UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 

Commission file number 001-32587

 

ALTIMMUNE, INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

 

20-2726770

(State or Other Jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

910 Clopper Road Suite 201S, Gaithersburg, Maryland

 

20878

(Address of Principal Executive Offices)

 

(Zip Code)

 

(240) 654-1450

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.0001 per share

ALT

The NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

 

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes      No  

As of August 7, 2020 there were 32,904,333 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

 

 

 


 

 

 

ALTIMMUNE, INC.

TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

PART I. FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Financial Statements

 

1

 

 

 

 

 

Consolidated Balance Sheets as of June 30, 2020 (unaudited) and December 31, 2019

 

1

 

 

 

 

 

Consolidated Statements of Operations and Comprehensive Loss for the three and six months ended June 30, 2020 and 2019 (unaudited)

 

2

 

 

 

 

 

Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2020 and 2019 (unaudited)

 

3

 

 

 

 

 

Consolidated Statements of Cash Flows for the six months ended June 30, 2020 and 2019 (unaudited)

 

4

 

 

 

 

 

Notes to Consolidated Financial Statements (unaudited)

 

5

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

14

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

 

18

 

 

 

 

Item 4.

Controls and Procedures

 

18

 

 

 

 

 

 

 

PART II. OTHER INFORMATION

 

 

 

 

 

 

Item 1.

Legal Proceedings

 

19

 

 

 

 

Item 1A.

Risk Factors

 

19

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

20

 

 

 

 

Item 3.

Defaults Upon Senior Securities

 

20

 

 

 

 

Item 4.

Mine Safety Disclosures

 

20

 

 

 

 

Item 5.

Other Information

 

20

 

 

 

 

Item 6.

Exhibits

 

21

 

 

 

 

 

Signatures

 

22

 

 

 

 

 

 

 


 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

ALTIMMUNE, INC.

CONSOLIDATED BALANCE SHEETS

 

 

 

June 30, 2020

 

 

December 31, 2019

 

 

 

(unaudited)

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

64,741,921

 

 

$

8,962,686

 

Restricted cash

 

 

34,174

 

 

 

34,174

 

Total cash, cash equivalents and restricted cash

 

 

64,776,095

 

 

 

8,996,860

 

Short-term investments

 

 

15,484,402

 

 

 

28,277,386

 

Accounts receivable

 

 

1,182,099

 

 

 

1,021,179

 

Tax refund receivable

 

 

5,506,946

 

 

 

629,096

 

Prepaid expenses and other current assets

 

 

1,020,876

 

 

 

470,228

 

Total current assets

 

 

87,970,418

 

 

 

39,394,749

 

Property and equipment, net

 

 

1,024,640

 

 

 

1,104,208

 

Right of use asset

 

 

662,074

 

 

 

698,321

 

Intangible assets, net

 

 

12,785,655

 

 

 

12,732,195

 

Other assets

 

 

100,980

 

 

 

128,547

 

Total assets

 

$

102,543,767

 

 

$

54,058,020

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

195,217

 

 

$

18,232

 

Accrued expenses and other current liabilities

 

 

4,089,749

 

 

 

3,904,767

 

Notes payable

 

 

632,000

 

 

 

 

Total current liabilities

 

 

4,916,966

 

 

 

3,922,999

 

Contingent consideration

 

 

16,390,000

 

 

 

2,750,000

 

Other long-term liabilities

 

 

1,715,024

 

 

 

1,864,875

 

Total liabilities

 

 

23,021,990

 

 

 

8,537,874

 

Commitments and contingencies (Note 14)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value; 200,000,000 shares authorized;

   26,553,957 and 15,312,381 shares issued; 26,553,886 and 15,312,167

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

 

 

2,635

 

 

 

1,508

 

Additional paid-in capital

 

 

242,579,532

 

 

 

187,914,916

 

Accumulated deficit

 

 

(158,028,687

)

 

 

(137,376,122

)

Accumulated other comprehensive loss, net

 

 

(5,031,703

)

 

 

(5,020,156

)

Total stockholders’ equity

 

 

79,521,777

 

 

 

45,520,146

 

Total liabilities and stockholders’ equity

 

$

102,543,767

 

 

$

54,058,020

 

 

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

 

 

 

 

 

1


 

 

ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

 

 

 

For the Three Months Ended

June 30,

 

 

For the Six Months Ended

June 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

721,636

 

 

$

1,626,029

 

 

$

2,934,330

 

 

$

4,581,622

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

16,594,250

 

 

 

2,945,096

 

 

 

23,781,781

 

 

 

6,162,768

 

General and administrative

 

 

2,545,356

 

 

 

2,231,817

 

 

 

4,877,273

 

 

 

4,298,299

 

Total operating expenses

 

 

19,139,606

 

 

 

5,176,913

 

 

 

28,659,054

 

 

 

10,461,067

 

Loss from operations

 

 

(18,417,970

)

 

 

(3,550,884

)

 

 

(25,724,724

)

 

 

(5,879,445

)

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in fair value of warrant liability

 

 

 

 

 

(46,000

)

 

 

 

 

 

(46,000

)

Interest expense

 

 

(3,308

)

 

 

(748

)

 

 

(5,193

)

 

 

(1,488

)

Interest income

 

 

81,458

 

 

 

239,964

 

 

 

233,027

 

 

 

425,211

 

Other (expense) income, net

 

 

(5,878

)

 

 

(29,220

)

 

 

19,664

 

 

 

17,528

 

Total other (expense) income, net

 

 

72,272

 

 

 

163,996

 

 

 

247,498

 

 

 

395,251

 

Net loss before income tax benefit

 

 

(18,345,698

)

 

 

(3,386,888

)

 

 

(25,477,226

)

 

 

(5,484,194

)

Income tax benefit

 

 

1,578,782

 

 

 

 

 

 

4,824,661

 

 

 

 

Net loss

 

 

(16,766,916

)

 

 

(3,386,888

)

 

 

(20,652,565

)

 

 

(5,484,194

)

Other comprehensive loss – unrealized gain (loss) on investments

 

 

20,888

 

 

 

 

 

 

(11,547

)

 

 

 

Comprehensive loss

 

$

(16,746,028

)

 

$

(3,386,888

)

 

$

(20,664,112

)

 

$

(5,484,194

)

Net loss

 

$

(16,766,916

)

 

$

(3,386,888

)

 

$

(20,652,565

)

 

$

(5,484,194

)

Deemed dividends

 

 

 

 

 

 

 

 

 

 

 

(452,925

)

Net loss attributed to common stockholders

 

$

(16,766,916

)

 

$

(3,386,888

)

 

$

(20,652,565

)

 

$

(5,937,119

)

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

 

$

(0.94

)

 

$

(0.26

)

 

$

(1.25

)

 

$

(0.52

)

Weighted-average common shares outstanding, basic and diluted

 

 

17,886,853

 

 

 

13,127,773

 

 

 

16,498,719

 

 

 

11,318,819

 

 

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

 

 

2


 

 

ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited)

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance at December 31, 2019

 

 

15,312,167

 

 

$

1,508

 

 

$

187,914,916

 

 

$

(137,376,122

)

 

$

(5,020,156

)

 

$

45,520,146

 

Stock-based compensation

 

 

 

 

 

 

 

 

214,921

 

 

 

 

 

 

 

 

 

214,921

 

Vesting of restricted stock awards including withholding, net

 

 

(5,974

)

 

 

1

 

 

 

(17,080

)

 

 

 

 

 

 

 

 

(17,079

)

Issuance of common stock from Employee Stock Purchase Plan

 

 

38,809

 

 

 

3

 

 

 

56,736

 

 

 

 

 

 

 

 

 

56,739

 

Issuance of common stock upon exercise of warrants

 

 

14,500

 

 

 

2

 

 

 

39,972

 

 

 

 

 

 

 

 

 

39,974

 

Unrealized loss on short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(32,435

)

 

 

(32,435

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(3,885,649

)

 

 

 

 

 

(3,885,649

)

Balance at March 31, 2020

 

 

15,359,502

 

 

 

1,514

 

 

 

188,209,465

 

 

 

(141,261,771

)

 

 

(5,052,591

)

 

 

41,896,617

 

Stock-based compensation

 

 

 

 

 

 

 

 

330,510

 

 

 

 

 

 

 

 

 

330,510

 

Exercise of stock options

 

 

13,935

 

 

 

1

 

 

 

36,174

 

 

 

 

 

 

 

 

 

36,175

 

Vesting of restricted stock awards including withholding, net

 

 

(5,974

)

 

 

1

 

 

 

(46,390

)

 

 

 

 

 

 

 

 

(46,389

)

Issuance of common stock in at the market offering, net of offering costs

 

 

2,965,144

 

 

 

297

 

 

 

22,780,432

 

 

 

 

 

 

 

 

 

22,780,729

 

Issuance of common stock upon exercise of warrants

 

 

8,221,279

 

 

 

822

 

 

 

31,269,341

 

 

 

 

 

 

 

 

 

31,270,163

 

Unrealized gain on short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20,888

 

 

 

20,888

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(16,766,916

)

 

 

 

 

 

(16,766,916

)

Balance at June 30, 2020

 

 

26,553,886

 

 

$

2,635

 

 

$

242,579,532

 

 

$

(158,028,687

)

 

$

(5,031,703

)

 

$

79,521,777

 

 

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

 

 

Accumulated

Other

Comprehensive

 

 

Total

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance at December 31, 2018

 

 

9,078,239

 

 

$

876

 

 

$

170,207,844

 

 

$

(116,855,991

)

 

$

(5,040,163

)

 

$

48,312,566

 

Stock-based compensation

 

 

 

 

 

 

 

 

407,714

 

 

 

 

 

 

 

 

 

407,714

 

Vesting of restricted stock awards

 

 

71

 

 

 

 

 

 

28

 

 

 

 

 

 

 

 

 

28

 

Issuance of common stock in registered direct offering, net of offering costs

 

 

4,361,370

 

 

 

436

 

 

 

12,668,348

 

 

 

 

 

 

 

 

 

12,668,784

 

Issuance of common stock upon exercise of warrants

 

 

11,000

 

 

 

1

 

 

 

30,323

 

 

 

 

 

 

 

 

 

30,324

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(2,097,306

)

 

 

 

 

 

(2,097,306

)

Balance at March 31, 2019

 

 

13,450,680

 

 

 

1,313

 

 

 

183,314,257

 

 

 

(118,953,297

)

 

 

(5,040,163

)

 

 

59,322,110

 

Stock-based compensation and vesting of restricted stock

 

 

71

 

 

 

 

 

 

289,800

 

 

 

 

 

 

 

 

 

289,800

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(3,386,888

)

 

 

 

 

 

(3,386,888

)

Balance at June 30, 2019

 

 

13,450,751

 

 

$

1,313

 

 

$

183,604,057

 

 

$

(122,340,185

)

 

$

(5,040,163

)

 

$

56,225,022

 

 

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

 

 

 

3


 

 

ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2020

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(20,652,565

)

 

$

(5,484,194

)

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

 

 

 

 

 

 

 

 

Change in fair value of contingent consideration

 

 

13,640,000

 

 

 

 

Stock-based compensation expense

 

 

545,431

 

 

 

697,486

 

Depreciation

 

 

120,169

 

 

 

121,899

 

Amortization

 

 

25,876

 

 

 

107,580

 

Unrealized losses (gains) on foreign currency exchange

 

 

(18,851

)

 

 

(24,943

)

Changes in fair value of warrant liability

 

 

 

 

 

46,000

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(160,920

)

 

 

832,098

 

Prepaid expenses and other current assets

 

 

(343,337

)

 

 

(113,200

)

Accounts payable

 

 

176,985

 

 

 

(102,763

)

Accrued expenses and other liabilities

 

 

26,761

 

 

 

(1,181,457

)

Tax refund receivable

 

 

(4,877,851

)

 

 

(71,586

)

Net cash used in operating activities

 

 

(11,518,302

)

 

 

(5,173,080

)

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Proceeds from sales and maturities of short-term investments

 

 

24,900,000

 

 

 

 

Purchases of short-term investments

 

 

(12,118,563

)

 

 

 

Purchase of property and equipment

 

 

(40,601

)

 

 

(1,226

)

Cash paid for internally developed patents

 

 

(79,336

)

 

 

(15,874

)

Net cash provided by (used in) investing activities

 

 

12,661,500

 

 

 

(17,100

)

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Payments of deferred offering costs

 

 

(179,743

)

 

 

 

Proceeds from exercises of warrants

 

 

31,310,137

 

 

 

30,324

 

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

 

 

22,780,729

 

 

 

 

Proceeds from issuance of common units, net of issuance costs

 

 

 

 

 

12,668,784

 

Proceeds from issuance of notes payable

 

 

632,000

 

 

 

 

Proceeds from issuance of common stock from Employee Stock Purchase Plan

 

 

56,739

 

 

 

 

Proceeds from exercises of stock options

 

 

36,175

 

 

 

 

Payments of notes payable

 

 

 

 

 

(156,145

)

Net cash provided by financing activities

 

 

54,636,037

 

 

 

12,542,963

 

Net increase in cash and cash equivalents and restricted cash

 

 

55,779,235

 

 

 

7,352,783

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

8,996,860

 

 

 

34,353,129

 

Cash, cash equivalents and restricted cash at end of period

 

$

64,776,095

 

 

$

41,705,912

 

 

 

 

 

 

 

 

 

 

 

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

 

 

4


 

ALTIMMUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Nature of Business and Basis of Presentation

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.

The Company is focused on developing intranasal vaccines, immune modulating therapies and treatments for liver disease. The Company’s diverse pipeline includes proprietary intranasal vaccines for COVID-19 (AdCOVID), anthrax (NasoShield) and influenza (NasoVAX); an intranasal immune modulating therapeutic for COVID-19 (T-COVID); and next generation peptide therapeutics for NASH (ALT-801) and chronic hepatitis B (HepTcell). Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, and raising capital, and has financed its operations through the issuance of common and preferred stock, long-term debt, and proceeds from research grants and government contracts. The Company has not generated any revenues from the sale of any products to date, and there is no assurance of any future revenues from product sales.

Basis of Presentation

The accompanying unaudited consolidated financial statements are prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. 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. 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 2020 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 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.

2. Summary of Significant Accounting Policies

During the six months ended June 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.

Use of Estimates

The preparation of 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 six months ended June 30, 2020. 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. 20218-13”). 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 15 regarding the Company’s recurring Level 3 fair value measurements.    

3. Contingent Consideration

5


ALTIMMUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

The Company entered into a definitive agreement to acquire all of the equity interests of Spitfire Pharma, Inc. (“Spitfire”) on July 8, 2019. Spitfire was a privately held, preclinical pharmaceutical company developing a novel dual GLP-1/glucagon receptor agonist for the treatment of non-alcoholic steatohepatitis.  

The transaction closed on July 12, 2019. The Company issued 1,887,250 unregistered shares of its common stock (the “shares”) as upfront consideration to certain former securityholders of Spitfire (collectively, the “Spitfire Equityholders”), representing an amount equal to $5.0 million less working capital and transaction expense adjustment amounts as defined in the agreement.

The 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;

 

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

 

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

The Regulatory Milestones will be payable in shares of the Company’s Common Stock, with the number of shares of the Company’s Common Stock to be issued in connection with each milestone amount, if any, are dependent on the share price at the time of achievement. The number of any shares issued in consideration for the IND Milestone Consideration Amount will be determined based on lower of (A) the average of the closing prices of our Common Stock as reported on the Nasdaq Global Market for the twenty (20) consecutive trading days prior to the IND Reference Date or (B) $2.95. The 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.

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 Company recorded an in-process research and development expense for the up-front consideration during the third quarter of 2019. Transaction costs of $0.6 million were recorded within research and development expense on the Company’s consolidated statements of operations and comprehensive loss during the three and six months ended June 30, 2019.

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. 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 June 30, 2020, and increased the liability from March 31, 2020 to $16.4 million primarily due to an increase in the share price during the six months ended June 30, 2020 and an increase in the probability of milestone achievement. The increased change in the liability of $11.9 million and $13.6 million was expensed to research and development expense during the three and six months ended June 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.

4. Net Loss Per Share

Because the Company has reported a net loss attributable to common stockholders for all periods presented, basic and diluted net loss per share attributable to common stockholders are the same for all periods presented. For periods presented, all unvested restricted stock, common stock warrants, and stock options have been excluded from the computation of diluted weighted-average shares outstanding because such securities would have an antidilutive impact.

 

6


ALTIMMUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

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 Six Months Ended

 

 

For the Three and Six Months Ended

 

 

 

June 30, 2020

 

 

June 30, 2019

 

Common stock warrants

 

 

2,150,285

 

 

 

10,386,256

 

Common stock options

 

 

1,527,978

 

 

 

873,066

 

Restricted stock

 

 

304,686

 

 

 

323,262

 

 

5. Intangible Assets

The Company’s intangible assets consisted of the following:

 

 

 

June 30, 2020

 

 

 

Estimated

Useful

Lives

 

Gross

Carrying

Value

 

 

Accumulated

Amortization

 

 

Net Book

Value

 

Internally developed patents

 

6-10 years

 

$

825,659

 

 

$

(466,866

)

 

$

358,793

 

Acquired licenses

 

16-20 years

 

 

285,000

 

 

 

(277,105

)

 

 

7,895

 

Total intangible assets subject to amortization

 

 

 

 

1,110,659

 

 

 

(743,971

)

 

 

366,688

 

IPR&D assets

 

Indefinite

 

 

12,418,967

 

 

 

 

 

 

12,418,967

 

Total

 

 

 

$

13,529,626

 

 

$

(743,971

)

 

$

12,785,655

 

 

 

 

December 31, 2019

 

 

 

Estimated

Useful

Lives

 

Gross

Carrying

Value

 

 

Accumulated

Amortization

 

 

Net Book

Value

 

Internally developed patents

 

6-10 years

 

$

746,323

 

 

$

(448,874

)

 

$

297,449

 

Acquired licenses

 

16-20 years

 

 

285,000

 

 

 

(269,221

)

 

 

15,779

 

Total intangible assets subject to amortization

 

 

 

 

1,031,323

 

 

 

(718,095

)

 

 

313,228

 

IPR&D assets

 

Indefinite

 

 

12,418,967

 

 

 

 

 

 

12,418,967

 

Total

 

 

 

$

13,450,290

 

 

$

(718,095

)

 

$

12,732,195

 

Amortization expense of intangible assets was $12,025 and $14,836 for the three months ended June 30, 2020 and 2019, and $25,876 and $107,580 for the six months ended June 30, 2020 and 2019, respectively. Amortization expense was classified as research and development expenses in the accompanying unaudited consolidated statements of operations and comprehensive loss.

As of June 30, 2020, future estimated amortization expense are as follows:

 

Years ending December 31,

 

 

 

 

The remainder of 2020

 

$

20,596

 

2021

 

 

27,687

 

2022

 

 

27,687

 

2023

 

 

27,687

 

2024

 

 

23,781

 

2025 and thereafter

 

 

239,250

 

Total

 

$

366,688

 

 

7


ALTIMMUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

6. Accrued Expenses

Accrued expenses and other current liabilities consist of the following:

 

 

 

June 30,

2020

 

 

December 31,

2019

 

Accrued professional services

 

$

472,329

 

 

$

429,467

 

Accrued payroll and employee benefits

 

 

956,584

 

 

 

1,183,130

 

Accrued interest

 

 

10,240

 

 

 

5,047

 

Accrued research and development

 

 

2,343,629

 

 

 

1,966,111

 

Lease obligation, current portion (see Note 12)

 

 

273,276

 

 

 

259,449

 

Deferred revenue

 

 

33,691

 

 

 

61,563

 

Total accrued expenses

 

$

4,089,749

 

 

$

3,904,767

 

 

7. 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. Subsequent to the quarter ended June 30, 2020, the Company received approximately $136.2 million in net proceeds from warrant exercises, ATM usage, and the public offering of its common stock and decided to voluntarily extinguish the Promissory Note on July 21, 2020 by paying the outstanding principal and accrued interest in cash.

8. Other Long-Term Liabilities

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

 

 

 

June 30,

2020

 

 

December 31,

2019

 

Lease obligation, long-term portion (see Note 12)

 

$

1,344,779

 

 

$

1,484,679

 

Common stock warrant liability (see Note 10)

 

 

10,000

 

 

 

10,000

 

Economic conditional grants

 

 

250,000

 

 

 

250,000

 

Other

 

 

110,245

 

 

 

120,196

 

Total other long-term liabilities

 

$

1,715,024

 

 

$

1,864,875

 

 

9. At-the-Market Offering

On March 27, 2020, the Company entered into an Equity Distribution Agreement (the “Agreement”) with JMP Securities LLC, serving as placement agent (the “Placement Agent”) with respect to an at-the-market offering program under which 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 “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

8


ALTIMMUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

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. 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 Agreement which amended the prospectus supplement dated March 27, 2020 to increase the aggregate offering price to $50.0 million.

As of June 30, 2020, the Company has sold 2,965,144 shares of Common Stock under the Agreement resulting in $22.8 million in net proceeds, leaving $26.3 million available to be sold under the amended Agreement. As of June 30, 2020, the Company recorded approximately $0.3 million of offering costs which offset the proceeds received from the shares sold through June 30, 2020 and recognized approximately $0.2 million of deferred offering costs which will offset future proceeds received under the Agreement.

Subsequent to the quarter ended June 30, 2020, the Company sold 234,856 shares of Common Stock under the Equity Distribution Agreement, that resulted in $2.5 million in net proceeds, leaving $23.7 million available to be sold under the amended Agreement.

10. Warrants

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

 

 

 

 

 

 

 

 

 

Warrants outstanding, December 31, 2019

 

 

10,384,706

 

 

Warrants issued due to anti-dilution features triggered from Registered Direct Offering

 

 

1,358

 

 

Exercises

 

 

(8,235,779

)

 

Warrants outstanding, June 30, 2020

 

 

2,150,285

 

 

 

During the six months ended June 30, 2020, the Company received net proceeds of $31.3 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 six months ended June 30, 2020:

 

Balance, December 31, 2019

 

$

10,000

 

Changes in fair value

 

 

 

Balance, June 30, 2020

 

$

10,000

 

 

Subsequent to the quarter ended June 30, 2020, there were additionally 1,983,110 warrants exercised resulting in net proceeds of $9.6 million and 1,630,436 pre-funded warrants issued in connection with a Public Offering (see Note 16).

11. Stock-Based Compensation

Stock Options

The Company’s stock option awards generally vest over four years and typically have a contractual life of ten years. At June 30, 2020, there was $1.9 million of unrecognized compensation cost related to stock options, which is expected to be recognized over a weighted-average period of 3.06 years. During the six months ended June 30, 2020, the Company granted 520,500 stock options with a weighted average exercise price of $2.31 and per share weighted average grant date fair value of $1.83.

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

 

 

Number

of Stock

Options

 

 

Weighted-

average

Exercise

Price

 

 

Weighted-

average

Remaining

Contractual

Term

(Years)

 

 

Aggregate

Intrinsic

Value

 

Outstanding

 

 

1,477,153

 

 

$

3.65