Financial Performance - Total operating expenses for Q3 2023 were $53.3 million, an increase of 45% compared to $36.7 million in Q3 2022[12]. - Net loss for Q3 2023 was $51.0 million, compared to a net loss of $35.3 million in Q3 2022, representing a 44% increase in losses[12]. - The company reported a net loss per share of $1.24 for Q3 2023, compared to $0.87 for Q3 2022[12]. - The net loss for the nine months ended September 30, 2023, was $115,333, compared to a net loss of $92,773 for the same period in 2022, representing a 24.2% increase in losses[17]. - The company incurred a net loss of $115.3 million for the nine months ended September 30, 2023, compared to $92.8 million for the same period in 2022, reflecting a 24% increase in losses[80]. - The company reported net losses of $51.0 million for Q3 2023, compared to $35.3 million for Q3 2022, marking a 44% increase in losses[80]. Research and Development Expenses - Research and development expenses were $45.8 million in Q3 2023, up from $29.4 million in Q3 2022, reflecting a 56% increase[12]. - Research and development expenses for Q3 2023 were $45.8 million, a 56% increase from $29.4 million in Q3 2022[81]. - For the nine months ended September 30, 2023, research and development expenses rose by $26.8 million (37%) compared to the same period in 2022, driven by a $22.3 million increase in clinical and development costs[82]. - Research and development expenses increased by $16.4 million (56%) for the three months ended September 30, 2023, compared to the same period in 2022, primarily due to a $14.7 million increase in clinical and development costs[82]. Cash and Liquidity - Cash, cash equivalents, and restricted cash at the end of the period were $19,650, down from $49,120 at the end of the previous year, reflecting a decrease of 60%[17]. - As of September 30, 2023, the company had cash, cash equivalents, and investments totaling $196.4 million[88]. - The company experienced a net increase in cash, cash equivalents, and restricted cash of $(29.2) million for the nine months ended September 30, 2023, compared to $(314.5) million for the same period in 2022[92]. - The company has borrowed $10.0 million under a Loan Agreement and has access to draw an additional $40.0 million through the end of 2023, with potential further funding of $50.0 million based on milestones[111]. Equity and Stockholder Information - The company issued 290,000 shares under equity incentive plans during the quarter[16]. - As of September 30, 2023, the company had 41,151,819 shares of common stock outstanding, an increase from 40,861,386 shares as of December 31, 2022[43]. - The total stock options issued and outstanding as of September 30, 2023, were 9,114,886, compared to 6,214,107 for the same period in 2022, indicating a 46.0% increase[55]. - The company completed a follow-on public offering on October 10, 2023, issuing 8,663,793 shares of common stock and receiving net proceeds of approximately $59.0 million after expenses[60]. Debt and Liabilities - Total liabilities increased to $51.4 million from $43.0 million at the end of 2022[10]. - The Company entered into a loan agreement for a secured term loan facility of up to $100.0 million, with an initial draw of $10.0 million and access to an additional $40.0 million through the end of 2023[40]. - As of September 30, 2023, the future maturities under the loan agreement total $10.6 million, with $5.2 million due in 2026 and $4.9 million due in 2027[42]. - Interest expense incurred in connection with the loan agreement was $0.3 million for the three months ended September 30, 2023, and $0.8 million for the nine months ended September 30, 2023[40]. Clinical Trials and Product Development - Evorpacept demonstrated a confirmed overall response rate (ORR) of 52% in combination with trastuzumab, ramucirumab, and paclitaxel for advanced gastric/GEJ cancer, compared to 22% for the control group[65]. - The ASPEN-06 trial included 54 randomized patients previously treated with fam-trastuzumab deruxtecan-nxki and checkpoint inhibitors[65]. - The ASPEN-02 trial, evaluating evorpacept in combination with azacitidine for MDS, was terminated due to insufficient activity to support progression to Phase 2 trials[63]. - The company has initiated multiple clinical studies to explore combinations of evorpacept with anti-cancer antibodies and PD-1/PD-L1 immune checkpoint inhibitors[63]. Regulatory and Compliance Risks - The company must successfully complete clinical trials and obtain regulatory approvals to commercialize evorpacept, which is subject to comprehensive regulation by the FDA[113]. - The FDA may require additional data or clinical trials, potentially delaying clinical timelines for product candidates[114]. - The company faces risks related to the COVID-19 pandemic and geopolitical unrest, which could adversely impact its business and clinical trials[108]. - The company is subject to the Foreign Corrupt Practices Act and similar anti-bribery laws, which could result in serious consequences for violations, including criminal liability[134]. Market and Competitive Landscape - The company faces substantial competition from major pharmaceutical and biotechnology companies in developing immuno-oncology therapies[116]. - The company faces significant competition from various firms developing drugs targeting the CD47 pathway, including major players like Gilead Sciences and Pfizer[117]. - The company’s ability to generate revenue is contingent upon successful product development and regulatory approval, which are subject to various risks and uncertainties[120]. Intellectual Property and Patent Risks - The company faces risks related to potential litigation over intellectual property rights, which could result in significant liabilities and distract management[146]. - The company may need to obtain additional intellectual property rights from others to advance its research or allow commercialization of product candidates, which may not be available on reasonable terms[149]. - The company’s intellectual property rights may not provide competitive advantages due to limitations and potential invalidation of patents[148]. Operational and Management Challenges - The company has limited financial and managerial resources, which may lead to missed opportunities in pursuing potentially profitable product candidates[156]. - The company is vulnerable to product liability claims, and existing insurance coverage may not be sufficient to cover all potential liabilities[156]. - The company must effectively manage its information technology and cloud-based systems to avoid disruptions that could adversely affect business operations[156].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 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 001-39386 ALX ONCOLOGY HOLDINGS INC. (Exact name of Registrant as specified in its Charter) Delaware 85-0642577 (State or other juris ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 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 001-39386 ALX ONCOLOGY HOLDINGS INC. (Exact name of Registrant as specified in its Charter) Delaware 85-0642577 (State or other juri ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Number 001-39386 ALX ONCOLOGY HOLDINGS INC. (Exact name of Regis ...

[PART I FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Item 1 Financial Statements (Unaudited)](index=5&type=section&id=Item%201%20Financial%20Statements%20(Unaudited)) The unaudited financial statements reveal a decrease in total assets and stockholders' equity, alongside significant net losses driven by increased R&D expenses [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2022 | December 31, 2021 | | :---------------------------------- | :-------------- | :------------------ | | **Assets** | | | | Cash and cash equivalents | $66,378 | $363,667 | | Short-term investments | $246,988 | — | | Total current assets | $316,847 | $367,019 | | Total assets | $346,018 | $380,183 | | **Liabilities and Stockholders' Equity** | | | | Total current liabilities | $23,952 | $15,295 | | Total liabilities | $29,699 | $17,134 | | Total stockholders' equity | $316,319 | $363,049 | | Total liabilities and stockholders' equity | $346,018 | $380,183 | - Total assets decreased from **$380.2 million** at December 31, 2021, to **$346.0 million** at June 30, 2022, primarily due to a significant reduction in cash and cash equivalents, partially offset by new short-term investments[9](index=9&type=chunk) - Total stockholders' equity decreased from **$363.0 million** at December 31, 2021, to **$316.3 million** at June 30, 2022, mainly due to accumulated deficit and unrealized losses on available-for-sale investments[10](index=10&type=chunk) [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--------------------------------------------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $26,748 | $11,213 | $43,821 | $21,062 | | General and administrative | $7,041 | $5,086 | $14,715 | $9,445 | | Total operating expenses | $33,789 | $16,299 | $58,536 | $30,507 | | Loss from operations | $(33,789) | $(16,299) | $(58,536) | $(30,507) | | Interest income | $876 | $23 | $1,101 | $48 | | Net loss | $(32,920) | $(16,274) | $(57,453) | $(30,459) | | Net loss per share, basic and diluted | $(0.81) | $(0.40) | $(1.41) | $(0.76) | | Weighted-average shares of common stock used to compute net loss per shares, basic and diluted | 40,687,751 | 40,247,110 | 40,652,224 | 40,151,802 | - Net loss for the three months ended June 30, 2022, increased to **$32.9 million** from $16.3 million in the prior year, a **102% increase**, primarily due to higher operating expenses[12](index=12&type=chunk)[64](index=64&type=chunk) - Net loss for the six months ended June 30, 2022, increased to **$57.5 million** from $30.5 million in the prior year, an **89% increase**[12](index=12&type=chunk)[64](index=64&type=chunk) - Research and development expenses significantly increased by **139%** for the three months and **108%** for the six months ended June 30, 2022, compared to the same periods in 2021[12](index=12&type=chunk)[64](index=64&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(32,920) | $(16,274) | $(57,453) | $(30,459) | | Unrealized loss on available-for-sale investments | $(650) | — | $(1,256) | — | | Total comprehensive loss | $(33,570) | $(16,274) | $(58,709) | $(30,459) | - Total comprehensive loss for the three months ended June 30, 2022, was **$33.6 million**, including an unrealized loss of $0.7 million on available-for-sale investments, compared to $16.3 million in the prior year with no such loss[14](index=14&type=chunk) - For the six months ended June 30, 2022, total comprehensive loss was **$58.7 million**, including an unrealized loss of $1.3 million on available-for-sale investments, compared to $30.5 million in the prior year[14](index=14&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Condensed Consolidated Statements of Stockholders' Equity (in thousands, except share amounts) | Metric | Common Shares (June 30, 2022) | Common Stock Amount (June 30, 2022) | Additional Paid-In Capital (June 30, 2022) | Accumulated Other Comprehensive Loss (June 30, 2022) | Accumulated Deficit (June 30, 2022) | Total Stockholders' Equity (June 30, 2022) | | :---------------------------------------- | :---------------------------- | :-------------------------- | :--------------------------------------- | :--------------------------------------- | :---------------------------------- | :--------------------------------------- | | Balance as of December 31, 2021 | 40,587,067 | $41 | $564,993 | $0 | $(201,985) | $363,049 | | Issuance of common stock under equity incentive plans | 114,183 | $0 | $340 | $0 | $0 | $340 | | Issuance of common stock under employee stock purchase plan | 44,002 | $0 | $302 | $0 | $0 | $302 | | Stock-based compensation | — | $0 | $11,337 | $0 | $0 | $11,337 | | Unrealized loss on available-for-sale investments | — | $0 | $0 | $(1,256) | $0 | $(1,256) | | Net loss | — | $0 | $0 | $0 | $(57,453) | $(57,453) | | Balance as of June 30, 2022 | 40,745,252 | $41 | $576,972 | $(1,256) | $(259,438) | $316,319 | - Total stockholders' equity decreased from **$363.0 million** at December 31, 2021, to **$316.3 million** at June 30, 2022, primarily due to a net loss of $57.5 million and an accumulated other comprehensive loss of $1.3 million[16](index=16&type=chunk) - Additional paid-in capital increased by **$11.9 million**, driven by stock-based compensation of $11.3 million and proceeds from equity incentive plans and employee stock purchase plans[16](index=16&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------------------------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(37,672) | $(25,757) | | Net cash used in investing activities | $(260,053) | $(7) | | Net cash provided by financing activities | $502 | $1,509 | | Net decrease in cash, cash equivalents and restricted cash | $(297,223) | $(24,255) | | Cash, cash equivalents and restricted cash at end of period | $66,444 | $409,964 | - Net cash used in operating activities increased to **$37.7 million** for the six months ended June 30, 2022, from $25.8 million in the prior year, driven by a higher net loss[18](index=18&type=chunk)[71](index=71&type=chunk) - Net cash used in investing activities significantly increased to **$260.1 million** for the six months ended June 30, 2022, primarily due to purchases of short-term and long-term investments[18](index=18&type=chunk)[74](index=74&type=chunk) - Net cash provided by financing activities decreased to **$0.5 million** for the six months ended June 30, 2022, from $1.5 million in the prior year[18](index=18&type=chunk)[75](index=75&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [(1) ORGANIZATION](index=10&type=section&id=(1)%20ORGANIZATION) - ALX Oncology Holdings Inc is a clinical-stage immuno-oncology company focused on developing therapies that block the CD47 checkpoint pathway to fight cancer[20](index=20&type=chunk) - The Company has not realized product revenues and expects to incur additional losses, planning to raise capital through equity sales, debt financings, or strategic alliances[20](index=20&type=chunk) - Management believes existing capital resources are sufficient to fund projected operating requirements for at least the next twelve months[20](index=20&type=chunk) [(2) SIGNIFICANT ACCOUNTING POLICIES](index=10&type=section&id=(2)%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP and SEC interim reporting rules, with certain disclosures condensed or omitted[21](index=21&type=chunk) - The Company's investments are classified as available-for-sale, carried at fair value, and include money market funds, U.S. Treasury securities, corporate debt, commercial paper, and asset-backed securities[24](index=24&type=chunk) - No new or material changes to significant accounting policies were reported, except for the policy on Investments[23](index=23&type=chunk) [(3) FAIR VALUE OF FINANCIAL INSTRUMENTS](index=11&type=section&id=(3)%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) Fair Value of Cash Equivalents and Available-for-Sale Investments (in thousands) | Metric | June 30, 2022 | December 31, 2021 | | :-------------------------------- | :-------------- | :------------------ | | Cash and cash equivalents | $55,205 | $357,181 | | Short-term investments | $246,988 | — | | Long-term investments | $10,860 | — | | Total | $313,053 | $357,181 | - The Company classifies financial assets into **Level 1** (quoted prices in active markets) and **Level 2** (observable inputs other than active market prices) of the fair value hierarchy[25](index=25&type=chunk) - As of June 30, 2022, unrealized losses on available-for-sale investments were non-credit related, and the Company does not intend to sell these investments before recovery of their amortized cost basis[29](index=29&type=chunk) [(4) BALANCE SHEET COMPONENTS](index=13&type=section&id=(4)%20BALANCE%20SHEET%20COMPONENTS) Property and Equipment, Net (in thousands) | Metric | June 30, 2022 | December 31, 2021 | | :---------------------------------------- | :-------------- | :------------------ | | Property and equipment, gross | $1,835 | $960 | | Less: accumulated depreciation and amortization | $(205) | $(63) | | Property and equipment, net | $1,630 | $897 | Other Assets (in thousands) | Metric | June 30, 2022 | December 31, 2021 | | :---------------------------------------- | :-------------- | :------------------ | | Long-term prepaid clinical expenses | $7,012 | $6,694 | | Operating lease right-of-use assets | $6,083 | $1,829 | | Total other assets | $16,681 | $12,267 | Accrued Expenses and Other Current Liabilities (in thousands) | Metric | June 30, 2022 | December 31, 2021 | | :---------------------------------------- | :-------------- | :------------------ | | Accrued clinical and nonclinical study costs | $4,237 | $4,125 | | Accrued contract manufacturing | $2,811 | $693 | | Total accrued expenses and other current liabilities | $12,747 | $9,901 | [(5) LEASES](index=13&type=section&id=(5)%20LEASES) - The Company has operating leases for office and laboratory space in South San Francisco and Palo Alto, California, and finance leases for pharmaceutical support services equipment[33](index=33&type=chunk)[34](index=34&type=chunk) Total Lease Costs (in thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $271 | $62 | $520 | $97 | | Finance lease cost | $114 | $93 | $229 | $151 | | Total lease costs | $515 | $172 | $975 | $287 | - Operating lease costs significantly increased for both the three and six months ended June 30, 2022, primarily due to the expansion of new laboratory space[36](index=36&type=chunk) [(6) STOCKHOLDERS' EQUITY](index=15&type=section&id=(6)%20STOCKHOLDERS'%20EQUITY) - As of June 30, 2022, the Company had **40,745,252 shares** of common stock outstanding, with **11,213,603 shares** reserved for future issuance under equity incentive plans and the Employee Stock Purchase Plan[39](index=39&type=chunk)[40](index=40&type=chunk) [(7) STOCK-BASED COMPENSATION](index=15&type=section&id=(7)%20STOCK-BASED%20COMPENSATION) - The 2020 Equity Incentive Plan and Employee Stock Purchase Plan shares increased on January 1, 2022, providing more shares for future issuance[41](index=41&type=chunk) Stock-based Compensation Expense (in thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $2,690 | $715 | $4,765 | $1,294 | | General and administrative | $3,146 | $1,522 | $6,572 | $2,743 | | Total | $5,836 | $2,237 | $11,337 | $4,037 | - Total stock-based compensation expense increased significantly to **$5.8 million** for the three months and **$11.3 million** for the six months ended June 30, 2022, compared to the prior year periods[42](index=42&type=chunk) [(8) RELATED-PARTY TRANSACTIONS](index=16&type=section&id=(8)%20RELATED-PARTY%20TRANSACTIONS) - The Company has a research and development services agreement and a collaboration agreement with Tallac Therapeutics, Inc, for preclinical research and joint development of a novel cancer immunotherapy (ALTA-002)[45](index=45&type=chunk)[46](index=46&type=chunk) - R&D costs related to the Tallac Collaboration Agreement increased to **$2.5 million** for the three months and **$3.7 million** for the six months ended June 30, 2022, from $0.6 million for both periods in 2021[46](index=46&type=chunk) [(9) NET LOSS PER SHARE](index=17&type=section&id=(9)%20NET%20LOSS%20PER%20SHARE) Net Loss Per Share (in thousands, except per share data) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(32,920) | $(16,274) | $(57,453) | $(30,459) | | Net loss per share, basic and diluted | $(0.81) | $(0.40) | $(1.41) | $(0.76) | | Weighted-average shares outstanding, basic and diluted | 40,687,751 | 40,247,110 | 40,652,224 | 40,151,802 | - Basic and diluted net loss per share were the same for all periods presented due to the Company being in a loss position, making potential common stock anti-dilutive[48](index=48&type=chunk) - Potentially dilutive securities, including stock options and restricted stock, totaling **5.7 million shares** as of June 30, 2022, were excluded from diluted EPS calculation[49](index=49&type=chunk) [(10) COMMITMENTS AND CONTINGENCIES](index=17&type=section&id=(10)%20COMMITMENTS%20AND%20CONTINGENCIES) - The Company has contractual obligations for manufacturing and service contracts totaling approximately **$49.2 million** as of June 30, 2022, primarily for evorpacept clinical trials[52](index=52&type=chunk)[76](index=76&type=chunk) - No pending or threatened material legal proceedings were reported as of June 30, 2022[51](index=51&type=chunk) [(11) SUBSEQUENT EVENTS](index=18&type=section&id=(11)%20SUBSEQUENT%20EVENTS) - The Company did not identify any subsequent events requiring adjustment or disclosure in the financial statements up to the date of issuance[54](index=54&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial condition and results, highlighting increased operating losses from R&D, the current liquidity position, and future funding needs [Overview](index=19&type=section&id=Overview) - ALX Oncology is a clinical-stage immuno-oncology company developing therapies that block the CD47 checkpoint pathway, with **evorpacept** as its lead product candidate in multiple Phase 1 and 2 clinical trials[56](index=56&type=chunk) - Evorpacept has received **FDA Fast Track designation** for first-line advanced HNSCC and HER2-overexpressing gastric/GEJ cancer, and **Orphan Drug Designation** for gastric/GEJ cancer and AML[56](index=56&type=chunk) - The Company has incurred significant net losses since inception, with **$57.5 million** for the six months ended June 30, 2022, and expects increasing operating losses as it advances product candidates and expands operations[57](index=57&type=chunk) [Components of Results of Operations](index=20&type=section&id=Components%20of%20Results%20of%20Operations) [Research and Development Expenses](index=20&type=section&id=Research%20and%20Development%20Expenses) - R&D expenses primarily consist of costs for evorpacept development, including preclinical and clinical development, employee-related expenses, clinical material production, and laboratory/vendor expenses[58](index=58&type=chunk) - The Company expenses R&D costs as incurred and expects them to increase substantially due to advancing existing and developing new product candidates, and conducting larger clinical trials[59](index=59&type=chunk) [General and Administrative Expenses](index=21&type=section&id=General%20and%20Administrative%20Expenses) - G&A expenses include personnel-related costs, business development, facilities, depreciation, and professional services, expected to increase with headcount, infrastructure, and public company compliance[60](index=60&type=chunk) [Interest Income](index=21&type=section&id=Interest%20Income) - Interest income is primarily derived from cash, cash equivalents, and short-term and long-term investments[61](index=61&type=chunk) [Other Income (Expense), Net](index=22&type=section&id=Other%20Income%20(Expense),%20Net) - Other income (expense), net, primarily consists of interest expense on finance leases[62](index=62&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) Summary of Results of Operations (in thousands) | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $26,748 | $11,213 | $43,821 | $21,062 | | General and administrative | $7,041 | $5,086 | $14,715 | $9,445 | | Total operating expenses | $33,789 | $16,299 | $58,536 | $30,507 | | Net loss | $(32,920) | $(16,274) | $(57,453) | $(30,459) | - Research and development expenses increased by **$15.5 million (139%)** for the three months and **$22.8 million (108%)** for the six months ended June 30, 2022, primarily due to increased clinical and development costs, personnel, and stock-based compensation[63](index=63&type=chunk)[65](index=65&type=chunk) - General and administrative expenses increased by **$2.0 million (38%)** for the three months and **$5.3 million (56%)** for the six months ended June 30, 2022, mainly due to higher stock-based compensation and headcount growth[66](index=66&type=chunk)[67](index=67&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2022, the Company had **$324.2 million** in cash, cash equivalents, and short-term and long-term investments[66](index=66&type=chunk) - The Company believes existing capital resources are sufficient to fund operating expenses and capital expenditure requirements through the **fourth quarter of 2024**[69](index=69&type=chunk) - Future funding will be required through equity offerings, debt financings, collaborations, or licensing arrangements, with no committed external sources currently[91](index=91&type=chunk) Summary of Net Cash Flow Activity (in thousands) | Metric | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :-------------------------------------------------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(37,672) | $(25,757) | | Net cash used in investing activities | $(260,053) | $(7) | | Net cash provided by financing activities | $502 | $1,509 | | Net decrease in cash, cash equivalents and restricted cash | $(297,223) | $(24,255) | Contractual Obligations and Commitments as of June 30, 2022 (in thousands) | Type | Total | 2022 (remaining 6 months) | 2023-2024 | 2025-2026 | Thereafter | | :-------------------------------- | :------ | :------------------------ | :-------- | :-------- | :--------- | | Operating lease obligations | $8,572 | $549 | $2,519 | $2,504 | $3,000 | | Finance lease obligations | $504 | $216 | $288 | — | — | | Manufacturing and service contracts | $49,150 | $17,205 | $31,727 | $218 | — | | Total | $58,226 | $17,970 | $34,534 | $2,722 | $3,000 | [Critical Accounting Policies and Significant Judgments and Estimates](index=26&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) - The Company's financial statements rely on estimates and assumptions, particularly for long-lived assets, clinical trial accruals, fair value measurements, income taxes, and stock-based compensation[79](index=79&type=chunk) - No material changes to critical accounting policies were reported during the six months ended June 30, 2022, from those discussed in the 2021 Annual Report on Form 10-K[79](index=79&type=chunk) [Recent Accounting Pronouncements](index=26&type=section&id=Recent%20Accounting%20Pronouncements) - No new accounting pronouncements were identified that would have a material impact on the Company's financial statements[25](index=25&type=chunk)[80](index=80&type=chunk) [Item 3 Quantitative and Qualitative Disclosures about Market Risk](index=26&type=section&id=Item%203%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The Company's market risk exposure is primarily from interest rates, credit, and foreign currency, though these are not currently considered material [Interest Rate Risk](index=26&type=section&id=Interest%20Rate%20Risk) - The Company's primary market risk exposure is interest rate sensitivity, with **$324.2 million** in cash, cash equivalents, and investments as of June 30, 2022[81](index=81&type=chunk) - An immediate **100 basis point change** in interest rates would not materially affect the fair market value of the Company's cash, cash equivalents, and investments[81](index=81&type=chunk) [Credit Risk](index=26&type=section&id=Credit%20Risk) - The Company's financial instruments, including cash, cash equivalents, and investments, are subject to credit risk, but investments are limited to highly rated corporate entities and government securities[82](index=82&type=chunk) - No realized losses on deposits or investments have been experienced during the periods presented[82](index=82&type=chunk) [Foreign Currency Risk](index=26&type=section&id=Foreign%20Currency%20Risk) - The Company has limited exposure to foreign currency risk from contracts denominated primarily in Euro, but foreign currency transaction gains and losses have not been material[83](index=83&type=chunk) - A **10.0% increase or decrease** in current exchange rates would not have a material effect on financial results[83](index=83&type=chunk) [Item 4 Controls and Procedures](index=26&type=section&id=Item%204%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were effective as of June 30, 2022, with no material changes in internal control [Evaluation of Disclosure Controls and Procedures](index=26&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) - Management, including the CEO and CFO, concluded that disclosure controls and procedures were **effective** as of June 30, 2022, ensuring timely and accurate reporting[84](index=84&type=chunk)[85](index=85&type=chunk) [Changes in Internal Control over Financial Reporting](index=27&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2022[86](index=86&type=chunk) [PART II OTHER INFORMATION](index=28&type=section&id=PART%20II%20OTHER%20INFORMATION) [Item 1 Legal Proceedings](index=28&type=section&id=Item%201%20Legal%20Proceedings) The Company is not currently involved in any material legal proceedings, though it may encounter ordinary course claims that could negatively impact the business - The Company is not currently a party to any material legal proceedings[87](index=87&type=chunk) - Litigation, if it arises, could adversely impact the business due to defense and settlement costs, diversion of management resources, and reputational harm[87](index=87&type=chunk) [Item 1A Risk Factors](index=28&type=section&id=Item%201A%20Risk%20Factors) The Company faces significant risks in its financial position, product development, regulatory environment, intellectual property, and operational challenges [Risk Factors Summary](index=28&type=section&id=Risk%20Factors%20Summary) - Key risks include **significant net losses**, the need for substantial additional capital, limited operating history, stock price volatility, and heavy dependence on the success of evorpacept[89](index=89&type=chunk) - Other risks involve the unpredictability of clinical trial outcomes, potential adverse events, regulatory approval challenges, intellectual property protection, reliance on key personnel and third parties, and the impact of the COVID-19 pandemic[89](index=89&type=chunk) [Risks Related to Our Financial Position and Need for Additional Capital](index=29&type=section&id=Risks%20Related%20to%20Our%20Financial%20Position%20and%20Need%20for%20Additional%20Capital) - The Company has incurred significant net losses since inception (**$259.4 million accumulated deficit** as of June 30, 2022) and expects to continue incurring losses for the foreseeable future[90](index=90&type=chunk) - **Substantial additional capital** will be required to finance operations, and failure to raise it on acceptable terms could lead to delays or elimination of R&D programs[91](index=91&type=chunk) - The Company has a limited operating history and no products approved for commercial sale, making it difficult to evaluate its likelihood of success and viability[91](index=91&type=chunk) [Risks Related to the Discovery, Development and Commercialization of Our Product Candidates](index=31&type=section&id=Risks%20Related%20to%20the%20Discovery,%20Development%20and%20Commercialization%20of%20Our%20Product%20Candidates) - The Company is substantially dependent on the success of its lead product candidate, **evorpacept**, which is in clinical development and has not completed a pivotal trial[93](index=93&type=chunk) - Preclinical and early clinical trial outcomes may not predict success in later trials, and clinical trials are expensive, time-consuming, and may fail to demonstrate adequate safety or efficacy[93](index=93&type=chunk)[94](index=94&type=chunk) - Product candidates may cause significant adverse events or undesirable side effects, potentially preventing regulatory approval, limiting commercial potential, or leading to market withdrawal[96](index=96&type=chunk) - The Company faces substantial competition from major pharmaceutical and biotechnology companies developing immuno-oncology therapies, including those targeting the CD47 pathway[98](index=98&type=chunk)[99](index=99&type=chunk) - Reliance on third parties for manufacturing and clinical trials increases risks of insufficient supply, quality issues, and delays[102](index=102&type=chunk)[104](index=104&type=chunk) [Risks Related to Government Regulation](index=42&type=section&id=Risks%20Related%20to%20Government%20Regulation) - Even if product candidates receive regulatory approval, they will be subject to significant ongoing post-marketing regulatory requirements and oversight, leading to additional expenses[108](index=108&type=chunk) - The regulatory approval processes are lengthy, time-consuming, and unpredictable, potentially preventing the Company from generating product revenue or commercializing products outside the U.S[109](index=109&type=chunk) - Failure to obtain or maintain adequate coverage and reimbursement for approved products could limit marketability and revenue generation[106](index=106&type=chunk) - Business operations are subject to federal and state healthcare fraud and abuse laws, false claims laws, and health information privacy and security laws, with non-compliance leading to substantial penalties[113](index=113&type=chunk) - Data collection and transfer are governed by restrictive regulations like GDPR, UK GDPR, and CCPA, increasing compliance costs and potential liability[115](index=115&type=chunk)[116](index=116&type=chunk) [Risks Related to Intellectual Property](index=51&type=section&id=Risks%20Related%20to%20Intellectual%20Property) - Inability to obtain, maintain, and enforce patent protection for product candidates and related technology could materially harm the business[117](index=117&type=chunk) - Patent protection may be inadequate globally, and changes in patent laws or jurisprudence could diminish the value of patents[118](index=118&type=chunk)[119](index=119&type=chunk) - The Company may become involved in lawsuits to protect or enforce patents and trade secrets, which are expensive, time-consuming, and may be unsuccessful[122](index=122&type=chunk) - Commercial success depends on operating without infringing third-party intellectual property rights, and the Company may be subject to claims of infringement[123](index=123&type=chunk) [Risks Related to Our Operations](index=58&type=section&id=Risks%20Related%20to%20Our%20Operations) - The Company needs to grow its organization and may experience difficulties managing this growth, including recruiting and retaining qualified personnel[127](index=127&type=chunk)[129](index=129&type=chunk) - International operations expose the Company to business, regulatory, political, operational, financial, pricing, and reimbursement risks[131](index=131&type=chunk) - Reliance on third parties for operational and administrative services, and potential system failures or security breaches, could adversely affect the business[133](index=133&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk) - The ongoing **COVID-19 pandemic** continues to adversely impact business, clinical trials, and preclinical research, causing potential delays and increased costs[134](index=134&type=chunk)[135](index=135&type=chunk) [Risks Related to Ownership of Our Common Stock](index=65&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) - The trading market for common stock may not be sustained, and future sales of shares could cause the stock price to fall due to dilution[141](index=141&type=chunk)[145](index=145&type=chunk) - The stock price may be **highly volatile** due to various factors, including clinical trial results, regulatory developments, competition, and macroeconomic conditions[142](index=142&type=chunk)[143](index=143&type=chunk) - The Company incurs significant increased costs and management resources as a public company, especially after no longer qualifying as an 'emerging growth company'[146](index=146&type=chunk)[147](index=147&type=chunk) - Principal stockholders and management own a significant percentage of stock, allowing them to exert substantial control over matters subject to stockholder approval[148](index=148&type=chunk) [General Risks](index=72&type=section&id=General%20Risks) - Business disruptions from natural disasters, public health crises, or man-made events could seriously harm future revenue and financial condition[151](index=151&type=chunk) - System failures or security breaches could lead to data loss, delays in regulatory approval, increased costs, and reputational damage[152](index=152&type=chunk)[153](index=153&type=chunk) - Disclosure controls and procedures may not prevent or detect all errors or acts of fraud, potentially leading to misstated financial reports[154](index=154&type=chunk) [Item 2 Unregistered Sales of Equity Securities and Use of Proceeds](index=74&type=section&id=Item%202%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or issuer purchases occurred, and IPO proceeds were invested according to policy with no change in planned use - Proceeds from the initial public offering were invested in accordance with the Company's investment policy, with no material change in planned use[156](index=156&type=chunk) - No unregistered sales of equity securities or issuer purchases of equity securities occurred during the period[156](index=156&type=chunk) [Item 3 Defaults Upon Senior Securities](index=74&type=section&id=Item%203%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the Company for the reporting period - This item is not applicable[157](index=157&type=chunk) [Item 4 Mine Safety Disclosures](index=74&type=section&id=Item%204%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the reporting period - This item is not applicable[157](index=157&type=chunk) [Item 5 Other Information](index=74&type=section&id=Item%205%20Other%20Information) No other information is reported under this item - No other information is reported[157](index=157&type=chunk) [Item 6 Exhibits](index=75&type=section&id=Item%206%20Exhibits) This section lists the exhibits filed with the Quarterly Report, including officer certifications and Inline XBRL documents - Exhibits include certifications from the Principal Executive Officer and Principal Financial Officer (31.1, 31.2, 32.1, 32.2) and various Inline XBRL documents (101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[158](index=158&type=chunk)[159](index=159&type=chunk) [SIGNATURES](index=76&type=section&id=SIGNATURES) - The report is signed by Jaume Pons, Ph.D. (President and CEO), Peter Garcia (CFO), and Shelly Pinto (VP, Finance and Chief Accounting Officer) on August 8, 2022[161](index=161&type=chunk)

Licensing and Commercialization - The company has entered into license agreements with third parties for the development and commercialization of product candidates, including evorpacept, with customary payment terms including milestone payments and low single-digit royalties [147]. - The company plans to retain significant development and commercial rights to its product candidates and aims to build the necessary infrastructure for commercialization in the U.S. and potentially other regions [148]. Clinical Trials and Regulatory Compliance - The existing supply of evorpacept drug product is sufficient to complete clinical trials through Q1 2023, with plans to manufacture additional supplies with existing CMOs [151]. - The FDA regulates biologic products, and the company must navigate extensive regulatory requirements for product development and approval [157]. - The BLA submission process requires substantial data from preclinical and clinical studies, and the FDA aims to review standard applications within ten months [173]. - Clinical trials are conducted in three phases, with Phase 1 focusing on safety and dosage, Phase 2 on preliminary efficacy, and Phase 3 on larger populations for clinical efficacy [170]. - The company relies on contract manufacturing organizations (CMOs) for drug substance and product, as it does not intend to establish its own manufacturing facilities [150]. - The company must comply with cGMP requirements to ensure consistent production quality and safety of its biologic products [171]. - The FDA may issue an approval letter or a Complete Response letter after evaluating a BLA, with the latter outlining deficiencies in the submission [176]. - Products may receive expedited development and review through programs like Fast Track, which allows for frequent interactions with the review team and potential priority review [178]. - Breakthrough therapy designation can expedite development for products showing substantial improvement over existing therapies, involving more intensive FDA interaction [179]. - Priority review aims for FDA action on marketing applications within six months, compared to ten months under standard review [181]. - Accelerated approval may be granted if a product shows effects on a surrogate endpoint likely to predict clinical benefit, with post-marketing trials required [182]. - Orphan drug designation is available for drugs intended to treat rare diseases affecting fewer than 200,000 individuals in the U.S. [184]. - Orphan drug exclusivity grants seven years of market exclusivity following FDA approval for the designated disease [185]. - The FDA requires ongoing compliance with regulations post-approval, including potential modifications to labeling and manufacturing processes [188]. - Non-compliance with FDA regulations can lead to severe consequences, including product recalls and fines [190]. - The BPCIA created an abbreviated approval pathway for biosimilars, with a 12-year exclusivity period for reference products [196]. - The European Union's Clinical Trials Regulation EU No 536/2014 aims to harmonize clinical trial authorization and improve transparency [201]. - Medicinal products in the European Economic Area require a Marketing Authorization (MA), which can be either Community MA or National MA [202]. - The Community MA is mandatory for certain products, including biotechnology and orphan medicinal products, while National MAs are issued by individual member states [202]. - The assessment of the risk-benefit balance of a product is conducted by the EMA or competent authorities before granting the MA [203]. Market Competition and Financial Risks - The company faces significant competition in the immuno-oncology market from major pharmaceutical and biotechnology companies, including AstraZeneca, Bristol Myers Squibb, and Merck [152]. - Competitors may have greater financial resources and expertise, which could impact the company's market position if they develop safer or more effective products [155]. - The pharmaceutical industry faces pricing pressures due to managed healthcare trends and legislative proposals affecting coverage and reimbursement [211]. - Third-party payors may deny coverage if a product is deemed not medically necessary or cost-effective, impacting sales potential [210]. - The Affordable Care Act (ACA) significantly changed healthcare financing and includes provisions affecting pharmaceutical pricing and rebates [214]. - The ACA introduced a new methodology for calculating Medicaid Drug Rebate Program rebates for certain drug administration methods [216]. - The pharmaceutical industry is subject to extensive regulations, including compliance with federal and state fraud and abuse laws [205]. - Companies may face significant penalties for violations of healthcare laws, which could adversely affect business operations and financial results [208]. Financial Position and Employee Relations - As of December 31, 2021, the company had cash and cash equivalents of $363.7 million, with $363.4 million exceeding the Federal Deposit Insurance Corporation insurance limit of $250,000 [580][581]. - The company is exposed to interest rate risk, but an immediate 100 basis point change in interest rates would not have a material effect on the fair market value of its cash and cash equivalents [580]. - The company has limited exposure to foreign currency risk, primarily with contracts denominated in Euros, and a 10% change in exchange rates would not materially affect financial results [582]. - The company employs 43 individuals, with 19 holding Ph.D. or M.D. degrees, and 29 engaged in research and development activities [222]. - The company emphasizes a diverse, equitable, and inclusive culture to attract and retain skilled employees in a competitive biopharmaceutical industry [222]. - The company maintains good relations with employees and offers a collaborative work environment, flexible work arrangements, and professional development opportunities [222]. Legislative and Regulatory Changes - Legislative changes have resulted in aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, affecting the company's financial operations [218]. - The company is subject to heightened governmental scrutiny regarding product pricing, which may lead to additional regulations impacting financial operations [219]. - The Right to Try Act allows certain patients to access investigational drugs without enrolling in clinical trials, but manufacturers are not obligated to provide these drugs [220]. Corporate Structure - The company has undergone a reorganization, becoming ALX Oncology Holdings Inc. on April 1, 2020, with ALX Oncology Limited as its wholly-owned subsidiary [223].