What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-28 compared with 2022-03-15 · 237 added, 426 removed, 620 unchanged (52% of the section changed)

9 unchanged sentences

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Shareholders and the Board of Directors of Altimmune, Inc.

To the Shareholders and the Board of Directors of Altimmune, Inc.

Opinion on the Financial Statements

8 unchanged sentences

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

6 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

1 unchanged sentence

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Accounting for the Lonza manufacturing agreement, including related long-lived asset impairment assessment

Accrued Research and Development Expenses

Description of the Matter

As explained in Note 3 to the consolidated financial statements, the Company capitalized costs related to the procurement of long-lead equipment and build out of the suite associated with the Company’s manufacturing collaboration with Lonza Houston, Inc.

(“Lonza”) for the manufacture of AdCOVID or other adenovirus-based vaccines.

In June 2021, the Company announced the discontinuation of further development of AdCOVID and in the fourth quarter terminated its agreement with Lonza.

For the year ended December 31, 2021, the Company recorded $11.4 million of impairment loss on construction-in-progress.

The fair value of the assets related to construction-in-progress was primarily determined utilizing the cost approach, which determines the current replacement cost of the asset being appraised and then deducts for the loss in value caused by

contractual restrictions on the asset, the probability of satisfying the contractual restrictions, physical deterioration, functional obsolescence and economic obsolescence.

Auditing the Company's accounting conclusions for the Lonza Manufacturing Agreement and related impairment loss was complex due to the unusual and non-recurring nature of the transaction which required extensive audit effort.

In particular, the accounting for the agreement involved an assessment of the relevant accounting guidance to determine whether the costs incurred qualified for capitalization and an evaluation of the fair value of the construction-in-progress in order to determine the impairment loss to be recorded.

The Company’s accrued research and development expenses were $7.3 million at December 31, 2022.

As discussed in Note 2 of the consolidated financial statements, the Company analyzes progress of the studies, including the phase or completion of events, invoices received and contracted costs to estimate the accrual for research and development expense at period end.

How We Addressed the Matter in Our Audit

To test the accounting for the Lonza manufacturing agreement, our audit procedures included, among others, inspecting the agreements and evaluating the completeness and accuracy of the Company’s technical accounting analyses of the transactions and application of relevant accounting guidance.

This also included the involvement of subject matter resources to assist in evaluating the Company’s conclusion on the interpretation and application of the relevant accounting literature.

It also included recalculating the estimate of fair value of the construction-in-progress and impairment loss recorded.

Auditing the Company’s accrued research and development expenses was especially challenging due to the application of management judgment about the estimate of services provided but not yet invoiced.

Specifically, the amount of accrued research and development expenses recognized is sensitive to the availability of information to make the estimate, including the estimate of the period over which services will be performed, the associated cost of such services, and the level of services performed and progress in the period for which the Company has not yet received an invoice from the supplier.

Additionally, due to the duration of clinical trials and the timing of invoicing received from third parties, the actual amounts incurred are not always known by the report date.

To evaluate the Company’s estimate of services incurred as of period end pursuant to its research and development activities, our audit procedures included, among others, testing the completeness and accuracy of the underlying data used in the estimates and evaluating the significant assumptions stated above that are used by management to estimate the recorded amounts.

To assess the reasonableness of the significant assumptions, we obtained information regarding the nature and extent of progress of clinical trials and other activities from the Company’s research and development personnel that oversee the clinical trials.

To evaluate the completeness of the accrued research and development expenses, we also compared payments made by the Company subsequent to December 31, 2022 to the amounts accrued by the Company as of that date.

/s/ Ernst & Young LLP

1 unchanged sentence

Tysons, Virginia

March 15, 2022

February 28, 2023

ALTIMMUNE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per-share)

Current assets:

15 unchanged sentences

Total current liabilities

Contingent consideration

Other long-term liabilities

4 unchanged sentences

200,000,000 shares authorized;

40,993,768 and 37,142,946 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively

49,199,845 and 40,993,768 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

Accumulated deficit

( 293,171,423 )

( 186,420,599 )

Accumulated other comprehensive loss, net

( 5,040,163 )

( 5,044,517 )

Total stockholders’ equity

3 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per-share amounts)

Year Ended December 31,

5 unchanged sentences

Loss from operations

( 96,914,041 )

( 54,798,741 )

Other income (expense):

1 unchanged sentence

Interest income

Other (expense) income, net

Total other (expense) income, net

Net loss before income tax benefit

( 97,090,824 )

( 54,461,501 )

Income tax benefit

( 97,090,824 )

( 49,044,477 )

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

Other income (expense), net

Total other income (expense), net

Net loss before income taxes

Income tax expense (benefit)

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

Comprehensive loss

( 97,086,470 )

( 49,068,838 )

Net loss per share, basic and diluted

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

Comprehensive

1 unchanged sentence

Balance at December 31, 2020

( 137,376,122 )

( 5,020,156 )

Stock-based compensation

2 unchanged sentences

Issuance of common stock from Employee Stock Purchase Plan

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

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

Issuance of common stock upon exercise of warrants

Issuance of common stock related to contingent consideration liability

Unrealized loss on short term investments

( 49,044,477 )

Retirement of common stock in exchange for common stock warrant

( 1,000,000 )

Issuance of common stock warrant in exchange for retirement of common stock

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

Issuance of common stock upon cashless exercise of warrants

Unrealized gain (loss) on short-term investments

Balance at December 31, 2021

( 186,420,599 )

( 5,044,517 )

Stock-based compensation

2 unchanged sentences

Issuance of common stock from Employee Stock Purchase Plan

Retirement of common stock in exchange for common stock warrant

( 1,000,000 )

( 7,539,900 )

( 9,660,000 )

( 17,200,000 )

Issuance of common stock warrant in exchange for retirement of common stock

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

Issuance of common stock upon cashless exercise of warrants

Unrealized gain on short-term investments

( 97,090,824 )

Issuance of common stock related to contingent consideration liability

Other increase

Unrealized gain (loss) on short-term investments

Balance at December 31, 2022

( 293,171,423 )

( 5,040,163 )

The accompanying notes are an integral part of the consolidated financial statement

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Year Ended December 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

( 97,090,824 )

( 49,044,477 )

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

4 unchanged sentences

Depreciation and amortization

Unrealized losses (gains) on foreign currency exchange

Loss on foreign currency exchange

Changes in operating assets and liabilities:

Accounts receivable

( 3,589,024 )

Prepaid expenses and other current assets

( 5,907,878 )

( 1,371,312 )

Prepaid expenses and other assets

Accounts payable

Accrued expenses and other liabilities

( 2,299,368 )

Income tax and R&D incentive receivables

( 7,133,698 )

Net cash used in operating activities

( 78,237,941 )

( 34,305,815 )

CASH FLOWS FROM INVESTING ACTIVITIES:

1 unchanged sentence

Purchases of short-term investments

( 7,592,100 )

( 128,289,919 )

Purchases of property and equipment, net

( 12,117,111 )

Cash paid for internally developed patents

Net cash provided by (used in) investing activities

( 72,225,776 )

Net cash (used in) provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments of deferred offering costs

Proceeds from exercises of warrants

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

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

Proceeds from issuance of notes payable

Payments of notes payable

Proceeds from issuance of common stock from Employee Stock Purchase Plan

Proceeds from exercises of stock options

Proceeds from exercises of stock options, net

Net cash provided by financing activities

Net increase in cash and cash equivalents and restricted cash

Net (decrease) increase in cash and cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for interest

SUPPLEMENTAL NON-CASH ACTIVITIES:

8 unchanged sentences

The Company is focused on developing treatments for obesity and liver diseases.

The Company’s pipeline includes next generation peptide therapeutics for obesity and non-alcoholic steatohepatitis (“NASH”) (for both, pemvidutide [proposed INN], formerly known as ALT-801), and for chronic hepatitis B (HepTcell).

The Company’s pipeline includes next generation peptide therapeutics for obesity and non-alcoholic steatohepatitis (“NASH”) (for both, pemvidutide, formerly known as ALT-801), and for chronic hepatitis B (HepTcell).

Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff and raising capital, and has financed its operations through the issuance of common and preferred stock, long-term debt and proceeds from research grants and government contracts.

10 unchanged sentences

The Company bases estimates and assumptions on historical experience when available and on various factors that it believes to be reasonable under the circumstances.

Significant estimates relied upon in preparing the accompanying consolidated financial statements were related to revenue recognition, the fair value of common stock and other equity instruments, accounting for stock-based compensation, income taxes, useful lives of long-lived assets, fair value of contingent consideration, impairment of long-lived assets, and accounting for project development and certain accruals.

Significant estimates relied upon in preparing the accompanying consolidated financial statements were related to the fair value of common stock and other equity instruments, accounting for stock-based compensation, income taxes, useful lives of long-lived assets, fair value of contingent consideration, impairment of long-lived assets, and accounting for project development and certain accruals.

The Company assesses the above estimates on an ongoing basis;

5 unchanged sentences

Cash Equivalents

The Company considers all highly liquid investments purchased with remaining maturities of 90 days or less on the purchase date to be cash equivalents, and include amounts held in money market funds which are actively traded (a Level 1 input).

The Company considers all highly liquid investments purchased with remaining maturities of 90 days or less on the purchase date to be cash equivalents, and includes amounts held in money market funds which are actively traded (a Level 1 input).

Restricted Cash

The Company had restricted cash of $ 34,174 at both December 31, 2021 and 2020, held in money market savings accounts as collateral.

The Company had restricted cash of $ 34,000 as of both December 31, 2022 and 2021, held in money market savings accounts as collateral.

The restricted cash as of December 31, 2022 and 2021 is for the Company’s facility lease obligation.

26 unchanged sentences

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure.

Therefore, even when market assumptions are not readily available, the Company’s own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date.

The Company uses prices and inputs that are current as of the measurement date, including during periods of market dislocation.

In periods of market dislocation, the observability of prices and inputs may change for many instruments.

This condition could cause an instrument to be reclassified within levels in the fair value hierarchy.

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 during the years ended December 31, 2022 and 2021.

Financial Instruments

The Company’s financial instruments consist of cash, cash equivalents, restricted cash, accounts receivable, short-term investments, notes payable, accounts payable, accrued expenses, contingent consideration, common stock warrants classified as a liability, and common stock warrants classified as equity.

The Company’s financial instruments consist of cash, cash equivalents, restricted cash, accounts receivable, short-term investments, accounts payable, accrued expenses, and common stock warrants classified as equity.

The carrying amounts of cash, cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued expenses approximate their fair value due to the short-term nature of those financial instruments.

Short-term investments are recorded at fair value, with any unrealized holding gains or losses reported as accumulated other comprehensive income or loss.

Notes payable, prior to their redemption or cancellation, are recorded at their repayment value which approximates fair value.

Contingent payments classified as a liability are recorded at fair value estimated using the Monte Carlo simulation valuation model.

Common stock warrants classified as equity are initially recorded at their grant date fair value.

Short-term investments are

recorded at fair value, with any unrealized holding gains or losses reported as accumulated other comprehensive income or loss.

For those warrants with a down round feature, if the down round feature is triggered, the Company would remeasure those instruments at that time with changes recorded as a deemed dividend all within equity.

Common stock warrants classified as a liability are recorded at fair value and are remeasured every reporting period with the changes in fair value recorded as a component of other income (expenses), net until their settlement or exercise.

Accounts Receivable

6 unchanged sentences

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash, cash equivalents, restricted cash, and accounts receivable.

Financial instruments that potentially subject the Company to significant concentration of credit risk consist primarily of cash, cash equivalents, restricted cash, short-term investments and accounts receivable.

Periodically, the Company maintains deposits in financial institutions in excess of government insured limits.

1 unchanged sentence

The Company has not experienced any losses in these deposits.

The Company recognizes research grants and contracts earned in connection with the services provided on research and development projects.

The Company provides credit in the normal course of providing such services based on evaluations of the grantors’ financial condition and generally does not require collateral.

To manage accounts receivable credit risk, the Company monitors the creditworthiness of its grantors.

government accounts for 97 % of revenue for both of the years ended December 31, 2021 and 2020.

government accounts for 100 % of accounts receivable for both of the years ended December 31, 2021 and 2020.

Property and Equipment, Net

11 unchanged sentences

Intangible Assets

Intangible assets acquired in a business combination consist primarily of in-process research and development (“IPR&D”) assets.

The value attributable to IPR&D projects at the time of acquisition is capitalized as an indefinite-lived intangible asset and tested for impairment until the project is completed or abandoned.

The Company records intangible assets acquired in a business combination based on fair value on the date of acquisition.

Acquired in-process research and development (“IPR&D”) assets that have alternative future use at the time of acquisition are capitalized as an indefinite-lived intangible asset and tested for impairment until the project is completed or abandoned.

Upon completion of the project, the indefinite-lived intangible asset will be accounted for as a finite-lived intangible asset and amortized on a straight-line basis over its estimated useful life.

If the project is abandoned, the indefinite-lived intangible asset will be charged to expense.

Intangible assets, including patents and licenses, acquired in other transactions are recorded at cost.

Intangible assets with finite useful lives consist of legal and patent costs incurred in the course of obtaining patents and license issuance fees for the use of proprietary technologies.

Intangible assets acquired in other transactions are recorded at cost.

The Company capitalizes costs incurred in the course of obtaining patents and license issuance fees for the use of proprietary technologies.

Costs incurred for obtaining patents are amortized on a straight-line basis over the estimated useful lives of the assets from the time of approval of the patent.

2 unchanged sentences

License issuance fees are amortized on a straight-line basis over the estimated useful lives of the underlying licensed technology.

Intangible assets with finite useful lives are being amortized over 6 to 20 years .

These amortization costs are classified as research and development expenses in the accompanying statements of operations and comprehensive loss.

Amortization costs are classified as research and development expenses.

Impairment of Long-lived Assets

1 unchanged sentence

Impairment of long-lived assets other than goodwill and indefinite lived intangibles is assessed by comparing the undiscounted cash flows expected to be generated by the asset group to its carrying value.

During the year ended December 31, 2021, the Company recorded non-cash impairment charges for assets that were previously capitalized in connection with the discontinuation of AdCOVID (see Note 3).

In addition, the Company recorded an impairment loss of $ 0.6 million on intangible assets associated with the Company’s discontinued development programs (see Note 5).

The Company has indefinite lived intangible assets associated with in-process research and development (“IPR&D”).

The Company’s IPR&D assets are currently non-amortizing.

Until such time as the projects are either completed or abandoned, the Company test those assets for impairment at least annually at year end, or more frequently at interim periods, by evaluating qualitative factors which could be indicative of impairment.

Qualitative factors being considered include, but are not limited to, the current project status, forecasted changes in the timing or amounts required to complete the project, forecasted changes in timing or changes in the future cash flows to be generated by the completed products, a probability of success of the ultimate project and changes to other market-based assumptions, such as discount rates.

If impairment indicators are present as a result of the Company’s qualitative assessment, the Company will test those assets for impairment by comparing the fair value of the assets to their carrying value.

Upon completion or abandonment, the value of the IPR&D assets will be amortized to expense over the anticipated useful life of the developed products, if completed, or charged to expense when abandoned if no alternative future use exists.

Key assumptions used in the Company’s impairment analysis tests include projected cash flows, a probability of success of the ultimate project, and the discount rate.

The Company has one IPR&D asset, HepTcell, that was acquired in 2015.

This candidate is a viral pathogen immunotherapy product for the treatment of chronic HBV.

The Company performed a qualitative assessment for the IPR&D impairment testing for 2021 and 2020 and determined that no impairment indicators were present.

The Company’s headquarters lease is the primary lease, accounted for as an operating lease under FASB Accounting Standards Codification Topic 842, Leases (“ASC 842”), utilizing the prospective optional transition method.

The Company elected the package of practical expedients permitted.

Accordingly, the Company accounted for its existing operating leases as operating leases under ASC 842, without reassessing (a) whether the contracts contain a lease, (b) whether classification of the operating leases would be different in accordance with ASC 842, or (c) whether the unamortized initial direct costs before transition adjustments would have met the definition of initial direct costs at lease commencement.

In addition, the Company does not allocate the consideration between lease and non-lease components.

The IPR&D asset is currently non-amortizing.

Until such time as the project is either completed or abandoned, the Company tests this asset for impairment at least annually at year end, or more frequently at interim periods, by evaluating qualitative factors which could be indicative of impairment.

Qualitative factors being considered include, but are not limited to, the current project status, forecasted changes in the timing or amounts required to complete the project, forecasted changes in timing or changes in the future cash flows to be generated by the completed product, a probability of success of the ultimate project and changes to other market-based assumptions, such as discount rates.

If impairment indicators are present as a result of the Company’s qualitative assessment, the Company will test the asset for impairment by comparing the fair value of the asset to its carrying value.

Upon completion or abandonment, the value of the IPR&D asset will be amortized to expense over the anticipated useful life of the developed product, if completed, or charged to expense when abandoned if no alternative future use exists.

Key assumptions used in the Company’s impairment analysis tests include projected cash flows, a probability of success of the ultimate project, and the discount rate.

The Company performed a qualitative assessment for the IPR&D impairment testing for the year ended December 31, 2022 and 2021 and determined that no impairment indicators were present.

The Company determines if an arrangement is a lease at inception.

Operating leases are recorded as a current and long-term lease obligation, with a corresponding right of use lease assets.

The lease obligations represent the Company’s obligation to make lease payments arising from the lease.

The right of use lease assets represent the Company’s right to use an underlying asset for the lease term.

The lease obligations and the operating right of use lease assets are recognized at the commencement date based on the present value of lease payments over the lease term.

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Lease liabilities represent the Company’s obligation to make lease payments arising from leases.

Right of use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term.

Lease liabilities and ROU assets are recognized at the lease commencement date based on the present value of lease payments over the lease term.

As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments.

The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

8 unchanged sentences

Changes in the fair value can result from adjustments to the probability of achievement of the milestones, stock price, volatility and the risk-free interest rate.

The change in Company’s estimates associated with the timing of payments which will become due and payable for development and regulatory milestones will change the fair value of contingent consideration, resulting in a charge or contra expense to research and development expense in the period in which the increase or decrease is determined.

The change in the Company’s estimates associated with payments for development and regulatory milestones could change the fair value of contingent consideration, resulting in a charge or contra expense to research and development expense in the period in which the increase or decrease is determined.

Common stock warrants issued in connection with the 2018 Unit Offering, the 2018 and 2019 Registered Direct Offerings, and the 2020 Public Offering (all terms defined in Note 10 and Note 11), were classified as a component of permanent equity because they are freestanding financial instruments that were legally detachable and separately exercisable from other debt and equity instruments, are contingently exercisable, do not embody an obligation for the Company to repurchase its shares, and permits the holders to receive a fixed number of common shares upon exercise.

In addition, such warrants did not provide any guarantee of value or return.

The 2018 Registered Direct Offering and 2019 Registered Direct Offering triggered down round adjustments to the exercise price of warrants issued in connection with

the 2018 Unit Offering.

In 2019, the Company treated the value of the effect of the reduction in exercise price as a deemed dividend, resulting in a reduction to income available to common shareholders (see Note 11).

There was a reduction in exercise price in 2020 due to the At-the-Market Offering which triggered an anti-dilution provision under the warrant agreement with the Company’s holders of redeemable preferred stock (see Note 11).

The 2018 Registered Direct Offering and 2019 Registered Direct Offering triggered down round adjustments to the exercise price of warrants issued in connection with the 2018 Unit Offering.

In the event that down round adjustment is triggered, the Company treats the value of the effect of the reduction in exercise price as a deemed dividend, resulting in a reduction to income available to common shareholders.

Stock-based Compensation

The Company accounts for all stock-based compensation granted to employees and non-employees using a fair value method.

The Company estimates the fair value of stock options granted using the Black-Scholes option pricing model on the dates of grant.

For restricted stock and restricted stock units granted, fair value is determined based on the grant date closing price of the Company’s common stock.

Stock-based compensation awarded to employees is measured at the grant date fair value of stock option grants and is recognized over the requisite service period of the awards, usually the vesting period, on a straight-line basis, net of estimated forfeitures.

13 unchanged sentences

Third party clinical trial expenses include investigator fees, site and patient costs, CRO costs, costs for central laboratory testing, data management and CMO costs.

The accrual for site and patient costs includes inputs such as estimates of patient enrollment, patient cycles incurred, clinical site activations and other pass-through costs.

The accrual for

site and patient costs includes inputs such as estimates of patient enrollment, patient cycles incurred, clinical site activations and other pass-through costs.

These inputs are required to be estimated due to a lag in receiving the actual clinical information from third parties.

7 unchanged sentences

R&D Small and Medium Enterprise tax relief program (“U.K.

R&D credit”) and the Australian

research and development incentive credit (the “Australia R&D credit”) program administered through the Australian Tax Office (the “ATO”).

R&D credit”) and the Australian research and development incentive credit (the “Australia R&D credit”) program administered through the Australian Tax Office (the “ATO”).

R&D credits are calculated as a percentage of qualifying R&D expenses and are payable in cash by the U.K.

3 unchanged sentences

Qualifying R&D expenses must be incurred within the country.

The Company will record a reduction to R&D expense in the consolidated statement of operations and comprehensive loss when there is reasonable assurance that the Company will comply with the conditions attached to the incentive credits and that the incentive credits will be received.

and Australian incentive credits are available on the basis of specific criteria with which the Company must comply.

The incentive credits are subject to future audits by the government authorities and a four-year statute of limitations.

The incentive credits are subject to future audits by the government authorities and a statute of limitations.

Although the incentive credits may be administered through the local tax authority, the Company has accounted for the incentives outside of the scope of FASB Accounting Standards Codification Topic 740, Income Taxes (“ASC 740”), since the incentives are not linked to the Company’s taxable income and can be realized regardless of whether the Company has generated taxable income in the respective jurisdictions.

The Company accounts for these incentive credits as a government grant which analogizes with International Accounting Standards 20 (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance .

As of and for the year ended December 31, 2021 and 2020, the Company recognized $ 1.8 million and $ 2.3 million, respectively, of R&D credits included in “Income tax and R&D incentive receivables” on the accompanying consolidated balance sheets and a corresponding reduction to R&D expense in the consolidated statement of operations and comprehensive loss.

The Company records qualifying U.K.

R&D expenses as receivable and a corresponding reduction to R&D expense in the consolidated statement of operations and comprehensive loss.

During the years ended December 31, 2022 and 2021, the Company recognized $ 1.8 million and $ 1.9 million, respectively, of R&D credits as a reduction to R&D expense in the consolidated statement of operations and comprehensive loss.

As of December 31, 2022 and 2021, the Company had $ 1.6 million and $ 1.8 million, respectively, of R&D credits included in “Income tax and R&D incentive receivables” on the accompanying consolidated balance sheets.

The Company records qualifying Australian R&D as receivable with a full valuation reserve.

Cash receipts for Australia R&D credits are recorded as long-term liability until it either passes an audit performed by the Australian Tax Office, or the statute of limitations ends, whichever occurs first.

Upon successfully passing an audit or the expiration of the statute of limitations, the Company will clear the liability and a corresponding reduction to R&D expense unless recognition criteria is met in a later year, in which case the R&D credit will be recorded as other income in the consolidated statement of operations and comprehensive loss.

During the year ended December 31, 2022, the Company received a total of $ 3.6 million in cash for R&D incentive credit related to R&D costs that the Company incurred during the fiscal years 2021 and 2020 through the participation in the Australian R&D credit program, and is included in “Other long-term liabilities” on the accompanying consolidated balance sheets.

The Company accounts for income taxes in accordance with ASC 740.

ASC 740 uses the asset and liability approach, which requires the recognition of future tax benefits or liabilities on the temporary differences between the financial reporting and tax bases of our assets and liabilities.

ASC 740 uses the asset and liability approach, which requires the recognition of future tax benefits or liabilities on the temporary differences between the

financial reporting and tax bases of our assets and liabilities.

Deferred tax assets and liabilities represent future tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities and for loss carryforwards using enacted tax rates expected to be in effect in the years in which the differences reverse.

8 unchanged sentences

Once the Company becomes profitable, it will likely have a study prepared, and the amount of R&D tax credits available could generate income tax benefit, subject to an annual Section 383 limitation and valuation allowance for realizability of the deferred tax asset.

As of December 31, 2021 and 2020, the Company recognized $ 3.6 million and $ 5.4 million of income tax receivables included in “Income tax and R&D incentive receivables” on the accompanying consolidated balance sheets.

Comprehensive Loss

For the years presented, the total comprehensive loss includes net loss and other comprehensive income (loss) which represents unrealized gains or losses on investments.

For the years presented, the total comprehensive loss includes net loss and other comprehensive income (loss) which represents unrealized gains or losses on short-term investments.

Net Loss per Share

2 unchanged sentences

Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares and dilutive common stock equivalents outstanding for the period determined using the treasury-stock and if-converted methods.

Recently Issued Accounting Pronouncements

Recently Adopted :

In December 2019, the FASB issued Accounting Standards Update (“ASU”) No.

2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes (“ASU No.

2019-12 amends the approaches and methodologies in accounting for income taxes during interim periods and makes changes to certain income tax classifications.

The new standard allows exceptions to the use of the incremental approach for intra-period tax allocation, when there is a loss from continuing operations and income or a gain from other items, and to the general methodology for calculating income taxes in an interim period, when a year-to-date loss exceeds the anticipated loss for the year.

The standard also requires franchise or similar taxes partially based on income to be reported as income tax and the effects of enacted changes in tax laws or rates to be included in the annual effective tax rate computation from the date of enactment.

Lastly, in any future acquisition, the Company would be required to evaluate when the step-up in the tax basis of goodwill is part of the business combination and when it should be considered a separate transaction.

The Company adopted the standard as of January 1, 2021 and determined that the adoption did not have a material impact on the Company’s consolidated financial statements.

In November 2021, the FASB issued ASU No.

2021-10, Government Assistance (Topic 832):

Disclosures by Business Entities about Government Assistance (“ASU No.

2021-10 has an effective and transition date of January 1, 2022.

This standard increases the transparency of transactions with the government that are accounted for by applying a grant or contribution accounting model and aims to reduce diversity that currently exists in the recognition, measurement, presentation, and disclosure of government assistance received by business entities due to the lack of specific authoritative guidance in GAAP.

This standard requires an entity to provide information regarding the nature of the transaction with a government and the related accounting policy used to account for this transaction, the line item on the consolidated balance sheets and consolidated statement of operations and comprehensive loss that are affected by the transaction and the amounts applicable to each financial statement line item, and the significant terms and conditions of the transaction, including commitments and contingencies.

The Company early adopted the standard as of December 31, 2021 and determined that the adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Not Yet Adopted :

Recently Issued Accounting Pronouncements not yet adopted

In June 2016, the FASB issued ASU No.

1 unchanged sentence

Measurement of Credit Losses on Financial Instruments (“ASU No.

2016-13 requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts.

This update also required enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio.

This standard is effective for the Company as a smaller reporting company beginning January 1, 2023.

Adoption is not expected to have a material impact on the Company’s consolidated financial statements.

2016-13 requires financial assets measured at amortized cost to be presented at the net amount expected to be collected and any unrealized loss relating to available-for-sale debt securities that is a result of credit losses be recorded through an allowance for credit losses.

The Company will adopt this new accounting standard on January 1, 2023 using a modified retrospective method.

Adoption of this update is not expected to have a material impact on the Company’s financial statements and related disclosures.

Fair Value Measurement

The Company records cash equivalents, short-term investments, contingent consideration and warrant liability at fair value on a recurring basis.

The Company records cash equivalents, short-term investments and contingent consideration liability at fair value on a recurring basis.

Fair value is an exit price, representing the amount that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants based on assumptions that market participants would use in pricing an asset or liability.

The Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2021 consisted of the following:

The Company’s assets and liabilities measured at fair value on a recurring basis as of December 31, 2022 consisted of the following (in thousands):

Fair Value Measurement at December 31, 2022

Cash equivalents - money market funds

Contingent consideration liability (see Note 8)

The Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2020 consisted of the following:

Short-term investments

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

Fair Value Measurement at December 31, 2021

Cash equivalents - money market funds

Short-term investments

Contingent consideration liability (see Note 8)

Warrant liability

There was no warrant liability at December 31, 2021.

The warranty 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.

As described in Note 8 the remaining milestone payment underlying the contingent consideration liability was fully settled during 2022 in shares of the Company’s common stock.

As of December 31, 2022, the Company had no contingent consideration liability.

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

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

There were no short-term investments at December 31, 2021.

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

Short-term investments with quoted prices at December 31, 2022 as shown below (in thousands):

December 31, 2022

Unrealized Gain

Amortized Cost

Unrealized (Loss) Gain

United States treasury securities

1 unchanged sentence

Asset backed securities

Certificate of deposit

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 were classified as a liability at December 31, 2021 include the following significant unobservable inputs:

Unobservable input

Value or Range

Weighted-Average

Expected volatility

Risk-free interest rate

Cost of capital

Discount for lack of marketability

Probability of payment

Projected year of payment

Agency debt securities

As of December 31, 2021, the fair value of contingent payments classified as a liability was based on the regulatory milestones described in Note 8 and was estimated using the Monte Carlo simulation valuation model with Level 3 inputs.

The assumptions used to estimate the fair value of contingent payments that were classified as a liability at December 31, 2021 include the following significant unobservable inputs:

8 unchanged sentences

Projected year of payment

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 and out of Level 3 of the fair value hierarchy during the years ended December 31, 2021 or 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 year ended December 31, 2021, the Company recorded non-cash impairment charges to property and equipment, net on a non-recurring basis (see below).

During the year ended December 31, 2022, the Company had no significant assets or liabilities that were measured at fair value on a non-recurring basis.

During the year ended December 31, 2021, the Company recorded non-cash impairment charges to property and equipment, net on a non-recurring basis (see below).

Lonza Manufacturing Agreement

1 unchanged sentence

(“Lonza”) for the manufacture of AdCOVID or other adenovirus-based 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.

This work was completed during the fourth quarter of 2021.

The Company capitalized a total of $ 11.4 million as construction-in-progress (“CIP”) during the year ended December 31, 2021 under this expanded agreement.

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.

Under the expanded agreement, the Company had committed approximately $ 23.0 million to Lonza to procure long-lead equipment and construct a dedicated manufacturing suite for clinical and commercial production of adenovirus-based vaccines.

In June 2021, the Company announced the discontinuation of further development of AdCOVID following the Company’s review of findings from its Phase 1 clinical trial.

Construction continued at Lonza, and the Company assessed its strategic options with respect to the suite.

Should Lonza contract a replacement project with another customer for the suite within 12 months of termination, Lonza shall reimburse the Company for 75 % of the price paid for any equipment that can be utilized for the other customer.

The Company’s expectation was that, more likely than not, the suite would be disposed of significantly before the end of its previously estimated useful life.

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 associated with the construction of the Lonza facility.

The fair value of the CIP related assets was $ 3.3 million at September 30, 2021.

At September 30, 2021, the fair value of the CIP related assets was primarily determined utilizing the cost approach, which reflects the current replacement cost of the asset being appraised, adjusted for contractual restrictions on the assets, the probability of satisfying the contractual restrictions, physical

deterioration, functional obsolescence and economic obsolescence.

This work was completed during the fourth quarter of 2021.

The Company capitalized a total of $ 11.4 million as construction-in-progress (“CIP”) during the nine months ended September 30, 2021 under this expanded agreement.

In connection with the discontinuation of further development of AdCOVID, the Company recorded a non-cash impairment charge of $ 8.1 million in the unaudited consolidated statements of operations and comprehensive loss for the nine months ended September 30, 2021 to write-down the CIP associated with the construction of the Lonza facility to its fair value of $ 3.3 million as of September 30, 2021.

As of September 30, 2021, the fair value of the CIP related assets was primarily determined utilizing the cost approach, which reflected the replacement cost of the asset being appraised, adjusted for contractual restrictions on the assets, the probability of satisfying the contractual restrictions, physical deterioration, functional obsolescence and economic obsolescence.

The fair value measurement was considered a Level 3 measurement within the valuation hierarchy.

During the fourth quarter of 2021, due to the failure of negotiations with the lead potential replacement customer for the CIP related assets and potential negotiations with other prospective customers failing to materialize, and due to other specific competitive and market conditions, as well as the termination of the manufacturing agreement with Lonza in December 2021, along with the remote probability of recovering cost after termination, the Company considered these triggering events and reassessed the CIP related assets for impairment and determined that the assets had no potential value and recorded an additional impairment charge of $ 3.3 million for the full remaining value of the CIP related assets.

For the year ended December 31, 2021, the Company recorded a total of $ 11.4 million in non-cash impairment charges associated with CIP in the accompanying audited consolidated statements of operations and comprehensive loss.

Following the discontinuation of AdCOVID, incremental costs incurred under the construction contract have been recorded to research and development expenses in the accompanying audited consolidated statements of operations and comprehensive loss.

Research and development expenses related to the Lonza manufacturing agreement was approximately $ 11.6 million, less $ 1.0 million of credit issued by Lonza, for the year ended December 31, 2021.

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

Property and Equipment, Net

Property and equipment, net consists of the following:

Property and equipment, net consists of the following (in thousands):

Furniture, fixtures and equipment

4 unchanged sentences

accumulated depreciation and amortization

( 2,046,880 )

( 1,598,811 )

Property and equipment, net

1 unchanged sentence

Intangible Assets

The Company’s intangible assets consist of the following:

The Company’s intangible assets consist of the following (in thousands):

December 31, 2022:

Internally developed patents

Acquired licenses

16 – 20 years

Total intangible assets subject to amortization

December 31, 2021:

3 unchanged sentences

Total intangible assets subject to amortization

Amortization expense of intangible assets subject to amortization totaled $ 19,920 and $ 46,813 for the years ended December 31, 2021 and 2020, respectively.

Amortization expense was classified as research and development expenses in the accompanying consolidated statements of operations and comprehensive loss.

Intangible assets subject to amortization, which represent incomplete technologies, was amortized to expense over their estimated useful lives once the underlying technologies were substantially complete.

In the event that in the future the Company ceases the development of these assets, the remaining carrying value would be written off at that time.

IPR&D assets are periodically assessed for impairment by considering the state of completion of the projects, the remaining activities required to complete development, the anticipated market for the completed products and anticipated future cash required to complete development.

As of December 31, 2021, the Company recorded an impairment loss of $ 0.6 million for the remaining net book value of the internally developed patents that are associated with the Company's discontinued development programs.

The impairment loss has been recorded to research and development expenses in the accompanying audited consolidated statements of operations and comprehensive loss.

There was no IPR&D impairment loss during the year ended December 31, 2021 and 2020.

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 years ended December 31, 2021 and 2020 under all of the Company’s operating leases was $ 0.5 million and $ 0.4 million, respectively, which includes short-term leases and variable lease costs that are not included in the lease obligation.

There was no IPR&D impairment loss during the years ended December 31, 2022 and 2021

The Company rents office and laboratory space in the United States, which are operating leases and expire in April 2025.

Rent expense under these leases during each of the years ended December 31, 2022 and 2021 was $ 0.5 million, which includes short-term leases and variable lease costs that are not included in the lease obligation.

The office space lease provides for increases in future minimum annual rental payments as defined in the lease agreements.

1 unchanged sentence

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 year ended December 31, 2021 and 2020 was $ 0.5 million and $ 0.4 million, respectively.

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

The cash paid for operating lease liabilities for each of the years ended December 31, 2022 and 2021 was $ 0.5 million.

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

Operating lease obligations (see Note 7 and 9)

3 unchanged sentences

Weighted-average discount rate

Maturities of operating lease liabilities are as follows:

Maturities of operating lease liabilities are as follows (in thousands):

Year ending December 31,

3 unchanged sentences

Accrued Expenses and Other Current Liabilities

Accrued expense and other current liabilities consist of the following:

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

Accrued professional services

2 unchanged sentences

Lease obligation, current portion (see Note 6)

Excess tax refund payable

Accrued interest and other

4 unchanged sentences

(“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.

Spitfire was a privately held, preclinical pharmaceutical company developing a novel GLP-1/glucagon receptor dual agonist for the treatment of NASH.

The transaction closed on July 12, 2019.

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

The Company issued 1,887,250 unregistered shares of its common stock as upfront consideration to certain former securityholders of Spitfire, 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”):

The Spitfire Merger Agreement also includes future contingent payments up to $ 88.0 million payable in either cash or shares of the Company’s common stock as follows:

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

1 unchanged sentence

● payments of up to $ 80.0 million upon the achievement of specified worldwide net sales (the “Sales Milestones”) of all products developed using the technology acquired in the License Agreement within ten years following the approval of a new drug application filed with the FDA.

The Regulatory Milestones will be payable in shares of the Company’s Common Stock, with the number of shares of the Company’s Common Stock to be issued in connection with each milestone amount, if any, 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 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 probable and the amount is reasonably estimated.

On November 3, 2020, the Company received acknowledgement from the Australian Government Department of Health on the Company’s submitted clinical trial notification (“CTN”) which triggered the obligation to settle the IND Milestone payment to the former owners.

As a result, on November 19, 2020, the Company issued 1,694,906 shares of its Common Stock valued at $ 9.57 per share for the amount value of $ 13.6 million to the former Spitfire stockholders.

Pursuant to the Spitfire Merger Agreement, the Company issued the shares within sixty days of the submission of the CTN, which was October 29, 2020 .

From September 30, 2020 through the date of issuance, the Company recognized a decrease in the fair value of the IND Milestone payment of $ 5.4 million to research and development expense and reclassified the balance in the contingent consideration liability associated with the fair value of the IND Milestone payment to equity in the Company’s consolidated balance sheet.

No Regulatory Milestones were achieved during the year ended December 31, 2021;

however, the milestone which would trigger the Phase 2 Milestone Consideration Amount remains outstanding.

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 discussed above.

Below is a summary of the contingent consideration activity:

The Regulatory Milestones were payable in shares of the Company’s Common Stock, with the number of shares of the Company’s common stock issued in connection with each milestone amount, if any, dependent on the share price at the time of achievement.

The number of shares issued in consideration for the IND Milestone Consideration Amount was determined based on the lower of (A) the average of the closing prices of the Company’s common stock as reported on the Nasdaq Global Market for the twenty (20) consecutive trading days prior to the IND Reference Date or (B) $ 2.95 .

The number of shares issued in consideration for the Phase 2 Milestone Consideration Amount was determined based on the lower of (A) the average of the closing trading prices of the Company’s common stock as reported on the Nasdaq

Global Market for the twenty (20) consecutive trading days immediately preceding the date of the occurrence of the Phase 2 Milestone Event or (B) $ 3.54 .

The 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 probable and the amount can be reasonably estimated.

In November 3, 2020, the Company issued 1,694,906 shares of its common stock valued at $ 9.57 per share for the amount value of $ 13.6 million to the former Spitfire stockholders to satisfy the obligations under IND Milestone.

On April 26, 2022, the Company dosed the first patient in the Phase 2 MOMENTUM trial of pemvidutide in obesity, which triggered the obligation to pay the Phase 2 Milestone Consideration Amount to the former owners.

As a result, on June 10, 2022, the Company issued 847,444 shares of its common stock valued at $ 8.55 per share for the amount value of $ 7.2 million to the former Spitfire stockholders.

From the last valuation date on March 31, 2022 through June 10, 2022, the date of issuance, the Company recognized an increase in the fair value of the Phase 2 Milestone Consideration Amount of $ 1.9 million to research and development expense and reclassified the balance in the contingent consideration liability to equity in the Company’s consolidated balance sheet.

As of December 31, 2022, the Company had no contingent consideration liability.

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

Year Ended December 31,

1 unchanged sentence

Change in fair value

Fair value of payments settled in common stock (IND Milestone)

( 13,625,010 )

Fair value of payments settled in common stock (Phase II Milestone)

Ending balance

The net increase in fair value throughout 2021 was primarily attributable to timing of the probability of milestone achievement.

The net increase in fair value throughout the year ended December 31, 2020 was primarily attributable to an increase in the closing share price of the Company’s common stock and in the probability of milestone achievement, partially offset by the fair value of the IND Milestone payment settled in common stock.

Any changes in fair value have been recorded within research and development expense during the respective periods presented.

As of December 31, 2021, we classified the total contingent consideration of $ 6.1 million as current liabilities.

The balance sheet classification between current and non-current liabilities was based upon our reasonable expectation as to the timing of settlement of the Phase 2 Milestone payment to the former owners.

Notes Payable and Other Liabilities

Paycheck Protection Program

On April 7, 2020, the Company applied for a loan from ServisFirst Bank, as lender, pursuant to the Paycheck Protection Program of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) as administered by the U.S.

Small Business Administration (the "SBA").

On April 13, 2020, the Loan was approved and the Company received the proceeds from a loan in the amount of $ 632,000 (the “PPP Loan”).

The PPP Loan, which took the form of a promissory note (the “Promissory Note”), was set to mature on April 7, 2022 and bore interest at a rate of 1 % per annum.

Monthly principal and interest payments, less the amount of any potential forgiveness, was to commence on November 7, 2020.

All or a portion of the Loan may have been forgiven by the SBA and lender upon application by the Company upon documentation of expenditures in accordance with the SBA requirements.

On July 21, 2020, the Company voluntarily extinguished the Promissory Note by paying the outstanding principal and accrued interest in cash.

The Company’s other long-term liabilities are summarized as follows:

Other Long-Term Liabilities

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

Research and development incentive credit

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

1 unchanged sentence

Total other long-term liabilities

R&D incentive credit Program

During the year ended December 31, 2022, the Company received a total of $ 3.6 million in cash for research and development (“R&D”) incentive credit related to R&D costs that the Company incurred during the fiscal years 2021 and 2020 through the participation in the Australian research and development incentive credit program administered through the Australian Tax Office.

The Company recorded the receipt as long-term liability until there is reasonable assurance that the Company will comply with the conditions attached to the incentive credit.

Economic Incentive Grants

2 unchanged sentences

The State of Maryland grant was received in October 2019, with a 10 -year term expiring on December 31, 2029 .

These grants are conditional primarily based on the Company maintaining its current headquarter locations in addition to employing a required number of employees at different reporting dates through the term of the grants.

The Company is accruing 3 % interest on both grants and has recorded $ 7,563 and $ 7,583 in interest expense for the years ended December 31, 2021 and 2020, respectively.

The Company is accruing 3 % interest on both grants and has recorded approximately $ 8,000 in interest expense for each of the years ended December 31, 2022 and 2021.

The Amended and Restated Certificate of Incorporation, as amended (“Charter”), authorized the Company to issue 200,000,000 shares of common stock, par value $ 0.0001 per share.

As of December 31, 2022, the Company had 49,199,845 shares of common stock issued and outstanding .

The Charter also authorized the Company to issue 1,000,000 shares of preferred stock, par value $ 0.0001 per share.

As of December 31, 2022, the Company had no shares of preferred stock issued and outstanding .

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 ATM Offering”).

Any Shares offered and sold in the 2021 ATM Offering will be issued pursuant to the Company’s Registration Statement on Form S-3 filed with the SEC on December 31, 2020, which was declared effective on January 11, 2021, the prospectus supplement relating to the 2021 ATM Offering filed with the SEC on February 25, 2021 and any applicable additional prospectus supplements related to the 2021 ATM Offering that form a part of the Registration Statement.

As of December 31, 2021, the Company has sold 4,800,454 shares of Common Stock under the 2021 Agreement resulting in approximately $ 64.8 million in net proceeds, with $ 58.0 million remaining available to be sold under the 2021 Agreement.

As of December 31, 2021, the Company recorded approximately $ 0.1 million of offering costs which offset the proceeds received from the shares sold through December 31, 2021.

The Company capitalized approximately $ 0.1 million of deferred offering costs which will offset future proceeds received under the 2021 Agreement.

O n 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, having an aggregate offering price of up to $ 50.0 million (the “Shares”) through the Placement Agent (the “2020 ATM Offering”).

Any Shares offered and sold in the 2020 ATM 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 ATM Offering filed with the SEC on March 27, 2020 and any applicable additional prospectus supplements related to the 2020 ATM Offering that form a part of the Registration Statement.

The aggregate market value of Shares eligible for sale in the 2020 ATM 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 December 31, 2020, the Company sold 5,594,455 shares of Common Stock under the amended 2020 Agreement resulting in $ 48.2 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 year ended December 31, 2021.

Riley Securities, Inc., serving as sales agents (the “Sales Agents”) with respect to an at-the-market offerings program under which the Company offered and sold shares of its common stock, par value $ 0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $ 125.0 million (the “Shares”) through the Sale Agents (the “2021 Offering”).

All Shares offered and sold in the 2021 Offering were issued pursuant to the Company’s Registration Statement on Form S-3 filed with the SEC on December 31, 2020, which was declared effective on January 11, 2021 (“2021 Shelf”), the prospectus supplement relating to the 2021 Offering filed with the SEC on February 25, 2021 and any applicable additional prospectus supplements related to the 2021 Offering that form a part of the Registration Statement.

During the year ended December 31, 2022, the Company sold 5,204,415 shares of Common Stock under the 2021 Agreement resulting in approximately $ 56.2 million in proceeds, net of $ 1.9 million commission and other offering cost.

As of December 31, 2022, the Company has sold 10,004,869 shares of Common Stock under the 2021 Agreement resulting in approximately $ 121.0 million in proceeds, net of $ 4.0 million commission and other offering costs.

As of December 31, 2022, there were no remaining shares available under the 2021 Agreement.

The Company recorded approximately $ 0.3 million of other offering costs which offset the proceeds received from the shares sold through December 31, 2022.

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 December 31, 2021, none of the Exchange Warrants have been exercised.

On January 24, 2022, the Exchange Warrants to purchase 1,000,000 shares were net exercised, resulting in the issuance of 999,984 shares of common stock, and no Exchange Warrants remain outstanding (see Note 11).

Public Offering

1 unchanged sentence

The Pre-Funded Warrants are exercisable at any time, provided that each Pre-Funded Warrant holder will be prohibited from exercising such Pre-Funded Warrants into shares of the Company’s common stock if, as a result of such exercise, the holder, together with its affiliates, would own more than 4.99 % of the total number of shares of the Company’s common stock then issued and outstanding, which percentage may change at the 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.

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 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 December 31, 2021, no Pre-Funded Warrants were exercised.

Registered Direct Offering

On March 12, 2019 , the Company issued a combined total of 4,361,370 common units and pre-funded units to certain institutional investors in a registered direct offering (the “Registered Direct Offering”).

Each common unit in the Registered Direct Offering was sold at a price of $ 3.21 and consisted of one share of common stock and 0.70 of a warrant to purchase one share of common stock at an exercise price of $ 3.21 .

Each warrant sold in the Registered Direct Offering was exercisable immediately and expired five years from the date of issuance.

Each pre-funded unit in the Registered Direct Offering was sold at a public offering price of $ 3.20 and consisted of a pre-funded warrant to purchase one share of common stock at an exercise price of $ 0.01 per share and 0.70 of a warrant to purchase one share of common stock at an exercise price of $ 3.21 .

All of the pre-funded warrants were exercised during 2019.

The net proceeds of the Registered Direct Offering were $ 12.7 million, after deducting the underwriting discount and estimated offering expenses payable by the Company.

The warrants issued in the Registered Direct Offering were recognized as equity classified freestanding financial instruments.

The Registered Direct Offering triggered a down round adjustment to the exercise price of the warrants issued in the 2018 Unit Offering (refer to Note 11) from $ 4.1798 to $ 2.7568 .

During the year ended December 31, 2019, the Company treated the value of the effect of the reduction in exercise price as a deemed dividend of $ 452,925 which reduced income available to common shareholders.

The value of a down round feature is measured as the difference between the financial instrument’s fair value (without the down round feature) using the pre-trigger exercise price and the financial instrument’s fair value (without the down round feature) using the reduced exercise price.

Accordingly, the Pre-Funded Warrants are classified as equity and were accounted for as a component of additional paid-in capital at the time of issuance.

As of December 31, 2022, 760,870 of the Pre-Funded Warrants were exercised, leaving 869,566 remaining Pre-Funded Warrants unexercised (see Note 11).

The following common stock warrants were outstanding at December 31, 2022:

1 unchanged sentence

Expiration Date

Replacement warrants

March 3, 2012

March 3, 2022

Issued with common units in the 2018 Unit Offering

4 unchanged sentences

October 10, 2023

Issued with common units in the 2019 Registered Direct Offering (see Note 10)

Issued with common units in the 2019 Registered Direct Offering

March 12, 2019

2 unchanged sentences

July 16, 2020

Issued in exchange for retirement of common stock per the Exchange Agreement (see Note 10)

February 25, 2021

The following common stock warrants were outstanding at December 31, 2021:

4 unchanged sentences

March 3, 2022

Issued with redeemable preferred stock*

August 16, 2017

August 16, 2022

Issued with common units in the 2018 Unit Offering

4 unchanged sentences

October 10, 2023

Issued with common units in the 2019 Registered Direct Offering (see Note 10)

Issued with common units in the 2019 Registered Direct Offering

March 12, 2019

2 unchanged sentences

July 16, 2020

*Liability classified warrants

Issued in exchange for retirement of common stock per the Exchange Agreement (see Note 10)

February 25, 2021

The following is a description of the common stock warrants issued prior to January 1, 2020:

Replacement Warrants

In May 2017, the Company issued 155 common stock warrants to replace outstanding common stock warrants in connection with the Company’s merger with PharmAthene, Inc.

Redeemable Preferred Stock Warrants

In August 2017, in connection with a redeemable preferred stock issuance, the Company granted warrants to holders of redeemable preferred stock to purchase up to 78,181 shares of the Company’s common stock.

Warrants issued with the redeemable preferred stock are classified as a liability and were initially recorded at their grant date fair value, and remeasured on each subsequent balance sheet date.

The warrant liability is classified as a component of other long-term liabilities on the consolidated balance sheets.

During the year ended December 31, 2019, the Company exchanged 1,550 of these warrants for a combination of common stock and cash, leaving 62 of these warrants outstanding as of December 31, 2019.

During the second quarter of 2020, the 62 common stock warrants were repriced to 1,420 common stock warrants due to the at-the-market offerings which triggered an anti-dilution provision under the warrant agreement with the Company’s holders of redeemable preferred stock.

As of December 31, 2021, all of the redeemable preferred stock warrants were exercised.

2019 Registered Direct Offering

Each warrant sold in the Registered Direct Offering was exercisable immediately and expired five years from the date of issuance.

All of the pre-funded warrants were exercised during 2019.

The warrants issued in the Registered Direct Offering were recognized as equity classified

freestanding financial instruments.

As of December 31, 2022, there were 50,000 unexercised warrants issued under the 2019 Registered Direct Offering.

2018 Unit Offering

2 unchanged sentences

Each warrant sold in the 2018 Unit Offering was exercisable immediately and expired five years from the date of issuance.

Each pre-funded unit in the 2018 Unit Offering was sold at a public offering price of $ 4.99 and consisted of a pre-funded warrant to purchase one share of common stock at an exercise price of $ 0.01 per share and a warrant to purchase one share of common stock at an exercise price of $ 6.00 .

The pre-funded warrants were immediately exercisable and were able to be exercised at any time until all of the pre-funded warrants were exercised in full.

All of the pre-funded warrants were exercised prior to December 31, 2018.

1 unchanged sentence

Accordingly, to the extent the Company was to issue additional common stock or securities convertible into common stock at an issuance price lower than exercise price of the warrants, the exercise price of the warrants would be adjusted to the lower of (i) the issuance price or (ii) the lowest volume weighted-average price of the Company’s common stock on the five trading days following the announcement of the new offering.

In conjunction with the 2018 Unit Offering, the Company issued 196,650 warrants to the underwriter.

The underwriter warrants had an exercise price per share equal to 125 % of the public offering price per common unit in this offering and could be exercised on a cashless basis.

As of December 30, 2021, all of the underwriter warrants were exercised in full.

The 2018 Registered Direct Offering triggered a down round adjustment to the exercise price of the warrants issued in the 2018 Unit Offering from $ 6.00 to $ 4.1798 .

In addition, the 2019 Registered Direct Offering triggered a down round adjustment to the exercise price of the warrants issued in the 2018 Unit Offering from $ 4.1798 to $ 2.7568 .

As of December 31, 2022, there were 3,300 unexercised warrants issued under the 2018 Unit Offering.

2018 Registered Direct Offering

2 unchanged sentences

Each warrant sold in the 2018 Registered Direct Offering was exercisable immediately and expired five years from the date of issuance.

Each pre-funded unit in the 2018 Registered Direct Offering was sold at a public offering price of $ 5.39 and consisted of a pre-funded warrant to purchase one share of common stock at an exercise price of $ 0.01 per share and a warrant to purchase one share of common stock at an exercise price of $ 5.40 .

The pre-funded warrants were immediately exercisable and were able to be exercised at any time until all of the pre-funded warrants are exercised in full.

All of the pre-funded warrants were exercised prior to December 31, 2018.

The 2018 Registered Direct Offering triggered a down round adjustment to the exercise price of the warrants issued in the 2018 Unit Offering from $ 6.00 to $ 4.1798 .

As of December 31, 2022, there were 92,300 unexercised warrants issued under the 2018 Registered Direct Offering.

A summary of warrant activity is as follows:

Year Ended December 31,

Weighted-Average

Contractual Term

Exercise Price

Warrants outstanding, December 31, 2021

Exchanges (see Note 10)

Exercises (see Note 10)

( 1,760,870 )

3 unchanged sentences

The Company established the 2001 Employee Stock Option Plan to provide incentive stock options and non-qualified stock options to employees, and the 2001 Non-employee Stock Option Plan to provide non-qualified stock options to the members of the board of directors and advisory board, and non-employees.

The 2001 Employee Stock Option Plan and the 2001 Non-employee Stock Option Plan are collectively referred to as the “2001 Plans.” In connection with the PharmAthene Merger Agreement in 2017, the Company issued options from its 2001 Plans to replace options previously granted.

The 2001 Employee Stock Option Plan and the 2001 Non-employee Stock Option Plan are collectively referred to as the “2001 Plans.” In connection with the Company’s merger with PharmAthene, Inc.

in 2017, the Company issued options from its 2001 Plans to replace options previously granted.

The Company de-designated common stock available for issuance under the 2001 Plans.

1 unchanged sentence

Options outstanding and unvested restricted stock granted or replaced under these plans will continue to vest over the remaining vesting period through the earlier of exercise, expiration or forfeiture.

The replacement options issued after the 2017 mergers will continue to vest over the remaining vesting period through the earlier of exercise, expiration, or forfeiture.

The replacement options issued after the 2017 mergers will continue to vest over the remaining

vesting period through the earlier of exercise, expiration or forfeiture.

Also, in connection with the 2017 mergers, the 2001 Plans were assumed by the Company.

4 unchanged sentences

The Company established the 2017 Omnibus Incentive Plan (the “Omnibus Plan”) to provide incentive stock options, non-qualified stock options, restricted stock, and other stock-based awards denominated in shares of the Company’s common stock, and performance-based cash awards to eligible employees, consultants and directors.

In 2018, the Company’s shareholders approved an amendment to the Omnibus Plan to increase the number of shares reserved for

issuance from 1,500,000 to 5,000,000 .

In 2018, the Company’s shareholders approved an amendment to the Omnibus Plan to increase the number of shares reserved for issuance from 1,500,000 to 5,000,000 .

The aggregate share reserve will be increased on January 1 of each year commencing in 2018 and ending on and including January 1, 2027 up to an amount equal to the lowest of (i) 4 % of the total number of shares of common stock outstanding on a fully diluted basis as of December 31 of the immediately preceding calendar year, and (ii) such number of shares of common stock, if any, determined by the Company’s board of directors.

Accordingly, on January 1, 2023, the number of shares of Common Stock reserved and available for issuance under the Omnibus Plan increased by 2,160,537 .

The maximum shares of common stock that may be granted to each employee or consultant in any fiscal year under the Omnibus Plan is the lesser of 800,000 shares per type of award or a maximum compensation amount of $ 5,000,000 under a Black-Scholes valuation model.

9 unchanged sentences

The fair value of stock option issued to employees was estimated at the date of grant using Black-Scholes with the following weighted-average assumptions:

For the Year Ended December 31,

Year Ended December 31,

Expected volatility

6 unchanged sentences

Expected term represents the number of years that the Company’s option grants are expected to be outstanding.

There is not sufficient historical share exercise data to calculate the expected term of the stock options;

There is not sufficient historical share exercise data to calculate the expected term of the stock

therefore, the Company elected to utilize the simplified method to value option grants.

6 unchanged sentences

The fair value of each non-employee stock option is estimated at the date of grant using Black-Scholes with assumptions generally consistent with those used for employee stock options, with the exception of expected term, which is over the contractual life.

A summary of stock option activity under the Plans is presented below:

A summary of stock option activity under the Plans is presented below (in thousands, except share and per share data):

Weighted-Average

10 unchanged sentences

The total intrinsic value of stock options exercised during the years ended December 31, 2022 and 2021 was $ 4.4 million and $ 0.7 million, respectively.

The total fair value of awards vested during the years ended December 31, 2021 and 2020 was $ 4.7 million and $ 1.1 million, respectively.

At December 31, 2021, there was $ 10.0 million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 2.3 years.

The total fair value of options vested during the years ended December 31, 2022 and 2021 was $ 6.8 million and $ 4.7 million, respectively.

As of December 31, 2022, there was $ 11.7 million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 2.6 years.

Restricted Stock

In October 2016, the Company authorized and granted a restricted stock award of 2,651 shares at an aggregate purchase price of $ 1,067 .

The weighted-average grant date fair value of the restricted stock award was $ 310.80 per share.

The restricted stock vested ratably at the end of each quarter over four years starting on December 31, 2016 with 50 % of the original issued shared subject to accelerated vesting upon a deemed liquidation event.

During the year ended December 31, 2020, 213 of the restricted shares fully vested, which completed the vesting of this share award.

In November 2018, the Company authorized and granted the Chief Executive Officer a restricted stock award of 322,907 shares on his date of hire.

The weighted-average grant date fair value of the restricted stock award was $ 3.59 per share.

The restricted stock vests over a four-year period, 25 % of the shares vesting on the one-year anniversary, and the remaining 75 % vesting in 36 substantially equal monthly installments and will be fully vested on December 1, 2022 ;

provided, however, that the executive officer has not experienced a termination prior to the applicable vesting date.

The fair value of the 80,726 restricted shares that vested during the year ended December 31, 2021 totaled $ 1.0 million.

In June 2020, the Company authorized and granted 109,525 shares of restricted stock awards which vested over three months .

The weighted-average grant date fair value of the restricted stock award was $ 9.19 per share.

During the year ended December 31, 2020, all of the 109,525 of restricted shares fully vested, which completed the vesting of this share award.

In September 2020, the Company authorized and granted 15,000 shares of restricted stock units which vest over a four-year period, 25 % of the shares vesting on the one-year anniversary, and the remaining 75 % vesting in 36 substantially equal monthly installments and will be fully vested on September 22, 2024 .

The weighted-average grant date fair value of the restricted stock award was $ 14.35 per share.

The fair value of the 4,687 restricted shares that vested during the year ended December 31, 2021 totaled $ 0.1 million.

In February 2021, the Company authorized and granted 181,279 shares of restricted stock units which vest over four years and will be fully vested on February 1, 2025 .

The weighted-average grant date fair value of the restricted stock award was $ 16.71 per share.

No restricted shares vested during the year ended December 31, 2021.

In June 2021, the Company authorized and granted 15,000 shares of restricted stock units which vest over a four-year period, 25 % of the shares vesting on the one-year anniversary, and the remaining 75 % vesting in 36 substantially equal monthly installments and will be fully vested on June 30, 2025 .

The weighted-average grant date fair value of the restricted stock award was $ 9.85 per share.

No restricted shares vested during the year ended December 31, 2021.

In December 2021, the Company authorized and granted 50,000 shares of restricted stock units which vest over four years and will be fully vested on December 31, 2025 .

The weighted-average grant date fair value of the restricted stock award was $ 9.16 per share.

No restricted shares vested during the year ended December 31, 2021.

The restricted stock vested over a four-year period, 25 % of the shares vesting on the one-year anniversary, and the remaining 75 % vesting in 36 substantially equal monthly installments.

The restricted stock was fully vested on November 30, 2022 .

During the year ended December 31, 2022, the Company issued 41,572 of unrestricted common stock as a result of the vesting of 74,000 restricted stock net of 32,428 shares of common stock withheld to satisfy tax withholding obligations.

The fair value of restricted stock awards vested during the years ended December 31, 2022 and 2021 was $ 0.7 million and $ 1.0 million, respectively.

As of December 31, 2022, there was no unrecognized compensation expense related to restricted stock.

A summary of restricted stock activities is presented below:

Unvested, December 31, 2021

Unvested, December 31, 2022

Restricted Stock Units (RSUs)

During the year ended December 2022, the Company granted 285,000 shares of RSUs with a weighted-average grant date fair value of $ 7.11 per share which vest over four years .

During the year ended December 31, 2022, the Company issued 41,123 shares of unrestricted common stock as a result of the vesting of 61,028 RSUs net of 19,905 shares of common stock withheld to satisfy tax withholding obligations.

The fair value of RSUs vested during the years ended December 31, 2022 and 2021 was $ 0.6 million and $ 0.1 million, respectively.

A summary of RSUs activities is presented below:

Unvested, December 31, 2021

Forfeited or expired

Unvested, December 31, 2022

As of December 31, 2021, total unrecognized compensation expense related to restricted stock awards was $ 2.7 million, which the Company expects to recognize over a weighted-average period of approximately 2.7 years.

As of December 31, 2022, total unrecognized compensation expense related to RSUs was $ 2.8 million, which the Company expects to recognize over a weighted-average period of approximately 2.8 years.

2019 Employee Stock Purchase Plan

On March 29, 2019, the board of directors adopted the 2019 Employee Stock Purchase Plan (the “2019 ESPP”).

On March 29, 2019, the Board adopted the 2019 Employee Stock Purchase Plan (the “2019 ESPP”).

A total of 403,500 shares of the Company’s common stock have been reserved for issuance under the 2019 ESPP.

3 unchanged sentences

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

The 2019 ESPP estimated shares to be purchased fair value is included in the stock-based compensation expense.

The 2019 ESPP estimated shares to be purchased fair value is included in stock-based compensation expense.

Employees have the ability to purchase shares of the Company’s common stock at a price equal to the lower of the first or last trading day of the offering period, which represents an option and, therefore, the 2019 ESPP is a compensatory plan under ASC 718-50, Employee Stock Purchase Plans .

Accordingly, stock-based compensation expense is determined based on the option’s grant-date fair value, employee contributions, and the Company’s stock price and is recognized over the requisite service period of the option.

The Company used the Black-Scholes valuation model.

The Company used the Black-Scholes valuation model to determine the fair value of ESPP.

During the year ended December 31, 2022, employees purchased 26,395 shares for $ 0.2 million under the 2019 ESPP.

The Company recognized stock-based compensation expense related to this plan of $ 0.3 million and $ 0.2 million for the years ended December 31, 2021 and 2020, respectively.

As of December 31, 2022, there were 260,344 shares of common stock available for future issuance under the 2019 ESPP Plan.

The Company recognized stock-based compensation expense related to this plan of $ 0.3 million for each of the years ended December 31, 2022 and 2021, respectively.

Stock-based Compensation Expense

Stock-based compensation expense is classified in the accompanying consolidated statements of operations and comprehensive loss for the years ended December 31, 2021 and 2020 as follows:

Stock-based compensation expense is classified in the accompanying consolidated statements of operations and comprehensive loss for the years ended December 31, 2022 and 2021 as follows (in thousands):

Year Ended December 31,

6 unchanged sentences

Under the contract, MTEC paid the Company a firm fixed fee based upon the achievement of certain milestones for conduct and completion of a Phase 1/2 study and research and development work on the replication-deficient adenovirus 5 (“RD-Ad5”) vector vaccine platform.

For the years ended December 31, 2021 and 2020, the Company has recognized $ 0.5 million and $ 4.2 million of grant revenue under this contract, respectively.

For the year ended December 31, 2021, the Company has recognized $ 0.5 million of grant revenue under this contract, which completed the full recognition of this award.

No revenue was recognized for this contract for the year ended December 31, 2022.

In July 2016, the Company 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.

The contract, as amended, had a total value of up to $ 136.8 million and is used to fund clinical development of NasoShield.

Under the contract, BARDA paid 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.

2 unchanged sentences

Each option, if exercised by BARDA, would have provided additional funding ranging from approximately $ 1.1 million to $ 34.4 million for a three-year period beginning in 2021.

For the years ended December 31, 2021 and 2020, the Company has recognized $ 3.7 million and $ 3.1 million of grant revenue under the current BARDA contract, respectively.

At December 31, 2021, BARDA had not elected to extend the contract.

For the year ended December 31, 2021, the Company has recognized $ 3.7 million of grant revenue under the current BARDA contract.

For the year ended December 31, 2022, the Company has recognized de minimis grant revenue related to the close-out of the BARDA contract.

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

The Company accounts for these contracts as a government grant which analogizes with International Accounting Standards 20 (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance .

2 unchanged sentences

Eligible employees may elect to contribute up to the maximum limits, as set by the Internal Revenue Service, of their eligible compensation.

During the years ended December 31, 2021 and 2020, the Company made discretionary plan contributions of $ 0.3 million and $ 0.2 million, respectively.

The components of net loss before income tax benefit are as follows:

During each of the years ended December 31, 2022 and 2021, the Company made discretionary plan contributions of $ 0.3 million.

The components of net loss before income tax benefit are as follows (in thousands):

Year Ended December 31,

( 78,583,331 )

( 50,735,735 )

( 18,507,493 )

( 3,725,766 )

Net loss before income tax benefit

( 97,090,824 )

( 54,461,501 )

The components of the income tax benefit are as follows:

The components of the income tax expense (benefit) are as follows (in thousands):

Year Ended December 31,

state and local

Income tax benefit

Income tax expense (benefit)

Reconciliation between the effect of applying the federal statutory rate and the effective income tax rate used to calculate the Company’s income tax benefit is as follows:

4 unchanged sentences

Acquired in process research and development

CARES Act U.S.

federal and state carryback claim

Change in valuation allowance

1 unchanged sentence

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income and for tax carryforwards.

Significant components of the Company’s deferred tax assets and liabilities are as follows:

Significant components of the Company’s deferred tax assets and liabilities are as follows (in thousands):

Deferred tax assets:

4 unchanged sentences

Asset impairment

Capitalized research and development costs

Total deferred tax assets

Valuation allowance

( 40,584,149 )

( 18,671,086 )

Deferred tax assets, net

Deferred tax liabilities:

( 2,359,604 )

( 2,386,667 )

Right of use asset

Total deferred tax liabilities

( 2,679,050 )

( 2,781,003 )

Total deferred tax assets (liabilities), net

2 unchanged sentences

The increase in the valuation allowance during the year ended December 31, 2022 primarily relates to increases for current year losses in both the U.S.

and foreign locations which the Company concluded needed a full valuation allowance.

and foreign locations.

The Company has recorded a valuation allowance against its net U.S.

deferred tax assets it believes are not more likely than not realizable and the net non-U.S.

deferred tax assets.

and net non-U.S.

deferred tax assets as it believes are not more likely than not realizable.

Deferred tax liabilities, consist primarily of indefinite life IPR&D assets located in a foreign subsidiary, which will be applied in the future to offset against net operating losses (“NOLs”) that have an indefinite life.

8 unchanged sentences

The Company has reduced the NOL and related valuation allowance in historical periods.

Our existing NOLs are subject to limitations arising from previous ownership changes from 2020 and prior that impact the timing and amount.

In addition, future changes in our stock ownership, many of which are outside of our control, could result in an ownership change.

While we do not believe we have experienced ownership changes in 2021, it is possible we may have incurred a change as no new IRC 382 study was performed in 2021 to determine if there was another ownership change.

Accordingly, we may not be able to utilize a material portion of our NOLs and this could harm our future operating results by effectively increasing our future tax obligations.

The Company’s existing NOLs are subject to limitations arising from previous ownership changes from 2020 and prior that impact the timing and amount.

In addition, future changes in the Company’s stock ownership, many of which are outside of the Company’s control, could result in an ownership change.

We have not determined if we have experienced Section 382 ownership changes in the past and if a portion of our NOL and tax credit carryforwards are subject to an annual limitation under Section 382.

Accordingly, the Company may not be able to utilize a material portion of its NOLs and this could harm the Company’s future operating results by effectively increasing the Company’s future tax obligations.

Significant judgment is required in evaluating tax positions and determining the provision for income taxes.

5 unchanged sentences

Any changes in the next twelve months are not anticipated to have a significant impact on the results of operations, financial position or cash flows of the Company.

All of the Company’s uncertain tax positions, if recognized, would affect its income tax expense.

All of the Company’s uncertain tax positions, if recognized, would affect its income tax expense, although the net impact would be zero due to the Company’s valuation allowance position.

The Company has elected an accounting policy to classify interest and penalties related to unrecognized tax benefits as a component of income tax expense.

As of December 31, 2021 and 2020, potential interest and penalties on unrecognized tax benefits were not significant.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits excluding related interest and penalties:

During the year ended December 31, 2022, the company recorded income tax benefit of $ 0.2 million related to interest received and receivable on income tax refunds.

As of December 31, 2021, potential interest and penalties on unrecognized tax benefits were not significant.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits excluding related interest and penalties (in thousands):

Year Ended December 31,

Beginning balance

Increases for current year tax positions

Increases for prior year tax positions

Decreases for prior year tax positions

4 unchanged sentences

Net Loss Per Share

Because the Company has reported net loss attributable to common stockholders for the years ended December 31, 2021 and 2020, basic and diluted net loss per share attributable to common stockholders are the same for both years.

Because the Company has reported net loss attributable to common stockholders for the years ended December 31, 2022 and 2021, basic and diluted net loss per share attributable to common stockholders in each year are the same.

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.

3 unchanged sentences

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:

Year Ended December 31,

Common stock warrants

Common stock options

Restricted stock units

Restricted stock

19 unchanged sentences

Fees incurred under the Janssen agreement totaled $ 0.1 million and $ 0.2 million for the years ended December 31, 2022 and 2021, respectively, and are included in research and development expenses in the accompanying consolidated statements of operations and comprehensive loss.

The agreement’s current maintenance fee term is set to expire on April 2, 2023, and the Company has provided notice to Janssen that it does not intend to renew the agreement.

Spitfire Acquisition

8 unchanged sentences

In March 2020 the Defendants filed a motion to dismiss the complaint.

The Court denied the motion without prejudice and allowed Plaintiff an opportunity to file an amended complaint.

Plaintiff’s second amended complaint was filed on April 17, 2020, and Defendants filed a motion to dismiss that complaint on May 1, 2020.

A hearing on Defendants’ motion to dismiss was held on May 20, 2020.

Plaintiff, who is representing himself, alleges five causes of action as follows:

(1) Defendants’ alleged retention of Plaintiff’s lab notebooks after the termination of his employment in 2012;

(2) alleged plagiarism based on publishing an article without naming Plaintiff as an author;

(3) use of the Adhigh System, which Plaintiff alleges he developed;

(4) allegations that Defendants manipulated the Company’s stock and caused a decrease in value;

and (5) allegations that the Defendants “wast[ed] government grant money and poison[ed] science by leaving data to rot.” On September 30, 2020, Plaintiff filed a motion titled “Motion to Proscribe Defendants’ Allegedly Illegal Use of Plaintiff’s AdHigh System in Altimmune’s Human Clinical Trials,” to which Defendants filed an opposition on October 13, 2020.

The court has not yet ruled on that motion, which also remains pending.

On November 6, 2020, Defendants filed a motion for summary judgment on the basis of lack of personal jurisdiction, insufficient service of process, and failure to state a claim.

The court ruled on that motion on March 25, 2021, which dismissed the case on the basis of lack of personal jurisdiction.

On December 1, 2020, the magistrate judge assigned to the case issued a report and recommendation that Defendants’ motion to dismiss of May 1, 2020 be granted and that this action be dismissed for lack of personal jurisdiction.

Plaintiff filed objections to the report and recommendation on December 14, 2020, and the resolution of those objections by the district court remains pending.

In December 2021, the Plaintiff refiled the complaint in the United States District Court for the District of Maryland.

The Company believes the allegations in the complaint are without merit and intends to vigorously defend the litigation.

However, the outcome of this legal proceeding is uncertain at this time and the Company cannot reasonably estimate a range of loss, if any.

Accordingly, the Company has not accrued any liability associated with this action.

On March 25, 2021, the court granted the motion and dismissed the action for lack of personal jurisdiction.

In December 2021, the Plaintiff refiled the case in the United States District Court for the District of Maryland, captioned Tang v.

Altimmune, Inc., et al ., Case No.

8:21-cv-03283 (D.

Plaintiff, who is representing himself, asserts two causes of action:

(1) breach of a prior settlement agreement by “robbing Plaintiff’s properties”;

and (2) use by the Company of the “AdHigh system,” which Plaintiff claims is “proprietary.” On April 4, 2022, Defendants filed a motion to dismiss all claims in Plaintiff’s operative complaint, which motion is pending.

The Company believes the allegations in the operative complaint are without merit and intend to vigorously defend the 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.

Subsequent Events

Exchange Agreement

On January 20, 2022, Exchange Warrants to purchase 1,000,000 shares were net exercised, resulting in the issuance of 999,984 shares of common stock.

All of the Exchange Warrants were exercised in full.

See Note 10 for further details.

Public Offering

On January 20, 2022, warrant holders exercised 760,870 of the Pre-Funded Warrants and were issued 760,870 shares of common stock, leaving 869,566 remaining Pre-Funded Warrants unexercised.

See Note 10 for further details.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data