UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number
(Exact name of Registrant as specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
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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.
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).
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.
Large accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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 May 4, 2023, the registrant had
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:
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
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PART I |
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Item 1 |
5 |
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6 |
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7 |
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8 |
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Item 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
19 |
Item 3 |
27 |
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Item 4 |
28 |
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PART II |
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Item 1 |
29 |
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Item 1A |
29 |
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Item 2 |
76 |
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Item 3 |
76 |
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Item 4 |
76 |
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Item 5 |
76 |
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Item 6 |
77 |
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78 |
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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March 31, |
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December 31, |
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2023 |
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2022 |
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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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$ |
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Short-term investments |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Long-term investments |
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Other assets |
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Total assets |
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$ |
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$ |
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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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$ |
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Payable and accrued liabilities due to related party |
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Accrued expenses and other current liabilities |
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Total current liabilities |
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Term loan, non-current |
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Other non-current liabilities |
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Total liabilities |
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Stockholders’ equity |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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( |
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( |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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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 |
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March 31, |
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2023 |
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2022 |
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Operating expenses: |
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Research and development |
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$ |
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$ |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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Interest income |
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Interest expense |
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( |
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( |
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Other income (expense), net |
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( |
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Net loss |
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$ |
( |
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$ |
( |
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Net loss per share, basic and diluted |
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$ |
( |
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$ |
( |
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Weighted-average shares of common stock used to compute |
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See accompanying notes to these condensed consolidated financial statements (unaudited).
6
ALX ONCOLOGY HOLDINGS INC.
Condensed Consolidated Statements of Comprehensive Loss
(unaudited)
(in thousands)
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Three Months Ended |
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March 31, |
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2023 |
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2022 |
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Net loss |
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$ |
( |
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$ |
( |
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Other comprehensive gain (loss), net of tax: |
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Unrealized gain (loss) on available-for-sale investments |
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( |
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Total comprehensive loss |
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$ |
( |
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$ |
( |
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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)
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Common Stock |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Loss |
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Deficit |
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Equity |
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Balance as of December 31, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Issuance of common stock under |
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— |
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— |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Unrealized gain on available-for-sale |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance as of March 31, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Common Stock |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Loss |
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Deficit |
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Equity |
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Balance as of December 31, 2021 |
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$ |
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$ |
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$ |
— |
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$ |
( |
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$ |
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Issuance of common stock under |
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— |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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Unrealized loss on available-for-sale |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
Net loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
) |
Balance as of March 31, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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See accompanying notes to these condensed consolidated financial statements (unaudited).
8
ALX ONCOLOGY HOLDINGS INC.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
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Three Months Ended |
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March 31, |
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2023 |
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2022 |
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Operating activities |
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Net loss |
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$ |
( |
) |
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$ |
( |
) |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Non-cash lease costs |
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Stock-based compensation |
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Net amortization of premiums and accretion of discounts on investments |
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( |
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Accretion of term loan discount and issuance costs |
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— |
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Changes in operating assets and liabilities |
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Prepaid expenses and other current assets |
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( |
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Other assets |
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( |
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Accounts payable |
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Payable and accrued liabilities due to related party |
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( |
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( |
) |
Accrued expenses and other current liabilities |
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( |
) |
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( |
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Other non-current liabilities |
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( |
) |
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( |
) |
Net cash used in operating activities |
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( |
) |
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( |
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Investing activities |
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Purchase of investments |
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( |
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( |
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Maturities of investments |
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— |
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Purchase of property and equipment |
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( |
) |
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( |
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Net cash provided by (used in) investing activities |
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( |
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Financing activities |
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Proceeds from exercise of stock options under equity incentive plan |
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— |
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Principal payments on finance leases |
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( |
) |
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( |
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Net cash (used in) provided by financing activities |
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( |
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Net increase (decrease) in cash, cash equivalents and restricted cash |
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( |
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Cash, cash equivalents and restricted cash at beginning of year |
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Cash, cash equivalents and restricted cash at end of period |
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$ |
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$ |
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Supplemental disclosure of non-cash investing and financing activities |
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Purchase of property and equipment in accounts payable and accrued expenses |
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$ |
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$ |
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Right-of-use asset acquired under operating leases |
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$ |
— |
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$ |
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Reconciliation of cash and cash equivalents and restricted cash: |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash (included in other assets) |
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Total cash and cash equivalents and restricted cash |
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$ |
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$ |
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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 date of 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's subsidiaries include: ALX Oncology Limited, incorporated in Ireland, and a wholly-owned subsidiary of ALX Oncology Holdings Inc.; ALX Oncology Inc., incorporated in Delaware, and a wholly-owned subsidiary of ALX Oncology Limited; and Alexo International Holdings Limited, incorporated in Malta, and a wholly-owned subsidiary of ALX Oncology Inc. (collectively, the Subsidiaries).
As of March 31, 2023, 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 does not have 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 and/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 twelve months after the filing date.
(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 U.S. 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 U.S. 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, 2022 filed with the SEC on March 9, 2023.
The condensed consolidated balance sheet as of March 31, 2023 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by U.S. 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, 2023.
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 U.S. 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, but not limited to, those related to the estimated useful lives of long-lived assets, clinical trial accruals, fair value of assets and liabilities, fair value of investments 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 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, 2022.
Recent
None.
(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 U.S. government agency securities, corporate debt securities, commercial paper, and asset-backed securities as Level 2 within the fair value hierarchy as the fair value is estimated by third-party pricing sources using quoted prices for identical or similar instruments in markets that are not active and industry-standard 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 by level within the fair value hierarchy as of March 31, 2023 and December 31, 2022 (in thousands):
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March 31, 2023 |
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Fair Value |
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Amortized Cost |
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Unrealized Gains |
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Unrealized Losses |
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Fair Value |
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Cash equivalents |
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Money market funds |
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Level 1 |
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$ |
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$ |
— |
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$ |
— |
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$ |
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Short-term investments |
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U.S. Treasury securities |
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Level 1 |
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( |
) |
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U.S. government agency securities |
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Level 2 |
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( |
) |
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Corporate debt securities |
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Level 2 |
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( |
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Commercial paper |
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Level 2 |
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— |
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— |
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Asset-backed securities |
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Level 2 |
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— |
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( |
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|
|
||
Long-term investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury securities |
|
Level 1 |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
U.S. government agency securities |
|
Level 2 |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Asset-backed securities |
|
Level 2 |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Total |
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|||
|
|
December 31, 2022 |
|
|||||||||||||||
|
|
Fair Value |
|
Amortized Cost |
|
|
Unrealized Gains |
|
|
Unrealized Losses |
|
|
Fair Value |
|
||||
Cash equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Money market funds |
|
Level 1 |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
U.S. government agency securities |
|
Level 2 |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Short-term investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury securities |
|
Level 1 |
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
U.S. government agency securities |
|
Level 2 |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Corporate debt securities |
|
Level 2 |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Commercial paper |
|
Level 2 |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
||
Asset-backed securities |
|
Level 2 |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Long-term investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. Treasury securities |
|
Level 1 |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
U.S. government agency securities |
|
Level 2 |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
||
Asset-backed securities |
|
Level 2 |
|
|
|
|
|
— |
|
|
|
( |
||||||