ALX Oncology Holdings Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. The company is a clinical-stage immuno-oncology business developing therapies targeting the CD47 pathway. It has no approved products and reported no product revenue.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $17.1 million | $9.8 million; up 73% |
| General and administrative expense | $7.7 million | $4.4 million; up 76% |
| Total operating expenses | $24.7 million | $14.2 million; up 74% |
| Net loss | $24.5 million | $14.2 million |
| Basic and diluted loss per share | $0.60 | $0.35 |
| Cash used in operating activities | $20.7 million | $5.1 million |
| Cash, cash equivalents and investments | $341.7 million | $363.7 million cash and cash equivalents at December 31, 2021; investments were added during Q1 |
At March 31, 2022, cash and cash equivalents were $159.1 million, short-term investments $157.5 million, and long-term investments $25.1 million. Current assets were $321.5 million and current liabilities $15.3 million. Total liabilities were $20.1 million, including lease-related obligations; the balance sheet shows no conventional borrowings. Operating margins are not meaningful for a pre-revenue company.
Cash, cash equivalents and restricted cash decreased by $204.5 million, largely because the company invested $183.3 million in securities, rather than from operating outflows alone. The company reported $343.6 million of stockholders’ equity and an accumulated deficit of $226.5 million.
Material changes and business developments
- Net loss increased by $10.3 million year over year. Higher clinical and development costs, personnel costs, stock-based compensation and facility costs drove expense growth.
- Research and development expense rose by $7.2 million, including higher costs for clinical-trial materials, trial activity and the Tallac collaboration. General and administrative expense rose by $3.3 million, driven mainly by stock-based compensation and corporate costs.
- The company reported dosing more than 200 subjects with lead candidate evorpacept across hematologic and solid-tumor studies. It began dosing in a Phase 2/3 study in second-line HER2-overexpressing gastric/GEJ cancer in March 2022; randomized Phase 2 HNSCC studies and Phase 1 MDS and AML studies were also underway.
Outlook, risks and contingencies
- Management expects significant expenses and operating losses to continue as development advances. It estimated existing cash, cash equivalents and investments would fund operations through mid-2024, while cautioning that assumptions could prove inaccurate and capital could be used sooner.
- A $450 million universal shelf registration statement filed in March 2022 had not been declared effective. A related at-the-market program could permit up to $150 million of common-stock sales once effective; no shares had been sold under either arrangement as of the report.
- Contractual obligations totaled $65.6 million, including $54.3 million for manufacturing and service contracts and $10.7 million for operating leases. Manufacturing commitments include approximately $51.8 million with KBI Biopharma and $2.5 million with two other manufacturers.
- Key risks include clinical-trial failure or delay, safety issues, reliance on third-party manufacturers and research providers, competition, additional financing needs and potential dilution. The filing notes COVID-19 and geopolitical uncertainty as potential sources of operational disruption.
- The company reported single-digit rates of treatment-related Grade 3 or higher cytopenias across its clinical program, along with other generally low-grade, manageable treatment-related events. These are early clinical observations and do not establish safety or efficacy.
- The FDA lifted a partial clinical hold and patient cap on the two HNSCC studies in June 2021; the company reported no resulting impact on enrollment or study timelines. Evorpacept had Fast Track designations for specified HNSCC and gastric/GEJ combinations and received orphan drug designation for gastric/GEJ cancer in January 2022.
- No pending or threatened litigation was reported at March 31, 2022. Management said disclosure controls were effective and there were no material changes to internal control over financial reporting during the quarter; previously identified material weaknesses were described as remediated.
Important facts for investors to verify
- Progress, enrollment, safety and efficacy data from evorpacept trials, particularly the randomized HNSCC and gastric/GEJ studies, and the timing and basis for any future readouts.
- The assumptions behind the mid-2024 cash runway, quarterly operating cash use and expected clinical and manufacturing spending.
- Timing and terms of any shelf or ATM financing, including potential dilution, and whether the shelf registration statement becomes effective.
- Manufacturing commitments, their cancellation terms and expected payment timing, alongside the company’s reliance on external manufacturers and Tallac.
- Share-based compensation and potential dilution: 40.7 million common shares were outstanding at March 31, 2022, with additional options and restricted stock units outstanding.