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 September 30, ~~2021~~2022

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

For the transition period from to

Commission file number 001-32587

ALTIMMUNE, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware		20-2726770
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

910 Clopper Road Suite 201S, Gaithersburg, Maryland		20878
(Address of Principal Executive Offices)		(Zip Code)

(240) 654-1450

(Registrant’s Telephone Number, Including Area Code)

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, par value $0.0001 per share	ALT	The NASDAQ Global Market

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

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

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


Large accelerated filer	◻	Accelerated filer	◻
Non-accelerated filer	⌧	Smaller reporting company	⌧
		Emerging growth company	◻

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

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

As of November ~~5, 2021~~4, 2022, there were ~~39,738,625~~49,159,056 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

Table of Contents

ALTIMMUNE, INC.

TABLE OF CONTENTS


		Page

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Consolidated Balance Sheets as of September 30, ~~2021~~2022 (unaudited) and December 31, ~~2020~~2021	1

	Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	2

	Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	3

	Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2021~~2022 and ~~2020~~2021 (unaudited)	5

	Notes to Consolidated Financial Statements (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1816

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2423

Item 4.	Controls and Procedures	2423


PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	2523

Item 1A.	Risk Factors	2524

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2524

Item 3.	Defaults Upon Senior Securities	2524

Item 4.	Mine Safety Disclosures	2524

Item 5.	Other Information	2524

Item 6.	Exhibits	2625

	Signatures	2726

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ALTIMMUNE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

September 30,

December 31,

2021

2020

(unaudited)

ASSETS




Current assets:




Cash and cash equivalents

$
174,863,565

$
115,917,807
Restricted cash

34,174

34,174
Total cash, cash equivalents and restricted cash

174,897,739

115,951,981
Short-term investments

25,020,738

100,005,558
Accounts receivable

1,573,760

4,610,202
Income tax receivable

9,476,435

7,762,793
Prepaid expenses and other current assets

7,294,360

1,926,675
Total current assets

218,263,032

230,257,209
Property and equipment, net

4,718,146

1,056,920
Intangible assets, net

12,993,575

12,823,846
Other assets

931,904

977,238
Total assets

$
236,906,657

$
245,115,213
LIABILITIES AND STOCKHOLDERS’ EQUITY




Current liabilities:




Accounts payable

$
6,083

$
612,293
Accrued expenses and other current liabilities

19,120,902

11,408,154
Total current liabilities

19,126,985

12,020,447
Contingent consideration

6,950,000

5,390,000
Other long-term liabilities

1,565,611

1,828,443
Total liabilities

27,642,596

19,238,890
Commitments and contingencies (Note 16)




Stockholders’ equity:




Common stock, $0.0001 par value; 200,000,000 shares authorized; 39,702,768 and 37,142,946 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

3,959

3,697
Additional paid-in capital

483,582,367

417,337,742
Accumulated deficit

(269,282,102)

(186,420,599)
Accumulated other comprehensive loss, net

(5,040,163)

(5,044,517)
Total stockholders’ equity

209,264,061

225,876,323
Total liabilities and stockholders’ equity

$
236,906,657

$
245,115,213


	September 30,		December 31,
	2022		2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	127,465	$	190,301
Restricted cash		34		34
Total cash, cash equivalents and restricted cash		127,499		190,335
Short-term investments		74,362		—
Accounts receivable		633		429
Income tax and R&D incentive receivables		3,720		5,410
Prepaid expenses and other current assets		4,790		7,952
Total current assets		211,004		204,126
Property and equipment, net		1,172		1,448
Intangible assets, net		12,419		12,419
Other assets		682		872
Total assets	$	225,277	$	218,865
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,419	$	2,034
Contingent consideration		—		6,090
Accrued expenses and other current liabilities		14,323		10,152
Total current liabilities		15,742		18,276
Other long-term liabilities		4,506		1,454
Total liabilities		20,248		19,730
Commitments and contingencies (Note 14)
Stockholders’ equity:
Common stock, $0.0001 par value; 200,000,000 shares authorized; 49,161,637 and 40,993,768 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		5		4
Additional paid-in capital		566,551		497,342
Accumulated deficit		(356,224)		(293,171)
Accumulated other comprehensive loss, net		(5,303)		(5,040)
Total stockholders’ equity		205,029		199,135
Total liabilities and stockholders’ equity	$	225,277	$	218,865

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

Table of Contents

ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

~~(unaudited)~~(Unaudited)

(In thousands, except share and per share data)

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2021

2020

2021

2020
Revenues

$
157,559

$
2,937,991

$
1,132,698

$
5,872,321
Operating expenses:








Research and development

29,205,739

17,041,975

54,356,051

40,823,756
General and administrative

4,155,928

4,220,238

11,636,001

9,097,511
Impairment loss on construction-in-progress

—

—

8,070,000

—
Total operating expenses

33,361,667

21,262,213

74,062,052

49,921,267
Loss from operations

(33,204,108)

(18,324,222)

(72,929,354)

(44,048,946)
Other income (expense):








Interest expense

(32,866)

(2,275)

(66,763)

(7,468)
Interest income

12,485

45,127

87,847

278,154
Other (expense) income, net

(286,199)

29,218

(293,233)

48,882
Total other (expense) income, net

(306,580)

72,070

(272,149)

319,568
Net loss before income tax benefit

(33,510,688)

(18,252,152)

(73,201,503)

(43,729,378)
Income tax benefit

0

482,017

0

5,306,678
Net loss

(33,510,688)

(17,770,135)

(73,201,503)

(38,422,700)
Other comprehensive (loss) income — unrealized (loss) gain on short-term investments

(1,923)

(10,569)

4,354

(22,116)
Comprehensive loss

$
(33,512,611)

$
(17,780,704)

$
(73,197,149)

$
(38,444,816)
Net loss per share, basic and diluted

$
(0.81)

$
(0.54)

$
(1.79)

$
(1.74)
Weighted-average common shares outstanding, basic and diluted

41,370,768

33,056,971

40,843,905

22,058,424


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Revenues	$	2	$	158	$	42	$	1,133
Operating expenses:
Research and development		20,262		29,206		51,359		54,356
General and administrative		4,492		4,156		13,329		11,636
Impairment loss on construction-in-progress		—		—		—		8,070
Total operating expenses		24,754		33,362		64,688		74,062
Loss from operations		(24,752)		(33,204)		(64,646)		(72,929)
Other income (expense):
Interest expense		(64)		(33)		(191)		(67)
Interest income		1,053		13		1,402		88
Other income (expense), net		50		(286)		185		(293)
Total other income (expense), net		1,039		(306)		1,396		(272)
Net loss before income taxes		(23,713)		(33,510)		(63,250)		(73,201)
Income tax benefit		197		—		197		—
Net loss		(23,516)		(33,510)		(63,053)		(73,201)
Other comprehensive income — unrealized (loss) gain on short-term investments		(143)		(2)		(263)		4
Comprehensive loss	$	(23,659)	$	(33,512)	$	(63,316)	$	(73,197)
Net loss per share, basic and diluted	$	(0.48)	$	(0.81)	$	(1.37)	$	(1.79)
Weighted-average common shares outstanding, basic and diluted		49,286,535		41,370,768		45,881,547		40,843,905

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

Table of Contents

ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

~~(unaudited)~~(Unaudited)

(In thousands, except share amounts)

Accumulated

Additional

Other

Total


Common Stock

Paid-In

Accumulated

Comprehensive

Stockholders’

Shares

Amount

Capital

Deficit

Loss

Equity
Balance at December 31, 2020

37,142,946

$
3,697

$
417,337,742

$
(186,420,599)

$
(5,044,517)

$
225,876,323
Stock-based compensation

—

—

1,218,351

—

—

1,218,351
Vesting of restricted stock awards including withholding, net

(6,349)

1

(92,507)

—

—

(92,506)
Issuance of common stock from Employee Stock Purchase Plan

8,733

1

106,000

—

—

106,001
Retirement of common stock in exchange for common stock warrant

(1,000,000)

(100)

(7,539,900)

(9,660,000)

—

(17,200,000)
Issuance of common stock warrant in exchange for retirement of common stock

—

—

17,200,000

—

—

17,200,000
Issuance of common stock in at-the-market offerings, net

2,110,800

211

34,178,020

—

—

34,178,231
Issuance of common stock upon cashless exercise of warrants

1,050

—

10,000

—

—

10,000
Unrealized gain on short-term investments

—

—

—

—

5,136

5,136
Net loss

—

—

—

(14,864,108)

—

(14,864,108)
Balance at March 31, 2021

38,257,180

3,810

462,417,706

(210,944,707)

(5,039,381)

246,437,428
Stock-based compensation

—

—

1,484,829

—

—

1,484,829
Exercise of stock options

38,217

4

94,425

—

—

94,429
Vesting of restricted stock awards including withholding, net

(7,583)

1

(91,122)

—

—

(91,121)
Issuance of common stock in at-the-market offerings, net

1,405,710

141

18,177,832

—

—

18,177,973
Unrealized gain on short-term investments

—

—

—

—

1,141

1,141
Net loss

—

—

—

(24,826,707)

—

(24,826,707)
Balance at June 30, 2021

39,693,524

3,956

482,083,670

(235,771,414)

(5,038,240)

241,277,972
Stock-based compensation

—

—

1,496,884

—

—

1,496,884
Exercise of stock options

398

—

5,970

—

—

5,970
Vesting of restricted stock awards including withholding, net

(6,521)

1

(122,626)

—

—

(122,625)
Issuance of common stock from Employee Stock Purchase Plan

15,367

2

118,469

—

—

118,471
Unrealized loss on short-term investments

—

—

—

—

(1,923)

(1,923)
Net loss

—

—

—

(33,510,688)

—

(33,510,688)
Balance at September 30, 2021

39,702,768

$
3,959

$
483,582,367

$
(269,282,102)

$
(5,040,163)

$
209,264,061


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Loss		Equity
Balance at December 31, 2021	40,993,768	$	4	$	497,342	$	(293,171)	$	(5,040)	$	199,135
Stock-based compensation	—		—		2,033		—		—		2,033
Exercise of stock options	95,771		—		197		—		—		197
Vesting of restricted stock awards including withholding, net	17,568		—		(170)		—		—		(170)
Issuance of common stock from Employee Stock Purchase Plan	16,450		—		113		—		—		113
Issuance of common stock in at-the-market offerings, net	335,485		—		2,990		—		—		2,990
Issuance of common stock upon exercise of warrants	1,760,854		—		—		—		—		—
Net loss	—		—		—		(19,430)		—		(19,430)
Balance at March 31, 2022	43,219,896	$	4	$	502,505	$	(312,601)	$	(5,040)	$	184,868
Stock-based compensation	—	$	—	$	2,048	$	—	$	—	$	2,048
Exercise of stock options	152,913		—		403		—		—		403
Vesting of restricted stock awards including withholding, net	(5,865)		—		(80)		—		—		(80)
Issuance of common stock in at-the-market offerings, net	2,157,717		1		21,346		—		—		21,347
Issuance of common stock related to contingent consideration liability	847,444		—		6,176		—		—		6,176
Unrealized (loss) gain on short-term investments	—		—		—		—		(120)		(120)
Net loss	—		—		—		(20,107)		—		(20,107)
Balance at June 30, 2022	46,372,105	$	5	$	532,398	$	(332,708)	$	(5,160)	$	194,535
Stock-based compensation	—	$	—	$	2,128	$	—	$	—	$	2,128
Exercise of stock options	76,161		—		268		—		—		268
Vesting of restricted stock awards including withholding, net	(7,744)		—		(140)		—		—		(140)
Issuance of common stock in at-the-market offerings, net	2,711,013		—		31,829		—		—		31,829
Issuance of common stock from Employee Stock Purchase Plan	9,945		—		68		—		—		68
Other increase	157		—		—		—		—		—
Unrealized loss on short-term investments	—		—		—		—		(143)		(143)
Net loss	—		—		—		(23,516)		—		(23,516)
Balance at September 30, 2022	49,161,637	$	5	$	566,551	$	(356,224)	$	(5,303)	$	205,029

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

Table of Contents

ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

~~(unaudited)~~(Unaudited)

(In thousands, except share amounts)

Accumulated

Additional

Other

Total


Common Stock

Paid-In

Accumulated

Comprehensive

Stockholders’

Shares

Amount

Capital

Deficit

Loss

Equity
Balance at December 31, 2019

15,312,167

$
1,508

$
187,914,916

$
(137,376,122)

$
(5,020,156)

$
45,520,146
Stock-based compensation

—

—

214,921

—

—

214,921
Vesting of restricted stock awards including withholding, net

(5,974)

1

(17,080)

—

—

(17,079)
Issuance of common stock from Employee Stock Purchase Plan

38,809

3

56,736

—

—

56,739
Issuance of common stock upon exercise of warrants

14,500

2

39,972

—

—

39,974
Unrealized loss on short-term investments

—

—

—

—

(32,435)

(32,435)
Net loss

—

—

—

(3,885,649)

—

(3,885,649)
Balance at March 31, 2020

15,359,502

1,514

188,209,465

(141,261,771)

(5,052,591)

41,896,617
Stock-based compensation

—

—

330,510

—

—

330,510
Exercise of stock options

13,935

1

36,174

—

—

36,175
Vesting of restricted stock awards including withholding, net

(5,974)

1

(46,390)

—

—

(46,389)
Issuance of common stock in at-the-market offerings, net

2,965,144

297

22,780,432

—

—

22,780,729
Issuance of common stock upon exercise of warrants

8,221,279

822

31,269,341

—

—

31,270,163
Unrealized gain on short-term investments

—

—

—

—

20,888

20,888
Net loss

—

—

—

(16,766,916)

—

(16,766,916)
Balance at June 30, 2020

26,553,886

2,635

242,579,532

(158,028,687)

(5,031,703)

79,521,777
Stock-based compensation

—

—

1,320,089

—

—

1,320,089
Issuance of common stock from exercise of stock options

32,189

3

90,267

—

—

90,270
Vesting of restricted stock awards including withholding, net

103,551

13

(114,585)

—

—

(114,572)
Issuance of common stock from Employee Stock Purchase Plan

53,852

5

78,727

—

—

78,732
Issuance of common stock and pre-funded warrants in public offering, net

4,119,564

412

124,027,403

—

—

124,027,815
Issuance of common stock in at-the-market offerings, net

247,865

25

2,834,082

—

—

2,834,107
Issuance of common stock upon exercise of warrants

1,962,128

196

9,728,125

—

—

9,728,321
Unrealized loss on short-term investments

—

—

—

—

(10,569)

(10,569)
Net loss

—

—

—

(17,770,135)

—

(17,770,135)
Balance at September 30, 2020

33,073,035

$
3,289

$
380,543,640

$
(175,798,822)

$
(5,042,272)

$
199,705,835


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Loss		Equity
Balance at December 31, 2020	37,142,946	$	4	$	417,337	$	(186,421)	$	(5,044)	$	225,876
Stock-based compensation	—		—		1,218		—		—		1,218
Vesting of restricted stock awards including withholding, net	(6,349)		—		(92)		—		—		(92)
Issuance of common stock from Employee Stock Purchase Plan	8,733		—		106		—		—		106
Retirement of common stock in exchange for common stock warrant	(1,000,000)		—		(7,540)		(9,660)		—		(17,200)
Issuance of common stock warrant in exchange for retirement of common stock	—		—		17,200		—		—		17,200
Issuance of common stock in at-the-market offerings, net	2,110,800		—		34,178		—		—		34,178
Issuance of common stock upon cashless exercise of warrants	1,050		—		10		—		—		10
Unrealized gain on short-term investments	—		—		—		—		5		5
Net loss	—		—		—		(14,864)		—		(14,864)
Balance at March 31, 2021	38,257,180	$	4	$	462,417	$	(210,945)	$	(5,039)	$	246,437
Stock-based compensation	—	$	—	$	1,485	$	—	$	—	$	1,485
Exercise of stock options	38,217		—		94		—		—		94
Vesting of restricted stock awards including withholding, net	(7,583)		—		(90)		—		—		(90)
Issuance of common stock in at-the-market offerings, net	1,405,710		—		18,178		—		—		18,178
Unrealized (loss) gain on short-term investments	—		—		—		—		1		1
Net loss	—		—		—		(24,827)		—		(24,827)
Balance at June 30, 2021	39,693,524	$	4	$	482,084	$	(235,772)	$	(5,038)	$	241,278
Stock-based compensation	—	$	—	$	1,497	$	—	$	—	$	1,497
Exercise of stock options	398		—		6		—		—		6
Vesting of restricted stock awards including withholding, net	(6,521)		—		(124)		—		—		(124)
Issuance of common stock from Employee Stock Purchase Plan	15,367		—		119		—		—		119
Unrealized loss on short-term investments	—		—		—		—		(2)		(2)
Net loss	—		—		—		(33,510)		—		(33,510)
Balance at September 30, 2021	39,702,768	$	4	$	483,582	$	(269,282)	$	(5,040)	$	209,264

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

Table of Contents

ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

~~(unaudited)~~(Unaudited)

(In thousands)


	Nine Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(73,201,503)	$	(38,422,700)	$	(63,053)	$	(73,201)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of contingent consideration liability		1,560,000		22,320,000		86		1,560
Impairment loss on construction-in-progress		8,070,000		—		—		8,070
Stock-based compensation expense		4,200,064		1,865,520		6,209		4,200
Depreciation and amortization		434,009		218,932		31		434
Unrealized losses (gains) on foreign currency exchange		297,135		(44,323)
Unrealized (gains) losses on foreign currency exchange						(183)		297
Changes in operating assets and liabilities:
Accounts receivable		3,036,442		(2,815,343)		(204)		3,036
Prepaid expenses and other current assets		(5,263,432)		(636,943)
Prepaid expenses and other assets						3,204		(5,263)
Accounts payable		(606,210)		856,653		(615)		(606)
Accrued expenses and other liabilities		6,916,132		1,199,708		7,555		6,916
Income tax receivable		(1,713,642)		(5,564,759)
Income tax and R&D incentive receivables						1,690		(1,714)
Net cash used in operating activities		(56,271,005)		(21,023,255)		(45,280)		(56,271)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of short-term investments		82,406,000		39,385,689		—		82,406
Purchases of short-term investments		(7,591,962)		(74,413,135)		(74,292)		(7,592)
Purchases of property and equipment, net		(11,970,179)		(100,329)		(88)		(11,970)
Cash paid for internally developed patents		(189,649)		(98,893)		—		(190)
Net cash provided by (used in) investing activities		62,654,210		(35,226,668)
Net cash (used in) provided by investing activities						(74,380)		62,654
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of deferred offering costs		(118,522)		(160,522)		—		(118)
Proceeds from exercises of warrants		—		41,038,458
Proceeds from issuance of common stock in at-the-market offerings, net		52,356,204		25,614,836		56,166		52,356
Proceeds from issuance of common stock and pre-funded warrants in public offering, net		—		124,027,815
Proceeds from issuance of notes payable		—		632,000
Payments of notes payable		—		(632,000)
Proceeds from issuance of common stock from Employee Stock Purchase Plan		224,472		135,471		181		225
Proceeds from exercises of stock options		100,399		126,445
Proceeds from exercises of stock options, net						477		100
Net cash provided by financing activities		52,562,553		190,782,503		56,824		52,563
Net increase in cash and cash equivalents and restricted cash		58,945,758		134,532,580
Net (decrease) increase in cash and cash equivalents and restricted cash						(62,836)		58,946
Cash, cash equivalents and restricted cash at beginning of period		115,951,981		8,996,860		190,335		115,952
Cash, cash equivalents and restricted cash at end of period	$	174,897,739	$	143,529,440	$	127,499	$	174,898

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	—	$	1,791
SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES:
SUPPLEMENTAL NON-CASH ACTIVITIES:
Common stock issued related to contingent consideration liability					$	6,176	$	—
Operating lease liability and right of use asset addition	$	72,047	$	—	$	—	$	72

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

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ALTIMMUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~(unaudited)~~(Unaudited)

1. Nature of Business and Basis of Presentation

Nature of Business

Altimmune, Inc., headquartered in Gaithersburg, Maryland, United States, together with its subsidiaries (collectively, the “Company” or “Altimmune”) is a clinical stage biopharmaceutical company incorporated under the laws of the State of Delaware.

The Company is focused on developing treatments for obesity and liver diseases. The Company’s pipeline includes ~~proprietary intranasal vaccines and~~ next generation peptide therapeutics for obesity ~~NASH (pemvidutide, proposed INN,~~and non-alcoholic steatohepatitis (“NASH”) (for both, pemvidutide, formerly known as ALT-801), and for chronic hepatitis B (HepTcell). Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff and raising capital, and has financed its operations through the issuance of common and preferred stock, long-term debt and proceeds from research grants and government contracts. The Company has not generated any revenues from the sale of any products to date, and there is no assurance of any future revenues from product sales.

Basis of Presentation

The accompanying unaudited consolidated financial statements are prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, ~~2020~~2021 included in the Annual Report on Form 10-K which was filed with the SEC on ~~February 25, 2021.~~March 15, 2022. In the opinion of management, the Company has prepared the accompanying unaudited consolidated financial statements on the same basis as the audited consolidated financial statements, and these consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year ~~2021~~2022 or any future years or periods.

The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and liabilities that might be necessary should we be unable to continue as a going concern.

2. Summary of Significant Accounting Policies

During the nine months ended September 30, ~~2021,~~2022, there have been no significant changes to the Company’s summary of significant accounting policies contained in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 as filed with the ~~SEC, except for the recently adopted accounting standard for income taxes.~~SEC.

Use of Estimates

The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The extent to which the COVID-19 pandemic, including any resurgences or the emergence of new variants, may directly or indirectly impact the Company’s business, financial condition, and results of operations is highly uncertain and subject to change.

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The Company considered the potential impact of the COVID-19 pandemic on the Company’s estimates and assumptions and determined that there was not a material impact to the Company’s unaudited consolidated financial statements as of and for the three and nine months ended September 30, ~~2021.~~2022. However, actual results could differ from those estimates and there may be changes to the Company’s estimates in future periods.

~~Recently Issued Accounting Pronouncements - Adopted~~

~~In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12,~~ ~~Income Taxes~~ ~~(Topic 740),~~ ~~Simplifying the Accounting for Income Taxes~~ (“ASU No. 2019-12”). ASU 2019-12 amends the approaches and methodologies in accounting for income taxes during interim periods and makes changes to certain income tax classifications. The new standard eliminates the legacy exceptions to the general guidance for intra-period tax allocation, when there is a loss from continuing operations and income or a gain from other items, and to the general methodology for calculating income taxes in an interim period, when a year-to-date loss exceeds the anticipated loss for the year. The standard also requires franchise or similar taxes partially based on income to be reported as income tax and the effects of enacted changes in tax laws or rates to be included in the annual effective tax rate computation from the date of enactment. Lastly, in any future acquisition, the Company would be required to evaluate when the step-up in the tax basis of goodwill is part of the business combination and when it should be considered a separate transaction. The Company adopted the standard as of January 1, 2021 and has evaluated the effects of this standard and determined that the adoption did not have a material impact on the Company’s consolidated financial statements.

3. Fair Value Measurements

The Company’s assets ~~and liabilities~~ measured at fair value on a recurring basis atas of September 30, ~~2021~~2022 consisted of the ~~following:~~following (in thousands):


	Fair Value Measurement at September 30, 2021								Fair Value Measurement at September 30, 2022
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents - money market funds	$	65,632,943	$	65,632,943	$	—	$	—	$	123,921	$	123,921	$	—	$	—
Short-term investments		25,020,738		—		25,020,738		—		74,362		—		74,362		—
Total		90,653,681		65,632,943		25,020,738		—	$	198,283	$	123,921	$	74,362	$	—
Liabilities:
Contingent consideration liability (see Note 8)		6,950,000		—		—		6,950,000
Total	$	6,950,000	$	—	$	—	$	6,950,000

The Company’s assets and liabilities measured at fair value on a recurring basis atas of December 31, ~~2020~~2021 consisted of the ~~following:~~following (in thousands):


	Fair Value Measurement at December 31, 2020								Fair Value Measurement at December 31, 2021
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents - money market funds	$	90,389,473	$	90,389,473	$	—	$	—	$	65,634	$	65,634	$	—	$	—
Short-term investments		100,005,558		—		100,005,558		—
Total		190,395,031		90,389,473		100,005,558		—	$	65,634	$	65,634	$	—	$	—
Liabilities:
Contingent consideration liability (see Note 8)		5,390,000		—		—		5,390,000
Warrant liability		10,000		—		—		10,000
Contingent consideration liability (see Note 6)									$	6,090	$	—	$	—	$	6,090
Total	$	5,400,000	$	—	$	—	$	5,400,000	$	6,090	$	—	$	—	$	6,090

~~The warrant liability is included~~

As described in ~~Other long-term liabilities in~~Note 6 the ~~consolidated balance sheet at December 31, 2020. The warrant~~remaining milestone payment underlying the contingent consideration liability was ~~valued using~~fully settled in shares of the ~~Monte Carlo simulation valuation model with Level 3 inputs.~~Company’s common stock. As of September 30, 2022, the Company had no contingent consideration liability.

Short-term investments have been initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third party pricing services or other market observable data (Level 2). The pricing services

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utilize industry standard valuation models, including both income and market-based approaches and observable market inputs to determine value.

Short-term investments had quoted prices ~~at September 30, 2021 as shown below:~~

September 30, 2021

Unrealized Gain

Amortized Cost

(Loss)

Market Value
Certificate of deposit

$
25,020,738

$
—

$
25,020,738
Total

$
25,020,738

$
—

$
25,020,738

~~Short-term investments had quoted prices at December 31, 2020 as shown below:~~

December 31, 2020

Unrealized Gain

Amortized Cost

(Loss)

Market Value
United States treasury securities

$
20,052,757

$
1,843

$
20,054,600
Commercial paper and corporate debt securities

47,521,344

(5,440)

47,515,904
Asset backed securities

7,414,619

(757)

7,413,862
Certificate of deposit

25,021,192

—

25,021,192
Total

$
100,009,912

$
(4,354)

$
100,005,558

The fair value of contingent payments classified as a liability is based on the regulatory milestones described in Note 8 and estimated using the Monte Carlo simulation valuation model with Level 3 inputs.

~~The assumptions used to estimate the fair value of contingent payments that are classified as a liability at September 30, 2021 include the following significant unobservable inputs:~~

Unobservable input

Value or Range

Weighted Average
Expected volatility

78.0%

78.0%
Risk-free interest rate

0.06%

0.06%
Cost of capital

30%

30%
Discount for lack of marketability

10%‑12%

11%
Probability of payment

81%

81%
Projected year of payment

2022

2022

If applicable, the Company will recognize transfers into and out of Level 3 within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurs. There were 0 transfers into or out of Level 3 of the fair value hierarchy as of September 30, ~~2021 and December 31, 2020.~~2022 as shown below (in thousands):


	September 30, 2022
	Amortized Cost		Unrealized Loss		Market Value
United States treasury securities	$	17,784	$	(112)	$	17,672
Commercial paper and corporate debt securities		49,931		(124)		49,807
Asset backed securities		6,910		(27)		6,883
Total	$	74,625	$	(263)	$	74,362

Separate disclosure is required for assets and liabilities measured at fair value on a recurring basis from those measured at fair value on a non-recurring basis. Assets recorded at fair value on a non-recurring basis, such as property and equipment and intangible assets are recognized at fair value when they are impaired. During the nine months ended September 30, ~~2021, the Company recorded a non-cash impairment charge to property and equipment, net on a non-recurring basis (see below). As of December 31, 2020,~~2022, the Company had 0no significant assets or liabilities that were measured at fair value on a non-recurring basis.

~~Property and Equipment, Net~~

During the ~~nine months~~year ended ~~September 30,~~December 31, 2021, the Company recorded a non-cash impairment ~~charge of $8.1 million~~charges to property and equipment, net. The fair value of the impaired assets was $3.3 million at September 30, 2021. At September 30, 2021, the fair value of the construction-in-progress related assets was primarily determined utilizing the cost approach, which reflects the current replacement cost of the asset being appraised, adjusted for contractual restrictionsnet on a non-recurring basis (see below).

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on the assets, the probability of satisfying the contractual restrictions, physical deterioration, functional obsolescence, and economic obsolescence. The fair value measurement is considered a Level 3 measurement within the valuation hierarchy.Lonza Manufacturing Agreement

~~4. Property and Equipment, Net~~

~~Property and equipment, net consists of~~In March 2021, the ~~following:~~

September 30, 2021

December 31, 2020
Furniture, fixtures and equipment

$
202,100

$
125,538
Laboratory equipment

1,039,805

959,585
Computers and telecommunications

279,026

220,316
Software

94,409

64,409
Leasehold improvements

1,731,934

1,285,883
Construction-in-progress

3,300,000

—
Property and equipment, at cost

6,647,274

2,655,731
Less: accumulated depreciation and amortization

(1,929,128)

(1,598,811)
Property and equipment, net

$
4,718,146

$
1,056,920

~~As of September 30, 2021, construction-in-progress primarily includes costs related to the procurement of long-lead equipment associated with the Company’s~~Company expanded its manufacturing collaboration with Lonza Houston, Inc. (“Lonza”) for the manufacture of AdCOVID or other adenovirus-based vaccines. Under the expanded agreement, the Company ~~has~~had committed approximately $23.0 million to Lonza to procure long-lead equipment and construct a dedicated manufacturing suite for clinical and commercial production of adenovirus-based vaccines. ~~This work is expected to be completed during the fourth quarter of 2021.~~

In June 2021, the Company announced the discontinuation of further development of AdCOVID following the Company’s review of findings from ~~the~~its Phase 1 clinical trial. Construction ~~continues~~continued at Lonza, and the Company ~~is currently assessing~~assessed its strategic options with respect to the suite. This work was completed during the fourth quarter of 2021. The ~~Company’s current expectation is that, more likely than not,~~Company capitalized a total of $11.4 million as construction-in-progress (“CIP”) during the ~~suite will be disposed of significantly before the end of its previously estimated useful life. As of~~nine months ended September 30, 2021 under this expanded agreement.

In connection with the discontinuation of further development of AdCOVID, the Company recorded a non-cash impairment charge of $8.1 million ~~of impairment loss on construction-in-progress~~ in the ~~accompanying~~ unaudited consolidated statements of operations and comprehensive loss with $3.3 million remaining capitalized in the unaudited consolidated balance sheet, as it represents expected recoveries available to the Company under the construction contract. Following the discontinuation of AdCOVID, incremental cost incurred under the construction contract has been recorded to research and development expenses in the accompanying unaudited consolidated statements of operations and comprehensive loss. Research and development expenses related to property and equipment was approximately $9.6 million and $17.7 million for the three and nine months ended September 30, 2021, respectively.

Depreciation expense related to property and equipment was approximately $0.1 million and $0.1 million for the three months ended September 30, 2021 and 2020, respectively, and $0.2 million and $0.2 million for the nine months ended September 30, 2021 to write-down the CIP associated with the construction of the Lonza facility to its fair value of $3.3 million as of September 30, 2021. As of September 30, 2021, the fair value of the CIP related assets was primarily determined utilizing the cost approach, which reflected the replacement cost of the asset being appraised, adjusted for contractual restrictions on the assets, the probability of satisfying the contractual restrictions, physical deterioration, functional obsolescence and ~~2020, respectively.~~economic obsolescence. The fair value measurement was considered a Level 3 measurement within the valuation hierarchy.

~~Table~~Furthermore, the remaining $3.3 million CIP was fully charged to impairment during the three months ended December 31, 2021 upon termination of ~~Contents~~the agreement.

~~5. Intangible Assets~~

~~The Company’s intangible assets consist of the following:~~

September 30, 2021

Gross

Estimated

Carrying

Accumulated

Net Book

Useful Lives

Value

Amortization

Value
Internally developed patents

6–20 years

$
1,074,436

$
(499,828)

$
574,608
Acquired licenses

16–20 years

285,000

(285,000)

—
Total intangible assets subject to amortization



1,359,436

(784,828)

574,608
IPR&D assets

Indefinite

12,418,967

—

12,418,967
Total



$
13,778,403

$
(784,828)

$
12,993,575

December 31, 2020

Gross

Estimated

Carrying

Accumulated

Net Book


Useful Lives

Value

Amortization

Value
Internally developed patents

6–10 years

$
884,787

$
(479,908)

$
404,879
Acquired licenses

16–20 years

285,000

(285,000)

—
Total intangible assets subject to amortization



1,169,787

(764,908)

404,879
IPR&D assets

Indefinite

12,418,967

—

12,418,967
Total



$
13,588,754

$
(764,908)

$
12,823,846

Amortization expense of intangible assets was $6,641 and $10,406 for the three months ended September 30, 2021 and 2020, respectively, and $19,920 and $36,282 for the nine months ended September 30, 2021 and 2020, respectively. As of September 30, 2021, the weighted average amortization period remaining for intangible assets was ~~12.0~~ ~~years. Amortization expense was classified as research and development expenses in the accompanying unaudited consolidated statements of operations and comprehensive loss.~~

6.4. Operating Leases

The Company rents office and laboratory space in the United ~~States. The Company also leases office equipment under non-cancellable equipment leases through June 2026.~~States which expires in April 2025. Rent expense ~~during the three and nine months ended September 30, 2021~~ under ~~all of~~ the Company’s operating leases was $0.1 million and $0.4 million ~~respectively. Rent expense~~ during each of the three and nine months ended September 30, ~~2020 under all of the Company’s operating leases was $0.1 million~~2022 and ~~$0.3 million,~~2021, respectively. Rent expense includes short-term leases and variable lease costs that are not included in the lease obligation.

Short-term leases are leases having a term of twelve months or less. The Company recognizes short-term leases on a straight-line basis and does not record a related lease asset or liability for such leases.

The office space ~~leases provide~~lease provides for increases in future minimum annual rental payments as defined in the lease ~~agreements.~~agreement. The office space lease also includes an option to renew the lease as of the end of the term. The Company has determined that the lease renewal option is not reasonably certain of being exercised.

The cash paid for operating lease liabilities for each of the ~~three and~~ nine months ended September 30, 2022 and 2021 was ~~$0.1 million and~~ $0.4 ~~million, respectively, and for the three and nine months ended September 30, 2020 was $0.1 million and $0.3 million, respectively.~~million.

Supplemental other information related to the operating leases balance sheet information is as ~~follows:~~follows (in thousands):



	September 30, 2022			December 31, 2021
Operating lease obligations (see Note 5 and 7)	$	1,230		$	1,535
Operating lease right-of-use assets (included in "Other assets" in Balance Sheet)	$	649		$	798
Weighted-average remaining lease term (years)		2.6			3.3
Weighted-average discount rate		7.2	%		7.2	%

108

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September 30, 2021

December 31, 2020

Operating lease obligations (see Note 7 and 9)

$
1,631,867

$
1,824,840

Operating lease right-of-use assets (included in "Other assets" in Balance Sheet)

$
844,222

$
903,825

Weighted-average remaining lease term (years)

3.6

4.3

Weighted-average discount rate

7.2
%

7.3
%

7.5. Accrued Expenses

Accrued expenses and other current liabilities consist of the ~~following:~~following (in thousands):


	September 30, 2021		December 31, 2020		September 30, 2022		December 31, 2021
Accrued professional services	$	729,434	$	1,350,194	$	624	$	396
Accrued payroll and employee benefits		2,006,675		2,351,599		2,110		2,313
Accrued interest		19,423		13,016
Accrued research and development		15,943,874		7,316,876		9,930		6,988
Lease obligation, current portion (see Note 6)		401,743		356,716
Deferred revenue		19,753		19,753
Total accrued expenses	$	19,120,902	$	11,408,154
Lease obligation, current portion (see Note 4)						442		411
Income tax payable						1,169		—
Accrued interest and other						48		44
Total accrued expenses and other current liabilities					$	14,323	$	10,152

8.6. Contingent Consideration

The Company entered into an Agreement and Plan of Merger and Reorganization, dated July 8, 2019, by and among the Company, Springfield Merger Sub, Inc., Springfield Merger Sub, LLC, Spitfire Pharma, Inc. and David Collier, as the Stockholder Representative (the “Spitfire Merger Agreement”) to acquire all of the equity interests of Spitfire Pharma, Inc. (“Spitfire”). Spitfire was a privately held, preclinical pharmaceutical company developing a novel ~~dual~~ GLP-1/glucagon receptor dual agonist for the treatment of ~~non-alcoholic steatohepatitis.~~NASH.

The transaction closed on July 12, 2019. The Company issued 1,887,250 unregistered shares of its common stock ~~(the “shares”)~~ as upfront consideration to certain former securityholders of Spitfire, ~~(collectively, the “Spitfire Equityholders”),~~ representing an amount equal to $5.0 million less working capital and transaction expense adjustment amounts as defined in the agreement.

The acquisition of Spitfire was accounted for as an asset acquisition instead of a business combination because substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable asset or group of similar identifiable assets, and therefore, the asset was not considered a business. The Company expensed the acquired intellectual property as of the acquisition date as in-process research and development with no alternative future uses.

The Spitfire Merger Agreement also includes future contingent payments up to $88.0 million in cash and shares of the Company’s common stock as ~~follows (each, a “Milestone Event”):~~follows:

●

a one-time payment of $5.0 million (the “IND Milestone Consideration Amount”) within sixty days of the submission of an Investigational New Drug Application (“IND”) to the United States Food and Drug Administration (the “FDA”) or other applicable governmental authority in a foreign jurisdiction, which IND has not been rejected or placed on clinical hold by the FDA or such applicable foreign governmental authority within time specified in the Spitfire Merger Agreement;

●

a one-time payment of $3.0 million (the “Phase 2 Milestone Consideration Amount” and together with the IND Milestone Consideration Amount, the “Regulatory Milestones”) within sixty days of the initiation (first patient, first dosing) of a Phase 2 clinical trial of a product candidate anywhere in the ~~world;~~world (a “Phase 2 Milestone Event”); and

●

payments of up to $80.0 million upon the achievement of specified worldwide net sales (the “Sales Milestones”) of all products developed using the technology acquired in the Amended and Restated License Agreement, dated July 12, 2019, by and between Mederis Diabetes, LLC and Spitfire, within ten years following the approval of a new drug application filed with the FDA.

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The Regulatory Milestones ~~will be~~were payable in shares of the Company’s ~~Common Stock,~~common stock, with the number of shares of the Company’s ~~Common Stock to be~~common stock issued in connection with each milestone amount, if any, ~~are~~ dependent on the share price at the time of achievement. The number of ~~any~~ shares issued in consideration for the IND Milestone Consideration Amount ~~will be~~was determined based on the lower of (A) the average of the closing prices of ~~our Common Stock~~the Company’s common stock as reported on the Nasdaq Global Market for the twenty (20) consecutive trading days prior to the IND Reference Date or (B) $2.95.

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The ~~value~~number of ~~any~~ shares issued in consideration for the Phase 2 Milestone Consideration Amount ~~shall be~~was determined based on the lower of (A) on the average of the closing trading prices of ~~our Common Stock~~the Company’s common stock as reported on the Nasdaq Global Market for the twenty (20) consecutive trading days immediately preceding the date of the occurrence of the Phase 2 Milestone Event or (B) $3.54.

The ~~future~~ contingent payments related to the Regulatory Milestones ~~are~~were stock-based payments accounted for under FASB Accounting Standards Codification Topic 480, Distinguishing Liabilities From Equity (“ASC 480”). Such stock-based payments are subject to a lock-up whereby 50% of the shares are released at 3 months following issuance and 50% are released at 6 ~~months.~~months following issuance. The future contingent payments related to the Sales Milestones are predominately cash-based payments accounted for under FASB Accounting Standards Codification Topic 450, Contingencies. Accordingly, the Company will recognize the Sales Milestones when the contingency is ~~resolved~~probable and the amount ~~is paid or payable.~~can be reasonably estimated.

~~The~~On November 3, 2020, the Company ~~estimates~~received acknowledgement from the ~~future contingent consideration~~Australian Government Department of Health on the Company’s submitted clinical trial notification (“CTN”) which triggered the obligation to settle the IND Milestone payment to the former owners. As a result, on November 19, 2020, the Company issued 1,694,906 shares of its common stock valued at $9.57 per share for the ~~Regulatory Milestones based upon~~amount value of $13.6 million to the former Spitfire stockholders. Pursuant to the Spitfire Merger Agreement, the Company issued the shares within sixty days of the submission of the CTN, which was October 29, 2020. From September 30, 2020 through November 19, 2020, the date of issuance, the Company recognized a ~~Monte Carlo simulation valuation model that is risk adjusted based on the probability of achieving the milestones and a discount for lack of marketability. The Company remeasures~~decrease in the fair value of the IND Milestone payment of $5.4 million to research and development expense and reclassified the balance in the contingent consideration ~~at each reporting period. During~~liability associated with the ~~fourth quarter~~fair value of ~~2020, the Company achieved~~ the IND Milestone ~~and paid~~payment to equity in the Company’s consolidated balance sheet.

On April 26, 2022, the Company dosed the first patient in the Phase 2 MOMENTUM trial of pemvidutide in obesity, which triggered the obligation ~~in shares according~~to pay the Phase 2 Milestone Consideration Amount to the ~~calculation above.~~ former owners. As a result, on June 10, 2022, the Company issued 847,444 shares of its common stock valued at $8.55 per share for the amount value of $7.2 million to the former Spitfire stockholders. From the last valuation date on March 31, 2022 through June 10, 2022, the date of issuance, the Company recognized an increase in the fair value of the Phase 2 Milestone Consideration Amount of $1.9 million to research and development expense and reclassified the balance in the contingent consideration liability to equity in the Company’s consolidated balance sheet. As of September 30, 2022, the Company had no contingent consideration liability.

Below is a summary of the contingent consideration ~~activity:~~activity (in thousands):


	Nine Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2022		2021
Beginning balance	$	5,390,000	$	2,750,000	$	6,090	$	5,390
Change in fair value		1,560,000		22,320,000		86		1,560
Fair value of payments settled in common stock (Phase II Milestone)						(6,176)		—
Ending balance	$	6,950,000	$	25,070,000	$	—	$	6,950

7. Other Long-Term Liabilities

During the nine months ended September 30, 2022, the Company received a total of ~~September 30,~~$3.4 million in cash for research and development (“R&D”) incentive credit that the Company earned during the fiscal years 2021 and 2020 through the ~~increase in fair value was primarily attributable to an increase~~participation in the ~~closing share price of the Company’s common stock and in the probability of milestone achievement. Any changes in fair value have been recorded within~~Australian research and development ~~expense during~~incentive credit program administered through the ~~respective periods presented.~~Australian Tax Office. The Company recorded the receipt as long-term liability until there is reasonable assurance that the Company will comply with the conditions attached to the incentive credit. See Note 2. Summary of Significant Accounting Policies in the Company’s 2021 Annual Report on Form 10-K for accounting policies related to research and development incentive credits.

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~~9. Other Long-Term Liabilities~~

The Company’s other long-term liabilities are summarized as ~~follows:~~follows (in thousands):


	September 30, 2021		December 31, 2020
Lease obligation, long-term portion (see Note 6)	$	1,230,124	$	1,468,124
					September 30, 2022		December 31, 2021
Research and development incentive credit					$	3,402	$	—
Lease obligation, long-term portion (see Note 4)						788		1,124
Conditional economic incentive grants		250,000		250,000		250		250
Other		85,487		110,319		66		80
Total other long-term liabilities	$	1,565,611	$	1,828,443	$	4,506	$	1,454

~~10.~~8. Common Stock

Public Offering

On July 16, 2020, the Company offered and sold (i) 3,369,564 shares of common stock, at a price to the public of $23.00 per share, and (ii) pre-funded warrants of the Company to purchase 1,630,436 shares of common stock at an exercise price equal to $0.0001 per share (the “Pre-Funded Warrants”), at a price to the public of $22.9999 per share of common stock underlying the Pre-Funded Warrants (equal to the public offering price per share of Common Stock, minus the exercise price of each Pre-Funded Warrant). The Pre-Funded Warrants are exercisable at any time, provided that each Pre-Funded Warrant holder will be prohibited from exercising such Pre-Funded Warrants into shares of the Company’s

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common stock if, as a result of such exercise, the holder, together with its affiliates, would own more than 4.99% of the total number of shares of the Company’s common stock then issued and outstanding, which percentage may change at the holders’ election to any other number less than or equal to 19.99% upon 61 days’ notice to the Company. The gross proceeds of this offering were approximately $132.2 million, which includes the exercise in full of the underwriters’ option to purchase an additional 750,000 shares of common stock, before deducting underwriting discounts and commissions and offering expenses during the third quarter of 2020. The net proceeds of this offering were approximately $124.0 million, after deducting underwriting discounts and commissions and offering expenses payable by the Company.

The Company has assessed the Pre-Funded Warrants for appropriate equity or liability classification and determined that the Pre-Funded Warrants are freestanding instruments that do not meet the definition of a liability pursuant to ASC 480 and do not meet the definition of a derivative pursuant to FASB Accounting Standards Codification Topic 815, Derivatives and Hedging (“ASC 815”). The Pre-Funded Warrants are indexed to the Company’s common stock and meet all other conditions for equity classification under ASC 480 and ASC 815. Accordingly, the Pre-Funded Warrants are classified as equity and are accounted for as a component of additional paid-in capital at the time of issuance. As of September 30, ~~2021, 0~~2022, 760,870 of the Pre-Funded Warrants were ~~exercised.~~exercised, leaving 869,566 remaining Pre-Funded Warrants unexercised.

At-the-Market Offerings

On February 25, 2021, the Company entered into an Equity Distribution Agreement (the “2021 Agreement”) with Piper Sandler & Co., Evercore Group L.L.C., and B. Riley Securities, Inc., serving as sales agents (the “Sales Agents”) with respect to an at-the-market offerings program under which the Company ~~may offer~~offered and ~~sell, from time to time at its sole discretion,~~sold shares of its common stock, par value $0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $125.0 million (the “Shares”) through the ~~Sale~~Sales Agents (the “2021 Offering”). ~~Any~~All the Shares offered and sold in the 2021 Offering ~~will be~~were issued pursuant to the Company’s Registration Statement on Form S-3 filed with the Securities and Exchange Commission (the “SEC”) on December 31, 2020, which was declared effective on January 11, 2021 (“2021 Shelf”), the prospectus supplement relating to the 2021 Offering filed with the SEC on February 25, 2021 and any applicable additional prospectus supplements related to the 2021 Offering that form a part of the Registration Statement.

~~As of~~During the nine months ended September 30, ~~2021,~~2022, the Company ~~has~~ sold ~~3,516,510~~5,204,415 shares of Common Stock under the 2021 Agreement resulting in approximately ~~$52.4~~$56.2 million in proceeds, net of $1.9 million commission and other offering costs. As of September 30, 2022, the Company has sold 10,004,869 shares of Common Stock under the 2021 Agreement resulting in approximately $121.0 million in proceeds, ~~with $70.9~~net of $4.0 million commission and other offering costs, As of September 30, 2022, there were no remaining shares available ~~to be sold~~for issuance under the 2021 Agreement. AsThe Company

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recorded approximately ~~$0.1~~$0.3 million of other offering costs which offset the proceeds received from the shares sold through September 30, ~~2021 and recognized approximately $0.1 million of deferred offering costs which will offset future proceeds received under the 2021 Agreement.~~2022.

On March 27, 2020, the Company entered into an Equity Distribution Agreement (the “2020 Agreement”) with JMP Securities LLC, serving as placement agent (the “Placement Agent”) with respect to an at-the-market offerings program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $50.0 million (the “Shares”) through the Placement Agent (the “2020 Offering”). Any Shares offered and sold in the 2020 Offering were issued pursuant to the Company’s Registration Statement on Form S-3 filed with the SEC on April 4, 2019, which was declared effective on April 12, 2019, the prospectus supplement relating to the 2020 Offering filed with the SEC on March 27, 2020 and any applicable additional prospectus supplements related to the 2020 Offering that form a part of the Registration Statement. The aggregate market value of Shares eligible for sale in the 2020 Offering and under the 2020 Agreement were subject to the limitations of General Instruction I.B.6 of Form S-3, to the extent required under such instruction. The Company offered Shares having an aggregate offering price of $18.9 million pursuant to the prospectus supplement filed with the SEC on March 27, 2020. On June 1, 2020, the Company filed an amendment to the 2020 Agreement which amended the prospectus supplement dated March 27, 2020 to increase the aggregate offering price to $50.0 million. As of September 30, 2020, the Company sold 3,213,009 shares of Common Stock under the amended 2020 Agreement resulting in $25.6 million in net proceeds. The 2020 Agreement was fully utilized during the year ended December 31, 2020, and 0 Shares were sold under the 2020 Agreement during the three and nine months ended September 30, 2021.

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Exchange Agreement

On February 25, 2021, the Company entered into an exchange agreement (the “Exchange Agreement”) with an ~~Investor~~investor and its affiliates (the “Exchanging Stockholders”), pursuant to which the Company exchanged an aggregate of 1,000,000 shares of the Company’s common stock, par value $0.0001 per share, owned by the Exchanging Stockholders for pre-funded warrants (the “Exchange Warrants”) to purchase an aggregate of 1,000,000 shares of common stock (subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Exchange Warrants), with an exercise price of $0.0001 per share. The Exchange Warrants dodid not ~~expire~~have an expiration date and ~~are~~were exercisable at any time except that the Exchange Warrants ~~cannot~~could not be exercised by the Exchanging Stockholders if, after giving effect thereto, the Exchanging Stockholders would beneficially own more than 9.99% of the Company’s common stock, subject to certain exceptions. In accordance with FASB Accounting Standards Codification Topic 505, Equity, the Company recorded the retirement of the common stock exchanged as a reduction of common shares outstanding and a corresponding debit to additional paid-in-capital and accumulated deficit at the fair value of the Exchange Warrants on the issuance date. The Exchange Warrants were classified as equity in accordance with ASC 480 and the fair value of the Exchange Warrants was recorded as a credit to additional paid-in-capital and is not subject to remeasurement. The Company determined that the fair value of the Exchange Warrants is substantially similar to the fair value of the retired shares on the issuance date due to the negligible exercise price for the Exchange Warrants. ~~As of September 30, 2021, NaN of~~On January 24, 2022, the Exchange Warrants ~~have been exercised.~~

~~11. Warrants~~

~~A summary~~to purchase 1,000,000 shares were net exercised, resulting in the issuance of ~~warrant activity during the nine months ended September 30, 2021 is as follows:~~


~~Warrants outstanding, December 31, 2020~~		~~1,777,611~~
~~Exchanges (see Note 10)~~		~~1,000,000~~
~~Exercises~~		~~(1,420)~~
~~Warrants outstanding, September 30, 2021~~		~~2,776,191~~

As999,984 shares of ~~September 30, 2021, all of the~~ common stock, ~~warrants that were previously classified as a liability were exercised in full.~~

and no Exchange Warrants remain outstanding.

~~12.~~9. Warrants

A summary of warrant activity during the nine months ended September 30, 2022 is as follows:


				Weighted-Average
			Weighted	Remaining
	Number of		Average	Contractual Term
	Warrants		Exercise Price	(Years)
Warrants outstanding, December 31, 2021	2,776,191
Expired	(155)
Exercises (see Note 8)	(1,760,870)
Warrants outstanding, September 30, 2022	1,015,166	$	0.66	1.2

The warrants outstanding as of September 30, 2022 included 869,566 Pre-Funded Warrants with an exercise price of $0.0001 per-share and no expiration date.

10. Stock-Based Compensation

Stock Options

The Company’s stock option awards generally vest over four years and typically have a contractual life of ten years. AtAs of September 30, ~~2021,~~2022, there was ~~$11.3~~$13.7 million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 2.6 years. During the nine months ended September 30, ~~2021,~~2022, the Company granted ~~1,075,700~~1,433,427 stock options with a weighted average exercise price of ~~$15.07~~$8.39 and per share weighted average grant date fair value of ~~$12.38.~~

~~Information related to stock options outstanding at September 30, 2021 is as follows:~~

Weighted-Average


Weighted-

Remaining

Number of

Average

Contractual Term

Aggregate Intrinsic

Stock Options

Exercise Price

(Years)

Value
Outstanding

2,612,585

$
8.74

5.9

$
14,034,500
Exercisable

984,613

$
5.45

5.8

$
7,851,439
Unvested

1,627,972

$
10.73

6.0

$
6,183,061

$6.97.

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Information related to stock options outstanding as of September 30, 2022 is as follows (in thousands, except share and per share data):


				Weighted-Average
		Weighted-		Remaining
	Number of	Average		Contractual Term	Aggregate Intrinsic
	Stock Options	Exercise Price		(Years)	Value
Outstanding	3,528,473	$	9.09	5.9	$	16,975
Exercisable	1,382,587	$	8.75	5.8	$	7,824
Unvested	2,145,886	$	9.31	6.0	$	9,151

Restricted Stock

AtAs of September 30, ~~2021,~~2022, the Company had unvested restricted stock of ~~94,181~~13,454 shares with total unrecognized compensation expense of ~~$0.3~~$47,000, which the Company expects to recognize over a weighted average period of approximately 0.2 years. During the nine months ended September 30, 2022, the Company issued 34,132 of unrestricted common stock as a result of the vesting of 60,546 restricted stock net of 26,414 shares of common stock withheld to satisfy tax withholding obligations.

Restricted Stock Units (RSUs)

During the nine months ended September 30, 2022, the Company granted 285,000 shares of RSUs with a weighted average grant date fair value of $7.11 which vest over four years. As of September 30, 2022, the Company had unvested RSUs of 470,275 shares with total unrecognized compensation expense of $3.4 million, which the Company expects to recognize over a weighted average period of approximately ~~1.2~~3.1 years. During the nine months ended September 30, ~~2021,~~2022, the Company ~~released 60,545~~issued 30,373 shares of unrestricted common stock ~~from restriction~~ as a result of the vesting of ~~restricted stock.~~

~~During the nine months ended September 30, 2021, the Company granted 196,279 shares~~46,653 RSUs net of restricted stock units which vest over four years. At September 30, 2021, the Company had unvested restricted stock units of 207,529 shares with total unrecognized compensation expense of $2.5 million, which the Company expects to recognize over a weighted average period of approximately 3.4 years. During the nine months ended September 30, 2021, the Company released 3,75016,280 shares of common stock ~~from restriction as a result of the vesting of restricted stock units.~~withheld to satisfy tax withholding obligations.

2019 Employee Stock Purchase Plan (ESPP)

Under the ~~Employee Stock Purchase Plan,~~ESPP, employees purchased ~~24,100~~26,395 shares for $0.2 million during the nine months ended September 30, ~~2021.~~2022. During the three and nine months ended September 30, 2022, the Company recognized compensation expense of $0.1 million and $0.2 million respectively. During the three and nine months ended September 30, 2021, the Company recognized compensation expense of ~~$28,811~~$29,000 and $0.3 million, respectively.

Stock-based Compensation Expense

Stock-based compensation expense is classified in the unaudited consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2022 and 2021 ~~and 2020~~ as ~~follows:~~follows (in thousands):


	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,				September 30,				September 30,
	2021		2020		2021		2020		2022		2021		2022		2021
Research and development	$	449,486	$	143,844	$	1,211,164	$	250,783	$	743	$	449	$	2,024	$	1,211
General and administrative		1,047,398		1,176,245		2,988,900		1,614,737		1,385		1,048		4,185		2,989
Total	$	1,496,884	$	1,320,089	$	4,200,064	$	1,865,520	$	2,128	$	1,497	$	6,209	$	4,200

~~13.~~11. U.S. Government Contracts and Grants

In June 2020, the Company was awarded $4.7 million from the U.S. Army Medical Research & Development Command (“USAMRDC”) to fund ~~our~~its Phase 1/2 clinical trial of T-COVID. The competitive award was granted by USAMRDC in collaboration with the Medical Technology Enterprise Consortium (“MTEC”), a 501(c)(3) biomedical technology consortium working in partnership with the Department of Defense (“DoD”). Under the contract, MTEC ~~will pay~~paid the Company a firm fixed fee based upon the achievement of certain milestones for conduct and completion of a Phase 1/2 study and research and development work on the replication-deficient adenovirus 5 (“RD-Ad5”) vector vaccine

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platform. For the nine months ended September 30, 2021, the Company ~~has~~ recognized approximately $0.5 million of grant revenue under the ~~contract. For~~contract, which completed the full recognition of this award. No revenue was recognized for this contract for the three and nine months ended September 30, ~~2020, the Company recognized $2.3 million of grant revenue under the contract.~~2022.

In July 2016, the Company signed a five-year contract with ~~BARDA.~~Biomedical Advanced Research and Development Authority (“BARDA”). The contract, as amended, ~~has~~had a total value of up to $136.8 million ~~and is~~to be used to fund clinical development of NasoShield. Under the contract, BARDA ~~pays~~paid the Company a fixed fee and ~~reimburses~~reimbursed certain costs for the research and development of an Ad5-vectored, protective antigen-based intranasal anthrax vaccine through cGMP manufacture and conduct of a Phase 1 clinical trial dose ranging assessment of safety and immunogenicity. The contract ~~consists~~consisted of an initial base performance period providing approximately $30.9 million in funding for the period July 2016 through December 2021. BARDA ~~has~~had seven options to extend the contract to fund certain continued development and manufacturing activities for the anthrax vaccine, including Phase 2 clinical studies. Each option, if exercised by BARDA, would ~~provide~~have provided additional funding ranging from approximately $1.1 million to $34.4 million for a three-year period beginning in 2021. For the three and nine months ended September 30, 2021, the Company ~~has~~ recognized approximately $0.1 million and $0.4 million, respectively, of grant

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revenue under the ~~current~~ BARDA contract. For the three and nine months ended September 30, ~~2020,~~2022, the Company has recognized ~~approximately $0.6 million and $2.7 million, respectively, of~~de minimis grant revenue ~~under~~related to the ~~current~~close-out of the BARDA contract. BARDA did not extend the contract beyond the end of December 2021.

~~14.~~12. Income Taxes

~~Due~~During the three and nine months ended September 30, 2022, the Company recorded a total of $0.2 million income tax benefit related to ~~a full valuation allowance,~~interest received and receivable on income tax refunds. Other than the tax benefit related to interest, the Company did not record an income tax benefit ~~for~~in the three and nine months ended September 30, ~~2021.~~

~~With respect~~2022 and 2021 due to the prior year, on March 27, 2020, President Donald Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act provided both stimulus measures and a number of tax provisions, including: temporary changes regarding the utilization and carry back of net operating losses, temporary changes to the prior and future limitations on interest deductions, technical corrections from prior tax legislation for tax depreciation of qualified improvement property, and certain refundable employee retention credits. As of September 30, 2020, the Company recognized a total tax benefit of $5.3 million related to the carry back of losses back to obtain a refund of its 2016 tax liability.full valuation allowance.

~~15.~~13. Net Loss Per Share

Because the Company has reported a net loss attributable to common stockholders for all periods presented, basic and diluted net loss per share attributable to common stockholders are the same for all periods presented.

Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average numbers of shares of common stock outstanding for the period. Basic shares outstanding includes the weighted average effect of the Company’s outstanding pre-funded warrants, the exercise of which requires little or no consideration for the delivery of shares of common stock.

Diluted net loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period. As such, all unvested restricted stock, restricted stock units, common stock warrants and stock options have been excluded from the computation of diluted weighted average shares outstanding because such securities would have an anti-dilutive impact for all periods presented.

Potential common shares issuable upon conversion, vesting or exercise of unvested restricted stock, restricted stock units, common stock warrants and stock options that are excluded from the computation of diluted weighted-average shares outstanding, as they are anti-dilutive, are as follows:


	For the Three and Nine	For the Three and Nine	For the Three and Nine Months Ended
	Months Ended	Months Ended	September 30,
	September 30, 2021	September 30, 2020	2022	2021
Common stock warrants	145,755	147,175	145,600	145,755
Common stock options	2,626,482	1,627,394	3,542,534	2,626,482
Restricted stock units			470,275	207,529
Restricted stock	301,710	189,908	13,454	94,181

~~16.~~14

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14. Commitments and Contingencies

Spitfire Acquisition

As disclosed in Note 8,6, the Company is obligated to make payments of up to $80.0 million upon the achievement of specified worldwide net sales of all products developed using the technology acquired from Spitfire Pharma Inc. within ten years following the approval of a new drug application filed with the FDA.

~~Lonza Manufacturing Agreement~~Litigation

In December 2019, a complaint was filed by Dr. De-Chu Christopher Tang (“Plaintiff”) against the Company, which was removed to the United States District Court for the Eastern District of Texas. The Plaintiff amended the complaint in February 2020 to include Vipin K. Garg and David J. Drutz as defendants, in addition to the Company (Dr. Garg, Dr. Drutz, and the Company are collectively referred to as “Defendants”). In March 2020 the Defendants filed a motion to dismiss the complaint. The Court denied the motion without prejudice and allowed Plaintiff an opportunity to file an amended complaint. Plaintiff’s second amended complaint was filed on April 17, 2020, and Defendants filed a motion to dismiss that complaint on May 1, 2020. A hearing on Defendants’ motion to dismiss was held on May 20, 2020. Plaintiff, who is representing himself, alleges five causes of action as follows: (1) Defendants’ alleged retention of Plaintiff’s lab notebooks after the termination of his employment in 2012; (2) alleged plagiarism based on publishing an article without naming Plaintiff as an author; (3) use of the Adhigh System, which Plaintiff alleges he developed; (4) allegations that Defendants manipulated the Company’s stock and caused a decrease in value; and (5) allegations that the Defendants “wast[ed] government grant money and poison[ed] science by leaving data to rot.” On September 30, 2020, Plaintiff filed a motion titled “Motion to Proscribe Defendants’ Allegedly Illegal Use of Plaintiff’s AdHigh System in Altimmune’s Human Clinical Trials,” to which Defendants filed an opposition on October 13, 2020. The court has not yet ruled on that motion, which also remains pending. On November 6, 2020, Defendants filed a motion for summary judgment on the basis of lack of personal jurisdiction, insufficient service of process, and failure to state a claim. The court ruled on that motion on March 25, 2021, which dismissed the case on the basis of lack of personal jurisdiction. On December 1, 2020, the magistrate judge assigned to the case issued a report and recommendation that Defendants’ motion to dismiss of May 1, 2020 be granted and that this action be dismissed for lack of personal jurisdiction. Plaintiff filed objections to the report and recommendation on December 14, 2020, and the resolution of those objections by the district court remains pending.

In December 2021, the ~~Company expanded its manufacturing collaboration with Lonza~~Plaintiff refiled the complaint in ~~connection with~~ the ~~Manufacturing Agreement entered into in November 2020~~United States District Court for the ~~manufacture~~District of ~~AdCOVID or other adenovirus-based~~

~~Table~~Maryland. On February 24, 2022, Defendants filed a memorandum containing a brief description of ~~Contents~~

~~vaccines. Under~~ the ~~expanded agreement,~~planned motion and a concise summary of the factual and legal support for it. On the basis of that memorandum, the Court granted Defendants’ request to file a motion to dismiss and allowed Plaintiff an opportunity to file an amended complaint. Plaintiff’s amended complaint was filed on March 3, 2022, and Defendants filed a motion to dismiss that complaint on April 4, 2022. The Company ~~has committed approximately $23.0 million~~believes the allegations in the complaint are without merit and intends to ~~Lonza to procure long-lead equipment and construct a dedicated manufacturing suite for clinical and commercial production of adenovirus-based vaccines. As of September 30, 2021,~~vigorously defend the ~~Company had $2.0 million in remaining commitments under the agreement. In June 2021, the Company discontinued further development of AdCOVID. Refer to Note 4 for further details.~~

~~Litigation~~litigation.

The Company is a party in various contracts and subject to disputes, litigation and potential claims arising in the ordinary course of business, none of which are currently reasonably possible or probable of material loss.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our consolidated financial statements and related notes for the year ended December 31, ~~2020~~2021 included in our Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission on ~~February 25, 2021.~~March 15, 2022.

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “may,” “will,” “should,” “could,” “target,” “strategy,” “intend,” “project,” “guidance,” “likely,” “usually,” “potential,” or the negative of these words or variations of such words, similar expressions, or comparable terminology are intended to identify such forward-looking statements, although not all forward-looking statements contain these identifying words. There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by forward-looking statements. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. A further list and description of risks, uncertainties and other factors that could cause actual results or events to differ materially from the forward-looking statements that we make is included in the cautionary statements herein and in our other filings with the Securities and Exchange Commission, including those set forth under Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments that we may make.

We have based the forward-looking statements included in this Quarterly Report on Form 10-Q on information available to us on the date of this quarterly report, and we assume no obligation to update any such forward-looking statements, other than as required by law. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we, in the future, may file with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Overview

Altimmune, Inc. is a clinical stage biopharmaceutical company focused on developing treatments for obesity and liver diseases. Our ~~pipeline includes proprietary intranasal vaccines and next generation peptide therapeutics for obesity, NASH (pemvidutide, proposed INN, formerly~~lead product candidate, pemvidutide (formerly known as ALT-801), is a GLP-1/glucagon receptor dual agonist that is being developed for the treatment of obesity and non-alcoholic steatohepatitis (“NASH”). In addition, we are developing HepTcell, an immunotherapeutic agent designed to achieve a functional cure for chronic hepatitis B (HepTcell). In June 2021, we announced the discontinuation of further development of our COVID-19 vaccine candidate, AdCOVID following our review of findings from the Phase 1 clinical trial, and in view of the highly competitive COVID-19 landscape. In the study, AdCOVID was generally well tolerated, but the immunogenicity data demonstrated lower than expected immune responses for each of the immune parameters tested.B.

Impact of COVID-19

We are closely monitoring how the spread of COVID-19, including any resurgences or the emergence of new variants, is affecting our employees, business, preclinical studies and clinical trials. We have reopened our executive office to allow ~~certain~~ employees to return to the office based on ~~a phased~~an approach that is intended to comply with federal and state guidelines, with a focus on employee safety and optimal work environment. We are continuing our regular interactions with the FDA and other regulatory agencies and, based on current information, we do not anticipate COVID-19 to materially affect our regulatory timelines for our ongoing clinical trials. Furthermore, as a government contractor, we are subject to the federal government vaccination mandate, which requires federal contractor employees, except in certain limited circumstances, to be vaccinated against COVID-19 by December 8, 2021. While the vaccination mandate remains subject to the interpretation of various government agencies and other entities, and questions remain regarding the specific application of the vaccination mandate, we are continuing to develop and implement health, safety, employment and operational protocols in order to timely comply with the vaccination mandate. As of and for the ~~three and~~ nine months ended September 30, ~~2021,~~2022, the vaccination mandate has not had a material impact on our employees or operations.

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Although operations have not been materially affected by the COVID-19 pandemic as of and for the three and nine months ended September 30, ~~2021,~~2022, at this time, however, ~~there is significant uncertainty relating to the trajectory of the pandemic and the impact of related responses, and~~ disruptions caused by the COVID-19 pandemic may result in difficulties or delays in initiating, enrolling, conducting or completing our planned and ongoing trials and the incurrence

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of unforeseen costs as a result of disruptions in clinical supply or preclinical study or clinical trial delays. The impact of COVID-19 on our future results will largely depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions, the ultimate impact on financial markets and the global economy, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. In addition, a recurrence of COVID-19 cases, or variants thereof, could cause other widespread or more severe impacts depending on where infection rates are highest. We continue to monitor developments as we deal with the disruptions and uncertainties relating to the COVID-19 pandemic. See “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Recent Global Events

Russia and Ukraine Conflict

The military conflict in Russia and Ukraine that began in February 2022 continues as of the date of this quarterly report. As the conflict continues to evolve, we are closely monitoring the impact on our business. The conflict, and the sanctions and counter-sanctions imposed in response to it, have created increased economic uncertainty and operational complexity globally. While we have no direct exposure to Russia and Ukraine, and do not at the moment believe the situation will have a material impact on our operating results, we are monitoring any broader economic impact from the situation. Should the conflict continue or escalate, it could have a significant negative effect on the global economy or on our operations, including continued inflationary pressures on raw materials, supply chain and logistics disruptions, volatility in foreign exchange rates and interest rates and heightened cybersecurity threats.

U.S. Government Contracts and Grants

In June 2020, we were awarded $4.7 million from the U.S. Army Medical Research & Development Command (“USAMRDC”) to fund our Phase 1/2 clinical trial of T-COVID. The competitive award was granted by USAMRDC in collaboration with the Medical Technology Enterprise Consortium (“MTEC”), a 501(c)(3) biomedical technology consortium working in partnership with the Department of Defense (“DoD”). Under the contract, MTEC ~~pays~~paid us a firm fixed fee based upon the achievement of certain milestones for conduct and completion of a Phase 1/2 study and research and development work on the replication-deficient adenovirus 5 (“RD-Ad5”) vector vaccine platform. For the nine months ended September 30, 2021, we ~~have~~ recognized approximately $0.5 million of grant revenue under the ~~contract. For~~contract, which completed the full recognition of this award. No revenue was recognized for this contract for the three and nine months ended September 30, ~~2020, we have recognized approximately $2.3 million of grant revenue under the contract.~~2022.

In July 2016, we signed a five-year contract with Biomedical Advanced Research and Development Authority (“BARDA”). The contract, as amended, ~~has~~had a total value of up to $136.8 million ~~and is~~to be used to fund clinical development of NasoShield. Under the contract, BARDA ~~pays~~paid us a fixed fee and ~~reimburses~~reimbursed certain costs for the research and development of an Ad5-vectored, protective antigen-based intranasal anthrax vaccine through cGMP manufacture and conduct of a Phase 1 clinical trial dose ranging assessment of safety and immunogenicity. The contract ~~consists~~consisted of an initial base performance period providing approximately $30.9 million in funding for the period July 2016 through December 2021. BARDA ~~has~~had seven options to extend the contract to fund certain continued development and manufacturing activities for the anthrax vaccine, including Phase 2 clinical trials. Each option, if exercised by BARDA, would ~~provide~~have provided additional funding ranging from approximately $1.1 million to $34.4 million for a three-year period beginning in 2021. For the three and nine months ended September 30, 2021, we ~~have~~ recognized approximately $0.1 million and $0.4 million, respectively, of grant revenue under the ~~current~~ BARDA contract. For the three and nine months ended September 30, ~~2020,~~2022, we have recognized ~~approximately $0.6 million and $2.7 million, respectively, of~~de minimis grant revenue ~~under~~related to the ~~current~~close-out of the BARDA contract. BARDA did not extend the contract beyond the end of December 2021.

Critical Accounting Policies and Significant Judgment and Estimates

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our unaudited consolidated financial statements, which have been prepared in accordance with accounting principles generally

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accepted in the U.S. and the rules and regulations of the SEC for interim financial reporting. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and the disclosure of contingent liabilities in our consolidated financial statements. We base our estimates and judgments on historical experience, knowledge of current conditions and expectations of what could occur in the future given available information.

There have been no changes in our critical accounting policies and significant judgment and estimates as disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020 except for recently adopted accounting standards (See Note 2 to the consolidated financial statements appearing in Item 1 of this report).~~2021. For more information

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regarding our critical accounting policies, we encourage you to read the discussion contained in Item 7 under the heading “Critical Accounting Policies and Significant Judgments and Estimates” and Note 2 “Summary of Significant Accounting Policies” included in the notes to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Results of Operations

Comparison of the three months ended September 30, ~~2021~~2022 and ~~2020:~~2021:


	For the Three Months Ended								For the Three Months Ended
	September 30,								September 30,
	2021		2020		Increase (Decrease)
(in thousands)									2022			2021		Increase (Decrease)
Revenue	$	157,559	$	2,937,991	$	(2,780,432)	(95)	%	$	2		$	158	$	(156)	(99)	%
Operating expenses:
Research and development		29,205,739		17,041,975		12,163,764	71	%		20,262			29,206		(8,944)	(31)	%
General and administrative		4,155,928		4,220,238		(64,310)	(2)	%		4,492	��		4,156		336	8	%
Total operating expenses		33,361,667		21,262,213		12,099,454	57	%		24,754			33,362		(8,608)	(26)	%
Loss from operations		(33,204,108)		(18,324,222)		(14,879,886)	(81)	%		(24,752)			(33,204)		8,452	25	%
Other income (expense):
Interest expense		(32,866)		(2,275)		(30,591)	(1,345)	%		(64)			(33)		(31)	(94)	%
Interest income		12,485		45,127		(32,642)	(72)	%		1,053			13		1,040	8,000	%
Other (expense) income, net		(286,199)		29,218		(315,417)	(1,080)	%
Total other (expense) income, net		(306,580)		72,070		(378,650)	(525)	%
Net loss before income tax benefit		(33,510,688)		(18,252,152)		(15,258,536)	(84)	%
Other income (expense), net										50			(286)		336	(117)	%
Total other income (expense), net										1,039			(306)		1,345	(440)	%
Net loss before income taxes										(23,713)			(33,510)		9,797	29	%
Income tax benefit		—		482,017		(482,017)	(100)	%		197			—		197
Net loss	$	(33,510,688)	$	(17,770,135)	$	(15,740,553)	(89)	%	$	(23,516)		$	(33,510)	$	9,994	30	%

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Comparison of the nine months ended September 30, ~~2021~~2022 and ~~2020:~~2021:

For the Nine Months Ended

September 30,


2021

2020

Increase (Decrease)

Revenue

$
1,132,698

$
5,872,321

$
(4,739,623)

(81)
%
Operating expenses:







Research and development

54,356,051

40,823,756

13,532,295

33
%
General and administrative

11,636,001

9,097,511

2,538,490

28
%
Impairment loss on construction-in-progress

8,070,000

—

8,070,000

100
%
Total operating expenses

74,062,052

49,921,267

24,140,785

48
%
Loss from operations

(72,929,354)

(44,048,946)

(28,880,408)

(66)
%
Other income (expense):







Interest expense

(66,763)

(7,468)

(59,295)

(794)
%
Interest income

87,847

278,154

(190,307)

(68)
%
Other (expense) income, net

(293,233)

48,882

(342,115)

(700)
%
Total other (expense) income, net

(272,149)

319,568

(591,717)

(185)
%
Net loss before income tax benefit

(73,201,503)

(43,729,378)

(29,472,125)

(67)
%
Income tax benefit

—

5,306,678

(5,306,678)

(100)
%
Net loss

$
(73,201,503)

$
(38,422,700)

$
(34,778,803)

(91)
%


	For the Nine Months Ended
	September 30,
(in thousands)	2022		2021		Increase (Decrease)
Revenue	$	42	$	1,133	$	(1,091)	(96)	%
Operating expenses:
Research and development		51,359		54,356		(2,997)	(6)	%
General and administrative		13,329		11,636		1,693	15	%
Impairment loss on construction-in-progress		—		8,070		(8,070)	100	%
Total operating expenses		64,688		74,062		(9,374)	(13)	%
Loss from operations		(64,646)		(72,929)		8,283	11	%
Other income (expense):
Interest expense		(191)		(67)		(124)	(185)	%
Interest income		1,402		88		1,314	1,493	%
Other income (expense), net		185		(293)		478	163	%
Total other income (expense), net		1,396		(272)		1,668	613	%
Net loss before income taxes		(63,250)		(73,201)		9,951	14	%
Income tax benefit		197		—		197
Net loss	$	(63,053)	$	(73,201)	$	10,148	14	%

Revenue

Revenue consists primarily of research grants in the United States from MTEC for our T-COVID product candidate and BARDA for our NasoShield vaccine product candidate. These grants consist of firm fixed fee contracts based on milestones and cost reimbursement contracts, with a fixed fee based on either costs incurred or milestones met.

~~Table~~ Our T-COVID and NasoShield programs were discontinued as of ~~Contents~~the end of 2021.

Revenue decreased by ~~$2.8~~$0.2 million, or ~~95%~~99% for the three months ended September 30, 2022 and $1.1 million, or 96%, for the nine months ended September 30, 2022, as compared to the three and nine months ended September 30, 2021. The decrease was primarily the result of the discontinuation of development work on both T-COVID and NasoShield programs as described above.

Research and development expenses

Research and development expense decreased by $8.9 million, or 31%, for the three months ended September 30, ~~2021,~~2022, as compared to the ~~same period in 2020. The decrease was primarily the result of a decrease in MTEC revenue attributable to the timing of clinical trial and development work on the T-COVID program.~~

~~Revenue decreased by $4.7 million, or 81%, for the nine~~three months ended September 30, ~~2021, as compared to the same period in 2020.~~2021. The decrease was primarily the result of:

●

a decrease of ~~$2.9~~$17.9 million ~~in BARDA revenue~~ due primarily to ~~timing of clinical trials,~~ development activities for our COVID-19 programs, which included AdCOVID and ~~settlement of indirect rates on the NasoShield program; and~~T-COVID (which were discontinued in 2021);

●

a decrease of ~~$1.8 million in MTEC revenue attributable to the timing of clinical trial and development work on the T-COVID program.~~

~~Research and development expenses~~

Research and development operating expense increased by $12.2 million, or 71%, for the three months ended September 30, 2021, as compared to the same period in 2020. The increase was primarily the result of:

●

~~an increase of $14.0~~$1.7 million due to ~~development activities for the COVID-19 programs, which include AdCOVID (discontinued in June 2021) and T-COVID;~~

●

~~an increase of $1.5 million in other pre-clinical and clinical projects and non-project specific research and development costs; and~~

●

~~a decrease of $3.3 million due primarily to a decrease~~change in the fair value of contingent consideration liability with respect to the acquisition of pemvidutide, ~~and~~which was fully paid on June 10, 2022;

●

an increase of $9.1 million due to the development activities for ~~pemvidutide.~~pemvidutide primarily due to the ongoing NAFLD trials and the MOMENTUM Phase 2 trial in obesity;

●

an increase of $0.2 million due to development activities for HepTcell; and

●

a net increase of $1.4 million due primarily to costs associated with non-project specific research and development costs including employee compensation and facility costs.

Research and development ~~operating~~ expense ~~increased~~decreased by ~~$13.5~~$3.0 million, or ~~33%~~6%, for the nine months ended September 30, ~~2021,~~2022, as compared to the ~~same period in 2020.~~nine months ended September 30, 2021. The ~~increase~~decrease was primarily the result of:

●

~~an increase~~a decrease of ~~$27.1~~$32.1 million due primarily to development activities for ~~the~~our COVID-19 ~~program,~~programs, which included AdCOVID ~~(discontinued~~and T-COVID (which were discontinued in ~~June~~ 2021);

●

~~an increase of $4.2 million in other pre-clinical and clinical projects and non-project specific research and development costs; and~~

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●

a decrease of ~~$17.8~~$1.5 million due ~~primarily~~ to ~~a decrease~~change in the fair value of contingent consideration liability with respect to the acquisition of pemvidutide, ~~and~~which was fully paid on June 10, 2022;

●

an increase of $25.2 million due to the development activities for ~~pemvidutide.~~pemvidutide primarily due to the ongoing NAFLD trials and initiation of the MOMENTUM Phase 2 trial in obesity;

●

an increase of $2.9 million due to development activities for HepTcell; and

●

a net increase of $2.5 million due primarily to costs associated with non-project specific research and development costs including employee compensation and facility costs.

General and administrative expenses

General and administrative expense ~~were consistent during~~increased by $0.3 million, or 8% for the three months ended September 30, ~~2021,~~2022, as compared to the ~~same period~~three months ended September 30, 2022, primarily due to increase in ~~2020. General~~stock compensation expense. For the nine months ended September 30, 2022, general and administrative expense increased by ~~$2.5~~$1.7 million, or ~~28%~~15%, ~~for~~as compared to the nine months ended September 30, 2021, ~~as compared to the same period in 2020,~~ due primarily to ana $1.2 million increase in stock compensation ~~expense~~ and other labor related ~~costs.~~costs and $0.4 million increase in professional fees.

Impairment loss on construction-in-progress

Impairment loss on construction-in-progress of $8.1 million reported during the nine months ended September 30, 2021 represents a non-cash impairment ~~charge~~charges recorded for assets that were previously capitalized in connection with the construction of the Lonza facility and subsequent discontinuation of AdCOVID. There were no such impairment charges reported during the nine months ended September 30, 2022.

Total other income (expense) ~~income,~~, net

Total other ~~(expense)~~ income (expense), net ~~decreased~~increased by ~~$0.4~~$1.3 million and ~~$0.6~~$1.7 million ~~during~~for the three and nine months ended September 30, 2022, as compared to the three and nine months ended September 30, 2021, respectively, ~~as compared to the same period in 2020. The net decreases are~~ primarily due to ~~changes~~increase in ~~foreign currency conversion~~interest income earned on our cash equivalents and ~~interest income.~~short-term investments.

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Income tax benefit

Income tax benefit ~~decreased by $0.5~~of $0.2 million related to interest received and ~~$5.3 million~~receivable on income tax refunds was recorded during the three and nine months ended September 30, ~~2021, respectively, as compared to~~2022. Other than the ~~same period in 2020. In both 2021 and 2020, we had a valuation allowance against all of our deferred~~income tax ~~assets, but in 2020 a~~ benefit ~~was recognized~~ related to interest, we did not record an income tax benefit in the three and nine months ended September 30, 2022 and 2021 due to a ~~net operating loss carryback refund claim pursuant to the Coronavirus Aid, Relief, and Economic Security Act.~~full valuation allowance.

Liquidity and Capital Resources

Overview

Our primary sources of cash during the nine months ended September 30, ~~2021~~2022 were from ~~sales of~~ equity ~~maturities of short-term investments, cash receipts of accounts receivable from research grants and cash receipts of income tax refunds.~~transactions. Our cash, cash equivalents, restricted cash and short-term investments were ~~$199.9~~$201.9 million atas of September 30, ~~2021.~~2022. We believe, based on the operating cash requirements and capital expenditures expected for ~~2021~~2022 and ~~2022,~~2023, our cash on hand ~~and short-term investments at~~as of September 30, ~~2021,~~2022, together with expected ~~collections~~cash receipts from our ~~government sponsored contracts~~income tax refunds and ~~tax refunds,~~R&D incentives, are sufficient to fund operations for at least a twelve-month period from the issuance date of our September 30, ~~2021~~2022 consolidated financial statements.

We have not generated any revenues from the sale of any products to date, and there is no assurance of any future revenues from product sales. Our sources of revenue have consisted of grant revenues under our arrangements with BARDA for the development of NasoShield, MTEC for a clinical trial and development work on T-COVID, and to a lesser degree from other licensing arrangements. We have incurred significant losses since we commenced operations. As of September 30, ~~2021,~~2022, we had an accumulated deficit of ~~$269.3~~$356.2 million. In addition, we have not generated positive cash flows from operations. We have had to rely on a variety of financing sources, including the issuance of debt and equity

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securities. As capital resources are consumed to fund our research and development activities, we may require additional capital beyond our currently anticipated amounts. In order to address our capital needs, including our planned clinical trials, we must continue to actively pursue additional equity or debt financing, government funding, and monetization of our existing programs through partnership arrangements or sales to third parties.

On December 31, 2020, we filed a shelf registration statement on Form S-3, which was declared effective by the SEC on January 11, 2021. This shelf registration statement covered the offering, issuance and sale by us of up to an aggregate of $250.0 million of our common stock, preferred stock, debt securities, warrants, rights and units (the “2021 Shelf”). As of September 30, 2022, approximately $125.0 million remained available to be sold under the 2021 Shelf.

In June 2020, we were awarded $4.7 million from the U.S. Army Medical Research & Development Command (“USAMRDC”) to fund our Phase 1/2 clinical trial of T-COVID. The competitive award was granted by USAMRDC in collaboration with the Medical Technology Enterprise Consortium (“MTEC”), a 501(c)(3) biomedical technology consortium working in partnership with the Department of Defense (“DoD”). Under the contract, MTEC ~~pays~~paid us a firm fixed fee based upon the achievement of certain milestones for conduct and completion of a Phase 1/2 study and research and development work on the replication-deficient adenovirus 5 (“RD-Ad5”) vector vaccine platform. Through September 30, ~~2021,~~2022, we have collected approximately ~~$3.7~~$4.7 million in cash under the ~~contract.~~contract, which completed the full recognition of this award.

In July 2016, we signed a five-year contract with BARDA. The contract, as amended, ~~has~~had a total value of up to $136.8 million ~~and is~~to be used to fund clinical development of NasoShield. Under the contract, BARDA ~~pays~~paid us a fixed fee and ~~reimburses~~reimbursed certain costs for the research and development of an Ad5-vectored, protective antigen-based intranasal anthrax vaccine through cGMP manufacture and conduct of a Phase 1 clinical trial dose ranging assessment of safety and immunogenicity. The contract ~~consists~~consisted of an initial base performance period providing approximately $30.9 million in funding for the period July 2016 through December 2021. BARDA ~~has~~had seven options to extend the contract to fund certain continued development and manufacturing activities for the anthrax vaccine, including Phase 2 clinical trials. Each option, if exercised by BARDA, would ~~provide~~have provided additional funding ranging from approximately $1.1 million to $34.4 million for a three-year period beginning in 2021. Through September 30, ~~2021,~~2022, we have collected approximately ~~$25.8~~$29.3 million in cash under the ~~current~~ BARDA contract.

~~Table~~ BARDA did not extend the contract beyond the end of ~~Contents~~December 2021.

Cash Flows

The following table provides information regarding our cash flows for the nine months ended September 30, ~~2021~~2022 and ~~2020:~~2021:


	Nine Months Ended September 30,				Nine Months Ended September 30,
	2021		2020
(in thousands)					2022		2021
Net cash (used in) provided by:
Operating activities	$	(56,271,005)	$	(21,023,255)	$	(45,280)	$	(56,271)
Investing activities		62,654,210		(35,226,668)		(74,380)		62,654
Financing activities		52,562,553		190,782,503		56,824		52,563
Net increase in cash and cash equivalents and restricted cash	$	58,945,758	$	134,532,580
Net (decrease) increase in cash and cash equivalents and restricted cash					$	(62,836)	$	58,946

Operating Activities

Net cash used in operating activities was ~~$56.3~~$45.3 million for the nine months ended September 30, ~~2021~~2022 compared to ~~$21.0~~$56.3 million during the nine months ended September 30, 2020. Our sources of cash provided by operations during the nine months ended September 30, 2021 were primarily cash receipts of income tax refunds and revenue generated by our BARDA and MTEC contracts.2021. The primary uses of cash from our operating activities include payments for labor and ~~labor related~~labor-related costs, professional fees, research and development costs associated with our clinical trials and other general corporate expenditures. The ~~increase~~decrease in cash used in operations of ~~$35.2~~$11.0 million year over year is due to ~~an increase~~changes in working capital accounts of $9.3 million and a decrease in net loss as adjusted for non-cash items of ~~$44.6 million and changes in working capital accounts~~$1.7 million.

Table of ~~$9.3 million.~~Contents

Investing Activities

Net cash ~~provided by (used in)~~used in investing activities was ~~$62.7~~$74.4 million for the nine months ended September 30, ~~2021~~2022 compared to ~~$35.2~~$62.7 million net cash provided during the nine months ended September 30, ~~2020.~~2021. The net cash used in investing activities during the nine months ended September 30, 2022 was primarily due to purchase of short-term investments. The net cash provided by investing activities during the nine months ended September 30, 2021 was primarily due to $74.8 million net proceeds from short-term investment activity, partially offset by a $12.0 million purchases of property and equipment. ~~The net cash used in investing activities during the nine months ended September 30, 2020 was primarily due to purchases and maturities from short-term investments.~~

Financing Activities

Net cash provided by financing activities during the nine months ended September 30, ~~2021~~2022 was ~~$52.6~~$56.8 million compared to ~~$190.8~~$52.6 million for the nine months ended September 30, ~~2020.~~2021. The net cash provided by financing activities during the nine months ended September 30, 2022 was primarily the result of the receipt of $56.2 million in net proceeds from the issuance of common stock from our at-the-market offerings program and $0.5 million in net proceeds from exercise of stock options. The net cash provided by financing activities during the nine months ended September 30, 2021 was primarily the result of the receipt of $52.4 million in ~~proceeds from the issuance of common stock from our at-the-market offerings program. The~~ net cash provided by financing activities during the nine months ended September 30, 2020 was primarily the result of the receipt of $124.0 million in proceeds from a public offering (discussed below), $41.0 million in proceeds from the exercise of warrants and $25.6 million in proceeds from the issuance of common stock from our at-the-market offerings program.

Financing

Public Offering

On July 16, 2020, we offered and sold (i) 3,369,564 shares of our common stock, at a price to the public of $23.00 per share, and (ii) pre-funded warrants to purchase 1,630,436 shares of our common stock at an exercise price equal to $0.0001 per share (the “Pre-Funded Warrants”), at a price to the public of $22.9999 per share of common stock underlying the Pre-Funded Warrants (equal to the public offering price per share of Common Stock, minus the exercise price of each Pre-Funded Warrant). The Pre-Funded Warrants are exercisable at any time, provided that each Pre-Funded Warrant holder will be prohibited from exercising such Pre-Funded Warrants into shares of our common stock if, as a result of such exercise, the holder, together with its affiliates, would own more than 4.99% of the total number of shares of our common stock then issued and outstanding, which percentage may change at the holders’ election to any other number less than or

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equal to 19.99% upon 61 days’ notice to us. The gross proceeds of this offering were approximately $132.2 million, which includes the exercise in full of the underwriters’ option to purchase an additional 750,000 shares of common stock, before deducting underwriting discounts and commissions and offering expenses during the third quarter of 2020. The net proceeds of this offering were approximately $124.0 million, after deducting underwriting discounts and commissions and offering expenses payable by us. As of September 30, 2022, 760,870 of the ~~Company.~~Pre-Funded Warrants were exercised, leaving 869,566 remaining Pre-Funded Warrants unexercised.

At-the-Market Offerings

On February 25, 2021, we entered into an Equity Distribution Agreement (the “2021 Agreement”) with Piper Sandler & Co., Evercore Group L.L.C., and B. Riley Securities, Inc., serving as sales agents (the “Sales Agents”) with respect to an at-the-market offerings program under which we ~~may offer~~offered and ~~sell, from time to time at its sole discretion,~~sold shares of our common stock, par value $0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $125.0 million ~~(the “Shares”)~~ through the ~~Sale~~Sales Agents ~~(the “2021 Offering”). As of~~from the 2021 Shelf.

During the nine months ended September 30, ~~2021,~~2022, we sold ~~3,516,510~~5,204,415 shares of Common Stock under the 2021 Agreement resulting in approximately ~~$52.4~~$56.2 million in net ~~proceeds, with $70.9~~proceeds. As of September 30, 2022, we sold 10,004,869 shares of Common Stock under the 2021 Agreement resulting in approximately $121.0 million in net proceeds. As of September 30, 2022, there were no remaining shares available ~~to be sold~~for issuance under the 2021 Agreement.

On March 27, 2020, we entered into an Equity Distribution Agreement (the “2020 Agreement”) with JMP Securities LLC, serving as placement agent (the “Placement Agent”) with respect to an at-the-market offerings program under which we may offer and sell, from time to time at our sole discretion, shares22

Table of our common stock, par value $0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $50.0 million (the “Shares”) through the Placement Agent (the “2020 Offering”). We offered Shares having an aggregate offering price of $18.9 million pursuant to the prospectus supplement filed with the SEC on March 27, 2020. On June 1, 2020, we filed an amendment to the 2020 Agreement which amended the prospectus supplement dated March 27, 2020 to increase the aggregate offering price to $50.0 million. The 2020 Agreement was fully utilized during the year ended December 31, 2020, and no Shares were sold under the 2020 Agreement during the three and nine months ended September 30, 2021.Contents

Current Resources

We have financed our operations to date principally through our equity offerings and proceeds from issuances of our preferred stock, common stock and warrants. AtAs of September 30, ~~2021,~~2022, we had ~~$174.9~~$127.5 million of cash, cash equivalents and restricted cash and ~~$25.0~~$74.4 million of short-term investments. Accordingly, management believes that ~~the Company has~~we have sufficient capital to fund ~~its~~our plan of operations for at least a twelve-month period from the issuance date of our September 30, ~~2021~~2022 financial statements. However, in order to address our capital needs in the long-term, including ~~our planned~~potential future clinical trials, we must continue to actively pursue additional equity or debt financing, government funding, and monetization of our existing programs through partnership arrangements or sales to third parties.

Off-Balance Sheet Arrangements

~~As of September 30, 2021, we~~We did not have ~~any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as “special purpose” entities, which would~~during the periods presented, and we do not currently have, ~~been established for the purpose of facilitating~~any off-balance sheet arrangements, ~~or other contractually narrow or limited purposes.~~as defined in the rules and regulations of the Securities and Exchange Commission.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities

~~Table of Contents~~

Exchange Act of 1934, as amended (“the “Exchange Act”) as of the end of the period covered by this Quarterly Report on Form 10-Q.

Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, ~~2021,~~2022, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during the quarter ended September 30, ~~2021~~2022 identified in connection with the evaluation thereof by our management, including the Chief Executive Officer and Chief Financial Officer, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~Not applicable.~~From time to time, we may be involved in various legal proceedings arising from the normal course of business activities. Defending such proceedings is costly and can impose a significant burden on management and employees. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

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In December 2019, a complaint was filed by Dr. De-Chu Christopher Tang (“Plaintiff”) against us, which we removed to the United States District Court for the Eastern District of Texas. The Plaintiff amended the complaint in February 2020 to include Vipin K. Garg and David J. Drutz as defendants, in addition to the Company (Dr. Garg, Dr. Drutz, and the Company are collectively referred to as “Defendants”). In December 2021, the Plaintiff refiled the complaint in the United States District Court for the District of Maryland. See Note 14 to the consolidated financial statements appearing in Item 1 of this report for further details.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K filed with the SEC on ~~February 25, 2021.~~March 15, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~Not applicable.~~None.

Item 3. Default upon Senior Securities

~~Not applicable.~~None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~Not applicable.~~None.

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Item 6. Exhibits


		Exhibit Index

Exhibit No.		Description

~~10.1 §~~		~~Amendment No. 8 Contract Award issued by the Biomedical Advanced Research and Development Authority of the United Sates Department of Health and Human Services, dated September 17, 2021~~

31.1 †		Certification of Principal Executive Officer Pursuant to SEC Rule 13a-14(a)/15d-14(a)

31.2 †		Certification of Principal Financial Officer Pursuant to SEC Rule 13a-14(a)/15d-14(a)

32.1 †		Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code

32.2 †		Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code

101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

†

This certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent specifically incorporated by reference into such filing.

§	Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused the report to be signed on its behalf by the undersigned, thereunto duly authorized.


	ALTIMMUNE, INC.

Dated: November ~~9, 2021~~10, 2022	By:	/s/ Vipin K. Garg
	Name:	Vipin K. Garg
	Title:	President and Chief Executive Officer (Principal Executive Officer)

Dated: November ~~9, 2021~~10, 2022	By:	/s/ ~~Will Brown~~Richard Eisenstadt
	Name:	~~Will Brown~~Richard Eisenstadt
	Title:	Chief Financial Officer (Principal Financial and Accounting Officer)

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	September 30, 2021
			Unrealized Gain
	Amortized Cost		(Loss)		Market Value
Certificate of deposit	$	25,020,738	$	—	$	25,020,738
Total	$	25,020,738	$	—	$	25,020,738


Unobservable input	Value or Range	Weighted Average
Expected volatility	78.0%	78.0%
Risk-free interest rate	0.06%	0.06%
Cost of capital	30%	30%
Discount for lack of marketability	10%‑12%	11%
Probability of payment	81%	81%
Projected year of payment	2022	2022


	September 30, 2021		December 31, 2020
Furniture, fixtures and equipment	$	202,100	$	125,538
Laboratory equipment		1,039,805		959,585
Computers and telecommunications		279,026		220,316
Software		94,409		64,409
Leasehold improvements		1,731,934		1,285,883
Construction-in-progress		3,300,000		—
Property and equipment, at cost		6,647,274		2,655,731
Less: accumulated depreciation and amortization		(1,929,128)		(1,598,811)
Property and equipment, net	$	4,718,146	$	1,056,920


	September 30, 2021
		Gross
	Estimated	Carrying		Accumulated		Net Book
	Useful Lives	Value		Amortization		Value
Internally developed patents	6–20 years	$	1,074,436	$	(499,828)	$	574,608
Acquired licenses	16–20 years		285,000		(285,000)		—
Total intangible assets subject to amortization			1,359,436		(784,828)		574,608
IPR&D assets	Indefinite		12,418,967		—		12,418,967
Total		$	13,778,403	$	(784,828)	$	12,993,575


	September 30, 2021			December 31, 2020
Operating lease obligations (see Note 7 and 9)	$	1,631,867		$	1,824,840
Operating lease right-of-use assets (included in "Other assets" in Balance Sheet)	$	844,222		$	903,825
Weighted-average remaining lease term (years)		3.6			4.3
Weighted-average discount rate		7.2	%		7.3	%