ALX Oncology Holdings Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. The company is a clinical-stage immuno-oncology biotech developing therapies targeting the CD47 checkpoint pathway. It has no approved products and reported no product revenue.
Financial performance and liquidity
| Metric | Q2 2022 | Six months ended June 30, 2022 | Comparable 2021 period |
|---|---|---|---|
| Revenue | None | None | None |
| Research and development expense | $26.7 million | $43.8 million | $11.2 million / $21.1 million |
| General and administrative expense | $7.0 million | $14.7 million | $5.1 million / $9.4 million |
| Net loss | $32.9 million | $57.5 million | $16.3 million / $30.5 million |
| Basic and diluted loss per share | $0.81 | $1.41 | $0.40 / $0.76 |
| Net cash used in operating activities | Not separately stated | $37.7 million | $25.8 million |
At June 30, cash and cash equivalents were $66.4 million, with short- and long-term investments of $257.8 million, for total cash, cash equivalents and investments of $324.2 million. Current assets were $316.8 million and current liabilities $24.0 million; total liabilities were $29.7 million. The filing reports no revenue-based margins. The balance sheet shows no borrowings; liabilities include lease and operating obligations.
Cash and cash equivalents plus restricted cash declined $297.2 million in the first half, primarily because $279.2 million was invested in securities; this is not equivalent to operating cash burn. The company used $37.7 million in operating cash flow. Management believes existing resources will fund operations through the fourth quarter of 2024, while also stating additional capital will likely be needed to fully implement its plans. No financing source is committed. The $450 million shelf registration and $150 million ATM program had generated no sales as of the filing.
Material changes versus prior year and balance-sheet date
- Q2 operating expenses rose 107% year over year; first-half expenses rose 92%. R&D increased 139% in Q2 and 108% for the first half, largely reflecting clinical-trial and manufacturing costs, expanded trials, staffing, stock compensation and Tallac collaboration work.
- G&A increased 38% in Q2 and 56% for the first half, primarily due to stock-based compensation, headcount and public-company, legal and facility costs.
- Cash and cash equivalents fell from $363.7 million at December 31, 2021 to $66.4 million at June 30, 2022, while investments increased from none to $257.8 million. The portfolio had $1.3 million in non-credit-related unrealized losses recorded in other comprehensive loss; the company reported no investment impairment or credit-loss allowance.
- Total liabilities increased to $29.7 million from $17.1 million at year-end, including higher accrued expenses and non-current liabilities. Stockholders’ equity was $316.3 million, down from $363.0 million.
Business outlook, risks and notable items
- Evorpacept was being studied in multiple Phase 1 and Phase 2 trials, including randomized Phase 2 HNSCC trials and a Phase 2/3 gastric/GEJ cancer trial. Management planned to initiate the ASPEN-07 urothelial cancer study in Q4 2022 and planned an IND for the Tallac collaboration program ALTA-002 in 2023.
- Enrollment in the ASPEN-05 AML trial was paused in June 2022 to use upcoming ASPEN-02 MDS dose-optimization data to inform dose selection. Evorpacept received FDA orphan drug designations for gastric/GEJ cancer and AML; the FDA granted an additional Fast Track designation for a first-line HNSCC combination in July 2022.
- The company expects significant future losses and expense growth. Key uncertainties include clinical efficacy and safety, trial timing and enrollment, regulatory approval, manufacturing supply and third-party performance, competition, intellectual-property protection, and the need for additional financing. COVID-19, geopolitical disruption and inflation may add operational and cost pressures.
- Manufacturing and service purchase commitments totaled approximately $49.2 million; lease obligations totaled approximately $9.1 million. Aggregate contractual obligations shown were $58.2 million, with payments expected through 2030 for leases and through 2026 for manufacturing commitments.
- The filing reported no pending or threatened litigation, no material legal proceedings, no off-balance-sheet arrangements and no subsequent events requiring adjustment or disclosure. Management concluded disclosure controls were effective and reported no material quarterly change in internal control over financial reporting.
Important facts for investors to verify
- Whether clinical data and dose-optimization results support continued development of evorpacept, especially in ASPEN-02 and the paused ASPEN-05 program.
- Whether the stated funding runway through Q4 2024 remains achievable as trial, manufacturing and operating costs evolve, and whether additional financing will be required.
- The scope, timing and cancellation exposure of manufacturing commitments and the company’s reliance on third-party manufacturers and research providers.
- Potential dilution from future use of the shelf registration or ATM program, and the effects of stock-based compensation and equity-plan issuance.
- How investment-market value changes, clinical-trial execution, regulatory decisions and competition affect liquidity and development plans.