Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our consolidated financial statements and related notes for the year ended December 31, 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. The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate,” “may,” “will,” “should,” “could,” “target,” “strategy,” “intend,” “project,” “guidance,” “likely,” “usually,” “potential,” or the negative of these words or variations of such words, similar expressions, or comparable terminology are intended to identify such forward-looking statements, although not all forward-looking statements contain these identifying words. There are a number of important risks and uncertainties that could cause our actual results to differ materially from those indicated by forward-looking statements. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions, and expectations disclosed in the forward-looking statements we make. A further list and description of risks, uncertainties, and other factors that could cause actual results or events to differ materially from the forward-looking statements that we make is included in the cautionary statements herein and in our other filings with the SEC, including those set forth under Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments that we may make.
We have based the forward-looking statements included in this Quarterly Report on Form 10-Q on information available to us on the date of this quarterly report, and we assume no obligation to update any such forward-looking statements, other than as required by law. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events, or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we, in the future, may file with the SEC, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Overview
Altimmune, Inc. is a clinical stage biopharmaceutical company focused on developing treatments for obesity and liver diseases. Our 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
Pemvidutide
On November 7, 2024, we announced the successful completion of its End-of-Phase 2 Meeting with the U.S. Food and Drug Administration (the “FDA”) and agreement on the design of a Phase 3 registrational program for its product candidate, pemvidutide, in the treatment of obesity.
The interaction with the FDA included an extensive review of the preclinical and clinical data generated to date, including data from six completed clinical trials of pemvidutide. The planned registrational program will include four Phase 3, randomized, double-blind, placebo-controlled, parallel-group trials, each evaluating treatment with pemvidutide over a 60-week period. The Phase 3 program is expected to enroll approximately 5,000 subjects across the four trials. The safety and efficacy of pemvidutide doses of 1.2 mg, 1.8 mg, and 2.4 mg will be evaluated with the intention of obtaining approval for all three doses.
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The Phase 3 program is designed to leverage the key attributes of pemvidutide, including the effects of balanced GLP-1/glucagon dual agonism in subjects with overweight and obesity.
On September 30, 2024, we announced the completion of patient enrollment in IMPACT, our Phase 2b biopsy-driven trial evaluating Pemvidutide in MASH, and expect top-line efficacy data in the second quarter of 2025.
On September 10, 2024, we presented results of MRI-based body composition sub-study from our 48-week MOMENTUM Phase 2 obesity trial of pemvidutide in subjects with overweight and obesity at the 60 th annual meeting of the European Association for the Study of Diabetes. In an MRI sub-study of 67 subjects from the MOMENTUM Phase 2 obesity trial, 50 of whom were treated with pemvidutide for 48 weeks, the lean loss ratio, defined as the change in lean mass compared to the change in total mass, was 21.9%. Lean mass preservation was greater in subjects aged 60 years and older, in whom the lean loss ratio was only 19.9%. In addition to lean mass preservation, there was a preferential reduction of visceral adipose tissue (VAT), the adipose tissue associated with cardiovascular risk. At the 2.4mg dose of pemvidutide, VAT was reduced by 28.3% at week 48 compared to a 19.5% loss in subcutaneous adipose tissue.
On June 23, 2024, we presented the full results of the body composition analysis from our 48-week MOMENTUM Phase 2 obesity trial of pemvidutide at the American Diabetes Association’s 84 th Annual Scientific Sessions. The body composition analysis showed that 78.1% of weight loss was derived from adipose tissue and only 21.9% from lean mass. Historically, lean mass loss has been shown to be approximately 25% from diet and exercise programs.
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.
HepTcell
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, 2024 and 2023
The following table summarizes our results of operations for the three months ended September 30, 2024 and 2023 (in thousands):
Three Months Ended September 30,
2024
2023
Increase (Decrease)
Revenues
$
5
$
362
$
(357)
99
%
Operating expenses:
Research and development
19,803
18,388
1,415
8
%
General and administrative
4,969
4,514
455
10
%
Total operating expenses
24,772
22,902
1,870
8
%
Loss from operations
(24,767)
(22,540)
(2,227)
10
%
Other income (expense):
Interest expense
(6)
(29)
23
(79)
%
Interest income
1,910
1,884
26
1
%
Other income (expense), net
18
14
4
(29)
%
Total other income (expense), net
1,922
1,869
53
3
%
Net loss
$
(22,845)
$
(20,671)
$
(2,174)
11
%
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Revenues
We have not generated any revenues from the sale of any products to date. Our revenues 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 the revenue reported during the three months ended September 30, 2023 was primarily from the final indirect rate adjustments.
Research and development expenses
Research and development expenses consisted primarily of expenses related to product candidate development. Research and development expenses for the three months ended September 30, 2024 and 2023 are summarized as follows:
Three Months Ended September 30,
Product candidates
2024
2023
Increase (Decrease)
Pemvidutide
$
12,376
$
10,441
$
1,935
19
%
HepTcell
334
1,585
(1,251)
(79)
%
Non-project costs
7,093
6,362
731
11
%
Total research and development expenses
$
19,803
$
18,388
$
1,415
8
%
The increase in research and development expenses for pemvidutide was primarily due to a $5.9 million increase related to the ramp up of the IMPACT Phase 2b trial in MASH and a $0.7 million increase for other nonclinical studies. These increases were partially offset by a $2.7 million reduction in expense associated with the MOMENTUM Phase 2 trial in obesity, which was ongoing during the three months ended September 30, 2023 and wound down in the year ended December 31, 2023, and a $2.0 million decrease in net manufacturing expenses for production of Good Manufacturing Practice drug substance materials.
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 September 30, 2024 were 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 $0.8 million initial cost for additional research and discovery projects.
General and administrative expenses
General and administrative expenses increased by $0.5 million, or 10%, for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023, primarily due to a $0.4 million increase in professional fees.
Total other income (expense), net
Total other income (expense), net increased by $0.1 million, or 3%, for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023. The net increase is primarily due to a $0.1 million increase in interest income earned on our cash equivalents and short-term investments.
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Comparison of the nine months ended September 30, 2024 and 2023
The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023 (in thousands):
Nine Months Ended September 30,
2024
2023
Increase (Decrease)
Revenues
$
15
$
389
$
(374)
96
%
Operating expenses:
Research and development
62,445
48,890
13,555
28
%
General and administrative
15,876
13,805
2,071
15
%
Total operating expenses
78,321
62,695
15,626
25
%
Loss from operations
(78,306)
(62,306)
(16,000)
26
%
Other income (expense):
Interest expense
(8)
(33)
25
(76)
%
Interest income
6,505
5,387
1,118
21
%
Other income (expense), net
(70)
146
(216)
148
%
Total other income (expense), net
6,427
5,500
927
17
%
Net loss
$
(71,879)
$
(56,806)
$
(15,073)
27
%
Revenues
We have not generated any revenues from the sale of any products to date. Our revenues 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 the revenue reported during the nine months ended September 30, 2023 was primarily from the final indirect rate adjustments.
Research and development expenses
Research and development expenses consisted primarily of expenses related to product candidate development. Research and development expenses for the nine months ended September 30, 2024 and 2023 are summarized as follows:
Nine Months Ended September 30,
Product candidates
2024
2023
Increase (Decrease)
Pemvidutide
$
39,665
$
25,464
$
14,201
56
%
HepTcell
2,359
5,481
(3,122)
(57)
%
Non-project costs
20,421
17,945
2,476
14
%
Total research and development expenses
$
62,445
$
48,890
$
13,555
28
%
The increase in research and development expenses for pemvidutide was primarily due to a $22.7 million increase related to the ramp up of the IMPACT Phase 2b trial in MASH, a $1.3 million increase for other clinical analysis, and a $1.9 million increase in nonclinical studies. These increases were partially offset by a $9.0 million reduction in expense associated with the MOMENTUM Phase 2 trial in obesity, which was ongoing during the nine months ended September 30, 2023 and wound down in the year ended December 31, 2023, and a $2.7 million reduction in expenses associated with Phase 1 safety trials, which was substantially completed in 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 nine months ended September 30, 2024 were 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 $1.2 million increase in stock compensation expense and a $1.3 million initial cost for additional research and discovery projects.
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General and administrative expenses
General and administrative expenses increased by $2.1 million, or 15%, for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023, primarily due to a $2.1 million increase in stock compensation and other labor-related expense, including the $1.0 million incremental stock-based compensation expense because of modifications of stock awards (see Note 8).
Total other income (expense), net
Total other income (expense), net increased by $0.9 million, or 17%, for the nine months ended September 30, 2024, as compared to the nine months ended September 30, 2023. The net increase is primarily due to a $1.1 million increase in interest income earned on our cash equivalents and short-term investments, partially offset by a $0.2 million increase in foreign currency exchange losses.
Liquidity and Capital Resources
Overview
Our primary sources of cash during the nine months ended September 30, 2024 were from equity transactions, interest and dividends from our money market funds and short-term investments, and proceeds from maturities of our short-term investments. Our cash, cash equivalents, restricted cash, and short-term investments were $139.4 million as of September 30, 2024. We believe, based on the operating cash requirements and capital expenditures expected for 2024 and 2025, our cash on hand as of September 30, 2024, together with expected cash receipts from our R&D incentives, is sufficient to fund operations for at least a twelve-month period from the issuance date of our September 30, 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. We have incurred significant losses since we commenced operations. As of September 30, 2024, we had an accumulated deficit of $538.2 million. In addition, we have not generated positive cash flows from operations. We have had to rely on a variety of financing sources, including the issuance of debt and equity securities. As capital resources are consumed to fund our research and development activities, we may require additional capital beyond our currently anticipated amounts. In order to address our capital needs, including our planned clinical trials, we must continue to actively pursue additional equity or debt financing, government funding, and monetization of our existing programs through partnership arrangements or sales to third parties.
Sources of Liquidity
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.
At-the-Market Offerings
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 September 30, 2024, we have sold 20,454,516 shares of common stock under the 2023 Agreement, resulting in approximately $86.6 million in net proceeds. During the nine months ended September 30, 2024, we did not sell any shares of common stock under the 2023 Agreement, and as of September 30, 2024, $60.6 million remained available to be sold under the 2023 Shelf.
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Cash Flows
The following table provides information regarding our cash flows for the nine months ended September 30, 2024 and 2023:
Nine Months Ended September 30,
(in thousands)
2024
2023
Increase (Decrease)
Net cash (used in) provided by:
Operating activities
$
(61,583)
$
(59,277)
$
(2,306)
Investing activities
(42,018)
21,691
(63,709)
Financing activities
(41)
13,351
(13,392)
Net decrease in cash and cash equivalents and restricted cash
$
(103,642)
$
(24,235)
$
(79,407)
Operating Activities
Net cash used in operating activities was $61.6 million for the nine months ended September 30, 2024 compared to $59.3 million during the nine months ended September 30, 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 $2.3 million year over year is due to changes in working capital accounts of $11.1 million, offset by an increase in net loss as adjusted for non-cash items of $13.4 million.
Investing Activities
Net cash used in investing activities was $42.0 million for the nine months ended September 30, 2024 compared to $21.7 million net cash provided by during the nine months ended September 30, 2023. The net cash used in investing activities during the nine months ended September 30, 2024 was primarily due to purchases of $102.5 million of short-term investments, partially offset by $60.5 million proceeds from sales and maturities of short-term investments. The net cash provided by investing activities during the nine months ended September 30, 2023 was primarily due to $76.5 million proceeds from sales and maturities of short-term investments, partially offset by $54.8 million purchases of short-term investments.
Financing Activities
Net cash used in financing activities during the nine months ended September 30, 2024 was negligible compared to $13.4 million cash provided by financing activities during the nine months ended September 30, 2023. The net cash used in financing activities during the nine months ended September 30, 2024 was primarily due to $0.8 million net payments for tax withholding obligations related to share-based compensation, partially offset by $0.3 million in proceeds from the employee stock purchase plan, $0.3 million proceeds from exercises of stock options, and $0.2 million proceeds from exercises of stock warrants. The net cash provided by financing activities during the nine months ended September 30, 2023 was primarily the result of the receipt of $13.7 million in net proceeds from the issuance of common stock from our at-the-market offerings program, partially offset by $0.5 million net payments for tax withholding obligations related to share-based compensation.
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, 2024, we had $31.5 million of cash, cash equivalents, and restricted cash, and $107.9 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, 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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Critical Accounting Estimates
Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our unaudited consolidated financial statements, which have been prepared in accordance with U.S. GAAP and the rules and regulations of the SEC for interim financial reporting. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and the disclosure of contingent liabilities in our consolidated financial statements. We base our estimates and judgments on historical experience, knowledge of current conditions, and expectations of what could occur in the future given available information.
There have been no changes in our critical accounting policies and significant judgment and estimates as disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the information required by this Item.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.