Altimmune, Inc. — Q3 2018 Form 10-Q
Reporting period: Three and nine months ended September 30, 2018. Altimmune is a clinical-stage immunotherapeutics and vaccine company; it had no product sales. Revenue was primarily from government research grants and contracts. Share and per-share data reflect the September 2018 1-for-30 reverse stock split.
Financial performance and liquidity
| Metric | Q3 2018 | Q3 2017 | Nine months 2018 | Nine months 2017 |
|---|---|---|---|---|
| Total revenue | $2.63 million | $4.59 million | $7.74 million | $7.93 million |
| Research and development expense | $4.73 million | $5.91 million | $15.39 million | $13.95 million |
| General and administrative expense | $1.96 million | $3.04 million | $7.35 million | $6.86 million |
| Operating loss | $(4.06) million | $(30.95) million | $(15.49) million | $(39.48) million |
| Net loss | $(2.35) million | $(29.91) million | $(14.66) million | $(37.59) million |
| Net loss per share, basic and diluted | $(1.73) | $(61.57) | $(17.48) | $(102.76) |
| Operating cash flow | — | $(4.23) million | $(15.41) million |
At September 30, cash, cash equivalents and restricted cash totaled $8.00 million; current assets were $11.97 million and current liabilities were $8.34 million. Notes payable were $1.47 million, including $1.5 million principal on exchange notes, net of discount. The exchange notes were repaid in cash on October 17, 2018. No gross margin is reported; product revenue had not begun. Accumulated deficit was $92.35 million.
Changes versus the prior comparable period
- Q3 revenue fell 43%, primarily because BARDA revenue for NasoShield declined with program spending. Nine-month revenue was down 2%; lower BARDA revenue was largely offset by higher NIAID revenue.
- Q3 net loss narrowed substantially, mainly because Q3 2017 included a $26.6 million goodwill impairment charge. Nine-month net loss also improved substantially for the same reason; 2018 included a further $0.49 million impairment adjustment.
- R&D expense declined 20% in Q3, mainly due to timing of NasoShield manufacturing activity, partly offset by NasoVAX spending. For the nine months, R&D expense increased 10%, reflecting program timing and higher employee and facility costs.
- Operating cash use decreased by $11.17 million year over year, largely due to working-capital changes, including tax refunds and receivables.
Outlook, developments and risks
- Management stated that cash on hand, government-contract revenue, and approximately $37 million of net equity proceeds from offerings completed September 24 through October 10 were sufficient to fund the operating plan for at least 12 months from the financial-statement issuance date. These post-quarter proceeds included approximately $4.3 million from the September offering, $10.1 million from the October 2 offering, and $22.6 million from the October 10 offering.
- NasoVAX Phase 2 follow-up data reported in September showed a durable, dose-dependent protective immune response, mucosal response, and continued clean safety profile. The company also disclosed multiple recent manufacturing failures for NasoVAX clinical material, which could delay planned trials.
- NasoShield Phase 1 single-dose cohorts were reported as safe and well tolerated, but showed limited immunogenicity; the filing notes this may indicate a need for more than one dose. BARDA support is subject to contract terms and options at the agency’s discretion.
- HepTcell Phase 1 was generally well tolerated, but initial immunogenicity results in chronic HBV patients were inconclusive. The company was awaiting six-month follow-up results expected in Q4 2018 to inform further development. SparVax-L remained dependent on obtaining additional government funding.
- The company reported no numeric financial guidance. It warned of continuing losses, need for future financing, potential dilution, clinical and regulatory uncertainty, dependence on government funding, and manufacturing and trial delays. The October offerings included warrants; the October 10 offering triggered a reduction in the exercise price of warrants from the October 2 offering.
- Management found disclosure controls effective as of September 30, 2018. The filing reported no legal proceedings and no material off-balance-sheet arrangements.
Key facts for investors to verify
- Cash runway assumptions against actual operating cash burn, planned trials, and the timing and conditions of government-contract funding.
- Whether NasoVAX manufacturing issues are resolved and how they affect the next clinical study; review full follow-up data and trial plans.
- HepTcell follow-up results and the company’s decision on continued development; confirm any additional SparVax-L funding.
- Actual proceeds, share issuance and warrant dilution from the October financings, including the warrant exercise-price adjustment.
- Potential tax effects of ownership-change limitations on net operating losses; the company said its Section 382 analysis was ongoing.