What changed in this filing

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Item 1. Financial Statements

2023-05-11 compared with 2022-11-10 · 131 added, 207 removed, 210 unchanged (62% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

September 30,

(In thousands, except share and per-share)

Current assets:

8 unchanged sentences

Property and equipment, net

Intangible assets, net

Indefinite-lived intangible asset

LIABILITIES AND STOCKHOLDERS’ EQUITY

1 unchanged sentence

Accounts payable

Contingent consideration

Accrued expenses and other current liabilities

6 unchanged sentences

200,000,000 shares authorized;

49,161,637 and 40,993,768 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

49,286,710 and 49,199,845 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively

Additional paid-in capital

6 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(In thousands, except share and per share data)

(In thousands, except share and per-share)

Three Months Ended

Nine Months Ended

September 30,

Operating expenses:

1 unchanged sentence

General and administrative

Impairment loss on construction-in-progress

Total operating expenses

5 unchanged sentences

Total other income (expense), net

Net loss before income taxes

Income tax benefit

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

Other comprehensive income — unrealized gain on short-term investments

Comprehensive loss

4 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(In thousands, except share amounts)

(In thousands, except share)

Comprehensive

5 unchanged sentences

Issuance of common stock from Employee Stock Purchase Plan

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

Issuance of common stock upon exercise of warrants

Balance at March 31, 2022

Stock-based compensation

Exercise of stock options

Vesting of restricted stock awards including withholding, net

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

Issuance of common stock related to contingent consideration liability

Unrealized (loss) gain on short-term investments

Balance at June 30, 2022

Stock-based compensation

Exercise of stock options

Vesting of restricted stock awards including withholding, net

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

Issuance of common stock from Employee Stock Purchase Plan

Other increase

Unrealized loss on short-term investments

Balance at September 30, 2022

Balance at March 31, 2023

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

6 unchanged sentences

Stock-based compensation

Exercise of stock options

Vesting of restricted stock awards including withholding, net

Issuance of common stock from Employee Stock Purchase Plan

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 on short-term investments

Issuance of common stock upon exercise of warrants

Balance at March 31, 2022

Stock-based compensation

Exercise of stock options

Vesting of restricted stock awards including withholding, net

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

Unrealized (loss) gain on short-term investments

Balance at June 30, 2021

Stock-based compensation

Exercise of stock options

Vesting of restricted stock awards including withholding, net

Issuance of common stock from Employee Stock Purchase Plan

Unrealized loss on short-term investments

Balance at September 30, 2021

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

2 unchanged sentences

(In thousands)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

1 unchanged sentence

Change in fair value of contingent consideration liability

Impairment loss on construction-in-progress

Stock-based compensation expense

Depreciation and amortization

Unrealized (gains) losses on foreign currency exchange

Loss on foreign currency exchange

Changes in operating assets and liabilities:

9 unchanged sentences

Purchases of property and equipment, net

Cash paid for internally developed patents

Net cash (used in) provided by investing activities

Net cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

2 unchanged sentences

Proceeds from issuance of common stock from Employee Stock Purchase Plan

Proceeds from exercises of stock options, net

Net cash provided by financing activities

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

(Payments for) proceeds from share-based compensation, net

Net cash (used in) provided by financing activities

Net decrease in cash and cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

1 unchanged sentence

SUPPLEMENTAL NON-CASH ACTIVITIES:

Common stock issued related to contingent consideration liability

Operating lease liability and right of use asset addition

Deferred offering costs in accrued expenses and other current liabilities

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

5 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, 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.

4 unchanged sentences

Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States (“U.S.

GAAP”) for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021 included in the Annual Report on Form 10-K which was filed with the SEC on March 15, 2022.

GAAP”) for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022 included in the Annual Report on Form 10-K which was filed with the SEC on February 28, 2023.

In the opinion of management, the Company has prepared the accompanying unaudited consolidated financial statements on the same basis as the audited consolidated financial statements, and these consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented.

3 unchanged sentences

The accompanying unaudited consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities in the ordinary course of business.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and liabilities that might be necessary should we be unable to continue as a going concern.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

Summary of Significant Accounting Policies

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

During the three months ended March 31, 2023, there have been no significant changes to the Company’s summary of significant accounting policies contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC, except for the recently adopted accounting standard for ASU No.

2016-13 as disclosed below.

Use of Estimates

1 unchanged sentence

GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

The extent to which the COVID-19 pandemic, including any resurgences or the emergence of new variants, may directly or indirectly impact the Company’s business, financial condition, and results of operations is highly uncertain and subject to change.

The Company considered the potential impact of the COVID-19 pandemic on the Company’s estimates and assumptions and determined that there was not a material impact to the Company’s unaudited consolidated financial statements as of and for the three and nine months ended September 30, 2022.

Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not

limited to, the valuation of share-based awards, income taxes, and accruals for research and development activities.

The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable.

However, actual results could differ from those estimates and there may be changes to the Company’s estimates in future periods.

Short-term Investments

The Company’s short-term investments are comprised of U.S.

Treasuries, corporate debt securities and certificates of deposit that have original maturities less than or equal to one year and are classified as available-for-sale (“AFS”) securities.

Such securities are carried at estimated fair value, net of allowance for credit loss determined based on the Current Expected Credit Loss.

Any unrealized holding gains or losses are reported as accumulated other comprehensive income or loss, which is a separate component of stockholders’ equity.

In the event that the AFS security's fair value is below the amortized cost and (i) the Company intends to sell the AFS security and (ii) the AFS security is required to be sold before recovery of the loss, the AFS security's amortized cost base will be written down to its fair value and the loss will be recognized in the income statement.

If the Company intends not to sell the AFS security and the AFS security is not required to be sold before recovery of the loss, the Company evaluates whether a portion of the unrealized loss is a result of credit loss.

The portion of unrealized loss related to credit loss will be recorded as allowance for credit loss in the balance sheet with the corresponding credit loss in the income statement and the portion of unrealized loss not related to credit loss will be recognized in other comprehensive income (“OCI”).

Dividend and interest income are recognized in other income when earned.

The cost of securities sold is calculated using the specific identification method.

The Company places all investments with government agencies, or corporate institutions whose debt is rated as investment grade.

As of March 31, 2023, none of the unrealized losses on our short-term investments are a result of credit loss, and therefore, the unrealized losses were recognized in OCI.

Due to a full valuation allowance, the Company did not record an income tax expense (benefit) for either of the three months ended March 31, 2023 or 2022.

The Company calculates its quarterly income tax provision based on an estimated, annual effective tax rates applied to ordinary income (or loss) and other known items computed and recognized as they occur.

The Company’s total provision is based on the United States statutory rate, increased by state and foreign taxes and reduced by a full valuation allowance on the Company’s deferred tax assets.

Recently adopted accounting pronouncements

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments – Credit Losses (Topic 326):

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

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 to be recorded through an allowance for credit losses.

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

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

Fair Value Measurements

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

Fair Value Measurement at September 30, 2022

The Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 consisted of the following (in thousands):

Fair Value Measurement at March 31, 2023

Cash equivalents - money market funds

3 unchanged sentences

Cash equivalents - money market funds

Contingent consideration liability (see Note 6)

As described in Note 6 the remaining milestone payment underlying the contingent consideration liability was fully settled in shares of the Company’s common stock.

As of September 30, 2022, the Company had no contingent consideration liability.

Short-term investments

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

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

Short-term investments had quoted prices as of September 30, 2022 as shown below (in thousands):

September 30, 2022

Short-term investments with quoted prices as of March 31, 2023 as shown below (in thousands):

March 31, 2023

Amortized Cost

Unrealized Loss

Unrealized (Loss) Gain

United States treasury securities

1 unchanged sentence

Asset backed securities

Agency debt securities

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

December 31, 2022

Amortized Cost

Unrealized (Loss) Gain

United States treasury securities

Commercial paper and corporate debt securities

Asset backed securities

Agency debt securities

Separate disclosure is required for assets and liabilities measured at fair value on a recurring basis from those measured at fair value on a non-recurring basis.

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

During the nine months ended September 30, 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

In March 2021, the Company expanded its manufacturing collaboration with Lonza Houston, Inc.

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

Under the expanded agreement, the Company 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.

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.

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.

During the three months ended March 31, 2023 and year ended December 31, 2022, the Company had no significant assets or liabilities that were measured at fair value on a non-recurring basis.

Operating Leases

The Company rents office and laboratory space in the United States which expires in April 2025.

Rent expense under the Company’s operating leases was $ 0.1 million and $ 0.4 million during each of the three and nine months ended September 30, 2022 and 2021, respectively.

The Company’s operating leases consist of leases for office and laboratory space in the United States, which expire in April 2025.

Rent expense during the three months ended March 31, 2023 and 2022 under all of the Company’s operating leases was $ 0.2 million and $ 0.1 million, respectively.

Rent expense includes short-term leases and variable lease costs that are not included in the lease obligation.

1 unchanged sentence

The Company recognizes short-term leases on a straight-line basis and does not record a related lease asset or liability for such leases.

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

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

The office space lease also includes an option to renew the lease as of the end of the term.

The Company has determined that the lease renewal option is not reasonably certain of being exercised.

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

The cash paid for operating lease liabilities for each of the three months ended March 31, 2023 and 2022 was $ 0.1 million.

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

September 30, 2022

March 31, 2023

December 31, 2022

6 unchanged sentences

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

September 30, 2022

March 31, 2023

December 31, 2022

3 unchanged sentences

Lease obligation, current portion (see Note 4)

Income tax payable

Excess tax refund payable

Accrued interest and other

9 unchanged sentences

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:

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.

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

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

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 Regulatory Milestones were stock-based payments accounted for under FASB Accounting Standards Codification Topic 480, Distinguishing Liabilities From Equity (“ASC 480”).

Such stock-based payments are subject to a lock-up whereby 50 % of the shares are released at 3 months following issuance and 50 % are released at 6 months following issuance.

The future contingent payments related to the Sales Milestones are predominately cash-based payments accounted for under FASB Accounting Standards Codification Topic 450, Contingencies .

In November 2020, the Company issued 1,694,906 shares of its common stock to fully satisfy the obligations under the IND Milestone.

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

In June 2022 the Company issued 847,444 shares of its common stock to fully satisfy the obligations under the Phase 2 Milestone.

● 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 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.

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 November 19, 2020, 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.

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 September 30, 2022, the Company had no contingent consideration liability.

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

Nine Months Ended September 30,

Beginning balance

Change in fair value

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

Ending balance

During the three months ended March 31, 2022, the Company recognized $ 1.8 million gain from change in fair value of contingent consideration liability.

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

As described above, the Company fully satisfied the contingent consideration liability in June 2022.

As of March 31, 2023 and December 31, 2022, the Company had no contingent consideration liability.

Other Long-Term Liabilities

During the nine months ended September 30, 2022, the Company received a total of $ 3.4 million in cash for research and development (“R&D”) incentive credit that the Company earned during the fiscal years 2021 and 2020 through the 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.

Summary of Significant Accounting Policies in the Company’s 2021 Annual Report on Form 10-K for accounting policies related to research and development incentive credits.

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

September 30, 2022

March 31, 2023

December 31, 2022

3 unchanged sentences

Total other long-term liabilities

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

As of March 31, 2023, the Company had 49,286,710 shares of common stock issued and outstanding .

Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders.

Common stockholders are not entitled to receive dividends, unless declared by the board of directors.

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

As of March 31, 2023, the Company had no shares of preferred stock issued and outstanding .

At-the-Market Offerings

On February 28, 2023, the Company entered into an Equity Distribution Agreement (the “2023 Agreement”) with Evercore Group L.L.C., JMP Securities LLC 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, having an aggregate offering price of up to $ 150.0 million (the “Shares”) through the Sales Agents (the “2023 Offering”).

All Shares offered and sold in the 2023 Offering will be issued pursuant to the Company’s Registration Statement on Form S-3 filed with the SEC on February 28, 2023, which was declared effective immediately, the prospectus supplement relating to the 2023 Offering filed with the SEC on February 28, 2023 and any applicable additional prospectus supplements related to the 2023 Offering that form a part of the Registration Statement.

The Company capitalized approximately $ 0.2 million of other offering costs which will offset the proceeds

received from the shares sold under the 2023 Agreement.

No shares were sold under the 2023 Agreement during the three months ended March 31, 2023, and as of March 31, 2023, $ 150.0 million remained available to be sold under the 2023 Agreement.

As of March 31, 2023, there was $ 0.2 million deferred offering costs included in prepaid expenses and other current assets on the accompanying consolidated balance sheets.

On February 25, 2021, the Company entered into an Equity Distribution Agreement (the “2021 Agreement”) with Piper Sandler & Co., Evercore Group L.L.C.

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

All 2021 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, 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.

Under the 2021 Agreement, the Company sold 10,004,869 shares of common stock resulting in approximately $ 121.0 million in proceeds, net of $ 4.0 million commission and other offering costs.

As of March 31, 2023, there were no remaining shares available under the 2021 Agreement.

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 common stock, 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.

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.

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.

The Company has assessed the Pre-Funded Warrants for appropriate equity or liability classification and determined that the Pre-Funded Warrants are freestanding instruments that do not meet the definition of a liability pursuant to ASC 480 and do not meet the definition of a derivative pursuant to FASB Accounting Standards Codification Topic 815, Derivatives and Hedging (“ASC 815”).

The Pre-Funded Warrants are indexed to the Company’s common stock and meet all other conditions for equity classification under ASC 480 and ASC 815.

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

As of September 30, 2022, 760,870 of the Pre-Funded Warrants were exercised, leaving 869,566 remaining Pre-Funded Warrants unexercised.

At-the-Market Offerings

On February 25, 2021, the Company entered into an Equity Distribution Agreement (the “2021 Agreement”) with Piper Sandler & Co., Evercore Group L.L.C.

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 Sales Agents (the “2021 Offering”).

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

During the nine months ended September 30, 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 costs.

As of September 30, 2022, the Company has sold 10,004,869 shares of Common Stock under the 2021 Agreement resulting in approximately $ 121.0 million in proceeds, net of $ 4.0 million commission and other offering costs, As of September 30, 2022, there were no remaining shares available for issuance under the 2021 Agreement.

recorded approximately $ 0.3 million of other offering costs which offset the proceeds received from the shares sold through September 30, 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 did not have an expiration date and were exercisable at any time except that the Exchange Warrants could not be exercised by the Exchanging Stockholders if, after giving effect thereto, the Exchanging Stockholders would beneficially own more than 9.99 % of the Company’s common stock, subject to certain exceptions.

In accordance with FASB Accounting Standards Codification Topic 505, Equity , the Company recorded the retirement of the common stock exchanged as a reduction of common shares outstanding and a corresponding debit to additional paid-in-capital and accumulated deficit at the fair value of the Exchange Warrants on the issuance date.

The Exchange Warrants were classified as equity in accordance with ASC 480 and the fair value of the Exchange Warrants was recorded as a credit to additional paid-in-capital and is not subject to remeasurement.

The Company determined that the fair value of the Exchange Warrants is substantially similar to the fair value of the retired shares on the issuance date due to the negligible exercise price for the Exchange Warrants.

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.

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

Weighted-Average

Contractual Term

Exercise Price

Warrants outstanding, December 31, 2021

Exercises (see Note 8)

( 1,760,870 )

Warrants outstanding, September 30, 2022

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

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

On January 24, 2022, 760,870 of the Pre-Funded Warrants were exercised, resulting in the issuance of 760,870 shares of common stock.

As of March 31, 2023, there were 869,566 remaining Pre-Funded Warrants unexercised.

As of March 31, 2023, including the remaining 869,566 Pre-Funded Warrants, there were 1,015,166 outstanding warrants with a weighted-average exercise price of $ 0.66 and weighted-average contractual term of 0.7 years.

Stock-Based Compensation

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The Company’s stock option awards generally vest over four years and typically have a contractual life of ten years .

As of September 30, 2022, there was $ 13.7 million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 2.6 years.

During the nine months ended September 30, 2022, the Company granted 1,433,427 stock options with a weighted average exercise price of $ 8.39 and per share weighted average grant date fair value of $ 6.97 .

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

As of March 31, 2023, there was $ 20.5 million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 3.1 years.

During the three months ended March 31, 2023, the Company granted 1,159,725 stock options with a weighted average exercise price of $ 12.81 and per share weighted average grant date fair value of $ 10.42 .

Information related to stock options outstanding as of March 31, 2023 is as follows (in thousands, except share, exercise price and contractual term):

Weighted-Average

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Exercise Price

Restricted Stock

As of September 30, 2022, the Company had unvested restricted stock of 13,454 shares with total unrecognized compensation expense of $ 47,000 , which the Company expects to recognize over a weighted average period of approximately 0.2 years.

During the nine months ended September 30, 2022, the Company issued 34,132 of unrestricted common stock as a result of the vesting of 60,546 restricted stock net of 26,414 shares of common stock withheld to satisfy tax withholding obligations.

Restricted Stock Units (RSUs)

During the nine months ended September 30, 2022, the Company granted 285,000 shares of RSUs with a weighted average grant date fair value of $ 7.11 which vest over four years .

As of September 30, 2022, the Company had unvested RSUs of 470,275 shares with total unrecognized compensation expense of $ 3.4 million, which the Company expects to recognize over a weighted average period of approximately 3.1 years.

During the nine months ended September 30, 2022, the Company issued 30,373 shares of unrestricted common stock as a result of the vesting of 46,653 RSUs net of 16,280 shares of common stock withheld to satisfy tax withholding obligations.

2019 Employee Stock Purchase Plan (ESPP)

Under the ESPP, employees purchased 26,395 shares for $ 0.2 million during the nine months ended September 30, 2022.

During the three and nine months ended September 30, 2022, the Company recognized compensation expense of $ 0.1 million and $ 0.2 million respectively.

During the three and nine months ended September 30, 2021, the Company recognized compensation expense of $ 29,000 and $ 0.3 million, respectively.

During the three months ended March 31, 2023, the Company granted 319,700 shares of RSUs with a weighted average grant date fair value of $ 13.20 which vest over four years .

As of March 31, 2023, the Company had unvested RSUs of 629,793 shares with total unrecognized compensation expense of $ 6.1 million, which the Company expects to recognize over a weighted average period of approximately 3.2 years.

During the three months ended March 31, 2023, the Company issued 54,347 shares of unrestricted common stock as a result of the vesting of 89,392 RSUs net of 35,045 shares of common stock withheld to satisfy tax withholding obligations.

2019 Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan, employees purchased 13,215 shares for $ 0.1 million during the three months ended March 31, 2023.

During the three months ended March 31, 2023, the Company recognized compensation expense of $ 0.1 million.

Stock-based Compensation Expense

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

Stock-based compensation expense is classified in the unaudited consolidated statements of operations and comprehensive loss for the three months ended March 31, 2023 and 2022 as follows (in thousands):

For the Three Months Ended

For the Nine Months Ended

September 30,

Research and development

General and administrative

Government Contracts and Grants

In June 2020, the Company was awarded $ 4.7 million from the U.S.

Army Medical Research & Development Command (“USAMRDC”) to fund its Phase 1/2 clinical trial of T-COVID.

The competitive award was granted by USAMRDC in collaboration with the Medical Technology Enterprise Consortium (“MTEC”), a 501(c)(3) biomedical technology consortium working in partnership with the Department of Defense (“DoD”).

Under the contract, MTEC 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

For the nine months ended September 30, 2021, the Company recognized approximately $ 0.5 million of grant revenue under the contract, which completed the full recognition of this award.

No revenue was recognized for this contract for the three and nine months ended September 30, 2022.

In July 2016, the Company signed a five-year contract with Biomedical Advanced Research and Development Authority (“BARDA”).

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

Under the contract, BARDA paid the Company a fixed fee and reimbursed certain costs for the research and development of an Ad5-vectored, protective antigen-based intranasal anthrax vaccine through cGMP manufacture and conduct of a Phase 1 clinical trial dose ranging assessment of safety and immunogenicity.

The contract consisted of an initial base performance period providing approximately $ 30.9 million in funding for the period July 2016 through December 2021.

BARDA had seven options to extend the contract to fund certain continued development and manufacturing activities for the anthrax vaccine, including Phase 2 clinical studies.

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

For the three and nine months ended September 30, 2021, the Company recognized approximately $ 0.1 million and $ 0.4 million, respectively, of grant revenue under the BARDA contract.

For the three and nine months ended September 30, 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.

During the three and nine months ended September 30, 2022, the Company recorded a total of $ 0.2 million income tax benefit related to interest received and receivable on income tax refunds.

Other than the tax benefit related to interest, the Company did no t record an income tax benefit in the three and nine months ended September 30, 2022 and 2021 due to a full valuation allowance.

Net Loss Per Share

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

Because the Company has reported a net loss attributable to common stockholders for the three months ended March 31, 2023 and 2022, basic and diluted net loss per share attributable to common stockholders in each period 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.

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Diluted net loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period.

As such, all unvested restricted stock, restricted stock units, common stock warrants and stock options have been excluded from the computation of diluted weighted average shares outstanding because such securities would have an anti-dilutive impact for all periods presented.

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

For the Three and Nine Months Ended

September 30,

As such, all unvested restricted stock, RSUs, common stock warrants, and stock options have been excluded from the computation of diluted weighted average shares outstanding because such securities would have an anti-dilutive impact for all periods presented.

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

Three Months Ended

Common stock warrants

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In December 2019, a complaint was filed by Dr.

De-Chu Christopher Tang (“Plaintiff”) against the Company, which was removed to the United States District Court for the Eastern District of Texas.

De-chu Christopher Tang (“Plaintiff”) against the Company, which the Company removed to the United States District Court for the Eastern District of Texas.

The Plaintiff amended the complaint in February 2020 to include Vipin K.

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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.

On February 24, 2022, Defendants filed a memorandum containing a brief description of the planned motion and a concise summary of the factual and legal support for it.

On the basis of that memorandum, the Court granted Defendants’ request to file a motion to dismiss and allowed Plaintiff an opportunity to file an amended complaint.

Plaintiff’s amended complaint was filed on March 3, 2022, and Defendants filed a motion to dismiss that complaint on April 4, 2022.

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

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.

On March 24, 2023, the court granted the motion, and dismissed the case as to Dr.

Drutz without prejudice for lack of jurisdiction, and dismissed the case as to the Company with prejudice.

Plaintiff did not file a notice of appeal within the 30-day deadline for appeal.

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.

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-Q

Item 1. Financial Statements