Aligos Therapeutics, Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Aligos is a clinical-stage biopharmaceutical company developing therapies for chronic hepatitis B (CHB), NASH and coronaviruses. It has no approved products and has generated no product-sale revenue; reported revenue is from collaborations.
Financial performance
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Collaboration revenue | $3.7 million | $1.5 million | $6.3 million | $2.5 million |
| Research and development | $16.5 million | $24.6 million | $48.2 million | $47.4 million |
| General and administrative | $7.6 million | $6.6 million | $14.0 million | $12.3 million |
| Total operating expenses | $24.1 million | $31.1 million | $62.2 million | $59.8 million |
| Net loss | $19.9 million | $29.8 million | $55.5 million | $57.5 million |
| Net loss per share, basic and diluted | $0.47 | $0.79 | $1.30 | $1.53 |
Quarterly collaboration revenue increased about 139% year over year, while six-month revenue increased about 155%. Q2 R&D expense fell 33%, principally reflecting reduced third-party spending as discontinued programs wound down; six-month R&D expense rose 2%. G&A increased 16% for the quarter and 14% for the half year. Net loss narrowed in both comparisons. Product gross margin is not applicable because there are no product sales.
- Cash, cash equivalents and investments: $159.3 million unrestricted at June 30, 2022, versus $205.8 million at December 31, 2021. This included $71.2 million cash and equivalents and $88.2 million short-term investments.
- Cash flow: Operating activities used $45.5 million in the first half, compared with $52.8 million a year earlier. Investing activities used $70.4 million, mainly reflecting purchases of short-term investments; financing provided $0.1 million. Cash, cash equivalents and restricted cash decreased $115.8 million, largely because cash was shifted into investments.
- Balance sheet: Total assets were $182.5 million; total liabilities were $45.5 million and stockholders’ equity was $137.0 million. The filing reports no debt outstanding. Lease liabilities were $13.4 million in total, including operating and finance leases.
- Accumulated deficit was $358.6 million. No material liquidity or solvency ratios or product margins are reported.
Business developments, outlook and risks
- ALG-000184 (CHB): Phase 1b dose-ranging study was ongoing. Preliminary company-reported data described dose-proportional pharmacokinetics, tolerability to date and reductions in HBV DNA/RNA in early cohorts. Aligos planned to share further cohort data in Q4 2022, seek regulatory advice in H2 2022 and initiate a Phase 2 study in H1 2023.
- ALG-125755 (CHB siRNA): The company planned a clinical trial application in Q3 2022 and a single-ascending-dose study in healthy volunteers in Q4 2022.
- ALG-055009 (NASH): Phase 1a/1b dosing was complete. Preliminary findings were described as showing tolerability and expected pharmacodynamic effects; topline data were anticipated in Q3 2022, with conference presentation planned for Q4.
- ALG-097558 (coronavirus): In preclinical development. The company reported preclinical activity and planned first-in-human-enabling studies in Q4 2022 and a clinical trial application in Q1 2023. These are forward-looking plans, not assured outcomes.
- Program discontinuations: ALG-010133 was halted after Phase 1 data showed inadequate HBsAg reduction at projected efficacious doses. ALG-020572 was discontinued after ALT elevations, including a serious adverse event and hospitalization in one subject. Related charges for non-cancelable purchase obligations were approximately $3.8 million and $3.4 million, respectively, in the first half.
- Collaboration: A January 2022 amendment expanded the Merck collaboration to include an additional NASH target and an option for a third target. Aligos recognized $3.7 million of Merck collaboration revenue in Q2 2022, including revenue under the amended arrangement.
- Runway and financing: Management expected existing unrestricted cash, cash equivalents and investments to fund operations for at least 12 months following issuance of the financial statements. The company expects continuing substantial losses and says additional financing may be required; no committed external funding source was identified. Capital-market disruption, inflation and rising interest rates could impair access to financing.
- Litigation: Janssen sued Aligos and two executives, alleging former employees assigned Janssen-owned inventions to Aligos. Janssen seeks, among other relief, intellectual-property assignment, an injunction and damages. Aligos disputes the allegations and intends to defend itself. No liability was accrued for contingencies at June 30, 2022.
- Other significant risks include clinical-trial failure or delay, adverse events, reliance on third-party manufacturers and research organizations, competition, intellectual-property disputes, and COVID-19 or geopolitical and economic disruptions. The filing notes that the Ukraine conflict affected the ability to conduct planned studies in Ukraine and Moldova. Disclosure controls were reported effective as of June 30, 2022, with no material quarterly change in internal control over financial reporting.
Important facts for investors to verify
- Whether subsequent, complete trial data support the preliminary efficacy and safety descriptions for ALG-000184 and ALG-055009, and whether announced development timelines were met.
- Whether the discontinued CHB programs’ safety and efficacy findings have further implications for the remaining pipeline.
- Actual cash burn, investment liquidity and updated runway assumptions; the stated runway is an estimate subject to changes in plans and costs.
- Progress and terms of the Merck collaboration, including any further target selection, payments or changes in recognized collaboration revenue.
- Developments, potential costs and possible effects on intellectual property or programs from the Janssen litigation.