Altimmune, Inc. — 2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020. This is an annual report; it does not present a standalone fourth-quarter income statement. Altimmune is a clinical-stage biopharmaceutical company with no approved products or product-sales revenue. Its pipeline includes AdCOVID and T-COVID (COVID-19), NasoShield (anthrax), NasoVAX (influenza), ALT-801 (NASH) and HepTcell (hepatitis B).
Financial performance and position
| Metric | 2020 | 2019 |
|---|---|---|
| Revenue, primarily government contracts and grants | $8.2 million | $5.8 million |
| Research and development expense | $49.8 million | $17.8 million |
| General and administrative expense | $13.2 million | $8.5 million |
| Operating loss | $54.8 million | $21.5 million |
| Net loss | $49.0 million | $20.5 million |
| Net loss per share, basic and diluted | $1.91 | $1.60 |
| Net cash used in operating activities | $34.4 million | $9.6 million |
- Revenue rose 41%, mainly reflecting $4.2 million recognized under the MTEC T-COVID award; BARDA revenue declined $1.6 million due to timing of NasoShield activities. The U.S. government accounted for 97% of revenue and all accounts receivable in 2020.
- R&D expense increased 180%, reflecting COVID-19 program development, ALT-801 development and an $8.5 million increase in ALT-801 contingent-consideration fair value, partly offset by 2019 acquisition costs. G&A rose 55%, including higher personnel costs, professional fees and stock compensation.
- Net loss includes a $5.4 million income-tax benefit associated primarily with CARES Act net-operating-loss carrybacks. The company reported a $7.8 million tax-refund receivable at year-end and said it had filed a $2.7 million refund claim, with further claims planned.
- At December 31, cash, cash equivalents and restricted cash were $116.0 million, and short-term investments were $100.0 million, totaling $216.0 million in cash and short-term investments. Total current assets were $230.3 million versus current liabilities of $12.0 million.
- Total liabilities were $19.2 million; the filing reports no material outstanding borrowing at year-end. The $632,000 PPP loan was repaid in July 2020. Other liabilities include $5.4 million of contingent consideration and lease obligations.
- Net cash used in investing was $72.1 million, primarily reflecting purchases and maturities of short-term investments. Financing provided $213.5 million, including $124.0 million net from a public offering, $48.2 million from an at-the-market offering and $41.0 million from warrant exercises.
- Year-end stockholders’ equity was $225.9 million; accumulated deficit was $186.4 million. Common shares issued increased from 15.3 million to 37.1 million during 2020. The filing says existing resources were expected to fund operations for at least 12 months from issuance of the financial statements, but not to fund completion of clinical trials needed for approval or commercialization.
- No product gross margin is reported because the company had no product sales. The filing does not provide a meaningful product-sales margin measure.
Material changes and operating developments
- AdCOVID advanced through preclinical work and manufacturing; FDA clearance to begin its Phase 1 trial came in February 2021, after year-end. The trial was enrolling, with results expected in Q2 2021.
- T-COVID entered a Phase 1/2 trial supported by a $4.7 million MTEC award; trial results were expected in Q2 2021. The filing describes a placebo-controlled study, although one trial description contains an apparent reference to NasoVAX in the treatment-arm wording; investors should verify the actual protocol.
- NasoShield’s Phase 1b trial tested modified intranasal dosing, with results expected in Q1 2021. Its earlier Phase 1a trial met safety endpoints but did not show an appreciable immune response; management said subsequent data suggested administration method affected immunogenicity.
- ALT-801 began a Phase 1 trial in Australia in Q4 2020, with initial data expected in Q2 2021 and potential Phase 1b data in Q3 2021. These are management expectations, not guaranteed milestones.
- HepTcell began a Phase 2 study in Q4 2020, with data expected in Q1 2022. NasoVAX development path remained under evaluation.
- The BARDA NasoShield contract has a base period through June 2021 and discretionary extension options. Potential total contract value is up to $133.7 million, but option funding depends on BARDA decisions and program progress. BARDA represented about 46% of 2020 revenue versus 92% in 2019.
Outlook, risks and unusual items
- Management expects substantial R&D spending and losses to continue; the company has not completed pivotal trials and may never achieve profitability. No numerical revenue, earnings or cash-burn guidance is provided.
- Principal risks include clinical failure or delay, regulatory uncertainty, patient enrollment, manufacturing and supply constraints, competition, reliance on government funding, and the need for future financing. COVID-19-related disruptions could affect trials, suppliers and regulatory timelines; management said operations had not been materially affected at the time of filing but uncertainty remained.
- Government funding is subject to milestones, audits, appropriations and termination or modification rights. Failure to obtain BARDA options could require Altimmune to fund NasoShield itself or suspend or end the program.
- The Spitfire acquisition agreement provides for up to $88 million of future contingent payments, including sales milestones. In 2020, the company issued 1,694,906 shares valued at $13.6 million for the IND milestone. Fair-value changes to contingent consideration are sensitive to assumptions and were a material noncash R&D item.
- A former employee’s lawsuit against the company and two executives remained pending. The company said it believed the claims were without merit; a magistrate judge recommended dismissal for lack of personal jurisdiction, but objections were pending. No liability was accrued because the loss, if any, could not be reasonably estimated.
- Ernst & Young issued an unqualified opinion on the financial statements. The auditor highlighted the judgment involved in assessing the $12.4 million HepTcell in-process R&D asset for impairment; management recorded no impairment in 2020. Management reported effective disclosure controls and internal control over financial reporting; the company’s auditor was not engaged to opine on internal-control effectiveness.
Key facts investors should verify
- Latest clinical-trial status, results and timelines for AdCOVID, T-COVID, NasoShield, ALT-801 and HepTcell, including whether management’s expected readouts were achieved.
- BARDA’s decisions on contract options, funding conditions and the effect of any funding change on NasoShield and revenue.
- Cash burn, investment maturities, tax-refund collections and the company’s updated cash runway relative to its development plans.
- Further dilution from equity issuance, warrant exercises, equity awards and remaining contingent consideration.
- Manufacturing readiness and clinical-supply availability, especially for adenoviral-vector programs, as well as the status of the Tang litigation.