AIM ImmunoTech(AIM) - 2022 Q2 - Quarterly Report

PART I- FINANCIAL INFORMATION This section presents the company's financial statements, management's discussion, market risk, and internal controls Financial Statements AIM ImmunoTech reported a reduced net loss of $8.67 million for H1 2022, with total assets decreasing to $50.88 million Consolidated Balance Sheets The balance sheet shows a decrease in total assets to $50.88 million by June 30, 2022, primarily due to reduced marketable securities Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $34,452 | $32,093 | | Marketable securities | $7,320 | $16,175 | | Total current assets | $46,045 | $50,213 | | Total assets | $50,884 | $57,699 | | Liabilities & Equity | | | | Total current liabilities | $1,368 | $673 | | Total liabilities | $2,104 | $820 | | Total stockholders' equity | $48,780 | $56,879 | | Total liabilities and stockholders' equity | $50,884 | $57,699 | Consolidated Statements of Comprehensive Loss The company reported a net loss of $8.67 million for the six months ended June 30, 2022, an improvement from the prior year Consolidated Statements of Comprehensive Loss (in thousands, except per share data) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $30 | $23 | $64 | $52 | | Research and development | $2,475 | $1,317 | $3,511 | $2,742 | | General and administrative | $2,181 | $2,145 | $4,253 | $4,256 | | Operating loss | $(4,695) | $(3,718) | $(7,847) | $(7,463) | | Net Loss | $(4,851) | $(5,876) | $(8,671) | $(9,455) | | Basic and diluted loss per share | $(0.10) | $(0.12) | $(0.18) | $(0.20) | Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity decreased to $48.78 million by June 30, 2022, primarily due to the net comprehensive loss - Total stockholders' equity decreased from $56.88 million at December 31, 2021, to $48.78 million at June 30, 2022. The decrease was primarily driven by the net comprehensive loss of $8.67 million for the six-month period[10] Consolidated Statements of Cash Flows Cash and cash equivalents increased to $34.45 million by June 30, 2022, despite net cash used in operating activities Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(5,071) | $(4,763) | | Net cash provided by (used in) investing activities | $7,375 | $(629) | | Net cash provided by financing activities | $55 | $8,033 | | Net increase in cash and cash equivalents | $2,359 | $2,641 | | Cash and cash equivalents at end of period | $34,452 | $41,142 | Notes to Financial Statements The notes detail the company's R&D focus on Ampligen, recent asset sales, and significant clinical trial agreements - The company is an immuno-pharma firm focused on R&D for cancer, viral diseases, and immune disorders. Its flagship products are Ampligen® (rintatolimod) and Alferon N Injection®. Ampligen is approved in Argentina for Chronic Fatigue Syndrome (CFS) but not in the U.S[14][15] - Primary business focus is on Ampligen, with key development areas including pancreatic cancer, modifying tumor microenvironments, exploring antiviral activities, and treating ME/CFS and Post-COVID conditions[15][16] - On March 3, 2022, AIM entered an agreement to sell its New Brunswick manufacturing facility for $3.9 million, while retaining some space for Alferon activity[18] - In April 2022, AIM executed a work order with Amarex Clinical Research for a Phase 2 trial in advanced pancreatic cancer (AMP-270), estimated to cost $8.2 million over 4.6 years. In June 2022, another work order was executed with Amarex for a Phase 2 trial in Post-COVID Conditions, estimated to cost $4.4 million[77][78] - Subsequent to the quarter end, the company became involved in legal proceedings related to a nomination notice from an activist stockholder, Jonathan Thomas Jorgl, seeking to change control of the Board[80][82][83] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) AIM ImmunoTech focuses on Ampligen development for oncology and viral diseases, reporting a reduced Q2 2022 net loss and sufficient liquidity Overview AIM ImmunoTech is an immuno-pharma company focused on R&D for cancers, viral diseases, and immune disorders, with Ampligen as its core - AIM ImmunoTech is an immuno-pharma company focused on R&D for therapeutics to treat cancers, viral diseases, and immune-deficiency disorders. Its main products are Ampligen® (rintatolimod) and Alferon N Injection®[107] - The company's primary strategic focus is on four key areas for Ampligen: a randomized controlled study in pancreatic cancer, evaluation in other cancers as a checkpoint inhibitor combination therapy, exploring its broad-spectrum antiviral potential, and its use as a treatment for ME/CFS and Post-COVID conditions[108][109] - In March 2022, the FDA cleared the clinical hold on the company's Investigational New Drug (IND) application for a planned Phase 2 study of Ampligen in late-stage pancreatic cancer, allowing the study to proceed[111] Product Portfolio The company's product portfolio includes Ampligen® for CFS and cancers, and Alferon N Injection® for external genital warts - Ampligen® (rintatolimod): A first-in-class dsRNA drug, approved in Argentina for severe Chronic Fatigue Syndrome (CFS) and under clinical development in the U.S. for various cancers and ME/CFS. It acts as a selective Toll-like Receptor 3 (TLR3) agonist[122][123][124] - Alferon N Injection®: An FDA-approved natural alpha interferon product for treating refractory or recurring external genital warts. It is the only natural-source, multi-species alpha interferon approved for sale in the U.S. and Argentina[122][179] - The AMP-511 Expanded Access Program for Ampligen in ME/CFS was expanded to include patients with Post-COVID conditions. As of June 30, 2022, 11 patients were enrolled, including three with Post-COVID conditions, with preliminary data showing a clinically significant decrease in fatigue[127] Results of Operations The company reported a reduced net loss for Q2 and H1 2022, despite increased R&D costs driven by clinical trials Q2 2022 vs Q2 2021 Performance (in thousands) | Metric | Q2 2022 | Q2 2021 | Change | | :--- | :--- | :--- | :--- | | Revenues | $30 | $23 | +$7 | | R&D Costs | $2,475 | $1,317 | +$1,158 | | G&A Expenses | $2,181 | $2,145 | +$36 | | Net Loss | $(4,851) | $(5,876) | +$1,025 | | Loss Per Share | $(0.10) | $(0.12) | +$0.02 | Six Months 2022 vs 2021 Performance (in thousands) | Metric | H1 2022 | H1 2021 | Change | | :--- | :--- | :--- | :--- | | Revenues | $64 | $52 | +$12 | | R&D Costs | $3,511 | $2,742 | +$769 | | G&A Expenses | $4,253 | $4,256 | -$3 | | Net Loss | $(8,671) | $(9,455) | +$784 | | Loss Per Share | $(0.18) | $(0.20) | +$0.02 | - The increase in R&D costs for Q2 2022 was primarily due to a $1.09 million increase in clinical trial expenses, largely related to work with Amarex[205] - The decrease in net loss for Q2 2022 was mainly driven by a $2.72 million decrease in interest expense and finance costs, following the extinguishment of debt in 2021[201][210] Liquidity and Capital Resources The company held $41.8 million in cash and marketable securities as of June 30, 2022, sufficient for 24 months of operations - As of June 30, 2022, the company had approximately $41.8 million in cash, cash equivalents, and marketable securities, a decrease of about $6.5 million from December 31, 2021[227] - Net cash used in operating activities for the first six months of 2022 was approximately $5.1 million, compared to $4.8 million for the same period in 2021[225] - Management believes that current funds are adequate to meet operational cash needs and fund current clinical trials for approximately the next twenty-four months. An effective S-3 shelf registration statement is in place for potential future capital raises[228] Quantitative and Qualitative Disclosures About Market Risk The company is classified as a smaller reporting company and is therefore not required to provide the information for this item - As a smaller reporting company defined by Rule 12b-2 of the Exchange Act, AIM ImmunoTech is not required to provide quantitative and qualitative disclosures about market risk[229] Controls and Procedures Based on an evaluation performed by the CEO and CFO, the company's disclosure controls and procedures were deemed effective as of June 30, 2022. There were no material changes to internal controls over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2022[230] - No material changes were made to the company's internal controls over financial reporting during the six months ended June 30, 2022[231] Part II – OTHER INFORMATION This section details legal proceedings, risk factors, and a comprehensive list of exhibits filed with the Form 10-Q Legal Proceedings The company is involved in legal proceedings with an activist stockholder, Jonathan Thomas Jorgl, who attempted to nominate two directors to the board. The company rejected the nomination, leading to lawsuits filed by both AIM and Mr. Jorgl - The company refers to Note 15 (Subsequent Events) for a description of pending material legal proceedings involving an activist stockholder's attempt to nominate directors[232][353] Risk Factors The primary risk factor highlighted is the ongoing situation with an activist stockholder. This conflict could lead to a costly and distracting proxy contest, divert management's attention, create uncertainty about the company's future direction, and potentially cause stock price volatility - A key risk is the potential negative impact from actions by activist investors, specifically a stockholder who has purported to nominate two new directors to the three-member board[234] - The company has initiated a lawsuit against the activist and related individuals, and the activist has sued the company in return. This legal battle and potential proxy contest could be costly, time-consuming, and divert management's attention from business operations[235][236] - Uncertainty from the activist situation could harm relationships with strategic partners, disrupt clinical trials, and make it difficult to retain qualified personnel[237] Exhibits This section provides a comprehensive list of all exhibits filed with the Form 10-Q, including corporate governance documents, securities agreements, material contracts, and certifications from the CEO and CFO - This section lists all exhibits filed with the Form 10-Q, incorporating by reference numerous historical agreements and filing new certifications and amendments[240]