0001326190--12-312021Q30039702768371429460.810.541.791.74P6YP16YP6YP16YP12Y2M18DP20DP20Dfalse0001326190us-gaap:AdditionalPaidInCapitalMemberalt:MarketOfferingMember2021-04-012021-06-300001326190alt:MarketOfferingMember2021-04-012021-06-300001326190us-gaap:AdditionalPaidInCapitalMemberalt:MarketOfferingMember2021-01-012021-03-310001326190alt:MarketOfferingMember2021-01-012021-03-310001326190us-gaap:AdditionalPaidInCapitalMemberalt:MarketOfferingMember2020-04-012020-06-300001326190alt:MarketOfferingMember2020-04-012020-06-300001326190alt:JMPSecuritiesLimitedLiabilityCompanyMemberalt:AtTheMarketOfferingMemberalt:EquityDistributionAgreementMember2021-07-012021-09-300001326190us-gaap:CommonStockMemberalt:MarketOfferingMember2021-04-012021-06-300001326190alt:JMPSecuritiesLimitedLiabilityCompanyMemberalt:AtTheMarketOfferingMemberalt:EquityDistributionAgreementMember2021-01-012021-09-300001326190us-gaap:CommonStockMemberalt:MarketOfferingMember2021-01-012021-03-310001326190us-gaap:CommonStockMemberus-gaap:IPOMember2020-07-162020-07-160001326190us-gaap:CommonStockMemberalt:MarketOfferingMember2020-04-012020-06-300001326190us-gaap:RetainedEarningsMember2021-09-300001326190us-gaap:AdditionalPaidInCapitalMember2021-09-300001326190us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-300001326190us-gaap:RetainedEarningsMember2021-06-300001326190us-gaap:AdditionalPaidInCapitalMember2021-06-300001326190us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-3000013261902021-06-300001326190us-gaap:RetainedEarningsMember2021-03-310001326190us-gaap:AdditionalPaidInCapitalMember2021-03-310001326190us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-03-3100013261902021-03-310001326190us-gaap:RetainedEarningsMember2020-12-310001326190us-gaap:AdditionalPaidInCapitalMember2020-12-310001326190us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-12-310001326190us-gaap:RetainedEarningsMember2020-09-300001326190us-gaap:AdditionalPaidInCapitalMember2020-09-300001326190us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300001326190us-gaap:RetainedEarningsMember2020-06-300001326190us-gaap:AdditionalPaidInCapitalMember2020-06-300001326190us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-3000013261902020-06-300001326190us-gaap:RetainedEarningsMember2020-03-310001326190us-gaap:AdditionalPaidInCapitalMember2020-03-310001326190us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-03-3100013261902020-03-310001326190us-gaap:RetainedEarningsMember2019-12-310001326190us-gaap:AdditionalPaidInCapitalMember2019-12-310001326190us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310001326190us-gaap:CommonStockMember2021-09-300001326190us-gaap:CommonStockMember2021-06-300001326190us-gaap:CommonStockMember2021-03-310001326190us-gaap:CommonStockMember2020-12-310001326190us-gaap:CommonStockMember2020-09-300001326190us-gaap:CommonStockMember2020-06-300001326190us-gaap:CommonStockMember2020-03-310001326190us-gaap:CommonStockMember2019-12-310001326190us-gaap:CommonStockMemberus-gaap:IPOMember2020-07-160001326190alt:TwoThousandAndNineteenEmployeeStockPurchasePlanMember2021-07-012021-09-300001326190alt:TwoThousandAndNineteenEmployeeStockPurchasePlanMember2021-01-012021-09-300001326190alt:BARDAContractMemberus-gaap:GrantMember2021-07-012021-09-300001326190us-gaap:GrantMemberalt:MedicalTechnologyEnterpriseConsortiumCollaborativeArrangementMember2021-01-012021-09-300001326190alt:BARDAContractMemberus-gaap:GrantMember2021-01-012021-09-300001326190us-gaap:GrantMemberalt:MedicalTechnologyEnterpriseConsortiumCollaborativeArrangementMember2020-07-012020-09-300001326190alt:BARDAContractMemberus-gaap:GrantMember2020-07-012020-09-300001326190alt:MedicalTechnologyEnterpriseConsortiumCollaborativeArrangementMember2020-06-012020-06-300001326190us-gaap:GrantMemberalt:MedicalTechnologyEnterpriseConsortiumCollaborativeArrangementMember2020-01-012020-09-300001326190alt:BARDAContractMemberus-gaap:GrantMember2020-01-012020-09-300001326190alt:BARDAContractMemberus-gaap:InvestmentPerformanceMember2016-07-312016-07-310001326190us-gaap:CommonStockMember2021-07-012021-09-300001326190us-gaap:CommonStockMember2021-04-012021-06-300001326190alt:LonzaManufacturingAgreementMemberalt:AdCOVIDMember2021-07-012021-09-300001326190alt:BARDAContractMember2016-07-310001326190us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2021-09-300001326190us-gaap:LeaseholdImprovementsMember2021-09-300001326190us-gaap:FurnitureAndFixturesMember2021-09-300001326190us-gaap:ConstructionInProgressMember2021-09-300001326190us-gaap:ComputerEquipmentMember2021-09-300001326190alt:LaboratoryEquipmentMember2021-09-300001326190us-gaap:SoftwareAndSoftwareDevelopmentCostsMember2020-12-310001326190us-gaap:LeaseholdImprovementsMember2020-12-310001326190us-gaap:FurnitureAndFixturesMember2020-12-310001326190us-gaap:ComputerEquipmentMember2020-12-310001326190alt:LaboratoryEquipmentMember2020-12-310001326190us-gaap:IPOMember2020-07-162020-07-160001326190us-gaap:CommonStockMemberus-gaap:OverAllotmentOptionMember2020-07-162020-07-160001326190alt:JMPSecuritiesLimitedLiabilityCompanyMemberalt:AtTheMarketOfferingMemberalt:EquityDistributionAgreementMember2020-01-012020-09-300001326190alt:PiperSandlerCompanyAndEvercoreGroupLimitedLiabilityCompanyAndBRileySecuritiesIncMemberalt:AtTheMarketOfferingMemberalt:EquityDistributionAgreementMember2021-01-012021-09-300001326190us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300001326190us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-04-012021-06-300001326190us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-01-012021-03-310001326190us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300001326190us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-04-012020-06-300001326190us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-03-310001326190us-gaap:RetainedEarningsMember2021-07-012021-09-300001326190us-gaap:RetainedEarningsMember2021-04-012021-06-300001326190us-gaap:RetainedEarningsMember2020-07-012020-09-300001326190us-gaap:RetainedEarningsMember2020-04-012020-06-300001326190us-gaap:RetainedEarningsMember2020-01-012020-03-310001326190us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001326190us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001326190us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001326190us-gaap:MoneyMarketFundsMemberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001326190us-gaap:InProcessResearchAndDevelopmentMember2021-09-300001326190us-gaap:InProcessResearchAndDevelopmentMember2020-12-310001326190alt:BARDAContractMembersrt:MinimumMember2021-01-010001326190alt:BARDAContractMembersrt:MaximumMember2021-01-010001326190srt:MinimumMemberalt:InternallyDevelopedPatentsMember2021-01-012021-09-300001326190srt:MinimumMemberalt:AcquiredLicensesMember2021-01-012021-09-300001326190srt:MaximumMemberalt:InternallyDevelopedPatentsMember2021-01-012021-09-300001326190srt:MaximumMemberalt:AcquiredLicensesMember2021-01-012021-09-300001326190srt:MinimumMemberalt:InternallyDevelopedPatentsMember2020-01-012020-12-310001326190srt:MinimumMemberalt:AcquiredLicensesMember2020-01-012020-12-310001326190srt:MaximumMemberalt:InternallyDevelopedPatentsMember2020-01-012020-12-310001326190srt:MaximumMemberalt:AcquiredLicensesMember2020-01-012020-12-310001326190alt:InternallyDevelopedPatentsMember2021-09-300001326190alt:AcquiredLicensesMember2021-09-300001326190alt:InternallyDevelopedPatentsMember2020-12-310001326190alt:AcquiredLicensesMember2020-12-3100013261902020-01-012020-12-310001326190us-gaap:EmployeeStockOptionMember2021-09-300001326190us-gaap:RestrictedStockUnitsRSUMember2021-09-300001326190us-gaap:RestrictedStockMember2021-09-300001326190us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-09-300001326190us-gaap:RestrictedStockMember2021-01-012021-09-300001326190us-gaap:EmployeeStockOptionMember2021-01-012021-09-300001326190alt:PiperSandlerCompanyAndEvercoreGroupLimitedLiabilityCompanyAndBRileySecuritiesIncMemberalt:AtTheMarketOfferingMemberalt:EquityDistributionAgreementMember2021-02-250001326190alt:JMPSecuritiesLimitedLiabilityCompanyMemberalt:AtTheMarketOfferingMemberalt:EquityDistributionAgreementMember2020-03-270001326190alt:PreFundedWarrantsMember2021-09-300001326190alt:PreFundedWarrantsMemberus-gaap:CommonStockMemberus-gaap:IPOMember2020-07-160001326190alt:ExchangeWarrantsMember2021-02-250001326190alt:PreFundedWarrantsMemberus-gaap:IPOMember2020-07-160001326190srt:WeightedAverageMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputRiskFreeInterestRateMember2021-09-300001326190srt:WeightedAverageMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputPriceVolatilityMember2021-09-300001326190srt:WeightedAverageMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputDiscountForLackOfMarketabilityMember2021-09-300001326190srt:WeightedAverageMemberus-gaap:FairValueInputsLevel3Memberalt:MeasurementInputProbabilityOfPaymentMember2021-09-300001326190srt:WeightedAverageMemberus-gaap:FairValueInputsLevel3Memberalt:MeasurementInputCostOfCapitalMember2021-09-300001326190us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputRiskFreeInterestRateMember2021-09-300001326190us-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputPriceVolatilityMember2021-09-300001326190us-gaap:FairValueInputsLevel3Memberalt:MeasurementInputProbabilityOfPaymentMember2021-09-300001326190us-gaap:FairValueInputsLevel3Memberalt:MeasurementInputCostOfCapitalMember2021-09-300001326190srt:MinimumMemberus-gaap:MeasurementInputDiscountForLackOfMarketabilityMember2021-09-300001326190srt:MaximumMemberus-gaap:MeasurementInputDiscountForLackOfMarketabilityMember2021-09-300001326190us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001326190us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-3100013261902020-09-3000013261902019-12-310001326190srt:MaximumMemberalt:SpitfirePharmaIncMemberus-gaap:CommonStockMember2019-07-120001326190alt:SpitfirePharmaIncMemberalt:SalesMilestoneMember2019-07-120001326190alt:SpitfirePharmaIncMemberalt:InvestigationalNewDrugApplicationMilestoneMember2019-07-120001326190alt:SpitfirePharmaIncMemberalt:InvestigationalNewDrugApplicationAndRegulatoryMilestonesMember2019-07-120001326190alt:SpitfirePharmaIncMember2019-07-122019-07-120001326190us-gaap:CertificatesOfDepositMember2021-09-300001326190us-gaap:USTreasurySecuritiesMember2020-12-310001326190us-gaap:CertificatesOfDepositMember2020-12-310001326190us-gaap:AssetBackedSecuritiesMember2020-12-310001326190alt:CommercialPaperAndCorporateDebtSecuritiesMember2020-12-310001326190us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001326190us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2021-09-300001326190us-gaap:FairValueMeasurementsRecurringMember2021-09-300001326190us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001326190us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2020-12-310001326190us-gaap:FairValueMeasurementsRecurringMember2020-12-310001326190us-gaap:WarrantMember2021-07-012021-09-300001326190us-gaap:RestrictedStockMember2021-07-012021-09-300001326190us-gaap:EmployeeStockOptionMember2021-07-012021-09-300001326190us-gaap:WarrantMember2021-01-012021-09-300001326190us-gaap:RestrictedStockMember2021-01-012021-09-300001326190us-gaap:EmployeeStockOptionMember2021-01-012021-09-300001326190us-gaap:WarrantMember2020-07-012020-09-300001326190us-gaap:RestrictedStockMember2020-07-012020-09-300001326190us-gaap:EmployeeStockOptionMember2020-07-012020-09-300001326190us-gaap:WarrantMember2020-01-012020-09-300001326190us-gaap:RestrictedStockMember2020-01-012020-09-300001326190us-gaap:EmployeeStockOptionMember2020-01-012020-09-300001326190us-gaap:ResearchAndDevelopmentExpenseMember2021-07-012021-09-300001326190us-gaap:GeneralAndAdministrativeExpenseMember2021-07-012021-09-300001326190us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-09-300001326190us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-09-300001326190us-gaap:ResearchAndDevelopmentExpenseMember2020-07-012020-09-300001326190us-gaap:GeneralAndAdministrativeExpenseMember2020-07-012020-09-300001326190us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-09-300001326190us-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-09-300001326190us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-3000013261902021-07-012021-09-300001326190us-gaap:AdditionalPaidInCapitalMember2021-04-012021-06-3000013261902021-04-012021-06-3000013261902021-11-050001326190us-gaap:AdditionalPaidInCapitalMember2020-04-012020-06-3000013261902020-04-012020-06-300001326190us-gaap:AdditionalPaidInCapitalMember2020-01-012020-03-3100013261902020-01-012020-03-310001326190us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-3000013261902020-07-012020-09-300001326190us-gaap:CommonStockMember2020-07-012020-09-300001326190us-gaap:CommonStockMember2020-04-012020-06-300001326190us-gaap:CommonStockMember2020-01-012020-03-310001326190alt:ExchangeWarrantsMember2021-02-252021-02-250001326190us-gaap:RetainedEarningsMember2021-01-012021-03-310001326190us-gaap:CommonStockMember2021-01-012021-03-310001326190alt:SpitfirePharmaIncMemberalt:RegulatoryMilestoneMember2019-07-122019-07-1200013261902020-01-012020-09-300001326190alt:ExchangeWarrantsMember2021-01-012021-09-300001326190us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-3100013261902021-01-012021-03-310001326190alt:BARDAContractMember2021-01-012021-01-010001326190alt:BARDAContractMember2016-07-312016-07-310001326190alt:PiperSandlerCompanyAndEvercoreGroupLimitedLiabilityCompanyAndBRileySecuritiesIncMemberalt:AtTheMarketOfferingMemberalt:EquityDistributionAgreementMember2021-09-300001326190alt:LonzaManufacturingAgreementMemberalt:AdCOVIDMember2021-03-012021-03-310001326190alt:LonzaManufacturingAgreementMemberalt:AdCOVIDMember2021-01-012021-09-300001326190alt:PreFundedWarrantsMemberus-gaap:IPOMember2020-07-162020-07-160001326190alt:SpitfirePharmaIncMemberalt:InvestigationalNewDrugApplicationMilestoneMember2019-07-122019-07-120001326190alt:SpitfirePharmaIncMemberalt:InvestigationalNewDrugApplicationAndRegulatoryMilestonesMember2019-07-122019-07-120001326190srt:WeightedAverageMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputMaturityMember2021-01-012021-09-300001326190srt:MinimumMemberus-gaap:FairValueInputsLevel3Memberus-gaap:MeasurementInputMaturityMember2021-01-012021-09-300001326190alt:SpitfirePharmaIncMemberalt:SalesMilestoneMember2019-07-122019-07-120001326190alt:PiperSandlerCompanyAndEvercoreGroupLimitedLiabilityCompanyAndBRileySecuritiesIncMemberalt:AtTheMarketOfferingMemberalt:EquityDistributionAgreementMember2021-02-252021-02-250001326190alt:JMPSecuritiesLimitedLiabilityCompanyMembersrt:MaximumMemberalt:AtTheMarketOfferingMemberalt:EquityDistributionAgreementMember2020-03-272020-03-270001326190alt:JMPSecuritiesLimitedLiabilityCompanyMemberalt:AtTheMarketOfferingMemberalt:EquityDistributionAgreementMember2020-03-272020-03-2700013261902021-01-012021-09-3000013261902021-09-3000013261902020-12-31iso4217:USDiso4217:USDxbrli:sharesxbrli:sharesxbrli:pure

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended September 30, 2021

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

Graphic

ALTIMMUNE, INC.

(Exact Name of Registrant as Specified in its Charter)

    

Delaware

    

20-2726770

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

910 Clopper Road Suite 201S, Gaithersburg, Maryland

    

20878

(Address of Principal Executive Offices)

 

(Zip Code)

(240) 654-1450

(Registrant’s Telephone Number, Including Area Code)

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.0001 per share

ALT

The NASDAQ Global Market

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

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

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

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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

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

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

Table of Contents

ALTIMMUNE, INC.

TABLE OF CONTENTS

Page

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

1

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

1

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

2

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

3

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

5

Notes to Consolidated Financial Statements (unaudited)

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

24

Item 4.

Controls and Procedures

24

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

25

Item 1A.

Risk Factors

25

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

25

Item 3.

Defaults Upon Senior Securities

25

Item 4.

Mine Safety Disclosures

25

Item 5.

Other Information

25

Item 6.

Exhibits

26

Signatures

27

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ALTIMMUNE, INC.

CONSOLIDATED BALANCE SHEETS

    

September 30, 

December 31, 

2021

2020

(unaudited)

ASSETS

 

  

 

  

Current assets:

 

  

 

  

Cash and cash equivalents

$

174,863,565

$

115,917,807

Restricted cash

 

34,174

 

34,174

Total cash, cash equivalents and restricted cash

 

174,897,739

 

115,951,981

Short-term investments

 

25,020,738

 

100,005,558

Accounts receivable

 

1,573,760

 

4,610,202

Income tax receivable

 

9,476,435

 

7,762,793

Prepaid expenses and other current assets

 

7,294,360

 

1,926,675

Total current assets

 

218,263,032

 

230,257,209

Property and equipment, net

 

4,718,146

 

1,056,920

Intangible assets, net

 

12,993,575

 

12,823,846

Other assets

 

931,904

 

977,238

Total assets

$

236,906,657

$

245,115,213

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

  

 

  

Current liabilities:

 

  

 

  

Accounts payable

$

6,083

$

612,293

Accrued expenses and other current liabilities

 

19,120,902

 

11,408,154

Total current liabilities

 

19,126,985

 

12,020,447

Contingent consideration

 

6,950,000

 

5,390,000

Other long-term liabilities

 

1,565,611

 

1,828,443

Total liabilities

 

27,642,596

 

19,238,890

Commitments and contingencies (Note 16)

 

  

 

  

Stockholders’ equity:

 

  

 

  

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

3,959

3,697

Additional paid-in capital

 

483,582,367

 

417,337,742

Accumulated deficit

 

(269,282,102)

 

(186,420,599)

Accumulated other comprehensive loss, net

 

(5,040,163)

 

(5,044,517)

Total stockholders’ equity

 

209,264,061

 

225,876,323

Total liabilities and stockholders’ equity

$

236,906,657

$

245,115,213

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

1

Table of Contents

ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

    

For the Three Months Ended

    

For the Nine Months Ended

September 30, 

September 30, 

2021

    

2020

2021

    

2020

Revenues

$

157,559

$

2,937,991

$

1,132,698

$

5,872,321

Operating expenses:

 

  

 

  

 

  

 

  

Research and development

 

29,205,739

 

17,041,975

 

54,356,051

 

40,823,756

General and administrative

 

4,155,928

 

4,220,238

 

11,636,001

 

9,097,511

Impairment loss on construction-in-progress

 

 

 

8,070,000

 

Total operating expenses

 

33,361,667

 

21,262,213

 

74,062,052

 

49,921,267

Loss from operations

 

(33,204,108)

 

(18,324,222)

 

(72,929,354)

 

(44,048,946)

Other income (expense):

 

  

 

  

 

  

 

  

Interest expense

 

(32,866)

 

(2,275)

 

(66,763)

 

(7,468)

Interest income

 

12,485

 

45,127

 

87,847

 

278,154

Other (expense) income, net

 

(286,199)

 

29,218

 

(293,233)

 

48,882

Total other (expense) income, net

 

(306,580)

 

72,070

 

(272,149)

 

319,568

Net loss before income tax benefit

 

(33,510,688)

 

(18,252,152)

 

(73,201,503)

 

(43,729,378)

Income tax benefit

 

 

482,017

 

 

5,306,678

Net loss

 

(33,510,688)

 

(17,770,135)

 

(73,201,503)

 

(38,422,700)

Other comprehensive (loss) income — unrealized (loss) gain on short-term investments

 

(1,923)

 

(10,569)

 

4,354

 

(22,116)

Comprehensive loss

$

(33,512,611)

$

(17,780,704)

$

(73,197,149)

$

(38,444,816)

Net loss per share, basic and diluted

$

(0.81)

$

(0.54)

$

(1.79)

$

(1.74)

Weighted-average common shares outstanding, basic and diluted

 

41,370,768

 

33,056,971

 

40,843,905

 

22,058,424

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

2

Table of Contents

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

Stock-based compensation

 

 

 

1,496,884

 

 

 

1,496,884

Exercise of stock options

398

 

 

5,970

 

 

 

5,970

Vesting of restricted stock awards including withholding, net

 

(6,521)

 

1

 

(122,626)

 

 

 

(122,625)

Issuance of common stock from Employee Stock Purchase Plan

15,367

2

118,469

118,471

Unrealized loss on short-term investments

 

 

 

 

 

(1,923)

 

(1,923)

Net loss

 

 

 

 

(33,510,688)

 

 

(33,510,688)

Balance at September 30, 2021

 

39,702,768

 

$

3,959

 

$

483,582,367

 

$

(269,282,102)

 

$

(5,040,163)

 

$

209,264,061

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

3

Table of Contents

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, 2019

15,312,167

$

1,508

$

187,914,916

$

(137,376,122)

$

(5,020,156)

$

45,520,146

Stock-based compensation

 

 

 

214,921

 

 

 

214,921

Vesting of restricted stock awards including withholding, net

 

(5,974)

 

1

 

(17,080)

 

 

 

(17,079)

Issuance of common stock from Employee Stock Purchase Plan

 

38,809

 

3

 

56,736

 

 

 

56,739

Issuance of common stock upon exercise of warrants

 

14,500

 

2

 

39,972

 

 

 

39,974

Unrealized loss on short-term investments

 

 

 

 

 

(32,435)

 

(32,435)

Net loss

 

 

 

 

(3,885,649)

 

 

(3,885,649)

Balance at March 31, 2020

 

15,359,502

 

1,514

 

188,209,465

 

(141,261,771)

 

(5,052,591)

 

41,896,617

Stock-based compensation

 

 

 

330,510

 

 

 

330,510

Exercise of stock options

13,935

1

36,174

36,175

Vesting of restricted stock awards including withholding, net

 

(5,974)

 

1

 

(46,390)

 

 

 

(46,389)

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

 

2,965,144

 

297

 

22,780,432

 

 

 

22,780,729

Issuance of common stock upon exercise of warrants

 

8,221,279

 

822

 

31,269,341

 

 

 

31,270,163

Unrealized gain on short-term investments

 

 

 

 

 

20,888

 

20,888

Net loss

 

 

 

 

(16,766,916)

 

 

(16,766,916)

Balance at June 30, 2020

 

26,553,886

 

2,635

 

242,579,532

 

(158,028,687)

 

(5,031,703)

 

79,521,777

Stock-based compensation

 

 

 

1,320,089

 

 

 

1,320,089

Issuance of common stock from exercise of stock options

32,189

3

90,267

90,270

Vesting of restricted stock awards including withholding, net

 

103,551

 

13

 

(114,585)

 

 

 

(114,572)

Issuance of common stock from Employee Stock Purchase Plan

 

53,852

 

5

 

78,727

 

 

 

78,732

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

 

4,119,564

 

412

 

124,027,403

 

 

 

124,027,815

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

247,865

25

2,834,082

2,834,107

Issuance of common stock upon exercise of warrants

 

1,962,128

 

196

 

9,728,125

 

 

 

9,728,321

Unrealized loss on short-term investments

 

 

 

 

 

(10,569)

 

(10,569)

Net loss

 

 

 

 

(17,770,135)

 

 

(17,770,135)

Balance at September 30, 2020

 

33,073,035

 

$

3,289

 

$

380,543,640

 

$

(175,798,822)

 

$

(5,042,272)

 

$

199,705,835

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

4

Table of Contents

ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

    

Nine Months Ended September 30, 

2021

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

 

  

 

  

Net loss

$

(73,201,503)

$

(38,422,700)

Adjustments to reconcile net loss to net cash used in operating activities:

 

  

 

  

Change in fair value of contingent consideration liability

 

1,560,000

 

22,320,000

Impairment loss on construction-in-progress

 

8,070,000

 

Stock-based compensation expense

 

4,200,064

 

1,865,520

Depreciation and amortization

 

434,009

 

218,932

Unrealized losses (gains) on foreign currency exchange

 

297,135

 

(44,323)

Changes in operating assets and liabilities:

 

  

 

  

Accounts receivable

 

3,036,442

 

(2,815,343)

Prepaid expenses and other current assets

 

(5,263,432)

 

(636,943)

Accounts payable

 

(606,210)

 

856,653

Accrued expenses and other liabilities

 

6,916,132

 

1,199,708

Income tax receivable

 

(1,713,642)

 

(5,564,759)

Net cash used in operating activities

 

(56,271,005)

 

(21,023,255)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

  

 

  

Proceeds from sales and maturities of short-term investments

 

82,406,000

 

39,385,689

Purchases of short-term investments

 

(7,591,962)

 

(74,413,135)

Purchases of property and equipment, net

 

(11,970,179)

 

(100,329)

Cash paid for internally developed patents

 

(189,649)

 

(98,893)

Net cash provided by (used in) investing activities

 

62,654,210

 

(35,226,668)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

  

 

  

Payments of deferred offering costs

(118,522)

(160,522)

Proceeds from exercises of warrants

 

 

41,038,458

Proceeds from issuance of common stock in at-the-market offerings, net

 

52,356,204

 

25,614,836

Proceeds from issuance of common stock and pre-funded warrants in public offering, net

 

 

124,027,815

Proceeds from issuance of notes payable

 

 

632,000

Payments of notes payable

 

 

(632,000)

Proceeds from issuance of common stock from Employee Stock Purchase Plan

 

224,472

 

135,471

Proceeds from exercises of stock options

 

100,399

 

126,445

Net cash provided by financing activities

 

52,562,553

 

190,782,503

Net increase in cash and cash equivalents and restricted cash

 

58,945,758

 

134,532,580

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

$

174,897,739

$

143,529,440

SUPPLEMENTAL CASH FLOW INFORMATION:

 

  

 

  

Cash paid for interest

$

$

1,791

SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES:

 

  

 

  

Operating lease liability and right of use asset addition

$

72,047

$

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

5

Table of Contents

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”) is a clinical stage biopharmaceutical company incorporated under the laws of the State of Delaware.

The Company is focused on developing treatments for obesity and liver diseases. The Company’s pipeline includes proprietary intranasal vaccines and next generation peptide therapeutics for obesity, NASH (pemvidutide, proposed INN, formerly known as 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.

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 nine months ended September 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.

Use of Estimates

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

6

Table of Contents

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

Recently Issued Accounting Pronouncements - Adopted

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

3. Fair Value Measurements

The Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2021 consisted of the following:

Fair Value Measurement at September 30, 2021

    

Total

    

Level 1

    

Level 2

    

Level 3

Assets:

Cash equivalents - money market funds

$

65,632,943

$

65,632,943

$

$

Short-term investments

 

25,020,738

 

 

25,020,738

 

Total

90,653,681

65,632,943

25,020,738

Liabilities:

Contingent consideration liability (see Note 8)

 

6,950,000

 

 

 

6,950,000

Total

$

6,950,000

$

$

$

6,950,000

The Company’s assets and liabilities measured at fair value on a recurring basis 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

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

7

Table of Contents

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

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

September 30, 2021

Unrealized Gain

Amortized Cost

(Loss)

Market Value

Certificate of deposit

$

25,020,738

$

$

25,020,738

Total

$

25,020,738

$

$

25,020,738

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

December 31, 2020

Unrealized Gain

Amortized Cost

(Loss)

Market Value

United States treasury securities

    

$

20,052,757

    

$

1,843

    

$

20,054,600

Commercial paper and corporate debt securities

47,521,344

(5,440)

47,515,904

Asset backed securities

 

7,414,619

 

(757)

 

7,413,862

Certificate of deposit

25,021,192

25,021,192

Total

$

100,009,912

$

(4,354)

$

100,005,558

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

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

Unobservable input

Value or Range

    

Weighted Average

Expected volatility

    

78.0%

78.0%

Risk-free interest rate

 

0.06%

0.06%

Cost of capital

 

30%

30%

Discount for lack of marketability

 

10%‑12%

11%

Probability of payment

 

81%

81%

Projected year of payment

 

2022

 

2022

If applicable, the Company will recognize transfers into and out of Level 3 within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurs. There were no transfers into or out of Level 3 of the fair value hierarchy as of September 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. During the nine months ended September 30, 2021, the Company recorded a non-cash impairment charge to property and equipment, net on a non-recurring basis (see below). As of December 31, 2020, the Company had no significant assets or liabilities that were measured at fair value on a non-recurring basis.

Property and Equipment, Net

During the nine months ended September 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 September 30, 2021. At September 30, 2021, the fair value of the construction-in-progress related assets was primarily determined utilizing the cost approach, which reflects the current replacement cost of the asset being appraised, adjusted for contractual restrictions

8

Table of Contents

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

4. Property and Equipment, Net

Property and equipment, net consists of the following:

September 30, 2021

December 31, 2020

Furniture, fixtures and equipment

    

$

202,100

    

$

125,538

Laboratory equipment

 

1,039,805

 

959,585

Computers and telecommunications

 

279,026

 

220,316

Software

 

94,409

 

64,409

Leasehold improvements

 

1,731,934

 

1,285,883

Construction-in-progress

3,300,000

Property and equipment, at cost

 

6,647,274

 

2,655,731

Less: accumulated depreciation and amortization

 

(1,929,128)

 

(1,598,811)

Property and equipment, net

$

4,718,146

$

1,056,920

As of September 30, 2021, construction-in-progress primarily includes costs related to the procurement of long-lead equipment associated with the Company’s manufacturing collaboration with Lonza Houston, Inc. (“Lonza”) for 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 during the fourth quarter of 2021.

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

Depreciation expense related to property and equipment was approximately $0.1 million and $0.1 million for the three months ended September 30, 2021 and 2020, respectively, and $0.2 million and $0.2 million for the nine months ended September 30, 2021 and 2020, respectively.

9

Table of Contents

5. Intangible Assets

The Company’s intangible assets consist of the following:

September 30, 2021

Gross

Estimated

Carrying

Accumulated

Net Book

Useful Lives

Value

Amortization

Value

Internally developed patents

    

620 years

    

$

1,074,436

    

$

(499,828)

    

$

574,608

Acquired licenses

 

1620 years

 

285,000

 

(285,000)

 

Total intangible assets subject to amortization

 

  

 

1,359,436

 

(784,828)

 

574,608

IPR&D assets

 

Indefinite

 

12,418,967

 

 

12,418,967

Total

 

  

$

13,778,403

$

(784,828)

$

12,993,575

December 31, 2020

Gross

Estimated

Carrying

Accumulated

Net Book

    

Useful Lives

    

Value

    

Amortization

    

Value

Internally developed patents

 

610 years

$

884,787

$

(479,908)

$

404,879

Acquired licenses

 

1620 years

 

285,000

 

(285,000)

 

Total intangible assets subject to amortization

 

  

 

1,169,787

 

(764,908)

 

404,879

IPR&D assets

 

Indefinite

 

12,418,967

 

 

12,418,967

Total

 

  

$

13,588,754

$

(764,908)

$

12,823,846

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

6. Operating Leases

The Company rents office and laboratory space in the United States. The Company also leases office equipment under non-cancellable equipment leases through June 2026. Rent expense during the three and nine months ended September 30, 2021 under all of the Company’s operating leases was $0.1 million and $0.4 million, respectively. Rent expense during the three and nine months ended September 30, 2020 under all of the Company’s operating leases was $0.1 million and $0.3 million, 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 nine months ended September 30, 2021 was $0.1 million and $0.4 million, respectively, and for the three and nine months ended September 30, 2020 was $0.1 million and $0.3 million, respectively.

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

10

Table of Contents

September 30, 2021

December 31, 2020

 

Operating lease obligations (see Note 7 and 9)

    

$

1,631,867

    

$

1,824,840

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

$

844,222

$

903,825

Weighted-average remaining lease term (years)

 

3.6

 

4.3

Weighted-average discount rate

 

7.2

%  

 

7.3

%

7. Accrued Expenses

Accrued expenses and other current liabilities consist of the following:

September 30, 2021

December 31, 2020

Accrued professional services

    

$

729,434

    

$

1,350,194

Accrued payroll and employee benefits

 

2,006,675

 

2,351,599

Accrued interest

 

19,423

 

13,016

Accrued research and development

 

15,943,874

 

7,316,876

Lease obligation, current portion (see Note 6)

 

401,743

 

356,716

Deferred revenue

 

19,753

 

19,753

Total accrued expenses

$

19,120,902

$

11,408,154

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.

11

Table of Contents

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 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:

Nine Months Ended September 30, 

2021

2020

Beginning balance

    

$

5,390,000

    

$

2,750,000

Change in fair value

 

1,560,000

 

22,320,000

Ending balance

$

6,950,000

$

25,070,000

As of September 30, 2021 and 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. 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:

September 30, 2021

December 31, 2020

Lease obligation, long-term portion (see Note 6)

    

$

1,230,124

    

$

1,468,124

Conditional economic incentive grants

 

250,000

 

250,000

Other

 

85,487

 

110,319

Total other long-term liabilities

$

1,565,611

$

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

12

Table of Contents

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

The Company has assessed the Pre-Funded Warrants for appropriate equity or liability classification and determined that the Pre-Funded Warrants are freestanding instruments that do not meet the definition of a liability pursuant to ASC 480 and do not meet the definition of a derivative pursuant to FASB Accounting Standards Codification Topic 815, Derivatives and Hedging (“ASC 815”). The Pre-Funded Warrants are indexed to the Company’s common stock and meet all other conditions for equity classification under ASC 480 and ASC 815. Accordingly, the Pre-Funded Warrants are classified as equity and are accounted for as a component of additional paid-in capital at the time of issuance. As of September 30, 2021, no 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 offerings program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $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 September 30, 2021, the Company has sold 3,516,510 shares of Common Stock under the 2021 Agreement resulting in approximately $52.4 million in net proceeds, with $70.9 million remaining available to be sold under the 2021 Agreement. As of September 30, 2021, the Company recorded approximately $0.1 million of offering costs which offset the proceeds received from the shares sold through September 30, 2021 and recognized approximately $0.1 million of deferred offering costs which will offset future proceeds received under the 2021 Agreement.

On March 27, 2020, the Company entered into an Equity Distribution Agreement (the “2020 Agreement”) with JMP Securities LLC, serving as placement agent (the “Placement Agent”) with respect to an at-the-market offerings program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $50.0 million (the “Shares”) through the Placement Agent (the “2020 Offering”). Any Shares offered and sold in the 2020 Offering were issued pursuant to the Company’s Registration Statement on Form S-3 filed with the SEC on April 4, 2019, which was declared effective on April 12, 2019, the prospectus supplement relating to the 2020 Offering filed with the SEC on March 27, 2020 and any applicable additional prospectus supplements related to the 2020 Offering that form a part of the Registration Statement. The aggregate market value of Shares eligible for sale in the 2020 Offering and under the 2020 Agreement were subject to the limitations of General Instruction I.B.6 of Form S-3, to the extent required under such instruction. The Company offered Shares having an aggregate offering price of $18.9 million pursuant to the prospectus supplement filed with the SEC on March 27, 2020. On June 1, 2020, the Company filed an amendment to the 2020 Agreement which amended the prospectus supplement dated March 27, 2020 to increase the aggregate offering price to $50.0 million. As of September 30, 2020, the Company sold 3,213,009 shares of Common Stock under the amended 2020 Agreement resulting in $25.6 million in net proceeds. The 2020 Agreement was fully utilized during the year ended December 31, 2020, and no Shares were sold under the 2020 Agreement during the three and nine months ended September 30, 2021.

13

Table of Contents

Exchange Agreement

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 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 were classified as equity in accordance with ASC 480 and the fair value of the Exchange Warrants was recorded as a credit to additional paid-in-capital and is not subject to remeasurement. The Company determined that the fair value of the Exchange Warrants is substantially similar to the fair value of the retired shares on the issuance date due to the negligible exercise price for the Exchange Warrants. As of September 30, 2021, none of the Exchange Warrants have been exercised.

11. Warrants

A summary of warrant activity during the nine months ended September 30, 2021 is as follows:

Warrants outstanding, December 31, 2020

 

1,777,611

Exchanges (see Note 10)

1,000,000

Exercises

 

(1,420)

Warrants outstanding, September 30, 2021

 

2,776,191

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

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 September 30, 2021, there was $11.3 million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 2.6 years. During the nine months ended September 30, 2021, the Company granted 1,075,700 stock options with a weighted average exercise price of $15.07 and per share weighted average grant date fair value of $12.38.

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

    

    

    

Weighted-Average

    

Weighted-

Remaining

Number of

Average

Contractual Term

Aggregate Intrinsic

Stock Options

Exercise Price

(Years)

Value

Outstanding

 

2,612,585

$

8.74

 

5.9

$

14,034,500

Exercisable

 

984,613

$

5.45

 

5.8

$

7,851,439

Unvested

 

1,627,972

$

10.73

 

6.0

$

6,183,061

14

Table of Contents

Restricted Stock

At September 30, 2021, the Company had unvested restricted stock of 94,181 shares with total unrecognized compensation expense of $0.3 million, which the Company expects to recognize over a weighted average period of approximately 1.2 years. During the nine months ended September 30, 2021, the Company released 60,545 shares of common stock from restriction as a result of the vesting of restricted stock.

During the nine months ended September 30, 2021, the Company granted 196,279 shares of restricted stock units which vest over four years. At September 30, 2021, the Company had unvested restricted stock units of 207,529 shares with total unrecognized compensation expense of $2.5 million, which the Company expects to recognize over a weighted average period of approximately 3.4 years. During the nine months ended September 30, 2021, the Company released 3,750 shares of common stock from restriction as a result of the vesting of restricted stock units.

2019 Employee Stock Purchase Plan

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

Stock-based Compensation Expense

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

    

For the Three Months Ended

    

For the Nine Months Ended

September 30, 

September 30, 

2021

    

2020

2021

    

2020

Research and development

$

449,486

$

143,844

$

1,211,164

$

250,783

General and administrative

 

1,047,398

 

1,176,245

 

2,988,900

 

1,614,737

Total

$

1,496,884

$

1,320,089

$

4,200,064

$

1,865,520

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 nine months ended September 30, 2021, the Company has recognized approximately $0.5 million of grant revenue under the contract. For the three and nine months ended September 30, 2020, the Company recognized $2.3 million of grant revenue under the contract.

In July 2016, the Company signed a five-year contract with BARDA. The contract, as amended, has a total value of up to $136.8 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 $30.9 million in funding for the period July 2016 through December 2021. BARDA has seven options to extend the contract to fund certain continued development and manufacturing activities for the anthrax vaccine, including Phase 2 clinical studies. Each option, if exercised by BARDA, would provide additional funding ranging from approximately $1.1 million to $34.4 million for a three-year period beginning in 2021. For the three and nine months ended September 30, 2021, the Company has recognized approximately $0.1 million and $0.4 million, respectively, of grant

15

Table of Contents

revenue under the current BARDA contract. For the three and nine months ended September 30, 2020, the Company recognized approximately $0.6 million and $2.7 million, respectively, of grant revenue under the current BARDA contract.

14. Income Taxes

Due to a full valuation allowance, the Company did not record an income tax benefit for the nine months ended September 30, 2021.

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 of tax provisions, including: temporary changes regarding the utilization and carry back of net operating losses, temporary changes to the prior and future limitations on interest deductions, technical corrections from prior tax legislation for tax depreciation of qualified improvement property, and certain refundable employee retention credits. As of September 30, 2020, the Company recognized a total tax benefit of $5.3 million related to the carry back of losses back to obtain a refund of its 2016 tax liability.

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:

    

For the Three and Nine

For the Three and Nine

Months Ended

Months Ended

September 30, 2021

    

September 30, 2020

Common stock warrants

 

145,755

 

147,175

Common stock options

 

2,626,482

 

1,627,394

Restricted stock

 

301,710

 

189,908

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 or other adenovirus-based

16

Table of Contents

vaccines. 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 adenovirus-based vaccines. As of September 30, 2021, the Company had $2.0 million in remaining commitments under the agreement. In June 2021, the Company discontinued further development of AdCOVID. Refer to Note 4 for further details.

Litigation

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

17

Table of Contents

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

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

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

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

Overview

Altimmune, Inc. is a clinical stage biopharmaceutical company focused on developing treatments for obesity and liver diseases. Our pipeline includes proprietary intranasal vaccines and next generation peptide therapeutics for obesity, NASH (pemvidutide, proposed INN, formerly known as ALT-801) and chronic hepatitis B (HepTcell). In June 2021, we announced the discontinuation of further development of our COVID-19 vaccine candidate, AdCOVID following our review of findings from the Phase 1 clinical trial, and in view of the highly competitive COVID-19 landscape. In the study, AdCOVID was generally well tolerated, but the immunogenicity data demonstrated lower than expected immune responses for each of the immune parameters tested.

Impact of COVID-19

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

18

Table of Contents

Although operations have not been materially affected by the COVID-19 pandemic as of and for the three and nine months ended September 30, 2021, at this time, however, there is significant uncertainty relating to the trajectory of the pandemic and the impact of related responses, and disruptions caused by the COVID-19 pandemic may result in difficulties or delays in initiating, enrolling, conducting or completing our planned and ongoing trials and the incurrence of unforeseen costs as a result of disruptions in clinical supply or preclinical study or clinical trial delays. The impact of COVID-19 on our future results will largely depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions, the ultimate impact on financial markets and the global economy, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease. In addition, a recurrence of COVID-19 cases, or variants thereof, could cause other widespread or more severe impacts depending on where infection rates are highest. We continue to monitor developments as we deal with the disruptions and uncertainties relating to the COVID-19 pandemic. See “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020.

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 nine months ended September 30, 2021, we have recognized approximately $0.5 million of grant revenue under the contract. For the three and nine months ended September 30, 2020, we have recognized approximately $2.3 million of grant revenue under the contract.

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 $136.8 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 $30.9 million in funding for the period July 2016 through December 2021. 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 a three-year period beginning in 2021. For the three and nine months ended September 30, 2021, we have recognized approximately $0.1 million and $0.4 million, respectively, of grant revenue under the current BARDA contract. For the three and nine months ended September 30, 2020, we recognized approximately $0.6 million and $2.7 million, respectively, of grant revenue under the current BARDA contract.

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 Annual Report on Form 10-K for the year ended December 31, 2020 except for recently adopted accounting standards (See Note 2 to the consolidated financial statements appearing in Item 1 of this report). For more information

19

Table of Contents

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

Results of Operations

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

For the Three Months Ended

September 30, 

    

2021

    

2020

    

Increase (Decrease)

 

Revenue

$

157,559

$

2,937,991

$

(2,780,432)

 

(95)

%

Operating expenses:

 

  

 

  

 

  

 

  

Research and development

 

29,205,739

 

17,041,975

 

12,163,764

 

71

%

General and administrative

 

4,155,928

 

4,220,238

 

(64,310)

 

(2)

%

Total operating expenses

 

33,361,667

 

21,262,213

 

12,099,454

 

57

%

Loss from operations

 

(33,204,108)

 

(18,324,222)

 

(14,879,886)

 

(81)

%

Other income (expense):

 

  

 

  

 

  

 

  

Interest expense

 

(32,866)

 

(2,275)

 

(30,591)

 

(1,345)

%

Interest income

 

12,485

 

45,127

 

(32,642)

 

(72)

%

Other (expense) income, net

 

(286,199)

 

29,218

 

(315,417)

 

(1,080)

%

Total other (expense) income, net

 

(306,580)

 

72,070

 

(378,650)

 

(525)

%

Net loss before income tax benefit

 

(33,510,688)

 

(18,252,152)

 

(15,258,536)

 

(84)

%

Income tax benefit

 

 

482,017

 

(482,017)

 

(100)

%

Net loss

$

(33,510,688)

$

(17,770,135)

$

(15,740,553)

 

(89)

%

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

For the Nine Months Ended

September 30, 

    

2021

    

2020

    

Increase (Decrease)

 

Revenue

$

1,132,698

$

5,872,321

$

(4,739,623)

 

(81)

%

Operating expenses:

 

  

 

  

 

  

 

Research and development

 

54,356,051

 

40,823,756

 

13,532,295

 

33

%

General and administrative

 

11,636,001

 

9,097,511

 

2,538,490

 

28

%

Impairment loss on construction-in-progress

8,070,000

8,070,000

100

%

Total operating expenses

 

74,062,052

 

49,921,267

 

24,140,785

 

48

%

Loss from operations

 

(72,929,354)

 

(44,048,946)

 

(28,880,408)

 

(66)

%

Other income (expense):

 

  

 

  

 

 

  

Interest expense

 

(66,763)

 

(7,468)

 

(59,295)

 

(794)

%

Interest income

 

87,847

 

278,154

 

(190,307)

 

(68)

%

Other (expense) income, net

 

(293,233)

 

48,882

 

(342,115)

 

(700)

%

Total other (expense) income, net

 

(272,149)

 

319,568

 

(591,717)

 

(185)

%

Net loss before income tax benefit

 

(73,201,503)

 

(43,729,378)

 

(29,472,125)

 

(67)

%

Income tax benefit

 

 

5,306,678

 

(5,306,678)

 

(100)

%

Net loss

$

(73,201,503)

$

(38,422,700)

$

(34,778,803)

 

(91)

%

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.

20

Table of Contents

Revenue decreased by $2.8 million, or 95%, for the three months ended September 30, 2021, as compared to the same period in 2020. The decrease was primarily the result of a decrease in MTEC revenue attributable to the timing of clinical trial and development work on the T-COVID program.

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

a decrease of $2.9 million in BARDA revenue due to timing of clinical trials, development activities and settlement of indirect rates on the NasoShield program; and
a decrease of $1.8 million in MTEC revenue attributable to the timing of clinical trial and development work on the T-COVID program.

Research and development expenses

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

an increase of $14.0 million due to development activities for the COVID-19 programs, which include AdCOVID (discontinued in June 2021) and T-COVID;
an increase of $1.5 million in other pre-clinical and clinical projects and non-project specific research and development costs; and
a decrease of $3.3 million due primarily to a decrease in the fair value of contingent consideration liability with respect to the acquisition of pemvidutide and development activities for pemvidutide.

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

an increase of $27.1 million due primarily to development activities for the COVID-19 program, AdCOVID (discontinued in June 2021);
an increase of $4.2 million in other pre-clinical and clinical projects and non-project specific research and development costs; and
a decrease of $17.8 million due primarily to a decrease in the fair value of contingent consideration liability with respect to the acquisition of pemvidutide and development activities for pemvidutide.

General and administrative expenses

General and administrative expense were consistent during the three months ended September 30, 2021, as compared to the same period in 2020. General and administrative expense increased by $2.5 million, or 28%, for the nine months ended September 30, 2021, as compared to the same period in 2020, due primarily to an increase in stock compensation expense and other labor related costs.

Impairment loss on construction-in-progress

Impairment loss on construction-in-progress reported during the nine months ended September 30, 2021 represents a non-cash impairment charge recorded for assets that were previously capitalized in connection with the discontinuation of AdCOVID.

Total other (expense) income, net

Total other (expense) income, net decreased by $0.4 million and $0.6 million during the three and nine months ended September 30, 2021, respectively, as compared to the same period in 2020. The net decreases are primarily due to changes in foreign currency conversion and interest income.

21

Table of Contents

Income tax benefit

Income tax benefit decreased by $0.5 million and $5.3 million during the three and nine months ended September 30, 2021, respectively, as compared to the same period in 2020. In both 2021 and 2020, we had a valuation allowance against 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 nine months ended September 30, 2021 were from sales of equity, maturities of short-term investments, cash receipts of accounts receivable from research grants and cash receipts of income tax refunds. Our cash, cash equivalents, restricted cash and short-term investments were $199.9 million at September 30, 2021. We believe, based on the operating cash requirements and capital expenditures expected for 2021 and 2022, our cash on hand and short-term investments at September 30, 2021, together with expected collections 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 September 30, 2021 consolidated financial statements.

We have not generated any revenues from the sale of any products to date, and there is no assurance of any future revenues from product sales. Our sources of revenue have consisted of grant revenues under our arrangements with BARDA for the development of NasoShield, MTEC for a clinical trial and development work on T-COVID, and to a lesser degree from other licensing arrangements. We have incurred significant losses since we commenced operations. As of September 30, 2021, we had an accumulated deficit of $269.3 million. In addition, we have not generated positive cash flows from operations. We have had to rely on a variety of financing sources, including the issuance of debt and equity securities. As capital resources are consumed to fund our research and development activities, we may require additional capital beyond our currently anticipated amounts. In order to address our capital needs, including our planned clinical trials, we must continue to actively pursue additional equity or debt financing, government funding, and monetization of our existing programs through partnership arrangements or sales to third parties.

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 September 30, 2021, we have collected approximately $3.7 million in cash under the contract.

In July 2016, we signed a five-year contract with BARDA. The contract, as amended, has a total value of up to $136.8 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 $30.9 million in funding for the period July 2016 through December 2021. 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 a three-year period beginning in 2021. Through September 30, 2021, we have collected approximately $25.8 million in cash under the current BARDA contract.

22

Table of Contents

Cash Flows

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

Nine Months Ended September 30, 

    

2021

    

2020

Net cash (used in) provided by:

 

  

 

  

Operating activities

$

(56,271,005)

$

(21,023,255)

Investing activities

 

62,654,210

 

(35,226,668)

Financing activities

 

52,562,553

 

190,782,503

Net increase in cash and cash equivalents and restricted cash

$

58,945,758

$

134,532,580

Operating Activities

Net cash used in operating activities was $56.3 million for the nine months ended September 30, 2021 compared to $21.0 million during the nine months ended September 30, 2020. Our sources of cash provided by operations during the nine months ended September 30, 2021 were primarily cash receipts of income tax refunds and revenue generated by our BARDA and MTEC contracts. 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 $35.2 million year over year is due to an increase in net loss as adjusted for non-cash items of $44.6 million and changes in working capital accounts of $9.3 million.

Investing Activities

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

Financing Activities

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

Financing

Public Offering

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

23

Table of Contents

equal to 19.99% upon 61 days’ notice to us. The gross proceeds of this offering were approximately $132.2 million, which includes the exercise in full of the underwriters’ option to purchase an additional 750,000 shares of common stock, before deducting underwriting discounts and commissions and offering expenses during the third quarter of 2020. The net proceeds of this offering were approximately $124.0 million, after deducting underwriting discounts and commissions and offering expenses payable by 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 offerings program under which we may offer and sell, from time to time at its sole discretion, shares of our common stock, par value $0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $125.0 million (the “Shares”) through the Sale Agents (the “2021 Offering”). As of September 30, 2021, we sold 3,516,510 shares of Common Stock under the 2021 Agreement resulting in approximately $52.4 million in net proceeds, with $70.9 million remaining available to be sold under the 2021 Agreement.

On March 27, 2020, we entered into an Equity Distribution Agreement (the “2020 Agreement”) with JMP Securities LLC, serving as placement agent (the “Placement Agent”) with respect to an at-the-market offerings program under which we may offer and sell, from time to time at our sole discretion, 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 “2020 Offering”). We offered Shares having an aggregate offering price of $18.9 million pursuant to the prospectus supplement filed with the SEC on March 27, 2020. On June 1, 2020, we filed an amendment to the 2020 Agreement which amended the prospectus supplement dated March 27, 2020 to increase the aggregate offering price to $50.0 million. The 2020 Agreement was fully utilized during the year ended December 31, 2020, and no Shares were sold under the 2020 Agreement during the three and nine months ended September 30, 2021.

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 September 30, 2021, we had $174.9 million of cash, cash equivalents and restricted cash and $25.0 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 September 30, 2021 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.

Off-Balance Sheet Arrangements

As of September 30, 2021, 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.

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

24

Table of Contents

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

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

Changes in Internal Control Over Financial Reporting

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Not applicable.

Item 1A. Risk Factors

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

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

Not applicable.

Item 3. Default upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

25

Table of Contents

Item 6. Exhibits

Exhibit Index

Exhibit No.

    

Description

10.1 §

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

31.1 †

  

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

31.2 †

  

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

32.1 †

  

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

32.2 †

  

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

101.INS

  

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

101.SCH

  

Inline XBRL Taxonomy Extension Schema Document

101.CAL

  

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

  

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

  

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

  

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

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

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

§

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

26

Table of Contents

SIGNATURES

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

ALTIMMUNE, INC.

Dated: November 9, 2021

By:

/s/ Vipin K. Garg

Name:

Vipin K. Garg

Title:

President and Chief Executive Officer (Principal Executive Officer)

Dated: November 9, 2021

By:

/s/ Will Brown

Name:

Will Brown

Title:

Chief Financial Officer (Principal Financial and Accounting Officer)

27