ALX Oncology Holdings Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. The company is a clinical-stage immuno-oncology biotech developing therapies targeting the CD47 checkpoint pathway. It had no approved products and reported no product revenue.
Financial position and performance
| Metric | Q3 2021 / Sep. 30, 2021 | Comparable period / prior year-end |
|---|---|---|
| Revenue | $0 | Q3 2020: $0; nine months 2020: $1.2m related-party revenue |
| Research and development | Q3: $18.2m; nine months: $39.3m | Q3 2020: $5.3m; nine months 2020: $16.8m |
| General and administrative | Q3: $6.4m; nine months: $15.8m | Q3 2020: $4.5m; nine months 2020: $9.1m |
| Net loss | Q3: $24.6m; nine months: $55.0m | Q3 2020: $10.2m; nine months 2020: $27.0m |
| Net loss per share, basic and diluted | Q3: $0.61; nine months: $1.37 | Q3 2020: $0.36; nine months 2020: $2.67 |
| Cash and cash equivalents | $385.1m | $434.2m at Dec. 31, 2020 |
| Total assets / liabilities | $399.7m / $14.6m | $436.1m / $6.2m at Dec. 31, 2020 |
For the nine months, operating cash use was $50.6m, investing cash use was $0.4m, and financing cash provided was $1.9m; cash declined by $49.1m. No term loan remained outstanding: it was repaid in December 2020. Lease liabilities were $2.9m in total ($2.1m operating and $0.8m finance) at September 30, 2021. Current assets were $389.0m versus current liabilities of $12.5m. Operating margins are not meaningful given the absence of product revenue and ongoing development-stage losses.
Changes and key developments
- Q3 operating expenses rose 151% year over year, with R&D up 242%; nine-month operating expenses increased 104%. Management attributed the principal increases to more clinical activity and enrollment, higher development costs, headcount growth, and stock-based compensation.
- Management reported evorpacept had been dosed in more than 185 subjects. Two randomized Phase 2 first-line head-and-neck cancer trials had begun dosing; the FDA removed the partial clinical hold and patient cap on those trials in June 2021.
- Clinical plans included advancing evorpacept for AML and initiating a randomized Phase 2 second-line gastric/GEJ trial in Q4 2021. The company also planned additional combination studies.
- On October 4, 2021, after quarter-end, the company acquired ScalmiBio for approximately $4.5m at closing, with a further $2.0m payment subject to conditions, up to $35m in development milestones, and low-single-digit royalties. CEO Jaume Pons had owned 31.7% of ScalmiBio and received a proportional share of consideration, plus approximately $87,000 repayment of a note and accrued interest.
- The March 2021 Tallac collaboration shares R&D costs and any profit or loss equally. The company recorded $1.4m of collaboration R&D expense for the nine months. Tallac is also a related-party service provider and performs preclinical research.
Outlook, risks and contingencies
- Management expected significant future losses and increased spending as clinical and preclinical programs advanced. It estimated existing cash would fund operations through 2024, while cautioning that assumptions could prove wrong and cash could be used sooner. The company had no committed external funding source and may need additional capital.
- Manufacturing and service commitments totaled approximately $25.0m, alongside lease obligations; aggregate listed contractual obligations were $28.1m. Manufacturing commitments are expected through 2025.
- Key risks include clinical-trial failure or delay, safety and efficacy uncertainty, regulatory approval uncertainty, competition, reliance on third-party manufacturers and CROs, dependence on Tallac for preclinical work, intellectual-property disputes, and possible COVID-19-related disruption. The company reported no pending or threatened litigation for the nine-month period and no material legal proceedings.
- Substantially all cash was held at one financial institution; $384.9m exceeded the FDIC insurance limit. Management said a 100-basis-point interest-rate change would not materially affect cash fair value.
- Disclosure controls were assessed as effective at September 30, 2021. The company disclosed prior material weaknesses that it said had been remediated; no material weakness was identified as of the quarter-end.
Important facts for investors to verify
- Whether clinical enrollment, trial timelines, and the planned AML and gastric/GEJ programs progressed as anticipated, and how subsequent clinical data compare with preliminary results.
- Whether the stated cash runway through 2024 remains supportable after operating burn, manufacturing commitments, and the ScalmiBio acquisition and contingent payments.
- The status, economics, governance, and conflict-of-interest management of the ScalmiBio transaction, including milestone and royalty exposure and the CEO’s financial interest.
- Actual R&D cash requirements and the nature, timing, and cancellability of the approximately $25.0m manufacturing and service commitments.
- Whether dependence on Tallac and third-party manufacturers creates execution, supply, intellectual-property, or related-party risks.
- Whether any later financing, clinical, regulatory, or safety developments materially change the filing’s outlook and risk disclosures.