What changed in this filing

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Item 1. Financial Statements

2022-05-12 compared with 2021-11-09 · 153 added, 277 removed, 247 unchanged (64% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30,

(in thousands, except share and per share data)

Current assets:

2 unchanged sentences

Total cash, cash equivalents and restricted cash

Short-term investments

Accounts receivable

Income tax receivable

Income tax and R&D incentive receivables

Prepaid expenses and other current assets

5 unchanged sentences

Accounts payable

Contingent consideration

Accrued expenses and other current liabilities

Total current liabilities

Contingent consideration

Other long-term liabilities

4 unchanged sentences

200,000,000 shares authorized;

39,702,768 and 37,142,946 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively

43,219,896 and 40,993,768 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

Accumulated deficit

( 269,282,102 )

( 186,420,599 )

Accumulated other comprehensive loss, net

( 5,040,163 )

( 5,044,517 )

Total stockholders’ equity

3 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except share and per share data)

For the Three Months Ended

For the Nine Months Ended

September 30,

Operating expenses:

1 unchanged sentence

General and administrative

Impairment loss on construction-in-progress

Total operating expenses

Loss from operations

( 33,204,108 )

( 18,324,222 )

( 72,929,354 )

( 44,048,946 )

Other income (expense):

1 unchanged sentence

Interest income

Other (expense) income, net

Total other (expense) income, net

Net loss before income tax benefit

( 33,510,688 )

( 18,252,152 )

( 73,201,503 )

( 43,729,378 )

Income tax benefit

( 33,510,688 )

( 17,770,135 )

( 73,201,503 )

( 38,422,700 )

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

Other income (expense), net

Total other income (expense), net

Other comprehensive income — unrealized gain on short-term investments

Comprehensive loss

( 33,512,611 )

( 17,780,704 )

( 73,197,149 )

( 38,444,816 )

Net loss per share, basic and diluted

3 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

Comprehensive

1 unchanged sentence

Balance at December 31, 2021

( 186,420,599 )

( 5,044,517 )

Stock-based compensation

Exercise of stock options

Vesting of restricted stock awards including withholding, net

Issuance of common stock from Employee Stock Purchase Plan

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 offerings, net

Issuance of common stock upon cashless exercise of warrants

Unrealized gain on short-term investments

( 14,864,108 )

Issuance of common stock upon exercise of warrants

Balance at March 31, 2022

( 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 )

Stock-based compensation

Exercise of stock options

Vesting of restricted stock awards including withholding, net

Issuance of common stock from Employee Stock Purchase Plan

Unrealized loss on short-term investments

( 33,510,688 )

Balance at September 30, 2021

( 269,282,102 )

( 5,040,163 )

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

Comprehensive

1 unchanged sentence

Balance at December 31, 2020

( 137,376,122 )

( 5,020,156 )

Stock-based compensation

1 unchanged sentence

Issuance of common stock from Employee Stock Purchase Plan

Issuance of common stock upon exercise of warrants

Unrealized loss on short-term investments

( 3,885,649 )

Balance at March 31, 2020

( 141,261,771 )

Retirement of common stock in exchange for common stock warrant

( 1,000,000 )

Stock-based compensation

Exercise of stock options

Vesting of restricted stock awards including withholding, net

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

Issuance of common stock in at-the-market offerings, net

Issuance of common stock upon exercise of warrants

Issuance of common stock upon cashless exercise of warrants

Unrealized gain on short-term investments

( 16,766,916 )

Balance at June 30, 2020

( 158,028,687 )

( 5,031,703 )

Stock-based compensation

Issuance of common stock from exercise of stock options

Vesting of restricted stock awards including withholding, net

Issuance of common stock from Employee Stock Purchase Plan

Issuance of common stock and pre-funded warrants in public offering, net

Issuance of common stock in at-the-market offerings, net

Issuance of common stock upon exercise of warrants

Unrealized loss on short-term investments

( 17,770,135 )

Balance at September 30, 2020

( 175,798,822 )

( 5,042,272 )

Balance at March 31, 2021

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

(in thousands)

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

( 73,201,503 )

( 38,422,700 )

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 (gains) on foreign currency exchange

Unrealized (gains) losses on foreign currency exchange

Changes in operating assets and liabilities:

Accounts receivable

( 2,815,343 )

Prepaid expenses and other current assets

( 5,263,432 )

Accounts payable

Accrued expenses and other liabilities

Income tax receivable

( 1,713,642 )

( 5,564,759 )

Income tax and R&D incentive receivables

Net cash used in operating activities

( 56,271,005 )

( 21,023,255 )

CASH FLOWS FROM INVESTING ACTIVITIES:

1 unchanged sentence

Purchases of short-term investments

( 7,591,962 )

( 74,413,135 )

Purchases of property and equipment, net

( 11,970,179 )

Cash paid for internally developed patents

Net cash provided by (used in) investing activities

( 35,226,668 )

Net cash (used in) provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments of deferred offering costs

Proceeds from exercises of warrants

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

Proceeds from issuance of common stock and pre-funded warrants in public offering, net

Proceeds from issuance of notes payable

Payments of notes payable

Proceeds from issuance of common stock from Employee Stock Purchase Plan

1 unchanged sentence

Net cash provided by financing activities

Net increase in cash and cash equivalents and restricted cash

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

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for interest

SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES:

Operating lease liability and right of use asset addition

SUPPLEMENTAL NON-CASH 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.

5 unchanged sentences

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

The Company’s pipeline includes proprietary intranasal vaccines and next generation peptide therapeutics for obesity, NASH (pemvidutide, proposed INN, formerly known as ALT-801) and chronic hepatitis B (HepTcell).

The Company’s pipeline includes next generation peptide therapeutics for obesity and non-alcoholic steatohepatitis (“NASH”) (for both, pemvidutide [proposed INN], formerly known as ALT-801), and for chronic hepatitis B (HepTcell).

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.

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Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States (“U.S.

GAAP”) for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2020 included in the Annual Report on Form 10-K which was filed with the SEC on February 25, 2021.

GAAP”) for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021 included in the Annual Report on Form 10-K which was filed with the SEC on March 15, 2022.

In the opinion of management, the Company has prepared the accompanying unaudited consolidated financial statements on the same basis as the audited consolidated financial statements, and these consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented.

5 unchanged sentences

Summary of Significant Accounting Policies

During the nine months ended September 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.

During the three months ended March 31, 2022, 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, 2021 as filed with the SEC.

Use of Estimates

1 unchanged sentence

GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

The extent to which the COVID-19 pandemic, including any resurgences or the emergence of new variants, 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 and nine months ended September 30, 2021.

The extent to which the COVID-19 pandemic, including any resurgences or the emergence of new variants, may directly or indirectly

impact the Company’s business, financial condition, and results of operations is highly uncertain and subject to change.

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

Recently Issued Accounting Pronouncements - Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes (“ASU No.

ASU 2019-12 amends the approaches and methodologies in accounting for income taxes during interim periods and makes changes to certain income tax classifications.

The new standard eliminates the legacy exceptions to the general guidance for intra-period tax allocation, when there is a loss from continuing operations and income or a gain from other items, and to the general methodology for calculating income taxes in an interim period, when a year-to-date loss exceeds the anticipated loss for the year.

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 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 September 30, 2021 consisted of the following:

Fair Value Measurement at September 30, 2021

The Company’s assets and liabilities measured at fair value on a recurring basis at March 31, 2022 consisted of the following (in thousands):

Fair Value Measurement at March 31, 2022

Cash equivalents - money market funds

Short-term investments

Contingent consideration liability (see Note 8)

The Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2020 consisted of the following:

The Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2021 consisted of the following (in thousands):

Fair Value Measurement at December 31, 2021

Cash equivalents - money market funds

Short-term investments

Contingent consideration liability (see Note 8)

Warrant liability

The warrant liability is included in Other long-term liabilities in the consolidated balance sheet at December 31, 2020.

The warrant liability was valued using the Monte Carlo simulation valuation model with Level 3 inputs.

Short-term investments have been initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third party pricing services or other market observable data (Level 2).

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 September 30, 2021 as shown below:

September 30, 2021

Unrealized Gain

Amortized Cost

Certificate of deposit

Short-term investments had quoted prices at December 31, 2020 as shown below:

December 31, 2020

Unrealized Gain

Amortized Cost

United States treasury securities

Commercial paper and corporate debt securities

Asset backed securities

Certificate of deposit

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 September 30, 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 March 31, 2022 include the following significant unobservable inputs:

Unobservable input

8 unchanged sentences

If applicable, the Company 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 as of September 30, 2021 and December 31, 2020.

There were no transfers into or out of Level 3 of the fair value hierarchy as of March 31, 2022 and December 31, 2021.

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.

During the nine months ended September 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

During the nine months ended September 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 September 30, 2021.

At September 30, 2021, the fair value of the construction-in-progress related assets was primarily determined utilizing the cost approach, which reflects the current replacement cost of the asset being appraised, adjusted for contractual restrictions

on the assets, the probability of satisfying the contractual restrictions, physical deterioration, functional obsolescence, and economic obsolescence.

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

During the three months ended March 31, 2022, the Company had no significant assets or liabilities that were measured at fair value on a non-recurring

During the year ended December 31, 2021, the Company recorded non-cash impairment charges to property and equipment, net on a non-recurring basis (see below).

Lonza Manufacturing Agreement

In March 2021, the Company expanded its manufacturing collaboration with Lonza Houston, Inc.

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

Under the expanded agreement, the Company had 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 was completed during the fourth quarter of 2021.

The Company capitalized a total of $ 4.0 million as construction-in-progress (“CIP”) during the three months ended March 31, 2021 under this expanded agreement.

The Company subsequently terminated the agreement and impaired the amount during the year ended December 31, 2021.

Property and Equipment, Net

Property and equipment, net consists of the following:

September 30, 2021

Property and equipment, net consists of the following (in thousands):

March 31, 2022

December 31, 2021

3 unchanged sentences

Leasehold improvements

Construction-in-progress

Property and equipment, at cost

accumulated depreciation and amortization

( 1,929,128 )

( 1,598,811 )

Property and equipment, net

As of September 30, 2021, construction-in-progress primarily includes costs related to the procurement of long-lead equipment 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 during the fourth quarter 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 September 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.

Following the discontinuation of AdCOVID, incremental cost incurred under the construction contract has been recorded to research and development expenses in the accompanying unaudited consolidated statements of operations and comprehensive loss.

Research and development expenses related to property and equipment was approximately $ 9.6 million and $ 17.7 million for the three and nine months ended September 30, 2021, respectively.

Depreciation expense related to property and equipment was approximately $ 0.1 million and $ 0.1 million for the three months ended September 30, 2021 and 2020, respectively, and $ 0.2 million and $ 0.2 million for the nine months ended September 30, 2021 and 2020, respectively.

Depreciation expense related to property and equipment was approximately $ 0.1 million for both the three months ended March 31, 2022 and 2021.

Intangible Assets

The Company’s intangible assets consist of the following:

September 30, 2021

Internally developed patents

Acquired licenses

16 – 20 years

Total intangible assets subject to amortization

The Company’s intangible assets consist of the following (in thousands):

March 31, 2022

December 31, 2021

3 unchanged sentences

Total intangible assets subject to amortization

Amortization expense of intangible assets was $ 6,641 and $ 10,406 for the three months ended September 30, 2021 and 2020, respectively, and $ 19,920 and $ 36,282 for the nine months ended September 30, 2021 and 2020, respectively.

As of September 30, 2021, the weighted average amortization period remaining for intangible assets was 12.0 years.

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

There was no amortization expense of intangible assets subject to amortization for the three months ended March 31, 2022.

Amortization expense of intangible assets subject to amortization totalled $ 6,640 for the three months ended March 31, 2021.

Amortization expense was classified as research and development expenses in the consolidated statements

of operations and comprehensive loss.

There was no in-process research and development (“IPR&D”) impairment loss during the three months ended March 31, 2022 and the year ended December 31, 2021.

Operating Leases

1 unchanged sentence

The Company also leases office equipment under non-cancellable equipment leases through June 2026 .

Rent expense during the three and nine months ended September 30, 2021 under all of the Company’s operating leases was $ 0.1 million and $ 0.4 million, respectively.

Rent expense during the three and nine months ended September 30, 2020 under all of the Company’s operating leases was $ 0.1 million and $ 0.3 million, respectively.

Rent expense during the three months ended March 31, 2022 and 2021 under all of the Company’s operating leases was $ 0.1 million and $ 0.1 million, 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 and nine months ended September 30, 2021 was $ 0.1 million and $ 0.4 million, respectively, and for the three and nine months ended September 30, 2020 was $ 0.1 million and $ 0.3 million, respectively.

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

September 30, 2021

The cash paid for operating lease liabilities for both the three months ended March 31, 2022 and 2021 was $ 0.1 million.

Supplemental other information related to the operating leases balance sheet information is as follows (in thousands, except lease term and discount rate):

March 31, 2022

December 31, 2021

5 unchanged sentences

Accrued Expenses

Accrued expenses and other current liabilities consist of the following:

September 30, 2021

Accrued expenses and other current liabilities consist of the following (in thousands):

March 31, 2022

December 31, 2021

1 unchanged sentence

Accrued payroll and employee benefits

Accrued interest

Accrued research and development

Lease obligation, current portion (see Note 6)

Deferred revenue

Total accrued expenses

Accrued interest and other

Total accrued expenses and other current liabilities

Contingent Consideration

4 unchanged sentences

The transaction closed on July 12, 2019.

The Company issued 1,887,250 unregistered shares of its common stock (the “shares”) as upfront consideration to certain former securityholders of Spitfire (collectively, the “Spitfire Equityholders”), representing an amount equal to $ 5.0 million less working capital and transaction expense adjustment amounts as defined in the agreement.

The Company issued 1,887,250 unregistered shares of its common stock as upfront consideration to certain former securityholders of Spitfire (collectively, the “Spitfire Equityholders”), representing an amount equal to $ 5.0 million less working capital and transaction expense adjustment amounts as defined in the agreement.

The acquisition of Spitfire was accounted for as an asset acquisition instead of a business combination because substantially all of the fair value of the gross assets acquired was concentrated in a single identifiable asset or group of similar identifiable assets, and therefore, the asset was not considered a business.

2 unchanged sentences

● a one-time payment of $ 5.0 million (the “IND Milestone Consideration Amount”) within sixty days of the submission of an Investigational New Drug Application (“IND”) to the United States Food and Drug Administration (the “FDA”) or other applicable governmental authority in a foreign jurisdiction, which IND has not been rejected or placed on clinical hold by the FDA or such applicable foreign governmental authority within time specified in the Merger Agreement;

● a one-time payment of $ 3.0 million (the “Phase 2 Milestone Consideration Amount” and together with the IND Milestone Consideration Amount, the “Regulatory Milestones”) within sixty days of the initiation of a Phase 2 clinical trial of a product candidate anywhere in the world;

● a one-time payment of $ 3.0 million (the “Phase 2 Milestone Consideration Amount” and together with the IND Milestone Consideration Amount, the “Regulatory Milestones”) within sixty days of the initiation (first patient, first dosing) of a Phase 2 clinical trial of a product candidate anywhere in the world;

● payments of up to $ 80.0 million upon the achievement of specified worldwide net sales (the “Sales Milestones”) of all products developed using the technology acquired in the License Agreement within ten years following the approval of a new drug application filed with the FDA.

5 unchanged sentences

The future contingent payments related to the Sales Milestones are predominately cash-based payments accounted for under FASB Accounting Standards Codification Topic 450, Contingencies .

Accordingly, the Company will recognize the Sales Milestones when the contingency is resolved and the amount is paid or payable.

Accordingly, the Company will recognize the Sales Milestones when the contingency is probable and the amount is reasonably estimated.

On November 3, 2020, the Company received acknowledgement from the Australian Government Department of Health on the Company’s submitted clinical trial notification (“CTN”) which triggered the obligation to settle the IND Milestone payment to the former owners.

As a result, on November 19, 2020, the Company issued 1,694,906 shares of its Common Stock valued at $ 9.57 per share for the amount value of $ 13.6 million to the former Spitfire stockholders.

Pursuant to the Spitfire Merger Agreement, the Company issued the shares within sixty days of the submission of the CTN, which was October 29, 2020 .

From September 30, 2020 through November 19, 2020, the date of issuance, the Company recognized a decrease in the fair value of the IND Milestone payment of $ 5.4 million to research and development expense and reclassified the balance in the contingent consideration liability associated with the fair value of the IND Milestone payment to equity in the Company’s consolidated balance sheet.

No Regulatory Milestones were achieved during the three months ended March 31, 2022.

The Phase 2 Milestone was met on April 26, 2022.

See Note 17 for further details.

The Company estimates the future contingent consideration for the Regulatory Milestones based upon a Monte Carlo simulation valuation model that is risk adjusted based on the probability of achieving the milestones and a discount for lack of marketability.

1 unchanged sentence

During the fourth quarter of 2020, the Company achieved the IND Milestone and paid the obligation in shares according to the calculation above.

Below is a summary of the contingent consideration activity:

Nine Months Ended September 30,

Below is a summary of the contingent consideration activity (in thousands):

Three Months Ended March 31,

Beginning balance

1 unchanged sentence

Ending balance

As of September 30, 2021 and 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.

As of March 31, 2022, 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 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.

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

Other Long-Term Liabilities

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

September 30, 2021

The Company’s other long-term liabilities are summarized as follows (in thousands):

March 31, 2022

December 31, 2021

4 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 September 30, 2021, no Pre-Funded Warrants were exercised.

As of March 31, 2022, 760,870 of the Pre-Funded Warrants were exercised, leaving 869,566 remaining Pre-Funded Warrants unexercised.

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.

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

Riley Securities, Inc., serving as sales agents (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 September 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 September 30, 2021, the Company recorded approximately $ 0.1 million of offering costs which offset the proceeds received from the shares sold through September 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.

The aggregate market value of Shares eligible for sale in the 2020 Offering and under the 2020 Agreement were subject to the limitations of General Instruction I.B.6 of Form S-3, to the extent required under such instruction.

The Company 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, 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.

As of September 30, 2020, the Company sold 3,213,009 shares of Common Stock under the amended 2020 Agreement resulting in $ 25.6 million in net proceeds.

The 2020 Agreement was fully utilized during the year ended December 31, 2020, and no Shares were sold under the 2020 Agreement during the three and nine months ended September 30, 2021.

During the three months ended March 31, 2022, the Company sold 335,485 shares of Common Stock under the 2021 Agreement resulting in approximately $ 3.0 million in net proceeds.

As of March 31, 2022, the Company has sold in aggregate 5,135,939 shares of Common Stock under the 2021 Agreement resulting in approximately $ 67.8 million in net proceeds, with $ 55.0 million remaining available to be sold under the 2021 Agreement.

As of March 31, 2022, the Company recorded approximately $ 0.1 million of offering costs which offset the proceeds received from the shares sold through March 31, 2022.

The Company capitalized approximately $ 0.1 million of deferred offering costs which will offset future proceeds received under the 2021 Agreement.

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.

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.

The Exchange Warrants did not have an expiration date and were exercisable at any time except that the Exchange Warrants could not 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.

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

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

As of March 31, 2022, the Exchange Warrants to purchase 1,000,000 shares were net exercised, resulting in the issuance of 999,984 shares of common stock.

All of the Exchange Warrants were exercised in full.

A summary of warrant activity during the three months ended March 31, 2022 is as follows:

Warrants outstanding, December 31, 2021

Exchanges (see Note 10)

Warrants outstanding, September 30, 2021

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

Exercises (see Note 10)

( 1,760,870 )

Warrants outstanding, March 31, 2022

Stock-Based Compensation

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

At September 30, 2021, there was $ 11.3 million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 2.6 years.

During the nine months ended September 30, 2021, the Company granted 1,075,700 stock options with a weighted average exercise price of $ 15.07 and per share weighted average grant date fair value of $ 12.38 .

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

At March 31, 2022, there was $ 14.0 million of unrecognized compensation cost related to stock options, which is

expected to be recognized over a weighted-average period of 3.1 years.

During the three months ended March 31, 2022, the Company granted 1,020,427 stock options with a weighted average exercise price of $ 6.91 and per share weighted average grant date fair value of $ 6.06 .

Information related to stock options outstanding at March 31, 2022 is as follows (in thousands, except share, exercise price and contractual term):

Weighted-Average

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Restricted Stock

At September 30, 2021, the Company had unvested restricted stock of 94,181 shares with total unrecognized compensation expense of $ 0.3 million, which the Company expects to recognize over a weighted average period of approximately 1.2 years.

During the nine months ended September 30, 2021, the Company released 60,545 shares of common stock from restriction as a result of the vesting of restricted stock.

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

At September 30, 2021, the Company had unvested restricted stock units of 207,529 shares with total unrecognized compensation expense of $ 2.5 million, which the Company expects to recognize over a weighted average period of approximately 3.4 years.

During the nine months ended September 30, 2021, the Company released 3,750 shares of common stock from restriction as a result of the vesting of restricted stock units.

At March 31, 2022, the Company had unvested restricted stock of 53,818 shares with total unrecognized compensation expense of $ 0.2 million, which the Company expects to recognize over a weighted average period of approximately 0.7 years.

During the three months ended March 31, 2022, the Company released 20,182 shares of unrestricted common stock as a result of the vesting of restricted stock.

Restricted Stock Units

During the three months ended March 31, 2022, the Company granted 255,000 shares of restricted stock units which vest over four years .

At March 31, 2022, the Company had unvested restricted stock units of 446,837 shares with total unrecognized compensation expense of $ 3.9 million, which the Company expects to recognize over a weighted average period of approximately 3.5 years.

During the three months ended March 31, 2022, the Company released 40,091 shares of unrestricted common stock as a result of the vesting of restricted stock units.

2019 Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan, employees purchased 24,100 shares for $ 0.2 million during the nine months ended September 30, 2021.

During the three and nine months ended September 30, 2021, the Company recognized compensation expense of $ 28,811 and $ 0.3 million, respectively.

Under the Employee Stock Purchase Plan, employees purchased 16,450 shares for $ 0.1 million during the three months ended March 31, 2022.

During the three months ended March 31, 2022, the Company recognized compensation expense of $ 0.1 million.

Stock-based Compensation Expense

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

Stock-based compensation expense is classified in the unaudited consolidated statements of operations and comprehensive loss for the three months ended March 31, 2022 and 2021 as follows (in thousands):

For the Three Months Ended

For the Nine Months Ended

September 30,

Research and development

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In June 2020, the Company was awarded $ 4.7 million from the U.S.

Army Medical Research & Development Command (“USAMRDC”) to fund our Phase 1/2 clinical trial of T-COVID.

Army Medical Research & Development Command (“USAMRDC”) to fund its Phase 1/2 clinical trial of T-COVID.

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 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 nine months ended September 30, 2021, the Company has recognized approximately $ 0.5 million of grant revenue under the contract.

For the three and nine months ended September 30, 2020, the Company recognized $ 2.3 million of grant revenue under the contract.

In July 2016, the Company signed a five-year contract with 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 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 $ 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 in 2021.

For the three and nine months ended September 30, 2021, the Company has recognized approximately $ 0.1 million and $ 0.4 million, respectively, of grant

revenue under the current BARDA contract.

For the three and nine months ended September 30, 2020, the Company recognized approximately $ 0.6 million and $ 2.7 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 nine months ended September 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:

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 September 30, 2020, the Company recognized a total tax benefit of $ 5.3 million related to the carry back of losses back to obtain a refund of its 2016 tax liability.

Under the contract, MTEC paid 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 recognized approximately $ 0.5 million of grant revenue under the contract, which completed the full recognition of this award.

No revenue was recognized for this contract for the three months ended March 31, 2022.

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

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

Under the contract, BARDA paid the Company a fixed fee and reimbursed 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 studies.

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 in 2021.

For the three months ended March 31, 2021, the Company recognized approximately $ 0.2 million of grant revenue under the BARDA contract.

For the three months ended March 31, 2022, the Company has recognized de minimis grant revenue related to the close-out of the BARDA contract.

BARDA did not extend the contract beyond the end of December 2021.

Due to a full valuation allowance, the Company did not record an income tax benefit for both the three months ended March 31, 2022 and 2021.

Net Loss Per Share

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Diluted net loss per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period.

As such, all unvested restricted stock, common stock warrants, and stock options have been excluded from the computation of diluted weighted average shares outstanding because such securities would have an anti-dilutive impact for all periods presented.

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 and Nine

September 30, 2021

September 30, 2020

As such, all unvested restricted stock, restricted stock units, common stock warrants, and stock options have been excluded from the computation of diluted weighted average shares outstanding because such securities would have an anti-dilutive impact for all periods presented.

Potential common shares issuable upon conversion, vesting or exercise of unvested restricted stock, restricted stock units, 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

Common stock warrants

Common stock options

Restricted stock units

Restricted stock

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

Lonza Manufacturing Agreement

In March 2021, the Company expanded its manufacturing collaboration with Lonza in connection with the Manufacturing Agreement entered into in November 2020 for the manufacture of AdCOVID or other adenovirus-based

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 adenovirus-based vaccines.

As of September 30, 2021, the Company had $ 2.0 million in remaining commitments under the agreement.

In June 2021, the Company discontinued further development of AdCOVID.

Refer to Note 4 for further details.

In December 2019, a complaint was filed by Dr.

De-Chu Christopher Tang (“Plaintiff”) against the Company, which was 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”).

In March 2020 the Defendants filed a motion to dismiss the complaint.

The Court denied the motion without prejudice and allowed Plaintiff an opportunity to file an amended complaint.

Plaintiff’s second amended complaint was filed on April 17, 2020, and Defendants filed a motion to dismiss that complaint on May 1, 2020.

A hearing on Defendants’ motion to dismiss was held on May 20, 2020.

Plaintiff, who is representing himself, alleges five causes of action as follows:

(1) Defendants’ alleged retention of Plaintiff’s lab notebooks after the termination of his employment in 2012;

(2) alleged plagiarism based on publishing an article without naming Plaintiff as an author;

(3) use of the Adhigh System, which Plaintiff alleges he developed;

(4) allegations that Defendants manipulated our stock and caused a decrease in value;

and (5) allegations that the Defendants “wast[ed] government grant money and poison[ed] science by leaving data to rot.” On September 30, 2020, Plaintiff filed a motion titled “Motion to Proscribe Defendants’ Allegedly Illegal Use of Plaintiff’s AdHigh System in Altimmune’s Human Clinical Trials,” to which Defendants filed an opposition on October 13, 2020.

The court has not yet ruled on that motion, which also remains pending.

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.

On December 1, 2020, the magistrate judge assigned to the case issued a report and recommendation that Defendants’ motion to dismiss of May 1, 2020 be granted and that this action be dismissed for lack of personal jurisdiction.

Plaintiff filed objections to the report and recommendation on December 14, 2020, and the resolution of those objections by the district court remains pending.

In December 2021, the Plaintiff refiled the complaint in the United States District Court for the District of Maryland.

On February 24, 2022, Defendants filed a memorandum containing a brief description of the planned motion and a concise summary of the factual and legal support for it.

On the basis of that memorandum, the Court granted Defendants’ request to file a motion to dismiss and allowed Plaintiff an opportunity to file an amended complaint.

Plaintiff’s amended complaint was filed on March 3, 2022, and Defendants filed a motion to dismiss that complaint on April 4, 2022.

The Company believes the allegations in the complaint are without merit and intends to vigorously defend the litigation.

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.

Subsequent Events

Contingent Consideration

On April 26, 2022, the Company dosed the first patient in the Phase 2 MOMENTUM trial of pemvidutide in obesity, which triggered the obligation to pay the Phase 2 Milestone Consideration Amount to the Spitfire Equityholders.

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