What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-03-27 compared with 2023-02-28 · 204 added, 355 removed, 502 unchanged (53% of the section changed)

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Notes to Consolidated Financial Statements

Nature of Business and Organization

Summary of Significant Accounting Policies

Fair Value Measurement

Property and Equipment, Net

Accrued Expenses and Other Current Liabilities

Noncurrent Liabilities

Stock-Based Compensation

Employee Benefit Plans

Net Loss Per Share

Commitments and Contingencies

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

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.

Accrued Research and Development Expenses

Accrued and Prepaid Research and Development Expenses

Description of the Matter

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.

As disclosed in Note 6, the Company’s total accrued research and development expenses were $5.8 million as of December 31, 2023, which represents the estimated obligation for research and development expenses incurred as of December 31, 2023 but not paid as of that date.

In addition, the Company’s total prepaid expenses and other current assets were $6.9 million as of December 31, 2023, which included amounts that were paid in advance of services incurred pursuant to research and development activities.

As discussed in Note 2 of the consolidated financial statements, material advance payments for goods or services that will be used or rendered for future research and development activities are recorded as a prepaid asset and recognized as expense as the related goods are delivered or the related services are performed.

When evaluating the adequacy of the accrued expenses, the Company analyzes progress of the studies, including the phase or completion of events, invoices received and contracted costs.

How We Addressed the Matter in Our Audit

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.

Auditing the Company’s accrued and prepaid research and development expenses was especially challenging due to the application of management judgment about the estimate of services provided.

Specifically, the amount of accrued and prepaid 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.

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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.

To evaluate the valuation of the accrued research and development expenses, we compared invoices received by the Company subsequent to December 31, 2023 to the amounts recognized by the Company as of that date.

To evaluate the valuation of the prepaid research and development expenses, we inspected the Company’s contracts with third parties to assess the impact to the amounts recorded.

/s/ Ernst & Young LLP

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Tysons, Virginia

February 28, 2023

March 27, 2024

ALTIMMUNE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per-share)

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

Current assets:

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Short-term investments

Accounts receivable

Accounts and other receivables

Income tax and R&D incentive receivables

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Property and equipment, net

Intangible assets, net

Indefinite-lived intangible asset

LIABILITIES AND STOCKHOLDERS’ EQUITY

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Accounts payable

Contingent consideration

Accrued expenses and other current liabilities

Total current liabilities

Other long-term liabilities

Noncurrent liabilities

Total liabilities

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200,000,000 shares authorized;

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

70,677,400 and 49,199,845 shares issued and outstanding as of December 31, 2023 and 2022, respectively

Additional paid-in capital

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General and administrative

Impairment loss on construction-in-progress

Impairment loss on intangible asset

Total operating expenses

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Income tax expense (benefit)

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

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

Comprehensive loss

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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

Issuance of common stock related to contingent consideration liability

Other increase

Unrealized gain (loss) on short-term investments

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Issuance of common stock upon cashless exercise of warrants

Issuance of common stock related to contingent consideration liability

Other increase

Unrealized gain (loss) on short-term investments

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Change in fair value of contingent consideration liability

Impairment loss on construction-in-progress

Impairment loss on intangible assets

Impairment loss on intangible asset

Stock-based compensation expense

Depreciation and amortization

Loss on foreign currency exchange

Depreciation of property and equipment

Accretion of discounts on short-term investments

(Gain) loss on foreign currency exchange

Changes in operating assets and liabilities:

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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:

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Proceeds from issuance of common stock from Employee Stock Purchase Plan

Proceeds from exercises of stock options, net

Payment of conditional economic incentive

Proceeds from exercises of stock options

Payments for tax withholding in share-based compensation

Net cash provided by financing activities

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

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

Cash, cash equivalents and restricted cash at beginning of period

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SUPPLEMENTAL NON-CASH ACTIVITIES:

Fair value of common stock retired in exchange for issuance of common stock warrant

Common stock issued related to contingent consideration liability

Operating lease liability and right of use asset addition

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

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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.

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

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

The Company has not generated any revenues from the sale of any products to date, and there is no assurance of any future revenues from product sales.

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The preparation of financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and the disclosure of contingent assets and liabilities as of and during the reporting period.

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 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;

however, actual results could differ materially from those estimates.

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

Significant estimates and assumptions made in the accompanying consolidated financial statements include, but are not limited to, the valuation of share-based awards, income taxes, and accruals for R&D 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.

Segment Information

The Company is managed and operates as a single business focused on the research and development of treatments for various diseases and disorders, and vaccines.

The Company is managed and operates as a single business focused on the R&D of treatments for various diseases and disorders, and vaccines.

The Company is managed by a single management team, and consistent with its organizational structure, the Chief Executive Officer manages and allocates resources at a consolidated level.

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Restricted Cash

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.

The Company had restricted cash of $ 41,000 and $ 34,000 as of December 31, 2023 and 2022, respectively, held in money market savings accounts as collateral.

The restricted cash as of December 31, 2023 and 2022 is for the Company’s

facility lease obligation.

Restricted cash is classified as a component of cash, cash equivalents, and restricted cash in the accompanying Consolidated Balance Sheets and Consolidated Statements of Cash Flows.

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

Treasury, corporate debt securities and certificate of deposit that have original maturities less than or equal to one year and are classified as available-for-sale securities.

Such securities are carried at estimated fair value, with any unrealized holding gains or losses reported as accumulated other comprehensive income or loss, which is a separate component of stockholders’ equity.

Realized gains and losses and declines in value judged to be other-than-temporary, if any, are included in other income (expenses), net in the consolidated results of operations.

The Company reviews its investment portfolio for impairment quarterly or more frequently if circumstances warrant.

In determining whether a decline in the value of an investment is other-than-temporary, the Company evaluates currently available factors that may include, among others:

(1) general market conditions;

(2) the duration and extent to which fair value has been less than the carrying value;

(3) the investment issuer’s financial condition and business outlook;

and (4) its assessment as to whether it is more likely than not that the Company will be required to sell a security prior to recovery of its amortized cost basis.

A decline in the market value of any available-for-sale security below cost that is deemed to be other-than-temporary results in a reduction in fair value charged to earnings in that period, and a new cost basis for the security is established.

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.

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

As of December 31, 2023, none of the unrealized losses on the Company’s short-term investments are a result of credit loss, and therefore, any unrealized losses were recognized in OCI.

As of December 31, 2023, the Company had $ 0.1 million accrued interest on short-term investments included in “Accounts and other receivables” on the accompanying Consolidated Balance Sheets.

Accounts and Other Receivables

Accounts and other receivables include both billed and unbilled amounts, interest and other receivables.

The Company makes judgments as to its ability to collect outstanding receivables and provides an allowance for receivables when collection becomes doubtful.

Provisions are made based upon a specific review of all significant outstanding invoices and the overall quality and age of those invoices not specifically reviewed.

The Company’s receivables represent billings for rate adjustment under a government contract that is being closed out, as well as interest and other receivables.

The Company believes that the credit risks associated with these receivables are not significant.

To date, the Company has not experienced any losses associated with accounts and other receivables and does not maintain an allowance for credit loss.

Fair Value Measurements

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To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.

Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3.

Accordingly, the degree of judgment that the Company exercises

in determining fair value is greatest for instruments categorized in Level 3.

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.

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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.

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.

Accounts Receivable

Accounts receivable includes both billed and unbilled amounts.

The Company makes judgments as to its ability to collect outstanding receivables and provides an allowance for receivables when collection becomes doubtful.

Provisions are made based upon a specific review of all significant outstanding invoices and the overall quality and age of those invoices not specifically reviewed.

The Company’s receivables represent amounts reimbursed under its government grants and contracts.

The Company believes that credit risks associated with these government grants and contracts is not significant.

To date, the Company has not experienced any losses associated with accounts receivable and does not maintain an allowance for doubtful accounts.

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

Concentrations of Credit Risk

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

Amortization costs are classified as research and development expenses.

Impairment of Long-lived Assets

The Company evaluates its long-lived tangible and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

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.

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 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.

Amortization costs are classified as R&D expenses.

Impairment or Disposal of Long-lived Assets

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying value of such assets may not be recoverable in accordance with the guidance in Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 360, Property, Plant and Equipment (“ASC 360”).

The Company’s long-lived assets include properties and equipment and right of use (“ROU”) assets.

For long-lived assets, impairment is recognized when the undiscounted cash flows used in the test for recoverability is less than their carrying value.

In the event impairment exists, the long-lived asset will be written down to its fair value, and an impairment loss is recorded as the difference between the carrying value and fair value.

For the years ended December 31, 2023 and 2022, the Company’s qualitative assessment of long-lived assets for impairment testing determined that no impairment indicators were present.

Impairment of Indefinite-lived Intangible Assets

The Company evaluates its indefinite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable in accordance with the guidance in FASB Accounting Standard Codification Topic 350, Intangibles—Goodwill and Other (“ASC 350”).

The Company had one IPR&D asset, HepTcell, that it acquired in 2015.

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

Since 2020, the Company has been conducting a Phase 2 clinical trial.

However, the preliminary data from this trial that management analyzed in December 2023, indicates that the results are not sufficient to warrant moving forward with this product candidate.

As a result, the Company expects to stop all further development related to HepTcell and does not anticipate that there would be any third-party interest in the asset.

This decision rendered the probability of success, which is one of the key inputs in the fair value measurement of this asset, to be effectively zero or close to zero.

With no alternative use nor any anticipated interest from third parties for this asset, management determined that the fair value of the IPR&D asset was deemed di minimis as of December 31, 2023.

Accordingly, the Company recorded a non-cash impairment charge of $ 12.4 million, which was the carrying value of the IPR&D asset, in the accompanying Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2023 under the caption “Impairment loss – intangible asset”.

As of December 31, 2023, the Company had no indefinite-lived intangible assets.

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

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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.

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.

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Lease incentives and allowance provided by our landlord for the construction of leasehold improvements are recorded as lease incentive obligations as the related construction costs are incurred, up to the maximum allowance.

Contingent Consideration

The Company records contingent consideration associated with development and regulatory milestones that meets the definition of a liability under FASB Accounting Standards Codification Topic 480, Distinguishing Liabilities From Equity (“ASC 480”) at fair value.

The fair value model used to calculate this obligation is based on the Monte Carlo simulation that has been risk adjusted based on the probability of achievement of the milestones.

The inputs the Company uses for determining the fair value of the contingent consideration associated with development and regulatory milestones are Level 3 fair value measurements.

The Company re-evaluates the fair value on a quarterly basis.

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 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 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

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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.

The Company estimates forfeitures at the time of grant and, if necessary, revises the estimate in subsequent periods if actual forfeitures differ from those estimates.

Estimates are based on the Company’s historical analysis of actual stock option forfeitures.

The actual expense recognized over the vesting period is only for those options that vest.

If awards are modified, the Company compares the fair value of the affected award measured immediately prior to modification to its value after modification.

To the extent that the fair value of the modified award exceeds the original award, the incremental fair value of the modified award is recognized as compensation expense on the date of modification for vested awards, and over the remaining vesting period for unvested awards.

The Company’s revenue consists primarily of government and foundation grants and contracts that support the Company’s efforts on specific research projects.

The Company has determined that the government agencies and foundations providing grants and contracts to the Company are not customers.

These grants and contracts generally provide for reimbursement of approved costs as those costs are incurred by the Company.

Research grants and contracts and the related accounts receivable are recognized as earned in proportion to when reimbursable expenses are incurred in performance of the contract.

Payments received in advance of services being provided are recorded as deferred revenue.

The Company anticipates that these government and foundation grants will decline in future periods.

Research and Development

Research and development costs are expensed as incurred.

Research and development costs consist of payroll and personnel expense, consulting costs, external contract research and development expenses, which includes fees paid to other entities that conduct certain research and development activities on the Company’s behalf, such as clinical research organizations (“CROs”) and contract manufacturing organizations (“CMOs”), raw materials, drug product manufacturing costs, laboratory supplies and allocated overhead, including depreciation and amortization, rent and utilities.

Material research and development costs that are paid in advance of performance are capitalized as a prepaid expense and amortized over the service period as the services are provided.

Clinical trial costs are a significant component of research and development expenses, and the Company outsources a significant portion of these costs to third parties.

R&D costs are expensed as incurred.

R&D costs consist of payroll and personnel expense, consulting costs, external contract R&D expenses, which includes fees paid to other entities that conduct certain R&D activities on the Company’s behalf, such as clinical research organizations (“CROs”) and contract manufacturing organizations (“CMOs”), raw materials, drug product manufacturing costs, laboratory supplies and allocated overhead, including depreciation and amortization, rent and utilities.

Material R&D costs that are paid in advance of performance are capitalized as a prepaid expense and amortized over the service period as the services are provided.

Clinical trial costs are a significant component of R&D expenses, and the Company outsources a significant portion of these costs to third parties.

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.

Payments for these activities are based on the terms of the individual arrangements, which may differ from the pattern of costs incurred, and are reflected on the Consolidated Balance Sheets as a prepaid asset or accrued expenses.

These third-party agreements are generally cancelable, and related costs are recorded as research and development expenses as incurred.

Material advance payments for goods or services that will be used or rendered for future research and development activities are recorded as a prepaid asset and recognized as expense as the related goods are delivered or the related services are performed.

These third-party agreements are generally cancelable, and related costs are recorded as R&D expenses as incurred.

Material advance payments for goods or services that will be used or rendered for future R&D activities are recorded as a prepaid asset and recognized as expense as the related goods are delivered or the related services are performed.

When evaluating the adequacy of the accrued expenses, the Company analyzes progress of the studies, including the phase or completion of events, invoices received and contracted costs.

Significant judgments and estimates may be made in determining the accrued balances at the end of any reporting period.

Research and Development Incentive Credits

The Company is eligible to obtain certain research and development (“R&D”) incentive credits, through the participation in the U.K.

R&D Incentive Credits

The Company is eligible to obtain certain R&D incentive credits, through the participation in the U.K.

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 R&D 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.

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Qualifying R&D expenses consist of employment costs for research staff, consumables, a proportion of relevant, permitted sub-contract costs and certain internal overhead costs incurred as part of research projects for which the Company does not receive income.

The Australia R&D credits provide for a cash refund based on a percentage of certain research and development activities undertaken in Australia by the Company’s wholly owned subsidiary, Altimmune AU Pty, Limited.

The Australia R&D credits provide for a cash refund based on a percentage of certain R&D activities undertaken in Australia by the Company’s wholly owned subsidiary, Altimmune AU Pty, Limited.

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

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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 .

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 .

The Company records qualifying U.K.

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As of December 31, 2023 and 2022, the Company had $ 3.0 million and $ 1.6 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.

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

Cash receipts for Australia R&D credits are recorded as noncurrent liability until it either passes an audit performed by the ATO, 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.

During the years ended December 31, 2023 and 2022, the Company received $ 0.4 million and $ 3.6 million in cash for R&D incentive, respectively.

The 2023 incentive credit received is related to R&D costs that the Company incurred during the fiscal year 2022, whereas the 2022 incentive credit received is related to R&D costs that the Company incurred during the fiscal years and 2021 and 2020, both through the participation in the Australian R&D credit program, and is included in “Noncurrent 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.

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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 not yet adopted

Recently issued accounting pronouncements

Recently Adopted:

In June 2016, the FASB issued ASU No.

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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 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.

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.

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

Not Yet Adopted:

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

2023-07 requires public business entities to disclose information about their reportable segments’ significant expenses on an interim and annual basis.

The amendments in ASU 2023-07 also clarify that entities with a single reportable segment are subject to both new and existing segment reporting requirements under Topic 280.

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The amendments in ASU 2023-07 should be applied retrospectively to all prior periods presented in the financial statements.

The amendments in this update are effective on the Company’s 2024 annual report and quarterly reports beginning on first quarter 2025.

The Company is currently evaluating the impact of this amendment on its Consolidated Financial Statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

2023-09 requires public business entities on an annual basis to (i) disclose in the rate reconciliation both percentages and amounts for certain categories in a tabular format, with further disaggregation of certain categories when the individual reconciling items meet a quantitative threshold, (ii) disclose income taxes paid, net of refunds received disaggregated by federal, state and foreign, with further disaggregation by individual jurisdictions that meet a qualitative threshold (iii) eliminates the requirement to disclose certain information when it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of the reporting date or make a statement that an estimate of the range cannot be made and (iv) eliminates the requirement to disclose cumulative amount of each type of temporary difference in certain circumstances.

The amendments in ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, with early adoption permitted for annual financial statements that have not yet been issued.

The amendments in ASU 2023-09 should be applied on a prospective basis, although retrospectively application is permitted.

The amendments in this update are effective on the Company’s 2025 annual report.

The Company is currently evaluating the impact of this amendment on its Consolidated Financial Statements.

Fair Value Measurement

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

The Company records cash equivalents and short-term investments 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 as of December 31, 2022 consisted of the following (in thousands):

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

Fair Value Measurement at December 31, 2023

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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):

The Company’s assets 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)

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

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

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

December 31, 2023

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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:

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

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

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 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

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 years ended December 31, 2023 and 2022, the Company had no assets or liabilities that were measured at fair value on a non-recurring basis.

Property and Equipment, Net

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Property and equipment, net

Depreciation expense related to property and equipment for the years ended December 31, 2022 and 2021 was $ 0.5 million and $ 0.4 million, respectively.

Intangible Assets

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

December 31, 2022:

December 31, 2021:

Internally developed patents

Acquired licenses

16 – 20 years

Total intangible assets subject to amortization

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 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.

Depreciation expense related to property and equipment for each of the years ended December 31, 2023 and 2022 was $ 0.5 million.

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

Rent expense under these leases during each of the years ended December 31, 2023 and 2022 was $ 0.5 million, which includes short-term leases and variable lease costs that are not included in the lease obligation.

Short-term leases are leases having a term of twelve months or less.

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

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

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Operating lease obligations (see Note 6 and 7)

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

in Balance Sheet)

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

Weighted-average remaining lease term (years)

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Total accrued expenses and other current liabilities

Contingent Consideration

The Company entered into an Agreement and Plan of Merger and Reorganization, dated July 8, 2019 , by and among the Company, Springfield Merger Sub, Inc., Springfield Merger Sub, LLC, Spitfire Pharma, Inc.

and David Collier, as the Stockholder Representative (the “Spitfire Merger Agreement”) to acquire all of the equity interests of Spitfire Pharma, Inc.

(“Spitfire”).

Spitfire was a privately held, preclinical pharmaceutical company developing a novel 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 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 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 the first Phase 2 clinical trial of a product candidate anywhere in the world;

● 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 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,

Beginning balance

Change in fair value

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

Ending balance

Other Long-Term Liabilities

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

Noncurrent Liabilities

The Company’s noncurrent liabilities are summarized as follows (in thousands):

Research and development incentive credit

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Conditional economic incentive grants

Total other long-term liabilities

Total noncurrent 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.

During the years ended December 31, 2023 and 2022, the Company received a total of $ 0.4 million and $ 3.6 million in cash for R&D incentive credit, respectively.

The 2023 incentive credit received is related to R&D costs that the Company incurred during the fiscal year 2022, whereas the 2022 incentive credit received is related to R&D costs that the Company incurred during the fiscal years and 2021 and 2020, both through the participation in the Australian R&D incentive credit program administered through the ATO.

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

Economic Incentive Grants

The Company has two conditional economic incentive grants for a total of $ 250,000 from Montgomery County, Maryland and the State of Maryland.

The Montgomery County grant was received in May 2018, with a term expiring on February 28, 2028 .

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

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 Company had two conditional economic incentive grants for a total of $ 250,000 from Montgomery County, Maryland and the State of Maryland.

The Montgomery County grant of $ 100,000 was received in May 2018, with a term expiring on February 28, 2028 .

The State of Maryland grant of $ 150,000 was received in October 2019, with a 10 -year term expiring on December 31, 2029 .

The annual interest rate on both economic incentive grants is 3 %.

During the year ended December 31, 2023, the Company repaid approximately $ 99,000 of the State of Maryland grant, including accrued interest, as the Company didn’t meet the required number of employees as of December 31, 2022 as per terms of the grant.

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.

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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 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.

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-3ASR 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.

During the year ended December 31, 2023, the Company sold 20,454,516 shares of common stock under the 2023 Agreement resulting in approximately $ 86.6 million in proceeds, net of $ 2.8 million commission and other offering costs, with, $ 60.6 million remaining available to be sold under the 2023 Agreement.

As of December 31, 2023, there was $ 0.1 million in 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 December 31, 2023, 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.

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

On July 16, 2020, the Company offered and sold (i) 3,369,564 shares of common stock, at a price to the public of $ 23.00 per share, and (ii) pre-funded warrants of the Company to purchase 1,630,436 shares of common stock at an exercise price equal to $ 0.0001 per share (the “Pre-Funded Warrants”), at a price to the public of $ 22.9999 per share of common stock underlying the Pre-Funded Warrants (equal to the public offering price per share of Common Stock, minus the exercise price of each Pre-Funded Warrant).

The Pre-Funded Warrants are exercisable at any time, provided that each Pre-Funded Warrant holder will be prohibited from exercising such Pre-Funded Warrants into shares of the Company’s common stock if, as a result of such exercise, the holder, together with its affiliates, would own more than 4.99 % of the total number of shares of the Company’s common stock then issued and outstanding, which percentage may change at the holders’ election to any other number less than or equal to 19.99 % upon 61 days ’ notice to 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 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 Pre-Funded Warrants were classified as equity and were accounted for as a component of additional paid-in capital at the time of issuance.

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

Furthermore, on October 18, 2023, warrant holders exercised the remaining 869,566 Pre-Funded Warrants in a net cashless exercise and were issued 869,530 shares of common stock (see Note 9).

The following common stock warrants were outstanding at December 31, 2023:

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Expiration Date

Issued with common units in the 2018 Unit Offering

October 2, 2018

October 2, 2023

Issued with common units in the 2019 Registered Direct Offering

October 10, 2018

October 10, 2023

Issued with common units in the 2019 Registered Direct Offering

March 12, 2019

March 12, 2024

Issued with common units in the 2020 Public Offering (see Note 10)

July 16, 2020

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

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Expiration Date

Replacement warrants

March 3, 2012

March 3, 2022

Issued with common units in the 2018 Unit Offering

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July 16, 2020

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:

2019 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.

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

On October 2, 2018 , the Company issued a combined total of 2,400,000 common units and pre-funded units in a public offering (the “2018 Unit Offering”).

Each common unit in the 2018 Unit Offering was sold at a public offering price of $ 5.00 and consisted of one share of common stock and a warrant to purchase one share of common stock at an exercise price of $ 6.00 .

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

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

The warrants issued in the 2018 Unit Offering are each subject to anti-dilution protection.

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.

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

On October 10, 2018 , the Company issued a combined total of 4,629,630 common units and pre-funded units to certain institutional investors in a registered direct offering (the “2018 Registered Direct Offering”).

Each common unit in the 2018 Registered Direct Offering was sold at a price of $ 5.40 and consisted of one share of common stock and a warrant to purchase one share of common stock at an exercise price of $ 5.40 .

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

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

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

On October 18, 2023, warrant holders exercised the remaining 869,566 Pre-Funded Warrants in a net cashless exercise and were issued 869,530 shares of common stock (see Note 8 Common Stock).

In addition, in October 2023, 95,600 various other warrants with a weighted-average exercise price of $ 5.31 expired unexercised.

On March 5, 2024, the remaining 50,000 warrants with an exercise price of $ 3.21 were fully exercised, resulting in the issuance of 50,000 shares of common stock.

A summary of warrant activity is as follows:

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Warrants outstanding, December 31, 2022

Exercises (see Note 10)

( 1,760,870 )

Exercised (see Note 8)

Warrants outstanding, December 31, 2023

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Accordingly, on January 1, 2024, the number of shares of Common Stock reserved and available for issuance under the Omnibus Plan increased by 3,055,006 .

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.

The maximum common stock that may be granted to directors under the Omnibus Plan during any fiscal year is 500,000 shares.

The maximum number of shares of common stock that may be issued under the Omnibus Plan in respect of Incentive Stock Option (“ISO”) is 5,000,000 shares.

The maximum number of shares of common stock that may be granted to non-employee directors under the Omnibus Plan during any fiscal year is 2,000,000 shares.

On November 29, 2018, the Board approved and adopted the Altimmune Inc.

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Expected dividend yield

Expected volatility:

As there is not sufficient historical volatility for the expected term of the stock options, the Company uses an average historical share price volatility, inclusive of its own volatility, based on an analysis of reported data for a peer group of comparable companies which were selected based upon industry similarities.

Expected term (years):

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

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

Under this approach, the weighted-average expected life is presumed to be the average of the vesting term and the contractual term of the option.

Risk-free interest rate:

The Company determined the risk-free interest rate by using a weighted-average equivalent to the expected term based on the daily U.S.

Treasury yield curve rate in effect as of the date of grant.

Expected dividend yield:

The Company does not anticipate paying any dividends in the foreseeable future.

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 (in thousands, except share and per share data):

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Exercise Price

Value (In thousands)

Outstanding, December 31, 2022

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As of December 31, 2023, there was $ 16.0 million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 2.5 years.

Restricted Stock

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 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 319,700 shares of RSUs with a weighted-average grant date fair value of $ 13.20 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.

During the year ended December 31, 2023, the Company issued 72,646 shares of common stock as a result of the vesting of 115,018 RSUs net of 42,372 shares of common stock withheld to satisfy tax withholding obligations.

The fair value of RSUs vested during the years ended December 31, 2023 and 2022 was $ 1.4 million and $ 0.6 million, respectively.

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As of December 31, 2023, there were 218,784 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.

The Company recognized stock-based compensation expense related to this plan of $ 0.2 million and $ 0.3 million for of the years ended December 31, 2023 and 2022, respectively.

Stock-based Compensation Expense

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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 platform.

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, 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.

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 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 .

Employee Benefit Plans

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

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

During the years ended December 31, 2023 and 2022, the Company made discretionary plan contributions of $ 0.4 million and $ 0.3 million, respectively.

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

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Net operating losses

Accrued expenses

Capitalized research and development costs

Stock compensation

Accrued expenses

Lease liability

Asset impairment

Capitalized research and development costs

Total deferred tax assets

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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.

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

Deferred tax liabilities will be applied in the future to offset against net operating losses (“NOLs”) that have an indefinite life.

The Company has U.S.

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The amount of the annual limitation is determined based on the value of the Company immediately before the ownership change.

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

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

The Company has reduced the NOL and related valuation allowance in historical periods for NOLs that cannot be utilized in the future because of IRC 382.

The Company has reviewed for any ownership changes as defined under IRC Section 382 from January 1, 2021 through November 3, 2023 and determined that the ownership change was less than 50 % during that period.

The Company’s existing NOLs are subject to limitations arising from previous ownership changes impacting the timing and amount, and the impact of such changes is reflected in the NOL amounts disclosed above.

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.

Beginning January 1, 2022, pursuant to the Tax Cuts and Jobs Act of 2017 ("TCJA"), R&D costs in the current period are required to be capitalized and amortized over five or fifteen years , for domestic and foreign-incurred R&D, respectively.

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

The Company establishes liabilities for tax-related uncertainties based on estimates of whether, and the extent to which, additional taxes may be due.

These liabilities are established when the Company believes that certain positions might be challenged despite its belief that its tax return positions are fully supportable.

These liabilities are established when the Company believes that its tax return positions are more-likely-than-not to be sustained upon audit by taxing authorities.

The Company adjusts these liabilities in light of changing facts and circumstances, such as the outcome of a tax audit.

The provision for income taxes includes the impact of changes to these liabilities.

The amount of unrecognized tax benefits was $ 0.7 million and $ 0.2 million as of December 31, 2022 and 2021, respectively.

The amount of unrecognized tax benefits was $ 0.7 million as of both December 31, 2023 and 2022.

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.

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Increases for prior year tax positions

Decreases for prior year tax positions

Ending balance

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Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average numbers of shares of common stock outstanding for the period.

Basic shares outstanding includes the weighted-average effect of the Company’s outstanding pre-funded warrants, the exercise of which requires little or no consideration for the delivery of shares of common stock.

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

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

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, 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:

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Restricted stock units

Restricted stock

Commitments and Contingencies

License Obligations

PER.C6 Cell Line - Janssen Vaccines & Prevention B.V.

The Company has a royalty-bearing, worldwide non-exclusive license agreement with Janssen Vaccines & Prevention B.V.

(formerly known as Crucell Holland B.V.) (“Janssen”) for use of its vaccine technology.

The Company may terminate the license agreement without cause, and the agreement contains customary provisions for either party to terminate prior to the expiration of the agreement.

The amended license agreement expires on a product-by-product and country-by-country basis on the later of the date upon which the last of the licensed patents applicable to the relevant product expires or 15 years from the date of first commercial sale of the relevant product.

The Janssen patent rights include patents issued in the United States with an expected expiration date no earlier than April 2020, in each case not giving effect to any potential extensions and assuming payment of all associated fees.

Upon expiration of the amended license agreement, or if the Company terminates the amended license agreement for Janssen’s material breach, the Company retains the right to exploit the rights granted.

Under the agreement, the Company is required to pay an annual license fee and annual royalty fees upon reaching certain milestones in an amount that equals the greater of a low single digit percentage of net sales or $ 150,000 .

On April 2, 2020, the Company entered into Amendment No.

3 to the Second Restated License Agreement and additionally entered into Amendment No.

4, 5 and 6 throughout 2020 (collectively, the “Amendments”), by and between the Company and Janssen (as amended by Amendment No.

1 to Second Restated License Agreement and Amendment No.

2 to Second Restated License Agreement, together with the Amendments, the “License Agreement”).

Pursuant to the Amendment, the field of licenses granted to the Company for the use of the PER.C6 cell line under the License Agreement is expanded to cover COVID-19 caused by SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2), in addition to the existing licenses related to Bacillus anthracis and influenza virus.

All capitalized terms not defined herein shall have the meanings assigned to them in the Amendment or the License Agreement, as applicable.

Pursuant to the Amendment, the Company agreed to pay certain additional development-based milestone payments through approval of licensed products by the FDA for the treatment or prevention of COVID-19, up to an aggregate amount of $ 1.2 million.

The Company also agreed to pay royalty payments as a percentage of net sales of products to a royalty stacking reduction and minimum annual royalty payments, until the expiration of the term of the License Agreement, as amended.

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

As disclosed in Note 8, the Company is obligated to make payments of up to $ 80.0 million upon the achievement of specified worldwide net sales of all products developed using the technology acquired from Spitfire Pharma Inc.

within ten years following the approval of a new drug application filed with the FDA.

In December 2019, a complaint was filed by Dr.

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.

Garg and David J.

Drutz as defendants, in addition to the Company (Dr.

Drutz, and the Company are collectively referred to as “Defendants”).

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

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.

In July 2019, the Company entered into the Spitfire merger agreement to acquire all of the equity interests of Spitfire Pharma, Inc.

(“Spitfire”).

Spitfire was a privately held, preclinical pharmaceutical company developing novel peptide products for pharmaceutical indications, including pemvidutide for the treatment of MASH.

As part of the agreement, the Company is obligated to make payments of up to $ 80.0 million upon the achievement of specified worldwide net sales of all products developed using the technology acquired from Spitfire Pharma Inc.

(the “Sales Milestone”) within ten years following the approval of a new drug application filed with the U.S.

Food and Drug Administration (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.

The Company is not currently subject to any material legal proceedings.

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.

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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