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Feb. 3, 2022, 8:21 a.m. EST

10-Q: REPLIMUNE GROUP, INC.

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(EDGAR Online via COMTEX) -- 2015 Enterprise Management Incentive Share Option Plan The 2015 Enterprise Management Incentive Share Option Plan of Replimune UK (the "2015 Plan") provided for Replimune UK to grant incentive stock options, non-statutory stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. Incentive stock options were granted under the 2015 Plan only to the Company's employees, including officers and directors who were also employees. Non-statutory stock options were granted under the 2015 Plan to employees, members of the board of directors, outside advisors and consultants of the Company. 2017 Equity Compensation Plan In July 2017, in conjunction with reorganization by Replimune Limited, pursuant to which each shareholder thereof exchanged their outstanding shares in Replimune Limited for shares in Replimune Group, Inc., on a one-for-one basis (the "Reorganization"), the 2015 Plan was terminated, and all awards were cancelled with replacement awards issued under the 2017 Equity Compensation Plan (the "2017 Plan"). Subsequent to the Reorganization, no additional grants have been or will be made under the 2015 Plan and any outstanding awards under the 2015 Plan have continued, and will continue with their original terms. The Company concluded that the cancellation of the 2015 Plan and issuance of replacement awards under the 2017 Plan was a modification with no change in the material rights and preferences and therefore no recorded change in the fair value of each respective award. The Company's 2017 Plan provides for the Company to grant incentive stock options or non-statutory stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. Incentive stock options were granted under the 2017 Plan only to the Company's employees, including officers and directors who were also employees. Restricted stock awards and non-statutory stock options were granted under the 2017 Plan to employees, officers, members of the board of directors, advisors and consultants of the Company. The maximum number of common shares that may be issued under the 2017 Plan was 2,659,885, of which none remained available for future grants as of December 31, 2021. Shares with respect to which awards have expired, terminated, surrendered or cancelled under the 2017 Plan without having been fully exercised will be available for future awards under the 2018 Plan referenced below. In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for the grant of awards. 2018 Omnibus Incentive Compensation Plan On July 9, 2018, the Company's board of directors adopted, and the Company's stockholders approved the 2018 Omnibus Incentive Compensation Plan (the "2018 Plan"), which became effective immediately prior to the effectiveness of the registration statement for the Company's initial public offering. The 2018 Plan provides for the issuance of incentive stock options, non-qualified stock options, stock awards, stock units, stock appreciation rights and other stock-based awards. The Table of Contents number of shares of common stock initially reserved for issuance under the 2018 Plan is 3,617,968 shares. If any options or stock appreciation rights, including outstanding options and stock appreciation rights granted under the 2017 Plan (up to 2,520,247 shares), terminate, expire, or are canceled, forfeited, exchanged, or surrendered without having been exercised, or if any stock awards, stock units or other stock-based awards, including outstanding awards granted under the 2017 Plan, are forfeited, terminated, or otherwise not paid in full in shares of common stock, the shares of the Company's common stock subject to such grants will be available for purposes of our 2018 Plan. The number of shares reserved for issuance under the 2018 Plan will increase automatically on the first day of each April equal to 4.0% of the total number of shares of Company stock outstanding on the last trading day in the immediately preceding fiscal year, or such lesser amount as determined by the Board. On April 1, 2021, the number of shares reserved for issuance under the 2018 Plan automatically increased by 2,074,028 shares pursuant to the terms of the 2018 Plan and based on total number of shares of Company stock outstanding on March 31, 2021, including the November 2019 Pre-Funded Warrants, the June 2020 Pre-Funded Warrants and the October 2020 Pre-Funded Warrants. On April 1, 2020, the number of shares reserved for issuance under the 2018 Plan automatically increased by 1,466,749 shares pursuant to the terms of the 2018 Plan. As of December 31, 2021, 1,715,467 shares remained available for future grants under the 2018 Plan. The 2015 Plan, the 2017 Plan and the 2018 Plan are administered by the board of directors or, at the discretion of the board of directors, by a committee of the board of directors. However, the board of directors shall administer and approve all grants made to non-employee directors. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, except that the exercise price per share of incentive stock options may not be less than 100% of the fair market value of the common stock on the date of grant (or 110% of fair value in the case of an award granted to employees who hold more than 10% of the total combined voting power of all classes of stock at the time of grant) and the term of stock options may not be greater than five years for an incentive stock option granted to a 10% stockholder and greater than ten years for all other options granted. Stock options awarded under both plans expire ten years after the grant date, unless the board of directors sets a shorter term. Vesting periods for the plans are determined at the discretion of the board of directors. Incentive stock options granted to employees and non-statutory options granted to employees, officers, members of the board of directors, advisors, and consultants of the Company typically vest over four years. In 2021 the board of directors initiated the award of restricted stock units ("RSUs"), under the 2018 Plan in addition to stock option awards available as part of the Company's equity incentive for employees, officers, advisors and consultants of the Company. The RSUs typically vest over four approximately equal annual installments with the first such installment occurring on a designated vesting date that is approximately on the one year anniversary of the date of grant and the subsequent installments occurring on the subsequent three annual anniversaries of the designated vesting date. Employee Stock Purchase Plan On July 9, 2018, the Company's board of directors adopted and the Company's stockholders approved the Employee Stock Purchase Plan (the "ESPP"), which became effective immediately prior to the effectiveness of the registration statement for the Company's IPO. The total shares of common stock initially reserved for issuance under the ESPP is 348,612 shares. In addition, as of the first trading day of each fiscal year during the term of the ESPP (excluding any extensions), an additional number of shares of the Company's common stock equal to 1% of the total number of shares outstanding on the last trading day in the immediately preceding fiscal year, including the November 2019 Pre-Funded Warrants, the June 2020 Pre-Funded Warrants, and the October 2020 Pre-Funded Warrants, or 697,224 shares, whichever is less (or such lesser amount as determined by the Company's board of directors) will be added to the number of shares authorized under the ESPP. In accordance with the terms of the ESPP, on April 1, 2021 and 2020, the number of shares reserved for issuance under the ESPP automatically increased by 518,507 and 366,687 shares respectively, for a total of 1,550,375 shares reserved for the ESPP. If the total number of shares of common stock to be purchased pursuant to outstanding purchase rights on any particular date exceed the number of shares then available for issuance under the ESPP, then the plan administrator will allocate the available shares pro-rata and refund any excess payroll deductions or other contributions to participants. The Company's ESPP is not currently active.

Out-of-Plan Inducement Grant







                                         Three Months Ended              Nine Months Ended
                                            December 31,                    December 31,
                                          2021              2020          2021             2020
        Risk-free interest rate                1.27  %     0.31  %            1.12  %     1.01  %
        Expected term (in years)                   6.0         6.1                6.0         6.4
        Expected volatility                    78.3  %     76.3  %            80.0  %     74.8  %
        Expected dividend yield                   0  %        0  %               0  %        0  %
        


Stock options







                                                                              Weighted               Weighted
                                                                               Average               Average              Aggregate
                                                       Number of              Exercise             Contractual            Intrinsic
                                                         Shares                 Price              Term (Years)             Value
        Outstanding as of March 31, 2021               6,460,184            $    13.26                        7.95       $ 116,193
        Granted                                        1,476,507            $    32.09
        Exercised                                       (639,835)           $    10.05                                   $  14,552
        Cancelled                                       (601,469)           $    26.24
        Outstanding as of December 31, 2021            6,695,387            $    16.55                        7.44       $  81,838
        Options exercisable as of March 31, 2021       2,698,708            $     8.38                        6.79       $  59,717
        Options exercisable as of December 31,
        2021                                           3,492,076            $     9.96                        6.47       $  60,493
        


As of December 31, 2021, there was $42.8 million of unrecognized compensation cost related to unvested common stock options, which is expected to be recognized over a weighted average period of 2.5 years.







                                                                                                                    Weighted
                                                                                                                     Average
                                                                         Number of Restricted Shares          Grant Date Fair Value
        Outstanding as of March 31, 2021                                            15,975                             34.15
        Granted                                                                    803,151                             32.35
        Vested                                                                           -                                 -
        Cancelled                                                                  (37,122)                            32.09
        Outstanding as of December 31, 2021                                        782,004                             32.40
        


As of December 31, 2021, there was $21.6 million of unrecognized compensation cost related to unvested restricted stock units, which is expected to be recognized over a weighted average period of 3.4 years. As of December 31, 2020, there was no unrecognized compensation cost related to unvested restricted stock units.







                                                         Three Months Ended December 31,                 Nine Months Ended December 31,
                                                           2021                    2020                    2021                    2020
        Numerator:
        Net loss attributable to common
        stockholders                                $        (29,674)         $    (21,783)         $        (86,340)         $    (59,371)
        Denominator:
        Weighted average common shares outstanding,
        basic and diluted                                 52,319,877            49,382,213                52,104,548            44,436,680
        Net loss per share attributable to common
        stockholders, basic and diluted             $          (0.57)         $      (0.44)         $          (1.66)         $      (1.34)
        


The November 2019 Pre-Funded Warrants, the June 2020 Pre-Funded Warrants and the October 2020 Pre-Funded Warrants are included as outstanding common stock in the calculation of basic and diluted net loss per share attributable to common stockholders.







                                                Three and Nine Months Ended December 31,
                                                  2021                              2020
        Options to purchase common stock     6,695,387                           6,326,577
        Warrants to purchase common stock      497,344                             497,344
                                             7,192,731                           6,823,921
        


11 Significant agreements







                                                    Three Months Ended December 31,            Nine Months Ended December 31,
                                                        2021                2020                  2021                   2020
        Lease cost
        Finance lease costs:
        Amortization of right-to-use asset         $       607          $     607          $          1,821          $   1,821
        Interest on lease liabilities                      555                560                     1,670              1,683
        Operating lease costs                              249                239                       736                705
        Total lease cost                           $     1,411          $   1,406          $          4,227          $   4,209
        


The Company incurred finance lease amortization costs of $607 and $1,821 for the three and nine months ended December 31, 2021, respectively, of which $518 and $1,553 are recognized in research and development expenses. For the three and nine months ended December 31, 2020, the Company incurred finance lease amortization costs of $607 and $1,821, respectively, of which $518 and $1,553 are recognized in research and development costs. In addition, the Company incurred interest expense on finance leases of $555 and $1,670, respectively, for the three and nine months ended December 31, 2021, of which $466 and $1,402 are recognized in research and development. For the three and nine months ended December 31, 2020, the Company incurred $560 and $1,683 of interest expense on finance leases, of which $470 and $1,412 are recognized in research and development. For the three and nine months ended December 31, 2021, the Company recognized $89 and $267 of operating lease costs within general and administrative expenses. For the three and nine months ended December 31, 2020, the Company recognized $90 and $268 of operating lease costs within general and administrative expenses. The following table summarizes the maturity of the Company's lease liabilities on an undiscounted cash flow basis and a reconciliation to the operating and financing lease liabilities recognized on our balance sheet as of December 31, 2021:







                                                            December 31, 2021
                                          Operating leases       Financing lease        Total
        2022 (remaining three months)    $             260      $            629      $    889
        2023                                         1,083                 2,562         3,645
        2024                                         1,093                 2,639         3,732
        2025                                         1,102                 2,718         3,820
        2026                                         1,111                 2,799         3,910
        Thereafter                                   4,095                40,905        45,000
        Total lease payments                         8,744                52,252        60,996
        Less: interest                               2,691                25,208        27,899
        Total lease liabilities          $           6,053      $         27,044      $ 33,097
        


Feb 03, 2022

COMTEX_401702879/2041/2022-02-03T08:21:21

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