SEC Filing | Aligos Therapeutics

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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, 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: 001-39617

Aligos Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	82-4724808
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Corporate Drive, 2nd Floor South San Francisco, California	94080
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (800) 466-6059

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, $0.0001 per share

ALGS

The Nasdaq Stock Market LLC
(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. 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 May 1, 2023, the registrant had 42,940,089 shares of common stock, $0.0001 par value per share, outstanding, comprised of 39,847,751 shares of voting common stock, $0.0001 par value per share and 3,092,338 shares of non-voting common stock, $0.0001 par value per share.

Special note regarding forward-looking statements

This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be 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 terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

•

the scope, progress, results and costs of developing our drug candidates or any other future drug candidates, and conducting nonclinical studies and clinical trials, including our ALG-055009, ALG‑000184, and ALG‑125755 clinical trials;

•

the scope, progress, results and costs related to the research and development of our pipeline;

•

the timing of, and costs involved in, obtaining and maintaining regulatory approval for any of our current or future drug candidates, and any related restrictions or limitations;

•

the impact of developments related to COVID-19 on our business and operations, including clinical trials, manufacturing suppliers, collaborators, use of contract research organizations and employees;

•

our expectations regarding the potential market size and size of the potential patient populations for ALG‑055009, ALG‑000184, and ALG‑125755, our other drug candidates and any future drug candidates, if approved for commercial use;

•

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

•

our commercialization, marketing and manufacturing capabilities and expectations;

•

the rate and degree of market acceptance of our drug candidates, as well as the pricing and reimbursement of our drug candidates, if approved;

•

the implementation of our business model and strategic plans for our business, drug candidates and technology, including additional indications for which we may pursue;

•

the scope of protection we are able to establish and maintain for intellectual property rights covering our drug candidates, including the projected term of patent protection;

•

any lawsuits related to our drug candidates or commenced against us, including the costs associated with our current litigation with Janssen Biopharma, LLC (Janssen);

•

estimates of our expenses, future revenue, capital requirements, our needs for additional financing and our ability to obtain additional capital;

•

developments and projections relating to our competitors and our industry, including competing therapies and procedures;

•

regulatory and legal developments in the United States and foreign countries;

•

the performance of our third-party suppliers and manufacturers;

•

our ability to attract and retain key management, scientific and medical personnel;

•

our expectations regarding the period during which we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012;

•

our expectations regarding our ability to obtain, maintain, enforce and defend our intellectual property protection for our drug candidates; and

•

other risks and uncertainties, including those listed under the caption “Risk Factors.”

These forward-looking statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate and management’s beliefs and assumptions and are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our

control. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under 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. We undertake no obligation to publicly update or revise any forward-looking statements contained herein for any reason after the date of this report to conform these statements to new information, actual results or changes in our expectations, except as required by applicable law.

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 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.

Investors and others should note that we may announce material business and financial information to our investors using our investor relations website, Securities and Exchange Commission, or SEC, filings, webcasts, press releases and conference calls. We use these mediums, including our website, to communicate with the public about our company, our business and other issues. It is possible that the information that we make available may be deemed to be material information. We therefore encourage investors and others interested in our company to review the information that we make available on our website.

Summary of material risks associated with our business

The principal risks and uncertainties affecting our business include the following:

•

We are a clinical-stage biopharmaceutical company with a limited operating history and no products approved for commercial sale. We have incurred significant losses since inception. We expect to incur losses for at least the next several years and may never achieve or maintain profitability, which, together with our limited operating history, makes it difficult to assess our future viability.

•

We have never generated revenue from product sales and may never be profitable.

•

We will require substantial additional financing to achieve our goals, which may not be available on acceptable terms, or at all. A failure to obtain this necessary capital when needed could force us to delay, limit, reduce or terminate our product development or commercialization efforts.

•

We are early in our development efforts, and our business is dependent on the successful development of our current and future drug candidates. If we are unable to advance our current or future drug candidates through clinical trials, obtain marketing approval and ultimately commercialize any drug candidates we develop, or experience significant delays in doing so, our business will be materially harmed.

•

Our current or future drug candidates may cause undesirable side effects or have other properties when used alone or in combination with other approved products or investigational new drugs that could delay or halt their clinical development, prevent their marketing approval, limit their commercial potential or result in significant negative consequences.

•

We depend on collaborations with third parties for the development of certain of our potential drug candidates, and we may depend on additional collaborations in the future for the development and commercialization of these or other potential candidates. If our collaborations are not successful, we may not be able to capitalize on the market potential of these drug candidates.

•

We intend to develop our current drug candidates, and expect to develop other future drug candidates, in combination with other therapies, which exposes us to additional risks.

•

We face significant competition, and if our competitors develop and market products that are more effective, safer or less expensive than the drug candidates we develop, our commercial opportunities will be negatively impacted.

•

If we and our collaborators are unable to obtain, maintain, protect and enforce sufficient patent and other intellectual property protection for our drug candidates and technology, our competitors could develop and commercialize products and technology similar or identical to ours, and we may not be able to compete effectively in our market or successfully commercialize any drug candidates we may develop.

•

Third parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could negatively impact the success of our business.

•

We have entered into licensing and collaboration agreements with third parties. If we fail to comply with our obligations in the agreements under which we license intellectual property rights to or from third parties, or these agreements are

terminated, or we otherwise experience disruptions to our business relationships with our licensors or licensees, our competitive position, business, financial condition, results of operations and prospects could be harmed.

•

We are highly dependent on our key personnel, and if we are not successful in attracting, motivating and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.

The summary risk factors described above should be read together with the text of the full risk factors below in the section entitled “Risk Factors” and the other information set forth in this Quarterly Report on Form 10-Q, including our consolidated financial statements and the related notes, as well as in other documents that we file with the SEC. The risks summarized above or described in full below are not the only risks that we face. Additional risks and uncertainties not precisely known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, results of operations, and future growth prospects.

iii

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements (Unaudited)	1

	Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	1

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2023 and 2022	2

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2023 and 2022	3

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2023 and 2022	5

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

Item 4.	Controls and Procedures	25

PART II.	OTHER INFORMATION	26

Item 1.	Legal Proceedings	26

Item 1A.	Risk Factors	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	81

Item 3.	Defaults Upon Senior Securities	81

Item 4.	Mine Safety Disclosures	81

Item 5.	Other Information	81

Item 6.	Exhibits	82

Signatures		83

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ALIGOS THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	March 31, 2023			December 31, 2022
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	78,671		$	81,347
Restricted cash		397			115
Short-term investments		24,845			44,480
Other current assets		5,516			7,603
Total current assets		109,429			133,545
Operating lease right-of-use assets		7,308			7,698
Property and equipment, net		4,369			4,816
Other assets		632			634
Total assets	$	121,738		$	146,693

LIABILITIES AND
STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,822		$	4,737
Accrued liabilities		15,081			16,039
Operating lease liabilities, current		3,041			3,035
Finance lease liabilities, current		108			108
Deferred revenue from customers, current		467			467
Deferred revenue from collaborations, current		6,560			8,743
Total current liabilities		28,079			33,129
Operating lease liabilities, net of current portion		8,611			9,201
Finance lease liabilities, net of current portion		205			230
Deferred revenue from customers, net of current portion		93			233
Total liabilities		36,988			42,793
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred Stock, $0.0001 par value; 10,000,000 shares authorized as of March 31, 2023 (unaudited) and December 31, 2022, respectively; no shares issued and outstanding as of March 31, 2023 (unaudited) and December 31, 2022, respectively.		-			-
Common stock, $0.0001 par value; 320,000,000 shares authorized as of March 31, 2023 (unaudited) and December 31, 2022, respectively; 42,940,089 and 42,922,980 shares issued and outstanding as of March 31, 2023 (unaudited) and December 31, 2022, respectively.		4			4
Additional paid-in capital		506,320			502,613
Accumulated deficit		(422,073	)		(399,118	)
Accumulated other comprehensive income		499			401
Total stockholders’ equity		84,750			103,900
Total liabilities and stockholders’ equity	$	121,738		$	146,693

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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except share and per share data)


	Three Months Ended March 31,
	2023			2022
Revenue from collaborations	$	2,583		$	2,571
Revenue from customers		140			-
Operating expenses:
Research and development		18,135			31,676
General and administrative		8,506			6,452
Total operating expenses		26,641			38,128
Loss from operations		(23,918	)		(35,557	)
Interest and other income (expense), net		1,002			(5	)
Loss before income tax expense		(22,916	)		(35,562	)
Income tax expense		(39	)		(53	)
Net loss		(22,955	)		(35,615	)
Other comprehensive income (loss):
Unrealized gain (loss) on available-for-sale securities		98			(248	)
Other comprehensive income (loss)		98			(248	)
Comprehensive loss	$	(22,857	)	$	(35,863	)
Net loss per share, basic and diluted	$	(0.53	)	$	(0.84	)
Weighted average shares of common stock, basic and diluted		42,910,065			42,511,559

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

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except share and per share data)


	Three Months Ended March 31, 2023
	Common Stock				Additional Paid-in		Accumulated			Accumulated Other Comprehensive		Total Stockholders’
	Shares		Amount		Capital		Deficit			Income		Equity

Balance as of December 31, 2022		42,922,980	$	4	$	502,613	$	(399,118	)	$	401	$	103,900
Issuance of common stock upon exercise of stock options		17,109		-		23		-			-		23
Issuance of common stock related to ESPP purchase		-		-		-		-			-		-
Stock-based compensation expense related to employee stock awards		-		-		3,503		-			-		3,503
Stock-based compensation expense related to employee stock purchases		-		-		161		-			-		161
Vesting of early exercised common stock options		-		-		20		-			-		20
Other comprehensive income		-		-		-		-			98		98
Net loss		-		-		-		(22,955	)		-		(22,955	)
Balance as of March 31, 2023		42,940,089	$	4	$	506,320	$	(422,073	)	$	499	$	84,750


	Three Months Ended March 31, 2022
		Common Stock				Additional Paid-in		Accumulated			Accumulated Other Comprehensive			Total Stockholders’
		Shares		Amount		Capital		Deficit			Income (Loss)			Equity

Balance as of December 31, 2021			42,690,229	$	4	$	487,347	$	(303,072	)	$	452		$	184,731
Issuance of common stock upon exercise of stock options			4,966		-		10		-			-			10
Stock-based compensation expense related to employee stock awards			-		-		3,480		-			-			3,480
Stock-based compensation expense related to employee stock purchases			-		-		444		-			-			444
Vesting of early exercised common stock options			-		-		84		-			-			84
Other comprehensive loss			-		-		-		-			(248	)		(248	)
Net loss			-		-		-		(35,615	)		-			(35,615	)
Balance as of March 31, 2022			42,695,195	$	4	$	491,365	$	(338,687	)	$	204		$	152,886

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Three Months Ended March 31,
	2023			2022
Cash flows from operating activities:
Net loss	$	(22,955	)	$	(35,615	)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion of discount on investments		(267	)		9
Amortization of right of use assets		390			307
Depreciation expense		454			676
Stock-based compensation including ESPP		3,664			3,786
Changes in operating assets and liabilities:
Other assets		2,086			3,620
Right of use assets		-			(278	)
Accounts payable		(1,915	)		740
Accrued liabilities		(937	)		(6,071	)
Operating lease liabilities		(584	)		(47	)
Other liabilities		-			1
Deferred revenue from collaborations		(2,323	)		12,438
Net cash and cash equivalents used in operating activities		(22,387	)		(20,434	)
Cash flows from investing activities:
Activities in available-for-sale investments:
Maturities of investments		20,000			-
Purchase of short-term investments		-			(59,889	)
Purchases of property and equipment		(7	)		(515	)
Net cash and cash equivalents provided by (used in) investing activities		19,993			(60,404	)
Cash flows from financing activities:
Payments on finance lease		(24	)		(31	)
Proceeds from the exercise of common stock option		23			10
Net cash and cash equivalents used in financing activities		(1	)		(21	)
Net decrease in cash, cash equivalents, and restricted cash		(2,395	)		(80,859	)
Cash, cash equivalents, and restricted cash, beginning of period		81,463			186,980
Cash, cash equivalents, and restricted cash, end of period	$	79,068		$	106,121

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Three Months Ended March 31,
	2023		2022
Reconciliation to amounts on the consolidated balance sheet:
Cash and cash equivalents	$	78,671	$	104,562
Restricted cash		397		1,559
Total cash, cash equivalents, and restricted cash	$	79,068	$	106,121


Supplemental disclosures of noncash financing and investing activities:
Mark to market adjustment for available-for-sale investments	$	98	$	(248	)
Vesting of early exercised options	$	21	$	84

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

ALIGOS THERAPEUTICS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Organization

Description of business

Aligos Therapeutics, Inc. (Aligos-US) was incorporated in the state of Delaware on February 5, 2018 (inception). On September 10, 2018, the Company formed Aligos Belgium BVBA (Aligos-Belgium), a limited liability company organized under the laws of Belgium. On March 30, 2020, the Company formed as a wholly owned subsidiary, Aligos Australia Pty LTD (Aligos-Australia), a proprietary limited company. On May 18, 2021, the Company formed as a wholly owned subsidiary, Aligos Therapeutics (Shanghai) Co. Ltd. (Aligos-Shanghai) and together with Aligos-US, Aligos-Belgium, and Aligos-Australia being the “Company” or “Aligos”.

Aligos is a clinical-stage biopharmaceutical company developing novel therapeutics to address unmet medical needs in viral and liver diseases, including for non-alcoholic steatohepatitis (NASH), coronaviruses and chronic hepatitis B.

The Company is devoting substantially all of its efforts to the research and development of its drug candidates. The Company has not generated any product revenue to date. The Company is also subject to a number of risks similar to other companies in the biotechnology industry, including the uncertainty of success of its nonclinical studies and clinical trials, regulatory approval of drug candidates, uncertainty of market acceptance of products, competition from substitute products and larger companies, the need to obtain additional financing, compliance with government regulations, protection of proprietary technology, dependence on third-parties, product liability, and dependence on key individuals.

Liquidity

The Company has incurred losses and negative cash flows from operations since its inception. As of March 31, 2023 and December 31, 2022, the Company had an accumulated deficit of $422.1 million and $399.1 million, respectively. Management expects to continue to incur additional substantial losses in the foreseeable future as a result of expanded research and development activities.

As of March 31, 2023, the Company has unrestricted cash, cash equivalents and investments of approximately $103.5 million which is available to fund future operations. The Company expects to continue to spend substantial amounts to continue the nonclinical and clinical development of its current and future programs. If the Company is able to gain marketing approval for drug candidates that are being developed, it will require significant additional amounts of cash in order to launch and commercialize such drug candidates. In addition, other unanticipated costs may arise. Because the design and outcome of the Company’s planned and anticipated clinical trials is highly uncertain, the Company cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of any drug candidate the Company may develop.

The Company expects to finance its cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing or distribution arrangements. In addition, the Company may seek additional capital to take advantage of favorable market conditions or strategic opportunities even if the Company believes it has sufficient funds for its current or future operating plans. Based on the Company’s research and development plans, the Company expects its existing unrestricted cash, cash equivalents and investments, will enable it to fund its operations for at least 12 months following the date the condensed consolidated financial statements are issued. However, the Company’s operating plan may change as a result of many factors currently unknown, and the Company may need to seek additional funds sooner than planned. Moreover, it is particularly difficult to estimate with certainty the Company’s future expenses given the dynamic nature of its business, the COVID‑19 pandemic and the macro-economic environment generally.

The Company’s ability to raise additional funds will depend on financial, economic and other factors, many of which are beyond its control. For example, the COVID-19 pandemic, the current inflationary economic environment and rising interest rates have resulted in a disruption of global financial markets. If the disruption persists or deepens, the Company could be unable to access additional capital, which could negatively affect its ability to consummate certain corporate development transactions or other important, beneficial or opportunistic investments. If additional funds are not available to the Company when needed, on terms that are acceptable to the Company, or at all, the Company may be required to: delay, limit, reduce or terminate nonclinical studies, clinical trials or other research and development activities or eliminate one or more of its development programs altogether; or delay, limit, reduce or terminate its efforts to establish manufacturing and sales and marketing capabilities or other activities that may be necessary to commercialize any future approved products, or reduce the Company’s flexibility in developing or maintaining its sales and marketing strategy.

Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company has always maintained a dual banking system to limit its credit and liquidity risk.

Summary of significant accounting policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Any reference in these notes to applicable accounting guidance is meant to refer to the authoritative U.S. GAAP included in the Accounting Standards Codification (ASC), and Accounting Standards Update (ASU) issued by the Financial Accounting Standards Board (FASB).

The condensed consolidated balance sheet as of December 31, 2022 included herein was derived from the audited consolidated financial statements as of that date but does not include all of the information and notes required by U.S. GAAP for complete financial statements. 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 requirements for interim financial statements. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 9, 2023.

Unaudited interim financial information

The accompanying consolidated balance sheet as of March 31, 2023, the consolidated statements of operations and comprehensive loss for the three months ended March 31, 2023 and 2022, the consolidated statements of stockholders’ equity for the three months ended March 31, 2023 and 2022, and the consolidated statements of cash flows for the three months ended March 31, 2023 and 2022 are unaudited. The unaudited consolidated interim financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s consolidated financial position as of March 31, 2023 and the consolidated results of its operations and cash flows for the three months ended March 31, 2023 and 2022. The consolidated financial data and other information disclosed in these notes related to the three months ended March 31, 2023 and 2022 are unaudited. The consolidated results for the three months ended March 31, 2023 are not necessarily indicative of results to be expected for the year ending December 31, 2023, any other interim periods, or any future year or period.

Significant accounting policies and estimates

No material changes have been made to the Company’s significant accounting policies disclosed in Note 2, Summary of significant accounting policies, in its Annual Report on Form 10-K, filed on March 9, 2023, for the year ended December 31, 2022.

Recently issued accounting standards

From time to time, new accounting pronouncements are issued by FASB that the Company adopts as of the specified effective date. The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has the option to not “opt out” of the extended transition related to complying with new or revised accounting standards. This means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company has the option to adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and can do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company.

The Company has considered all recent accounting pronouncements issued, but not yet effective, and does not expect any to have a material effect on the Company’s condensed consolidated financial statements other than those discussed in its Annual Report on Form 10-K, filed on March 9, 2023, for the year ended December 31, 2022.

Property and equipment

The components of property and equipment as of March 31, 2023 and December 31, 2022 were as follows (in thousands):


	March 31, 2023			December 31, 2022
Leasehold improvements	$	6,087		$	6,087
Lab equipment		6,186			6,179
Computer equipment		1,051			1,052
Furniture and office equipment		740			739
Vehicles		305			305
Asset under construction		22			22
Total, at cost		14,391			14,384
Accumulated depreciation		(10,022	)		(9,568	)
Total, net	$	4,369		$	4,816

Depreciation expense was $0.5 million for the three months ended March 31, 2023, and $0.7 million for the three months ended March 31, 2022, respectively. Finance leases are also included in property and equipment as vehicles and lab equipment on the condensed consolidated balance sheets.

Investments

As of March 31, 2023 and December 31, 2022, amortized cost, gross unrealized gains and losses, and estimated fair values of total fixed-maturity securities were as follows (in thousands):

March 31, 2023

Gross

Gross

Amortized

Unrealized

Unrealized

Estimated

Cost

Gain

Loss

Fair Value

Available-for-sale securities: