ALX Oncology Holdings Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. ALX Oncology is a clinical-stage immuno-oncology company developing therapies targeting the CD47 checkpoint pathway. It has no approved products and generated no product revenue.
Financial performance and position
| Metric | Q1 2023 / March 31, 2023 | Comparable period / prior year-end |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $24.8 million | $17.1 million in Q1 2022 |
| General and administrative expense | $7.4 million | $7.7 million in Q1 2022 |
| Total operating expenses | $32.2 million | $24.7 million in Q1 2022 |
| Net loss | $30.2 million; $0.74 per share | $24.5 million; $0.60 per share in Q1 2022 |
| Operating cash used | $27.8 million | $20.7 million in Q1 2022 |
| Cash, cash equivalents and investments | $256.2 million | At March 31, 2023 |
| Total assets | $278.1 million | $306.5 million at December 31, 2022 |
| Total liabilities | $37.8 million | $43.0 million at December 31, 2022 |
| Term loan | $9.45 million carrying value, net; $10.0 million principal outstanding | At March 31, 2023 |
Gross profit and operating margins are not meaningful because the company has no product revenue. The accumulated deficit was $355.7 million. Cash and cash equivalents were $63.2 million on the balance sheet; short- and long-term investments totaled approximately $193.0 million. The company reported no cash financing proceeds in Q1 2023; investing activities provided $42.3 million, principally from investment maturities.
Changes versus Q1 2022 and year-end 2022
- Net loss increased 23% year over year, while operating expenses rose 30%. R&D expense increased 45%, primarily with more active trials, patient enrollment and clinical-material manufacturing, as well as higher personnel and stock-based compensation costs.
- Interest income increased to $2.3 million from $0.2 million, mainly reflecting higher interest rates. Interest expense rose to $0.4 million, primarily due to the term loan entered into in October 2022.
- Operating cash use increased by $7.1 million year over year. Cash and investments declined from approximately $282.9 million at December 31, 2022 to $256.2 million at March 31, 2023.
- Unrealized gains on available-for-sale investments were $0.8 million in Q1 2023, versus unrealized losses of $0.6 million in Q1 2022. The company characterized unrealized losses at quarter-end as non-credit-related and recorded no investment impairment.
Outlook, developments and risks
- Management expects existing cash, cash equivalents, investments and funds available under the term loan to fund operations through the middle of 2025. The estimate depends on assumptions that may prove incorrect; the company expects continuing losses and says additional capital will likely be needed to fully implement its business plan.
- The lead candidate, evorpacept, is being evaluated in multiple Phase 1, Phase 2 and Phase 2/3 studies, including trials in head and neck, gastric/GEJ and urothelial cancers, and hematologic malignancies. Enrollment in the AML ASPEN-05 trial had been paused to use dose-optimization information from ASPEN-02.
- Management reported first-patient dosing in ASPEN-07 in February 2023. The filing also describes later developments: first patient dosing in an ovarian cancer investigator-sponsored trial in May 2023 and an April 2023 collaboration with Sanofi for a multiple-myeloma trial. An IND filing for ALTA-002 was planned for the first half of 2023.
- The loan facility provides access to an additional $40 million through the end of 2023, with up to a further $50 million potentially available subject to development milestones and lender discretion. The company was in compliance with financial reporting covenants. Following SVB’s closure and its successor’s acquisition by First Citizens Bank, management expected the successor to fulfill SVB’s loan obligations; availability of the full facility is not assured.
- The company said SVB held less than 1% of its total cash, cash equivalents and investments, with most funds in custodial accounts at U.S. Bank. It reported no material negative liquidity impact from the SVB events, while noting broader financial-institution access and credit risks.
- Key risks include clinical-trial failure or delays, adverse events, reliance on third-party manufacturers and research providers, competition, intellectual-property disputes, and the need for additional financing. Manufacturing and service contract commitments totaled $14.4 million, including approximately $9.8 million with KBI Biopharma and $4.6 million with another manufacturer.
- No material legal proceedings were pending or threatened at March 31, 2023. Disclosure controls were assessed as effective, and no material change in internal control over financial reporting was reported for the quarter.
Important facts for investors to verify
- Whether clinical data, enrollment and trial timelines support continued investment in evorpacept and other pipeline programs.
- Whether the stated middle-of-2025 cash runway remains achievable as trial, manufacturing and operating costs evolve, and whether new financing will be required sooner.
- Availability and terms of undrawn loan tranches, including the portion previously committed by SVB and any milestone or lender-discretion conditions.
- Changes in quarterly operating cash use, R&D spending and remaining investment liquidity.
- Manufacturing capacity, supply commitments and performance of third-party clinical, research and manufacturing providers.