Business Context and Reporting Period
The submitted Form 10-Q identifies the registrant as AlloVir, Inc., not Kalaris Therapeutics, Inc. The report covers the quarter and six months ended June 30, 2021, and was filed August 6, 2021. AlloVir is a late clinical-stage cell therapy company developing allogeneic, off-the-shelf virus-specific T-cell therapies. Its lead candidate is posoleucel, with additional programs ALVR106, ALVR109, ALVR107 and ALVR108.
The company had no approved products and generated no product-sale revenue. Its common stock traded on Nasdaq under the symbol ALVR; 65,117,971 shares were outstanding as of July 30, 2021.
Financial Performance and Position
| Metric | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 |
|---|---|---|---|---|
| Research and development expense | $25.7 million | $8.9 million | $46.1 million | $15.7 million |
| General and administrative expense | $12.0 million | $3.3 million | $22.4 million | $6.3 million |
| Total operating expenses | $37.7 million | $12.2 million | $68.5 million | $22.0 million |
| Net loss | $37.6 million | $11.6 million | $68.5 million | $21.0 million |
| Net loss per share | $0.60 | $4.43 | $1.10 | $8.66 |
| Net cash used in operating activities | Not separately presented | $41.8 million | $21.7 million |
There was no revenue-based margin or profitability measure because the company had no product sales. Six-month stock-based compensation expense was $17.8 million, compared with $1.1 million in the prior-year period, and was a significant non-cash component of expenses.
At June 30, 2021, cash and cash equivalents were $225.4 million and short-term investments were $87.9 million, for total cash, cash equivalents and short-term investments of $313.3 million. Total liabilities were $25.0 million, consisting primarily of operating lease liabilities, accounts payable, accrued expenses and amounts due to a related party. The company reported stockholders’ equity of $302.5 million and an accumulated deficit of $193.6 million.
Investing activities provided $144.5 million during the first six months, primarily because $175.0 million of short-term investments matured, partially offset by $30.1 million of investment purchases and $0.4 million of property and equipment purchases. Financing activities provided no cash during the period.
Material Changes Versus the Prior Comparable Period
- Quarterly net loss increased by $26.0 million, or approximately 223%, to $37.6 million; six-month net loss increased by $47.5 million, or approximately 227%, to $68.5 million.
- Quarterly research and development expense increased $16.8 million, driven primarily by higher posoleucel clinical and manufacturing costs, ALVR106 and ALVR109 development, and increased personnel costs.
- Six-month research and development expense increased $30.3 million. Posoleucel costs rose by $9.5 million, ALVR106 costs by $1.4 million and ALVR109 costs by $2.0 million.
- Quarterly general and administrative expense increased $8.7 million and six-month expense increased $16.2 million, primarily because of higher headcount, stock-based compensation, professional fees and insurance costs associated with operating as a public company.
- Operating cash usage increased $20.2 million for the six-month period, reflecting the higher research and development and general and administrative spending.
- Shares outstanding increased from 61.9 million at December 31, 2020 to 62.8 million at June 30, 2021, excluding additional potential dilution from options and restricted stock.
- Diana M. Brainard became chief executive officer in May 2021, succeeding David Hallal, who became executive chairman.
Guidance, Outlook, Risks and Unusual Items
Management stated that existing cash, cash equivalents and short-term investments were expected to fund operating expenses and capital expenditures into 2023, although this estimate depends on assumptions that may prove incorrect. The financial statements state that available liquidity was sufficient to fund planned operations for at least twelve months from issuance of the financial statements.
- Management planned to initiate two additional Phase 3 pivotal trials and one Phase 2 proof-of-concept trial for posoleucel by the end of 2021.
- AlloVir planned to initiate an ALVR106 Phase 1/2 study in the second half of 2021 and complete preclinical IND-enabling studies for ALVR107 and ALVR108 in the second half of 2021.
- ALVR109 remained in an ongoing proof-of-concept COVID-19 trial, but management stated that it did not see a broad role for the therapy given available vaccines and treatments; a potential future role for immunocompromised patients remained under evaluation.
- The company expected significant additional operating losses and increasing research and development expenses and stated that substantial additional funding would eventually be required. No committed source of additional capital was identified.
- COVID-19 had delayed clinical trials and could disrupt enrollment, research sites, contract research organizations, contract manufacturers, suppliers and regulatory timelines.
- The company relied substantially on third-party manufacturing and on intellectual property licensed from Baylor College of Medicine. License termination, milestone obligations, manufacturing delays, supply shortages or failure to qualify processes could materially affect development.
- BCM milestone events triggered approximately $0.2 million of accrued milestone expenses during the first six months. BCM license agreements could require aggregate milestone payments exceeding $40 million and $30 million, respectively, if specified development, regulatory and sales milestones are achieved.
- The company entered into a dedicated manufacturing-suite arrangement in February 2021 and recorded a $3.1 million right-of-use asset and $2.5 million lease liability. On July 30, 2021, it notified the supplier that it would reduce capacity, terminating that lease agreement on February 5, 2022.
- No material legal proceedings were pending, and management concluded that disclosure controls and procedures were effective at the reasonable assurance level.
Important Facts for Investors to Verify
- Confirm the entity mismatch: the source filing is for AlloVir, Inc., whereas the request identifies Kalaris Therapeutics, Inc.
- Verify the timing and results of the planned posoleucel, ALVR106, ALVR107 and ALVR108 development milestones.
- Assess cash burn, projected runway into 2023 and the likelihood, timing and terms of future financing.
- Review clinical efficacy, safety, enrollment and regulatory status, particularly for posoleucel and ALVR109.
- Evaluate manufacturing qualification, capacity reduction and dependence on ElevateBio, other contract manufacturers and single-source suppliers.
- Review potential dilution from 6.1 million outstanding options, 3.5 million unvested restricted shares and additional shares reserved under equity plans.
- Examine BCM license obligations, milestone payments, royalties and termination provisions, as well as related-party arrangements with ElevateBio.