10-Q 1 alxo-20240331.htm 10-Q 10-Q
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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 March 31, 2024

OR

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 001-39386

ALX ONCOLOGY HOLDINGS INC.

(Exact name of Registrant as specified in its Charter)

 

Delaware

85-0642577

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

323 Allerton Avenue

South San Francisco, California

94080

(Address of principal executive offices)

(Zip Code)

650-466-7125

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

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

 

ALXO

 

The Nasdaq Global Select Market

 

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. YesNo

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). YesNo

As of May 2, 2024, the registrant had 52,100,107 shares of common stock outstanding, $0.001 par value per share.

 

 


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial position, business strategy, product candidates, planned preclinical studies and clinical trials, results of clinical trials, research and development costs, regulatory approvals, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that are in some cases beyond our control and may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report include, but are not limited to, statements about:

 

our financial performance;
the sufficiency of our existing cash to fund our future operating expenses and capital expenditure requirements;
the accuracy of our estimates regarding expenses, future revenue, capital requirements, and needs for additional financing;
our plans relating to commercializing our product candidates, if approved, including the geographic areas of focus and our ability to grow a sales team;
the implementation of our strategic plans for our business and product candidates;
our ability to obtain and maintain regulatory approval of our product candidates and the timing or likelihood of regulatory filings and approvals, including our expectation to seek special designations, such as orphan drug designation, for our product candidates for various diseases;
our reliance on third parties to conduct preclinical research activities, and for the manufacture of our product candidates;
the beneficial characteristics, mechanisms of action, safety profile, efficacy and therapeutic effects of our product candidates;
the progress and focus of our current and future clinical trials, and the reporting of data from those trials;
our ability to advance product candidates into and successfully complete clinical trials;
the ability of our clinical trials, including collaborations and investigator sponsored trials, to demonstrate the safety and efficacy of our product candidates, and other positive results;
the success of competing therapies that are or may become available;
developments relating to our competitors and our industry, including competing product candidates and therapies;
our plans relating to the further development and manufacturing of our product candidates, including additional indications that we may pursue;
existing regulations and regulatory developments in the United States and other jurisdictions;
our potential and ability to successfully manufacture and supply our product candidates for clinical trials and for commercial use, if approved;
our continued reliance on third parties to conduct clinical trials of our product candidates, and for the manufacture of our product candidates;
our plans and ability to obtain or protect intellectual property rights, including extensions of existing patent terms where available;
the scope of protection we are able to establish and maintain for intellectual property rights, including our technology platform and product candidates;
our ability to retain the continued service of our key personnel, the impacts of any executive officer changes, and to identify, hire, and then retain additional qualified personnel;
the impact of the COVID-19 pandemic, rising interest rates, bank failures or instability in the financial services sector, or geopolitical risks on our business;

 


 

our plans for and prospects of our acquisitions and other business development activities, and our ability to successfully capitalize on these opportunities;
changes in our financial and internal controls; and
our anticipated use of our existing cash and cash equivalents, short-term and long-term investments, and the funds available from our term loan.

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

In addition, statements that “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 Quarterly 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 you are cautioned not to unduly rely upon these statements.

 


 

Table of Contents

 

Page

PART I

FINANCIAL INFORMATION

Item 1

Financial Statements (Unaudited)

5

 

Condensed Consolidated Balance Sheets

5

 

Condensed Consolidated Statements of Operations

6

 

Condensed Consolidated Statements of Comprehensive Loss

7

 

Condensed Consolidated Statements of Stockholders’ Equity

8

 

Condensed Consolidated Statements of Cash Flows

9

 

Notes to Condensed Consolidated Financial Statements

10

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3

Quantitative and Qualitative Disclosures about Market Risk

29

Item 4

Controls and Procedures

30

 

PART II

OTHER INFORMATION

 

Item 1

Legal Proceedings

31

Item 1A

Risk Factors

31

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

78

Item 3

Defaults Upon Senior Securities

78

Item 4

Mine Safety Disclosures

78

Item 5

Other Information

78

Item 6

Exhibits

79

 

 

SIGNATURES

80

 

 

 


 

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

ALX ONCOLOGY HOLDINGS INC.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share amounts)

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

14,041

 

 

$

22,406

 

Short-term investments

 

 

143,396

 

 

 

160,330

 

Prepaid expenses and other current assets

 

 

10,427

 

 

 

5,923

 

Total current assets

 

 

167,864

 

 

 

188,659

 

Property and equipment, net

 

 

3,441

 

 

 

3,589

 

Long-term investments

 

 

27,049

 

 

 

35,411

 

Other assets

 

 

14,296

 

 

 

14,894

 

Total assets

 

$

212,650

 

 

$

242,553

 

 

 

 

 

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

6,227

 

 

$

8,591

 

Payable and accrued liabilities due to related party

 

 

375

 

 

 

543

 

Accrued expenses and other current liabilities

 

 

25,626

 

 

 

26,867

 

Total current liabilities

 

 

32,228

 

 

 

36,001

 

Term loan, non-current

 

 

9,703

 

 

 

9,639

 

Other non-current liabilities

 

 

6,524

 

 

 

7,201

 

Total liabilities

 

 

48,455

 

 

 

52,841

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Common stock, $0.001 par value; 1,000,000,000 shares authorized
     as of March 31, 2024 and December 31, 2023;
50,277,193 and
     
49,951,989 shares issued and outstanding as of March 31, 2024
     and December 31, 2023, respectively

 

 

50

 

 

 

50

 

Additional paid-in capital

 

 

685,970

 

 

 

675,678

 

Accumulated other comprehensive loss

 

 

28

 

 

 

256

 

Accumulated deficit

 

 

(521,853

)

 

 

(486,272

)

Total stockholders’ equity

 

 

164,195

 

 

 

189,712

 

Total liabilities and stockholders’ equity

 

$

212,650

 

 

$

242,553

 

See accompanying notes to these condensed consolidated financial statements (unaudited).

5


 

ALX ONCOLOGY HOLDINGS INC.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share amounts)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Operating expenses:

 

 

 

 

 

 

Research and development

 

$

31,717

 

 

$

24,763

 

General and administrative

 

 

6,045

 

 

 

7,440

 

Total operating expenses

 

 

37,762

 

 

 

32,203

 

Loss from operations

 

 

(37,762

)

 

 

(32,203

)

Interest income

 

 

2,622

 

 

 

2,311

 

Interest expense

 

 

(427

)

 

 

(387

)

Other income (expense), net

 

 

(14

)

 

 

95

 

Net loss

 

$

(35,581

)

 

$

(30,184

)

Net loss per share, basic and diluted

 

$

(0.71

)

 

$

(0.74

)

Weighted-average shares of common stock used to
    compute net loss per share, basic and diluted

 

 

50,120,758

 

 

 

40,862,513

 

See accompanying notes to these condensed consolidated financial statements (unaudited).

6


 

ALX ONCOLOGY HOLDINGS INC.

Condensed Consolidated Statements of Comprehensive Loss

(unaudited)

(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Net loss

 

$

(35,581

)

 

$

(30,184

)

Other comprehensive gain (loss), net of tax:

 

 

 

 

 

 

Unrealized (loss) gain on available-for-sale investments

 

 

(228

)

 

 

757

 

Total comprehensive loss

 

$

(35,809

)

 

$

(29,427

)

See accompanying notes to these condensed consolidated financial statements (unaudited).

7


 

ALX ONCOLOGY HOLDINGS INC.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(in thousands, except share amounts)

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance as of December 31, 2023

 

 

49,951,989

 

 

$

50

 

 

$

675,678

 

 

$

256

 

 

$

(486,272

)

 

$

189,712

 

Issuance of common stock under
   equity incentive plans

 

 

113,385

 

 

 

 

 

 

237

 

 

 

 

 

 

 

 

 

237

 

Issuance of common stock through
   ATM offering, net of commissions
   of $
0.1 million

 

 

211,819

 

 

 

 

 

 

3,024

 

 

 

 

 

 

 

 

 

3,024

 

Stock-based compensation

 

 

 

 

 

 

 

 

7,031

 

 

 

 

 

 

 

 

 

7,031

 

Unrealized loss on available-for-sale
   investments

 

 

 

 

 

 

 

 

 

 

 

(228

)

 

 

 

 

 

(228

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35,581

)

 

 

(35,581

)

Balance as of March 31, 2024

 

 

50,277,193

 

 

$

50

 

 

$

685,970

 

 

$

28

 

 

$

(521,853

)

 

$

164,195

 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Equity

 

Balance as of December 31, 2022

 

 

40,861,386

 

 

$

41

 

 

$

589,735

 

 

$

(845

)

 

$

(325,467

)

 

$

263,464

 

Issuance of common stock under
   equity incentive plans

 

 

1,663

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation

 

 

 

 

 

 

 

 

6,351

 

 

 

 

 

 

 

 

 

6,351

 

Unrealized gain on available-for-sale
   investments

 

 

 

 

 

 

 

 

 

 

 

757

 

 

 

 

 

 

757

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,184

)

 

 

(30,184

)

Balance as of March 31, 2023

 

 

40,863,049

 

 

$

41

 

 

$

596,086

 

 

$

(88

)

 

$

(355,651

)

 

$

240,388

 

See accompanying notes to these condensed consolidated financial statements (unaudited).

8


 

ALX ONCOLOGY HOLDINGS INC.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(35,581

)

 

$

(30,184

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

214

 

 

 

213

 

Non-cash lease costs

 

 

449

 

 

 

305

 

Stock-based compensation

 

 

7,031

 

 

 

6,351

 

Net accretion of discounts on investments

 

 

(1,553

)

 

 

(1,114

)

Accretion of term loan discount and issuance costs

 

 

64

 

 

 

61

 

Loss on disposal of fixed asset

 

 

10

 

 

 

 

Changes in operating assets and liabilities

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

(4,504

)

 

 

170

 

Other assets

 

 

149

 

 

 

1,177

 

Accounts payable

 

 

(2,326

)

 

 

1,767

 

Payable and accrued liabilities due to related party

 

 

(168

)

 

 

(820

)

Accrued expenses and other current liabilities

 

 

(1,079

)

 

 

(5,551

)

Other non-current liabilities

 

 

(630

)

 

 

(191

)

Net cash used in operating activities

 

 

(37,924

)

 

 

(27,816

)

Investing activities

 

 

 

 

 

 

Purchase of investments

 

 

(31,285

)

 

 

(72,204

)

Maturities of investments

 

 

57,906

 

 

 

115,189

 

Purchase of property and equipment

 

 

(148

)

 

 

(690

)

Net cash provided by investing activities

 

 

26,473

 

 

 

42,295

 

Financing activities

 

 

 

 

 

 

Proceeds from ATM offering, net of commissions

 

 

3,024

 

 

 

 

Proceeds from exercise of stock options under equity incentive plan

 

 

237

 

 

 

 

Principal payments on finance leases

 

 

(175

)

 

 

(107

)

Net cash provided by (used in) financing activities

 

 

3,086

 

 

 

(107

)

Net (decrease) increase in cash, cash equivalents and restricted cash

 

 

(8,365

)

 

 

14,372

 

Cash, cash equivalents and restricted cash at beginning of year

 

 

22,472

 

 

 

48,888

 

Cash, cash equivalents and restricted cash at end of period

 

$

14,107

 

 

$

63,260

 

 

 

 

 

 

 

 

Supplemental disclosure of non-cash investing and financing activities

 

 

 

 

 

 

Purchase of property and equipment in accounts payable and accrued expenses

 

$

1,335

 

 

$

1,711

 

 

 

 

 

 

 

 

Reconciliation of cash and cash equivalents and restricted cash:

 

 

 

 

 

 

Cash and cash equivalents

 

$

14,041

 

 

$

63,194

 

Restricted cash (included in other assets)

 

 

66

 

 

 

66

 

Total cash and cash equivalents and restricted cash

 

$

14,107

 

 

$

63,260

 

See accompanying notes to these condensed consolidated financial statements (unaudited).

9


 

ALX ONCOLOGY HOLDINGS INC.

Notes to Condensed Consolidated Financial Statements

(unaudited)

(1) ORGANIZATION

Organization

ALX Oncology Holdings Inc., or the Company, was formed as a Delaware corporation on April 1, 2020, or Inception. The Company was formed for the purpose of completing the Company’s initial public offering of its common stock and related transactions in order to carry on the business of ALX Oncology Limited. The Company is a clinical-stage immuno-oncology company focused on helping patients fight cancer by developing therapies that block the CD47 checkpoint pathway and bridge the innate and adaptive immune system.

ALX Oncology Holdings Inc. is incorporated in Delaware. ALX Oncology Limited, incorporated in Ireland, is a wholly-owned subsidiary of ALX Oncology Holdings Inc. ALX Oncology Inc., incorporated in Delaware, is a wholly-owned subsidiary of ALX Oncology Limited. Alexo International Holdings Limited, incorporated in Malta, is a wholly-owned subsidiary of ALX Oncology Inc. All the companies, except for ALX Oncology Holdings Inc., are collectively known as the Subsidiaries.

As of March 31, 2024, the Company has devoted substantially all of its efforts to the formation and financing of the Company, as well as product development, and has not realized product revenues from its planned principal operations. The Company does not have manufacturing facilities and all manufacturing related activities are contracted out to third-party service providers.

Management expects to incur additional losses in the future to conduct product candidate research and development and to conduct pre-commercialization activities and recognizes that the Company will likely raise additional capital to fully implement its business plan. The Company intends to raise such capital through the sale of additional equity, debt financings and/or strategic alliances with third parties. However, there can be no assurance that the Company will be successful in acquiring additional funding at levels sufficient to fund its operations or on terms acceptable to the Company. If the Company is unsuccessful in its efforts to raise additional financing, the Company could be required to significantly reduce operating expenses and delay, reduce the scope of or eliminate some of its development programs or its future commercialization efforts, out-license intellectual property rights to its product candidates and sell unsecured assets, or a combination of the above, any of which may have a material adverse effect on the Company’s business, results of operations, financial condition and/or its ability to fund its scheduled obligations on a timely basis or at all. The Company believes that the existing capital resources will be sufficient to fund the projected operating requirements for at least the next twelve months.

(2) SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in the Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 7, 2024.

The condensed consolidated balance sheet as of March 31, 2024 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by U.S. GAAP.

The accompanying condensed consolidated financial statements reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year ending December 31, 2024.

Principles of Consolidation

All intercompany balances and transactions have been eliminated in consolidation.

10


 

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. On an ongoing basis, management evaluates its estimates, including, but not limited to, those related to the estimated useful lives of long-lived assets, clinical trial accruals, fair value of assets and liabilities, fair value of investments and stock-based compensation. Management bases its estimates on historical experience and on various other market-specific and relevant assumptions that management believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Significant Accounting Policies

There have been no new or material changes to the significant accounting policies discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Recent Accounting Pronouncements

None.

(3) FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of the Company’s financial assets and liabilities are determined in accordance with the fair value hierarchy established in ASC 820, Fair Value Measurements and Disclosures.

The following table presents the Company’s investments, which consist of cash equivalents and investments classified as available-for-sale investments, that are measured at fair value on a recurring basis by level within the fair value hierarchy as of March 31, 2024 and December 31, 2023 (in thousands):

 

 

March 31, 2024

 

 

 

Fair Value
Hierarchy
Level

 

Amortized Cost

 

 

Unrealized Gains

 

 

Unrealized Losses

 

 

Fair Value

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

Level 1

 

$

11,640

 

 

$

 

 

$

 

 

$

11,640

 

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

Level 1

 

 

74,583

 

 

 

24

 

 

 

(15

)

 

 

74,592

 

U.S. government agency securities

 

Level 2

 

 

14,184

 

 

 

11

 

 

 

(21

)

 

 

14,174

 

Corporate debt securities

 

Level 2

 

 

27,938

 

 

 

15

 

 

 

(20

)

 

 

27,933

 

Commercial paper

 

Level 2

 

 

26,593

 

 

 

9

 

 

 

(6

)

 

 

26,596

 

Asset-backed securities

 

Level 2

 

 

101

 

 

 

 

 

 

 

 

 

101

 

Long-term investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

Level 1

 

 

9,815

 

 

 

 

 

 

(12

)

 

 

9,803

 

Corporate debt securities

 

Level 2

 

 

17,203

 

 

 

49

 

 

 

(6

)

 

 

17,246

 

Total

 

 

 

$

182,057

 

 

$

108

 

 

$

(80

)

 

$

182,085

 

 

 

 

December 31, 2023

 

 

 

Fair Value
Hierarchy
Level

 

Amortized Cost

 

 

Unrealized Gains

 

 

Unrealized Losses

 

 

Fair Value

 

Cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market funds

 

Level 1

 

$

15,591

 

 

$

 

 

$

 

 

$

15,591

 

Corporate debt securities

 

Level 2

 

 

4,489

 

 

 

1

 

 

 

 

 

 

4,490

 

Short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

Level 1

 

 

74,790

 

 

 

80

 

 

 

(20

)

 

 

74,850

 

U.S. government agency securities

 

Level 2

 

 

28,215

 

 

 

 

 

 

(38

)

 

 

28,177

 

Corporate debt securities

 

Level 2

 

 

21,881

 

 

 

24

 

 

 

(3

)

 

 

21,902

 

Commercial paper

 

Level 2

 

 

34,967

 

 

 

22

 

 

 

(9

)

 

 

34,980

 

Asset-backed securities

 

Level 2

 

 

423

 

 

 

 

 

 

(2

)

 

 

421

 

Long-term investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury securities

 

Level 1

 

 

14,737

 

 

 

75

 

 

 

 

 

 

14,812

 

U.S. government agency securities

 

Level 2

 

 

3,009

 

 

 

31

 

 

 

 

 

 

3,040

 

Asset-backed securities

 

Level 2

 

 

17,464

 

 

 

95

 

 

 

 

 

 

17,559

 

Total

 

 

 

$

215,566

 

 

$

328

 

 

$

(72

)

 

$

215,822

 

 

11


 

The fair value of cash equivalents and available-for-sale investments by classification included in the condensed consolidated balance sheets was as follows as of March 31, 2024 and December 31, 2023 (in thousands):

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Cash equivalents

 

$

11,640

 

 

$

20,081

 

Short-term investments

 

 

143,396

 

 

 

160,330

 

Long-term investments

 

 

27,049

 

 

 

35,411

 

Total

 

$

182,085

 

 

$

215,822

 

Cash and cash equivalents in the above table excludes bank account cash of $2.4 million and $2.3 million as of March 31, 2024 and December 31, 2023, respectively.

The fair value of cash equivalents and available-for-sale investments by contractual maturity was as follows as of March 31, 2024 and December 31, 2023 (in thousands):

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Maturing in one year or less

 

$

155,036

 

 

$

180,411

 

Maturing after one year through five years

 

 

27,049

 

 

 

35,411

 

Total

 

$

182,085

 

 

$

215,822

 

The primary objective of the Company’s investment portfolio is to maintain safety of principal, prudent levels of liquidity and acceptable levels of risk. The Company’s investment policy limits investments to certain types of instruments issued by institutions with investment-grade credit ratings, and it places restrictions on maturities and concentration by asset class and issuer.

There were no transfers of financial instruments between the fair value measurement levels during the three months ended March 31, 2024 and 2023 and there were no financial instruments classified as Level 3 as of March 31, 2024 and 2023.

As of March 31, 2024 and December 31, 2023, accrued interest receivable related to the Company’s investments of $1.1 million and $1.0 million, respectively, was included in prepaid expenses and other current assets on the condensed consolidated balance sheet.

As of March 31, 2024, the unrealized losses for available-for-sale investments were non-credit related and the Company does not intend to sell the investments that were in an unrealized loss position, nor does it foresee or project that it will be required to sell those investments before recovery of their amortized costs basis, which may be maturity. As of March 31, 2024 and 2023, no allowance for credit losses for the Company’s investments was recorded. As of March 31, 2024 and December 31, 2023, securities with a fair value of $0.1 million and $5.9 million, respectively, were in a continuous net unrealized loss position for more than 12 months. As of March 31, 2024 and 2023, the Company has not recognized any impairment losses on available-for-sale investments.

(4) BALANCE SHEET COMPONENTS

Property and Equipment, Net

The following table presents the components of property and equipment, net as of March 31, 2024 and December 31, 2023 (in thousands):

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Leasehold improvements

 

$

2,513

 

 

$

2,513

 

Laboratory equipment

 

 

1,757

 

 

 

1,733

 

Computer hardware and software

 

 

452

 

 

 

414

 

Furniture and fixtures

 

 

166

 

 

 

166

 

Property and equipment, gross

 

 

4,888

 

 

 

4,826

 

Less: accumulated depreciation

 

 

(1,447

)

 

 

(1,237

)

Property and equipment, net

 

$

3,441

 

 

$

3,589

 

Depreciation was $0.2 million and $0.2 million for the three months ended March 31, 2024 and 2023, respectively.

12


 

Other Assets

The following table presents the components of other assets as of March 31, 2024 and December 31, 2023 (in thousands):

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Long-term prepaid clinical expenses

 

$

6,879

 

 

$

7,442

 

Operating lease right-of-use assets

 

 

4,647

 

 

 

4,847

 

Finance lease right-of-use assets

 

 

2,157

 

 

 

2,405

 

Long-term prepaid contract manufacturing costs

 

 

413

 

 

 

 

Other

 

 

200

 

 

 

200

 

Total other assets

 

$

14,296

 

 

$

14,894

 

Accrued Expenses and Other Current Liabilities

The following table presents the components of accrued expenses and other current liabilities as of March 31, 2024 and December 31, 2023 (in thousands):

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Accrued clinical and nonclinical study costs

 

$

11,428

 

 

$

8,873

 

Accrued contract manufacturing

 

 

9,312

 

 

 

9,543

 

Accrued compensation and related expenses

 

 

2,488

 

 

 

6,067

 

Accrued property and equipment

 

 

182

 

 

 

179

 

Other

 

 

2,216

 

 

 

2,205

 

Total accrued expenses and other current liabilities

 

$

25,626

 

 

$

26,867

 

 

(5) LEASES

The Company has non-cancelable operating leases for its offices located in the U.S. As of March 31, 2024, these leases expire on various dates between 2026 and 2030. Certain lease agreements include one or more options to renew, with renewal terms that can extend the lease up to two years after expiration. The Company has the right to exercise or forego the lease renewal options. The lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The following table presents the maturities and balance sheet information of the Company’s operating lease liabilities as of March 31, 2024 (in thousands, except lease term and discount rate):

 

 

March 31, 2024

 

 

 

Operating Leases

 

 

Finance Leases

 

2024

 

$

954

 

 

$

792

 

2025

 

 

1,305

 

 

 

1,056

 

2026

 

 

1,187

 

 

 

440

 

2027

 

 

912

 

 

 

 

2028

 

 

939

 

 

 

 

Thereafter

 

 

1,130

 

 

 

 

Total lease payments

 

 

6,427

 

 

 

2,288

 

Less: imputed interest

 

 

(1,371

)

 

 

(205

)

Total lease liabilities

 

$

5,056

 

 

$

2,083

 

 

 

 

 

 

 

 

Lease liabilities: current (i)

 

$

872

 

 

$

914

 

Lease liabilities: non-current (ii)

 

 

4,184

 

 

 

1,169

 

Total lease liabilities

 

$

5,056

 

 

$

2,083

 

 

 

 

 

 

 

 

Weighted average remaining lease term (in years)

 

 

5.2

 

 

 

2.2

 

Weighted average discount rate

 

 

8.7

%

 

 

8.5

%

(i)
Current lease liabilities are presented within accrued expenses and other current liabilities on the condensed consolidated balance sheets.
(ii)
Non-current lease liabilities are presented within other non-current liabilities on the condensed consolidated balance sheets.

13


 

The following table presents the components of lease costs for the three months ended March 31, 2024 and 2023 (in thousands):

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Operating lease cost

 

$

311

 

 

$

318

 

Variable lease cost and other, net (i)

 

 

167

 

 

 

116

 

Short-term lease cost

 

 

8

 

 

 

3

 

Finance lease cost:

 

 

 

 

 

 

Amortization of right-of-use assets

 

 

249

 

 

 

112

 

Interest

 

 

47

 

 

 

1

 

Total lease costs

 

$

782

 

 

$

550

 

(i)
The variable lease cost and other, net is comprised primarily of common area maintenance charges for the operating lease, which are dependent on usage. These costs are classified as operating lease expense due to the election to not separate lease and non-lease components. These costs were not included within the measurement of the Company’s operating lease ROU assets and operating lease liabilities.

The following table presents the supplemental cash flow disclosures for cash paid for leases for the three months ended March 31, 2024 and 2023 (in thousands):

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Cash paid for amounts included in the measurement of lease liabilities:

 

 

 

 

 

 

Operating cash flows from operating leases

 

$

313

 

 

$

310

 

Operating cash flows from finance leases

 

$

41

 

 

$

1

 

Financing cash flows from finance leases

 

$

175

 

 

$

107

 

 

(6) TERM LOAN

Oxford Finance and Silicon Valley Bank Loan

In October 2022, the Company entered into a loan and security agreement, as amended, the Loan Agreement, with Oxford Finance LLC, Oxford Finance Credit Fund II LP, and Silicon Valley Bank, or SVB, collectively the Lenders, for a secured term loan facility of up to $100.0 million. Pursuant to the Loan Agreement, the Company drew an initial loan of $10.0 million and has access to draw an additional $40.0 million through the end of June 2024. The Loan Agreement provides for an additional $50.0 million over three tranches, with $12.5 million available in each of two tranches based upon the achievement of milestones related to the development of evorpacept and one preclinical product candidate, and $25.0 million at the Lenders’ sole discretion. The proceeds of the loans may be used by the Company for working capital and to fund its general business requirements.

Additional information regarding our indebtedness is included in our notes to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on March 7, 2024.

During the three months ended March 31, 2024 and 2023, interest expense incurred in connection with the Loan Agreement was $0.3 million and $0.3 million, respectively.

As of March 31, 2024, we were in compliance with all financial reporting covenants under the Loan Agreement.

As of March 31, 2024, the future maturities under the Loan Agreement are as follows (in thousands):

 

 

 

March 31, 2024

 

2024

 

$

 

2025

 

 

435

 

2026

 

 

5,217

 

2027

 

 

4,948

 

Total future maturities

 

 

10,600

 

Less: current portion of term loan

 

 

 

Total term loan, net of current portion

 

 

10,600

 

Less: unamortized debt issuance costs

 

 

(727

)

Less: unaccreted final payment costs

 

 

(170

)

Term loan, non-current, net

 

$

9,703

 

 

14


 

(7) STOCKHOLDERS’ EQUITY

On July 21, 2020, the Company’s amended and restated certificate of incorporation became effective, authorizing 1,000,000,000 shares of common stock, $0.001 par value per share, and 100,000,000 shares of undesignated preferred stock, $0.001 par value per share. As of March 31, 2024 and December 31, 2023, the Company had 50,277,193 and 49,951,989 shares of common stock outstanding, respectively.

Common stock reserved for future issuance as of March 31, 2024 consists of the following:

 

March 31, 2024

 

Stock options issued and outstanding

 

9,870,347

 

Stock options authorized for future issuance

 

1,625,753

 

Employee Stock Purchase Plan shares authorized for future issuance

 

1,065,389

 

RSUs issued and outstanding

 

1,263,321

 

PSUs issued and outstanding

 

365,000

 

Total

 

14,189,810

 

At-the-Market Equity Offering

In December 2021, the Company entered into a sales agreement with Cantor Fitzgerald & Co. and Credit Suisse Securities (USA) LLC (Sales Agreement), under which it may offer and sell shares of the Company's common stock, having aggregate gross proceeds of up to $150.0 million, from time to time through them as the Company's sales agents in its at-the-market (ATM) equity offering program. In August 2023, the Company entered into an amendment to the Sales Agreement to include UBS Securities LLC as an additional sales agent and to remove Credit Suisse as a sales agent. As of March 31, 2024, the Company had issued approximately 211,819 shares of common stock pursuant to the Sales Agreement for net proceeds of $3.0 million. The Company may terminate this ATM program at any time, pursuant to its terms.

Pre-Funded Warrants

In October 2023, we completed an underwritten follow-on public offering (the October 2023 Offering) pursuant to our shelf registration statement, which provides for aggregate offerings of up to $450.0 million of the Company’s securities. As part of the October 2023 underwritten public offering, the Company issued pre-funded warrants to certain investors to purchase 1,250,000 shares of common stock in an underwritten public offering at a public offering price of $6.379 per pre-funded warrant. Each pre-funded warrant entitles the holder to purchase one share of common stock at an exercise price of $0.001 per share.

As of March 31, 2024 and December 31, 2023, respectively, no shares underlying the pre-funded warrants had been exercised. All of the outstanding pre-funded warrants are included in the weighted-average number of shares of common stock used to calculate basic net loss per share attributable to common stockholders (see Note 10 “Net Loss Per Share”).

 

(8) STOCK-BASED COMPENSATION

Amended and Restated 2020 Equity Incentive Plan

The Company’s Amended and Restated 2020 Equity Incentive Plan, or the 2020 Plan, serves as the successor to the Company’s 2020 Equity Incentive Plan and provides for the granting of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units and performance shares.

On January 1, 2024, the number of shares available under the 2020 Plan was increased by 1,998,080 shares.

Performance-Based Restricted Stock Units

In February 2024, the Company granted 365,000 performance-based restricted stock units, or PSUs, to certain employees under the 2020 Plan. The PSUs are subject to both performance-based and service-based vesting conditions with a fair value based on the closing price of the underlying common stock on the date of grant. Each PSU is split into two tranches with each tranche having performance goals based on the achievement of pre-determined clinical milestones that result in the shares attributable to such tranche being eligible for vesting, subject to the service-based vesting condition. The service-based vesting condition is satisfied on the one-year anniversary of the performance achievement date for each tranche and is subject to the employee’s continuous service through such vesting date. Upon vesting, each PSU will automatically convert into one share of the Company’s common stock. If the performance condition for a tranche is not met by March 31, 2025, the shares attributable to such tranche will be forfeited.

Compensation expense for awards with performance-based vesting requirements are recognized on a tranche-by-tranche basis based on the grant date fair value over the requisite service period using the accelerated attribution method if and when the performance condition is deemed to be probable of being achieved. At each reporting period, the Company will assess the probability of the performance condition being met for each tranche and, as applicable, recognize the cumulative effect of the change in estimate in the period of the change.

15


 

As of March 31, 2024, the Company determined that the achievement of the performance conditions for each tranche of PSUs was not probable. As a result, no compensation expense has been recognized for these awards as of and for the three months ended March 31, 2024.

Employee Stock Purchase Plan

Under the Company’s 2020 Employee Stock Purchase Plan, or the ESPP, eligible employees are entitled to purchase shares of common stock with accumulated payroll deductions.

Stock-based Compensation Expenses

Total stock-based compensation expense recognized in the condensed consolidated statements of operations was as follows (in thousands):

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Research and development

 

$

4,998

 

 

$

3,214

 

General and administrative

 

 

2,033

 

 

 

3,137

 

Total

 

$

7,031

 

 

$

6,351

 

 

(9) RELATED-PARTY TRANSACTIONS

The Company has several related-party agreements with Tallac Therapeutics, Inc., or Tallac, and with ScalmiBio, Inc., or ScalmiBio. The details of these agreements are described in our notes to our consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which was filed with the SEC on March 7, 2024. During the three months ended March 31, 2024, there were no material changes to these agreements.

Tallac Service Agreement

In each of the three months ended March 31, 2024 and 2023, the Company recorded a nominal amount and $0.1 million, respectively, as research and development, or R&D, costs in relation to the research and development services agreement with Tallac, or the Tallac Services Agreement.

Tallac Collaboration Agreement

During the three months ended March 31, 2024 and 2023, the Company recorded $0.4 million and $0.7 million, respectively, as R&D costs in relation to the collaboration agreement with Tallac, or the Tallac Collaboration Agreement.

As of March 31, 2024 and December 31, 2023, the Company had accrued expenses of $0.4 million and $0.5 million, respectively, related to the Tallac Collaboration Agreement, which was presented within the payable and accrued liabilities due to related party on the condensed consolidated balance sheets.

ScalmiBio Milestone Payments

The Company has agreed to pay up to $35.0 million, in aggregate, in certain milestones based on the clinical development of the acquired ScalmiBio technology and has also agreed to pay a low single digit royalty on net sales of any products developed from the ScalmiBio acquired technology for a defined term. The Company has the option to buy-out the royalty payment, prior to the first marketing approval of the developed product.

During the three months ended March 31, 2024, the Company made a $1.0 million milestone payment, as a result of selecting a development candidate, to the stockholders of ScalmiBio, including 31.7%, or $0.3 million, to the Company’s former Chief Executive Officer and current Chief Scientific Officer and President, and 63.5%, or $0.6 million, to another employee of the Company. This milestone payment was recorded as R&D costs within the condensed consolidated statements of operations.

16


 

(10) NET LOSS PER SHARE

The following table sets forth the computation of the basic and diluted net loss per share for the three months ended March 31, 2024 and 2023 (in thousands, except share and per share data):

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Numerator:

 

 

 

 

 

 

Net loss

 

$

(35,581

)

 

$

(30,184

)

Denominator:

 

 

 

 

 

 

Weighted-average shares of common stock outstanding, basic and diluted

 

 

50,120,758

 

 

 

40,862,513

 

Net loss per share, basic and diluted

 

$

(0.71

)

 

$

(0.74

)

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods presented as the inclusion of all potential common stock outstanding would have been anti-dilutive.

The following outstanding potentially dilutive securities were excluded from the computation of diluted net loss per share for the three months ended March 31, 2024 and 2023 because including them would have been anti-dilutive:

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2024

 

 

2023

 

Stock options issued and outstanding

 

 

9,870,347

 

 

 

6,511,136

 

RSUs issued and outstanding

 

 

1,263,321

 

 

 

793,088

 

PSUs issued and outstanding