Aligos Therapeutics, Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. Aligos is a clinical-stage biopharmaceutical company developing treatments for hepatitis B, NASH and coronaviruses. It has no approved products and has generated no product-sales revenue. Financial amounts below are in U.S. dollars; statements are unaudited.
Financial performance and liquidity
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Collaboration revenue | $1.5m | — | $4.0m | — |
| Research and development expense | $28.1m | $17.3m | $75.6m | $51.8m |
| General and administrative expense | $6.5m | $4.2m | $18.8m | $11.7m |
| Operating loss | $33.1m | $21.6m | $90.4m | $63.5m |
| Net loss | $33.1m | $33.3m | $90.6m | $74.1m |
| Net loss per share, basic and diluted | $0.78 | $11.00 | $2.31 | $26.20 |
- Q3 collaboration revenue was recognized under the Merck research collaboration as work progressed. The company reported no product revenue; no collaboration milestones were met and no royalties were due during the periods.
- Operating expenses rose as research programs and clinical, nonclinical and manufacturing activity expanded, alongside higher employee and public-company costs. R&D increased 62% in Q3 and 46% year to date; G&A increased 53% and 60%, respectively.
- Q3 net loss was nearly flat year over year despite higher operating loss, primarily because Q3 2020 included an $11.8m loss from fair-value changes in preferred-stock and warrant liabilities. Those instruments were converted or exercised in connection with the 2020 IPO. Year-to-date net loss increased, principally reflecting higher operating expenses.
- Cash, cash equivalents and investments totaled $242.7m at September 30, 2021, versus $243.5m at December 31, 2020. Cash and cash equivalents alone were $239.7m. Total assets were $263.1m; stockholders’ equity was $217.0m.
- Operating cash outflow was $78.2m for the first nine months, compared with $54.6m in 2020. Investing activities provided $19.5m and financing activities provided $78.1m, the latter mainly from the July 2021 follow-on offering. Cash, cash equivalents and restricted cash increased $19.4m to $240.4m.
- The July follow-on offering issued 4.4m shares at $19 per share and generated approximately $77.9m net proceeds. Shares issued and outstanding were 42.6m at September 30; the filing reported 42.6m outstanding as of November 1, 2021, including voting and non-voting shares.
- The company reported no debt outstanding other than ordinary-course short-term payables. Lease liabilities were $12.4m in total, including $12.3m operating leases and $0.1m finance leases. Current liabilities were $34.8m versus current assets of $248.7m. No conventional profit margin is meaningful given the company’s development-stage operations and lack of product sales.
Business developments, outlook and risks
- Hepatitis B: ALG-010133 (STOPS) Phase 1b cohorts were evaluating weekly 120mg, 200mg and 400mg doses; safety and viral-kinetic data were expected in the first half of 2022. ALG-000184 (capsid assembly modulator) had completed enrollment in three patient cohorts, with a fourth cohort enrolling; further data were planned for late 2021 and the first half of 2022. ALG-020572 (ASO) was in Phase 1a/1b, with dosing in hepatitis B patients anticipated to begin in Q1 2022. A clinical trial application for siRNA candidate ALG-125755 was targeted for the first half of 2022.
- NASH: Aligos filed a clinical trial application in September 2021 for Phase 1a/1b testing of ALG-055009, a THR-β agonist. Topline data were expected in the second half of 2022.
- Coronaviruses: Preclinical work continued, including selection of an orally available protease-inhibitor candidate with collaborators. Management described the program as early-stage and acknowledged competition, uncertainty in future demand and potential diversion of resources from other programs.
- Management expected substantial and increasing expenses and operating losses for at least the next several years, with no product-sales revenue expected for several years, if ever. It estimated existing cash, cash equivalents and investments would fund operations for at least 12 months following issuance of the financial statements, while noting that plans may change and additional financing may be needed sooner. There is no committed external funding source.
- Principal risks include clinical and regulatory failure or delay, adverse effects, reliance on third-party manufacturers and CROs, collaboration and licensing risks, competition, intellectual-property challenges, need for further financing and possible COVID-19-related disruptions. Aligos reported $4.1m in non-cancellable purchase commitments and no contingent liabilities requiring accrual or material litigation proceedings at quarter end.
- Management reported disclosure controls and procedures were effective as of September 30, 2021, with no material change in internal control over financial reporting during the quarter. The filing provides no formal revenue or earnings guidance.
Most important facts for investors to verify
- Whether the stated cash runway remains adequate as clinical and research spending rises; compare subsequent cash burn and financing activity with the 12-month estimate.
- Clinical-trial progress and complete safety and efficacy data for ALG-010133, ALG-000184 and ALG-020572, including whether expected milestones and reporting timelines were met.
- Progress and results for ALG-055009 and the coronavirus pipeline, and whether either program’s development requirements or commercial prospects change.
- The terms, milestones, revenue recognition and potential future economics of the Merck collaboration, and the company’s obligations under other licenses and collaborations.
- Future share issuance, stock-based compensation and other potential dilution; the filing reported 5.6m options outstanding and $35.5m of unrecognized option compensation expense.