~~Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report~~Code)

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.

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 ☒

~~Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: as~~As of August ~~13, 2019~~7, 2020 there were ~~15,338,001~~32,904,333 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

							June 30, 2020			December 31, 2019
	June 30, 2019			December 31, 2018			(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	41,671,738		$	33,718,713		$	64,741,921		$	8,962,686
Restricted cash		34,174			634,416			34,174			34,174
Total cash, cash equivalents and restricted cash		41,705,912			34,353,129			64,776,095			8,996,860
Short-term investments								15,484,402			28,277,386
Accounts receivable		2,629,840			3,461,938			1,182,099			1,021,179
Tax refund receivable		1,080,559			1,008,973			5,506,946			629,096
Prepaid expenses and other current assets		688,862			548,094			1,020,876			470,228
Total current assets		46,105,173			39,372,134			87,970,418			39,394,749
Property and equipment, net		1,222,130			1,342,802			1,024,640			1,104,208
Right of use asset		732,380			—			662,074			698,321
Intangible assets, net		13,760,216			13,851,924			12,785,655			12,732,195
Other assets		156,115			183,682			100,980			128,547
Total assets	$	61,976,014		$	54,750,542		$	102,543,767		$	54,058,020
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Notes payable	$	163,724		$	71,596
Accounts payable		270,097			372,860		$	195,217		$	18,232
Accrued expenses and other current liabilities		3,046,567			4,082,949			4,089,749			3,904,767
Notes payable								632,000			—
Total current liabilities		3,480,388			4,527,405			4,916,966			3,922,999
Deferred income taxes		58,500			58,500
Contingent consideration								16,390,000			2,750,000
Other long-term liabilities		2,212,104			1,852,071			1,715,024			1,864,875
Total liabilities		5,750,992			6,437,976			23,021,990			8,537,874
Commitments and contingencies (Note 12)
Commitments and contingencies (Note 14)
Stockholders’ equity:
Common stock, $0.0001 par value; 200,000,000 shares authorized; 13,451,106 and 9,078,735 shares issued; 13,450,751 and 9,078,238 shares outstanding at June 30, 2019 and December 31, 2018, respectively		1,313			876
Common stock, $0.0001 par value; 200,000,000 shares authorized; 26,553,957 and 15,312,381 shares issued; 26,553,886 and 15,312,167 shares outstanding at June 30, 2020 and December 31, 2019, respectively								2,635			1,508
Additional paid-in capital		183,604,057			170,207,844			242,579,532			187,914,916
Accumulated deficit		(122,340,185	)		(116,855,991	)		(158,028,687	)		(137,376,122	)
Accumulated other comprehensive loss – foreign currency translation adjustments		(5,040,163	)		(5,040,163	)
Accumulated other comprehensive loss, net								(5,031,703	)		(5,020,156	)
Total stockholders’ equity		56,225,022			48,312,566			79,521,777			45,520,146
Total liabilities and stockholders’ equity	$	61,976,014		$	54,750,542		$	102,543,767		$	54,058,020

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

	For the Three Months Ended June 30,						For the Six Months Ended June 30,						For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019

Revenue	$	1,626,029		$	2,417,140		$	4,581,622		$	5,108,121
Revenues													$	721,636		$	1,626,029		$	2,934,330		$	4,581,622
Operating expenses:
Research and development		2,945,096			4,918,961			6,162,768			10,665,890			16,594,250			2,945,096			23,781,781			6,162,768
General and administrative		2,231,817			2,933,982			4,298,299			5,381,917			2,545,356			2,231,817			4,877,273			4,298,299
Impairment charges		—			—			—			490,676
Total operating expenses		5,176,913			7,852,943			10,461,067			16,538,483			19,139,606			5,176,913			28,659,054			10,461,067
Loss from operations		(3,550,884	)		(5,435,803	)		(5,879,445	)		(11,430,362	)		(18,417,970	)		(3,550,884	)		(25,724,724	)		(5,879,445	)
Other income (expense):
Other (expense) income:
Changes in fair value of warrant liability		(46,000	)		(5,228,691	)		(46,000	)		(3,680,709	)		—			(46,000	)		—			(46,000	)
Changes in fair value of embedded derivatives		—			4,912			—			(2,130	)
Interest expense		(748	)		(1,921	)		(1,488	)		(2,791	)		(3,308	)		(748	)		(5,193	)		(1,488	)
Interest income		239,964			25,617			425,211			57,206			81,458			239,964			233,027			425,211
Other income (expense)		(29,220	)		(49	)		17,528			257,675
Total other income (expense)		163,996			(5,200,132	)		395,251			(3,370,749	)
Other (expense) income, net														(5,878	)		(29,220	)		19,664			17,528
Total other (expense) income, net														72,272			163,996			247,498			395,251
Net loss before income tax benefit		(3,386,888	)		(10,635,935	)		(5,484,194	)		(14,801,111	)		(18,345,698	)		(3,386,888	)		(25,477,226	)		(5,484,194	)
Income tax benefit		—			1,497,093			—			2,488,731			1,578,782			—			4,824,661			—
Net loss		(3,386,888	)		(9,138,842	)		(5,484,194	)		(12,312,380	)		(16,766,916	)		(3,386,888	)		(20,652,565	)		(5,484,194	)
Other comprehensive income (loss) – foreign currency translation adjustments		—			(1,078,648	)		—			(463,177	)
Other comprehensive loss – unrealized gain (loss) on investments														20,888			—			(11,547	)		—
Comprehensive loss	$	(3,386,888	)	$	(10,217,490	)	$	(5,484,194	)	$	(12,775,557	)	$	(16,746,028	)	$	(3,386,888	)	$	(20,664,112	)	$	(5,484,194	)
Net loss	$	(3,386,888	)	$	(9,138,842	)	$	(5,484,194	)	$	(12,312,380	)	$	(16,766,916	)	$	(3,386,888	)	$	(20,652,565	)	$	(5,484,194	)
Preferred stock accretion and other deemed dividends		—			(700,093	)		(452,925	)		(2,591,414	)
Deemed dividends														—			—			—			(452,925	)
Net loss attributed to common stockholders	$	(3,386,888	)	$	(9,838,935	)	$	(5,937,119	)	$	(14,903,794	)	$	(16,766,916	)	$	(3,386,888	)	$	(20,652,565	)	$	(5,937,119	)
Net loss per share attributed to common stockholders, basic and diluted													$	(0.94	)	$	(0.26	)	$	(1.25	)	$	(0.52	)
Weighted-average common shares outstanding, basic and diluted		13,127,773			956,057			11,318,819			817,077			17,886,853			13,127,773			16,498,719			11,318,819
Net loss per share attributed to common stockholders, basic and diluted	$	(0.26	)	$	(10.29	)	$	(0.52	)	$	(18.24	)

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

CONSOLIDATED STATEMENTS OF ~~REDEEMABLE CONVERTIBLE PREFERRED STOCK AND~~CHANGES IN STOCKHOLDERS’ EQUITY

Common Stock

Additional
Paid-In

Accumulated

Accumulated
Other
Comprehensive

Total
Stockholders’

Shares

Amount

Capital

Deficit

Loss

Equity

Balance, January 1, 2019

9,078,239

$
876

$
170,207,844

$
(116,855,991
)

$
(5,040,163
)

$
48,312,566

Stock based compensation and vesting of restricted stock

71

407,742

407,742

Issuance of common stock in registered direct offering,
net of offering costs

4,361,370

436

12,668,348

12,668,784

Issuance of common stock upon exercise of warrants

11,000

1

30,323

30,324

Net loss

(2,097,306
)

(2,097,306
)
Balance, March 31, 2019

13,450,680

$
1,313

$
183,314,257

$
(118,953,297
)

$
(5,040,163
)

$
59,322,110

Stock based compensation and vesting of restricted stock

71

289,800

289,800

Net loss

(3,386,888
)

(3,386,888
)
Balance, June 30, 2019

13,450,751

$
1,313

$
183,604,057

$
(122,340,185
)

$
(5,040,163
)

$
56,225,022

	Common Stock					Additional Paid-In			Accumulated			Accumulated Other Comprehensive			Total 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 offering, net of offering costs		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

	Common Stock				Additional Paid-In		Accumulated			Accumulated Other Comprehensive			Total Stockholders’
	Shares		Amount		Capital		Deficit			Loss			Equity
Balance at December 31, 2018		9,078,239	$	876	$	170,207,844	$	(116,855,991	)	$	(5,040,163	)	$	48,312,566
Stock-based compensation		—		—		407,714		—			—			407,714
Vesting of restricted stock awards		71		—		28		—			—			28
Issuance of common stock in registered direct offering, net of offering costs		4,361,370		436		12,668,348		—			—			12,668,784
Issuance of common stock upon exercise of warrants		11,000		1		30,323		—			—			30,324
Net loss		—		—		—		(2,097,306	)		—			(2,097,306	)
Balance at March 31, 2019		13,450,680		1,313		183,314,257		(118,953,297	)		(5,040,163	)		59,322,110
Stock-based compensation and vesting of restricted stock		71		—		289,800		—			—			289,800
Net loss		—		—		—		(3,386,888	)		—			(3,386,888	)
Balance at June 30, 2019		13,450,751	$	1,313	$	183,604,057	$	(122,340,185	)	$	(5,040,163	)	$	56,225,022

~~CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY~~

Series B Redeemable
Convertible Preferred
Stock

Common Stock

Additional
Paid-In

Accumulated

Accumulated
Other
Comprehensive

Total
Stockholders’

Shares

Amount

Shares

Amount

Capital

Deficit

Loss

Equity

Balance, January 1, 2018

12,177

$
9,281,767

608,499

$
61

$
121,657,587

$
(77,684,839
)

$
(4,576,986
)

$
39,395,823

Stock based compensation and vesting of restricted stock

71

—

356,737

356,737

Exercises of stock options

7,703

1

18,487

18,488

Conversion of Series B redeemable convertible preferred
   stock into common stock

(5,219
)

(5,218,572
)

130,447

13

5,218,559

5,218,572

Accretion of Series B Redeemable convertible preferred
   stock

1,891,321

(1,891,321
)

(1,891,321
)
Foreign currency translation adjustments

615,471

615,471

Net loss

(3,173,538
)

(3,173,538
)
Balance, March 31, 2018

6,958

$
5,954,516

746,720

$
75

$
125,360,049

$
(80,858,377
)

$
(3,961,515
)

$
40,540,232

Stock based compensation and vesting of restricted stock

71

252,156

252,156

Exercises of stock options

1,837

-

4,410

4,410

Accretion of Series B redeemable convertible preferred stock

956,150

(956,150
)

(956,150
)
Conversion of Series B redeemable convertible preferred
  stock into common stock

(4,036
)

(4,036,539
)

334,180

33

4,036,506

4,036,539

Redemption of Series B redeemable convertible
  preferred stock for cash and release of embedded
  derivative

(2,364
)

(2,364,044
)

23,292

23,292

Issuance of common stock for the exchange of warrants

167,700

17

2,126,983

2,127,000

Foreign currency translation
   adjustments

(1,078,648
)

(1,078,648
)
Net loss

(9,138,842
)

(9,138,842
)
Balance, June 30, 2018

558

$
510,083

1,250,508

$
125

$
130,847,246

$
(89,997,219
)

$
(5,040,163
)

$
35,809,989

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

For the Six Months Ended
June 30,

2019

2018

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss

$
(5,484,194
)

$
(12,312,380
)
Adjustments to reconcile net loss to net cash used in operating activities:

Impairment charge

—

490,676

Stock-based compensation

697,486

608,893

Depreciation

121,899

77,528

Amortization

107,580

29,446

Unrealized gains on foreign currency exchange

(24,943
)

—

Changes in fair value of warrant liability

46,000

3,680,709

Changes in fair value of embedded derivatives

—

2,130

Changes in operating assets and liabilities:

Accounts receivable

832,098

951,727

Prepaid expenses and other current assets

(113,200
)

479,600

Accounts payable

(102,763
)

115,452

Accrued expenses and other current liabilities

(1,094,831
)

1,160,415

Deferred revenue

2,802

2,614

Lease obligation

(89,428
)

765,239

Tax refund receivable

(71,586
)

2,244,751

Deferred taxes

—

(1,507,358
)
Net cash used in operating activities

(5,173,080
)

(3,210,558
)
CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of property and equipment

(1,226
)

(811,646
)
Additions to intangible assets

(15,874
)

(27,505
)
Net cash used in investing activities

(17,100
)

(839,151
)
CASH FLOWS FROM FINANCING ACTIVITIES:

Redemption of preferred stock

—

(2,364,044
)
Cash paid in conjunction with warrant exchange

—

(1,100,000
)
Proceeds from issuance of common units, net of issuance costs

12,668,784

—

Proceeds from exercise of warrants

30,324

—

Payments of notes payable

(156,145
)

—

Proceeds from exercise of stock options

—

22,898

Net cash provided by (used in) financing activities

12,542,963

(3,441,146
)
EFFECT OF EXCHANGE RATES ON CASH

—

(50,365
)
Net increase (decrease) in cash and cash equivalents and restricted cash

7,352,783

(7,541,220
)
Cash, cash equivalents and restricted cash, beginning of period

34,353,129

12,303,639

Cash, cash equivalents and restricted cash, end of period

$
41,705,912

$
4,762,419

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for interest

$
—

$
1,791

SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES:

Conversion of Series B redeemable convertible preferred stock into
common stock

$
—

$
9,255,111

Accretion of Series B redeemable convertible preferred stock

$
—

$
2,847,471

Notes payable issued in conjunction with the exchange of warrants

$
—

$
1,500,000

Addition of property and equipment not yet paid

$
—

$
139,349

Addition of intangible assets not yet paid

$
—

$
5,763

Lease incentive billed but not yet received

$
—

$
139,349

	Six Months Ended June 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(20,652,565	)	$	(5,484,194	)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of contingent consideration		13,640,000			—
Stock-based compensation expense		545,431			697,486
Depreciation		120,169			121,899
Amortization		25,876			107,580
Unrealized losses (gains) on foreign currency exchange		(18,851	)		(24,943	)
Changes in fair value of warrant liability		—			46,000
Changes in operating assets and liabilities:
Accounts receivable		(160,920	)		832,098
Prepaid expenses and other current assets		(343,337	)		(113,200	)
Accounts payable		176,985			(102,763	)
Accrued expenses and other liabilities		26,761			(1,181,457	)
Tax refund receivable		(4,877,851	)		(71,586	)
Net cash used in operating activities		(11,518,302	)		(5,173,080	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of short-term investments		24,900,000			—
Purchases of short-term investments		(12,118,563	)		—
Purchase of property and equipment		(40,601	)		(1,226	)
Cash paid for internally developed patents		(79,336	)		(15,874	)
Net cash provided by (used in) investing activities		12,661,500			(17,100	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of deferred offering costs		(179,743	)		—
Proceeds from exercises of warrants		31,310,137			30,324
Proceeds from issuance of common stock in at the market offering, net of offering costs		22,780,729			—
Proceeds from issuance of common units, net of issuance costs		—			12,668,784
Proceeds from issuance of notes payable		632,000			—
Proceeds from issuance of common stock from Employee Stock Purchase Plan		56,739			—
Proceeds from exercises of stock options		36,175			—
Payments of notes payable		—			(156,145	)
Net cash provided by financing activities		54,636,037			12,542,963
Net increase in cash and cash equivalents and restricted cash		55,779,235			7,352,783
Cash, cash equivalents and restricted cash at beginning of period		8,996,860			34,353,129
Cash, cash equivalents and restricted cash at end of period	$	64,776,095		$	41,705,912

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

Altimmune, Inc., headquartered in Gaithersburg, Maryland, 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 ~~discovering~~developing intranasal vaccines, immune modulating therapies and ~~developing immunotherapies~~treatments for liver disease. The Company’s diverse pipeline includes proprietary intranasal vaccines for COVID-19 (AdCOVID), anthrax (NasoShield) and ~~vaccines to address significant unmet medical needs.~~influenza (NasoVAX); an intranasal immune modulating therapeutic for COVID-19 (T-COVID); and next generation peptide therapeutics for NASH (ALT-801) and 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.

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, ~~2018~~2019 included in the annual report on Form 10-K which was filed with the SEC on ~~April 1, 2019.~~March 27, 2020. 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 ~~2019~~2020 or any future years or periods.

The 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.

On September 13, 2018, the Company filed Certificates of Amendment to its Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware to increase the number of authorized shares of the Company’s common stock, par value $0.0001 per share, from 100,000,000 to 200,000,000 shares and to effect a reverse stock split of the Company’s common stock at a ratio of 1-for-30 (the “Reverse Stock Split”). All references set forth in this quarterly report to number of shares or per share data have been presented retroactively on a post Reverse Stock Split basis.

During the six months ended June 30, ~~2019,~~2020, 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, ~~2018~~2019 as filed with the SEC, except for the recently adopted accounting standard for ~~leases.~~investments.

The ~~Company determines if an arrangement is a lease at inception. Operating leases are recorded as a current~~preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and ~~long-term lease obligation, with a corresponding right of use lease assets.~~

assumptions that affect the amounts reported in the financial statements and accompanying notes. The ~~lease obligations represent~~extent to which the COVID-19 pandemic may directly or indirectly impact the Company’s ~~obligation~~business, financial condition, and results of operations is highly uncertain and subject to ~~make lease payments arising from~~change. The Company considered the ~~lease. The right~~potential impact of ~~use lease assets represent~~the COVID-19 pandemic on the Company’s ~~right~~estimates and assumptions and determined that there was not a material impact to ~~use an underlying asset~~the Company’s consolidated financial statements as of and for the ~~lease term. The lease obligations~~three and ~~the operating right of use lease assets are recognized at the commencement date based on the present value of lease payments over the lease term. As most of~~six months ended June 30, 2020. However, actual results could differ from those estimates and there may be changes to the Company’s ~~leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date~~estimates in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.future periods.

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.

In ~~February 2016,~~August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 requires a lessee to separate the lease components from the non-lease components in a contract and recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. The standard requires a modified retrospective approach or an optional transition to apply the new guidance in the year of transition rather than at the beginning of the earliest period presented. The Company adopted ASU 2016-02 in the first quarter of 2019 under the optional transition method. The Company’s current operating leases will be accounted for as operating lease liabilities and right of use assets upon adoption. The Company has elected the package of practical expedients permitted. Accordingly, the Company accounted for its existing operating leases as operating leases under the new guidance, without reassessing (a) whether the contracts contain a lease, (b) whether classification of the operating leases would be different in accordance, or (c) whether the unamortized initial direct costs before transition adjustments would have met the definition of initial direct costs at lease commencement. In addition, the Company does not allocate the consideration between lease and non-lease components. On January 1, 2019, the Company recorded a lease liability and a corresponding right of use asset. The adjustment resulted in an increase of $756,347 to total assets and total liabilities on the January 1, 2019 consolidated balance sheet. The adoption will not have a material impact on the consolidated statement of operations or consolidated statement of cash flows.

~~In June 2018, FASB issued ASU No. 2018-07,~~2018-13, ~~Compensation—Stock Compensation (Topic 718)—Improvements to Nonemployee Share-Based Payment Accounting~~ (“ASU 2018-07”). ASU 2018-07 expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The Company adopted ASU 2018-07 in the first quarter of 2019. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

~~In August 2018, FASB issued ASU No. 2018-13,~~ Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU No. 20218-13”). ASU No. 2018-13 was issued to modify and enhance the disclosure requirements for fair value ~~measurements.~~measurements and eliminates certain disclosure requirements, such as the amount of, and reasons for, transfers between Level 1 and Level 2 of the fair value hierarchy. This ~~update~~ASU adds new disclosure requirements for Level 3 measurements and is effective infor fiscal years ~~including interim periods,~~ beginning after December 15, 2019 and ~~early adoption is permitted.~~interim periods within those fiscal years. The Company ~~is still completing its assessment of~~adopted this guidance effective January 1, 2020 which resulted in expanded disclosures in Note 15 regarding the ~~impacts and anticipated adoption date of this guidance.~~Company’s recurring Level 3 fair value measurements.

The Company entered into a definitive agreement to acquire all of the equity interests of Spitfire Pharma, Inc. (“Spitfire”) on July 8, 2019. Spitfire was a privately held, preclinical pharmaceutical company developing a novel dual GLP-1/glucagon receptor agonist for the treatment of non-alcoholic steatohepatitis.

The transaction closed on July 12, 2019. The Company issued 1,887,250 unregistered shares of its common stock (the ~~“Shares”~~“shares”) as upfront consideration to certain former securityholders of Spitfire (collectively, the “Spitfire Equityholders”), representing an amount equal to ~~$5,000,000~~$5.0 million less working capital and transaction expense adjustment amounts as defined in the ~~agreement~~agreement.

The 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”):

The Regulatory Milestones will be payable in shares of the Company’s Common Stock, with the number of shares of the Company’s Common Stock to be issued in connection with each milestone amount, if any, are dependent on the share price at the time of achievement. The number of ~~Shares~~any shares issued ~~as payment of~~in consideration for the ~~Closing~~IND Milestone Consideration ~~was~~Amount will be determined based on lower of (A) the average of the closing prices of ~~the Company’s common stock~~our Common Stock as reported on the Nasdaq Global Market for the twenty (20) consecutive trading days prior to ~~and including July 8, 2019,~~the IND Reference Date or (B) $2.95. The value of any shares issued in consideration for the Phase 2 Milestone Consideration Amount shall be determined based the lower of (A) on the average of the closing trading prices of our Common Stock as reported on the Nasdaq Global Market for the twenty (20) consecutive trading days immediately preceding the date ~~on which~~of the ~~parties entered into~~occurrence of the ~~Agreement and Plan of Merger and Reorganization (the “Merger Agreement”).~~Phase 2 Milestone Event or (B) $3.54.

The Merger Agreement includes $88,000,000 in future contingent payments for regulatory, clinical and sales milestones using the acquired intellectual property. The Company will record the contingent consideration when and if the milestones are achieved and the milestone payments become payable.

~~The Company determined that the~~ acquisition of Spitfire ~~should be~~was accounted for as an asset acquisition instead of a business combination because substantially all of the fair value of the gross assets acquired iswas concentrated in a single identifiable asset or group of similar identifiable assets, and therefore, the asset iswas not considered a business. The Company ~~plans to expense~~expensed the acquired intellectual property as of the acquisition date as in-process research and development with no alternative future uses. The Company ~~expects to record~~recorded an in-process research and development expense for the up-front consideration during the third quarter of 2019. Transaction costs of ~~$618,417~~ ~~are~~$0.6 million were recorded within research and development expense on the ~~Consolidated Statements~~Company’s consolidated statements of ~~Operations~~operations and ~~Comprehensive Loss~~comprehensive loss during the three and six months ended June 30, ~~2019~~2019.

The future contingent payments related to the Regulatory Milestones are stock-based payments accounted for under FASB Accounting Standards Codification Topic 480, Distinguishing Liabilities From Equity. Such stock-based payments are subject to a lock-up whereby 50% of the shares are released at 3 months and 50% are released at 6 months. As of the acquisition date, the Company estimated future contingent consideration of $2.8 million based upon a Monte Carlo simulation that was risk adjusted based on the probability of achieving the milestones and a discount for lack of marketability, which was expensed to in-process research and development expenses during the third quarter of 2019. The Company remeasured the fair value of the contingent consideration as of June 30, 2020, and increased the liability from March 31, 2020 to $16.4 million primarily due to an increase in the share price during the six months ended June 30, 2020 and an increase in the probability of milestone achievement. The increased change in the liability of $11.9 million and $13.6 million was expensed to research and development expense during the three and six months ended June 30, 2020, respectively.

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 and the amount is paid or payable.

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. For periods presented, all ~~preferred stock,~~ unvested restricted stock, common stock warrants, and stock options have been excluded from the computation of diluted weighted-average shares outstanding because such securities would have an antidilutive impact.

Potential common shares issuable upon conversion, vesting or exercise of ~~preferred stock,~~ unvested restricted stock, 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:

In May 2017, the Company closed on a business combination and recorded an initial purchase price allocation including goodwill. During the six months ended June 30, 2018 and prior to the end of the measurement period for accounting for the business combination, the Company recorded adjustments to the purchase price allocation resulting in a net decrease in tax refunds receivable, with a corresponding net increase in goodwill, of $490,676. As goodwill related to this transaction had previously been determined to be fully impaired, the Company recognized an impairment charge of $490,676 as a result of these purchase price allocation adjustments during the six months ended June 30, 2018. The purchase price allocation was considered final in May 2018, and no further adjustments were recorded.

Amortization expense of intangible assets ~~subject to amortization~~ was ~~$14,836~~$12,025 and ~~$14,972~~$14,836 for the three months ended June 30, 2020 and 2019, and ~~2018,~~$25,876 and $107,580 ~~and $29,446~~ for the six months ended June 30, ~~2019~~2020 and ~~2018,~~2019, respectively. Amortization expense was classified as research and development expenses in the accompanying unaudited consolidated statements of operations and comprehensive loss.

As of June 30, ~~2019,~~2020, future estimated amortization expense ~~was~~are as follows:

On April 7, 2020, the Company applied for a loan from ServisFirst Bank, as lender, pursuant to the Paycheck Protection Program of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) as administered by the U.S. Small Business Administration (the "SBA"). On April 13, 2020, the Loan was approved and the Company received the proceeds from a loan in the amount of $632,000 (the “PPP Loan”).

The PPP Loan, which took the form of a promissory note (the “Promissory Note”), was set to mature on April 7, 2022 and bore interest at a rate of 1% per annum. Monthly principal and interest payments, less the amount of any potential forgiveness (discussed below), was to commence on November 7, 2020. The Company did not provide any collateral or guarantees for the PPP Loan, nor did the Company pay any facility charge to obtain the PPP Loan. The Promissory Note provided for customary events of default, including, among others, those relating to failure to make payment, bankruptcy, breaches of representations and material adverse effects. The Company could prepay the principal of the PPP Loan at any time without incurring any prepayment charges.

All or a portion of the Loan may be forgiven by the SBA and lender upon application by the Company upon documentation of expenditures in accordance with the SBA requirements. Subsequent to the quarter ended June 30, 2020, the Company received approximately $136.2 million in net proceeds from warrant exercises, ATM usage, and the public offering of its common stock and decided to voluntarily extinguish the Promissory Note on July 21, 2020 by paying the outstanding principal and accrued interest in cash.

The Company’s ~~current portion of outstanding notes payable are summarized as follows:~~

~~The Company’s long-term portion of outstanding notes payable as well as~~ other long-term liabilities are summarized as follows:

On March 27, 2020, the Company entered into an Equity Distribution Agreement (the “Agreement”) with JMP Securities LLC, serving as placement agent (the “Placement Agent”) with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of ~~Credit~~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 “Offering”).

Any Shares offered and sold in the Offering will be issued pursuant to the Company’s Registration Statement on Form S-3 filed with the Securities and Exchange Commission (the “SEC”) on April 4, 2019, which was declared effective on April 12, 2019, the prospectus supplement relating to the Offering filed with the SEC on March 27, 2020 and any applicable additional prospectus supplements related to the Offering that

form a part of the Registration Statement. The aggregate market value of Shares eligible for sale in the Offering and under the Equity Distribution Agreement will be 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 ~~July 27, 2018,~~June 1, 2020, the Company ~~renewed its existing line of credit agreement for a six-month term with~~filed an ~~increase~~amendment to the ~~borrowing capacity from $250,000~~Agreement which amended the prospectus supplement dated March 27, 2020 to ~~$1,750,000, subject~~increase the aggregate offering price to a minimum liquidity requirement equal to the outstanding balance of the line. The line of credit was not renewed and expired in January 2019. There was no balance on this credit facility as of December 31, 2018 or for the period within 2019 prior to its expiration.$50.0 million.

Altimmune France has two non-interest-bearing research and development funding arrangements with BPI France that were entered into in December 2013 to provide Altimmune France up to €750,000 in research funding in the first arrangement and up to €250,000 in the second arrangement. Altimmune France was permitted to draw 50% of the funds upon the signing of the arrangements, an additional 30% contingent upon a financial audit and technical progress report, and the remaining amounts at the completion of the research and development project being funded by the arrangements. In October 2016, the Company and BPI France agreed to extend the term on the arrangement by two years. Each of the two obligations is repayable in sixteen quarterly installments from June 2019 through March 2023. The total amount advanced under the arrangements was €500,000 as of June 30, 2019 ($568,321 as of June 30, 2019). In April 2019, the Company was notified that €102,951 ($117,018 as of June 30, 2019) exceeded the allowable funding in accordance with the arrangement and made payment of this amount on June 5, 2019. The remaining balance is repayable in sixteen quarterly installments from June 2019 through March 2023, and the Company paid €31,250 ($35,520) during the six months ended June 30, 2019. As of June 30, ~~2019, $163,724 on this note is classified as short term,~~2020, the Company has sold 2,965,144 shares of Common Stock under the Agreement resulting in $22.8 million in net proceeds, leaving $26.3 million available to be sold under the amended Agreement. As of June 30, 2020, the Company recorded approximately $0.3 million of offering costs which offset the proceeds received from the shares sold through June 30, 2020 and ~~$252,902 as long term. The BPI France notes are recorded at their repayment value~~recognized approximately $0.2 million of deferred offering costs which ~~approximates fair value.~~

On March 12, 2019, the Company issued a combined total of 1,500,000 common units and 2,861,370 pre-funded units to two institutional investors in a registered direct offering (the “Registered Direct Offering”). Each common unit in the Registered Direct Offering was sold at a price of $3.21 and consisted of one share of common stock and 0.70 of a warrant to purchase one share of common stock at an exercise price of $3.21. Each warrant sold in the Registered Direct Offering was exercisable immediately and expired five years from the date of issuance. Each pre-funded unit in the Registered Direct Offering was sold at a public offering price of $3.20 and consisted of a pre-funded warrant to purchase

one share of common stock at an exercise price of $0.01 per share and 0.70 of a warrant to purchase one share of common stock at an exercise price of $3.21. The pre-funded warrants were immediately exercisable and were able to be exercised at any time until all of the pre-funded warrants were exercised in full. All of the pre-funded warrants were exercised prior to March 31, 2019. The net proceeds of the Registered Direct Offering were approximately $12,668,784, after deducting the underwriting discount and offering expenses payable by the Company.

~~The warrants issued in the Registered Direct Offering were concluded to be equity classified freestanding financial instruments. The Registered Direct Offering triggered a down round adjustment~~Subsequent to the exercise price of warrants previously issued in an October 2018 public offering from $4.1798 to $2.7568. The Company treated the value of the effect of the reduction in exercise price as a deemed dividend of $452,925 during the six monthsquarter ended June 30, ~~2019, which reduced income~~2020, the Company sold 234,856 shares of Common Stock under the Equity Distribution Agreement, that resulted in $2.5 million in net proceeds, leaving $23.7 million available to ~~common shareholders.~~be sold under the amended Agreement.

A summary of warrant activity during the six months ended June 30, ~~2019~~2020 is as follows:

During the six months ended June 30, 2020, the Company received net proceeds of $31.3 million from warrant exercises.

For warrants classified as a liability, the following is a summary of the periodic changes in their fair value during the six months ended June 30, ~~2019:~~2020:

~~The fair value of common warrants classified as a liability was estimated using~~Subsequent to the ~~Monte Carlo simulation valuation model with Level 3 inputs. The following assumptions were used to estimate the fair value of warrants that were classified as a liability at~~quarter ended June 30, ~~2019.~~2020, there were additionally 1,983,110 warrants exercised resulting in net proceeds of $9.6 million and 1,630,436 pre-funded warrants issued in connection with a Public Offering (see Note 16).

The Company’s stock option awards generally vest over four years and typically have a contractual life of ten years. At June 30, ~~2019,~~2020, there was ~~$1,579,524~~$1.9 million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of ~~3.39~~3.06 years. During the six months ended June 30, ~~2019,~~2020, the Company granted ~~618,000~~520,500 stock options with a weighted average exercise price of ~~$2.76~~$2.31 and per share weighted average grant date fair value of ~~$2.09.~~$1.83.

Information related to stock options outstanding at June 30, ~~2019~~2020 is as follows:

At June 30, ~~2019,~~2020, the Company had unvested restricted stock of ~~323,262~~195,161 shares with total unrecognized compensation expense of ~~$990,288,~~$0.7 million, which the Company expects to recognize over a weighted average period of approximately ~~3.42~~2.42 years. During the six months ended June 30, ~~2019,~~2020, the Company released 7140,505 shares of common stock from restriction as a result of the vesting of restricted stock.

~~Stock-based~~During the three months ended June 30, 2020, the Company granted 109,525 shares of restricted stock units which vest during the third quarter of 2020. At June 30, 2020, the Company had unvested restricted stock units of 109,525 shares with total unrecognized compensation expense of $0.9 million, which the Company expects to recognize over a weighted average period of approximately 0.25 years.

Under the Employee Stock Purchase Plan (“ESPP”), employees purchased 38,809 shares for $56,739 during the six months ended June 30, 2020. During the three and six months ended June 30, 2020, the Company recognized compensation expense of $20,372 and $35,084, respectively.

Stock-based compensation expense is classified in the unaudited consolidated statements of operations and comprehensive loss for the three and six months ended June 30, ~~2019~~2020 and ~~2018~~2019 as follows:

On March 29, 2019, the board of directors adopted the 2019 Employee Stock Purchase Plan (the “2019 ESPP”). A total of 403,500 shares of the Company’s common stock have been reserved for issuance under the 2019 ESPP. Subject to any plan limitations, the 2019 ESPP allows eligible employees to contribute through payroll deductions up to 10% of their earnings for the purchase of the Company’s common stock at a discounted price per share. The offering periods begin in February and August of each year, with the initial offering period commencing on August 1, 2019. The common shares issuable under the 2019 ESPP were registered pursuant to a registration statement on Form S-8 on April 4, 2019.

Unless otherwise determined by the administrator, the Company’s common stock will be purchased for the accounts of employees participating in the 2019 ESPP at a price per share that is the lesser of 85% of the fair market value of the Company’s common stock on the first trading day of the offering period or 85% of the fair market value of the Company’s common stock on the last trading day of the offering period.

The Company rents office and laboratory space in the United States. The Company also leases office equipment under a non-cancellable equipment lease through December 2022. Rent expense during the three and six months ended June 30, ~~2019~~2020 under all of the Company’s operating leases was $86,295 and $173,894, respectively. Rent expense during the three and six months ended June 30, 2019 was $83,903 and $174,079, ~~respectively, which~~respectively. Rent expense includes short-term leases and variable lease costs that are not included in the lease obligation.

The office space lease provides for increases in future minimum annual rental payments as defined in the lease agreements. The Company has determined the lease renewal option is not reasonably certain.

The cash paid for operating ~~cash outflows related to operating leases~~lease liabilities for the three and six months ended June 30, ~~2019~~2020 was ~~$89,428.~~$64,193 and $126,073, respectively.

Supplemental other information related to the operating leases balance sheet information is as follows:

In response to global pandemic associated with COVID-19, President Donald Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) on March 27, 2020. 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. The CARES Act enables the Company to file a refund claim to reflect a refund of its 2016 tax liability by carrying back its 2018, 2019 and 2020 losses to fully offset this liability. The refund claim attributable to the 2018 and 2019 tax years has been recorded as a discrete item in the income tax benefit for the three months ended March 31, 2020 of $2.9 million. In addition, the Company is currently estimating it will be able to carry back a portion of its current and forecasted 2020 net operating losses as of the end of the year and has included an estimate in its annual effective tax rate calculation as of June 30, 2020, which resulted in an additional income tax benefit of $1.0 million recorded during the six months ended June 30, 2020.

On June 12, 2020, the Comptroller of Maryland issued a report announcing that the state decoupled from the CARES Act loss carryback provisions for the 2020 year only, but indicated uncertainty as to whether the General Assembly would pass a measure to decouple from all years in the CARES Act and not process amended filings in the interim. As a result, an additional discrete item in the income tax benefit of $1.0 million was recognized for the three months ended June 30, 2020 related to the release of valuation allowance related to losses that could potentially be carried back to the 2016 tax year under current law.

Accordingly, the Company has recognized a total tax benefit of $4.8 million for the six months ended June 30, 2020.

As disclosed in Note 3, 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.

On April 2, 2020, the Company entered into Amendment No. 3 to the Second Restated License Agreement (the “Amendment”), by and between the Company and Janssen Vaccines & Prevention B.V. (formerly known as Crucell Holland B.V.) (as amended by Amendment No. 1 to Second Restated License Agreement and Amendment No. 2 to Second Restated License Agreement, together with the Amendment, the “License Agreement”). Pursuant to the Amendment, the field of licenses granted to the Company for the use of the PER.C6 cell line under the License Agreement is expanded to cover COVID-19 caused by SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2), in addition to the existing licenses related to Bacillus anthracis and influenza virus. All capitalized terms not defined herein shall have the meanings assigned to them in the Amendment or the License Agreement, as applicable.

Pursuant to the Amendment, the Company agreed to pay certain additional development-based milestone payments through approval of licensed products by the FDA for the treatment or prevention of COVID-19, up to an aggregate amount of $1.2 million. The Company also agreed to pay royalty payments as a percentage of net sales of products to a royalty stacking reduction and minimum annual royalty payments, until the expiration of the term of the License Agreement, as amended. As of June 30, 2020, payments made under the License Agreement were de minimis.

In December 2019, a complaint was filed by Dr. De-Chu Christopher Tang (“Plaintiff”) against the Company in U.S. 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. Plaintiff, who is representing himself, alleges five causes of action as follows: (1) Defendants’ alleged retention of Plaintiff’s lab notebooks; (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.” A hearing on Defendants’ motion to dismiss was held on May 20, 2020, and the motion is currently pending. The Company believes the allegations in the complaint are without merit and intends to vigorously defend the litigation. However, the outcome of this legal proceeding is uncertain at this time and the Company cannot reasonably estimate a range of loss, if any. Accordingly, the Company has not accrued any liability associated with this action. The Company is a party in various other contractual disputes, litigation, and potential claims arising in the ordinary course of ~~business.~~ business none of which are currently reasonably possible or probable of material loss.

The Company’s assets and liabilities measured at fair value on a recurring basis at June 30, 2020 consisted of the following:

The Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2019 consisted of the following:

Assets recorded at fair value on a nonrecurring basis, such as property and equipment and intangible assets are recognized at fair value when they are impaired.

Cash equivalents and 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. The pricing services 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 June 30, 2020 as shown below:

The fair value of contingent payments classified as a liability was based on the regulatory milestones described in Note 3 and estimated using the Monte Carlo simulation valuation model with Level 3 inputs. The following table is a reconciliation of the beginning and ending balance of contingent consideration liability:

The assumptions used to estimate the fair value of contingent payments that are classified as a liability at June 30, 2020 include the following significant unobservable inputs:

The Company’s warrant liability is valued using the Monte Carlo simulation valuation model. If applicable, the Company ~~does not believe~~will recognize transfers into and out of levels within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurs.

There were no transfers into and out of any of the levels of the fair value hierarchy as of June 30, 2020 and December 31, 2019.

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 ~~resolution~~Company’s common stock if, as a result of ~~these matters will have a material adverse effect on~~such exercise, the holder, together with its ~~financial position~~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 ~~results~~equal to 19.99% upon 61 days’ notice to the Company. The gross proceeds of ~~operations.~~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. The net proceeds of this offering were approximately $124.0 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

~~13.~~Item 2.Management’s Discussion and Analysis of ~~Subsequent Events~~Financial Condition and Results of Operations

~~Refer to Note 3 for a description of the Merger Agreement entered into on July 8, 2019.~~

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, ~~2018~~2019 included in our annual report on Form 10-K, which was filed with the Securities and Exchange Commission on ~~April 1, 2019.~~March 27, 2020.

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. We have included important factors in the cautionary statements included in this quarterly report on Form 10-Q, particularly in the section entitled “Risk Factors” in Part II, Item 1A, that could cause actual results or events to differ materially from the forward-looking statements that we make. 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.

Altimmune, Inc. is a clinical stage biopharmaceutical company focused on developing ~~liver disease and~~intranasal vaccines, immune modulating ~~therapies.~~therapies and treatments for liver disease. Our diverse pipeline includes proprietary intranasal vaccines for COVID-19 (AdCOVID), anthrax (NasoShield) and influenza (NasoVAX); an intranasal immune modulating therapeutic for COVID-19 (T-COVID); and next generation peptide therapeutics for NASH (ALT-801) and chronic ~~Hepatitis~~hepatitis B ~~(HepTcell~~^TM~~), conjugated immunostimulants~~(HepTcell).

We are closely monitoring how the spread of COVID-19 is affecting our employees, business, preclinical studies and clinical trials. In response to the COVID-19 pandemic, we have closed our executive offices with certain employees continuing their work outside of our offices and travel for all employees has been restricted. Essential laboratory staff continue to work onsite with enhanced safety measures. 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 NasoShield, T-COVID, AdCOVID and ALT-801. We expect the pandemic to have some near-term impact on the initiation of our HepTcell Phase 2 trial and, accordingly, we will delay the initiation of this trial. We expect we will be able to provide an update on timing for initiating the study in the second half of 2020.

Although operations have not been materially affected by the COVID-19 pandemic as of and for the ~~treatment~~three and six months ended June 30, 2020, at this time, however, there is significant uncertainty relating to the trajectory of ~~cancer (ALT-702)~~the pandemic and ~~intranasal vaccines (NasoVAX~~^TMthe impact of related responses, and ~~NasoShield~~^TM).

~~On September 13, 2018 we amended~~disruptions caused by the COVID-19 pandemic may result in difficulties or delays in initiating, enrolling, conducting or completing our ~~Amended~~planned and ~~Restated Certificate~~ongoing trials and the incurrence of ~~Incorporation~~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 ~~effect a reverse stock split~~contain and treat the disease. See “Risk Factors— Our business, results of ~~our issued~~operations and ~~outstanding common stock at a ratio 1-for-30,~~financial condition may be adversely affected by the widespread outbreak of an illness or any other communicable disease, or any other public health crisis, including the ~~“Reverse Stock Split”. The Reverse Stock Split was effective on September 13, 2018, and our shares~~ongoing coronavirus disease (COVID-19) pandemic.” in Part II, Item 1A of ~~common stock commenced trading on the NASDAQ Global Market on a post-Reverse Stock Split basis on September 14, 2018. Unless otherwise noted, all share and per share numbers in~~ this Quarterly Report on Form ~~10-Q are reflected on a Post-Reverse Stock Split basis for all periods presented.~~

Subsequent to the quarter ended June 30, 2019, the Company entered into a definitive agreement to acquire all of the equity interests of Spitfire Pharma, Inc. (“Spitfire”) on July 8, 2019. Spitfire was a privately held, preclinical pharmaceutical company developing a novel dual GLP-1/glucagon receptor agonist for the treatment of non-alcoholic steatohepatitis.

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 (the “Closing Consideration”). The number of Shares issued as payment of the Closing Consideration was determined based on the average of the closing prices of the Company’s common stock as reported on the Nasdaq Global Market for the twenty (20) consecutive trading days prior to and including July 8, 2019, the date on which the parties entered into the Agreement and Plan of Merger and Reorganization (the “Merger Agreement”).10-Q.

The Merger Agreement also includes $88.0 million in future contingent payments based on regulatory, clinical and sales milestones using the acquired intellectual property. The Company will record the contingent consideration when and if the milestones are achieved and the milestone payments become payable.

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 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, and expenses, and the related disclosure of contingent assets and liabilities. 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, ~~2018~~2019 except for recently adopted accounting standards (See ~~note 2)~~Note 2 to the consolidated financial statements appearing in Item 1 of this report). For more information 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, ~~2018.~~2019.

	For the Three Months Ended June 30,
	2019			2018			Increase (Decrease)						For the Three Months Ended June 30,
													2020			2019			Increase (Decrease)
Revenue	$	1,626,029		$	2,417,140		$	(791,111	)	(32.7	)	%	$	721,636		$	1,626,029		$	(904,393	)	(56	)	%
Operating expenses
Operating expenses:
Research and development		2,945,096			4,918,961			(1,973,865	)	(40.1	)			16,594,250			2,945,096			13,649,154		463
General and administrative		2,231,817			2,933,982			(702,165	)	(23.9	)			2,545,356			2,231,817			313,539		14
Total operating expenses		5,176,913			7,852,943			(2,676,030	)	(34.1	)			19,139,606			5,176,913			13,962,693		270
Loss from operations		(3,550,884	)		(5,435,803	)		1,884,919		(34.7	)			(18,417,970	)		(3,550,884	)		(14,867,086	)	(419	)
Other income (expense):
Changes in fair value of warrant liability		(46,000	)		(5,228,691	)		5,182,691		(99.1	)			—			(46,000	)		46,000		100
Changes in fair value of embedded derivative		—			4,912			(4,912	)	—
Interest expense		(748	)		(1,921	)		1,173		(61.1	)			(3,308	)		(748	)		(2,560	)	(342	)
Interest income		239,964			25,617			214,347		836.7				81,458			239,964			(158,506	)	(66	)
Other income (expenses)		(29,220	)		(49	)		(29,171	)	59,532.7
Total other income (expense)		163,996			(5,200,132	)		5,364,128		(103.2	)
Other (expenses), net														(5,878	)		(29,220	)		23,342		80
Total other (expense) income, net														72,272			163,996			(91,724	)	(56	)
Net loss before income tax benefit		(3,386,888	)		(10,635,935	)		7,249,047		(68.2	)			(18,345,698	)		(3,386,888	)		(14,958,810	)	(442	)
Income tax benefit		—			1,497,093			(1,497,093	)	—				1,578,782			—			1,578,782		100
Net loss	$	(3,386,888	)	$	(9,138,842	)	$	5,751,954		(62.9	)	%	$	(16,766,916	)	$	(3,386,888	)	$	(13,380,028	)	(395	)	%

	For the Six Months Ended June 30,												For the Six Months Ended June 30,
	2019			2018			Increase (Decrease)						2020			2019			Increase (Decrease)
Revenue	$	4,581,622		$	5,108,121		$	(526,499	)	(10.3	)	%	$	2,934,330		$	4,581,622		$	(1,647,292	)	(36	)	%
Operating expenses
Research and development		6,162,768			10,665,890			(4,503,122	)	(42.2	)			23,781,781			6,162,768			17,619,013		286
General and administrative		4,298,299			5,381,917			(1,083,618	)	(20.1	)			4,877,273			4,298,299			578,974		13
Goodwill impairment		—			490,676			(490,676	)	—
Total operating expenses		10,461,067			16,538,483			(6,077,416	)	(36.7	)			28,659,054			10,461,067			18,197,987		174
Loss from operations		(5,879,445	)		(11,430,362	)		5,550,917		(48.6	)			(25,724,724	)		(5,879,445	)		(19,845,279	)	(338	)
Other income (expense):
Changes in fair value of warrant liability		(46,000	)		(3,680,709	)		3,634,709		(98.8	)			—			(46,000	)		46,000		100
Changes in fair value of embedded derivative		—			(2,130	)		2,130		—
Interest expense		(1,488	)		(2,791	)		1,303		(46.7	)			(5,193	)		(1,488	)		(3,705	)	(249	)
Interest income		425,211			57,206			368,005		643.3				233,027			425,211			(192,184	)	(45	)
Other income (expenses)		17,528			257,675			(240,147	)	(93.2	)
Total other income (expense)		395,251			(3,370,749	)		3,766,000		(111.7	)
Other (expenses) income, net														19,664			17,528			2,136		12
Total other income, net														247,498			395,251			(147,753	)	(37	)
Net loss before income tax benefit		(5,484,194	)		(14,801,111	)		9,316,917		(62.9	)			(25,477,226	)		(5,484,194	)		(19,993,032	)	(365	)
Income tax benefit		-			2,488,731			(2,488,731	)	—				4,824,661			—			4,824,661		100
Net loss	$	(5,484,194	)	$	(12,312,380	)	$	6,828,186		(55.5	)	%	$	(20,652,565	)	$	(5,484,194	)	$	(15,168,371	)	(277	)	%

Revenue consists primarily of research grants from Biomedical Advanced Research and Development Authority, or BARDA, and in 2019, the National Institute of Allergy and Infectious Diseases, or NIAID, in the United States for our anthrax vaccine product candidates. These grants consist of cost reimbursement contracts, with a fixed fee based on either costs or milestones.

Revenue decreased by ~~$0.79~~$0.9 million, or ~~32.7%~~56%, for the three months ended June 30, ~~2019~~2020 as compared to the same period in ~~2018.~~2019. The decrease was primarily the result of:

Revenue decreased by $1.6 million, or 36%, for the six months ended June 30, 2020 as compared to the same period in 2019. The decrease was primarily the result of:

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 ~~$0.53~~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 us a firm fixed fee based on achieving 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. As of June 30, 2020, we have not received any cash under the contract nor have we recognized any amounts of grant revenue within the statement of operations.

Research and development operating expense increased by $13.6 million, or ~~10.3%~~463%, for the ~~six~~three months ended June 30, ~~2019,~~2020 as compared to the same period in ~~2018.~~2019. The increase was primarily the result of:

Research and development operating expense decreased by $1.97 million, or 40.1%, for the three months ended June 30, 2019 as compared to the same period in 2018. The decrease was primarily the result of:

Research and development operating expense increased by $17.6 million, or 286%, for the six months ended June 30, 2020 as compared to the same period in 2019. The increase was primarily the result of:

Research and development operating expense decreased by $4.50 million, or 42.2%, for the six months ended June 30, 2019, as compared to the same period in 2018. The decrease was primarily the result of:

General and administrative expense ~~decreased~~increased by ~~$0.7~~$0.3 million, or ~~23.9%~~14%, for the three months ended June 30, ~~2019~~2020 and by ~~$1.1~~$0.6 million, or ~~20.1%~~13%, for the six months ended June 30, ~~2019,~~2020, as compared to the same periods in ~~2018~~2019 due primarily ~~due~~ to ~~a reduction in labor, legal and professional costs.~~

~~Goodwill impairment charges reported during the six months ended June 30, 2018 represented~~ an adjustment recorded during the measurement period to reduce the tax refund receivable acquired in connection with a 2017 business combination. We recorded adjustments to the purchase price allocation resulting in a net decrease in tax refunds receivable, with a corresponding net increase in goodwill, of $490,676. As goodwill related to this transaction had previously been determined to be fully impaired, we recognized an impairment charge of $490,676. The purchase price allocation was considered final in May 2018,legal, professional and ~~no further adjustments were recorded.~~labor costs.

~~Other~~Total other (expense) income, ~~(expense)~~net decreased by ~~$5.4~~$0.1 million and ~~$3.8~~$0.1 million during the three and six months ended June 30, ~~2019,~~2020, respectively, as compared to the same ~~periods~~period in ~~2018.~~2019. The decreases are primarily due to changes in ~~the fair value of warrant liability and embedded derivatives.~~interest income.

~~We recorded no income~~Income tax benefit ~~or expense for~~increased by $1.6 million and $4.8 million during the three and six months ended June 30, ~~2019,~~2020, as compared to ~~an income tax benefit of $1.5 million and $2.5 million for~~ the same ~~respective periods~~period in ~~2018. We had a valuation allowance against most~~2019. The increase is due to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020 which made temporary changes regarding the utilization and carry back of ~~the deferred tax assets. During the three and six months ended~~net operating losses. As of June 30, 2020, the Company intends to file a refund claim for a discrete item of $2.9 million with the Internal Revenue Service reflecting a partial refund of its 2016 tax liability by carrying back its 2019 ~~we did~~and 2018 losses not ~~identify any discrete items, therefore all of our tax loss was applied~~previously claimed, and estimates $2.9 million related to ~~the valuation allowance. During~~net operating losses arising during the six months ended June 30, ~~2018, our~~2020 will be claimed.

On June 12, 2020, the Comptroller of Maryland issued a report announcing that the state decoupled from the CARES Act loss carryback provisions for the 2020 year only, but indicated uncertainty as to whether the General Assembly would pass a measure to decouple from all years in the CARES Act and not process amended filings in the interim. As a result, an additional discrete item in the income tax benefit ~~included $1.5~~of $1.0 million was recognized for ~~our projected 2018 unlimited~~the three months ended June 30, 2020 related to the release of valuation allowance related to losses that could potentially be carried back to the 2016 tax year under current law.

~~lived Federal net operating loss determined to be realizable, $0.7 million due to Maryland state net operating losses, and discrete tax benefits of $0.3 million related to a change in estimate.~~

Our primary sources of cash during the six months ended June 30, ~~2019 was the~~2020 were from equity activity, maturities of short-term investments and cash ~~on-hand as~~receipts of ~~January 1, 2019 and the receipt of $12.7 million in proceeds~~revenue from ~~the Registered Direct Offering.~~our BARDA contract. Our cash, ~~and~~ cash equivalents, and short-term investments were ~~$41.7~~$80.3 million at June 30, ~~2019.~~2020. We believe, based on the operating cash requirements and capital expenditures expected for ~~2019,~~2020, our cash on hand at June 30, ~~2019, and~~2020, short-term investments, revenue from our government sponsored contracts and tax refunds, are sufficient to fund operations for at least a twelve-month period from the issuance date of our June 30, ~~2019~~2020 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 ~~consist~~have consisted of revenues under our contract with BARDA ~~and NIAID~~ for the development of NasoShield ~~and SparVax-L, respectively,~~ and to a lesser degree from other licensing arrangements. We have incurred significant losses since we commenced operations. As of June 30, ~~2019,~~2020, we had accumulated losses of ~~$122.3~~$158.0 million since our inception. 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 securities. As capital resources are consumed to fund our research and development activities, we may not have sufficient capital to fund our plan of operations. In order to address our capital needs, including our planned clinical trials, we have initiated the ATM Offering and the Public Offering and 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.

In July 2016, we signed a five-year contract with BARDA. The contract, as amended, has a total value of up to ~~$130.0~~$133.7 million and is used to fund clinical development of NasoShield. Under the contract, BARDA pays us a fixed fee and reimburses 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 of an initial base performance period providing approximately ~~$24.1~~$27.8 million in funding for the period July 2016 through ~~November 2019.~~December 2020. BARDA has 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 additional funding ranging from approximately $1.1 million to $34.4 million for ~~the~~a three-year period ~~November 2019 through July~~beginning January 2021. Through June 30, ~~2019,~~2020, we have received an aggregate of approximately ~~$19.6~~$23.8 million under the current BARDA contract.

We have a NIAID contract that is incrementally funded for the development of SparVax-L. Over the base period of the contract, approximately $5.2 million was awarded for initial funding, which includes a cost reimbursement component and a fixed fee component payable upon achievement of certain milestones. NIAID exercised options under this agreement to provide additional funding of approximately $10.1 million and an extension of the period of performance through September 2019. The contract had a maximum total value of up to approximately $28.1 million if all technical milestones were met and all eight contract options were exercised by NIAID. Work under all exercised options will bring total committed and final funding under the NIAID contract to $15.3 million. Activities under this contract are substantially complete, and we are seeking additional government funding to advance the program beyond the completion of this contract. No such funding has been identified as of the date of this filing.

The following table provides information regarding our cash flows for the ~~three~~six months ended June 30, ~~2019~~2020 and ~~2018:~~

Net cash used in operating activities was ~~$5.2~~$11.5 million for the six months ended June 30, ~~2019~~2020 compared to ~~$3.2~~$5.2 million during the six months ended June 30, ~~2018.~~2019. Our sources of cash provided by operations during the ~~three~~six months ended June 30, ~~2019~~2020 were primarily cash receipts of revenue generated by our BARDA ~~and NIAID contracts.~~contract. The primary uses of cash from our operating activities include payments for labor and labor-related costs, professional fees, research and development costs associated with our clinical trials, and other general corporate expenditures. The increase in cash used in operations of ~~$2.0~~$6.3 million year over year is due to ~~a decrease~~an increase in net loss as adjusted for ~~noncash~~non-cash items of ~~$3.5~~$1.8 million ~~offset by~~and changes in working capital accounts of ~~$5.5 million.~~$4.5 million, primarily due to recording of the income tax benefit receivable.

Net cash ~~used in~~provided by investing activities was ~~$0.02~~$12.7 million for the six months ended June 30, ~~2019~~2020 compared to ~~$0.84 million~~net cash used in investing activities of $17,100 during the six months ended June 30, ~~2018.~~2019. The net cash provided by investing activities during 2020 was primarily due to maturities of short-term investments. The net cash used in investing activities ~~during 2018~~in 2019 was primarily due to purchases of ~~property~~equipment and ~~equipment related to the buildout of the Company’s new office and laboratory facilities which was completed in 2018.~~

Net cash provided by financing activities during the six months ended June 30, ~~2019~~2020 was ~~$12.5~~$54.6 million compared to ~~net cash used in financing activities of $3.4~~$12.5 million for the ~~same period~~six months ended June 30, 2019. The net cash provided by financing activities during the six months ended June 30, 2020 was primarily the result of $31.3 million in ~~2018.~~proceeds from the exercise of warrants and $22.8 million in proceeds from the issuance of common stock from our at-the-market offering program. The net cash provided by financing activities during the six months ended June 30, 2019 was primarily the result of ~~the receipt of~~ $12.7 million in proceeds from the Registered Direct Offering (as discussed below). The net cash used by financing activities during the six months ended June 30, 2018 was the result of cash paid to redeem preferred stock and retire certain warrants.

~~On March 12, 2019, we issued a combined total of 1,500,000 common units and 2,861,370 pre-funded units to certain institutional investors in~~ a registered direct offering ~~or the “Registered Direct Offering”. Each common unit in the Registered Direct Offering was sold at a price~~ of ~~$3.21 and~~units that consisted of ~~one share~~common stock and warrants.

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 ~~0.70 of a warrant~~(ii) pre-funded warrants to purchase ~~one share~~1,630,436 shares of our common stock at an exercise price of $3.21. Each warrant sold in the Registered Direct Offering was exercisable immediately and expires five years from the date of issuance. Each pre-funded unit in the Registered Direct Offering was soldequal 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 ~~$3.20 and consisted~~Common Stock, minus the exercise price of ~~a pre-funded warrant to purchase one share~~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 ~~at an~~if, as a result of such exercise, ~~price~~the holder, together with its affiliates, would own more than 4.99% of ~~$0.01 per share and 0.70~~the total number of ~~a warrant to purchase one share~~shares of our common stock then issued and outstanding, which percentage may change at anthe holders’ election to any other number less than or 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 ~~price of $3.21. The pre-funded warrants were immediately exercisable and were able to be exercised at any time until all~~in full of the ~~pre-funded warrants are exercised in full. All~~underwriters’ option to purchase an additional 750,000 shares of ~~the pre-funded warrants were exercised prior to March 31, 2019.~~common stock, before deducting underwriting discounts and commissions and offering expenses. The net proceeds of ~~the Registered Direct Offering~~this offering were approximately ~~$12.7~~$124.0 million, after deducting ~~the~~ underwriting ~~discount~~discounts and commissions and estimated offering expenses payable by ~~us. The Registered Direct~~the Company.

On March 27, 2020, we entered into an ~~adjustment~~Equity Distribution Agreement (the “Agreement”) with JMP Securities LLC, serving as placement agent (the “Placement Agent”) with respect to an at-the-market offering program under which we may offer and sell, from time to time at our sole discretion, shares 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 “Offering”). We offered Shares having an aggregate offering price of $18.9 million pursuant to the ~~exercise price of the warrants issued~~prospectus supplement filed with the SEC on March 27, 2020. On June 1, 2020, we filed an amendment to the Agreement which amended the prospectus supplement dated March 27, 2020 to increase the aggregate offering price to $50.0 million. As of ~~common units and pre-funded units on October 2, 2018 from $4.1798~~June 30, 2020, we sold 2,965,144 shares of Common Stock under the Agreement resulting in $22.8 million in net proceeds, leaving $26.3 million available to ~~$2.7568.~~be sold under the amended Agreement.

We have financed our operations to date principally through our equity offerings and proceeds from issuances of our preferred stock, common stock, and warrants. At June 30, ~~2019~~2020, we had ~~$41.7~~$64.8 million of cash, cash equivalents and restricted ~~cash.~~cash and $15.5 million of short-term investments. Accordingly, management believes that the Company has sufficient capital to fund its plan of operations for at least a twelve-month period from the issuance date of our June 30, ~~2019~~2020 financial statements. However, in order to address our capital needs in the long-term, 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.

As of June 30, ~~2019,~~2020, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as “special purpose” entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

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.

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 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 June 30, ~~2019,~~2020, 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.

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 June 30, ~~2019~~2020 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.

In addition to the other information set forth in this Form 10-Q, you should carefully consider the factors discussed in Part I, Item 1A, subsection “Risk Factors” in our ~~2018~~2019 Annual Report on Form 10-K filed with the SEC on ~~April 1, 2019,~~March 27, 2020 and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on May 13, 2020, as they could materially affect our business, financial condition or future results of operations. The risks described in our ~~2018~~2019 Annual Report on Form 10-K filed with the SEC on ~~April 1, 2019~~March 27, 2020 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on May 13, 2020 are not the only risks that we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition and future results of operations. The following information updates, and should be read in conjunction with, the risk factors previously disclosed in Item 1A, subsection “Risk Factors” to Part I of our ~~2018~~2019 Annual Report on Form 10-K filed with the SEC on ~~April 1, 2019.~~March 27, 2020 and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on May 13, 2020. Except as set forth below, there have been no material changes to the risk factors previously disclosed under the caption “Risk Factors” in our ~~2018~~2019 Annual Report on Form ~~10-K.~~10-K and in our Quarterly Report on Form 10-Q.

Our pursuit of potential therapeutic and prophylactic treatments for COVID-19 is at an early stage and subject to many risks. We may be unable to receive approval for any of our COVID-19 product candidates a timely manner, if at all, and our COVID-19 product candidates may never be approved.

The U.S. Food and Drug Administration recently ~~completed~~cleared our Investigational New Drug, or IND, application to proceed with a clinical trial of T-COVID, our investigational agent for the ~~acquisition~~treatment of ~~Spitfire Pharma, Inc.~~early COVID-19 and we have not yet filed an IND for AdCOVID, our intranasal vaccine candidate for COVID-19. We have not yet initiated a clinical trial for either program, and we may experience difficulties or delays in enrolling patients in clinical trials due to the impact of the global COVID-19 pandemic or other reasons. Many of the risks related to the development of these product candidates are beyond our control, including risks related to clinical development, the regulatory submission process, potential threats to our intellectual property rights and manufacturing delays or difficulties. We may be unable to produce an efficacious and/or approved product for the treatment of patients with early COVID-19 in a timely manner, if at all.

The results of preclinical studies from our COVID-19 product candidates may not be predictive of the results of clinical trials, and the ~~failure~~results of any early-stage clinical trials we commence may not be predictive of the results of the later-stage clinical trials. There can be no assurance that any of our clinical trials for our COVID-19 product candidates, or any other of our product candidates, will ultimately be successful or support further clinical development. In addition, the interpretation of the data from our clinical trials of T-COVID or AdCOVID by FDA and other regulatory agencies may differ from our interpretation of such data and the FDA or other regulatory agencies may require that we conduct additional studies or analyses. Any of these factors could delay or prevent us from receiving regulatory approval of T-COVID or AdCOVID and there can be no assurance that either product candidate will be approved in a timely manner, if at all.

If the COVID-19 outbreak is effectively contained or the risk of coronavirus infection is diminished or eliminated before we can successfully develop and manufacture our product candidate, the commercial viability of such product candidate may be diminished or eliminated. We are also committing financial resources and personnel to the development of this product candidate which may cause delays in or otherwise negatively impact our other development programs, despite uncertainties surrounding the longevity and extent of coronavirus as a global health concern. Our business could be negatively impacted by our allocation of significant resources to a global health threat that is

unpredictable and could rapidly dissipate or against which our treatment, if successfully ~~integrate its operations could adversely affect our future results.~~developed, may not be effective. In addition, other parties are currently producing therapeutic and vaccine candidates for COVID-19, which may be more efficacious or may be approved prior to T-COVID or AdCOVID.

~~Our success will depend, in significant part, on our ability to realize the anticipated benefits from combining our operations with the operations of Spitfire Pharma, Inc. (“Spitfire”).~~ The ~~failure to integrate successfully~~regulatory pathway for T-COVID and ~~to manage successfully the challenges presented by the integration process~~AdCOVID is continually evolving, and may result in unexpected or unforeseen challenges.

The speed at which parties are acting to create and test many therapeutics and vaccines for COVID-19 is unusual, and evolving or changing plans or priorities within the FDA, including those based on new knowledge of COVID-19 and how the disease affects the human body, may significantly affect the regulatory timeline for our ~~failure~~product candidates. Results from ongoing clinical trials and discussions with regulatory authorities may raise new questions and require us to ~~achieve some~~redesign proposed clinical trials, including revising proposed endpoints or ~~all~~adding new clinical trial sites or cohorts of subjects. Any such developments could delay the development timeline for our product candidates and materially increase the cost of the ~~anticipated benefits of the merger. Potential difficulties that may be encountered in the integration process include the following:~~

If the acquired business is not successfully integrated into our company, our business, financial condition and results of operations could be materially adversely affected, as well as our professional reputation. Furthermore, if we are unable to successfully integrate the acquired business and operations, or if there are delays in combining the businesses, the anticipated benefits of the acquisition may not be realized fully or at all or may take longer to realize than expected. Successful integration of the acquired business will depend on our ability to manage these operations, to realize opportunitiesdevelopment for ~~revenue growth presented by our products and eliminate certain excess costs of the acquired business.~~such candidates.

# 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 incorcporated by reference into such filing.

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.

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

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

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

		Page

PART ~~I —~~I. FINANCIAL INFORMATION

Item 1.	~~Item 1. Consolidated Financial Statements~~ ~~(Unaudited)~~

	~~Consolidated Balance Sheets~~	1
	~~Consolidated Statements of Operations and Comprehensive Loss~~	2
	~~Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity~~	3
	~~Consolidated Statements of Cash Flows~~	5
	~~Notes to Consolidated~~ Financial Statements	61

	~~Item 2. Management’s Discussion~~Consolidated Balance Sheets as of June 30, 2020 (unaudited) and ~~Analysis of Financial Condition and Results of Operations~~December 31, 2019	131

	~~Item 3. Quantitative~~Consolidated Statements of Operations and ~~Qualitative Disclosures about Market Risk~~Comprehensive Loss for the three and six months ended June 30, 2020 and 2019 (unaudited)	172

	~~Item 4. Controls~~Consolidated Statements of Changes in Stockholders’ Equity for the three and ~~Procedures~~six months ended June 30, 2020 and 2019 (unaudited)	173

	Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019 (unaudited)	4

	Notes to Consolidated Financial Statements (unaudited)	5

~~PART II — OTHER INFORMATION~~Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18

Item 4.	Controls and Procedures	18


PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	1819

Item 1A.	Risk Factors	19

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20

Item 3.	Defaults Upon Senior Securities	20

Item 4.	Mine Safety Disclosures	20

Item 5.	Other Information	20

Item 6.	Exhibits	21

	~~Item 1A. Risk Factors~~Signatures	1822

	~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds~~	18

	~~Item 3. Defaults Upon Senior Securities~~	18

	~~Item 4. Mine Safety Disclosures~~	18

	~~Item 5. Other Information~~	18

	~~Item 6. Exhibits~~	19

	As of June 30,				For the Three and Six Months Ended		For the Three and Six Months Ended
	2019		2018		June 30, 2020		June 30, 2019
Redeemable preferred stock		-		6,966
Common stock warrants		10,386,256		25,211		2,150,285		10,386,256
Common stock options		873,066		53,846		1,527,978		873,066
Restricted stock		323,262		639		304,686		323,262

	June 30, 2019								June 30, 2020
	Estimated Useful Lives	Gross Carrying Value		Accumulated Amortization			Net Book Value		Estimated Useful Lives	Gross Carrying Value		Accumulated Amortization			Net Book Value
Internally developed patents	6-10 years	$	734,432	$	(416,857	)	$	317,575	6-10 years	$	825,659	$	(466,866	)	$	358,793
Acquired licenses	16-20 years		285,000		(261,326	)		23,674	16-20 years		285,000		(277,105	)		7,895
Total intangible assets subject to amortization			1,019,432		(678,183	)		341,249			1,110,659		(743,971	)		366,688
IPR&D assets	Indefinite		13,418,967		—			13,418,967	Indefinite		12,418,967		—			12,418,967
Total		$	14,438,399	$	(678,183	)	$	13,760,216		$	13,529,626	$	(743,971	)	$	12,785,655

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

Years ending December 31,
The remainder of 2019	$	29,690
2020		45,933
The remainder of 2020			$	20,596
2021		25,375		27,687
2022		25,375		27,687
2023		25,375		27,687
2024 and thereafter		189,501
2024				23,781
2025 and thereafter				239,250
Total	$	341,249	$	366,688

	June 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
Accrued professional services	$	417,618	$	552,619	$	472,329	$	429,467
Accrued payroll and employee benefits		808,585		1,257,191		956,584		1,183,130
Accrued interest		2,685		1,192		10,240		5,047
Accrued research and development		1,539,045		2,076,704		2,343,629		1,966,111
Lease obligation, current portion		246,193		—
Deferred rent, current portion		—		175,490
Lease obligation, current portion (see Note 12)						273,276		259,449
Deferred revenue		32,441		19,753		33,691		61,563
Total accrued expenses	$	3,046,567	$	4,082,949	$	4,089,749	$	3,904,767

	June 30, 2019		December 31, 2018
BPI France notes, long-term portion	$	252,902	$	501,174
Lease obligation, long-term portion (see Note 11)		1,618,055		—
Deferred rent, long-term portion		—		1,045,807
Common stock warrant liability (see Note 9)		111,000		65,000
Other		230,147		240,090
Total other long-term liabilities	$	2,212,104	$	1,852,071



Warrants outstanding, ~~beginning of period~~December 31, 2019	~~7,344,297~~10,384,706
~~Issuances~~Warrants issued due to anti-dilution features triggered from Registered Direct Offering	~~3,052,959~~1,358
Exercises ~~and conversions~~	(~~11,000~~8,235,779	)
Warrants outstanding, ~~end of period~~June 30, 2020	~~10,386,256~~2,150,285

Balance, January 1, 2019	$	65,000
Changes in fair value (Monte Carlo simulation valuation)		46,000
Balance, June 30, 2019	$	111,000

Balance, December 31, 2019	$	10,000
Changes in fair value		—
Balance, June 30, 2020	$	10,000


~~Expected volatility~~	~~96.3~~	%
~~Expected term (years)~~	~~3.10~~
~~Risk-free interest rate~~	~~1.7~~	%
~~Expected dividend yield~~	~~0.0~~	%

	Number of Stock Options		Weighted- average Exercise Price		Weighted- average Remaining Contractual Term (Years)		Aggregate Intrinsic Value		Number of Stock Options		Weighted- average Exercise Price		Weighted- average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding		873,066	$	5.67		5.89	$	2,000		1,477,153	$	3.65		5.96	$	12,804,940
Exercisable		112,944	$	18.97		5.18	$	-		416,022	$	5.97		5.69	$	3,097,502
Unvested		760,122	$	3.69		5.99	$	2,000		1,061,131	$	2.74		6.07	$	9,707,438

	June 30, 2019			June 30, 2020
Operating lease obligations	$	1,864,248		$	1,618,055
Operating lease right-of-use assets	$	732,380		$	662,074
Weighted-average remaining lease term		5.83			4.83
Weighted-average discount rate		8.0	%		8.0	%

Unobservable input	Value or Range	Weighted Average

Expected volatility	112.9%	112.9%
Risk-free interest rate	0.16%	0.16%
Cost of capital	30.0%	30.0%
Discount for lack of marketability	14%-22%	18.0%
Probability of payment	52%-83%	76%
Projected year of payment	2020-2022	2020

Year ending December 31,
The remainder of 2019	$	191,428
2020		387,079
2021		393,542
2022		400,198
2023		407,054
2024 and thereafter		552,948
Total lease payments		2,332,249
Less imputed interest		(468,001	)
Total	$	1,864,248

Year ending December 31,
The remainder of 2020	$	194,596
2021		393,542
2022		400,198
2023		407,054
2024		414,116
2025 and thereafter		138,831
Total lease payments		1,948,337
Less imputed interest		(330,282	)
Total	$	1,618,055

	Fair Value Measurement at June 30, 2020
	Total		Level 1		Level 2		Level 3
Recurring fair value measurements
Cash equivalents - money market funds	$	38,011,208	$	38,011,208	$	—	$	—
Short-term investments		15,484,402		—		15,484,402		—
Contingent consideration		16,390,000		—		—		16,390,000
Warrant liability		10,000		—		—		10,000

	Fair Value Measurement at December 31, 2019
	Total		Level 1		Level 2		Level 3
Recurring fair value measurements
Cash equivalents - money market funds	$	8,034,640	$	8,034,640	$	—	$	—
Short-term investments		28,277,386		—		28,277,386		—
Contingent consideration		2,750,000		—		—		2,750,000
Warrant liability		10,000		—		—		10,000

	June 30, 2020
	Amortized Cost		Unrealized Gain (Loss)		Market Value

Certificate of deposit	$	5,000,000	$	—	$	5,000,000
Financial and corporate debt securities		10,475,942		8,460		10,484,402
Total	$	15,475,942	$	8,460	$	15,484,402

Balance at December 31, 2019	$	2,750,000
Change in fair value		13,640,000
Balance at June 30, 2020	$	16,390,000

		Exhibit Index

Exhibit No.		Description


10.1		~~Transition Services~~Equity Distribution Agreement, dated March 27, 2020, by and ~~between~~among Altimmune, Inc. and JMP Securities LLC (incorporated by reference to Exhibit 1.1 to the ~~Company and Sybil Tasker, M.D., MPH, dated June 17, 2019.~~Registrant’s Form 8-K filed on March 27, 2020)

10.2		~~Release of Claims~~Amendment No. 2 to the Second Restated License Agreement, by and ~~between the Company~~among Altimmune, Inc. and ~~Dr. Tasker,~~Janssen Vaccines & Prevention B.V., dated ~~June 17, 2019.~~as of September 20, 2016

10.3 ^^		~~Employment~~Amendment No. 3 to the Second Restated License Agreement, ~~dated June 10, 2019,~~ by and ~~between the Company~~among Altimmune, Inc. and ~~William Brown (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on June 12, 2019).~~Janssen Vaccines & Prevention B.V., dated as of April 2, 2020

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		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

	ALTIMMUNE, INC.

Dated: August ~~13, 2019~~11, 2020	By:	/s/ Vipin K. Garg
	Name:	Vipin K. Garg
	Title:	President and Chief Executive Officer (Principal Executive Officer)

Dated: August ~~13, 2019~~11, 2020	By:	/s/ Will Brown
	Name:	Will Brown
	Title:	Chief Financial Officer (Principal Financial and Accounting Officer)