Altimmune, Inc. — Q1 2020 Form 10-Q
Reporting period: Three months ended March 31, 2020; compared with the three months ended March 31, 2019. Altimmune is a clinical-stage biopharmaceutical company developing treatments for liver disease, immune-modulating therapies and vaccines. It had not generated product sales; reported revenue was primarily from government research contracts and grants.
Financial results and liquidity
| Metric | Q1 2020 | Q1 2019 / comparison |
|---|---|---|
| Revenue | $2.21 million | $2.96 million; down 25.1% |
| Research and development expense | $7.19 million | $3.22 million; up 123.4% |
| General and administrative expense | $2.33 million | $2.07 million; up 12.8% |
| Operating loss | $7.31 million | $2.33 million |
| Net loss | $3.89 million | $2.10 million |
| Net loss per share, basic and diluted | $0.26 | $0.27 |
| Net cash used in operating activities | $4.35 million | $2.11 million |
Q1 2020 net loss included a $3.25 million income tax benefit associated with CARES Act net operating loss carrybacks. Before that benefit, the loss before tax was $7.13 million. The filing does not present a gross-margin measure.
At March 31, 2020, cash, cash equivalents and restricted cash were $11.31 million, and short-term investments were $21.64 million, for approximately $32.95 million in combined cash and short-term investments. Current assets were $39.64 million and current liabilities $6.05 million. Total liabilities were $12.34 million, including $4.50 million of contingent consideration and lease obligations; stockholders’ equity was $41.90 million. Management said available cash, investments, expected government-contract revenue and tax refunds were expected to fund operations for at least 12 months from issuance of the financial statements. The company continued to report accumulated losses and negative operating cash flow.
Changes versus the prior-year quarter
- Revenue declined mainly because of the timing of NasoShield development activity and completion of the SparVax-L contract, partly offset by a final NasoShield contract reconciliation payment.
- R&D expense rose by $3.97 million, principally from $2.42 million of ALT-801 development activity and a $1.75 million increase in the estimated Spitfire acquisition milestone liability, partly offset by lower NasoShield activity.
- Operating cash use increased by $2.23 million. Financing cash inflow fell to $0.10 million from $12.70 million, when a registered direct offering had generated proceeds.
Outlook, risks and other material items
- COVID-19: Altimmune reported office closures, remote work for most personnel, restricted travel and continued onsite work for essential laboratory staff with safety measures. It delayed initiation of the HepTcell Phase 2 study and expected to update timing in the second half of 2020. Management did not then anticipate a material effect on regulatory timelines for NasoShield, AdCOVID and ALT-801, but warned that the pandemic could disrupt trials, enrollment, supplies, research, regulatory review and financing.
- Funding: The company stated it would need to pursue additional equity or debt financing, government funding, partnerships or asset monetization for longer-term capital needs. Its ATM program permits sales up to $50 million, but the then-current prospectus supplement covered up to $18.9 million. No ATM shares had been sold by March 31; 164,900 shares sold from April 8 through May 13 generated $0.6 million net proceeds.
- Government contract: The BARDA NasoShield contract had a stated value of up to $133.7 million, including a base period funded at approximately $27.8 million through December 2020 and options for additional work. Through March 31, Altimmune had received approximately $22.6 million under the contract; future option funding was not assured.
- Post-quarter events: The company received a $632,000 Paycheck Protection Program loan on April 13, bearing 1% interest and due April 7, 2022. Some or all may qualify for forgiveness, but forgiveness is not assured. On April 2, it expanded a Janssen license to cover COVID-19 and agreed to development milestones of up to $1.225 million plus royalties, subject to the agreement’s terms.
- Contingencies: Spitfire acquisition consideration includes regulatory milestones and up to $80 million of sales milestones. The regulatory contingent-consideration liability rose from $2.75 million at year-end to $4.50 million, with the $1.75 million increase charged to R&D. A lawsuit filed by a former employee alleges several claims; the company disputes the allegations, intends to defend itself, and said it could not reasonably estimate any loss. No liability was accrued.
- No specific financial guidance: The filing provides no quantified revenue, earnings or cash-flow guidance. Management’s stated runway estimate is subject to trial plans, financing needs and the uncertain effects of COVID-19.
Important facts for investors to verify
- Whether the $3.25 million CARES Act-related tax benefit is realized, including the intended refund claim and estimated carryback benefit.
- Timing, costs and enrollment progress for HepTcell and other clinical programs amid COVID-19 disruptions.
- Actual BARDA revenue and whether options or further government funding are obtained.
- ATM share sales, remaining offering capacity and the company’s financing needs beyond management’s 12-month runway estimate.
- PPP loan forgiveness and any resulting repayment obligations or audit findings.
- Progress toward Spitfire milestones, the contingent-consideration valuation, and developments in the pending litigation.