Aligos Therapeutics, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; filed March 10, 2022. Aligos is a clinical-stage biopharmaceutical company developing treatments for chronic hepatitis B (CHB), NASH and coronaviruses. It has no approved products and has generated no product-sale revenue.
Financial results and liquidity
| Metric | 2021 | 2020 | Change |
|---|---|---|---|
| Collaboration revenue | $4.4 million | None | New revenue |
| Research and development expense | $104.2 million | $79.9 million | Up 30% |
| General and administrative expense | $28.5 million | $17.9 million | Up 59% |
| Operating loss | $128.3 million | $97.8 million | Loss widened |
| Net loss | $128.3 million | $108.5 million | Loss widened 18% |
| Basic and diluted loss per share | $3.22 | $10.87 | Lower loss per share, with a larger weighted-average share count |
| Net cash used in operating activities | $115.7 million | $74.3 million | Cash use increased |
Collaboration revenue was recognized under the Merck research collaboration as work progressed; it is not product revenue. Gross margin is not meaningful for this pre-commercial company.
- At year-end, cash and cash equivalents were $186.8 million; short- and long-term investments were $19.0 million; unrestricted cash, cash equivalents and investments totaled approximately $205.8 million.
- Current assets were $204.4 million and current liabilities $39.0 million. Total liabilities were $50.6 million and stockholders’ equity $184.7 million.
- Cash, cash equivalents and investments declined from $243.5 million at year-end 2020 to $205.8 million at year-end 2021. The company reported no material conventional debt; lease obligations included $14.1 million of operating lease liabilities and $0.4 million of finance lease liabilities.
- Financing provided $78.7 million in 2021, primarily net proceeds from a July follow-on offering. Management expected existing funds to support operations for at least 12 months following issuance of the financial statements, while noting plans and expenses could change.
Changes, pipeline and outlook
- Higher R&D spending reflected increased clinical, nonclinical, manufacturing and personnel costs; higher G&A included public-company costs and stock-based compensation. Stock-based compensation totaled $13.5 million in 2021 versus $3.0 million in 2020.
- The $11.8 million other loss in 2020 largely reflected fair-value changes in preferred-stock and warrant liabilities before the IPO; those liabilities were retired in 2020. 2021 interest and other income, net was $0.1 million.
- CHB: ALG-000184 (CAM) produced preliminary 28-day antiviral activity in Phase 1b cohorts, with reductions in HBV DNA and RNA; longer-duration dosing and further dose cohorts were planned for 2022. ALG-020572 (ASO) advanced to multiple-dose testing in CHB patients. ALG-125755 (siRNA) remained preclinical, with first-in-human dosing planned for 2022. A Phase 2 combination-platform study was planned for 2023, subject to advancement of candidates.
- Portfolio change: In January 2022, Aligos halted ALG-010133 after Phase 1b data showed insufficient antiviral activity. The company expected to record an approximately $1.9 million charge in Q1 2022 for non-cancellable commitments related to the discontinued program.
- NASH: ALG-055009 entered Phase 1a/1b testing in late 2021. Topline safety, pharmacokinetic and lipid-effect data were anticipated in Q3 2022; management also discussed potential partnering.
- Coronavirus: Protease-inhibitor work was in discovery/preclinical development with collaborators. The company anticipated beginning enabling nonclinical studies in Q3 2022 and clinical testing in 2023.
- In January 2022, Merck collaboration terms were expanded to include a second undisclosed NASH target and allow a third target to be added. Aligos may receive up to approximately $460 million in development and commercial milestones per target, plus royalties; these are contingent potential payments, not assured revenue.
Risks, contingencies and other items
- The company has incurred recurring losses, has no product revenue, expects substantial future R&D spending, and may need additional capital. Funding may be unavailable or dilutive, and management’s runway estimate depends on assumptions.
- All principal programs remain in early development. Clinical results, safety, regulatory approval, manufacturing, market adoption and eventual profitability are uncertain; interim results may differ from final results.
- Aligos relies on third parties for clinical trials and manufacturing and has significant licensing and collaboration obligations. Competition is substantial, particularly in CHB, NASH and COVID-19 therapies.
- COVID-19, supply interruptions, trial enrollment, intellectual-property disputes, data-privacy requirements and evolving drug-pricing and reimbursement policies could affect operations and prospects.
- The filing reported no material legal proceedings or accrued contingent liabilities at December 31, 2021. It disclosed approximately $1.9 million in non-cancellable purchase commitments related to the discontinued STOPS program.
- The independent auditor issued an unqualified opinion on the financial statements. Management concluded disclosure controls and internal control over financial reporting were effective at December 31, 2021; the auditor did not attest to internal-control effectiveness.
Important facts for investors to verify
- Review subsequent clinical data and safety findings for ALG-000184, ALG-020572 and ALG-055009 against the preliminary results and timelines described in the filing.
- Confirm actual cash burn, investment balances and financing needs in later filings; the stated runway is a management estimate, not a guarantee.
- Check the Q1 2022 accounting and cash impact of the approximately $1.9 million ALG-010133 commitment charge.
- Verify Merck collaboration payments, target additions, milestone conditions and royalty terms; headline milestone amounts are contingent.
- Assess dilution from equity compensation and future financing, and review the status and scope of patent protection, particularly for early-stage candidates.