ALPINE IMMUNE SCIENCES, INC. [ALPN] Filings

10-Q 1 alpn-20230930.htm 10-Q alpn-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly

period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-37449

ALPINE IMMUNE SCIENCES, INC.

(Exact name of registrant as specified in its charter)


Delaware						20-8969493
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

188 East Blaine Street, Suite 200

Seattle, WA 98102

(206) 788-4545

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

ALPN

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☐

Accelerated Filer

☐

Non-accelerated Filer

☒

Smaller Reporting Company

☒

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 9, 2023, the registrant had 58,097,961 shares of common stock, $0.001 par value per share, outstanding.

ALPINE IMMUNE SCIENCES, INC.

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	27
Item 4.	Controls and Procedures	27

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	74
Item 3.	Defaults Upon Senior Securities	75
Item 4.	Mine Safety Disclosure	75
Item 5.	Other Information	75
Item 6.	Exhibits	76
	Signatures

In this report, unless otherwise stated or as the context otherwise requires, references to “Alpine,” “the Company,” “we,” “us,” “our” and similar references refer to Alpine Immune Sciences, Inc. “VIGD,” “SIP” and “TIP” are registered trademarks and “NEON-1,” “NEON-2,” “SYNERGY,” “RUBY” and the Company logo are trademarks of Alpine Immune Sciences, Inc. All rights reserved. This report also contains registered marks, trademarks, and trade names of other companies. All other trademarks, registered marks, and trade names appearing in this report are the property of their respective holders.

SUMMARY RISK FACTORS

Our business is subject to numerous risks and uncertainties, including those highlighted in the section of this report captioned “Risk Factors.” The following is a summary of the principal risks we face:

•Our approach to the discovery and development of innovative therapeutic treatments based on our technology is unproven and may not result in marketable products.

•Our therapeutic candidates are in early stages of development and may fail in development or suffer delays that materially and adversely affect their commercial viability.

•Product development involves a lengthy and expensive process with an uncertain outcome, and results of earlier preclinical and clinical trials may not be predictive of future clinical trial results.

•If we encounter delays or difficulties enrolling patients in our clinical trials and/or retention of patients in clinical trials, our clinical development activities could be delayed or otherwise adversely affected.

•We face competition from entities that have developed or may develop therapeutic candidates for our target disease indications, including companies developing novel treatments and technology platforms based on modalities and technology similar to us.

•To date, our revenue has been primarily derived from our collaboration agreements, and our success will be dependent, in part, on our collaborators’ efforts to develop our therapeutic candidates.

•If third parties on which we depend to conduct our clinical or preclinical studies, or any future clinical trials, do not perform as expected, fail to satisfy regulatory or legal requirements, or miss expected deadlines, our development program could be delayed, which may result in materially adverse effects on our business, financial condition, results of operations, and prospects.

•We may not successfully engage in strategic transactions, including any additional collaborations we seek, which could adversely affect our ability to develop and commercialize therapeutic candidates, impact our cash position, increase our expenses, and present significant distractions to our management.

•If any of our therapeutic candidates are approved for marketing and commercialization and we are unable to develop sales, marketing and distribution capabilities on our own or enter into agreements with third parties to perform these functions on acceptable terms, we may be unable to successfully commercialize any such future products.

•We will need to raise substantial additional funds to advance development of our therapeutic candidates, and we cannot guarantee we will have sufficient funds available in the future to develop and commercialize our current or future therapeutic candidates.

•We are an early-stage biopharmaceutical company with a history of losses, we expect to continue to incur significant loses for the foreseeable future, we may never achieve or maintain profitability, and we have a limited operating history that may make it difficult for investors to evaluate the potential success of our business.

•Our computer systems, or those of any of our CROs, manufacturers, other contractors or consultants or potential future collaborators, may fail or suffer security or data privacy breaches or incidents or other unauthorized or improper access to, use of, or destruction of our proprietary or confidential data, employee data, or personal data, which could result in additional costs, loss of revenue, significant liabilities, harm to our brand and material disruption of our operations.

•If we are not able to obtain and enforce patent protection for our technology, including therapeutic candidates, therapeutic products, and platform technology, development of our therapeutic candidates and platform, and commercialization of our therapeutic products may be materially and adversely affected.

•We may license patent rights from third-party owners or licensees. If such owners or licensees do not properly or successfully obtain, maintain or enforce the patents underlying such licenses, or if they retain or license to others any competing rights, our competitive position and business prospects may be materially and adversely affected.

•We or our licensors, collaborators, or any future strategic partners may become subject to third-party claims or litigation alleging infringement of patents or other proprietary rights or seeking to invalidate patents or other proprietary rights, and we may need to resort to litigation to protect or enforce our patents or other proprietary rights, all of which could be costly, time consuming, delay or prevent the development of our therapeutic

candidates and commercialization of our therapeutic products, or put our patents and other proprietary rights at risk.

•If we fail to comply with our obligations under any license, collaboration, or other agreements, we may be required to pay damages and could lose intellectual property rights necessary for developing and protecting our technology, including our platform technology, therapeutic candidates, and therapeutic products, or we could lose certain rights to grant sublicenses, either of which could have a material adverse effect on our results of operations and business prospects.

•We may be unable to obtain U.S. or foreign regulatory approval and, as a result, may be unable to commercialize our therapeutic candidates.

•The healthcare industry is heavily regulated in the U.S. at the federal, state, and local levels, and in other jurisdictions in which we may conduct trials or other activities, and our failure to comply with applicable requirements may subject us to penalties and negatively affect our financial condition.

•Our stock price may be volatile, and an active, liquid, and orderly trading market may not develop for our common stock. As a result, stockholders may not be able to resell shares at or above their purchase price.

•Our officers and directors, and their respective affiliates, have a significant influence over our business affairs and may make business decisions with which stockholders disagree and which may adversely affect the value of their investment.

Our Risk Factors are not guarantees that no such conditions exist as of the date of this report and should not be interpreted as an affirmative statement that such risks or conditions have not materialized, in whole or in part.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

ALPINE IMMUNE SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)


	September 30, 2023		December 31, 2022
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	18,981	$	13,376
Short-term investments	174,472		224,265
Accounts receivable	219		392
Prepaid expenses and other current assets	3,743		2,960
Total current assets	197,415		240,993
Restricted cash, noncurrent	254		254
Property and equipment, net	1,533		1,584
Operating lease, right-of-use asset	7,697		8,219
Long-term investments	33,502		35,481
Deferred tax asset	146		155
Total assets	$	240,547	$	286,686
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	3,068	$	4,286
Accrued liabilities	17,788		14,003

Deferred revenue, current	30,092		35,571
Operating lease liability, current	870		756
Current portion of long-term debt	—		3,380
Total current liabilities	51,818		57,996
Deferred revenue, noncurrent	17,812		39,185
Operating lease liability, noncurrent	9,286		10,085


Total liabilities	78,916		107,266
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.001 par value per share; 10,000,000 shares authorized at September 30, 2023 and December 31, 2022; zero shares issued and outstanding at September 30, 2023 and December 31, 2022	—		—
Common stock, $0.001 par value per share; 200,000,000 shares authorized at September 30, 2023 and December 31, 2022; 49,274,160 shares issued and outstanding at September 30, 2023; 47,234,900 shares issued and 45,984,433 shares outstanding at December 31, 2022	49		46
Treasury stock, at cost; zero and 1,250,467 shares at September 30, 2023 and December 31, 2022, respectively	—		—
Additional paid-in capital	424,227		404,456
Accumulated other comprehensive loss	(540)		(1,121)
Accumulated deficit	(262,105)		(223,961)
Total stockholders’ equity	161,631		179,420
Total liabilities and stockholders’ equity	$	240,547	$	286,686

The accompanying notes are an integral part of these condensed consolidated financial statements.

ALPINE IMMUNE SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(in thousands, except share and per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(unaudited)
Collaboration revenue	$	10,043	$	8,367	$	28,023	$	27,288
Operating expenses:
Research and development	19,150		17,589		57,972		51,487
General and administrative	5,443		4,610		15,848		13,579
Total operating expenses	24,593		22,199		73,820		65,066
Loss from operations	(14,550)		(13,832)		(45,797)		(37,778)
Other income (expense):
Interest income	2,891		664		7,837		1,123
Interest expense	—		(105)		(98)		(389)
Other, net	(63)		—		(86)		(72)
Loss before taxes	(11,722)		(13,273)		(38,144)		(37,116)
Income tax expense	—		—		—		(1,782)
Net loss	$	(11,722)	$	(13,273)	$	(38,144)	$	(38,898)
Comprehensive income (loss):
Unrealized gain (loss) on investments	170		(307)		677		(1,385)
Unrealized (loss) gain on foreign currency translation	(60)		7		(96)		(11)
Comprehensive loss	$	(11,612)	$	(13,573)	$	(37,563)	$	(40,294)
Weighted-average shares used to compute basic and diluted net loss per share	49,222,344		31,574,358		48,286,203		31,559,886
Basic and diluted net loss per share	$	(0.24)	$	(0.42)	$	(0.79)	$	(1.23)

The accompanying notes are an integral part of these condensed consolidated financial statements.

ALPINE IMMUNE SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

(in thousands, except share amounts)


	Shares		Common Stock, Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Common Stock	Treasury
Balance, December 31, 2022	45,984,433	1,250,467	$	46	$	404,456	$	(1,121)	$	(223,961)	$	179,420
Stock-based compensation	—	—	—		2,552		—		—		2,552
Issuance of common stock under equity incentive plans	65,039	—	—		113		—		—		113
Exercise of warrants	1,708,535	—	2		(2)		—		—		—
Adjustments to offering costs	—	—	—		10		—		—		10
Unrealized gain on investments	—	—	—		—		745		—		745
Unrealized loss on foreign currency translation	—	—	—		—		(31)		—		(31)
Net loss	—	—	—		—		—		(13,266)		(13,266)
Balance, March 31, 2023	47,758,007	1,250,467	48		407,129		(407)		(237,227)		169,543
Stock-based compensation	—	—	—		2,621		—		—		2,621
Issuance of common stock under equity incentive plans	210,653	—	—		928		—		—		928
Exercise of warrants	236,567	—	—		—		—		—		—
Issuance of common stock under at the market offering, net of issuance costs	919,413	—	1		9,694		—		—		9,695
Retirement of treasury stock	—	(1,250,467)	—		—		—		—		—
Unrealized loss on investments	—	—	—		—		(238)		—		(238)
Unrealized loss on foreign currency translation	—	—	—		—		(5)		—		(5)
Net loss	—	—	—		—		—		(13,156)		(13,156)
Balance, June 30, 2023	49,124,640	—	49		420,372		(650)		(250,383)		169,388
Stock-based compensation	—	—	—		2,654		—		—		2,654
Issuance of common stock under equity incentive plans	149,520	—	—		1,202		—		—		1,202
Adjustments to offering costs	—	—	—		(1)		—		—		(1)
Unrealized gain on investments	—	—	—		—		170		—		170
Unrealized loss on foreign currency translation	—	—	—		—		(60)		—		(60)
Net loss	—	—	—		—		—		(11,722)		(11,722)
Balance, September 30, 2023	49,274,160	—	$	49	$	424,227	$	(540)	$	(262,105)	$	161,631

Balance, December 31, 2021	30,194,279	1,250,467	$	30	$	287,345	$	(273)	$	(166,199)	$	120,903
Stock-based compensation	—	—	—		2,289		—		—		2,289
Issuance of common stock under equity incentive plans	100,155	—	—		550		—		—		550
Unrealized loss on investments	—	—	—		—		(774)		—		(774)
Unrealized loss on foreign currency translation	—	—	—		—		(14)		—		(14)
Net loss	—	—	—		—		—		(7,527)		(7,527)
Balance, March 31, 2022	30,294,434	1,250,467	30		290,184		(1,061)		(173,726)		115,427
Stock-based compensation	—	—	—		2,335		—		—		2,335
Issuance of common stock under equity incentive plans	41,728	—	—		180		—		—		180
Unrealized loss on investments	—	—	—		—		(304)		—		(304)
Unrealized loss on foreign currency translation	—	—	—		—		(4)		—		(4)
Net loss	—	—	—		—		—		(18,098)		(18,098)
Balance, June 30, 2022	30,336,162	1,250,467	30		292,699		(1,369)		(191,824)		99,536
Stock-based compensation	—	—	—		2,555		—		—		2,555
Issuance of common stock under equity incentive plans	68,989	—	—		12		—		—		12
Unrealized loss on investments	—	—	—		—		(307)		—		(307)
Unrealized gain on foreign currency translation	—	—	—		—		7		—		7
Issuance of common stock in public offering, net of financing costs	13,606,000	—	14		93,465		—		—		93,479
Net loss	—	—	—		—		—		(13,273)		(13,273)
Balance, September 30, 2022	44,011,151	1,250,467	$	44	$	388,731	$	(1,669)	$	(205,097)	$	182,009

The accompanying notes are an integral part of these condensed consolidated financial statements.

ALPINE IMMUNE SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)


	Nine Months Ended September 30,
	2023		2022
	(unaudited)
Operating activities
Net loss	$	(38,144)	$	(38,898)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	7,827		7,179
Amortization of premium/discount on investments	(5,490)		634
Depreciation expense	428		452
Non-cash interest expense	45		145
Realized gain on investments	(33)		—
Loss on sale of property and equipment	11		68
Deferred income tax	—		113
Changes in operating assets and liabilities:
Accounts receivable	168		24,618
Prepaid expenses and other current assets	(327)		858
Operating lease, right-of-use asset	522		456
Accounts payable and accrued liabilities	2,490		3,577
Deferred revenue	(26,852)		(25,590)
Operating lease liability	(686)		(580)
Net cash used in operating activities	(60,041)		(26,968)
Investing activities
Purchases of property and equipment	(373)		(296)

Purchase of investments	(189,259)		(120,335)
Maturities of investments	246,775		115,182

Net cash provided by (used in) investing activities	57,143		(5,449)
Financing activities

Proceeds from sale of common stock, net of offering costs	9,694		94,004
Repayment of debt	(3,425)		(3,600)
Proceeds from exercise of stock options	2,243		742
Net cash provided by financing activities	8,512		91,146
Effect of exchange rate on cash and cash equivalents	(9)		(11)
Net increase in cash and cash equivalents and restricted cash	5,605		58,718
Cash and cash equivalents and restricted cash, beginning of period	13,630		68,161
Cash and cash equivalents and restricted cash, end of period	$	19,235	$	126,879

The accompanying notes are an integral part of these condensed consolidated financial statements.

ALPINE IMMUNE SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Information as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 is unaudited)

1. Description of Business

Alpine Immune Sciences, Inc. (the “Company”, “Alpine”, “we”, “us”, or “our”), together with its consolidated subsidiaries, is a clinical-stage biopharmaceutical company dedicated to discovering and developing innovative, protein-based immunotherapies to treat autoimmune and inflammatory diseases. Our approach includes a proprietary scientific platform that converts native immune system proteins into differentiated, multi-targeted therapeutics. We are seeking to create first- or best-in-class multifunctional immunotherapies via our unique protein engineering technologies to improve outcomes in patients with serious diseases. We were incorporated under the laws of the State of Delaware and are headquartered in Seattle, Washington.

2. Summary of Significant Accounting Policies

Basis of Presentation and Use of Estimates

The accompanying condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and generally accepted accounting principles in the United States of America (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make judgments, estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Significant estimates inherent in the preparation of the accompanying condensed consolidated financial statements include those used for revenue recognition, accruals for clinical trial activities and other accruals, the potential outcome of uncertain tax positions that have been recognized in our condensed consolidated financial statements or tax returns, and the estimated fair value of equity-based awards. We base our estimates and assumptions on historical experience when available and on various factors we believe to be reasonable under the circumstances. Actual results could differ materially from those estimates.

The accompanying condensed consolidated financial statements as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 and the related interim information contained within the notes to the condensed consolidated financial statements are unaudited. The interim financial statements have been prepared on the same basis as the audited financial statements and in the opinion of management, reflect all normal recurring adjustments necessary for a fair statement of our financial position for the interim periods presented. The accompanying condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 23, 2023. The results of our operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year.

Principles of Consolidation

Our condensed consolidated financial statements include the financial position and results of operations of Alpine Immune Sciences, Inc. and our wholly owned operating company and subsidiary, AIS Operating Co., Inc., and our wholly-owned subsidiary, Alpine Immune Sciences Australia PTY LTD. All inter-company balances and transactions have been eliminated in consolidation.

Cash and Cash Equivalents and Restricted Cash

We consider all highly liquid investments with an original maturity of 90 days or less at the time of purchase to be cash equivalents. Cash and cash equivalents consist of deposits with commercial banks in checking and interest-bearing accounts, and highly liquid money market funds.

Restricted cash represents cash reserved under our letter of credit, which serves as a security deposit for our operating lease to rent office and laboratory space in Seattle, Washington.

Periodically, we maintain deposits in financial institutions in excess of government insured limits. We believe we are not exposed to significant credit risk as our deposits, which are held at financial institutions, are high credit quality securities such as money market funds, U.S. Treasury bills, and commercial paper. To date, we have not realized any losses on these deposits.

Investments

Our investments include funds invested in highly liquid money market funds, U.S. Treasury bills, U.S. agency securities, non-U.S. government securities, and corporate debt and commercial paper with contractual maturities of less than two years. These investments are classified as available-for-sale debt securities, which are recorded at fair value based on quoted prices in active markets for Level 1 assets and based on market pricing and other observable market inputs for similar securities for Level 2 assets. We classify our investments maturing within one year of the reporting date as short-term investments.

If the estimated fair value of a debt security is below its amortized cost basis, we evaluate whether it is more likely than not that we will sell the security before its anticipated recovery in market value and whether credit losses exist for the related securities. A credit loss exists if the present value of expected cash flows is less than the amortized cost basis of the security. Credit-related losses are recognized as an allowance for credit losses on the balance sheet with a corresponding adjustment to earnings. Unrealized gains and losses that are unrelated to credit deterioration are reported in other comprehensive income (loss). Purchase premiums and discounts are recognized as interest income using the interest method over the terms of the securities. Realized gains and losses and declines in fair value for these investments deemed to be expected credit losses are reflected in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) using the specific-identification method.

3. Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period.

The net loss per share for the three and nine months ended September 30, 2023 reflects the issuance of 15,509,282 shares of common stock sold in our underwritten public offering in September 2022, including the subsequent partial exercise of the underwriters’ over-allotment option in October 2022. The increase in the number of shares outstanding impacts the comparability of our net loss per share for each period.

The common stock issuable upon the conversion or exercise of the following dilutive securities has been excluded from the diluted net loss per share calculation because their effect would have been anti-dilutive. Diluted net loss per share, therefore, is the same as basic net loss per share for the periods presented.


	September 30,
	2023	2022
	(unaudited)
Warrants to purchase common stock	6,893,321	8,838,694
Stock options and restricted stock units outstanding	8,441,929	7,327,631
Total	15,335,250	16,166,325

4. Cash Equivalents and Investments

The amortized cost and fair value of our cash equivalents and investments are as follows (in thousands):


	September 30, 2023
	(unaudited)
Assets:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Money market funds	$	16,670	$	—	$	—	$	16,670
U.S. treasury bills	97,168		1		(193)		96,976
U.S. agency securities	35,168		—		(215)		34,953

Corporate debt securities and commercial paper	76,100		—		(55)		76,045
Total	$	225,106	$	1	$	(463)	$	224,644

Classified as:
Cash equivalents							$	16,670
Short-term investments							174,472
Long-term investments							33,502
Total							$	224,644


	December 31, 2022
Assets:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Money market funds	$	11,004	$	—	$	—	$	11,004
U.S. treasury bills	113,964		5		(721)		113,248
U.S. agency securities	10,921		5		(11)		10,915
Non-U.S. government securities	6,060		—		(22)		6,038
Corporate debt securities and commercial paper	129,940		4		(399)		129,545
Total	$	271,889	$	14	$	(1,153)	$	270,750

Classified as:
Cash equivalents							$	11,004
Short-term investments							224,265
Long-term investments							35,481
Total							$	270,750

All investments held as of September 30, 2023 and December 31, 2022 were classified as available-for-sale debt securities and consist of highly liquid funds with high credit ratings that, on their date of purchase, had a contractual maturity of two years or less. Realized gains on investments were zero and $33,000 for the three and nine months ended September 30, 2023, respectively, and zero for the three and nine months ended September 30, 2022. There were no realized losses on investments for the three and nine months ended September 30, 2023 and 2022.

For investments in an unrealized loss position as of the respective balance sheet dates, the following table summarizes the fair value and gross unrealized losses by category, disaggregated by the length of time that individual debt securities have been in a continuous unrealized loss position (in thousands):


	September 30, 2023
	(unaudited)
	Less Than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. treasury bills	$	54,412	$	(115)	$	13,898	$	(78)	$	68,310	$	(193)
U.S. agency securities	34,953		(215)		—		—		34,953		(215)
Corporate debt securities and commercial paper	19,440		(55)		—		—		19,440		(55)
Total	$	108,805	$	(385)	$	13,898	$	(78)	$	122,703	$	(463)


	December 31, 2022
	(unaudited)
	Less Than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. treasury bills	$	82,694	$	(368)	$	17,648	$	(353)	$	100,342	$	(721)
U.S. agency securities	7,552		(11)		—		—		7,552		(11)
Non-U.S. government securities	3,012		(16)		3,026		(6)		6,038		(22)
Corporate debt securities and commercial paper	27,839		(195)		22,171		(204)		50,010		(399)
Total	$	121,097	$	(590)	$	42,845	$	(563)	$	163,942	$	(1,153)

Unrealized gains and losses on investments were primarily due to changes in interest rates. We have evaluated our investments that are in an unrealized loss position and believe it is more likely than not that we will hold these investments until maturity and will recover the amortized cost basis of these investments.

5. Fair Value Measurements

Cash and cash equivalents, restricted cash, receivables, accounts payable and accrued liabilities, which are recorded at invoiced amount or cost, approximate fair value based on the short-term nature of these financial instruments. Fair value is defined as the exchange price received for an asset or paid to transfer a liability, or an exit price, in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value, is as follows:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3: Unobservable inputs supported by little or no market activity and significant to the fair value of the assets or liabilities.

As of September 30, 2023 and December 31, 2022, cash of $2.3 million and $2.4 million, respectively, is excluded from the fair value table below. The following tables summarize our financial assets and liabilities measured at fair value on a recurring basis (in thousands):


	September 30, 2023
	(unaudited)
Assets:	Level 1		Level 2		Level 3		Total
Money market funds	$	16,670	$	—	$	—	$	16,670
U.S. treasury bills	96,976		—		—		96,976
U.S. agency securities	—		34,953		—		34,953

Corporate debt securities and commercial paper	—		76,045		—		76,045
Total	$	113,646	$	110,998	$	—	$	224,644


	December 31, 2022
Assets:	Level 1		Level 2		Level 3		Total
Money market funds	$	11,004	$	—	$	—	$	11,004
U.S. treasury bills	113,248		—		—		113,248
U.S. agency securities	—		10,915		—		10,915
Non-U.S. government securities	—		6,038		—		6,038
Corporate debt securities and commercial paper	—		129,545		—		129,545
Total	$	124,252	$	146,498	$	—	$	270,750

Our Level 2 assets consist of U.S. agency securities, non-U.S. government securities, corporate debt securities, and commercial paper. We review trading activity and pricing for our available-for-sale securities as of the measurement date. When sufficient quoted pricing for identical securities is not available, we use market pricing and other observable market inputs for similar securities obtained from various third-party data providers. These inputs either represent quoted prices for similar assets in active markets or have been derived from observable market data.

6. Additional Balance Sheet Information

Prepaid expenses and other current assets consist of the following (in thousands):


	September 30, 2023		December 31, 2022
	(unaudited)
Prepaid research and development	$	2,193	$	1,881
Prepaid insurance	573		368
Prepaid other	318		394
Other receivables	659		317
Prepaid expenses and other current assets	$	3,743	$	2,960

Accrued liabilities consist of the following (in thousands):


	September 30, 2023		December 31, 2022
	(unaudited)
Research and development services	$	12,041	$	7,657
Employee compensation	4,263		4,110
Accrued taxes	803		1,847
Legal and professional fees	593		334
Accrued other	88		55
Accrued liabilities	$	17,788	$	14,003

7. Long-term Debt

In August 2019, we entered into an Amended and Restated Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (“SVB”), pursuant to which SVB agreed to extend term loans to us with an aggregate principal amount of up to $15.0 million (the “Term Loans”). Borrowings under the Loan Agreement consisted of up to three separate tranches. The initial tranche of $5.0 million was funded in August 2019, the second tranche of $5.0 million was funded in March 2020, and we did not draw down the final tranche of $5.0 million, which expired in July 2020.

In May 2023, we voluntarily repaid in full the remaining outstanding carrying value of $1.4 million of our Term Loans, which consisted of $800,000 in principal and final payments of $625,000, plus prorated accrued interest. In connection with the debt payoff, we wrote-off the remaining unamortized debt discount. As of September 30, 2023, we had no remaining balance outstanding under our Loan Agreement with SVB.

8. Contingencies

Certain tax credits received related to our research and development expenditures, which were recorded in previous years within other income within our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), were subject to review by foreign taxing authorities. During 2022, we reached constructive agreement with the Australian Taxation Office and recorded an estimated current foreign income tax provision for the expected repayments of $1.3 million. As of September 30, 2023, accrued estimated remaining tax liabilities of $801,000, net of amounts paid in 2022, are recorded within accrued liabilities on our accompanying Condensed Consolidated Balance Sheets.

9. License and Collaboration Agreements

AbbVie Ireland Unlimited Company (“AbbVie”)

In June 2020, we entered into an option and license agreement with AbbVie (the “AbbVie Agreement”) for the development of ALPN-101 (“acazicolcept”). The AbbVie Agreement grants AbbVie the exclusive option to purchase an exclusive worldwide license to acazicolcept (the “License Option”). The License Option is exercisable by AbbVie at any time and will expire 90 days from the achievement of certain development milestones. If AbbVie exercises the License Option, AbbVie will take over the future development and commercialization. Prior to the exercise of the License Option, we will perform research and development services, including conducting our Phase 2 study in systemic lupus erythematosus, based on an agreed-upon development plan (the “Development Plan”). We will be fully responsible for all costs incurred to conduct the activities under the Development Plan, provided that, AbbVie may be responsible for increased costs under the Development Plan in connection with certain material amendments proposed by AbbVie. We will also be solely responsible, at our sole cost and expense, for manufacturing and regulatory filings for acazicolcept necessary to complete activities under the Development Plan.

In June 2020, in connection with the execution of the AbbVie Agreement, AbbVie paid us a nonrefundable upfront payment of $60.0 million. Prior to the exercise of the License Option, AbbVie has agreed to make cash payments upon our achievement of certain predefined pre-option development milestones (the “Alpine Development Milestones”) up to an aggregate amount of $75.0 million. In 2021, we received $45.0 million of the Alpine Development Milestones. If AbbVie exercises the License Option, they will pay a one-time cash payment of $75.0 million. Following the exercise of the License Option, AbbVie has also agreed to make aggregate cash payments of up to $205.0 million upon AbbVie’s achievement of certain development and commercial milestones and additional aggregate cash payments of up to $450.0 million upon AbbVie’s achievement of certain sales-based cash milestones, collectively referred to as (the “AbbVie Milestones”). Subsequent to commercialization, we are also eligible to receive high single-digit to low double-digit percentage royalties on worldwide net sales of licensed products.

For revenue recognition purposes, we determined that our contractual promises in the AbbVie Agreement are not distinct and are interdependent with our performance obligation to provide research and development services under the Development Plan. Thus, all contractual promises related to the upfront payment and Alpine’s Development Milestones were combined into a single performance obligation. We determined the Alpine Development Milestone payments are probable of significant revenue reversal as the achievement is highly dependent on factors outside our control. Therefore, these milestone payments were fully constrained and were not initially included in the transaction price. In June 2021, we re-evaluated and updated the transaction price to include the achieved portion of the Alpine Development Milestones. We will continue to re-evaluate the transaction price each reporting period and update as uncertain events are resolved or other changes in circumstances occur. We expect to recognize the remaining deferred revenue over the remaining life of the Development Plan, which began in June 2020 and ends upon the later of the exercise or expiration of the option.

The License Option and the AbbVie Milestones were determined not to be performance obligations at the inception of the contract as they did not represent material rights. If exercised, the License Option and AbbVie Milestones will be accounted for as a separate contract and will be recognized as revenue if and when triggered. Any consideration related to sales-based royalties and profit-sharing payments will be recognized when the related sales occur.

Horizon Therapeutics Ireland DAC (“Horizon”)

In December 2021, we entered into an exclusive license and collaboration agreement with Horizon (the “Horizon Agreement”) for the development and commercialization of up to four preclinical candidates generated from our unique discovery platform. The agreement includes licensing of one of our existing preclinical biologic therapeutic programs (the “Existing Program”), as well as a research partnership to jointly develop candidates for up to three additional autoimmune and inflammatory disease programs for other designated biological targets (the “Research Programs”). These candidates include previously undisclosed multi-specific fusion protein-based therapeutic candidates for autoimmune and inflammatory diseases. We will advance candidate molecules to predefined preclinical milestones while Horizon will be responsible for the respective costs and, ultimately, Horizon will assume responsibility for development and commercialization activities and costs.

In connection with the execution of the Horizon Agreement in December 2021, we entered into a stock purchase agreement under which Horizon purchased 951,980 shares of our common stock in a private placement for approximately $15.76 per share and aggregate proceeds of $15.0 million. The shares were sold at a 25% premium to the volume-weighted average share price of our common stock for a specified 30-day period prior to entering into the agreement. The fair value of the common stock issued to Horizon of $11.9 million was recorded to equity, based on the closing price of common stock on the effective date of the Horizon Agreement. For accounting purposes, the $3.1 million difference between the cash proceeds and the fair value of the common stock was treated as additional consideration attributable to the Horizon Agreement.

Under the terms of the agreements, Horizon also paid us a non-refundable upfront payment of $25.0 million in the first quarter of 2022. In addition, we are eligible to receive up to $381.0 million per program, or up to approximately $1.5 billion in total, in future success-based payments related to development, regulatory and commercial milestones. Furthermore, we are eligible to receive tiered royalties from a mid-single digit percentage to a low double-digit percentage on global net sales. In addition to proceeds from the non-refundable upfront payment, we have recognized $1.9 million from research and development support provided by us through September 30, 2023.

For revenue recognition purposes, we determined the transaction price at inception was $28.1 million, which consists of the upfront payment of $25.0 million and the $3.1 million premium on the stock purchase, and that the Existing Program and each Research Program are distinct performance obligations. We allocated revenue to each performance obligation based on its relative stand-alone selling price. The future success-based payments related to development and regulatory milestones are probable of significant revenue reversal as the achievement is highly dependent on factors outside our control. Therefore, these milestone payments are fully constrained and are not initially included in the transaction price. We will continue to re-evaluate the transaction price each reporting period and update as uncertain events are resolved or other changes in circumstances occur. Any consideration related to commercial milestones and royalties will be recognized when the related sales occur.

Adaptimmune Therapeutics plc (“Adaptimmune”)

In May 2019, we entered into a collaboration and licensing agreement with Adaptimmune to develop next-generation SPEAR T cell products (the “Adaptimmune Agreement”). Under the Adaptimmune Agreement, we are to perform certain research services and grant Adaptimmune an exclusive license to programs from our secreted immunomodulatory protein (“SIP”) and transmembrane immunomodulatory protein (“TIP”) technologies.

Through September 30, 2023, we have recorded a total of $3.0 million in license payments under the terms of the Adaptimmune Agreement consisting of a $2.0 million upfront license payment received in June 2019 and an additional $1.0 million license fee upon Adaptimmune’s selection of an additional research program in June 2022. In addition, through June 2023 we have received and recognized as revenue $2.1 million in research support payments received in connection with research services completed by us. We furthermore are eligible for additional one-time payments and downstream development and commercialization milestones of up to $288.0 million, if respective pre-specified milestones for each program are achieved. We are also eligible to receive low-single digit percentage royalties on worldwide net sales of the applicable products.

For revenue recognition purposes, licensing and research support fees paid in advance under the agreement were recorded as deferred revenue and recognized to revenue based on employee hours contributed to each performance obligation. Upon completion of final deliverables under the Adaptimmune Agreement, we recognized the remaining deferred revenue in June 2023.

Contract balances and revenue recognition

We report contract assets resulting from unconditional rights to consideration related to upfront payments, and for completed but unpaid research and development services within accounts receivable in our accompanying Condensed Consolidated Balance Sheets. Contract liabilities, representing advance consideration for licensing rights bundled with research and development services and other promises for which the underlying performance obligations have not yet been satisfied, are reported as deferred revenue in our accompanying Condensed Consolidated Balance Sheets. Contract liabilities are presented as current and noncurrent based on estimated timing of when the underlying performance obligations will be met. Respective balances are as follows (in thousands):


	September 30, 2023		December 31, 2022
	(unaudited)
Contract Assets	$	219	$	392
Contract Liabilities	$	47,904	$	74,756

We use cost-based input methods to measure progress towards completion of our performance obligations and to calculate the corresponding revenue to recognize under our contracts with customers each period. In applying the cost-based input, we use actual costs incurred relative to budgeted costs for each combined performance obligation. Actual costs consist primarily of labor related to internal personnel and third-party contracts. Revenue is recognized based on the percentage of costs incurred relative to the total estimated costs for the performance obligation. A cost-based input method of revenue recognition requires management to estimate the costs to complete our performance obligations. In making such estimates, significant judgment is required to evaluate assumptions related to cost estimates. The cumulative effect of revisions to estimated costs to complete our performance obligations will be recorded in the period in which changes are identified and amounts can be reasonably estimated. A significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods.

Collaboration revenue recognized in our accompanying Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), disaggregated by customer, is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(unaudited)
AbbVie	$	5,272	$	6,632	$	17,618	$	17,155
Horizon	4,771		1,279		9,941		9,535
Adaptimmune	—		456		464		598
Total collaboration revenue	$	10,043	$	8,367	$	28,023	$	27,288

Revenue recognized during the period that was included in the opening contract liability balance was $26.9 million and $26.3 million for the nine months ended September 30, 2023 and 2022, respectively.

10. Stockholders’ Equity

Securities Offering

In April 2023, we entered into a sales agreement (the “Sales Agreement”) with Cowen and Company, LLC (“TD Cowen”) to sell shares of our common stock, from time to time, through an “at the market” equity offering for up to $100.0 million in aggregate gross proceeds. TD Cowen will act as the sales agent and will be entitled to compensation for services of up to 3.0% of the gross sales proceeds from shares sold through TD Cowen under the Sales Agreement. The shares will be issued pursuant to our shelf registration statement on Form S-3 (File No. 333-271517), which was filed with the SEC on April 28, 2023 and declared effective on May 9, 2023. On May 11, 2023, we filed a final prospectus supplement with the SEC relating to the offer and sale of the shares pursuant to the Sales Agreement. As of September 30, 2023, we have sold 919,413 shares of common stock under the Sales Agreement for a price of $10.93 per share. The associated gross proceeds of $10.0 million were recorded net of directly related financing costs of $355,000 within additional-paid-in-capital on our accompanying Condensed Consolidated Balance Sheets.

In November 2023, we sold 8,800,000 shares of our common stock and 3,200,000 pre-funded warrants to purchase shares of our common stock in an underwritten public offering pursuant to our effective shelf registration statement on Form S-3 (File No. 333-271517), resulting in net proceeds of $140.5 million to us, after deducting underwriting discounts and commissions, and $0.5 million in estimated offering costs.

Treasury Shares

In June 2023, we retired 1,250,467 shares of treasury stock, and returned the shares of common stock to the status of authorized but unissued shares.

Warrants

During the nine months ended September 30, 2023, we issued 1,945,102 shares of common stock in connection with the exercise of certain prefunded warrants.

Equity Incentive Plans

On January 1, 2023, in connection with our 2018 Equity Incentive Plan (the “2018 Plan”) annual increase provision, a total of 1,500,000 additional shares were automatically added to the shares authorized under the 2018 Plan.

During the nine months ended September 30, 2023, we issued stock option grants totaling 2,358,347 shares with a weighted average exercise price of $8.78 per share under our 2018 Plan.

Stock-Based Compensation Expense

We use the Black-Scholes option pricing model to estimate the fair value of stock options at the grant date. The fair value of restricted stock units (“RSUs”) is equal to the closing stock price on the date of grant. We recognize the fair value of stock-based compensation as compensation expense over the requisite service period, which is the vesting period. Stock-based compensation is classified in our Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(unaudited)
Research and development	$	1,555	$	1,558	$	4,567	$	4,212
General and administrative	1,099		997		3,260		2,967
Total stock-based compensation expense	$	2,654	$	2,555	$	7,827	$	7,179

11. Income Taxes

We are subject to income taxes in the United States and Australia and our effective tax rate is calculated quarterly based upon current assumptions relating to the full year’s estimated operating results and various tax-related items. Each quarter an estimate of the annual effective tax rate is updated should we revise our forecast of earnings based upon our operating results. If there is a change in the estimated effective annual tax rate, a cumulative adjustment is made. Our effective tax rate was 0% and 4.8% for the nine months ended September 30, 2023 and 2022, respectively.

Our effective tax rate of 4.8% for the nine months ended September 30, 2022 was primarily due to the recognition of current foreign tax liabilities of $1.3 million as a result of a cumulative change to our income tax provision and a $0.1 million reduction to our deferred tax assets as a result of a change to our transfer pricing methodology for the activities of our wholly owned subsidiary, Alpine Immune Sciences Australia PTY, LTD, and $0.4 million in domestic federal income tax expense resulting from the mandatory capitalization of research and development expenses beginning with the 2022 tax year.

The differences between the effective tax rates of 0% and 4.8% and the U.S. federal statutory rate of 21% for the nine months ended September 30, 2023 and 2022, respectively, were primarily due to recognizing a full valuation allowance on deferred tax assets, and partial valuation allowance on our foreign deferred tax assets, tax expense resulting from the acceptance of a voluntary disclosure agreement with the Australian Taxation Office, and tax benefits relating to research and development tax credits.

As of September 30, 2023, we determined that, based on an evaluation of our sources of income and all available evidence, both positive and negative, including our latest forecasts and cumulative losses in recent years, it was more likely than not that none of our domestic deferred tax assets would be realized and, therefore, we continued to record a full domestic valuation allowance. As of September 30, 2023, we determined that it was more likely than not that only a portion of our foreign deferred tax assets would be realized and have recorded a partial foreign valuation allowance. We did not record significant current tax liabilities or expense during the nine months ended September 30, 2023.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following Management’s Discussion and Analysis of Financial Condition and Results of Operations in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in Part I, Item 1 of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the year ended December 31, 2022, included in our Annual Report on Form 10-K, or the “Annual Report”, filed with the SEC on March 23, 2023.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by those sections. Forward-looking statements may be identified by words such as “believe,” “may,” “will,” “seek,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “expect,” or similar expressions, or the negative or plural of these words or expressions. You should read these statements carefully because they discuss future expectations, contain projections of future results of operations or financial condition, or state other “forward-looking” information. These statements relate to our future plans, objectives, expectations, intentions and financial performance and the assumptions that underlie these statements. These forward-looking statements include, but are not limited to:

•our ability to identify, develop and commercialize additional products or product candidates;

•our estimates regarding our expenses, revenues, anticipated capital requirements and our needs for additional financing;

•our ability to obtain funding for our operations;

•the implementation of our business model and strategic plans for our business and technology;

•the timing of the commencement, progress and receipt of data from any of our preclinical and clinical trials;

•the expected results of any preclinical or clinical trial and the impact on the likelihood or timing of any regulatory approval;

•our ability to gain regulatory approval and advance povetacicept directly into a pivotal trial in IgAN in the second half of 2024;

•the scope of protection we are able to establish and maintain for intellectual property rights covering our technology and product candidates;

•the anticipated impact of pandemics or other health crises on our business, research and clinical development plans and timelines and results of operations;

•the timing or likelihood of regulatory filings and approvals;

•the therapeutic benefits, effectiveness and safety of our product candidates;

•the rate and degree of market acceptance and clinical utility of any future products;

•our ability to maintain and establish collaborations;

•our ability to achieve milestones in our current and any future collaborations;

•our expectations regarding market risk, including interest rate changes and general macroeconomic conditions;

•our expectations regarding the sufficiency of our cash, cash equivalents and marketable securities to fund operations for at least the next 12 months;

•developments relating to our competitors and our industry; and

•our expectations regarding licensing, acquisitions and strategic operations.

These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in this report in Part II, Item 1A — Risk Factors, and elsewhere in this report. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. These statements, like all statements in this report, speak only as of their date, and we undertake no obligation to update or revise any forward-looking statements in light of future developments, except as required by law.

In addition, statements that include “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

Overview

We are a clinical-stage biopharmaceutical company dedicated to discovering and developing innovative, protein-based immunotherapies to treat autoimmune and inflammatory diseases. Our approach includes a proprietary scientific platform that converts native immune system proteins into differentiated, multi-targeted therapeutics. We are seeking to create first- or best-in-class multifunctional immunotherapies via our unique protein engineering technologies to improve outcomes in patients with serious diseases.

Autoimmune and Inflammatory Diseases

Povetacicept (ALPN-303)

ALPN-303, or povetacicept, is a dual antagonist of the B cell activating factor, or BAFF, and a proliferation inducing ligand, or APRIL, cytokines, which play key roles in the pathogenesis of multiple autoimmune diseases via their roles in the activation, differentiation and/or survival of B cells, particularly antibody-secreting cells, as well as T cells and innate immune cells. Based upon an engineered transmembrane activator and CAML interactor, or TACI, domain, povetacicept has exhibited greater potency in preclinical studies versus wild-type TACI-based comparators, as well as other inhibitors of BAFF and/or APRIL alone and B cell depletion. In addition, povetacicept has been well-tolerated in preclinical models and exhibited superior pharmacokinetics and pharmacodynamics over wild-type TACI-Fc counterparts, including superior serum exposure, suppression of T-dependent antibody production, and/or serum immunoglobulins in mice and/or cynomolgus monkeys. In a randomized, placebo-controlled, first-in-human, Phase 1 study in adult healthy volunteers (NCT05034484), povetacicept was well tolerated at doses up to 960 mg, with dose-dependent pharmacokinetics and reductions in circulating immunoglobulins and antibody-secreting cells, which we believe supports the use of a once every four-week dose regimen for subsequent studies and enables a broad development plan across multiple indications. Povetacicept is in development for multiple autoimmune diseases, including IgA nephropathy, or IgAN, and other autoimmune kidney diseases, systemic lupus erythematosus, or SLE, and autoimmune cytopenias.

We are currently evaluating povetacicept in our RUBY-3 and RUBY-4 studies. RUBY-3 is a multiple ascending dose, multi-cohort, open label, phase 1b/2a study of povetacicept in autoimmune glomerulonephritis, where povetacicept is being administered subcutaneously once every four-weeks for up to 48 weeks. Key endpoints include proteinuria, estimated glomerular filtration rate, or eGFR, renal response, and disease-related autoantibodies. RUBY-4 is a multi-cohort, open label phase 1b/2a study of povetacicept in immune thrombocytopenia, autoimmune hemolytic anemia, and cold agglutinin disease, where povetacicept is being administered subcutaneously once every four-weeks for up to 48 weeks. Key endpoints include respective blood cell counts, including durable responses, as well as disease-related autoantibodies. We anticipate initial data from RUBY-4 during the first half of 2024.

Initial clinical data from RUBY-3 presented in a late-breaking poster session at the American Society of Nephrology, or ASN, Kidney Week 2023 demonstrate that low-dose povetacicept at 80 mg administered once every four weeks has been well tolerated and in IgAN demonstrates highly encouraging improvements in urine protein-creatinine ratio, or UPCR, and disease biomarkers, with early evidence suggesting potential for disease remission, as defined as UPCR < 0.5 g/g and ≥ 50% reduction in UPCR from baseline with stable renal function (≤ 25% reduction in eGFR, or estimated glomerular filtration rate, from baseline). Based on these data, we intend to engage with the Food and Drug Administration, or FDA, to seek to begin a pivotal phase 3 IgAN study in the second half of 2024. In addition, we plan to initiate RUBY-2, a phase 2 study of povetacicept in SLE. We anticipate initial data from the high dose cohort (240 mg, administered once every 4 weeks) in the first half of 2024.

Acazicolcept (ALPN-101)

ALPN-101, or acazicolcept, is a dual Inducible T cell Costimulator, or ICOS, and CD28 antagonist intended for the treatment of autoimmune and inflammatory diseases. Preclinical studies with acazicolcept have demonstrated efficacy in models of SLE, Sjögren’s syndrome, or SjS, arthritis, inflammatory bowel disease, multiple sclerosis, type 1 diabetes, uveitis, and graft versus host disease. We have evaluated acazicolcept in a Phase 1 healthy volunteer study and are currently evaluating acazicolcept in Synergy, a global, randomized, double-blind, placebo-controlled Phase 2 study of acazicolcept in adults with moderate-to-severe SLE. In June 2020, we entered into an Option and License Agreement with AbbVie Ireland Unlimited Company, or AbbVie, which grants AbbVie an exclusive option to take an exclusive license to acazicolcept. Through September 30, 2023, we have received $105.0 million in upfront and pre-option exercise development milestones as part of the Option and License Agreement with AbbVie, or the AbbVie Agreement.

In December 2021, we entered into a license and collaboration agreement, or the Horizon Agreement, with Horizon Therapeutics Ireland DAC, or Horizon (acquired by Amgen Inc. in October 2023), which grants Horizon an exclusive license for the development, manufacture and commercialization of one of our existing preclinical biologic therapeutic programs, or the Existing Program, and up to three additional autoimmune and inflammatory disease programs for other designated biological targets, or the Research Programs, generated from our libraries of proteins and molecules for research, discovery and identification of additional compounds. Under the terms of the Horizon Agreement, Horizon made an upfront payment to us of $25.0 million as well as an equity investment for which they paid $15.0 million, a 25% premium to the 30-day volume-weighted average share price as of December 9, 2021. In addition, we are eligible to receive up to $381.0 million per program, or approximately $1.5 billion in total, in future success-based payments related to development, regulatory and commercial milestones as well as tiered royalties on global net sales.

Scientific Platform

Our scientific platform has also generated immune modulatory proteins with the potential of improving engineered cell therapies such as chimeric antigen receptor T cells, T cell receptor-engineered T cells, and tumor infiltrating lymphocytes. In May 2019, we signed a collaboration and license agreement with Adaptimmune Therapeutics plc, or Adaptimmune, to develop next-generation SPEAR™ T cell products which incorporate our secreted and transmembrane immunomodulatory protein (termed SIP™ and TIP™) technology. We intend to continue to leverage our existing pipeline and platform for internal development and to actively explore and evaluate potential value-creating partnering opportunities.

Operations

Our operations to date have been limited to business planning, raising capital, developing our platform technology, identifying potential immunotherapy candidates, clinical studies, and other research and development activities. To date, we have financed operations primarily through public offerings of common stock and warrants, private placement sales of common stock, warrants and convertible preferred stock, funds received from license and research agreements, debt financing and assets acquired upon the close of our merger with Nivalis Therapeutics Inc., or Nivalis. We do not have any products approved for sale and have not generated any product sales. Since inception and through September 30, 2023, excluding amounts borrowed through debt financing, we have raised an aggregate of approximately $537.7 million to fund operations, of which $302.0 million was from the sale of common stock and warrants, $142.4 million from license and collaboration agreements, $49.2 million from the sale of convertible preferred stock, and $44.1 million in the form of cash, cash equivalents, and marketable securities acquired through the merger with Nivalis. As of September 30, 2023, we had cash, cash equivalents, restricted cash, and investments totaling $227.2 million, which excludes $140.5 million in estimated net proceeds from our underwritten public offering completed in November 2023.

Our net loss was $11.7 million and $13.3 million for the three months ended, and $38.1 million and $38.9 million for the nine months ended September 30, 2023 and 2022, respectively. We expect to continue incurring significant expenses and operating losses for at least the next several years as we:

•initiate and complete nonclinical studies and clinical trials for our product candidates, including povetacicept, a dual B cell cytokine antagonist for B cell-mediated autoimmune and inflammatory diseases, and acazicolcept, a dual ICOS/CD28 antagonist program targeting autoimmune and inflammatory disorders;

•contract to manufacture and perform additional process development for our product candidates;

•continue research and development efforts to build our pipeline beyond the current product candidates;

•maintain, expand, and protect our intellectual property portfolio;

•hire additional clinical, quality control, scientific, and management personnel; and

•add operational and financial personnel to support our product development efforts and operational capabilities applicable to operating as a public company.

We do not expect to generate product revenue unless and until we successfully complete development of, obtain marketing approval for, and commercialize our product candidates, either alone or in collaboration with third parties. We expect these activities will take a number of years and our success in these efforts is subject to significant uncertainty. Accordingly, we will need to raise additional capital prior to the regulatory approval and commercialization of any of our product candidates. Until such time, if ever, as we can generate substantial product revenues, we expect to finance our operating activities through equity or debt financings, collaborations or licenses, capital lease transactions, or other available financing transactions. However, additional capital may not be available on reasonable terms, if at all, and if we raise additional funds through the issuance of additional equity or debt securities, it could result in dilution to our existing stockholders and increased fixed payment obligations.

Financial Overview

Collaboration Revenue

We derive our collaboration revenue primarily from our collaboration and licensing agreements. We may generate revenue in the future from milestone payments received pursuant to our collaboration and licensing agreements with AbbVie, Horizon, Adaptimmune, or from payments from future license or collaboration agreements, product sales, or government contracts and grants. We expect revenue we generate, if any, will fluctuate from quarter to quarter.

AbbVie

In June 2020, we entered into the AbbVie Agreement for the development of acazicolcept. The agreement grants AbbVie the option to obtain an exclusive worldwide license to acazicolcept, or the License Option. The License Option is exercisable by AbbVie at any time and will expire 90 days from the achievement of certain development milestones. If AbbVie exercises the License Option, AbbVie will take over the future development and commercialization. Prior to the exercise of the License Option, we will perform research and development services, including conducting our Phase 2 study in SLE, based on an agreed-upon development plan, or the Development Plan. We will be fully responsible for all costs incurred to conduct the activities under the Development Plan, provided that, AbbVie may be responsible for increased costs under the Development Plan in connection with certain material amendments proposed by AbbVie. We will also be solely responsible, at our sole cost and expense, for manufacturing and regulatory filings for acazicolcept necessary to complete activities under the Development Plan.

In June 2020, in connection with the execution of the AbbVie Agreement, AbbVie paid us a nonrefundable upfront payment of $60.0 million. Prior to the exercise of the License Option, AbbVie has agreed to make cash payments upon our achievement of certain predefined pre-option development milestones, or the Alpine Development Milestones, up to an aggregate amount of $75.0 million. In the second quarter of 2021, we achieved $45.0 million of the Alpine Development Milestones. If AbbVie exercises the License Option, they will pay a one-time cash payment of $75.0 million. Following the exercise of the License Option, AbbVie has also agreed to make aggregate cash payments of up to $205.0 million upon AbbVie’s achievement of certain development and commercial milestones and additional aggregate cash payments of up to $450.0 million upon AbbVie’s achievement of certain sales-based cash milestones, collectively referred to as the AbbVie Milestones. Subsequent to commercialization, we are also eligible to receive high single-digit to low double-digit percentage royalties on worldwide net sales of licensed products.

For revenue recognition purposes, we determined that our contractual promises in the AbbVie Agreement are not distinct and are interdependent with our performance obligation to provide research and development services under the Development Plan. Thus, all contractual promises related to the upfront payment and Alpine’s Development Milestones were combined into a single performance obligation. We determined the Alpine Development Milestone payments are probable of significant revenue reversal as the achievement is highly dependent on factors outside our control. Therefore, these milestone payments were fully constrained and were not initially included in the transaction price. In 2021, we re-evaluated and updated the transaction price to include the achieved portion of the Alpine Development Milestones. We continue to re-evaluate the transaction price each reporting period and will update it as required if uncertain events are resolved or other changes in circumstances occur.

We use a cost-based input method to measure progress toward completion of the performance obligation and to calculate the corresponding revenue to recognize each period. In applying the cost-based input, we use actual costs incurred relative to budgeted costs for the combined performance obligation. These costs consist primarily of internal personnel efforts and third-party contract costs relative to the level of patient enrollment in the study. Revenue will be recognized based on the level of costs incurred relative to the total budgeted costs for the performance obligation. A cost-based input method of revenue recognition requires management to make estimates of costs to complete our performance obligation. In making such estimates, significant judgment is required to evaluate assumptions related to cost estimates. The cumulative effect of revisions to estimated costs to complete our performance obligation will be recorded in the period in which changes are identified and amounts can be reasonably estimated. A significant change in these assumptions and estimates could have a material impact on the timing and amount of revenue recognized in future periods.

Horizon

In December 2021, we entered into the Horizon Agreement, which grants Horizon an exclusive license for the development, manufacture and commercialization of one Existing Program and up to three additional Research Programs generated from our libraries of proteins and molecules for research, discovery and identification of additional compounds.

Under the terms of the agreement, Horizon made an upfront payment to us of $25.0 million as well as an equity investment for which they paid $15.0 million, a 25% premium to the 30-day volume-weighted average share price as of December 9, 2021. In addition, we are eligible to receive up to $381.0 million per program, or approximately $1.5 billion in total, in future success-based payments related to development, regulatory and commercial milestones as well as tiered royalties on global net sales. We have completed our activities under the Existing Program and will conduct additional activities for up to three Research Programs to deliver compounds meeting agreed criteria. In addition, Horizon will pay us for the costs and expenses of conducting such activities under the deliverables plans. Horizon will then assume responsibility for development and commercialization activities and costs.

For revenue recognition purposes, we determined that the Existing Program and each Research Program are distinct performance obligations. We allocated revenue to each performance obligation based on its relative stand-alone selling price. The future success-based payments related to development and regulatory milestones are probable of significant revenue reversal as the achievement is highly dependent on factors outside our control. Therefore, these milestone payments are fully constrained and are not initially included in the transaction price. We will continue to re-evaluate the transaction price each reporting period and update as uncertain events are resolved or other changes in circumstances occur. Any consideration related to commercial milestones and royalties will be recognized when the related sales occur.

Adaptimmune

In May 2019, we entered into a collaboration and licensing agreement with Adaptimmune, or the Adaptimmune Agreement, to develop next-generation SPEAR T cell products. Under the Adaptimmune Agreement, we are to perform certain research services and grant Adaptimmune an exclusive license to programs from our SIP or TIP, technologies.

Through September 30, 2023, we have recorded a total of $3.0 million in license payments under the terms of the Adaptimmune Agreement consisting of a $2.0 million upfront license payment received in June 2019 and an additional $1.0 million license fee received upon Adaptimmune’s selection of an additional research program in June 2022. In addition, through June 2023, we have received and recognized as revenue $2.1 million in research support payments received in connection with research services completed by us. We furthermore are eligible for additional one-time payments and downstream development and commercialization milestones of up to $288.0 million, if respective pre-specified milestones for each program are achieved. We are also eligible to receive low-single digit percentage royalties on worldwide net sales of the applicable products.

Research and Development Expenses

We focus our resources on research and development activities, including the conduct of preclinical studies, product development, regulatory support, and clinical trials for our product candidates. We recognize research and development expenses as they are incurred. Our research and development expenses consist of:

•employee-related expenses, including salaries, benefits, taxes, travel, and stock-based compensation expense for personnel in research and development functions;

•expenses related to process development and production of product candidates paid to contract manufacturing organizations;

•costs associated with preclinical activities and regulatory operations, including the cost of acquiring, developing, and manufacturing research material;

•clinical trials and activities related to regulatory filings for our product candidates; and

•allocation of facilities, overhead, depreciation, and amortization of laboratory equipment and other expenses.

We expect our direct and indirect research and development expenses to increase for the foreseeable future as we continue to develop our platform and product candidates. We remain focused on using our resources to further advance povetacicept’s broad development plan. We expect the investment in this program, including a potential phase 2 study in SLE, and a potential pivotal phase 3 study in IgAN, in addition to open label basket studies in glomerulonephritis and autoimmune cytopenias, to more than offset the significant decrease in previously planned costs to support davoceticept as a result of the voluntary termination of enrollment of davoceticept clinical studies as announced by us in October 2022.

The successful development of our platform and product candidates is highly uncertain. At this time, we cannot reasonably estimate the nature, timing, or costs of the efforts necessary to finish developing any of our product candidates or the period in which material net cash, if any, from these product candidates may commence. This is due to the numerous risks and uncertainties associated with developing therapeutics, including the uncertainty of:

•the scope, rate of progress, expense, and results of clinical trials;

•the scope, rate of progress, and expense of process development and manufacturing;

•preclinical and other research activities; and

•the timing of regulatory approvals.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related costs for employees in executive, business development, finance, legal, and administrative functions. Other significant general and administrative expenses include professional fees for accounting and legal services, expenses associated with obtaining and maintaining patents and other intellectual property, and allocation of facility and overhead costs.

We expect general and administrative expenses to increase as we expand infrastructure, headcount, and continue to prosecute our patents and other intellectual property. Other increases could potentially include increased costs for insurance, costs related to the hiring of additional personnel, and increased fees for directors, outside consultants, lawyers, and accountants. We expect to incur significant costs to comply with corporate governance, internal controls, and similar requirements applicable to public companies.

Interest Income

Interest income consists of interest earned on our cash, cash equivalents, and investments.

Interest Expense

Interest expense consists of interest associated with our term loans with Silicon Valley Bank, or SVB, and the amortization of the related debt discount. In May 2023, we voluntarily repaid in full the remaining outstanding carrying value of our term loans, and wrote-off the remaining unamortized debt discount.

Income Tax Expense

Income tax expense for the 2022 period primarily relates to a cumulative change to our foreign income tax provision as a result of filing amended tax returns under a revised transfer pricing model for the activities of our wholly owned subsidiary, Alpine Immune Sciences Australia PTY LTD, and domestic federal income tax expense resulting from the mandatory capitalization of research and development expenses beginning with the 2022 tax year.

JOBS Act

We ceased to be an “emerging growth company” under the JOBS Act effective December 31, 2020. However, for so long as we are not classified as an “accelerated filer” or “large accelerated filer” pursuant to SEC rules, we will continue to be exempt from the auditor attestation requirements of Section 404(b) of Sarbanes-Oxley.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which we have prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported revenues and expenses during the reporting periods. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies are more fully described in Note 2 of the accompanying condensed consolidated financial statements and in Note 2 to the audited consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no significant or material changes in our significant accounting policies during the nine months ended September 30, 2023, as compared to those disclosed in our Annual Report.

Results of Operations

Comparison of Three Months Ended September 30, 2023 and 2022

The following table summarizes our results of operations for the three months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended September 30,
	2023		2022		$ Change		% Change
	(unaudited)
Collaboration revenue	$	10,043	$	8,367	$	1,676	20	%
Operating expenses:
Research and development	19,150		17,589		1,561		9	%
General and administrative	5,443		4,610		833		18	%
Total operating expenses	24,593		22,199		2,394		11	%
Loss from operations	(14,550)		(13,832)		(718)		5	%
Other income (expense):
Interest income	2,891		664		2,227		335	%
Interest expense	—		(105)		105		(100)	%
Other, net	(63)		—		(63)		NM


Net loss	$	(11,722)	$	(13,273)	$	1,551	(12)	%
NM: No amount in comparable period or not a meaningful comparison.

Collaboration Revenue

The following table summarizes our collaboration revenue by partner (in thousands):


	Three Months Ended September 30,
	2023		2022		$ Change		% Change
	(unaudited)
AbbVie	$	5,272	$	6,632	$	(1,360)	(21)	%
Horizon	4,771		1,279		3,492		273	%
Adaptimmune	—		456		(456)		(100)	%
Total collaboration revenue	$	10,043	$	8,367	$	1,676	20	%

The $1.7 million, or 20%, increase in collaboration revenue relates primarily to our Horizon Agreement. Revenue recognized under the Horizon Agreement increased by $3.5 million, largely as the result of our two ongoing Research Programs nearing completion during the 2023 period, whereas the lower revenue during the 2022 period resulted from services rendered in connection with only the first Research Program. AbbVie revenue decreased by $1.4 million primarily due to lower contributed employee hours. Adaptimmune revenue decreased as all services related to the additional research program selected by Adaptimmune in June 2022 were completed by June 2023.

Research and Development Expenses

Our direct research and development expenses consist primarily of expenses incurred pursuant to agreements with third-party manufacturing organizations for our product candidates, contract research organizations, or CROs, clinical trial sites, collaborators, and consultants. Other direct costs included direct research and development costs incurred before a selected product candidate begins clinical trials.

We use our employee and infrastructure resources across multiple research and development programs that we are advancing in parallel, and therefore do not allocate salaries, stock-based compensation, employee benefit expenses or other indirect costs related to our research and development to specific product candidates. These expenses are included in indirect research and development expense by type in the table below.

Our research and development expenses are summarized as follows (in thousands):


	Three Months Ended September 30,
	2023		2022		$ Change		% Change
	(unaudited)
Direct research and development expense by program:
Acazicolcept	$	2,737	$	2,711	$	26	1	%
Davoceticept	(374)		2,354		(2,728)		(116)	%
Povetacicept	6,046		2,665		3,381		127	%
Other	454		299		155		52	%
Total direct research and development expense	8,863		8,029		834		10	%
Indirect research and development expense by type:
Personnel-related costs	8,525		8,011		514		6	%
Research and development supplies and services	763		655		108		16	%
Allocated facility, equipment and other expenses	999		894		105		12	%
Total indirect research and development expense	10,287		9,560		727		8	%
Total research and development expense	$	19,150	$	17,589	$	1,561	9	%

Total research and development expenses increased by $1.6 million, or 9%, for the three months ended September 30, 2023 as compared to the same period in 2022.

Direct research and development expenses increased by $0.8 million, or 10%, for the three months ended September 30, 2023 as compared to the same period in 2022. Within direct program expenses, povetacicept costs increased by $3.4 million related to process development, manufacturing and higher clinical trial costs. This increase was partially offset by a $2.7 million decrease in davoceticept costs due to the voluntary termination of enrollment of our davoceticept clinical studies in October 2022, which includes favorable supplier contract adjustments recognized upon contract termination and vendor billing reconciliations in 2023. Acazicolcept costs remained consistent as the study continues patient enrollment.

Indirect research and development expenses increased by $0.7 million, or 8%, which primarily relates to higher personnel-related expenses.

General and Administrative Expenses

The $0.8 million, or 18%, increase in general and administrative expenses was primarily attributable to a $0.6 million increase in personnel-related expenses, which includes $0.1 million in higher non-cash stock-based compensation expense, and $0.2 million in legal and professional services.

Interest Income

The $2.2 million increase in interest income was primarily attributable to rising yields on cash equivalents and investments, and a higher average investments balance during 2023.

Interest Expense

The $0.1 million decrease in interest expense was due to the voluntary early payoff of our term loans with SVB, which occurred in May 2023.

Comparison of Nine Months Ended September 30, 2023 and 2022

The following table summarizes our results of operations for the nine months ended September 30, 2023 and 2022 (in thousands):


	Nine Months Ended September 30,				$ Change		% Change
	2023		2022
	(unaudited)
Collaboration revenue	$	28,023	$	27,288	$	735	3	%
Operating expenses:
Research and development	57,972		51,487		6,485		13	%
General and administrative	15,848		13,579		2,269		17	%
Total operating expenses	73,820		65,066		8,754		13	%
Loss from operations	(45,797)		(37,778)		(8,019)		21	%
Other income (expense):
Interest income	7,837		1,123		6,714		598	%
Interest expense	(98)		(389)		291		(75)	%
Other, net	(86)		(72)		(14)		19	%
Loss before taxes	(38,144)		(37,116)		(1,028)		3	%
Income tax expense	—		(1,782)		1,782		(100)	%
Net loss	$	(38,144)	$	(38,898)	$	754	(2)	%

Collaboration Revenue

The following table summarizes our collaboration revenue by partner (in thousands):


	Nine Months Ended September 30,
	2023		2022		$ Change		% Change
	(unaudited)
AbbVie	$	17,618	$	17,155	$	463	3	%
Horizon	9,941		9,535		406		4	%
Adaptimmune	464		598		(134)		(22)	%
Total collaboration revenue	$	28,023	$	27,288	$	735	3	%

The $0.7 million, or 3%, increase in collaboration revenue relates to our AbbVie and Horizon Agreements, partially offset by lower revenue recognized under our Adaptimmune Agreement. AbbVie revenue increased by $0.5 million as the related clinical trial continues patient enrollment. Horizon revenue for the nine months ended September 30, 2023 relates to services rendered in connection with our two ongoing Research Programs, whereas the lower revenue in the 2022 period was primarily the result of the completion of the Existing Program, followed by the commencement of the first additional Research Program. Adaptimmune revenue decreased by $0.1 million as all services related to the additional research program selected by Adaptimmune in June 2022 were completed by June of 2023.

Research and Development Expenses

Our research and development expenses are summarized as follows (in thousands):


	Nine Months Ended September 30,
	2023		2022		$ Change		% Change
	(unaudited)
Direct research and development expense by program:
Acazicolcept	$	10,928	$	8,117	$	2,811	35	%
Davoceticept	1,585		8,435		(6,850)		(81)	%
Povetacicept	13,666		8,931		4,735		53	%
Other	828		642		186		29	%
Total direct research and development expense	27,007		26,125		882		3	%
Indirect research and development expense by type:
Personnel-related costs	25,920		20,719		5,201		25	%
Research and development supplies and services	2,382		2,105		277		13	%
Allocated facility, equipment and other expenses	2,663		2,538		125		5	%
Total indirect research and development expense	30,965		25,362		5,603		22	%
Total research and development expense	$	57,972	$	51,487	$	6,485	13	%

Total research and development expenses increased by $6.5 million, or 13%, for the nine months ended September 30, 2023 primarily due to higher indirect expenses.

Direct research and development expenses increased by $0.9 million, or 3%, for the nine months ended September 30, 2023 as compared to the same period in 2022. Within direct program expenses, povetacicept costs increased by $4.7 million related to process development, manufacturing and higher clinical trial costs. Additionally, acazicolcept costs increased by $2.8 million primarily related to process development and manufacturing costs. These increases were substantially offset by a $6.9 million decrease in davoceticept costs resulting from the termination and close out of our NEON-1 and NEON-2 clinical studies.

Indirect research and development expenses increased by $5.6 million, or 22%, which is largely due to personnel-related expenses. The rise in personnel costs, which includes an increase of $0.4 million in non-cash stock-based compensation expense, was primarily due to increased headcount to support increased clinical trial activities.

General and Administrative Expenses

The $2.3 million, or 17%, increase in general and administrative expenses was primarily attributable to increases of $1.5 million in personnel-related expenses, which includes $0.3 million in higher non-cash stock-based compensation expense, and $0.8 million in legal and professional services.

Interest Income

The $6.7 million increase in interest income was primarily attributable to rising yields on cash equivalents and investments and a higher average invested balance during 2023.

Interest Expense

The $0.3 million decrease in interest expense was due to a lower average outstanding principal balances on our term loans with SVB, which we voluntarily terminated and paid off in May 2023.

Income Tax Expense

The $1.8 million income tax expense for the nine months ended September 30, 2022 relates to a $1.3 million cumulative change to our foreign income tax provision and a $0.1 million reduction to our deferred tax assets as a result of a change to our transfer pricing methodology for our wholly owned subsidiary, Alpine Immune Sciences Australia PTY LTD, and $0.4 million in domestic federal income tax expense resulting from the mandatory capitalization of research and development expenses beginning with the 2022 tax year.

Liquidity and Capital Resources

Sources of Liquidity

To date, we have financed our operations primarily through the sale of equity securities, payments received under our collaboration agreements, debt, and funds acquired upon the close of our merger with Nivalis. As of September 30, 2023, we had cash, cash equivalents, restricted cash, and investments totaling $227.2 million. Except for any obligations of our collaborators to make milestone payments under our agreements with them, we do not have any committed external sources of capital. Until such time as we can generate substantial product revenue, if ever, we expect to finance our cash needs through a combination of collaboration agreements and equity or debt financings.

Equity Financing Agreements

In April 2023, we entered into a sales agreement, or the Sales Agreement, with Cowen and Company, LLC, or TD Cowen, to sell shares of our common stock through an “at the market” equity offering for aggregate sales proceeds of up to $100.0 million in gross cash proceeds. TD Cowen will act as the sales agent and will be entitled to compensation for services of up to 3.0% of the gross sales price per share of all shares sold through TD Cowen under the Sales Agreement. The shares will be issued pursuant to our shelf registration statement on Form S-3 (File No. 333-271517), which was filed with the Securities and Exchange Commission, or the SEC, on April 28, 2023 and declared effective on May 9, 2023. On May 11, 2023, we filed a final prospectus supplement with the SEC relating to the offer and sale of the shares pursuant to the Sales Agreement. As of September 30, 2023, we have sold 919,413 shares of common stock under the Sales Agreement for a price of $10.93 per share and received $10.0 million in gross proceeds. Financing costs of $355,000 incurred in connection with this equity offering were netted against the gross proceeds within additional-paid-in-capital on our accompanying Condensed Consolidated Balance Sheets.

In September 2022, we entered into an underwriting agreement, the Underwriting Agreement, with Morgan Stanley & Co. LLC, SVB Securities LLC and Cowen and Company, LLC, acting as representatives of the several underwriters named therein, or, collectively, the Underwriters, pursuant to which we sold 15,509,282 shares of our common stock, or the Firm Shares, in an underwritten public offering, including the subsequent partial exercise of the underwriters’ over-allotment option in October 2022, pursuant to our effective shelf registration statement on Form S-3 (File No. 333-256107). The net proceeds of

the public offering were approximately $106.7 million, after deducting underwriting discounts, commissions and offering expenses.

Debt Financing Agreements

In August 2019, we entered into an Amended and Restated Loan and Security Agreement, or the Loan Agreement, with SVB pursuant to which SVB agreed to extend term loans to us with an aggregate principal amount of up to $15.0 million, or the Term Loans. Borrowings under the Loan Agreement consisted of up to three separate tranches. The initial tranche of $5.0 million was funded in August 2019; the second tranche of $5.0 million was funded in March 2020; and we did not draw down the final tranche of $5.0 million, which expired in July 2020.

In May 2023, we voluntarily repaid in full the remaining outstanding carrying value of $1.4 million under our Term Loans, which consisted of $0.8 million in principal and final payments of $0.6 million, plus prorated accrued interest. As of September 30, 2023, we had no remaining balance outstanding under our Loan Agreement with SVB.

Cash Flows

The following is a summary of our cash flows (in thousands):


	Nine Months Ended September 30,
	2023		2022
	(unaudited)
Net cash used in operating activities	$	(60,041)	$	(26,968)
Net cash provided by (used in) investing activities	57,143		(5,449)
Net cash provided by financing activities	8,512		91,146

Net Cash Used in Operating Activities:

Net cash used in operating activities was $60.0 million during the nine months ended September 30, 2023, and consisted of our net loss of $38.1 million, and a net change of $24.7 million in our operating assets and liabilities. This was partially offset by $2.8 million in net non-cash adjustments, which primarily related to stock-based compensation, amortization of premiums and discounts on our investments, and depreciation.

Net cash used in operating activities was $27.0 million during the nine months ended September 30, 2022, and consisted of our net loss of $38.9 million. The net loss from operations was partially offset by a favorable net change of $3.3 million in our operating assets and liabilities, which was primarily due to the receipt of a $25.0 million upfront payment from Horizon, and $8.6 million in net non-cash adjustments, which primarily related to stock-based compensation, amortization of premiums and discounts on our investments, and depreciation.

Net Cash Provided by (Used in) Investing Activities:

Cash flows from investing activities primarily reflect cash used to purchase investments and proceeds from the maturities and sales of investments, thus causing a shift between our cash and cash equivalents and investment balances. We manage our cash usage with respect to our total cash, cash equivalents and investments.

Net cash provided by investing activities was $57.1 million during the nine months ended September 30, 2023, compared to $5.4 million cash used in investing activities during the nine months ended September 30, 2022. Net investing cash flows for both periods consisted primarily of the net impact from purchases and maturities of investments, and purchases of property and equipment, primarily lab equipment to support our research and development efforts.

Net Cash Provided by Financing Activities:

Net cash provided by financing activities was $8.5 million for the nine months ended September 30, 2023 and consisted primarily of the net proceeds of $9.7 million received from sale of common stock under our Sales Agreement with TD Cowen and $2.2 million in proceeds from exercises of stock options. This was partially offset by $3.4 million in cash used in the repayment of all outstanding principal and final fees on our Term Loans.

Net cash provided by financing activities was $91.1 million for the nine months ended September 30, 2022 and consisted primarily of cash proceeds of $94.0 million, net of underwriting fees and commissions, from the sale of 13,606,000 shares of our common stock in an underwritten public offering pursuant to our effective shelf registration statement on Form S-3 (File No. 333-256107), and $0.7 million in proceeds from exercises of stock options. These increases were partially offset by $3.6 million in principal payments on our debt.

Funding Requirements

We have incurred operating losses since inception. We expect to continue to incur significant expenses and operating losses for the foreseeable future as we continue our research and preclinical and clinical development of our product candidates; expand the scope of our current studies for our product candidates; initiate additional preclinical, clinical or other studies for our product candidates, including under any collaboration agreements; change or add additional manufacturers or suppliers; seek regulatory and marketing approvals for any of our product candidates that successfully complete clinical studies; seek to identify, evaluate and validate additional product candidates; acquire or in-license other product candidates and technologies; maintain, protect and expand our intellectual property portfolio; attract and retain skilled personnel; and experience any delays or encounter issues with any of the above. Additionally, we have ongoing obligations with respect to our operating lease and certain contingencies, as described below.

Until such time as we can generate substantial product revenue, if ever, we expect to finance our cash needs through a combination of equity or debt financings and collaboration agreements. To the extent that we raise additional capital through the future sale of equity or debt, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing common stockholders. If we raise additional funds through collaboration agreements in the future, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Our future capital requirements are difficult to forecast and will depend on many factors, including:

•the number and characteristics of the future product candidates we pursue either from our internal research efforts or through acquiring or in-licensing other product candidates or technologies;

•the scope, progress, results and costs of independently researching and developing any of our future product candidates, including conducting preclinical research and clinical trials;

•whether our existing collaborations generate substantial milestone payments and, ultimately, royalties on future approved products for us;

•the timing of, and the costs involved in, obtaining regulatory approvals for any future product candidates we develop independently;

•the cost of future commercialization activities, if any;

•the cost of manufacturing our future product candidates and products, if any;

•our ability to maintain our existing collaborations and to establish new collaborations, licensing or other arrangements and the financial terms of such arrangements;

•the costs of preparing, filing, prosecuting, maintaining, defending and enforcing patents, including litigation costs and the outcome of such litigation; and

•the timing, receipt and amount of sales of, or royalties on, our current or future collaborators’ product candidates, and our future products, if any.

We have considered that our long-term operations anticipate continuing net losses and the need for potential equity or debt financing. We have also considered that new collaborations or selectively partnering our technology or programs may provide other sources of capital. However, there can be no assurances that additional funding or other sources of capital will be available on terms acceptable to us, or at all. Based on our current operating plan, we believe our available cash and cash equivalents and investments, will be sufficient to fund our planned level of operations for at least the next 12 months. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we expect. Additionally, the process of testing drug candidates in preclinical and clinical studies is costly, and the timing of progress in these studies remains uncertain. Further, inflation may affect our use of capital resources by increasing our cost of labor and clinical trial expenses. Our long-term funding requirements will consist of operational, capital, and manufacturing expenditures, including those contractual commitments described above. Because of the inherent risks and uncertainties associated with the

development and commercialization of our product candidates, we are unable to estimate the amounts of capital outflows and operating expenditures associated with our long-term anticipated preclinical studies and clinical trials.

Operating Lease

In March 2019, we entered into a lease with ARE-Seattle No. 28, LLC, or the Landlord, for 27,164 square feet of office and laboratory space located at 188 East Blaine Street, Seattle, Washington. The term of the lease is 10.8 years with one option to extend the term by 5 years. The lease term commenced in June 2019. The “Rent Commencement Date” began in March 2020, nine months after the commencement date. We were not required to pay base rent from the Rent Commencement Date through November 2020, the last day of the ninth month following the Rent Commencement Date. The annual base rent under the lease is $1.7 million for the first year and will increase by 3.0% each year thereafter. We received a tenant improvement allowance of $5.4 million, which is included in our base rent, and a maximum additional tenant improvement allowance of $1.8 million, which resulted in additional rent amortized over the term of the lease at an annual rate of 8.0%. The lease also requires us to pay additional amounts for operating and maintenance expenses. In March 2019, in connection with the lease, we provided a $254,000 letter of credit as a security deposit, which is recorded as restricted cash in our accompanying Condensed Consolidated Balance Sheets.

Contingencies

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As a “smaller reporting company,” as defined by Rule 12b-2 of the Exchange Act, and pursuant to Item 305 of Regulation S-K, we are not required to provide quantitative and qualitative disclosures about market risk.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act), as of the end of the period covered by this report. Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective, in design and operation, at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated any changes in our internal control over financial reporting during the period ended September 30, 2023, and has concluded that there were no changes that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitation on the Effectiveness of Internal Control

The effectiveness of any system of internal control over financial reporting, including ours, is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, including ours, no matter how well designed and operated, can only provide reasonable, not absolute assurances. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.

PART II: OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not presently a party to any legal proceedings that, in the opinion of our management, would reasonably be expected to have a material adverse effect on our business, financial condition, operating results or cash flows if determined adversely to us. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

Item 1A. Risk Factors.

You should carefully consider the following risk factors, in addition to the other information contained in this Quarterly Report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Part I, Item 2, and our condensed consolidated financial statements and related notes. If any of the events described in the following risk factors and the risks described elsewhere in this report occurs, our business, operating results and financial condition could be seriously harmed. Our Risk Factors are not guarantees that no such conditions exist as of the date of this report and should not be interpreted as an affirmative statement that such risks or conditions have not materialized, in whole or in part. This report on Form 10-Q also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as a result of factors that are described below and elsewhere in this report.

Risks Related to Our Pipeline and Product Development

Our approach to the discovery and development of innovative therapeutic treatments based on our technology is unproven and may not result in marketable products.

We plan to develop novel protein-based immunotherapies in part via our proprietary directed evolution platform for the treatment of autoimmune and inflammatory diseases. The potential to create therapies capable of working within and/or modulating an immune synapse, forcing a synapse to occur, or preventing a synapse from occurring is an important, novel attribute of the majority of our approaches. However, the scientific research forming the basis of our efforts to develop therapeutic candidates based on our platform is relatively new. Further, the scientific evidence to support the feasibility of developing therapeutic treatments based on our platform is both preliminary and limited.

Relatively few therapeutic candidates based on immunoglobulin superfamily, or IgSF, domains, or tumor necrosis factor receptor super family, or TNFRSF, domains, have been tested in humans. We may discover the therapeutic candidates developed using our scientific platform do not possess certain properties required for the therapeutic candidate to be effective. We currently have only limited data to suggest we can introduce these necessary therapeutic properties into variant Ig domain, or vIgD or variant TNF(R) domain, or vTD, based therapeutic candidates. In addition, vIgDs or vTDs may demonstrate different chemical and pharmacological properties in human subjects or patients than they do in laboratory studies. Even if our programs have successful results in animal studies, they may not demonstrate the same chemical and pharmacological properties in humans and may interact with human biological systems in unforeseen, ineffective, or harmful ways. While we continue to evaluate our vIgDs and vTDs preclinically and clinically, the risk profile in humans is still being fully assessed. Undesirable side effects that may be caused by our therapeutic candidates could cause us or regulatory authorities to interrupt, delay or halt clinical trials and could result in a more restrictive label or the delay or denial of regulatory approval by the Food and Drug Administration, or the FDA, or other comparable foreign authorities. Such side effects could also affect patient recruitment or the ability of enrolled patients to complete clinical trials or result in potential product liability claims. For example, we voluntarily terminated enrollment in both clinical studies involving davoceticept, including the NEON-1 study of davoceticept as monotherapy and the NEON-2 study of davoceticept in combination with pembrolizumab. The decision to terminate enrollment in the davoceticept studies was made following notification of a second Grade 5 serious adverse event (death) in the NEON-2 study. Occurrences like these may harm our business, financial condition and prospects significantly. As a result, we may never succee

ALPINE IMMUNE SCIENCES, INC. [ALPN] Filings
10-Q	[2023-11-14]
10-Q	[2023-08-14]
10-Q	[2023-05-11]
10-K	[2023-03-23]
10-Q	[2022-11-14]
10-Q	[2022-08-11]
10-Q	[2022-05-12]
10-K	[2022-03-17]
10-Q	[2021-11-10]
10-Q	[2021-08-10]
10-Q	[2021-05-13]
10-K	[2021-03-18]
10-Q	[2020-11-12]
10-Q	[2020-08-11]
S-1	[2020-08-11]
10-Q	[2020-05-14]
10-K	[2020-03-30]
10-Q	[2019-11-14]
10-Q	[2019-08-13]
10-Q	[2019-05-09]
10-K	[2019-03-18]
S-1	[2019-03-18]
10-Q	[2018-11-08]
10-Q	[2018-08-09]
10-Q	[2018-05-14]
10-K	[2018-03-28]
10-Q	[2017-11-14]
10-Q	[2017-07-21]
10-Q	[2017-05-02]
10-K	[2017-02-13]
10-Q	[2016-11-07]
10-Q	[2016-08-02]
10-Q	[2016-05-03]
10-K	[2016-03-08]
10-Q	[2015-11-03]
10-Q	[2015-08-04]
S-1	[2015-05-13]