Altimmune, Inc. 10-Q

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, 2024 included in our Annual Report on Form 10-K, which was filed with the SEC on February 27, 2025. 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, 2024. 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 late clinical stage biopharmaceutical company focused on developing novel peptide-based therapeutics for liver and cardiometabolic diseases. Our lead program is pemvidutide (formerly known as ALT-801), a GLP-1/glucagon dual receptor agonist for the treatment of MASH, obesity, AUD and ALD. We may also pursue additional indications for pemvidutide that leverage our differentiated clinical profile. 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 March 13, 2025, we announced that we are pursuing two additional indications for our lead product candidate, pemvidutide. The new indications are Alcohol Use Disorder (“AUD”) and Alcohol-Associated Liver Disease (“ALD”), also known as Alcohol Liver Disease and Alcohol-Related Liver Disease. AUD is a chronic disease characterized by uncontrolled drinking. In addition to the underlying alcohol misuse by AUD patients, AUD patients have comorbidities that pose significant treatment and management challenges (including steatosis, obesity, hypertension and hyperlipidemia). We expect to begin a Phase 2 AUD trial for pemvidutide in the second quarter of 2025. The planned trial will be a randomized, double-blind, placebo-controlled trial of approximately 100 subjects with moderate to severe AUD over a 24-week period. Endpoints will include change in heavy drinking days, change in biomarkers of alcohol consumption and weight loss. ALD is a condition that damages the liver due to excessive, chronic alcohol use. ALD progression (like metabolic dysfunction-associated steatohepatitis (“MASH”) progression), begins with liver steatosis, which may lead to fibrosis, and ultimately to cirrhosis. We expect to begin a Phase 2 ALD trial for pemvidutide in the third quarter of 2025. The planned trial will be a randomized, double-blind, placebo-controlled trial of approximately 100 subjects with obesity and ALD 13 Table of Contents over a 48-week period. Endpoints will include change in liver stiffness, change in alcohol consumption, and biomarkers of steatosis and liver fibrosis and inflammation. Recent Global Events Tariff The United States recently imposed reciprocal and additional tariffs on many countries around the world. Such tariffs and counter tariffs by other countries against the U.S. have been causing uncertainties in the global markets. If the tariffs and counter tariffs continue or escalate, they could have a significant negative effect on the global economy or on our operations, including continued inflationary pressures on raw materials, supply chain and logistics disruptions, and volatility in the capital markets, foreign exchange rates and interest rates. Results of Operations Comparison of the three months ended March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ 2025 2024 Increase (Decrease) Revenues ​ $ 5 ​ $ 5 ​ $ — — % Operating expenses: ​ ​ ​ ​ ​ Research and development ​ 15,827 ​ 21,487 ​ (5,660) (26) % General and administrative ​ 5,993 ​ 5,312 ​ 681 13 % Total operating expenses ​ 21,820 ​ 26,799 ​ (4,979) (19) % Loss from operations ​ (21,815) ​ (26,794) ​ (4,979) (19) % Other income (expense): ​ ​ ​ ​ ​ Interest expense ​ (1) ​ (1) ​ — — % Interest income ​ 1,545 ​ 2,413 ​ (868) (36) % Other income (expense), net ​ 15 ​ (12) ​ 27 (225) % Total other income (expense), net ​ 1,559 ​ 2,400 ​ (841) (35) % Net loss before income taxes ​ ​ (20,256) ​ ​ (24,394) ​ ​ 4,138 (17) % Income tax expense (benefit) ​ (681) ​ — ​ (681) 100 % Net loss ​ $ (19,575) ​ $ (24,394) ​ $ (4,819) (20) % Revenue We have not generated any revenues from the sale of any products to date. Our revenue in previous years consisted primarily of government and foundation grants and contracts that supported our efforts on specific research projects. Research and development expenses Research and development expenses consisted primarily of expenses related to product candidate development. Research and development expenses decreased by $5.7 million, or 26%, for the three months ended March 31, 2025, as compared to the same period the three months ended March 31, 2024. The $4.3 million decrease in research and development expenses for pemvidutide was primarily due to a $2.4 million reduction related to IMPACT Phase 2b trial in MASH, a $0.6 million reduction related to other clinical activities, a $0.4 million reduction in expense associated with the winddown of MOMENTUM Phase 2 trial in obesity and a $1.6 million decrease in manufacturing expenses for production of Good Manufacturing Practice drug substance materials. These decreases were partially offset by a $0.2 million increase in expense related to other nonclinical activities and a $0.4 million increase in expense associated the start of AUD and ALD trials. The $1.0 million decrease in research and development expenses was related to the winddown and completion of the in-life portion of the Phase 2 trial in 2023, and subsequent termination of HepTcell in March 2024. 14 Table of Contents General and administrative expenses General and administrative expenses increased by $0.7 million, or 13%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The increase is due primarily to a $0.5 million increase in stock compensation and other labor related expense and a $0.2 million increase in professional fees. Total other income (expense), net Total other income (expense), net decreased by $0.8 million, or 35%, for the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. The net decrease is primarily due to a $0.9 million decrease in interest income earned on our cash equivalents and short-term investments. Income tax expense (benefit) During the three months ended March 31, 2025, we have recorded a discrete tax benefit of approximately $0.7 million related to a portion of carryback claims with the State of Maryland of which we previously held an uncertain tax position against. Other then the discrete tax benefit discussed above, due to a full valuation allowance, the Company did not record an income tax expense (benefit) for either of the three months ended March 31, 2025 and 2024. Liquidity and Capital Resources Overview Our primary sources of cash during the three months ended March 31, 2025, were from equity transactions, interest 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 $149.9 million as of March 31, 2025. We believe, based on the operating cash requirements and capital expenditures expected for 2025 and 2026, our cash on hand as of March 31, 2025, 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, 2025 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 March 31, 2025, we had an accumulated deficit of $581.0 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, and monetization of our existing programs through partnership arrangements or sales to third parties. Sources of Liquidity Loan Financing On May 13, 2025 (“Closing Date”), we entered into a Loan and Security Agreement (“Loan Agreement”) with Hercules Capital, Inc. (“Hercules”) and the lenders party thereto, pursuant to which the lenders will make available up to four tranches of term loans in an aggregate principal amount of $100.0 million (the “Term Loan”), subject to certain terms and conditions. The first Term Loan tranche was made on the Closing Date in an aggregate principal amount of $15.0 million. Upon the achievement of certain milestones and subject to other terms and conditions set out in the Loan Agreement, (i) the second Term Loan tranche will be made available in an aggregate principal amount of up to $25.0 million and (ii) the third Term Loan tranche will be made available in an aggregate principal amount of up to $15.0 million. The fourth Term Loan tranche will be made available in an aggregate principal amount of up to $45.0 million subject to the approval of the lenders. The Term Loan will mature on June 1, 2029 (the “Maturity Date”). The Term Loan bears interest equal to the greater of (a) the prime rate as reported in The Wall Street Journal plus 2.45% and (b) (i) 9.95% until 15 Table of Contents December 31, 2025, and (ii) 9.45% thereafter. We may make interest-only payments for an initial period of up to 24 months from the Closing Date, which may be extended up to 42 months upon achievement of certain milestones and subject to other terms and conditions set out in the Loan Agreement (the “Interest-Only Period”). After the Interest-Only Period, we will be required to repay in equal monthly installments the principal and interest until the Maturity Date. Shelf Registrations On February 27, 2025, we filed a shelf registration statement on Form S-3, which was declared effective on March 13, 2025. This shelf registration allows us to offer and sell up to $400.0 million of our common stock, preferred stock, debt securities, warrants, rights and units (the “2025 Shelf”) for a period of 3 years from effectiveness. On February 28, 2023, we filed a shelf registration statement on Form S-3ASR, which was declared effective immediately. This shelf registration allowed us to offer and sell any amount of our common stock, preferred stock, debt securities, warrants, rights and units (the “2023 Shelf”). The 2023 Shelf expired on February 27, 2025. At-the-Market Offerings On February 27, 2025, we entered an Equity Distribution Agreement (the “2025 Agreement”) with Leerink Partners LLC, Piper Sandler & Co. and Stifel, Nicolaus & Company, Incorporated, 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 $150.0 million through the sale agents from the 2025 Shelf. During the three months ended March 31, 2025, we have sold 805,502 shares of common stock under the 2025 Agreement resulting in approximately $4.6 million in net proceeds, and as of March 31, 2025, $145.3 million remained available to be sold under the 2025 Agreement. 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 offered and sold shares of our common stock having an aggregate offering price of up to $150.0 million through the sale agents from the 2023 Shelf. During the three months ended March 31, 2025, we have sold 4,467,866 shares of common stock under the 2023 Agreement, resulting in approximately $30.2 million in net proceeds. Since inception through the expiration of the 2023 Agreement in February 2025, we raised approximately $126.8 million in net proceeds through the issuance of 26,129,903 shares of our common stock. As of March 31, 2025, there were no remaining shares available under the 2023 Agreement as the 2023 Agreement was terminated. Cash Flows The following table provides information regarding our cash flows for the three months ended March 31, 2025 and 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, (in thousands) 2025 2024 Increase (Decrease) Net cash (used in) provided by: ​ ​ ​ Operating activities ​ $ (16,840) ​ $ (16,357) ​ $ 483 Investing activities ​ (5,101) ​ (39,521) ​ 34,420 Financing activities ​ 34,119 ​ (261) ​ 34,380 Net increase (decrease) in cash and cash equivalents and restricted cash ​ $ 12,178 ​ $ (56,139) ​ $ 68,317 ​ Operating Activities Net cash used in operating activities was $16.8 million for the three months ended March 31, 2025, compared to $16.4 million during the three months ended March 31, 2024. 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 $0.4 million year 16 Table of Contents over year is due to changes in working capital accounts of $5.1 million, partially offset by a decrease in net loss as adjusted for non-cash items of $4.7 million. Investing Activities Net cash used in investing activities was $5.1 million, for the three months ended March 31, 2025 compared to $39.5 million net cash used in during the three months ended March 31, 2024. The cash used in investing activities during the three months ended March 31, 2025, was primarily due to the purchase of $43.1 million of short-term investments, partially offset by $38.0 million in proceeds from sale and maturities of short-term investments. The cash used in investing activities during the three months ended March 31, 2024, was primarily due to a $53.5 million purchase of short-term investments, partially offset by $14.0 million in proceeds from sale and maturities of short-term investments. Financing Activities Net cash provided by financing activities was $34.1 million during the three months ended March 31, 2025, compared to $0.3 million net cash used in financing activities during the three months ended March 31, 2024. The net cash provided by financing activities during the three months ended March 31, 2025, was primarily the result of the receipt of $34.6 million in net proceeds from the issuance of common stock from our at-the-market offerings program, $0.2 million in proceeds from proceeds from the ESPP, partially offset by $0.7 million net payment for tax withholding obligations related to share-based compensation. The net cash used by financing activities during the three months ended March 31, 2024, was primarily due to $0.6 million payment for tax withholding obligations related to share-based compensation, partially offset by $0.2 million in proceeds from proceeds from the ESPP and $0.2 million in proceeds from exercise of stock warrants. Current Resources We have financed our operations to date principally through our equity offerings and proceeds from issuances of our common stock. As of March 31, 2025, we had $49.2 million of cash, cash equivalents and restricted cash and $100.7 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, 2025 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 and monetization of our existing programs through partnership arrangements or sales to third parties. 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, 2024. ​ 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. ​ 17 Table of Contents