UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
FORM 10-Q
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31,June 30, 2021
or
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number 001-32587
ALTIMMUNE, INC.
ALTIMMUNE, INC.
(Exact Name of Registrant as Specified in its Charter)
| | |
Delaware |
| 20-2726770 |
(State or Other Jurisdiction of Incorporation or Organization) |
| (I.R.S. Employer Identification No.) |
| | |
910 Clopper RoadSuite 201S, Gaithersburg, Maryland |
| 20878 |
(Address of Principal Executive Offices) |
| (Zip Code) |
(240) (240) 654-1450
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common stock, par value $0.0001 per share | ALT | The NASDAQ Global Market |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒⌧ No ☐◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒⌧ No ☐◻
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| | | | |
Large accelerated filer |
| | Accelerated filer |
|
Non-accelerated filer |
| | Smaller reporting company |
|
| | | Emerging growth company |
|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒⌧
As of May 14,August 6, 2021 there were 38,396,84339,705,884 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.
ALTIMMUNE, INC.
TABLE OF CONTENTS
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1 | |||
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| Consolidated Balance Sheets as of | 1 | |
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| 2 | ||
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| 3 | ||
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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PART I. FINANCIAL INFORMATION
CONSOLIDATED BALANCE SHEETS
| | | | | | |
|
| June 30, | | December 31, | ||
| | 2021 | | 2020 | ||
| | (unaudited) | | | | |
ASSETS |
| |
|
| |
|
Current assets: |
| |
|
| |
|
Cash and cash equivalents | | $ | 174,102,382 | | $ | 115,917,807 |
Restricted cash | |
| 34,174 | |
| 34,174 |
Total cash, cash equivalents and restricted cash | |
| 174,136,556 | |
| 115,951,981 |
Short-term investments | |
| 43,723,840 | |
| 100,005,558 |
Accounts receivable | |
| 4,463,442 | |
| 4,610,202 |
Tax refund receivable | |
| 6,887,981 | |
| 7,762,793 |
Prepaid expenses and other current assets | |
| 9,413,070 | |
| 1,926,675 |
Total current assets | |
| 238,624,889 | |
| 230,257,209 |
Property and equipment, net | |
| 4,751,010 | |
| 1,056,920 |
Intangible assets, net | |
| 12,956,112 | |
| 12,823,846 |
Other assets | |
| 928,839 | |
| 977,238 |
Total assets | | $ | 257,260,850 | | $ | 245,115,213 |
LIABILITIES AND STOCKHOLDERS’ EQUITY | |
|
| |
|
|
Current liabilities: | |
|
| |
|
|
Accounts payable | | $ | 1,421,192 | | $ | 612,293 |
Accrued expenses and other current liabilities | |
| 7,674,536 | |
| 11,408,154 |
Total current liabilities | |
| 9,095,728 | |
| 12,020,447 |
Contingent consideration | |
| 5,270,000 | |
| 5,390,000 |
Other long-term liabilities | |
| 1,617,150 | |
| 1,828,443 |
Total liabilities | |
| 15,982,878 | |
| 19,238,890 |
Commitments and contingencies (Note 16) | |
|
| |
|
|
Stockholders’ equity: | |
|
| |
|
|
Common stock, $0.0001 par value; 200,000,000 shares authorized; 39,693,524 and 37,142,946 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively | | | 3,956 | | | 3,697 |
Additional paid-in capital | |
| 482,083,670 | |
| 417,337,742 |
Accumulated deficit | |
| (235,771,414) | |
| (186,420,599) |
Accumulated other comprehensive loss, net | |
| (5,038,240) | |
| (5,044,517) |
Total stockholders’ equity | |
| 241,277,972 | |
| 225,876,323 |
Total liabilities and stockholders’ equity | | $ | 257,260,850 | | $ | 245,115,213 |
|
| March 31, 2021 |
|
| December 31, 2020 |
| ||
|
| (unaudited) |
|
|
|
|
| |
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 149,932,387 |
|
| $ | 115,917,807 |
|
Restricted cash |
|
| 34,174 |
|
|
| 34,174 |
|
Total cash, cash equivalents and restricted cash |
|
| 149,966,561 |
|
|
| 115,951,981 |
|
Short-term investments |
|
| 76,574,768 |
|
|
| 100,005,558 |
|
Accounts receivable |
|
| 4,801,428 |
|
|
| 4,610,202 |
|
Tax refund receivable |
|
| 7,898,067 |
|
|
| 7,762,793 |
|
Prepaid expenses and other current assets |
|
| 5,950,999 |
|
|
| 1,926,675 |
|
Total current assets |
|
| 245,191,823 |
|
|
| 230,257,209 |
|
Property and equipment, net |
|
| 5,198,052 |
|
|
| 1,056,920 |
|
Right of use asset |
|
| 866,336 |
|
|
| 903,825 |
|
Intangible assets, net |
|
| 12,879,247 |
|
|
| 12,823,846 |
|
Other assets |
|
| 115,300 |
|
|
| 73,413 |
|
Total assets |
| $ | 264,250,758 |
|
| $ | 245,115,213 |
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
| $ | 418,243 |
|
| $ | 612,293 |
|
Accrued expenses and other current liabilities |
|
| 9,405,649 |
|
|
| 11,408,154 |
|
Total current liabilities |
|
| 9,823,892 |
|
|
| 12,020,447 |
|
Contingent consideration |
|
| 6,270,000 |
|
|
| 5,390,000 |
|
Other long-term liabilities |
|
| 1,719,438 |
|
|
| 1,828,443 |
|
Total liabilities |
|
| 17,813,330 |
|
|
| 19,238,890 |
|
Commitments and contingencies (Note 16) |
|
|
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value; 200,000,000 shares authorized; 38,257,180 and 37,142,946 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively |
|
| 3,810 |
|
|
| 3,697 |
|
Additional paid-in capital |
|
| 462,417,706 |
|
|
| 417,337,742 |
|
Accumulated deficit |
|
| (210,944,707 | ) |
|
| (186,420,599 | ) |
Accumulated other comprehensive loss, net |
|
| (5,039,381 | ) |
|
| (5,044,517 | ) |
Total stockholders’ equity |
|
| 246,437,428 |
|
|
| 225,876,323 |
|
Total liabilities and stockholders’ equity |
| $ | 264,250,758 |
|
| $ | 245,115,213 |
|
The accompanying notes are an integral part of the unaudited consolidated financial statements.
1
ALTIMMUNE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
| | | | | | | | | | | | |
|
| For the Three Months Ended |
| For the Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
| | 2021 |
| 2020 | | 2021 |
| 2020 | ||||
Revenues | | $ | 137,623 | | $ | 721,636 | | $ | 975,139 | | $ | 2,934,330 |
Operating expenses: | |
|
| |
|
| |
|
| |
|
|
Research and development | |
| 13,272,412 | |
| 16,594,250 | |
| 25,150,312 | |
| 23,781,781 |
General and administrative | |
| 3,658,653 | |
| 2,545,356 | |
| 7,480,073 | |
| 4,877,273 |
Impairment loss on construction-in-progress | |
| 8,070,000 | |
| — | |
| 8,070,000 | |
| — |
Total operating expenses | |
| 25,001,065 | |
| 19,139,606 | |
| 40,700,385 | |
| 28,659,054 |
Loss from operations | |
| (24,863,442) | |
| (18,417,970) | |
| (39,725,246) | |
| (25,724,724) |
Other income (expense): | |
|
| |
|
| |
|
| |
|
|
Interest expense | |
| (22,226) | |
| (3,308) | |
| (33,897) | |
| (5,193) |
Interest income | |
| 32,863 | |
| 81,458 | |
| 75,362 | |
| 233,027 |
Other income (expense), net | |
| 26,098 | |
| (5,878) | |
| (7,034) | |
| 19,664 |
Total other income, net | |
| 36,735 | |
| 72,272 | |
| 34,431 | |
| 247,498 |
Net loss before income tax benefit | |
| (24,826,707) | |
| (18,345,698) | |
| (39,690,815) | |
| (25,477,226) |
Income tax benefit | |
| 0 | |
| 1,578,782 | |
| 0 | |
| 4,824,661 |
Net loss | |
| (24,826,707) | |
| (16,766,916) | |
| (39,690,815) | |
| (20,652,565) |
Other comprehensive income (loss) — unrealized gain (loss) on short-term investments | |
| 1,141 | |
| 20,888 | |
| 6,277 | |
| (11,547) |
Comprehensive loss | | $ | (24,825,566) | | $ | (16,746,028) | | $ | (39,684,538) | | $ | (20,664,112) |
Net loss per share, basic and diluted | | $ | (0.60) | | $ | (0.94) | | $ | (0.99) | | $ | (1.25) |
Weighted-average common shares outstanding, basic and diluted | |
| 41,356,643 | |
| 17,886,853 | |
| 40,142,561 | |
| 16,498,719 |
|
| For the Three Months Ended March 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Revenues |
| $ | 837,516 |
|
| $ | 2,212,694 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
Research and development |
|
| 11,877,900 |
|
|
| 7,187,531 |
|
General and administrative |
|
| 3,821,420 |
|
|
| 2,331,917 |
|
Total operating expenses |
|
| 15,699,320 |
|
|
| 9,519,448 |
|
Loss from operations |
|
| (14,861,804 | ) |
|
| (7,306,754 | ) |
Other income (expense): |
|
|
|
|
|
|
|
|
Interest expense |
|
| (11,671 | ) |
|
| (1,885 | ) |
Interest income |
|
| 42,499 |
|
|
| 151,569 |
|
Other (expense) income, net |
|
| (33,132 | ) |
|
| 25,542 |
|
Total other (expense) income, net |
|
| (2,304 | ) |
|
| 175,226 |
|
Net loss before income tax benefit |
|
| (14,864,108 | ) |
|
| (7,131,528 | ) |
Income tax benefit |
|
| — |
|
|
| 3,245,879 |
|
Net loss |
|
| (14,864,108 | ) |
|
| (3,885,649 | ) |
Other comprehensive income (loss) – unrealized gain (loss) on investments |
|
| 5,136 |
|
|
| (32,435 | ) |
Comprehensive loss |
| $ | (14,858,972 | ) |
| $ | (3,918,084 | ) |
Net loss per share, basic and diluted |
| $ | (0.38 | ) |
| $ | (0.26 | ) |
Weighted-average common shares outstanding, basic and diluted |
|
| 38,914,990 |
|
|
| 15,110,585 |
|
The accompanying notes are an integral part of the unaudited consolidated financial statements.
2
ALTIMMUNE, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(unaudited)
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Accumulated | | | | |
| | | | | | | Additional | | | | | Other | | Total | |||
|
| Common Stock |
| Paid-In |
| Accumulated |
| Comprehensive |
| Stockholders’ | |||||||
| | Shares | | Amount | | Capital | | Deficit | | Loss | | Equity | |||||
Balance at December 31, 2020 | | 37,142,946 | | $ | 3,697 | | $ | 417,337,742 | | $ | (186,420,599) | | $ | (5,044,517) | | $ | 225,876,323 |
Stock-based compensation |
| — |
| | — |
| | 1,218,351 |
| | — |
| | — |
| | 1,218,351 |
Vesting of restricted stock awards including withholding, net |
| (6,349) |
| | 1 |
| | (92,507) |
| | — |
| | — |
| | (92,506) |
Issuance of common stock from Employee Stock Purchase Plan | | 8,733 | | | 1 | | | 106,000 | | | — | | | — | | | 106,001 |
Retirement of common stock in exchange for common stock warrant |
| (1,000,000) |
| | (100) |
| | (7,539,900) |
| | (9,660,000) |
| | — |
| | (17,200,000) |
Issuance of common stock warrant in exchange for retirement of common stock |
| — |
| | — |
| | 17,200,000 |
| | — |
| | — |
| | 17,200,000 |
Issuance of common stock in at the market offerings, net | | 2,110,800 | | | 211 | | | 34,178,020 | | | — | | | — | | | 34,178,231 |
Issuance of common stock upon cashless exercise of warrants |
| 1,050 |
| | — |
| | 10,000 |
| | — |
| | — |
| | 10,000 |
Unrealized gain on short-term investments |
| — |
| | — |
| | — |
| | — |
| | 5,136 |
| | 5,136 |
Net loss |
| — |
| | — |
| | — |
| | (14,864,108) |
| | — |
| | (14,864,108) |
Balance at March 31, 2021 |
| 38,257,180 |
| | 3,810 |
| | 462,417,706 |
| | (210,944,707) |
| | (5,039,381) |
| | 246,437,428 |
Stock based compensation |
| — |
| | — |
| | 1,484,829 |
| | — |
| | — |
| | 1,484,829 |
Exercise of stock options | | 38,217 |
| | 4 |
| | 94,425 |
| | — |
| | — |
| | 94,429 |
Vesting of restricted stock awards including withholding, net |
| (7,583) |
| | 1 |
| | (91,122) |
| | — |
| | — |
| | (91,121) |
Issuance of common stock in at the market offerings, net | | 1,405,710 | | | 141 | | | 18,177,832 | | | — | | | — | | | 18,177,973 |
Unrealized gain on short term investments |
| — |
| | — |
| | — |
| | — |
| | 1,141 |
| | 1,141 |
Net loss |
| — |
| | — |
| | — |
| | (24,826,707) |
| | — |
| | (24,826,707) |
Balance at June 30, 2021 |
| 39,693,524 |
| $ | 3,956 |
| $ | 482,083,670 |
| $ | (235,771,414) |
| $ | (5,038,240) |
| $ | 241,277,972 |
|
| Common Stock |
|
| Additional Paid-In |
|
| Accumulated |
|
| Accumulated Other Comprehensive |
|
| Total Stockholders’ |
| |||||||||
| Shares |
|
| Amount |
|
| Capital |
|
| Deficit |
|
| Loss |
|
| Equity |
| |||||||
Balance at December 31, 2020 |
|
| 37,142,946 |
|
| $ | 3,697 |
|
| $ | 417,337,742 |
|
| $ | (186,420,599 | ) |
| $ | (5,044,517 | ) |
| $ | 225,876,323 |
|
Stock-based compensation |
|
| — |
|
|
| — |
|
|
| 1,218,351 |
|
|
| — |
|
|
| — |
|
|
| 1,218,351 |
|
Vesting of restricted stock awards including withholding, net |
|
| (6,349 | ) |
|
| 1 |
|
|
| (92,507 | ) |
|
| — |
|
|
| — |
|
|
| (92,506 | ) |
Issuance of common stock from Employee Stock Purchase Plan |
|
| 8,733 |
|
|
| 1 |
|
|
| 106,000 |
|
|
| — |
|
|
| — |
|
|
| 106,001 |
|
Retirement of common stock in exchange for common stock warrant |
|
| (1,000,000 | ) |
|
| (100 | ) |
|
| (7,539,900 | ) |
|
| (9,660,000 | ) |
|
| — |
|
|
| (17,200,000 | ) |
Issuance of common stock warrant in exchange for retirement of common stock |
|
| — |
|
|
| — |
|
|
| 17,200,000 |
|
|
| — |
|
|
| — |
|
|
| 17,200,000 |
|
Issuance of common stock in at the market offering, net |
|
| 2,110,800 |
|
|
| 211 |
|
|
| 34,178,020 |
|
|
| — |
|
|
| — |
|
|
| 34,178,231 |
|
Issuance of common stock upon cashless exercise of warrants |
|
| 1,050 |
|
|
| — |
|
|
| 10,000 |
|
|
| — |
|
|
| — |
|
|
| 10,000 |
|
Unrealized income on short-term investments |
|
| — |
|
|
| — |
|
|
| — |
|
|
| — |
|
|
| 5,136 |
|
|
| 5,136 |
|
Net loss |
|
| — |
|
|
| — |
|
|
| — |
|
|
| (14,864,108 | ) |
|
| — |
|
|
| (14,864,108 | ) |
Balance at March 31, 2021 |
|
| 38,257,180 |
|
| $ | 3,810 |
|
| $ | 462,417,706 |
|
| $ | (210,944,707 | ) |
| $ | (5,039,381 | ) |
| $ | 246,437,428 |
|
|
| 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 |
|
The accompanying notes are an integral part of the unaudited consolidated financial statements.
3
ALTIMMUNE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWSCHANGES IN STOCKHOLDERS’ EQUITY
(unaudited)
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | Accumulated | | | | |
| | | | | | | Additional | | | | | Other | | Total | |||
|
| Common Stock |
| Paid-In |
| Accumulated |
| Comprehensive |
| Stockholders’ | |||||||
| | Shares | | Amount | | Capital | | Deficit | | Loss | | Equity | |||||
Balance at December 31, 2019 | | 15,312,167 | | $ | 1,508 | | $ | 187,914,916 | | $ | (137,376,122) | | $ | (5,020,156) | | $ | 45,520,146 |
Stock-based compensation |
| — |
| | — |
| | 214,921 |
| | — |
| | — |
| | 214,921 |
Vesting of restricted stock awards including withholding, net |
| (5,974) |
| | 1 |
| | (17,080) |
| | — |
| | — |
| | (17,079) |
Issuance of common stock from Employee Stock Purchase Plan |
| 38,809 |
| | 3 |
| | 56,736 |
| | — |
| | — |
| | 56,739 |
Issuance of common stock upon exercise of warrants |
| 14,500 |
| | 2 |
| | 39,972 |
| | — |
| | — |
| | 39,974 |
Unrealized loss on short-term investments |
| — |
| | — |
| | — |
| | — |
| | (32,435) |
| | (32,435) |
Net loss |
| — |
| | — |
| | — |
| | (3,885,649) |
| | — |
| | (3,885,649) |
Balance at March 31, 2020 |
| 15,359,502 |
| | 1,514 |
| | 188,209,465 |
| | (141,261,771) |
| | (5,052,591) |
| | 41,896,617 |
Stock based compensation |
| — |
| | — |
| | 330,510 |
| | — |
| | — |
| | 330,510 |
Exercise of stock options | | 13,935 | | | 1 | | | 36,174 | | | — | | | — | | | 36,175 |
Vesting of restricted stock awards including withholding, net |
| (5,974) |
| | 1 |
| | (46,390) |
| | — |
| | — |
| | (46,389) |
Issuance of common stock in at the market offerings, net |
| 2,965,144 |
| | 297 |
| | 22,780,432 |
| | — |
| | — |
| | 22,780,729 |
Issuance of common stock upon exercise of warrants |
| 8,221,279 |
| | 822 |
| | 31,269,341 |
| | — |
| | — |
| | 31,270,163 |
Unrealized gain on short term investments |
| — |
| | — |
| | — |
| | — |
| | 20,888 |
| | 20,888 |
Net loss |
| — |
| | — |
| | — |
| | (16,766,916) |
| | — |
| | (16,766,916) |
Balance at June 30, 2020 |
| 26,553,886 |
| $ | 2,635 |
| $ | 242,579,532 |
| $ | (158,028,687) |
| $ | (5,031,703) |
| $ | 79,521,777 |
|
| Three Months Ended March 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
Net loss |
| $ | (14,864,108 | ) |
| $ | (3,885,649 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
|
|
Change in fair value of contingent consideration liability |
|
| 880,000 |
|
|
| 1,750,000 |
|
Stock-based compensation expense |
|
| 1,218,351 |
|
|
| 214,921 |
|
Depreciation and amortization |
|
| 74,298 |
|
|
| 73,356 |
|
Unrealized losses on foreign currency exchange |
|
| 33,376 |
|
|
| 24,939 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
| (191,226 | ) |
|
| (973,557 | ) |
Prepaid expenses and other current assets |
|
| (4,200,624 | ) |
|
| (214,893 | ) |
Accounts payable |
|
| (194,050 | ) |
|
| 911,397 |
|
Accrued expenses and other liabilities |
|
| (2,189,903 | ) |
|
| 1,112,718 |
|
Tax refund receivable |
|
| (135,274 | ) |
|
| (3,360,633 | ) |
Net cash used in operating activities |
|
| (19,569,160 | ) |
|
| (4,347,401 | ) |
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|
Proceeds from sales and maturities of short-term investments |
|
| 30,912,000 |
|
|
| 13,700,000 |
|
Purchases of short-term investments |
|
| (7,476,074 | ) |
|
| (7,099,263 | ) |
Purchases of property and equipment, net |
|
| (4,208,790 | ) |
|
| (18,131 | ) |
Cash paid for internally developed patents |
|
| (62,041 | ) |
|
| (19,390 | ) |
Net cash provided by investing activities |
|
| 19,165,095 |
|
|
| 6,563,216 |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Payments of deferred offering costs |
|
| 134,413 |
|
|
| — |
|
Proceeds from exercises of warrants |
|
| — |
|
|
| 39,974 |
|
Proceeds from issuance of common stock in at the market offering, net |
|
| 34,178,231 |
|
|
| — |
|
Proceeds from issuance of common stock from Employee Stock Purchase Plan |
|
| 106,001 |
|
|
| 56,739 |
|
Net cash provided by financing activities |
|
| 34,418,645 |
|
|
| 96,713 |
|
Net increase in cash and cash equivalents and restricted cash |
|
| 34,014,580 |
|
|
| 2,312,528 |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
| 115,951,981 |
|
|
| 8,996,860 |
|
Cash, cash equivalents and restricted cash at end of period |
| $ | 149,966,561 |
|
| $ | 11,309,388 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|
Fair value of common stock retired in exchange for issuance of common stock warrant |
| $ | 17,200,000 |
|
| $ | — |
|
The accompanying notes are an integral part of the unaudited consolidated financial statements.
4
ALTIMMUNE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
| | | | | | |
|
| Six Months Ended June 30, | ||||
| | 2021 | | 2020 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
| |
|
| |
|
Net loss | | $ | (39,690,815) | | $ | (20,652,565) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
|
| |
|
|
Change in fair value of contingent consideration liability | |
| (120,000) | |
| 13,640,000 |
Impairment loss on construction-in-progress | |
| 8,070,000 | |
| — |
Stock-based compensation expense | |
| 2,703,180 | |
| 545,431 |
Depreciation and amortization | |
| 149,388 | |
| 146,045 |
Unrealized losses (gains) on foreign currency exchange | |
| 10,108 | |
| (18,851) |
Changes in operating assets and liabilities: | |
|
| |
|
|
Accounts receivable | |
| (93,672) | |
| (160,920) |
Prepaid expenses and other current assets | |
| (7,155,593) | |
| (343,337) |
Accounts payable | |
| 808,899 | |
| 176,985 |
Accrued expenses and other liabilities | |
| (4,052,095) | |
| 26,761 |
Tax refund receivable | |
| 874,812 | |
| (4,877,851) |
Net cash used in operating activities | |
| (38,495,788) | |
| (11,518,302) |
CASH FLOWS FROM INVESTING ACTIVITIES: | |
|
| |
|
|
Proceeds from sales and maturities of short-term investments | |
| 63,712,000 | |
| 24,900,000 |
Purchases of short-term investments | |
| (7,424,005) | |
| (12,118,563) |
Purchases of property and equipment, net | |
| (11,900,198) | |
| (40,601) |
Cash paid for internally developed patents | |
| (145,546) | |
| (79,336) |
Net cash provided by investing activities | |
| 44,242,251 | |
| 12,661,500 |
CASH FLOWS FROM FINANCING ACTIVITIES: | |
|
| |
|
|
Payments of deferred offering costs | | | (118,522) | | | (179,743) |
Proceeds from exercises of warrants | |
| — | |
| 31,310,137 |
Proceeds from issuance of common stock in at the market offerings, net | |
| 52,356,204 | |
| 22,780,729 |
Proceeds from issuance of notes payable | |
| — | |
| 632,000 |
Proceeds from issuance of common stock from Employee Stock Purchase Plan | |
| 106,001 | |
| 56,739 |
Proceeds from exercises of stock options | |
| 94,429 | |
| 36,175 |
Net cash provided by financing activities | |
| 52,438,112 | |
| 54,636,037 |
Net increase in cash and cash equivalents and restricted cash | |
| 58,184,575 | |
| 55,779,235 |
Cash, cash equivalents and restricted cash at beginning of period | |
| 115,951,981 | |
| 8,996,860 |
Cash, cash equivalents and restricted cash at end of period | | $ | 174,136,556 | | $ | 64,776,095 |
The accompanying notes are an integral part of the unaudited consolidated financial statements.
5
ALTIMMUNE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Nature of Business and Basis of Presentation
Nature of Business
Altimmune, Inc., headquartered in Gaithersburg, Maryland, United States, together with its subsidiaries (collectively, the “Company” or “Altimmune��“Altimmune”) is a clinical stage biopharmaceutical company incorporated under the laws of the State of Delaware.
The Company is focused on developing intranasal vaccines, immune modulating therapies, and treatments for obesity and liver disease.diseases. The Company’s diverse pipeline includes next generation peptide therapeutics for obesity, NASH (ALT-801) and chronic hepatitis B (HepTcell); proprietary intranasal vaccines for COVID-19 (AdCOVID), anthrax (NasoShield)vaccines; and influenza (NasoVAX); an intranasal immune modulating therapeutic for COVID-19the coronavirus disease (“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.
On June 29, 2021, the Company announced the discontinuation of the development program for the COVID-19 vaccine candidate, AdCOVID following the Company’s review of findings from the Phase 1 clinical trial, and in view of the highly competitive COVID-19 landscape. The Company is currently evaluating options for the future development of T-COVID as a result of enrollment challenges due to the effective rollout in the United States of authorized COVID-19 vaccines and decreasing incidence of the disease.
Basis of Presentation
The accompanying unaudited consolidated financial statements are prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2020 included in the Annual Report on Form 10-K which was filed with the SEC on February 25, 2021. In the opinion of management, the Company has prepared the accompanying unaudited consolidated financial statements on the same basis as the audited consolidated financial statements, and these consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year 2021 or any future years or periods.
The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and liabilities that might be necessary should we be unable to continue as a going concern.
2. Summary of Significant Accounting Policies
During the threesix months ended March 31,June 30, 2021, there have been no significant changes to the Company’s summary of significant accounting policies contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the SEC, except for the recently adopted accounting standard for income taxes.
6
Use of Estimates
The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The extent to which the COVID-19 pandemic may directly or indirectly impact the Company’s business, financial condition, and results of operations is highly uncertain and subject to change. The Company considered the potential impact of the COVID-19 pandemic on the Company’s estimates and assumptions and determined that there was not a material impact to the Company’s unaudited consolidated financial statements as of and for the three and six months ended March 31,June 30, 2021. However, actual results could differ from those estimates and there may be changes to the Company’s estimates in future periods.
Recently Issued Accounting Pronouncements - Adopted
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes (“ASU No. 2019-12”). ASU 2019-12 amends the approaches and methodologies in accounting for income taxes during interim periods and makes changes to certain income tax classifications. The new standard allows exceptions to the use of the incremental approach for intra-period tax allocation, when there is a loss from continuing operations and income or a gain from other items, and to the general methodology for calculating income taxes in an interim period, when a year-to-date loss exceeds the anticipated loss for the year. The standard also requires franchise or similar taxes partially based on income to be reported as income tax and the effects of enacted changes in tax laws or rates to be included in the annual effective tax rate computation from the date of enactment. Lastly, in any future acquisition, the Company would be required to evaluate when the step-up in the tax basis of
goodwill is part of the business combination and when it should be considered a separate transaction. The Company adopted the standard as of January 1, 2021 and has evaluated the effects of this standard and determined that the adoption did not have a material impact on the Company’s consolidated financial statements.
3. Fair Value Measurements
The Company’s assets and liabilities measured at fair value on a recurring basis at March 31,June 30, 2021 consisted of the following:
|
| Fair Value Measurement at March 31, 2021 |
| |||||||||||||||||||||||||
|
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||||||||||||||
| | | | | | | | | | | | | ||||||||||||||||
| | Fair Value Measurement at June 30, 2021 | ||||||||||||||||||||||||||
|
| Total |
| Level 1 |
| Level 2 |
| Level 3 | ||||||||||||||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | |
Cash equivalents - money market funds |
| $ | 13,962,902 |
|
| $ | 13,962,902 |
|
| $ | — |
|
| $ | — |
| | $ | 46,865,390 | | $ | 46,865,390 | | $ | — | | $ | — |
Short-term investments |
|
| 76,574,768 |
|
|
| — |
|
|
| 76,574,768 |
|
|
| — |
| |
| 43,723,840 | |
| — | |
| 43,723,840 | |
| — |
Total |
|
| 90,537,670 |
|
|
| 13,962,902 |
|
|
| 76,574,768 |
|
|
| — |
| | | 90,589,230 | | | 46,865,390 | | | 43,723,840 | | | — |
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| | | | | | | | | | | | |
Contingent consideration liability (see Note 8) |
|
| 6,270,000 |
|
|
| — |
|
|
| — |
|
|
| 6,270,000 |
| |
| 5,270,000 | |
| — | |
| — | |
| 5,270,000 |
Total |
| $ | 6,270,000 |
|
| $ | — |
|
| $ | — |
|
| $ | 6,270,000 |
| | $ | 5,270,000 | | $ | — | | $ | — | | $ | 5,270,000 |
The Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2020 consisted of the following:
| | | | | | | | | | | | |
| | Fair Value Measurement at December 31, 2020 | ||||||||||
|
| Total |
| Level 1 |
| Level 2 |
| Level 3 | ||||
Assets: | | | | | | | | | | | | |
Cash equivalents - money market funds | | $ | 90,389,473 |
| $ | 90,389,473 |
| $ | — |
| $ | — |
Short-term investments | |
| 100,005,558 | |
| — | |
| 100,005,558 | |
| — |
Total | | | 190,395,031 | | | 90,389,473 | | | 100,005,558 | | | — |
Liabilities: | | | | | | | | | | | | |
Contingent consideration liability (see Note 8) | |
| 5,390,000 | |
| — | |
| — | |
| 5,390,000 |
Warrant liability | |
| 10,000 | |
| — | |
| — | |
| 10,000 |
Total | | $ | 5,400,000 | | $ | — | | $ | — | | $ | 5,400,000 |
|
| Fair Value Measurement at December 31, 2020 |
| |||||||||||||
|
| Total |
|
| Level 1 |
|
| Level 2 |
|
| Level 3 |
| ||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents - money market funds |
| $ | 90,389,473 |
|
| $ | 90,389,473 |
|
| $ | — |
|
| $ | — |
|
Short-term investments |
|
| 100,005,558 |
|
|
| — |
|
|
| 100,005,558 |
|
|
| — |
|
Total |
|
| 190,395,031 |
|
|
| 90,389,473 |
|
|
| 100,005,558 |
|
|
| — |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent consideration liability (see Note 8) |
|
| 5,390,000 |
|
|
| — |
|
|
| — |
|
|
| 5,390,000 |
|
Warrant liability |
|
| 10,000 |
|
|
| — |
|
|
| — |
|
|
| 10,000 |
|
Total |
| $ | 5,400,000 |
|
| $ | — |
|
| $ | — |
|
| $ | 5,400,000 |
|
7
The warrant liability is included in Other long-term liabilities in the consolidated balance sheet at December 31, 2020. The warrant liability was valued using the Monte Carlo simulation valuation model with Level 3 inputs.
Short-term investments have been initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third party pricing services or other market observable data (Level 2). The pricing services 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 March 31,June 30, 2021 as shown below:
| | | | | | | | | |
| | June 30, 2021 | |||||||
| | | | Unrealized Gain | | | |||
| | Amortized Cost | | (Loss) | | Market Value | |||
United States treasury securities |
| $ | 8,005,129 |
| $ | 431 |
| $ | 8,005,560 |
Commercial paper and corporate debt securities | | | 8,599,717 | | | 1,290 | | | 8,601,007 |
Asset backed securities | |
| 2,096,332 | |
| 202 | |
| 2,096,534 |
Certificate of deposit | |
| 25,020,739 | |
| — | |
| 25,020,739 |
Total | | $ | 43,721,917 | | $ | 1,923 | | $ | 43,723,840 |
|
| March 31, 2021 |
| |||||||||
|
| Amortized Cost |
|
| Unrealized Gain (Loss) |
|
| Market Value |
| |||
United States treasury securities |
| $ | 16,029,965 |
|
| $ | 2,995 |
|
| $ | 16,032,960 |
|
Commercial paper and corporate debt securities |
|
| 33,412,043 |
|
|
| (1,935 | ) |
|
| 33,410,108 |
|
Asset backed securities |
|
| 2,111,239 |
|
|
| (278 | ) |
|
| 2,110,961 |
|
Certificate of deposit |
|
| 25,020,739 |
|
|
| — |
|
|
| 25,020,739 |
|
Total |
| $ | 76,573,986 |
|
| $ | 782 |
|
| $ | 76,574,768 |
|
Short-term investments had quoted prices at December 31, 2020 as shown below:
|
| December 31, 2020 |
| ||||||||||||||||||
| Amortized Cost |
|
| Unrealized Gain (Loss) |
|
| Market Value |
| |||||||||||||
| | | | | | | | | | ||||||||||||
| | December 31, 2020 | |||||||||||||||||||
| | | | Unrealized Gain | | | | ||||||||||||||
| | Amortized Cost | | (Loss) | | Market Value | |||||||||||||||
United States treasury securities |
| $ | 20,052,757 |
|
| $ | 1,843 |
|
| $ | 20,054,600 |
|
| $ | 20,052,757 |
| $ | 1,843 |
| $ | 20,054,600 |
Commercial paper and corporate debt securities |
|
| 47,521,344 |
|
|
| (5,440 | ) |
|
| 47,515,904 |
| | | 47,521,344 | | | (5,440) | | | 47,515,904 |
Asset backed securities |
|
| 7,414,619 |
|
|
| (757 | ) |
|
| 7,413,862 |
| |
| 7,414,619 | |
| (757) | |
| 7,413,862 |
Certificate of deposit |
|
| 25,021,192 |
|
|
| — |
|
|
| 25,021,192 |
| | | 25,021,192 | | | — | | | 25,021,192 |
Total |
| $ | 100,009,912 |
|
| $ | (4,354 | ) |
| $ | 100,005,558 |
| | $ | 100,009,912 | | $ | (4,354) | | $ | 100,005,558 |
The fair value of contingent payments classified as a liability is based on the regulatory milestones described in Note 8 and estimated using the Monte Carlo simulation valuation model with Level 3 inputs.
The assumptions used to estimate the fair value of contingent payments that are classified as a liability at March 31,June 30, 2021 include the following significant unobservable inputs:
| | | | |
Unobservable input | | Value or Range |
| Weighted Average |
Expected volatility |
| 94.6% | | 94.6% |
Risk-free interest rate |
| 0.07% | | 0.07% |
Cost of capital |
| 30% | | 30% |
Discount for lack of marketability |
| 11%‑15% | | 13% |
Probability of payment |
| 72% | | 72% |
Projected year of payment |
| 2022 |
| 2022 |
Unobservable input |
| Value or Range |
|
| Weighted Average |
|
Expected volatility |
| 117.4% |
|
| 117.4% |
|
Risk-free interest rate |
| 0.09% |
|
| 0.09% |
|
Cost of capital |
| 30% |
|
| 30% |
|
Discount for lack of marketability |
| 16%-19% |
|
| 18% |
|
Probability of payment |
| 63% |
|
| 63% |
|
Projected year of payment |
| 2022 |
|
| 2022 |
|
If applicable, the Company 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 no0 transfers into and out of any of the levels of the fair value hierarchy as of March 31,June 30, 2021 and December 31, 2020.
Separate disclosure is required for assets and liabilities measured at fair value on a recurring basis from those measured at fair value on a non-recurring basis. Assets recorded at fair value on a non-recurring basis, such as property and equipment and intangible assets are recognized at fair value when they are impaired. As of March 31,June 30, 2021, the Company recorded a non-cash impairment charge to property and equipment, net on a non-recurring basis (see below). As of December 31, 2020, the Company had no0 significant assets or liabilities that were measured at fair value on a non-recurring basis.
8
Property and Equipment, Net
During the three and six months ended June 30, 2021, the Company recorded a non-cash impairment charge of $8.1 million to property and equipment, net. The fair value of the impaired assets was $3.3 million at June 30, 2021. At June 30, 2021, the fair value of the assets related to construction-in-progress were primarily determined utilizing the cost approach, which determines the current replacement cost of the asset being appraised and then deducts for the loss in value caused by contractual restrictions on the asset, physical deterioration, functional obsolescence, and economic obsolescence the amount required to replace the asset as if new and adjusts to reflect usage. The fair value measurement is considered Level 3 measurements within the valuation hierarchy.
4. Property and Equipment, Net
Property and equipment, net consists of the following:
|
| March 31, 2021 |
|
| December 31, 2020 |
| ||
Furniture, fixtures and equipment |
| $ | 185,878 |
|
| $ | 125,538 |
|
Laboratory equipment |
|
| 1,041,752 |
|
|
| 959,585 |
|
Computers and telecommunications |
|
| 250,516 |
|
|
| 220,316 |
|
Software |
|
| 64,409 |
|
|
| 64,409 |
|
Leasehold improvements |
|
| 1,415,608 |
|
|
| 1,285,883 |
|
Construction-in-progress |
|
| 4,000,000 |
|
|
| — |
|
Property and equipment, at cost |
|
| 6,958,163 |
|
|
| 2,655,731 |
|
Less: accumulated depreciation and amortization |
|
| (1,760,111 | ) |
|
| (1,598,811 | ) |
Property and equipment, net |
| $ | 5,198,052 |
|
| $ | 1,056,920 |
|
| | | | | | |
| | June 30, 2021 | | December 31, 2020 | ||
Furniture, fixtures and equipment |
| $ | 190,117 |
| $ | 125,538 |
Laboratory equipment | |
| 1,041,749 | |
| 959,585 |
Computers and telecommunications | |
| 270,755 | |
| 220,316 |
Software | |
| 94,409 | |
| 64,409 |
Leasehold improvements | |
| 1,682,538 | |
| 1,285,883 |
Construction-in-progress | | | 3,300,000 | | | — |
Property and equipment, at cost | |
| 6,579,568 | |
| 2,655,731 |
Less: accumulated depreciation and amortization | |
| (1,828,558) | |
| (1,598,811) |
Property and equipment, net | | $ | 4,751,010 | | $ | 1,056,920 |
As of March 31,June 30, 2021, construction-in-progress primarily includes costs related to the procurement of long-lead equipment and build out of the suite associated with the Company'sCompany’s manufacturing collaboration with Lonza Houston, Inc. (“Lonza”) describedfor the manufacture of AdCOVID or other adenovirus-based vaccines. Under the agreement, the Company has committed approximately $23.0 million to Lonza to procure long-lead equipment and construct a dedicated manufacturing suite for clinical and commercial production of adenovirus-based vaccines. This work is expected to be completed by the end of 2021.
In June 2021, the Company announced the discontinuation of further development of AdCOVID following the Company’s review of findings from the Phase 1 clinical trial. Construction continues at Lonza, and the Company is currently assessing its strategic options with respect to the suite. The Company’s current expectation is that, more likely than not, the suite will be disposed of significantly before the end of its previously estimated useful life. As of June 30, 2021, the Company recorded $8.1 million of impairment loss on construction-in-progress in Note 16. the accompanying unaudited consolidated statements of operations and comprehensive loss, with $3.3 million remaining capitalized in the unaudited consolidated balance sheet, as it represents expected recoveries available to the Company under the construction contract.
Depreciation expense related to property and equipment was approximately $67,658$68,450 and $59,505,$60,664 for the three months ended March 31,June 30, 2021 and 2020, respectively, and $136,108 and $120,169 for the six months ended June 30, 2021 and 2020, respectively.
9
5. Intangible Assets
The Company’s intangible assets consistedconsists of the following:
| | | | | | | | | | | |
| | June 30, 2021 | |||||||||
| | | | Gross | | | | | | | |
| | Estimated | | Carrying | | Accumulated | | Net Book | |||
| | Useful Lives | | Value | | Amortization | | Value | |||
Internally developed patents |
| 6–20 years |
| $ | 1,030,333 |
| $ | (493,188) |
| $ | 537,145 |
Acquired licenses |
| 16–20 years | |
| 285,000 | |
| (285,000) | |
| — |
Total intangible assets subject to amortization |
|
| |
| 1,315,333 | |
| (778,188) | |
| 537,145 |
IPR&D assets |
| Indefinite | |
| 12,418,967 | |
| — | |
| 12,418,967 |
Total |
|
| | $ | 13,734,300 | | $ | (778,188) | | $ | 12,956,112 |
|
| March 31, 2021 |
| ||||||||||||||||||||||
|
| Estimated Useful Lives |
| Gross Carrying Value |
|
| Accumulated Amortization |
|
| Net Book Value |
| ||||||||||||||
| | | | | | | | | | | | ||||||||||||||
| | December 31, 2020 | |||||||||||||||||||||||
| | | | Gross | | | | | | | |||||||||||||||
| | Estimated | | Carrying | | Accumulated | | Net Book | |||||||||||||||||
|
| Useful Lives |
| Value |
| Amortization |
| Value | |||||||||||||||||
Internally developed patents |
| 6-20 years |
| $ | 946,828 |
|
| $ | (486,548 | ) |
| $ | 460,280 |
|
| 6–10 years | | $ | 884,787 | | $ | (479,908) | | $ | 404,879 |
Acquired licenses |
| 16-20 years |
|
| 285,000 |
|
|
| (285,000 | ) |
|
| — |
|
| 16–20 years | |
| 285,000 | |
| (285,000) | |
| — |
Total intangible assets subject to amortization |
|
|
|
| 1,231,828 |
|
|
| (771,548 | ) |
|
| 460,280 |
|
|
| |
| 1,169,787 | |
| (764,908) | |
| 404,879 |
IPR&D assets |
| Indefinite |
|
| 12,418,967 |
|
|
| — |
|
|
| 12,418,967 |
|
| Indefinite | |
| 12,418,967 | |
| — | |
| 12,418,967 |
Total |
|
|
| $ | 13,650,795 |
|
| $ | (771,548 | ) |
| $ | 12,879,247 |
|
|
| | $ | 13,588,754 | | $ | (764,908) | | $ | 12,823,846 |
|
| December 31, 2020 |
| |||||||||||
| Estimated Useful Lives |
| Gross Carrying Value |
|
| Accumulated Amortization |
|
| Net Book Value |
| ||||
Internally developed patents |
| 6-10 years |
| $ | 884,787 |
|
| $ | (479,908 | ) |
| $ | 404,879 |
|
Acquired licenses |
| 16-20 years |
|
| 285,000 |
|
|
| (285,000 | ) |
|
| — |
|
Total intangible assets subject to amortization |
|
|
|
| 1,169,787 |
|
|
| (764,908 | ) |
|
| 404,879 |
|
IPR&D assets |
| Indefinite |
|
| 12,418,967 |
|
|
| — |
|
|
| 12,418,967 |
|
Total |
|
|
| $ | 13,588,754 |
|
| $ | (764,908 | ) |
| $ | 12,823,846 |
|
Amortization expense of intangible assets was $6,640 and $13,851$12,025 for the three months ended March 31,June 30, 2021 and 2020, respectively, and $13,280 and $25,876 for the six months ended June 30, 2021 and 2020, respectively. As of March 31,June 30, 2021, the weighted average amortization period remaining for intangible assets was 12.312.2 years. Amortization expense was classified as research and development expenses in the accompanying unaudited consolidated statements of operations and comprehensive loss.
6. Operating Leases
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 March 31,June 30, 2021 under all of the Company’s operating leases was $123,734 and $253,872, respectively. Rent expense during the three and six months ended June 30, 2020 under all of the Company’s operating leases was $130,138$86,295 and $87,599,$173,894, respectively. Rent expense includes short-term leases and variable lease costs that are not included in the lease obligation.
Short-term leases are leases having a term of twelve months or less. The Company recognizes short-term leases on a straight-line basis and does not record a related lease asset or liability for such leases.
The office space leases provide for increases in future minimum annual rental payments as defined in the lease agreements. The office space lease also includes an option to renew the lease as of the end of the term. The Company has determined that the lease renewal option is not reasonably certain of being exercised.
The cash paid for operating lease liabilities for the three and six months ended March 31,June 30, 2021 was $118,843 and $236,197, and for the three and six months ended June 30, 2020 was $117,354$96,770 and $95,714,$192,484, respectively.
Supplemental other information related to the operating leases balance sheet information wasis as follows:
| | | | | | | |
| | June 30, 2021 | | December 31, 2020 |
| ||
Operating lease obligations (see Note 7 and 9) |
| $ | 1,651,217 |
| $ | 1,824,840 | |
Operating lease right-of-use assets (included in "Other assets" in Balance Sheet) | | $ | 827,273 | | $ | 903,825 | |
Weighted-average remaining lease term (years) | |
| 3.8 | |
| 4.3 | |
Weighted-average discount rate | |
| 7.3 | % |
| 7.3 | % |
|
| March 31, 2021 |
|
| December 31, 2020 |
| ||
Operating lease obligations (see Note 7 and 9) |
| $ | 1,739,559 |
|
| $ | 1,824,840 |
|
Operating lease right-of-use assets |
| $ | 866,336 |
|
| $ | 903,825 |
|
Weighted-average remaining lease term (years) |
|
| 4.1 |
|
|
| 4.3 |
|
Weighted-average discount rate |
|
| 7.3 | % |
|
| 7.3 | % |
10
7. Accrued Expenses
Accrued expenses and other current liabilities consist of the following:
|
| March 31, 2021 |
|
| December 31, 2020 |
| ||||||||
| | | | | | | ||||||||
| | June 30, 2021 | | December 31, 2020 | ||||||||||
Accrued professional services |
| $ | 612,212 |
|
| $ | 1,350,194 |
|
| $ | 489,836 |
| $ | 1,350,194 |
Accrued payroll and employee benefits |
|
| 1,182,658 |
|
|
| 2,351,599 |
| |
| 1,661,708 | |
| 2,351,599 |
Accrued interest |
|
| 13,744 |
|
|
| 13,016 |
| |
| 16,456 | |
| 13,016 |
Accrued research and development |
|
| 7,211,778 |
|
|
| 7,316,876 |
| |
| 5,074,045 | |
| 7,316,876 |
Lease obligation, current portion (see Note 6) |
|
| 365,504 |
|
|
| 356,716 |
| |
| 374,502 | |
| 356,716 |
Deferred revenue |
|
| 19,753 |
|
|
| 19,753 |
| |
| 57,989 | |
| 19,753 |
Total accrued expenses |
| $ | 9,405,649 |
|
| $ | 11,408,154 |
| | $ | 7,674,536 | | $ | 11,408,154 |
8. Contingent Consideration
The Company entered into an Agreement and Plan of Merger and Reorganization, dated July 8, 2019, by and among the Company, Springfield Merger Sub, Inc., Springfield Merger Sub, LLC, Spitfire Pharma, Inc. and David Collier, as the Stockholder Representative (the “Spitfire Merger Agreement”) to acquire all of the equity interests of Spitfire Pharma, Inc. (“Spitfire”). Spitfire was a privately held, preclinical pharmaceutical company developing a novel dual GLP-1/glucagon receptor 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 as defined in the agreement.
The acquisition of Spitfire was accounted for as an asset acquisition instead of a business combination because substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable asset or group of similar identifiable assets, and therefore, the asset was not considered a business. The Company expensed the acquired intellectual property as of the acquisition date as in-process research and development with no alternative future uses.
The Spitfire Merger Agreement also includes future contingent payments up to $88.0 million in cash and shares of the Company’s common stock as follows (each, a “Milestone Event”):
● | a one-time payment of $5.0 million (the “IND Milestone Consideration Amount”) within sixty days of the submission of an Investigational New Drug Application (“IND”) to the United States Food and Drug Administration (the “FDA”) or other applicable governmental authority in a foreign jurisdiction, which IND has not been rejected or placed on clinical hold by the FDA or such applicable foreign governmental authority within time specified in the Merger Agreement; |
● | a one-time payment of $3.0 million (the “Phase 2 Milestone Consideration Amount” and together with the IND Milestone Consideration Amount, the “Regulatory Milestones”) within sixty days of the initiation of a Phase 2 clinical trial of a product candidate anywhere in the world; and |
● | payments of up to $80.0 million upon the achievement of specified worldwide net sales (the “Sales Milestones”) of all products developed using the technology acquired in the License Agreement within ten years following the approval of a new drug application filed with the FDA. |
a one-time payment of $5.0 million (the “IND Milestone Consideration Amount”) within sixty days of the submission of an Investigational New Drug Application (“IND”) to the United States Food and Drug Administration (the “FDA”) or other applicable governmental authority in a foreign jurisdiction, which IND has not been rejected or placed on clinical hold by the FDA or such applicable foreign governmental authority within time specified in the Merger Agreement;
a one-time payment of $3.0 million (the “Phase 2 Milestone Consideration Amount” and together with the IND Milestone Consideration Amount, the “Regulatory Milestones”) within sixty days of the initiation of a Phase 2 clinical trial of a product candidate anywhere in the world; and
payments of up to $80.0 million upon the achievement of specified worldwide net sales (the “Sales Milestones”) of all products developed using the technology acquired in the License Agreement within ten years following the approval of a new drug application filed with the FDA.
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 any shares issued in consideration for the IND Milestone Consideration Amount will be determined based on lower of (A) the average of the closing prices of our Common Stock
11
as reported on the Nasdaq Global Market for the twenty (20) consecutive trading days prior to 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 of the occurrence of the Phase 2 Milestone Event or (B) $3.54.
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 (“ASC 480”). 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. 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.
The Company estimates the future contingent consideration for the Regulatory Milestones based upon a Monte Carlo simulation valuation model that is risk adjusted based on the probability of achieving the milestones and a discount for lack of marketability. The Company remeasures the fair value of the contingent consideration at each reporting period. During the fourth quarter of 2020, the Company achieved the IND Milestone and paid the obligation in shares according to the calculation above. Below is a summary of the contingent consideration activity:
|
| Three Months Ended March 31, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Beginning balance |
| $ | 5,390,000 |
|
| $ | 2,750,000 |
|
Change in fair value |
|
| 880,000 |
|
|
| 1,750,000 |
|
Ending balance |
| $ | 6,270,000 |
|
| $ | 4,500,000 |
|
| | | | | | |
| | Six Months Ended June 30, | ||||
| | 2021 | | 2020 | ||
Beginning balance |
| $ | 5,390,000 |
| $ | 2,750,000 |
Change in fair value | |
| (120,000) | |
| 13,640,000 |
Ending balance | | $ | 5,270,000 | | $ | 16,390,000 |
As of March 31,June 30, 2021, the decrease in fair value was primarily attributable to a decrease in the closing share price of the Company’s common stock, partially offset by an increase in the probability of milestone achievement. As of June 30, 2020, the increase in fair value was primarily attributable to an increase in the closing share price of the Company’s common stock and in the probability of milestone achievement. As of March 31, 2020, the increase in fair value was primarily due to an increase in the probability of milestone achievement. Any changes in fair value have been recorded within research and development expense during the respective periods presented.
9. Other Long-Term Liabilities
The Company’s other long-term liabilities are summarized as follows:
|
| March 31, 2021 |
|
| December 31, 2020 |
| ||||||||
| | | | | | | ||||||||
| | June 30, 2021 | | December 31, 2020 | ||||||||||
Lease obligation, long-term portion (see Note 6) |
| $ | 1,374,055 |
|
| $ | 1,468,124 |
|
| $ | 1,276,715 |
| $ | 1,468,124 |
Conditional economic incentive grants |
|
| 250,000 |
|
|
| 250,000 |
| |
| 250,000 | |
| 250,000 |
Other |
|
| 95,383 |
|
|
| 110,319 |
| |
| 90,435 | |
| 110,319 |
Total other long-term liabilities |
| $ | 1,719,438 |
|
| $ | 1,828,443 |
| | $ | 1,617,150 | | $ | 1,828,443 |
10. Common Stock
Public Offering
On July 16, 2020, the Company offered and sold (i) 3,369,564 shares of common stock, at a price to the public of $23.00 per share, and (ii) pre-funded warrants of the Company to purchase 1,630,436 shares of common stock at an exercise price equal to $0.0001 per share (the “Pre-Funded Warrants”), at a price to the public of $22.9999 per share of common stock underlying the Pre-Funded Warrants (equal to the public offering price per share of Common Stock, minus the exercise price of each Pre-Funded Warrant). The Pre-Funded Warrants are exercisable at any time, provided that each Pre-Funded Warrant holder will be prohibited from exercising such Pre-Funded Warrants into shares of the Company’s common stock if, as a result of such exercise, the holder, together with its affiliates, would own more than 4.99% of the total number of shares of the Company’s common stock then issued and outstanding, which percentage may change at the
12
holders’ election to any other number less than or equal to 19.99% upon 61 days’ notice to the Company. The gross proceeds of this offering were approximately $132.2 million, which includes the exercise in full of the underwriters’ option to purchase an additional 750,000 shares of common stock, before deducting underwriting discounts and commissions and offering expenses during the third quarter of 2020. The net proceeds of this offering were approximately $124.0 million, after deducting underwriting discounts and commissions and offering expenses payable by the Company.
The Company has assessed the Pre-Funded Warrants for appropriate equity or liability classification and determined that the Pre-Funded Warrants are freestanding instruments that do not meet the definition of a liability pursuant to ASC 480 and do not meet the definition of a derivative pursuant to FASB Accounting Standards Codification Topic 815, Derivatives and Hedging (“ASC 815”). The Pre-Funded Warrants are indexed to the Company’s common stock and meet all other conditions for equity classification under ASC 480 and ASC 815. Accordingly, the Pre-Funded Warrants are classified as equity and are accounted for as a component of additional paid-in capital at the time of issuance. As of March 31,June 30, 2021, no0 Pre-Funded Warrants were exercised.
At-the-Market Offerings
On February 25, 2021, the Company entered into an Equity Distribution Agreement (the “2021 Agreement”) with Piper Sandler & Co., Evercore Group L.L.C., and B. Riley Securities, Inc., serving as sales agents (the “Sales Agents”) with respect to an at-the-market offeringofferings program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $125.0 million (the “Shares”) through the Sale Agents (the “2021 Offering”). Any Shares offered and sold in the 2021 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 December 31, 2020, which was declared effective on January 11, 2021, the prospectus supplement relating to the 2021 Offering filed with the SEC on February 25, 2021 and any applicable additional prospectus supplements related to the 2021 Offering that form a part of the Registration Statement.
As of March 31,June 30, 2021, the Company has sold 2,110,8003,516,510 shares of Common Stock under the 2021 Agreement resulting in approximately $34.2$52.4 million in net proceeds, with $89.7$70.9 million remaining available to be sold under the 2021 Agreement. As of March 31,June 30, 2021, the Company recorded approximately $0.1 million of offering costs which offset the proceeds received from the shares sold through March 31,June 30, 2021 and recognized approximately $0.1 million of deferred offering costs which will offset future proceeds received under the 2021 Agreement.
On March 27, 2020, the Company entered into an Equity Distribution Agreement (the “2020 Agreement”) with JMP Securities LLC, serving as placement agent (the “Placement Agent”) with respect to an at-the-market offeringofferings program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $50.0 million (the “Shares”) through the Placement Agent (the “2020 Offering”). Any Shares offered and sold in the 2020 Offering were issued pursuant to the Company’s Registration Statement on Form S-3 filed with the SEC on April 4, 2019, which was declared effective on April 12, 2019, the prospectus supplement relating to the 2020 Offering filed with the SEC on March 27, 2020 and any applicable additional prospectus supplements related to the 2020 Offering that form a part of the Registration Statement. The aggregate market value of Shares eligible for sale in the 2020 Offering and under the 2020 Agreement were subject to the limitations of General Instruction I.B.6 of Form S-3, to the extent required under such instruction. The Company offered Shares having an aggregate offering price of $18.9 million pursuant to the prospectus supplement filed with the SEC on March 27, 2020. On June 1, 2020, the Company filed an amendment to the 2020 Agreement which amended the prospectus supplement dated March 27, 2020 to increase the aggregate offering price to $50.0 million.No As of June 30, 2020, the Company sold 2,965,144 shares of Common Stock under the amended 2020 Agreement resulting in $22.8 million in net proceeds. As of June 30, 2021, the 2020 Agreement was fully utilized and 0 Shares were sold under the 2020 Agreement during the three and six months ended March 31, 2020. As of March 31, 2021, the 2020 Agreement was fully utilized and no Shares were sold under the 2020 Agreement during the three months ended March 31,June 30, 2021.
On February 25, 2021, the Company entered into an exchange agreement (the “Exchange Agreement”) with an Investor and its affiliates (the “Exchanging Stockholders”), pursuant to which the Company exchanged an aggregate of 1,000,000 shares of the Company’s common stock, par value $0.0001 per share, owned by the Exchanging Stockholders
13
for pre-funded warrants (the “Exchange Warrants”) to purchase an aggregate of 1,000,000 shares of common stock (subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Exchange Warrants), with an exercise price of $0.0001 per share. The Exchange Warrants do not expire and are exercisable at any time except that the Exchange Warrants cannot be exercised by the Exchanging Stockholders if, after giving effect thereto, the Exchanging Stockholders would beneficially own more than 9.99% of the Company’s common stock, subject to certain exceptions. In accordance with FASB Accounting Standards Codification Topic 505, Equity, the
Company recorded the retirement of the common stock exchanged as a reduction of common shares outstanding and a corresponding debit to additional paid-in-capital and accumulated deficit at the fair value of the Exchange Warrants on the issuance date. The Exchange Warrants arewere classified as equity in accordance with ASC 480 and the fair value of the Exchange Warrants was recorded as a credit to additional paid-in-capital and is not subject to remeasurement. The Company determined that the fair value of the Exchange Warrants is substantially similar to the fair value of the retired shares on the issuance date due to the negligible exercise price for the Exchange Warrants. As of March 31,June 30, 2021, noneNaN of the Exchange Warrants have been exercised.
11. Warrants
A summary of warrant activity during the threesix months ended March 31,June 30, 2021 is as follows:
As of 12. Stock-Based Compensation Stock Options The Company’s stock option awards generally vest over four years and typically have a contractual life of ten years. At Information related to stock options outstanding at
Restricted Stock At
During the six months ended June 30, 2021, the Company granted 2019 Employee Stock Purchase Plan Under the Employee Stock Purchase Plan, employees purchased 8,733 shares for $0.1 million during the Stock-based Compensation Expense Stock-based compensation expense is classified in the unaudited consolidated statements of operations and comprehensive loss for the three and six months ended
13. U.S. Government Contracts and Grants In June 2020, the Company was awarded $4.7 million from the U.S. Army Medical Research & Development Command (“USAMRDC”) to fund our Phase 1/2 clinical trial of T-COVID. The competitive award was granted by USAMRDC in collaboration with the Medical Technology Enterprise Consortium (“MTEC”), a 501(c)(3) biomedical technology consortium working in partnership with the Department of Defense (“DoD”). Under the contract, MTEC will pay the Company a firm fixed fee based upon the achievement of certain milestones for conduct and completion of a Phase 1/2 study and research and development work on the replication-deficient adenovirus 5 (“RD-Ad5”) vector vaccine platform. For the In July 2016, the Company signed a five-year contract with BARDA. The contract, as amended, has a total value of up to $133.7 million and is used to fund clinical development of NasoShield. Under the contract, BARDA pays the Company 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 $27.8 million in funding for the period July 2016 through 14. Income Taxes Due to a full valuation allowance, the Company did not record an income tax benefit for the With respect to the prior year, on March 27, 2020, President Donald Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The CARES Act provided both stimulus measures and a number 15 of tax provisions, including: temporary changes regarding the utilization and carry back of net operating losses, temporary changes to the prior and future limitations on interest deductions, technical corrections from prior tax legislation for tax depreciation of qualified improvement property, and certain refundable employee retention credits. As of 15. Net Loss Per Share Because the Company has reported a net loss attributable to common stockholders for all periods presented, basic and diluted net loss per share attributable to common stockholders are the same for all periods presented. Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted average numbers of shares of common stock outstanding for the period. Basic shares outstanding includes the weighted average effect of the Company’s outstanding pre-funded warrants, the exercise of which requires little or no consideration for the delivery of shares of common stock. Diluted net loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period. As such, all unvested restricted stock, common stock warrants, and stock options have been excluded from the computation of diluted weighted average shares outstanding because such securities would have an anti-dilutive impact for all periods presented. Potential common shares issuable upon conversion, vesting or exercise of unvested restricted stock, 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:
16. Commitments and Contingencies Spitfire Acquisition As disclosed in Note 8, the Company is obligated to make payments of up to $80.0 million upon the achievement of specified worldwide net sales of all products developed using the technology acquired from Spitfire Pharma Inc. within ten years following the approval of a new drug application filed with the FDA.
Lonza Manufacturing Agreement In March 2021, the Company expanded its manufacturing collaboration with Lonza in connection with the Manufacturing Agreement entered into in November 2020 for the manufacture of AdCOVID. Under the expanded agreement, the Company has committed approximately $23.0 million to Lonza to procure long-lead equipment and construct a dedicated manufacturing suite for clinical and commercial production of AdCOVID.
Litigation
The Company is a party in various 16 Item 2. 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 This We have based the forward-looking statements included in this Overview Altimmune, Inc. is a clinical stage biopharmaceutical company focused on developing Impact of COVID-19 We are closely monitoring how the spread of Although operations have not been materially affected by the COVID-19 pandemic as of and for the three and six months ended 17 social distancing in the United States and other countries, business closures or business disruptions, the ultimate impact on financial markets and the global economy, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. In addition, a recurrence of COVID-19 cases could cause other widespread or more severe impacts depending on where infection rates are highest. We continue to monitor developments as we deal with the disruptions and uncertainties relating to the COVID-19 pandemic. See “Risk U.S. Government Contracts and Grants In June 2020, we were awarded $4.7 million from the U.S. Army Medical Research & Development Command (“USAMRDC”) to fund our Phase 1/2 clinical trial of T-COVID. The competitive award was granted by USAMRDC in collaboration with the Medical Technology Enterprise Consortium (“MTEC”), a 501(c)(3) biomedical technology consortium working in partnership with the Department of Defense (“DoD”). Under the contract, MTEC pays us a firm fixed fee based upon the achievement of certain milestones for conduct and completion of a Phase 1/2 study and research and development work on the replication-deficient adenovirus 5 (“RD-Ad5”) vector vaccine platform. For the In July 2016, we signed a five-year contract with Biomedical Advanced Research and Development Authority (“BARDA”). The contract, as amended, has a total value of up to $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 $27.8 million in funding for the period July 2016 through Critical Accounting Policies and Significant Judgment and Estimates Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our unaudited consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. and the rules and regulations of the SEC for interim financial reporting. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and the disclosure of contingent liabilities in our consolidated financial statements. We base our estimates and judgments on historical experience, knowledge of current conditions, and expectations of what could occur in the future given available information. There have been no changes in our critical accounting policies and significant judgment and estimates as disclosed in our 18 Results of Operations Comparison of the three months ended
Comparison of the six months ended June 30, 2021 and 2020:
Revenue Revenue consists primarily of research grants in the United States from MTEC for our T-COVID product candidate and BARDA for our NasoShield vaccine product candidate. These grants consist of firm fixed fee contracts based on milestones and cost reimbursement contracts, with a fixed fee based on either costs incurred or milestones met. Revenue decreased by 19 Revenue decreased by $2.0 million, or 67%, for the six months ended June 30, 2021, as compared to the same period in 2020. The decrease was primarily the result of:
Research and development expenses Research and development operating expense
Research and development operating expense increased by $1.4 million, or 6%, for the six months ended June 30, 2021, as compared to the same period in 2020. The increase was primarily the result of:
General and administrative expenses General and administrative expense increased by Impairment loss on construction-in-process Impairment loss on construction-in-process reported during the three and six months ended June 30, 2021 represented a non-cash impairment charge recorded for assets that were previously capitalized in connection with the discontinuation of AdCOVID. Total other Total other Income tax benefit Income tax benefit decreased by 20 all of our deferred tax assets, but in 2020 a benefit was recognized related to a net operating loss carryback refund claim pursuant to the Coronavirus Aid, Relief, and Economic Security Act. Liquidity and Capital Resources Overview Our primary sources of cash during the We have not generated any revenues from the sale of any products to date, and there is no assurance of any future revenues from product sales. Our sources of revenue have consisted of grant revenues under our arrangements with BARDA for the development of NasoShield, MTEC for a clinical trial and development work on T-COVID, and to a lesser degree from other licensing arrangements. We have incurred significant losses since we commenced operations. As of In June 2020, we were awarded $4.7 million from the U.S. Army Medical Research & Development Command (“USAMRDC”) to fund our Phase 1/2 clinical trial of T-COVID. The competitive award was granted by USAMRDC in collaboration with the Medical Technology Enterprise Consortium (“MTEC”), a 501(c)(3) biomedical technology consortium working in partnership with the Department of Defense (“DoD”). Under the contract, MTEC pays us a firm fixed fee based upon the achievement of certain milestones for conduct and completion of a Phase 1/2 study and research and development work on the replication-deficient adenovirus 5 (“RD-Ad5”) vector vaccine platform. Through In July 2016, we signed a five-year contract with BARDA. The contract, as amended, has a total value of up to $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 $27.8 million in funding for the period July 2016 through 21 Cash Flows The following table provides information regarding our cash flows for the
Operating Activities Net cash used in operating activities was Investing Activities Net cash provided by investing activities was Financing Activities Net cash provided by financing activities during the Financing Public Offering On July 16, 2020, we offered and sold (i) 3,369,564 shares of our common stock, at a price to the public of $23.00 per share, and (ii) pre-funded warrants to purchase 1,630,436 shares of our common stock at an exercise price equal to $0.0001 per share (the “Pre-Funded Warrants”), at a price to the public of $22.9999 per share of common stock underlying the Pre-Funded Warrants (equal to the public offering price per share of Common Stock, minus the exercise price of each Pre-Funded Warrant). The Pre-Funded Warrants are exercisable at any time, provided that each Pre-Funded Warrant holder will be prohibited from exercising such Pre-Funded Warrants into shares of our common stock if, as a result of such exercise, the holder, together with its affiliates, would own more than 4.99% of the total number of shares of our common stock then issued and outstanding, which percentage may change at the holders’ election to any other number less than or equal to 19.99% upon 61 days’ notice to us. The gross proceeds of this offering were approximately $132.2 million, which includes the exercise in full of the underwriters’ option to purchase an additional 750,000 shares of common stock, before 22 deducting underwriting discounts and commissions and offering expenses during the third quarter of 2020. The net proceeds of this offering were approximately $124.0 million, after deducting underwriting discounts and commissions and offering expenses payable by the Company. At-the-Market Offerings On February 25, 2021, we entered into an Equity Distribution Agreement (the “2021 Agreement”) with Piper Sandler & Co., Evercore Group L.L.C., and B. Riley Securities, Inc., serving as sales agents (the “Sales Agents”) with respect to an at-the-market On March 27, 2020, we entered into an Equity Distribution Agreement (the “2020 Agreement”) with JMP Securities LLC, serving as placement agent (the “Placement Agent”) with respect to an at-the-market
Current Resources We have financed our operations to date principally through our equity offerings and proceeds from issuances of our preferred stock, common stock, and warrants. At Off-Balance Sheet Arrangements As of Item 3. Quantitative and Qualitative Disclosures about Market Risk As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required by this Item. Item 4. Controls and Procedures Evaluation of Disclosure Controls and Procedures Our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities 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. 23 Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) under the Exchange Act) during the quarter ended
There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K filed with the SEC on February 25, 2021. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Default upon Senior Securities None. Item 4. Mine Safety Disclosures Not applicable. None. 24
25 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused the report to be signed on its behalf by the undersigned, thereunto duly authorized.
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