ALX Oncology Holdings Inc. — FY2021 Form 10-K
Business context and reporting period. This annual report covers the fiscal year ended December 31, 2021; it is not a standalone fourth-quarter report. ALX Oncology is a clinical-stage immuno-oncology company with no approved products. Its lead candidate, evorpacept (also known as ALX148), is being tested in Phase 1 and Phase 2 combination trials targeting solid tumors and blood cancers. The company reported dosing more than 185 subjects with evorpacept by year-end.
Financial performance and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | No product, license, or collaboration revenue; related-party revenue was $0 | $1.2 million related-party research reimbursement |
| Research and development expense | $60.2 million | $29.0 million |
| General and administrative expense | $23.4 million | $14.8 million |
| Total operating expenses | $83.6 million | $44.8 million |
| Net loss | $83.5 million | $45.7 million |
| Net loss per share, basic and diluted | $2.07 | $2.76 |
| Cash used in operating activities | $68.1 million | $38.3 million |
| Cash and cash equivalents at year-end | $363.7 million | $434.2 million |
There is no meaningful sales margin to assess because ALX had no product sales. Cash used in investing activities was $4.9 million, including acquisition-related spending and equipment purchases; financing activities provided $2.5 million, mainly from employee stock-plan exercises. Accumulated deficit was $202.0 million. The company had $17.1 million in total liabilities, including $0.7 million of finance lease liabilities; its $6.0 million term loan was repaid in December 2020. Contractual obligations disclosed at year-end totaled $24.1 million, primarily manufacturing and service commitments and lease obligations.
Management believes existing cash will fund operations through mid-2024, based on its current operating plan and assumptions. An at-the-market program permits up to $150 million of common-stock sales; no shares had been sold under it as of the filing. Most cash was held at one financial institution, with $363.4 million above the FDIC-insured limit.
Material changes versus FY2020
- Net loss rose by $37.7 million as operating expenses increased 86%, principally due to higher clinical-development activity, more active trials and increased enrollment.
- Research and development spending more than doubled. FY2021 included $4.7 million of acquired in-process research and development from ScalmiBio, expensed at acquisition.
- General and administrative expense increased 58%, including higher stock-based compensation, public-company compliance costs and directors’ and officers’ insurance.
- Operating cash use increased, while year-end cash declined by $70.6 million. FY2020 cash had been boosted by public offerings; FY2021 had no comparable large equity financing.
- Related-party research revenue ended after the prior arrangement was terminated in July 2020.
Outlook, clinical progress and key risks
- Evorpacept: Two randomized Phase 2 first-line HNSCC trials began enrollment in 2021. The company planned a randomized Phase 2 trial in second-line HER2-positive gastric/GEJ cancer in Q1 2022. A Zymeworks-led Phase 1 combination trial in HER2-expressing cancers enrolled its first subject in October 2021.
- Early clinical findings: In first-line HNSCC, preliminary results at September 1, 2021 showed a 38.5% objective response rate among 13 evaluable subjects and a 12-month overall-survival rate of 87.5%; median overall survival was not reached. In a gastric/GEJ combination cohort, the reported response rate was 72.2% among 18 subjects. These are early, small-cohort findings, not evidence of approval or established benefit.
- Blood cancers: In an early MDS study with azacitidine, 3 of 6 evaluable previously untreated higher-risk patients had an objective response; among 9 evaluable relapsed/refractory patients, 5 had marrow complete responses. The company also initiated a Phase 1/2 AML study with venetoclax and azacitidine in October 2021.
- Other programs: ALTA-002, developed with Tallac Therapeutics, is a preclinical program with an IND planned for 2023. The ScalmiBio acquisition adds antibody-shielding technology and cytotoxic payloads intended to support future drug candidates and antibody-drug conjugates.
- The FDA lifted a partial clinical hold and enrollment cap on the two HNSCC studies in June 2021 after reviewing a required nonclinical safety study. The filing says the hold did not affect enrollment or trial timelines. Evorpacept has Fast Track designations for specified HNSCC and gastric/GEJ combinations; the FDA granted Orphan Drug Designation for gastric/GEJ cancer in January 2022.
- Management expects losses and spending to rise as trials advance. Financing beyond current resources may be required; additional equity could dilute shareholders, while debt or partnerships could constrain operations or require rights concessions.
- Principal risks include clinical-trial failure or delay, uncertain regulatory outcomes, adverse effects and changing standards of care; dependence on third-party manufacturers, CROs and collaborators; competition; patent and licensing uncertainty; and potential COVID-19-related disruption. The company has no commercial manufacturing, sales or marketing infrastructure.
- In October 2021, ALX acquired ScalmiBio. The CEO had owned 31.7% of ScalmiBio and received a proportional share of consideration; the audit committee approved the transaction and the CEO recused himself from negotiation and approval. The deal included a further $2.0 million payment subject to continued employment, up to $35.0 million in development milestones, and royalties.
Investor facts to verify
- Whether clinical-trial enrollment, timelines and later-stage efficacy results support the preliminary response and survival findings, particularly in the small, early cohorts.
- Whether the cash runway remains consistent with management’s mid-2024 estimate as trial spending, manufacturing commitments and acquisition-related costs evolve.
- How the $150 million ATM facility, potential future financing and stock-based compensation may affect dilution.
- Whether evorpacept’s safety profile holds up in larger studies and in combinations, and whether regulators require further studies or impose restrictions.
- Whether third-party supply, collaboration arrangements and intellectual-property rights remain adequate; review the ScalmiBio related-party terms and contingent consideration.
Controls and audit. KPMG issued an unqualified opinion on the financial statements and internal control over financial reporting as of December 31, 2021. Management reported controls effective; the filing notes material weaknesses identified in earlier periods had been remediated. No material legal proceedings were reported.