UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
(
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
Trading Symbol(s) |
Name of Each Exchange on Which Registered |
The |
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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.
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Emerging growth company |
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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
As of August 4, 2023, the registrant had
ALLAKOS INC.
Table of Contents
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PART I. |
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Item 1. |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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PART II. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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1
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited).
allakos inc.
balance sheets
(in thousands, except per share data)
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June 30, |
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December 31, |
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2023 |
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2022 |
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(unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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Investments |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Other long-term assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued expenses and other current liabilities |
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Total current liabilities |
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Operating lease liabilities, net of current portion |
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Total liabilities |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive loss |
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Accumulated deficit |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes to unaudited interim financial statements
2
Allakos Inc.
Statements of Operations and Comprehensive Loss
(in thousands, except per share data)
(unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2023 |
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2022 |
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2023 |
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2022 |
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Operating expenses |
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Research and development |
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$ |
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$ |
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$ |
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$ |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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Interest income |
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Other expense, net |
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Net loss |
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Unrealized gain (loss) on investments |
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Comprehensive loss |
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$ |
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$ |
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$ |
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$ |
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Net loss per common share: |
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Basic and diluted |
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$ |
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$ |
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$ |
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Weighted-average number of common shares outstanding: |
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Basic and diluted |
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See accompanying notes to unaudited interim financial statements
3
Allakos Inc.
Statements of STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
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Common Stock |
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Additional |
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Accumulated Other Comprehensive Gain (Loss) |
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Accumulated |
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Total |
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Shares |
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Amount |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Stock-based compensation expense |
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— |
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Issuance of common stock upon exercise of stock options |
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Issuance of common stock upon 2018 ESPP purchase |
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Issuance of common stock upon vesting of restricted stock units |
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Issuance of common stock under the ATM Offering, net of issuance costs |
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Unrealized gain on investments |
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— |
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Net loss |
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— |
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Balance at March 31, 2023 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Stock-based compensation expense |
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— |
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Issuance of common stock upon vesting of restricted stock units |
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Unrealized loss on investments |
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— |
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Net loss |
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— |
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Balance at June 30, 2023 |
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Common Stock |
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Additional |
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Accumulated Other Comprehensive Gain (Loss) |
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Accumulated |
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Total |
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Shares |
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Amount |
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Balance at December 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Stock-based compensation expense |
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— |
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Issuance of common stock upon exercise of stock options |
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Issuance of common stock upon 2018 ESPP purchase |
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Issuance of common stock upon vesting of restricted stock units |
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Unrealized loss on investments |
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— |
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Net loss |
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— |
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Balance at March 31, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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Stock-based compensation expense |
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— |
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Issuance of common stock upon exercise of stock options |
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Issuance of common stock upon vesting of restricted stock units |
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Unrealized gain on investments |
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— |
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Net loss |
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— |
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Balance at June 30, 2022 |
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$ |
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$ |
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$ |
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$ |
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$ |
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See accompanying notes to unaudited interim financial statements
4
Allakos Inc.
Statements of Cash Flows
(in thousands)
(unaudited)
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Six Months Ended |
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June 30, |
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2023 |
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2022 |
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Cash flows from operating activities |
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Net loss |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Stock-based compensation |
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Net amortization (accretion) of premiums and discounts on investments |
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Noncash lease expense |
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Loss on disposal of property and equipment |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other current assets |
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Other long-term assets |
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Accounts payable |
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Accrued expenses and other current liabilities |
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Operating lease liabilities, net of current portion |
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Net cash used in operating activities |
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Cash flows from investing activities |
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Purchases of investments |
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Proceeds from sales of investments |
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Proceeds from maturities of investments |
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Proceeds from sale of property and equipment |
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Purchases of property and equipment |
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Net cash provided by investing activities |
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Cash flows from financing activities |
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Proceeds from issuance of common stock, net of issuance costs |
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Proceeds from exercise of stock options |
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Proceeds from issuance of common stock under the 2018 ESPP |
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Net cash provided by financing activities |
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Net increase (decrease) in cash, cash equivalents and |
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Cash, cash equivalents and restricted cash, beginning of period |
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Cash, cash equivalents and restricted cash, end of period |
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$ |
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Supplemental disclosures |
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Noncash investing and financing items: |
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Noncash adjustments to right-of-use assets |
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$ |
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Increase (decrease) in payables related to purchase of property |
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See accompanying notes to unaudited interim financial statements
5
ALLAKOS INC.
NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
1. Organization and Business
Allakos Inc. (“Allakos” or the “Company”) was incorporated in the state of Delaware in March 2012. Allakos is a clinical stage biopharmaceutical company focused on the development of lirentelimab (AK002) and AK006 for the treatment of eosinophil and mast cell related diseases. The Company’s primary activities to date have included establishing its facilities, recruiting personnel, conducting research and development of its product candidates and raising capital. The Company’s operations are located in San Carlos, California. The Company operates in
Liquidity Matters
Since inception, the Company has incurred net losses and negative cash flows from operations. During the six months ended June 30, 2023, the Company incurred a net loss of $
Due to the clinical study results released in December 2021, our Board of Directors approved in February 2022 plans to reduce our contractual commitments and a reorganization plan (the “Reorganization Plan”) to reduce operating costs and better align our workforce with the clinical development plans of our business.
The Company had $
2. Summary of Significant Accounting Policies
Basis of Presentation
The unaudited interim financial statements have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements and accompanying notes.
The interim balance sheet as of June 30, 2023, the statements of operations and comprehensive loss, statements of stockholders’ equity for the three and six months ended June 30, 2023 and 2022 and statements of cash flows for the six months ended June 30, 2023 and 2022 are unaudited. The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for the fair presentation of the Company’s financial position as of June 30, 2023 and its results of operations and comprehensive loss for the three and six months ended June 30, 2023 and 2022 and its cash flows for the six months ended June 30, 2023 and 2022. Certain information and note disclosures normally included in annual audited financial statements prepared in accordance with U.S. GAAP have been omitted. The financial data and the other financial information disclosed in these notes to the interim financial statements are also unaudited. The results of operations for any interim period are not necessarily indicative of the results to be expected for the entire year or for any other future annual or interim period. These interim financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K, which was filed with the SEC on March 6, 2023.
Use of Estimates
Management uses significant judgment when making estimates related to common stock valuation and related stock-based compensation expense, accrued research and development expense, and lease-related assets and liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates under different assumptions or conditions, and those differences could be material to the financial position and results of operations.
Concentration of Credit Risk and Other Risks and Uncertainties
Financial instruments that potentially subject the Company to credit risk principally consist of cash, cash equivalents and investments. These financial instruments are currently held in accounts in varying amounts at four separate financial institutions that management believes possesses high credit quality. Amounts on deposit with these financial institutions have and will continue to exceed federally-insured limits. The Company has not experienced any losses on its cash deposits. Additionally, the Company’s investment policy limits its investments to certain types of securities issued by or backed by the U.S. government and its agencies.
6
The Company is subject to a number of risks similar to that of other early stage biopharmaceutical companies, including, but not limited to, the need to obtain adequate additional funding, possible failure of current or future clinical trials, its reliance on third-parties to conduct its clinical trials, the need to obtain regulatory and marketing approvals for its product candidates, competitive developments, the need to successfully commercialize and gain market acceptance of the Company’s product candidates, its right to develop and commercialize its product candidates pursuant to the terms and conditions of the licenses granted to the Company, protection of proprietary technology, the ability to make milestone, royalty or other payments due under licensing agreements, and the need to secure and maintain adequate manufacturing arrangements with third-parties. If the Company does not successfully commercialize or partner its product candidates, it will be unable to generate product revenue or achieve profitability.
Cash, Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Company’s balance sheets and which, in aggregate, represent the amounts reported in the accompanying statements of cash flows (in thousands):
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June 30, |
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December 31, |
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2023 |
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2022 |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash in other long-term assets |
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Total |
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$ |
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$ |
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June 30, |
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December 31, |
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2022 |
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2021 |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash in other long-term assets |
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