Merger

12 Months Ended

Dec. 31, 2023

Merger

Merger

3. Merger

On October 2, 2023 the Company closed the Merger transaction contemplated by the Merger Agreement. As a result of the Merger, the Company acquired 100% of the outstanding equity interests of Morphimmune through the issuance of 8,835,710 shares of the Company’s common stock to Morphimmune stockholders, based upon an exchange ratio of 0.3042 shares of the Company’s common stock for each outstanding share of Morphimmune capital stock. 

Upon completion of the Merger, 8,128,096 options to purchase shares of Morphimmune capital stock pursuant to the Morphimmune 2020 Equity Incentive Plan, or Morphimmune Plan, were converted into 2,472,563 options to purchase shares of the Company’s common stock with a weighted average exercise price of $1.29 per share.  The Company assumed the Morphimmune Plan and all other terms and conditions associated with these options, including vesting and exercisability, are governed by the original terms and conditions of the Morphimmune’s Plan. 

The Company accounted for the acquisition of Morphimmune as an asset acquisition as substantially all of the fair value of the gross assets acquired of Morphimmune was concentrated within two programs that are considered a group of similar assets. These programs are deemed to be similar IPR&D assets being acquired based on the similarity of: (i) their current preclinical stage of development, (ii) solid tumor therapeutic indications, (iii) risks for development, (iv) regulatory pathway, and (v) economics of commercialization. 

The consideration paid for an acquisition of assets is allocated to identifiable assets acquired and liabilities assumed based on a relative fair value basis.

The fair value of the consideration transferred for the acquisition of Morphimmune was calculated based on the closing stock price of Immunome’s common stock on October 2, 2023, which was $8.20 per share, and based upon the vested and unvested balances of Morphimmune share-based awards as of the same date. Direct transaction costs for an asset acquisition are typically deferred and recognized as part of the consideration paid; however, the Company expensed $2.7 million of transaction costs for the Merger as incurred because substantially all of the fair value acquired relates to Morphimmune IPR&D assets that have no alternative future use and were immediately expensed following the closing of the Merger.  Transaction costs capitalized as part of consideration paid were costs that were contingent on the closing of the Merger.

The consideration paid and the relative fair values of assets acquired and liabilities assumed were as follows:

Common stock issued to Morphimmune shareholders	$	72,453
Share-based equity awards allocated to consideration paid		14,708
Transaction costs		792
Consideration paid	$	87,953
Assets acquired:
Cash and cash equivalents	$	10,068
Prepaid expenses and other current assets		191
Property and equipment		646
In-process research and development		80,802
Total assets acquired	$	91,707
Liabilities assumed:
Accounts payable	$	1,147
Accrued expenses		2,607
Total liabilities assumed	$	3,754
Net assets acquired	$	87,953

Under the asset acquisition model, an entity that acquires IPR&D assets follows the guidance in ASC 730, Research and Development, which requires that both tangible and intangible identifiable research and development assets with no alternative future use be initially allocated a portion of the consideration transferred and then charged to expense at the acquisition date. As the Morphimmune IPR&D assets acquired have no alternative future use to the Company, the Company charged $80.8 million to expense within its consolidated statement of operations and comprehensive loss for the year ended December 31, 2023.