Aligos Therapeutics, Inc. quarterly report, Q2 FY2023

Aligos Therapeutics, Inc. — Q2 2023 Form 10-Q

Reporting period: Three and six months ended June 30, 2023. Financial statements are unaudited. Aligos is a clinical-stage biopharmaceutical company focused on liver diseases and viral infections; it has no approved products and has generated no product-sales revenue.

Financial results and liquidity

Metric	Q2 2023	Q2 2022	Six months 2023	Six months 2022
Collaboration revenue	$2.6 million	$3.7 million	$5.2 million	$6.3 million
Customer revenue	$4.3 million	—	$4.4 million	—
Total revenue	$6.9 million	$3.7 million	$9.6 million	$6.3 million
Research and development	$16.8 million	$16.5 million	$34.9 million	$48.2 million
General and administrative	$9.2 million	$7.6 million	$17.8 million	$14.0 million
Net loss	$18.8 million	$19.9 million	$41.7 million	$55.5 million
Basic and diluted loss per share	$0.43	$0.47	$0.97	$1.30

Revenue consists of collaboration and customer arrangement revenue, not product sales. Revenue from customers primarily reflects the Amoytop agreement. The filing does not present a meaningful product gross margin; the company remains loss-making.

Cash and liquidity: Cash, cash equivalents and restricted cash totaled $90.9 million at June 30, 2023; unrestricted cash, cash equivalents and investments were approximately $90.8 million. Short-term investments were only $10,000, versus $44.5 million at December 31, 2022, largely reflecting investment maturities and transfer into cash.
Cash flows, first half: Operating activities used $36.0 million, compared with $45.5 million in 2022. Investing activities provided $45.0 million, primarily from investment maturities; financing activities provided $0.4 million. Cash, cash equivalents and restricted cash increased $9.4 million.
Balance sheet: Total assets were $106.1 million and stockholders’ equity $69.6 million. Current assets were $94.2 million and current liabilities $27.2 million. The company reported no debt outstanding; it had operating and finance lease liabilities, including $11.9 million of operating lease liabilities in total.
Accumulated deficit: $440.9 million at June 30, 2023. Management expects continued substantial losses and stated existing unrestricted cash, cash equivalents and investments should fund operations for at least 12 months after the financial statements were issued.

Material changes versus the prior comparable period

First-half net loss narrowed by $13.8 million year over year, while total operating expenses declined $9.5 million. R&D fell $13.3 million, mainly because of lower third-party spending following discontinuation of the ASO and STOPs programs; ongoing CAM and NASH work partly offset the reduction.
Q2 R&D was broadly flat year over year. Q2 G&A increased $1.7 million, and first-half G&A increased $3.7 million, primarily due to higher legal costs, including costs associated with the Janssen dispute.
Customer revenue was newly reported in 2023 following the Amoytop agreement; no customer revenue was reported in the comparable 2022 periods. Collaboration revenue declined year over year.
Interest and other income increased to $1.1 million for Q2 and $2.1 million for the first half, principally reflecting higher interest income as market rates rose.

Programs, outlook and notable items

NASH — ALG-055009: The company reported preliminary Phase 1 findings of tolerability and dose-proportional pharmacokinetics. It anticipated submitting a Phase 2 protocol to the FDA in Q4 2023 and reporting topline results in Q4 2024. The proposed study was a 12-week placebo-controlled trial in approximately 80–100 participants; plans were still under discussion.
Coronavirus — ALG-097558: An ongoing Phase 1 study was assessing safety and pharmacokinetics. Topline data were anticipated in the first half of 2024. The company described favorable preclinical activity, which does not establish clinical efficacy.
Chronic hepatitis B — ALG-000184: Phase 1b combination cohorts with entecavir were continuing. Management cited preliminary antiviral activity, including reported mean HBV DNA reductions of about 6 log₁₀ IU/mL in certain cohorts after 24 weeks; data were interim and the company planned further dosing and conference updates during 2023.
ALG-125755: Although single doses were described as tolerated and showed evidence of HBsAg lowering, comparative efficacy versus competing siRNAs was inconclusive. Further clinical evaluation was not prioritized with current funding and would require a partner.
Collaborations: The May 2023 Amoytop agreement included a $7.0 million upfront payment, less $1.1 million withholding taxes, and potential development and commercialization milestones up to $109 million plus royalties. Aligos recognized $4.3 million of customer revenue in Q2 and $4.4 million in the first half. In February 2023, Merck gave notice terminating one collaboration target.
Janssen litigation: The parties filed a stay on July 31, 2023 and had reached an agreement in principle to resolve their dispute; they expected to finalize a settlement. Settlement terms were not provided, and the filing reported no litigation accrual at June 30.
Unusual expense: Vacating leased office space resulted in a $0.7 million right-of-use asset impairment charge in Q2. A $0.2 million workforce-reduction accrual remained, expected to be used by year-end.
Other risks and contingencies: Additional financing may be needed and may not be available on acceptable terms. Clinical and regulatory outcomes, safety, competition, third-party manufacturing and collaboration performance, and intellectual-property disputes remain significant risks. The company reported no material non-cancellable purchase commitments or accrued contingent liabilities at June 30.

Important facts for investors to verify

Whether the Janssen settlement was finalized, and its financial, intellectual-property and operating implications.
Actual cash burn, spending plans and financing needs relative to management’s stated minimum 12-month runway; the runway is based on assumptions that may change.
FDA alignment, protocol submission and timing for the ALG-055009 Phase 2 study, and whether the anticipated Q4 2024 data timeline remains achievable.
Complete and final clinical results for ALG-097558 and ALG-000184, including safety, study design, patient numbers and durability; distinguish interim or company-reported findings from final analyses.
Amoytop’s option and development progress, the timing of deferred-revenue recognition, and whether potential milestones or royalties become payable or receivable.
Effects of Merck’s target termination and the funding or partnering outlook for ALG-125755 and other programs.
Potential share dilution: 43.5 million common shares were outstanding at July 31, 2023, including 3.1 million non-voting shares, and 10.5 million stock options were outstanding at June 30.