Aligos Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Amounts below are in U.S. dollars; financial statement figures are unaudited. Aligos is a clinical-stage biopharmaceutical company with no approved products and no product-sale revenue.
Financial performance and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Collaboration revenue | $2.2m | $4.1m | $7.3m | $10.4m |
| Customer revenue | $1.1m | — | $5.5m | — |
| Total revenue | $3.2m | $4.1m | $12.8m | $10.4m |
| Research and development expense | $15.9m | $17.8m | $50.8m | $66.0m |
| General and administrative expense | $6.4m | $5.3m | $24.2m | $19.3m |
| Operating loss | $(19.1)m | $(18.9)m | $(62.1)m | $(74.9)m |
| Net loss | $(18.0)m | $(18.6)m | $(59.8)m | $(74.2)m |
| Basic and diluted loss per share | $(0.41) | $(0.44) | $(1.38) | $(1.74) |
Margins: Product margins are not meaningful because the company has no product sales; the filing does not present a product gross margin.
- Cash and liquidity at September 30: Cash and cash equivalents were $70.4m; short-term investments were zero. The company reported $74.6m of current assets and $22.5m of current liabilities. Total assets were $85.9m and stockholders’ equity was $54.8m.
- Cash flow, nine months: Operating activities used $56.3m, compared with $62.6m in 2022. Investing activities provided $45.0m, principally from investment maturities; financing activities provided $0.4m. Cash, cash equivalents and restricted cash decreased by $11.0m to $70.5m.
- Debt and obligations: The company reported no debt outstanding other than ordinary-course payables. It had operating and finance lease liabilities; the filing does not identify these as borrowings.
- Management stated that cash, cash equivalents and investments were expected to fund operations for at least 12 months from issuance of the financial statements, while cautioning that plans could change and additional financing might be needed sooner.
Material changes versus the prior comparable periods
- Nine-month total operating expenses fell 12%, driven mainly by lower R&D spending, including reduced third-party costs following discontinued programs and lower employee-related costs. Q3 operating expenses fell 3%.
- Nine-month G&A expense increased 25%, primarily due to a $6.6m increase in legal and related costs. Q3 G&A increased 22%.
- Collaboration revenue declined in both periods as upfront payments were recognized over the progress of the work. New Amoytop customer revenue contributed $5.5m for the nine months; there was no customer revenue in 2022.
- Nine-month net loss narrowed to $59.8m from $74.2m, while Q3 net loss also narrowed modestly. Higher interest income contributed to the improvement; Q3 operating loss was slightly greater than in the prior-year quarter.
- Cash and cash equivalents plus investments fell from $125.8m at December 31, 2022 to $70.4m at September 30, 2023, including as investments matured and funded operations.
Outlook, programs, risks and unusual items
- Financing after quarter-end: On October 25, 2023, Aligos closed a PIPE that raised approximately $92.15m gross. It issued 31.4m common shares, pre-funded warrants for up to 81.1m shares and common warrants for up to 56.2m shares. The warrants are immediately exercisable; common warrants have a $0.7568 exercise price and expire in October 2030. The financing materially increases potential share dilution. The filing does not state net proceeds in the provided text.
- Pipeline outlook: For ALG-055009 in NASH, management anticipated submitting a Phase 2 protocol in Q4 2023, beginning dosing in Q1 2024 and reporting 12-week topline data in Q4 2024. These are expectations, not assured milestones. ALG-097558 was in a Phase 1 study, with multiple-dose cohorts expected to begin in Q4 2023 and topline data anticipated in H1 2024. ALG-000184’s longer-term hepatitis B combination cohorts were ongoing. Further ALG-125755 development was not prioritized with current funding and would require external support.
- Management described preliminary clinical findings for its candidates, but cautioned generally that development is uncertain. Clinical efficacy, safety, enrollment, regulatory review, third-party manufacturing and collaboration execution remain material risks.
- Aligos expected approximately $11m in funding across NIH and NIAID awards/contracts for coronavirus work. The filing describes this funding as partial support, not as assured unrestricted proceeds.
- Legal matter: On October 16, 2023, Aligos and Janssen agreed to settle litigation concerning alleged ownership of intellectual property and related claims. Both sides agreed to dismiss and release their respective claims. The filing does not provide a clear settlement payment value.
- Other unusual item: Aligos recorded a $0.7m impairment charge on right-of-use assets in Q2 2023 after vacating leased office space; no additional impairment was recorded in Q3. A $2.0m KU Leuven milestone payment was recognized and paid in the nine months, following first-patient dosing in a Phase 1 trial.
- Listing and financing risks: Nasdaq notified Aligos in September 2023 that its share price had been below the $1.00 minimum bid for 30 consecutive business days. The company had a 180-day compliance period and no assurance of regaining compliance. It also warned that further capital may be required and could dilute shareholders or constrain development plans.
- The company reported effective disclosure controls as of September 30, 2023 and no material change in internal control over financial reporting during the quarter.
Most important facts for investors to verify
- PIPE net proceeds, transaction costs, warrant exercise activity and the resulting fully diluted share count; distinguish issued shares from shares issuable upon warrant exercise.
- Cash burn and runway after the October financing, including whether management’s stated runway assumptions remain valid as trial costs and plans evolve.
- Actual timing and results for ALG-055009 Phase 2 and ALG-097558 clinical milestones, and the safety and efficacy evidence supporting further development.
- Progress and funding plans for ALG-125755 and other programs, including the impact of partnership needs and discontinued programs.
- Nasdaq bid-price compliance status and any measures or financing actions that could affect listing or shareholder dilution.
- Any financial or intellectual-property consequences of the Janssen settlement; the filing does not quantify settlement consideration.