10-Q
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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 September 30, 2023

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: 001-38582

 

Allakos Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

45-4798831

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

825 Industrial Road, Suite 500

San Carlos, California

94070

(Address of principal executive offices)

(Zip Code)

 

 

(650) 597-5002

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

Common Stock, par value $0.001

ALLK

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. 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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

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

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

As of November 7, 2023, the registrant had 87,476,338 shares of common stock outstanding.

 


 

ALLAKOS INC.

Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

2

Item 1.

Financial Statements (Unaudited)

2

Balance Sheets

2

Statements of Operations and Comprehensive Loss

3

 

Statements of Stockholders’ Equity

4

Statements of Cash Flows

5

Notes to Unaudited Interim Financial Statements

6

Item 2.

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

17

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

26

Item 4.

Controls and Procedures

26

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

29

Item 3.

Defaults Upon Senior Securities

29

Item 4.

Mine Safety Disclosures

29

Item 5.

Other Information

29

Item 6.

Exhibits

30

Signatures

31

 

 

 

1


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited).

allakos inc.

balance sheets

(in thousands, except per share data)

 

 

 

September 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

70,519

 

 

$

87,217

 

Investments

 

 

123,389

 

 

 

192,569

 

Prepaid expenses and other current assets

 

 

24,371

 

 

 

29,057

 

Total current assets

 

 

218,279

 

 

 

308,843

 

Property and equipment, net

 

 

34,965

 

 

 

39,144

 

Operating lease right-of-use assets

 

 

24,167

 

 

 

30,225

 

Other long-term assets

 

 

6,084

 

 

 

8,208

 

Total assets

 

$

283,495

 

 

$

386,420

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

915

 

 

$

4,832

 

Accrued expenses and other current liabilities

 

 

22,535

 

 

 

25,206

 

Total current liabilities

 

 

23,450

 

 

 

30,038

 

Operating lease liabilities, net of current portion

 

 

39,002

 

 

 

45,949

 

Total liabilities

 

 

62,452

 

 

 

75,987

 

Contingencies (Note 7)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value per share; 20,000 shares
   authorized as of September 30, 2023 and December 31, 2022;
   
no shares issued and outstanding as of September 30, 2023
   and December 31, 2022

 

 

 

 

 

 

Common stock, $0.001 par value per share; 200,000 shares
   authorized as of September 30, 2023 and December 31, 2022;
   
87,476 and 85,387 shares issued and outstanding as of
   September 30, 2023 and December 31, 2022, respectively

 

 

87

 

 

 

85

 

Additional paid-in capital

 

 

1,276,954

 

 

 

1,243,408

 

Accumulated other comprehensive loss

 

 

(72

)

 

 

(284

)

Accumulated deficit

 

 

(1,055,926

)

 

 

(932,776

)

Total stockholders’ equity

 

 

221,043

 

 

 

310,433

 

Total liabilities and stockholders’ equity

 

$

283,495

 

 

$

386,420

 

 

See accompanying notes to unaudited interim financial statements

 

2


 

Allakos Inc.

Statements of Operations and Comprehensive Loss

(in thousands, except per share data)

(unaudited)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

36,749

 

 

$

18,438

 

 

$

97,107

 

 

$

229,693

 

General and administrative

 

 

11,461

 

 

 

13,007

 

 

 

33,966

 

 

 

46,520

 

Total operating expenses

 

 

48,210

 

 

 

31,445

 

 

 

131,073

 

 

 

276,213

 

Loss from operations

 

 

(48,210

)

 

 

(31,445

)

 

 

(131,073

)

 

 

(276,213

)

Interest income

 

 

2,590

 

 

 

711

 

 

 

7,965

 

 

 

898

 

Other expense, net

 

 

(6

)

 

 

(103

)

 

 

(42

)

 

 

(1,648

)

Net loss

 

 

(45,626

)

 

 

(30,837

)

 

 

(123,150

)

 

 

(276,963

)

Unrealized gain on investments

 

 

87

 

 

 

196

 

 

 

212

 

 

 

89

 

Comprehensive loss

 

$

(45,539

)

 

$

(30,641

)

 

$

(122,938

)

 

$

(276,874

)

Net loss per common share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.52

)

 

$

(0.53

)

 

$

(1.42

)

 

$

(4.95

)

Weighted-average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted

 

 

87,115

 

 

 

58,169

 

 

 

86,539

 

 

 

55,905

 

 

See accompanying notes to unaudited interim financial statements

 

3


 

Allakos Inc.

Statements of STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

 

 

 

Common Stock

 

 

Additional
Paid-In
Capital

 

 

Accumulated Other Comprehensive Gain (Loss)

 

 

Accumulated
Deficit

 

 

Total
Stockholders’
Equity

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2022

 

 

85,387

 

 

$

85

 

 

$

1,243,408

 

 

$

(284

)

 

$

(932,776

)

 

$

310,433

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

10,665

 

 

 

 

 

 

 

 

 

10,665

 

Issuance of common stock upon exercise of stock options

 

 

6

 

 

 

 

 

 

26

 

 

 

 

 

 

 

 

 

26

 

Issuance of common stock upon 2018 ESPP purchase

 

 

144

 

 

 

 

 

 

442

 

 

 

 

 

 

 

 

 

442

 

Issuance of common stock upon vesting of restricted stock units

 

 

881

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

Issuance of common stock under the ATM Offering, net of issuance costs

 

 

142

 

 

 

 

 

 

990

 

 

 

 

 

 

 

 

 

990

 

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

296

 

 

 

 

 

 

296

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(42,404

)

 

 

(42,404

)

Balance at March 31, 2023

 

 

86,560

 

 

$

86

 

 

$

1,255,530

 

 

$

12

 

 

$

(975,180

)

 

$

280,448

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

9,821

 

 

 

 

 

 

 

 

 

9,821

 

Issuance of common stock upon vesting of restricted stock units

 

 

263

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

(171

)

 

 

 

 

 

(171

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(35,120

)

 

 

(35,120

)

Balance at June 30, 2023

 

 

86,823

 

 

 

87

 

 

 

1,265,350

 

 

 

(159

)

 

 

(1,010,300

)

 

 

254,978

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

10,534

 

 

 

 

 

 

 

 

 

10,534

 

Issuance of common stock upon exercise of stock options

 

 

200

 

 

 

 

 

 

647

 

 

 

 

 

 

 

 

 

647

 

Issuance of common stock upon 2018 ESPP purchase

 

 

137

 

 

 

 

 

 

423

 

 

 

 

 

 

 

 

 

423

 

Issuance of common stock upon vesting of restricted stock units

 

 

316

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

87

 

 

 

 

 

 

87

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(45,626

)

 

 

(45,626

)

Balance at September 30, 2023

 

 

87,476

 

 

$

87

 

 

$

1,276,954

 

 

$

(72

)

 

$

(1,055,926

)

 

$

221,043

 

 

 

 

Common Stock

 

 

Additional
Paid-In
Capital

 

 

Accumulated Other Comprehensive Gain (Loss)

 

 

Accumulated
Deficit

 

 

Total
Stockholders’
Equity

 

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2021

 

 

54,622

 

 

$

54

 

 

$

1,058,399

 

 

$

(153

)

 

$

(612,824

)

 

$

445,476

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

11,392

 

 

 

 

 

 

 

 

 

11,392

 

Issuance of common stock upon exercise of stock options

 

 

34

 

 

 

 

 

 

104

 

 

 

 

 

 

 

 

 

104

 

Issuance of common stock upon 2018 ESPP purchase

 

 

42

 

 

 

 

 

 

243

 

 

 

 

 

 

 

 

 

243

 

Issuance of common stock upon vesting of restricted stock units

 

 

63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized loss on investments

 

 

 

 

 

 

 

 

 

 

 

(316

)

 

 

 

 

 

(316

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(197,023

)

 

 

(197,023

)

Balance at March 31, 2022

 

 

54,761

 

 

$

54

 

 

$

1,070,138

 

 

$

(469

)

 

$

(809,847

)

 

$

259,876

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

11,761

 

 

 

 

 

 

 

 

 

11,761

 

Issuance of common stock upon exercise of stock options

 

 

25

 

 

 

 

 

 

66

 

 

 

 

 

 

 

 

 

66

 

Issuance of common stock upon vesting of restricted stock units

 

 

58

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

209

 

 

 

 

 

 

209

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(49,103

)

 

 

(49,103

)

Balance at June 30, 2022

 

 

54,844

 

 

$

54

 

 

$

1,081,965

 

 

$

(260

)

 

$

(858,950

)

 

$

222,809

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

10,732

 

 

 

 

 

 

 

 

 

10,732

 

Issuance of common stock upon exercise of stock options

 

 

346

 

 

 

1

 

 

 

492

 

 

 

 

 

 

 

 

 

493

 

Issuance of common stock upon 2018 ESPP purchase

 

 

62

 

 

 

 

 

 

195

 

 

 

 

 

 

 

 

 

195

 

Issuance of common stock upon vesting of restricted stock units

 

 

59

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock upon registered direct offering, net

 

 

29,882

 

 

 

30

 

 

 

140,561

 

 

 

 

 

 

 

 

 

140,591

 

Unrealized gain on investments

 

 

 

 

 

 

 

 

 

 

 

196

 

 

 

 

 

 

196

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(30,837

)

 

 

(30,837

)

Balance at September 30, 2022

 

 

85,193

 

 

$

85

 

 

$

1,233,945

 

 

$

(64

)

 

$

(889,787

)

 

$

344,179

 

 

See accompanying notes to unaudited interim financial statements

 

4


 

Allakos Inc.

Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Nine Months Ended

 

 

 

September 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$

(123,150

)

 

$

(276,963

)

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

 

 

 

 

 

 

Depreciation and amortization

 

 

4,594

 

 

 

5,560

 

Stock-based compensation

 

 

31,020

 

 

 

33,885

 

Net amortization (accretion) of premiums and discounts on investments

 

 

(4,324

)

 

 

2,335

 

Noncash lease expense

 

 

1,106

 

 

 

2,459

 

Loss on disposal of property and equipment

 

 

3

 

 

 

28

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

4,790

 

 

 

12,569

 

Other long-term assets

 

 

2,124

 

 

 

(1,051

)

Accounts payable

 

 

(3,709

)

 

 

(8,820

)

Accrued expenses and other current liabilities

 

 

(2,372

)

 

 

157

 

Operating lease liabilities, net of current portion

 

 

(2,294

)

 

 

(3,344

)

Net cash used in operating activities

 

 

(92,212

)

 

 

(233,185

)

Cash flows from investing activities

 

 

 

 

 

 

Purchases of investments

 

 

(139,388

)

 

 

(139,958

)

Proceeds from sales of investments

 

 

 

 

 

19,989

 

Proceeds from maturities of investments

 

 

213,000

 

 

 

270,000

 

Proceeds from sale of property and equipment

 

 

 

 

 

1,169

 

Purchases of property and equipment

 

 

(626

)

 

 

(8,042

)

Net cash provided by investing activities

 

 

72,986

 

 

 

143,158

 

Cash flows from financing activities

 

 

 

 

 

 

Proceeds from issuance of common stock, net of issuance costs

 

 

990

 

 

 

140,591

 

Proceeds from exercise of stock options

 

 

673

 

 

 

663

 

Proceeds from issuance of common stock under the 2018 ESPP

 

 

865

 

 

 

438

 

Net cash provided by financing activities

 

 

2,528

 

 

 

141,692

 

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

 

 

(16,698

)

 

 

51,665

 

Cash, cash equivalents and restricted cash, beginning of period

 

 

88,689

 

 

 

155,097

 

Cash, cash equivalents and restricted cash, end of period