ITEM
1: Financial Statements
AIM
IMMUNOTECH INC. AND SUBSIDIARIES
Consolidated
Balance Sheets
(in
thousands, except for share and per share data)
(Unaudited)
See
accompanying notes to consolidated financial statements.
AIM
IMMUNOTECH INC. AND SUBSIDIARIES
Consolidated
Statement of Operations and Comprehensive Loss
(in
thousands, except share and per share data)
(Unaudited)
See
accompanying notes to consolidated financial statements.
AIM
IMMUNOTECH INC. AND SUBSIDIARIES
Consolidated
Statement of Changes in Stockholders’ Equity
For
the Nine Months Ended September 30, 2022
(in
thousands except share data)
(Unaudited)
See
accompanying notes to consolidated financial statements.
AIM
IMMUNOTECH INC. AND SUBSIDIARIES
Consolidated
Statement of Changes in Stockholders’ Equity
For
the Nine Months Ended September 30, 2021
(in
thousands except share data)
(Unaudited)
| |
Series B Preferred | | |
Common Stock Shares | | |
Common Stock Par Value | | |
Additional Paid-in Capital | | |
Accumulated other Comprehensive Income (Loss) | | |
Accumulated Deficit | | |
Total
Stockholders’ Equity | |
Balance December 31, 2020 | |
$ | 732 | | |
| 42,154,371 | | |
$ | 42 | | |
$ | 402,541 | | |
$ | (47 | ) | |
$ | (341,974 | ) | |
$ | 61,294 | |
Common stock issuances, net of costs | |
| — | | |
| 5,678,626 | | |
| 6 | | |
| 12,881 | | |
| — | | |
| — | | |
| 12,887 | |
Equity-based compensation | |
| — | | |
| — | | |
| — | | |
| 526 | | |
| — | | |
| — | | |
| 526 | |
Series B preferred shares converted to common shares | |
| (7 | ) | |
| — | | |
| — | | |
| 7 | | |
| — | | |
| — | | |
| — | |
Comprehensive loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| (163 | ) | |
| (3,579 | ) | |
| (3,742 | ) |
Balance March 31, 2021 | |
$ | 725 | | |
| 47,832,997 | | |
$ | 48 | | |
$ | 415,955 | | |
$ | (210 | ) | |
$ | (345,553 | ) | |
$ | 70,965 | |
Equity-based compensation | |
| — | | |
| — | | |
| — | | |
| 480 | | |
| — | | |
| — | | |
| 480 | |
Comprehensive loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| (37 | ) | |
| (5,876 | ) | |
| (5,913 | ) |
Balance June 30, 2021 | |
$ | 725 | | |
| 47,832,997 | | |
$ | 48 | | |
$ | 416,435 | | |
$ | (247 | ) | |
$ | (351,429 | ) | |
$ | 65,532 | |
Common stock issuances, net of costs | |
| — | | |
| 15,625 | | |
| — | | |
| 30 | | |
| — | | |
| — | | |
| 30 | |
Equity-based compensation | |
| — | | |
| — | | |
| — | | |
| 314 | | |
| — | | |
| — | | |
| 314 | |
Comprehensive loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| (3 | ) | |
| (3,826 | ) | |
| (3,829 | ) |
Net Comprehensive loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| (3 | ) | |
| (3,826 | ) | |
| (3,829 | ) |
Balance September 30, 2021 | |
$ | 725 | | |
| 47,848,622 | | |
$ | 48 | | |
$ | 416,779 | | |
$ | (250 | ) | |
$ | (355,255 | ) | |
$ | 62,047 | |
See
accompanying notes to consolidated financial statements.
AIM
IMMUNOTECH INC. AND SUBSIDIARIES
Consolidated
Statements of Cash Flows
For
the Nine Months Ended September 30, 2022 and 2021
(in
thousands)
(Unaudited)
See
accompanying notes to consolidated financial statements.
AIM
IMMUNOTECH INC. AND SUBSIDIARIES
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note
1: Business and Basis of Presentation
AIM
ImmunoTech Inc. and its subsidiaries (collectively, “AIM”, “the Company”,) are an immuno-pharma company headquartered
in Ocala, Florida, and focused on the research and development of therapeutics to treat multiple types of cancers, viral diseases and
immune-deficiency disorders. The Company has established a strong foundation of laboratory, pre-clinical and clinical data with respect
to the development of nucleic acids and natural interferon to enhance the natural antiviral defense system of the human body, and to
aid the development of therapeutic products for the treatment of certain cancers and chronic diseases.
Our
flagship products are Ampligen® (rintatolimod), a first-in-class drug of large macromolecular RNA (ribonucleic acid) molecules, and
Alferon N Injection® (Interferon alfa-n3). Ampligen has not been approved by the U.S. Food and Drug Administration (“FDA”)
or marketed in the United States. Ampligen is approved for commercial sale in the Argentine Republic for the treatment of severe Chronic
Fatigue Syndrome (“CFS”).
Our
primary present business focus involves Ampligen. Ampligen represents a double-stranded RNA being developed for globally important cancers,
viral diseases and disorders of the immune system.
The
Company is currently proceeding primarily in four areas:
|
● |
A
randomized controlled study to evaluate efficacy and safety of Ampligen compared to a control group to treat locally advanced pancreatic
cancer patients. |
|
● |
Evaluate
Ampligen in other cancers, as a potential therapy that modifies the tumor microenvironment with the goal of increasing anti-tumor
responses to check point inhibitors and other immuno oncology therapies. |
|
● |
Exploring
Ampligen’s antiviral activities and potential use as a prophylactic or early onset treatment for existing viruses, new viruses
and mutated viruses thereof. |
|
● |
Ampligen
as a treatment for myalgic encephalomyelitis/chronic fatigue syndrome (“ME/CFS”) and fatigue and/or Post-COVID conditions
of fatigue. |
The
Company is prioritizing activities in an order related to the stage of development, with those clinical activities in oncology,
ME/CFS and Post-COVID conditions having priority over antiviral experimentation. The Company intends that priority clinical work be
conducted in trials authorized by the FDA or European Medicines Agency (“EMA”), which trials support commercial
development. However, AIM’s antiviral experimentation is designed to accumulate additional preliminary data supporting their
hypothesis that Ampligen is a powerful, broad-spectrum prophylaxis and early-onset therapeutic that may confer enhanced immunity and
cross-protection. Accordingly, AIM will conduct antiviral programs in those venues most readily available including foreign venues
and able to generate valid proof-of-concept data,.
In
May 2021, AIM exercised the option to re-purchase the New Brunswick manufacturing facility, pursuant to the terms of the March 2018
sale and lease-back agreement. The Company thereafter sold certain equipment and machinery that it determined to be obsolete and no
longer needed for current or future manufacturing. On March 3, 2022, AIM entered into an Agreement of Sale and Purchase with
Acellories, Inc. to purchase the property for an estimated $3.9 million,
with AIM’s intention to keep some space specifically for its Alferon activity. The sale closed on November 1, 2022 for $3.7
million net of normal closing
cost.
AIM’s
business plan requires one or more Contract Manufacturing Organizations (“CMO”) to produce Ampligen API. This includes utilizing
Polysciences Inc. (“Polysciences”) for the manufacture of our Poly I and Poly C12U polynucleotides and associated test methods.
While AIM believes it has sufficient Ampligen API to meet current needs, it is also continually exploring new efficiencies so as to maximize
its ability to fulfill future obligations.
In
the opinion of management, all adjustments necessary for a fair presentation of the consolidated financial statements have been included.
Such adjustments consist of normal recurring items. Interim results are not necessarily indicative of results for a full year.
The
interim consolidated financial statements and notes thereto are presented as permitted by the Securities and Exchange Commission (“SEC”),
and do not contain certain information which will be included in the Company’s annual consolidated financial statements and notes
thereto.
These
consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the years
ended December 31, 2021 and 2020, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed
with the SEC on March 31, 2022.
Use of Estimates
The preparation of
financial statements in conformity with accounting principles generally accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure (“GAAP”) of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the reporting period.
Actual results could differ from those estimates, and those differences may be material. Accounts requiring the use of significant estimates
include determination of other-than-temporary impairment on securities, valuation of deferred taxes, patent and trademark valuations,
stock-based compensation calculations, building valuation, fair value of warrants, and contingency accruals.
Note
2: Net Loss Per Share
Basic
and diluted net loss per share is computed using the weighted average number of shares of common stock outstanding during the period.
Equivalent common shares, consisting of stock options and warrants which amounted to 2,445,805 and 1,617,145, are excluded from the calculation
of diluted net loss per share for the nine months ended September 30, 2022, and 2021, respectively, since their effect is antidilutive
due to the net loss.
Note
3: Equity-Based Compensation
The
fair value of each option and equity warrant award is estimated on the date of grant using a Black-Scholes-Merton option pricing valuation
model. Expected volatility is based on the historical volatility of the price of the Company’s stock. The risk-free interest rate
is based on U.S. Treasury issues with a term equal to the expected life of the option and equity warrant. The Company uses historical
data to estimate expected dividend yield, expected life and forfeiture rates. There were 300,000 options granted in the nine months ended
September 30, 2022, and no options granted in the nine months ended September 30, 2021.
Stock
option for employees’ activity during the nine months ended September 30, 2022, is as follows:
Stock
option activity for employees:
Schedule of Stock Option Activity
| |
Number of Options | | |
Weighted Average Exercise Price | | |
Weighted Average Remaining Contractual Term (Years) | | |
Aggregate Intrinsic Value | |
Outstanding January 1, 2021 | |
| 1,498,798 | | |
$ | 4.22 | | |
| 9.11 | | |
$ | — | |
Granted | |
| 150,000 | | |
| 0.70 | | |
| 9.17 | | |
| — | |
Forfeited | |
| (1,684 | ) | |
| 117.6 | | |
| — | | |
| — | |
Expired | |
| — | | |
| — | | |
| — | | |
| — | |
Outstanding September 30, 2022 | |
| 1,647,114 | | |
$ | 3.78 | | |
| 8.43 | | |
$ | — | |
Vested and expected to vest September 30, 2022 | |
| 1,647,114 | | |
$ | 3.78 | | |
| 8.43 | | |
$ | — | |
Exercisable September 30, 2022 | |
| 1,542,949 | | |
$ | 2.43 | | |
| 6.66 | | |
$ | — | |
Unvested
stock option activity for employees:
Schedule of Unvested
Stock Option Activity
| |
Number of Options | | |
Weighted Average Exercise Price | | |
Weighted Average Remaining Contractual Term (Years) | | |
Aggregate Intrinsic Value | |
Unvested January 1, 2022 | |
| 412,500 | | |
$ | 4.15 | | |
| 5.85 | | |
$ | — | |
Granted | |
| 150,000 | | |
| 0.70 | | |
| 9.17 | | |
| — | |
Expired | |
| (1,684 | ) | |
| 117.6 | | |
| — | | |
| — | |
Vested | |
| (456,651 | ) | |
| 1.43 | | |
| — | | |
| — | |
Unvested September 30, 2022 | |
| 104,165 | | |
$ | 6.52 | | |
| 3.14 | | |
$ | — | |
Stock
option activity for non-employees:
Schedule
of Stock Option Activity
| |
Number of Options | | |
Weighted Average Exercise Price | | |
Weighted Average Remaining Contractual Term (Years) | | |
Aggregate Intrinsic Value | |
Outstanding January 1, 2022 | |
| 279,723 | | |
$ | 6.12 | | |
| 7.93 | | |
$ | — | |
Granted | |
| 150,000 | | |
| 0.70 | | |
| 9.42 | | |
| — | |
Forfeited | |
| — | | |
| — | | |
| — | | |
| — | |
Expired | |
| — | | |
| — | | |
| — | | |
| — | |
Outstanding September 30, 2022 | |
| 429,723 | | |
$ | 4.10 | | |
| 7.96 | | |
$ | — | |
Vested and expected to vest September 30, 2022 | |
| 429,723 | | |
$ | 4.10 | | |
| 7.96 | | |
$ | — | |
Exercisable September 30, 2022 | |
| 354,526 | | |
$ | 4.21 | | |
| 8.32 | | |
$ | — | |
Unvested
stock option activity for non-employees:
Schedule of Unvested Stock Option Activity
| |
Number of Options | | |
Weighted Average Exercise Price | | |
Weighted Average Remaining Contractual Term (Years) | | |
Aggregate Intrinsic Value | |
Unvested January 1, 2022 | |
| 97,831 | | |
$ | 3.89 | | |
| 7.82 | | |
$ | — | |
Granted | |
| 150,000 | | |
| 0.70 | | |
| 9.42 | | |
| — | |
Expired | |
| — | | |
| — | | |
| — | | |
| — | |
Vested | |
| (172,634 | ) | |
| 1.16 | | |
| — | | |
| — | |
Unvested September 30, 2022 | |
| 75,197 | | |
$ | 3.79 | | |
| 8.24 | | |
$ | — | |
Stock-based
compensation expense was approximately $792,000 and $1,320,000 for the nine months ended September 30, 2022, and 2021, resulting in an
increase in general and administrative expenses, respectively.
As
of September 30, 2022, and 2021, respectively, there was approximately $179,000 and $279,000 of unrecognized equity-based compensation
cost related to options granted under the Equity Incentive Plan.
Note
4: Marketable Securities
Marketable
securities consist of mutual funds. As of September 30, 2022, and December 31, 2021, it was determined that none of the marketable securities
had an other-than-temporary impairment. As of September 30, 2022, and December 31, 2021, all securities were measured as Level 1 instruments
under the fair value measurements standard (See Note 11: Fair Value). As of September 30, 2022, and December 31, 2021, the Company held
approximately $6,986,000 and $16,175,000 in mutual funds.
Mutual
Funds classified as available for sale consisted of:
Schedule of Available for Sale
September
30, 2022
(in
thousands)
Securities | |
Fair Value | | |
Short-Term Investments | |
Mutual Funds | |
$ | 6,986 | | |
$ | 6,986 | |
Totals | |
$ | 6,986 | | |
$ | 6,986 | |
Schedule
of Equity Securities
September
30, 2022
(in
thousands)
Securities | |
| |
Net losses recognized during the period on equity securities | |
$ | (1,769 | ) |
Less: Net gains and losses recognized during the period on equity securities sold during the period | |
| (598 | ) |
Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date | |
$ | (1,171 | ) |
Mutual
Funds classified as available for sale consisted of:
Note
5: Accrued Expenses
Accrued
expenses consist of the following:
Schedule
of Accrued Expenses
| |
| | | |
| | |
| |
(in thousands) | |
| |
September 30, 2022 | | |
December 31, 2021 | |
Compensation | |
$ | 33 | | |
$ | 1 | |
Professional fees | |
| 1,535 | | |
| 169 | |
Clinical trial expenses | |
| — | | |
| 61 | |
Other expenses | |
| 199 | | |
| 207 | |
Accrued
expenses | |
$ | 1,767 | | |
$ | 438 | |
Note
6: Property and Equipment, net
Schedule
of Property and Equipment
| |
| | | |
| | |
| |
(in thousands) | |
| |
September 30, 2022 | | |
December 31, 2021 | |
Land, buildings and improvements | |
$ | — | | |
$ | 3,900 | |
Furniture, fixtures, and equipment | |
| 2,353 | | |
| 2,353 | |
Total property and equipment | |
| 2,353 | | |
| 6,253 | |
Less: accumulated depreciation | |
| (2,235 | ) | |
| (2,206 | ) |
Property and equipment, net | |
$ | 118 | | |
$ | 4,047 | |
Property
and equipment are recorded at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the respective
assets, ranging from three to thirty-nine years. Depreciation expense for the nine months ending September 30, 2022 and September 30,
2021 was $29,000 and $484,000.
The
Company made a strategic shift on in-house manufacturing and recorded an impairment of the facility in the amount of $1,800,000 during
the year ended December 31, 2021. During the period ending September 30, 2022, the Company reported assets held for sale related to
the pending sale of the manufacturing facility located at 783 Jersey Avenue. On November 1, 2022, AIM completed the sale of its
facility at 783 Jersey Avenue, New Brunswick, N.J., for $3.7
million net of normal closing cost. (See Note 11
Fair Value).
Note
7: Patents
Schedule
of Patents, Trademark Rights
(in thousands) |
December 31, 2020 | |
$ | 1,498 | |
Acquisitions | |
| 592 | |
Amortization
| |
| (116 | ) |
December 31, 2021 | |
$ | 1,974 | |
Acquisitions | |
| 96 | |
Amortization | |
| (57 | ) |
September 30, 2022 | |
$ | 2,013 | |
Patents
and trademarks are stated at cost (primarily legal fees) and are amortized using the straight-line method of the estimated useful life
of 17
years.
Amortization
of patents and trademarks for each of the next five years is as follows:
Schedule
of Amortization of Patents and Trademarks
| |
| | |
Period Ending December 31, |
(in thousands) |
2022 | |
$ | 23 | |
2023 | |
| 154 | |
2024 | |
| 178 | |
2025 | |
| 199 | |
2026 | |
| 235 | |
Thereafter | |
| 1,224 | |
Total | |
$ | 2,013 | |
Note
8: Stockholders’ Equity
(a)
Preferred Stock
The
Company is authorized to issue 5,000,000 shares of $0.01 par value preferred stock with such designations, rights and preferences as
may be determined by the Board of Directors. Of our authorized preferred stock, 250,000 shares have been designated as Series A Junior
Participating Preferred Stock and 8,000 shares have been designated as Series B Convertible Preferred Stock. The Series B Convertible
Preferred Stock has a stated value $1,000 per share.
The
Company is authorized to issue 8,000 Series B Convertible Preferred Stock, no par value, stated value $1,000 per share. As of September
30, 2022, and December 31, 2021, the Company had 713 and 715 shares of Series B Convertible Preferred Stock outstanding, respectively.
Holders shall be entitled to receive, and the Company shall pay, dividends on shares of Series B Preferred Stock equal (on an as-if-converted-to-Common-Stock
basis) to and in the same form as dividend actually paid on shares of Common Stock when as and if such dividends are paid on shares of
the Common Stock. Each such Preferred Share is convertible into 114 shares of common stock. Upon any liquidation, dissolution or winding-up
of the Company, whether voluntary or involuntary, the Holders shall be entitled to receive out of the assets, whether capital or surplus
of the Company the same amount that a holder of Common Stock would receive if the Preferred Stock was fully converted. The Series B Convertible
Preferred Stock shall have no voting Rights.
Pursuant
to a registration statement relating to a rights offering declared effective by the SEC on February 14, 2019, AIM distributed to its
holders of common stock and to holders of certain options and warrants as of February 14, 2019, at no charge, one non-transferable subscription
right for each share of common stock held or deemed held on the record date. Each right entitled the holder to purchase one unit, at
a subscription price of $1,000 per unit, consisting of one share of Series B Convertible Preferred Stock with a face value of $1,000
(and immediately convertible into common stock at an assumed conversion price of $8.80) and 114 warrants with an assumed exercise price
of $8.80. The warrants are exercisable for five years after the date of issuance. The net proceeds realized from the rights offering
were approximately $4,700,000. During the nine months ending September 30, 2022 and September 30, 2021, 2 and 7 shares, respectively,
of Series B Convertible Preferred Stock were converted into common stock.
(b)
Common Stock
The
Company has authorized shares of 350,000,000 with specific limitations and restrictions on the usage of 8,000,000 of the 350,000,000
authorized shares.
On
July 7, 2020, the board of directors approved a plan pursuant to which all directors, officers, and employees could purchase from the
Company up to an aggregate of $500,000 worth of shares at the market price. Pursuant to NYSE American rules, this plan was effective
for a sixty-day period commencing upon the date that the NYSE American approved the Company’s Supplemental Listing Application.
When this plan expired, the board of directors approves subsequent similar $500,000 plans for all directors, officers and employees to
buy Company shares from the Company at the market price. Subsequent plans were approved by the board of directors upon the expiration
of prior plans. The latest plan was approved by the board of directors on March 2, 2022.
During
the nine months ended September 30, 2022, the Company issued a total of 87,045 shares of its common stock at prices ranging from $0.76
to $1.02 for a total of $80,000 as part of the employee stock purchase plan, not from the 2018 Equity Incentive Plan.
During
the twelve months ended December 31, 2021, the Company issued a total of 132,238 shares of its common stock at prices ranging from $1.16
to $2.35 for a total of $205,000.
On
September 27, 2019, the Company closed a public offering underwritten by A.G.P./Alliance Global Partners, LLC (the “Offering”)
of (i) 1,740,550 shares of Common Stock; (ii) pre-funded warrants exercisable for 7,148,310 shares of Common Stock (the “Pre-funded
Warrants”), and (iii) warrants to purchase up to an aggregate of 8,888,860 shares of Common Stock (the “Warrants”).
In conjunction with the Offering, a Representative’s
Warrant to purchase up to an aggregate of 266,665 shares of common stock (the “Representative’s Warrant”).
The shares of Common Stock and Warrants were sold at a combined Offering price of $0.90, less underwriting discounts and commissions.
Each Warrant sold with the shares of Common Stock represents the right to purchase one share of Common Stock at an exercise price of
$0.99 per share. The Pre-Funded Warrants and Warrants were sold at a combined Offering price of $0.899, less underwriting discounts and
commissions. The Pre-Funded Warrants were sold to purchasers whose purchase of shares of Common Stock in the Offering would otherwise
result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% of the Company’s
outstanding Common Stock immediately following the consummation of the Offering, in lieu of shares of Common Stock. Each Pre-Funded Warrant
represents the right to purchase one share of Common Stock at an exercise price of $0.001 per share. The Pre-Funded Warrants are exercisable
immediately and may be exercised at any time until the Pre-Funded Warrants are exercised in full. A registration statement on Form S-1,
relating to the Offering was filed with the SEC and was declared effective on September 25, 2019, the net proceeds were approximately
$7,200,000. As of September 30, 2022, there are 15,000 Warrants outstanding.
On
July 19, 2019, the Company entered into a new Equity Distribution Agreement (the “2019 EDA”) with Maxim Group LLC (“Maxim”),
pursuant to which it could sell, from time to time, shares of its Common Stock through Maxim, as agent. The 2019 EDA replaced a prior
EDA with Maxim. For the year ended December 31, 2020, the Company sold 20,444,807 shares under the 2019 EDA for total gross proceeds
of $53,936,615, which includes a 3.5% fee to Maxim of $1,888,727. During the period ended December 31, 2021, the Company sold 5,665,731
shares under the 2019 EDA for total gross proceeds of $13,301,526, which includes a 3.5% fee to Maxim of $465,533. The 2019 EDA was terminated
in early February 2021.
The
2018 Equity Incentive Plan, effective September 12, 2018, authorizes the grant of (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) Stock Appreciation Rights, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance Stock Awards,
(vii) Performance Cash Awards, and (viii) Other Stock Awards. Initially, a maximum of 7,000,000 shares of Common Stock is reserved for
potential issuance pursuant to awards under the 2018 Equity Incentive Plan. Unless sooner terminated, the 2018 Equity Incentive Plan
will continue in effect for a period of 10 years from its effective date. During first quarter of 2022, 300,000 options were issued to
employees with an exercise price of $.70 for a period of ten years with a vesting period of one year. During fourth quarter of 2021,
613,512 options were issued to employees with an exercise price range of $1.11 to $1.71 for a period of ten years with a vesting period
of one year.
As
of September 30, 2022, and December 31, 2021, there were 48,082,275 and 47,994,672 shares outstanding, respectively.
Note
9: Cash and Cash Equivalents
The
Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Note
10: Recent Accounting Pronouncements
During
the third quarter of 2022 accounting pronouncements issued by the FASB did not or are not believed by management to have a material impact
on the Company’s present or future financial statements.
Note
11: Fair Value
The
Company is required under U.S. GAAP to disclose information about the fair value of all the Company’s financial instruments, whether
or not these instruments are measured at fair value on the Company’s consolidated balance sheets.
The
Company estimates that the fair values of cash and cash equivalents, other assets, accounts payable and accrued expenses approximate
their carrying values due to the short-term maturities of these items. The Company also has certain warrants with a cash settlement
feature in the occurrence of a Fundamental Transaction. The fair value of the redeemable warrants (“Warrants”) related
to the Company’s April 2018, and March 2019 common stock and warrant issuance, are calculated using a Monte Carlo Simulation.
While the Monte Carlo Simulation is one of a number of possible pricing models, the Company has determined it to be industry
accepted and fairly presented the fair value of the Warrants. As an additional factor to determine the fair value of the Put’s
liability, the occurrence probability of a Fundamental Transaction event was factored into the valuation.
The
Company recomputes the fair value of the Warrants at the issuance date and the end of each quarterly reporting period. Such value computation
includes subjective input assumptions that are consistently applied each period. If the Company were to alter its assumptions or the
numbers input based on such assumptions, the resulting fair value could be materially different.
The
Company utilized the following assumptions to estimate the fair value of the April 2018 Warrants:
Schedule
of Assumptions to Estimate Fair Value of Warrants
| |
September 30, 2022 | | |
December 31, 2021 | |
Underlying price per share | |
$ | 0.58 | | |
$ | 0.92 | |
Exercise price per share | |
$ | 17.16 | | |
$ | 17.16 | |
Risk-free interest rate | |
| 4.06 | % | |
| 0.67 | % |
Expected holding period | |
| 1.07 | | |
| 1.81 | |
Expected volatility | |
| 70 | % | |
| 120 | % |
Expected dividend yield | |
| — | | |
| — | |
The
Company utilized the following assumptions to estimate the fair value of the March 2019 Warrants:
| |
September 30, 2022 | | |
December 31, 2021 | |
Underlying price per share | |
$ | 0.58 | | |
$ | 0.92 | |
Exercise price per share | |
$ | 8.80 | | |
$ | 8.80 | |
Risk-free interest rate | |
| 4.12 | % | |
| 0.78 | % |
Expected holding period | |
| 1.44 | | |
| 2.19 | |
Expected volatility | |
| 65 | % | |
| 125 | % |
Expected dividend yield | |
| — | | |
| — | |
Measurement input | |
| — | | |
| — | |
The
significant assumptions using the Monte Carlo Simulation approach for valuation of the Warrants are:
(i) |
Risk-Free
Interest Rate. The risk-free interest rates for the Warrants are based on U.S. Treasury constant maturities for periods commensurate
with the remaining expected holding periods of the warrants. |
(ii) |
Expected Holding Period.
The expected holding period represents the period of time that the Warrants are expected to be outstanding until they are exercised.
The Company utilizes the remaining contractual term of the Warrants at each valuation date as the expected holding period. |
(iii) |
Expected Volatility.
Expected stock volatility is based on daily observations of the Company’s historical stock values for a period commensurate
with the remaining expected holding period on the last day of the period for which the computation is made. |
(iv) |
Expected Dividend Yield.
Expected dividend yield is based on the Company’s anticipated dividend payments over the remaining expected holding period.
As the Company has never issued dividends, the expected dividend yield is $0.00 and this assumption will be continued in future calculations
unless the Company changes its dividend policy. |
(v) |
Expected Probability
of a Fundamental Transaction. The possibility of the occurrence of a Fundamental Transaction triggering a Put right is extremely
remote. As discussed above, a Put right would only arise if a Fundamental Transaction (1) is an all cash transaction; (2) results
in the Company going private; or (3) is a transaction involving a person or entity not traded on a national securities exchange.
The Company believes such an occurrence is highly unlikely because: |
|
a. |
The Company
only has one product that is FDA approved but which will not be available for commercial sales for 18 months at the earliest; |
|
b. |
The Company flagship product
is approved only in Argentina for Severely Debilitated Chronic Fatigue Syndrome patients; |
|
c. |
The Company may have to
perform additional clinical trials for FDA approval of its flagship product; |
|
d. |
Industry and global market
conditions continue to include uncertainty, adding risk to any transaction; |
|
e. |
Available capital for a
potential buyer in a cash transaction continues to be limited; |
|
f. |
The nature of a life science
company is heavily dependent on future funding and high costs, including research & development; |
|
g. |
The Company has minimal
revenue streams which could be insufficient to meet the funding needs for the cost of operations or construction at their manufacturing
facility; and |
|
h. |
The Company’s Rights
Agreement and Executive Agreements make it less attractive to a potential buyer. |
With
the above factors utilized in analysis of the likelihood of the Put’s potential Liability, the Company estimated the range of probabilities
related to a Put right being triggered as:
Schedule
of Range of Probabilities
Range of Probability | |
Probability | |
Low | |
| 0.5 | % |
Medium | |
| 1.0 | % |
High | |
| 5.0 | % |
The
Monte Carlo Simulation has incorporated a 5.0% probability of a Fundamental Transaction to date for the life of the securities.
(vi) |
Expected
Timing of Announcement of a Fundamental Transaction. As the Company has no specific expectation of a Fundamental Transaction,
for reasons stated above, the Company used a discrete uniform probability distribution over the Expected Holding Period to model
the potential announcement of a Fundamental Transaction occurring during the Expected Holding Period. |
(vii) |
Expected
100 Day Volatility at Announcement of a Fundamental Transaction. An estimate of future volatility is necessary as there is no
mechanism for directly measuring future stock price movements. Daily observations of the Company’s historical stock values
for the 100 days immediately prior to the Warrants’ grant dates, with a floor of 100%, were utilized as a proxy for the future
volatility. |
(viii) |
Expected Risk-Free Interest
Rate at Announcement of a Fundamental Transaction. The Company utilized a risk-free interest rate corresponding to the forward
U.S. Treasury rate for the period equal to the time between the date forecast for the public announcement of a Fundamental Transaction
and the Warrant expiration date for each simulation. |
(ix) |
Expected Time Between
Announcement and Consummation of a Fundamental Transaction. The expected time between the announcement and the consummation of
a Fundamental Transaction is based on the Company’s experience with the due diligence process performed by acquirers and is
estimated to be six months. The Monte Carlo Simulation approach incorporates this additional period to reflect the delay Warrant
Holders would experience in receiving the proceeds of the Put. |
While
the assumptions remain consistent from period to period (e.g., using historical stock prices), the numbers input change from period to
period (e.g., the actual historical prices input for the relevant period).
The
Company applies FASB ASC 820 that defines fair value, establishes a framework for measuring fair value in U.S. GAAP, and expands disclosures
about fair value measurements. The guidance does not impose any new requirements around which assets and liabilities are to be measured
at fair value, and instead applies to asset and liability balances required or permitted to be measured at fair value under existing
accounting pronouncements. The Company measures its warrant liability for those warrants with a cash settlement feature at fair value.
FASB
ASC 820-10-35-37 establishes a valuation hierarchy based on the transparency of inputs used in the valuation of an asset or liability.
Classification is based on the lowest level of inputs that is significant to the fair value measurement. The valuation hierarchy contains
three levels:
● |
Level 1 –
Quoted prices are available in active markets for identical assets or liabilities at the reporting date. Generally, this includes
certain U.S. and government agency debt and equity securities that are traded in an active market. |
● |
Level 2 – Observable
inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active;
or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets
or liabilities. Generally, this includes debt and equity securities that are not traded in an active market. |
● |
Level 3 – Unobservable
inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow
methodologies, or other valuation techniques, as well as instruments for which the determination of fair value requires significant
management judgment or estimation. As of September 30, 2022, the Company has classified the warrants with cash settlement features
as Level 3. Management evaluates a variety of inputs and then estimates fair value based on those inputs. As discussed above, the
Company utilized the Monte Carlo Simulation Model in valuing these warrants. |
The
table below presents the balances of assets and liabilities measured at fair value on a recurring basis by level within the hierarchy
as:
Schedule
of Assets and Liabilities Measured at Fair Value on a Recurring Basis
| |
(in thousands) As of September 30, 2022 | |
| |
Total | | |
Level 1 | | |
Level 2 | | |
Level 3 | |
Assets: | |
| | | |
| | | |
| | | |
| | |
Marketable securities | |
$ | 6,986 | | |
$ | 6,986 | | |
$ | — | | |
$ | — | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Redeemable warrants | |
$ | — | | |
| — | | |
| — | | |
$ | — | |
| |
(in thousands) As of December 31, 2021 | |
| |
Total | | |
Level 1 | | |
Level 2 | | |
Level 3 | |
Assets: | |
| | | |
| | | |
| | | |
| | |
Marketable securities | |
$ | 16,175 | | |
$ | 16,175 | | |
$ | — | | |
$ | — | |
Liabilities: | |
| | | |
| | | |
| | | |
| | |
Redeemable warrants | |
$ | 35 | | |
| — | | |
| — | | |
$ | 35 | |
The
changes in Level 3 Liabilities measured at fair value on a recurring basis are summarized as follows (in thousands):
Schedule
of Changes in Level 3 Liabilities Measured at Fair Value on a Recurring Basis
Redeemable warrants: | |
| | |
Balance at December 31, 2021 | |
$ | 35 | |
Fair value adjustment | |
| (35 | ) |
Balance at September 30, 2022 | |
$ | — | |
The
table below presents the balances of assets and liabilities measured at fair value on a nonrecurring basis by level within the hierarchy
as:
Schedule
of Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
| |
(in thousands) As of December 31, 2021 | | |
| |
| |
Total | | |
Level 1 | | |
Level 2 | | |
Level 3 | | |
Total Gains (Losses) | |
Assets: | |
| | | |
| | | |
| | | |
| | | |
| | |
Long lived assets held and used(a) | |
$ | 3,900 | | |
$ | — | | |
$ | — | | |
$ | 3,900 | | |
$ | (1,800 | ) |
|
(a) |
In
accordance with Subtopic 360-10, long-lived assets held and used with a carrying amount of $5,700,000 were written down to their
fair value of $3,900,000 resulting in an impairment charge of $1,800,000, which was included in earnings for the period ending December
31, 2021. A $300,000 deposit was received in the third quarter 2022 related
to the asset. |
Note
12: Financing Obligation Arising from Sale Leaseback Transaction
On
March 16, 2018, the Company sold land and a building for $4,080,000 and concurrently entered into an agreement to lease the property
back for ten years at $408,000 per year for two years through March 31, 2020. The lease payments would increase 2.5% per year for the
next three years through March 31, 2023, and the lease payments would increase 3% for the remaining five years through March 31, 2028.
As part of the sale of this building, warrants were provided to the buyer for the purchase of up to 73,314 shares of Company common stock
for a period of five years at an exercise price of $17.05 per share, 125% of the closing price of the common stock on the NYSE American
on the date of execution of the letter of intent for the purchase. The sale of the property included an option to repurchase the property
based on a contractual formula which does not permanently transfer all the risks and rewards of ownership to the buyer. Because the sale
of the property included the option to repurchase the property and included the above attributes, the transaction was accounted for as
a financing transaction whereby the Company recorded the cash received and a financing obligation. The warrants cannot be exercised to
the extent that any exercise would result in the purchaser owning in excess of 4.99% of our issued and outstanding shares of common stock.
On
May 13, 2021, the Company completed its repurchase of the property for cash of $4,732,637. The repurchase resulted in the related liability
recorded upon sale being extinguished on the date of the repurchase. A loss on the extinguishment was recorded based on the difference
between the carrying value of the financing obligation including unamortized debt discount and the amount exchanged to extinguish the
debt.
Interest
expense relating to this financing agreement was $0 for the period ended September 30, 2022 and $67,000 for the nine months ended September
30, 2021.
Note
13: Leases
The
Company leases office and storage space, and other equipment under non-cancellable operating leases with initial terms typically ranging
from 1 to 5 years. At contract inception, the Company reviews the facts and circumstances of the arrangement to determine if the contract
is or contains a lease. The Company follows the guidance in Topic 842 “Leases” to evaluate whether the contract has
an identified asset; if the Company has the right to obtain substantially all economic benefits from the asset; and if the Company has
the right to direct the use of the underlying asset. When determining if a contract has an identified asset, the Company considers both
explicit and implicit assets, and whether the supplier has the right to substitute the asset. When determining if the Company has the
right to direct the use of an underlying asset, the Company considers if it has the right to direct how and for what purpose the asset
is used throughout the period of use and if it controls the decision-making rights over the asset.
The
Company’s lease terms may include options to extend or terminate the lease. The Company exercises judgment to determine the term
of those leases when extension or termination options are present and include such options in the calculation of the lease term when
it is reasonably certain that it will exercise those options.
The
Company has elected to include both lease and non-lease components in the determination of lease payments. Payments made to a lessor
for items such as taxes, insurance, common area maintenance, or other costs commonly referred to as executory costs, are also included
in lease payments if they are fixed. The fixed portion of these payments are included in the calculation of the lease liability, while
any variable portion would be recognized as variable lease expenses, when incurred. Variable payments made to third parties for these,
or similar costs, such as utilities, are not included in the calculation of lease payments.
At
lease commencement, lease-related assets and liabilities are measured at the present value of future lease payments over the lease term.
As most of the Company’s leases do not provide an implicit rate, the Company exercises judgment in determining the incremental
borrowing rate based on the information available when the lease commences to measure the present value of future payments.
Operating
leases are included in other assets, current operating lease obligations, and operating lease obligations (less current portion) on the
Company’s consolidated balance sheet. Short term leases with an initial term of 12 months or less are not presented on the balance
sheet with expense recognized as incurred.
The
Company entered into a Lease Agreement for a term of five years commencing on September 14, 2020 pursuant to which the Company agreed
to lease two Sharp copiers. The base of $1,415 per month.
On
June 13, 2018, the Company entered into a Lease Agreement for a term of six years commencing on July 1, 2018 pursuant to which the Company
agreed to lease approximately 3,000 rentable square feet. The base rent increases by 3% each year, and ranges from $2,100 per month for
the first year to $2,785 per month for the sixth year.
On
May 1, 2019, the Company entered into a Lease Agreement for a term of three years commencing on May 1, 2019, pursuant to which the Company
agreed to lease approximately 3,000 rentable square feet. The base rent is $2,500 per month for the term of the lease. On October 4,
2021, the Company executed a request to renew the lease for a one-year term as defined in the Lease Agreement. The request was accepted,
and the one-year term commenced on April 30, 2022. On October 5, 2022, the Company executed a request to renew the lease for an additional
one-year term at a monthly cost of $2,850. The request was accepted and the one-year term commences on May 1, 2023.
On
February 17, 2022, the Company entered into a Lease Agreement for a term of two years commencing on March 1, 2022, pursuant to which
the Company agreed to lease a Canon copier. The base rent is $322 per month for the term of the lease.
On
June 16, 2022, the Company entered into a Lease Agreement for a term of five years commencing on July 1, 2022 pursuant to which the Company
agreed to lease approximately 5,210 rentable square feet. The base rent increases by 3% each year, and ranges from $15,630 per month
for the first year to $18,118 per month for the fifth year.
The
expected lease term includes both contractual lease periods and, when applicable, cancelable option periods when it is reasonably certain
that the Company would exercise such options. The Company’s leases have remaining lease terms between 11 months and 5 years. As
of September 30, 2022, and December 31, 2021, the weighted-average remaining term is 2.67 and 2.72 years, respectively.
The
Company has determined that the incremental borrowing rate is 10% as of September 30, 2022, and December 31, 2021, respectively, based
upon the recently completed financing transaction in December 2019.
Future
minimum payments as of September 30, 2022, are as follows:
Schedule
of Operating lease Future Payments
| |
| | |
Period December 31, |
(in thousands) |
2022 | |
$ | 46 | |
2023 | |
| 187 | |
2024 | |
| 183 | |
2025 | |
| 180 | |
2026 | |
| 185 | |
Thereafter | |
| 171 | |
Less imputed interest | |
| (86 | ) |
Total | |
$ | 866 | |
As
of September 30, 2022, and December 31, 2021, the balance of the right of use assets was $866,000 and $149,000, respectively, and the
corresponding lease liability balance was $866,000 and $149,000, respectively. Total rent expense for the nine months ended September
30, 2022, and September 30, 2021, amounted to approximately $75,000 and $39,000, respectively. Total rent expense for short term leases
for the nine months ended September 30, 2022, and September 30, 2021, amounted to approximately $8,000 for both periods.
Note
14: Research, Consulting and Supply Agreements
In
January 2021, the Company entered into a Sponsor Agreement with the Centre for Human Drug Research (“CHDR”) for a Phase 1
clinical study to assess the safety, tolerability, and biological activity of Ampligen as a potential intranasal therapy. The Company
has paid CHDR approximately $1,066,000.
In
April 2021, the Company approved a proposal from Polysciences for the manufacture of our Poly I and Poly C12U polynucleotides and associated
test methods at Polysciences’ Warrington, PA location to enhance our capacity to produce the polymer precursors to the drug Ampligen.
The Company is working with Polysciences to negotiate and finalize both a Service Agreement and a Quality Agreement. For the year ended
December 31, 2021, the Company has incurred an expense and paid Polysciences approximately $250,000. For the nine months ended September
30, 2022, the Company paid Polysciences $103,000.
In
April 2022, AIM executed a work order with Amarex Clinical Research LLC (“Amarex”), our contract research organization, pursuant
to which Amarex will manage a Phase 2 clinical trial in advanced pancreatic cancer patients designated AMP-270. Per the work order, AIM
anticipates that the study will cost approximately $8.2 million, which includes pass through costs of approximately $1.0 million and
excludes certain third-party costs and escalations. AIM anticipates that the study will take approximately 4.6 years to complete.
On
June 13, 2022, AIM executed a work order with Amarex, pursuant to which Amarex will manage a Phase 2 trial in patients with Post-COVID
Conditions. It is planned that the study will be conducted at up to 10 sites in the United States. AIM is sponsoring the study. AIM anticipates
that the study will cost approximately $4.4 million, which includes pass through costs of approximately $125,470, investigator costs
estimated at about $2.4 million and excludes certain other third-party costs and escalations.
In
December 2020, AIM added Pharmaceutics International Inc. (“Pii”) as a “Fill & Finish” provider to enhance
its capacity to produce Ampligen. This addition amplifies AIM’s manufacturing capability by providing redundancy and cost savings.
The contracts augment our active and in-process fill and finish capacity. For the period ended December 31, 2021, the Company has incurred
an expense and paid Pii approximately $89,000. For the nine months ended September 30, 2022, the Company incurred an expense and paid
Pii approximately $259,000.
Note
15: Subsequent Events
On
October 5, 2022, the Delaware Court of Chancery held a hearing regarding a motion to require the AIM Board of Directors to accept the
Jorgl Group’s director nominations and include the group’s nominees on a universal proxy card for the 2022 Annual Meeting
of Stockholders. On October 28, 2022, the court denied Jorgl’s motion. The Jorgl Group announced on November 2, 2022, that it did
not intend to appeal the decision.
On
October 12, 2022, the Company announced that its Investigational New Drug (IND) application filed with the FDA was granted clearance
to proceed and therefore the Company could initiate a Phase 2 study evaluating Ampligen as a therapeutic for patients with post-COVID
conditions (“AMP-518”).
On
November 1, 2022, AIM completed the sale of its facility at 783 Jersey Avenue, New Brunswick, N.J., for $3.7
million net of normal closing cost.
In November 2022, AIM received notice that the FDA had granted Orphan
Drug Designation to Ampligen for the treatment of Ebola virus disease.
ITEM
2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Special
Note Regarding Forward-Looking Statements
Certain
statements in this Report contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E
of the Securities Exchange Act of 1934, as amended, which we refer to as the Exchange Act. These statements are based on our management’s
current beliefs, expectations and assumptions about future events, conditions and results and on information currently available to us.
Discussions containing these forward-looking statements may be found, among other places, in this Report in Part I, Item 7. “Management’s
Discussion and Analysis of Financial Condition and Results of Operations”; Part II, Item 1. “Legal Proceedings”; and
Part II, Item 1A. “Risk Factors”, as well as the following sections of our Annual Report on Form 10-K for the year ended
December 31, 2021: Item 1. “Business”, Part I; Item 1A. “Risk Factors”, Part I; Item 3. “Legal Proceedings”,
Part I and Part II; Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.
All
statements, other than statements of historical fact, included or incorporated herein regarding our strategy, future operations, financial
position, future revenues, projected costs, plans, prospects and objectives are forward-looking statements. Words such as “expect,”
“anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,”
“think,” “may,” “could,” “will,” “would,” “should,” “continue,”
“potential,” “likely,” “opportunity” and similar expressions or variations of such words are intended
to identify forward-looking statements but are not the exclusive means of identifying forward-looking statements and their absence does
not mean that a statement is not forward-looking. Our forward-looking statements are not guarantees of performance, and actual results
could vary materially from those contained in or expressed by such statements due to risks and uncertainties.
Among
the factors that could cause actual results to differ materially from those indicated in the forward-looking statements are risks and
uncertainties inherent in our business including, without limitation: our ability to adequately fund our projects as we will need additional
funding to proceed with our objectives; the potential therapeutic effect of our products; the possibility of obtaining regulatory approval;
our ability to find senior co-development partners with the capital and expertise needed to commercialize our products and to enter into
arrangements with them on commercially reasonable terms; our ability to manufacture and sell any products; our ability to enter into
arrangements with third party vendors; market acceptance of our products; our ability to earn a profit from sales or licenses of any
drugs; our ability to discover new drugs in the future, changing market conditions, changes in laws and regulations affecting our industry;
and future matters related to our New Jersey facility, which by definition we cannot define at this time.
We
are in various stages of seeking to determine whether Ampligen will be effective in the treatment of multiple types of viral diseases,
cancers, and immune-deficiency disorders. We discuss in this Report our current and anticipated future activities, all of which are subject
to change for a number of reasons. Significant testing and trials will be required to determine whether Ampligen will be effective in
the treatment of these conditions. Results obtained in animal models do not necessarily predict results in humans. Human clinical trials
will be necessary to prove whether or not Ampligen will be efficacious in humans. No assurance can be given as to whether current or
planned clinical trials will be successful or yield favorable data and the trials are subject to many factors including lack of regulatory
approval(s), lack of study drug, or a change in priorities at the institutions sponsoring other trials. We cannot assure that the clinical
studies will be successful or yield any useful data or require additional funding.
With
the outbreak of the COVID-19 coronavirus and our prior research into Ampligen’s antiviral activity against Severe Acute Respiratory
Syndrome, or SARS, we have been focused on the potential role that Ampligen could play in the treatment of SARS-CoV-2 — from a
protective prophylaxis/early-onset therapeutic to a treatment for post-COVID conditions. Our beliefs rely on a number of studies. No
assurance can be given that future studies will not result in findings that are different from those reported in the studies we refer
to. The pandemic is disrupting world health and world economies and most likely will continue to do so for a long time. While we are
able to continue to operate, clearly, like all businesses, we are unable to gauge how bad this pandemic will affect our operations in
the future. We reached out to numerous foreign governments related to COVID-19 and, if successful, may be working in these countries.
Operating in foreign countries carries with it a number of risks, including potential difficulties in enforcing intellectual property
rights. We cannot assure that our potential operations in foreign countries will not be adversely affected by these risks. We have filed
provisional patent applications related to the COVID-19 coronavirus. However, these filings do not assure that patents will ultimately
be granted.
In
February 2013, we received a Complete Response Letter (CRL) from the Food and Drug Administration, or FDA, for our Ampligen New Drug
Application, or NDA, for the treatment of CFS. The FDA communicated that we should conduct at least one additional clinical trial, complete
various nonclinical studies and perform a number of data analyses. Accordingly, the remaining steps to potentially gain FDA approval
of the Ampligen NDA, the final results of these and other ongoing activities could vary materially from our expectations and could adversely
affect the chances for approval of the Ampligen NDA. These activities and the ultimate outcomes are subject to a variety of risks and
uncertainties, including but not limited to risks that (i) the FDA may ask for additional data, information or studies to be completed
or provided; and (ii) the FDA may require additional work related to the commercial manufacturing process to be completed or may, in
the course of the inspection of manufacturing facilities, identify issues to be resolved. A proposed confirmatory trial and responses
to the CRL are being worked on now by our R&D team and consultants.
In
August 2016, we received approval of our NDA from Administracion Nacional de Medicamentos, Alimentos y Tecnologia Medica (“ANMAT”),
for commercial sale of rintatolimod (U.S. tradename: Ampligen®) in the Argentine Republic for the treatment of severe CFS. The product
will be marketed by GP Pharm, our commercial partner in Latin America. We believe, but cannot assure, that this approval provides a platform
for potential sales in certain countries within the European Union under regulations that support cross-border pharmaceutical sales of
licensed drugs. In Europe, approval in a country with a stringent regulatory process in place, such as Argentina, should add further
validation for the product as the Early Access Program, or EAP, as discussed below and underway in Europe in pancreatic cancer. ANMAT
approval is only an initial, but important, step in the overall successful commercialization of our product. There are a number of actions
that must occur before we could be able to commence commercial sales in Argentina. In September 2019, we received clearance from the
FDA to ship Ampligen to Argentina for the commercial launch and subsequent sales. In June 2020, we received import clearance from ANMAT
to import the first shipment of commercial grade vials of Ampligen into Argentina. We are currently working with GP Pharma on the commercial
launch of Ampligen in Argentina. Commercialization in Argentina will require, among other things, an appropriate reimbursement level,
appropriate marketing strategies, completion of manufacturing preparations for launch and ANMAT conducting a final inspection of the
product and release tests before granting final approval to begin commercial sales. This testing and approval process is currently delayed
due to the COVID-19 pandemic and ANMAT’s internal processes. Approval of rintatolimod for severe CFS in the Argentine Republic
does not in any way suggest that the Ampligen NDA in the United States or any comparable application filed in the European Union or elsewhere
will obtain commercial approval.
In
May 2016, we entered into a five-year agreement with myTomorrows, a Netherlands based company, for the commencement and management of
an EAP in Europe and Turkey related to CFS. Pursuant to the agreement, myTomorrows, as our exclusive service provider and distributor
in this territory, is performing EAP activities. In January 2017, the EAP was extended to pancreatic cancer patients beginning in the
Netherlands. In February 2018, we signed an amendment to extend the territory to cover Canada to treat pancreatic cancer patients, pending
government approval. In March 2018, we signed an amendment to which myTomorrows will be our exclusive service provider for special access
activities in Canada for the supply of Ampligen for the treatment of CFS. MyTomorrows provides services related to the supply and distribution
of Ampligen to patients in Early Access Programs (EAPs) which are initiated through a physician’s request; there have been no physician
requests that have led to government approval, therefore no patients have been treated under an EAP for either pancreatic cancer or CFS
in Canada. No assurance can be given that we can sufficiently supply product should we experience an unexpected demand for Ampligen in
our clinical studies, the commercial launch in Argentina or pursuant to the EAPs. No assurance can be given that Ampligen will prove
effective in the treatment of pancreatic cancer. The agreement was automatically extended for a period of 12 months on May 20, 2021,
and again for an additional period of 12 months on May 20, 2022.
Multiple
Ampligen clinical trials are underway, in various phases of development and activity, with a number of subjects enrolled at university
cancer centers testing whether tumor microenvironments can be reprogrammed to increase the effectiveness of cancer immunotherapy, including
checkpoint blockade. One site of clinical trials is Roswell Park and the other is the University of Pittsburgh Medical Center. (See:
“Research and Development; Immuno-oncology”). No assurance can be given as to the results of these underway trials. No assurance
can be given as to whether some or all of the planned additional oncology clinical trials will occur and they are subject to many factors,
including lack of regulatory approval(s), lack of study drug, or a change in priorities at the sponsoring universities or cancer centers.
Even if these additional clinical trials are initiated, as we are not the sponsor, we cannot assure that these clinical studies or the
studies underway will be successful or yield any useful data. In addition, initiation of planned clinical trials may not occur secondary
to many factors including lack of regulatory approval(s) or lack of study drug. Even if these clinical trials are initiated, we cannot
assure that the clinical studies will be successful or yield any useful data or require additional funding.
Our
overall objectives include plans to continue seeking approval for commercialization of Ampligen in the United States and abroad as well
as seeking to broaden commercial therapeutic indications for Alferon N Injection presently approved in the United States and Argentina.
We continue to pursue senior co-development partners with the capital and expertise needed to commercialize our products and to enter
into arrangements with them on commercially reasonable terms. Our ability to commercialize our products, widen commercial therapeutic
indications of Alferon N Injection and/or capitalize on our collaborations with research laboratories to examine our products are subject
to a number of significant risks and uncertainties including, but not limited to our, ability to enter into more definitive agreements
with some of the research laboratories and others that we are collaborating with, to fund and conduct additional testing and studies,
whether or not such testing is successful or requires additional testing and meets the requirements of the FDA and comparable foreign
regulatory agencies. We do not know when, if ever, our products will be generally available for commercial sale for any indication.
We
strived to maximize the outsourcing of certain components of our manufacturing, quality control, marketing and distribution while maintaining
control over the entire process through our quality assurance and regulatory groups. We cannot provide any guarantee that the facility
or our contract manufacturers will pass an FDA pre-approval inspection for Alferon N Injection manufacturing.
In
May 2021, we exercised our option to re-purchase the New Brunswick manufacturing facility, pursuant to the terms of the March 2018
sale and lease-back agreement. We thereafter sold certain equipment and machinery that we determined to be obsolete and no longer
needed for current or future manufacturing. On March 3, 2022, we entered into an Agreement of Sale and Purchase with Acellories,
Inc. to purchase the property for an estimated $3.9 million, with AIM’s intention to keep some space specifically for its
Alferon activity. The sale was finalized on November 1, 2022 for $3.7 million net of normal closing cost.
In
June 2022 we entered into a lease agreement with the New Jersey Economic Development Authority for a 5,210 square-foot, state-of-the-art
R&D facility at the New Jersey Bioscience Center (“NJBC”), primarily consisting of two separate laboratory suites. The
facility is AIM’s operations, research and development center.
The
production of new Alferon N Injection Active Pharmaceutical Ingredient, or API, is currently on hold. The New Brunswick facility is approved
by the FDA under the Biological License Application, or BLA, for Alferon N Injection. While we are selling the New Brunswick facility,
we intend to maintain a certain amount of space at that facility for Alferon activities, the sale of the facility will move up the timeline
for contracting with a CMO, or CMOs, capable of producing Alferon, and receiving FDA approval to do so, prior to commercial sale of newly
produced inventory product. If and when we obtain a reaffirmation of FDA BLA status and have begun production of new Alferon N Injection
API, it will need FDA approval as to the quality and stability of the final product before commercial sales can resume. We may need additional
funds to finance the validation process. If we are unable to gain the necessary FDA approvals related to the manufacturing process and/or
final product of new Alferon N Injection inventory, our operations most likely will be materially and/or adversely affected. In light
of these contingencies, there can be no assurances that the approved Alferon N Injection product will be returned to production on a
timely basis, if at all, or that if and when it is again made commercially available, it will return to prior sales levels.
In
December 2020, we added Pii as a “Fill & Finish” provider to enhance our capacity to produce Ampligen. This addition
amplifies our manufacturing capability by providing redundancy and cost savings. The contracts augment our active and in-process fill
and finish capacity.
Due
to continuing delays and other obstacles related to importing Ampligen to China, on August 10, 2022, we ended our contract with Shenzhen
Smoore Technology for the development of an Ampligen delivery device for the treatment of SARS-CoV-2.
We
believe, and are investigating, Ampligen’s potential role in enhancing the activity of influenza vaccines. While certain studies
involving rodents, non-human primates (monkeys) and healthy human subjects indicate that Ampligen may enhance the activity of influenza
vaccines by conferring increased cross-reactivity or cross-protection, further studies will be required and no assurance can be given
that Ampligen will assist in the development of a universal vaccine for influenza or other viruses.
Because
forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some
of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events
and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially
from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties
may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required
by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of
any new information, future events, changed circumstances or otherwise.
This
Report also refers to estimates and other statistical data made by independent parties and by us relating to market size and growth and
other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight
to such estimates. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets
in which we operate are necessarily subject to a high degree of uncertainty and risk.
Overview
General
AIM
ImmunoTech Inc. and its subsidiaries (collectively, “AIM”, “Company”, “we” or “us”) are
an immuno-pharma company headquartered in Ocala, Florida, and focused on the research and development of therapeutics to treat multiple
types of cancers, viral diseases and immune-deficiency disorders. We have established a strong foundation of laboratory, pre-clinical
and clinical data with respect to the development of nucleic acids and natural interferon to enhance the natural antiviral defense system
of the human body, and to aid the development of therapeutic products for the treatment of certain cancers and chronic diseases.
Our
flagship products are Ampligen® (rintatolimod), a first-in-class drug of large macromolecular RNA (ribonucleic acid) molecules, and
Alferon N Injection® (Interferon alfa-n3). Ampligen has not been approved by the FDA or marketed in the United States. Ampligen is
approved for commercial sale in the Argentine Republic for the treatment of severe CFS.
Our
primary present business focus involves Ampligen. Ampligen represents a dsRNA being developed for globally important cancers, viral diseases
and disorders of the immune system.
We
currently are proceeding primarily in four areas:
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A
randomized controlled study to evaluate efficacy and safety of Ampligen compared to a control group to treat locally advanced pancreatic
cancer patients. |
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Evaluate
Ampligen in other cancers, as a potential therapy that modifies the tumor microenvironment with the goal of increasing anti-tumor
responses to check point inhibitors. |
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Exploring
Ampligen’s antiviral activities and potential use as a prophylactic or treatment for existing viruses, new viruses and mutated
viruses thereof. |
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Ampligen
as a treatment for ME/CFS and fatigue and/or Post-COVID conditions of fatigue. |
We
are prioritizing our activities in an order related to the stage of development, with those clinical activities such as pancreatic cancer,
ME/CFS and Post-COVID conditions having priority over antiviral experimentation. We intend that priority clinical work be conducted in
FDA- or EMA-authorized trials which could support a potential future NDA. However, our antiviral experimentation is designed to accumulate
additional preliminary data supporting our hypothesis that Ampligen is a powerful, broad-spectrum prophylaxis and early-onset therapeutic
that may confer enhanced immunity and cross-protection. Accordingly, we will conduct our antiviral programs in those venues most readily
available and able to generate valid proof-of-concept data, including foreign venues.
Immuno-Oncology.
We
are focused on pancreatic cancer because testing results, to date, primarily conducted in the Netherlands, have been very promising.
The Netherlands study generated statistically significant data indicating that Ampligen extended survival well beyond the Standard of
Care (“SOC”), when compared to well-matched historical controls. These data support the proposition that Ampligen, when administered
to either patients with locally advanced or metastatic pancreatic cancer after systemic chemotherapy showed a statistically significant
increase in survival rate. In October 2021, we and our Contract Research Organization, Amarex, submitted an Investigational New Drug
(“IND”) application to the U.S. Food and Drug Administration (“FDA”) for a planned Phase 2 study of Ampligen
as a therapy for locally advanced or metastatic late-stage pancreatic cancer. In August 2022, we received Institutional Review Board
(“IRB”) approval of the trial protocol and so announced the trial’s commencement. Assuming this trial and subsequent
planned clinical trials confirm the existing data, our goal is to then submit an NDA for use of Ampligen in pancreatic cancer patients.
Because
of the differences in the scale of necessary trials, our initial primary focus when it comes to pancreatic cancer will be cases that
are locally advanced, rather than metastatic. The number of different approaches to treating metastatic pancreatic cancer —
approaches which would be determined by treating physicians — would require a much larger, far more expensive trial than would
a trial for locally advanced pancreatic cancer. Therefore, we are focusing on patients who have completed FOLFIRINOX and have stable
disease. Ampligen has also demonstrated in the clinic the potential for standalone efficacy in
a number of other solid tumors. We have also seen success in increasing survival rates and efficacy in the treatment of animal
tumors when Ampligen is used in combination with checkpoint blockade therapies. In fact, in March 2022 we announced interim data
from an investigator-initiated, Phase 2, single-arm, efficacy/safety trial to evaluate the effectiveness of combining intensive
locoregional intraperitoneal (IP) chemoimmunotherapy of cisplatin with IP Ampligen (TLR-3 agonist) and IV infusion of the checkpoint
inhibitor pembrolizumab for patients with recurrent platinum-sensitive ovarian cancer. We believe that data from the study, which is
being conducted by the University of Pittsburgh Medical Center and funded by a Merck grant, demonstrated that when combining three
drugs – Ampligen and pembrolizumab, which are both immune therapies, with cisplatin, a chemotherapy – evidence of
increased biomarkers associated with T cell chemotaxis and cytolytic function has been seen. Importantly, increases of these
biomarkers in the tumor microenvironment have been correlated with favorable tumor responses. These successes in the field of
immuno-oncology have guided our efforts toward the potential use of Ampligen as a combinational therapy for the treatment of a
variety of solid tumor types. The first of our patent applications in this space was granted by the Netherlands on March 15,
2021.
Please
see “Immuno-Oncology” below.
Ampligen
as an Antiviral.
We
have a research and pre-clinical history that indicates broad-spectrum antiviral capability of Ampligen in animals. We hope to demonstrate
that it has the same effect in humans. To do this, among other things, we need a population infected with a virus. That is why we have
spent significant resources on COVID-19 (the disease caused by SARS-CoV-2) which is active and still infecting many subjects. While much
would need to be done to get Ampligen to market as a broad-spectrum antiviral, we believe that it is important to focus our efforts first
and foremost on thoroughly proving the concept, especially while there is still a large COVID-19-infected population. Previously, animal
studies were conducted that yielded positive results utilizing Ampligen to treat numerous viruses, such as Western Equine Encephalitis
Virus, Ebola, Vaccinia Virus (which is used in the manufacture of smallpox vaccine) and SARS-CoV-1. We have conducted experiments in
SARS-CoV-2 showing Ampligen has a powerful impact on viral replication. The prior studies of Ampligen in SARS-CoV-1 animal experimentation
may predict similar protective effects against SARS-CoV-2.
The
FDA has requested that we provide additional data to assist the agency in evaluating the potential risks and benefits of administering
Ampligen to asymptomatic and mild COVID-19 individuals. However, as discussed in more detail below, where the threat to the patient from
COVID-19 is high, the FDA has already authorized Ampligen in a clinical trial of patients with COVID-19 who have a pre-existing cancer.
That Phase 1/2a study utilizing Ampligen is underway. We have also elected to explore studies (initially with healthy volunteers) outside
the United States and have already conducted an intranasal safety study in the Netherlands.
In
this regard, CHDR, a foundation located in Leiden in the Netherlands, managed a Phase 1 randomized, double-blind study for us to evaluate
the safety, tolerability and biological activity of repeated administration of Ampligen intranasally. A total of 40 healthy subjects
received either Ampligen or a placebo in the trial, with the Ampligen given at four escalating dosages across four cohorts, to a maximum
level of 1,250 micrograms. All patients had completed treatment by June 2021 and the Final Safety Report reported no Serious or Severe
Adverse Events at any dosage level.
Today,
over two years after COVID-19 first appeared, the world has a number of vaccines and some promising therapeutics. Our quest to prove
the antiviral activities of Ampligen continues. If Ampligen has the broad-spectrum antiviral properties that we believe that it has,
it could be a very valuable tool in treating variants of existing viral diseases, including COVID-19, or novel ones that arise in the
future. Unlike most developing therapeutics which attack the virus, Ampligen works differently. We believe that it activates antiviral
immune system pathways that fight not just a particular virus or viral variant, but other similar viruses as well.
In
October 2022, our IND application filed with the FDA had cleared the approval process and we are proceeding with a Phase 2 study evaluating
Ampligen as a therapeutic for patients with post-COVID conditions (“AMP-518”).
Please
see “Ampligen as a Potential Antiviral” below.
Ampligen
as a treatment for ME/CFS and Post-COVID Conditions
We
have long been focused on seeking the FDA’s approval for the use of Ampligen to treat ME/CFS. In fact, in February 2013, we received
a Complete Response letter (“CRL”) from the FDA for our Ampligen NDA for ME/CFS, stating that we should conduct at least
one additional clinical trial, complete various nonclinical studies and perform a number of data analyses.
While
developing a comprehensive response to the FDA and a plan for a confirmatory trial for the FDA NDA, we proceeded independently in Argentina
and, in August 2016, we received approval of an NDA from ANMAT for commercial sale of Ampligen in the Argentine Republic for the treatment
of severe CFS. In September 2019, we received clearance from the FDA to ship Ampligen to Argentina for the commercial launch and subsequent
sales. On June 10, 2020, we received import clearance from ANMAT to import the first shipment of commercial grade vials of Ampligen into
Argentina. The next steps in the commercial launch of Ampligen include ANMAT conducting a final inspection of the product and release
tests before granting final approval to begin commercial sales. This testing and approval process is currently delayed due to the COVID-19
pandemic and ANMAT’s internal processes. The ongoing impact of COVID-19 in Argentina is taxing the nation’s health care system
and is, understandably, the main priority of its regulators. Once final approval by ANMAT is obtained, GP Pharm will begin distributing
Ampligen in Argentina.
The
FDA authorized an open-label treatment protocol (“AMP-511”) allowing patient access to Ampligen for treatment in a study
under which severely debilitated CFS patients have the opportunity to be on Ampligen to treat this very serious and chronic condition.
The data collected from the AMP-511 protocol through a consortium group of clinical sites provide safety information regarding the use
of Ampligen in patients with CFS. The AMP-511 protocol is ongoing. In October 2020, we received IRB approval for the expansion of the
AMP-511 protocol to include patients previously diagnosed with SARS-CoV-2 following clearance of the virus, but who still demonstrate
chronic fatigue-like symptoms that we refer to as Post-COVID conditions. As of September 30, 2022, there were 11 patients enrolled in
this open-label expanded access treatment protocol (including two patients with Post-COVID-19 Conditions). To date, there have been five
such Post-COVID patients treated. In July 2022, AIM reported positive preliminary results based on data from the first four Post-COVID
Condition patients enrolled in the study. The data show that, by week 12, compared to baseline, there was what the investigators considered
a clinically significant decrease in fatigue-related measures.
We
plan on a comprehensive follow through with the FDA regarding the use of Ampligen as a treatment for ME/CFS. We have learned a great
deal since the FDA’s CRL and plan to adjust our approach to concentrate on specific ME/CFS symptoms. Responses to the CRL and a
proposed confirmatory trial are being worked on now by our R&D team and consultants.
Please
see “Myalgic Encephalomyelitis/Chronic Fatigue Syndrome (ME/CFS)” below.
OUR
PRODUCTS
Our
primary pharmaceutical product platform consists of Ampligen (rintatolimod), a first-in-class drug of large macromolecular double-stranded
(ds) RNA (ribonucleic acid) molecules, and our FDA-approved natural alpha-interferon product, Alferon N Injection.
Ampligen®
Ampligen
is approved for sale in Argentina (to 2026) for severe CFS and is an experimental drug in the United States currently undergoing clinical
development for the treatment of certain cancers and ME/CFS. Over its developmental history, Ampligen has received various designations,
including Orphan Drug Product Designation (FDA and EMA), Treatment protocol (e.g., “Expanded Access” or “Compassionate”
use authorization) with Cost Recovery Authorization (FDA) and “promising” clinical outcome recognition based on the evaluation
of certain summary clinical reports (“AHRQ” or Agency for Healthcare Research and Quality). Based on the results of published,
peer-reviewed pre-clinical studies and clinical trials, we believe that Ampligen may have broad-spectrum antiviral and anti-cancer properties.
We
believe that nucleic acid compounds represent a potential new class of pharmaceutical products designed to act at the molecular level
for treatment of many human diseases. Ampligen represents the first drug in the class of large (macromolecular) dsRNA molecules to apply
for NDA review. There are two forms of nucleic acids: deoxyribonucleic acid (“DNA”) and ribonucleic acid (“RNA”).
DNA is a group of naturally occurring molecules found in chromosomes, the cell’s genetic machinery. RNA is a group of naturally
occurring informational molecules which orchestrate a cell’s behavior which, in turn, regulates the action of groups of cells,
including the cells which comprise the body’s immune system. RNA directs the production of proteins and regulates certain cell
activities including the activation of an otherwise dormant cellular defense against viruses and tumors. Our drug technology utilizes
specifically configured RNA and is a selective Toll-like Receptor 3 (“TLR3”) agonist that can be administered intravenously,
intranasally and intraperitoneally. Ampligen has been assigned the generic name rintatolimod by the United States Adopted Names Council
(“USANC”) and has the chemical designation poly(I):poly(C12U).
Expanded
Access Program/Early Access Programs/clinical trials of Ampligen that have been conducted or that are ongoing include studies of the
potential treatment of patients with pancreatic cancer, renal cell carcinoma, malignant melanoma, non-small cell lung cancer, ovarian
cancer, breast cancer, colorectal cancer, prostate cancer, ME/CFS, Hepatitis B, HIV, COVID-19 and Post-COVID conditions.
We
have received approval of our NDA from ANMAT for the commercial sale of Ampligen in the Argentine Republic for the treatment of severe
CFS. The product will be marketed by GP Pharm, our commercial partner in Latin America. Shipment of the drug product to Argentina was
initiated in 2018 to complete the release testing by ANMAT needed for commercial distribution. In September 2019, we received clearance
from the FDA to ship Ampligen to Argentina for the commercial launch and subsequent sales. In June 2020, we received import clearance
from ANMAT to import the first shipment of commercial grade vials of Ampligen into Argentina. We are currently working with GP Pharm
on the commercial launch of Ampligen in Argentina. Commercialization in Argentina will require, among other things, GP Pharm to establish
disease awareness, medical education, creation of an appropriate reimbursement level, design of marketing strategies and completion of
manufacturing preparations for launch and ANMAT conducting a final inspection of the product and release tests before granting final
approval to begin commercial sales. AIM has supplied GP Pharm with the Ampligen required for testing and ANMAT release. This testing
and approval process is currently delayed due to the COVID-19 pandemic and ANMAT’s internal processes. The ongoing impact of COVID-19
in Argentina is taxing the nation’s health care system and is, understandably, the main priority of its regulators. Once final
approval by ANMAT is obtained, GP Pharm will begin distributing Ampligen in Argentina. We continue to pursue our Ampligen NDA, for the
treatment of CFS with the FDA.
The
FDA has authorized an open-label expanded access treatment protocol (AMP-511) allowing patient access to Ampligen in a study under which
severely debilitated CFS patients have the opportunity to be on Ampligen to treat this very serious and chronic condition. The AMP-511
protocol started in the 1990s and is ongoing. The data collected from the AMP-511 protocol through clinical sites provide safety information
regarding the use of Ampligen in patients with CFS. We are establishing an enlarged database of clinical safety information which we
believe will provide further documentation regarding the absence of autoimmune disease associated with Ampligen treatment. We believe
that continued efforts to understand existing data, and to advance the development of new data and information, will ultimately support
our future filings for Ampligen and/or the design of future clinical studies that the FDA requested in a CRL. The FDA approved an increased
reimbursement level from $200 to $345 per 200 mg vial of Ampligen, due to increased production costs; which was re-authorized in 2021
and again in 2022. At this time, we do not plan on passing this adjustment along to the patients in this program. In October 2020, we
received IRB approval for the expansion of the AMP-511 Expanded Access Program clinical trial for ME/CFS to include patients previously
diagnosed with SARS-CoV-2 following clearance of the virus, but who still demonstrate chronic fatigue-like symptoms that we refer to
as Post-COVID conditions. As of September 30, 2022, there are 11 patients enrolled in this open-label expanded access treatment protocol
(including two Post-COVID-19 patients). To date, there have been five such Post-COVID patients treated. In July 2022, AIM reported positive
preliminary results based on data from the first four Post-COVID Condition patients enrolled in the study. The data show that, by week
12, compared to baseline, there was what the investigators considered a clinically significant decrease in fatigue-related measures.
In
May 2016, we entered into a five-year agreement with myTomorrows, a Netherlands based company, for the commencement and management of
an Early Access Program (“EAP”) in Europe and Turkey related to ME/CFS. Pursuant to the agreement, as amended, myTomorrows
also is managing all Early Access Programs and Special Access Programs in Europe, Canada and Turkey to treat pancreatic cancer and ME/CFS
patients. The agreement was automatically extended for a period of 12 months on May 20, 2021, and again for an additional period of 12
months on May 20, 2022.
In
June 2018, Ampligen was cited as outperforming two other TLR3 agonists — poly IC and natural double stranded RNA — in creating
an enhanced tumor microenvironment for checkpoint blockade therapy in the journal of Cancer Research (http://cancerres.aacrjournals.org/content/early/2018/05/31/0008-5472.CAN-17-3985).In
a head-to-head study in explant culture models, Ampligen activated the TLR3 pathway and promoted an accumulation of killer T cells but,
unlike the other two TLR3 agonists, it did so without causing regulatory T cell (Treg) attraction. These findings were considered important
because they indicate that Ampligen selectively reprograms the tumor microenvironment by inducing the beneficial aspects of tumor inflammation
(attracting killer T cells), without amplifying immune-suppressive elements such as regulatory T cells. The study was conducted at the
University of Pittsburgh and Roswell Park as a part of the NIH-funded P01 CA132714 and Ovarian Cancer Specialized Program of Research
Excellence (“SPORE”).
In
2018, we completed production of two commercial-size batches of more than 16,000 vials of Ampligen, following its “Fill & Finish”
at Jubilant HollisterStier, the Contract Manufacturing Organization. These lots passed all required testing for regulatory release for
human use and are being used for multiple programs, including: the treatment of ME/CFS; the pancreatic cancer EAP in the Netherlands;
and will continue to be used for ongoing and future clinical studies in oncology. Additionally, two lots of Ampligen were manufactured
in December 2019 and January 2020 at Jubilant HollisterStier. The current manufactured lots of Ampligen have been fully tested and released
for commercial product launch in Argentina and for clinical trials. Additionally, in December 2020, we added Pii as a “Fill &
Finish” provider to enhance our capacity to produce Ampligen. This addition amplifies our manufacturing capability by providing
redundancy and cost savings. The contracts augment our active and in-process fill and finish capacity.
Immuno-Oncology
The
potential of Ampligen as an immuno-oncology therapeutic has been a major focus of AIM since our current leadership took over in 2016.
We have been working with the University of Pittsburgh’s chemokine modulation research initiative, which includes the use of Ampligen
as a potential adjuvant to modify the tumor microenvironment (“TME”) with the goal of increasing anti-tumor responses to
check point inhibitors (“CPI”). As part of this collaboration, we have supplied Ampligen to the University. The study, under
the leadership of Robert P. Edwards, MD, chair of gynecologic services at Magee-Women’s Hospital of the University of Pittsburgh
School of Medicine, and Professor of Surgery Pawel Kalinski, M.D., Ph.D., at Roswell Park, Buffalo, N.Y., involved the chemokine modulatory
regimen developed by Dr. Kalinski’s group and successfully completed the Phase 1 dose escalation in patients with resectable colorectal
cancer.
Multiple
Ampligen clinical trials are underway or recently completed at major university cancer centers testing whether tumor microenvironments
can be reprogrammed to increase the effectiveness of cancer immunotherapy, including checkpoint inhibitors. The underway trials include:
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Pancreatic
Cancer Trial - The Phase 2 AMP-270 clinical trial is a randomized, open-label, controlled, parallel-arm study with the primary
objective of comparing the efficacy of Ampligen versus a no treatment control group following FOLFIRINOX for subjects with locally
advanced pancreatic adenocarcinoma. Secondary objectives include comparing safety and tolerability. The AMP-270 is expected to enroll
approximately 90 subjects in up to 30 centers across the U.S. and Europe. The Buffett Cancer Center at the University of Nebraska
Medical Center (UNMC) and Erasmus MC in the Netherlands are expected to be the primary study sites. In March 2022, the FDA granted
clearance to proceed with the study. In April 2022, we executed a work order with Amarex to manage the clinical trial. In August
2022, we received IRB approval of the trial protocol and so announced the trial’s commencement. For the year ended December
31, 2021, we incurred expense of approximately $195,000. For the nine months ended September 30, 2022, we paid approximately $1,756,000. |
See
“Immuno-Oncology; Additional Progress and Analysis Related to Pancreatic Cancer” for more analysis.
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Advanced
Recurrent Ovarian Cancer |
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Results
of the Phase 1 portion of a Phase 1/2 study of intraperitoneal chemo-immunotherapy in advanced recurrent ovarian cancer were published
in the American Association for Cancer Research publication, Clinical Cancer Research (Clin Cancer Res January 19, 2022 DOI: 10.1158/1078-0432.CCR-21-3659).
The study results represent an important extension of prior studies using human tumor explants that showed Ampligen’s potentially
important role as a TLR3 agonist acting synergistically with high-dose IFNα and celecoxib to selectively enhance Teff cell-attractants
while suppressing Treg-attractants in the tumor microenvironment with a concomitant increase in the Teff/Treg ratio. The importance of
boosting the Teff/Treg ratio in the tumor microenvironment is that it is associated with the conversion of ‘cold’ tumors
into ‘hot’ tumors, which have an increased sensitivity to chemo-immunotherapy and an improved chance of showing tumor regression.
The Phase 1 portion was designed to establish intraperitoneal safety. The Phase 2 portion of the study is planned to be conducted in
the future. https://clinicaltrials.gov/ct2/show/NCT02432378 |
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A follow-up Phase 2 study of advanced recurrent
ovarian cancer using cisplatin, pembrolizumab, plus Ampligen; up to 45 patients to be enrolled; enrollment has commenced, and numerous
patients have commenced treatment. We announced interim data from the study demonstrating that evidence of increased biomarkers
associated with T cell chemotaxis and cytolytic function was seen when combining Ampligen, pembrolizumab and cisplatin. Increases
of these biomarkers in the tumor microenvironment have been correlated with favorable tumor responses. Interim results announced
March 2022 detailed an observed clinical response rate of 61% includes two complete and three partial tumor responses, plus three
patients with stable disease among the 13 evaluable patients. An important priority will be to confirm these findings through continuing
to enroll patients onto this study. https://clinicaltrials.gov/ct2/show/NCT03734692 |
In
March 2021, we were granted a patent by the Netherlands Patent Office with granted patent claims that include, but are not limited to,
the use of Ampligen as a combination cancer therapy with checkpoint blockade inhibitors (e.g. pembrolizumab, nivolumab). Interim data
from an investigator-initiated, Phase 2, single-arm, efficacy/safety trial demonstrated that evidence of increased biomarkers associated
with T cell chemotaxis and cytolytic function was seen when combining Ampligen, pembrolizumab and cisplatin. It is critical to note that
increases of these biomarkers in the tumor microenvironment have been correlated with favorable tumor responses. All told, the study
has seen an Objective Response Rate (ORR) 38.5%; a study of pembrolizumab alone in the treatment of advanced recurrent ovarian cancer
found ORR of 8.1% and 9.9% across two cohorts. The positive data makes this patent have heightened potential. Similar patents are
pending in other countries.
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Stage
4 Metastatic Triple Negative Breast Cancer - Phase 1 study of metastatic triple-negative breast cancer using chemokine modulation
therapy, including Ampligen and pembrolizumab. Eight patients were enrolled and 6 patients were evaluable. https://www.clinicaltrials.gov/ct2/show/NCT03599453.
The key findings announced April 2022 included: |
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The
pre-determined primary endpoint of efficacy was met (increase in CD8 in TME). |
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Uniform
increase of immune markers upon treatment was observed: CD8 mRNA (6.1-fold; p-0.034), GZMB mRNA (3.5-fold; p=0.058), ratios of CD8
/FOXP3 and GZMB/FOXP3 (5.7-fold; p=0.036, and 7.6-fold; p=0.024 respectively), thus successfully meeting the pre-determined primary
endpoint in the study (increase in CD8 in TME). |
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In
addition, an increase in CTL attractants CXCL10 (2.6-fold; p=0.104) and CCL5 (3.3-fold; p=0.019) was observed. In contrast, Treg
marker FOXP3 or Treg attractants CCL22 or CXCL12 were not enhanced. |
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Three
patients had stable disease lasting 2.4, 2.5 and 3.8 months, as of data cut off September 1, 2021. |
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An
additional patient (non-evaluable) had a partial response (breast tumor autoamputation) with massive tumor necrosis in the post-CKM
biopsy. |
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Stage
4 Colorectal Cancer Metastatic to the Liver - Phase 2a study of Ampligen as a component of chemokine modulatory regimen on colorectal
cancer metastatic to liver; recruitment has been completed; 19 patients were enrolled and 12 patients were evaluable for the primary
endpoint https://clinicaltrials.gov/ct2/show/NCT03403634. The key findings announced April 2022 included: |
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The
study’s primary endpoint was met, evidenced by increased CD8a expression post-treatment (p=0.046). |
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Saw
increase in the CD8a/CD4 (p=0.03), CD8a/FOXP3 (p<0.01) and GZMB/FOXP3 (p<0.01) ratios. |
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The
expression of CTL-attracting chemokines CCL5 (p=0.08), CXCL9 (p=0.05), and CXCL10 (p=0.06) were increased, while expression of the
Treg/MDSC attractant CXCL12 (p=0.07) was decreased post-treatment. |
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Median
OS was 10.5 (90% CI 2.2-15.2) months, and the median PFS was 1.5 (90% CI 1.4, 1.8) months. |
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○ |
No
tumor responses were seen. The treatment was well tolerated. Of all enrolled patients (N=19), adverse events were noted in 74% of
patients, with the most common being fatigue (58%). Grade 3 or higher adverse events were rare (5%). |
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Early-Stage
Prostate Cancer - Phase 2 study investigating the effectiveness and safety of aspirin and Ampligen with or without interferon-alpha
2b (Intron A) compared to no drug treatments in a randomized three-arm study of patients with prostate cancer before undergoing radical
prostatectomy. Patient enrollment has been initiated in this study designed for up to 45 patients. https://clinicaltrials.gov/ct2/show/NCT03899987 |
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Early-Stage
Triple Negative Breast Cancer - Phase 1 study of chemokine modulation plus neoadjuvant chemotherapy in patients with early-stage
triple negative breast cancer has received FDA authorization; the objective of this study is to evaluate the safety and tolerability
of a combination of Ampligen, celecoxib with or without Intron A, when given along with chemotherapy; the goal of this approach is
to increase survival. Interim results announced in March 2022 detailed data gathered from evaluating paclitaxel’s impact on
chemokine production in the human breast tumor microenvironment (TME) and the ability of a chemokine modulatory regimen (CKM) of
Ampligen and Interferon-α to mitigate potentially undesirable aspects of taxane chemotherapy. Based on the results, we believe
that the combination chemokine modulatory regimen including Ampligen has the potential to mitigate undesirable aspects of taxane
chemotherapy. Investigators are currently analyzing data. https://clinicaltrials.gov/ct2/show/NCT04081389 |
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Refractory
Melanoma — Roswell Park Comprehensive Cancer Center (“Roswell Park”), in a clinical trial fully funded by the
National Cancer Institute (NCI), has commenced patient enrollment in its Phase 2 study in subjects with primary PD-1/PD-L1 resistant
melanoma. The Phase 2 study will evaluate type-1 polarized dendritic cell (αDC1) vaccine in combination with tumor-selective
chemokine modulation (“CKM”) comprised of Interferon alpha 2b, Ampligen (rintatolimod) and Celecoxib. Up to 24 patients
to be (See: https://www.clinicaltrials.gov/show/NCT04093323). |
Additional
Progress and Analysis Related to Pancreatic Cancer
In
January 2017, the EAP established under our agreement with myTomorrows to enable access of Ampligen to ME/CFS patients was extended to
pancreatic cancer patients beginning in the Netherlands. myTomorrows is our exclusive service provider in Europe and Turkey and will
manage all EAP activities relating to the pancreatic cancer extension of the program. In February 2018, the agreement with myTomorrows
was extended to cover Canada to treat pancreatic cancer patients, pending government approval. There have been no physician requests
to date that would cause the program to move forward with the approval process.
A
total of 42 pancreatic cancer patients initially received treatment with Ampligen immuno-oncology therapy under the EAP program at Erasmus
MC in the Netherlands; that initial program has since continued to expand and proceed with additional patients to be treated with Ampligen
Supervised by Prof. C.H.J. van Eijck, MD. The team at Erasmus MC in September 2020 reported data which demonstrated a statistically significant
positive survival benefit when using Ampligen in patients with locally advanced or metastatic pancreatic cancer after systemic chemotherapy,
compared with historical control patients. We are working with our Contract Research Organization, Amarex Clinical Research LLC, to seek
FDA “fast-track.” We have applied for fast-track status; have received denials to date; and are currently working through
the FDA process to provide all the materials and information required to achieve fast-track status. The IND authorization to proceed
with the Phase 2 pancreatic cancer clinical trial has been received with potential sites in the Netherlands at Erasmus MC under Prof.
C.H.J. van Eijck, and also at major cancer research centers in the United States such as The Buffett Cancer Center at the University
of Nebraska Medical Center (UNMC).
Additionally:
|
● |
In
December 2020, the FDA granted Ampligen Orphan Drug Designation status for the treatment of pancreatic cancer. The Orphan Drug Designation
program provides orphan status to drugs and biologics which are defined as those intended for the treatment, prevention or diagnosis
of a rare disease or condition, which is one that affects less than 200,000 persons in the United States or meets cost recovery provisions
of the act. The status helps incentivize the treatment of therapies to treat unmet medical needs by providing a company with seven
years of exclusivity rights once a drug reaches market. |
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● |
In
February 2021, our subsidiary, NV Hemispherx Biopharma Europe, received formal notification from the European Commission (“EC”)
granting Orphan Medicinal Product Designation for Ampligen as a treatment for pancreatic cancer. Orphan products, once commercially
approved in the European Union (“EU”), receive benefits including up to ten years of protection from market competition
from similar medicines with similar active component and indication for use that are not shown to be clinically superior. |
In
June 2021, Ampligen was featured in a publication containing state-of-the-art methodologies in the peer-reviewed medical journal Cancers
as a potential treatment option for cancer patients who are infected with SARS-CoV-2. The study’s authors stated that Ampligen
has the potential to reduce the severity of the deadly respiratory disease COVID-19. According to laboratory data presented in the publication,
“Rintatolimod [Ampligen] activated the innate and the adaptive immune systems by activating a cascade of actions in human pancreatic
cancer cells”, including:
|
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Stimulation
of interferon regulatory factors and activation of the interferon signaling pathway, |
|
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Production
of immunomodulatory activity and |
|
● |
Induction
of the expression of MHC class I and II histocompatibility |
The
full journal article is titled: “Rintatolimod Induces Antiviral Activities in Human Pancreatic Cancer Cells: Opening for an
Anti-COVID-19 Opportunity in Cancer Patients?” Cancers is a peer-reviewed, open access journal of oncology published
semimonthly online by MDPI. The study’s authors include Prof. C.H.J. van Eijck, MD, PhD, the lead investigator at Erasmus Medical
Center in the Netherlands.
In
October 2021, we and Amarex submitted an IND application with the FDA for a planned Phase 2 study of Ampligen as a therapy for locally
advanced or metastatic late-stage pancreatic cancer. In December 2021, the FDA responded with a Clinical Hold on the proposed study.
We submitted our response to the FDA in February 2022. In March 2022, we received notification from the FDA that the Clinical Hold was
released and cleared, meaning that we are now able to proceed with the study. In August 2022, we received IRB approval of the trial protocol
and so announced the trial’s commencement.
In
March 2022, we announced the publication of positive data in a manuscript titled, “Rintatolimod (Ampligen®) enhances numbers
of peripheral B cells and is associated with longer survival in patients with locally advanced and metastasized pancreatic cancer pre-treated
with FOLFIRINOX: a single-center named patient program,” in Cancers Special Issue: Combination and Innovative Therapies
for Pancreatic Cancer. In the single-center, named-patient program, patients with locally advanced pancreatic cancer (LAPC) or metastatic
disease were treated with Ampligen for 6 weeks, at 2 doses per week with 400 mg per infusion. The study found that Ampligen improved
the median survival of these patients. The study’s primary endpoints were the Systemic Immune-Inflammation Index (SIII), the Neutrophils
to Lymphocyte Ratio (NLR), and absolute counts of 18 different populations of circulating immune cells as measured by flow cytometry.
Secondary endpoints were progression-free survival (PFS) and overall survival (OS). The median overall survival in the Ampligen group
was 19 months, compared to a historical control group and subgroup (7.5 and 12.5, respectively) that did not receive Ampligen.
Also
in March 2022, we announced that study data evaluating the direct effects of Ampligen on human pancreatic ductal adenocarcinoma (PDAC)
cells was accepted for presentation at the 15th Annual International Hepato-Pancreato-Biliary Association World Congress in New York,
NY. For the study, three PDAC cell lines (CFPAC-1, MIAPaCa-2, and PANC-1) were treated with various concentrations of Ampligen and their
corresponding vehicle control. The proliferation and migration effects were examined using in-vitro assays and the molecular effect was
examined by targeted gene expression profiling. Additionally human PDAC samples were used to validate the expression of toll-like receptor
3 (TLR3) by immunohistochemistry. Results from the study demonstrated Ampligen decreased the proliferation and migration ability of CFPAC-1
cells. In addition, it decreased the proliferation of MIAPaCa-2 cells and the migration of PANC-1 cells. However, it did not have a dual
effect in MIAPaCa-2 and PANC-1 cells. Interestingly, TLR3 was highly expressed in CFPAC-1 cells, low expressed in MIAPaCa-2 and not expressed
in PANC-1. Gene expression analysis revealed the upregulation of interferon-related genes, chemokines, interleukins and cell cycle regulatory
genes. The heterogeneity of TLR3 expression was confirmed in human PDAC samples. Based on these results, treating pancreatic cancer with
Ampligen may have a direct anti-tumor effect in pancreatic cancer cells expressing TLR-3.
Myalgic
Encephalomyelitis/Chronic Fatigue Syndrome (ME/CFS)
Myalgic
Encephalomyelitis/Chronic Fatigue Syndrome (ME/CFS), also known as Chronic Fatigue Immune Dysfunction Syndrome (“CFIDS”)
and Chronic Fatigue Syndrome (CFS), is a serious and debilitating chronic illness and a major public health problem. ME/CFS is recognized
by both the government and private sector as a significant unmet medical need, including the U.S. National Institutes of Health (“NIH”),
FDA and the CDC. The CDC states on its website at https://www.cdc.gov/me-cfs/ that “Myalgic encephalomyelitis/chronic
fatigue syndrome (ME/CFS) is a serious, long-term illness that affects many body systems. People with ME/CFS are often not able to do
their usual activities. At times, ME/CFS may confine them to bed. People with ME/CFS have severe fatigue and sleep problems. ME/CFS may
get worse after people with the illness try to do as much as they want or need to do. This symptom is called post-exertional malaise
(PEM). Other symptoms can include problems with thinking and concentrating, pain, and dizziness.”
Many
severe ME/CFS patients become completely disabled or totally bedridden and are afflicted with severe pain and mental confusion even at
rest. ME/CFS is characterized by incapacitating fatigue with profound exhaustion and extremely poor stamina, sleep difficulties and problems
with concentration and short-term memory. It is also accompanied by flu-like symptoms, pain in the joints and muscles, tender lymph nodes,
sore throat and new headaches. A distinctive characteristic of the illness is a worsening of symptoms following physical or mental exertion,
which do not subside with rest.
The
high number of younger people being hospitalized for COVID-19 suggests considerable numbers of people in the prime of their lives may
have a COVID-induced ME/CFS-like illness in their future. According to a 2016 journal article, the estimated annual cost of lost productivity
related to ME/CFS was $9-37 billion in the United States, and for direct medical costs it was $9-14 billion.
In
June of 2020, we filed a provisional patent application for, among other discoveries, the use of Ampligen as a potential early-onset
therapy for the treatment of COVID-19 induced chronic fatigue.
Many
survivors of the first SARS-CoV-1 epidemic in 2003 continued to report chronic fatigue, difficulty sleeping and shortness of breath months
after recovering from the acute illness. “After one year, 17% of patients had not returned to work and 9% more had not returned
to their pre-SARS work levels,” according to Simmaron Research. Now there is increasing evidence that patients with COVID-19 can
develop a similar, ME/CFS-like illness. These patients are commonly referred to as “Long Haulers.”
In
October 2020, we received IRB approval for the expansion of the AMP-511 Expanded Access Program clinical trial for ME/CFS to include
patients previously diagnosed with SARS-CoV-2 following clearance of the virus, but who still demonstrate chronic fatigue-like symptoms.
For more information on our AMP-511 Expanded Access Program, please see “OUR PRODUCTS: Ampligen” above.
In
November 2020, we announced the publication of statistically significant data detailing how Ampligen could have a considerable positive
impact on people living with ME/CFS when administered in the early stages of the disease. The data were published in PLOS ONE,
a peer-reviewed open access scientific journal published by the Public Library of Science. AIM researchers found that the TLR3 agonist
Ampligen substantially improved physical performance in a subset of ME/CFS patients.
As
noted above in Overview; General; Ampligen as a treatment for ME/CFS and Post-COVID Conditions, we have long been focused on seeking
the FDA’s approval for the use of Ampligen to treat ME/CFS. In fact, in February 2013, we received a CRL from the FDA for our Ampligen
NDA for ME/CFS, stating that we should conduct at least one additional clinical trial, complete various nonclinical studies and perform
a number of data analyses.
While
developing a comprehensive response to the FDA and a plan for a confirmatory trial for the FDA NDA, we proceeded independently in Argentina
and, in August 2016, we received approval of an NDA from ANMAT for commercial sale of Ampligen in the Argentine Republic for the treatment
of severe CFS. In September 2019, we received clearance from the FDA to ship Ampligen to Argentina for the commercial launch and subsequent
sales. On June 10, 2020, we received import clearance from ANMAT to import the first shipment of commercial grade vials of Ampligen into
Argentina. The next steps in the commercial launch of Ampligen include ANMAT conducting a final inspection of the product and release
tests before granting final approval to begin commercial sales. This testing and approval process is currently delayed due to the COVID-19
pandemic and ANMAT’s internal processes. The ongoing impact of COVID-19 in Argentina is taxing the nation’s health care system
and is, understandably, the main priority of its regulators. Once final approval by ANMAT is obtained, GP Pharm will begin distributing
Ampligen in Argentina.
We
plan on a comprehensive follow through with the FDA regarding the use of Ampligen as a treatment for ME/CFS. We have learned a great
deal since the FDA’s CRL and plan to adjust our approach to concentrate on specific ME/CFS symptoms. Responses to the CRL and a
proposed confirmatory trial are being worked on now by our R&D team and consultants.
Ampligen
as a Potential Antiviral
Following
the SARS-CoV-1 outbreak in 2002-03, Ampligen exhibited excellent antiviral properties and protective survival effect in NIH-contracted
studies of SARS-CoV-1-infected mice, which is very similar to SARS-CoV-2, the novel virus that causes COVID-19.
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The
Barnard 2006 study (https://journals.sagepub.com/doi/abs/10.1177/095632020601700505) found that Ampligen reduced virus lung
levels to below detectable limits. |
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The
Day 2009 study (https://www.sciencedirect.com/science/article/pii/S0042682209005832) found that, instead of 100% mortality,
there was 100% protective survival using Ampligen. |
We
compared key transcription regulatory sequences of SARS-CoV-1 to SARS-CoV-2 and found significant similarities, suggesting highly probable
extension of the antiviral effects of Ampligen in the earlier NIH-contracted SARS experiments to COVID-19. The SARS-CoV-2 virus –
which causes COVID-19 – shares important genomic and pathogenic similarities with SARS-CoV-1 (hence its name). Since Ampligen has
shown antiviral activity against more distantly related coronaviruses, there was a reasonable probability that the antiviral effects
of Ampligen against SARS-CoV-1 will likely extend to SARS-CoV-2, and as discussed below, recently, Ampligen has demonstrated ex vivo
antiviral activity against SARS-CoV-2. We believe that this creates a compelling case for clinical trials to evaluate Ampligen as a potential
tool in the fight against COVID-19.
Since
the late 2019 outbreak of SARS-CoV-2, we have been actively engaged in determining whether Ampligen could be an effective treatment for
this virus or could be part of a vaccine. We believe that Ampligen has the potential to be both an early-onset treatment for and prophylaxis
against SARS-CoV-2. We believe that prior studies of Ampligen in SARS-CoV-1 animal experimentation may predict similar protective effects
against the new virus.
In
February 2020, we filed three provisional patent applications related to Ampligen in our efforts toward joining the global health community
in the fight against the deadly coronavirus (See: https://aimimmuno.com/press-release/aim-immunotech-files-provisional-patent-application-for-the-use-of-ampligenr-as-a-potential-therapy-for-covid-19-induced-chronic-
fatigue/). Our three provisional patent applications include: 1) Ampligen as a therapy for the coronavirus; 2) Ampligen as part of
a proposed intranasal universal coronavirus vaccine that combines Ampligen with inactivated coronavirus, conveying immunity and cross-protection
and; 3) a high-volume manufacturing process for Ampligen. Under the Patent Cooperation Treaty of 1970, which provides international protections
for patents, these three provisional patent applications were converted in to two international patent applications based on the date
of their filings.
In
April 2020, we entered into a Material Transfer and Research Agreement (“MTA”) with Shenzhen Smoore Technology to study the
utilization of an innovative Smoore inhalation delivery device and Ampligen as a potential treatment approach for the SARS-CoV-2 pandemic.
The MTA was extended for two years in May 2021. Due to continuing delays and other obstacles related to importing Ampligen to China,
we ended our contract with Smoore on August 10, 2022.
In
August 2020, we contracted Amarex to act as our Clinical Research Organization and provide regulatory support with regard to a possible
clinical trial testing Ampligen’s potential as a COVID-19 prophylaxis via intranasal delivery.
Beginning
in April 2020, we entered into confidentiality and non-disclosure agreements with numerous companies for the potential outsourcing of
the production of polymer, enzyme, placebo as well as Ampligen, and one Contract Research Organization, Amarex, which will provide regulatory
and monitoring support related to a clinical trial testing Ampligen’s intranasal safety and potential as a COVID-19 prophylaxis
via intranasal delivery.
In
May 2020, the FDA authorized an IND for Roswell Park to conduct a Phase 1/2a study of a regimen of Ampligen and interferon alpha in cancer
patients with COVID-19 infections. This clinical trial, sponsored by Roswell Park in collaboration with us, will test the safety of this
combination regimen in patients with cancer and COVID-19, and the extent to which this therapy will promote clearance of the SARS-CoV-2
virus from the upper airway. Several subjects have been treated and recruitment continues. It is planned that the phase 1/2a study will
enroll up to 44 patients in two stages. Phase 1 will see 12-24 patients receiving both Ampligen and interferon alpha-2b at escalating
doses. Once that initial phase is complete, further study participants will be randomized to two arms: one receiving the two-drug combination
and a control group who will not receive Ampligen or interferon alpha but will receive best available care. We are a financial sponsor
of the study and will provide Ampligen at no charge for this study.
In
July 2020, we entered into a clinical trial agreement with Roswell Park pursuant to which Roswell Park will conduct a Phase 1/2a trial
of Ampligen (rintatolimod) in combination with interferon alpha, in cancer patients with COVID-19, the disease caused by the SARS-CoV-2
coronavirus. We and the National Cancer Institute are supporting this trial. We reported in September 2020 that recruitment in the trial
had begun (See clinicaltrials.gov/NCT04379518). In November 2020, the first patient in the study had been enrolled and treated.
This study was amended to add 20 patients, with 10 randomized to receive a single dose of Ampligen and 10 patients to receive current
best therapies.
We
also entered into a specialized services agreement with Utah State University and have supplied Ampligen to support the University’s
Institute for Viral Research in its research into SARS-CoV-2. The Utah State results show that Ampligen was able to decrease SARS-CoV-2
infectious viral yields by 90% at clinically achievable intranasal Ampligen dosage levels.
In
October 2020, we received IRB approval for the expansion of the AMP-511 Expanded Access Program clinical trial for ME/CFS to include
patients previously diagnosed with SARS-CoV-2, but who still demonstrate chronic fatigue-like symptoms. Patients in the trial are treated
with our flagship pipeline drug Ampligen. In January 2021, we commenced with the treatment of the first previously diagnosed COVID-19
patient with long-COVID symptoms (i.e., Long Hauler) also known as Post-COVID Conditions in the AMP-511 study. Enrollment of post-COVID
patients continues in the study.
In
November 2020, we entered into a Material Transfer and Research Agreement with Leyden Laboratories, B.V., (“Leyden Lab”)
to facilitate two proposed studies/research projects:
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An assessment of protective potential
of intranasal administration of Ampligen in SARS-CoV-2 Syrian hamster challenge model; and |
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An assessment of protective potential of intranasal
Ampligen in lethal influenza mouse challenge model. |
In
January 2021, we entered into a Sponsor Agreement with CHDR to manage a Phase 1 randomized, double-blind study to evaluate the safety
and activity of repeated intranasal administration of Ampligen. AIM funded and sponsored the study. This study was designed to assess
the safety, tolerability and biological activity of repeated administration of Ampligen intranasally. A total of 40 healthy subjects
received either Ampligen or a placebo in the trial, with the Ampligen given at four escalating dosages across four cohorts, to a maximum
level of 1,250 micrograms. All patients had completed treatment by June 2021 and the Final Safety Report reported no Serious or Severe
Adverse Events at any dosage level. We believe that the trial is a critical step in our ongoing efforts to develop Ampligen as a potential
prophylaxis or treatment for COVID-19 and other respiratory viral diseases. Amarex provided us with monitoring support during the trial.
Additionally,
we filed two COVID-19-related provisional patent applications in the third quarter of 2021. In August, we filed an application for Ampligen
as both an intranasal and an intravenous therapy for what we describe as Post-COVID conditions. The people suffering from Post-COVID
conditions, including some young adults, can be afflicted with severe difficulties in concentrating; serious memory problems; and the
inability to live an active lifestyle, to work and even to perform everyday tasks. Early data has demonstrated that patients with symptoms
of Post-COVID conditions being treated with Ampligen in the ongoing AMP-511 Expanded Access Program have reported improvements in fatigue
symptoms. Similarly, in ME/CFS, data supports the claim that Ampligen improves fatigue symptoms. Then in September, we filed a patent
application for Ampligen as a potential early-onset intranasal therapy designed to enhance and expand infection-induced immunity, epitope
spreading, cross-reactivity and cross-protection in patients exposed to a wide range of RNA respiratory viruses, such as influenza, Rhinoviruses
and SARS-CoV-2.
In
addition to securing these two provisional patent applications, we also moved forward with proposed studies in these areas and with Pre-Investigational
New Drug Applications in September 2021. One pre-IND was for a Phase 2, two-arm, randomized, double-blind, placebo-controlled, multicenter
study to evaluate the efficacy and safety of Ampligen in patients experiencing Post-COVID conditions (originally referred to as Post-COVID
Cognitive Dysfunction (PCCD) and being revised to Post-COVID conditions).
In
October 2022, our IND application cleared the approval process and we are proceeding with the clinical trial (AMP-518). We are working
to get the study up and running as quickly and efficiently as possible. We expect to commence enrollment in early 2023.
In
September 2021, we submitted another pre-IND meeting request for two separate Phase 2 clinical studies to study the potential of Ampligen
as both an infusion and an intranasal therapy for early-onset COVID-19. The two clinical trials would be Phase 2, randomized, double-blind,
placebo-controlled studies to evaluate the efficacy and safety of Ampligen as an:
|
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Intravenous
therapy – 200 mg of Ampligen or placebo, with five doses over a treatment period of 17 days; and an |
|
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Intranasal therapy –
1,250 μg spray (625 μg per nostril), with seven doses over a treatment period of 15 days. |
The
FDA responded that it was premature and denied our meeting request, noting the primary reason that we first needed to address its comments
on two prior similar pre-IND submissions related to the potential risks of administering Ampligen to patients with asymptomatic or mildly
symptomatic COVID-19 were justified by potential benefits. We plan to respond to the FDA regarding the early onset COVID-19 submission.
The FDA has already authorized Ampligen for a clinical trial in cancer patients, and subjects have been and will be treated in the investigator-sponsored
Phase 2 trial at the Roswell Park Comprehensive Cancer Center. Our plans to study Ampligen in asymptomatic and mild COVID-19 cases await
further consideration of the different risks and benefits associated with those trials.
In
June 2022, we announced that the Netherlands Patent Office (Octrooicentrum Nederland) had issued Patent No. 2027383 – a utility
patent – covering Ampligen® (rintatolimod) and other AIM developed dsRNA products for use in the prevention or treatment of
COVID-19, with a base patent term extending until 2041.
Other
Diseases
In
Europe, the EMA has approved the Orphan Medicinal Products Designation for Ampligen as a potential treatment of Ebola virus disease and
for Alferon N Injection as a potential treatment of MERS.
We
concluded our series of collaborations designed to determine the potential effectiveness of Ampligen and Alferon N Injection as potential
preventive and/or therapeutic treatments for Ebola-related disorders. Although we believe that the threat of both MERS and Ebola globally
may reemerge in the future, it appears that the spread of these disorders has diminished.
In
April 2021, we entered into an MTA with the University of Cagliari Dipartimento di Scienze della Vita e dell’Ambiente (“UNICA”),
an educational institution, under the laws of Italy, located in Monserrato (Cagliari), Italy. The MTA relates to the research and development
of the effects of Ampligen and its ability to induce interferon production in several cell lines, and also on the ability of the Ebola
virus protein VP35 to bind to viral dsRNA and impede interferon’s upregulation and activity, and on Ampligen’s ability to
reverse VP35 inhibition of interferon production in biological systems. The research is active and ongoing.
In
May 2021, we filed a U.S. Provisional Patent Application for Ampligen as a potential therapeutic to possibly slow, halt, or reverse the
progression of Alzheimer’s disease.
In
November 2022, we received notice that the FDA had granted Orphan Drug Designation to Ampligen for the treatment of Ebola virus disease.
Alferon
N Injection®
Alferon
N Injection is the registered trademark for our injectable formulation of natural alpha interferon. Alferon N Injection is the only natural-source,
multi-species alpha interferon currently approved for sale in the United States and Argentina for the intralesional (within lesions)
treatment of refractory (resistant to other treatment) or recurring external genital warts in patients 18 years of age or older. Alferon
N Injection is also approved in Argentina for the treatment of refractory patients that failed or were intolerant to treatment with recombinant
interferons. Certain types of human papilloma viruses (“HPV”) cause genital warts, a sexually transmitted disease (“STD”).
According to the CDC, HPV is the most common sexually transmitted infection, with approximately 79 million Americans — most in
their late teens and early 20s — infected with HPV. In fact, the CDC states that “HPV is so common that nearly all sexually
active men and women get the virus at some point in their lives.” Although they do not usually result in death, genital warts commonly
recur, causing significant morbidity and entail substantial health care costs.
Interferons
are a group of proteins produced and secreted by cells to combat diseases. Researchers have identified four major classes of human interferon:
alpha, beta, gamma and omega. Alferon N Injection contains a multi-species form of alpha interferon. The worldwide market for injectable
alpha interferon-based products has experienced rapid growth and various alpha interferon injectable products are approved for many major
medical uses worldwide. Alpha interferons are manufactured commercially in three ways: by genetic engineering, by cell culture, and from
human white blood cells. All three of these types of alpha interferon are or were approved for commercial sale in the United States.
Our natural alpha interferon is produced from human white blood cells. The potential advantages of natural alpha interferon over recombinant
(i.e., synthetic) interferon produced and marketed by other pharmaceutical firms may be based upon their respective molecular compositions.
Natural alpha interferon is composed of a family of proteins containing many molecular species of interferon. In contrast, commercial
recombinant alpha interferon products each contain only a single species. Researchers have reported that the various species of interferons
may have differing antiviral activity depending upon the type of virus. Natural alpha interferon presents a broad complement of species,
which we believe may account for its higher activity in laboratory studies. Natural alpha interferon is also glycosylated (i.e., partially
covered with sugar molecules). Such glycosylation is not present on the currently U.S.-marketed recombinant alpha interferons. We believe
that the absence of glycosylation may be in part responsible for the production of interferon-neutralizing antibodies seen in patients
treated with recombinant alpha interferon. Although cell culture-derived interferon is also composed of multiple glycosylated alpha interferon
species, the types and relative quantity of these species are different from our natural alpha interferon.
Alferon
N Injection [Interferon alfa-n3 (human leukocyte derived)] is a highly purified, natural-source, glycosylated, multi-species alpha interferon
product. There are essentially no neutralizing antibodies observed against Alferon N Injection to date and the product has a relatively
low side-effect profile. The recombinant DNA derived alpha interferon formulations have been reported to have decreased effectiveness
after one year of treatment, probably due to neutralizing antibody formation (See “Manufacturing” and “Marketing/Distribution”
sections below for more details on the manufacture and marketing/distribution of Alferon N Injection).
MANUFACTURING
ANMAT
in Argentina approved Ampligen for commercial distribution for the treatment of CFS in 2016. Shipment of the drug product to Argentina
was initiated in 2018 to complete the release testing by ANMAT needed for commercial distribution. In September 2019, we received clearance
from the FDA to ship Ampligen to Argentina for the commercial launch and subsequent sales. In June 2020, we received import clearance
from ANMAT to import the first shipment of commercial grade vials of Ampligen into Argentina. We are currently working with GP Pharm
on the commercial launch of Ampligen in Argentina (See “Our Products; Ampligen” above).
Following
our approval in Argentina, in 2017 we engaged Jubilant HollisterStier (“Jubilant”) to be our authorized CMO for Ampligen.
Two lots of Ampligen consisting of more than 16,000 units were manufactured and released in 2018; these lots have been designated for
human use in the United States in the cost recovery CFS program and for expanded oncology clinical trials. The production of additional
polymer (Ampligen intermediates) took place in 2019 at our New Brunswick facility. Additionally, Jubilant manufactured two more lots
of Ampligen in December 2019 and January 2020. The current manufactured lots of Ampligen have been fully tested and released for commercial
product launch in Argentina and for clinical trials. In addition, we have supplied GP Pharm with the Ampligen required for testing and
ANMAT release. Once final approval by ANMAT is obtained, we anticipate that GP Pharm will begin distributing Ampligen in Argentina.
In
December 2020, we added Pii as a “Fill & Finish” provider to enhance our capacity to produce Ampligen. This addition
amplifies our manufacturing capability by providing redundancy and cost savings. The contracts augment our existing fill and finish capacity.
We are prepared to initiate the production of additional Ampligen when and if needed.
In
May 2021, we exercised our option to re-purchase the New Brunswick manufacturing facility, pursuant to the terms of the March 2018 sale
and lease-back agreement. We thereafter sold certain equipment and machinery that we determined to be obsolete and no longer needed for
current or future manufacturing. On March 3, 2022, we entered into an Agreement of Sale and Purchase with Acellories, Inc. as purchaser
pursuant to which we would sell our property for $3.9 million; we have kept some space specifically for Alferon activity. The sale was
completed on November 1, 2022 for $3.7 million net of normal closing cost.
In
June 2022 we entered into a lease agreement with the New Jersey Economic Development Authority for a 5,210 square-foot, state-of-the-art
R&D facility at the New Jersey Bioscience Center (NJBC), primarily consisting of two separate laboratory suites. The lease commenced
on July 1, 2022, and runs through August 31, 2027, but can be extended for an additional five-year period. The facility is AIM’s
operations, research and development center.
Our
business plan calls for the utilization of one or more CMOs to produce Ampligen API. While we believe we have sufficient Ampligen API
to meet our current needs, we are also continually exploring new efficiencies so as to maximize our ability to fulfill future obligations.
In this regard, in April 2021, we approved a proposal from Polysciences for the manufacture of our Poly I and Poly C12U polynucleotides
and associated test methods at Polysciences’ Warrington, PA location to enhance our capacity to produce the polymer precursors
to the drug Ampligen. We are utilizing Polysciences’s expertise to refine our approach to polymer production. Additionally, we
continue to be open to the possibility of agreements with other CMOs, so as to create redundancy and to meet the potential need for larger
quantities of API.
Our
second product, Alferon N Injection, is approved by the FDA for commercial sales in the United States for the treatment of genital warts.
It is also approved by ANMAT in Argentina for commercial sales for the treatment of genital warts and in patients who are refractory
to treatment with recombinant interferons. Commercial sales of Alferon N Injection in the United States will not resume until new batches
of commercial filled and finished product are produced and released by the FDA. While our New Brunswick facility has FDA approval under
the Biologics License Application (“BLA”) for Alferon N Injection, and we intend to maintain a certain amount of space at
the to-be-sold facility, we will need the FDA’s approval to release commercial product once we have identified our new manufacturing
approach and submitted satisfactory stability and quality release data; the FDA has conducted any required inspections; and the FDA has
approved our new manufacturing process. Currently, we are not manufacturing Alferon N Injection and there is no definitive timetable
to resume production.
LICENSING/COLLABORATIONS/JOINT
VENTURES
To
enable potential availability of Ampligen to patients on a worldwide basis, we have embarked on a strategy to license the product and/or
to collaborate and/or create a joint venture with companies that have the demonstrated capabilities and commitment to successfully gain
approval and commercialize Ampligen in their respective global territories of the world. Ideal partners would have the following characteristics:
well-established global and regional experience and coverage; robust commercial infrastructure; a strong track record of successful development
and registration of in-licensed products; and a therapeutic area fit (ME/CFS, immuno-oncology, e.g.).
MARKETING/DISTRIBUTION
In
May 2016, we entered into a five-year exclusive Renewed Sales, Marketing, Distribution and Supply Agreement (the “Agreement”)
with GP Pharm. Under this Agreement, GP Pharm was responsible for gaining regulatory approval in Argentina for Ampligen to treat severe
CFS in Argentina and for commercializing Ampligen for this indication in Argentina. We granted GP Pharm the right to expand rights to
sell this experimental therapeutic into other Latin America countries based upon GP Pharm achieving certain performance milestones. We
also granted GP Pharm an option to market Alferon N Injection in Argentina and other Latin America countries (See “Our Products;
Ampligen” above). The GP Pharm contract was extended in May 2021, and will now end on May 24, 2024. In August 2021, the ANMAT granted
a five-year extension to a previous approval to sell and distribute Ampligen to treat severe CFS in Argentina. This extends the approval
until 2026.
In
May 2016, we entered into a five-year agreement (the “Impatients Agreement”) with Impatients, N.V. (“myTomorrows”),
a Netherlands-based company, for the commencement and management of an EAP in Europe and Turkey (the “Territory”) related
to ME/CFS. Pursuant to the agreement, myTomorrows, as our exclusive service provider and distributor in the Territory, is performing
EAP activities. These activities will be directed to (a) the education of physicians and patients regarding the possibility of early
access to innovative medical treatments not yet the subject of a Marketing Authorization (regulatory approval) through named-patient
use, compassionate use, expanded access and hospital exemption, (b) patient and physician outreach related to a patient-physician platform,
(c) the securing of Early Access Approvals (exemptions and/or waivers required by regulatory authorities for medical treatments prior
to Marketing Authorization) for the use of such treatments, (d) the distribution and sale of such treatments pursuant to such Early Access
Approvals, (e) pharmacovigilance (drug safety) activities and/or (f) the collection of data such as patient-reported outcomes, doctor-reported
experiences and registry data. We are supporting these efforts and supplying Ampligen to myTomorrows at a predetermined transfer price.
In the event that we receive Marketing Authorization in any country in the Territory, we will pay myTomorrows a royalty on products sold.
Pursuant to the Impatients Agreement, the royalty would be a percentage of Net Sales (as defined in the Impatients Agreement) of Ampligen
sold in the Territory where Marketing Authorization was obtained. The formula to determine the percentage of Net Sales will be based
on the number of patients that are entered into the EAP. We believe that disclosure of the exact maximum royalty rate and royalty termination
date could cause competitive harm. However, to assist the public in gauging these terms, the actual maximum royalty rate is somewhere
between 2% and 10% and the royalty termination date is somewhere between five and fifteen years from the First Commercial Sale of a product
within a specific country. The parties established a Joint Steering Committee comprised of representatives of both parties to oversee
the EAP. No assurance can be given that activities under the EAP will result in Marketing Authorization or the sale of substantial amounts
of Ampligen in the Territory. The agreement was automatically extended for a period of 12 months on May 20, 2021, and again for an additional
12 months on May 20, 2022.
In
January 2017, the ANMAT granted a five-year extension to a previous approval to sell and distribute Alferon N Injection (under the brand
name “Naturaferon”) in Argentina. This extends the approval until 2022. A request to extend the approval beyond 2022 has
been filed and is still under review. In February 2013, we received the ANMAT approval for the treatment of refractory patients that
failed or were intolerant to treatment with recombinant interferon, with Naturaferon in Argentina.
In
January 2017, the EAP through our agreement with myTomorrows designed to enable access of Ampligen to ME/CFS patients was extended to
pancreatic cancer patients beginning in the Netherlands. myTomorrows is our exclusive service provider in the Territory and will manage
all EAP activities relating to the pancreatic cancer extension of the program.
In
August 2017, we extended our agreement with Asembia LLC, formerly Armada Healthcare, LLC, to undertake the marketing, education and sales
of Alferon N Injection throughout the United States. This agreement has expired. We are in discussions with Asembia about the possibility
of continuing the relationship, while also exploring the possibility of working with other, similar companies. However, we do not foresee
an immediate need for this service and so may push this search further out in our expected timeline.
In
February 2018, we signed an amendment to the EAP with myTomorrows. This amendment extended the Territory to cover Canada to treat pancreatic
cancer patients, pending government approval. In March 2018, we signed an amendment to the EAP with myTomorrows, pursuant to which myTomorrows
will be our exclusive service provider for special access activities in Canada for the supply of Ampligen for the treatment of ME/CFS.
In
December 2020, we entered into a signed Letter of Agreement with myTomorrows for the delivery of Ampligen for the treatment of up to
16 pancreatic cancer patients. In November 2021, we entered into a signed Letter of Agreement with myTomorrows for the delivery of Ampligen
for the treatment of up to an additional 5 pancreatic cancer patients. In March 2022, we entered into a signed Letter of Agreement with
myTomorrows for the delivery of Ampligen for the treatment of up to an additional 10 pancreatic cancer patients.
401(k)
Plan
We
have a defined contribution plan, entitled the AIM ImmunoTech Employees 401(k) Plan and Trust Agreement (the “401(k) Plan”).
Our full-time employees are eligible to participate in the 401(k) Plan following 61 days of employment. Subject to certain limitations
imposed by federal tax laws, participants are eligible to contribute up to 15% of their salary (including bonuses and/or commissions)
per annum. Participants’ contributions to the 401(k) Plan may be matched by us at a rate determined annually by the Board of Directors.
Each
participant immediately vests in his or her deferred salary contributions, while our contributions will vest over one year. A 6% matching
contribution by us was reinstated effective January 1, 2021. For the nine months ending September 30, 2022 we made $107,000 in contributions
and for the year ending December 31, 2021 $139,000 contributions were made.
New
Accounting Pronouncements
See
“Note 10: Recent Accounting Pronouncements”.
Disclosure
About Off-Balance Sheet Arrangements
None.
Critical
Accounting Policies
There
have been no material changes in our critical accounting policies and estimates from those disclosed in Part II; Item 7: “Management’s
Discussion and Analysis of Financial Condition and Results of Operations; Critical Accounting Policies” contained in our Annual
Report on Form 10-K for the year ended December 31, 2021.
RESULTS
OF OPERATIONS
Three
months ended September 30, 2022, versus three months ended September 30, 2021
Net
Loss
Our
net loss was approximately $6,385,000 and $3,826,000 for the three months ended September 30, 2022, and 2021, respectively, representing
an increase in loss of approximately $2,559,000 or 67%. This increase in loss was primarily due to the following:
|
● |
an
increase in loss on investments, net of $365,000; |
|
● |
an
increase in interest and other income of $192,000; |
|
● |
an
increase in general and administrative expenses of $3,370,000; offset by |
|
● |
an
increase in gain from sale of Income tax operating of $256,000; |
|
● |
a
decrease of the quarterly revaluation of certain redeemable warrants of $50,000; |
|
● |
a
decrease in production costs of $157,000; |
|
● |
a
decrease in research and development expenses of $634,000. |
Net
loss per share was $(0.13) and $(0.08) for the three months ended September 30, 2022, and 2021, respectively. The weighted average number
of shares of our common stock outstanding as of September 30, 2022, was 48,079,210 as compared to 47,846,074 as of September 30, 2021.
Revenues
Revenues
from our Ampligen® Cost Recovery Program were $21,000 and $33,000 for the three months ended September 30, 2022, and 2021, respectively.
The change was due primarily to the timing of orders.
Production
Costs
Production
costs were approximately $0 and $157,000 respectively, for the three months ended September 30, 2022, and 2021, representing a decrease
of $157,000 in production costs in the current period. The decrease was due primarily to the sale of the facility and no production
for the quarter ended September 30, 2022.
Research
and Development Costs
Overall
Research and Development (“R&D”) costs for the three months ended September 30, 2022, were approximately $1,372,000 as
compared to $2,006,000 for the same period a year ago, reflecting a decrease of approximately $634,000. The primary reason for the decrease
in research and development costs was largely due to the timing and decrease in clinical trials expense of $919,000 net with an increase
in salaries and facility costs of $222,000.
General
and Administrative Expenses
General
and Administrative (“G&A”) expenses for the three months ended September 30, 2022, and 2021, were approximately $5,170,000
and $1,799,000, respectively, reflecting an increase of approximately $3,370,000. The increase in G&A expenses during the current
period was mainly due to an increase in legal fees of $3,017,000. Legal fees increased due to litigation detailed in “Part II, Item
1 – Legal Proceedings.”
Loss
on Investments, net
Loss
on investments for the three months ended September 30, 2022, and 2021 was approximately $365,000 and $0 respectively. This loss for
the three months ended September 30, 2022 was due to the change in fair value of equity investments.
Interest
and Other Income
Interest
and other income for the three months ended September 30, 2022, and 2021 was approximately $172,000 and $(20,000), respectively. This
represents a net increase of approximately $192,000. This is primarily due to the change of investments into higher interest-bearing securities.
Redeemable
Warrants
The
quarterly revaluation of certain redeemable warrants resulted in a non-cash adjustment to the redeemable warrants liability amounted
to a gain of $1,000 for the three months ended September 30, 2022, compared to a gain of approximately $51,000 for the three months ended
September 30, 2021 (see “Financial Statements: Note 11: Fair Value” for the various factors considered in the valuation of
redeemable warrants).
Gain
from sale of income tax operating losses
The
quarterly income tax benefit for the three months ended September 30, 2022 amounted to a gain of approximately $328,000 compared to a
gain of $72,000 for the three months ended September 30, 2021 due primarily to a change in the deferred tax asset recorded for the New
Jersey NOL to be sold.
Nine
months ended September 30, 2022 versus nine months ended September 30, 2021
Net
Loss
Our
net loss was approximately $15,056,000 and $13,281,000 for the nine months ended September 30, 2022, and 2021, respectively, representing
an increase in loss of approximately $1,795,000 or 14%. This increase in loss was primarily due to the following:
|
● |
an
increase in loss on investments, net of $1,769,000; |
|
● |
an
increase of the quarterly revaluation of certain redeemable warrants of $13,000; |
|
● |
an
increase in interest and other income of $196,000; |
|
● |
an
increase in research and development expenses of $134,000; |
|
● |
an
increase in general and administrative expenses of $3,514,000; offset by |
|
● |
an
increase in gain from sale of Income tax operating of $207,000; |
|
● |
a
decrease in interest expense and finance cost of $2,768,000; |
|
● |
a
decrease in production costs of $674,000. |
Net
loss per share was $(0.31) and $(0.28) for the nine months ended September 30, 2022, and 2021, respectively. The weighted average number
of shares of our common stock outstanding as of September 30, 2022, was 48,036,559 as compared to 47,156,158 as of September 30, 2021.
Revenues
Revenues
from our Ampligen® Cost Recovery Program were $85,000 for each of the nine months ended September 30, 2022 and 2021, respectively
Production
Costs
Production
costs were approximately $0 and $674,000, respectively, for the nine months ended September 30, 2022, and 2021, representing a decrease
of $674,000 in production costs in the current period. The decrease was due primarily to the sale of the facility and no production for the quarter ended September
30, 2022.
Research
and Development Costs
Overall
R&D costs for the nine months ended September 30, 2022, were approximately $4,883,000 as compared to $4,749,000 for the same period
a year ago, reflecting an increase of approximately $134,000. The primary reason for the increase in research and development costs was
largely due to an increase in clinical trials expense of $415,000 net with decreases in Ampligen costs of $393,000 and manufacturing
costs of $178,000.
General
and Administrative Expenses
G&A
expenses for the nine months ended September 30, 2022, and 2021, were approximately $9,569,000 and $6,055,000, respectively, reflecting
an increase of approximately $3,515,000. The increase in G&A expenses during the current period was mainly due to a decrease in stock
compensation of $527,000, offset by an increase in legal fees of $3,500,000. Legal fees increased due to litigation detailed in “Part
II, Item 1 – Legal Proceedings.”
Loss
on Investments, net
Loss
on investments for the nine months ended September 30, 2022, and 2021 was approximately $1,769,000 and $0 respectively. This loss for
the nine months ended September 30, 2022 was due to the change in fair value of equity investments.
Interest
and Other Income
Interest
and other income for the nine months ended September 30, 2022, and 2021 was approximately $296,000 and $100,000, respectively. This represents
a net increase of approximately $196,000. This is primarily due to the change of investments into higher interest-bearing securities.
Interest
Expense and Other Finance Costs
Interest
and other finance costs decreased $2,768,000 primarily due to the extinguishment of debt and notes payable of $2,701,000 in the nine
months ended September 30, 2021. We had no debt in the nine months ended September 30, 2022.
Redeemable
Warrants
The
quarterly revaluation of certain redeemable warrants resulted in a non-cash adjustment to the redeemable warrants liability amounted
to a gain of $35,000 for the nine months ended September 30, 2022, compared to a gain of approximately $22,000 for the nine months ended
September 30, 2021 (see “Financial Statements: Note 11: Fair Value” for the various factors considered in the valuation of
redeemable warrants).
Gain
from sale of income tax operating losses
The
quarterly income tax benefit for the nine months ended September 30, 2022 amounted to a gain of approximately $749,000 compared to a
gain of $542,000 for the nine months ended September 30, 2021 due primarily to a change in the deferred tax asset recorded for the New
Jersey NOL to be sold.
Liquidity
and Capital Resources
Cash
used in operating activities for the nine months ended September 30, 2022, was approximately $10,039,000 compared to approximately $8,220,000
for the same period in 2021, representing a change of $1,819,000. The primary reasons for this change in cash used in operations in 2022
was related to non-cash charges which primarily consisted of $792,000 in stock compensation, $1,768,000 of loss on investments, net,
and $749,000 of gain from sale of income tax operating losses. The main changes in working capital were an increase in accounts payable,
lease liability, prepaid expenses and accrued expense. The increase in accrued expenses was due to litigation detailed in “Part
II, Item 1 – Legal Proceedings.”
Cash
provided by investing activities for the nine months ended September 30, 2022, was approximately $7,625,000 compared to cash used for
the same period in 2021 of approximately $995,000 representing a change of $8,620,000. The primary reason for the change for the periods
ended September 30, 2022 and September 30, 2021 is the sale of marketable securities of $9,082,000 and $849,000, respectively, net with
the purchase of marketable securities for the same time period of $1,661,000 and $1,611,000, respectively.
Cash
provided by financing activities for the nine months ended September 30, 2022, was approximately $80,000 compared to approximately $8,063,000
for the same period in 2021, a decrease of $7,983,000. The primary reason for this decrease was our receipt of $12,917,000 in net proceeds
from the sale of shares in the first three months of 2021, offset with a payment for notes payable of $4,732,000 for the same period
in 2021.
As
of September 30, 2022, AIM had approximately $41,150,000 in cash, cash equivalents and marketable securities, inclusive of approximately
$6,986,000 in Marketable Securities, representing a decrease of approximately $9,063,000 from December 31, 2021.
We
are committed to a focused business plan oriented toward finding senior co-development partners with the capital and expertise needed
to commercialize the many potential therapeutic aspects of our experimental drugs and our FDA approved drug Alferon N Injection.
The
development of our products requires the commitment of substantial resources to conduct the time-consuming research, preclinical development,
and clinical trials that are necessary to bring pharmaceutical products to market. We believe, based on our current financial condition,
that we have adequate funds to meet our anticipated operational cash needs and fund current clinical trials over approximately the next
twenty-four months. In addition, in February 2022, the SEC declared our new S-3 shelf Registration Statement effective which will allow
us to raise additional capital in the future. At present we do not generate any material revenues from operations, and we do not anticipate
doing so in the near future. We may need to obtain additional funding in the future for new studies and/or if current studies do not
yield positive results, require unanticipated changes and/or additional studies. If we are unable to commercialize and sell Ampligen
and/or recommence material sales of Alferon N Injection, our operations, financial position and liquidity may be adversely impacted,
and additional financing may be required. There can be no assurances that, if needed, we will be able to raise adequate funds or enter
into licensing, partnering or other arrangements to advance our business goals. We may seek to access the public equity market whenever
conditions are favorable, even if we do not have an immediate need for additional capital at that time. We are unable to estimate the
amount, timing or nature of future sales of outstanding common stock or instruments convertible into or exercisable for our common stock.
Any additional funding may result in significant dilution and could involve the issuance of securities with rights, which are senior
to those of existing stockholders. See Part I, Item 1A - “Risk Factors; We may require additional financing which may not be
available” in our Annual Report on Form 10-K for the year ended December 31, 2021.