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Item 1. Business

2021-02-25 compared with 2020-03-27 · 406 added, 320 removed, 426 unchanged (63% of the section changed)

Altimmune, Inc.

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

Our diverse pipeline of product candidates includes next generation peptide therapeutics for non-alcoholic steatohepatitis (“NASH “) (ALT-801) and chronic hepatitis B (HepTcell), conjugated immunostimulants for the treatment of cancer (ALT-702) and intranasal vaccines (NasoVAX, NasoShield, and AdCOVID).

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).

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

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(“Private Altimmune”).

In May 2017, Private Altimmune merged with PharmAthene pursuant to an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) dated January 18, 2017, among Private Altimmune, PharmAthene, its wholly owned acquisition subsidiaries Mustang Merger Sub Corp I Inc.

(“Merger Sub Corp”) and Mustang Merger Sub II LLC (“Merger Sub LLC”).

Pursuant to the Merger Agreement, Merger Sub LLC agreed to acquire 100% of the outstanding capital stock of Private Altimmune in a reverse triangular merger and reorganization pursuant to section 368(a) of the Internal Revenue Code (the “Mergers”).

On May 4, 2017, Private Altimmune merged with PharmAthene in a series of mergers and reorganizations (collectively, the “Mergers”) pursuant to an Agreement and Plan of Merger and Reorganization (the “PharmAthene Merger Agreement”) dated January 18, 2017, among Private Altimmune, PharmAthene, its wholly owned acquisition subsidiaries Mustang Merger Sub Corp I Inc.

and Mustang Merger Sub II LLC.

Upon closing of the Mergers, all equity instruments of Private Altimmune were exchanged for corresponding equity instruments of PharmAthene.

Prior to the Mergers, PharmAthene was a publicly traded biodefense company engaged in Phase 2 clinical trials.

On May 4, 2017, Private Altimmune and PharmAthene closed the Mergers in accordance with the terms of the Merger Agreement.

Upon the closing of the Mergers, (i) Merger Sub Corp merged with and into Private Altimmune, with Private Altimmune remaining as the surviving corporation;

(ii) Private Altimmune then merged with and into Merger Sub LLC, with Merger Sub LLC (renamed as “Altimmune LLC”) remaining as the surviving entity;

and (iii) PharmAthene was renamed as “Altimmune, Inc.” Upon closing of the Mergers, all equity instruments of Private Altimmune were exchanged for corresponding equity instruments of PharmAthene.

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.

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

(“Spitfire”).

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 metabolic dysfunction that causes non-alcoholic steatohepatitis.

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.

As observed in a well-established preclinical model of the disease, ALT-801 was capable of inducing significant weight loss with concomitant decreases in liver fat, inflammation and fibrosis.

We plan to advance ALT-801 into Phase 1 development in 2020.

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

It 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 strongly diminishes T-cell immunity directed against the virus.

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

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

HepTcell is based on our synthetic peptide technology platform and is given by intramuscular injection.

In 2018, we completed a Phase 1 trial in the United Kingdom and South Korea in patients with chronic HBV.

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

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

P atients rece ived three injections each 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 plan to advance HepTcell into Phase 2 development in 2020 .

ALT-702 is an investigational tumor immunostimulant designed to act locally to reverse local immunosuppression within the tumor microenvironment and stimulate systemic antitumor immune responses.

The ALT-702 technology is a novel synthetic peptide conjugate technology platform designed to retain and concentrate immunostimulants within a tumor potentially leading to enhanced immune stimulation without the risk of systemic inflammation.

We believe that ALT-702 represents a new approach in immuno-oncology that may be developed as a monotherapy or be used in conjunction with immune checkpoint inhibitors, oncolytic viruses or other approaches in immuno-oncology or improve their effectiveness.

We are currently conducting preclinical studies using an aggressive tumor model based on the murine CT26 colorectal carcinoma cell line.

We recently met a key preclinical milestone with the demonstration of systemic antitumor activity following intra-tumoral injection in an individual solid tumor.

The aggressive tumor model involved the establishment of a tumor in each flank of a mouse.

In the study, three doses of ALT-702 were injected into one tumor mass over five days with concomitant treatment with an anti-CTLA4 antibody immune checkpoint inhibitor administered intraperitoneally.

Tumor regression was noted in both injected (88%) and non-injected (38%) lesions, and overall survival in the ALT-702 + anti-CTLA4 group was markedly better than either agent alone.

We plan to complete ALT-702’s preclinical data set in 2020.

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.

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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 plan to commence a Phase 1b trial of NasoShield in 2020.

The planned Phase 1b clinical trial builds on the Phase 1a trial completed in 2018 and will evaluate the effect of modified methods of intranasal dosing on NasoShield safety and immunogenicity.

Results are expected in the fourth quarter of 2020.

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.

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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.

We believe 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 evaluating strategic alternatives to fund the development of NasoVAX, such as regional licensing, government funding, or co-development of the program.

In February 2020, we announced the advancement of AdCOVID, a novel single-dose, intranasal vaccine using our proprietary intranasal vaccine technology, to protect against COVID-19, the disease caused by the SARS-CoV-2 virus.

Based on the RespirVec vaccine platform, it is expected that AdCOVID has the potential to activate the mucosal, humoral, and cellular immune arms against the virus that causes COVID-19.

We believe the excellent stability of RespirVec vaccines when combined with the simple intranasal route of administration may allow for efficient and inexpensive distribution of the vaccine.

We have completed the design and synthesis of the vaccine and are now advancing it toward animal testing and manufacturing.

We plan to initiate a Phase 1 clinical study for AdCOVID in the third quarter of 2020.

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.

(“Spitfire”).

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.

NAFLD 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.

We also 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.

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

Approximately 300 million people worldwide live with chronic HBV infection, including approximately 2.2 million in the United States.

Chronic HBV infection can lead to serious complications, including cirrhosis and liver cancer.

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

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.

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.

HepTcell is based on our synthetic peptide technology platform and is given by intramuscular injection.

In 2018, we completed a Phase 1 trial in the United Kingdom and South Korea in adult patients with chronic HBV.

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 IC31 TM , 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.

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.

Key elements of our strategy include the following:

Apply our platform technologies to design and develop immunotherapeutic products tailored to address a wide range of disease indications including NASH, obesity, cancer, acute and chronic infections;

Apply our RespirVec platform technologies to design and develop vaccines and therapeutics tailored to address a wide range of infectious diseases, including COVID-19, anthrax, and influenza;

Apply our EuPort platform technologies to design and develop treatments for NASH, obesity, and other metabolic diseases;

Apply our Densigen platform technologies to design and develop immunotherapeutic products tailored to address acute and chronic infections;

Strategically partner or out-license certain product candidates at later stages of development to focus our efforts on early to mid-stage product development;

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Certain product candidates are based on our proprietary platform technologies as described below.

Densigen is our synthetic peptide technology platform.

HepTcell was developed using our Densigen platform which is designed to activate T-cells to generate a cytotoxic immune response against intracellular pathogens.

This synthetic peptide technology is based on peptides of 30 – 40 amino acids that comprise a high density of CD4 and CD8 T-cell epitopes selected to focus the T-cell response on highly conserved targets and allow diverse populations to respond to the product candidate.

Densigen technology is protected by patents owned by us.

Key aspects of our Densigen technology, supported by findings in our preclinical studies and clinical trials, include its potential to:

elicit responses across multiple targets for the disease;

direct an immune response precisely to specific antigen sites, thereby avoiding more reactive but less effective sites present in the full-length protein;

prompt a stronger immune response than naked peptides due to depot effect caused by attaching a biologically inert fluorocarbon chain to each peptide.

NasoShield, NasoVAX and AdCOVID, our respiratory anti-infective product candidates, are derived from our RespirVec platform, which is designed to elicit rapid and long-term immune protection by intranasal delivery of adenovectored pathogen sequences.

Intranasal Vaccines - RespirVec

NasoShield, NasoVAX, AdCOVID and T-COVID, our respiratory anti-infective product candidates, are derived from our RespirVec platform, which is designed to elicit rapid and long-term immune protection by intranasal delivery of adenovectored pathogen sequences.

We believe that our RespirVec technology may be particularly well-suited for pandemic response to respiratory pathogens as a result of its ability to stimulate mucosal immunity in the nasal cavity, a site of viral attack.

RespirVec is designed to stimulate serum neutralizing antibody and cellular immune response for a broad immune response and is stable at room temperature for several months.

RespirVec is designed to stimulate serum neutralizing antibody and cellular immune response for a broad immune response and is stable at room temperature

for several months.

We believe that the favorable stability profile of RespirVec vaccines, when combined with the simple intranasal route of administration, has the potential for efficient and inexpensive distribution of the vaccine in a pandemic.

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allow a rapid production cycle at anticipated lower costs.

Incretin-based Peptide Technology – EuPort

EuPort is a platform technology exclusively licensed by us and comprises a hydrophobic domain (e.g., substituted or unsubstituted alkyl chain) and a hydrophilic group (e.g., saccharide) conjugated to a non-terminal amino acid of the peptide.

Pursuant to a license agreement between the Company and Mederis Diabetes, LLC (“Mederis”) (the “Mederis IP License Agreement”), we are the exclusive licensee of patent rights owned by Mederis to develop and commercialize surfactant functionalized (“EuPort domain”) incretin-based peptide therapeutics, including GLP-1, Glucagon, Oxyntomodulin, and variants thereof, for any indication, and Mederis has certain patent rights granted back to it for the use of the EuPort technology outside of the Company’s exclusive field of incretin-based peptide therapeutics.

ALT-801, our GLP-1/ Glucagon dual agonist, was developed using the EuPort technology and is based on peptides at least four amino acids in length that bind receptors for Glucagon and/or GLP-1, conjugated to an alkyl saccharide surfactant, including an alkyl glycoside surfactant.

Key aspects of our EuPort technology, supported by findings in our preclinical studies, include its potential to:

Induce significant weight loss;

Enhance pharmacokinetics for gastrointestinal tract tolerability;

Improve metabolic function and exhibit pleiotropic effects, including suppression of genes associated with steatosis, inflammation and stellate cell fibrosis by RNA sequencing.

Synthetic Peptide Technology - Densigen

Densigen is our synthetic fluorocarbon peptide technology platform.

HepTcell, an immunotherapeutic developed using our Densigen platform, is designed to activate T-cells to generate a cytotoxic immune response against intracellular pathogens.

Densigen technology is protected by patents owned by us.

Key aspects of our Densigen technology, supported by findings in our preclinical studies and clinical trials, include its potential to:

elicit responses across multiple targets for the disease;

direct an immune response precisely to specific antigen sites, thereby avoiding more reactive but less effective sites present in the full-length protein;

prompt a stronger immune response than naked peptides due to depot effect caused by attaching a biologically inert fluorocarbon chain to each peptide.

The biopharmaceutical industry and the vaccine market are intensely competitive and are characterized by rapid technological progress.

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These companies also compete with us by having significantly greater research and marketing capabilities than we do and may also have products that have been approved or are in late stages of development and have collaborative arrangements in our target markets with leading companies and research institutions.

Established pharmaceutical companies may also invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds that could make the product that we develop obsolete.

We also face competition from smaller companies who, like us, rely on investors to fund research and development and compete for co-development and licensing opportunities from large and established pharmaceutical companies.

We face competition for ALT-801, our dual GLP-1/glucagon dual agonist for the treatment of NASH, from companies such as Genfit SA, which is developing a peroxisime proliferator activated receptor agonist;

Viking Therapeutics, which is developing a thryroid hormone receptor beta selective agonist;

and Intercept Pharmaceuticals, which is developing a farnesoid X receptor agonist.

We face competition for HepTcell, our immunotherapeutic HBV product candidate, from companies such as Transgene which is developing an adenovirus-based vaccine;

Arrowhead Pharmaceuticals, which is developing an HBV therapeutic vaccine;

and Inovio, which is developing a DNA vaccine delivered by in vivo electroporation.

We face competition for ALT-702, our conjugated TLR7/8 agonist for the treatment of cancer, from companies such as Curevac, which is developing a CV8102, a TLR7/8/RIG-1 agonist based on noncoding single stranded RNA for the treatment of solid tumors;

and Urogen, which is developing a TLR7 agonist for bladder cancer.

We face competition from multiple biotechnology and bio-pharmaceutical companies, such as Pfizer, Moderna, AstraZeneca, Regeneron and Johnson & Johnson, that are in the process of developing vaccines and therapeutics against COVID-19.

Certain of these vaccine and therapeutic technologies are being developed at a faster rate than AdCOVID and T-COVID or have superior immunogenicity or manufacturability attributes.

We face competition for NasoShield, our single dose intranasal anthrax vaccine product candidate, from Emergent Biosolutions which manufactures the existing anthrax vaccine.

and additionally, we generally face substantial competition for government funding from companies that develop products with government contracts and grants.

Finally, we face competition for NasoVAX, our intranasal influenza candidate from Novavax, which is developing an influenza vaccine;

Additionally, we generally face substantial competition for government funding from companies that develop products with government contracts and grants.

We face competition for NasoVAX, our intranasal influenza candidate from Novavax, which is developing an influenza vaccine;

and a number of companies of varying sizes are also pursuing the development of a “universal” flu vaccine.

Any of these smaller companies may develop competing products more rapidly than we do.

We also face competition from multiple biotechnology and bio-pharmaceutical companies, such as Moderna, Inovio and Sanofi, that are in the process of developing vaccines against COVID-19 using different vaccine platforms.

Certain of these vaccine technologies may develop at a faster rate than AdCOVID or have superior immunogenicity or manufacturability attributes.

We face competition for ALT-801, our dual GLP-1/glucagon dual agonist for the treatment of NASH, from companies such as Intercept Pharmaceuticals, which is developing a farnesoid X receptor agonist;

Madrigal Pharmaceuticals, which is developing an orally administered, small-molecule, liver-directed, thyroid hormone receptor (THR) β-selective agonist;

and, Akero Therapeutics, which is developing a fibroblast growth factor 21 analog.

Finally, we face competition for HepTcell, our immunotherapeutic HBV product candidate, from companies such as Transgene which is developing an adenovirus-based vaccine;

Arrowhead Pharmaceuticals, which is developing an HBV therapeutic vaccine;

and Inovio, which is developing a DNA vaccine delivered by in vivo electroporation.

Any of these companies may develop competing products more rapidly than we do.

Intellectual Property

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We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary rights are covered by valid and enforceable patents or are effectively maintained as trade secrets.

Patent Rights Related to Our Densigen Platform Technology

Fluorocarbon Antigen Delivery Vectors

We are developing a fluorocarbon antigen construct platform technology.

Our patents covering this technology are issued in the United States, China, India, Japan and certain European countries, including the United Kingdom, Germany and France.

Additional patents are issued in other commercially relevant jurisdictions and an application is pending in the United States.

The claims are directed to the fluorocarbon linked antigen construct, compositions comprising the construct and methods of using the construct to stimulate an immune response.

The patents and, if issued, the patent(s) resulting from the pending patent applications are expected to have an expiration date no earlier than April 2025, not giving effect to any potential extensions and assuming payment of all associated fees.

Formulation of Antigen Delivery Vectors — Manufacturing Process for the Final Formulation of the Antigen Delivery Vectors

We are developing an intermediary of the manufacturing process for solubilizing the fluorocarbon antigens, for which we have a patent issued in the United States, Europe, China, South Korea and Japan and patent applications pending in the United States and Japan, as well as other commercially relevant jurisdictions.

The claims are directed to methods of solubilizing certain fluorocarbon antigen peptides using acetic acid formulations and manufactured lyophilized compositions thereof that are soluble in an aqueous solution.

The patent and, if issued, the patent(s) resulting from the pending patent applications are expected to have an expiration date no earlier than December 2031, not giving effect to any potential extensions and assuming payment of all associated fees.

Patent Rights Related to our RespirVec Platform Technology

Immunotherapy for Respiratory Pathogens — Intranasal Application of Adenoviral Vector Vaccines

We are developing a rapid and prolonged immunologic-therapeutic technology, for which we have a patent issued or allowed in the United States, Europe, South Korea and Japan for respiratory pathogens including influenza and anthrax;

the respiratory pathogen COVID-19 in Europe;

and pending applications in the United States, Europe, Japan, and other commercially relevant jurisdictions.

The claims are directed to methods for inducing an immune response against respiratory pathogens including influenza and Bacillus anthracis , the causative agent of anthrax, comprising intranasal administration of an effective amount of E1 and/or E3 deleted adenovirus.

The claims are directed to methods for inducing an immune response against respiratory pathogens including influenza, coronavirus and Bacillus anthracis, the causative agent of anthrax, comprising intranasal administration of an effective amount of E1 and/or E3 deleted adenovirus.

The patent and, if issued, the patent(s) resulting from the pending applications have an expiration date no earlier than March 2032, not giving effect to any potential extensions and assuming payment of all associated fees.

Topical and Intranasal Application of Adenoviral Vectors Expressing Heterologous Antigen — In-Licensed from the University of Alabama at Birmingham Research Foundation

We were the exclusive licensee of patents owned by the University of Alabama at Birmingham Research Foundation (“UABRF”).

That agreement expired in accordance with its terms in January 2020.

The patents were directed to topical noninvasive

application of genetic vectors.

The patents were issued in the United States and certain European countries, including Great Britain, France, Germany, Italy, Netherlands and Spain, as well as other commercially relevant jurisdictions.

The claims were directed to methods of non-invasively inducing a systemic immune response in a bird or mammal against a gene product comprising contacting skin, or intranasal administration, of the bird or mammal with a genetic vector in an amount effective to induce the response.

Under that same agreement with UABRF we were also the exclusive licensee of one issued U.S.

patent and a pending patent application owned by the UABRF directed to mucosal administration of genetic vectors.

The claims were directed to methods of non-invasive immunization by administering a non-replicating adenovirus vector expressing influenza antigens via intranasal administration.

The issued U.S.

patent expired in January 2020 and the pending patent application was abandoned.

We entered into the agreement with the UABRF on March 1, 1998, amended and restated the agreement on June 2, 2014 and further amended the agreement as of October 16, 2015.

This is the agreement pursuant to which we obtained an exclusive license under the patent rights described above to develop, manufacture and commercialize a non-invasive vaccine technology within the field of use, which includes any diagnostic, vaccine or therapeutic use or methods, in any country in which the licensed patents were pending or had been granted.

In connection with the original license, we paid an up-front license fee of $0.03 million and issued 2,986 shares of common stock to UABRF.

We also agreed to make certain payments, including an annual maintenance payment and royalty payments as a percentage of net sales of licensed products covered by valid claims of any licensed patent in the country of sale until the expiration of the last to expire of such patents in such country.

The royalty payments were subject to a minimum annual royalty amount following the first commercial sale of a licensed product, ranging from low five figures to low six figures.

To date, we have paid UABRF an aggregate of $498,000 under the license agreement consisting of cash and promissory notes to UABRF that have since been repaid, and $94,000 in shares of common stock

PER.C6 Cell Line — In-Licensed from Janssen Vaccines & Prevention B.V (Formerly Crucell Holland, B.V.)

We are the non-exclusive licensee of patent rights held by Janssen Vaccines & Prevention B.V (Formerly Crucell Holland, B.V.) (“Janssen”), covering a method of producing an adenoviral vector stock using cell lines including the PER.C6 cell line, which may be used for the development and manufacture of vaccine products.

We are also developing methods of administering and dosing the intranasal adenoviral vector vaccine compositions, for which we have an international (PCT) patent application filed, with expectation that in due course in jurisdictions of commercial consideration (e.g., United States, Europe, Japan) there will be national or regional patent applications based on the PCT.

The claims are directed to transmucosal administration of our respiratory anti-infective product candidates based on our RespirVec platform technology.

The patent(s), if issued, resulting from the pending application have an expiration date of no earlier than August 2040, not giving effect to any potential extensions and assuming payment of all associated fees.

PER.C6 Cell Line — In-Licensed from Janssen Vaccines & Prevention B.V.

(Formerly Crucell Holland, B.V.)

We are the non-exclusive licensee of patent rights held by Janssen Vaccines & Prevention B.V.

(Formerly Crucell Holland, B.V.) (“Janssen”), covering a method of producing an adenoviral vector stock using cell lines including the PER.C6 cell line, which may be used for the development and manufacture of vaccine products.

We entered into an amended license agreement with Janssen, effective as of October 4, 2005, which amended and restated our prior license agreements with Janssen.

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We also agreed to pay royalty payments as a percentage of net sales of products in any country where the manufacture of such product is covered by a valid claim of any licensed patent or uses licensed know-how, subject to a royalty stacking reduction and minimum annual royalty payments, until the expiration of the term of the amended agreement.

To date, we have paid Janssen $2.2 million in cash and equity under the amended agreement.

We further amended our license agreement with Janssen, effective September 25, 2015, primarily to streamline our manufacturing license arrangements.

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Upon expiration of the amended license agreement, or if we terminate the amended license agreement for Janssen’s material breach, we retain the right to exploit the rights granted.

On April 2, 2020, we entered into Amendment No.

3 to the Second Restated License Agreement and additionally entered into Amendment No.

4, 5 and 6 throughout 2020 (collectively, the “Amendments”), by and between us and Janssen (as amended by Amendment No.

1 to Second Restated License Agreement and Amendment No.

2 to Second Restated License Agreement, together with the Amendments, the “License Agreement”).

Pursuant to the Amendment, the field of licenses granted to us for the use of the PER.C6 cell line under the License Agreement is expanded to cover COVID-19 caused by SARS-CoV-2 (severe acute respiratory syndrome coronavirus 2), in addition to the existing licenses related to Bacillus anthracis and influenza virus.

Pursuant to the Amendment, we agreed to pay certain additional development-based milestone payments through approval of licensed products by the FDA for the treatment or prevention of COVID-19, up to an aggregate amount of $1.2 million.

We also agreed to pay royalty payments as a percentage of net sales of products to a royalty stacking reduction and minimum annual royalty payments, until the expiration of the term of the License Agreement, as amended.

We additionally entered into Amendment No.

4, 5 and 6 throughout

2020 to add additional manufacturing partners related to manufacturing AdCOVID .

As of December 31, 2020 , we have paid Janssen $2.

7 million in cash and equity under the amended agreement.

Patent Rights Related to our EuPort Platform Technology

EuPort Technology — In-Licensed from Mederis Diabetes, LLC

The EuPort domain comprises a hydrophobic domain (e.g., substituted or unsubstituted alkyl chain) and a hydrophilic group (e.g., saccharide) conjugated to a non-terminal amino acid of the peptide.

Patents under Mederis IP License Agreement have been granted in the United States and Korea, and applications pending in the United States, Japan as well as other commercially relevant jurisdictions.

The claims are directed to peptides (at least four amino acids in length), including peptides that bind receptors for Glucagon and/or GLP-1, conjugated to an alkyl saccharide surfactant, including an alkyl glycoside surfactant.

The patents and, if issued, the patent(s) resulting from the pending application(s) have an expiration date of no earlier than May 2032, not giving effect to any potential extensions and assuming payment of all associated fees.

Patents subject to the Mederis IP License Agreement have also been granted in the United States, and Japan, and applications pending in the United States, Europe, Japan, China and other commercially relevant jurisdictions, wherein the claims are directed to specific GLP-1 and/or Glucagon peptides conjugated to the EuPort domain.

The patents and, if issued, the patent(s) resulting from the pending application(s) have an expiration date of no earlier than May 2035.

Patent Rights Related to Our Densigen Platform Technology

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We are developing a fluorocarbon antigen construct platform technology.

Our patents covering this technology are issued in the United States, China, India, Japan and certain European countries, including the United Kingdom, Germany and France.

Our patents covering this technology are issued in the United States, China, Japan and certain European countries, including the United Kingdom, Germany and France.

Additional patents are issued in other commercially relevant jurisdictions and an application is pending in the United States.

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Formulation of Antigen Delivery Vectors — Manufacturing Process for the Final Formulation of the Antigen Delivery Vectors

We are developing an intermediary of the manufacturing process for solubilizing the fluorocarbon antigens, for which we have a patent issued in the United States, Europe and Japan and patent applications pending in the United States and Japan, as well as other commercially relevant jurisdictions.

We are developing a manufacturing process for solubilizing certain fluorocarbon peptides and final lyophilized compositions thereof that are soluble in an aqueous solution, for which we have a patent issued in the United States, Europe and Japan and patent applications pending in the United States and Japan, as well as other commercially relevant jurisdictions.

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Patent Rights Related to Our Product Candidates

ALT-801, Dual GLP-1/Glucagon Dual Agonist for NASH

We are the exclusive licensee of patent rights held by Mederis Diabetes, LLC (“Mederis”) to develop and commercialize a dual GLP-1/glucagon dual agonist for the treatment of obesity, metabolic syndrome, insulin resistance, diabetes and cardiovascular disease.

Patents under this license have been granted in the United States, Europe, Japan, Australia and Mexico with pending applications in the United States, Europe, Japan, and Korea, as well as other commercially relevant jurisdictions.

The License Agreement provides us with a royalty-free, fully paid-up exclusive (even as to Mederis) license under certain Mederis-owned know-how and patents (the “Licensed IP”) to make, use, sell, offer for sale, import and export products worldwide (the “License Grant”).

The License Agreement also provides a royalty-free, fully paid-up, non-exclusive license back to Mederis under certain Licensed IP to make, use, sell, offer for sale, import and export certain products outside of the field of incretin-based peptide therapeutics, and variants thereof worldwide (the “Grant Back License”).

We may terminate the License Agreement in its entirety upon sixty (60) days’ written notice to Mederis.

Spitfire and Mederis also each have the right to terminate the License Agreement upon the occurrence of a material breach of the License Agreement by the other party, subject to cure provisions.

In addition, Spitfire has the right to terminate the Grant Back License portion of the License Agreement upon the occurrence of a material breach of the License Agreement by Mederis, subject to cure provisions.

HepTcell, Chronic Hepatitis B Immunotherapy

We are developing an HBV immunotherapy technology directed to compositions comprising fluorocarbon constructs with specific peptide HBV antigen sequences.

We have an issued patent for this technology in the United States, and pending applications in the United States, Europe, Asia, and India, as well as other commercially relevant jurisdictions.

The claims are directed to HBV antigen peptide sequences comprising T-cell epitopes linked to fluorocarbon chains and compositions comprising at least two of the fluorocarbon linked HBV antigen peptide sequences.

If issued, the patent(s) resulting from the pending patent applications are expected to have an expiration date no earlier than December 2033, not giving effect to any potential extensions and assuming payment of all associated fees.

HepTcell is also covered by the patents and patent applications relating to our Densigen platform technology.

ALT-702, Immunostimulant for Solid Tumors

We are developing a depot-forming immunostimulant for solid tumors for which we have a patent issued in the United States and patent applications pending in the United States, Canada, Russia, Europe, Japan and Korea.

The claims are directed to conjugated immune stimulatory constructs, compositions comprising the constructs and methods of using the constructs to stimulate an immune response.

The patents and, if issued, the patent(s) resulting from the pending patent applications are expected to have an expiration date no earlier than 2034, not giving effect to any potential extensions and assuming payment of all associated fees.

NasoShield, Anthrax Vaccines

AdCOVID, COVID-19 Vaccines

We are developing an intranasal COVID-19 vaccine candidate based on our replication-deficient adenoviral vectored RespirVec platform technology, for which we have a patent application filed in the United States, Taiwan, Argentina and an international (PCT) patent application filed, with expectation that in due course in jurisdictions of commercial consideration (e.g., Europe, Japan) there will be national or regional patent applications based on the PCT.

The claims are directed to the AdCOVID vaccine composition and its method of use.

If issued, patent(s) resulting from the pending application(s) have an expiration date of no earlier than February 2041, not giving effect to any potential extensions and assuming payment of all associated fees.

AdCOVID is further covered by our patent rights related to our RespirVec platform technology, for which we have patent applications pending in the US, Europe and Japan.

The claims are directed to a method of inducing an innate immune response against coronavirus following intranasal administration of an effective amount of E1 and/or E3 deleted adenovirus expressing a coronavirus antigen.

The patent application(s), if issued, would have an expiration date no earlier than March 2032, not giving effect to any potential extensions and assuming payment of all associated fees.

Use and dosing of AdCOVID is further covered by an international (PCT) patent application, from which we expect to file national and regional applications in the U.S., Europe and other commercially

relevant jurisdictions.

The claims are directed to transmucosal administration of our respiratory anti-infective product candidates, including AdCOVID.

If issued, the patents resulting from the pending applications have an expiration date of no earlier than August 2040, not giving effect to any potential extensions and assuming payment of all associated fees .

T-COVID, COVID-19 Therapeutic

We are developing an intranasal COVID-19 therapeutic candidate based on our replication-deficient adenoviral vectored RespirVec platform technology, for which we have a patent application filed in the United States, Taiwan, Argentina and an international (PCT) patent application filed, with expectation that in due course in jurisdictions of commercial consideration (e.g., Europe, Japan) there will be national or regional patent applications based on the PCT.

The claims are directed to the T-COVID therapeutic composition and its method of use.

T-COVID is further covered by our patent rights related to our RespirVec platform technology, for which we have a granted patent in Europe and have recently received a Notice of Allowance from the United States Patent and Trademark Office (“USPTO”) for claims directed to a method of inducing an innate immune response against coronavirus.

That patent, once issued, will have an expiration date of no earlier than March 2032.

Use and dosing of T-COVID is further covered by an international (PCT) patent application, from which we expect to file national and regional applications in the U.S., Europe and other commercially relevant jurisdictions.

The claims are directed to transmucosal administration of our respiratory anti-infective product candidates, including T-COVID.

If issued, patent(s) resulting from the pending application(s) have an expiration date of no earlier than August 2040, not giving effect to any potential extensions and assuming payment of all associated fees.

NasoShield, Anthrax Vaccine

We are developing a rapid and prolonged immunologic-therapeutic technology for anthrax (NasoShield), for which we have a patent granted in the United States, Canada, Europe and Japan.

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The patent, if issued, resulting from the pending applications are expected to have an expiration date no earlier than March 2032, not giving effect to any potential extensions and assuming payment of all associated fees.

NasoShield is further covered by an issued and pending US patent.

NasoShield is further covered by an issued and pending U.S.

The issued claims are directed to methods of inducing a protective immune response against inhalation anthrax, comprising intranasal administration of an adenoviral vector expressing anthrax protective antigen.

The patent has an expiration date no earlier than July 2024, not giving effect to any potential extensions and assuming payment of all associated fees.

NasoShield is also covered by the patents and patent applications relating to our RespirVec platform technology.

Use and dosing of NasoShield is further covered by an international (PCT) patent application, from which we expect to file national and regional applications in the US, Europe and other commercially relevant jurisdictions.

The claims are directed to transmucosal administration of our respiratory anti-infective product candidates, including NasoShield.

If issued, the patent(s) resulting from the pending application(s) have an expiration date of no earlier than August 2040, not giving effect to any potential extensions and assuming payment of all associated fees.

NasoVAX, an Influenza Vaccine

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The patent and, if issued, the patent(s) resulting from the pending applications are expected to have an expiration date no earlier than March 2032, not giving effect to any potential extensions and assuming payment of all associated fees.

NasoVAX is also covered by the patents and patent applications relating to our RespirVec platform technology, including an issued U.S.

patent with claims directed to methods of non-invasive immunization by administering a non-replicating adenovirus vector expressing influenza antigens via intranasal administration.

Veterinary Product Candidates

We co-own with Auburn University patents and patent applications covering technology directed to an avian vaccine using human adenovirus vectors for the delivery of avian immunogens and antigens.

These patents are issued in the United States and Europe, as well as other commercially relevant jurisdictions;

and an application is pending in the United States.

The claims are directed to methods for avian ( in ovo or embryonic) administration of a human adenoviral vector expressing avian influenza antigens.

The patents and, if issued, the patent(s) resulting from the patent applications are expected to have an expiration date no earlier than August 2026, not giving effect to any potential extensions and assuming payment of all associated.

Use and dosing of NasoVAX is further covered by an international (PCT) patent application, from which we expect to file national and regional applications in the U.S., Europe and other commercially relevant jurisdictions.

The claims are directed to transmucosal administration of our respiratory anti-infective product candidates, including NasoVAX.

The patents, if issued, resulting from the pending application have an expiration date of no earlier than August 2040, not giving effect to any potential extensions and assuming payment of all associated fees.

Single dose NasoVAX formulations and their use for inducing a combined mucosal, humoral and T cell immune response against influenza virus is further covered by an international (PCT) patent application, from which we expect to file national and

regional applications in commercially relevant jurisdictions, and a pending U .

patent application.

The claims are directed to a single dose NasoVAX intranasal formulation and its use for inducing a combined immune response in humans providing durable immunity against influenza.

If issued, patent(s) resulting from the pending application(s) have an expiration date of no earlier than April 2040, not giving effect to any potential extensions and assuming payment of all associated fees .

ALT-801, Dual GLP-1/Glucagon Dual Agonist for NASH

We are the exclusive licensee of patent rights owned by Mederis Diabetes, LLC (“Mederis”) to develop and commercialize surfactant functionalized GLP-1/Glucagon/Oxyntomodulin-based peptide therapeutics, and variants thereof, for any use including the treatment of obesity, metabolic syndrome, insulin resistance, diabetes and cardiovascular disease.

Patents under this license agreement (“Mederis IP License Agreement”) have been granted in the United States, Europe, Japan, Australia and Mexico with pending applications in the United States, Europe, Japan, and Korea, as well as other commercially relevant jurisdictions.

The claims are directed to GLP-1/glucagon dual agonist peptides conjugated to a surfactant and their use to treat metabolic syndrome, obesity and other related diseases.

The patents and, if issued, the patent(s) resulting from the pending application(s) have an expiration date of no earlier than May 2032 and extending to May 2035, not giving effect to any potential extensions and assuming payment of all associated fees.

Use of ALT-801 for treating NASH is further covered by, and subject to the Mederis IP License Agreement, pending applications in the U.S., Europe, Japan and other commercially relevant jurisdictions.

If issued, the patent(s) resulting from the pending application(s) have an expiration date of no earlier than January 2039, not giving effect to any potential extensions and assuming payment of all associated fees.

Use of ALT-801 in methods with improved tolerability, dosing and therapeutic regimens is further covered in two pending U.S.

provisional patent applications owned by us and not subject to the Mederis IP License Agreement, and from which we expect to file U.S.

and international patent applications.

The claims are directed to the use of ALT-801 in a therapeutic dosing regimen with improved tolerability.

If issued, the patent(s) resulting from the pending application(s) have an expiration date of no earlier than February 2041 and December 2041, respectively, not giving effect to any potential extensions and assuming payment of all associated fees.

HepTcell, Chronic Hepatitis B Immunotherapy

We are developing an HBV immunotherapy technology directed to compositions comprising fluorocarbon constructs with specific peptide HBV antigen sequences.

We have an issued patent for this technology in the United States, and pending applications in the United States, Europe, Japan, China and Korea, as well as other commercially relevant jurisdictions.

The claims are directed to HBV antigen peptide sequences comprising T-cell epitopes linked to fluorocarbon chains and compositions comprising a combination of HBV antigen peptide sequences.

HepTcell is also covered by the patents and patent applications relating to our Densigen platform technology.

Use of HepTcell for treating patients with chronic hepatitis B viral (HBV) infection is further covered by a pending U.S.

provisional patent application, from which we expect to file U.S.

and international patent applications.

The claims are directed to treating patients with chronic hepatitis B virus (HBV) infection characterized with low hepatitis B surface antigen (HBsAg).

If issued, the patent(s) resulting from the pending patent application(s) are expected to have an expiration date no earlier than December 2041, not giving effect to any potential extensions and assuming payment of all associated fees.

Government Contracts

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government in procuring undelivered items from another source.

MTEC COVID-19 Contract

We are funding our Phase 1/2 clinical trial of T-COVID with a $4.7 million grant from the U.S.

Army Medical Research & Development Command (“USAMRDC”).

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 on achieving certain milestones for conduct and completion of a Phase 1/2 study.

As of December 31, 2020, we have collected an aggregate of approximately $1.1 million in receivables under the contract.

We own the intellectual property rights to inventions made by us in the performance of work under the MTEC contracts provided that we disclose such inventions to the U.S.

government and notifies the U.S.

government of our election to retain title.

government will have a non-exclusive, non-transferable, irrevocable, paid-up license to practice, or have practiced for or on our behalf, such inventions throughout the world, in addition to other rights customarily reserved by the U.S.

government for intellectual property generated using government funds.

BARDA Anthrax Contract

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Under this contract, BARDA pays us a fixed fee and reimburses certain of our costs for the research and development of an Ad5-vectored, protective antigen-based intranasal anthrax vaccine through current good manufacturing practice (“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 December 2020.

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 studies for a three-year period.

Each option, if exercised by BARDA, would provide additional funding ranging from approximately $1.1 million to $34.4 million, providing a total contract potential of $133.7 million.

To date, we have received an aggregate of approximately $21.9 million in revenue under the current BARDA contract.

As of December 31, 2020, we have collected an aggregate of approximately $24.7 million in receivables under the current BARDA contract.

We have been audited by BARDA through 2016 and have agreed on final indirect rates with the Defense Contract Audit Agency (“DCAA”) through 2016.

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NIAID Anthrax Contract

Through the third quarter of 2019, we were developing an anthrax vaccine pursuant to a contract with NIAID.

SparVax-L, a recombinant protein-based anthrax vaccine, was designed to require fewer doses and have a longer shelf life than the only currently licensed anthrax vaccine.

Through the third quarter of 2019, we were developing our SparVax-L anthrax vaccine pursuant to a contract with the National Institute of Allergy and Infectious Diseases (“NIAID”).

SparVax-L, a recombinant protein-based anthrax vaccine, was designed to

require fewer doses and have a longer shelf life than the only currently licensed anthrax vaccine.

We demonstrated a significant improvement in shelf life (two years at room temperature and six years at refrigerated temperatures) with a lyophilized formulation.

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Activities under this contract were completed during the quarter ended September 30, 2019 and no further funding is expected for this program.

As a result of the contract completion and the US government’s funding prioritization of only single dose anthrax vaccine candidates, we abandoned the project and impaired the $1.0 million remaining net book value of the SparVax-L IPR&D asset.

The carrying value at December 31, 2019 and 2018 is $0 and $1.0 million, respectively.

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 $1.0 million net book value of the SparVax-L IPR&D asset in 2019.

United States Government Regulation

Biological products, such as our product candidates, are subject to regulation under the Federal Food, Drug, and Cosmetic Act (“FD&C Act”), the Public Health Service (“PHS Act”), the Food and Drug Administration (FDA) regulations under Title 21 of the Code of Federal Regulations (21 CFR) as well as other federal, state and local statutes and regulations.

Both the FD&C Act and the PHS Act and their corresponding regulations govern, among other things, the testing, manufacturing, safety, efficacy, labeling, packaging, storage, record keeping, distribution, reporting, advertising and other promotional practices involving biological products.

FDA concurrence must be obtained before clinical testing of biological products.

FDA approval must be obtained before marketing of biological products.

The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources, and each process may take several years to complete, although certain expedited programs potentially applicable to our product candidates, such as FDA fast track designation for certain new drugs with the potential to address unmet medical needs for certain serious or life-threatening

conditions, may potentially expedite approval processes.

Biological products, such as our product candidates, are subject to regulation under the Federal Food, Drug, and Cosmetic Act (“FD&C Act”), the Public Health Service (“PHS Act”), the FDA regulations under Title 21 of the Code of Federal Regulations (21 CFR), as well as other federal, state and local statutes and regulations.

Both the FD&C Act and the PHS Act and their corresponding regulations govern, among other things, the testing, research, manufacturing, approval, safety, efficacy, labeling, packaging, storage, record keeping, distribution, import, export, reporting, sale, advertising and other promotional practices involving biological products.

An investigational new drug (“IND”) application must be in effect before clinical testing of biological products can begin.

FDA approval must be obtained before biological products can be marketed.

Certain federal incentive programs are also potentially applicable to our product candidates, such as for “orphan drugs” that treat rare conditions, and programs supporting the development of bioterrorism medical countermeasures.

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The process required by the FDA before a biological product may be marketed in the United States generally involves the following:

completion of preclinical laboratory tests and animal studies according to applicable good laboratory practices (“GLPs”), studies used to support animal rule pathway submissions, and applicable requirements for the humane use of laboratory animals or other applicable regulations;

submission to the FDA of an application for an IND which must become effective before human clinical trials may begin and which must include approval by an independent Institutional Review Board (“IRB”) at each clinical site before the trials may be initiated;

performance of adequate and well controlled human clinical trials according to the FDA’s regulations commonly referred to as good clinical practices (“GCPs”), and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biological product for its intended use;

submission to the FDA of a biologics license application (“BLA”), for marketing approval that includes substantive evidence of safety, purity and potency from results of preclinical testing and clinical trials, and detailed information about the chemistry, manufacturing and controls for the product candidate, reports of the outcomes and full data sets of the clinical trials and proposed labeling and packaging for the product candidate;

review of the product candidate by an FDA advisory committee, where appropriate or if applicable;

satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biological product is produced to assess compliance with cGMPs, to assure that the facilities, methods and controls are adequate to preserve the biological product candidate’s identity, strength, quality and purity;

satisfactory completion of potential FDA audit of the preclinical study and clinical trial sites that generated the data in support of the BLA;

completion of preclinical laboratory tests and animal studies according to applicable good laboratory practices (“GLP”) applicable requirements for the humane use of laboratory animals, such as the Animal Welfare Act or other applicable regulations;

submission to the FDA of an application for an IND which must become effective before human clinical trials may begin;

obtaining approval by an independent Institutional Review Board (“IRB”) at each clinical site before a clinical trial may be initiated at that site;

performance of adequate and well-controlled human clinical trials according to the FDA’s regulations commonly referred to as good clinical practices (“GCP”) and any additional requirements for the protection of human research subjects and their health information, to establish the safety and efficacy of the proposed biological product for its intended use;

submission to the FDA of a biologics license application (“BLA”) for marketing approval that includes substantial evidence of safety, purity and potency from results of clinical trials, as well as the results of preclinical testing, detailed information about the chemistry, manufacturing and controls, and proposed labeling and packaging for the product candidate;

review of the product candidate by an FDA advisory committee, if applicable;

satisfactory completion of an FDA inspection of the manufacturing facility or facilities where the biological product candidate is produced to assess compliance with cGMP and to confirm that the facilities, methods and controls are adequate to assure the biological product candidate’s identity, strength, quality and purity ;

satisfactory completion of potential FDA audits of the preclinical study and clinical trial sites that generated the data in support of the BLA;

FDA review and approval, or licensure, of the BLA, including agreement on post-marketing commitments, if applicable.

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Preclinical studies include laboratory evaluations of product chemistry, toxicity and formulation, as well as animal studies to assess the potential safety and activity of the product candidate.

The conduct of certain preclinical studies must comply with federal regulations and requirements including GLPs.

The clinical trial sponsor must submit the results of the preclinical studies, together with manufacturing information, analytical data, any available clinical data or literature and a proposed clinical protocol, to the FDA as part of the IND.

The conduct of certain preclinical studies must comply with federal regulations and requirements including GLP and the Animal Welfare Act.

Some preclinical studies may continue even after the IND is submitted.

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In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin.

The FDA may also impose clinical holds on a biological product candidate at any time before or during clinical trials due to safety concerns or non-compliance.

Even after the IND has gone into effect and clinical testing has begun, the FDA may also impose clinical holds on clinical trials due to safety concerns or non-compliance.

If the FDA imposes a clinical hold, studies may not recommence without FDA authorization and then only under terms authorized by the FDA.

Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical trials to begin, or that, once begun, issues will not arise that suspend or terminate such studies.

Accordingly, we cannot be sure that submission of an IND will result in the FDA allowing clinical trials to begin, or that, once the trials have begun, issues will not arise that suspend or terminate such studies.

Clinical trials involve the administration of the biological product candidate to healthy volunteers or patients under the supervision of qualified investigators.

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Each protocol and any amendments to the protocol must be submitted to the FDA as part of the IND, during applicable phases of development.

Clinical trials must be conducted and monitored in accordance with the FDA’s regulations comprising the GCP requirements, including the requirement that all research subjects provide informed consent.

Clinical trials must be conducted and monitored in accordance with the FDA’s regulations and GCP requirements, which establish standards for conducting, recording data from, and reporting the results of clinical trials, with the goals of assuring that the data and results are credible and accurate and that study participants’ rights, safety, and well-being are protected.

GCP requirements include the requirement that all research subjects provide informed consent.

Further, each clinical trial must be reviewed and approved by an IRB at or servicing each institution at which the clinical trial will be conducted.

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Human clinical trials are typically conducted in three sequential phases that may overlap or be combined:

The biological product is initially introduced into a small group of healthy human subjects (e.g., 10 to 20 volunteers) and tested for safety.

The biological product is initially introduced into a small group of healthy human subjects (e.g., 10 to 20 volunteers) and tested for safety and to develop detailed profiles of its pharmacological and pharmacokinetic actions, determine side effects associated with increasing doses, and, if possible, gain early evidence of effectiveness.

In the case of some products for severe or life-threatening diseases, especially when the product may be too inherently toxic to ethically administer to healthy volunteers, the initial human testing is often conducted in patients.

The biological product is evaluated in a larger but limited patient population (e.g., a few hundred patients) to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance, optimal dosage and dosing schedule.

Clinical trials are undertaken to further evaluate dosage, clinical efficacy, potency and safety in an expanded patient population (e.g., several hundred to several thousand patients) at geographically dispersed clinical trial sites.

These clinical trials are intended to establish the overall risk/benefit ratio of the product and provide an adequate basis for product labeling.

These clinical trials are undertaken to further evaluate dosage, clinical efficacy, potency and safety in an expanded patient population (e.g., several hundred to several thousand patients) at geographically dispersed clinical trial sites.

These clinical trials are intended to establish the overall risk/benefit profile of the product and provide an adequate basis for product labeling.

Post-approval clinical trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial marketing approval.

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Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements or if the biological product has been associated with unexpected serious harm to patients .

FDA also permits the administration of investigational biological products to patients under its expanded access regulatory authorities.

Under these authorities, patients who are ineligible to meet clinical trial entry criteria may be eligible for accessing investigational products, including through individual compassionate or emergency use in concert with their requesting physician.

For MCM-focused products, in particular, FDA has recently indicated that its expanded access authorities may be important in enabling quicker access to investigational products intended for MCM uses in the COVID-19 pandemic.

Concurrent with clinical trials, companies usually complete additional animal studies, develop additional information about the physical characteristics of the biological product and finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.

To help reduce the risk of the introduction of adventitious agents with use of biological products, the PHS Act emphasizes the importance of manufacturing control for products whose attributes cannot be precisely defined.

In limited circumstances, FDA also permits the administration of investigational biological products to patients under its expanded access regulatory authorities.

Under the FDA’s expanded access authority, patients who are not able to participate in a clinical trial may be eligible for accessing investigational products, including through individual compassionate or emergency use in concert with their requesting physician.

For medical countermeasure (“MCM”) focused products, in particular, FDA has recently indicated that its expanded access authorities may be important in enabling quicker access to investigational products intended for MCM uses in the COVID-19 pandemic.

Concurrent with clinical trials, companies usually complete additional animal studies, develop additional information about the physical characteristics of the biological product candidate and finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.

To help reduce the risk of the introduction of adventitious agents with use of biological products, the PHS Act emphasizes the importance of manufacturing controls for products whose attributes cannot be precisely defined.

The manufacturing process must be capable of consistently producing quality batches of the product candidate and, among other things, the sponsor must develop methods for testing the identity, strength, quality, potency and purity of the final biological product.

Additionally, appropriate packaging must be selected and tested, and stability studies must be conducted to demonstrate that the biological product candidate does not undergo unacceptable deterioration over its shelf life.

A manufacturer of an investigational drug for a serious disease or condition is required to make available, such as by posting on its website, its policy on evaluating and responding to requests for individual patient access to such investigational drug.

This requirement applies on the earlier of the first initiation of a Phase 2 or Phase 3 trial of the investigational drug or, as applicable, 15 days after the drug receives a designation as a breakthrough therapy, fast track product, or regenerative advanced therapy.

Certain FDA programs are available to facilitate and expedite the development and review of new drugs intended to address unmet needs in the treatment of serious or life-threatening conditions.

These expedited programs include fast track designation, breakthrough therapy designation, priority review, and accelerated approval.

Each of these programs has its own features and qualifying criteria.

A sponsor must submit a request for fast track designation, breakthrough therapy designation, or priority review, which may or may not be granted by the FDA.

For accelerated approval, a sponsor generally discusses the possibility of accelerated approval with the FDA during development, and the FDA may or may not agree that accelerated approval is an appropriate pathway for a particular drug.

Some of these expedited programs could potentially apply to our product candidates, although this cannot be assured, and we do not currently have any products with expedited program designations.

The sponsor of a clinical trial or the sponsor’s designated responsible party may be required to register certain information about the trial and disclose certain results on government or independent registry websites, such as ClinicalTrials.gov.

Additionally, a manufacturer of an investigational drug for a serious disease or condition is required to make available, such as by posting on its website, its policy on evaluating and responding to requests for individual patient access to such investigational drug.

Review and Approval Processes

After the completion of clinical trials of a biological product, the FDA approval of a BLA must be obtained before commercial marketing of the biological product.

After the completion of clinical trials of a biological product candidate, the FDA’s approval of a BLA must be obtained before commercial marketing of the biological product may begin.

The BLA must include results of product development, laboratory and animal studies, human studies, information on the manufacture and composition of the product, proposed labeling and other relevant information.

In addition, under the Pediatric Research Equity Act, as amended, a BLA or supplement to a BLA must contain data to assess the safety and effectiveness of the biological product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

In addition, under the Pediatric Research Equity Act, as amended, a BLA or supplement to a BLA generally must contain data to assess the safety and effectiveness of the biological product for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective.

The FDA may grant deferrals for submission of data or full or partial waivers depending on the designated pathway for submission.

The testing and approval processes require substantial time and effort and there can be no assurance that the FDA will accept the BLA for filing and, even if filed, that any approval will be granted on a timely basis, if at all.

In addition, annual reports must be submitted for BLAs for seasonal influenza vaccines.

Under the Prescription Drug User Fee Act (“PDUFA”), as amended, each BLA must be accompanied by a significant user fee.

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Once the submission is accepted for filing, the FDA begins an in-depth substantive review of the BLA.

The FDA reviews the BLA to determine, among other things, whether the proposed product is safe and potent, or effective, for its intended use, and has an acceptable purity profile, and whether the product is being manufactured in accordance with cGMP to assure and preserve the product’s identity, safety, strength, quality, potency and purity.

FDA performance goals generally provide for action on a BLA within 10 months of the 60-day filing date, or within 12 months of its submission.

That deadline can be extended under certain circumstances, including by the FDA’s requests for additional information.

The targeted action date can also be shortened to 6 months of the 60-day filing date, or 8 months after submission, for products that are granted priority review designation because they are intended to treat serious or life-threatening conditions and demonstrate the potential to address unmet medical needs.

The FDA reviews the BLA to determine, among other things, whether the proposed product is safe and potent, or effective, for its intended use, has an acceptable purity profile, and whether the product is being manufactured in accordance with cGMP to assure the product’s identity, safety, quality, potency and purity.

The FDA may refer applications for novel biological products or biological products that present difficult questions of safety or efficacy to an advisory committee, typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved and under what conditions.

The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.

During the biological product approval process, the FDA also will determine whether a Risk Evaluation and Mitigation Strategy (“REMS”), is necessary to assure the safe use of the biological product.

During the BLA review process, the FDA also will determine whether a Risk Evaluation and Mitigation Strategy (“REMS”) is necessary to assure the safe use of the biological product.

If the FDA concludes a REMS is needed, the sponsor of the BLA must submit a proposed REMS;

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Before approving a BLA, the FDA will inspect the facilities at which the product is manufactured.

The FDA will not approve the product unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.

The FDA will not approve the BLA unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications.

Additionally, before approving a BLA, the FDA will typically inspect one or more clinical sites to assure that the clinical trials were conducted in compliance with IND study requirements and GCP requirements.

To assure cGMP and GCP compliance, an applicant must incur significant expenditure of time, money and effort in the areas of training, record keeping, production and quality control.

Notwithstanding the submission of relevant data and information, the FDA may ultimately decide that the BLA does not satisfy its regulatory criteria for approval and deny approval.

Notwithstanding the submission of relevant data and information, the FDA may ultimately decide that the BLA does not satisfy its regulatory criteria for approval.

Data obtained from clinical trials are not always conclusive and the FDA may interpret data differently than how we interpret the same data.

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or major, for example, requiring additional clinical trials.

Additionally, the complete response letter may include recommended actions that the applicant might take to place the application in a condition for approval.

If a complete response letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the letter, or withdraw the application.

Additionally, the complete response letter may include recommended actions that the applicant may take for the FDA to reconsider the application.

If a complete response letter is issued, the applicant may either resubmit the BLA, addressing all of the deficiencies identified in the complete response letter, or withdraw the application.

If a product receives regulatory approval, the approval may be significantly limited to specific diseases and dosages or the indications for use may otherwise be limited, which could restrict the commercial value of the product.

Further, the FDA may require that certain contraindications, warnings or precautions be included in the product labeling.

The FDA may impose restrictions and conditions on product distribution, prescribing, or dispensing in the form of a risk management plan, or otherwise limit the scope of any approval.

In addition, the FDA may require post-marketing clinical trials, sometimes referred to as Phase 4 clinical trials, designed

to further assess a biological product’s safety and effectiveness, and testing and surveillance programs to monitor the safety of approved products that have been commercialized.

The FDA may impose restrictions and conditions on product distribution, prescribing, or dispensing in the form of a REMS, or otherwise limit the scope of any approval.

In addition, the FDA may require post-marketing clinical trials, sometimes referred to as Phase 4 clinical trials, designed to further assess a biological product’s safety and effectiveness, and testing and surveillance programs to monitor the safety of approved products that have been commercialized.

Post-approval modifications to a drug product, such as changes in indications, labeling or manufacturing processes or facilities, may require development and submission of additional information or data in a new or supplemental BLA, which would also require prior FDA approval.

Post-Approval Requirements

After regulatory approval of a product is obtained, there may be a number of post-approval requirements.

After regulatory approval of a product is obtained, products are subject to continuing extensive regulation and post-approval requirements.

For example, as a condition of approval of a BLA, the FDA may require post-marketing testing and surveillance to monitor the product’s safety or efficacy.

In addition, holders of an approved BLA are required to keep extensive records, to report certain adverse reactions and production problems to the FDA, to provide updated safety and efficacy information and to comply with requirements concerning advertising and promotional labeling for their products.

In addition, holders of an approved BLA are required to submit annual reports, keep extensive records, to report certain adverse reactions and production problems to the FDA, to provide updated safety and efficacy information and to comply with requirements concerning advertising and promotional labeling for their products.

Also, quality control and manufacturing procedures must continue to conform to cGMP regulations and practices, as well as the manufacturing conditions of approval set forth in the BLA.

The FDA periodically inspects manufacturing facilities to assess compliance with cGMP, which imposes certain procedural, substantive and recordkeeping requirements.

Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance.

Future FDA inspections may identify compliance issues at manufacturer facilities or at the facilities of third-party suppliers that may disrupt production or distribution or require substantial resources to correct and prevent recurrence of any deficiencies and could result in fines or penalties by regulatory authorities.

In addition, discovery of problems with a product or the failure to comply with applicable requirements may result in restrictions on a product, manufacturer or holder of an approved BLA, including withdrawal or recall of the product from the market or other voluntary, FDA-initiated or judicial action, including fines, injunctions, civil penalties, license revocations, seizure, total or partial suspension of production or criminal penalties, any of which could delay or prohibit further marketing.

Accordingly, manufacturers must continue to expend time,

money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of regulatory compliance.

If, after receiving approval, a company makes a material change in manufacturing equipment, location, or process (all of which are, to some degree, incorporated in the BLA), additional regulatory review and approval may be required .

Future FDA inspections may identify cGMP compliance issues at manufacturer facilities or at the facilities of third-party suppliers that may disrupt production or distribution or require substantial resources to correct and prevent recurrence of any deficiencies and could result in fines or penalties by regulatory authorities.

In addition, discovery of problems with a product or the failure to comply with applicable requirements may result in restrictions on a product, manufacturer or holder of an approved BLA, including withdrawal or recall of the product from the market or other voluntary, FDA-initiated or judicial action, including warning letters, fines, injunctions, civil penalties, license revocations, seizure, total or partial suspension of production or criminal penalties, any of which could delay or prohibit further marketing.

Newly discovered or developed safety or efficacy data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications.

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Priority Rule Voucher (PRV)

The 21st Century Cures Act (“Cures Act”), which was signed into law on December 13, 2016, established a new priority review voucher (“PRV”) program for material threat Medical Countermeasures (“MCMs”).

The 21st Century Cures Act (“Cures Act”), which was signed into law on December 13, 2016, established a new priority review voucher (“PRV”) program for material threat MCMs.

Upon approval of a material threat MCM application, the FDA will award a PRV provided certain criteria are met.

When a marketing application receives a priority review designation, the FDA’s goal is to take action on that application within 6 months.

A PRV voucher can be used to obtain priority review for a subsequent marketing application that would not otherwise have met the criteria for priority review.

When a marketing application receives priority review, the FDA’s goal is to take action on that application within 6 months of the filing date.

To be considered a material threat MCM application, the application must be:

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and (iv) for a drug for which an active ingredient has not been previously approved by the FDA.

Although the material threat MCM PRV program is separate and distinct from the FDA’s other PRV programs, FDA intends to implement the law consistently with implementation of the other PRV programs.

Animal Rule and Project BioShield Emergency Use Authorization

In 2002, the FDA amended its requirements applicable to BLAs to permit the approval of certain biologics that are intended to reduce or prevent serious or life-threatening conditions based on evidence of safety from trial in healthy subjects and effectiveness from appropriate animal studies when human efficacy studies are not ethical or feasible.

In 2002, the FDA amended its requirements applicable to BLAs to permit the approval of certain biologics that are intended to treat or prevent serious or life-threatening conditions caused by exposure to lethal or permanently disabling toxic CBRN substances based on evidence of safety from trial in healthy human subjects and animal studies, and effectiveness from appropriate animal studies when human efficacy studies are not ethical or feasible.

These regulations, also known as the “Animal Rule,” and published in the Code of Federal Regulations (21 CFR 601 Subpart H), authorize the FDA to rely on evidence from animal studies to provide evidence of a product’s effectiveness under circumstances where there is a reasonably well-understood mechanism for the toxicity of the agent and its prevention or substantial reduction by the biological product, the effect is demonstrated in more than one animal species expected to react with a response predictive for humans, the animal study endpoint is clearly related to the desired benefit in humans, and the data or information on the kinetics and pharmacodynamics of the product or other relevant data or information, in animals and humans, allows selection of an effective dose in humans.

Under these requirements, and with FDA’s prior agreement, biologics used to reduce or prevent the toxicity of CBRN substances may be approved for use in humans based on evidence of effectiveness derived from appropriate animal studies and any additional supporting data.

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Under certain circumstances a single animal species may be acceptable if that animal model is sufficiently well-characterized for predicting a response in humans.

The animal study endpoint must be clearly related to the desired benefit in humans and the information obtained from animal studies must allow for selection of an effective dose in humans.

The Animal Rule also requires post-marketing studies, such as field studies, to verify and describe the product’s clinical benefit and assess its safety should an exigency exists that leads to the product being used in humans;

the nature of these studies will be discussed with FDA as part of the BLA process.

Products approved under the Animal Rule are subject to additional requirements, such as restrictions imposed on marketing or distribution or requirements to provide information to patients.

the nature of these studies will be discussed with the FDA as part of the BLA process.

Products approved under the Animal Rule are subject to additional requirements, such as restrictions imposed on distribution or labeling requirements to inform patients that the product’s approval was based on efficacy studies conducted in animals alone.

The Animal Rule drug development pathway typically involves costs and time for nonclinical studies and animal models in excess of what would be expended in conducting human vaccine clinical trials not requiring compliance with the Animal Rule.

Under Project BioShield, the Secretary of HHS may, with the concurrence of the Secretary of the Department of Homeland Security (“DHS”), and upon the approval of the President, contract to purchase unapproved medical countermeasures for the Strategic National Stockpile (“SNS”), in specified circumstances.

Under the Project BioShield Act of 2004 and subsequent amendments by the Pandemic and All-Hazards Preparedness Reauthorization Act of 2013 (“Project Bioshield”), the Secretary of HHS may, with the concurrence of the Secretary of the Department of Homeland Security (“DHS”), and upon the approval of the President, contract to purchase unapproved MCMs for the Strategic National Stockpile (“SNS”), in specified circumstances.

Congress is notified of a recommendation for a stockpile purchase after Presidential approval.

Project BioShield specifies that a company supplying the countermeasure to the SNS is paid on delivery of a substantial portion of the countermeasure.

To be eligible for purchase under these provisions, the Secretary of HHS must determine that there are sufficient and satisfactory clinical results or research data, including data, if available, from preclinical studies and clinical trials, to support a reasonable conclusion that the countermeasure will qualify for approval or licensing within eight years.

To be eligible for purchase under these provisions, the Secretary of HHS must

determine that there are sufficient and satisfactory clinical results or research data, including data, if available, from preclinical studies and clinical trials, to support a reasonable conclusion that the countermeasure will qualify for FDA approval or licensing within eight years.

The legislation also allows unlicensed products to be procured for the SNS so that they are available at the time an emergency is declared .

Project BioShield also allows the Secretary of HHS to authorize the emergency use of medical products that have not yet been approved by the FDA.

To exercise this authority, the Secretary of HHS must conclude that:

the agent for which the countermeasure is designed can cause serious or life-threatening disease;

based on the totality of scientific evidence available to the Secretary of HHS, including data from adequate and well-controlled clinical trials, if available, it is reasonable to believe that the product may be effective in diagnosing, treating or preventing the disease;

Project BioShield also allows the Secretary of HHS to authorize the emergency use of unapproved medical products or an unapproved use of an approved medical product under certain emergency circumstances (“Emergency Use Authorization”).

To exercise this authority, the FDA must conclude that:

the CBRN agent for which the countermeasure is designed to treat can cause serious or life-threatening disease;

based on the totality of scientific evidence available to the FDA, including data from adequate and well-controlled clinical trials, if available, it is reasonable to believe that the product may be effective in diagnosing, treating or preventing the disease;

the known and potential benefits of the product outweigh its known and potential risks;

there is no adequate, approved, and available alternative to the product for diagnosing, preventing, or treating such disease or condition.

Some product candidates may be eligible both for consideration for procurement into the SNS and for use in the event of an emergency, although there is no guarantee that our product candidates will meet the criteria set forth by HHS or the FDA for procurement and Emergency use Authorization, respectively.

Some product candidates may be eligible both for consideration for procurement into the SNS and for Emergency Use Authorization, although there is no guarantee that our product candidates will meet the criteria set forth by HHS or the FDA for procurement and Emergency Use Authorization, respectively.

Marketing Exclusivity for Reference Biological Products

As part of the ongoing efforts of governmental authorities to lower health care costs by facilitating generic competition to pharmaceutical products, the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), enacted as part of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (“Health Care Reform Law”), created a new abbreviated regulatory approval pathway in the United States for biological products that are found to be “biosimilar” or “interchangeable” with a biological “reference product” previously licensed under a BLA.

As part of the ongoing efforts of governmental authorities to lower health care costs by facilitating generic competition to pharmaceutical products, the Biologics Price Competition and Innovation Act of 2009 (“BPCIA”), enacted as part of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the “Health Care Reform Law”), created a new abbreviated regulatory approval pathway in the United States for biological products that are found to be “biosimilar” or “interchangeable” with a biological “reference product” previously licensed under a BLA.

This abbreviated approval pathway is intended to permit a biosimilar to come to market more quickly and less expensively by relying to some extent on the data generated by the reference product’s sponsor, and the FDA’s previous review and approval of the reference product.

Under the BPCIA, a biosimilar sponsor’s ability to seek or obtain approval through the abbreviated pathway is limited by periods of exclusivity granted by the FDA to the holder of the reference product’s BLA, and no biosimilar application may be accepted by the FDA for review until 4 years after the date the reference product was first licensed by the FDA, and no biosimilar application, once accepted, may receive final approval until 12 years after the reference product was first licensed by the FDA.

While we would expect to be granted this 12-year period of exclusivity for our product candidates, if approved, notably, this period of reference product market exclusivity applies only to the biosimilar pathway and will not, for example, provide protection against any biological product for a similar indication that achieves FDA approval under a traditional BLA based on the sponsor’s own research data There is also risk that the 12-year period of biological reference product exclusivity could be shortened due to congressional action, or that the FDA will not consider our product candidates, if they are approved, to be reference products for competing products, potentially creating the opportunity for competition sooner than anticipated.

There is also risk that the 12-year period of biological reference product exclusivity could be shortened due to congressional action, or that the FDA will not consider our product candidates, if they are approved, to be reference products for competing products, potentially creating the opportunity for competition sooner than anticipated.

Once approved, biosimilars likely would compete with, and in some circumstances may be deemed under the law to be “interchangeable with,” the previously approved reference product.

The extent to which a biosimilar, once approved, will be substituted for any one of our product candidates, if approved, in a way that is similar to traditional generic substitution for non-biological products is not yet clear, and will depend on a number of marketplace and regulatory factors that are still developing.

Although there is uncertainty regarding the impact of this program, it seems likely that if any of our product candidates are approved by the FDA, there is risk that the approval of a biosimilar competitor to one of our products could have an adverse impact on our business.

Although there is uncertainty regarding the impact of this program, there is risk that the approval of a biosimilar competitor to one of our products, if approved, could have an adverse impact on our business.

In particular, a biosimilar could be significantly less costly to bring to market and priced significantly lower than our product, if approved by the FDA.

FDA Expedited Development and Approval Programs

Certain FDA programs are intended to speed the availability of drugs that treat serious diseases, which could potentially apply to our product candidates, although this cannot be assured, and we do not currently have any products with fast track designation.

The FDA fast track designation programs is designed to facilitate the development and review of new drugs that are intended to treat serious or life-threatening conditions and that demonstrate the potential to address unmet medical needs for the conditions.

designation applies to a combination of the product and the specific indication for which it is being studied.

Thus, it is the development program for a specific drug for a specific indication that receives fast track designation.

The sponsor of a product designated as being in a fast track drug development program may engage in close early communication with the FDA, including through timely meetings and feedback on clinical trials.

Products in fast track drug development programs also may be eligible for FDA priority review or accelerated approval, if relevant criteria are met.

A drug reviewed pursuant to priority review has a six-month review clock instead of a ten-month review clock.

Sponsors of drugs with fast track designation may also be able to submit completed portions of an application before the entire application is completed;

however, the review clock will not officially begin until the entire completed BLA is submitted to and filed by the FDA.

The FDA may notify a sponsor that its program is no longer classified as a fast track development program if the fast track designation is no longer supported by emerging data, the designated drug development program is no longer being pursued, or another product that meets the unmet medical need for the same indication.

A product may be designated as a breakthrough therapy if it is intended, either alone or in combination with one or more other products, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development.

The FDA may take certain actions with respect to breakthrough therapies, including holding meetings with the sponsor throughout the development process;

providing timely advice to the product sponsor regarding development and approval;

involving more senior staff in the review process;

assigning a cross-disciplinary project lead for the review team;

and taking other steps to design the clinical trials in an efficient manner.

Accelerated Approval Pathway

The FDA may grant accelerated approval to a product for a serious or life-threatening condition that provides meaningful therapeutic advantage to patients over existing treatments based upon a determination that the product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit.

The FDA may also grant accelerated approval for such a condition when the product has an effect on an intermediate clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality, or IMM, and that is reasonably likely to predict an effect on IMM or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments.

Products granted accelerated approval must meet the same statutory standards for safety and effectiveness as those granted traditional approval.

For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign, or other measure that is thought to predict clinical benefit but is not itself a measure of clinical benefit.

Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints.

An intermediate clinical endpoint is a measurement of a therapeutic effect that is considered reasonably likely to predict the clinical benefit of a product, such as an effect on IMM.

The FDA has limited experience with accelerated approvals based on intermediate clinical endpoints, but has indicated that such endpoints generally may support accelerated approval where the therapeutic effect measured by the endpoint is not itself a clinical benefit and basis for traditional approval, if there is a basis for concluding that the therapeutic effect is reasonably likely to predict the ultimate clinical benefit of a product.

The accelerated approval pathway is most often used in settings in which the course of a disease is long and an extended period of time is required to measure the intended clinical benefit of a product, even if the effect on the surrogate or intermediate clinical endpoint occurs rapidly.

Thus, accelerated approval has been used extensively in the development and approval of products for treatment of a variety of cancers in which the goal of therapy is generally to improve survival or decrease morbidity and the duration of the typical disease course requires lengthy and sometimes large trials to demonstrate a clinical or survival benefit.

The accelerated approval pathway is usually contingent on a sponsor’s agreement to conduct, in a diligent manner, additional post-approval confirmatory studies to verify and describe the product’s clinical benefit.

As a result, a product candidate approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase 4 or post-approval clinical trials to confirm the effect on the clinical endpoint.

Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing studies, would allow the FDA to withdraw the product from the market on an expedited basis.

All promotional materials for product candidates approved under accelerated regulations are subject to prior review by the FDA.

Pediatric Exclusivity

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Pediatric exclusivity, if granted, adds six months to existing exclusivity periods applicable to biological products — namely, the four-year period during which the FDA will not consider an application for a biosimilar product, and the 12-year period during which the FDA will not approve a biosimilar application.

This six-month exclusivity, which runs from the end of these exclusivity protection periods, may be granted based on the completion of a pediatric trial in response to a written request from

It is possible, but not assured, that certain of our current or future product candidates may be targeted to pediatric populations, such as our influenza vaccine candidate, and so pursuit of this incentive may be relevant.

This six-month exclusivity, which runs from the end of these exclusivity protection periods, may be granted based on the completion of one or more pediatric trials in response to a Written Request from the FDA.

It is possible, but not assured, that certain of our current or future product candidates may be targeted to pediatric populations, such as our influenza vaccine candidate.

Orphan Drug Designation

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In addition, if a product that has an orphan drug designation subsequently receives FDA approval for the indication for which it has such designation, the product may be entitled to orphan drug exclusivity, which means the FDA would not approve any other application to market the same drug for the same indication for a period of seven years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity.

It is possible, but not assured, that certain of our current or future product candidates may be targeted to rare diseases or conditions, such as with respect to our cancer vaccine activities, and so pursuit of this incentive may be relevant to us.

It is possible, but not assured, that certain of our current or future product candidates may be targeted to rare diseases or conditions.

Regulations Affecting Health Care Companies

Pharmaceutical manufacturers with products that are reimbursed by U.S.

federally funded programs such as Medicare and Medicaid are subject to regulation by the Centers for Medicare & Medicaid Services (“CMS”) and enforcement by the HHS Office of Inspector General (“OIG”), and in the event our product candidates are approved, regulation by CMS and enforcement by HHS OIG would be relevant to the Company.

Some of these laws, referred to as “false claims laws,” prohibit the submission or causing the submission of false or fraudulent claims for reimbursement to federal, state and other health care payers and programs.

Other laws, referred to as “anti-kickback laws,” prohibit soliciting, offering, receiving or paying remuneration in order to induce the referral of a patient or ordering, purchasing, leasing or arranging for, or recommending ordering, purchasing or leasing of, items or services that are paid for by federal, state and other health care payers and programs.

The federal Anti-Kickback Law prohibits providers and others from knowingly and willingly, directly or indirectly, soliciting, receiving, offering or paying any remuneration with the intent of generating referrals of individuals or purchases, orders, or recommendations for services or items covered by a federal government health care program.

Many states have enacted similar laws.

federally funded health care programs such as Medicare and Medicaid are subject to so-called fraud and abuse laws including false claims and anti-kickback laws.

The federal Anti-Kickback Law prohibits anyone from, among other things, knowingly and willingly, directly or indirectly, soliciting, receiving, offering, or paying any remuneration with the intent of (or in return for) generating referrals of individuals or purchases, orders, or recommendations for services or items reimbursable by federal health care programs like Medicare and Medicaid.

Courts have interpreted this law very broadly, including by holding that a violation has occurred if one purpose of the remuneration is to generate referrals even if there are other lawful purposes.

There are statutory and regulatory exceptions, or safe harbors, that outline arrangements that are deemed lawful.

However, the fact that an arrangement does not fall within a safe harbor does not necessarily render the conduct illegal under the Anti-Kickback Law.

In sum, even common business arrangements, such as discounted terms and volume incentives for customers in a position to recommend or choose drugs for patients, such as physicians and hospitals, can result in substantial legal penalties, including, among others, exclusion from Medicare and Medicaid programs, and arrangements with referral sources must be structured with care to comply with applicable requirements.

Also, certain business practices, such as payment of consulting fees to health care providers, sponsorship of educational or research grants, charitable donations, interactions with health care providers that prescribe products for uses not approved by the FDA and financial support for continuing medical education programs, must be conducted within narrowly prescribed and controlled limits to avoid the possibility of wrongfully influencing health care providers to prescribe or purchase particular products or as a reward for past prescribing.

Violations of the Anti-Kickback Law may be punished by civil and criminal penalties or exclusion from participation in federal health care programs, including Medicare and Medicaid.

The Federal False Claims Act (“FCA”) is violated by any entity that “presents or causes to be presented” knowingly false, fictitious, or fraudulent claims for payment to the federal government.

In addition, the Health Care Reform Law amended the FCA to create a cause of action against any person who knowingly makes a false statement material to an obligation to pay money to the government or knowingly conceals or improperly decreases an obligation to pay or transmit money or property to the government.

For the purposes of these recent amendments, an “obligation” includes an identified overpayment, which is defined broadly to include “any funds that a person receives or retains under Medicare and Medicaid to which the person, after applicable reconciliation, is not entitled…” The FCA is commonly used to sue those who submit allegedly false Medicare or Medicaid claims, as well as those who induce or assist others to submit a false claim.

Moreover, liability under the Anti-Kickback Law may be established without proving actual knowledge of the law or specific intent to violate.

There are statutory exceptions and regulatory safe harbors that protect certain arrangements from prosecution or administrative sanctions, but the exceptions and safe harbors are drawn narrowly.

The fact that an arrangement does not fall within a safe harbor does not necessarily render the conduct illegal under the Anti-Kickback Law, but the arrangement may be subject to scrutiny based on the facts and circumstances.

Practices that involve remuneration to those who prescribe, purchase, or recommend pharmaceutical products, including certain discounts, or engaging such individuals as consultants, advisors and speakers, may be subject to scrutiny if they do not fit squarely within an exception or safe harbor.

Moreover, there are no safe harbors for many common practices, such as educational and research grants, charitable donations, product support and patient assistance programs.

Violations of the Anti-Kickback Law may be punished by civil and criminal penalties, damages, fines, or exclusion from participation in federal health care programs like Medicare and Medicaid.

Many states have enacted similar laws, some of which apply regardless of payer.

The Federal civil False Claims Act (“FCA”) prohibits any person from, among other things, knowingly presenting or causing to be presented a false or fraudulent claim for payment of government funds, or making, or causing to be made, a false statement material to a false or fraudulent claim, or knowingly concealing or knowingly and improperly avoiding, or decreasing an obligation to pay or transmit money or property to the government.

The FCA is commonly used to sue those who submit allegedly false Medicare or Medicaid claims, as well as those who induce or assist others to submit a false claim.

“False claims” can result not only from non-compliance with the express requirements of applicable governmental reimbursement programs, such as Medicaid or Medicare, but also from non-compliance with other laws, such as the Anti-Kickback Law or laws that require quality care in service delivery.

The fraud and abuse regulations have been subject to varying interpretations, as well as heightened enforcement activity over the past few years, and significant enforcement activity has been the result of “relators,” who serve as whistleblowers by filing complaints in the name of the United States (and if applicable, particular states) under federal and state false claims laws.

Violations of the FCA can result in treble damages, and each false claim

submitted can be subject to a civil penalty.

Most states have adopted similar state false claims laws, and these state laws have their own penalties which may be in addition to federal FCA penalties.

The Health Care Reform Law significantly strengthened the federal FCA and federal Anti-Kickback Law provisions, which could lead to the possibility of increased whistleblower or relator suits, and among other things made clear that a federal Anti-Kickback Law violation can be a basis for federal FCA liability.

The bringing of any FCA action, even if unsuccessful could require us to devote resources to investigate and defend the action, as well as result in reputational harm.

Actions under the FCA may be brought by the government or by whistleblowers referred to as “relators,” who may initiate an action in the name of the government and the individual and may share in any monetary recovery.

Violations of the FCA can result in treble damages, mandatory per claim penalties, and exclusion from participation in federal health care programs.

Most states have adopted similar state false claims laws, some of which are broader than the FCA, and these state laws have their own penalties which may be in addition to FCA penalties.

The Health Care Reform Law significantly strengthened the FCA and federal Anti-Kickback Law provisions, which could lead to the possibility of increased whistleblower or relator suits, and among other things, made clear that a federal Anti-Kickback Law violation can be a basis for federal FCA liability.

The bringing of any FCA or other enforcement investigation or action, even if unsuccessful, could require us to devote resources to investigate and defend the action, as well as result in reputational harm.

Failure to comply with fraud and abuse laws could result in significant civil and criminal penalties and costs, including the loss of licenses and the ability to participate in federal and state health care programs, and could have a material adverse effect on our business.

In addition, many of these laws are vague or indefinite and have not been interpreted by the courts and have been subject to frequent modification and varied interpretation by prosecutorial and regulatory authorities, increasing the risk of noncompliance.

In addition, many of these laws are vague, subject to modification, and are subject to evolving interpretation by prosecutorial and regulatory authorities, increasing the risk of noncompliance.

We cannot predict whether changes in applicable law, or interpretation of laws, or changes in our services or marketing practices in response to changes in applicable law or interpretation of laws, could have a material adverse effect on our business.

In addition to the above, several other laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, structuring and commission(s), certain customer incentive programs and other business arrangements generally.

Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical trials .

For example, the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additional federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters.

Similar to the Anti-Kickback Law, a person or entity can be found guilty of violating HIPAA without actual knowledge of the statute or specific intent to violate it.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, impose, among other things, requirements relating to the privacy, security and transmission of individually identifiable health information on certain covered healthcare providers, health plans, and healthcare clearinghouses, known as covered entities, as well as their respective “business associates,” those independent contractors or agents of covered entities that perform services for covered entities them that involve the creation, use, receipt, maintenance or disclosure of, individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information..

HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions.

In addition, federal consumer protection and unfair competition laws, broadly regulate marketplace activities and activities that potentially harm consumers.

Analogous state and foreign law equivalents may differ in significant ways.

Data privacy and security laws and regulations in foreign jurisdictions such as the General Data Protection Regulation, which became effective in May 2018, are more stringent than laws in the United States.

State laws governing the privacy and security of health information in certain circumstances, such as the California Consumer Privacy Act, which went into effect January 1, 2020, increase privacy and security obligations on entities handling personal data.

For example, the federal Health Insurance Portability and Accountability Act of 1996, and its implementing regulations (collectively, “HIPAA”), created additional federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters.

Similar to the Anti-Kickback Law, a person or entity can be found guilty of violating the HIPAA fraud statute without actual knowledge of the statute or specific intent to violate it.

In the U.S., we may be subject to data privacy and security laws and regulations by both the federal government and the states in which we conduct our business.

The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy and data protection issues which may affect our business.

Numerous federal and state laws and regulations, including state data breach notification laws, state health information and/or genetic privacy laws and federal and state consumer protection laws (e.g., Section 5 of the FTC Act and the California Consumer Privacy Act (“CCPA”)), govern the collection, use, disclosure, and protection of health-related and other personal information.

Many of these laws differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Compliance with these laws is difficult, constantly evolving, and time consuming.

Federal regulators, state attorneys general, and plaintiffs’ attorneys, including class action attorneys, have been and will likely continue to be active in this space.

HIPAA imposes requirements relating to the privacy, security and transmission of individually identifiable health information.

We may obtain health information from third parties, such as research institutions, that are subject to privacy and security requirements under HIPAA.

Although we are not directly subject to HIPAA other than with respect to providing certain employee benefits, we could potentially be subject to criminal penalties if we, our affiliates, or our agents knowingly obtain, use, or disclose individually identifiable health information maintained by a HIPAA-covered entity in a manner that is not authorized or permitted by HIPAA.

In addition, the CCPA became effective on January 1, 2020 and establishes certain requirements for data use and sharing transparency, and provides California residents certain rights concerning the use, disclosure, and retention of their personal data.

The CCPA and its implementing regulations have already been amended multiple times since their enactment.

Similarly, there are a number of legislative proposals in the United States, at both the federal and state level, that could impose new obligations or limitations in areas affecting our business.

These laws and regulations are evolving and subject to interpretation, and may impose limitations on our activities or otherwise adversely affect our business.

The CCPA and evolving legislation may require us, among other things, to update our notices and develop new processes internally and with our partners.

If we, our agents, or our third-party partners fail to comply or are alleged to have failed to comply with these or other applicable data protection and privacy laws and regulations, or if we were to experience a data breach involving personal information, we could be subject to government enforcement actions or private lawsuits.

Any associated claims, inquiries, or investigations or other government actions could lead to unfavorable outcomes that have a material impact on our business including through significant penalties or fines, monetary judgments or settlements including criminal and civil liability for us and our officers and directors, increased compliance costs, delays or impediments in the development of new products, negative publicity, increased operating costs, diversion of management time and attention, or other remedies that harm our business, including orders that we modify or cease existing business practices.

Outside the U.S., the legislative and regulatory landscape for privacy and data security continues to evolve.

There has been increased attention to privacy and data security issues that could potentially affect our business, including the EU General Data Protection Regulation, which entered into effect on May 25, 2018 and imposes penalties up to 4% of annual global turnover.

In addition, laws and regulations enacted in the United States, Europe, Asia, and Latin America increases potential enforcement and litigation activity.

Health Care Reform Law

Our financial prospects could be affected by changes in health care spending and policy in the United States and abroad.

We operate in a highly regulated industry and new laws or judicial decisions, or new interpretations of existing laws or decisions, related to health care availability, the method of delivery or payment for health care products and services could negatively impact our business, operations and financial condition.

For example, in the United States there is significant interest in promoting health care reform, as evidenced by the enactment in the United States of the Patient Protection and Affordable Care Act and the companion Health Care Reform Law.

The Health Care Reform Law increased federal oversight of private health insurance plans and included a number of provisions designed to reduce Medicare expenditures and the cost of health care generally, to reduce fraud and abuse, and to provide access to increased health coverage.

The Health Care Reform Law has also imposed substantial changes to the U.S.

system for paying for health care, including programs to extend medical benefits to millions of individuals who have lacked insurance coverage.

Generally, implementation of the Health Care Reform Law has thus far included significant cost-saving, revenue and payment reduction measures with respect to, for example, several government health care programs that might cover our products in the United States, should they be commercialized, including Medicaid and Medicare.

Additional downward pricing pressure associated with the Health Care Reform Law includes that the Health Care Reform Law established and provided significant funding for a Patient-Centered Outcomes Research Institute to coordinate and fund Comparative Effectiveness Research, as those terms are defined in the Health Care Reform Law.

We operate in a highly regulated industry and new laws, regulations, or judicial decisions, or new interpretations of existing laws, regulations, or decisions, related to, among other things, health care availability, or the method of delivery of or payment for health care products and services could negatively impact our business, operations and financial condition.

For example, in the United States there is significant interest in promoting health care reform, as evidenced by the enactment in the United States of the Health Care Reform Law.

The Health Care Reform Law substantially changed the way health care is financed by both governmental and commercial payers and significantly impacts the pharmaceutical industry.

The Health Care Reform Law contains provisions that may reduce the profitability of drug products, including, for example, by increasing the minimum rebates owed by manufacturers under the Medicaid Drug Rebate Program, extending the rebate program to individuals enrolled in Medicaid managed care plans, addressing a new methodology by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or injected, and imposing certain annual fees based on pharmaceutical companies’ share of sales to federal health care programs .

The Health Care Reform Law established and provided significant funding for a new Patient-Centered Outcomes Research Institute to coordinate and fund comparative effectiveness research.

While the stated intent of comparative effectiveness research is to develop information to guide providers to the most efficacious therapies, outcomes of comparative effectiveness research could influence the reimbursement or coverage for therapies that are determined to be less cost effective than others.

Should any of our products be approved for sale, but then determined to be less cost effective than alternative therapies, the levels of reimbursement for these products, or the willingness to reimburse at all, could be impacted, which could materially impact our financial results.

Since its enactment, there have been numerous judicial, administrative, executive, and legislative challenges to certain aspects of the ACA, and we expect there will be additional challenges and amendments to the ACA in the future.

Various portions of the ACA are currently undergoing legal and constitutional challenges in the Fifth Circuit Court and the United States Supreme Court;

the Trump Administration has issued various Executive Orders which eliminated cost sharing subsidies and various provisions that would impose a fiscal burden on states or a cost, fee, tax, penalty or regulatory burden on individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices;

and Congress has introduced several pieces of legislation aimed at significantly revising or repealing the ACA.

It is unclear whether the ACA will be overturned, repealed, replaced, or further amended.

We cannot predict what affect further changes to the ACA would have on our business.

Another provision of the Health Care Reform Law, generally referred to as the Physician Payment Sunshine Act or Open Payments Program, has imposed new reporting and disclosure requirements for pharmaceutical and medical device manufacturers and distributors with certain FDA-approved products, such as approved vaccines, with regard to payments or other transfers of value made to certain U.S.

health care practitioners, such as physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and academic medical centers, and with regard to certain ownership interests held by physicians and their immediate family members in reporting entities.

Effective January 1, 2022, these reporting obligations will extend to include transfers of value made to certain non-physician providers such as physician assistants and nurse practitioners.

The CMS publishes information from these reports on a publicly available website, including amounts transferred and the physician and teaching hospital identities.

Under the Physician Payment Sunshine Act, should any of our products be approved for sale, we may be required to collect and report detailed information regarding certain financial relationships we have with physicians and teaching hospitals.

Our compliance with these rules may also impose additional costs.

It is difficult to predict how the new requirements, which also preempt similar state law reporting requirements, may impact our relationships with physicians and teaching hospitals.

It is likely that federal and state legislatures within the United States and foreign governments will continue to consider changes to existing health care legislation.

On May 30, 2018, the Right to Try Act, was signed into law.

The law, among other things, provides a federal framework for certain patients to access certain investigational new drug products that have completed a Phase 1 clinical trial and that are undergoing investigation for FDA approval.

Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without obtaining FDA permission under the FDA expanded access program.

There is no obligation for a pharmaceutical manufacturer to make its drug products available to eligible patients as a result of the Right to Try Act.

Further, in May 2019, CMS issued a final rule to allow Medicare Advantage Plans the option of using step therapy, a type of prior authorization, for Part B drugs beginning January 1, 2020.

This final rule codified CMS’s policy change that was effective January 1, 2019.

Certain provisions of the Health Care Reform Law have been subject to judicial challenges, as well as efforts to repeal, replace or otherwise modify them or to alter their interpretation or implementation.

For example, the Tax Cuts and Jobs Act enacted on December 22, 2017, eliminated the tax-based payment for individuals who fail to maintain minimum essential coverage under section 5000A of the Internal Revenue Code of 1986, as amended, commonly referred to as the “individual mandate,” effective January 1, 2019.

Further, the Bipartisan Budget Act of 2018 among other things, amended the Medicare statute, effective January 1, 2019, to reduce the coverage gap in most Medicare prescription drug plans, commonly known as the “donut hole,” by raising the manufacturer discount under the Medicare Part D coverage gap discount program to 70%.

Additional legislative changes, regulatory changes and judicial challenges related to the Health Care Reform Law remain possible.

It is unclear how the Health Care Reform Law and its implementation, as well as efforts to repeal, replace or otherwise modify, or invalidate, the Health Care Reform Law, or portions thereof, will affect our business.

Another provision of the Health Care Reform Law, generally referred to as the Physician Payment Sunshine Act or Open Payments Program, requires manufacturers of drugs, devices, biologics, and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS information related to direct or indirect payments and other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held in the company by physicians and their immediate family members.

Effective January 1, 2022, these reporting obligations will extend to include transfers of value made (starting in 2021) to certain non-physician providers such as physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives.

CMS publishes information from these reports on a publicly available website.

Our compliance with these rules may also impose additional costs and may impact our relationships with physicians, teaching hospitals, and the other non-physician health care providers.

In addition, other legislative changes have been proposed and adopted since the Health Care Reform Law was enacted.

For example, the Budget Control Act of 2011, as amended by the American Taxpayer Relief Act of 2012, among other things led to aggregate reductions in Medicare payments for all items and services, including prescription drugs and biologics, to service providers of, on average, 2% per fiscal year beginning April 1, 2013, and, due to subsequent legislation, will continue until 2030 (with the exception of a temporary suspension from May 1, 2020, through March 31, 2021) unless Congress takes additional action.

Additional legislative changes, regulatory changes or guidance could be adopted, which may impact the marketing approvals and reimbursement for our product candidates.

Further, there has been increasing legislative, regulatory and enforcement interest in the United States with respect to drug pricing practices.

There have been several Congressional inquiries and proposed and enacted federal and state legislation and regulatory initiatives designed to, among other things, bring more transparency to product pricing, evaluate the relationship between pricing and manufacturer patient programs, and reform government healthcare program reimbursement methodologies for drug products.

For example, in May 2019, CMS issued a final rule to allow Medicare Advantage Plans the option of using step therapy, a type of prior authorization, for Part B drugs beginning January 1, 2020.

And, on November 20, 2020, CMS issued an interim final rule to implement a “Most Favored Nation” demonstration project to test Medicare Part B reimbursement of certain separately payable drugs and biologicals based on international reference prices.

The rule has become subject to judicial challenges, and federal courts have enjoined the rule at this time.

If the rule survives judicial scrutiny, the Most Favored Nation model will subject certain drugs or biologicals identified by CMS as having the highest annual Medicare Part B spending to an alternative payment methodology based on international reference prices, with the list of products to be updated annually to add more products and products not to be removed absent limited circumstances.

There has also been legislation that would establish an international reference price-based Medicare Part B drug and biological payment methodology.

It is possible that the Health Care Reform Law, as currently enacted or may be amended or otherwise modified in the future, as well as other health care reform measures that may be adopted in the future, may result in additional reductions in Medicare payment and other health care financing, more rigorous coverage criteria, and new payment methodologies and in additional downward pressure on coverage and payment and the price that we receive for any approved product.

Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors.

We cannot predict the reform initiatives that may be adopted in the future or whether initiatives that have been adopted will be repealed or modified.

The continuing efforts of the government, insurance companies, managed care organizations and other payers of health care services to contain or reduce costs of health care may adversely affect:

These continuing health care reform initiatives may adversely affect :

the demand for any product candidates for which we may obtain regulatory approval;

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the level of taxes that we are required to pay.

Coverage and Reimbursement

In the United States and markets in other countries, patients generally rely on third-party payors to reimburse all or part of the costs associated with their treatment.

Adequate coverage and reimbursement from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors is critical to new product acceptance.

Our ability to successfully commercialize our product candidates will depend in part on the extent to which coverage and adequate reimbursement for these products and related treatments will be available from government health administration authorities, private health insurers and other organizations.

Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels.

The availability of coverage and extent of reimbursement by governmental and private payors is essential for most patients to be able to afford treatments such as gene therapy products.

Sales of these or other product candidates that we may identify will depend substantially, both domestically and abroad, on the extent to which the costs of our product candidates will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payors.

If coverage and adequate reimbursement is not available, or is available only to limited levels, we may not be able to successfully commercialize our product candidates.

Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient return on our investment.

There is also significant uncertainty related to the insurance coverage and reimbursement of newly approved products and coverage may be more limited than the purposes for which the medicine is approved by the FDA or comparable foreign regulatory authorities.

In the United States, the principal decisions about reimbursement for new medicines are typically made by CMS.

CMS decides whether and to what extent a new medicine will be covered and reimbursed under Medicare and private payors tend to follow CMS to a substantial degree.

Environmental Regulations

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There have been a number of federal and state legislative changes made over the last few years regarding the pricing of pharmaceutical and biological products, government control and other changes to the health care system of the United States.

Concerns about drug pricing have been expressed by members of Congress and President Trump.

Concerns about drug pricing have been expressed by members of Congress and prior presidential administrations.

It is uncertain how such legislative changes will be adopted or what actions federal, state or private payers for medical goods and services may take in response to such legislation.

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CHMP has issued a guideline on quality requirements during the clinical trial period for investigational medicinal products containing biological or biotechnology-derived substances.

The guideline describes quality documentation that should be submitted to the competent authority as part of the sponsor’s investigational medicinal product dossier (“IMPD”).

The guideline describes quality documentation that should be submitted to the competent authority as part of the sponsor’s investigational

medicinal product dossier (“IMPD”).

The IMPD should include, among other things, (i) an adequate description of the process and process controls, including a flow chart of all successive steps and details of in-process testing and (ii) a description and justification of “any reprocessing during manufacture of the drug substance.” The guideline also recognizes that sponsors will improve and optimize their manufacturing processes during clinical development and describes the steps sponsors should take following these changes.

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European Marketing Authorization

In the European Economic Area (“EEA”), which includes the 27-member states of the European Union plus Norway, Iceland and Liechtenstein, medicinal products can only be placed on the market after approval of a Marketing Authorization Application, or MA.

The MA is based on the results of pharmaceutical tests, preclinical tests and clinical trials conducted on the medicinal product in question.

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In the European Union, new medicinal products qualify for eight years of data exclusivity upon marketing authorization and an additional two years of market exclusivity.

This data exclusivity prevents regulatory authorities in the European Union from referencing the innovator’s data to assess a generic or biosimilar application for eight years, after which generic marketing authorization can be submitted, and the innovator’s data may be referenced, but not approved for two years.

This data exclusivity prevents regulatory authorities in the European Union from referencing the innovator’s data to assess a generic or biosimilar application for eight years, after which generic or biosimilar marketing authorization can be submitted, and the innovator’s data may be referenced, but not approved for two years.

The overall ten-year period may be extended to a maximum of 11 years if, during the period of data exclusivity, the marketing authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies.

Orphan Designation in the European Union

The EMA is also able to grant orphan designation in respect of medicinal products.

The European Commission is also able to grant orphan designation in respect of medicinal products.

To qualify the medicinal product must be intended for the diagnosis, prevention or treatment of (i) a life-threatening or chronically debilitating condition affecting not more than 5 in 10,000 persons in the European Union or (ii) a life-threatening, seriously debilitating or serious and chronic condition in the European Union where without incentives it is unlikely that the marketing of the medicinal product in the European Union would generate sufficient return to justify the necessary investment.

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However, sponsors of orphan medicinal products are eligible to benefit from a number of incentives offered, including certain assistance with development of the medicinal product, reduced fees for MA applications and protection from market competition once the medicinal product is authorized, as below.

Where an MA in respect of an orphan medicinal product is granted, the EMA and the competent authorities of the member states shall not, for a period of ten years, accept another application for an MA, or grant an MA or accept an application to extend an existing MA, for the same therapeutic indication, in respect of a similar medicinal product, unless:

Where an MA in respect of an orphan medicinal product is granted, the European Commission, EMA and the competent authorities of the member states shall not, for a period of ten years, accept another application for an MA, or grant an MA or accept an application to extend an existing MA, for the same therapeutic indication, in respect of a similar medicinal product, unless:

(i) the holder of the MA for the original orphan medicinal product has given its consent to the second applicant;

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or (iii) the second applicant can establish the second medicinal is safer, more effective or otherwise clinically superior.

Other government regulation in the European Union

The European Union and the European Union member states have extensive laws and regulations relating to a variety of other topics that would be of relevance for us if we are active in the European Union, including but not limited to laws and regulations regarding data privacy, drug pricing and reimbursement, advertising and interactions with healthcare professionals.

Other Jurisdictions

In addition to regulations in the United States and the European Union, we may be subject to a variety of regulations in other jurisdictions governing, among other things, clinical trials and any commercial sales and distribution of our product.

As the United Kingdom is no longer a member state of the European Union, this may also apply to the United Kingdom.

Whether or not we obtain FDA approval for a product, we must obtain approval from comparable regulatory authorities in foreign countries before we can commence clinical trials in such countries and the approval of the regulators of foreign countries before we may market products in such countries.

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Acceptance of Foreign Clinical Trials in the United States and Europe

The FDA has adopted regulations governing its acceptance of foreign clinical data not conducted under an IND to support IND applications or marketing authorizations, such as BLAs.

The conditions include requirements regarding the ability of the FDA to conduct onsite inspections to validate such data, and compliance with GCPs.

The FDA has issued regulations governing its acceptance of foreign clinical data not conducted under an IND to support IND applications or marketing authorizations, such as BLAs.

FDA may accept a well-designed, well-conducted, non-IND foreign study as support for an IND or marketing application if the study was conducted in accordance with GCP and if FDA is able to validate the data from the study through an onsite inspection, if necessary.

Where a marketing application is based solely on foreign data, additional requirements apply, including a demonstration that the foreign data are applicable to the U.S.

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For our product candidates, we intend to identify and qualify additional contract manufacturers to provide commercial scale manufacturing prior to submission of a BLA to the FDA.

Employees and Human Capital Management

As of December 31, 2020, we had 43 full-time employees, 11 of whom hold M.D.

degrees and 5 of whom hold other advanced degrees.

In light of the COVID-19 pandemic, our headcount has grown by 72% in the past year in order to support our pipeline of research programs and product candidates.

Of our total workforce, 27 are engaged primarily in research and development activities and 16 are engaged primarily in executive, finance and accounting, and administrative functions.

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We consider our relations with our employees to be good.

Financial Information

Our consolidated contract revenues were approximately $5.8 million and $10.3 million during the years ended December 31, 2019 and 2018, respectively.

For the year ended December 31, 2019, we recognized $5.3 million and $0.2 million as revenue from the BARDA and NIAID contracts, respectively.

For the year ended December 31, 2018, we recognized $8.3 million and $2.0 million as revenue from the BARDA and NIAID contracts, respectively.

Financial Information by Geographic Area

For the years ended December 31, 2019 and 2018, all revenues were generated in the United States, which is our country of domicile.

As of ended December 31, 2019 and 2018, long-lived assets with a net book value of $2.1 million and $2.8 million, respectively, were located in the United States.

As of both years ended December 31, 2019 and 2018, long-lived assets with a net book value of $12.4 million were located outside of the United States.

Research and Development

During the years ended December 31, 2019 and 2018, we spent approximately $17.8 million and $18.5 million on research and development activities, respectively.

Corporate Information

Compensation and Benefits Program

Our compensation program is designed to attract and reward talented individuals who possess the skills necessary to support our business objectives, assist in the achievement of our strategic goals and create long-term value for our stockholders.

We provide employees with what we consider to be a very competitive mix of compensation and insurance benefits for all our employees, as well as participation in our equity programs.

Diversity and Inclusion

We believe that an equitable and inclusive environment with diverse teams produces more creative solutions, results in better, more innovative products and services and is crucial to our efforts to attract and retain key talent.

Hybrid Culture and COVID-19

Like other companies, we have learned to adapt during the COVID-19 pandemic.

We have prioritized employee safety and transparency during the pandemic and continue to do so, ensuring all employees are set up to work remotely and providing clarity on office closures and evolving guidelines, where possible.

In the second quarter of 2020, we made the decision to move to a hybrid workplace model, which means that certain of our employees will have the option to be 100% remote, work full-time in our office, or have the flexibility to work between office and remotely until the pandemic is resolved.

This move provides our employees with continued flexibility, through the resolution of the pandemic, to work in person, remotely, or in a hybrid model.

This will enable us to grow better as we develop our programs.

Available Information

Our stock is traded on the Nasdaq Global Market (“NASDAQ”) under the symbol “ALT”.

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The information on, or that can be accessed through, our website is not part of this Annual Report and is not incorporated by reference herein.

Available Information

We make available our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, and amendments to these reports, free of charge through our website (www.altimmune.com) as soon as reasonably practicable after we electronically file such material with, or furnish such material to, the SEC.

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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 1. Business