Apollomics Inc. Form 20-F Summary
Reporting period: Fiscal year ended December 31, 2022. The filing was signed April 28, 2023 and uses IFRS as issued by the IASB. Apollomics is a Cayman Islands holding company and clinical-stage oncology biotechnology company operating primarily in the United States and China. It reported nine drug candidates across 11 programs, including six clinical-stage candidates, and had no products approved for commercial sale.
Business Context
- Lead programs include APL-101, a selective c-Met inhibitor in Phase 2 studies for tumors with c-Met alterations, and APL-106, an E-Selectin antagonist in a Phase 3 bridging study in China for relapsed or refractory AML.
- Other programs include APL-102, APL-122, APL-501, APL-502, APL-801, APL-810 and the preclinical APL-108.
- The company relies substantially on third-party collaborators, CROs and contract manufacturers for development, clinical trials, data generation and drug supply.
- Apollomics completed its business combination with Maxpro Capital Acquisition Corp. on March 29, 2023. Its Class A ordinary shares and warrants began trading on Nasdaq on March 30, 2023 under APLM and APLMW.
Financial Highlights
| Metric | 2021 | 2022 | Change |
|---|---|---|---|
| Revenue | $0 | $0 | No change |
| Other income | $1.1 million | $1.4 million | Up 37.3% |
| Research and development expense | $35.6 million | $35.5 million | Down 0.3% |
| Administrative expense | $15.3 million | $9.9 million | Down 34.9% |
| Loss for the year | $94.8 million | $240.8 million | Increase of $146.0 million |
| Loss per share | $0.23 | $0.62 | Higher loss per share |
| Net cash used in operating activities | $43.3 million | $42.8 million | Improved by $0.5 million |
| Cash and cash equivalents | $46.7 million | $32.7 million | Down $14.1 million |
| Total liquid financial assets | $102.3 million | $58.9 million | Down $43.4 million |
The 2022 loss was substantially affected by a non-cash $189.6 million fair-value loss on convertible preferred shares, compared with $37.4 million in 2021. Excluding this item, the filing states that loss from operations was approximately $51.2 million in 2022 versus $57.4 million in 2021. No operating margin is meaningful because revenue was zero.
Liquidity, Capital Resources and Debt
- At December 31, 2022, the company had $32.7 million of cash and cash equivalents, $2.9 million of short-term time deposits, $4.3 million of long-term time deposits and $19.1 million invested in a U.S. market fund holding U.S. Treasury securities.
- Management stated that cash, cash equivalents and other liquid financial assets at December 31, 2022 were expected to maintain financial viability through June 30, 2024. This outlook is subject to continued spending, clinical development results and access to additional financing.
- Convertible preferred shares were classified as financial liabilities at fair value through profit or loss, with a carrying value of $511.9 million at year-end, up from $322.2 million. These instruments were converted into ordinary shares upon completion of the March 2023 business combination.
- The company reported net liabilities of $448.1 million at December 31, 2022, compared with $212.9 million at December 31, 2021. Lease liabilities totaled $991 thousand, and disclosed lease commitments totaled $991 thousand.
- Net cash provided by investing activities was $29.1 million, primarily from redemption of time deposits and disposal of financial assets. Net cash used in financing activities was $0.3 million. No debt financing proceeds were reported in 2022.
Material Changes Versus 2021
- Net loss increased sharply, primarily because the fair value of convertible preferred shares increased as the probability of an IPO or listing increased.
- R&D spending was broadly stable. APL-101 spending increased 3.0% to $16.8 million, while APL-122 spending increased 56.9% to $0.7 million. APL-102 and APL-106 spending declined modestly.
- Administrative expenses declined mainly because of lower employee share-based compensation following forfeitures associated with employee departures.
- Cash and liquid financial assets declined materially, while operating cash use remained above $42 million.
- Other expense increased to $6.6 million from $4.5 million, primarily reflecting professional fees related to the business combination and Nasdaq listing process.
- Foreign-exchange results shifted from a $36 thousand gain to an $829 thousand loss, mainly due to RMB-denominated time deposits.
Outlook, Commentary and Risks
- Management expects continuing operating losses and negative operating cash flow as clinical trials, regulatory submissions, intellectual-property activities and public-company costs continue.
- Additional capital may be required through equity, debt, collaborations, licensing, strategic alliances or other financing. Failure to obtain financing could delay, reduce or eliminate development programs.
- Key development risks include failure to demonstrate safety or efficacy, clinical-trial enrollment delays, adverse events, changing FDA or NMPA requirements, manufacturing and supply constraints, and the inability to obtain regulatory approvals.
- APL-101 clinical studies have observed elevated liver enzymes; the company expects potential liver-related warnings if the product is approved. Third-party Structure Patents and other patents may create licensing, litigation or launch-delay risk, particularly before their stated expiration in December 2026.
- The company faces complex and evolving PRC rules involving data security, cybersecurity, human genetic resources, cross-border data transfers, foreign listings and capital flows. It believes no additional CSRC or CAC approval was required as of the filing date, but acknowledged continuing uncertainty.
- COVID-19, supply-chain disruption, inflation, labor-market conditions and geopolitical tensions, including the Russia-Ukraine conflict, have affected or may affect clinical enrollment, manufacturing, regulatory inspections and financing access.
- One significant deficiency in internal control over financial reporting was identified for 2021 and 2022 relating to insufficient integration of accounting systems across geographic locations. Management plans to implement a global IT system. The company is an emerging growth company and did not provide an auditor attestation report on internal controls.
- The filing reports no material pending or threatened legal proceedings and no off-balance-sheet arrangements as of December 31, 2022.
Investor Verification Checklist
- Verify post-business-combination cash, cash runway, financing proceeds and any subsequent equity or debt issuance.
- Confirm the current status, enrollment, endpoints and regulatory strategy for APL-101 and APL-106, including any partner-generated data.
- Review the conversion of the $511.9 million preferred-share liability and the resulting dilution, Class A/Class B ownership and warrant overhang.
- Assess the third-party patent and licensing position for APL-101, including potential obligations before December 2026.
- Monitor clinical-trial safety signals, particularly liver-enzyme elevations and other serious adverse events.
- Evaluate whether the significant internal-control deficiency has been remediated and whether additional deficiencies have been identified.
- Reconcile management’s stated liquidity runway with current operating cash burn, contractual commitments and expected milestone or royalty payments.
- Review PRC regulatory developments affecting cross-border data, human genetic resources, offshore listings, cash transfers and access to financial information.