What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-17 compared with 2020-11-09 · 165 added, 199 removed, 247 unchanged (60% of the section changed)

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

September 30, 2020

March 31, 2021

December 31, 2020

23 unchanged sentences

200,000,000 shares authorized;

33,073,035 and 15,312,381 shares issued;

33,073,035 and 15,312,167

shares outstanding at September 30, 2020 and December 31, 2019, respectively

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

Additional paid-in capital

7 unchanged sentences

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

Operating expenses:

1 unchanged sentence

General and administrative

Impairment charges

Total operating expenses

1 unchanged sentence

Other income (expense):

Changes in fair value of warrant liability

Interest expense

Interest income

Other income (expense), net

Total other income, net

Other (expense) income, net

Total other (expense) income, net

Net loss before income tax benefit

Income tax benefit

Other comprehensive loss – unrealized (loss) gain on investments

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

Comprehensive loss

Deemed dividends

Net loss attributed to common stockholders

Net loss per share attributed to common stockholders, basic and diluted

Net loss per share, basic and diluted

Weighted-average common shares outstanding, basic and diluted

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

ALTI MMUNE, INC.

ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

5 unchanged sentences

Issuance of common stock from Employee Stock Purchase Plan

Issuance of common stock upon exercise of warrants

Unrealized loss on short-term investments

Balance at March 31, 2020

Stock-based compensation

Issuance of common stock from exercise of stock options

Vesting of restricted stock awards including withholding, net

Issuance of common stock in at the market offering, net

Issuance of common stock upon exercise of warrants

Unrealized gain on short-term investments

Balance at June 30, 2020

Stock-based compensation

Issuance of common stock from exercise of stock options

Vesting of restricted stock awards including withholding, net

Issuance of common stock from Employee Stock Purchase Plan

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

Retirement of common stock in exchange for common stock warrant

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

Issuance of common stock in at the market offering, net

Issuance of common stock upon exercise of warrants

Unrealized loss on short-term investments

Balance at September 30, 2020

ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

Issuance of common stock upon cashless exercise of warrants

Unrealized income on short-term investments

Balance at March 31, 2021

Comprehensive

3 unchanged sentences

Vesting of restricted stock awards including withholding, net

Issuance of common stock in registered direct offering, net

Issuance of common stock from Employee Stock Purchase Plan

Issuance of common stock upon exercise of warrants

Unrealized loss on short-term investments

Balance at March 31, 2020

Stock-based compensation

Vesting of restricted stock awards including withholding, net

Balance at June 30, 2019

Stock-based compensation

Vesting of restricted stock awards including withholding, net

Issuance of common stock for acquired in-process research and development

Unrealized gain on short-term investments

Balance at September 30, 2019

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

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

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

Non-cash consideration for acquired in-process research and development

Change in fair value of contingent consideration liability

Impairment charge

Stock-based compensation expense

Unrealized gains on foreign currency exchange

Changes in fair value of warrant liability

Depreciation and amortization

Unrealized losses on foreign currency exchange

Changes in operating assets and liabilities:

4 unchanged sentences

Tax refund receivable

Deferred taxes

Net cash used in operating activities

2 unchanged sentences

Purchases of short-term investments

Purchase of property and equipment

Purchases of property and equipment, net

Cash paid for internally developed patents

Net cash used in investing activities

Net cash provided by investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Cash paid in conjunction with warrant exchange

Payments of deferred offering costs

1 unchanged sentence

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

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

Proceeds from issuance of common stock in registered direct offering, net

Proceeds from issuance of notes payable

Payments of notes payable

Proceeds from issuance of common stock from Employee Stock Purchase Plan

Proceeds from exercises of stock options

Net cash provided by financing activities

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

Net increase in cash and cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

Cash, cash equivalents and restricted cash at end of period

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for interest

SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES:

Common stock issued for acquired in-process research and development

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

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

3 unchanged sentences

Nature of Business

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

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

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

8 unchanged sentences

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

GAAP”) for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2019 included in the annual report on Form 10-K which was filed with the SEC on March 27, 2020.

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

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

The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year 2021 or any future years or periods.

The unaudited consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities in the ordinary course of business.

The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities in the ordinary course of business.

The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and liabilities that might be necessary should we be unable to continue as a going concern.

Summary of Significant Accounting Policies

During the nine months ended September 30, 2020, there have been no significant changes to the Company’s summary of significant accounting policies contained in the Company’s Annual report on Form 10-K for the year ended December 31, 2019 as filed with the SEC, except for the recently adopted accounting standard for investments.

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

Use of Estimates

The preparation of financial statements in conformity with U.S.

The preparation of these financial statements in conformity with U.S.

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

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

The Company considered the potential impact of the COVID-19 pandemic on the Company’s estimates and assumptions and determined that there was not a material impact to the Company’s consolidated financial statements as of and for the three and nine months ended September 30, 2020.

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

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

Recently Issued Accounting Pronouncements - Adopted

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU No.

2018-13 was issued to modify and enhance the disclosure requirements for fair value measurements and eliminates certain disclosure requirements, such as the amount of, and reasons for, transfers between Level 1 and Level 2 of the fair value hierarchy.

This ASU adds new disclosure requirements for Level 3 measurements and is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years.

The Company adopted this guidance effective January 1, 2020 which resulted in expanded disclosures in Note 3 regarding the Company’s recurring Level 3 fair value measurements.

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

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

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

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

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

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

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

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

Fair Value Measurements

The Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2020 consisted of the following:

Fair Value Measurement at September 30, 2020

Recurring fair value measurements

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

Fair Value Measurement at March 31, 2021

Cash equivalents - money market funds

1 unchanged sentence

Contingent consideration liability (see Note 8)

Warrant liability

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

Fair Value Measurement at December 31, 2020

Recurring fair value measurements

Cash equivalents - money market funds

2 unchanged sentences

Warrant liability

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

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

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

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

Short-term investments had quoted prices at September 30, 2020 as shown below:

September 30, 2020

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

March 31, 2021

Amortized Cost

1 unchanged sentence

United States treasury securities

Financial and corporate debt securities

Commercial paper and corporate debt securities

Asset backed securities

Certificate of deposit

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

The following table is a reconciliation of the beginning and ending balance of contingent consideration liability:

Balance at December 31, 2019

Change in fair value

Balance at September 30, 2020

The assumptions used to estimate the fair value of contingent payments that are classified as a liability at September 30, 2020 include the following significant unobservable inputs:

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

December 31, 2020

Amortized Cost

Unrealized Gain (Loss)

United States treasury securities

Commercial paper and corporate debt securities

Asset backed securities

Certificate of deposit

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

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

Unobservable input

7 unchanged sentences

Projected year of payment

The Company’s warrant liability is valued using the Monte Carlo simulation valuation model with Level 3 inputs.

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

There were no transfers into and out of any of the levels of the fair value hierarchy as of September 30, 2020 and December 31, 2019.

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

Separate disclosure is required for assets and liabilities measured at fair value on a recurring basis from those measured at fair value on a non-recurring basis.

Assets re corded at fair value on a non - recurring basis, such as property and equipment and intangible assets are recognized at fair value when they are impaired.

As of September 30, 2020, the Company had no significant assets or liabilities that were measured at fa ir value on a non - recurring basis.

Assets recorded at fair value on a non-recurring basis, such as property and equipment and intangible assets are recognized at fair value when they are impaired.

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

Property and Equipment, Net

March 31, 2021

December 31, 2020

Furniture, fixtures and equipment

Laboratory equipment

Computers and telecommunications

Leasehold improvements

Construction-in-progress

Property and equipment, at cost

accumulated depreciation and amortization

Property and equipment, net

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

(“Lonza”) described in Note 16.

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

Intangible Assets

The Company’s intangible assets consisted of the following:

September 30, 2020

March 31, 2021

Internally developed patents

5 unchanged sentences

Total intangible assets subject to amortization

Amortization expense of intangible assets was $10,406 and $28,084 for the three months ended September 30, 2020 and 2019, and $36,282 and $135,664 for the nine months ended September 30, 2020 and 2019, respectively.

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

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

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

As of September 30, 2020, future estimated amortization expense was as follows:

Years ending December 31,

The remainder of 2020

2025 and thereafter

Operating Leases

1 unchanged sentence

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

Rent expense during the three and nine months ended September 30, 2020 under all of the Company’s operating leases was $107,709 and $281,603, respectively.

Rent expense during the three and nine months ended September 30, 2019 was $84,745 and $258,824, respectively.

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

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

2 unchanged sentences

The office space leases provide for increases in future minimum annual rental payments as defined in the lease agreements.

The Company has determined the lease renewal option is not reasonably certain.

The cash paid for operating lease liabilities for the three and nine months ended September 30, 2020 was $64,244 and $190,317, respectively.

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

September 30, 2020

The office space lease also includes an option to renew the lease as of the end of the term.

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

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

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

March 31, 2021

December 31, 2020

Operating lease obligations (see Note 7 and 9)

Operating lease right-of-use assets

Weighted-average remaining lease term

Weighted-average remaining lease term (years)

Weighted-average discount rate

Maturities of lease liabilities is as follows:

Year ending December 31,

The remainder of 2020

2025 and thereafter

Total lease payments

Less imputed interest

Accrued Expenses

Accrued expenses and other current liabilities consist of the following:

September 30,

March 31, 2021

December 31, 2020

Accrued professional services

5 unchanged sentences

Total accrued expenses

Notes Payable

Paycheck Protection Program

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

Small Business Administration (the "SBA").

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

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

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

The Company did not provide any collateral or guarantees for the PPP Loan, nor did the Company pay any facility charge to obtain the PPP Loan.

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

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

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

On July 21, 2020, the Company voluntarily extinguished the Promissory Note by paying the outstanding principal and accrued interest in cash.

As of September 30, 2020, no amounts were outstanding.

Contingent Consideration

The Company entered into a definitive agreement to acquire all of the equity interests of Spitfire Pharma, Inc.

(“Spitfire”) on July 8, 2019.

The Company entered into an Agreement and Plan of Merger and Reorganization, dated July 8, 2019, by and among the Company, Springfield Merger Sub, Inc., Springfield Merger Sub, LLC, Spitfire Pharma, Inc.

and David Collier, as the Stockholder Representative (the “Spitfire Merger Agreement”) to acquire all of the equity interests of Spitfire Pharma, Inc.

(“Spitfire”).

Spitfire was a privately held, preclinical pharmaceutical company developing a novel dual GLP-1/glucagon receptor agonist for the treatment of non-alcoholic steatohepatitis.

1 unchanged sentence

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

The Merger Agreement also includes future contingent payments up to $88.0 million in cash and shares of the Company’s common stock as follows (each, a “Milestone Event”):

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

The Company expensed the acquired intellectual property as of the acquisition date as in-process research and development with no alternative future uses.

The Spitfire Merger Agreement also includes future contingent payments up to $88.0 million in cash and shares of the Company’s common stock as follows (each, a “Milestone Event”):

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

4 unchanged sentences

The value of any shares issued in consideration for the Phase 2 Milestone Consideration Amount shall be determined based the lower of (A) on the average of the closing trading prices of our Common Stock as reported on the Nasdaq Global Market for the twenty (20) consecutive trading days immediately preceding the date of the occurrence of the Phase 2 Milestone Event or (B) $3.54.

On November 3, 2020, the Company received acknowledgement from the Australian Government Department of Health on the Company’s submitted clinical trial notification (“CTN”) which triggers the IND Milestone payment of 1,694,916 shares of the Company’s Common Stock to the previous owners.

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

The shares are subject to a lockup whereby 50% of the shares are released from restriction after 3 months, and the remainder are released from restriction after 6 months.

The Company expensed the acquired intellectual property as of the acquisition date as in-process research and development with no alternative future uses.

The Company recorded an in-process research and development expense for the up-front consideration during the third quarter of 2019.

Transaction costs of $0.1 million and $0.7 million were recorded within research and development expense on the Company’s consolidated statements of operations and comprehensive loss during the three and nine months ended September 30, 2019, respectively.

The future contingent payments related to the Regulatory Milestones are stock-based payments accounted for under FASB Accounting Standards Codification Topic 480, Distinguishing Liabilities From Equity (“ASC 480”).

Such stock-based payments are subject to a lock-up whereby 50% of the shares are released at 3 months and 50% are released at 6 months.

As of the acquisition date, the Company estimated future contingent consideration of $2.8 million based upon a Monte Carlo simulation that was risk adjusted based on the probability of achieving the milestones and a discount for lack of marketability, which was expensed to in-process research and development expenses during the third quarter of 2019.

The Company remeasured the fair value of the contingent consideration as of September 30, 2020, and increased the liability from June 30, 2020 to $25.1 million primarily due to an increase in the share price during the nine months ended September 30, 2020 and an increase in the probability of milestone achievement.

The change in the liability of $8.7 million and $22.3 million was expensed to research and development expense during the three and nine months ended September 30, 2020, respectively.

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

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

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

The Company remeasures the fair value of the contingent consideration at each reporting period.

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

Below is a summary of the contingent consideration activity:

Three Months Ended March 31,

Beginning balance

Change in fair value

Ending balance

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

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

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

Other Long-Term Liabilities

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

September 30,

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

9 unchanged sentences

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

During the nine months ended September 30, 2020, no Pre-Funded Warrants were exercised.

At-the-Market Offering

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

At-the-Market Offerings

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

Riley Securities, Inc., serving as sales agents (the “Sales Agents”) with respect to an at-the-market offering program under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock, par value $0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $125.0 million (the “Shares”) through the Sale Agents (the “2021 Offering”).

Any Shares offered and sold in the 2021 Offering will be issued pursuant to the Company’s Registration Statement on Form S-3 filed with the Securities and Exchange Commission (the “SEC”) on December 31, 2020, which was declared effective on January 11, 2021, the prospectus supplement relating to the 2021 Offering filed with the SEC on February 25, 2021 and any applicable additional prospectus supplements related to the 2021 Offering that form a part of the Registration Statement.

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

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

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

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

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

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

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

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

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

As of September 30, 2020, the Company has sold 3,213,009 shares of Common Stock under the Agreement resulting in $25.6 million in net proceeds, with $23.4 million remaining available to be sold under the amended Agreement.

As of September 30, 2020, the Company recorded approximately $0.3 million of offering costs which offset the proceeds received from the shares sold through September 30, 2020 and recognized approximately $0.2 million of deferred offering costs which will offset future proceeds received under the Agreement.

A summary of warrant activity during the nine months ended September 30, 2020 is as follows:

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

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

Exchange Agreement

On February 25, 2021, the Company entered into an exchange agreement (the “Exchange Agreement”) with an Investor and its affiliates (the “Exchanging Stockholders”), pursuant to which the Company exchanged an aggregate of 1,000,000 shares of the Company’s common stock, par value $0.0001 per share, owned by the Exchanging Stockholders for pre-funded warrants (the “Exchange Warrants”) to purchase an aggregate of 1,000,000 shares of common stock (subject to adjustment in the event of any stock dividends and splits, reverse stock split, recapitalization, reorganization or similar transaction, as described in the Exchange Warrants), with an exercise price of $0.0001 per share.

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

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

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

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

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

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

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

Warrants outstanding, December 31, 2020

Warrants outstanding, September 30, 2020

During the nine months ended September 30, 2020, the Company received net proceeds of $41.0 million from warrant exercises.

For warrants classified as a liability, the following is a summary of the periodic changes in their fair value during the nine months ended September 30, 2020:

Balance, December 31, 2019

Changes in fair value

Balance, September 30, 2020

Exchanges (see Note 10)

Warrants outstanding, March 31, 2021

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

Stock-Based Compensation

1 unchanged sentence

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

At September 30, 2020, there was $3.1 million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 2.55 years.

During the nine months ended September 30, 2020, the Company granted 698,000 stock options with a weighted average exercise price of $4.64 and per share weighted average grant date fair value of 3.69.

Information related to stock options outstanding at September 30, 2020 is as follows:

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

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

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

Restricted Stock

At September 30, 2020, the Company had unvested restricted stock of 174,908 shares with total unrecognized compensation expense of $0.6 million, which the Company expects to recognize over a weighted average period of approximately 2.17 years.

During the nine months ended September 30, 2020, the Company released 60,758 shares of common stock from restriction as a result of the vesting of restricted stock.

During the third quarter of 2020, the Company granted 15,000 shares of restricted stock units which vest over four years.

At September 30, 2020, the Company had unvested restricted stock units of 15,000 shares with total unrecognized compensation expense of $0.2 million, which the Company expects to recognize over a weighted average period of approximately 3.99 years.

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

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

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

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

2019 Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan (“ESPP”), employees purchased 53,852 shares for $0.1 million during the three months ended September 30, 2020.

During the three and nine months ended September 30, 2020, the Company recognized compensation expense of $87,092 and $122,177, respectively.

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

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

Stock-based Compensation Expense

Stock-based compensation expense is classified in the unaudited consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2020 and 2019 as follows:

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

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

Research and development

5 unchanged sentences

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

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

In response to global pandemic associated with COVID-19, President Donald Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) on March 27, 2020.

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

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

The contract, as amended, has a total value of up to $133.7 million and is used to fund clinical development of NasoShield.

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

The contract consists of an initial base performance period providing approximately $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.

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

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

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

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

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

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

The CARES Act enables the Company to file a refund claim to reflect a refund of its 2016 tax liability by carrying back its 2018, 2019 and 2020 losses to fully offset this liability.

The refund claim attributable to the 2018 and 2019 tax years has been recorded as a discrete item in the income tax benefit for the nine months ended September 30, 2020 of $3.9 million related to the U.S.

Federal and Maryland state benefit and represents a partial refund of the Company’s 2016 tax liability.

In addition, the Company is currently estimating it will be able to carry back a portion of its current and forecasted 2020 net operating losses as of the end of the year and has included an estimate in its annual effective tax rate calculation as of September 30, 2020, which resulted in an additional income tax benefit of $0.5 million and $1.4 million recorded during the three and nine months ended September 30, 2020, respectively.

Accordingly, the Company has recognized a total tax benefit of $5.3 million for the nine months ended September 30, 2020.

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

Net Loss Per Share

5 unchanged sentences

Potential common shares issuable upon conversion, vesting or exercise of unvested restricted stock, common stock warrants, and stock options that are excluded from the computation of diluted weighted-average shares outstanding, as they are anti-dilutive, are as follows:

For the Three and Nine Months Ended

September 30, 2020

September 30, 2019

For the Three Months Ended

Common stock warrants

8 unchanged sentences

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

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

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

1 to Second Restated License Agreement and Amendment No.

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

Pursuant to the Amendment, the field of licenses granted to the Company for the use of the PER.

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

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

All capitalized terms not defined herein shall have the meanings assigned to them in the Amendment or the License Agreement, as applicable.

1 unchanged sentence

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

As of September 30, 2020, payments made under the License Agreement were de minimis.

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

Lonza Manufacturing Agreement

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

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

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

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

Summit Biosciences Development and Manufacturing Agreement

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

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

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

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

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

In December 2019, a complaint was filed by Dr.

De-Chu Christopher Tang (“Plaintiff”) against the Company in United States District Court for the Eastern District of Texas.

De-Chu Christopher Tang (“Plaintiff”) against the Company, which the Company removed to the United States District Court for the Eastern District of Texas.

The Plaintiff amended the complaint in February 2020 to include Vipin K.

2 unchanged sentences

Drutz, and the Company are collectively referred to as “Defendants”).

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

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

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

A hearing on Defendants’ motion to dismiss was held on May 20, 2020, and the motion is currently pending.

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

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

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

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

(4) allegations that Defendants manipulated the Company’s stock and caused a decrease in value;

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

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

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

However, the outcome of this legal proceeding is uncertain at this time and the Company cannot reasonably estimate a range of loss, if any.

Accordingly, the Company has not accrued any liability associated with this action.

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

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

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

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

Subsequent Events

Contingent Consideration

On November 3, 2020, the Company received acknowledgement from the Australian Government Department of Health on the Company’s submitted clinical trial notification which triggers the IND Milestone payment.

See Note 8 for further details.

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

What changed 10-Q

Item 1. Financial Statements