What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-09 compared with 2023-11-07 · 54 added, 120 removed, 62 unchanged (74% of the section changed)

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

The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our consolidated financial statements and related notes for the year ended December 31, 2022 included in our Annual Report on Form 10-K, which was filed with the SEC on February 28, 2023.

The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our consolidated financial statements and related notes for the year ended December 31, 2023 included in our Annual Report on Form 10-K, which was filed with the SEC on March 27, 2024.

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties.

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is a clinical stage biopharmaceutical company focused on developing treatments for obesity and liver diseases.

Our lead product candidate, pemvidutide (formerly known as ALT-801), is a GLP-1/glucagon dual receptor agonist that is being developed for the treatment of obesity and non-alcoholic steatohepatitis (“NASH”).

In addition, we are developing HepTcell, an immunotherapeutic agent designed to achieve a functional cure for chronic hepatitis B.

Our lead product candidate, pemvidutide (formerly known as ALT-801), is a novel, investigational, peptide-based GLP-1/glucagon dual receptor agonist in development for the treatment of obesity and metabolic dysfunction-associated steatohepatitis (“MASH”), previously termed non-alcoholic steatohepatitis (“NASH”).

Except where the context indicates otherwise, references to “we,” “us,” “our,” “Altimmune” or the “Company” refer to the company and its subsidiaries.

Recent Business Update

On October 24, 2023, the U.S.

Food and Drug Administration (“FDA”) granted Fast Track designation to the investigation of pemvidutide for the treatment of NASH.

Pemvidutide - IMPACT trial

On August 1, 2023 we announced that we enrolled the first subject in the Phase 2b IMPACT trial evaluating the safety and efficacy of pemvidutide in subjects with NASH.

Pemvidutide is a novel, investigational GLP-1/glucagon dual receptor agonist under development for the treatment of obesity and NASH.

The biopsy-driven trial is expected to enroll approximately 190 subjects with and without diabetes randomized 1:2:2 to receive either 1.2 mg, 1.8 mg pemvidutide or placebo weekly for 48 weeks.

The key efficacy endpoints are NASH resolution and fibrosis improvement after 24 weeks of treatment, with subjects followed for an additional 24 weeks to a total of 48 weeks for assessment of safety and additional biomarker responses.

Top-line results from this trial are expected in the first quarter of 2025.

Pemvidutide - MOMENTUM trial

On September 12, 2023, we announced the completion of dosing (last subject last dose) in our 48-week Phase 2 MOMENTUM trial evaluating the efficacy and safety of pemvidutide in subjects with obesity or overweight.

Topline results from this trial are expected in the fourth quarter of 2023.

On March 21, 2023 we announced the topline results from a Week 24 interim analysis of 160 subjects in our 48-week MOMENTUM Phase 2 obesity trial of pemvidutide.

The MOMENTUM Phase 2 obesity trial is being conducted at 30 sites across the U.S.

and enrolled 391 subjects with subjects randomized 1:1:1:1 to 1.2 mg, 1.8 mg, 2.4 mg pemvidutide or placebo administered weekly for 48 weeks in conjunction with diet and exercise.

A pre-specified interim analysis was conducted after the first 160 subjects received up to 24 weeks of treatment.

At Week 24, subjects receiving pemvidutide achieved mean weight losses of 7.3%, 9.4% and 10.7% at the 1.2 mg, 1.8 mg, and 2.4 mg doses, respectively, with the placebo group experiencing a mean weight loss of 1.0% (efficacy estimand using a mixed model of repeated measures (“MMRM”) analysis).

Approximately 50% of subjects achieved 10% or more weight loss and approximately 20% of subjects achieved 15% or more weight loss at Week 24 at the 1.8 mg and 2.4 mg doses.

Robust reductions in waist circumference (a measure of visceral fat) and serum lipids were also observed, and clinically meaningful reductions in blood pressure were achieved without clinically significant increases in heart rate.

On March 21, 2023, we also announced the results of the 12-week Phase 1b safety trial of pemvidutide in subjects with type 2 diabetes.

The Phase 1b trial, which was conducted to evaluate the safety profile of pemvidutide in overweight and obese subjects with type 2 diabetes, was comprised of 54 subjects randomized 1:1:1:1 to 1.2 mg, 1.8 mg, 2.4 mg pemvidutide or placebo administered weekly for 12 weeks.

Subjects receiving pemvidutide achieved mean weight losses of 4.4%, 6.1% and 7.7% at the 1.2 mg, 1.8 mg, and 2.4 mg doses, respectively, over only 12 weeks of treatment, with the placebo group experiencing a mean weight gain of 0.8% (efficacy estimand using MMRM analysis).

On April 11, 2023, we announced the completion of enrollment in our Phase 2 clinical trial of HepTcell, an immunotherapeutic for the treatment of chronic hepatitis B (“CHB”).

With the achievement of this milestone, data readout is planned for the first quarter of 2024.

The multicenter clinical trial, which is being conducted at 26 sites in North America, Europe and Southeast Asia, enrolled approximately 80 subjects with inactive CHB and low levels of hepatitis B surface antigen (“HBsAg”).

Subjects were randomized 1:1 to HepTcell or placebo.

The primary endpoint of the trial is clinical response, defined as a 1-log or greater reduction or clearance in HBsAg.

Secondary endpoints include changes in the levels of hepatitis B virus (“HBV”) DNA, pre-genomic RNA and other markers of virologic response.

On March 27, 2024, the Company announced results of the body composition analysis from its 48-week MOMENTUM Phase 2 obesity trial of pemvidutide.

As announced on November 30, 2023, the trial enrolled 391 subjects with obesity or overweight with at least one co-morbidity and without diabetes.

Subjects were randomized 1:1:1:1 to 1.2 mg, 1.8 mg, 2.4 mg pemvidutide or placebo administered weekly for 48 weeks in conjunction with diet and exercise.

The 1.2 mg and 1.8 mg doses were administered without dose titration, while a short 4-week titration period was employed for the 2.4 mg dose.

At baseline, subjects had a mean age of approximately 50 years, mean body mass index (BMI) of approximately 37 kg/m 2 and mean body weight of approximately 104 kg.

Approximately 75% of subjects were female.

The body composition analysis showed that 74.5% of weight loss was derived from adipose tissue and only 25.5% from lean mass, comparable to the effects historically associated with weight loss from diet and exercise programs.

On March 27, 2024, we announced that the overall response in the Phase 2 trial was deemed to be insufficient to warrant further advancement in clinical trials.

As a result, any further development related to HepTcell has been stopped.

Results of Operations

Comparison of the three months ended September 30, 2023 and 2022

The following table summarizes our results of operations for the three months ended September 30, 2023 and 2022 (in thousands):

Three Months Ended

September 30,

Comparison of the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

Increase (Decrease)

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Total other income (expense), net

Net loss before income taxes

Income tax expense (benefit)

We have not generated any revenues from the sale of any products to date.

Our revenue has historically consisted primarily of government and foundation grants and contracts that supported our efforts on specific research projects.

We are closing out one such contract and any revenue reported during the three months ended September 30, 2023 and 2022 were for indirect rate adjustments.

Our revenue in previous years consisted primarily of government and foundation grants and contracts that supported our efforts on specific research projects.

We recently closed out one of the remaining such contracts and any revenue reported during the three months ended March 31, 2024 and 2023 were for the final indirect rate adjustments.

Research and development expenses

Research and development expenses decreased by $1.9 million, or 9%, for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022.

The decrease was primarily the result of:

● a decrease of $3.5 million due to the development activities for pemvidutide primarily due to $5.5 million in expenses associated with the NAFLD trials and $1.3 million in expenses associated with Phase 1 safety trials, which were ongoing during the three months ended September 30, 2022, being substantially completed by March 31, 2023, and a $1.8 million reduction due to winding down of MOMENTUM Phase 2 trial , partially offset by $2.3 million in startup costs related to the IMPACT Phase 2b trial in NASH and a $2.8 million increase in net manufacturing expenses for production of Good Manufacturing Practice (“GMP”) drug substance materials;

● a decrease of $0.2 million due to development activities for HepTcell;

● a net increase of $1.9 million due primarily to costs associated with non-project specific research and development costs such as $1.2 million for employee compensation including stock compensation, $0.2 million for contractors and $0.3 million for electronic document management system (“EDMS”) implementation and service costs.

General and administrative expenses

General and administrative expenses were consistent period-over-period at $4.5 million for the three months ended September 30, 2023 and 2022.

Total other income (expense), net

Total other income (expense), net increased by $0.8 million or 80%, for the three months ended September 30, 2023, as compared to the three months ended September 30, 2022, primarily due to increase in interest income earned on our cash equivalents and short-term investments.

Income tax benefit

Income tax benefit of $0.2 million related to interest received and receivable on income tax refunds was recorded during the three months ended September 30, 2022.

Other than the income tax benefit related to interest, we did not record an income tax expense (benefit) for the three months ended September 30, 2023 and 2022 due to a full valuation allowance.

Comparison of the nine months ended September 30, 2023 and 2022

The following table summarizes our results of operations for the nine months ended September 30, 2023 and 2022 (in thousands):

Nine Months Ended

September 30,

Research and development expenses consisted primarily of expenses related to product candidate development.

Research and development expenses for the three months ended March 31, 2024 and 2023 are summarized as follows:

Three Months Ended March 31,

Product candidates

Increase (Decrease)

Operating expenses:

Research and development

General and administrative

Total operating expenses

Loss from operations

Other income (expense):

Interest expense

Interest income

Other income (expense), net

Total other income (expense), net

Net loss before income taxes

Income tax expense (benefit)

We have not generated any revenues from the sale of any products to date.

Our revenue has historically consisted primarily of government and foundation grants and contracts that supported our efforts on specific research projects.

We are closing out one such contract and any revenue reported during the nine months ended September 30, 2023 and 2022 were for indirect rate adjustments.

Research and development expenses

Research and development expenses decreased by $2.5 million, or 5%, for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022.

The decrease was primarily the result of:

● a decrease of $8.0 million due to the development activities for pemvidutide primarily due to $11.5 million in expenses associated with the NAFLD trials and $5.5 million in expenses associated with Phase 1 safety trials, which were ongoing during the nine months ended September 30, 2022, being substantially completed by March 31, 2023, partially offset by $4.1 million in startup costs related to the IMPACT Phase 2b trial in NASH, a $1.9 million increase in net manufacturing expenses for production of GMP drug substance materials and $3.0 million for the MOMENTUM Phase 2 trial, which began in September 2022 and completed dosing in September 2023;

● a net increase of $5.5 million due primarily to costs associated with non-project specific research and development costs such as $4.2 million for employee compensation including stock compensation, $0.6 million for contractors and $0.8 million for EDMS implementation and service costs.

Non-project costs

Total research and development expenses

The increase in research and development expenses for pemvidutide was primarily due to an $8.1 million increase related to the ramp up of the IMPACT Phase 2b trial in MASH, a $0.5 million increase for other clinical analysis and a $1.9 million increase in net manufacturing expenses for production of Good Manufacturing Practice drug substance materials.

These increases were partially offset by a $3.8 million reduction in expense associated with the MOMENTUM Phase 2 trial in obesity, which was ongoing during the three months ended March 31, 2023 and wound down in the year ended December 31, 2023, and a $1.5 million reduction in expenses associated with the metabolic dysfunction-associated steatotic liver disease (“MASLD”) trials and a $0.6 million reduction in expenses associated with Phase 1 safety trials, both of which were substantially completed by March 31, 2023.

The decrease in research and development expenses for HepTcell was primarily due to the winddown and completion of the in-life portion of the Phase 2 trial in 2023.

The research and development expenses for the three months ended March 31, 2024 was due to program winddown activities.

In the coming months, we expect to have some additional wrap up costs as we finalize these activities.

The increase in other non-project specific research and development expenses was primarily due to a $0.5 million increase in stock compensation expense.

General and administrative expenses

General and administrative expenses increased by $0.5 million, or 4% for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, primarily due to a $0.4 million increase in stock compensation and other labor related expense.

General and administrative expenses increased by $0.8 million, or 17%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

The increase is due primarily to a $0.6 million increase in stock compensation and other labor related expense and a $0.1 million increase in professional fees.

Total other income (expense), net

Total other income (expense), net increased by $4.1 million or 294%, for the nine months ended September 30, 2023, as compared to the nine months ended September 30, 2022, primarily due to increase in interest income earned on our cash equivalents and short-term investments.

Income tax benefit

Income tax benefit of $0.2 million related to interest received and receivable on income tax refunds was recorded during the nine months ended September 30, 2022.

Other than the income tax benefit related to interest, we did not record an income tax expense (benefit) for the nine months ended September 30, 2023 and 2022 due to a full valuation allowance.

Total other income (expense), net increased by $0.7 million, or 42%, for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023.

The net increase is primarily due to a $0.7 million increase in interest income earned on our cash equivalents and short-term investments.

Liquidity and Capital Resources

Our primary sources of cash during the nine months ended September 30, 2023 were from equity transactions, interest and dividends from our money market funds and short-term investments, and proceeds from maturity of our short-term investments.

Our cash, cash equivalents, restricted cash and short-term investments were $140.8 million as of September 30, 2023.

We believe, based on the operating cash requirements and capital expenditures expected for 2023 and 2024, our cash on hand as of September 30, 2023, together with expected cash receipts from our income tax refunds and R&D incentives, are sufficient to fund operations for at least a twelve-month period from the issuance date of our September 30, 2023 consolidated financial statements.

Our primary sources of cash during the three months ended March 31, 2024 were from equity transactions, interest and dividends from our money market funds and short-term investments, and proceeds from maturity of our short-term investments.

Our cash, cash equivalents, restricted cash and short-term investments were $182.1 million as of March 31, 2024.

We believe, based on the operating cash requirements and capital expenditures expected for 2024 and 2025, our cash on hand as of March 31, 2024, together with expected cash receipts from our R&D incentives, are sufficient to fund operations for at least a twelve-month period from the issuance date of our March 31, 2024 consolidated financial statements.

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

In the past, our sources of revenue have consisted of grant revenues under our arrangements with BARDA for the development of NasoShield, MTEC for a clinical trial and development work on T-COVID, and to a lesser degree from other licensing arrangements.

The MTEC contract was closed out in June 2021 and we are currently closing out the BARDA contract which was not renewed after December 31, 2021.

We have incurred significant losses since we commenced operations.

As of September 30, 2023, we had an accumulated deficit of $434.7 million.

As of March 31, 2024, we had an accumulated deficit of $490.7 million.

In addition, we have not generated positive cash flows from operations.

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Sources of Liquidity

Public Offering

On July 16, 2020, we offered and sold (i) 3,369,564 shares of our common stock, at a price to the public of $23.00 per share, and (ii) Pre-Funded Warrants, at a price to the public of $22.9999 per share of common stock underlying the Pre-Funded Warrants (equal to the public offering price per share of common stock, minus the exercise price of each Pre-

Funded Warrant).

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

The gross proceeds of this offering were approximately $132.2 million, which includes the exercise in full of the underwriters’ option to purchase an additional 750,000 shares of common stock, before deducting underwriting discounts and commissions and offering expenses during the third quarter of 2020.

The net proceeds of this offering were approximately $124.0 million, after deducting underwriting discounts and commissions and offering expenses payable by us.

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

The remaining 869,566 Pre-Funded Warrants were net cashless exercised on October 18, 2023, resulting in the issuance of 869,530 shares of common stock (see Note 11 Subsequent Events).

Shelf Registrations

On February 28, 2023, we filed a shelf registration statement on Form S-3ASR, which was declared effective immediately.

This shelf registration allows us to offer and sell any amount of our common stock, preferred stock, debt securities, warrants, rights and units (the “2023 Shelf”) for a period of 3 years from effectiveness or until such determination that we no longer qualify as a well-known seasoned issuer.

On December 31, 2020, we filed a shelf registration statement on Form S-3, which was declared effective by the SEC on January 11, 2021.

This shelf registration statement covered the offering, issuance and sale by us of up to an aggregate of $250.0 million of our common stock, preferred stock, debt securities, warrants, rights and units (the “2021 Shelf”).

At-the-Market Offerings

On February 28, 2023, we entered 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, with respect to an at-the-market offerings program under which we may offer and sell, from time to time at our sole discretion, shares of our common stock, having an aggregate offering price of up to $150.0 million.

During the nine months ended September 30, 2023, we sold 3,536,284 shares of common stock under the 2023 Agreement resulting in approximately $13.9 million in net proceeds, and as of September 30, 2023, $135.7 million remained available to be sold under the 2023 Shelf.

On February 25, 2021, we 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, with respect to an at-the-market offerings program under which we offered and sold shares of our common stock, having an aggregate offering price of up to $125.0 million.

Under the 2021 Agreement, we 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 September 30, 2023, there were no remaining 2021 Shares available under the 2021 Agreement.

The following table provides information regarding our cash flows for the nine months ended September 30, 2023 and 2022:

Nine Months Ended

September 30,

On February 28, 2023, we entered into the 2023 Agreement with Sales Agents with respect to an at-the-market offerings program under which we may offer and sell, from time to time at our sole discretion, the Shares through the Sales Agents from the 2023 Shelf.

Since inception through March 31, 2024, the Company has sold 20,454,516 shares of

common stock under the 2023 Agreement resulting in approximately $86.6 million in proceeds.

During the three months ended March 31, 2024, we did not sell any shares of common stock under the 2023 Agreement, and as of March 31, 2024, $60.6 million remained available to be sold under the 2023 Shelf.

The following table provides information regarding our cash flows for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

(in thousands)

Increase (Decrease)

Net cash (used in) provided by:

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Operating Activities

Net cash used in operating activities was $59.3 million for the nine months ended September 30, 2023 compared to $45.3 million during the nine months ended September 30, 2022.

Net cash used in operating activities was $16.4 million for the three months ended March 31, 2024 compared to $19.4 million during the three months ended March 31, 2023.

The primary uses of cash from our operating activities include payments for labor and labor-related costs, professional fees, research and development costs associated with our clinical trials, and other general corporate expenditures.

The increase in cash used in operations of $14.0 million year over year is due to changes in working capital accounts of $20.7 million, partially offset by an increase in net loss as adjusted for non-cash items of $6.7 million.

The decrease in cash used in operations of $3.0 million year over year is due to changes in working capital accounts of $6.9 million, partially offset by an increase in net loss as adjusted for non-cash items of $3.9 million.

Investing Activities

Net cash provided by investing activities was $21.7 million for the nine months ended September 30, 2023 compared to $74.4 million net cash used in during the nine months ended September 30, 2022.

The net cash provided by investing activities during the nine months ended September 30, 2023 was primarily due to $76.5 million proceeds from sale and maturities of short-term investments, partially offset by $54.8 million purchase of short-term investments.

The net cash used in investing activities during the nine months ended September 30, 2022 was primarily due to $74.3 million purchase of short-term investments.

Net cash used in investing activities was $39.5 million, for the three months ended March 31, 2024 compared to $13.3 million net cash provided by during the three months ended March 31, 2023.

The cash used in investing activities during the three months ended March 31, 2024 was primarily due to purchase of $53.5 million of short-term investments, partially offset by $14.0 million proceeds from sale and maturities of short-term investments.

The cash provided by investing activities during the three months ended March 31, 2023 was primarily due to $34.6 million proceeds from sale and maturities of short-term investments, partially offset by $21.2 million purchase of short-term investments.

Financing Activities

Net cash provided by financing activities during the nine months ended September 30, 2023 was $13.4 million compared to $56.8 million for the nine months ended September 30, 2022.

The net cash provided by financing activities during the nine months ended September 30, 2023 was primarily the result of the receipt of $13.9 million in net proceeds from the issuance of common stock from our at-the-market offerings program, partially offset by $0.5 million payment for tax withholding obligations related to share-based compensation and $0.2 million payment for deferred offering costs.

The net cash provided by financing activities during the nine months ended September 30, 2022 was primarily the result of the receipt of $56.2 million in proceeds from the issuance of common stock from our at-the-market offerings program and $0.9 million in proceeds from exercise of stock options, partially offset by $0.4 million payment for tax withholding obligations related to share-based compensation.

Net cash used in financing activities during each of the three months ended March 31, 2024 and 2023 was $0.3 million.

The net cash used in financing activities during the three months ended March 31, 2024 was primarily due to $0.6 million net payment for tax withholding obligations related to share-based compensation, partially offset by $0.2 million in proceeds from proceeds from employee stock purchase plan and $0.2 million proceeds from exercise of stock warrants.

The net cash used by financing activities during the three months ended March 31, 2023 was primarily due to $0.5 million payment for tax withholding obligations related to share-based compensation, partially offset by $0.1 million in proceeds from proceeds from employee stock purchase plan and $0.1 million proceeds from exercise of stock options.

Current Resources

We have financed our operations to date principally through our equity offerings and proceeds from issuances of our preferred stock, common stock and warrants.

As of September 30, 2023, we had $86.9 million of cash, cash equivalents and restricted cash and $53.9 million of short-term investments.

Accordingly, management believes that we have sufficient capital to fund our plan of operations for at least a twelve-month period from the issuance date of our September 30, 2023 financial statements.

As of March 31, 2024, we had $79.0 million of cash, cash equivalents and restricted cash and $103.0 million of short-term investments.

Accordingly, management believes that we have sufficient capital to fund our plan of operations for at least a twelve-month period from the issuance date of our March 31, 2024 financial statements.

However, in order to address our capital needs in the long-term, including our planned clinical trials, we must continue to actively pursue additional equity or debt financing, government funding, and monetization of our existing programs through partnership arrangements or sales to third parties.

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We base our estimates and judgments on historical experience, knowledge of current conditions, and expectations of what could occur in the future given available information.

There have been no changes in our critical accounting policies and significant judgment and estimates as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, except for the recently adopted accounting standard for ASU No.

2016-13 as disclosed in Note 2.

For more information regarding our critical accounting policies, we encourage you to read the discussion contained in Item 7 under the heading “Critical Accounting Estimates” and Note 2

“Summary of Significant Accounting Policies” included in the notes to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2022.

There have been no changes in our critical accounting policies and significant judgment and estimates as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Quantitative and Qualitative Disclosures about Market Risk

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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-Q

Item 2. Management’s Discussion and Analysis