2020, sources of cash from financing activities included: $25.1 million in proceeds raised from the Private Placement less cash issuance costs of $152,000,
$40.8 million in proceeds raised from the ATM offering less cash issuance costs of $2 million, $3.1 million in proceeds from short-term borrowings related to financed
Directors and Officers insurance premium, $900,000 in proceeds from long-term conditionally repayable borrowings related to government funding of DPX-COVID-19 and
$2.5 million through the exercise of stock options and warrants. The Corporation used $2.6 million to repay short-term borrowings related to financing the Directors and
Officers insurance premium and used $146,000 to repay long-term debt and lease obligations during the period.
During Fiscal 2019, sources of cash from financing activities included: $29.5 million proceeds raised in the March 2019 Public Offering less cash issuance costs of $2.5
million, and $156,000 through the exercise of stock options and warrants. The Corporation used $178,000 to repay long-term debt and lease obligations during the period.
Cash flows from investing activities
During 2020, IMV used $442,000 of cash in investing activities, consisting mainly of purchases of furniture and equipment for ongoing research and operating activities.
During 2019, IMV used $476,000 of cash in investing activities, consisting mainly of purchases of furniture and equipment for ongoing research and operating activities.
JUNE 2017 EQUITY OFFERING AND USE OF PROCEEDS - COMPLETED
On June 21, 2017, the Corporation completed a public offering, issuing 2,403,846 Common Shares at a price of $4.16 per share for aggregate proceeds of $10 million. The
Corporation intended to use the net proceeds of this offering for the research and development and clinical advancement of its cancer and infectious disease therapy candidates
and for working capital and general corporate purposes. The table below provides the amount used to date and any variances in thousands of Canadian dollars (except for
working capital and general corporate purposes).
Intended Use of Proceeds
Phase 2 clinical trial in DLBCL with Merck
Phase 1 clinical trial for multiple indications
Estimated
amount
$
2,400
4,200
MARCH 2019 EQUITY OFFERING AND USE OF PROCEEDS
Amount
to date
$
2,400
4,200
Variances
None
None
On March 6, 2019, the Corporation completed a public offering, issuing 5,404,855 Common Shares (including 504,855 Common Shares upon the exercise of the
underwriters’ over-allotment option on March 11, 2019) at a price of $5.45 per share for aggregate proceeds of $29.5 million. The Corporation intends to use the net proceeds
of this offering to accelerate the development of DPX-Survivac in combination with Keytruda as part of the basket trial in selected advanced or recurrent solid tumors in
bladder, liver (hepatocellular carcinoma), ovarian and non-small-cell lung cancers, as well as tumors shown to be positive for the microsatellite instability high biomarker and
for general corporate purposes. The table below provides the amount used to date and any variances in thousands of Canadian dollars (except for working capital and general
corporate purposes).
24
Intended Use of Proceeds
Phase 2 clinical trial for multiple indications
Estimated
amount
$
16,000
MARCH AND JUNE 2020 ATM DISTRIBUTIONS - COMPLETED
Amount
to date
$
7,401
Variances
No variances anticipated
On March 17, 2020, the Corporation entered into a first Equity Distribution Agreement (“March 2020 ATM”) with Piper Sandler authorizing the Corporation to offer and sell
Common Shares from time-to-time up to an aggregate offering amount of US$30 million through Piper Sandler, as agent. The March 2020 ATM was terminated on June 30,
2020 and 2,070,883 Common Shares were sold under this agreement for total gross proceeds of $7.6 million. To maintain the remainder of IMV’s March 2020 ATM facility
under its new Canadian base shelf prospectus, IMV entered into a second ATM Distribution dated June 30, 2020 (“ June 2020 ATM ”), with Piper Sandler, to offer and sell
Common Shares from time-to-time up to an aggregate offering amount of US$24.5 million through Piper Sandler, as agent. An additional 4,770,890 Common Shares were
sold in the three months period ended September 30, 2020 for gross proceeds of US$24.5 million, concluding the proceeds raised under the June 2020 ATM to the maximum
offering amount of US$24.5 million as of July 20, 2020. As of September 30, 2020, a total of 6,841,773 shares have been sold under the two ATM Distribution agreements
for total gross proceeds of $40.8 million.
OCTOBER 2020 ATM DISTRIBUTION
On October 16, 2020, the Corporation entered into the October 2020 ATM with Piper Sandler authorizing the Corporation to offer and sell, through “at-the-market” offerings,
Common Shares from time to time up to an aggregate offering price of US$50 million through Piper Sandler, as agent. The Corporation intends to use the net proceeds from
the October 2020 ATM for research and development expenditures, clinical trial expenditures, including expenditures related to a COVID-19 vaccine candidate and general
corporate purposes. As of March 16, 2021, a total of 533,994 shares have been sold under the October 2020 ATM for total gross proceeds of US$2.3 million.
SUMMARY OF QUARTERLY RESULTS
The selected quarterly financial information(1) for the past eight financial quarters is outlined below: (in thousands of dollars, except for amounts per share)
Q4-2020
Q3-2020
Q2-2020
Q1-2020
Q4-2019
Q3-2019
Q2-2019
Q1-2019
Total Revenue
Total Expenses
Loss
Basic and Diluted
Loss per Share
90
9,686
(9,596)
(0.14)
88
8,415
(8,327)
(0.13)
55
7,323
(7,268)
(0.13)
68
9,732
(9,664)
(0.19)
136
8,611
(8,475)
(0.17)
164
8,060
(7,896)
(0.16)
186
5,237
(5,051)
(0.10)
82
6,025
(5,943)
(0.13)
(1) Unless otherwise noted, financial information in thousands of Canadian dollars and prepared in accordance with IFRS.
Revenues from quarter-to-quarter may vary significantly. Revenues are non-recurring by nature and are generated by license agreements as well as contract research
agreements. It is also important to note that historical patterns of expenses cannot be taken as an indication of future expenses. The amount and timing of expenses and
availability of capital resources vary substantially from quarter-to-quarter, depending on the level of R&D activities being undertaken at any time and the availability of
funding from investors or collaboration partners.
25
OUTLOOK FOR 2021
The exact timing could differ from expectations but are currently management’s best estimate.
RELATED PARTY TRANSACTIONS
For the year ending December 31, 2020, there were no related party transactions (2019 - $nil).
CONTRACTUAL OBLIGATIONS
The following table outlines the contractual maturities for long-term debt repayable over the next five years and thereafter:
Contractual
Obligations
Accounts payable and
accrued liabilities
Short term and low value
leases
Long-term leases
Long-term debt
TOTAL
Total
9,240
39
1,989
16,503
27,771
Payments Due by Period (in thousands of Canadian dollars)
1 - 3 years
_
Less than 1 year
9,240
4 - 5 years
_
18
282
1,253
10,793
21
578
2,372
2,971
_
542
2,153
2,695
After 5 years
_
_
587
10,725
11,312
OFF-BALANCE SHEET ARRANGEMENTS
The Corporation was not party to any off-balance sheet arrangements as of December 31, 2020.
OUTSTANDING SECURITIES
As at March 16, 2021, the number of issued and outstanding Common Shares was 67,711,045 and a total of 4,997,282 stock options, warrants and deferred share units were
outstanding.
RISKS AND UNCERTAINTIES
The Corporation is a clinical-stage company that operates in an industry that is dependent on a number of factors that include the Corporation’s capacity to raise additional
funding on reasonable terms when necessary, obtain positive results of pre-clinical studies and clinical, successfully develop existing and new products, hire and retain skilled
staff, protect its intellectual property, manufacture its products and meet demand, and obtain necessary regulatory approvals and the timing in respect thereof, etc. An
investment in the Common Shares is subject to a number of risks and uncertainties. An investor should carefully consider the risks described in the Corporation’s AIF and the
registration statement on Form 40-F filed with the U.S. Securities and Exchange Commission, as well as the other information filed with the securities regulators before
investing in the Common Shares. If any of such described risks occur, or if others occur, the Corporation’s business, operating results and financial condition could be
seriously harmed and investors may lose a significant proportion of their investment.
26
There are important risks which management believes could impact the Corporation’s business. For information on risks and uncertainties, please also refer to the “Risk
Factors” section of the Corporation’s most recent AIF filed on SEDAR at www.sedar.com and included in the registration statement on Form 40-F filed on EDGAR at
www.sec.gov/edgar.
DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING
Disclosure Controls and Procedures
The Chief Executive Officer (the “CEO”) and the Chief Financial Officer (the “CFO”) of the Corporation are responsible for establishing and maintaining the Corporation’s
disclosure controls and procedures (“DCP”) including adherence to the Disclosure Policy adopted by the Corporation. The Disclosure Policy requires all staff to keep senior
management fully apprised of all material information affecting the Corporation so that they may evaluate and discuss this information and determine the appropriateness and
timing for public disclosure.
The Corporation maintains DCP designed to ensure that information required to be disclosed in reports filed under applicable securities laws, is recorded, processed,
summarized and reported within the appropriate time periods and that such information is accumulated and communicated to the Corporation’s management, including the
CEO and CFO, to allow for timely decisions regarding required disclosure.
The CEO and CFO have evaluated whether there were changes to the DCP during the period ended September 30, 2020 that have materially affected, or are reasonably likely
to materially affect, the DCP. No such changes were identified through their evaluation.
In designing and evaluating DCP, the Corporation recognizes that any disclosure controls and procedures, no matter how well conceived or operated, can only provide
reasonable, not absolute, assurance that the objectives of the control system are met, and management is required to exercise its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.
Internal Control over Financial Reporting
The Corporation’s management, including the CEO and the CFO, are responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”)
for the Corporation to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with IFRS. The fundamental issue is ensuring all transactions are properly authorized and identified and entered into a well-designed, robust and clearly
understood accounting system on a timely basis to minimize risk of inaccuracy, failure to fairly reflect transactions, failure to fairly record transactions necessary to present
financial statements in accordance with IFRS, unauthorized receipts and expenditures, or the inability to provide assurance that unauthorized acquisitions or dispositions of
assets can be detected.
The CEO and CFO have evaluated whether there were changes to ICFR during the year ended December 31, 2020 that have materially affected, or are reasonably likely to
materially affect, ICFR. No such changes were identified through their evaluation. In response to the COVID-19 pandemic, the Corporation asked its employees to work from
home to the extent possible. This change requires certain processes and controls that were previously done or documented manually to be completed and retained in electronic
form. Despite the changes required by the current environment, there have been no significant changes in the Corporation’s internal controls during the year ended December
31, 2020 that have materially affected, or are reasonably likely to materially affect, ICFR.
The Corporation’s ICFR may not prevent or detect all misstatements because of inherent limitations. Additionally, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because changes in conditions or deterioration in the degree of compliance with the Corporation’s policies
and procedures.
27
BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS AND SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements have been prepared in accordance with the IFRS as issued by the IASB. The accounting policies, methods of computation and
presentation applied in the audited annual consolidated financial statements are consistent with those of previous financial year except for business development and investor
relations expenses are now presented in general and administrative expenses on the consolidated statements of loss and comprehensive loss. Certain comparative figures have
been reclassified to conform the presentation adopted in the current year for general and administrative expenses.
The significant accounting policies of IMV are detailed in the notes to the annual audited consolidated financial statements for the year ended December 31, 2020 filed on
SEDAR www.sedar.com and included in the registration statement on Form 40-F filed on EDGAR at www.sec.gov/edgar.
CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. The determination of estimates requires the exercise of judgement based on various assumptions and other factors such as historical
experience and current and expected economic conditions. Actual results could differ from those estimates.
While the Corporation’s significant accounting policies and critical judgements in applying the Corporation’s accounting policies are detailed in the audited annual
consolidated financial statements for the year ended December 31, 2020 filed on SEDAR www.sedar.com and included in the registration statement on Form 40-F filed on
EDGAR at www.sec.gov/edgar, the Corporation believes that the following critical accounting policies, estimates and judgements are most important to understanding and
evaluating its financial results.
Calculation of initial fair value and carrying amount of long-term debt
Atlantic Canada Opportunities Agency (“ACOA”) conditionally repayable loans (“Conditional ACOA Loans”)
The initial fair value of the Conditional ACOA Loans is determined by using a discounted cash flow analysis for each of the loans, which require a number of assumptions.
The difference between the face value and the initial fair value of the Conditional ACOA Loans is recorded in the consolidated statement of loss and comprehensive loss as
government assistance. The carrying amount of the Conditional ACOA Loans requires management to adjust the long-term debt to reflect actual and revised estimated cash
flows whenever revised cash flow estimates are made or new information related to market conditions is made available. Management recalculates the carrying amount by
computing the present value of the estimated future cash flows at the original effective interest rate. Any adjustments are recognized in the consolidated statement of loss as
accreted interest after initial recognition.
The significant assumptions used in determining the discounted cash flows include estimating the amount and timing of future revenue for the Corporation and the discount
rate.
As the Conditional ACOA Loans are repayable based on a percentage of gross revenue, if any, the determination of the amount and timing of future revenue significantly
impacts the initial fair value of the loan, as well as the carrying value of the Conditional ACOA Loans at each reporting date. The expected revenue streams include i)
estimated royalties generated from the eventual commercialization of the Corporation’s products, and ii) estimated milestone payments generated upon entering into potential
contractual partnerships and achieving development and sales milestones. The amount and timing of estimated milestone payments forecasted are earlier and less predictable,
therefore, changes in the amount and timing of milestone payments could have a significant impact on the fair value of the loans. Further, the Corporation is in the early stages
of research for its product candidates; accordingly, determination of the amount and timing of any revenue streams requires significant judgment by management.
The discount rate determined on initial recognition of the Conditional ACOA Loans is used to determine the present value of estimated future cash flows expected to be
required to settle the debt. In determining the appropriate discount rates, the Corporation considered the interest rates of similar long-term debt arrangements with similar
terms. The Conditional ACOA Loans are repayable based on a percentage of gross revenue, if any; accordingly, finding financing arrangements with similar terms is difficult
and management was required to use significant judgment in determining the appropriate discount rates. Management used a discount rate of 35% to discount the Conditional
ACOA Loans.
28
Province of Nova Scotia (“The Province”)
The initial fair value of the Province loan is determined by using a discounted cash flow analysis for the loan. The interest rate on the loan is below the market rate for a
commercial loan with similar terms.
The significant assumption used in determining the discounted cash flows is the discount rate.
Any changes in the discount rate would impact the amount recorded as initial fair value of the long-term debt and the carrying value of the long-term debt at each reporting
date. In determining the appropriate discount rate, the Corporation considers the interest rates of similar long-term debt arrangements with similar terms. The Province loan is
a government loan with principal payments only required at the end of seven years; accordingly, finding financing arrangements with similar terms is difficult and
management was required to use significant judgment in determining the appropriate discount rates. Management used a discount rate of 11% to discount the Province loan.
The difference between the book value and the initial fair value of the Province loan is recorded in the consolidated statement of loss as government assistance on initial
recognition. Any changes in the amounts recorded on the consolidated statement of financial position for the Province loan result in an offsetting charge to accreted interest
after initial recognition in the consolidated statement of loss.
FINANCIAL INSTRUMENTS
Financial instruments are defined as a contractual right or obligation to receive or deliver cash on another financial asset. The Corporation recognizes financial instruments
based on their classification. Depending on the financial instrument’s classification, changes in subsequent measurements are recognized in net loss or other comprehensive
loss.
A description of the financial instruments, their fair value and risk management is included in the Corporation’s audited annual consolidated financial statements for the year
ended December 31, 2020 filed on SEDAR www.sedar.com and included in the registration statement on Form 40-F filed on EDGAR at www.sec.gov/edgar.
(Signed) Frédéric Ors
Frédéric Ors
Chief Executive Officer
March 16, 2021
(Signed) Pierre Labbé
Pierre Labbé
Chief Financial Officer
29
CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 99.4
I, Frederic Ors, certify that:
1. I have reviewed this annual report on Form 40-F of IMV Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations, and cash flows of the issuer as of, and for, the periods presented in this report;
4. The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report
is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially
affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
5. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the
audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect the
issuer’s ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.
Date: March 16, 2021
/s/ Frederic Ors
Name: Frederic Ors
Title: Chief Executive Officer
(principal executive officer)
CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 99.5
I, Pierre Labbé, certify that:
1. I have reviewed this annual report on Form 40-F of IMV Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations, and cash flows of the issuer as of, and for, the periods presented in this report;
4. The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report
is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles;
(c) Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially
affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
5. The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the
audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting that are reasonably likely to adversely affect the
issuer’s ability to record, process, summarize, and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.
Date: March 16, 2021
/s/ Pierre Labbé
Pierre Labbé
Chief Financial Officer
(principal financial officer)
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 99.6
The undersigned, as the Chief Executive Officer of IMV Inc. certifies that, to the best of his knowledge and belief, the annual report on Form 40-F for the fiscal year ended
December 31, 2020, which accompanies this certification, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934,
as amended, and the information contained in the annual report on Form 40-F for the fiscal year ended December 31, 2020 fairly presents, in all material respects, the financial
condition and results of operations of IMV Inc. at the dates and for the periods indicated. The foregoing certification is made pursuant to § 906 of the Sarbanes-Oxley Act of
2002 (18 U.S.C. § 1350) and shall not be relied upon for any other purpose. The undersigned expressly disclaims any obligation to update the foregoing certification except as
required by law.
Date: March 16, 2021
/s/ Frederic Ors
Frederic Ors
Chief Executive Officer
(principal executive officer)
CERTIFICATION
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Exhibit 99.7
The undersigned, as the Chief Financial Officer of IMV Inc. certifies that, to the best of his knowledge and belief, the annual report on Form 40-F for the fiscal year ended
December 31, 2020, which accompanies this certification, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934,
as amended, and the information contained in the annual report on Form 40-F for the fiscal year ended December 31, 2020 fairly presents, in all material respects, the financial
condition and results of operations of IMV Inc. at the dates and for the periods indicated. The foregoing certification is made pursuant to § 906 of the Sarbanes-Oxley Act of
2002 (18 U.S.C. § 1350) and shall not be relied upon for any other purpose. The undersigned expressly disclaims any obligation to update the foregoing certification except as
required by law.
Date: March 16, 2021
/s/ Pierre Labbé
Pierre Labbé
Chief Financial Officer
(principal financial officer)
CONSENT OF REGISTERED PUBLIC ACCOUNTING FIRM
Exhibit 99.8
We consent to the incorporation by reference in this Annual Report on Form 40-F of our report dated March 16, 2021, with respect to the consolidated financial statements of
IMV Inc. as at and for the years ended December 31, 2020 and 2019, which appears in Exhibit 99.2 to this Annual Report on Form 40-F of IMV Inc.
We also consent to the incorporation by reference in the Registration Statements on Form F-10 (Nos. 333-239310 and 333-249493), as amended, and Form S-8 (No. 333-
225363, 333-238706 and 333-239550) of IMV Inc. of our report dated March 16, 2021 referred to above. We also consent to reference to us under the heading “Interests of
Experts,” which appears in the Annual Information Form included in Exhibit 99.1, which is incorporated by reference in this Annual Report on Form 40-F, which is
incorporated by reference in such Registration Statements.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Halifax, Nova Scotia, Canada
March 16, 2021