AIM IMMUNOTECH INC. : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

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 "Management's Discussion
and Analysis of Financial Condition and Results of Operations" section; Part II,
Item 1 "Legal Proceedings"; and Part II, Item 1A "Risk Factors".



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.



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 issues related to our New Brunswick,
New Jersey facility.



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 are now expanding our clinical/business focus to include the potential
of Ampligen to serve as a protective prophylaxis and an early-onset therapeutic
for the virus SARS-CoV-2, the cause of COVID-19 and as part of a vaccine.
Significant testing and trials will be required to determine whether Ampligen
will be effective in the treatment of the COVID-19 coronavirus in humans and no
assurance can be given that it will be the case. Our beliefs rely on a number of
previous studies related to SARS-CoV-1. No assurance can be given that future
studies will not result in findings that are different from those reported in
the studies to which we refer. Results obtained in animal models do not
necessarily predict results in humans. Some of the world's largest
pharmaceutical companies and medical institutions are racing to find a treatment
for COVID-19. Even if Ampligen proves effective in combating the virus, no
assurance can be given that our actions toward proving this will be given first
priority or that another treatment that eventually proves capable will not
negate our current and future efforts. 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, we -like all businesses - are unable
to gauge exactly how this pandemic will affect our operations in the future. We
are reaching out, directly and indirectly, to the U.S. government, numerous
foreign governments and entities related to the COVID-19 coronavirus and, if
successful, will be working in these countries.



In this regard, we are working with Japan's National Institute of Infectious
Diseases ("NIID") to test Ampligen as a potential treatment for COVID-19
coronavirus. In March 2020, the NIID initiated preliminary laboratory testing of
Ampligen as a potential treatment for COVID-19. On July 1, 2020, we entered into
a trilateral material transfer and research agreement with the NIID and Shionogi
& Co., Ltd. ("Shionogi"), one of Japan's premier pharma companies to test the
Company's drug Ampligen as a potential vaccine adjuvant for COVID-19. Under the
agreement, we have and will continue to provide Ampligen samples for various
research projects. Per the agreement, the details of all preclinical and
clinical results will remain confidential until released by NIID and Shionogi.



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In addition, Shenzhen Smoore Technology Limited has agreed to run preliminary
tests in China to the efficacy of Smoore's inhalation delivery device using
Ampligen. Ampligen is scheduled to be shipped to Smoore for testing, pending
resolution of various China inbound import regulatory requirements. AIM and
Smoore are working to identify and navigate any and all regulatory obligations.
Assuming Ampligen proves an effective COVID-19 treatment, significant testing
will be required to determine whether the Smoore device will be able to safely
deliver Ampligen in an appropriate dose without diminishing its efficacy against
COVID-19. 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. We recently contracted Amarex Clinical
Research LLC ("Amarex") to act as our Clinical Research Organization and provide
regulatory support with regard to a clinical trial testing Ampligen's potential
as a COVID-19 prophylaxis via intranasal delivery. Testing is subject to
obtaining IND authorization from the FDA. No assurance can be given that the IND
will be obtained or that the testing will be successful. Should it prove
promising, additional testing will be required.



On July 6, 2020, the Company entered into a clinical trial agreement (CTA) with
Roswell Park to support Roswell Park's Phase 1/2a trial of Ampligen in
combination with interferon alfa-2b, in cancer patients with mild to moderate
COVID-19, the disease caused by the SARS-CoV-2 coronavirus. Funding for the
clinical trial is provided, in part, through grants from the National Cancer
Institute and AIM, as well as institutional support from Roswell Park. 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 alfa-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 alfa
but will receive best available care. We are a financial sponsor of the study
and will provide Ampligen at no charge for this study. Additional information on
the clinical trial, which is recruiting patients, is available at
clinicaltrials.gov.



Recently, the Company also entered into a material transfer agreement with the
University of Rochester which is planning a series of in vitro experiments in
which it will be testing the direct antiviral activity of Ampligen on
SARS-CoV-2, as well as the mechanism of action. The Company also entered into a
specialized services agreement with Utah State University and 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 February 2013, we received a Complete Response Letter 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.



In August 2016, we received approval of our NDA from Administracion Nacional de
Medicamentos, Alimentos y Tecnologia Medica, or 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 was used 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. We
are currently working with GP Pharm 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. Additionally, AIM has shipped Ampligen to
Argentina for ANMAT's release. 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.



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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. 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.



Currently, six oncology Ampligen clinical trials are underway 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. Four are at Roswell Park and the
other two (one temporarily suspended with plans to be reactivated) are at the
University of Pittsburgh Medical Center. No assurance can be given as to the
results of these underway trials. Six additional cancer trials in collaboration
with University Medical/Cancer Research Centers using Ampligen plus checkpoint
blockade are in various pre-enrollment stages. 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 six 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, the Company cannot assure that the
clinical studies will be successful or yield any useful data or require
additional funding. The Company recognizes that all cancer centers, like all
medical facilities, must make the pandemic their priority. Therefore, there is
the potential for delays in clinical trial enrollment and reporting in ongoing
studies in cancer patients because of the COVID-19 medical emergency.



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 are investigating utilizing contract manufactures for the Alferon
process. We cannot provide any guarantee that the facility or current or
potential contract manufacturers will pass an FDA pre-approval inspection for
Alferon manufacturing.



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Commercial sales of Alferon in the U.S. will not resume until new batches of
commercial filled and finished product are produced and released by the FDA.
While the facility is approved by the FDA under the Biologics License
Application ("BLA") for Alferon, this status will need to be reaffirmed by an
FDA pre-approval inspection. We will also need the FDA's approval to release
commercial product once we have submitted satisfactory stability and quality
release data. Currently, the manufacturing process is on hold and there is no
definitive timetable to have the facility back online. Prior to completing
validation, we plan on modernizing the manufacturing process to make it
lower-cost and higher volume. If, following modernization, we are unable to gain
the necessary FDA approvals related to the manufacturing process and/or final
product of new Alferon inventory, our operations most likely will be materially
and/or adversely affected. Considering 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.



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, various viruses 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.



AIM's flagship products include Ampligen® (rintatolimod), a first-in-class drug
of large macromolecular RNA (ribonucleic acid) molecules, and Alferon N
Injection® (Interferon Alfa-N3). A first-in-class drug is also known as a new
molecular entity that contains an active moiety. Ampligen has not been approved
by the FDA or marketed in the US.



Since the outbreak of SARS-CoV-2, the novel virus that causes COVID-19, 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. Ampligen is also being researched as part of a potential
COVID-19 vaccine strategy that combines Ampligen as an immune enhancer seeking
to boost the efficacy of the vaccine and also convey cross-reactivity and
cross-protection against future mutations. We believe that prior studies of
Ampligen in SARS-CoV-1 animal experimentation may predict similar protective
effects against the new virus.



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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 which may also assist with the planning, presentation and
filing of documents with the FDA. These confidentiality and non-disclosure
agreements are only the initial step in forging relationships with these
entities to obtain contract manufacturers and research partners. No assurance
can be given as to how many of these, initial explorations, if any, will result
in definitive arrangements or, with regard to potential research partners, what
research arrangements will develop and thereafter prove fruitful.



Ampligen® represents an RNA being developed for globally important cancers,
viral diseases and disorders of the immune system. Ampligen® has in the clinic
demonstrated the potential for standalone efficacy in a number of 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. This success in the field of immuno-oncology has guided our
focus toward the potential use of Ampligen® as a combinational therapy for the
treatment of a variety of solid tumor types. There are currently multiple
Ampligen® clinical trials testing Ampligen in humans - both underway and planned
- at major cancer research centers around the country. Ampligen ® was used as a
monotherapy to treat pancreatic cancer patients in an Early Access Program (EAP)
approved by the Inspectorate of Healthcare in the Netherlands at Erasmus Medical
Center. In September, AIM reported receipt of statistically significantly
results of positive survival benefit when using Ampligen in patients with
locally advanced/metastatic pancreatic cancer after systemic chemotherapy. AIM
will work with its Contract Research Organization, Amarex Clinical Research LLC,
to seek FDA "fast-track" and possibly even FDA "breakthrough" designations and
to obtain authorization to conduct a follow-up pancreatic cancer Phase 2/3
clinical trial with sites in the Netherlands at Erasmus MC under Prof. van
Eijck, and also at major cancer research centers in the United States.



Ampligen® is also being evaluated for the treatment of myalgic
encephalomyelitis/chronic fatigue syndrome (ME/CFS). AIM is currently sponsoring
an expanded access program for ME/CFS patients in the U.S. In August 2016, we
received approval of our NDA from Administracion Nacional de Medicamentos,
Alimentos y Tecnologia Medica (ANMAT) for commercial sale of Ampligen® in the
Argentine Republic for the treatment of severe CFS. With regulatory approval in
Argentina, Ampligen® is the world's only approved therapeutic for ME/CFS. On
June 10, 2020, we received import clearance from ANMAT to import the first
shipment of commercial grade vials of Ampligen® to 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. AIM has supplied GP Pharm with the Ampligen required for
testing and ANMAT release. Once final approval by ANMAT is obtained, GP Pharm
will begin distributing Ampligen® in Argentina. We continue to pursue our
Ampligen New Drug Application, or NDA, for the treatment of CFS with the FDA.



Alferon N Injection® is approved for a category of sexually transmitted diseases
infection and patients that are intolerant to recombinant interferon in
Argentina. Alferon is the only natural-source, multi-species alpha interferon
currently approved for sale in the U.S. for the intralesional treatment of
refractory (resistant to other treatment) or recurring external condylomata
acuminata/genital warts (GW) in patients 18 years of age or older. Certain types
of human papilloma viruses cause GW. AIM also has approval from ANMAT for the
treatment of refractory patients that failed or were intolerant to treatment
with recombinant interferon in Argentina.



We operate a 30,000 sq. ft. facility in New Brunswick, NJ with the objective of
producing Ampligen® and Alferon®. 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
Ampligen® and our FDA-approved drug Alferon® N.



OUR PRODUCTS

Our primary pharmaceutical product platform consists of Ampligen®, 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®.

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Ampligen®



Ampligen® is approved for sale in Argentina for severe Chronic Fatigue Syndrome
(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 European Medicines Agency ("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). Ampligen® represents the
first drug in the class of large (macromolecular) dsRNA molecules to apply for
NDA review. Based on the results of published, peer reviewed pre-clinical
studies and clinical trials, we believe that Ampligen® may have broad-spectrum
anti-viral 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. 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 compromise 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 TLR3 agonist
that is administered intravenously. 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).



EAP/clinical trials of Ampligen® that have been conducted or that are ongoing
include studies of the potential treatment of patients with renal cell
carcinoma, malignant melanoma, non-small cell lung, ovarian, breast, colorectal,
urothelial, prostate and pancreatic cancer, ME/CFS, Hepatitis B and HIV.



We have received approval of our NDA from 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. On September 19, 2019, AIM received
clearance from the FDA to ship Ampligen to Argentina for the commercial launch
and subsequent sales. 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.



The FDA has authorized an open-label expanded access treatment protocol,
("AMP-511"), allowing patient access to Ampligen® in an open-label safety 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 clinical sites provide safety information
regarding the use of Ampligen® in patients with CFS. We are establishing an
enlarged data base 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 complete response letter. The FDA
approved the increase reimbursement level from $200 to $345 per 200 mg vial of
Ampligen, due to increased production costs; which was re-authorized in 2020. At
this time, we do not plan on passing this adjustment along to the patients in
this program. As of September 30, 2020, there are 10 patients enrolled in this
open-label expanded access treatment protocol. In October 2020, AIM received
Institutional Review Board (IRB) approval for the expansion of the AMP-511
Expanded Access Program (EAP) clinical trial for Myalgic
Encephalomyelitis/Chronic Fatigue Syndrome (ME/CFS) to include patients
previously diagnosed with SARS-CoV-2 following clearance of the virus, but who
still demonstrate chronic fatigue-like symptoms.



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 (the "Territory") related to ME/CFS.
Pursuant to the agreement, as amended, myTomorrows also will manage all Early
Access Programs and Special Access Programs in Europe, Canada and Turkey to
treat pancreatic cancer and ME/CFS patients.



In April 2018, we completed data analysis of an intranasal human safety study of
Ampligen® plus FluMist® known as AMP-600. The study was previously closed after
the US Centers for Disease Control and Prevention ("CDC") recommended against
the use of FluMist®. Intranasal Ampligen® in combination with FluMist® was
generally well-tolerated in the study.



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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 blockage 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).
Based upon these findings AIM and Roswell Park expanded their existing
scientific collaboration to advance the clinical development of Ampligen® which
has shown promise in preclinical studies when combined with checkpoint
inhibitors (CPIs). The parties executed a Memorandum of Understanding ("MOU")
designed to further assess the clinical potential of Ampligen® in treating
certain cancers. This phase I/II study will evaluate the potential of Ampligen®
to enhance the immune mediated effects of CPIs in patients with advanced solid
tumors including bladder, melanoma and renal cell carcinoma.



In 2018, we completed production of two commercial-size batches of more than
16,000 vials of Ampligen®, following its "Fill & Finish" at 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. The current manufactured lots of Ampligen have
been fully tested and released for commercial product launch in Argentina and
for clinical trials.



Alferon N Injection®



Alferon N Injection® is the registered trademark for our injectable formulation
of natural alpha interferon. Alferon® is the only natural-source, multi-species
alpha interferon currently approved for sale in the U.S. 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® 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 world-wide 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 U.S. Our natural
alpha interferon is produced from human white blood cells.



The potential advantages of natural alpha interferon over recombinant
(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 (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.



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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®.

COVID-19



Following the SARS-CoV-1 outbreak in 2002-03, Ampligen exhibited excellent
antiviral properties and protective survival effect in NIH-contracted studies of
SARS-infected mice, which is very similar to SARS-CoV-2, the novel virus that
causes COVID-19.



  ? The Barnard 2006 study

(https://journals.sagepub.com/doi/abs/10.1177/095632020601700505) found that

Ampligen reduced virus lung levels to below detectable limits.

  ? The Day 2009 study (https://www.ncbi.nlm.nih.gov/pmc/articles/PMC2787736/)

found that, instead of 100% mortality, there was 100% protective survival.

AIM 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, as discussed below, recently,
Ampligen has demonstrated in vitro 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. Ampligen
is also being researched as part of a potential COVID-19 vaccine strategy that
combines Ampligen as an immune enhancer seeking to boost the efficacy of the
vaccine and also convey cross-reactivity and cross-protection against future
mutations. 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, the three provisional patent
applications can convert to international patent applications based on the date
of their filings.



In early April 2020, we entered into a Material Transfer Agreement with Shenzhen
Smoore Technologies located in Shenzhen China, the world's largest manufacturer
of inhalation devices. Pursuant to this agreement, Smoore has agreed to run
preliminary tests in China to the efficacy of Smoore's inhalation delivery
device using Ampligen. Initial testing will include evaluation of Ampligen with
regards to safety and characterization of the inhaler vapor properties.
Additional testing will study the particle size of various Ampligen
concentrations in aqueous solutions obtainable using Smoore's technology. The
goal of these studies is to establish a reproducible method to obtain an
Ampligen-containing atomized mist that can deliver biologically active Ampligen
deep into the lung airways of humans. The Ampligen is scheduled to be shipped to
Smoore for testing, pending resolution of various China inbound import
regulatory requirements. AIM and Smoore are working to identify and navigate any
and all regulatory obligations.



  28






On August 6, 2020, we contracted Amarex Clinical Research LLC ("Amarex") to act
as our Clinical Research Organization and provide regulatory support with regard
to a clinical trial testing Ampligen's potential as a COVID-19 prophylaxis via
intranasal delivery. For Phase I we anticipate providing approximately $514,000
to Amarex. For the subsequent Phase II we anticipate providing approximately an
additional $650,000. Additional costs expected to be incurred by us for the
clinical trial are estimated at $4.5 million. We expect that Phase I will
consist of 24 test subjects and that Phase II will consist of 150 test subjects.



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 support related to
a clinical trial testing Ampligen's potential as a COVID-19 prophylaxis via
intranasal delivery.



In addition, we have joined with ChinaGoAbroad (CGA) to facilitate the entry of
Ampligen into the People's Republic of China (PRC) for use as a
prophylactic/early-onset therapeutic against COVID-19. CGA is a member-based
online information platform and offline advisory firm serving to facilitate
two-way international transactions relating to the PRC in collaboration with the
China Overseas Development Association (CODA). The relationship with
ChinaGoAbroad is ongoing.



On May 11, 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
mild or moderate COVID-19 infections. This new clinical trial, sponsored by the
Roswell Park in collaboration with us, will test the safety of this combination
regimen in patients with cancer and mild to moderate COVID-19, and the extent to
which this therapy will promote clearance of the SARS-CoV-2 virus from the upper
airway. 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 alfa-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 alfa but will receive best available care. We intend to be a
financial sponsor of the study and will provide Ampligen at no charge for this
study.



On July 6, 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 alfa, in cancer patients with
COVID-19, the disease caused by the SARS-CoV-2 coronavirus. The National Cancer
Institute and AIM are supporting this trial. AIM reported in September that
recruitment in the trial had begun. See: clinicaltrials.gov/NCT04379518.



Recently, we also entered into a material transfer agreement with the University
of Rochester which is planning a series of in vitro experiments in which it will
be testing the direct antiviral activity of Ampligen on SARS-CoV-2, as well as
the mechanism of action. We also entered into a specialized services agreement
with Utah State University and has 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.



Cancer



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, AIM has supplied Ampligen® (rintatolimod) 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. In the 1st quarter of 2017, Dr.
Kalinski relocated to Roswell Park in Buffalo, NY and has established a cancer
program which will continue to require a supply of Ampligen®.



  29






In October 2018, we signed a clinical trial agreement with Roswell Park to
evaluate Ampligen® in combination with checkpoint inhibitors (CPIs). The Phase
IIa clinical trial will evaluate the immune-mediated effects of cytokine
modulation in combination with CPIs in patients with primary resistance to CPI
therapy. The protocol will seek to evaluate the combination of Ampligen® and
CPIs in patients with advanced urothelial carcinoma, renal cell carcinoma and
melanoma. Ampligen® is our investigational immune-enhancing TLR3 agonist that
has demonstrated a robust anti-cancer effect in preclinical models when combined
with CPIs. This new agreement expands the extensive prior clinical and
preclinical work into the clinical checkpoint blockade arena and offers the
opportunity to begin evaluation of this combination therapy in patients with a
variety of solid tumors where large numbers of patients do not respond or
progress following treatment with standard CPI-based therapy.

Currently, six Ampligen® clinical trials are underway at university cancer centers testing whether tumor microenvironments can be reprogrammed to increase the effectiveness of cancer immunotherapy, including checkpoint inhibitors:

? Advanced Recurrent Ovarian Cancer - Phase 1 / 2 study of intraperitoneal

chemo-immunotherapy in advanced recurrent ovarian cancer; Phase 1 portion

establishes intraperitoneal safety. Awaiting publication of Phase I results.

https://clinicaltrials.gov/ct2/show/NCT02432378

? Advanced Recurrent Ovarian Cancer - 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 the numerous
    patients have commenced treatment.
    https://clinicaltrials.gov/ct2/show/NCT03734692

? Stage 4 Metastatic Triple Negative Breast Cancer - Phase 2 study of metastatic

triple-negative breast cancer using chemokine modulation therapy, including

Ampligen and pembrolizumab. All patients have been treated or are in

treatment. https://www.clinicaltrials.gov/ct2/show/NCT03599453

? Stage 4 Colorectal Cancer Metastatic to the Liver - Phase 2a study of Ampligen

as component of chemokine modulatory regimen on colorectal cancer metastatic

to liver; the majority of the 12 planned patients enrolled and treated.

https://clinicaltrials.gov/ct2/show/NCT03403634

? 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

? 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. This study is recruiting
    patients designed for up to 24 patients.
    https://clinicaltrials.gov/ct2/show/NCT04081389

Six Ampligen clinical trials are planned for initiation in 2020/21:

? Brain-Metastatic Breast Cancer - Phase 2 study to assess the effectiveness of

a three-pronged strategy combining distinct immunotherapy approaches,

including Ampligen. Roswell Park and Moffitt Cancer Center have both received

"Breakthrough Awards" from the U.S. Department of Defense (DOD). Together,

these separate but parallel proposed clinical trials are receiving

approximately $15 million in DOD funding to study Ampligen. Roswell Park is

currently working on its draft of the IND, which its study and Moffitt's study

require before next steps can be taken.

? Stage 4 Refractory Metastatic Colorectal Carcinoma - Phase 2 study that will

evaluate Ampligen in combination with pembrolizumab in refractory metastatic

colorectal carcinoma at Roswell Park. Up to 25 patients to be enrolled. This

is expected to be funded by grants, testing Ampligen and pembrolizumab. See:

https://www.clinicaltrials.gov/show/NCT04119830

? Refractory Melanoma - Phase 2 study that will evaluate polarized dendritic

cell vaccine, interferon alpha-2, Ampligen and celecoxib for the treatment of

HLA-A2+ refractory melanoma at Roswell Park. Up to 24 patients to be enrolled.

    See: https://www.clinicaltrials.gov/show/NCT04093323




  30

? Stage 4 Urothelial, Melanoma and Renal Cell Carcinoma - Phase 2 study of

advanced urothelial (bladder), melanoma and renal cell carcinoma, resistant to

checkpoint blockade, that will evaluate Ampligen in combination with a

checkpoint blockade therapy at Roswell Park. Protocol design and funding

currently being finalized.

? Non-Small Cell Lung Cancer - First-line therapy for non-small cell lung cancer

with SOC chemotherapy that will evaluate Ampligen in combination with

pembrolizumab at University of Nebraska Medical Center. Dr. V. Ernani, PI.

Study design and budget being developed. However, we now anticipate an

extended delay, as other studies with funding have moved ahead of the Ampligen

project. Roswell Park is exploring a pilot study to establish proof of

concept.

? Advanced Pancreatic Cancer - Phase 2 study in advanced pancreatic cancer using

checkpoint blockade plus Ampligen at University of Nebraska Medical Center and

Erasmus University. Protocol and budget being developed. This proposed study

may be based on data from our Dutch EAP (see below) and UNMC animal

experiments showing synergy between Ampligen and checkpoint therapy. A second

confirmatory animal trial has been completed; while it did not replicate the

previous survival results, it did demonstrate a significant anti-tumor effect.

In addition, the National Cancer Institute awarded $14.5 million to Roswell Park
to study Ampligen as part of five Roswell Park-led chemokine modulation clinical
trials in melanoma, colorectal and ovarian cancers



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 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.



As of December 31, 2019, 42 pancreatic cancer patients have received treatment
with Ampligen® immuno-oncology therapy under the EAP program at Erasmus
University in the Netherlands. Supervised by Prof. Casper van Eijck, MD, a
world-renowned specialist in this dread malignancy, and Diba Latifi, MD, the
team at Erasmus is making progress. Early progress was reported in a published
abstract from Erasmus, and a copy of the abstract can be found at
http://ir.aimimmuno.com/Events_Presentations. The abstract was part of a larger
original report covering a variety of medical topics, which can be found at
https://www.pancreasclub.com/wp-content/uploads/2018/06/Poster-Abstracts.pdf.



In September, AIM reported receipt of statistically significant results of
positive survival benefit when using Ampligen in patients with locally
advanced/metastatic pancreatic cancer after systemic chemotherapy versus matched
historical controls. AIM will work with its Contract Research Organization,
Amarex Clinical Research LLC, to seek FDA "fast-track" and possibly even FDA
"breakthrough" designations and to obtain IND authorizations to conduct a
follow-up pancreatic cancer Phase 2/3 clinical trial with sites in the
Netherlands at Erasmus MC under Prof. van Eijck, and also at major cancer
research centers in the United States.

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 known as post-exertional
malaise (PEM). Other symptoms can include problems with thinking and
concentrating, pain, and dizziness."



  31






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.



In October 2016, an analysis of a subset of CFS patients from the AMP-516 Phase
3 study was performed and presented at the IACFS/ME annual meeting in Fort
Lauderdale, FL. The ITT Population (n=208) was separated into two subsets based
primarily on baseline CFS symptom duration (2-8 years (n=75) and <2 years plus
>8 years (n=133)). Responder analyses of the ITT Population and both subsets
were performed. Responder analyses of Ampligen® vs. placebo patients improving
ET duration from baseline by ?25% shows over twice the percentage of patients
with clinical enhancement in ET effect in the Ampligen® cohort compared to
placebo for the 2-8-year subset vs. the ITT population. This subset may assist
in the design of future clinical studies of Ampligen® in the treatment for
ME/CFS patients.



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. Individuals with CFS lost an
estimated $20,000 in 2002, implying a total societal loss of $9.1 billion.
Twenty-five percent ($2.3 billion) resulted from lost household productivity,
and the remaining 75% ($6.8 billion) from lost labor force productivity.



In June of 2020, AIM 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"
(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."
http://simmaronresearch.com/2020/04/will-covid-19-leave-an-explosion-of-me-cfs-cases-in-its-wake/



In October 2020, AIM received Institutional Review Board (IRB) approval for the
expansion of the AMP-511 Expanded Access Program (EAP) clinical trial for
Myalgic Encephalomyelitis/Chronic Fatigue Syndrome (ME/CFS) to include patients
previously diagnosed with SARS-CoV-2 following clearance of the virus, but who
still demonstrate chronic fatigue-like symptoms.



On November 2, 2020, AIM 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.



Other Diseases



In Europe, the EMA has approved the Orphan Medicinal Products Designation for
rintatolimod (Ampligen®) as a potential treatment of Ebola virus disease and for
Alferon® N Injection, also known as interferon alfa-n3, as a potential treatment
of MERS.



We concluded our series of collaborations designed to determine the potential
effectiveness of Ampligen® and Alferon® N as potential preventative 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 somewhat diminished. As a result, we have
elected to focus our research and development efforts on other areas at this
time.



  32






Manufacturing



In January 2017, AIM approved a quote and provided a purchase order commitment
with Jubilant Hollister-Stier LLC ("Jubilant") pursuant to which Jubilant will
manufacture commercial size batches of Ampligen®. Additional orders will be
placed upon approved quotes and purchase orders provided by AIM to Jubilant.
Jubilant was approved by the FDA as a manufacture of Ampligen by the successful
completion of a previous preapproval inspection by the agency. The
Administracion Nacional de Medicamentos, Alimentos y Tecnologia Medica (ANMAT)
in Argentina has approved Ampligen for commercial distribution for the treatment
of Chronic Fatigue Syndrome (CFS). Shipment of the drug product to Argentina was
initiated in 2018 to complete the release testing by ANMAT needed for commercial
distribution. On September 19, 2019, AIM received clearance from the FDA to ship
Ampligen to Argentina for the commercial launch and subsequent sales. We are
currently working with GP Pharm on the commercial launch of Ampligen in
Argentina.



Jubilant Hollister-Stier (Jubilant) is AIM's authorized CMO for Ampligen for our
approval in Argentina. Since the 2017 engagement of Jubilant to manufacture
Ampligen, two lots of Ampligen consisting of more than 16,000 units have been
manufactured and released in year 2018. 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. The production of additional polymer (Ampligen intermediates) took
place in 2019 at our New Brunswick facility. Additionally, two lots of Ampligen
were manufactured in December 2019 and January 2020 at Jubilant. The current
manufactured lots of Ampligen have been fully tested and released by Jubilant
for commercial product launch in Argentina and for clinical trials.



Alferon® is approved by the FDA for commercial sales in the U.S. 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. While the AIM facility in
New Brunswick is approved by the FDA under the Biologic License Application
(BLA) for Alferon®, this status will need to be reaffirmed by an FDA
pre-approval inspection which will not occur until new batches of commercial
filled and finished product are produced and released by the FDA.

Licensing/Collaborations/Joint Ventures

To maximize the 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 territories of the world. Ideal partners would have the
following characteristics: well established global and regional experience and
coverage, robust commercial infrastructure, strong track record of successful
development and registration of in-licensed products, as well as a therapeutic
area fit (ME/CFS, immuno-oncology, etc.).



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.



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. 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.



  33






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, and the maximum royalty would be a percentage of Net Sales. 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.



In January 2017, the EAP through our agreement with myTomorrows designed to
enable access of Ampligen® to ME/CFS patients has been 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 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.

401(k) Plan



Each participant immediately vests in his or her deferred salary contributions,
while Company contributions will vest over one year. The 6% Company matching
contribution was terminated effective January 1, 2016. For the nine months ended
September 30, 2020, the Company did not make any contributions towards the
401(k) Plan.



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, 2019.



  34






RESULTS OF OPERATIONS

Three months ended September 30, 2020 versus three months ended September 30, 2019

Net Loss



Our net loss was approximately $3,306,000 and $2,948,000 for the three months
ended September 30, 2020 and 2019, respectively, representing an increase in
loss of approximately $358,000 or 12% when compared to the same period in 2019.
This increase in loss for these three months was primarily due to the following:

? an increase in general and administrative (G&A) expense of $239,000 or 13%;

  ? an increase in interest income of $61,000; offset by
  ? a decrease of $415,000 from the 2019 quarterly reevaluation of certain
    redeemable warrants in;
  ? a decrease in production costs of $26,000;
  ? a decrease in research and development expenses of $88,000; and
  ? a decrease interest expense and other finance cost of $142,000




Net loss per share was $(0.08) and $(1.13) for the three months ended September
30, 2020 and 2019, respectively. The weighted average number of shares of our
common stock outstanding as of September 30, 2020 was 38,907,546 as compared to
2,603,854 as of September 30, 2019.



Revenues



Revenues from our Ampligen® Cost Recovery Program were $36,000 and $61,000 for
the quarters ended September 30, 2020 and 2019, respectively. There was a
decrease in revenues of $25,000. The change in revenue is related to timing of
orders and shipments in the three months ending September 30, 2020. The revenue
was generated from the EAP and our FDA approved open-label treatment protocol,
("AMP 511"), that allows patient access to Ampligen® for treatment in an
open-label safety study.



Production Costs

Production costs were approximately $204,000 and $230,000, respectively, for the three months ended September 30, 2020 and 2019, representing a decrease of $26,000 in production costs in the current period. These costs primarily represent production expenses related to Ampligen produced in 2019.

Research and Development Costs

Research and Development ("R&D") costs for the quarter ended September 30, 2020
were approximately $1,102,000 as compared to $1,190,000 for the quarter ended
September 30, 2019 reflecting a decrease of approximately $88,000. The reason
for the decrease in research and development costs was due to decreases in
Ampligen polymer production cost of $350,000, Ampligen compliance and stability
of $64,000 and maintenance and engineering of $35,000 offset by and an increate
in cost recovery of $25,000 and an increase in clinical research of $268,000.

General and Administrative Expenses

General and Administrative ("G&A") expenses for the quarters ended September 30,
2020 and 2019 were approximately $2,085,000 and $1,846,000, respectively,
reflecting an increase of approximately $239,000 or 13%. The increase in G&A
expenses during the current period was mainly due to an increase in professional
fees of $236,000 and public relations of $34,000.



Other Income-Expenses



Interest and other finance costs decreased $142,000 in the three months ended
September 30, 2020 mostly due to the costs associated with the long-term debt
which were not in effect in the three months ended September 30, 2020. The
long-term debt was extinguished in the second quarter of 2020. Interest income
increased $61,000 in the three months ended September 30, 2020 from the
investments from the proceeds from stock sales and exercised warrants.



  35






Redeemable Warrants



The quarterly revaluation of certain redeemable warrants resulted in a non-cash
adjustment to the redeemable warrants liability for the three months ended
September 30, 2020 which amounted to a gain of approximately $31,000 compared to
a gain of $446,000 for September 30, 2019 (see Note 13: Fair Value - for the
various factors considered in the valuation of redeemable warrants).

Nine months ended September 30, 2020 versus nine months ended September 30, 2019

Net Loss



Our net loss was approximately $10,466,000 and $8,341,000 for the nine months
ended September 30, 2020 and 2019, respectively, representing an increase in
loss of approximately $2,125,000 or 25% when compared to the same period in
2019. This increase in loss for these nine months was primarily due to the
following:



  ? an increase in G&A expense of $515,000 or 9%;
  ? an increase in research and development expenses of $231,000;
  ? an increase of $392,000 from the extinguishment of notes payable;

? a change of $120,000 for the quarterly revaluation of certain redeemable

warrants in 2020 compared to a credit of $1,485,000 in 2019;

? a decrease in an insurance settlement of $260,000 in 2019;

? an increase in interest and finance costs of $80,000 related to long term

    debt; offset by
  ? an increase in interest income of $87,000; and
  ? a decrease in production costs of $68,000.




Net loss per share was $(0.36) and $(4.41) for the nine months ended September
30, 2020 and 2019, respectively. The weighted average number of shares of our
common stock outstanding as of September 30, 2020 was 28,826,283 as compared to
1,891,782 as of September 30, 2019.



Revenues



Revenues from our Ampligen® Cost Recovery Program were $121,000 and $90,000 for
the nine months ended September 30, 2020 and 2019, respectively. There was an
increase in revenues of $31,000. The change in revenue is related to timing of
orders and shipments in the nine months ending September 30, 2020. The revenue
was generated from the EAP and our FDA approved open-label treatment protocol,
("AMP 511"), that allows patient access to Ampligen® for treatment in an
open-label safety study.



Production Costs

Production costs were approximately $608,000 and $676,000, respectively, for the nine months ended September 30, 2020 and 2019, representing a decrease of $68,000 in production costs in the current period. These costs primarily represent production expenses related to Ampligen produced in 2019.

Research and Development Costs

Research and Development ("R&D") costs for the nine months ended September 30,
2020 were approximately $3,445,000 as compared to $3,214,000 for the nine months
ended September 30, 2019 reflecting an increase of approximately $231,000. The
primary reasons for the increase in research and development costs was due to an
increase in abandoned patents of $129,000, a general increase in Ampligen
compliance cost of $235,000 and outside lab fees of $110,000 and offset by a
decrease in outside contractors of $239,000.

General and Administrative Expenses

General and Administrative ("G&A") expenses for the nine months ended September
30, 2020 and 2019 were approximately $6,070,000 and $5,555,000, respectively,
reflecting an increase of approximately $515,000 or 9%. The increase in G&A
expenses during the current period was mainly due to increases in salaries &
benefits, including bonuses of $304,000, professional and legal fees of $331,000
and warrant modification of $46,000 offset by decreases in public relations of
$114,000 and stock market fees of $51,000.



  36






Other Income-Expenses



Interest and finance costs increased $80,000 in the nine months ended September
30, 2020 mostly due to the costs associated with the long-term debt which were
not in effect in the nine months ended September 30, 2019. Interest income
increased $87,000 in the nine months ended September 30, 2020 from the proceeds
from stock sales and exercised warrants. There was gain on extinguishment of
notes payable of $142,000 in the nine months ended September 30, 2020, in the
same nine months ending September 30, 2019 there was a loss on extinguished debt
of $250,000.

In June 2019 the was a gain from settlement proceeds of $260,000 which did not occur in 2020.

Redeemable Warrants



The quarterly revaluations of certain redeemable warrants resulted in a non-cash
adjustment to the redeemable warrants liability for the nine months ended
September 30, 2020 which amounted to a loss of approximately $120,000 compared
to a gain of $1,485,000 for September 30, 2019 (see Note 13: Fair Value - for
the various factors considered in the valuation of redeemable warrants).

Liquidity and Capital Resources

As of September 30, 2020, we had approximately $38,496,000 in cash and cash equivalents. As of December 31, 2019, we had approximately $1,470,000 in cash and cash equivalents. Cash used in operating activities for the nine months ended September 30, 2020 was $7,514,000 compared to $6,778,000. The primary reasons for the increase was the decrease in accounts receivable and other receivables which included the sale of New Jersey NOL in the period ended September 30, 2020.

Cash used in investing activities for the nine months ended September 30, 2020
was approximately $8,982,000 compared to $858,000 for the same period in 2019,
representing an increase of $8,124,000. The primary reason for the increase
during the current period is the purchase of marketable securities of
$17,169,000 offset by the sale of marketable securities of $8,497,000.



Cash provided by financing activities for the nine months ended September 30,
2020 was approximately $53,522,000 compared to approximately $16,953,000 for the
same period in 2019, an increase of $36,571,000. The primary reason for the
increase in the nine months ended September 30, 2020 is our receipt of net
proceeds of approximately $58,066,000 from the sale common stock pursuant to our
2019 EDA with Maxim Group and the exercise of warrants (see Note 8:
Stockholders' Equity) compared to $15,307,000 for the same period in 2019.



On August 6, 2020, we contracted Amarex to act as our Clinical Research
Organization and provide regulatory support with regard to a clinical trial
testing Ampligen's potential as a COVID-19 prophylaxis via intranasal delivery.
For Phase I we anticipate providing approximately $514,000 to Amarex. In Phase
II we anticipate providing approximately an additional $650,000. Additional
costs expected to be incurred by us for the clinical trial are estimated at
$4,500,000. (see "Covid-19" above).



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.



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.



The proceeds from our financings have been used to fund infrastructure growth
including manufacturing, regulatory compliance and market development along with
our efforts regarding the Ampligen manufacturing, Ampligen NDA. There can be no
assurances that, if needed, we will raise adequate funds from these or other
sources, which may have a material adverse effect on our ability to develop our
products. Also, we have the ability to curtail discretionary spending, including
some research and development activities, if required to conserve cash.

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