AIM ImmunoTech(AIM) - 2022 Q1 - Quarterly Report

Part I - Financial Information Financial Statements Unaudited Q1 2022 financial statements report a net loss of $3.82 million and total assets of $54.16 million Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $28,989 | $32,093 | | Marketable securities | $15,554 | $16,175 | | Assets held for sale | $3,900 | $— | | Total current assets | $50,380 | $50,213 | | Total assets | $54,155 | $57,699 | | Liabilities & Equity | | | | Total current liabilities | $766 | $673 | | Total liabilities | $854 | $820 | | Total stockholders' equity | $53,301 | $56,879 | Consolidated Statements of Comprehensive Loss (in thousands, except per share data) | Metric | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Total Revenues | $33 | $28 | | Research and development | $1,036 | $1,424 | | General and administrative | $2,072 | $2,112 | | Operating loss | $(3,152) | $(3,745) | | Net Loss | $(3,820) | $(3,579) | | Basic and diluted loss per share | $(0.08) | $(0.08) | Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three months ended March 31, 2022 | Three months ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,758) | $(3,045) | | Net cash (used in)/provided by investing activities | $(346) | $523 | | Net cash provided by financing activities | $— | $12,794 | | Net (decrease) increase in cash | $(3,104) | $10,272 | Note 1: Business and Basis of Presentation AIM ImmunoTech develops Ampligen for cancers and viral diseases, shifting manufacturing to CMOs after facility sale - The company's flagship products are Ampligen® (rintatolimod) and Alferon N Injection, with Ampligen approved in Argentina for severe Chronic Fatigue Syndrome (CFS) but not yet in the United States[16] - AIM's primary business focus is on Ampligen, with key development areas including pancreatic cancer, other cancers as combination therapy, antiviral activities, and ME/CFS and Post-COVID conditions[16] - AIM agreed to sell its New Brunswick manufacturing facility for $3.9 million, shifting production of Ampligen API to Contract Manufacturing Organizations (CMOs)[18][19] Note 3: Equity-Based Compensation Q1 2022 saw 300,000 options granted, with compensation expense of $242,000 and $729,000 unrecognized cost - During the three months ended March 31, 2022, 300,000 options were granted, compared to none in the same period of 2021[23] - Stock-based compensation expense was approximately $242,000 for Q1 2022, compared to $526,000 for Q1 2021[27] Note 14: Research, Consulting and Supply Agreements Key R&D agreements include a Phase 1 Ampligen study and a $8.2 million Phase 2 pancreatic cancer trial - In April 2022, AIM executed a work order with Amarex Clinical Research LLC to manage the AMP-270 Phase 2 clinical trial for advanced pancreatic cancer, anticipated to cost approximately $8.2 million and take about 4.6 years to complete[85] - The company has an ongoing agreement with Polysciences Inc for the manufacture of polymer precursors to Ampligen and paid them $51,390 for the period ended March 31, 2022[84] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Ampligen's strategic focus, Q1 2022 net loss of $3.8M, and $44.5M liquidity Overview AIM ImmunoTech prioritizes Ampligen clinical trials for pancreatic cancer, ME/CFS, and Post-COVID conditions - The company is prioritizing clinical activities for Ampligen in pancreatic cancer, ME/CFS, and Post-COVID conditions, with the goal of conducting trials that could support future NDAs[108] - In March 2022, the FDA cleared the company's Investigational New Drug (IND) application for a planned Phase 2 study of Ampligen as a therapy for locally advanced or metastatic late-stage pancreatic cancer[109] - The company is exploring Ampligen's broad-spectrum antiviral capabilities, with a focus on proving its concept against COVID-19 and its variants[111] Our Products Company's platform features Ampligen (CFS approved in Argentina) and Alferon N Injection (production on hold) - Ampligen is approved for sale in Argentina for severe Chronic Fatigue Syndrome (CFS) and is an experimental drug in the U.S undergoing development for cancers and ME/CFS[119] - The AMP-511 open-label expanded access program for Ampligen in severely debilitated CFS patients is ongoing and has been expanded to include patients with Post-COVID conditions, with 11 patients enrolled as of March 31, 2022[123] - Alferon N Injection is the only natural-source, multi-species alpha interferon approved for sale in the U.S for refractory or recurring external genital warts, but production is currently on hold[129] Immuno-Oncology Ampligen's immuno-oncology focus includes FDA-cleared Phase 2 pancreatic cancer trial and promising ovarian data - The FDA has cleared the company to proceed with a Phase 2 study (AMP-270) of Ampligen for locally advanced or metastatic late-stage pancreatic cancer[138] - Interim results from a Phase 2 study in advanced recurrent ovarian cancer showed a clinical response rate of 61% among 13 evaluable patients[134] - A Phase 1 study in Stage 4 Metastatic Triple Negative Breast Cancer met its primary endpoint, demonstrating an increase in immune markers like CD8 T-cells in the tumor microenvironment[136] Results of Operations Q1 2022 net loss increased to $3.82 million, primarily due to a $0.93 million loss on investments Q1 2022 vs Q1 2021 Financial Performance (in thousands) | Metric | Q1 2022 | Q1 2021 | Change | | :--- | :--- | :--- | :--- | | Net Loss | $(3,820) | $(3,579) | $(241) | | Revenues | $33 | $28 | $5 | | R&D Costs | $1,036 | $1,424 | $(388) | | G&A Expenses | $2,072 | $2,112 | $(40) | | Production Costs | $77 | $237 | $(160) | - The increase in net loss was primarily due to a $934,000 loss on investments in Q1 2022, compared to none in Q1 2021[190][197] - Research and Development (R&D) costs decreased by $388,000, largely due to a decrease in clinical trial activity compared to the prior year[194] Liquidity and Capital Resources As of March 31, 2022, AIM had $44.5 million in liquidity, sufficient for the next 24 months of operations - As of March 31, 2022, the company had approximately $44.5 million in cash, cash equivalents, and marketable securities[203] - Management believes current funds are adequate to meet anticipated operational cash needs for approximately the next twenty-four months[204] - Cash provided by financing activities was $0 in Q1 2022, a decrease of $12.8 million from Q1 2021, which included proceeds from the sale of stock[202] Quantitative and Qualitative Disclosures About Market Risk Company holds $44.5 million in liquidity, investing excess cash in conservative instruments to manage market risk - The company had approximately $44.5 million in cash, cash equivalents, and marketable securities as of March 31, 2022[206] Controls and Procedures Disclosure controls were effective as of March 31, 2022, with no material changes to internal controls during Q1 - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[207] - No changes were made in internal controls over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, the controls[208] Part II - Other Information Legal Proceedings No new legal proceedings were reported during Q1 2022, referring to the 2021 10-K for existing matters - Nothing new to report regarding legal proceedings during the quarter ended March 31, 2022[209] Risk Factors This section refers readers to the comprehensive risk factor discussion in the 2021 Annual Report on Form 10-K - The report refers readers to the "Item 1A. Risk Factors" section in the Annual Report on Form 10-K for the year ended December 31, 2021, for a comprehensive discussion of potential risks[210] Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance and material agreements - The exhibits section lists numerous agreements, including those related to stock offerings, clinical trials, manufacturing, and executive employment, as well as required Sarbanes-Oxley certifications[213][233]