What changed in this filing

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Item 1. Financial Statements

2021-08-10 compared with 2021-05-17 · 191 added, 112 removed, 300 unchanged (50% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

March 31, 2021

December 31, 2020

Current assets:

8 unchanged sentences

Property and equipment, net

Right of use asset

Intangible assets, net

11 unchanged sentences

200,000,000 shares authorized;

38,257,180 and 37,142,946 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

39,693,524 and 37,142,946 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

Accumulated deficit

( 235,771,414 )

( 186,420,599 )

Accumulated other comprehensive loss, net

( 5,038,240 )

( 5,044,517 )

Total stockholders’ equity

4 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Operating expenses:

1 unchanged sentence

General and administrative

Impairment loss on construction-in-progress

Total operating expenses

Loss from operations

( 24,863,442 )

( 18,417,970 )

( 39,725,246 )

( 25,724,724 )

Other income (expense):

1 unchanged sentence

Interest income

Other (expense) income, net

Total other (expense) income, net

Other income (expense), net

Total other income, net

Net loss before income tax benefit

( 24,826,707 )

( 18,345,698 )

( 39,690,815 )

( 25,477,226 )

Income tax benefit

Other comprehensive income (loss) – unrealized gain (loss) on investments

( 24,826,707 )

( 16,766,916 )

( 39,690,815 )

( 20,652,565 )

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

Comprehensive loss

( 24,825,566 )

( 16,746,028 )

( 39,684,538 )

( 20,664,112 )

Net loss per share, basic and diluted

6 unchanged sentences

Balance at December 31, 2020

( 186,420,599 )

( 5,044,517 )

Stock-based compensation

2 unchanged sentences

Retirement of common stock in exchange for common stock warrant

( 1,000,000 )

( 7,539,900 )

( 9,660,000 )

( 17,200,000 )

Issuance of common stock warrant in exchange for retirement of common stock

Issuance of common stock in at the market offering, net

Issuance of common stock in at the market offerings, net

Issuance of common stock upon cashless exercise of warrants

Unrealized income on short-term investments

Unrealized gain on short-term investments

( 14,864,108 )

Balance at March 31, 2021

( 210,944,707 )

( 5,039,381 )

Stock based compensation

Exercise of stock options

Vesting of restricted stock awards including withholding, net

Issuance of common stock in at the market offerings, net

Unrealized gain on short term investments

( 24,826,707 )

Balance at June 30, 2021

( 235,771,414 )

( 5,038,240 )

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

ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Comprehensive

1 unchanged sentence

Balance at December 31, 2019

( 137,376,122 )

( 5,020,156 )

Stock-based compensation

3 unchanged sentences

Unrealized loss on short-term investments

( 3,885,649 )

Balance at March 31, 2020

( 141,261,771 )

( 5,052,591 )

Stock based compensation

Exercise of stock options

Vesting of restricted stock awards including withholding, net

Issuance of common stock in at the market offerings, net

Issuance of common stock upon exercise of warrants

Unrealized gain on short term investments

( 16,766,916 )

Balance at June 30, 2020

( 158,028,687 )

( 5,031,703 )

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

( 39,690,815 )

( 20,652,565 )

Adjustments to reconcile net loss to net cash used in operating activities:

Change in fair value of contingent consideration liability

Impairment loss on construction-in-progress

Stock-based compensation expense

Depreciation and amortization

Unrealized losses on foreign currency exchange

Unrealized losses (gains) on foreign currency exchange

Changes in operating assets and liabilities:

1 unchanged sentence

Prepaid expenses and other current assets

( 7,155,593 )

Accounts payable

Accrued expenses and other liabilities

( 4,052,095 )

Tax refund receivable

( 4,877,851 )

Net cash used in operating activities

( 38,495,788 )

( 11,518,302 )

CASH FLOWS FROM INVESTING ACTIVITIES:

1 unchanged sentence

Purchases of short-term investments

( 7,424,005 )

( 12,118,563 )

Purchases of property and equipment, net

( 11,900,198 )

Cash paid for internally developed patents

3 unchanged sentences

Proceeds from exercises of warrants

Proceeds from issuance of common stock in at the market offering, net

Proceeds from issuance of common stock in at the market offerings, net

Proceeds from issuance of notes payable

Proceeds from issuance of common stock from Employee Stock Purchase Plan

Proceeds from exercises of stock options

Net cash provided by financing activities

2 unchanged sentences

Cash, cash equivalents and restricted cash at end of period

SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES:

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

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

4 unchanged sentences

Altimmune, Inc., headquartered in Gaithersburg, Maryland, United States, together with its subsidiaries (collectively, the “Company” or “Altimmune”) is a clinical stage biopharmaceutical company incorporated under the laws of the State of Delaware.

The Company is focused on developing intranasal vaccines, immune modulating therapies, and treatments for liver disease.

The Company’s diverse pipeline includes proprietary intranasal vaccines for COVID-19 (AdCOVID), anthrax (NasoShield) and influenza (NasoVAX);

an intranasal immune modulating therapeutic for COVID-19 (T-COVID);

and next generation peptide therapeutics for NASH (ALT-801) and chronic hepatitis B (HepTcell).

The Company is focused on developing treatments for obesity and liver diseases.

The Company’s pipeline includes next generation peptide therapeutics for obesity, NASH (ALT-801) and chronic hepatitis B (HepTcell);

proprietary intranasal vaccines;

and an intranasal immune modulating therapeutic for the coronavirus disease (“COVID 19”) (T-COVID).

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 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.

On June 29, 2021, the Company announced the discontinuation of the development program for the COVID-19 vaccine candidate, AdCOVID following the Company’s review of findings from the Phase 1 clinical trial, and in view of the highly competitive COVID-19 landscape.

The Company is currently evaluating options for the future development of T-COVID as a result of enrollment challenges due to the effective rollout in the United States of authorized COVID-19 vaccines and decreasing incidence of the disease.

Basis of Presentation

10 unchanged sentences

Summary of Significant Accounting Policies

During the three months ended March 31, 2021, there have been no significant changes to the Company’s summary of significant accounting policies contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the SEC, except for the recently adopted accounting standard for income taxes.

During the six months ended June 30, 2021, there have been no significant changes to the Company’s summary of significant accounting policies contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the SEC, except for the recently adopted accounting standard for income taxes.

Use of Estimates

2 unchanged sentences

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

The Company considered the potential impact of the COVID-19 pandemic on the Company’s estimates and assumptions and determined that there was not a material impact to the Company’s unaudited consolidated financial statements as of and for the three months ended March 31, 2021.

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

5 unchanged sentences

The standard also requires franchise or similar taxes partially based on income to be reported as income tax and the effects of enacted changes in tax laws or rates to be included in the annual effective tax rate computation from the date of enactment.

Lastly, in any future acquisition, the Company would be required to evaluate when the step-up in the tax basis of

goodwill is part of the business combination and when it should be considered a separate transaction.

The Company a dopt ed the standard as of January 1, 2021 and has evaluated the effects of this standard and determined that the adoption did not have a material impact on the Company’s consolidated financial statement s .

Lastly, in any future acquisition, the Company would be required to evaluate when the step-up in the tax basis of goodwill is part of the business combination and when it should be considered a separate transaction.

The Company adopted the standard as of January 1, 2021 and has evaluated the effects of this standard and determined that the adoption did not have a material impact on the Company’s consolidated financial statements.

Fair Value Measurements

The Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2021 consisted of the following:

Fair Value Measurement at March 31, 2021

The Company’s assets and liabilities measured at fair value on a recurring basis at June 30, 2021 consisted of the following:

Fair Value Measurement at June 30, 2021

Cash equivalents - money market funds

11 unchanged sentences

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

Short-term investments had quoted prices at March 31, 2021 as shown below:

March 31, 2021

Short-term investments had quoted prices at June 30, 2021 as shown below:

June 30, 2021

Unrealized Gain

Amortized Cost

Unrealized Gain (Loss)

United States treasury securities

4 unchanged sentences

December 31, 2020

Unrealized Gain

Amortized Cost

Unrealized Gain (Loss)

United States treasury securities

3 unchanged sentences

The fair value of contingent payments classified as a liability is based on the regulatory milestones described in Note 8 and estimated using the Monte Carlo simulation valuation model with Level 3 inputs.

The assumptions used to estimate the fair value of contingent payments that are classified as a liability at March 31, 2021 include the following significant unobservable inputs:

The assumptions used to estimate the fair value of contingent payments that are classified as a liability at June 30, 2021 include the following significant unobservable inputs:

Unobservable input

8 unchanged sentences

If applicable, the Company will recognize transfers into and out of levels within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurs.

There were no transfers into and out of any of the levels of the fair value hierarchy as of March 31, 2021 and December 31, 2020.

There were no transfers into and out of any of the levels of the fair value hierarchy as of June 30, 2021 and December 31, 2020.

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.

As of March 31, 2021 and December 31, 2020, the Company had no significant assets or liabilities that were measured at fair value on a non-recurring basis.

As of June 30, 2021, the Company recorded a non-cash impairment charge to property and equipment, net on a non-recurring basis (see below).

As of December 31, 2020, the Company had no significant assets or liabilities that were measured at fair value on a non-recurring basis.

Property and Equipment, Net

March 31, 2021

During the three and six months ended June 30, 2021, the Company recorded a non-cash impairment charge of $ 8.1 million to property and equipment, net.

The fair value of the impaired assets was $ 3.3 million at June 30, 2021.

At June 30, 2021, the fair value of the assets related to construction-in-progress were primarily determined utilizing the cost approach, which determines the current replacement cost of the asset being appraised and then deducts for the loss in value caused by contractual restrictions on the asset, physical deterioration, functional obsolescence, and economic obsolescence the amount required to replace the asset as if new and adjusts to reflect usage.

The fair value measurement is considered Level 3 measurements within the valuation hierarchy.

Property and Equipment, Net

Property and equipment, net consists of the following:

June 30, 2021

December 31, 2020

6 unchanged sentences

accumulated depreciation and amortization

( 1,828,558 )

( 1,598,811 )

Property and equipment, net

As of March 31, 2021, construction-in-progress primarily includes costs related to the procurement of long-lead equipment and build out of the suite associated with the Company's manufacturing collaboration with Lonza Houston, Inc.

(“Lonza”) described in Note 16.

Depreciation expense related to property and equipment was approximately $67,658 and $59,505, for the three months ended March 31, 2021 and 2020, respectively.

As of June 30, 2021, construction-in-progress primarily includes costs related to the procurement of long-lead equipment and build out of the suite associated with the Company’s manufacturing collaboration with Lonza Houston, Inc.

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

Under the agreement, the Company has 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.

This work is expected to be completed by the end of 2021.

In June 2021, the Company announced the discontinuation of further development of AdCOVID following the Company’s review of findings from the Phase 1 clinical trial.

Construction continues at Lonza, and the Company is currently assessing its strategic options with respect to the suite.

The Company’s current expectation is that, more likely than not, the suite will be disposed of significantly before the end of its previously estimated useful life.

As of June 30, 2021, the Company recorded $ 8.1 million of impairment loss on construction-in-progress in the accompanying unaudited consolidated statements of operations and comprehensive loss, with $ 3.3 million remaining capitalized in the unaudited consolidated balance sheet, as it represents expected recoveries available to the Company under the construction contract.

Depreciation expense related to property and equipment was approximately $ 68,450 and $ 60,664 for the three months ended June 30, 2021 and 2020, respectively, and $ 136,108 and $ 120,169 for the six months ended June 30, 2021 and 2020, respectively.

Intangible Assets

The Company’s intangible assets consisted of the following:

March 31, 2021

The Company’s intangible assets consists of the following:

June 30, 2021

Internally developed patents

Acquired licenses

16 – 20 years

Total intangible assets subject to amortization

2 unchanged sentences

Acquired licenses

16 – 20 years

Total intangible assets subject to amortization

Amortization expense of intangible assets was $6,640 and $13,851 for the three months ended March 31, 2021 and 2020, respectively.

As of March 31, 2021, the weighted average amortization period remaining for intangible assets was 12.3 years.

Amortization expense of intangible assets was $ 6,640 and $ 12,025 for the three months ended June 30, 2021 and 2020, respectively, and $ 13,280 and $ 25,876 for the six months ended June 30, 2021 and 2020, respectively.

As of June 30, 2021, the weighted average amortization period remaining for intangible assets was 12.2 years.

Amortization expense was classified as research and development expenses in the accompanying unaudited consolidated statements of operations and comprehensive loss.

2 unchanged sentences

The Company also leases office equipment under a non-cancellable equipment lease through December 2022 .

Rent expense during the three months ended March 31, 2021 and 2020 under all of the Company’s operating leases was $130,138 and $87,599, respectively.

Rent expense during the three and six months ended June 30, 2021 under all of the Company’s operating leases was $ 123,734 and $ 253,872 , respectively.

Rent expense during the three and six months ended June 30, 2020 under all of the Company’s operating leases was $ 86,295 and $ 173,894 , respectively.

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

4 unchanged sentences

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

The cash paid for operating lease liabilities for the three months ended March 31, 2021 and 2020 was $117,354 and $95,714, respectively.

Supplemental other information related to the operating leases balance sheet information was as follows:

March 31, 2021

The cash paid for operating lease liabilities for the three and six months ended June 30, 2021 was $ 118,843 and $ 236,197 , and for the three and six months ended June 30, 2020 was $ 96,770 and $ 192,484 , respectively.

Supplemental other information related to the operating leases balance sheet information is as follows:

June 30, 2021

December 31, 2020

Operating lease obligations (see Note 7 and 9)

Operating lease right-of-use assets

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

in Balance Sheet)

Weighted-average remaining lease term (years)

2 unchanged sentences

Accrued expenses and other current liabilities consist of the following:

March 31, 2021

June 30, 2021

December 31, 2020

20 unchanged sentences

The Regulatory Milestones will be payable in shares of the Company’s Common Stock, with the number of shares of the Company’s Common Stock to be issued in connection with each milestone amount, if any, are dependent on the share price at the time of achievement.

The number of any shares issued in consideration for the IND Milestone Consideration Amount will be determined based on lower of (A) the average of the closing prices of our 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 any shares issued in consideration for the IND Milestone Consideration Amount will be determined based on lower of (A) the average of the closing prices of our 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 value of any shares issued in consideration for the Phase 2 Milestone Consideration Amount shall be determined based the lower of (A) on the average of the closing trading prices of our 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 .

7 unchanged sentences

Below is a summary of the contingent consideration activity:

Three Months Ended March 31,

Six Months Ended June 30,

Beginning balance

1 unchanged sentence

Ending balance

As of March 31, 2021, the increase in fair value was primarily attributable to an increase in the closing share price of the Company’s common stock and in the probability of milestone achievement.

As of March 31, 2020, the increase in fair value was primarily due to an increase in the probability of milestone achievement.

As of June 30, 2021, the decrease in fair value was primarily attributable to a decrease in the closing share price of the Company’s common stock, partially offset by an increase in the probability of milestone achievement.

As of June 30, 2020, the increase in fair value was primarily attributable to an increase in the closing share price of the Company’s common stock and in the probability of milestone achievement.

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

1 unchanged sentence

The Company’s other long-term liabilities are summarized as follows:

June 30, 2021

December 31, 2020

Lease obligation, long-term portion (see Note 6)

3 unchanged sentences

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 Pre-Funded Warrants are exercisable at any time, provided that each Pre-Funded Warrant holder will be prohibited from exercising such Pre-Funded Warrants into shares of the Company’s common stock if, as a result of such exercise, the holder, together with its affiliates, would own more than 4.99 % of the total number of shares of the Company’s common stock then issued and outstanding, which percentage may change at the

holders’ election to any other number less than or equal to 19.99 % upon 61 days ’ notice to the Company.

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

3 unchanged sentences

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

As of March 31, 2021, no Pre-Funded Warrants were exercised.

As of June 30, 2021, no Pre-Funded Warrants were exercised.

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 offering program under which the Company may offer and sell, from time to time at its sole discretion, 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”).

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, 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”).

Any Shares offered and sold in the 2021 Offering will be issued pursuant to the Company’s Registration Statement on Form S-3 filed with the Securities and Exchange Commission (the “SEC”) on December 31, 2020, which was declared effective on January 11, 2021, 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.

As of March 31, 2021, the Company has sold 2,110,800 shares of Common Stock under the 2021 Agreement resulting in approximately $34.2 million in net proceeds, with $89.7 million remaining available to be sold under the 2021 Agreement.

As of March 31, 2021, the Company recorded approximately $0.1 million of offering costs which offset the proceeds received from the shares sold through March 31, 2021 and recognized approximately $0.1 million of deferred offering costs which will offset future proceeds received under the 2021 Agreement.

O n March 27, 2020, the Company entered into an Equity Distribution Agreement (the “2020 Agreement”) with JMP Securities LLC, serving as placement agent (the “Placement Agent”) with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $50.0 million (the “Shares”) through the Placement Agent (the “2020 Offering”).

As of June 30, 2021, the Company has sold 3,516,510 shares of Common Stock under the 2021 Agreement resulting in approximately $ 52.4 million in net proceeds, with $ 70.9 million remaining available to be sold under the 2021 Agreement.

As of June 30, 2021, the Company recorded approximately $ 0.1 million of offering costs which offset the proceeds received from the shares sold through June 30, 2021 and recognized approximately $ 0.1 million of deferred offering costs which will offset future proceeds received under the 2021 Agreement.

O n March 27, 2020, the Company entered into an Equity Distribution Agreement (the “2020 Agreement”) with JMP Securities LLC, serving as placement agent (the “Placement Agent”) 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, par value $ 0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $ 50.0 million (the “Shares”) through the Placement Agent (the “2020 Offering”).

Any Shares offered and sold in the 2020 Offering were issued pursuant to the Company’s Registration Statement on Form S-3 filed with the SEC on April 4, 2019, which was declared effective on April 12, 2019, the prospectus supplement relating to the 2020 Offering filed with the SEC on March 27, 2020 and any applicable additional prospectus supplements related to the 2020 Offering that form a part of the Registration Statement.

2 unchanged sentences

On June 1, 2020, the Company filed an amendment to the 2020 Agreement which amended the prospectus supplement dated March 27, 2020 to increase the aggregate offering price to $ 50.0 million.

No Shares were sold under the 2020 Agreement during the three months ended March 31, 2020.

As of March 31, 2021, the 2020 Agreement was fully utilized and no Shares were sold under the 2020 Agreement during the three months ended March 31, 2021.

As of June 30, 2020, the Company sold 2,965,144 shares of Common Stock under the amended 2020 Agreement resulting in $ 22.8 million in net proceeds.

As of June 30, 2021, the 2020 Agreement was fully utilized and no Shares were sold under the 2020 Agreement during the three and six months ended June 30, 2021.

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.

for pre-funded warrants (the “Exchange Warrants”) to purchase an aggregate of 1,000,000 shares of common stock (subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Exchange Warrants), with an exercise price of $ 0.0001 per share.

The Exchange Warrants do not expire and are exercisable at any time except that the Exchange Warrants cannot be exercised by the Exchanging Stockholders if, after giving effect thereto, the Exchanging Stockholders would beneficially own more than 9.99 % of the Company’s common stock, subject to certain exceptions.

In accordance with FASB Accounting Standards Codification Topic 505, Equity , the

Company recorded the retirement of the common stock exchanged as a reduction of common shares outstanding and a corresponding debit to additional paid-in-capital and accumulated deficit at the fair value of the Exchange Warrants on the issuance date.

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

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

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

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

As of March 31, 2021, no ne of the Exchange Warrants have been exercised.

A summary of warrant activity during the three months ended March 31, 2021 is as follows:

As of June 30, 2021, none of the Exchange Warrants have been exercised.

A summary of warrant activity during the six months ended June 30, 2021 is as follows:

Warrants outstanding, December 31, 2020

Exchanges (see Note 10)

Warrants outstanding, March 31, 2021

As of March 31, 2021, all of the common stock warrants that were previously classified as a liability were exercised in full.

Warrants outstanding, June 30, 2021

As of June 30, 2021, all of the common stock warrants that were previously classified as a liability were exercised in full.

Stock-Based Compensation

1 unchanged sentence

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

At March 31, 2021, there was $10.1 million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 2.9 years.

During the three months ended March 31, 2021, the Company granted 669,000 stock options with a weighted average exercise price of $16.73 and per share weighted average grant date fair value of $13.76.

Information related to stock options outstanding at March 31, 2021 is as follows:

At June 30, 2021, there was $ 10.9 million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 3.0 years.

During the six months ended June 30, 2021, the Company granted 907,000 stock options with a weighted average exercise price of $ 15.00 and per share weighted average grant date fair value of $ 12.35 .

Information related to stock options outstanding at June 30, 2021 is as follows:

Weighted-Average

Contractual Term

Aggregate Intrinsic

Stock Options

Exercise Price

Restricted Stock

At March 31, 2021, the Company had unvested restricted stock of 134,545 shares with total unrecognized compensation expense of $0.5 million, which the Company expects to recognize over a weighted average period of approximately 1.7 years.

During the three months ended March 31, 2021, the Company released 20,181 shares of common stock from restriction as a result of the vesting of restricted stock.

In February 2021, the Company granted 181,279 shares of restricted stock units which vest over four years.

At March 31, 2021, the Company had unvested restricted stock units of 196,279 shares with total unrecognized compensation expense of $2.8 million, which the Company expects to recognize over a weighted average period of approximately 3.8 years.

At June 30, 2021, the Company had unvested restricted stock of 114,363 shares with total unrecognized compensation expense of $ 0.4 million, which the Company expects to recognize over a weighted average period of approximately 1.4 years.

During the six months ended June 30, 2021, the Company released 40,363 shares of common stock from restriction as a result of the vesting of restricted stock.

During the six months ended June 30, 2021, the Company granted 196,279 shares of restricted stock units which vest over four years .

At June 30, 2021, the Company had unvested restricted stock units of 211,279 shares with total unrecognized compensation expense of $ 2.7 million, which the Company expects to recognize over a weighted average period of approximately 3.6 years.

2019 Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan, employees purchased 8,733 shares for $0.1 million during the three months ended March 31, 2021.

During the three months ended March 31, 2021, the Company recognized compensation expense of $0.1 million.

Under the Employee Stock Purchase Plan, employees purchased 8,733 shares for $ 0.1 million during the six months ended June 30, 2021.

During the three and six months ended June 30, 2021, the Company recognized compensation expense of $ 0.1 million and $ 0.2 million, respectively.

Stock-based Compensation Expense

Stock-based compensation expense is classified in the unaudited consolidated statements of operations and comprehensive loss for the three months ended March 31, 2021 and 2020 as follows:

Stock-based compensation expense is classified in the unaudited consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2021 and 2020 as follows:

For the Three Months Ended

For the Six Months Ended

Research and development

5 unchanged sentences

Under the contract, MTEC will pay 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 three months ended March 31, 2021, the Company has recognized approximately $0.5 million of grant revenue under the contract.

For the six months ended June 30, 2021, the Company has recognized approximately $ 0.5 million of grant revenue under the contract.

In July 2016, the Company signed a five-year contract with BARDA.

1 unchanged sentence

Under the contract, BARDA pays 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 consists of an initial base performance period providing approximately $27.8 million in funding for the period July 2016 through June 2021.

The contract consists of an initial base performance period providing approximately $ 27.8 million in funding for the period July 2016 through September 2021.

BARDA has 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 provide additional funding ranging from approximately $ 1.1 million to $ 34.4 million for a three-year period beginning in 2021.

For the three months ended March 31, 2021 and 2020, the Company has recognized approximately $0.2 million and $1.6 million, respectively, of grant revenue under the current BARDA contract.

Due to a full valuation allowance, the Company did not record an income tax benefit for the three months ended March 31, 2021.

For the three and six months ended June 30, 2021, the Company has recognized approximately $ 0.1 million and $ 0.3 million, respectively, of grant revenue under the current BARDA contract.

For the three and six months ended June 30, 2020, the Company recognized approximately $ 0.5 million and $ 2.1 million, respectively, of grant revenue under the current BARDA contract.

Due to a full valuation allowance, the Company did not record an income tax benefit for the six months ended June 30, 2021.

With respect to the prior year, on March 27, 2020, President Donald Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”).

The CARES Act provided both stimulus measures and a number of tax provisions, including:

The CARES Act provided both stimulus measures and a number

of tax provisions, including:

temporary changes regarding the utilization and carry back of net operating losses, temporary changes to the prior and future limitations on interest deductions, technical corrections from prior tax legislation for tax depreciation of qualified improvement property, and certain refundable employee retention credits.

As of March 31, 2020, the Company recognized a tax benefit of $3.2 million related to the carry back of losses back to obtain a refund of its 2016 tax liability.

As of June 30, 2020, the Company recognized a total tax benefit of $ 4.8 million related to the carry back of losses back to obtain a refund of its 2016 tax liability.

Net Loss Per Share

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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:

For the Three Months Ended

For the Three and Six

June 30, 2021

June 30, 2020

Common stock warrants

5 unchanged sentences

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

PER.C6 License Agreement Expansion

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

3 to the Second Restated License Agreement (the “Amendment”), by and between the Company and Janssen Vaccines & Prevention B.V.

(formerly known as Crucell Holland B.V.) (as amended by Amendment No.

1 to Second Restated License Agreement and Amendment No.

2 to Second Restated License Agreement, together with the Amendment, 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.

As of March 31, 2021, no payments were made under the License Agreement.

Lonza Manufacturing Agreement

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Under the expanded agreement, the Company has committed approximately $ 23.0 million to Lonza to procure long-lead equipment and construct a dedicated manufacturing suite for clinical and commercial production of AdCOVID.

This work is expected to be completed during the fourth quarter of 2021.

As of March 31, 2021, the Company capitalized approximately $4.0 million to construction-in-progress related to the equipment purchase and build out of the suite under the expanded agreement.

Summit Biosciences Development and Manufacturing Agreement

In March 2021, the Company entered into a development and manufacturing agreement with Summit Biosciences, Inc.

(“Summit”) to manufacture a metered nasal spray presentation of AdCOVID.

Under the agreement, the Company has committed approximately $6.7 million to Summit for the clinical manufacturing of AdCOVID multidose nasal spray.

This work is expected to be completed by the end of 2021.

As of March 31, 2021, the Company recorded approximately $1.4 million to prepaid expenses under the agreement.

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”).

On November 6, 2020, Defendants filed a motion for summary judgment on the basis of lack of personal jurisdiction, insufficient service of process, and failure to state a claim.

The court ruled on that motion on March 25, 2021, which dismissed the case on the basis of lack of personal jurisdiction.

As the outcome of this legal proceeding is certain at this time, the Company has not accrued any liability associated with this action.

The Company is a party in various other contractual disputes, litigation, and potential claims arising in the ordinary course of business none of which are currently reasonably possible or probable of material loss.

As of June 30, 2021, the Company decided to discontinue further development of AdCOVID.

Refer to Note 4 for further details.

The Company is a party in various contracts and subject to disputes, litigation, and potential claims arising in the ordinary course of business, none of which are currently reasonably possible or probable of material loss.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements