Altimmune – SEC Filing

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-32587

ALTIMMUNE, INC.

(Exact Name of Registrant as Specified in its Charter)


Delaware		20-2726770
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

910 Clopper Road Suite 201S, Gaithersburg, Maryland		20878
(Address of Principal Executive Offices)		(Zip Code)

(240) 654-1450

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.0001 per share	ALT	The NASDAQ Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	◻	Accelerated filer	◻
Non-accelerated filer	⌧	Smaller reporting company	⌧
		Emerging growth company	◻

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ⌧

As of November 5, 2021 there were 39,738,625 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

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ALTIMMUNE, INC.

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		Page

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Consolidated Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020	1

	Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2021 and 2020 (unaudited)	2

	Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2021 and 2020 (unaudited)	3

	Consolidated Statements of Cash Flows for the nine months ended September 30, 2021 and 2020 (unaudited)	5

	Notes to Consolidated Financial Statements (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24

Item 4.	Controls and Procedures	24


PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	25

Item 1A.	Risk Factors	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25

Item 3.	Defaults Upon Senior Securities	25

Item 4.	Mine Safety Disclosures	25

Item 5.	Other Information	25

Item 6.	Exhibits	26

	Signatures	27

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ALTIMMUNE, INC.

CONSOLIDATED BALANCE SHEETS


	September 30,		December 31,
	2021		2020
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	174,863,565	$	115,917,807
Restricted cash		34,174		34,174
Total cash, cash equivalents and restricted cash		174,897,739		115,951,981
Short-term investments		25,020,738		100,005,558
Accounts receivable		1,573,760		4,610,202
Income tax receivable		9,476,435		7,762,793
Prepaid expenses and other current assets		7,294,360		1,926,675
Total current assets		218,263,032		230,257,209
Property and equipment, net		4,718,146		1,056,920
Intangible assets, net		12,993,575		12,823,846
Other assets		931,904		977,238
Total assets	$	236,906,657	$	245,115,213
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	6,083	$	612,293
Accrued expenses and other current liabilities		19,120,902		11,408,154
Total current liabilities		19,126,985		12,020,447
Contingent consideration		6,950,000		5,390,000
Other long-term liabilities		1,565,611		1,828,443
Total liabilities		27,642,596		19,238,890
Commitments and contingencies (Note 16)
Stockholders’ equity:
Common stock, $0.0001 par value; 200,000,000 shares authorized; 39,702,768 and 37,142,946 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		3,959		3,697
Additional paid-in capital		483,582,367		417,337,742
Accumulated deficit		(269,282,102)		(186,420,599)
Accumulated other comprehensive loss, net		(5,040,163)		(5,044,517)
Total stockholders’ equity		209,264,061		225,876,323
Total liabilities and stockholders’ equity	$	236,906,657	$	245,115,213

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)


	For the Three Months Ended				For the Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Revenues	$	157,559	$	2,937,991	$	1,132,698	$	5,872,321
Operating expenses:
Research and development		29,205,739		17,041,975		54,356,051		40,823,756
General and administrative		4,155,928		4,220,238		11,636,001		9,097,511
Impairment loss on construction-in-progress		—		—		8,070,000		—
Total operating expenses		33,361,667		21,262,213		74,062,052		49,921,267
Loss from operations		(33,204,108)		(18,324,222)		(72,929,354)		(44,048,946)
Other income (expense):
Interest expense		(32,866)		(2,275)		(66,763)		(7,468)
Interest income		12,485		45,127		87,847		278,154
Other (expense) income, net		(286,199)		29,218		(293,233)		48,882
Total other (expense) income, net		(306,580)		72,070		(272,149)		319,568
Net loss before income tax benefit		(33,510,688)		(18,252,152)		(73,201,503)		(43,729,378)
Income tax benefit		—		482,017		—		5,306,678
Net loss		(33,510,688)		(17,770,135)		(73,201,503)		(38,422,700)
Other comprehensive (loss) income — unrealized (loss) gain on short-term investments		(1,923)		(10,569)		4,354		(22,116)
Comprehensive loss	$	(33,512,611)	$	(17,780,704)	$	(73,197,149)	$	(38,444,816)
Net loss per share, basic and diluted	$	(0.81)	$	(0.54)	$	(1.79)	$	(1.74)
Weighted-average common shares outstanding, basic and diluted		41,370,768		33,056,971		40,843,905		22,058,424

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited)


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Loss		Equity
Balance at December 31, 2020	37,142,946	$	3,697	$	417,337,742	$	(186,420,599)	$	(5,044,517)	$	225,876,323
Stock-based compensation	—		—		1,218,351		—		—		1,218,351
Vesting of restricted stock awards including withholding, net	(6,349)		1		(92,507)		—		—		(92,506)
Issuance of common stock from Employee Stock Purchase Plan	8,733		1		106,000		—		—		106,001
Retirement of common stock in exchange for common stock warrant	(1,000,000)		(100)		(7,539,900)		(9,660,000)		—		(17,200,000)
Issuance of common stock warrant in exchange for retirement of common stock	—		—		17,200,000		—		—		17,200,000
Issuance of common stock in at-the-market offerings, net	2,110,800		211		34,178,020		—		—		34,178,231
Issuance of common stock upon cashless exercise of warrants	1,050		—		10,000		—		—		10,000
Unrealized gain on short-term investments	—		—		—		—		5,136		5,136
Net loss	—		—		—		(14,864,108)		—		(14,864,108)
Balance at March 31, 2021	38,257,180		3,810		462,417,706		(210,944,707)		(5,039,381)		246,437,428
Stock-based compensation	—		—		1,484,829		—		—		1,484,829
Exercise of stock options	38,217		4		94,425		—		—		94,429
Vesting of restricted stock awards including withholding, net	(7,583)		1		(91,122)		—		—		(91,121)
Issuance of common stock in at-the-market offerings, net	1,405,710		141		18,177,832		—		—		18,177,973
Unrealized gain on short-term investments	—		—		—		—		1,141		1,141
Net loss	—		—		—		(24,826,707)		—		(24,826,707)
Balance at June 30, 2021	39,693,524		3,956		482,083,670		(235,771,414)		(5,038,240)		241,277,972
Stock-based compensation	—		—		1,496,884		—		—		1,496,884
Exercise of stock options	398		—		5,970		—		—		5,970
Vesting of restricted stock awards including withholding, net	(6,521)		1		(122,626)		—		—		(122,625)
Issuance of common stock from Employee Stock Purchase Plan	15,367		2		118,469		—		—		118,471
Unrealized loss on short-term investments	—		—		—		—		(1,923)		(1,923)
Net loss	—		—		—		(33,510,688)		—		(33,510,688)
Balance at September 30, 2021	39,702,768	$	3,959	$	483,582,367	$	(269,282,102)	$	(5,040,163)	$	209,264,061

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(unaudited)


								Accumulated
				Additional				Other		Total
	Common Stock			Paid-In		Accumulated		Comprehensive		Stockholders’
	Shares	Amount		Capital		Deficit		Loss		Equity
Balance at December 31, 2019	15,312,167	$	1,508	$	187,914,916	$	(137,376,122)	$	(5,020,156)	$	45,520,146
Stock-based compensation	—		—		214,921		—		—		214,921
Vesting of restricted stock awards including withholding, net	(5,974)		1		(17,080)		—		—		(17,079)
Issuance of common stock from Employee Stock Purchase Plan	38,809		3		56,736		—		—		56,739
Issuance of common stock upon exercise of warrants	14,500		2		39,972		—		—		39,974
Unrealized loss on short-term investments	—		—		—		—		(32,435)		(32,435)
Net loss	—		—		—		(3,885,649)		—		(3,885,649)
Balance at March 31, 2020	15,359,502		1,514		188,209,465		(141,261,771)		(5,052,591)		41,896,617
Stock-based compensation	—		—		330,510		—		—		330,510
Exercise of stock options	13,935		1		36,174		—		—		36,175
Vesting of restricted stock awards including withholding, net	(5,974)		1		(46,390)		—		—		(46,389)
Issuance of common stock in at-the-market offerings, net	2,965,144		297		22,780,432		—		—		22,780,729
Issuance of common stock upon exercise of warrants	8,221,279		822		31,269,341		—		—		31,270,163
Unrealized gain on short-term investments	—		—		—		—		20,888		20,888
Net loss	—		—		—		(16,766,916)		—		(16,766,916)
Balance at June 30, 2020	26,553,886		2,635		242,579,532		(158,028,687)		(5,031,703)		79,521,777
Stock-based compensation	—		—		1,320,089		—		—		1,320,089
Issuance of common stock from exercise of stock options	32,189		3		90,267		—		—		90,270
Vesting of restricted stock awards including withholding, net	103,551		13		(114,585)		—		—		(114,572)
Issuance of common stock from Employee Stock Purchase Plan	53,852		5		78,727		—		—		78,732
Issuance of common stock and pre-funded warrants in public offering, net	4,119,564		412		124,027,403		—		—		124,027,815
Issuance of common stock in at-the-market offerings, net	247,865		25		2,834,082		—		—		2,834,107
Issuance of common stock upon exercise of warrants	1,962,128		196		9,728,125		—		—		9,728,321
Unrealized loss on short-term investments	—		—		—		—		(10,569)		(10,569)
Net loss	—		—		—		(17,770,135)		—		(17,770,135)
Balance at September 30, 2020	33,073,035	$	3,289	$	380,543,640	$	(175,798,822)	$	(5,042,272)	$	199,705,835

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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ALTIMMUNE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Nine Months Ended September 30,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(73,201,503)	$	(38,422,700)
Adjustments to reconcile net loss to net cash used in operating activities:
Change in fair value of contingent consideration liability		1,560,000		22,320,000
Impairment loss on construction-in-progress		8,070,000		—
Stock-based compensation expense		4,200,064		1,865,520
Depreciation and amortization		434,009		218,932
Unrealized losses (gains) on foreign currency exchange		297,135		(44,323)
Changes in operating assets and liabilities:
Accounts receivable		3,036,442		(2,815,343)
Prepaid expenses and other current assets		(5,263,432)		(636,943)
Accounts payable		(606,210)		856,653
Accrued expenses and other liabilities		6,916,132		1,199,708
Income tax receivable		(1,713,642)		(5,564,759)
Net cash used in operating activities		(56,271,005)		(21,023,255)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of short-term investments		82,406,000		39,385,689
Purchases of short-term investments		(7,591,962)		(74,413,135)
Purchases of property and equipment, net		(11,970,179)		(100,329)
Cash paid for internally developed patents		(189,649)		(98,893)
Net cash provided by (used in) investing activities		62,654,210		(35,226,668)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of deferred offering costs		(118,522)		(160,522)
Proceeds from exercises of warrants		—		41,038,458
Proceeds from issuance of common stock in at-the-market offerings, net		52,356,204		25,614,836
Proceeds from issuance of common stock and pre-funded warrants in public offering, net		—		124,027,815
Proceeds from issuance of notes payable		—		632,000
Payments of notes payable		—		(632,000)
Proceeds from issuance of common stock from Employee Stock Purchase Plan		224,472		135,471
Proceeds from exercises of stock options		100,399		126,445
Net cash provided by financing activities		52,562,553		190,782,503
Net increase in cash and cash equivalents and restricted cash		58,945,758		134,532,580
Cash, cash equivalents and restricted cash at beginning of period		115,951,981		8,996,860
Cash, cash equivalents and restricted cash at end of period	$	174,897,739	$	143,529,440

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	—	$	1,791
SUPPLEMENTAL NON-CASH FINANCING ACTIVITIES:
Operating lease liability and right of use asset addition	$	72,047	$	—

The accompanying notes are an integral part of the unaudited consolidated financial statements.

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ALTIMMUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. Nature of Business and Basis of Presentation

Nature of Business

Altimmune, Inc., headquartered in Gaithersburg, Maryland, United States, together with its subsidiaries (collectively, the “Company” or “Altimmune”) is a clinical stage biopharmaceutical company incorporated under the laws of the State of Delaware.

The Company is focused on developing treatments for obesity and liver diseases. The Company’s pipeline includes proprietary intranasal vaccines and next generation peptide therapeutics for obesity, NASH (pemvidutide, proposed INN, formerly known as ALT-801) and chronic hepatitis B (HepTcell). Since its inception, the Company has devoted substantially all of its efforts to business planning, research and development, recruiting management and technical staff, and raising capital, and has financed its operations through the issuance of common and preferred stock, long-term debt, and proceeds from research grants and government contracts. The Company has not generated any revenues from the sale of any products to date, and there is no assurance of any future revenues from product sales.

Basis of Presentation

The accompanying unaudited consolidated financial statements are prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States (“U.S. GAAP”) for complete consolidated financial statements and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2020 included in the Annual Report on Form 10-K which was filed with the SEC on February 25, 2021. In the opinion of management, the Company has prepared the accompanying unaudited consolidated financial statements on the same basis as the audited consolidated financial statements, and these consolidated financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full year 2021 or any future years or periods.

The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets, and the satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and liabilities that might be necessary should we be unable to continue as a going concern.

2. Summary of Significant Accounting Policies

During the nine months ended September 30, 2021, there have been no significant changes to the Company’s summary of significant accounting policies contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 as filed with the SEC, except for the recently adopted accounting standard for income taxes.

Use of Estimates

The preparation of these financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The extent to which the COVID-19 pandemic, including any resurgences or the emergence of new variants, may directly or indirectly impact the Company’s business, financial condition, and results of operations is highly uncertain and subject to change.

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The Company considered the potential impact of the COVID-19 pandemic on the Company’s estimates and assumptions and determined that there was not a material impact to the Company’s unaudited consolidated financial statements as of and for the three and nine months ended September 30, 2021. However, actual results could differ from those estimates and there may be changes to the Company’s estimates in future periods.

Recently Issued Accounting Pronouncements - Adopted

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes (“ASU No. 2019-12”). ASU 2019-12 amends the approaches and methodologies in accounting for income taxes during interim periods and makes changes to certain income tax classifications. The new standard eliminates the legacy exceptions to the general guidance for intra-period tax allocation, when there is a loss from continuing operations and income or a gain from other items, and to the general methodology for calculating income taxes in an interim period, when a year-to-date loss exceeds the anticipated loss for the year. The standard also requires franchise or similar taxes partially based on income to be reported as income tax and the effects of enacted changes in tax laws or rates to be included in the annual effective tax rate computation from the date of enactment. Lastly, in any future acquisition, the Company would be required to evaluate when the step-up in the tax basis of goodwill is part of the business combination and when it should be considered a separate transaction. The Company adopted the standard as of January 1, 2021 and has evaluated the effects of this standard and determined that the adoption did not have a material impact on the Company’s consolidated financial statements.

3. Fair Value Measurements

The Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2021 consisted of the following:


	Fair Value Measurement at September 30, 2021
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents - money market funds	$	65,632,943	$	65,632,943	$	—	$	—
Short-term investments		25,020,738		—		25,020,738		—
Total		90,653,681		65,632,943		25,020,738		—
Liabilities:
Contingent consideration liability (see Note 8)		6,950,000		—		—		6,950,000
Total	$	6,950,000	$	—	$	—	$	6,950,000

The Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2020 consisted of the following:


	Fair Value Measurement at December 31, 2020
	Total		Level 1		Level 2		Level 3
Assets:
Cash equivalents - money market funds	$	90,389,473	$	90,389,473	$	—	$	—
Short-term investments		100,005,558		—		100,005,558		—
Total		190,395,031		90,389,473		100,005,558		—
Liabilities:
Contingent consideration liability (see Note 8)		5,390,000		—		—		5,390,000
Warrant liability		10,000		—		—		10,000
Total	$	5,400,000	$	—	$	—	$	5,400,000

The warrant liability is included in Other long-term liabilities in the consolidated balance sheet at December 31, 2020. The warrant liability was valued using the Monte Carlo simulation valuation model with Level 3 inputs.

Short-term investments have been initially valued at the transaction price and subsequently valued, at the end of each reporting period, utilizing third party pricing services or other market observable data (Level 2). The pricing services

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utilize industry standard valuation models, including both income and market-based approaches and observable market inputs to determine value.

Short-term investments had quoted prices at September 30, 2021 as shown below:


	September 30, 2021
			Unrealized Gain
	Amortized Cost		(Loss)		Market Value
Certificate of deposit	$	25,020,738	$	—	$	25,020,738
Total	$	25,020,738	$	—	$	25,020,738

Short-term investments had quoted prices at December 31, 2020 as shown below:


	December 31, 2020
			Unrealized Gain
	Amortized Cost		(Loss)		Market Value
United States treasury securities	$	20,052,757	$	1,843	$	20,054,600
Commercial paper and corporate debt securities		47,521,344		(5,440)		47,515,904
Asset backed securities		7,414,619		(757)		7,413,862
Certificate of deposit		25,021,192		—		25,021,192
Total	$	100,009,912	$	(4,354)	$	100,005,558

The fair value of contingent payments classified as a liability is based on the regulatory milestones described in Note 8 and estimated using the Monte Carlo simulation valuation model with Level 3 inputs.

The assumptions used to estimate the fair value of contingent payments that are classified as a liability at September 30, 2021 include the following significant unobservable inputs:


Unobservable input	Value or Range	Weighted Average
Expected volatility	78.0%	78.0%
Risk-free interest rate	0.06%	0.06%
Cost of capital	30%	30%
Discount for lack of marketability	10%‑12%	11%
Probability of payment	81%	81%
Projected year of payment	2022	2022

If applicable, the Company will recognize transfers into and out of Level 3 within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurs. There were no transfers into or out of Level 3 of the fair value hierarchy as of September 30, 2021 and December 31, 2020.

Separate disclosure is required for assets and liabilities measured at fair value on a recurring basis from those measured at fair value on a non-recurring basis. Assets recorded at fair value on a non-recurring basis, such as property and equipment and intangible assets are recognized at fair value when they are impaired. During the nine months ended September 30, 2021, the Company recorded a non-cash impairment charge to property and equipment, net on a non-recurring basis (see below). As of December 31, 2020, the Company had no significant assets or liabilities that were measured at fair value on a non-recurring basis.

Property and Equipment, Net

During the nine months ended September 30, 2021, the Company recorded a non-cash impairment charge of $8.1 million to property and equipment, net. The fair value of the impaired assets was $3.3 million at September 30, 2021. At September 30, 2021, the fair value of the construction-in-progress related assets was primarily determined utilizing the cost approach, which reflects the current replacement cost of the asset being appraised, adjusted for contractual restrictions

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on the assets, the probability of satisfying the contractual restrictions, physical deterioration, functional obsolescence, and economic obsolescence. The fair value measurement is considered a Level 3 measurement within the valuation hierarchy.

4. Property and Equipment, Net

Property and equipment, net consists of the following:


	September 30, 2021		December 31, 2020
Furniture, fixtures and equipment	$	202,100	$	125,538
Laboratory equipment		1,039,805		959,585
Computers and telecommunications		279,026		220,316
Software		94,409		64,409
Leasehold improvements		1,731,934		1,285,883
Construction-in-progress		3,300,000		—
Property and equipment, at cost		6,647,274		2,655,731
Less: accumulated depreciation and amortization		(1,929,128)		(1,598,811)
Property and equipment, net	$	4,718,146	$	1,056,920

As of September 30, 2021, construction-in-progress primarily includes costs related to the procurement of long-lead equipment associated with the Company’s manufacturing collaboration with Lonza Houston, Inc. (“Lonza”) for the manufacture of AdCOVID or other adenovirus-based vaccines. Under the agreement, the Company has committed approximately $23.0 million to Lonza to procure long-lead equipment and construct a dedicated manufacturing suite for clinical and commercial production of adenovirus-based vaccines. This work is expected to be completed during the fourth quarter of 2021.

In June 2021, the Company announced the discontinuation of further development of AdCOVID following the Company’s review of findings from the Phase 1 clinical trial. Construction continues at Lonza, and the Company is currently assessing its strategic options with respect to the suite. The Company’s current expectation is that, more likely than not, the suite will be disposed of significantly before the end of its previously estimated useful life. As of September 30, 2021, the Company recorded $8.1 million of impairment loss on construction-in-progress in the accompanying unaudited consolidated statements of operations and comprehensive loss, with $3.3 million remaining capitalized in the unaudited consolidated balance sheet, as it represents expected recoveries available to the Company under the construction contract. Following the discontinuation of AdCOVID, incremental cost incurred under the construction contract has been recorded to research and development expenses in the accompanying unaudited consolidated statements of operations and comprehensive loss. Research and development expenses related to property and equipment was approximately $9.6 million and $17.7 million for the three and nine months ended September 30, 2021, respectively.

Depreciation expense related to property and equipment was approximately $0.1 million and $0.1 million for the three months ended September 30, 2021 and 2020, respectively, and $0.2 million and $0.2 million for the nine months ended September 30, 2021 and 2020, respectively.

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5. Intangible Assets

The Company’s intangible assets consist of the following:


	September 30, 2021
		Gross
	Estimated	Carrying		Accumulated		Net Book
	Useful Lives	Value		Amortization		Value
Internally developed patents	6–20 years	$	1,074,436	$	(499,828)	$	574,608
Acquired licenses	16–20 years		285,000		(285,000)		—
Total intangible assets subject to amortization			1,359,436		(784,828)		574,608
IPR&D assets	Indefinite		12,418,967		—		12,418,967
Total		$	13,778,403