UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended December 31, 2020

OR

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

Commission File Number 001-38906

IMMUNOVANT, INC.

(Exact name of Registrant as specified in its Charter)

Delaware		83-2771572
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
320 West 37th Street		10018
New York,	NY
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (917) 580-3099 

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	IMVT	The Nasdaq Stock Market LLC

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

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

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

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☒

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

As of February 16, 2021, there were 97,971,243 shares of the Registrant’s common stock, $0.0001 par value per share, outstanding.

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Table of Contents

		Page
Summary Risk Factors		2
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Condensed Consolidated Balance Sheets as of December 31, 2020 and March 31, 2020	3
	Condensed Consolidated Statements of Operations for the Three and Nine Months Ended December 31, 2020 and 2019	4
	Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended December 31, 2020 and 2019	5
	Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended December 31, 2020 and 2019	6
	Condensed Consolidated Condensed Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2020 and 2019	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	29
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	78
Item 3.	Defaults Upon Senior Securities	79
Item 4.	Mine Safety Disclosures	79
Item 5.	Other Information	79
Item 6.	Exhibits	79
SIGNATURES		80

Where You Can Find More Information

Investors and others should note that we may announce material business and financial information to our investors using our investor relations website (www.immunovant.com), filings we make with the Securities and Exchange Commission, webcasts, press releases, and conference calls. We use these mediums, including our website, to communicate with our stockholders and the public about our company, our product candidates, and other matters. It is possible that the information that we make available may be deemed to be material information. We therefore encourage investors and others interested in our company to review the information that we make available on our website.

The information contained on the website referenced in this Quarterly Report on Form 10-Q is not incorporated by reference into this filing, and the website address is provided only as an inactive textual reference.

1

SUMMARY RISK FACTORS

You should consider carefully the risks described under “Risk Factors” in Part II, Item 1.A of this Quarterly Report on Form 10-Q. References to “we,” “us,” and “our” in this section titled “Summary Risk Factors” refer to Immunovant, Inc. and its wholly owned subsidiaries. A summary of the risks that could materially and adversely affect our business, financial condition, operating results and prospects include the following:

•Our product candidate may cause adverse events or have other properties that could delay or prevent its regulatory approval, cause us to suspend or discontinue clinical trials, abandon further development or limit the scope of any approved label or market acceptance.

•Our business, operations and clinical development plans and timelines and supply chain could be adversely affected by the effects of health epidemics, including the ongoing global Novel Coronavirus Disease 2019, or the COVID-19 pandemic, on the manufacturing, clinical trials and other business activities performed by us or by third parties with whom we conduct business, including our contract manufacturers, contract research organizations, or CROs, shippers and others.

•We have a limited operating history and have never generated any product revenue.

•We expect to incur significant losses for the foreseeable future and may never achieve or maintain profitability.

•Our business is heavily dependent on the successful development, regulatory approval and commercialization of our sole product candidate, IMVT-1401.

•We will require additional capital to fund our operations, and if we fail to obtain necessary financing, we may not be able to complete the development and commercialization of IMVT-1401.

•Raising additional funds by issuing equity securities may cause dilution to existing stockholders, raising additional funds through debt financings may involve restrictive covenants, and raising funds through lending and licensing arrangements may restrict our operations or require us to relinquish proprietary rights.

•We rely on the license agreement with HanAll Biopharma Co., Ltd., or the HanAll Agreement, to provide rights to the core intellectual property relating to IMVT-1401. Any termination or loss of significant rights under the HanAll Agreement would adversely affect our development or commercialization of IMVT-1401.

•The HanAll Agreement obligates us to make certain milestone payments, some of which may be triggered prior to our potential commercialization of IMVT-1401.

•We may not be able to manage our business effectively if we are unable to attract and retain key personnel.

•We plan to expand our organization, and we may experience difficulties in managing this growth, which could disrupt our operations.

•Clinical trials are very expensive, time-consuming, difficult to design and implement, and involve uncertain outcomes.

•The results of our nonclinical and clinical trials may not support our proposed claims for our product candidate, or regulatory approval on a timely basis or at all, and the results of earlier studies and trials may not be predictive of future trial results.

•Interim, “top-line” or preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data.

•We may not be able to successfully develop and commercialize our product candidate IMVT-1401 on a timely basis or at all.

•Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be made more difficult or rendered impossible by multiple factors outside our control.

•We face significant competition from other biotechnology and pharmaceutical companies targeting autoimmune disease indications, and our operating results will suffer if we fail to compete effectively.

2

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

IMMUNOVANT, INC.

Condensed Consolidated Balance Sheets

(Unaudited, in thousands, except share and per share data)

	December 31, 2020		March 31, 2020
Assets
Current assets:
Cash	$	421,974	$	100,571
Prepaid expenses	6,973		5,460
Income tax receivable	481		36
Value-added tax receivable	—		3,009
Total current assets	429,428		109,076
Operating lease right-of-use assets	3,469		—
Property and equipment, net	132		65
Deferred offering costs	—		246
Total assets	$	433,029	$	109,387
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,100	$	1,190
Accrued expenses	13,281		10,938
Current portion of operating lease liabilities	1,104		—
Due to Roivant Sciences Ltd.	—		3,190
Total current liabilities	16,485		15,318
Operating lease liabilities, net of current portion	2,392		—
Total liabilities	18,877		15,318
Commitments and contingencies (Note 11)
Stockholders’ equity:(1)
Series A preferred stock, par value $0.0001 per share, 10,000 shares authorized, issued and outstanding at December 31, 2020 and March 31, 2020	—		—
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized, no shares issued and outstanding at December 31, 2020 and March 31, 2020	—		—
Common stock, par value $0.0001 per share, 500,000,000 shares authorized, 97,971,243 shares issued and outstanding at December 31, 2020 and 500,000,000 shares authorized, 56,455,376 shares issued and 54,655,376 shares outstanding at March 31, 2020	10		5
Additional paid-in capital	584,174		185,306
Accumulated other comprehensive income (loss)	467		(16)
Accumulated deficit	(170,499)		(91,226)
Total stockholders’ equity	414,152		94,069
Total liabilities and stockholders’ equity	$	433,029	$	109,387

(1) Retroactively restated for the reverse recapitalization as described in Note 1.

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

3

IMMUNOVANT, INC.

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except share and per share data)

	Three Months Ended December 31,				Nine Months Ended December 31,
	2020		2019		2020		2019
Operating expenses:
Research and development (includes $2,549 and $4,025 of stock-based compensation expense for the three and nine months ended December 31, 2020, respectively, and $311 and $2,683 of stock-based compensation expense for the three and nine months ended December 31, 2019, respectively)(1)	$	21,091	$	4,953	$	49,989	$	33,759
General and administrative (includes $3,443 and $9,309 of stock-based compensation expense for the three and nine months ended December 31, 2020, respectively, and $1,103 and $2,440 of stock-based compensation expense for the three and nine months ended December 31, 2019, respectively)(2)	10,549		6,088		29,211		11,836
Total operating expenses	31,640		11,041		79,200		45,595
Interest expense	—		376		—		625
Other expense (income), net	503		(221)		352		(539)
Loss before (benefit) provision for income taxes	(32,143)		(11,196)		(79,552)		(45,681)
(Benefit) provision for income taxes	(367)		100		(279)		156
Net loss	$	(31,776)	$	(11,296)	$	(79,273)	$	(45,837)
Net loss per common share – basic and diluted(3)	$	(0.32)	$	(0.28)	$	(0.94)	$	(1.16)
Weighted-average common shares outstanding – basic and diluted(3)	97,920,460		41,035,055		84,413,511		39,408,236

(1)Includes $0 and $176 of costs allocated from Roivant Sciences Ltd. for the three and nine months ended December 31, 2020, respectively, and $0 and $152 of costs allocated from Roivant Sciences Ltd. for the three and nine months ended December 31, 2019, respectively.

(2)Includes $185 and $522 of costs allocated from Roivant Sciences Ltd. for the three and nine months ended December 31, 2020, respectively, and $487 and $1,001 of costs allocated from Roivant Sciences Ltd. for the three and nine months ended December 31, 2019, respectively.

(3)Retroactively restated for the reverse recapitalization as described in Note 1.

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

4

IMMUNOVANT, INC.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited, in thousands)

	Three Months Ended December 31,				Nine Months Ended December 31,
	2020		2019		2020		2019
Net loss	$	(31,776)	$	(11,296)	$	(79,273)	$	(45,837)
Other comprehensive income (loss):
Foreign currency translation adjustments	689		(149)		483		(493)
Total other comprehensive income (loss)	689		(149)		483		(493)
Comprehensive loss	$	(31,087)	$	(11,445)	$	(78,790)	$	(46,330)

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

5

IMMUNOVANT, INC.

Condensed Consolidated Statements of Stockholders’ Equity(1)

(Unaudited, in thousands except share data)

	Series A  preferred stock			Common stock			Common stock subscribed		Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Total stockholders’ equity
	Shares	Amount		Shares	Amount
Balance at March 31, 2020	10,000	$	—	54,655,376	$	5	$	—	$	185,306	$	(16)	$	(91,226)	$	94,069
Issuance of common stock upon underwritten public offering	—	—		9,613,365	1		—		130,427		—		—		130,428
Issuance of common stock upon achievement of earnout shares milestone	—	—		10,000,000	1		—		(1)		—		—		—
Vesting of sponsor restricted shares	—	—		900,000	—		—		—		—		—		—
Issuance of common stock upon warrant redemption	—	—		5,719,145	1		—		65,751		—		—		65,752
Stock options exercised	—	—		23,841	—		—		63		—		—		63
Capital contribution – stock-based compensation	—	—		—	—		—		63		—		—		63
Capital contribution – expenses allocated from Roivant Sciences Ltd.	—	—		—	—		—		164		—		—		164
Stock-based compensation	—	—		—	—		—		3,918		—		—		3,918
Foreign currency translation adjustments	—	—		—	—		—		—		26		—		26
Net loss	—	—		—	—		—		—		—		(26,708)		(26,708)
Balance at June 30, 2020	10,000	$	—	80,911,727	$	8	$	—	$	385,691	$	10	$	(117,934)	$	267,775
Issuance of common stock upon underwritten public offering	—	—		6,060,606	1		—		188,118		—		—		188,119
Issuance of common stock upon achievement of earnout shares milestone	—	—		10,000,000	1		—		(1)		—		—		—
Vesting of sponsor restricted shares	—	—		900,000	—		—		—		—		—		—
Stock options exercised	—	—		18,372	—		—		119		—		—		119
Capital contribution – stock-based compensation	—	—		—	—		—		54		—		—		54
Capital contribution – expenses allocated from Roivant Sciences Ltd.	—	—		—	—		—		53		—		—		53
Stock-based compensation	—	—		—	—		—		3,307		—		—		3,307
Foreign currency translation adjustments	—	—		—	—		—		—		(232)		—		(232)
Net loss	—	—		—	—		—		—		—		(20,789)		(20,789)
Balance at September 30, 2020	10,000	$	—	97,890,705	$	10	$	—	$	577,341	$	(222)	$	(138,723)	$	438,406
Stock options exercised and vesting of restricted stock units	—	—		80,538	—		—		725		—		—		725
Capital contribution – expenses allocated from Roivant Sciences Ltd.	—	—		—	—		—		116		—		—		116
Stock-based compensation	—	—		—	—		—		5,992		—		—		5,992
Foreign currency translation adjustments	—	—		—	—		—		—		689		—		689
Net loss	—	—		—	—		—		—		—		(31,776)		(31,776)
Balance at December 31, 2020	10,000	$	—	97,971,243	$	10	$	—	$	584,174	$	467	$	(170,499)	$	414,152

	Series A  preferred stock			Common stock			Common stock subscribed		Additional paid-in capital		Accumulated other comprehensive income (loss)		Accumulated deficit		Total stockholders’ equity
	Shares	Amount		Shares	Amount
Balance at March 31, 2019	—	$	—	38,590,381	$	4	$	(3)	$	31,830	$	346	$	(24,838)	$	7,339
Capital contribution – stock-based compensation	—	—		—	—		—		35		—		—		35
Capital contribution – expenses allocated from Roivant Sciences Ltd.	—	—		—	—		—		331		—		—		331
Stock-based compensation	—	—		—	—		—		537		—		—		537
Foreign currency translation adjustments	—	—		—	—		—		—		(291)		—		(291)
Net loss	—	—		—	—		—		—		—		(20,059)		(20,059)
Balance at June 30, 2019	—	$	—	38,590,381	$	4	$	(3)	$	32,733	$	55	$	(44,897)	$	(12,108)
Settlement of common share subscription	—	—		—	—		3		—		—		—		3
Capital contribution – stock-based compensation	—	—		—	—		—		18		—		—		18
Capital contribution – expenses allocated from Roivant Sciences Ltd.	—	—		—	—		—		220		—		—		220
Stock-based compensation	—	—		—	—		—		3,119		—		—		3,119
Foreign currency translation adjustments	—	—		—	—		—		—		(53)		—		(53)
Net loss	—	—		—	—		—		—		—		(14,482)		(14,482)
Balance at September 30, 2019	—	$	—	38,590,381	$	4	$	—	$	36,090	$	2	$	(59,379)	$	(23,283)
Conversion of convertible promissory notes	10,000	—		3,499,995	—		—		35,587		—		—		35,587
Issuance of preferred and common stock, net of deferred offering costs	—	—		12,565,000	1		—		109,276		—		—		109,277
Capital contribution – stock-based compensation	—	—		—	—		—		82		—		—		82
Capital contribution – expenses allocated from Roivant Sciences Ltd.	—	—		—	—		—		312		—		—		312
Stock-based compensation	—	—		—	—		—		1,332		—		—		1,332
Foreign currency translation adjustments	—	—		—	—		—		—		(149)		—		(149)
Net loss	—	—		—	—		—		—		—		(11,296)		(11,296)
Balance at December 31, 2019	10,000	$	—	54,655,376	$	5	$	—	$	182,679	$	(147)	$	(70,675)	$	111,862

(1) Retroactively restated for reverse recapitalization as described in Note 1.

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

6

IMMUNOVANT, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)

	Nine Months Ended December 31,
	2020		2019
Cash flows from operating activities
Net loss	$	(79,273)	$	(45,837)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation	13,334		5,123
Depreciation on property and equipment	43		15
Foreign currency translation adjustments	483		(493)
Loss on disposal of property and equipment	—		13
Gain on extinguishment of convertible notes payable	—		(38)
Non-cash lease expense	714		—
Write-off of deferred offering costs	—		1,628
Changes in operating assets and liabilities:
Prepaid expenses	(1,513)		2,591
Income tax receivable	(445)		49
Value-added tax receivable	3,009		(83)
Accounts payable	914		2,604
Accrued expenses	2,590		3,827
Due to Roivant Sciences Ltd.	—		188
Income tax payable	—		106
Operating lease liabilities	(687)		—
Net cash used in operating activities	(60,831)		(30,307)
Cash flows from investing activities
Purchase of property and equipment	(115)		(21)
Net cash used in investing activities	(115)		(21)
Cash flows from financing activities
Capital contributions	333		867
Proceeds from issuance of common stock upon underwritten public offering	319,783		—
Proceeds from issuance of common stock upon warrant redemption	65,752		—
Proceeds from stock options exercised	907		—
Payment of deferred offering costs	(1,236)		(2,917)
Proceeds from notes payable to Roivant Sciences Ltd.	—		7,907
Repayment of convertible promissory note payable to Roivant Sciences Ltd.	—		(2,500)
Proceeds from convertible promissory notes payable	—		35,000
Repayment of convertible promissory notes payable	(3,190)		(2,500)
Recapitalization transaction	—		111,016
Net cash provided by financing activities	382,349		146,873
Net change in cash	321,403		116,545
Cash – beginning of period	100,571		6,985
Cash – end of period	$	421,974	$	123,530
Non-cash operating activity
Operating lease right-of-use assets obtained and exchanged for operating lease liabilities	$	4,183	$	—
Non-cash financing activity
Deferred offering costs in accrued expenses	$	—	$	574
Conversion of convertible promissory notes to common stock	—		35,000
Cancellation of interest on convertible promissory notes recorded in equity	—		587
Total non-cash financing activity	$	—	$	36,161
Supplemental disclosure of cash paid:
Income taxes	$	166	$	—

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

7

IMMUNOVANT, INC.

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 — Description of Business and Liquidity

[A] Description of Business

Immunovant, Inc. together with its wholly owned subsidiaries (the “Company” or “Immunovant”) (formerly known as Health Sciences Acquisitions Corporation) is a clinical-stage biopharmaceutical company focused on enabling normal lives for patients with autoimmune diseases. The Company is developing a novel, fully human monoclonal antibody, IMVT-1401 (formerly referred to as “RVT-1401”), that selectively binds to and inhibits the neonatal fragment crystallizable receptor. The Company intends to develop IMVT-1401 for indications in which there is robust evidence that pathogenic immunoglobulin G antibodies drive disease manifestation and for which reduction of these antibodies should lead to clinical benefit for patients with autoimmune diseases.

The Company has determined that it has one operating and reporting segment.

Reverse Recapitalization

On December 18, 2019, Health Sciences Acquisitions Corporation (“HSAC”) completed the acquisition of Immunovant Sciences Ltd. (“ISL”) pursuant to the share exchange agreement dated as of September 29, 2019 (the “Share Exchange Agreement”), by and among HSAC, ISL, the stockholders of ISL (the “Sellers”), and Roivant Sciences Ltd. (“RSL”), as representative of the Sellers (the “Business Combination”). As of immediately prior to the closing of the Business Combination, the Sellers owned 100% of the issued and outstanding common shares of ISL (“ISL Shares”). At the closing of the Business Combination, HSAC acquired 100% of the issued and outstanding ISL Shares, in exchange for 42,080,376 shares of HSAC’s common stock issued to the Sellers and 10,000 shares of HSAC Series A preferred stock issued to RSL. Upon the closing of the Business Combination, ISL became a wholly owned subsidiary of HSAC and HSAC was renamed “Immunovant, Inc.”.

The Business Combination was accounted for as a reverse recapitalization and HSAC was treated as the “acquired” company for accounting purposes. The Business Combination was accounted as the equivalent of ISL issuing stock for the net assets of HSAC, accompanied by a recapitalization. Accordingly, all historical financial information presented in these unaudited condensed consolidated financial statements represents the accounts of ISL and its wholly owned subsidiaries “as if” ISL is the predecessor to the Company. The shares and net loss per common share, prior to the Business Combination, have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination (0.48906624 Immunovant, Inc. shares for 1 ISL Share).

One of the primary purposes of the Business Combination was to provide a platform for ISL to gain access to the U.S. capital markets. See Note 3 – Business Combination and Recapitalization for additional details.

[B] Liquidity

The Company has incurred significant losses and negative cash flows from operations since its inception. As of December 31, 2020, the Company’s cash totaled $422.0 million and its accumulated deficit was $170.5 million.

The Company has not generated any revenues to date and does not anticipate generating any revenues unless and until it successfully completes development and obtains regulatory approval for IMVT-1401 or any future product candidate. Management expects to incur additional losses in the future to fund its operations and conduct product research and development and recognizes the need to raise additional capital to fully implement its business plan.

The Company intends to raise such additional capital through the issuance of equity securities, debt financings or other sources in order to further implement its business plan. However, if such financing is not available at adequate levels, the Company will need to reevaluate its operating plan and may be required to delay the development of its product candidates. The Company currently expects that its existing cash as of December 31, 2020, will be sufficient to fund its operating expenses and capital expenditure requirements into the second half of calendar year 2023 from the date the unaudited condensed consolidated financial statements are issued.

8

Note 2 — Summary of Significant Accounting Policies

[A] Basis of Presentation

The Company’s fiscal year ends on March 31 and its first three fiscal quarters end on June 30, September 30, and December 31. The accompanying condensed consolidated financial statements are unaudited. The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and follow the requirements of the Securities and Exchange Commission (“SEC”) for interim financial reporting. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements as certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited combined and consolidated financial statements. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. The Company has no unconsolidated subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Any reference in these notes to applicable guidance is meant to refer to the authoritative U.S. GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board (“FASB”).

In the opinion of management, the unaudited condensed consolidated financial statements include all normal and recurring adjustments that are considered necessary for the fair statement of results for the interim periods. The results for the three and nine months ended December 31, 2020 are not necessarily indicative of those expected for the year ending March 31, 2021 or for any future period. The condensed consolidated balance sheet as of March 31, 2020 included herein was derived from the audited combined and consolidated financial statements as of that date. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited combined and consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on June 29, 2020.

All share and per-share data reported in the unaudited condensed consolidated financial statements herein have been retroactively restated to reflect the effect of the Business Combination (as discussed in Note 3).

[B] Use of Estimates

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. The Company regularly evaluates estimates and assumptions related to assets, liabilities, stock-based compensation, operating leases, research and development costs and income taxes. The Company bases its estimates and assumptions on historical experience and on various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Additionally, the Company assessed the impact that the COVID-19 pandemic has had on its operations and financial results as of December 31, 2020 and through the issuance of this report. The Company’s analysis was informed by the facts and circumstances as they were known to the Company. This assessment considered the impact COVID-19 may have on financial estimates and assumptions that affect the reported amounts of assets and liabilities and expenses.

[C] Risks and Uncertainties

The Company is subject to risks common to early-stage companies in the biopharmaceutical industry including, but not limited to, uncertainties related to commercialization of products, regulatory approvals, dependence on key products, key personnel, third-party service providers, such as contract research organizations, protection of intellectual property rights and the ability to make milestone, royalty or other payments due under any license, collaboration or supply agreements.

[D] Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk include cash. As of December 31, 2020, the cash balance is kept in one banking institution that the Company believes is of high credit quality and is in excess of federally insured levels. The Company maintains its cash with an accredited financial institution and accordingly, such funds are subject to minimal credit risk. The Company has not experienced any losses on its cash.

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[E] Research and Development Expense

Research and development costs with no alternative future use are expensed as incurred. Payments for a product license prior to regulatory approval of the product and payments for milestones achieved prior to regulatory approval of the product are expensed in the period incurred as research and development. Milestone payments made in connection with regulatory approvals are capitalized and amortized to cost of product sales over the remaining useful life of the asset. Research and development expenses primarily consist of employee-related costs and expenses from third parties who conduct research and development activities on behalf of the Company. The estimated costs of research and development activities conducted by third-party service providers, which primarily include the conduct of clinical trials and contract manufacturing activities, are accrued over the service periods specified in the contracts and adjusted as necessary based upon an ongoing review of the level of effort and costs actually incurred. The estimate of the work completed is developed through discussions with internal personnel and external services providers as to the progress toward completion of the services and the agreed-upon fee to be paid for such services. As actual costs become known, the accrued estimates are adjusted. Such estimates are not expected to be materially different from amounts actually incurred, however the Company’s understanding of the status and timing of services performed, the number of subjects enrolled, and the rate of subject enrollment may vary from estimates and could result in reporting amounts that are higher or lower than incurred in any particular period. The estimate of accrued research and development expense is dependent, in part, upon the receipt of timely and accurate reporting from clinical research organizations and other third-party service providers.

[F] Leases

The Company's operating leases primarily relate to its three subleased premises, two in New York and one in North Carolina. Operating lease right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset during the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease.

Operating lease ROU assets and lease liabilities are initially recognized based on the present value of the future fixed lease payments over the expected lease term at commencement date calculated using the Company’s incremental borrowing rate applicable to the lease asset, unless the implicit rate is readily determinable. Operating lease ROU assets also include any lease payments made at or before lease commencement, adjusted by any initial direct costs and exclude any lease incentives received. The Company determines the lease term as the non-cancelable period of the lease and may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Leases with a term of 12 months or less are not recognized on the unaudited condensed consolidated balance sheets. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease costs such as common area costs and other operating costs are expensed as incurred.

The Company accounts for lease and non-lease components as a single lease component for all its facilities leases.

[G] Fair Value of Financial Instruments

The Company applies a fair value framework in order to measure and disclose its financial assets and liabilities. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs, where available, and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value:

•Level 1 — Quoted prices in active markets for identical assets or liabilities.

•Level 2 — Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Fair values are determined by utilizing quoted prices for similar assets and liabilities in active markets or other market observable inputs such as interest rates and yield curves.

•Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The Company’s financial instruments consist of cash, accounts payable, accrued expenses and amounts due to RSL. These financial instruments are stated at their respective historical carrying amounts, which approximates fair value due to their short-term nature. There were no Level 2 or Level 3 financial instruments as of December 31, 2020 or March 31, 2020.

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[H] Net Loss per Common Share

Basic net loss per common share is computed by dividing net loss applicable to common stockholders by the weighted-average number of common stock outstanding during the period. Diluted net loss per common share is computed by dividing the net loss applicable to common stockholders by the diluted weighted-average number of common stock outstanding during the period. In periods in which the Company reports a net loss, all common stock equivalents are deemed anti-dilutive such that basic net loss per common share and diluted net loss per common share are equivalent. Potentially dilutive common stock have been excluded from the diluted net loss per common share computations in all periods presented because such securities have an anti-dilutive effect on net loss per common share due to the Company’s net loss. There are no reconciling items used to calculate the weighted-average number of total common stock outstanding for basic and diluted net loss per common share data.

The following potentially dilutive securities have been excluded from the calculation of diluted net loss per share due to their anti-dilutive effect:

	Nine Months Ended December 31,
	2020	2019
Preferred stock as converted	10,000	10,000
Options	5,757,732	4,209,573
Restricted stock units (unvested)	214,980	1,800,000
Warrants	—	5,750,000
Total	5,982,712	11,769,573

In addition, the convertible promissory notes issued in the nine months ended December 31, 2019 were not included in the calculation of diluted weighted-average number of common shares outstanding because they were anti-dilutive given the net loss of the Company.

[I] Recently Adopted Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). ASU 2018-13 removes, modifies, and adds certain recurring and nonrecurring fair value measurement disclosures, including removing disclosures around the amount(s) of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, the policy for timing of transfers between levels, and the valuation process for Level 3 fair value measurements, among other things. ASU 2018-13 adds disclosure requirements around changes in unrealized gains and losses included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting period, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and a narrative description of measurement uncertainty. The amendments in ASU 2018-13 are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company has adopted this ASU as of April 1, 2020, with no impact to the Company’s unaudited condensed consolidated financial statements from the adoption of this new standard.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model that requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses on available-for-sale debt securities to be recorded through an allowance for credit losses instead of as a reduction in the amortized cost basis of the securities. ASU 2016-13 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted, including adoption in any interim period. The Company has adopted this ASU as of April 1, 2020, with no impact to the Company’s unaudited condensed consolidated financial statements from the adoption of this new standard.

Recent authoritative guidance issued by the FASB (including technical corrections to the Accounting Standards Codification), the American Institute of Certified Public Accountants, and the SEC did not, or are not expected to, have a material impact on the Company’s consolidated financial statements and related disclosures.

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Note 3 — Business Combination and Recapitalization

As discussed in Note 1, on December 18, 2019, HSAC completed the acquisition of ISL and acquired 100% of the ISL Shares for total consideration of $420.9 million, consisting of 42,080,376 shares of HSAC’s common stock and 10,000 shares of HSAC’s Series A preferred stock, in each case, valued at $10.00 per share (the deemed value of the shares issued pursuant to the Share Exchange Agreement). The Business Combination was accounted for as a reverse recapitalization whereby HSAC was treated as the “acquired” company for accounting purposes. This determination was primarily based on the fact that subsequent to the Business Combination, the Sellers have a majority of the voting power of the combined company, ISL will comprise all of the ongoing operations of the combined entity, a majority of the governing body of the combined company, and ISL’s senior management will comprise all of the senior management of the combined company. The Business Combination was accounted as the equivalent of ISL issuing stock for the net assets of HSAC, accompanied by a recapitalization. The net assets of HSAC were stated at historical cost with no goodwill or other intangible assets recorded. Reported amounts from operations included herein prior to the Business Combination are those of ISL. The shares, options and net loss per share available to holders of the Company’s common stock, prior to the Business Combination, have been retroactively restated as shares reflecting the exchange ratio established in the Business Combination (0.48906624 Immunovant, Inc. shares for 1 ISL Share).

In connection with the Business Combination, the Company incurred direct and incremental costs of $2.8 million, consisting of legal, accounting, financial advisory and other professional fees, which are included in additional paid-in capital in the consolidated balance sheets as of December 31, 2020. The Company incurred additional financial advisory fees related to the Business Combination of $2.3 million, which are included in accumulated deficit within the consolidated balance sheets as of December 31, 2020.

Earnout Shares

Pursuant to the Share Exchange Agreement, the Sellers were entitled to receive up to an aggregate of 20,000,000 additional shares of the Company’s common stock (the “Earnout Shares”) if the volume-weighted average price of the Company’s shares equals or exceeds the following prices for any 20 trading days within any 30-trading-day period (the “Trading Period”) following December 18, 2019, the date of the closing of the Business Combination:

(i)during any Trading Period prior to March 31, 2023, 10,000,000 Earnout Shares upon the achievement of a volume-weighted average price of at least $17.50 per share (the “First Earnout Milestone”); and

(ii)during any Trading Period prior to March 31, 2025, 10,000,000 Earnout Shares upon the achievement of a volume-weighted average price of at least $31.50 per share (the “Second Earnout Milestone”).

On May 12 and September 17, 2020, the Company achieved the First Earnout Milestone and the Second Earnout Milestone, respectively. Accordingly, the Company issued all of the 20,000,000 Earnout Shares to the Sellers (including 17,547,938 Earnout Shares issued to RSL) in the six months ended September 30, 2020.

See Note 8 – Stockholders’ Equity for additional details.

Sponsor Restricted Stock Agreement

In accordance with that certain restricted stock agreement, dated September 29, 2019, by and between HSAC and Health Sciences Holdings, LLC (the “Sponsor”), the Sponsor subjected 1,800,000 shares of its common stock (“Sponsor Restricted Shares”) to potential forfeiture, with 900,000 shares to vest and be released from potential forfeiture upon achievement of each of the First Earnout Milestone and the Second Earnout Milestone (as defined above), respectively. On May 12 and September 17, 2020, the Company achieved the First Earnout Milestone and the Second Earnout Milestone, respectively, and, as a result, all of the 1,800,000 Sponsor Restricted Shares vested and are no longer subject to forfeiture.

Note 4 — Material Agreements

License Agreement

On December 19, 2017, Roivant Sciences GmbH (“RSG”), a wholly owned subsidiary of RSL, entered into a license agreement (the “HanAll Agreement”) with HanAll Biopharma Co., Ltd. (“HanAll”). Under the HanAll Agreement, RSG received (1) the non-exclusive right to manufacture and (2) the exclusive, royalty-bearing right to develop, import, use and commercialize the antibody referred to as IMVT-1401 and certain back-up and next-generation antibodies, and products containing such antibodies, in the United States, Canada, Mexico, the European Union, the United Kingdom, Switzerland, the Middle East, North Africa and Latin America (the “Licensed Territory”).

In exchange for this license, RSG provided or agreed to provide the following consideration:

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•Upfront, non-refundable payment of $30.0 million;

•Up to $20.0 million in shared (50/50)% research, development, and out-of-pocket costs incurred by HanAll;

•Up to an aggregate of $442.5 million (after $10.0 million of milestone payment) upon the achievement of certain development, regulatory and sales milestones; and

•Tiered royalties ranging from the mid-single digits to mid-teens on net product sales subject to reduction on a product-by-product and country-by-country basis, until the later of (1) expiration of patent and regulatory exclusivity or (2) the 11th anniversary of the first commercial sale of such product in such country.

Since the acquisition of IMVT-1401, RSL and the Company have performed all the development associated with IMVT-1401 and no amounts were incurred by HanAll and reported to the Company, to research or develop the technology for the three and nine months ended December 31, 2020 and December 31, 2019, respectively.

On August 18, 2018, RSG entered into a sublicense agreement (the “Sublicense Agreement”) with Immunovant Sciences GmbH (“ISG”), a wholly-owned subsidiary of the Company, to sublicense this technology, as well as RSG’s knowhow and patents necessary for the development, manufacture or commercialization of any compound or product that pertain to immunology. On December 7, 2018, RSG issued a notice to terminate the Sublicense Agreement with ISG and entered into an assignment and assumption agreement to assign to ISG all the rights, title, interest, and future obligations under the HanAll Agreement from RSG, including all rights to IMVT-1401 from RSG in the Licensed Territory, for an aggregate purchase price of $37.8 million. As a result of the assignment of IMVT-1401 by RSG to ISG, the Company recorded a Swiss value-added tax receivable of $3.0 million which was reflected as a capital contribution from RSL as of March 31, 2020. In April 2020, the Company received the payment related to this receivable.

In May 2019, the Company achieved its first development and regulatory milestone under the HanAll Agreement which resulted in a $10.0 million milestone payment that the Company subsequently paid in August 2019. The milestone payment was recorded as a research and development expense in the period incurred.

Note 5 — Accrued Expenses

Accrued expenses consist of the following (in thousands):

	December 31, 2020		March 31, 2020
Research and development expenses	$	9,527	$	8,332
Accrued bonuses	2,085		859
Legal and other professional fees	1,445		1,231
Other expenses	224		516
Total accrued expenses	$	13,281	$	10,938

Note 6 — Related Party Transactions

Roivant Sciences Inc. (“RSI”) and RSG Services Agreements

In addition to the agreements discussed in Note 4, in August 2018, the Company entered into services agreements (the “Services Agreements”) with RSI and RSG, under which RSI and RSG agreed to provide services related to development, administrative and financial activities to the Company during its formative period. Under each Services Agreement, the Company will pay or reimburse RSI or RSG, as applicable, for any expenses it, or third parties acting on its behalf, incurs for the Company. For any general and administrative and research and development activities performed by RSI or RSG employees, RSI or RSG, as applicable, will charge back the employee compensation expense plus a pre-determined mark-up. RSI and RSG also provided such services prior to the formalization of the Services Agreements, and such costs have been recognized by the Company in the period in which the services were rendered. Employee compensation expense, inclusive of base salary and fringe benefits, is determined based upon the relative percentage of time utilized on Company matters. All other costs will be billed back at cost. The term of the Services Agreements will continue until terminated by the Company, RSI or RSG, as applicable, upon 90 days’ written notice.

For the three and nine months ended December 31, 2020, the Company was charged $0.2 million and $0.7 million, respectively, by RSI, RSG and RSL, of which $0.1 million and $0.4 million, respectively, were treated as capital contributions and $0.1 million and $0.3 million, respectively, were treated as amounts due to RSL in the accompanying unaudited condensed consolidated financial statements.

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For the three and nine months ended December 31, 2019, the Company was charged $0.4 million and $1.0 million, respectively, by RSI, RSG, and RSL, of which $0.3 million and $0.9 million, respectively, were treated as capital contributions. The remaining amount of $0.1 million for the nine months ended December 31, 2019 was treated as an amount due to RSL in the accompanying unaudited condensed consolidated financial statements.

RSL Promissory Note

In June 2019, the Company entered into an interest-free promissory note payable to RSL in the amount of $5.0 million (the “June Promissory Note”). The June Promissory Note was due and payable at the earlier of December 12, 2019 or upon demand by RSL. Subsequently, in August 2019, the Company cancelled the June Promissory Note and entered into a convertible promissory note with RSL in the amount of $5.0 million (the “RSL Convertible Promissory Note”) under the same terms as other convertible promissory notes entered into with RTW Master Fund, Ltd. and RTW Innovation Master Fund, Ltd. (the “RTW Entities”). In September 2019, the Company repaid $2.5 million aggregate principal amount of the RSL Convertible Promissory Note, and accrued interest on such amount was forgiven. The remaining aggregate principal balance of the RSL Convertible Note of $2.5 million automatically converted immediately prior to the closing of the Business Combination into shares of ISL exchangeable for an aggregate of 250,000 shares of the Company’s common stock upon the closing of the Business Combination. All interest under the RSL Convertible Promissory Note was waived and cancelled immediately prior to the closing of the Business Combination.

In July 2019, the Company entered into an interest-free promissory note payable to RSL in the amount of $2.9 million (the “July Promissory Note”). The July Promissory Note had a 180-day term and was payable on demand upon the expiration of the term. In May 2020, the Company paid and settled the July Promissory Note.

RSL Information Sharing and Cooperation Agreement

In December 2018, the Company entered into an amended and restated information sharing and cooperation agreement (the “Cooperation Agreement”) with RSL. The Cooperation Agreement, among other things: (1) obligates the Company to deliver to RSL periodic financial statements and other information upon reasonable request and to comply with other specified financial reporting requirements; (2) requires the Company to supply certain material information to RSL to assist it in preparing any future SEC filings; and (3) requires the Company to implement and observe certain policies and procedures related to applicable laws and regulations. The Company has agreed to indemnify RSL and its affiliates and their respective officers, employees and directors against all losses arising out of, due to or in connection with RSL’s status as a stockholder under the Cooperation Agreement and the operations of or services provided by RSL or its affiliates or their respective officers, employees or directors to the Company or any of its subsidiaries, subject to certain limitations set forth in the Cooperation Agreement. No amounts have been paid or received under this agreement; however, the Company believes this agreement is material to its business and operations.

Subject to specified exceptions, the Cooperation Agreement will terminate upon the earlier of (1) the mutual written consent of the parties or (2) the later of when RSL no longer (a) is required by U.S. GAAP to consolidate the Company’s results of operations and financial position, account for its investment in the Company under the equity method of accounting or, by any rule of the SEC, include the Company’s separate financial statements in any filings it may make with the SEC and (b) has the right to elect directors constituting a majority of the Company’s board of directors.

RSI Subleases

See Note 10 for a discussion of the subleases the Company has entered into with RSI.

Note 7 — Income Taxes

The Company’s effective tax rates were 1.14% and 0.35% for the three and nine months ended December 31, 2020, respectively and (0.90)% and (0.34)% for the three and nine months ended December 31, 2019, respectively. The Company's effective rate is primarily driven by its jurisdictional earnings by location and a valuation allowance that eliminates the Company’s global net deferred tax assets.

The Company assesses the realizability of its deferred tax assets at each balance sheet date based on available positive and negative evidence in order to determine the amount which is more likely than not to be realized and records a valuation allowance as necessary.

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Note 8 — Stockholders’ Equity

Series A Preferred Stock

In connection with the closing of the Business Combination, the Company designated and issued 10,000 shares of Series A preferred stock, par value $0.0001 per share, to RSL, all of which shares are outstanding as of December 31, 2020.

Each share of Series A preferred stock will automatically convert into one share of common stock at such time as the holder(s) of Series A preferred stock hold less than 25% of the total voting power of the Company’s outstanding shares. In the event of the Company’s liquidation, dissolution, or winding up, the holder(s) of the Series A preferred stock will receive first an amount per share equal to $0.01 and then will be entitled to share ratably in the assets legally available for distribution to all stockholders.

Preferred Stock

In connection with the closing of the Business Combination, the Company authorized 10,010,000 shares of preferred stock par value $0.0001 per share. Other than the 10,000 shares of preferred stock designated as Series A preferred stock, there were no issued and outstanding shares of preferred stock as of December 31, 2020.

Common Stock

In connection with the closing of the Business Combination, the Company authorized 500,000,000 shares of common stock, par value $0.0001 per share. Immediately after giving effect to the Business Combination, there were 56,455,376 shares of common stock issued and 54,655,376 shares of common stock outstanding.

In April 2020, the Company completed an underwritten public offering of 9,613,365 shares of its common stock (including 1,034,483 shares of common stock purchased by RSL and the full exercise of the underwriters’ option to purchase 1,253,917 additional shares of common stock) at a price to the public of $14.50 per share, for net proceeds to the Company of approximately $131.0 million, after deducting underwriting discounts and commissions and offering expenses.

On May 12 and September 17, 2020, the Company achieved the First Earnout Milestone and the Second Earnout Milestone, respectively, under the Share Exchange Agreement (See Note 3). As a result, the Company issued all of the 20,000,000 Earnout Shares to the Sellers, (including 17,547,938 Earnout Shares issued to RSL) in the six months ended September 30, 2020. In addition, upon the achievement of the First Earnout Milestone and the Second Earnout Milestone and pursuant to the Sponsor Restricted Stock Agreement, all of the 1,800,000 Sponsor Restricted Shares vested and are no longer subject to forfeiture.

In September 2020, the Company completed an underwritten public offering of 6,060,606 shares of its common stock (including 380,000 shares of common stock purchased by RSL and the full exercise of the underwriters’ option to purchase 790,513 additional shares of common stock) at a price to the public of $33.00 per share, for net proceeds to the Company of approximately $188.1 million after deducting underwriting discounts and commissions and offering expenses.

The Company has reserved the following shares of common stock for issuance:

	December 31, 2020	March 31, 2020
Conversion of Series A preferred stock	10,000	10,000
Options outstanding	5,757,732	3,873,888
Restricted stock units outstanding	214,980	—
Options available for future option grants	4,893,006	5,283,520
Common stock warrants	—	5,750,000
Earnout shares	—	20,000,000
Total	10,875,718	34,917,408

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Common Stock Warrants

In connection with HSAC’s initial public offering in May 2019, HSAC issued 11,500,000 warrants for the purchase of one-half of one share of common stock (an aggregate of 5,750,000 shares) at a price of $11.50 per whole share, subject to adjustment. The warrants were classified as equity. All of the warrants remained outstanding as of and were exercisable commencing on May 14, 2020. The warrants were set to expire in December 2024 or earlier upon redemption or liquidation. The warrants were redeemable, at the Company’s option, in whole and not in part, at a price of $0.01 per warrant, upon a minimum of 30 days’ prior written notice of redemption, and if, and only if, the last sale price of the Company’s common stock equaled or exceeded $16.50 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends a notice of redemption to the warrant holders. In May 2020, the Company delivered a notice of the redemption to the warrant holders, and an aggregate of 11,438,290 outstanding warrants were subsequently exercised for an aggregate of 5,719,145 shares of the Company’s common stock at a price of $11.50 per share, for net proceeds of approximately $65.8 million. The remaining 61,710 warrants were cancelled, and the holders thereof paid $0.01 per cancelled warrant. No warrants remain outstanding as of December 31, 2020.

Note 9 — Stock-Based Compensation

2019 Equity Incentive Plan

In December 2019, in connection with the Business Combination, the Company’s stockholders approved the 2019 Equity Incentive Plan (the “2019 Plan”) and reserved 5,500,000 shares of common stock for issuance thereunder. The 2019 Plan became effective immediately upon the closing of the Business Combination. The maximum number of shares of common stock that may be issued pursuant to the exercise of incentive options under the 2019 Plan is 16,500,000. On April 1, 2020, the number of common shares reserved for issuance increased automatically by 4.0% of the total number of shares of common stock outstanding on the last day of the preceding month (i.e. 2,186,215 shares of common stock) in accordance with the evergreen provision of the 2019 Plan. As of December 31, 2020, options to purchase 2,546,580 shares of common stock and 214,980 restricted stock units (“RSUs”) were outstanding under the 2019 Plan and 4,893,006 shares of common stock remained available for future grant under the 2019 Plan.

2018 Equity Incentive Plan

Pursuant to the Share Exchange Agreement, upon the closing of the Business Combination, all vested or unvested outstanding options to purchase common shares of ISL under its 2018 Equity Incentive Plan (the “2018 Plan”) were automatically assumed by the Company and converted into options to purchase 4,408,287 shares of the Company’s common stock with no changes to the terms of the awards. As of the effective date of the 2019 Plan, no further stock awards have been or will be made under 2018 Plan. As of December 31, 2020, 3,211,152 stock options were outstanding under the 2018 Plan.

Stock Option Activity

A summary of the stock option activity under the Company’s equity incentive plans is as follows:

	Options Outstanding
	Number of options	Weighted- Average Exercise Price		Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Balance - March 31, 2020	3,873,888	$	8.33	9.37	$	28,029
Granted	2,602,268	25.92
Exercised	(114,084)	8.57
Forfeited	(378,107)	16.94
Canceled	(226,233)	7.86
Balance - December 31, 2020	5,757,732	$	15.73	8.99	$	175,578
Exercisable - December 31, 2020	1,372,915	$	8.44	8.60	$	51,828

The aggregate intrinsic value is calculated as the difference between the exercise price of all outstanding and exercisable stock options and the fair value of the Company’s common stock as of December 31, 2020. The options granted during the three and nine months ended December 31, 2020 had a weighted-average fair value of $30.65 and $17.81 per share, respectively, at the grant date. The options granted during the three and nine months ended December 31, 2019 had a weighted-average fair value of $5.70 and $3.02 per share, respectively, at the grant date.

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The Company estimated the fair value of each option on the date of grant using the Black-Scholes option pricing model applying the weighted-average assumptions in the following table:

	Three Months Ended December 31,		Nine Months Ended December 31,
	2020	2019	2020	2019
Risk-free interest rate	0.38% - 0.56%	1.61% - 1.78%	0.30% - 0.56%	1.61% - 2.25%
Expected term, in years	6.08 - 6.11	5.97 - 6.11	5.56 - 6.11	5.75 - 6.11
Expected volatility	83.40% - 83.80%	75.55% - 76.01%	78.16% - 84.05%	74.69% - 76.01%
Expected dividend yield	—%	—%	—%	—%