Alpha Tau Medical Ltd. — FY2023 Form 20-F
Reporting period: Fiscal year ended December 31, 2023; filed March 7, 2024. This is an annual report, not a standalone 2023 Q4 report, and the filing does not provide separate Q4 financial results. Financial amounts below are in U.S. dollars; unless stated otherwise, figures are in thousands.
Business context
Alpha Tau is an Israeli clinical-stage oncology company developing Alpha DaRT, a localized alpha-radiation therapy for solid tumors. It has no U.S. product approvals and has not generated product revenue. The company holds marketing approval in Israel for certain skin and oral-cavity squamous cell carcinomas, but had not commercialized the product there as of the filing. It reported 16 clinical studies ongoing worldwide as of March 1, 2024.
Financial performance and position
| Metric | FY2022 | FY2023 | Change / context |
|---|---|---|---|
| Product revenue | None | None | No revenue to date; no product sales expected in the foreseeable future. |
| Research and development, net | $20,890 | $26,424 | Up 26.5%, reflecting higher staffing, operating, preclinical and clinical-trial costs. |
| Marketing expense | $974 | $1,924 | Up 97.5%, including hiring of a chief commercial officer. |
| General and administrative expense | $10,272 | $7,332 | Down 28.6%, mainly due to lower professional fees and 2022 transaction costs. |
| Total operating expenses | $32,136 | $35,680 | Up 11.0%; operating loss widened. |
| Financial expense (income), net | $1,606 expense | $6,539 income | Improved mainly from warrant remeasurement and higher deposit interest income. |
| Net loss | $33,762 | $29,157 | Loss narrowed 13.6%; basic and diluted loss per share improved from $0.53 to $0.42. |
| Net cash used in operating activities | $23,879 | $17,958 | Cash burn declined by $5,921. |
Gross and operating margins are not meaningful because the company reported no product revenue. The improvement in net loss does not reflect lower operating expenses; it was driven chiefly by financial income, including non-cash warrant fair-value movements and interest income.
At December 31, 2023, cash and cash equivalents were $12,657, short-term deposits $69,131, and restricted deposits $3,152, totaling $84,940. Current assets were $85,756 and current liabilities $7,102. Total liabilities were $22,913, including a $5,610 long-term loan, $3,597 warrant liability and $7,666 in operating lease liabilities. Shareholders’ equity was $84,475; accumulated deficit was $115,759. The loan, denominated in NIS and secured by bank deposits, is due in a bullet payment in September 2025, subject to possible extension. The filing reports $10,671 of undiscounted future operating lease payments.
Investing cash flow was positive $18,682, principally reflecting proceeds and placements of bank deposits; property and equipment purchases were $6,401. Financing cash flow was $5,297, mainly from loan proceeds, versus $96,905 in 2022, which included SPAC and PIPE proceeds. The company reported 69,670,612 ordinary shares outstanding at year-end.
Material changes and business developments
- R&D and marketing spending rose while G&A costs fell. Operating expenses increased overall, even as the reported net loss narrowed.
- Cash, cash equivalents and deposits declined from $105,380 at year-end 2022 to $84,940 at year-end 2023. The company stated that existing resources were expected to fund operating and capital needs for at least two years; elsewhere it said funding could extend into 2026. These are estimates dependent on assumptions.
- Capital investment included a Jerusalem land leasehold and development plans for expanded manufacturing. The company also leased a building in New Hampshire for a planned U.S. source-manufacturing site and leased space in Japan.
- The company submitted a Japanese premarket approval request for recurrent head-and-neck cancer in November 2023 and anticipated a response in the second half of 2024.
Outlook, risks and unusual items
- Management expects continuing substantial losses and increased R&D, clinical, manufacturing, regulatory and commercialization spending. It has no committed external funding source and may need additional capital; inability to raise funds could delay, reduce or end development programs.
- The U.S. ReSTART pivotal study in recurrent cutaneous SCC is planned for up to 86 patients. Management expected enrollment completion in the second half of 2024 and results in 2025, potentially supporting an FDA submission. Alpha DaRT has FDA Breakthrough Device Designations, but no U.S. marketing authorization; the eventual regulatory pathway and outcome remain uncertain.
- Reported preliminary results include 100% overall response and more than 78% complete response in 28 evaluable tumors in an early superficial-tumor study; all ten lesions in a U.S. pilot feasibility study had complete responses at approximately 12 and 24 weeks; and long-term data from 81 lesions reported 77% two-year actuarial local recurrence-free survival with no grade 2 or higher late toxicities. These are clinical-study results, not evidence of approval or commercial effectiveness across indications.
- Pancreatic-cancer interim data covered only the first five patients: successful delivery and no product-associated serious adverse events were reported; the last three patients had two stable-disease responses and one partial response at last measurement. The company cautions that trials are early and results may change.
- Key risks include clinical efficacy and safety uncertainty, regulatory delays or rejection, reimbursement and market adoption, manufacturing scale-up, reliance on suppliers and limited radioisotope sources, additional financing and dilution, intellectual-property protection, and foreign-exchange exposure. A 10% unfavorable currency movement was estimated to increase operating expenses by about 4.5% in 2023; the company does not currently hedge this exposure.
- The company disclosed that Israel’s war had not materially affected operations as of the report date, but warned that escalation, employee reservist absences, facility disruption or broader economic effects could harm operations. It also disclosed cash and deposits at financial institutions above insured limits.
- Unusual earnings item: warrant liabilities are remeasured through earnings. Their fair value decreased, generating $2,033 of 2023 financial income; interest income from deposits was $4,830. The company also raised a $5,248 bank loan and recorded $338 of foreign-exchange expense related to it.
- The audited financial statements received an unqualified U.S. GAAP opinion. Management stated disclosure controls and internal control over financial reporting were effective at year-end; the auditor did not provide an internal-control attestation because of the company’s emerging-growth-company exemption.
Most important facts for investors to verify
- Cash runway assumptions, deposit accessibility and the timing and terms of any additional financing.
- ReSTART enrollment, final efficacy and safety data, and the FDA’s required pathway and evidence for U.S. authorization.
- Outcome and timing of the Japanese review, and whether Israeli marketing approval is renewed.
- Whether small, preliminary trial results are confirmed in larger studies and support durable benefit and acceptable safety across indications.
- Manufacturing-site costs, production capacity, reliable Thorium-228 supply and the loan’s September 2025 repayment or extension.
- Potential dilution from outstanding warrants, options and RSUs; the filing separately reports substantial outstanding equity awards and warrants.
- Potential U.S. tax consequences: the company believes it was a passive foreign investment company in 2023, a status that may adversely affect U.S. holders.