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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
10-Q
(Mark One)
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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the quarterly period ended
September 30,
2022
OR
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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For the transition period from to
Commission File Number
001-39386
ALX ONCOLOGY HOLDINGS INC.
(Exact name of Registrant as specified in its Charter)
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Delaware
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85-0642577
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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323 Allerton Avenue
South San Francisco,
California
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94080
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code:
650-466-7125
Securities registered pursuant to Section 12(b) of the
Act:
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Title of each class
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Trading
Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $0.001 per share
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ALXO
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The Nasdaq Global Select Market
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Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes
☒
No
☐
Indicate by check mark whether the Registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)
during the preceding 12 months (or for such shorter period that the
Registrant was required to submit such files).
Yes
☒ NO ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the Registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes
☐
No
☒
As of November 1, 2022, the Registrant had
40,755,452
shares of common stock outstanding, $0.001 par value per
share.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking
statements. All statements other than statements of historical
facts contained in this report, including statements regarding our
future results of operations and financial position, business
strategy, product candidates, planned preclinical studies and
clinical trials, results of clinical trials, research and
development costs, regulatory approvals, timing and likelihood of
success, as well as plans and objectives of management for future
operations, are forward-looking statements. These statements
involve known and unknown risks, uncertainties and other important
factors that are in some cases beyond our control and may cause our
actual results, performance or achievements to be materially
different from any future results, performance or achievements
expressed or implied by the forward-looking statements.
In some cases, you can identify forward-looking statements by terms
such as “may,” “will,” “should,” “would,” “expect,” “plan,”
“anticipate,” “could,” “intend,” “target,” “project,” “believe,”
“estimate,” “predict,” “potential,” or “continue” or the negative
of these terms or other similar expressions. Forward-looking
statements contained in this Quarterly Report include, but are not
limited to, statements about:
▪
our financial performance;
▪
the sufficiency of our existing cash to fund our future operating
expenses and capital expenditure requirements;
▪
the accuracy of our estimates regarding expenses, future revenue,
capital requirements, and needs for additional
financing;
▪
our plans relating to commercializing our product candidates, if
approved, including the geographic areas of focus and our ability
to grow a sales team;
▪
the implementation of our strategic plans for our business and
product candidates;
▪
our ability to obtain and maintain regulatory approval of our
product candidates and the timing or likelihood of regulatory
filings and approvals, including our expectation to seek special
designations, such as orphan drug designation, for our product
candidates for various diseases;
▪
our reliance on third parties to conduct preclinical research
activities, and for the manufacture of our product
candidates;
▪
the beneficial characteristics, safety, efficacy and therapeutic
effects of our product candidates;
▪
the progress and focus of our current and future clinical trials,
and the reporting of data from those trials;
▪
our ability to advance product candidates into and successfully
complete clinical trials;
▪
the ability of our clinical trials to demonstrate the safety and
efficacy of our product candidates, and other positive
results;
▪
the success of competing therapies that are or may become
available;
▪
developments relating to our competitors and our industry,
including competing product candidates and therapies;
▪
our plans relating to the further development and manufacturing of
our product candidates, including additional indications that we
may pursue;
▪
existing regulations and regulatory developments in the United
States and other jurisdictions;
▪
our potential and ability to successfully manufacture and supply
our product candidates for clinical trials and for commercial use,
if approved;
▪
our continued reliance on third parties to conduct clinical trials
of our product candidates, and for the manufacture of our product
candidates;
▪
our plans and ability to obtain or protect intellectual property
rights, including extensions of existing patent terms where
available;
▪
the scope of protection we are able to establish and maintain for
intellectual property rights, including our technology platform and
product candidates;
▪
our ability to retain the continued service of our key personnel
and to identify, hire, and then retain additional qualified
personnel;
▪
the impact of the ongoing COVID-19 pandemic, rising interest rates,
or geopolitical risks on our business;
▪
our plans for and prospects of our acquisitions and other business
development activities, and our ability to successfully capitalize
on these opportunities; and
▪
our anticipated use of our existing cash and cash equivalents,
short-term and long-term investments, and the funds available from
our term loan.
We have based these forward-looking statements largely on our
current expectations and projections about our business, the
industry in which we operate and financial trends that we believe
may affect our business, financial condition, results of operations
and prospects, and these forward-looking statements are not
guarantees of future performance or development. These
forward-looking statements speak only as of the date of this
Quarterly Report on Form 10-Q and are subject to a number of risks,
uncertainties and assumptions described in the section titled “Risk
Factors” and elsewhere in this Quarterly Report on Form 10-Q.
Because forward-looking statements are inherently subject to risks
and uncertainties, some of which cannot be predicted or quantified,
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. 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 or otherwise.
In addition, statements that “we believe” and similar statements
reflect our beliefs and opinions on the relevant subject. These
statements are based upon information available to us as of the
date of this Quarterly Report, and while we believe such
information forms a reasonable basis for such statements, such
information may be limited or incomplete, and our statements should
not be read to indicate that we have conducted an exhaustive
inquiry into, or review of, all potentially available relevant
information. These statements are inherently uncertain, and you are
cautioned not to unduly rely upon these statements.
Table of Contents
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
ALX ONCOLOGY HOLDINGS INC.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands, except share and per share amounts)
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September 30,
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December 31,
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2022
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2021
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Assets
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Current assets:
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Cash and cash equivalents
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$
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49,054
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$
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363,667
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Short-term investments
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235,855
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—
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Prepaid expenses and other current assets
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5,899
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3,352
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Total current assets
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290,808
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367,019
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Property and equipment, net
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2,336
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897
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Long-term investments
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8,217
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—
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Other assets
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16,328
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12,267
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Total assets
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$
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317,689
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$
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380,183
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Liabilities and stockholders’ equity
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Current liabilities:
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Accounts payable
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$
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5,880
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$
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3,764
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Payable and accrued liabilities due to related party
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2,759
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1,630
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Accrued expenses and other current liabilities
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16,604
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9,901
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Total current liabilities
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25,243
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15,295
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Other non-current liabilities
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5,483
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1,839
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Total liabilities
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30,726
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17,134
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Commitments and contingencies (Note
10)
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Stockholders’ equity
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Common stock, $0.001 par
value;
1,000,000,000 shares
authorized
as of September 30, 2022 and December 31,
2021;
40,748,290 and
40,587,067 shares
issued and outstanding as of September 30, 2022 and
December 31, 2021, respectively
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41
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41
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Additional paid-in capital
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583,184
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564,993
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Accumulated other comprehensive loss
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(1,504
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)
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—
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Accumulated deficit
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(294,758
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)
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(201,985
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)
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Total stockholders’ equity
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286,963
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363,049
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Total liabilities and stockholders’ equity
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$
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317,689
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$
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380,183
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See accompanying notes to these condensed consolidated financial
statements (unaudited).
5
ALX ONCOLOGY HOLDINGS INC.
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except share and per share amounts)
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|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
29,382
|
|
|
$
|
18,214
|
|
|
$
|
73,203
|
|
|
$
|
39,276
|
|
|
General and administrative
|
|
|
7,299
|
|
|
|
6,362
|
|
|
|
22,014
|
|
|
|
15,807
|
|
|
Total operating expenses
|
|
|
36,681
|
|
|
|
24,576
|
|
|
|
95,217
|
|
|
|
55,083
|
|
|
Loss from operations
|
|
|
(36,681
|
)
|
|
|
(24,576
|
)
|
|
|
(95,217
|
)
|
|
|
(55,083
|
)
|
|
Interest income
|
|
|
1,370
|
|
|
|
22
|
|
|
|
2,471
|
|
|
|
70
|
|
|
Other expense, net
|
|
|
(9
|
)
|
|
|
(12
|
)
|
|
|
(27
|
)
|
|
|
(12
|
)
|
|
Net loss
|
|
$
|
(35,320
|
)
|
|
$
|
(24,566
|
)
|
|
$
|
(92,773
|
)
|
|
$
|
(55,025
|
)
|
|
Net loss per share, basic and diluted
|
|
$
|
(0.87
|
)
|
|
$
|
(0.61
|
)
|
|
$
|
(2.28
|
)
|
|
$
|
(1.37
|
)
|
|
Weighted-average shares of common stock used to compute net loss
per shares, basic and diluted
|
|
|
40,747,026
|
|
|
|
40,396,188
|
|
|
|
40,684,172
|
|
|
|
40,234,159
|
|
See accompanying notes to these condensed consolidated financial
statements (unaudited).
6
ALX ONCOLOGY HOLDINGS INC.
Condensed Consolidated Statements of Comprehensive Loss
(unaudited)
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
2022
|
|
|
2021
|
|
|
Net loss
|
|
$
|
(35,320
|
)
|
|
$
|
(24,566
|
)
|
|
$
|
(92,773
|
)
|
|
$
|
(55,025
|
)
|
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized loss on available-for-sale investments
|
|
|
(248
|
)
|
|
|
—
|
|
|
|
(1,504
|
)
|
|
|
—
|
|
|
Total comprehensive loss
|
|
$
|
(35,568
|
)
|
|
$
|
(24,566
|
)
|
|
$
|
(94,277
|
)
|
|
$
|
(55,025
|
)
|
See accompanying notes to these condensed consolidated financial
statements (unaudited).
7
ALX ONCOLOGY HOLDINGS INC.
Condensed Consolidated Statements of Stockholders’
Equity
(unaudited)
(in thousands, except share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Additional
Paid-In
|
|
|
Accumulated
Other
Comprehensive
|
|
|
Accumulated
|
|
|
Total
Stockholders’
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Loss
|
|
|
Deficit
|
|
|
Equity
|
|
|
Balance as of December 31, 2021
|
|
|
40,587,067
|
|
|
$
|
41
|
|
|
$
|
564,993
|
|
|
$
|
—
|
|
|
$
|
(201,985
|
)
|
|
$
|
363,049
|
|
|
Issuance of common stock under
equity incentive plans
|
|
|
69,565
|
|
|
|
—
|
|
|
|
185
|
|
|
|
—
|
|
|
|
—
|
|
|
|
185
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
5,501
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,501
|
|
|
Unrealized loss on available-for-sale
investments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(606
|
)
|
|
|
—
|
|
|
|
(606
|
)
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(24,533
|
)
|
|
|
(24,533
|
)
|
|
Balance as of March 31, 2022
|
|
|
40,656,632
|
|
|
|
41
|
|
|
|
570,679
|
|
|
|
(606
|
)
|
|
|
(226,518
|
)
|
|
|
343,596
|
|
|
Issuance of common stock under
equity incentive plans
|
|
|
44,618
|
|
|
|
—
|
|
|
|
155
|
|
|
|
—
|
|
|
|
—
|
|
|
|
155
|
|
|
Issuance of common stock under
employee stock purchase plan
|
|
|
44,002
|
|
|
|
—
|
|
|
|
302
|
|
|
|
—
|
|
|
|
—
|
|
|
|
302
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
5,836
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,836
|
|
|
Unrealized loss on available-for-sale
investments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(650
|
)
|
|
|
—
|
|
|
|
(650
|
)
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(32,920
|
)
|
|
|
(32,920
|
)
|
|
Balance as of June 30, 2022
|
|
|
40,745,252
|
|
|
|
41
|
|
|
|
576,972
|
|
|
|
(1,256
|
)
|
|
|
(259,438
|
)
|
|
|
316,319
|
|
|
Issuance of common stock under
equity incentive plans
|
|
|
3,038
|
|
|
|
—
|
|
|
|
5
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
6,207
|
|
|
|
—
|
|
|
|
—
|
|
|
|
6,207
|
|
|
Unrealized loss on available-for-sale
investments
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(248
|
)
|
|
|
—
|
|
|
|
(248
|
)
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(35,320
|
)
|
|
|
(35,320
|
)
|
|
Balance as of September 30, 2022
|
|
|
40,748,290
|
|
|
$
|
41
|
|
|
$
|
583,184
|
|
|
$
|
(1,504
|
)
|
|
$
|
(294,758
|
)
|
|
$
|
286,963
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Additional
Paid-In
|
|
|
Accumulated
Other
Comprehensive
|
|
|
Accumulated
|
|
|
Total
Stockholders’
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Loss
|
|
|
Deficit
|
|
|
Equity
|
|
|
Balance as of December 31, 2020
|
|
|
39,844,522
|
|
|
$
|
40
|
|
|
$
|
548,327
|
|
|
$
|
—
|
|
|
$
|
(118,522
|
)
|
|
$
|
429,845
|
|
|
Issuance of common stock under
equity incentive plans
|
|
|
364,047
|
|
|
|
—
|
|
|
|
1,024
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,024
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
1,800
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,800
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(14,185
|
)
|
|
|
(14,185
|
)
|
|
Balance as of March 31, 2021
|
|
|
40,208,569
|
|
|
|
40
|
|
|
|
551,151
|
|
|
|
—
|
|
|
|
(132,707
|
)
|
|
|
418,484
|
|
|
Issuance of common stock under
equity incentive plans
|
|
|
114,488
|
|
|
|
—
|
|
|
|
464
|
|
|
|
—
|
|
|
|
—
|
|
|
|
464
|
|
|
Issuance of common stock under
employee stock purchase plan
|
|
|
2,213
|
|
|
|
—
|
|
|
|
103
|
|
|
|
—
|
|
|
|
—
|
|
|
|
103
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
2,237
|
|
|
|
—
|
|
|
|
—
|
|
|
|
2,237
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(16,274
|
)
|
|
|
(16,274
|
)
|
|
Balance as of June 30, 2021
|
|
|
40,325,270
|
|
|
|
40
|
|
|
|
553,955
|
|
|
|
—
|
|
|
|
(148,981
|
)
|
|
|
405,014
|
|
|
Issuance of common stock under
equity incentive plans
|
|
|
161,017
|
|
|
|
—
|
|
|
|
533
|
|
|
|
—
|
|
|
|
—
|
|
|
|
533
|
|
|
Stock-based compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
4,191
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,191
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(24,566
|
)
|
|
|
(24,566
|
)
|
|
Balance as of September 30, 2021
|
|
|
40,486,287
|
|
|
$
|
40
|
|
|
$
|
558,679
|
|
|
$
|
—
|
|
|
$
|
(173,547
|
)
|
|
$
|
385,172
|
|
See accompanying notes to these condensed consolidated financial
statements (unaudited).
8
ALX ONCOLOGY HOLDINGS INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
September 30,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Operating activities
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(92,773
|
)
|
|
$
|
(55,025
|
)
|
|
Adjustments to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
237
|
|
|
|
17
|
|
|
Non-cash lease costs
|
|
|
816
|
|
|
|
460
|
|
|
Stock-based compensation
|
|
|
17,544
|
|
|
|
8,228
|
|
|
Net amortization of premiums and accretion of discounts on
investments
|
|
|
(256
|
)
|
|
|
—
|
|
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
Prepaid expenses and other current assets
|
|
|
(2,613
|
)
|
|
|
(2,042
|
)
|
|
Other assets
|
|
|
(267
|
)
|
|
|
(10,653
|
)
|
|
Accounts payable
|
|
|
2,052
|
|
|
|
3,620
|
|
|
Payable and accrued liabilities due to related party
|
|
|
1,129
|
|
|
|
386
|
|
|
Accrued expenses and other current liabilities
|
|
|
6,412
|
|
|
|
2,333
|
|
|
Other non-current liabilities
|
|
|
(836
|
)
|
|
|
2,063
|
|
|
Net cash used in operating activities
|
|
|
(68,555
|
)
|
|
|
(50,613
|
)
|
|
Investing activities
|
|
|
|
|
|
|
|
Purchase of investments
|
|
|
(315,820
|
)
|
|
|
—
|
|
|
Maturities of investments
|
|
|
70,500
|
|
|
|
—
|
|
|
Purchase of property and equipment
|
|
|
(1,038
|
)
|
|
|
(405
|
)
|
|
Net cash used in investing activities
|
|
|
(246,358
|
)
|
|
|
(405
|
)
|
|
Financing activities
|
|
|
|
|
|
|
|
Proceeds from exercise of stock options under equity incentive
plan
|
|
|
345
|
|
|
|
2,022
|
|
|
Proceeds from issuance of common stock under employee stock
purchase plan
|
|
|
302
|
|
|
|
103
|
|
|
Principal payments on finance leases
|
|
|
(281
|
)
|
|
|
(177
|
)
|
|
Net cash provided by financing activities
|
|
|
366
|
|
|
|
1,948
|
|
|
Net decrease in cash, cash equivalents and restricted
cash
|
|
|
(314,547
|
)
|
|
|
(49,070
|
)
|
|
Cash, cash equivalents and restricted cash at beginning of
year
|
|
|
363,667
|
|
|
|
434,219
|
|
|
Cash, cash equivalents and restricted cash at end of
period
|
|
$
|
49,120
|
|
|
$
|
385,149
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing
activities
|
|
|
|
|
|
|
|
Purchase of property and equipment in accounts payable and
accrued expenses
|
|
$
|
876
|
|
|
$
|
129
|
|
|
Right-of-use asset acquired under operating leases
|
|
$
|
4,684
|
|
|
$
|
1,812
|
|
|
Right-of-use asset acquired under finance leases
|
|
$
|
—
|
|
|
$
|
834
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of cash and cash equivalents and restricted
cash:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
49,054
|
|
|
$
|
385,149
|
|
|
Restricted cash (included in other assets)
|
|
|
66
|
|
|
|
—
|
|
|
Total cash and cash equivalents and restricted cash
|
|
$
|
49,120
|
|
|
$
|
385,149
|
|
See accompanying notes to these condensed consolidated financial
statements (unaudited).
9
ALX ONCOLOGY HOLDINGS INC.
Notes to Condensed Consolidated Financial Statements
(unaudited)
(1) ORGANIZATION
Organization
ALX Oncology Holdings Inc., or the Company, was formed as a
Delaware corporation on April 1, 2020, or Inception. The Company
was formed for the purpose of completing the Company’s initial
public offering of its common stock and related transactions in
order to carry on the business of ALX Oncology Limited. The Company
is a clinical-stage immuno-oncology company focused on helping
patients fight cancer by developing therapies that block the CD47
checkpoint pathway and bridge the innate and adaptive immune
system.
The Company wholly-owns two subsidiaries, ALX Oncology Limited,
incorporated in Ireland, and ScalmiBio, Inc., incorporated in
Delaware. ALX Oncology Inc., incorporated in Delaware, and Alexo
International Holdings Limited, incorporated in Malta are
wholly-owned subsidiaries of ALX Oncology Limited. Alexo
Therapeutics International, incorporated in the Cayman Islands, is
a wholly-owned subsidiary of Alexo International Holdings Limited.
Sirpant Therapeutics, incorporated in the Cayman Islands, is a
wholly-owned subsidiary of Alexo Therapeutics International. All
the companies are collectively known as the
Subsidiaries.
As of September 30, 2022, the Company has devoted substantially all
of its efforts to the formation and financing of the Company, as
well as product development, and has not realized product revenues
from its planned principal operations. The Company has no
manufacturing facilities and all manufacturing related activities
are contracted out to third-party service providers.
Management expects to incur additional losses in the future to
conduct product candidate research and development and to conduct
pre-commercialization activities and recognizes that the Company
will likely raise additional capital to fully implement its
business plan. The Company intends to raise such capital through
the sale of additional equity, debt financings or strategic
alliances with third parties. However, there can be no assurance
that the Company will be successful in acquiring additional funding
at levels sufficient to fund its operations or on terms acceptable
to the Company. If the Company is unsuccessful in its efforts to
raise additional financing, the Company could be required to
significantly reduce operating expenses and delay, reduce the scope
of or eliminate some of its development programs or its future
commercialization efforts, out-license intellectual property rights
to its product candidates and sell unsecured assets, or a
combination of the above, any of which may have a material adverse
effect on the Company’s business, results of operations, financial
condition and/or its ability to fund its scheduled obligations on a
timely basis or at all.
The Company believes that the existing capital resources will be
sufficient to fund the projected operating requirements for at
least the next twelve months.
(2) SIGNIFICANT ACCOUNTING POLICIES
Basis of Preparation
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles in the United States, or GAAP, and applicable
rules and regulations of the Securities and Exchange Commission, or
SEC, regarding interim financial reporting. Certain information and
note disclosures normally included in the financial statements
prepared in accordance with GAAP have been condensed or omitted
pursuant to such rules and regulations. As such, the information
included in this Quarterly Report on Form 10-Q should be read in
conjunction with the consolidated financial statements and
accompanying notes included in the Annual Report on Form 10-K for
the year ended December 31, 2021 filed with the SEC on February 28,
2022.
The condensed consolidated balance sheet as of September 30, 2022
included herein was derived from the audited financial statements
as of that date, but does not include all disclosures including
notes required by GAAP.
The accompanying condensed consolidated financial statements
reflect all normal recurring adjustments that are necessary to
present fairly the results for the interim periods presented.
Interim results are not necessarily indicative of the results for
the full year ending December 31, 2022.
Reclassifications
Certain amounts in the prior period have been reclassified to
conform to the current period presentation.
Principles of Consolidation
All intercompany balances and transactions have been eliminated in
consolidation.
10
Use of Estimates
The preparation of the condensed consolidated financial statements
in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the condensed consolidated financial statements and the
reported amounts of revenues and expenses during the reporting
periods. On an ongoing basis, management evaluates its estimates,
including those related to the estimated useful lives of long-lived
assets, clinical trial accruals, fair value of assets and
liabilities, income taxes and stock-based compensation. Management
bases its estimates on historical experience and on various other
market-specific and relevant assumptions that management believes
to be reasonable under the circumstances. Actual results could
materially differ from those estimates.
Significant Accounting Policies
There have been no new or material changes to the significant
accounting policies discussed in the Company’s Annual Report on
Form 10-K for the year ended December 31, 2021 other than the below
policy on Investments.
Investments
Investments consist of money market funds, U.S. Treasury
securities, corporate debt securities, commercial paper, and
asset-backed securities. The Company’s investments are classified
as available-for-sale and carried at estimated fair values and
reported in cash equivalents, short-term investments and long-term
investments. Management determines the appropriate classification
of the investments at the time they are purchased and evaluates the
appropriateness of such classifications at each balance sheet date.
Investments with contractual maturities greater than 12 months at
date of purchase are considered long-term investments.
The Company regularly reviews its investments for declines in
estimated fair value below amortized cost. The factors considered
in determining whether a credit loss exists include the
creditworthiness of the security issuers, the number of investments
in an unrealized loss position, the severity and duration of the
unrealized losses, and whether it is more likely than not that the
Company will be required to sell the investments before the
recovery of their amortized cost basis. The cost of investments
sold is based on the specific identification method. In
circumstances when an unrealized loss is determined to be
credit-related, or when the Company intends to sell or is more
likely than not required to sell a security before it recovers its
amortized cost basis, the difference between the fair value and the
amortized cost of the security is recognized within other expense,
net in the condensed consolidated statements of operations, and an
allowance for credit loss is recorded on the condensed consolidated
balance sheets. In circumstances when the decline in fair value is
non-credit related, the difference is reported in accumulated other
comprehensive loss, net of tax as a separate component of
consolidated stockholders’ equity.
Recent
Accounting Pronouncements
(3) FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company’s financial assets and liabilities
are determined in accordance with the fair value hierarchy
established in ASC 820, Fair Value Measurements and Disclosures.
ASC 820 defines fair value as the exchange price that would be
received for an asset or paid to transfer a liability (an exit
price) in the principal or most advantageous market for the asset
or liability in an orderly transaction between market participants
on the measurement date. The fair value hierarchy of ASC 820
requires an entity to maximize the use of observable inputs when
measuring fair value and classifies those inputs into three
levels:
Level 1—Observable inputs, such as quoted prices in active
markets;
Level 2—Inputs, other than the quoted prices in active markets,
which are observable either directly or indirectly 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 instrument’s anticipated life; and
Level 3—Unobservable inputs in which there is little or no market
data, which require the reporting entity to develop its own
assumptions.
Assets and liabilities measured at fair value are classified in
their entirety based on the lowest level of input that is
significant to the fair value measurement. The Company classifies
money market funds and U.S. treasury securities as Level 1 within
the fair value hierarchy as the fair value is based on quoted
prices. The Company classifies its investments in corporate debt
securities, commercial paper, and asset-backed securities as Level
2 within the fair value hierarchy as the fair value is estimated by
using quoted prices for identical or similar instruments in markets
that are not active and model-based valuation techniques for which
all significant inputs are observable in the market or can be
corroborated by observable market data for substantially the full
term of the assets. Where applicable, these models project future
cash flows and discount the future amounts to a present value using
market-based observable inputs obtained from various third-party
data providers, including but not limited to benchmark yields,
reported trades and broker/dealer quotes. Where applicable the
market approach utilizes prices and information from market
transactions for similar or identical assets.
11
The following table presents the Company’s investments, which
consist of cash equivalents and investments classified as
available-for-sale investments, that are measured at fair value on
a recurring basis as of
September 30, 2022 and December 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2022
|
|
|
|
|
Fair Value
Hierarchy
Level
|
|
Amortized Cost
|
|
|
Unrealized Gains
|
|
|
Unrealized Losses
|
|
|
Fair Value
|
|
|
Money market funds
|
|
Level 1
|
|
$
|
39,271
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
39,271
|
|
|
U.S. Treasury securities
|
|
Level 1
|
|
|
80,872
|
|
|
|
—
|
|
|
|
(741
|
)
|
|
|
80,131
|
|
|
Corporate debt securities
|
|
Level 2
|
|
|
56,371
|
|
|
|
—
|
|
|
|
(653
|
)
|
|
|
55,718
|
|
|
Commercial paper
|
|
Level 2
|
|
|
86,573
|
|
|
|
—
|
|
|
|
—
|
|
|
|
86,573
|
|
|
Asset-backed securities
|
|
Level 2
|
|
|
13,512
|
|
|
|
—
|
|
|
|
(79
|
)
|
|
|
13,433
|
|
|
Long-term investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury securities
|
|
Level 1
|
|
|
1,436
|
|
|
|
—
|
|
|
|
(2
|
)
|
|
|
1,434
|
|
|
Asset-backed securities
|
|
Level 2
|
|
|
1,725
|
|
|
|
—
|
|
|
|
(14
|
)
|
|
|
1,711
|
|
|
Corporate debt securities
|
|
Level 2
|
|
|
5,088
|
|
|
|
—
|
|
|
|
(15
|
)
|
|
|
5,073
|
|
|
Total
|
|
|
|
$
|
284,848
|
|
|
$
|
—
|
|
|
$
|
(1,504
|
)
|
|
$
|
283,344
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021
|
|
|
|
|
Fair Value
Hierarchy
Level
|
|
Amortized Cost
|
|
|
Unrealized Gains
|
|
|
Unrealized Losses
|
|
|
Fair Value
|
|
|
Money market funds
|
|
Level 1
|
|
$
|
357,181
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
357,181
|
|
The fair value of cash equivalents and available-for-sale
investments by classification included in the condensed
consolidated balance sheets was as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Cash and cash equivalents
|
|
$
|
39,271
|
|
|
$
|
357,181
|
|
|
Short-term investments
|
|
|
235,855
|
|
|
|
—
|
|
|
Long-term investments
|
|
|
8,218
|
|
|
|
—
|
|
|
Total
|
|
$
|
283,344
|
|
|
$
|
357,181
|
|
Cash and cash equivalents in the above table excludes bank account
cash of
$9.8
million
and
$6.5
million
as of September 30, 2022 and December 31, 2021,
respectively.
The fair value of cash equivalents and available-for-sale
investments by contractual maturity was as follows (in
thousands):
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Maturing in one year or less
|
|
$
|
275,126
|
|
|
$
|
357,181
|
|
|
Maturing after one year through five years
|
|
|
8,218
|
|
|
|
—
|
|
|
Total
|
|
$
|
283,344
|
|
|
$
|
357,181
|
|
The primary objective of the Company’s investment portfolio is to
maintain safety of principal, prudent levels of liquidity and
acceptable levels of risk. The Company’s investment policy limits
investments to certain types of instruments issued by institutions
with investment-grade credit ratings, and it places restrictions on
maturities and concentration by asset class and issuer.
There were
no
transfers of financial instruments between the fair value
measurement levels during the
three months and nine months ended September 30, 2022 and
2021
and there were
no
financial instruments classified as Level 3 as of
September 30, 2022.
As of September 30, 2022, accrued interest receivable related to
the Company’s investments was
$0.7
million
and
was included in
prepaid expenses and other current assets
on the condensed consolidated balance sheet.
As of September 30, 2022, the unrealized losses for
available-for-sale investments were non-credit related and the
Company does not intend to sell the investments that were in an
unrealized loss position, nor will it be required to sell those
investments before recovery of their amortized costs basis, which
may be maturity. As of September 30, 2022,
no
allowance for credit losses for the Company’s investments was
recorded. During the
three months and nine months ended September 30,
2022,
the Company did
not
recognize any impairment losses related to investments.
12
(4) BALANCE SHEET COMPONENTS
Property and Equipment, Net
The following table presents the components of property and
equipment, net as of
September 30, 2022 and December 31, 2021 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2022
|
|
|
2021
|
|
|
Laboratory equipment
|
|
$
|
1,321
|
|
|
$
|
324
|
|
|
Computer hardware and software
|
|
|
312
|
|
|
|
241
|
|
|
Leasehold improvements
|
|
|
246
|
|
|
|
229
|
|
|
Furniture and fixtures
|
|
|
166
|
|
|
|
166
|
|
|
Construction in progress
|
|
|
591
|
|
|
|
—
|
|
|
Property and equipment, gross
|
|
|
2,636
|
|
|
|
960
|
|
|
Less: accumulated depreciation and amortization
|
|
|
(300
|
)
|
|
|