Altimmune, Inc. — Q3 2020 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2020. Altimmune is a clinical-stage biopharmaceutical company developing vaccines and therapies; it had not generated product-sale revenue. Figures below are in U.S. dollars.
Financial performance and position
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Revenue | $2.94 million | $0.64 million | $5.87 million | $5.23 million |
| Research and development expense | $17.04 million | $8.73 million | $40.82 million | $14.89 million |
| General and administrative expense | $4.22 million | $2.19 million | $9.10 million | $6.49 million |
| Operating loss | $18.32 million | $11.27 million | $44.05 million | $17.15 million |
| Net loss | $17.77 million | $10.94 million | $38.42 million | $16.42 million |
| Basic and diluted loss per share | $0.54 | $0.74 | $1.74 | $1.35 |
Revenue primarily reflects government-funded research and development contracts, including MTEC funding for T-COVID and BARDA funding for NasoShield. No gross margin is reported; the filing does not provide a clear product-margin measure.
- At September 30, cash, cash equivalents and restricted cash were $143.5 million, with $63.3 million of short-term investments; combined, $206.8 million. Current assets were $218.1 million versus current liabilities of $6.3 million.
- Nine-month operating cash use was $21.0 million, investing cash use was $35.2 million, and financing cash inflow was $190.8 million. Financing included $124.0 million net from a public offering, $41.0 million from warrant exercises and $25.6 million from the ATM offering.
- No notes payable remained at quarter-end; the $632,000 PPP loan was repaid in July. Operating lease obligations totaled $1.89 million. The separate contingent-consideration liability was $25.07 million.
- Management said available cash, investments, expected contract revenue and tax refunds were sufficient to fund operations for at least 12 months from issuance of the statements. The company nevertheless said it would need to pursue financing, government funding or partnerships for longer-term needs.
Material changes and unusual items
- Q3 revenue increased 356%, primarily due to $2.3 million of MTEC revenue for T-COVID; nine-month revenue increased 12%. Nine-month R&D expense rose 174%, reflecting program development costs and the increase in the Spitfire contingent-consideration valuation.
- The contingent-consideration fair value increased by $22.32 million during the first nine months, recorded as R&D expense; $8.7 million was expensed in Q3. The change was noncash and reflected, among other factors, a higher share price and increased probability of achieving milestones.
- The CARES Act supported a $5.31 million nine-month income tax benefit, including a $3.9 million refund claim related to prior-year losses and an estimated benefit from carrying back 2020 losses.
- Equity financing substantially increased the share base. A July public offering generated approximately $124.0 million net proceeds; the ATM program generated $25.6 million net proceeds through quarter-end, with $23.4 million remaining available under the amended program.
- After quarter-end, on November 3, the Australian authority acknowledged the submitted clinical trial notification, triggering a Spitfire IND milestone payment of 1,694,916 common shares. The filing says shares are to be issued within 60 days of the October 29 submission.
Outlook, risks and contingencies
No financial guidance was provided. Management reported that COVID-19 had not materially affected operations or the financial statements through September 30, but warned that pandemic disruptions could delay or increase costs for clinical trials. The company expected to delay the HepTcell Phase 2 trial and anticipated providing a timing update toward year-end 2020. It said current information did not indicate material regulatory-timeline effects for NasoShield, T-COVID, AdCOVID and ALT-801.
- COVID-19 candidates remained early-stage and faced clinical, regulatory, manufacturing, enrollment and competition risks. The filing noted that T-COVID had begun enrollment and AdCOVID had not yet entered clinical trials.
- The BARDA NasoShield contract had a base performance period through December 2020; potential extensions require BARDA to exercise options. The $4.7 million MTEC award for T-COVID is milestone-based.
- A pending lawsuit alleges, among other claims, misuse of a former employee’s work and stock manipulation. Altimmune said it considers the claims meritless and intends to defend itself; it had not accrued a liability because potential loss could not be reasonably estimated.
- Future Spitfire sales milestones could require payments of up to $80 million if specified sales milestones are achieved. COVID-19 license terms also provide for development milestones of up to $1.2 million and royalties.
Most important facts for investors to verify
- Whether operating cash use and clinical-development spending remain consistent with management’s stated 12-month liquidity runway.
- Progress, timing and funding requirements for T-COVID, AdCOVID, ALT-801 and the delayed HepTcell Phase 2 trial.
- The timing and accounting treatment of the triggered Spitfire share milestone and any further changes in contingent consideration.
- Actual receipt of CARES Act tax refunds and performance, renewal options and milestone collections under government contracts.
- Share-count dilution from offerings, warrant exercises and milestone shares, as well as developments in the pending litigation.