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Item 7. Management’s Discussion and Analysis

2022-03-15 compared with 2021-02-25 · 172 added, 180 removed, 205 unchanged (63% of the section changed)

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Altimmune, Inc.

is a clinical stage biopharmaceutical company focused on developing intranasal vaccines, immune modulating therapies and treatments for liver disease.

Our 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 non-alcoholic steatohepatitis (“NASH”) (ALT-801) and chronic hepatitis B (HepTcell).

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

Our lead product candidate, pemvidutide (proposed INN, 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.

In June 2021, we announced the discontinuation of further development of our COVID-19 vaccine candidate, AdCOVID following our review of findings from the Phase 1 clinical trial, and in view of the highly competitive COVID-19 landscape.

In the study, AdCOVID was generally well tolerated, but the immunogenicity data demonstrated lower than expected immune responses for each of the immune parameters tested.

Our business is the result of a merger between PharmAthene, Inc.

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Except where the context indicates otherwise, references to “we,” “us,” “our,” “Altimmune” or the “Company” refer, for periods prior to the completion of the Mergers, to Private Altimmune and its subsidiaries, and for periods following the completion of the Mergers to the combined company and its subsidiaries.

AdCOVID is an intranasal COVID-19 vaccine candidate designed to guard the respiratory tract from viral invasion and to provide downstream protection against viral spread through stimulation of both mucosal and systemic antibodies (IgA and IgG) as well as cell-mediated immunity.

By stimulating mucosal immunity in the nasal cavity, a key point of entry and replication for the SARS-CoV-2 virus, AdCOVID has the potential to defend against both the infection and spread of the virus to others.

AdCOVID’s intranasal delivery method provides an easier route of administration than an injection and may eliminate the need for administration by trained medical personnel.

We believe nasal mucosal immunity has the potential to provide an effective protection at the site of viral entry and early replication, and may block transmission by shed virus.

We believe AdCOVID has the potential to meet most of the World Health Organization’s published preferred attributes for a COVID-19 vaccine, including single dose, rapid onset of protection, immunity lasting one year, non-injected and temperature stability.

In particular, data from our NasoVAX clinical trials demonstrated a strong serological response at two weeks that remained unchanged at 400 days, after a single dose.

In addition, since it is expected to have extended stability at room temperature, AdCOVID may avoid the need for costly cold chain logistics.

During 2020, we completed initial preclinical mouse studies in collaboration with the University of Alabama at Birmingham (“UAB”) and began manufacturing AdCOVID during the third quarter of 2020.

We submitted an Investigation New Drug application (“IND”) with the U.S.

Food and Drug Administration (“FDA”) in the fourth quarter of 2020 and received clearance from the FDA in February 2021 to initiate a Phase 1 clinical trial of AdCOVID.

The Phase 1 clinical trial is currently enrolling and will evaluate the safety and immunogenicity of AdCOVID in up to 180 healthy adult volunteers between the ages of 18 and 55, with data expected in the second quarter of 2021.

T-COVID is an intranasal immune modulating therapeutic candidate based on the same replication-deficient adenovirus 5 (“RD-Ad5”) vector technology behind our other intranasal vaccine candidates, but it acts through a different mechanism.

In preclinical studies sponsored by the National Institute of Allergy and Infectious Diseases, intranasal administration of RD-Ad5 vectors modulated the innate immune response to lethal challenge with a respiratory virus in mice and protected them from death.

The immunomodulatory effects resulted in significantly decreased cellular inflammation and lower concentrations of IL-6 and other inflammatory cytokines in the lungs of treated animals compared to controls.

Excessive production of inflammatory cytokines like IL-6 has been associated with the lung pathology and death in COVID-19.

The protective effects were independent of any specific immunity or vaccine effects against the challenge virus.

These protective effects were only observed with intranasal administration of RD-Ad5, and intramuscular administration provided no survival benefit.

With the support of the U.S.

Army Medical Research & Development Command in collaboration with the Medical Technology Enterprise Consortium, we initiated a placebo-controlled Phase 1/2 double-blind clinical trial to evaluate the potential of T-COVID to

prevent clinical worsening in patients with early COVID-19 during 2020.

The trial is expected to enroll 96 community-based patients who are 18 years and older that present with fever, cough, or shortness of breath, with onset of symptoms within 48 hours, and a diagnosis of COVID-19 within 24 hours.

The trial consists of three cohorts of increasing age and risk for complications of COVID-19, and patients are randomized 1:1 to NasoVAX or placebo administered as a single 0.5ml nasal spray within 24 hours of diagnosis.

The primary endpoint of the trial is the proportion of patients with clinical worsening, defined as a 4% decrease in pulse oxygen saturation, or the need for hospitalization.

Secondary endpoints will measure the average decrease in resting pulse oxygen saturation, average increase in resting pulse rate and proportion of patients requiring oxygen supplementation and mechanical ventilation.

In order to expedite the study, we have been permitted by the FDA to use existing lots of NasoVAX, which is an identical vector to T-COVID, in lieu of newly manufactured T-COVID.

The protocol was recently amended such that 40% of patients in the final cohort, in which efficacy will primarily be assessed, to be either 65 years and older or have risk for complications of COVID-19.

Based on these protocol changes, we expect to receive results from the Phase 1/2 trial in the second quarter of 2021 .

NasoShield is an anthrax vaccine product candidate designed to provide rapid and stable protection after a single intranasal administration.

It is being developed with the support of the U.S.

Biomedical Advanced Research and Development Authority (“BARDA”) for post-exposure prophylaxis against anthrax following exposure to aerosolized B.

anthracis spores.

After an individual has been exposed to the spores that cause anthrax, B.

anthracis bacteria multiply and release toxins within the host.

Although antibiotic therapy is effective at eliminating the actively growing bacteria, vaccination is necessary to protect against the germination of dormant spores after the cessation of antibiotic therapy.

Because NasoShield is intended to protect against anthrax after a single intranasal dose, we believe it may be a convenient and simple alternative to the only approved vaccine, which must be given as a series of three injections over 1 month.

We believe the simplified immunization route and schedule, together with the reliable stability at ambient temperature may allow NasoShield to be deployed in an anthrax event more easily and faster than the currently approved vaccine.

We commenced a Phase 1b trial of NasoShield in adults in 2020 which builds on the Phase 1a trial completed in 2018 and evaluates the effect of modified methods of intranasal dosing on NasoShield safety and immunogenicity.

Results are expected in the first quarter of 2021.

NasoVAX is a recombinant intranasal vaccine product candidate that is being developed for both seasonal and pandemic use.

NasoVAX is believed to simultaneously activate the humoral, mucosal and cellular immune arms which may enable a more comprehensive immune response.

The data from our Phase 2a trial with a monovalent NasoVAX vaccine indicated that NasoVAX was generally well-tolerated and achieved 100% seroprotection with serum antibody responses, which was comparable to published results of a licensed injected influenza vaccine.

Statistically significant increases in mucosal antibody were noted as well as a robust T cell response directed against influenza.

Approximately half of the subjects from the highest dose were evaluated between 12 and 14 months after initial dosing for additional immunogenicity assessment.

The durability data show that the immune response elicited by NasoVAX was stable with no overall change in the antibody titer or level of seroprotection over an average of 13 months.

The combination of serum antibody, mucosal antibody and T-cell response in combination with the durability data provides the potential for improved protection against influenza and suggests that NasoVAX could have a great impact on flu symptoms and shedding of the influenza virus.

We are currently evaluating the development path of NasoVAX .

We completed an acquisition in July 2019 of all of the equity interests of Spitfire Pharma, Inc.

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Spitfire was a privately held, preclinical pharmaceutical company with the primary asset being a novel peptide-based dual GLP-1/glucagon receptor agonist for the treatment of NASH.

We refer to this product candidate as ALT-801, and it is designed to treat the obesity and metabolic dysfunction that causes NASH.

NASH, the most severe form of non-alcoholic fatty liver disease (“NAFLD”), involves multiple metabolic pathways leading to the abnormal accumulation of liver fat, toxic lipid metabolites, and inflammation, leading to fibrosis or eventually liver cancer.

NAFLD is present in up to 90% of obese patients, and approximately 20% of NAFLD patients progress to NASH.

We refer to this product candidate as pemvidutide, and it is designed to treat obesity and the metabolic dysfunction that causes NASH.

Obesity is a significant burden to the global healthcare systems and is implicated in two-thirds of the leading causes of death from non-communicable diseases worldwide.

Some of the leading co-morbidities of obesity include high blood pressure, high cholesterol, type 2 diabetes, coronary heart disease, stroke, gallbladder disease, osteoarthritis, sleep apnea and breathing problems, certain cancers and NASH.

NASH involves multiple metabolic pathways leading to the abnormal accumulation of liver fat, toxic lipid metabolites, and inflammation, leading to fibrosis or eventually liver cancer.

Non-alcoholic fatty liver disease (“NAFLD”), the fatty liver precursor to NASH, is present in up to 90% of obese patients, and approximately 20% of NAFLD patients progress to NASH.

In addition, up to 40% of NASH patients develop NAFLD recurrence one year after liver transplant, which we believe indicates that the underlying metabolic disease is still present after transplant.

We believe the treatment of obesity is the cornerstone of treating NASH and the principal morbidities of NASH.

ALT-801’s dual agonist mechanism of action is designed to combine the activity of GLP-1 for the reduction of appetite and inflammation, with the direct activity of glucagon on the liver, including increased energy expenditure, adipose browning, lipolysis and mobilization of the liver fat.

ALT-801 incorporates the EuPort domain, which is designed to enhance pharmacokinetics for tolerability in the gastrointestinal tract and permit weekly dosing.

As observed in a well-established preclinical model of the disease, ALT-801 is capable of inducing significant weight loss with concomitant decreases in liver fat, inflammation and fibrosis, with superior results compared to elafibranor and semaglutide.

In addition, ALT-801 demonstrated improved metabolic function and exhibited pleiotropic effects in our preclinical testing across multiple metabolic pathways that are involved in NASH.

observed in preclinical studies that ALT-801 resulted in more profound suppression of genes associated with steatosis, inflammation and stellate cell fibrosis by RNA sequencing compared to elafibranor and semaglutide.

We commenced a Phase 1 clinical trial in Australia in overweight and obese adult volunteers in the fourth quarter of 2020.

The trial is expected to have both single-ascending and multiple-ascending dose arms over a 6 week treatment duration, with data readouts planned for each arm in the second quarter of 2021.

The endpoints of the Phase 1a trial are expected to be safety, tolerability and pharmacokinetics, with a preliminary readout on weight loss, resting energy expenditure, liver fat by MRI-PDFF and glucose homeostasis.

Pending interim results of the single-ascending dose arms, we intend to extend the multiple-ascending dose arms by 6 weeks for a twelve-week, parallel-dosing Phase 1b clinical trial.

The endpoints of the Phase 1b trial are expected to be safety, tolerability, pharmacokinetics, weight loss, decrease in liver fat (as measured by the MRI-PDFF standard) and lean body mass, as well as other metabolic biomarkers.

If successful, we expect data from the Phase 1b study Q3 2021 .

Pemvidutide’s dual agonist mechanism of action is designed to combine the activity of GLP-1 for the reduction of appetite and inflammation, with the direct activity of glucagon on the liver, including increased energy expenditure, adipose browning, lipolysis and mobilization of the liver fat.

Pemvidutide incorporates a proprietary side chain, referred to as the EuPort domain, which is designed to enhance pharmacokinetics for tolerability in the gastrointestinal tract and permit weekly dosing.

As observed in a well-established preclinical model of the disease, pemvidutide is capable of inducing significant weight loss with concomitant decreases in liver fat, inflammation and fibrosis, with superior results

compared to semaglutide.

In addition, pemvidutide demonstrated improved metabolic function and exhibited pleiotropic effects in our preclinical testing across multiple metabolic pathways involved in NASH.

We also observed in these studies that pemvidutide resulted in more profound suppression of genes associated with steatosis, inflammation and stellate cell fibrosis by RNA sequencing compared to semaglutide.

In September 2021, we announced the completion of a 12-week Phase 1 clinical trial of pemvidutide in Australia under a clinical trial application.

The trial was a first-in-human, randomized, placebo-controlled, single-ascending and multiple-ascending dose (“MAD”) study in overweight and obese volunteers.

The endpoints of the Phase 1 trial were to assess the safety, tolerability and pharmacokinetics of pemvidutide, with primary readouts on safety, pharmacokinetics and weight loss.

Additional readouts included metabolic and lipid profile, cardiovascular measures and glucose homeostasis.

An Investigational New Drug application (“IND”) for obesity was submitted to the U.S.

Food and Drug Administration (“FDA”) in December 2021 and we announced on January 31, 2022 that we had received FDA clearance for a Phase 2 trial in this indication.

We expect to initiate this 48-week Phase 2 obesity trial in the first half of 2022.

The readouts of that study will include safety, weight loss and other metabolic measures.

The study will include a 24-week interim analysis of safety and weight loss that we expect will read out in the fourth quarter of 2022.

We are currently conducting a 12-week Phase 1b trial of pemvidutide in patients with NAFLD at multiple sites in the United States.

This double-blind, randomized, placebo-controlled study will enroll approximately 72 diabetic and non-diabetic overweight and obese adult patients with a liver fat content greater than 10% as measured by MRI-PDFF.

The primary efficacy endpoint is the change in liver fat content from baseline, with a secondary endpoint of weight loss.

The study is expected to read out topline results in the third quarter of 2022.

We expect to initiate a 12-week double-blind, placebo-controlled extension study which, combined with the 12-week Phase 1b NAFLD trial, will allow patients to receive up to a total of 24 weeks of continuous pemvidutide or placebo treatment and provide a read out on weight loss after 24 weeks of treatment, which is expected in the fourth quarter of 2022.

Based on the findings of the NAFLD study and evaluation of other priorities, we intend to initiate a 52-week biopsy-driven Phase 2 NASH study in 2022.

HepTcell is an immunotherapeutic product candidate for patients chronically infected with the hepatitis B virus (“HBV”).

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Approximately 780,000 people die per year worldwide due to cirrhosis and liver cancer.

Current antivirals prevent disease progression but rarely clear chronic infection.

HepTcell is designed to drive CD4+ and CD8+ T-cell responses against all HBV genotypes in patients of all ethnic backgrounds.

Stimulating T-cell responses in chronically infected HBV patients has been challenging because chronic infection with HBV and elevated hepatitis B surface antigen (HBsAg) levels strongly diminishes T-cell immunity directed against the virus.

HepTcell focuses the immune system on discrete highly conserved regions of the HBV proteome.

Stimulating T-cell responses in chronically infected HBV patients has been challenging because chronic infection with HBV strongly suppresses T-cell immunity directed against the virus.

HepTcell focuses the T cell response on discrete, highly conserved regions of the HBV proteome.

We believe our approach allows HepTcell to break immune tolerance by activating T-cells against critical viral sequences with decreased probability of immune escape due to viral mutation.

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The HepTcell Phase 1 trial was a double-blinded, placebo-controlled, randomized, dose-escalation study that enrolled 61 subjects with chronic HBV who were HBeAg-negative and well-controlled on licensed antivirals.

A total of 41 patients received one of two dose levels of HepTcell, with and without IC31TM, a depot-forming TLR9 adjuvant developed by Valneva SE, while 20 control patients received either placebo or IC31 alone.

Patients received three injections each 28 days apart and were followed for six months after the final dose.

All dose combinations showed excellent tolerability and met the primary endpoint of safety.

A total of 41 patients received one of two dose levels of HepTcell, with and without IC31™, a depot-forming TLR9 adjuvant developed by Valneva SE, while 20 control patients received either IC31 alone or placebo.

Patients received three injections 28 days apart and were followed for six months after the final dose.

All dose combinations were generally well-tolerated and met the primary endpoint of safety.

In the two adjuvanted HepTcell arms, T-cell responses against HBV markedly increased over baseline compared to placebo.

We initiated a Phase 2 study during Q4 2020 in the United States, Canada and Europe that is a double-blind, randomized, placebo-controlled study of 80 adult patients with HBeAg-negative inactive CHB and HBsAg ≤ 100 IU/mL.

HepTcell will be administered in 6 doses at 4-week intervals for 24 weeks, and patients will be followed for one year to evaluate safety and durability of response.

The primary efficacy endpoint is virological response, defined as a 1-log reduction in HBsAg levels from baseline at 24 weeks.

Secondary efficacy endpoints include reactivation of anti-HBV T cell responses, HBsAg clearance, and other assessments of virologic response.

We expect data from this study in the first quarter of 2022.

Patients with HBsAg ≤ 100/mL are more likely to mount effective T cell responses against HBV than those with higher levels.

The vision is that HepTcell could be used in combination with newer direct acting agents that may be more effective than nucleosides in reducing HBsAg to this level.

HepTcell is being administered in 6 doses at the low dose level of HepTcell plus IC31™ at 4-week intervals for 24 weeks, and patients will be followed for one year to evaluate safety and

durability of response.

The primary efficacy endpoint is virological response, defined as a 1-log reduction in HBsAg levels from baseline or HBsAg clearance at 24 weeks.

Secondary efficacy endpoints include reactivation of anti-HBV T cell responses, and other assessments of virologic response.

We expect data from this study in the first half of 2023.

A follow-up phase will assess the safety and durability of response one year after completion of treatment.

Discontinued Programs

AdCOVID was an intranasal COVID-19 vaccine candidate designed to guard the respiratory tract from viral invasion and to provide protection against viral spread through stimulation of both mucosal and systemic antibodies (IgA and IgG) as well as cell-mediated immunity.

By stimulating mucosal immunity in the nasal cavity, a key point of entry and replication for the SARS-CoV-2 virus, we believed that AdCOVID had the potential to defend against both the infection and spread of the virus to others.

We submitted an IND to the FDA in the fourth quarter of 2020 and received clearance from the FDA in February 2021 to initiate a Phase 1 clinical trial of AdCOVID.

The Phase 1 clinical trial evaluated the safety and immunogenicity of AdCOVID in 92 healthy adult volunteers between the ages of 18 and 55.

In June 2021, we announced the discontinuation of the development program for AdCOVID following our review of findings from the Phase 1 clinical trial and in consideration of the highly competitive COVID-19 landscape.

In the study, the tolerability of AdCOVID was similar to placebo, but the immunogenicity data demonstrated lower than expected immune responses for each of the immune parameters tested.

T-COVID was an intranasal immune modulating therapeutic candidate based on the same replication-deficient adenovirus 5 (“RD-Ad5”) vector technology behind our other intranasal vaccine candidates, but it acted through a different mechanism that may have involved the innate immune system.

With the support of the U.S.

Army Medical Research & Development Command in collaboration with the Medical Technology Enterprise Consortium, during 2020, we initiated a placebo-controlled Phase 1/2 double-blind clinical trial to evaluate the potential of T-COVID to prevent clinical worsening in patients with early COVID-19.

The trial was expected to enroll 96 community-based patients who were 18 years and older that present with fever, cough, or shortness of breath, with onset of symptoms within 48 hours, and a diagnosis of COVID-19 within 72 hours.

The primary endpoint of the trial was the proportion of patients with clinical worsening, defined as a 4% decrease in pulse oxygen saturation, or the need for hospitalization.

Secondary endpoints measured the average decrease in resting pulse oxygen saturation, average increase in resting pulse rate and proportion of patients requiring oxygen supplementation and mechanical ventilation.

However, the effective rollout in the U.S.

of authorized COVID-19 vaccines and decreasing incidence of disease significantly reduced the number of patients meeting our enrollment criteria, and we had been unable to enroll subjects in the final cohort, the cohort most likely to benefit from T-COVID.

As a result of enrollment challenges, we decided to terminate further enrollment and have terminated the development of T-COVID.

NasoShield was an anthrax vaccine product candidate designed to provide rapid and stable protection after a single intranasal administration.

It was being developed with the support of the U.S.

Biomedical Advanced Research and Development Authority (“BARDA”) for post-exposure prophylaxis against anthrax following exposure to aerosolized B.

anthracis spores.

We commenced a Phase 1b trial of NasoShield in adults in 2020 which builds on the Phase 1a trial completed in 2018 and evaluated the effect of modified methods of intranasal dosing on NasoShield safety and immunogenicity.

The trial enrolled 42 healthy subjects who received intranasally administered NasoShield or saline placebo and were then monitored for 6 months post-dosing.

The primary endpoint was the safety and tolerability of NasoShield.

The primary immunogenicity readouts included the serum binding antibody to protective antigen and anthrax toxin blocking antibody responses at 28- and 56-days post-dose administration.

Stimulation of the mucosal IgA immune response in the nasal cavity was also assessed.

In April 2021, we received clinical data from the Phase 1b trial that showed positive immunogenicity results and a NasoShield tolerability profile similar to placebo.

On December 31, 2021, the development support from BARDA ended and we have discontinued further development of the program.

NasoVAX was a recombinant intranasal vaccine product candidate that was being developed for both seasonal and pandemic use.

We believed NasoVAX could simultaneously activate the humoral, mucosal and cellular immune arms which may enable a more comprehensive immune response.

The data from our Phase 2a trial with a monovalent NasoVAX vaccine indicated that NasoVAX achieved 100% seroprotection based on serum antibody responses, which was comparable to published results of a licensed injected influenza vaccine.

Statistically significant increases in mucosal antibody were noted as well as a robust T cell response directed against influenza.

The tolerability profile of NasoVAX was similar to placebo.

Approximately half of the subjects from the highest dose were evaluated between 12 and 14 months after initial dosing for additional immunogenicity assessment.

The durability data show that the immune response elicited by NasoVAX was stable with no overall change in the antibody titer or level of seroprotection over an average of 13 months.

After evaluating the development path of NasoVAX, we have discontinued further development of the program.

Impact of COVID-19

We are closely monitoring how the spread of the coronavirus disease (“COVID-19”) is affecting our employees, business, preclinical studies and clinical trials.

In response to the COVID-19 pandemic, we have closed our executive offices with certain employees continuing their work outside of our offices and travel for all employees has been restricted.

Essential laboratory staff continue to work onsite with enhanced safety measures.

We are continuing our regular interactions with the FDA and other regulatory agencies and based on current information, we do not anticipate COVID-19 to materially affect our regulatory timelines for NasoShield, T-COVID, AdCOVID, ALT-801 and HepTcell.

Although operations have not been materially affected by the COVID-19 pandemic at this time, however, there is significant uncertainty relating to the trajectory of the pandemic and the impact of related responses, and disruptions caused by the COVID-19 pandemic may result in difficulties or delays in initiating, enrolling, conducting or completing our planned and ongoing trials and the incurrence of unforeseen costs as a result of disruptions in clinical supply or preclinical study or clinical trial delays.

The impact of COVID-19 on our future results will largely depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions, the ultimate impact on financial markets and the global economy, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

In addition, a recurrence of COVID-19 cases could cause other widespread or more severe impacts depending on where infection rates are highest.

We continue to monitor developments as we deal with the disruptions and uncertainties relating to the COVID-19 pandemic.

See “Risk Factors— Our business, results of operations and financial condition may be adversely affected by the widespread outbreak of an illness or any other communicable disease, or any other public health crisis, including the ongoing COVID-19 pandemic.” in Part I, Item 1A of this Annual Report on Form 10-K.

We are closely monitoring how the spread of COVID-19, including any resurgences or the emergence of new variants, is affecting our employees, business, preclinical studies and clinical trials.

We have reopened our executive office to allow certain employees to return to the office based on a phased approach that is intended to comply with federal and state guidelines, with a focus on employee safety and optimal work environment.

We are continuing our regular interactions with the FDA and other regulatory agencies and, based on current information, we do not anticipate COVID-19 to materially affect our regulatory timelines for our ongoing clinical trials.

Furthermore, as a government contractor, we are subject to the federal government vaccination mandate, which requires federal contractor employees, except in certain limited circumstances, to be vaccinated against COVID-19 by December 8, 2021.

While the vaccination mandate remains subject to the interpretation of various government agencies and other entities, and questions remain regarding the specific application of the vaccination mandate, we are continuing to develop and implement health, safety, employment and operational protocols in order to timely comply with the vaccination mandate.

As of December 31, 2021, the vaccination mandate has not had a material impact on our employees or operations.

Although operations have not been materially affected by the ongoing COVID-19 pandemic at this time, there is significant uncertainty relating to the trajectory of the pandemic and the impact of related responses, and disruptions caused by the ongoing COVID-19 pandemic may result in difficulties or delays in initiating, enrolling, conducting or completing our planned and ongoing trials and the incurrence of unforeseen costs as a result of disruptions in clinical supply or preclinical study or clinical trial delays.

The impact of the ongoing COVID-19 pandemic on our future results will largely depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread of the disease, the duration of the pandemic, travel restrictions and social distancing in the United States and other countries, business closures or business disruptions, the ultimate impact on financial markets and the global economy, and the effectiveness of actions taken in the United States and other countries to contain and treat the disease.

In addition, a recurrence of COVID-19 cases, or variants thereof, could cause other widespread or more severe impacts depending on where infection rates are highest.

We continue to monitor developments as we deal with the disruptions and uncertainties relating to the ongoing COVID-19 pandemic.

See “Risk Factors— A pandemic, epidemic or outbreak of an infectious disease in the United States such as the COVID-19 pandemic may adversely affect our business.” in Part I, Item 1A of this Annual Report on Form 10-K.

Government Contracts and Grants

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The competitive award was granted by USAMRDC in collaboration with the Medical Technology Enterprise Consortium (“MTEC”), a 501(c)(3) biomedical technology consortium working in partnership with the Department of Defense (“DoD”).

Under the contract, MTEC pays us a firm fixed fee based upon the achievement of certain milestones for conduct and completion of a Phase 1/2 study and research and development work on the replication-deficient adenovirus 5 (“RD-Ad5”) vector vaccine platform.

For the year ended December 31, 2020, we have recognized approximately $4.2 million of grant revenue under this contract.

Under the contract, MTEC paid us a firm fixed fee based upon the achievement of certain milestones for conduct and completion of a Phase 1/2 study and research and development work on the replication-deficient adenovirus 5 (“RD-Ad5”) vector vaccine platform.

For the year ended December 31, 2021 and 2020, we have recognized approximately $0.5 million and $4.2 million, respectively, of grant revenue under this contract.

In July 2016, we signed a five-year contract with Biomedical Advanced Research and Development Authority (“BARDA”).

The contract, as amended, has a total value of up to $136.8 million and is used to fund clinical development of NasoShield.

Under the contract, BARDA pays us 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.

BARDA has seven options to extend the contract to fund certain continued development and manufacturing activities for the anthrax vaccine, including Phase 2 clinical trials.

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 January 2021.

For the year ended December 31, 2020, we have recognized approximately $3.1 million of grant revenue under the current BARDA contract.

Under the contract, BARDA paid us a fixed fee and reimburses certain costs for the research and development of an Ad5-vectored, protective antigen-based intranasal anthrax vaccine through cGMP manufacture and conduct of a Phase 1 clinical trial dose ranging assessment of safety and immunogenicity.

The contract consisted of an initial base performance period providing approximately $30.9 million in funding for the period July 2016 through December 2021.

BARDA had seven options to extend the contract to fund certain continued development and manufacturing activities for the anthrax vaccine, including Phase 2 clinical trials.

Each option, if exercised by BARDA, would have provided additional funding ranging from approximately $1.1 million to $34.4 million for a three-year period beginning January 2021.

For the year ended December 31, 2021 and 2020, we have recognized approximately $3.7 million and $3.1 million, respectively, of grant revenue under the current BARDA contract.

At December 31, 2021, BARDA had not elected to extend the contract.

Public Offering

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At-the-Market Offering

On March 27, 2020, we entered into an Equity Distribution Agreement (the “Agreement”) with JMP Securities LLC, serving as placement agent (the “Placement Agent”) with respect to an at-the-market offering program under which we may offer and sell, from time to time at our sole discretion, shares of our 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 “Offering”).

On February 25, 2021, we entered into an Equity Distribution Agreement (the “2021 Agreement”) with Piper Sandler & Co., Evercore Group L.L.C., and B.

Riley Securities, Inc., serving as sales agents (the “Sales Agents”) with respect to an at-the-market offerings program under which we may offer and sell, from time to time at its sole discretion, shares of our 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”).

As of December 31, 2021, we sold 4,800,454 shares of Common Stock under the 2021 Agreement resulting in approximately $64.8 million in net proceeds, with $58.0 million remaining available to be sold under the 2021 Agreement.

On March 27, 2020, we 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 we may offer and sell, from time to time at our sole discretion, shares of our 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”).

We offered Shares having an aggregate offering price of $18.9 million pursuant to the prospectus supplement filed with the SEC on March 27, 2020.

On June 1, 2020, we 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.

As of December 31, 2020, we sold 5,594,455 shares of Common Stock under the Agreement resulting in $48.2 million in net proceeds which completed the At-the-Market Offering.

Registered Direct Offering

On March 12, 2019, we issued a combined total of 4,361,370 common units and pre-funded units to certain institutional investors in a registered direct offering (the “Registered Direct Offering”).

Each common unit in the Registered Direct Offering was sold at a price of $3.21 and consisted of one share of our common stock and 0.70 of a warrant to purchase one share of our common stock at an exercise price of $3.21.

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

Each pre-funded unit in the Registered Direct Offering was sold at a public offering price of $3.20 and consisted of a pre-funded warrant to purchase one share of our common stock at an exercise price of $0.01 per share and 0.70 of a warrant to purchase one share of our common stock at an exercise price of $3.21.

The pre-funded warrants were immediately exercisable and were able to be exercised at any time.

All of the pre-funded warrants were exercised prior to March 31, 2019.

The net proceeds of the Registered Direct Offering were approximately $12.7 million, after deducting the underwriting discount and estimated offering expenses payable by us.

The Registered Direct Offering triggered an adjustment to the exercise price of the warrants issued in the 2018 Unit Offering from $4.1798 to $2.7568.

The 2020 Agreement was fully utilized during the year ended December 31, 2020, and no Shares were sold under the 2020 Agreement during the year ended December 31, 2021.

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.

We secured net proceeds of $213.2 million through our Public Offering, At-the-Market Offering, and exercise of warrants during the year ended December 31, 2020 and $12.7 million through equity sales during the year ended December 31, 2019.

At December 31, 2021, we had $190.3 million of cash, cash equivalents

and restricted cash.

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 December 31, 2021 consolidated financial statements.

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Financial Operations Overview

The consolidated financial information presented below includes the accounts of Altimmune, Inc., Altimmune UK, Ltd, Spitfire Pharma, LLC., and Altimmune AU Pty, Ltd.

The consolidated financial information presented below includes the accounts of Altimmune, Inc., Altimmune UK, Ltd, Spitfire Pharma, LLC.

and Altimmune AU Pty, Ltd.

All intercompany accounts and transactions have been eliminated in consolidation.

To date, we have not generated any product sales.

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

Our revenue consists primarily of government and foundation grants and contracts that support our efforts on specific research projects.

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

We anticipate that these government and foundation grants will decline in future periods.

Research and development expenses

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A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate.

For example, if the FDA, or another regulatory authority were to require us to conduct clinical trials beyond those that we currently anticipate will be required for the completion of clinical development of a product candidate, we could be required to expend significant additional financial resources and time on the completion of clinical development.

For example, if the FDA, or another regulatory authority were to require us to conduct clinical trials beyond those that we currently

anticipate will be required for the completion of clinical development of a product candidate, we could be required to expend significant additional financial resources and time on the completion of clinical development.

We plan to increase our research and development expenses for the foreseeable future as we continue the development of clinical and preclinical candidates.

Our current planned research and development activities include the following:

● complete a Phase 1 clinical trial for pemvidutide in NASH;

● initiate a Phase 2 clinical trial for pemvidutide in obesity;

● conduct clinical and nonclinical safety studies for pemvidutide;

● complete a Phase 2 clinical trial for HepTcell;

complete a Phase 1/2 clinical trial for T-COVID;

complete a Phase 1 clinical trial for ALT-801;

complete a Phase 1 clinical trial of AdCOVID;

commence Phase 2 development of NasoShield, contingent on BARDA exercising one or more options under our existing contract;

additional development of NasoVAX, contingent on non-dilutive funding from BARDA or other entities;

● manufacture clinical trial materials in support of our clinical trials.

To date, a significant portion of our research and development efforts have been related to the development of AdCOVID, ALT-801, HepTcell, NasoShield, NasoVAX and T-COVID product candidates.

To date, a significant portion of our research and development efforts have been related to the development of pemvidutide, HepTcell, as well as for NasoShield, NasoVAX, AdCOVID and T-COVID programs which were discontinued in 2021.

We do not allocate personnel-related costs, costs associated with our general research platform improvements, depreciation or other indirect costs to specific programs.

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Impairment of long-lived assets other than indefinite lived intangibles is assessed by comparing the undiscounted cash flows expected to be generated by the asset group to its carrying value.

As of December 31, 2021, we recorded non-cash impairment charges of $11.4 million for assets that were previously capitalized in connection with the construction of the Lonza facility and subsequent discontinuation of AdCOVID (see Note 3).

In addition, the Company recorded an impairment loss of $0.6 million on intangible assets associated with the Company’s discontinued development programs (see Note 5).

We have indefinite lived intangible assets associated with in-process research and development (“IPR&D”).

Our IPR&D assets are currently non-amortizing.

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

We performed a qualitative assessment for the IPR&D impairment testing for 2020 and determined that no impairment indicators were present.

During 2019, we also carried a $1.0 million IPR&D asset for SparVax-L, a two-dose anthrax vaccine funded by the National Institute of Allergy and Infectious Diseases (“NIAID”).

As a result of the completion of the NIAID contract and the U.S.

government’s funding prioritization of only single dose anthrax vaccine candidates, we abandoned the project and concluded that the full remaining net book value of the SparVax-L IPR&D asset was impaired, resulting in an impairment charge of $1.0 million in Q3 2019.

We performed a qualitative assessment for the IPR&D impairment testing for the years ended December 31, 2021 and 2020 and determined that no impairment indicators were present.

Fair Value Measurements

We follow the guidance in Financial Accounting Standards Board (“FASB”) Accounting Standard Codification 820, Fair Value Measurements and Disclosures , which defines fair value and establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

We follow the guidance in Financial Accounting Standards Board (“FASB”) Accounting Standard Codification Topic 820, Fair Value Measurements and Disclosures (“ASC 820”), which defines fair value and establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

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Fair value is a market-based measure considered from the perspective of a market participant rather than an entity-specific measure.

Therefore, even when market assumptions are not readily available, our own assumptions are set to reflect those that market participants would use in pricing the asset or liability at the measurement date.

Therefore, even when market assumptions are not readily available, our own assumptions are set to

reflect those that market participants would use in pricing the asset or liability at the measurement date.

We use prices and inputs that are current as of the measurement date, including during periods of market dislocation.

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This condition could cause an instrument to be reclassified within levels in the fair value hierarchy.

There were no transfers within the fair value hierarchy during the years ended December 31, 2020 and 2019.

If applicable, we will recognize transfers into and out of Level 3 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 or out of Level 3 of the fair value hierarchy during the years ended December 31, 2021 and 2020.

Contingent Consideration

We record contingent consideration associated with development and regulatory milestones that meets the definition of a liability under ASC 480 at fair value.

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

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

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Comparison of years ended December 31, 2021 and December 31, 2020:

Year Ended December 31,

For the Year Ended

(in thousands, except percentages)

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General and administrative

Impairment charge

Impairment loss on construction-in-progress

Total operating expenses

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Other income (expense):

Changes in fair value of warrant liability

Interest expense

Interest income

Other income, net

Total other income, net

Other (expense) income, net

Total other (expense) income, net

Net loss before income tax benefit

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Increase (Decrease)

Revenue increased by $2.4 million, or 41% for the year ended December 31, 2020 as compared to 2019.

The increase was primarily the result of:

an increase of $4.2 million in MTEC revenue attributable to a clinical trial and development work on the T-COVID program;

a decrease of $1.6 million in BARDA revenue due to timing of clinical trials and development activities on the NasoShield program.

Revenue decreased by $3.8 million, or 46% for the year ended December 31, 2021 as compared to the year ended December 31, 2020.

The decrease was primarily the result of a decrease of $3.7 million in MTEC revenue attributable to the timing of clinical trial and the discontinuation of development work on the T-COVID program.

Research and development expenses

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Research and development

Research and development expenses increased by $32.0 million, or 180%, during the year ended December 31, 2020 as compared to 2019.

Research and development expenses increased by $24.8 million, or 50%, during the year ended December 31, 2021 as compared to the year ended December 31, 2020.

The increased expense was primarily due to:

an increase of $12.9 million due to development activities for the COVID-19 programs, which include AdCOVID and T-COVID;

an increase of $8.5 million due to an increase in the fair value of ALT-801 contingent consideration during 2020, that is partially offset by costs incurred in 2019 with respect to the acquisition of ALT-801;

an increase of $8.6 million due to development activities for ALT-801 which was acquired in July 2019;

● an increase of $22.5 million primarily due to development activities for the COVID-19 program, AdCOVID (which was discontinued in June 2021);

● an increase of $12.2 million due to the development activities for pemvidutide;

● a net increase of $5.7 million due to the timing of clinical trial and development activities related to our other programs, along with costs associated with our pre-clinical projects and non-project specific research and development costs including employee compensation and facility costs;

● a decrease of $15.6 million primarily due to a decrease in the fair value of contingent consideration liability with respect to the acquisition of pemvidutide.

General and administrative expenses

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General and administrative

General and administrative expenses increased by $4.7 million, or 55%, during the year ended December 31, 2020 as compared to 2019.

The increased expense is primarily due to an increase of $1.8 million in labor-related and other costs, $1.6 million in professional fees, and $1.3 million in stock compensation expense.

Impairment charges

General and administrative expenses increased by $2.2 million, or 17%, during the year ended December 31, 2021 as compared to the year ended December 31, 2020.

The increased expense is primarily due to an increase of $1.9 million in labor-related and other costs, an increase of $1.4 million in stock compensation expense, partially offset by a decrease of $1.1 million in professional fees.

Impairment loss on construction-in-progress

Impairment loss on construction-in-progress of $11.4 million reported during the year ended December 31, 2021 represents non-cash impairment charges recorded for assets that were previously capitalized in connection with the construction of the Lonza facility and subsequent discontinuation of AdCOVID.

There were no impairment charges reported during the year ended December 31, 2020.

Impairment charges of $1.0 million reported during the year ended December 31, 2019 resulted from the completion of the SparVax-L NIAID contract with no future funding identified.

As a result of the contract completion and the U.S.

government’s funding prioritization of only single dose anthrax vaccine candidates, we abandoned the project and impaired the remaining net book value of the SparVax-L IPR&D asset.

Total other income, net

Total other income, net decreased by $0.5 million during the year ended December 31, 2020 as compared to the year ended December 31, 2019.

The net decrease was primarily due to changes in interest income related to our short-term investments.

Income t ax b enefit

Total other (expense) income, net

Total other (expense) income, net decreased by $0.5 million during the year ended December 31, 2021 as compared to the year ended December 31, 2020.

The net decreases are primarily due to changes in foreign currency conversion and interest income.

Income tax benefit

Year Ended December 31,

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Income tax benefit

Income tax benefit increased by $5.4 million during the year ended December 31, 2020 as compared to the year ended December 31, 2019.

The increase is due to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020 which made temporary changes regarding the utilization and carry back of net operating losses.

As of December 31, 2020, we filed a refund claim of $2.7 million with the U.S.

Federal and Maryland tax authorities, reflecting a partial refund of our 2016 tax liability by carrying back a portion of our 2018 and 2019 tax losses.

We plan to file additional refund claims during 2021 by carrying back our 2020 tax losses to claim the remaining refund available for the 2016 tax liability.

Income tax benefit decreased by $5.4 million during the year ended December 31, 2021 as compared to the year ended December 31, 2020.

In both 2021 and 2020, we had a valuation allowance against all of our deferred tax assets, but in 2020 a benefit was recognized related to a net operating loss carryback refund claim pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020 which made temporary changes regarding the utilization and carry back of net operating losses.

Liquidity and Capital Resources

Our primary sources of cash for the year ended December 31, 2020 were from equity transactions, maturities of short-term investments and cash receipts of revenue from our BARDA and MTEC contracts.

Our cash, cash equivalents, restricted cash, and short-term investments were $216.0 million at December 31, 2020.

We believe, based on the operating cash requirements and capital expenditures expected for 2021 and 2022, our cash on hand and short-term investments at December 31, 2020, together with expected revenue from our government sponsored contracts and tax refunds, are sufficient to fund operations for at least a twelve-month period from issuance date of our December 31, 2020 consolidated financial statements.

Our primary sources of cash for the year ended December 31, 2021 were from equity transactions, maturities of short-term investments, cash receipts of accounts receivables from research grants and cash receipts of income tax refunds.

Our cash, cash equivalents, and restricted cash were $190.3 million at December 31, 2021.

We believe, based on the operating cash requirements expected for 2022 and 2023, our cash on hand at December 31, 2021, 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 issuance date of our December 31, 2021 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.

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.

We anticipate that these government and foundation grants will decline in future periods.

We have incurred significant losses since we commenced operations.

As of December 31, 2020, we had accumulated losses of $186.4 million since our inception.

As of December 31, 2021, we had an accumulated deficit of $293.2 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 not have sufficient capital to fund our plan of operations.

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.

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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 $30.9 million in funding for the period July 2016 through December 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 Q1 2021.

Through December 31, 2020, we have collected approximately $24.7 million in cash under the current BARDA contract.

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.

Through December 31, 2021, the end of the contract, we have collected approximately $29.2 million in cash under the current BARDA contract.

At December 31, 2021, BARDA had not elected to extend the contract.

Paycheck Protection Program

On April 7, 2020, we applied for a loan from ServisFirst Bank, as lender, pursuant to the Paycheck Protection Program of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) as administered by the U.S.

Small Business Administration (the "SBA").

On April 13, 2020, the Loan was approved and we received the proceeds from a loan in the amount of $632,000 (the “PPP Loan”).

The PPP Loan, which took the form of a promissory note (the “Promissory Note”), was set to mature on April 7, 2022 and bore interest at a rate of 1% per annum.

Monthly principal and interest payments, less the amount of any potential forgiveness (discussed below), was to commence on November 7, 2020.

The Promissory Note provided for customary events of default, including, among others, those relating to failure to make payment, bankruptcy, breaches of representations and material adverse effects.

We could prepay the principal of the PPP Loan at any time without incurring any prepayment charges.

Monthly principal and interest payments, less the amount of any potential forgiveness, was to commence on November 7, 2020.

All or a portion of the Loan may be forgiven by the SBA and lender upon application by us upon documentation of expenditures in accordance with the SBA requirements.

In July 2020, we voluntarily extinguished the Promissory Note by paying the outstanding principal and accrued interest in cash.

BPI France Notes

We had two non-interest-bearing research and development funding arrangements with BPI France that were entered into in December 2013 to provide up to €750,000 in research funding in the first arrangement and up to €250,000 in the second arrangement.

We were permitted to draw 50% of the funds upon the signing of the arrangements, an additional 30% contingent upon a financial audit and technical progress report, and the remaining amounts at the completion of the research and development project being funded by the arrangements.

In October 2016, we agreed to extend the term on the arrangement by two years.

The total amount advanced under the arrangements was €500,000.

In April 2019, we were notified that €102,951 exceeded the allowable funding in accordance with the arrangement and made a payment of this amount on June 5, 2019.

In September 2019, we were notified that €238,229 ($265,540) was converted into a grant and we recognized this amount as grant revenue for the three and nine months ended September 30, 2019.

In addition to the €102,951 amount paid in excess of the allowable funding, we paid €62,500 (total repayments of $186,940) during the nine months ended September 30, 2019.

In October 2019, we paid the remaining balance on the BPI France notes.

We had no indebtedness during the year ended and as of December 31, 2021.

The following table provides information regarding our cash flows for the years ended December 31, 2021 and 2020:

Year Ended December 31,

(in thousands, except percentages)

(in thousands)

Increase (Decrease)

Net cash provided by (used in):

Net cash (used in) provided by:

Operating activities

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Financing activities

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

Net increase in cash and cash equivalents and restricted cash

Operating Activities

Net cash used in operating activities was $78.2 million for the year ended December 31, 2021 compared to $34.3 million during the year ended December 31, 2020.

Our sources of cash provided by operations during the year ended December 31, 2020 were primarily cash receipts of revenue generated by our BARDA and MTEC contracts.

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 $24.8 million year over year is due to an increase in net loss as adjusted for noncash items of $18.6 million and changes in working capital accounts of $6.3 million.

Our sources of cash provided by operations during the year ended December 31, 2021 were primarily revenue generated by our BARDA and MTEC contracts and cash receipts of income tax refunds.

The increase in cash used in operating activities of $43.9 million is due to an increase in net loss as adjusted for noncash items of $48.2 million and changes in working capital accounts of $4.3 million.

Investing Activities

Net cash used in investing activities was $72.1 million for the year ended December 31, 2020 compared to $28.3 million during the year ended December 31, 2019.

The net cash used in investing activities during 2020 was primarily due to net purchases and maturities of short-term investments.

The net cash used in investing activities in 2019 was primarily due to purchases of short-term investments.

Net cash provided by (used in) investing activities was $87.5 million for the year ended December 31, 2021 compared to $72.2 million during the year ended December 31, 2020.

The net cash provided by investing activities during 2021 was primarily due to net proceeds from short-term investment activity, partially offset by purchases of property and equipment.

The net cash used in investing activities during the year ended December 31, 2020 was primarily due to purchases of short-term investments, net of maturities.

Financing Activities

Net cash provided by financing activities was $65.1 million for the year ended December 31, 2021 compared to $213.5 million during the year ended December 31, 2020.

The net cash provided by financing activities during 2020 was primarily the result of the receipt of $124.0 million in net proceeds from the Public Offering, $48.2 million in proceeds from the issuance of common stock from the At-the-Market Offering program and $41.0 million in proceeds from the exercise of warrants.

The net cash provided by financing activities in 2019 was primarily the result of the receipt of $12.7 million in proceeds from the Registered Direct Offering of units that consisted of common stock and warrants.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

The net cash provided by financing activities during 2021 was primarily the result of the receipt of $64.8 million in proceeds from the issuance of common stock from our at-the-market offerings program.

The net cash provided by financing activities during 2020 was primarily the result of the receipt of $124.0 million in net proceeds from a public offering, $48.2 million in proceeds from the issuance of common stock from our at-the-market offerings program and $41.0 million in proceeds from the exercise of warrants.

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.

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

What changed 10-K

Item 7. Management’s Discussion and Analysis