SEC Filing – ALX Oncology

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐	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 001-39386

ALX ONCOLOGY HOLDINGS INC.

(Exact name of Registrant as specified in its Charter)


Delaware	85-0642577
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
323 Allerton Avenue South San Francisco, California	94080
(Address of principal executive offices)	(Zip Code)

650-466-7125

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

ALXO

The Nasdaq Global Select Market

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.

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 6, 2023, the registrant had 49,818,812 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, mechanisms of action, safety profile, 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, including collaborations and investigator sponsored 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, the impacts of any executive officer changes, and to identify, hire, and then retain additional qualified personnel;

▪

the impact of the COVID-19 pandemic, rising interest rates, bank failures or instability in the financial services sector, 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;

▪

changes in our financial and internal controls; 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


		Page
PART I	FINANCIAL INFORMATION
Item 1	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations	6
	Condensed Consolidated Statements of Comprehensive Loss	7
	Condensed Consolidated Statements of Stockholders’ Equity	8
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	10
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3	Quantitative and Qualitative Disclosures about Market Risk	30
Item 4	Controls and Procedures	31

PART II	OTHER INFORMATION
Item 1	Legal Proceedings	32
Item 1A	Risk Factors	32
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	80
Item 3	Defaults Upon Senior Securities	80
Item 4	Mine Safety Disclosures	80
Item 5	Other Information	80
Item 6	Exhibits	81

	SIGNATURES	83

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

ALX ONCOLOGY HOLDINGS INC.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share amounts)


	September 30,			December 31,
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	19,584		$	48,822
Short-term investments		170,425			217,385
Prepaid expenses and other current assets		9,062			4,762
Total current assets		199,071			270,969
Property and equipment, net		3,617			3,889
Long-term investments		6,435			16,699
Other assets		10,984			14,932
Total assets	$	220,107		$	306,489

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	13,001		$	8,073
Payable and accrued liabilities due to related party		265			1,650
Accrued expenses and other current liabilities		21,876			18,602
Total current liabilities		35,142			28,325
Term loan, non-current		9,575			9,389
Other non-current liabilities		6,638			5,311
Total liabilities		51,355			43,025
Commitments and contingencies (Note 11)
Stockholders’ equity
Common stock, $0.001 par value; 1,000,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 41,151,819 and 40,861,386 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively		41			41
Additional paid-in capital		609,737			589,735
Accumulated other comprehensive loss		(226	)		(845	)
Accumulated deficit		(440,800	)		(325,467	)
Total stockholders’ equity		168,752			263,464
Total liabilities and stockholders’ equity	$	220,107		$	306,489

See accompanying notes to these condensed consolidated financial statements (unaudited).

ALX ONCOLOGY HOLDINGS INC.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share amounts)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
Operating expenses:
Research and development	$	45,766		$	29,382		$	100,011		$	73,203
General and administrative		7,509			7,299			22,244			22,014
Total operating expenses		53,275			36,681			122,255			95,217
Loss from operations		(53,275	)		(36,681	)		(122,255	)		(95,217	)
Interest income		2,677			1,370			7,654			2,471
Interest expense		(391	)		(2	)		(1,150	)		(7	)
Other income (expense), net		(1	)		(7	)		418			(20	)
Net loss	$	(50,990	)	$	(35,320	)	$	(115,333	)	$	(92,773	)
Net loss per share, basic and diluted	$	(1.24	)	$	(0.87	)	$	(2.82	)	$	(2.28	)
Weighted-average shares of common stock used to compute net loss per share, basic and diluted		41,147,938			40,747,026			40,963,015			40,684,172

See accompanying notes to these condensed consolidated financial statements (unaudited).

ALX ONCOLOGY HOLDINGS INC.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)

(in thousands)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
Net loss	$	(50,990	)	$	(35,320	)	$	(115,333	)	$	(92,773	)
Other comprehensive gain (loss), net of tax:
Unrealized gain (loss) on available-for-sale investments		86			(248	)		619			(1,504	)
Total comprehensive loss	$	(50,904	)	$	(35,568	)	$	(114,714	)	$	(94,277	)

See accompanying notes to these condensed consolidated financial statements (unaudited).

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, 2022		40,861,386	$	41	$	589,735	$	(845	)	$	(325,467	)	$	263,464
Issuance of common stock under equity incentive plans		1,663		—		—		—			—			—
Stock-based compensation		—		—		6,351		—			—			6,351
Unrealized gain on available-for-sale investments		—		—		—		757			—			757
Net loss		—		—		—		—			(30,184	)		(30,184	)
Balance as of March 31, 2023		40,863,049		41		596,086		(88	)		(355,651	)		240,388
Issuance of common stock under equity incentive plans		76,210		—		112		—			—			112
Issuance of common stock under employee stock purchase plan		52,920		—		338		—			—			338
Stock-based compensation		—		—		6,237		—			—			6,237
Unrealized loss on available-for-sale investments		—		—		—		(224	)		—			(224	)
Net loss		—		—		—		—			(34,159	)		(34,159	)
Balance as of June 30, 2023		40,992,179		41		602,773		(312	)		(389,810	)		212,692
Issuance of common stock under equity incentive plans		159,640		—		—		—			—			—
Stock-based compensation		—		—		6,964		—			—			6,964
Unrealized loss on available-for-sale investments		—		—		—		86			—			86
Net loss		—		—		—		—			(50,990	)		(50,990	)
Balance as of September 30, 2023		41,151,819	$	41	$	609,737	$	(226	)	$	(440,800	)	$	168,752


	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

See accompanying notes to these condensed consolidated financial statements (unaudited).

ALX ONCOLOGY HOLDINGS INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)


	Nine Months Ended
	September 30,
	2023			2022
Operating activities
Net loss	$	(115,333	)	$	(92,773	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		629			237
Non-cash lease costs		920			816
Stock-based compensation		19,552			17,544
Net amortization of premiums and accretion of discounts on investments		(4,606	)		(256	)
Accretion of term loan discount and issuance costs		186			—
Changes in operating assets and liabilities
Prepaid expenses and other current assets		(4,310	)		(2,613	)
Other assets		4,215			(267	)
Accounts payable		4,942			2,052
Payable and accrued liabilities due to related party		(1,385	)		1,129
Accrued expenses and other current liabilities		6,491			6,412
Other non-current liabilities		(1,987	)		(836	)
Net cash used in operating activities		(90,686	)		(68,555	)
Investing activities
Purchase of investments		(171,619	)		(315,820	)
Maturities of investments		234,068			70,500
Purchase of property and equipment		(1,126	)		(1,038	)
Net cash provided by (used in) investing activities		61,323			(246,358	)
Financing activities
Proceeds from exercise of stock options under equity incentive plan		112			345
Proceeds from issuance of common stock under employee stock purchase plan		338			302
Principal payments on finance leases		(325	)		(281	)
Net cash provided by financing activities		125			366
Net increase (decrease) in cash, cash equivalents and restricted cash		(29,238	)		(314,547	)
Cash, cash equivalents and restricted cash at beginning of year		48,888			363,667
Cash, cash equivalents and restricted cash at end of period	$	19,650		$	49,120

Supplemental disclosure of non-cash investing and financing activities
Purchase of property and equipment in accounts payable and accrued expenses	$	1,376		$	876
Right-of-use asset acquired under operating leases	$	—		$	4,684
Right-of-use asset acquired under finance leases	$	1,187		$	—

Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents	$	19,584		$	49,054
Restricted cash (included in other assets)		66			66
Total cash and cash equivalents and restricted cash	$	19,650		$	49,120

See accompanying notes to these condensed consolidated financial statements (unaudited).

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 September 30, 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 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 September 30, 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.

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 Accounting Pronouncements

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.

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 September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023
	Fair Value Hierarchy Level	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Cash equivalents
Money market funds	Level 1	$	19,103	$	—	$	—		$	19,103
Short-term investments
U.S. Treasury securities	Level 1		61,987		—		(96	)		61,891
U.S. government agency securities	Level 2		47,668		2		(110	)		47,560
Corporate debt securities	Level 2		8,753		1		(14	)		8,740