ALX Oncology(ALXO) - 2020 Q2 - Quarterly Report

Financial Performance - The company has incurred net losses of $11.3 million and $4.2 million for the three months ended June 30, 2020 and 2019, respectively, and $16.8 million and $8.4 million for the six months ended June 30, 2020 and 2019, respectively [132]. - The accumulated deficit as of June 30, 2020 was $89.6 million, up from $72.8 million as of December 31, 2019 [132]. - The company expects to continue incurring net losses for the foreseeable future [172]. - In the six months ended June 30, 2020, cash used in operating activities was $15.1 million, attributed to a net loss of $16.8 million [177]. Research and Development Expenses - Research and development expenses for the three months ended June 30, 2020 were $7.7 million, an increase of 111% compared to $3.6 million for the same period in 2019 [148]. - Total research and development expenses for the first half of 2020 were $11.5 million, a 56% increase from $7.4 million in the first half of 2019, mainly due to higher clinical and development costs [158]. - Research and development expenses for Q2 2020 were $7.7 million, a 111% increase from $3.6 million in Q2 2019, primarily due to a $2.3 million rise in stock-based compensation [151]. - The company has dosed over 150 subjects with ALX148 across various malignancies, indicating progress in clinical development [129]. Operating Expenses - Total operating expenses for the three months ended June 30, 2020 were $11.3 million, a 106% increase from $5.5 million in the same period of 2019 [148]. - General and administrative expenses for Q2 2020 totaled $3.2 million, up 367% from $0.7 million in Q2 2019, driven by a $1.4 million increase in other administrative costs [153]. - General and administrative expenses for the first half of 2020 reached $4.6 million, a 267% increase from $1.3 million in the first half of 2019, largely due to increased professional service fees [160]. - General and administrative expenses are anticipated to increase due to higher headcount and expanded infrastructure [145]. Revenue and Funding - Related-party revenue for the three months ended June 30, 2020 was $0.5 million, down from $1.3 million in the same period of 2019, reflecting decreased fee-for-service hours [149]. - The company reported a decrease in related-party revenue for the first half of 2020, totaling $1.2 million compared to $2.3 million in the same period of 2019, reflecting reduced service hours provided to Tallac Therapeutics [155]. - The company has no products approved for marketing and does not expect to generate revenue from product sales in the foreseeable future [135]. - The company has raised an aggregate of $180.9 million since inception, with $172.7 million raised from its initial public offering in July 2020 [131]. Cash and Capital Management - The company had cash and cash equivalents of $98.1 million as of June 30, 2020, following net proceeds of $175.1 million from stock sales and $5.8 million from term loan borrowings [163]. - The company raised net proceeds of $172.7 million from its initial public offering in July 2020, after deducting underwriting discounts and commissions [163]. - Cash provided by financing activities in the six months ended June 30, 2020, was $104.2 million, primarily from the sale of Series C convertible preferred stock [180]. - The company expects to fund its operating expenses and capital requirements through 2023 with the net proceeds from the IPO and existing cash [174]. - The company recognizes the need to raise additional capital to implement its business plan, with future capital requirements dependent on various factors including clinical trial progress and regulatory reviews [172]. - The company has no committed external sources of funds and may face dilution of ownership if additional capital is raised through equity offerings [173]. Debt and Obligations - The company entered into a Loan and Security Agreement with Silicon Valley Bank and WestRiver, providing for term loans of up to $10.0 million, with the first tranche of $6.0 million funded in December 2019 [165]. - The interest rate on the loans is set at 7.0% as of June 30, 2020, with interest-only payments required for the first 12 months [166]. - The company recorded a term loan compound derivative liability of $51,000, which is marked-to-market at each reporting date [170]. - The company has contractual obligations totaling $14.99 million, including operating lease obligations of $1.66 million and manufacturing contracts of $6.37 million [182].