Altimmune, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Unaudited results are for a clinical-stage biopharmaceutical company developing treatments for obesity and liver disease, along with vaccine and immune-modulating programs. The company has not generated product-sale revenue; reported revenue is primarily from government contracts and grants.
Key financial metrics
| Metric | Q2 2021 | Six months 2021 | Comparable 2020 |
|---|---|---|---|
| Revenue | $0.14 million | $0.98 million | $0.72 million and $2.93 million, respectively |
| Research and development expense | $13.27 million | $25.15 million | $16.59 million and $23.78 million |
| General and administrative expense | $3.66 million | $7.48 million | $2.55 million and $4.88 million |
| Net loss | $24.83 million | $39.69 million | $16.77 million and $20.65 million |
| Net loss per share, basic and diluted | $0.60 | $0.99 | $0.94 and $1.25 |
| Net cash used in operations | $38.50 million for the six months | $11.52 million |
Liquidity and balance sheet: At June 30, 2021, cash, cash equivalents and restricted cash were $174.1 million, and short-term investments were $43.7 million, or approximately $217.9 million combined. Total assets were $257.3 million; total liabilities were $16.0 million; stockholders’ equity was $241.3 million. The filing reports no material conventional borrowing balance; liabilities include lease obligations and contingent consideration. Current liabilities were $9.1 million.
Cash flows: Six-month investing activities provided $44.2 million, primarily from net short-term investment activity, while financing activities provided $52.4 million, primarily from at-the-market (ATM) stock sales. The company spent $11.9 million on property and equipment.
Margins: Product revenue has not begun, so commercial operating margins are not meaningful. Revenue was small relative to operating expenses.
Changes versus the prior comparable periods
- Q2 revenue fell 81% year over year, mainly due to lower BARDA revenue tied to NasoShield development timing. Six-month revenue fell 67%; lower BARDA revenue was partly offset by higher MTEC revenue for T-COVID.
- Q2 operating expenses rose 31% to $25.0 million, including an $8.07 million non-cash impairment charge related to AdCOVID manufacturing construction-in-progress. Six-month operating expenses rose 42% to $40.7 million.
- Net loss widened to $24.8 million for Q2 and $39.7 million for the half year. The 2020 comparisons included income tax benefits of $1.6 million and $4.8 million, respectively, related to a CARES Act tax-loss carryback; no tax benefit was recorded in 2021 due to a full valuation allowance.
- Operating cash use increased to $38.5 million from $11.5 million for the six months, reflecting higher adjusted net loss and working-capital changes.
- The company raised $52.4 million net through its 2021 ATM program in the first half and reported $70.9 million of capacity remaining at June 30. Shares issued and outstanding increased to 39.7 million from 37.1 million at year-end 2020.
Outlook, management commentary, risks and unusual items
- Management said cash and short-term investments, together with expected government-contract collections and tax refunds, were expected to fund operations for at least 12 months from issuance of the June 30 financial statements. It also said longer-term plans, including clinical trials, may require additional equity or debt financing, government funding, partnerships or asset monetization.
- Altimmune discontinued AdCOVID in June after Phase 1 data showed lower-than-expected immune responses, despite the candidate being generally well tolerated, and due to a highly competitive market. The company recorded an $8.07 million non-cash impairment; $3.3 million remained capitalized as expected recoveries under the construction contract.
- The company had committed approximately $23 million to Lonza for long-lead equipment and a dedicated vaccine manufacturing suite. Construction was continuing, and the company was assessing strategic options for the suite; management expected it would more likely than not be disposed of significantly before its previously estimated useful life.
- The company was evaluating future development options for T-COVID because enrollment had become challenging amid vaccine rollout and lower disease incidence. Management said the pandemic had not materially affected operations or regulatory timelines to date, but warned of potential trial, enrollment, supply and cost disruptions.
- The BARDA NasoShield contract’s initial base period was scheduled to run through September 2021. BARDA held seven extension options; future funding depends on whether those options are exercised.
- Other notable commitments include up to $80 million in contingent sales-milestone payments related to the Spitfire acquisition, payable upon specified sales achievements. Management reported no material legal proceedings or material changes to previously disclosed risk factors.
Important facts for investors to verify
- Whether the company can maintain its stated 12-month runway as operating cash use continues and clinical programs advance.
- Actual future cash recoveries, disposition costs and strategic outcome for the Lonza manufacturing suite after AdCOVID’s discontinuation.
- Progress, funding and enrollment for T-COVID and other development programs, including the consequences of BARDA contract options and timing.
- Potential dilution and remaining ATM capacity: $70.9 million was available at June 30, 2021, and additional financing may be needed.
- How recurring grant revenue, contingent consideration, stock-based compensation and non-cash impairment charges affect reported losses and cash needs.