ALX Oncology Holdings Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual filing; the supplied text does not provide standalone fourth-quarter results. ALX Oncology is a clinical-stage immuno-oncology company with no approved products and no product-sales revenue. Its lead candidate, evorpacept, is being studied in combination with other cancer therapies.
Financial performance and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $98.4 million | $60.2 million |
| General and administrative expense | $29.0 million | $23.4 million |
| Total operating expenses | $127.4 million | $83.6 million |
| Net loss | $123.5 million | $83.5 million |
| Net loss per share, basic and diluted | $3.03 | $2.07 |
| Net cash used in operating activities | $89.2 million | $68.1 million |
- R&D expense rose 64%, principally from clinical development, trial-material manufacturing, personnel and stock-based compensation. G&A expense rose 24%, largely due to stock-based compensation.
- Interest income increased to $4.3 million from $0.1 million, reflecting investment of cash in securities. The company reported no meaningful operating margins; it has no product revenue and incurred operating losses.
- At year-end, cash and cash equivalents were $48.8 million, with $217.4 million of short-term and $16.7 million of long-term investments. Together, cash and investments totaled approximately $282.9 million. Current assets were $271.0 million and current liabilities were $28.3 million.
- Total liabilities were $43.0 million, including a $10.0 million term-loan draw (carrying value, net of costs, was $9.4 million). Stockholders’ equity was $263.5 million; accumulated deficit was $325.5 million.
- Management estimated existing cash, investments and available term-loan funding would support operations through the middle of 2025, subject to assumptions and risks. The company said it expects to need additional capital to fully execute its plans.
Material changes and notable items
- Net loss increased 48% year over year as operating expenses grew. Operating cash use increased by $21.1 million.
- Investing cash outflow was $235.4 million, primarily reflecting purchases of investments, partly offset by maturities; it is not equivalent to operating cash burn.
- In October 2022, ALX drew $10.0 million under a secured loan facility of up to $100.0 million. It could draw another $40.0 million through 2023; up to a further $50.0 million is conditional on development milestones or lender discretion. Interest is floating, with a stated minimum annual rate of 8.58%; principal payments are scheduled to begin in December 2025, and the loans mature in October 2027. The facility includes covenants and a lien on substantially all assets, with intellectual property subject to a negative pledge unless the loan balance reaches at least $75.0 million.
- FY2022 included a $2.0 million payment related to the ScalmiBio acquisition, recognized as R&D expense. The CEO held an ownership interest in ScalmiBio; the audit committee approved the transaction under the company’s related-party policy, and the CEO recused himself from negotiation and approval.
- Available-for-sale investments had $0.8 million of unrealized losses recorded in other comprehensive loss; the company described these as non-credit-related and reported no impairment allowance.
- The company reported no material legal proceedings. KPMG issued an unqualified opinion on the financial statements. Management assessed internal control over financial reporting as effective; the filing notes prior material weaknesses had been remediated. The auditor was not engaged to opine on internal controls.
Outlook, programs and risks
- Management expects continued significant losses and expenses, particularly to advance evorpacept trials, manufacturing and other pipeline programs. No product revenue or profitability guidance was provided.
- Evorpacept trials include randomized Phase 2 studies in first-line head and neck cancer and a Phase 2/3 study in advanced HER2-positive gastric/GEJ cancer; the latter began dosing in 2022. The company paused enrollment in the AML study in June 2022 to use dose-optimization information from its MDS study.
- Preliminary, early-stage results included reported responses in MDS and AML combination cohorts and a 72.2% objective response rate in a small, previously treated gastric/GEJ cohort. These findings are not confirmatory evidence of efficacy; the filing cautions that interim data may change and later trials may not reproduce early results.
- FDA Fast Track designations for certain evorpacept combinations and Orphan Drug Designations for gastric/GEJ cancer and AML do not constitute approval or assure faster review. The filing also describes an FDA-required nonclinical safety study; the partial hold and enrollment cap on the two HNSCC trials were lifted in June 2021.
- After year-end, the company reported the first patient dosed in ASPEN-07 in February 2023. It planned to file an IND for ALTA-002 in the first half of 2023. These are post-period developments, not FY2022 results.
- Key risks include clinical and regulatory failure or delay, reliance on third-party manufacturers and research/clinical service providers, substantial future financing needs, loan covenants and floating-rate exposure, competition, and intellectual-property uncertainty. In particular, a European patent dispute involving soluble SIRPα claims was remanded for further consideration; the company said upheld claims could affect certain evorpacept indications in some geographies.
Most important facts for investors to verify
- Whether the reported preliminary clinical responses are sustained in larger, controlled trials, and how enrollment, dosing and dose optimization progress.
- Whether the projected mid-2025 cash runway remains achievable, including the availability and conditions of undrawn loan tranches and the need for additional financing.
- How R&D spending, operating cash use and investment maturities affect liquidity; distinguish investment purchases from operating burn.
- Whether the European patent proceedings or other intellectual-property claims constrain development or commercialization.
- Whether clinical supply, third-party execution and combination-drug availability support planned trial timelines.