10-Q
Q1false--12-31000179944810001799448srt:MaximumMemberalgs:ReplacementOptionOneMember2024-01-012024-01-310001799448algs:LuxnaLicenseAgreementMemberus-gaap:ResearchAndDevelopmentExpenseMemberalgs:LuxnaBiotechCoLtdMember2018-02-052018-12-310001799448us-gaap:EmployeeStockOptionMember2023-01-012023-03-310001799448algs:OctoberTwoThousandAndTwentyThreeSecuritiesPurchaseAgreementMember2024-03-310001799448us-gaap:EmployeeStockOptionMember2024-01-012024-03-310001799448algs:ReplacementOptionOneMember2024-01-012024-01-310001799448algs:MerckLicenseAndResearchCollaborationFirstAmendmentMemberalgs:MerckMember2023-01-012023-03-310001799448algs:EmoryUniversityMemberalgs:EmoryLicenseAgreementMember2024-01-012024-03-310001799448algs:NonVotingCommonStocksMember2024-05-030001799448us-gaap:LeaseholdImprovementsMember2023-12-310001799448us-gaap:CommonStockMember2023-12-310001799448algs:EmployeeStockPurchasePlanMember2023-01-012023-03-310001799448us-gaap:FurnitureAndFixturesMember2023-12-310001799448us-gaap:RestrictedStockMember2023-01-012023-03-310001799448algs:LuxnaLicenseAgreementMemberalgs:LuxnaBiotechCoLtdMember2024-01-012024-03-310001799448us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-03-310001799448srt:MaximumMemberalgs:EmoryUniversityMemberalgs:EmoryLicenseAgreementMember2018-06-300001799448us-gaap:RetainedEarningsMember2022-12-310001799448algs:VehiclesAndEquipmentMember2024-03-310001799448us-gaap:FurnitureAndFixturesMember2024-03-310001799448algs:GrantByTheNationalInstituteOfHealthNihForResearchToTargetCoronavirusesMember2022-01-012022-12-310001799448us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001799448algs:LuxnaLicenseAgreementMemberus-gaap:ResearchAndDevelopmentExpenseMemberalgs:LuxnaBiotechCoLtdMember2020-04-012020-04-300001799448algs:CommonWarrantsMember2024-01-012024-03-310001799448algs:EmoryUniversityMemberalgs:EmoryLicenseAgreementMember2020-06-012020-06-300001799448algs:CommonWarrantsMemberus-gaap:MeasurementInputExpectedTermMember2023-12-310001799448us-gaap:RetainedEarningsMember2023-03-310001799448algs:KatholiekeUniversiteitLeuvenMemberalgs:KatholiekeUniversiteitLeuvenLicenseAgreementMember2024-01-012024-03-310001799448us-gaap:FairValueInputsLevel1Member2023-12-310001799448algs:EmoryUniversityMemberalgs:EmoryLicenseAgreementMember2023-01-012023-03-310001799448algs:EmployeeStockPurchasePlanMember2024-01-012024-03-310001799448us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001799448us-gaap:ResearchAndDevelopmentExpenseMember2024-01-012024-03-310001799448us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-03-310001799448algs:TwoThousandTwentyThreePreFundedWarrantsMember2023-10-310001799448us-gaap:RetainedEarningsMember2023-01-012023-03-310001799448us-gaap:EmployeeStockOptionMember2024-03-310001799448us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001799448algs:KULeuvenMember2020-06-252020-06-250001799448us-gaap:RetainedEarningsMember2024-03-310001799448us-gaap:RetainedEarningsMember2023-12-310001799448us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001799448algs:CommonWarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2023-12-310001799448algs:CommonWarrantsMemberus-gaap:MeasurementInputPriceVolatilityMember2024-03-310001799448us-gaap:CommonStockMember2023-03-310001799448us-gaap:EquipmentMember2023-12-310001799448algs:VotingCommonStocksMember2024-05-030001799448us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001799448algs:ReplacementOptionTwoMember2024-01-012024-01-3100017994482023-10-252023-10-250001799448algs:GrantByTheNationalInstituteOfHealthNihForResearchToTargetCoronavirusesMember2023-01-012023-12-3100017994482023-03-310001799448algs:CommonWarrantsMember2023-10-310001799448us-gaap:RestrictedStockMember2023-01-012023-03-310001799448us-gaap:AdditionalPaidInCapitalMember2023-12-310001799448us-gaap:USTreasurySecuritiesMember2024-03-310001799448algs:TwoThousandTwentyThreePreFundedWarrantsMember2023-10-012023-10-310001799448srt:MaximumMemberalgs:MerckMemberalgs:MerckLicenseAndResearchCollaborationMember2022-01-310001799448us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310001799448algs:ReplacementOptionOneMembersrt:MinimumMember2024-01-012024-01-3100017994482023-10-310001799448srt:MaximumMemberalgs:EmoryUniversityMemberalgs:EmoryLicenseAgreementMember2020-06-012020-06-3000017994482024-01-012024-01-310001799448us-gaap:AssetUnderConstructionMember2024-03-310001799448us-gaap:EmployeeStockOptionMember2023-12-310001799448algs:VehiclesAndEquipmentMember2023-12-310001799448algs:OctoberTwoThousandAndTwentyThreeSecuritiesPurchaseAgreementMember2024-01-012024-03-310001799448us-gaap:EmployeeStockOptionMember2023-01-012023-12-310001799448us-gaap:CommonStockMember2023-01-012023-03-310001799448srt:MaximumMemberalgs:MerckMemberalgs:MerckLicenseAndResearchCollaborationMember2020-12-3100017994482024-03-310001799448us-gaap:AdditionalPaidInCapitalMember2022-12-310001799448algs:CommonWarrantsMemberus-gaap:MeasurementInputExpectedTermMember2024-03-310001799448algs:OctoberTwoThousandAndTwentyThreeSecuritiesPurchaseAgreementMember2023-10-252023-10-250001799448algs:KatholiekeUniversiteitLeuvenMember2024-01-012024-03-310001799448algs:CommonWarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2024-03-310001799448us-gaap:WarrantMember2023-01-012023-03-310001799448us-gaap:RetainedEarningsMember2024-01-012024-03-3100017994482023-12-310001799448us-gaap:ComputerEquipmentMember2023-12-310001799448us-gaap:RestrictedStockMember2024-01-012024-03-310001799448algs:GrantByTheNationalInstituteOfAllergiesAndInfectiousDiseasesNiaidForResearchToTargetCoronavirusesMember2023-01-012023-12-310001799448algs:GrantByTheNationalInstituteOfAllergiesAndInfectiousDiseasesNiaidForResearchToTargetCoronavirusesMember2024-03-012024-03-310001799448us-gaap:RestrictedStockMember2024-03-310001799448us-gaap:FairValueInputsLevel3Member2024-03-310001799448us-gaap:RestrictedStockMember2024-01-012024-03-310001799448us-gaap:RestrictedStockMember2023-12-3100017994482022-12-310001799448algs:KatholiekeUniversiteitLeuvenMemberalgs:KatholiekeUniversiteitLeuvenLicenseAgreementMember2020-06-252020-06-250001799448algs:CommonWarrantsMemberus-gaap:MeasurementInputRiskFreeInterestRateMember2023-12-310001799448us-gaap:FairValueInputsLevel3Memberalgs:OctoberTwoThousandAndTwentyThreeSecuritiesPurchaseAgreementMember2024-03-310001799448algs:OctoberTwoThousandAndTwentyThreeSecuritiesPurchaseAgreementMember2023-12-310001799448algs:MerckMemberalgs:MerckLicenseAndResearchCollaborationMember2020-12-012020-12-310001799448us-gaap:AdditionalPaidInCapitalMember2023-03-3100017994482023-10-012023-10-310001799448algs:GrantByTheNationalInstituteOfAllergiesAndInfectiousDiseasesNiaidForResearchToTargetCoronavirusesMember2024-01-012024-03-310001799448algs:LuxnaLicenseAgreementMemberus-gaap:ResearchAndDevelopmentExpenseMemberalgs:LuxnaBiotechCoLtdMember2019-01-012019-12-310001799448us-gaap:ComputerEquipmentMember2024-03-310001799448us-gaap:AssetUnderConstructionMember2023-12-310001799448us-gaap:FairValueInputsLevel3Memberalgs:OctoberTwoThousandAndTwentyThreeSecuritiesPurchaseAgreementMember2023-12-310001799448algs:AmoytopMembersrt:MaximumMemberalgs:AmoytopLicenseAndResearchCollaborationMember2023-05-3100017994482023-01-012023-03-310001799448us-gaap:EmployeeStockOptionMember2024-01-012024-03-310001799448us-gaap:AdditionalPaidInCapitalMember2024-03-310001799448algs:LuxnaLicenseAgreementMemberalgs:LuxnaBiotechCoLtdMember2023-01-012023-03-310001799448algs:MerckMemberalgs:MerckLicenseAndResearchCollaborationMember2022-01-012022-01-310001799448us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001799448us-gaap:FairValueInputsLevel3Member2023-12-310001799448us-gaap:CommonStockMember2022-12-310001799448us-gaap:GeneralAndAdministrativeExpenseMember2024-01-012024-03-310001799448us-gaap:CommonStockMember2024-01-012024-03-310001799448us-gaap:WarrantMember2024-01-012024-03-310001799448srt:MaximumMemberalgs:KatholiekeUniversiteitLeuvenMemberalgs:KatholiekeUniversiteitLeuvenLicenseAgreementMember2020-06-252020-06-250001799448algs:LuxnaLicenseAgreementMembersrt:MaximumMemberalgs:LuxnaBiotechCoLtdMember2018-12-190001799448algs:MerckLicenseAndResearchCollaborationFirstAmendmentMemberalgs:MerckMember2024-01-012024-03-310001799448algs:CommonWarrantsMember2023-10-012023-10-310001799448us-gaap:FairValueInputsLevel3Memberalgs:OctoberTwoThousandAndTwentyThreeSecuritiesPurchaseAgreementMember2024-01-012024-03-310001799448us-gaap:CommonStockMember2024-03-310001799448us-gaap:EmployeeStockOptionMember2023-01-012023-03-310001799448us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-310001799448algs:AmoytopMemberalgs:AmoytopLicenseAndResearchCollaborationMember2023-05-012023-05-310001799448us-gaap:FairValueInputsLevel1Member2024-03-310001799448us-gaap:EquipmentMember2024-03-3100017994482024-01-012024-03-310001799448us-gaap:LeaseholdImprovementsMember2024-03-310001799448us-gaap:FairValueInputsLevel2Member2024-03-310001799448country:BE2024-01-012024-03-310001799448us-gaap:FairValueInputsLevel2Member2023-12-3100017994482024-01-31xbrli:purexbrli:sharesiso4217:USDxbrli:sharesiso4217:USD

 

 

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, 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: 001-39617

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 Capital 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 3, 2024, the registrant had 78,109,927 shares of common stock, $0.0001 par value per share, outstanding, comprised of 75,017,589 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‑097558 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;
our expectations regarding the potential market size and size of the potential patient populations for ALG‑055009, ALG‑000184, and ALG‑097558 , 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;
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 our ability to obtain, maintain, enforce and defend our intellectual property protection for our drug candidates;
our expectations regarding the period during which we will qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012; 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

i


 

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 (the 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.
If we fail to comply with the continued listing requirements of the Nasdaq Stock Market LLC (Nasdaq) our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.
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.

ii


 

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, 2024 and December 31, 2023

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 31, 2024 and 2023

2

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2024 and 2023

3

 

Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2024 and 2023

4

 

Notes to Unaudited Condensed Consolidated Financial Statements

6

 

Item 2.

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

18

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

26

 

Item 4.

Controls and Procedures

27

 

PART II.

OTHER INFORMATION

28

 

Item 1.

Legal Proceedings

28

 

Item 1A.

Risk Factors

28

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

82

 

Item 3.

Defaults Upon Senior Securities

82

 

Item 4.

Mine Safety Disclosures

82

 

Item 5.

Other Information

82

 

Item 6.

Exhibits

83

 

Signatures

84

 

iv


 

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,
2024

 

 

December 31,
2023

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

24,151

 

 

$

135,704

 

Restricted cash

 

 

216

 

 

 

70

 

Short-term investments

 

 

88,588

 

 

 

-

 

Other current assets

 

 

5,109

 

 

 

5,310

 

Total current assets

 

 

118,064

 

 

 

141,084

 

Operating lease right-of-use assets

 

 

6,167

 

 

 

6,559

 

Property and equipment, net

 

 

3,046

 

 

 

3,259

 

Other assets

 

 

625

 

 

 

625

 

Total assets

 

$

127,902

 

 

$

151,527

 

 

 

 

 

 

 

LIABILITIES AND

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,842

 

 

$

2,517

 

Accrued liabilities

 

 

12,043

 

 

 

16,842

 

Operating lease liabilities, current

 

 

3,269

 

 

 

3,229

 

Finance lease liabilities, current

 

 

5

 

 

 

10

 

Deferred revenue from customers, current

 

 

721

 

 

 

1,224

 

Deferred revenue from collaborations, current

 

 

-

 

 

 

84

 

Total current liabilities

 

 

18,880

 

 

 

23,906

 

Operating lease liabilities, net of current portion

 

 

6,994

 

 

 

7,668

 

Finance lease liabilities, net of current portion

 

 

217

 

 

 

231

 

Warrant liability

 

 

41,969

 

 

 

27,596

 

Long term liability

 

 

46

 

 

 

46

 

Total liabilities

 

 

68,106

 

 

 

59,447

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred Stock, $0.0001 par value; 10,000,000 shares authorized as of March 31, 2024 and December 31, 2023, respectively; no shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.

 

 

-

 

 

 

-

 

Common stock, $0.0001 par value; 320,000,000 shares authorized as of March 31, 2024 and December 31, 2023, respectively; 75,668,521 and 42,922,980 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.

 

 

7

 

 

 

7

 

Additional paid-in capital

 

 

580,973

 

 

 

578,325

 

Accumulated deficit

 

 

(521,660

)

 

 

(486,797

)

Accumulated other comprehensive income

 

 

476

 

 

 

545

 

Total stockholders’ equity

 

 

59,796

 

 

 

92,080

 

Total liabilities and stockholders’ equity

 

$

127,902

 

 

$

151,527

 

 

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

1


 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(In thousands, except share and per share data)

 

 

 

 

 

 

Three Months Ended
March 31,

 

 

 

 

2024

 

 

2023

 

Revenue from collaborations

 

 

$

292

 

 

$

2,583

 

Revenue from customers

 

 

 

694

 

 

 

140

 

Operating expenses:

 

 

 

 

 

 

 

Research and development

 

 

 

16,366

 

 

 

18,135

 

General and administrative

 

 

 

6,666

 

 

 

8,506

 

Total operating expenses

 

 

 

23,032

 

 

 

26,641

 

Loss from operations

 

 

 

(22,046

)

 

 

(23,918

)

Interest and other income (expense), net

 

 

 

(12,793

)

 

 

1,002

 

Loss before income tax expense

 

 

 

(34,839

)

 

 

(22,916

)

Income tax expense

 

 

 

(24

)

 

 

(39

)

Net loss

 

 

 

(34,863

)

 

 

(22,955

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

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

 

 

 

(69

)

 

 

98

 

Other comprehensive income (loss)

 

 

 

(69

)

 

 

98

 

Comprehensive loss

 

 

$

(34,932

)

 

$

(22,857

)

Net loss per share, basic and diluted

 

 

$

(0.22

)

 

$

(0.53

)

Weighted average shares of common stock, basic and diluted

 

 

 

156,154,156

 

 

 

42,910,065

 

 

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

2


 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

(In thousands, except share and per share data)

 

 

Three Months Ended March 31, 2024

 

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Accumulated
Other
Comprehensive

 

 

Total
Stockholders’

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (loss)

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2023

 

 

 

75,096,906

 

 

$

7

 

 

$

578,325

 

 

$

(486,797

)

 

$

545

 

 

$

92,080

 

Issuance of common stock from RSU vesting

 

 

 

2,490

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Issuance of common stock upon exercise of pre-funded warrants

 

 

 

569,125

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Stock-based compensation expense related to employee stock awards

 

 

 

-

 

 

 

-

 

 

 

2,500

 

 

 

-

 

 

 

-

 

 

 

2,500

 

Stock-based compensation expense related to employee stock purchases

 

 

 

-

 

 

 

-

 

 

 

148

 

 

 

-

 

 

 

-

 

 

 

148

 

Other comprehensive loss

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(69

)

 

 

(69

)

Net loss

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(34,863

)

 

 

-

 

 

 

(34,863

)

Balance as of March 31, 2024

 

 

 

75,668,521

 

 

$

7

 

 

$

580,973

 

 

$

(521,660

)

 

$

476

 

 

$

59,796

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

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

 

 

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

3


 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(34,863

)

 

$

(22,955

)

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

 

 

 

 

 

 

Accretion of discount on investments

 

 

(84

)

 

 

(267

)

Amortization of right of use assets

 

 

392

 

 

 

390

 

Change in fair value of warrant liability

 

 

14,373

 

 

 

-

 

Depreciation expense

 

 

282

 

 

 

454

 

Stock-based compensation including ESPP

 

 

2,648

 

 

 

3,664

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Other assets

 

 

204

 

 

 

2,086

 

Accounts payable

 

 

325

 

 

 

(1,915

)

Accrued liabilities

 

 

(4,800

)

 

 

(937

)

Operating lease liabilities

 

 

(636

)

 

 

(584

)

Deferred revenue from collaborations

 

 

(84

)

 

 

(2,323

)

Deferred revenue from customers

 

 

(503

)

 

 

-

 

Net cash and cash equivalents used in operating activities

 

 

(22,746

)

 

 

(22,387

)

Cash flows from investing activities:

 

 

 

 

 

 

Activities in available-for-sale investments:

 

 

 

 

 

 

Maturities of short-term investments

 

 

-

 

 

 

20,000

 

Purchase of short-term investments

 

 

(88,573

)

 

 

-

 

Purchases of property and equipment

 

 

(69

)

 

 

(7

)

Net cash and cash equivalents (used in) provided by investing activities

 

 

(88,642

)

 

 

19,993

 

Cash flows from financing activities:

 

 

 

 

 

 

Payments on finance lease

 

 

(19

)

 

 

(24

)

Proceeds from the exercise of common stock option

 

 

-

 

 

 

23

 

Net cash and cash equivalents used in financing activities

 

 

(19

)

 

 

(1

)

Net decrease in cash, cash equivalents, and restricted cash

 

 

(111,407

)

 

 

(2,395

)

Cash, cash equivalents, and restricted cash, beginning of period

 

 

135,774

 

 

 

81,463

 

Cash, cash equivalents, and restricted cash, end of period

 

$

24,367

 

 

$

79,068

 

 

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

4


 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

Three Months Ended March 31,

 

 

 

2024

 

 

2023

 

Reconciliation to amounts on the Consolidated Balance Sheets:

 

 

 

 

 

 

   Cash and cash equivalents

 

$

24,151

 

 

$

78,671

 

   Restricted cash

 

 

216

 

 

 

397

 

Total cash, cash equivalents, and restricted cash

 

$

24,367

 

 

$

79,068

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures of noncash financing and investing activities:

 

 

 

 

 

 

   Mark to market adjustment for available-for-sale investments

 

$

(69

)

 

$

98

 

   Vesting of early exercised options

 

$

-

 

 

$

20

 

 

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

5


 

ALIGOS THERAPEUTICS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

1.
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 metabolic dysfunction associated steatohepatitis (MASH), chronic hepatitis B (CHB) and coronaviruses.

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, 2024 and December 31, 2023, the Company had an accumulated deficit of $521.7 million and $486.8 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, 2024, the Company has unrestricted cash, cash equivalents and investments of approximately $112.7 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.

6


 

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 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 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.

2.
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 (the 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, 2023 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, 2023, included in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2024.

Unaudited interim financial information

The accompanying consolidated balance sheet as of March 31, 2024, the consolidated statements of operations and comprehensive loss for the three months ended March 31, 2024 and 2023, the consolidated statements of stockholders’ equity for the three months ended March 31, 2024 and 2023, and the consolidated statements of cash flows for the three months ended March 31, 2024 and 2023 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, 2024 and the consolidated results of its operations and cash flows for the three months ended March 31, 2024 and 2023. The consolidated financial data and other information disclosed in these notes related to the three months ended March 31, 2024 and 2023 are unaudited. The consolidated results for the three months ended March 31, 2024 are not necessarily indicative of results to be expected for the year ending December 31, 2024, any other interim periods, or any future year or period.

 

 

7


 

Significant accounting policies and estimates

 

Accounting for Government Grants

In 2022, the Company was awarded a grant of $1.1 million by the National Institute of Health (NIH) for research to target coronaviruses. The grant is for multiple years with the amount updated after each year of progress through 2025, subject to the annual reapplication and approval by the NIH. In 2023, the approved grant awarded was an additional $1.4 million.

In 2023, the Company was awarded a contract of $8.5 million by the National Institute of Allergies and Infectious Diseases (NIAID) for research to target coronaviruses. In March 2024, the Company entered into an amendment to the above contract and was awarded an additional $1.3 million, making the total contract value $9.8 million. The contract ends in early 2026.

U.S. GAAP does not contain authoritative accounting standards for grants or contracts provided by governmental entities to a for-profit entity. Absent authoritative accounting standards, interpretative guidance issued and commonly applied by financial statement preparers allows for the selection of accounting policies amongst acceptable alternatives. The Company determined it most appropriate to account for grants by analogy to International Accounting Standards 20 (“IAS 20”), Accounting for Government Grants and Disclosure of Government Assistance. Under this model, reimbursements the Company receives from the U.S. government for qualifying expenditures under the NIH grant will be recognized in earnings as a reduction to Research and development expense when there is reasonable assurance that the Company will receive the grant. IAS 20 does not define “reasonable assurance”; however, based on certain interpretations, it is analogous to “probable” as defined in FASB ASC 450-20-20 under U.S. GAAP, which is the definition the Company has applied. The grants and contracts will be recognized in earnings as a reduction of the related expenses.

No other 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 12, 2024, for the year ended December 31, 2023.

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.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280)(ASU 2023-07). The guidance improves reportable segment disclosures requirements, primarily through enhanced disclosures about significant segment expenses. The standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is evaluating the potential impact of this standard on its consolidated financial statements.

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 12, 2024, for the year ended December 31, 2023.

3.
Property and equipment

The components of property and equipment as of March 31, 2024 and December 31, 2023 were as follows (in thousands):

 

 

 

March 31,
2024

 

 

December 31,
2023

 

Leasehold improvements

 

$

6,101

 

 

$

6,101

 

Lab equipment

 

 

6,264

 

 

 

5,830

 

Computer equipment

 

 

1,051

 

 

 

1,051

 

Furniture and office equipment

 

 

739

 

 

 

732

 

Vehicles and equipment

 

 

296

 

 

 

296

 

Asset under construction

 

 

4

 

 

 

4

 

Total, at cost

 

 

14,455

 

 

 

14,014

 

Accumulated depreciation

 

 

(11,409

)

 

 

(10,755

)

Total, net

 

$

3,046

 

 

$

3,259

 

 

8


 

 

Depreciation expense was $0.3 million and $0.5 million, respectively, for the three months ended March 31, 2024 and 2023. Finance leases are also included in property and equipment as vehicles and lab equipment on the condensed consolidated balance sheets.

4.
Investments

As of March 31, 2024, amortized cost, gross unrealized gains and losses, and estimated fair values of total fixed-maturity securities were as follows (in thousands):

 

 

 

March 31, 2024

 

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

 

 

Cost

 

 

Gain

 

 

Loss

 

 

Fair Value

 

Available-for-sale securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Treasury bonds

 

$

88,657

 

 

$

-

 

 

$

(69

)

 

$

88,588

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2023, the Company did not hold any available for sale securities.

 

Changes in fair value are related to changes in market interest rates. The Company expects to collect all contractual principal and interest payments.

The following is a summary of maturities of securities available-for-sale as of March 31, 2024 (in thousands):

 

 

 

Available-for-sale

 

 

Amortized Cost

 

 

Estimated
Fair Value

 

Amounts maturing in:

 

 

One year or less

$

88,657

 

$

88,588

 

Total investments

$

88,657

 

$

88,588

 

 

The Company recorded interest income of $0.6 million and $0.7 million for the three months ended March 31, 2024 and 2023, respectively, as a component of interest and other income (expense), net on the Company’s condensed consolidated statement of operations and comprehensive loss.

5.
Accrued liabilities

Accrued liabilities consisted of the following (in thousands):

 

 

 

March 31,

 

 

December 31,

 

 

 

2024

 

 

2023

 

Accrued compensation

 

$

3,058

 

 

$

6,673

 

Accrued payables

 

 

6,148

 

 

 

7,144

 

Other

 

 

2,837

 

 

 

3,025

 

Total

 

$

12,043

 

 

$

16,842

 

 

 

6.
Common Warrants and Pre Funded Warrants

In October 2023, the Company completed a private investment in public equity (PIPE) offering and entered into a securities purchase agreement (the Securities Purchase Agreement) with certain institutional and accredited investors, pursuant to which the Company agreed to offer, issue and sell to these investors 31,429,266 shares of common stock, par value $0.0001 per share (the Common Stock), pre-funded warrants to purchase an aggregate of 81,054,686 shares of Common Stock (the 2023 Pre-Funded Warrants), and common warrants to purchase an aggregate of 56,241,973 shares of Common Stock (the Common Warrants, and together with the 2023 Pre-Funded Warrants, the Warrants). Each Pre-Funded Warrant has an exercise price of $0.0001 per share of common stock, was immediately exercisable and is exercisable until exercised in full. Each accompanying Common Warrant has an

9


 

exercise price of $0.7568 per share of common stock, is immediately exercisable and will expire on October 25, 2030. Each warrant is exercisable for one share of Common Stock. The closing of the offering occurred on October 25, 2023. The Company received gross proceeds of $92.1 million, and after deducting the placement agent fees and expenses and offering costs, net proceeds were $86.2 million.

The Company measured the fair value of the Common Stock and the Pre-Funded Warrants based on the $0.7568 per share purchase price stated in the Securities Purchase Agreement. The Company measured the fair value of the 2023 Common Warrants using the Black-Scholes option pricing model.

 

The Company used the with-and-without method to allocate the net proceeds received from the sale of the Common Stock, the Pre-Funded Warrants, and the Common Warrants on the Consolidated Balance Sheets as follows:

 

 

 

As of October 25, 2023

 

 

 

 

 

Common Stock

 

$

18,641

 

Pre-Funded Warrants

 

$

48,079

 

Common Warrants

 

$

25,427

 

Total

 

$

92,147

 

 

The following table summarizes information about shares issuable under the Pre-Funded Warrants outstanding at March 31, 2024:

 

 

Pre-funded warrant shares outstanding

 

 

 

 

 

Outstanding at January 1, 2024

 

 

81,054,686

 

Issued

 

 

-

 

Exercised

 

 

(569,125

)

Outstanding at March 31, 2024

 

 

80,485,561

 

Exercisable at March 31, 2024

 

 

80,485,561

 

The following table sets forth a summary of the activities of the Company’s warrant liability, which represents a recurring measurement that is classified with Level 3 of the fair value hierarchy wherein the fair value is estimated using significant unobservable inputs:

 

 

 

Common warrant liability

 

 

 

 

 

Beginning liability as of January 1, 2024

 

$

27,596

 

Common warrants issued

 

 

-

 

Change in fair value of liability

 

 

14,373

 

Ending liability as of March 31, 2024

 

$

41,969

 

The fair value of the common warrants was measured using the Black Scholes option pricing model and will be remeasured each reporting period, and the change in fair value will be recorded in earnings. The assumptions that the Company used to determine the fair value at issuance and the reporting date of the common warrants granted to participants were as follows:

 

 

March 31, 2024

 

 

December 31, 2023

 

 

 

 

 

 

 

 

Expected term (in years)

 

 

6.58

 

 

 

6.83

 

Risk-free interest rate

 

 

4.20

%

 

 

3.88

%

Dividend yield

 

 

-

 

 

 

-

 

Volatility

 

 

77.99

%

 

 

82.80

%

 

10


 

 

 

 

The following table summarizes information about shares issuable under the Common Warrants outstanding at March 31, 2024:

 

 

 

Common warrant shares outstanding

 

 

 

 

 

Outstanding at January 1, 2024

 

 

56,241,973

 

Issued

 

 

-

 

Exercised

 

 

-

 

Outstanding at March 31, 2024

 

 

56,241,973

 

Exercisable at March 31, 2024

 

 

56,241,973

 

 

7.
Stock-based compensation

Stock options

During the three months ended March 31, 2024 and 2023, the Company’s stock option compensation expense was approximately $2.5 million and $3.5 million, respectively. There was no recognized tax benefit in either of the periods. As of March 31, 2024, the unamortized expense balance was $9.4 million, to be amortized over a weighted average period of 1.37 years.

Stock option activity during the three months ended March 31, 2024 is as follows:

 

 

 

Shares
subject
to options

 

 

Weighted-
average
exercise
price

 

 

Weighted-
average
remaining
contractual
term (years)

 

 

Aggregate
Intrinsic
Value
(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding as of January 1, 2024

 

 

10,376,838

 

 

$

6.38

 

 

6.9

 

 

$

 

Granted

 

 

2,885,385

 

 

 

1.10

 

 

 

 

 

 

 

Replacement options from Exchange

 

 

1,906,153

 

 

 

0.96

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

 

 

 

 

 

Forfeited or Expired

 

 

(1,161,111

)

 

 

8.58

 

 

 

 

 

 

 

Cancelled options from Exchange

 

 

(3,880,332

)

 

 

10.43

 

 

 

 

 

 

 

Outstanding as of March 31, 2024

 

 

10,126,933

 

 

 

2.05

 

 

 

8.51

 

 

 

186.81

 

Options vested and expected to vest as of March 31, 2024

 

 

10,126,933

 

 

 

2.05

 

 

 

8.51

 

 

 

186.81

 

Options vested and exercisable as of March 31, 2024

 

 

3,076,329

 

 

 

3.92

 

 

 

6.12

 

 

 

15.32

 

 

The weighted-average grant date fair value of options granted during the three months ended March 31, 2024 and 2023 was $0.77 and $0.93 per share, respectively.

Option exchange

In January 2024, the Company commenced a stock option exchange program (the Exchange Offer) pursuant to which eligible employees were provided the opportunity to exchange eligible stock options for a number of new replacement option grants at the exchange ratio of 1 replacement option for every 1.4 eligible options tendered for those priced between $2.10 to $11.85, and 1 replacement option for every 3.4 eligible options tendered for those priced over $11.86. The Exchange Offer concluded in February 2024.

In connection with the Exchange Offer, the Company canceled 3,880,332 eligible options and granted 1,906,153 replacement options. The exchange of these options was accounted for as a modification of share-based compensation awards. The Company recognized $3 thousand of unamortized compensation cost related to the canceled options as well as the incremental compensation cost associated with the replacement options over their one year vesting term.

11


 

Restricted stock units

During the three months ended March 31, 2024, the Company recorded $29 thousand stock-based compensation expense related to restricted stock units. During the three months ended March 31, 2023, the Company did not record any stock-based compensation expense related to restricted stock awards. As of March 31, 2024, the unamortized expense balance was $0.1 million, to be amortized over a weighted average period of 3.5 years.

Restricted stock activity during the three months ended March 31, 2024 is as follows:

 

 

 

Number
of Awards

 

 

Weighted-
Average
Grant Date
Fair Value

 

 

Aggregate
Fair Value
(in thousands)

 

 

 

 

 

 

 

 

 

 

 

Issued and unvested as of January 1, 2024

 

 

134,120

 

$

 

0.84

 

 

$

113

 

Restricted stock awards granted

 

 

22,950

 

 

 

1.13

 

 

 

26

 

Restricted stock awards vested

 

 

(2,490

)

 

 

(0.84

)

 

 

(2

)

Issued and unvested as of March 31, 2024

 

 

154,580

 

 

 

0.88

 

 

$

137

 

During the three months ended March 31, 2024 and 2023, the Company did not issue shares of common stock, upon exercise of unvested stock options or purchases for unvested restricted stock awards.

 

Employee stock purchase plan

During the three months ended March 31, 2024 and 2023, the Company recorded total stock-based compensation expense related to the employee stock purchase plan of $0.1 million and $0.2 million, respectively. During the three months ended March 31, 2024 and 2023, no purchases of awards under this plan have been made.

 

Stock-based compensation expense was allocated as follows for the three months ended March 31, 2024 and 2023 (in thousands):

 

 

 

Three Months Ended

 

 

March 31,

 

 

2024

 

 

2023

 

 

Research and development

 

$

1,439

 

 

$

2,172

 

 

General and administrative

 

 

1,209

 

 

 

1,492

 

 

Total

 

$

2,648

 

 

$

3,664

 

 

 

8.
Fair value

Certain assets and liabilities of the Company are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (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. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

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

Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

12


 

The following tables present the fair value of the Company’s financial instruments that are measured or disclosed at fair value on a recurring basis (in thousands):

 

 

 

Fair Value Measurements
as of March 31, 2024

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

24,151

 

 

$

-

 

 

$

-

 

Available for sale securities

 

 

88,588

 

 

 

-

 

 

 

-

 

Liabilities:

 

 

 

 

 

 

 

 

 

Warrant liability

 

 

-

 

 

 

-

 

 

 

(41,969

)

 

 

$

112,739

 

 

$

-

 

 

$

(41,969

)

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements
as of December 31, 2023

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

135,704

 

 

$

-

 

 

$

-

 

Liabilities:

 

 

 

 

 

 

 

 

 

Warrant liability

 

 

-

 

 

 

-

 

 

 

(27,596

)

 

$

135,704

 

 

$

-

 

 

$

(27,596

)

 

9.
License and collaboration agreements

Agreement with Emory University (Emory)

In June 2018, the Company entered into a license agreement with Emory (the Emory License Agreement), pursuant to which Emory granted the Company a worldwide, sublicensable license under certain of its intellectual property rights to make, have made, develop, use, offer to sell, sell, import and export products containing certain compounds relating to Emory’s hepatitis B virus capsid assembly modulator technology, for all therapeutic and prophylactic uses. Such license is initially exclusive with respect to specified licensed patents owned by Emory and non-exclusive with respect to certain of Emory’s specified know-how. In June 2022, the license to such patents became non-exclusive with respect to all fields except for the treatment and prevention of HBV; however, the Company may select up to six compounds which will maintain exclusivity with respect to all therapeutic and prophylactic uses. With respect to all other compounds that are enabled by the licensed patents, those which are jointly invented by the Company and Emory or inventors in the Schinazi laboratory, or which are disclosed in a specified licensed patent, are licensed to the Company exclusively including as to Emory; whereas all other such compounds are licensed to the Company non-exclusively. Under the terms of the Emory License Agreement, the Company is obligated to use commercially reasonable efforts to bring licensed products to market in accordance with a mutually agreed upon development plan. Unless terminated earlier by either party in accordance with the provisions thereof, the Emory License Agreement shall continue until the expiration of the last–to-expire of the patents licensed to the Company thereunder.

In June 2020, the Company amended the license agreement with Emory. Pursuant to the amended license agreement, Emory granted the Company additional patent rights to certain compounds targeting the treatment or prevention of HBV. As consideration for the additional rights, the Company made a one-time, non-refundable payment to Emory in the amount of $0.2 million, with an additional obligation to pay up to a maximum of $35,000. On the same date, the Company entered into a collaboration agreement with Emory, with the initial research plan pertaining to the synthesis and evaluation of the compounds licensed through the additional patent rights granted in the amended license agreement. The research plan was set to terminate one year from the effective date of June 2020 but the Company exercised its option to extend it for a second year. In June 2022, the research plan terminated. In connection with the research plan, the Company provided Emory funding up to $0.3 million per year.

The Company has agreed to pay Emory up to an aggregate of $125.0 million upon the achievement of specified development, regulatory, and commercial milestones, and all ongoing patent costs. During the three months ended March 31, 2024 and 2023, the Company had no expenses related to milestone payments. The Company also agreed to pay Emory tiered single-digit royalties on worldwide annual net sales of licensed products, on a quarterly basis and calculated on a product-by-product basis. With respect to licensed products containing any of a specified subset of the licensed compounds, such royalties range from a mid-single digit to a high-single digit percentage rate. With respect to licensed products which do not contain such compounds, the royalties span a range of percentage rates within the mid-single digits if a Phase 1 clinical trial is initiated for the product within three years of the effective date of the Emory License Agreement, and range from a low-single digit to a mid-single digit rate if a Phase 1 clinical trial is initiated

13


 

more than three years after the effective date. During the three months ended March 31, 2024 and 2023, the Company made no payments associated with royalties and recognized no expense or accruals.

Agreement with Luxna Biotech Co., Ltd. (Luxna)

On December 19, 2018, the Company entered into a license agreement with Luxna, pursuant to which Luxna granted the Company an exclusive, worldwide, sublicensable license under certain of Luxna’s intellectual property rights to research, develop make, have made and commercialize for all therapeutic and prophylactic uses, (i) products containing oligonucleotides targeting the hepatitis B virus genome, (ii) products containing certain oligonucleotides targeting up to three genes which contribute to MASH, which the Company may select at any time during the first eight years of the term, to the extent not licensed to a third party, and (iii) products containing oligonucleotides targeting up to three genes which contribute to hepatocellular carcinoma, which the Company may select at any time during the first three years of the term, which expired in December 2021. As consideration for this agreement, the Company paid an upfront license fee of $0.6 million.

In April 2020, the Company amended the license agreement with Luxna. Pursuant to the amended license agreement, Luxna granted the Company an exclusive, worldwide license under the licensed patents to research, develop, make, have made and commercialize products containing oligonucleotides targeting three families of viruses: Orthomyxoviridae, Paramyxoviridae, and Coronaviridae (a family which includes SARS-CoV-2). As consideration for the amended license agreement, the Company paid Luxna a one-time non-refundable fee of $0.2 million in April 2020.

The Company is obligated to make payments to Luxna, in aggregate, totaling up to but no more than $55.5 million upon the achievement of specified development, regulatory, and commercial milestones. During the three months ended March 31, 2024 and 2023, the Company recognized no expenses related to milestone payments. The Company is also required to pay Lux