Aligos Therapeutics, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Unaudited results are compared with the three months ended March 31, 2020; balance-sheet figures are compared with December 31, 2020. Amounts below are in U.S. dollars unless noted.
Business context
Aligos is a clinical-stage biopharmaceutical company developing therapies for viral and liver diseases, including chronic hepatitis B (CHB), non-alcoholic steatohepatitis (NASH), and coronaviruses. It has no approved products and has generated no product-sale revenue. Its two clinical-stage candidates, ALG-010133 and ALG-000184, were in Phase 1 development; ALG-055009, a NASH candidate, remained in nonclinical studies.
Financial performance and position
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Collaboration revenue | $0.91 million | None |
| Research and development expense | $22.87 million | $17.30 million |
| General and administrative expense | $5.78 million | $3.42 million |
| Total operating expenses | $28.65 million | $20.72 million |
| Loss from operations | $27.74 million | $20.72 million |
| Net loss | $27.67 million | $20.03 million |
| Basic and diluted loss per share | $0.74 | $7.56 |
| Net cash used in operating activities | $29.80 million | $20.32 million |
Revenue was collaboration revenue, not product sales. Gross margin is not meaningful for this pre-commercial company. The lower loss per share versus 2020 reflects a much higher weighted-average share count following the October 2020 IPO; net loss itself increased.
- R&D expense rose 32%, mainly due to higher employee-related costs (including stock-based compensation), third-party preclinical and development costs, and facility expenses.
- G&A expense rose 69%, reflecting employee costs, stock-based compensation, public-company expenses and D&O insurance, partly offset by lower allocated facility costs.
- Cash, cash equivalents and short-term investments totaled $213.4 million at March 31, 2021, down from $243.5 million at December 31, 2020. Cash, cash equivalents and restricted cash were $200.9 million.
- Current assets were $219.8 million and current liabilities $25.2 million. Stockholders’ equity was $195.2 million; accumulated deficit was $202.4 million.
- The company reported no debt outstanding other than ordinary-course payables. Lease liabilities totaled approximately $12.9 million, including $2.5 million current operating lease liabilities.
- Investing activities provided $9.7 million, primarily from investment maturities; financing activities provided $0.1 million, primarily from stock-option exercises.
Outlook, commentary and risks
Management expects substantial additional losses and spending as research and development expands. It stated that existing cash, cash equivalents and investments were expected to fund operations for at least 12 months following issuance of the financial statements, while cautioning that plans could change and funds could be needed sooner. The company has no committed external financing source. No specific revenue or earnings guidance was provided.
Under its December 2020 Merck collaboration, Aligos received an upfront payment and recognized $0.91 million of collaboration revenue in Q1 2021 related to milestone payments. It may be eligible for additional upfront consideration, development and commercialization milestones, and royalties; these are contingent and not assured.
- Development is early-stage and dependent on clinical results, regulatory approval, third-party research organizations and manufacturers, and collaboration partners. Candidates may fail, be delayed, or cause unacceptable side effects.
- COVID-19 could disrupt trials, suppliers, operations or access to capital. Management reported no anticipated clinical-supply issues at the time, but acknowledged possible future effects.
- Competition and changing demand for coronavirus therapies pose risks to the early-stage coronavirus program. The company also highlighted intellectual-property risks, including that it did not own issued patents specifically covering several named candidates.
- No material litigation requiring disclosure, accrued contingent liabilities, or material change in contractual commitments was reported. Disclosure controls were assessed as effective at March 31, 2021.
Investor verification points
- Confirm current clinical-trial progress, timing and results for ALG-010133 and ALG-000184, and development plans for the NASH and coronavirus programs.
- Review cash burn, investment availability and the assumptions supporting the stated minimum 12-month runway; assess potential financing needs and dilution.
- Check the Merck collaboration’s research-plan status, milestone conditions, revenue recognition and any subsequent payments or updates.
- Assess the status and scope of patent applications, third-party intellectual-property exposure, and obligations under the Emory, Luxna and KU Leuven agreements.
- Monitor whether COVID-19, clinical-site access, or third-party manufacturing affects development timelines or costs.