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What changed in Aligos Therapeutics, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Aligos Therapeutics, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+589 added−534 removedSource: 10-K (2024-03-12) vs 10-K (2023-03-09)

Top changes in Aligos Therapeutics, Inc.'s 2023 10-K

589 paragraphs added · 534 removed · 438 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

158 edited+64 added−43 removed203 unchanged
Biggest changeSimilarly, among subjects with available data at Week 10, HBsAg levels declined in cohorts 1 and 2 to a maximum of 0.3 log 10 IU/mL and 0.7 log 10 IU/mL compared to no meaningful change in subjects dosed with ETV alone – see Figure 7. 10 Figure 6 – DNA, RNA over time in HBeAg positive subjects dosed with ALG-000184 + ETV or ETV (Hou et al., APASL 2023) Figure 7 – HBsAg over time in HBeAg positive subjects dosed with ALG-000184 + ETV or ETV alone (Hou et al., APASL 2023) Dosing in these cohorts, and in at least one additional cohort evaluating additional regimens and/or populations, will continue throughout 2023, and interim safety, PK, and antiviral activity data will be presented at scientific conferences throughout the year.
Biggest changeEvidence for the inhibition of cccDNA establishment/replenishment can be found in Figure 9, where the rates of multiple important cccDNA-derived viral antigens (HBsAg, HBcrAg, and HBeAg) are reduced over time and in a dose responsive manner (Yuen et al., AASLD 2023). 11 Figure 8 – DNA over time in HBeAg positive subjects dosed with ALG-000184 with or without ETV or ETV alone (Yuen et al., AASLD 2023) Figure 9 – HBV antigens over time in HBeAg positive subjects dosed with 300 mg ALG-000184 with or without ETV (Yuen et al., AASLD 2023) 12 Long term dosing in HBeAg positive and HBeAg negative subjects will continue throughout 2024, and interim safety, PK, and antiviral activity data will be presented at scientific conferences throughout the year.
We leverage our oligonucleotide and small molecule platforms, which are designed to identify drug candidates with pharmacologically optimized characteristics compared to other drug candidates, including the potential for improved efficacy, safety and/or route of administration.
We leverage our small molecule and oligonucleotide platforms, which are designed to identify drug candidates with pharmacologically optimized characteristics compared to other drug candidates, including the potential for improved efficacy, safety and/or route of administration.
In the United States, numerous federal and state laws and regulations, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws and regulations (e.g., Section 5 of the FTC Act), govern the collection, use, disclosure, and protection of health-related and other personal information could apply to our operations or the operations of our partners.
In the United States, numerous federal and state laws and regulations, including state data breach notification laws, state health information privacy laws, and federal and state consumer protection laws and regulations (e.g., Section 5 of the FTC Act), govern the collection, use, disclosure, and protection of health-related and other personal information and could apply to our operations or the operations of our partners.
Among the ACA’s provisions of importance to the pharmaceutical industry, in addition to those otherwise described above, are the following: • an annual, nondeductible fee on any entity that manufactures or imports certain specified branded prescription drugs and biologic agents apportioned among these entities according to their market share in some government healthcare programs; • an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13% of the average manufacturer price for most branded and generic drugs, respectively, and a cap on the total rebate amount for innovator drugs at 100% of the Average Manufacturer Price (AMP); • a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D; • extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; • expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals, including individuals with income at or below 133% of the federal poverty level, thereby potentially increasing manufacturers’ Medicaid rebate liability; 28 • expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; and • a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.
Among the ACA’s provisions of importance to the pharmaceutical industry, in addition to those otherwise described above, are the following: • an annual, nondeductible fee on any entity that manufactures or imports certain specified branded prescription drugs and biologic agents apportioned among these entities according to their market share in some government healthcare programs; • an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13% of the average manufacturer price for most branded and generic drugs, respectively, and a cap on the total rebate amount for innovator drugs at 100% of the Average Manufacturer Price (AMP); • a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturers’ outpatient drugs to be covered under Medicare Part D; • extension of manufacturers’ Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations; • expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals, including individuals with income at or below 133% of the federal poverty level, thereby potentially increasing manufacturers’ Medicaid rebate liability; 30 • expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program; and • a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.
We may opportunistically explore licensing agreements, collaborations or partnerships with one or more pharmaceutical companies to enhance our commercial capabilities. 12 Manufacturing We are currently developing drug candidates in two primary modalities: oligonucleotides and small molecules. We have internal oligonucleotide and small molecule chemistry teams that are able to produce drug candidates at sufficient scale to support discovery activities.
We may opportunistically explore licensing agreements, collaborations or partnerships with one or more pharmaceutical companies to enhance our commercial capabilities. Manufacturing We are currently developing drug candidates in two primary modalities: small molecules and oligonucleotides. We have internal small molecule and oligonucleotide chemistry teams that are able to produce drug candidates at sufficient scale to support discovery activities.
The iPSP must include an outline of the pediatric study or studies that the sponsor plans to conduct, including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the 25 requirement to provide data from pediatric studies along with supporting information.
The iPSP must include an outline of the pediatric study or studies that the sponsor plans to conduct, including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information, and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with supporting information.
Many of our competitors have established distribution channels for the commercialization of their products, whereas we have no such channel or capabilities. In addition, many competitors have greater name recognition and more extensive collaborative relationships. Any drug candidates that we successfully develop and commercialize may compete with existing therapies and/or new therapies that may become available in the future.
Many of our competitors have established distribution channels for the commercialization of their products, whereas we have no such channel or capabilities. In addition, many competitors have greater name recognition and more extensive collaborative relationships. 15 Any drug candidates that we successfully develop and commercialize may compete with existing therapies and/or new therapies that may become available in the future.
A fast track drug candidate may also be eligible for rolling review, where the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA.
A fast track drug candidate may also be eligible for rolling review, where the FDA may consider for review sections of the NDA on a rolling basis before the complete application is submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and 26 determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA.
The FDA may refer applications for novel drug products or drug products which present difficult questions of safety or efficacy to an advisory committee for review, evaluation and recommendation as to whether the application should be approved and under what conditions. 23 Before approving an NDA, the FDA typically will inspect the facility or facilities where the drug is manufactured.
The FDA may refer applications for novel drug products or drug products which present difficult questions of safety or efficacy to an advisory committee for review, evaluation and recommendation as to whether the application should be approved and under what conditions. Before approving an NDA, the FDA typically will inspect the facility or facilities where the drug is manufactured.
(known outside of the United States and Canada as MSD) (which 3 Merck Sharp & Dohme Corp., or Merck & Co., Inc., individually or together, are referred to herein as “Merck”). • Maximizing the value of our drug candidates. We currently hold worldwide development and commercialization rights, including through exclusive licenses, to all of our drug candidates.
(known outside of the United States and Canada as MSD) (which Merck Sharp & Dohme Corp., or Merck & Co., Inc., individually or together, are referred to herein as “Merck”). • Maximizing the value of our drug candidates. We currently hold worldwide development and commercialization rights, including through exclusive licenses, to all of our drug candidates.
Moreover, the time required for development, testing and regulatory review of our candidate drug candidates may 20 shorten the length of effective patent protection following commercialization. If we do obtain any patents for our drug candidates, the term of such patents depends upon the legal term of the patents in the countries in which they are obtained.
Moreover, the time required for development, testing and regulatory review of our candidate drug candidates may shorten the length of effective patent protection following commercialization. If we do obtain any patents for our drug candidates, the term of such patents depends upon the legal term of the patents in the countries in which they are obtained.
Clinical trials are conducted under protocols detailing, among other things, the objectives of the trial, the parameters to be used in monitoring safety and the efficacy criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND.
Clinical trials are conducted under protocols detailing, among other things, the objectives of the trial, the parameters to be used in monitoring safety and the efficacy 24 criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND.
With respect to all other compounds that are enabled by the licensed patents, those which are jointly invented by Aligos and Emory or inventors in the Schinazi laboratory, or which are disclosed in a specified licensed patent, are licensed to us exclusively including as to Emory, whereas all other such compounds are licensed to us non-exclusively.
With respect to all other compounds that are enabled by the licensed patents, those which are jointly invented by us and Emory or inventors in the Schinazi laboratory, or which are disclosed in a specified licensed patent, are licensed to us exclusively including as to Emory; whereas all other such compounds are licensed to us non-exclusively.
In this event, the application must be resubmitted with the additional information and is subject to payment of additional user fees. The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review.
In this event, the application must be resubmitted with the additional information and is subject to payment of additional user fees. 25 The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review.
Several companies, including Altimmune, Inc., GSK, Janssen and Transgene SA, are developing therapeutic vaccines for HBV, and several others have approved HBV vaccines, including Dynavax Technologies, 14 Inc., GSK, Johnson & Johnson, and Merck. Replicor, Inc. is developing nucleic acid polymers (NAPs) for use in CHB patients.
Several companies, including Altimmune, Inc., GSK, Janssen and Transgene SA, are developing therapeutic vaccines for HBV, and several others have approved HBV vaccines, including Dynavax Technologies, Inc., GSK, Johnson & Johnson, and Merck. Replicor, Inc. is developing nucleic acid polymers (NAPs) for use in CHB patients.
These studies are designed to evaluate the safety, dosage tolerance, metabolism 22 and pharmacologic actions of the drug in humans, the side effects associated with increasing doses, and if possible, to gain early evidence of effectiveness. • Phase 2 .
These studies are designed to evaluate the safety, dosage tolerance, metabolism and pharmacologic actions of the drug in humans, the side effects associated with increasing doses, and if possible, to gain early evidence of effectiveness. • Phase 2 .
Drug candidates like resmetirom, 7 which preferentially binds the THR‑ subtype, have been shown in clinical trials to lower lipid levels in serum and the liver, while avoiding the unwanted effects associated with THR-α stimulation.
Drug candidates like resmetirom, which preferentially binds the THR‑ subtype, have been shown in clinical trials to lower lipid levels in serum and the liver, while avoiding the unwanted effects associated with THR-α stimulation.
Due to the ongoing COVID-19 pandemic and the risk of additional novel coronaviruses emerging in the future, there is a need to develop novel therapeutics with pan-coronavirus activity that have a high barrier to resistance.
Due to the COVID-19 pandemic and the risk of additional novel coronaviruses emerging in the future, there is a need to develop novel therapeutics with pan-coronavirus activity that have a high barrier to resistance.
In the case of nucleos(t)ide analogs, long-term treatment can lower the amount of HBV DNA in circulation, resulting in improvements in long-term disease outcomes, but virological relapse is common after treatment cessation.
In the case of nucleos(t)ide analogs, long-term treatment can lower the amount of HBV DNA in 10 circulation, resulting in improvements in long-term disease outcomes, but virological relapse is common after treatment cessation.
By initially focusing on clinically validated targets, we increase the likelihood of demonstrating clinical efficacy and delivering optimized combination regimens. • Creating combination regimens designed to achieve better outcomes.
By initially focusing on clinically validated 3 targets, we increase the likelihood of demonstrating clinical efficacy and delivering optimized combination regimens. • Creating combination regimens designed to achieve better outcomes.
These fibrotic changes are associated with numerous morbidities including recurrent hospitalization for complications of cirrhosis, hepatocellular carcinoma, need for liver transplant, and death. The only widely accepted treatment for NASH is weight loss through behavioral modifications such as diet and exercise, which is difficult to achieve at the broad population level.
These fibrotic changes are associated with numerous morbidities including recurrent hospitalization for complications of cirrhosis, hepatocellular carcinoma, need for liver transplant, and death. The only widely accepted treatment for MASH is weight loss through behavioral modifications such as diet and exercise, which is difficult to achieve at the broad population level.
In 2019, there were more than 90 million cases of CHB in China alone, while the EU, United States and Japan accounted for nearly 8 million cases. Complications from CHB include cirrhosis, end-stage liver disease, and HCC, which collectively resulted in approximately 820,000 deaths in 2019, according to the World Health Organization.
In 2019, there were more than 90 million cases of CHB in China alone, while the European Union (EU), United States and Japan accounted for nearly 8 million cases. Complications from CHB include cirrhosis, end-stage liver disease, and HCC, which collectively resulted in approximately 820,000 deaths in 2019, according to the World Health Organization.
Based on the favorable profile after dosing up to 300 mg ALG-000184 x 28 days, additional Phase 1b cohorts are ongoing and evaluating the risk-benefit profile of 100-300 mg doses of ALG-000184 with or without background entecavir (ETV) therapy for ≤48 weeks in HBeAg positive or negative CHB patients.
Based on the favorable profile after dosing up to 300 mg ALG-000184 x 28 days, additional Phase 1b cohorts are ongoing and evaluating the risk-benefit profile of 100-300 mg doses of ALG-000184 with or without background entecavir (ETV) therapy for ≤96 weeks in HBeAg positive or negative CHB patients.
Under the amendment, we received a payment from Merck to carry out the research program for the second undisclosed NASH target. With respect to each collaboration target, we will be eligible to receive up to approximately $460 million in development and commercialization milestones as well as tiered royalties on net sales.
Under the amendment, we received a payment from Merck to carry out the research program for the second undisclosed MASH target. With respect to each collaboration target, we will be eligible to receive up to approximately $460 million in development and commercialization milestones as well as tiered royalties on net sales.
Our drug candidate, ALG‑097558, is at least 6-fold more potent in cell-based assays than nirmatrelvir and PBI-0451 against a panel of SARS-CoV-2 variants (including Omicron), has broad pan-coronavirus activity, and is not projected to require ritonavir boosting.
Our drug candidate, ALG‑097558, is at least 6-fold more potent in cell-based assays than nirmatrelvir against a panel of SARS-CoV-2 variants (including Omicron), has broad pan-coronavirus activity, and is not projected to require ritonavir boosting.
Our scientists optimized this lead drug candidate to discover the potent CAM-E, ALG‑001075, which was further optimized to the prodrug ALG‑000184.
Our scientists optimized this lead drug candidate to discover the picomolar potent CAM-E, ALG‑001075, which was further optimized to the prodrug ALG‑000184.
Further, one payor’s determination to provide coverage for a drug product does not assure that other payors will also provide coverage for the drug product. 27 Moreover, the process for determining whether a third-party payor will provide coverage for a drug product may be separate from the process for setting the price of a drug product or for establishing the reimbursement rate that such a payor will pay for the drug product.
Further, one payor’s determination to provide coverage for a drug product does not assure that other payors will also provide coverage for the drug product. 29 Moreover, the process for determining whether a third-party payor will provide coverage for a drug product may be separate from the process for setting the price of a drug product or for establishing the reimbursement rate that such a payor will pay for the drug product.
These agreements provide that all confidential information concerning our business or financial affairs developed or made known to the individual or 18 entity during the course of the party’s relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances.
These agreements provide that all confidential information concerning our business or financial affairs developed or made known to the individual or 20 entity during the course of the party’s relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances.
For this and other risks related to our proprietary technology, inventions, improvements, platforms and product candidates, see the section titled “Risk Factors—Risks related to intellectual property.” Trademarks Our trademark portfolio contains several trademark applications and registrations, including U.S. and foreign, as of December 31, 2022.
For this and other risks related to our proprietary technology, inventions, improvements, platforms and product candidates, see the section titled “Risk Factors—Risks related to intellectual property.” Trademarks Our trademark portfolio contains several trademark applications and registrations, including U.S. and foreign, as of December 31, 2023.
(together with Novartis), Terns Pharmaceuticals, Inc. and Viking Therapeutics, Inc. are pursuing the development or marketing of pharmaceuticals that target NASH. It is also probable that the number of companies seeking to develop products and therapies for the treatment of serious metabolic diseases, such as NASH, will increase.
(together with Novartis), Terns Pharmaceuticals, Inc. and Viking Therapeutics, Inc. are pursuing the development or marketing of pharmaceuticals that target MASH. It is also probable that the number of companies seeking to develop products and therapies for the treatment of serious metabolic diseases, such as MASH, will increase.
We are utilizing our in-house discovery expertise to continually improve upon our existing drug candidates by identifying promising backup candidates and exploring novel and emerging drug targets in NASH and viral diseases. We are also evaluating novel mechanisms of action with the potential to complement our current pipeline.
We are utilizing our in-house discovery expertise to continually improve upon our existing drug candidates by identifying promising backup candidates and exploring novel and emerging drug targets in MASH and viral diseases. We are also evaluating novel mechanisms of action with the potential to complement our current pipeline.
In January 2022, we entered into an amendment to such License and Research Collaboration Agreement, which expanded our collaboration to include a license to Merck of an early-stage program directed to a second undisclosed NASH target on which we had previously been working independently and separately from Merck.
In January 2022, we entered into an amendment to such License and Research Collaboration Agreement, which expanded our collaboration to include a license to Merck of an early-stage program directed to a second undisclosed MASH target on which we had previously been working independently and separately from Merck.
As there are currently no approved drugs to treat NASH, many development programs are underway to identify drugs to address this epidemic. Small molecule approaches One of the promising MOAs in the NASH space appears to be drugs which preferentially target the beta subtype of the THR receptor.
As there are currently no approved drugs to treat MASH, many development programs are underway to identify drugs to address this epidemic. Small molecule approaches One of the promising MOAs in the MASH space appears to be drugs which preferentially target the beta subtype of the THR receptor.
In the United States alone, the prevalence of NASH is projected to increase from approximately 16.5 million in 2015 to 27.0 million in 2030. In the absence of changes in diet and exercise, the inflammation inherent in NASH persists and may result in progressive fibrosis of the liver, which may result in cirrhosis.
In the United States alone, the prevalence of MASH is projected to increase from approximately 16.5 million in 2015 to 27.0 million in 2030. In the absence of changes in diet and exercise, the inflammation inherent in MASH persists and may result in progressive fibrosis of the liver, which may result in cirrhosis.
Separately, Osaka granted rights to certain third parties in connection with the licensed patents, such as rights to amido-bridged nucleic acid (AmNA) for specific indications including NASH, rights to manufacture reagents containing the modifications of AmNA and rights to use specified genes.
Separately, Osaka granted rights to certain third parties in connection with the licensed patents, such as rights to amido-bridged nucleic acid (AmNA) for specific indications including MASH, rights to manufacture reagents containing the modifications of AmNA and rights to use specified genes.
New competitors may emerge, smaller or early-stage companies may grow, either on their own or through collaborative arrangements with large and established companies and competitors may concentrate through mergers and acquisitions. NASH competitors There currently are no FDA-approved treatments for NASH.
New competitors may emerge, smaller or early-stage companies may grow, either on their own or through collaborative arrangements with large and established companies and competitors may concentrate through mergers and acquisitions. MASH competitors There currently are no FDA-approved treatments for MASH.
We believe that most chronic and viral diseases require combination therapies for optimal treatment outcomes and that combining individual drugs which can act additively or synergistically provides the greatest potential for enhanced efficacy. For each of our drug candidates, our strategy in Phase 1 is to rapidly evaluate safety and demonstrate proof of activity for each individual drug.
We believe that most chronic and viral diseases require combination therapies for optimal treatment outcomes and that combining individual drugs which can act additively or synergistically provides the greatest potential for enhanced efficacy. For each of our drug candidates, our strategy in early phase studies is to rapidly evaluate safety and demonstrate proof of activity for each individual drug.
On the same date, the Company entered into a collaboration agreement with Emory, with the initial research plan pertaining to the synthesis and evaluation of the compounds licensed through the additional patent rights granted in the amended license agreement.
On the same date, we entered into a collaboration agreement with Emory, with the initial research plan pertaining to the synthesis and evaluation of the compounds licensed through the additional patent rights granted in the amended license agreement.
Good faith negotiations between the Company and Merck would be performed to enact a transition plan. In February 2023, Merck provided the Company written notice of termination for one of the targets in the collaboration.
Good faith negotiations between us and Merck would be performed to enact a transition plan. In February 2023, Merck provided us written notice of termination for one of the targets in the collaboration.
Hepatitis B We own multiple additional families of applications that include claims to compositions of matter, pharmaceutical compositions and methods of use for the treatment of CHB with our additional drug candidates.
Hepatitis B We own multiple additional patent families of applications that include claims directed to compositions of matter, pharmaceutical compositions and methods of use for the treatment of CHB with our additional drug candidates.
In conclusion, our proprietary siRNA technology is based on modifying chemistries, patterns and the use of our proprietary GalNAc liver targeting technology, and has resulted in the identification of drug candidates, including ALG‑125755, that have promising profiles with long lasting durability in nonclinical CHB models.
In conclusion, our proprietary siRNA technology is based on modifying chemistries, patterns and the use of our proprietary GalNAc liver targeting technology, and has resulted in the identification of drug candidates, including ALG‑125755, that have shown promising results with long lasting durability in nonclinical CHB models.
THR‑ b agonists are small molecules that have been shown to significantly reduce circulating lipid levels and improve liver histology in patients with NASH.
THR‑ b agonists are small molecules that have been shown to significantly reduce circulating lipid levels and improve liver histology in patients with MASH.
The SEC maintains a site on the worldwide web that contains reports, proxy and information statements and other information regarding our filings at www.sec.gov. 30
The SEC maintains a site on the worldwide web that contains reports, proxy and information statements and other information regarding our filings at www.sec.gov. 32
Based on its favorable PK, which is likely to result in more uniform exposures and which we believe will lead to more consistent efficacy and safety in a NASH population, ALG‑055009 has the potential to become a best-in-class THR‑ agonist and could play an integral role in future combination regimens for NASH.
Based on its favorable potency/selectivity and PK, which is likely to result in more uniform exposures and which we believe will lead to more consistent efficacy and safety in a MASH population, we believe ALG‑055009 has the potential to become a best-in-class THR‑ß agonist and could play an integral role in future combination regimens for MASH.
Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing. 29 Employees and human capital resources As of December 31, 2022, we had 83 full-time employees, including 66 employees engaged in research and development.
Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing. 31 Employees and human capital resources As of December 31, 2023, we had 66 full-time employees, including 52 employees engaged in research and development.
In addition to the intended effect of lowering liver lipid levels in NASH patients, lowering serum lipid levels via THR‑ agonism may also have favorable consequences in this population, which has a high rate of underlying cardiovascular disease.
In addition to the intended effect 7 of lowering liver lipid levels in MASH patients, lowering serum lipid levels via THR‑ agonism may also have favorable consequences in this population, which has a high rate of underlying cardiovascular disease.
In connection with the KU Leuven Agreement, KU Leuven and our Company granted each other exclusive cross-licenses to use certain know-how and existing patents of the other party as well as certain joint know-how and joint patents to carry out research and development collaboration activities during the collaboration period. As of December 2022, the collaboration period has expired.
In connection with the KU Leuven Agreement, we and KU Leuven granted each other exclusive cross-licenses to use certain know-how and existing patents of the other party as well as certain joint know-how and joint patents to carry out research and development collaboration activities during the collaboration period. As of December 2022, the original collaboration period has expired.
Agreement with Katholieke Universiteit Leuven (KU Leuven) On June 25, 2020, we entered into a Research, Licensing and Commercialization Agreement (KU Leuven Agreement) with KU Leuven, under which we are collaborating with KU Leuven’s Rega Institute for Medical Research, as well as its Centre for Drug Design and Discovery, to research and develop potential protease inhibitors for the treatment, diagnosis or prevention of coronaviruses, including of SARS-CoV-2.
Agreement with Katholieke Universiteit Leuven (KU Leuven) On June 25, 2020, we entered into a Research, Licensing and Commercialization Agreement (KU Leuven Agreement) with KU Leuven, under which we are collaborating with KU Leuven’s Rega Institute for Medical Research, as well as its CD3, to research and develop potential protease inhibitors for the treatment, diagnosis or prevention of coronaviruses, including of SARS-CoV-2.
In this area of focus, we are using a small molecule approach, where we are exploring coronavirus 3CL protease inhibitors (PIs) in collaboration with Katholieke Universiteit Leuven (KU Leuven), the Center for Innovation and Stimulation of Drug Discovery (CISTIM) and the Centre for Drug Design and Discovery (CD3).
In this area of focus, we are exploring small molecule coronavirus 3CL protease inhibitors (PIs) in collaboration with Katholieke Universiteit Leuven (KU Leuven), the Center for Innovation and Stimulation of Drug Discovery (CISTIM) and the Centre for Drug Design and Discovery (CD3).
At these conferences, data were presented that showed ALG‑055009 was well tolerated, had dose proportional PK and low variability, and demonstrated expected thyromimetic effects (i.e., generally dose proportional increases in sex hormone binding globulin and decreases in various atherogenic lipids and thyroid hormones) – see Figures 4 and 5 below.
At these conferences, data were presented that showed ALG‑055009 was well tolerated, had dose proportional PK and low variability, and demonstrated expected thyromimetic effects (i.e., generally dose proportional increases in sex hormone binding globulin and decreases in various atherogenic lipids and thyroid hormones) – see Figures 6 and 7.
Most members of our management team have worked together across multiple companies, many for over a decade, and have been collectively involved in the discovery and/or development of a number of drugs that have been successfully commercialized, including Ganovo, Olysio, Sovaldi, Hepsera, Infergen, Valtrex, Sirturo, Neupogen, Andexxa and Esbriet, among others.
Most members of our management team have worked together across multiple companies, many for over a decade, and have been collectively involved in the discovery and/or development of a number of drugs that have been successfully commercialized, including Ganovo, Sovaldi, Infergen, Neupogen, Andexxa, Esbriet, and Pegasys among others.
We intend to then efficiently evaluate drug candidates shown to have activity in Phase 1 in various combinations in Phase 2 platform protocols to enable us to identify optimized combination regimens that will then be evaluated in Phase 3 pivotal trials. The combinations we evaluate may include additional drug candidates or current standard of care.
We intend to then efficiently evaluate drug candidates shown to have activity in Phase 1 in various monotherapy and combinations in Phase 2 platform protocols to enable us to identify optimized regimens that will then be evaluated in Phase 3 pivotal trials. The potential combinations we may evaluate could include additional drug candidates or current standard of care.
In the area of CHB, our most advanced drug candidates are designed to achieve higher rates of functional cure, which we believe will require the use of a combination of drugs with complementary mechanisms of action (MOA).
In the area of CHB, our most advanced drug candidates are designed to achieve greater viral suppression and higher rates of functional cure, which we believe will require the use of a combination of drugs with complementary mechanisms of action (MOA).
To date, we have secured licenses for technology from Emory, Luxna and AM Chemicals, LLC (AM Chemicals), and have entered into collaborations with KU Leuven’s Rega Institute for Medical Research, as well as its Centre for Drug Design and Discovery, and we have a collaboration with Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc.
To date, we have secured licenses for technology from Emory, Luxna and AM Chemicals, LLC (AM Chemicals), and have entered into collaborations with KU Leuven’s Rega Institute for Medical Research, as well as its CD3, and we have a collaboration with Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc.
Several approved drugs are being studied for their utility in reducing the severity of SARS-CoV-2 infections, including Soliris by Alexion Pharmaceuticals Inc., Atea Pharmaceuticals, Inc. , Jakafi by Incyte Corporation, and Kevzara by Sanofi S.A./Regeneron Pharmaceuticals, Inc. There are significant efforts globally to develop both therapeutic and prophylactic drug candidates.
Several approved drugs are being studied for their utility in reducing the severity of SARS-CoV-2 infections, including Soliris by Alexion Pharmaceuticals Inc., Atea Pharmaceuticals, Inc. , Jakafi by Incyte Corporation, and Kevzara by Sanofi S.A./Regeneron Pharmaceuticals, Inc. There are significant efforts globally to develop both therapeutic and 16 prophylactic drug candidates including by Enanta Pharmaceuticals, Pardes Biosciences, Novartis, and Shionogi.
A number of pharmaceutical companies, including AbbVie, Inc., Akero, AstraZeneca PLC/MedImmune LLC, Bristol-Myers Squibb Company, Eli Lilly and 13 Company, Janssen, Merck, Novartis Pharmaceuticals Corporation (together with Pfizer, Inc.), Novo Nordisk A/S, Pfizer Inc., Roche, Sanofi S.A. and Takeda Pharmaceutical Company Limited (together with HemoShear Therapeutics, LLC), as well as large and small biotechnology companies such as 89bio, Inc., Akero Therapeutics, Inc., Cirius Therapeutics, Inc., Enanta Pharmaceuticals, Inc., FronThera US Pharmaceuticals LLC, Galectin Therapeutics Inc., Galmed Pharmaceuticals Ltd., Genfit SA, Gilead, Intercept Pharmaceuticals, Inc., Inventiva Pharma SA, Madrigal Pharmaceuticals, Inc., MediciNova, Inc., NGM Biopharmaceuticals, Inc., Pliant Therapeutics, Inc.
A number of pharmaceutical companies, including AbbVie, Inc., AstraZeneca PLC/MedImmune LLC, Bristol-Myers Squibb Company, Eli Lilly and Company, Janssen, Merck, Novartis Pharmaceuticals Corporation (together with Pfizer, Inc.), Novo Nordisk A/S, Pfizer Inc., Roche, Sanofi S.A. and Takeda Pharmaceutical Company Limited (together with HemoShear Therapeutics, LLC), as well as large and small biotechnology companies such as 89bio, Inc., Akero Therapeutics, Inc., Cirius Therapeutics, Inc., Galectin Therapeutics Inc., Galmed Pharmaceuticals Ltd., Gilead, Inventiva Pharma SA, Madrigal Pharmaceuticals, Inc., MediciNova, Inc., Pliant Therapeutics, Inc.
License and Research Collaboration with Merck In December 2020, we entered into an exclusive License and Research Collaboration Agreement with Merck under which Merck and Aligos will apply our oligonucleotide platform technology to discover, research, optimize and develop oligonucleotides directed against a NASH target and up to one additional liver-targeted cardiometabolic and/or fibroses target.
License agreements and collaborations License and Research Collaboration with Merck In December 2020, we entered into an exclusive License and Research Collaboration Agreement with Merck under which Merck and Aligos will apply our oligonucleotide platform technology to discover, research, optimize and develop oligonucleotides directed against a MASH target and up to one additional liver-targeted cardiometabolic and/or fibrosis target.
Throughout all phases of clinical development, pre-specified adaptive study rules allow real-time adjustment of trial conduct based on emerging clinical trial data. These practices allow us to gain a rapid understanding of the risk/benefit profile for our individual drug candidates and combination regimens, and iteratively refine our strategy based on emerging data. This approach is summarized in the figure below.
Throughout all phases of clinical development, pre-specified adaptive study rules allow real-time adjustment of trial conduct based on emerging clinical trial data. These practices allow us to gain a rapid understanding of the risk/benefit profile for our individual drug candidates and combination regimens, and iteratively refine our strategy based on emerging data.
For our drug candidates, we have filed and licensed certain patent applications and we generally intend to pursue patent protection covering compositions of matter, methods of making, and methods of use. As of December 31, 2022, we own U.S. patents with claims directed to ALG-000184 and ALG-055009.
For our drug candidates, we have filed and licensed certain patent applications and we generally intend to pursue patent protection covering compositions of matter, methods of making, and methods of use of such drug candidates. As of December 31, 2023, we own 5 U.S. patents with claims directed to ALG-000184, ALG-055009, ALG-125755 and ALG-097558.
Item 1. B usiness. Overview We are a clinical-stage biopharmaceutical company focused on developing novel therapeutics to address unmet medical needs in liver diseases and viral infections, including in the areas of non-alcoholic steatohepatitis (NASH), coronavirus (e.g., SARS-CoV-2 and related infections) and chronic hepatitis B (CHB).
Item 1. B usiness. Overview We are a clinical-stage biopharmaceutical company focused on developing novel therapeutics to address unmet medical needs in liver diseases and viral infections, including in the areas of metabolic dysfunction associated steatohepatitis (MASH), chronic hepatitis B (CHB) and coronavirus (e.g., SARS-CoV-2 and related infections).
There has also been heightened governmental scrutiny recently over the manner in which pharmaceutical companies set prices for their marketed products, which has resulted in several Congressional inquiries and proposed federal legislation, as well as state efforts, designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.
The rebate was previously capped at 100% of a drug's average manufacturer price There has also been heightened governmental scrutiny recently over the manner in which pharmaceutical companies set prices for their marketed products, which has resulted in several Congressional inquiries and proposed federal legislation, as well as state efforts, designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products.
Subsequently, we plan to combine multiple drug candidates in Phase 2 trials to identify optimized combination regimens to be advanced into pivotal trials. • Expanding our development capabilities and pipeline.
Subsequently, we may plan to combine drug candidates in later phase trials to identify optimized combination regimens to be advanced into pivotal trials. • Expanding our development capabilities and pipeline.
Unless terminated earlier by either party in accordance with provisions in the agreement, the collaboration period is set to terminate at the earlier of completion of all collaboration activities or 2.5 years.
Unless terminated earlier by either party in accordance with provisions in the agreement, the collaboration period will terminate at the earlier of completion of all collaboration activities or 2.5 years.
Our initial areas of focus are NASH and viral diseases, where our team can leverage their in-depth knowledge and expertise to develop potentially best-in-class combination regimens addressing large areas of unmet medical need. The core elements of our business strategy include: • Developing improved drug candidates against clinically validated targets.
Our initial areas of focus are MASH and viral diseases, where our team can leverage their in-depth knowledge and expertise to develop potential regimens addressing large areas of unmet medical need. The core elements of our business strategy include: • Developing improved drug candidates against clinically validated targets.
The initial Phase 1a study in HVs for our CAM-E, ALG‑000184, has been completed as has a Phase 1b dose ranging study evaluating the safety, pharmacokinetics and antiviral activity of 10-300 mg doses of ALG‑000184 for 28 days among untreated HBV E-antigen (HBeAg) positive/negative CHB subjects.
We have completed the initial Phase 1a study in HVs for our CAM-E, ALG‑000184, and a Phase 1b dose ranging study evaluating the safety, PK and antiviral activity of 10-300 mg doses of ALG‑000184 for 28 days among untreated HBV e-antigen (HBeAg) positive/negative CHB subjects.
Side-by-side biochemical and cell-based experiments in HEK293T cells indicate that ALG‑055009 is 5- to 47-fold more potent and 3- to 2-fold more selective for the receptor compared to VK-2809 and resmetirom, respectively, which may optimize the risk-benefit profile for ALG‑055009.
Side-by-side biochemical and cell-based experiments in HEK293T cells indicate that ALG‑055009 is 5- to 47-fold more potent and 3- to 2-fold more selective for the receptor compared to VK-2809 and resmetirom, respectively.
Importantly, the PK properties of ALG‑055009 include dose proportional increases in exposure across a broad range of doses as well as low inter-subject variability, which is likely to result in more uniform exposures and lead to more consistent efficacy and safety in a NASH population compared to other THR- b drugs in development.
Importantly, the PK properties of ALG‑055009 included dose proportional increases in exposure across a broad range of doses as well as low inter-subject variability, which may result in more uniform exposures and potentially lead to more consistent efficacy and safety in a MASH population compared to other THR‑ b drugs in development.
Hepatitis B—ALG‑000184 and additional potential drug candidates We own a patent family that includes one issued U.S. patent and 30 applications pending across multiple jurisdictions, and have claims directed to composition of matter, including ALG‑000184 (our lead CAM-E molecule), pharmaceutical composition and method of use claims.
Hepatitis B—ALG‑000184 and additional potential drug candidates We own a patent family that includes two issued U.S. patents, one non-provisional U.S. patent application, and 31 applications pending across multiple jurisdictions that have claims directed to composition of matter, including for ALG‑000184 (our lead CAM-E molecule), pharmaceutical composition and method of use claims.
Our third area of focus seeks to enhance the rate of functional cure for CHB, which often results in life-threatening conditions such as cirrhosis, and the most common form of liver cancer, hepatocellular carcinoma (HCC).
Our second area of focus seeks to enhance the viral suppression and rate of functional cure for CHB, which often results in life-threatening conditions such as cirrhosis, end-stage liver disease and, the most common form of liver cancer, hepatocellular carcinoma (HCC).
ALG-000184 was found in these portions of the study to be well tolerated with a favorable PK profile and demonstrated substantial HBV DNA and RNA reductions as well as HBsAg reductions in a subset of HBeAg positive subjects receiving 300 mg ALG-000184 (Hou et al, AASLD 2022).
ALG-000184 was found to be well tolerated with a favorable PK profile and demonstrated substantial HBV DNA and RNA reductions at all doses tested as well as HBsAg reductions in a subset of HBeAg positive subjects receiving 300 mg ALG-000184 (Hou et al., AASLD 2022).
The trademark portfolio includes the mark ALIGOS which is registered in the United States, Australia, the European Union, Great Britain and Japan, and is pending in China.
The trademark portfolio includes the mark ALIGOS which is registered in the United States, Australia, the EU, Great Britain, Japan, and China.
Under the Emory License Agreement, Emory granted us a worldwide, sublicensable license under certain of its intellectual property rights to make, have made, develop, use, offer to sell, sell, import and export products containing certain compounds relating to Emory’s hepatitis B virus capsid assembly modulator technology, for all therapeutic and prophylactic uses.
License agreement with Emory University In June 2018, we entered into a license agreement with Emory (the Emory License Agreement), pursuant to which Emory granted us a worldwide, sublicensable license under certain of its intellectual property rights to make, have made, develop, use, offer to sell, sell, import and export products containing certain compounds relating to Emory’s hepatitis B virus capsid assembly modulator technology, for all therapeutic and prophylactic uses.
For each licensed product developed through KU Leuven and the Company’s collaborative effort, the Company is obligated to make payments to KU Leuven, in aggregate, totaling up to $32.0 million upon the achievement of certain development 17 and regulatory milestones.
For each licensed product developed through KU Leuven and our collaborative effort, we are obligated to make payments to KU Leuven, in aggregate, totaling up to $32.0 million upon the achievement of certain development and regulatory milestones.
Licensed intellectual property Emory University We have licensed the exclusive rights to a patent estate from Emory in the CAM-E chemical space, consisting of one issued U.S. patent, two pending nonprovisional U.S. patent applications as well as 11 issued foreign patents and 30 foreign patent applications.
Licensed intellectual property Emory University We have licensed exclusive rights to a patent estate from Emory in the CAM-E chemical space, consisting of two issued U.S. patents, one pending non-provisional U.S. patent application as well as 13 issued foreign patents and 29 foreign patent applications.
Our clinical development strategy leverages past experience to rapidly advance drug candidates towards optimized combination regimens. We have strengthened our platforms by in-licensing select intellectual property, which, together with our in-house expertise, allows us to develop novel and proprietary drug candidates. Oligonucleotide platform We have distinct modalities within our oligonucleotide platform, including siRNAs.
Our clinical development strategy leverages past experiences to rapidly advance drug candidates towards optimized combination regimens. We have strengthened our platforms by in-licensing select intellectual property, which, together with our in-house expertise, allows us to develop novel and proprietary drug candidates.
Under the Luxna Agreement, Luxna granted us an exclusive, worldwide, sublicensable license under certain of Luxna’s intellectual property rights to research, develop, make, have made, and commercialize for all therapeutic and prophylactic uses, (i) products containing oligonucleotides targeting the hepatitis B virus genome, (ii) products containing certain oligonucleotides targeting up to three genes which contribute to NASH, which we may select at any time during the first eight years of the term, to the extent not licensed to a third party, and (iii) products containing oligonucleotides targeting up to three genes which contribute to HCC, which we may select at any time during the first three years of the term.
On December 19, 2018, we entered into a license agreement with Luxna, pursuant to which Luxna granted us an exclusive, worldwide, sublicensable license under certain of Luxna’s intellectual property rights to research, develop make, have made and commercialize for all therapeutic and prophylactic uses, (i) products containing oligonucleotides targeting the hepatitis B virus genome, (ii) products containing certain oligonucleotides targeting up to three genes which contribute to MASH, which we may select at any time during the first eight years of the term, to the extent not licensed to a third party, and (iii) products containing oligonucleotides targeting up to three genes which contribute to hepatocellular carcinoma, which we may select at any time during the first three years of the term, which expired in December 2021.
A Phase 1 study is ongoing in New Zealand and in several countries in Eastern Europe. Part 1 of this study evaluated single ascending doses (SAD) from 20 mg to 200 mg in healthy volunteers and found that these doses were well tolerated with a favorable PK profile (Gane et al., APASL, 2023).
Part 1 of this study evaluated single ascending doses (SAD) from 20 mg to 200 mg in healthy volunteers and found that these doses were well tolerated with a favorable PK profile (Gane et al., APASL, 2023).
Regarding our internal patent portfolio, as of December 31, 2022, we own 8 issued U.S. patents, 38 U.S. non-provisional patent applications, 21 U.S. provisional patent applications (excluding any non-expired U.S. provisional applications to which priority has already been claimed), 21 PCT applications and 284 foreign patent applications, including pending applications in Arab Emirates, ARIPO, Argentina, Australia, Brazil, Canada, Chile, China, Colombia, Eurasia, Egypt, European Union, Georgia, Indonesia, Israel, India, Japan, South Korea, Malaysia, Mexico, New Zealand, OAPI, Peru, Philippines, Russian Federation, Singapore, Thailand, Taiwan, Ukraine, Uzbekistan and South Africa.
Regarding our owned patent portfolio, as of December 31, 2023, we own 22 issued U.S. patents, 27 U.S. non-provisional patent applications, 6 U.S. provisional patent applications (excluding any non-expired U.S. provisional applications to which priority has already been claimed), 17 PCT applications, 2 issued foreign patents and 269 foreign patent applications, including pending applications in the Arab Emirates, ARIPO, Argentina, Australia, Brazil, Canada, Chile, China, Colombia, Eurasia, Egypt, the EU, Georgia, Indonesia, Israel, India, Japan, South Korea, Malaysia, Mexico, New Zealand, OAPI, Peru, Philippines, Russian Federation, Singapore, Thailand, Taiwan, Ukraine, Uzbekistan and South Africa.
Preliminary data presented for these cohorts (Hou et al, APASL 2023) indicate that ALG-000184 dosed for up to 12 weeks is well tolerated with a favorable PK profile and demonstrates potentially best‑in‑class antiviral activity.
Preliminary data presented for HBeAg positive subjects in these cohorts indicate that ALG-000184 dosed for up to 48 weeks is well tolerated with a favorable PK profile and demonstrates potentially best‑in‑class antiviral activity (Yuen et al., AASLD 2023).
Our goal is to achieve meaningful rates of functional cure, which is defined as a sustained loss of HBsAg and HBV DNA with or without hepatitis B surface antibody seroconversion after a finite treatment course.
Our goal is to achieve greater rates of viral suppression (as measured by a combination of HBV markers, including DNA) and more meaningful rates of functional cure, which is defined as a sustained loss of HBsAg and HBV DNA with or without hepatitis B surface antibody seroconversion after a finite treatment course.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in additional pricing pressure or reduced demand for any drug candidate we develop or complementary or companion diagnostics.
Biggest changeWe expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in additional pricing pressure or reduced demand for any drug candidate we develop or complementary or companion diagnostics. 60 Our actual or perceived failure to comply with current or future federal, state and foreign laws and regulations and industry standards relating to data privacy and protection laws could lead to government investigations and enforcement actions, which could result in civil or criminal penalties, private litigation, and/or adverse publicity and could negatively affect our operating results, financial condition and business.
Similarly, Merck (together with Ridgeback Bio) is developing the drug Molnupiravir, an oral antiviral drug which similarly has been issued an emergency use authorization by the FDA on December 23, 2021.
Similarly, Merck (together with Ridgeback Bio) is developing the drug Molnupiravir, an oral antiviral drug which similarly has been issued an emergency use authorization by the FDA on December 23, 2021.
Similar to the federal Anti-Kickback Statute, a person or entity can be found guilty of violating HIPAA without actual knowledge of the statutes or specific intent to violate them; • the Physician Payments Sunshine Act, created under the ACA, and its implementing regulations, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare professionals (including physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiology assistants and certified nurse-midwives) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; • federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; and • analogous state laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and healthcare laws in the EU and other jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers.
Similar to the federal Anti-Kickback Statute, a person or entity can be found guilty of violating HIPAA without actual knowledge of the statutes or specific intent to violate them; • the Physician Payments Sunshine Act, created under the ACA, and its implementing regulations, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) to report annually to CMS information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare professionals (including physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiology assistants and certified nurse-midwives) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; • federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers; and • analogous state laws and regulations, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the 68 relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and healthcare laws in the EU and other jurisdictions, including reporting requirements detailing interactions with and payments to healthcare providers.
Collaborations involving our current and future drug candidates may pose the following risks to us: • collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial, abandon a drug candidate, repeat or conduct new clinical trials or require a new formulation of a drug candidate for clinical testing; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products (if any) or drug candidates; • a collaborator with marketing, manufacturing and distribution rights to one or more products may not commit sufficient resources to or may otherwise not perform satisfactorily in carrying out these activities; • collaborators may not properly prosecute, maintain, enforce or defend our intellectual property rights or may use our proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation, or other intellectual property proceedings; • collaborators may own or co-own intellectual property covering products that result from our collaboration with them, and in such cases, we may not have the exclusive right to develop, license or commercialize such intellectual property; • disputes may arise with respect to ownership of any intellectual property developed pursuant to our collaborations; • disputes may arise between a collaborator or strategic partner and us that cause the delay or termination of the research, development or commercialization of the drug candidate, or that result in costly litigation or arbitration that diverts management attention and resources; and • if a current or future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program under such collaboration could be delayed, diminished or terminated.
Collaborations involving our current and future drug candidates may pose the following risks to us: • collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations; • collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial, abandon a drug candidate, repeat or conduct new clinical trials or require a new formulation of a drug candidate for clinical testing; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products (if any) or drug candidates; • a collaborator with marketing, manufacturing and distribution rights to one or more products may not commit sufficient resources to or may otherwise not perform satisfactorily in carrying out these activities; 63 • collaborators may not properly prosecute, maintain, enforce or defend our intellectual property rights or may use our proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation, or other intellectual property proceedings; • collaborators may own or co-own intellectual property covering products that result from our collaboration with them, and in such cases, we may not have the exclusive right to develop, license or commercialize such intellectual property; • disputes may arise with respect to ownership of any intellectual property developed pursuant to our collaborations; • disputes may arise between a collaborator or strategic partner and us that cause the delay or termination of the research, development or commercialization of the drug candidate, or that result in costly litigation or arbitration that diverts management attention and resources; and • if a current or future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program under such collaboration could be delayed, diminished or terminated.
These provisions include the following: • a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror; • the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval; • the required approval of at least 66 2/3% of the shares entitled to vote at an election of directors to adopt, amend or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • the requirement that a special meeting of stockholders may be called only by our chief executive officer or, in the absence of a chief executive officer, president or by the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and • advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.
These provisions include the following: • a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; 85 • the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror; • the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval; • the required approval of at least 66 2/3% of the shares entitled to vote at an election of directors to adopt, amend or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • the requirement that a special meeting of stockholders may be called only by our chief executive officer or, in the absence of a chief executive officer, president or by the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and • advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of us.
The success of our current and future drug candidates will depend on many factors, which may include the following: • sufficiency of our financial and other resources to complete the necessary nonclinical studies and clinical trials, and our ability to raise any additional required capital on acceptable terms, or at all; 36 • our ability to develop and successfully utilize our drug discovery platforms; • the timely and successful completion of our nonclinical studies and clinical trials, which may be significantly slower or cost more than we currently anticipate and will depend substantially upon the performance of third-party contractors; • acceptance of investigational new drug applications (INDs), clinical trial applications (CTAs) and/or similar applications in other jurisdictions for our planned and future clinical trials; • whether we are required by the FDA or a comparable foreign regulatory agency to conduct additional clinical trials or other studies beyond those planned to support approval of our drug candidates; • successful enrollment and completion of clinical trials; • successful data from our clinical program that supports an acceptable risk-benefit profile of our drug candidates in the intended populations; • receipt and maintenance of marketing approvals from applicable regulatory authorities; • establishing agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our drug candidates are approved; • our ability, and the ability of any third parties with whom we contract, to remain in good standing with regulatory agencies and develop, validate and maintain commercially viable manufacturing processes that are compliant with current good manufacturing practices (cGMPs); • entry into collaborations to further the development of our drug candidates in select indications or geographies; • obtaining, maintaining and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; • enforcing and defending our intellectual property rights and having and successfully executing an intellectual property life cycle management strategy that supports long-term product development and commercialization goals; • obtaining and maintaining regulatory exclusivity for our drug candidates; • successfully launching commercial sales of our drug candidates, if approved; • acceptance of the drug candidate’s benefits and uses, if approved, by patients, the medical community and third-party payors; • the prevalence, duration and severity of potential side effects or other safety issues experienced with our drug candidates following approval; • effectively competing with other therapies; and • obtaining and maintaining healthcare coverage and adequate reimbursement from third-party payors.
The success of our current and future drug candidates will depend on many factors, which may include the following: • sufficiency of our financial and other resources to complete the necessary nonclinical studies and clinical trials, and our ability to raise any additional required capital on acceptable terms, or at all; • our ability to develop and successfully utilize our drug discovery platforms; • the timely and successful completion of our nonclinical studies and clinical trials, which may be significantly slower or cost more than we currently anticipate and will depend substantially upon the performance of third-party contractors; • acceptance of investigational new drug applications (INDs), clinical trial applications (CTAs) and/or similar applications in other jurisdictions for our planned and future clinical trials; • whether we are required by the FDA or a comparable foreign regulatory agency to conduct additional clinical trials or other studies beyond those planned to support approval of our drug candidates; • successful enrollment and completion of clinical trials; • successful data from our clinical program that supports an acceptable risk-benefit profile of our drug candidates in the intended populations; • receipt and maintenance of marketing approvals from applicable regulatory authorities; • establishing agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our drug candidates are approved; • our ability, and the ability of any third parties with whom we contract, to remain in good standing with regulatory agencies and develop, validate and maintain commercially viable manufacturing processes that are compliant with current good manufacturing practices (cGMPs); 39 • entry into collaborations to further the development of our drug candidates in select indications or geographies; • obtaining, maintaining and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; • enforcing and defending our intellectual property rights and having and successfully executing an intellectual property life cycle management strategy that supports long-term product development and commercialization goals; • obtaining and maintaining regulatory exclusivity for our drug candidates; • successfully launching commercial sales of our drug candidates, if approved; • acceptance of the drug candidate’s benefits and uses, if approved, by patients, the medical community and third-party payors; • the prevalence, duration and severity of potential side effects or other safety issues experienced with our drug candidates following approval; • effectively competing with other therapies; and • obtaining and maintaining healthcare coverage and adequate reimbursement from third-party payors.
Later discovery of previously unknown problems with any approved candidate, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things: • restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or product recalls; • fines, untitled and warning letters, or holds on clinical trials; • refusal by the FDA or other regulatory authorities to approve pending applications or supplements to approved applications we filed or suspension or revocation of license approvals; • product seizure or detention, or refusal to permit the import or export of the product; and • injunctions or the imposition of civil or criminal penalties.
Later discovery of previously unknown problems with any approved candidate, including adverse events of unanticipated severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may result in, among other things: • restrictions on the marketing or manufacturing of the product, withdrawal of the product from the market, or product recalls; • fines, untitled and warning letters, or holds on clinical trials; • refusal by the FDA or other regulatory authorities to approve pending applications or supplements to approved applications we filed or suspension or revocation of license approvals; • product seizure or detention, or refusal to permit the import or export of the product; and 50 • injunctions or the imposition of civil or criminal penalties.
The ACA, among other things, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, established annual fees and taxes on manufacturers of certain branded prescription drugs, and created a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries 57 during their coverage gap period, as a condition for the manufacturer’s outpatient drugs being covered under Medicare Part D.
The ACA, among other things, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to individuals enrolled in Medicaid managed care organizations, established annual fees and taxes on manufacturers of certain branded prescription drugs, and created a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 70% point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs being covered under Medicare Part D.
Our ability to generate revenue from product sales depends heavily on our and our current and potential future collaborators’ success in: • completing clinical and nonclinical development of drug candidates and programs and identifying and developing new drug candidates; • seeking and obtaining marketing approvals for any drug candidates that we develop; • launching and commercializing drug candidates for which we obtain marketing approval by establishing a sales force, marketing, medical affairs and distribution infrastructure or, alternatively, collaborating with a commercialization partner; • achieving adequate coverage and reimbursement by third-party payors for drug candidates that we develop; 31 • establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate, in both amount and quality, products and services to support clinical development and the market demand for drug candidates that we develop, if approved; • obtaining market acceptance of drug candidates that we develop as viable treatment options; • technological and market developments; • negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter and performing our obligations in such collaborations; • maintaining, protecting, enforcing and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; • defending against third-party interference, infringement or other intellectual property-related claims, if any; and • attracting, hiring and retaining qualified personnel.
Our ability to generate revenue from product sales depends heavily on our and our current and potential future collaborators’ success in: • completing clinical and nonclinical development of drug candidates and programs and identifying and developing new drug candidates; • seeking and obtaining marketing approvals for any drug candidates that we develop; • launching and commercializing drug candidates for which we obtain marketing approval by establishing a sales force, marketing, medical affairs and distribution infrastructure or, alternatively, collaborating with a commercialization partner; • achieving adequate coverage and reimbursement by third-party payors for drug candidates that we develop; 33 • establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate, in both amount and quality, products and services to support clinical development and the market demand for drug candidates that we develop, if approved; • obtaining market acceptance of drug candidates that we develop as viable treatment options; • technological and market developments; • negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter and performing our obligations in such collaborations; • maintaining, protecting, enforcing and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; • defending against third-party interference, infringement or other intellectual property-related claims, if any; and • attracting, hiring and retaining qualified personnel.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the Code), and corresponding provisions of state law, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage point change (by value) in its equity ownership over a rolling three-year period), the corporation’s ability to use its pre-change net operating loss (NOL) carryforwards and other pre-change tax attributes to offset its post-change income may be limited.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the Code), and corresponding provisions of state law, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage point change (by value) in its equity ownership over a rolling three-year period), the corporation’s ability 84 to use its pre-change net operating loss (NOL) carryforwards and other pre-change tax attributes to offset its post-change income may be limited.
The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers, and formulary managers on the other; • the federal civil and criminal false claims laws, including the FCA, which prohibit any person or entity from, among other things, knowingly presenting, or causing to be presented, a false, fictitious or 65 fraudulent claim for payment to, or approval by, the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government.
The Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers, and formulary managers on the other; • the federal civil and criminal false claims laws, including the FCA, which prohibit any person or entity from, among other things, knowingly presenting, or causing to be presented, a false, fictitious or fraudulent claim for payment to, or approval by, the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government.
U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations (collectively, Trade Laws), prohibit, among other matters, companies and their employees, agents, clinical research organizations, legal counsel, accountants, consultants, contractors, and other partners from authorizing, promising, offering, providing, soliciting, or receiving directly or indirectly, corrupt or improper payments or anything else of value to or from recipients in the public or private sector.
U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions, and other trade laws and regulations (collectively, Trade Laws), prohibit, among other matters, companies and their employees, agents, clinical research organizations, legal counsel, accountants, consultants, contractors, and other partners from authorizing, promising, offering, providing, soliciting, or receiving directly or indirectly, corrupt or improper 88 payments or anything else of value to or from recipients in the public or private sector.
Our current drug candidates, and any future drug candidates we develop, will require additional nonclinical and clinical development, management of clinical, nonclinical and manufacturing activities, marketing approval in the United States and other markets, demonstrating effectiveness to pricing and reimbursement authorities, obtaining sufficient manufacturing supply for both clinical development and commercial production, building of a commercial organization, and substantial investment and significant marketing efforts before we generate any revenues from product sales.
Our current drug candidates, and any future drug candidates we develop, will require additional nonclinical and clinical development, management of clinical, nonclinical and manufacturing activities, marketing approval in the United States and other markets, demonstrating effectiveness to pricing and reimbursement authorities, obtaining sufficient manufacturing supply for both clinical development and commercial production, building of a commercial 38 organization, and substantial investment and significant marketing efforts before we generate any revenues from product sales.
If we are 83 unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness in our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities.
If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness in our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities.
For instance, the Pfizer/BioNTech BNT162b2, the adenovirus type 26 (Ad26) vaccine by Janssen Pharmaceutical Companies of Johnson & Johnson, Moderna mRNA-1273 and Novavax NVX-CoV2373 COVID-19 vaccines have been approved and/or authorized for emergency use and are in the process of being widely being administered in various countries throughout the world which could adversely impact the need for our potential COVID-19 therapies.
For instance, the Pfizer/BioNTech BNT162b2, the adenovirus type 26 (Ad26) vaccine by Janssen Pharmaceutical Companies of Johnson & Johnson, Moderna mRNA-1273 and Novavax NVX-CoV2373 COVID-19 vaccines have been approved and/or authorized for emergency use and are in the process of being widely being administered in various countries throughout the world which could adversely impact the need for our potential COVID-19 44 therapies.
For example, we are conducting our initial clinical trials for ALG‑055009, ALG‑000184, and ALG‑125755 in many countries (e.g., New Zealand, Hong Kong, the United Kingdom), and plan to conduct additional clinical trials in several other countries and territories within the Asia Pacific and/or Europe and our conduct of the trials must satisfy specific requirements in order for the FDA to accept the data in support of an IND or NDA in the United States.
For example, we are conducting our initial clinical trials for ALG-055009, ALG-000184, ALG-097558 and ALG-125755 in many countries (e.g., New Zealand, Hong Kong, the United Kingdom), and plan to conduct additional clinical trials in several other countries and territories within the Asia Pacific and/or Europe and our conduct of the trials must satisfy specific requirements in order for the FDA to accept the data in support of an IND or NDA in the United States.
Even if we are able to establish and maintain arrangements with third-party manufacturers, reliance on third-party manufacturers entails risks, including: • reliance on the third party for regulatory compliance and quality assurance; • the possible breach of the manufacturing agreement by the third party; 64 • the possible misappropriation of our proprietary information, including our trade secrets and know-how; and • the possible termination or non-renewal of the agreement by the third party at a time that is costly or inconvenient for us.
Even if we are able to establish and maintain arrangements with third-party manufacturers, reliance on third-party manufacturers entails risks, including: • reliance on the third party for regulatory compliance and quality assurance; • the possible breach of the manufacturing agreement by the third party; • the possible misappropriation of our proprietary information, including our trade secrets and know-how; and • the possible termination or non-renewal of the agreement by the third party at a time that is costly or inconvenient for us.
As a result of all of these factors, our competitors may 51 succeed in obtaining patent protection and/or marketing approval or discovering, developing and commercializing products in our field before we do. There are a number of companies developing or marketing treatments for CHB, including Roche Holding AG (Roche), Gilead, Bristol-Myers Squibb Company, Arbutus Biopharma Corporation, Dicerna Pharmaceuticals, Inc.
As a result of all of these factors, our competitors may succeed in obtaining patent protection and/or marketing approval or discovering, developing and commercializing products in our field before we do. There are a number of companies developing or marketing treatments for CHB, including Roche Holding AG (Roche), Gilead, Bristol-Myers Squibb Company, Arbutus Biopharma Corporation, Dicerna Pharmaceuticals, Inc.
In addition, if the breadth or strength of the claims of our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize current or future drug candidates, or could have a material adverse effect on our ability to raise funds necessary to continue our research programs or clinical trials.
In addition, if the breadth or strength of the claims of our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize current or future drug candidates, or could have a material adverse effect on our ability to raise funds 70 necessary to continue our research programs or clinical trials.
It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.
It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits 81 stemming from a failure to comply with these laws or regulations.
If these relationships and any related compensation result in perceived or actual conflicts of interest, or a regulatory authority concludes that the financial relationship may have affected the interpretation of the clinical trial, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized, which could result in the delay or rejection of any applications we submit.
If these relationships and any related compensation result in perceived or actual conflicts of interest, or a regulatory authority concludes that the financial relationship may have affected the interpretation of the clinical trial, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be 43 jeopardized, which could result in the delay or rejection of any applications we submit.
Public health pandemics or epidemics, political instability, terrorist attacks, other acts of violence or war or other unexpected events could materially interrupt our business operations (or those of the third parties upon whom we depend), cause consumer confidence and spending to decrease or result in increased volatility in the United States and worldwide financial markets and economy.
Public health pandemics or epidemics, political instability, terrorist attacks, other acts of violence or war or other unexpected events could materially interrupt our business operations (or those of the third parties upon whom we depend), cause consumer confidence and spending to decrease or result in increased volatility in the United 90 States and worldwide financial markets and economy.
We expect that we are or will be subject to additional risks related to these international business markets and relationships, including: • different regulatory requirements for approval of drug candidates in foreign countries, including challenging processes for marketing biopharmaceutical products; • reduced protection for and enforcement of intellectual property rights; • heightened or different data privacy and information security laws, regulations and policies; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation or political instability in particular foreign economies and markets; • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country; • foreign reimbursement, pricing and insurance regimes; • workforce uncertainty in countries where labor unrest is more common than in the United States; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities; • business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires; and 49 • disruptions resulting from the impact of public health pandemics or epidemics (including, for example, the ongoing COVID-19 pandemic).
We expect that we are or will be subject to additional risks related to these international business markets and relationships, including: • different regulatory requirements for approval of drug candidates in foreign countries, including challenging processes for marketing biopharmaceutical products; • reduced protection for and enforcement of intellectual property rights; • heightened or different data privacy and information security laws, regulations and policies; • unexpected changes in tariffs, trade barriers and regulatory requirements; • economic weakness, including inflation or political instability in particular foreign economies and markets; 51 • compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; • foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country; • foreign reimbursement, pricing and insurance regimes; • workforce uncertainty in countries where labor unrest is more common than in the United States; • production shortages resulting from any events affecting raw material supply or manufacturing capabilities; • business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires; and • disruptions resulting from the impact of public health pandemics or epidemics (including, for example, the COVID-19 pandemic).
Established pharmaceutical companies may also invest heavily to accelerate discovery and development of novel compounds or to in-license novel compounds that could make the drug candidates that we develop obsolete. Further, mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors.
Established pharmaceutical companies may also invest heavily to accelerate discovery and development of novel compounds or 53 to in-license novel compounds that could make the drug candidates that we develop obsolete. Further, mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors.
If these third-party manufacturers are unable to successfully scale up the manufacture of our drug candidates in sufficient quality and quantity, the development, testing and clinical trials of that drug candidate may be delayed or infeasible, and regulatory approval or commercial launch of that drug candidate may be delayed or not obtained, which could significantly harm our business.
If these third-party manufacturers are unable to successfully scale up the manufacture of our drug candidates in sufficient quality and quantity, the 66 development, testing and clinical trials of that drug candidate may be delayed or infeasible, and regulatory approval or commercial launch of that drug candidate may be delayed or not obtained, which could significantly harm our business.
From time to time, we may consider strategic transactions, such as acquisitions of companies, asset purchases and out-licensing or in-licensing of intellectual property, products or technologies. 88 Such potential transactions that we may consider in the future include a variety of business arrangements, including spin-offs, strategic partnerships, joint ventures, restructurings, divestitures, business combinations, investments and licensings.
From time to time, we may consider strategic transactions, such as acquisitions of companies, asset purchases and out-licensing or in-licensing of intellectual property, products or technologies. Such potential transactions that we may consider in the future include a variety of business arrangements, including spin-offs, strategic partnerships, joint ventures, restructurings, divestitures, business combinations, investments and licensings.
These combinations may have additional or more severe side effects than caused by our drug candidates as monotherapies or may cause side effects at lower doses. The uncertainty resulting from the use of our drug 45 candidates in combination with other therapies may make it difficult to accurately predict side effects in potential future clinical trials.
These combinations may have additional or more severe side effects than caused by our drug candidates as monotherapies or may cause side effects at lower doses. The uncertainty resulting from the use of our drug candidates in combination with other therapies may make it difficult to accurately predict side effects in potential future clinical trials.
In some cases, the price that we intend to charge for any drug candidates, if approved, is also subject to approval. Obtaining approval for our drug candidates in the European Union (the EU) from the European Commission following the opinion of the EMA, if we choose to submit a marketing authorization application there, would be a lengthy and expensive process.
In some cases, the price that we intend to charge for any drug candidates, if approved, is also subject to approval. Obtaining approval for our drug candidates in the European Union from the European Commission following the opinion of the EMA, if we choose to submit a marketing authorization application there, would be a lengthy and expensive process.
In addition, varying 46 interpretations of the data obtained from nonclinical and clinical testing could delay, limit, or prevent marketing approval of a drug candidate. Any marketing approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable.
In addition, varying interpretations of the data obtained from nonclinical and clinical testing could delay, limit, or prevent marketing approval of a drug candidate. Any marketing approval we ultimately obtain may be limited or subject to restrictions or post-approval commitments that render the approved product not commercially viable.
Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our drug candidates or the use of our drug candidates. The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a patent and the patent’s prosecution history.
Additionally, pending patent applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our drug candidates or the use of our drug candidates. The scope of a patent claim is determined by an interpretation of the law, the written disclosure in a 73 patent and the patent’s prosecution history.
Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Unauthorized parties may also attempt to copy or reverse engineer certain aspects of our drug candidates that we consider proprietary.
Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Unauthorized parties may also attempt to copy or reverse 89 engineer certain aspects of our drug candidates that we consider proprietary.
If unacceptable toxicities or other undesirable side effects arise in the development of any of our current or future drug candidates, we could suspend or terminate our trials, or the FDA or comparable foreign regulatory authorities could order us to cease clinical trials or deny approval of the drug candidate for any or all targeted indications.
If unacceptable toxicities or other undesirable side effects arise in the development of any of our current or future drug candidates, we could suspend or terminate our trials, or the FDA or comparable foreign regulatory 47 authorities could order us to cease clinical trials or deny approval of the drug candidate for any or all targeted indications.
As a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. As our 58 operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities.
As a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. As our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities.
Obtaining, maintaining, defending and enforcing pharmaceutical patents is costly, time consuming and complex, and we may not be able to file and prosecute all necessary or desirable patent applications, or maintain, enforce and license any patents that may issue from such patent applications, at a reasonable cost or in a timely manner.
Obtaining, 69 maintaining, defending and enforcing pharmaceutical patents is costly, time consuming and complex, and we may not be able to file and prosecute all necessary or desirable patent applications, or maintain, enforce and license any patents that may issue from such patent applications, at a reasonable cost or in a timely manner.
Although alternative public and private transaction structures may be available, these may require additional time and cost, may impose operational restrictions on us, and may not be available on attractive terms. 33 Our operating results may fluctuate significantly, which will make our future results difficult to predict and could cause our results to fall below expectations.
Although alternative public and private transaction structures may be available, these may require additional time and cost, may impose operational restrictions on us, and may not be available on attractive terms. Our operating results may fluctuate significantly, which will make our future results difficult to predict and could cause our results to fall below expectations.
Even if our agreements with current or future collaborators entitle us to indemnification against losses, such indemnification may not be available or adequate should any claim arise. Healthcare legislative reform measures may have a material adverse effect on our business and results of operations.
Even if our agreements with current or future collaborators entitle us to indemnification against losses, such indemnification may not be available or adequate should any claim arise. 59 Healthcare legislative reform measures may have a material adverse effect on our business and results of operations.
The inability to recruit, or the loss of services of certain executives, significant employees, consultants or advisors, may impede the progress of our research, development and commercialization objectives and have a material adverse effect on our business, financial condition, results of operations and prospects. We currently have no sales organization.
The inability to recruit, or the loss of services of certain executives, significant employees, consultants or advisors, may impede the progress of our research, development and commercialization objectives and have a material adverse effect on our business, financial condition, results of operations and prospects. 79 We currently have no sales organization.
We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these 89 requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.
We cannot predict or estimate the amount or timing of additional costs we may incur to respond to these requirements. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.
To obtain the requisite regulatory approvals to commercialize any of our drug candidates, we must demonstrate through extensive nonclinical studies and clinical trials that our products are safe and effective in humans. Clinical trials are expensive and can take many years to complete, and their outcomes are inherently 39 uncertain.
To obtain the requisite regulatory approvals to commercialize any of our drug candidates, we must demonstrate through extensive nonclinical studies and clinical trials that our products are safe and effective in humans. Clinical trials are expensive and can take many years to complete, and their outcomes are inherently uncertain.
However, commercialization under an EUA is permitted only during the underlying public health emergency (as declared by the Secretary of the Department of Health and Human Services), meaning that once the emergency declaration is terminated, we would be required to obtain NDA approval to continue marketing the product.
However, commercialization under an EUA is permitted only during the underlying public health emergency (as declared by the Secretary of the Department of Health and Human Services), meaning that once the emergency declaration is terminated, we would be required to obtain NDA approval to continue marketing the 45 product.
An adverse result in any litigation proceeding could put one or more of our owned or licensed patents at risk of being invalidated, held unenforceable or interpreted narrowly. We may find it impractical or undesirable to enforce our intellectual property against some third parties.
An adverse result in any litigation proceeding could put one or 76 more of our owned or licensed patents at risk of being invalidated, held unenforceable or interpreted narrowly. We may find it impractical or undesirable to enforce our intellectual property against some third parties.
For more information regarding our license agreements, see the section titled “Business—License agreements and collaborations” of this report. 70 If we are unable to obtain licenses from third parties on commercially reasonable terms or at all, our business could be harmed.
For more information regarding our license agreements, see the section titled “Business—License agreements and collaborations” of this report. If we are unable to obtain licenses from third parties on commercially reasonable terms or at all, our business could be harmed.
If we are unable to rely on nonclinical or clinical data collected by our CROs, we could be required to repeat, extend the 63 duration of, or increase the size of any nonclinical studies or clinical trials we conduct and this could significantly delay commercialization and require significantly greater expenditures.
If we are unable to rely on nonclinical or clinical data collected by our CROs, we could be required to repeat, extend the duration of, or increase the size of any nonclinical studies or clinical trials we conduct and this could significantly delay commercialization and require significantly greater expenditures.
Securing regulatory approval requires the submission of extensive nonclinical and clinical data and supporting information to the various regulatory authorities for each therapeutic indication to establish the drug candidate’s safety and efficacy. Securing regulatory approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority.
Securing 48 regulatory approval requires the submission of extensive nonclinical and clinical data and supporting information to the various regulatory authorities for each therapeutic indication to establish the drug candidate’s safety and efficacy. Securing regulatory approval also requires the submission of information about the product manufacturing process to, and inspection of manufacturing facilities by, the relevant regulatory authority.
Under the EU Patent Package as currently proposed, we will have the right to opt our patents out of the UPC over the first seven years of the court’s existence, but doing so may preclude us from realizing the benefits of the new unified court.
Under the EU Patent Package as currently proposed, we have the right to opt our patents out of the UPC over the first seven years of the court’s existence, but doing so may preclude us from realizing the benefits of the new unified court.
In the event that we are subject to or affected by HIPAA, the CCPA or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.
In the event that we are subject to or affected by HIPAA, the CCPA, the CPRA or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.
Licenses may not provide us with exclusive rights to use the applicable intellectual property and technology in all relevant fields of use and in all territories in which we may wish to develop or commercialize our drug candidates, products (if approved) and technology in the 68 future.
Licenses may not provide us with exclusive rights to use the applicable intellectual property and technology in all relevant fields of use and in all territories in which we may wish to develop or commercialize our drug candidates, products (if approved) and technology in the future.
If disputes over intellectual property that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms or at all, we may be unable to successfully develop and commercialize the affected drug candidates.
If disputes over intellectual property that we have licensed prevent or 72 impair our ability to maintain our current licensing arrangements on acceptable terms or at all, we may be unable to successfully develop and commercialize the affected drug candidates.
If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent rights directed towards the applicable drug candidates or 74 technology related to the patent rendered invalid or unenforceable.
If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of the patent rights directed towards the applicable drug candidates or technology related to the patent rendered invalid or unenforceable.
Furthermore, integral parties in our supply chain are similarly vulnerable to natural disasters or other 79 sudden, unforeseen and severe adverse events. If such an event were to affect our supply chain, it could have a material adverse effect on our business.
Furthermore, integral parties in our supply chain are similarly vulnerable to natural disasters or other sudden, unforeseen and severe adverse events. If such an event were to affect our supply chain, it could have a material adverse effect on our business.
Furthermore, if we are forced to raise additional funds, we may be required to delay, limit, 56 reduce or terminate our product development or future commercialization efforts, or grant rights to develop and market drug candidates that we would otherwise develop and market ourselves.
Furthermore, if we are forced to raise additional funds, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts, or grant rights to develop and market drug candidates that we would otherwise develop and market ourselves.
The time required to obtain approval by the FDA, the EMA and comparable foreign authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon 38 numerous factors, including the substantial discretion of the regulatory authorities.
The time required to obtain approval by the FDA, the EMA and comparable foreign authorities is unpredictable but typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities.
If public perception is influenced by claims that the use of therapies in our therapeutic areas of focus are unsafe, whether related to our therapies or those of our competitors, our products may not be accepted by the general public or the medical community.
If public perception is influenced by claims that the use 49 of therapies in our therapeutic areas of focus are unsafe, whether related to our therapies or those of our competitors, our products may not be accepted by the general public or the medical community.
The clinical and commercial success of our drug candidates will depend in part on public acceptance of the use of technologies for the prevention or treatment of human diseases. Adverse public attitudes may adversely 47 impact our ability to enroll clinical trials.
The clinical and commercial success of our drug candidates will depend in part on public acceptance of the use of technologies for the prevention or treatment of human diseases. Adverse public attitudes may adversely impact our ability to enroll clinical trials.
This competition will reduce the number and 44 types of patients available to us, because some patients who might have enrolled in our trials may instead opt to enroll in a trial conducted by one of our competitors.
This competition will reduce the number and types of patients available to us, because some patients who might have enrolled in our trials may instead opt to enroll in a trial conducted by one of our competitors.
Furthermore, there are companies developing or marketing treatments for NASH, including AbbVie, Inc., AstraZeneca PLC/MedImmune LLC, Bristol-Myers Squibb Company, Eli Lilly and Company, FronThera US Pharmaceuticals LLC, Janssen, Merck, Novartis Pharmaceuticals Corporation (together with Pfizer, Inc.), Novo Nordisk A/S, Pfizer Inc., Roche, Sanofi S.A., Takeda Pharmaceutical Company Limited (together with HemoShear Therapeutics, LLC), 89bio, Inc., Akero Therapeutics, Inc., Cirius Therapeutics, Inc., Enanta Pharmaceuticals, Inc., Galectin Therapeutics Inc., Galmed Pharmaceuticals Ltd., Genfit SA, Gilead, Intercept Pharmaceuticals, Inc., Inventiva Pharma SA, Madrigal Pharmaceuticals, Inc., MediciNova, Inc., NGM Biopharmaceuticals, Inc., Pliant Therapeutics, Inc.
Furthermore, there are companies developing or marketing treatments for MASH, including AbbVie, Inc., AstraZeneca PLC/MedImmune LLC, Bristol-Myers Squibb Company, Eli Lilly and Company, FronThera US Pharmaceuticals LLC, Janssen, Merck, Novartis Pharmaceuticals Corporation (together with Pfizer, Inc.), Novo Nordisk A/S, Pfizer Inc., Roche, Sanofi S.A., Takeda Pharmaceutical Company Limited (together with HemoShear Therapeutics, LLC), 89bio, Inc., Akero Therapeutics, Inc., Cirius Therapeutics, Inc., Enanta Pharmaceuticals, Inc., Galectin Therapeutics Inc., Galmed Pharmaceuticals Ltd., Genfit SA, Gilead, Intercept Pharmaceuticals, Inc., Inventiva Pharma SA, Madrigal Pharmaceuticals, Inc., MediciNova, Inc., NGM Biopharmaceuticals, Inc., Pliant Therapeutics, Inc.
These fluctuations may occur due to a variety of factors, many of which are outside of our control and may be difficult to predict, including: • the timing and cost of, and level of investment in, research, development and commercialization activities, which may change from time to time; • the timing and status of enrollment for our clinical trials; • the timing of regulatory approvals, if any, in the United States and internationally; • the timing of expanding our operational, financial and management systems and personnel, including personnel to support our clinical development, quality control, manufacturing and commercialization efforts and our operations as a public company; • the cost of manufacturing, as well as building out our supply chain, which may vary depending on the quantity produced, and the terms of any agreements we enter into with third-party suppliers; • the timing and amount of any milestone, royalty or other payments due under any current or future collaboration or license agreement, including our existing license agreements with Emory University (Emory) and KU Leuven; • coverage and reimbursement policies with respect to any future approved products, and potential future drugs that compete with our products; • the timing and cost to establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any products for which we may obtain marketing approval and intend to commercialize on our own or jointly with current or future collaborators; • expenditures that we may incur to acquire, develop or commercialize additional products and technologies; • expenditures that we may incur in any lawsuits related to our drug candidates or commenced against us, including the costs associated with our current litigation with Janssen; • the level of demand for any future approved products, which may vary significantly over time; • future accounting pronouncements or changes in accounting principles or our accounting policies; and • the timing and success or failure of nonclinical studies and clinical trials for our drug candidates or competing drug candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or collaboration partners.
These fluctuations may occur due to a variety of factors, many of which are outside of our control and may be difficult to predict, including: 35 • the timing and cost of, and level of investment in, research, development and commercialization activities, which may change from time to time; • the timing and status of enrollment for our clinical trials; • the timing of regulatory approvals, if any, in the United States and internationally; • the timing of expanding our operational, financial and management systems and personnel, including personnel to support our clinical development, quality control, manufacturing and commercialization efforts and our operations as a public company; • the cost of manufacturing, as well as building out our supply chain, which may vary depending on the quantity produced, and the terms of any agreements we enter into with third-party suppliers; • the timing and amount of any milestone, royalty or other payments due under any current or future collaboration or license agreement, including our existing license agreements with Emory University (Emory) and KU Leuven; • coverage and reimbursement policies with respect to any future approved products, and potential future drugs that compete with our products; • the timing and cost to establish a sales, marketing, medical affairs and distribution infrastructure to commercialize any products for which we may obtain marketing approval and intend to commercialize on our own or jointly with current or future collaborators; • expenditures that we may incur to acquire, develop or commercialize additional products and technologies; • expenditures that we may incur in any lawsuits related to our drug candidates or commenced against us; • the level of demand for any future approved products, which may vary significantly over time; • future accounting pronouncements or changes in accounting principles or our accounting policies; and • the timing and success or failure of nonclinical studies and clinical trials for our drug candidates or competing drug candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or collaboration partners.
We have elected to use the extended transition period for any other new or revised accounting standards during the period in which we remain an 81 emerging growth company; however, we may adopt certain new or revised accounting standards early.
We have elected to use the extended transition period for any other new or revised accounting standards during the period in which we remain an emerging growth company; however, we may adopt certain new or revised accounting standards early.
In addition, the 66 approval and commercialization of any drug candidate we develop outside the United States will also likely subject us to foreign equivalents of the healthcare laws mentioned above, among other foreign laws.
In addition, the approval and commercialization of any drug candidate we develop outside the United States will also likely subject us to foreign equivalents of the healthcare laws mentioned above, among other foreign laws.
In the absence of an active trading market for our common stock, investors may not be able to sell their common stock at a price or at the time that they would like to sell.
In the absence of an active trading market 82 for our common stock, investors may not be able to sell their common stock at a price or at the time that they would like to sell.
Any of the foregoing could harm our competitive position, business, financial condition, results of operations and prospects. 72 We may not be able to protect our intellectual property rights throughout the world.
Any of the foregoing could harm our competitive position, business, financial condition, results of operations and prospects. We may not be able to protect our intellectual property rights throughout the world.
As noted above, some of our competitors may be able to sustain the costs 87 of such litigation or proceedings more effectively than we can because of their greater financial resources.
As noted above, some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources.
Therefore, we cannot know with certainty whether we were the first to make the inventions 67 claimed in our patents or pending patent applications, or that we were the first to file for patent protection of such inventions.
Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our patents or pending patent applications, or that we were the first to file for patent protection of such inventions.
Accordingly, we cannot provide assurances that we will be able to generate sufficient revenue through the sale of products to continue our business. 37 Nonclinical development is uncertain.
Accordingly, we cannot provide assurances that we will be able to generate sufficient revenue through the sale of products to continue our business. Nonclinical development is uncertain.
Approval of a drug candidate in the United States by the FDA does not ensure approval of such drug candidate by regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory authority does 48 not ensure approval by regulatory authorities in other foreign countries.
Approval of a drug candidate in the United States by the FDA does not ensure approval of such drug candidate by regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries.
Additionally, stockholders who hold, in the aggregate, more than 10% of our common stock and non-voting common stock, but 10% or less of our common stock, and are not otherwise a company insider, may not be required to report changes in their ownership due to transactions in our non-voting common stock pursuant to Section 16(a) of the Exchange Act of 1934, as amended 82 (the Exchange Act), and may not be subject to the short-swing profit provisions of Section 16(b) of the Exchange Act.
Additionally, stockholders who hold, in the aggregate, more than 10% of our common stock and non-voting common stock, but 10% or less of our common stock, and are not otherwise a company insider, may not be required to report changes in their ownership due to transactions in our non-voting common stock pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended (the Securities Exchange Act), and may not be subject to the short-swing profit provisions of Section 16(b) of the Exchange Act.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a 76 distraction to management and other employees. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. Intellectual property rights do not necessarily address all potential threats.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a 78 distraction to management and other employees. Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations and prospects. Intellectual property rights do not necessarily address all potential threats.
We have invested substantially all of our efforts and financial resources in the identification of targets and nonclinical development of 35 therapeutics to address hepatological indications and viral diseases.
We have invested substantially all of our efforts and financial resources in the identification of targets and nonclinical development of therapeutics to address hepatological indications and viral diseases.
Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of their merit. 75 Even if we believe third-party intellectual property claims are without merit, there is no assurance that a court would find in our favor on questions of claim scope, infringement, validity, enforceability or priority.
Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of their merit. 77 Even if we believe third-party intellectual property claims are without merit, there is no assurance that a court would find in our favor on questions of claim scope, infringement, validity, enforceability or priority.
Quarantines, shutdowns and shelter-in-place and similar government orders related to COVID-19 or other infectious diseases, or the perception that such events, orders or other restrictions on the conduct of business operations could occur, could impact personnel at third-party manufacturing facilities in the United States and other countries, or the availability or cost of materials, which would disrupt our supply chain.
Quarantines, shutdowns and shelter-in-place and similar government orders related to infectious diseases, or the perception that such events, orders or other restrictions on the conduct of business operations could occur, could impact personnel at third-party manufacturing facilities in the United States and other countries, or the availability or cost of materials, which would disrupt our supply chain.
The mechanism of action of our NASH drug candidates is complex, and we do not know the degree to which it will translate into a therapeutic benefit, if any, in NASH or any other indication, and we do not know the degree to which the complex mechanism of action may contribute to long-term safety issues or adverse events when our drug candidates are taken for prolonged periods, as is inherent in the treatment of NASH.
The mechanism of action of our MASH drug candidates is complex, and we do not know the degree to which it will translate into a therapeutic benefit, if any, in MASH or any other indication, and we do not know the degree to which the complex mechanism of action may contribute to long-term safety issues or adverse events when our drug candidates are taken for prolonged periods, as is inherent in the treatment of MASH.
Our future capital requirements depend on many factors, including: • the scope, progress, results and costs of researching and developing our drug candidates and programs, and of conducting nonclinical studies and clinical trials; • the timing of, and the costs involved in, obtaining marketing approvals for drug candidates we develop if clinical trials are successful; • the cost of commercialization activities for our current drug candidates, and any future drug candidates we develop, whether alone or in collaboration, including marketing, sales and distribution costs if our current drug candidates or any future drug candidate we develop is approved for sale; • the cost of manufacturing our current and future drug candidates for clinical trials in preparation for marketing approval and commercialization; • our ability to establish and maintain strategic licenses or other arrangements and the financial terms of such agreements including milestone payments to our licensors; • the costs involved in preparing, filing, prosecuting, maintaining, expanding, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; 32 • any lawsuits related to our drug candidates or commenced against us, including the costs associated with our current litigation with Janssen; • the timing, receipt and amount of sales of, or profit share or royalties on, our future products, if any; • the emergence of competing therapies for hepatological indications and viral diseases and other adverse market developments; and • any acquisitions or in-licensing of other programs or technologies.
Our future capital requirements depend on many factors, including: • the scope, progress, results and costs of researching and developing our drug candidates and programs, and of conducting nonclinical studies and clinical trials; • the timing of, and the costs involved in, obtaining marketing approvals for drug candidates we develop if clinical trials are successful; • the cost of commercialization activities for our current drug candidates, and any future drug candidates we develop, whether alone or in collaboration, including marketing, sales and distribution costs if our current drug candidates or any future drug candidate we develop is approved for sale; • the cost of manufacturing our current and future drug candidates for clinical trials in preparation for marketing approval and commercialization; • our ability to establish and maintain strategic licenses or other arrangements and the financial terms of such agreements including milestone payments to our licensors; • the costs involved in preparing, filing, prosecuting, maintaining, expanding, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; 34 • any lawsuits related to our drug candidates or commenced against us; • the timing, receipt and amount of sales of, or profit share or royalties on, our future products, if any; • the emergence of competing therapies for hepatological indications and viral diseases and other adverse market developments; and • any acquisitions or in-licensing of other programs or technologies.
For example, this is currently the case with drugs for the treatment of NASH. As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate and well-controlled post-marketing clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit.
For example, this is currently the case with drugs for the treatment of MASH. As a condition of accelerated approval, the FDA will generally require the sponsor to perform adequate and well-controlled post-marketing clinical studies to verify and describe the anticipated effect on irreversible morbidity or mortality or other clinical benefit.
Prior to granting such rights to Luxna, Osaka granted certain rights to third parties and therefore the rights we in-license from Luxna are subject to such third-party rights.
Prior to granting such rights to Luxna, Osaka granted certain rights to third parties and therefore the rights we in-license 71 from Luxna are subject to such third-party rights.
Patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our and our collaborators’ or licensors’ patent applications and the enforcement or defense of our or our collaborators’ or 73 licensors’ issued patents.
Patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our and our collaborators’ or licensors’ patent applications and the enforcement or defense of our or our collaborators’ or licensors’ issued patents.
Further, if government authorities and third-party payors choose to limit coverage and reimbursement of our NASH drug candidate, such as limiting the number of patients’ treatment that would be covered and reimbursable, this could result in a smaller market opportunity for our NASH drug candidate than we anticipate.
Further, if government authorities and third-party payors choose to limit coverage and reimbursement of our MASH drug candidate, such as limiting the number of patients’ treatment that would be covered and reimbursable, this could result in a smaller market opportunity for our MASH drug candidate than we anticipate.
If our collaborations are not successful, we may not be able to capitalize on the market potential of these drug candidates. We are currently collaborating with third parties to develop certain of our potential drug candidates. For example, we are collaborating with Merck with respect to the discovery, research and development of oligonucleotides against a NASH target.
If our collaborations are not successful, we may not be able to capitalize on the market potential of these drug candidates. We are currently collaborating with third parties to develop certain of our potential drug candidates. For example, we are collaborating with Merck with respect to the discovery, research and development of oligonucleotides against a MASH target.
It is difficult to predict at this time what government authorities and third-party payors may decide with respect to coverage and reimbursement for our programs (if approved). 53 A primary trend in the U.S. healthcare industry and elsewhere is cost containment.
It is difficult to predict at this time what government authorities and third-party payors may decide with respect to coverage and reimbursement for our programs (if approved). 55 A primary trend in the U.S. healthcare industry and elsewhere is cost containment.
Combination therapies are commonly used for the treatment of viral diseases and it is generally believed they will be required for NASH, and we would be subject to similar risks if we develop any of our drug candidates for use in combination with other drugs.
Combination therapies are commonly used for the treatment of viral diseases and it is generally believed they will be required for MASH, and we would be subject to similar risks if we develop any of our drug candidates for use in combination with other drugs.
Even if we do receive such designations, there is no guarantee that we will enjoy the benefits of those designations. We may be required to make significant payments under our license agreements with Emory University and Luxna Biotech Co., Ltd.
Even if we do receive such designations, there is no guarantee that we will enjoy the benefits of those designations. We may be required to make significant payments under our license agreements with Emory University, KU Leuven, and Luxna Biotech Co., Ltd.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe current term of our Leuven, Belgium lease expires in August 2023, with an option to extend the term through August 2028. We lease all of our facilities and do not own any real property. We believe our existing facilities are sufficient for our needs for the foreseeable future.
Biggest changeThe current term of our Leuven, Belgium lease expires in August 2028. We lease all of our facilities and do not own any real property. We believe our existing facilities are sufficient for our needs for the foreseeable future.
To meet the future needs of our business, we may lease additional or alternate space, and we believe suitable additional or alternative space will be available in the future on commercially reasonable terms. 90
To meet the future needs of our business, we may lease additional or alternate space, and we believe suitable additional or alternative space will be available in the future on commercially reasonable terms.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe Company believes the allegations in the Complaint are without merit and intends to continue to defend itself vigorously. On August 22, 2022, the Company filed its response to the Complaint and on August 4, 2022, filed counterclaims against Janssen alleging Janssen has engaged in unfair competition and promissory fraud. Item 4. Mine Safe ty Disclosures.
Biggest changeOn August 4, 2022, the Company filed counterclaims against Janssen alleging Janssen had engaged in unfair competition and promissory fraud, and on August 22, 2022, the Company filed its response to the Complaint.
The Complaint was filed on March 9, 2022 in the Superior Court of the State of California, County of San Mateo, against the Company, Lawrence M. Blatt, Chairman, Chief Executive Officer and Director of the Company, and Leonid Beigelman, President and Director of the Company. The Complaint alleges breach of contract by Lawrence M.
The Complaint was filed on March 9, 2022 in the Superior Court of the State of California, County of San Mateo, against the Company, Lawrence M. Blatt, Chairman, Chief Executive Officer and Director of the Company, and Leonid Beigelman, the former President and a former Director of the Company. The Complaint alleged breach of contract by Lawrence M.
Blatt and Leonid Beigelman and tortious interference with contract by the Company and seeks declaratory judgment of ownership of certain intellectual property by the Company, among other claims. The Complaint states that Janssen is seeking injunctive relief, assignment of certain intellectual property from us to Janssen and monetary damages.
Blatt and Leonid Beigelman and tortious interference with contract by the Company and sought declaratory judgment of ownership of certain intellectual property by the Company, among other claims. The 93 Complaint stated that Janssen is seeking injunctive relief, assignment of certain intellectual property from us to Janssen and monetary damages.
While the outcome of any such proceedings cannot be predicted with certainty, we are not currently involved in any legal proceedings that we believe are, individually or in the aggregate, material to our business, results of operations or financial condition, except as described below.
Item 3. Legal Proceedings. From time to time, we may become involved in litigation or other legal proceedings. While the outcome of any such proceedings cannot be predicted with certainty, we are not currently involved in any legal proceedings that we believe are, individually or in the aggregate, material to our business, results of operations or financial condition.
Removed
Item 3. Legal Proceedings. From time to time, we may become involved in litigation or other legal proceedings.
Added
On October 16, 2023, the Company entered into a settlement agreement with Janssen that provides for the resolution of the action brought by Janssen alleging breach of contract by Lawrence M. Blatt, and Leonid Beigelman, and tortious interference with contract by the Company and seeking declaratory judgment of ownership of certain intellectual property by the Company, among other claims.
Added
Pursuant to the settlement agreement, Janssen agreed to dismiss the action and released the Company, Dr. Blatt and Dr. Beigelman from the claims alleged. In addition, pursuant to the Settlement Agreement, the Company agreed to dismiss the counterclaims against Janssen alleging unfair competition and promissory fraud and released Janssen from the alleged counterclaims. Item 4. Mine Safe ty Disclosures.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stock holder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock has been listed on The Nasdaq Global Select Market under the symbol “ALGS” since October 20, 2020. Prior to that date, there was no public trading market for our common stock.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stock holder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock was listed on The Nasdaq Global Select Market under the symbol “ALGS” from October 20, 2020 to March 5, 2024 and has been listed on The Nasdaq Capital Market since March 6, 2024.
Securities Authorized for Issuance under Equity Compensation Plans The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2023 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after December 31, 2022. Recent Sales of Unregistered Securities None. Use of Proceeds. None.
Securities Authorized for Issuance under Equity Compensation Plans The information required by this item is incorporated by reference to the definitive Proxy Statement for our 2024 Annual Meeting of Stockholders, which will be filed with the SEC no later than 120 days after December 31, 2023. Recent Sales of Unregistered Securities None. Use of Proceeds. None.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers. None. Item 6. [Reserved]. 92
Purchases of Equity Securities by the Issuer and Affiliated Purchasers. None. Item 6. [Reserved]. 95
Holders of Record As of March 6, 2023, there were 42 holders of record of our common stock, which consist of 40 holders of record of our voting common stock and two holders of record of our non-voting common stock.
Prior to October 20, 2020, there was no public trading market for our common stock. Holders of Record As of March 8, 2024, there were 46 holders of record of our common stock, which consist of 44 holders of record of our voting common stock and two holders of record of our non-voting common stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of operations Comparison of the years ended December 31, 2022 and 2021 The following table summarizes our operating expenses for the years ended December 31, 2022 and 2021: Consolidated Statements of Operations Data: 2022 2021 Change (in thousands) $ % Revenue from collaborations $ 13,907 $ 4,359 $ 9,548 219 % Operating expenses: Research and development 85,077 104,153 (19,076 ) (18 )% General and administrative 26,410 28,527 (2,117 ) (7 )% Total operating expenses 111,487 132,680 (21,193 ) (16 )% Loss from operations (97,580 ) (128,321 ) 30,741 (24 )% Interest and other income, net Interest income, net 1,521 242 1,279 527 % Other income (loss), net 119 (110 ) 229 (208 )% Total interest and other income, net 1,640 132 1,508 1,142 % Loss before provision for income taxes (95,940 ) (128,189 ) 32,249 (25 )% Income tax expense (106 ) (143 ) 37 (26 )% Net loss $ (96,046 ) $ (128,332 ) $ 32,286 (25 )% 96 Research and development expenses Research and development expenses were $85.1 million for the year ended December 31, 2022, compared to $104.2 million for the year ended December 31, 2021, a decrease of $19.1 million.
Biggest changeResults of operations Comparison of the years ended December 31, 2023 and 2022 The following table summarizes our operating expenses for the years ended December 31, 2023 and 2022: Twelve Months Ended December 31, Change 2023 2022 ($) % Revenue from collaborations $ 9,338 $ 13,907 $ (4,569 ) -33 % Revenue from customers 6,191 — $ 6,191 100 % Operating expenses: Research and development 73,040 85,077 (12,037 ) -14 % General and administrative 30,616 26,410 4,206 16 % Total operating expenses 103,656 111,487 (7,831 ) -7 % Loss from operations (88,127 ) (97,580 ) 9,453 -10 % Interest and other income, net: Interest income, net 4,297 1,521 $ 2,776 183 % Other income (expense), net (3,054 ) 119 $ (3,173 ) -2669 % Total interest and other income, net 1,243 1,640 (397 ) -24 % Loss before provision for income taxes (86,884 ) (95,940 ) $ 9,056 -9 % Income tax expense (795 ) (106 ) $ (689 ) 650 % Net Loss (87,679 ) (96,046 ) $ 8,367 -9 % Revenue from collaborations Revenue from collaborations was $9.3 million for the year ended December 31, 2023, compared to $13.9 million for the year ended December 31, 2022, a decrease of $4.6 million.
Interest and other (expense) income, net Interest and other (expense) income, net comprises interest (expense) income, net and other income (expense), net. Interest income (expense), net primarily consists of interest earned on our cash, cash equivalents, and investments. Other (expense) income, net consists primarily of foreign currency exchange gains and losses.
Interest and other income, net Interest and other income, net comprises interest income, net and other income (expense), net. Interest income, net primarily consists of interest earned on our cash, cash equivalents, and investments. Other income (expense), net consists primarily of foreign currency exchange gains and losses.
Investing activities During Fiscal 2022, investing activities used $26.3 million of cash, consisting primarily of $104.3 million of investment purchases, and $0.9 million of purchases of property and equipment, partially offset by $78.9 million of investment maturities.
During Fiscal 2022, investing activities used $26.3 million of cash, consisting primarily of $104.3 million of investment purchases, and $0.9 million of purchases of property and equipment, partially offset by $78.9 million of investment maturities.
Financing activities During Fiscal 2022, net cash provided by financing activities was $0.2 million, consisting primarily of $0.2 million from the issuance of common stock from the exercise of employee stock options and the issuance of shares through our employee stock purchase plan, partially offset by payments of our finance leases.
During Fiscal 2022, net cash provided by financing activities was $0.2 million, consisting primarily of $0.2 million from the issuance of common stock from the exercise of employee stock options and the issuance of shares through our employee stock purchase plan, partially offset by payments of our finance leases.
Research and development costs consist primarily of costs incurred for the identification and development of our drug candidates through our technology platforms, which include: • salaries, benefits and other employee-related costs, including stock-based compensation expense, for personnel engaged in research and development functions; • costs of outside consultants, including their fees, and related travel expenses; • costs associated with in-process research and development, including license fees and milestones paid to third-party collaborators for technologies with no alternative use; • costs related to production of clinical materials, including fees paid to contract manufacturers; • expenses incurred under agreements with collaborators that perform nonclinical activities; • costs related to compliance with regulatory requirements; and • facility costs, depreciation, and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance, and other supplies.
Research and development costs consist primarily of costs incurred for the identification and development of our drug candidates through our technology platforms, which include: • salaries, benefits and other employee-related costs, including stock-based compensation expense, for personnel engaged in research and development functions; • costs of outside consultants, including their fees, and related travel expenses; • costs associated with in-process research and development, including license fees and milestones paid to third-party collaborators for technologies with no alternative use; • costs related to production of clinical materials, including fees paid to contract manufacturers; • expenses incurred under agreements with collaborators that perform nonclinical activities; • costs related to compliance with regulatory requirements; and 98 • facility costs, depreciation, and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance, and other supplies.
Our future capital requirements will depend on many factors, including: • the scope, progress, results and costs of researching and developing our drug candidates and programs, and of conducting nonclinical studies and clinical trials; • the timing of, and the costs involved in, obtaining marketing approvals for drug candidates we develop if clinical trials are successful; • the cost of commercialization activities for our current drug candidates, and any future drug candidates we develop, whether alone or in collaboration, including marketing, sales and distribution costs if our current drug candidates or any future drug candidate we develop is approved for sale; • the cost of manufacturing our current and future drug candidates for clinical trials in preparation for marketing approval and commercialization; • our ability to establish and maintain strategic licenses or other arrangements and the financial terms of such agreements; • the costs involved in preparing, filing, prosecuting, maintaining, expanding, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; • the timing, receipt and amount of sales of, or profit share or royalties on, our future products, if any; 98 • the emergence of competing therapies for hepatological indications and viral diseases and other adverse market developments; and • any acquisitions or in-licensing of other programs or technologies.
Our future capital requirements will depend on many factors, including: • the scope, progress, results and costs of researching and developing our drug candidates and programs, and of conducting nonclinical studies and clinical trials; • the timing of, and the costs involved in, obtaining marketing approvals for drug candidates we develop if clinical trials are successful; • the cost of commercialization activities for our current drug candidates, and any future drug candidates we develop, whether alone or in collaboration, including marketing, sales and distribution costs if our current drug candidates or any future drug candidate we develop is approved for sale; 102 • the cost of manufacturing our current and future drug candidates for clinical trials in preparation for marketing approval and commercialization; • our ability to establish and maintain strategic licenses or other arrangements and the financial terms of such agreements; • the costs involved in preparing, filing, prosecuting, maintaining, expanding, defending and enforcing patent claims, including litigation costs and the outcome of such litigation; • the timing, receipt and amount of sales of, or profit share or royalties on, our future products, if any; • the emergence of competing therapies for hepatological indications and viral diseases and other adverse market developments; and • any acquisitions or in-licensing of other programs or technologies.
Net cash used as a result of changes in our operating assets and liabilities of $1.6 million consisted of a decrease in accrued liabilities of $9.1 million, an increase of $0.3 million in right of use assets, a decrease of $1.8 million in operating lease liabilities, and a decrease of $0.1 million in other liabilities, partially offset by a decrease in other current assets of $5.6 million, an increase of $1.6 million in accounts payable, and an increase of $2.5 million in deferred revenue from collaborations.
Net cash used as a result of changes in our operating assets and liabilities of $1.6 million consisted of a decrease in accrued liabilities of $9.1 million, an increase of $0.3 million in right of use assets, a decrease of $1.8 million in operating lease liabilities, and a decrease of $0.1 million in other liabilities, partially offset by a decrease in other current assets of $5.6 million, an increase of $1.7 million in accounts payable, and an increase of $2.5 million in deferred revenue from collaborations.
Our accrued expenses are dependent, in part, upon the receipt of timely and accurate reporting from clinical research organizations and other third-party service providers. For the periods presented, we have experienced no material differences between our accrued expenses and actual expenses. Research and development expenses We expense research and development costs as incurred.
Our accrued expenses are dependent, in part, upon the receipt of timely and accurate reporting from clinical research organizations and other third-party service providers. For the periods presented, we have experienced no material differences between our accrued expenses and actual expenses. 105 Research and development expenses We expense research and development costs as incurred.
The term of these indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future payments we could be required to make under these arrangements is not determinable. We have never 100 incurred costs to defend lawsuits or settle claims related to these indemnification agreements.
The term of these indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future payments we could be required to make under these arrangements is not determinable. We have never incurred costs to defend lawsuits or settle claims related to these indemnification agreements.
Stock-based compensation We measure stock options and other stock-based awards granted to employees, directors and other service providers based on their fair value on the date of grant and recognize compensation expense of those awards over 101 the requisite service period, which is generally the vesting period of the respective award.
Stock-based compensation We measure stock options and other stock-based awards granted to employees, directors and other service providers based on their fair value on the date of grant and recognize compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award.
Off-balance sheet arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC. Indemnification agreements We enter into standard indemnification arrangements in the ordinary course of business.
Off-balance sheet arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC. 104 Indemnification agreements We enter into standard indemnification arrangements in the ordinary course of business.
Recently issued and adopted accounting pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements. 102
Recently issued and adopted accounting pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our consolidated financial statements.
The Company enters into contracts in the normal course of business that includes arrangements with clinical research organizations, vendors for preclinical research and vendors for manufacturing. These agreements generally allow for cancellation with notice. As of December 31, 2022, the Company had no material non-cancellable purchase commitments.
The Company enters into contracts in the normal course of business that includes arrangements with clinical research organizations, vendors for preclinical research and vendors for manufacturing. These agreements generally allow for cancellation with notice. As of December 31, 2023, the Company had no material non-cancellable purchase commitments.
In addition, under current tax law, federal NOL carryforwards generated in periods after December 31, 2017, may be carried forward indefinitely but, in taxable years beginning after December 31, 2020, may only be used to offset 80% of our taxable income.
In addition, under current tax law, federal NOL carryforwards generated in periods after December 31, 2017, may be carried forward indefinitely but, may only be used to offset 80% of our taxable income.
We recognize the impact of forfeitures on stock-based compensation expense as forfeitures occur. We apply the straight-line method of expense recognition to all awards with only service-based vesting conditions. During the year ended December 31, 2022 and 2021, we did not grant any stock-based awards with performance-based vesting conditions.
We recognize the impact of forfeitures on stock-based compensation expense as forfeitures occur. We apply the straight-line method of expense recognition to all awards with only service-based vesting conditions. During the years ended December 31, 2023 and 2022, we did not grant any stock-based awards with performance-based vesting conditions.
Net cash used as a result of changes in our operating assets and liabilities of $4.7 million consisted of an increase of an increase in other assets of $8.1 million, a decrease of $4.4 million in deferred revenue from collaborations, a decrease of $1.4 million in operating lease liabilities, a decrease of $0.3 million in accounts payable and a decrease of $0.2 million in other liabilities, partially offset by an increase in accrued liabilities of $9.7 million.
Net cash used as a result of changes in our operating assets and liabilities of $9.5 million consisted of a increase in accrued liabilities of $0.9 million, an increase of $0.5 million in deferred revenue from customers, and a decrease in other current assets of $2.3 million, offset by a decrease of $2.4 103 million in operating lease liabilities, a decrease of $2.2 million in accounts payable, and a decrease of $8.7 million in deferred revenue from collaborations.
Overview We are a clinical-stage biopharmaceutical company focused on developing novel therapeutics to address unmet medical needs in liver diseases and viral infections, including in the areas of non-alcoholic steatohepatitis (NASH), coronavirus (e.g., SARS-CoV-2 and related infections) and chronic hepatitis B (CHB).
Overview We are a clinical-stage biopharmaceutical company focused on developing novel therapeutics to address unmet medical needs in liver diseases and viral infections, including in the areas of metabolic dysfunction associated steatohepatitis (MASH), chronic hepatitis B (CHB) and coronavirus (e.g., SARS-CoV-2 and related infections).
The initial Phase 1a study in HVs for our CAM-E, ALG‑000184, has been completed as has a Phase 1b dose ranging study evaluating the safety, pharmacokinetics and antiviral activity of 10-300 mg doses of ALG‑000184 for 28 days among untreated HBV E-antigen (HBeAg) positive/negative CHB subjects.
We have completed the initial Phase 1a study in HVs for our CAM-E, ALG‑000184, and a Phase 1b dose ranging study evaluating the safety, PK and antiviral activity of 10-300 mg doses of ALG‑000184 for 28 days among untreated HBV e-antigen (HBeAg) positive/negative CHB subjects.
As of December 31, 2022, we had federal net operating loss (NOL) carryforwards of $272.4 million available to reduce taxable income and these NOLs can be carried forward indefinitely. We have state NOL carryforwards of $352.7 million as of December 31, 2022, available to reduce future state taxable income, which expire at various dates beginning in 2038.
As of December 31, 2023, we had federal net operating loss (NOL) carryforwards of $3.7 million available to reduce taxable income and these NOLs can be carried forward indefinitely. We have state NOL carryforwards of $12.7 million as of December 31, 2023, available to reduce future state taxable income, which expire at various dates beginning in 2038.
Under Sections 382 and 383 of the Code, and corresponding provisions of state law, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage point change (by value) in its equity ownership over a rolling three-year period), the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited.
The Australian NOL and research and development tax credits have no expiration date. 99 Under Sections 382 and 383 of the Code, and corresponding provisions of state law, if a corporation undergoes an “ownership change” (generally defined as a greater than 50 percentage point change (by value) in its equity ownership over a rolling three-year period), our ability to use our pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change income may be limited.
Our third area of focus seeks to enhance the rate of functional cure for CHB, which often results in life-threatening conditions such as cirrhosis, and the most common form of liver cancer, hepatocellular carcinoma (HCC).
Our second area of focus seeks to enhance the viral suppression and rate of functional cure for CHB, which often results in life-threatening conditions such as cirrhosis, end-stage liver disease and, the most common form of liver cancer, hepatocellular carcinoma (HCC).
In July 2021, we completed a follow-on offering and issued 4,400,000 shares of our common stock at a price to the public of $19.00 per share for net proceeds of $77.7 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. As of December 31, 2022, we had cash, cash equivalents and investments of $125.8 million.
In July 2021, we completed a follow-on offering and issued 4,400,000 shares of our common stock at a price to the public of $19.00 per share for net proceeds of $77.7 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.
We will remain an EGC until the earliest to occur of: (1) the last day of the fiscal year in which we have more than $1.235 billion in annual revenue; (2) the date we qualify as a “large accelerated filer,” with at least $700.0 million of equity securities held by non-affiliates; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) the last day of the fiscal year ending after the fifth anniversary of our initial public offering.
We have elected to use the extended transition period for any new or revised accounting standards during the period in which we remain an EGC; however, we may adopt certain new or revised accounting standards early. 106 We will remain an EGC until the earliest to occur of: (1) the last day of the fiscal year in which we have more than $1.235 billion in annual revenue; (2) the date we qualify as a “large accelerated filer,” with at least $700.0 million of equity securities held by non-affiliates; (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period; and (4) the last day of the fiscal year ending after the fifth anniversary of our initial public offering.
In this area of focus, we are using a small molecule approach, where we are exploring coronavirus 3CL protease inhibitors (PIs) in collaboration with Katholieke Universiteit Leuven (KU Leuven), the Center for Innovation and Stimulation of Drug Discovery (CISTIM) and the Centre for Drug Design and Discovery (CD3).
In this area of focus, we are exploring small molecule coronavirus 3CL protease inhibitors (PIs) in collaboration with KU Leuven, the Center for Innovation and Stimulation of Drug Discovery (CISTIM) and the CD3.
ALG‑000184 was found in these portions of the study to be well tolerated with a favorable PK profile and demonstrated potentially best-in-class HBV DNA and RNA reductions as well as HBsAg reductions in a subset of HBeAg positive subjects receiving 300 mg ALG‑000184 (Hou et. al, AASLD 2022).
For these studies, ALG‑000184 was found to be well tolerated with a favorable PK profile and demonstrated potentially best-in-class substantial HBV DNA and RNA reductions at all doses tested, as well as HBV surface antigen (HBsAg) reductions in a subset of HBeAg positive subjects receiving 300 mg ALG‑000184 (Hou et. al, AASLD 2022).
Based on the favorable profile after dosing ≤300 mg ALG‑000184 x 28 days, additional Phase 1b cohorts are currently being evaluated for the risk-benefit profile of 100-300 mg doses of ALG‑000184 with or without background entecavir (ETV) therapy for ≤48 weeks in HBeAg positive or negative CHB patients.
Based on the favorable profile after dosing up to 300 mg ALG‑000184 x 28 days, additional Phase 1b cohorts are currently ongoing and evaluating the risk-benefit profile of up to 300 mg doses of ALG‑000184 with or without entecavir (ETV) therapy for up to 96 weeks in HBeAg positive/negative CHB subjects.
We track direct external research and development expenses on a program-specific basis (chronic hepatitis B, coronaviruses, steatohepatitis and early-stage programs).
We track direct external research and development expenses on a program-specific basis (CHB, coronaviruses, MASH and early-stage programs).
Preliminary data presented for these cohorts (Hou et. al, APASL 2023) indicate that ALG‑000184 dosed for up to 12 weeks is well tolerated with a favorable PK profile and potentially best-in-class antiviral activity.
Preliminary data have been presented for several of these cohorts 96 (Hou et al., EASL 2023, Yuen et al., AASLD 2023) and indicate that ALG‑000184 dosed for up to 48 weeks has shown to be well tolerated with a favorable PK profile and potentially best-in-class antiviral activity.
At these conferences, data were presented that showed ALG‑055009 was well tolerated, had dose proportional pharmacokinetics (PK) and low variability, and demonstrated expected thyromimetic effects (i.e., generally dose proportional increases in sex hormone binding globulin and decreases in various atherogenic lipids and thyroid hormones).
Clinical data after single doses up to 4 mg and multiple doses up to 1 mg showed that ALG‑055009 was well tolerated, had dose proportional pharmacokinetics (PK) with low intersubject variability, and demonstrated expected thyromimetic effects (i.e., generally dose proportional increases in sex hormone binding globulin and decreases in various atherogenic lipids and thyroid hormones).
We expect our expenses to increase substantially in connection with our ongoing clinical development activities related to our NASH drug candidate ALG-055009, which we have initiated clinical trials, as well as our research and development of our other drug candidates within our coronavirus and CHB programs. 97 In addition, we continue to incur additional costs associated with operating as a public company following our IPO in October 2020.
We expect our expenses to increase substantially in connection with our ongoing clinical development activities related to our MASH drug candidate ALG-055009, which we have initiated clinical trials, as well as our research and development of our other drug candidates within our coronavirus and CHB programs.
Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: (in thousands) 2022 2021 Net cash (used in) operating activities $ (79,389 ) $ (115,662 ) Net cash provided by (used in) investing activities (26,293 ) 3,022 Net cash provided by financing activities 164 78,677 Net decrease in cash, cash equivalents, and restricted cash $ (105,518 ) $ (33,963 ) Operating activities During Fiscal 2022, operating activities used $79.4 million of cash, primarily resulting from our net loss of $96.0 million and cash used as a result of changes in our operating assets and liabilities of $1.6 million, partially offset by non-cash charges of $18.2 million.
Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: Year Ended December 31, 2023 2022 Net cash used in operating activities $ (78,997 ) $ (79,389 ) Net cash provided by (used in) investing activities 44,981 (26,293 ) Net cash provided by financing activities 88,328 164 Net increase (decrease) in cash, cash equivalents, and restricted cash $ 54,312 $ (105,518 ) Operating activities During Fiscal 2023, operating activities used $79.0 million of cash, primarily resulting from our net loss of $87.7 million and cash used as a result of changes in our operating assets and liabilities of $9.5 million, partially offset by non-cash charges of $18.2 million.
The following table summarizes these research and development costs, in thousands: Year Ended December 31, 2022 2021 Direct research and development expenses by development program: Non-alcoholic Steatohepatitis program $ 3,489 $ 3,937 Coronaviruses program 5,651 2,118 Chronic Hepatitis B program 20,681 45,763 Other early-stage programs 11,324 10,911 Total direct research and development expenses $ 41,145 $ 62,729 Total indirect research and development expenses 43,931 41,425 Total research and development expense $ 85,077 $ 104,153 General and administrative expenses 95 General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, corporate and business development and administrative functions.
The following table summarizes these research and development costs, in thousands: Year ended December 31, 2023 2022 Direct research and development expenses by development program: Metabolic dysfunction-associated steatohepatitis program $ 7,899 $ 3,489 Chronic Hepatitis B program 7,345 20,681 Coronaviruses program 8,421 5,651 Other early-stage programs 9,213 11,324 Total direct research and development expenses $ 32,879 $ 41,145 Total indirect research and development expenses 40,161 43,932 Total research and development expense $ 73,040 $ 85,077 General and administrative expenses General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, corporate and business development and administrative functions.
Our lead candidate, ALG‑097558, is at least 6-fold more potent than nirmatrelvir and PBI-0451 in cell-based assays against a panel of SARS-CoV-2 variants (including Omicron), demonstrates broad pan-coronavirus activity, and based on preclinical studies, is not projected to require ritonavir boosting.
Our lead candidate, ALG‑097558, has been shown to be at least 6-fold more potent than nirmatrelvir and other PIs in clinical development in cell-based assays against a panel of SARS-CoV-2 variants (including Omicron). It also has demonstrated broad pan-coronavirus activity, and based on emerging Phase 1 clinical data, is not expected to require ritonavir boosting.
This was partially offset by an increase of $2.1 million in additional employee-related costs, of which $0.3 million related to stock-based compensation, an increase of $0.4 million in travel & entertainment expenses, and an increase of $1.1 million in facility expenses.
There was also a decrease of $0.5 million in depreciation, and a decrease of $2.9 million in employee-related costs, of which $0.9 million related to stock-based compensation. This was partially offset by an increase of $0.9 million in facility expenses.
General and administrative expenses General and administrative expenses were $26.4 million for the year ended December 31, 2022, compared to $28.5 million for the year ended December 31, 2021, a decrease of $2.1 million.
General and administrative expenses General and administrative expenses were $30.6 million for the year ended December 31, 2023, compared to $26.4 million for the year ended December 31, 2022, an increase of $4.2 million.
Operating lease liabilities decreased due to contractual lease payments, and the increase in accrued liabilities was due primarily due to a ramp in manufacturing activities for various drug compounds that are expected to be consumed in future clinical trials.
Operating lease liabilities decreased due to contractual lease payments, and the decrease in accrued liabilities was due primarily due to a slowdown in manufacturing activities for various drug compounds that are expected to be consumed in future clinical trials. Investing activities During Fiscal 2023, investing activities provided $45.0 million of cash, consisting primarily of investment maturities.
We have rationally designed these T cell activating drugs to localize in the liver and thereby potentially mitigate systemic toxicity in an effort to develop better tolerated PD-1/PD-L1 inhibitors for CHB patients.
We have rationally designed these T cell activating drug candidates to partition preferentially to the liver and thereby potentially mitigate systemic toxicity in an effort to develop better tolerated PD-1/PD-L1 inhibitors for CHB patients. Lead molecules developed to date show similar in vivo efficacy in tumor models to approved PD-1/PD-L1 antibodies.
We may in the future experience ownership changes as a result of changes in our stock ownership (some of which are not in our control).
We may experience additional ownership changes as a result of subsequent shifts in our stock ownership, some of which may be outside of our control.
Research and development expenses We rely substantially on third parties to conduct our discovery activities, nonclinical studies, clinical trials and manufacturing.
Components of our results of operations Operating expenses Our operating expenses since inception have consisted solely of research and development costs and general and administrative costs. Research and development expenses We rely substantially on third parties to conduct our discovery activities, nonclinical studies, clinical trials and manufacturing.
Our net operating losses may fluctuate from quarter to quarter and year to year depending primarily on the timing of our clinical trials and nonclinical studies and our other research and development expenses.
Our net operating losses may fluctuate from quarter to quarter and year to year depending primarily on the timing of our clinical trials and nonclinical studies and our other research and development expenses. We have no internal manufacturing capabilities or sales force and outsource a substantial portion of our clinical trial work to third parties.
Other income (loss), net Other income (loss), net was an income of $0.1 million for the year ended December 31, 2022 compared to a loss of $0.1 million for the year ended December 31, 2021, a difference of $0.2 million. The difference was due primarily to foreign currency exchange losses versus the U.S. dollar.
Other income (expense), net Other income (expense), net was an expense, net of $3.1 million for the year ended December 31, 2023 compared to income, net of $0.1 million for the year ended December 31, 2022, a difference of $3.2 million.
In addition, the preclinical activities of our COVID-19 program are funded through a grant from the National Institutes of Health (NIH) and the National Institute of Allergy and Infectious Disease (NIAID)'s Antiviral Drug Discovery (AViDD) Centers for Pathogens of Pandemic Concern program through the Metropolitan AntiViral Drug Accelerator (MAVDA) consortium.
We expect to share topline data from this study at a scientific conference in the second quarter of 2024. 97 Preclinical activities for our coronavirus program were partially funded through a grant from the National Institutes of Health (NIH) and the National Institute of Allergy and Infectious Diseases (NIAID) Antiviral Drug Discovery (AViDD) Centers for Pathogens of Pandemic Concern program through the Metropolitan AntiViral Drug Accelerator (MAVDA) consortium.
The federal research and development tax credit carryforwards begin to expire in 2038, while the state research and development tax credit carryforwards can be carried forward indefinitely.
As of December 31, 2023, we also had federal and state research and development tax credit carryforwards of $0.2 million and $0.2 million, respectively. The federal research and development tax credit carryforwards begin to expire in 2043, while the state research and development tax credit carryforwards can be carried forward indefinitely.
Interest income, net Interest income, net increased to $1.5 million for the year ended December 31, 2022 from $0.2 million for the year ended December 31, 2021, an increase of approximately $1.3 million, primarily due to the change in our portfolio of cash equivalents, short-term and long-term investments as well as a general increase in market interest rates during the year ended December 31, 2022.
Interest income, net Interest income, net increased to $4.3 million for the year ended December 31, 2023 from $1.5 million for the year ended December 31, 2022, an increase of approximately $2.8 million, primarily due to an increase in market interest rates.
We have incurred net losses and negative cash flows from operations in each year since our formation in February 2018. Our net losses were $96.0 million and $128.3 million for the years ended December 31, 2022 and 2021, respectively. We have had no revenue from product sales. As of December 31, 2022, we had an accumulated deficit of $399.1 million.
Our net losses were $87.7 million and $96.0 million for the years ended December 31, 2023 and 2022, respectively. We have had no revenue from product sales. As of December 31, 2023, we had an accumulated deficit of $486.8 million.
We believe ALG‑055009 has the potential to become a best‑in‑class THR‑ß agonist and could play an integral role in future NASH combination regimens based on its favorable pharmacokinetic profile, which could result in uniform exposures and lead to consistent efficacy and safety in a NASH population.
We believe ALG‑055009 has the potential to become a best‑in‑class THR‑ß agonist and could play an integral role in future MASH combination regimens based on its enhanced potency, beta selectivity, and its PK profile versus other THR‑ß drugs in development.
In addition to our small molecule THR‑ß program, we are also progressing oligonucleotide projects for NASH, including in collaboration with Merck. The programs are currently progressing through preclinical activities. Our second area of focus is to develop drug candidates with pan-coronavirus activity, including against Severe Acute Respiratory Syndrome coronavirus 2 (SARS-CoV-2), the virus responsible for COVID-19.
Our third area of focus is to develop drug candidates with pan-coronavirus antiviral activity, including against Severe Acute Respiratory Syndrome coronavirus 2 (SARS-CoV-2), the virus responsible for COVID-19.
ALG‑097558 also appeared to better maintain its antiviral activity against certain resistant mutants compared to other 3CL PIs in development 93 based on publicly available data. We are currently completing first-in-human enabling nonclinical studies for ALG‑097558 and anticipate a Phase 1 CTA filing and initiation of dosing in HVs in the second quarter of 2023.
ALG‑097558 also appeared to better maintain its antiviral activity against certain resistant mutants compared to other PIs in development based on publicly available data. The safety and PK properties of ALG-097558 are currently being assessed in an ongoing Phase 1 study in HVs.
This is due to a decrease of $2.1 million of third-party expenses primarily due to lower legal and patent attorney costs, a decrease of $0.5 million in consulting and recruiting costs, and a decrease of $0.7 million in facility expenses.
This is due to an increase of $6.5 million of third-party expenses primarily due to higher legal and patent attorney costs, partially offset by a decrease of $0.5 million of employee-related costs, of which $0.8 million related to stock-based compensation (partially offset by other immaterial items), a decrease of $0.2 million in depreciation and recruiting costs, and a decrease of $1.5 million in facility expenses.
Our most advanced drug candidate for NASH is ALG‑055009, a small molecule thyroid hormone receptor (THR‑ß) agonist. This drug candidate is being evaluated in a Phase 1 study in healthy volunteers (HVs) (oral single ascending doses (SAD)) and subjects with hyperlipidemia (14 oral daily doses).
This drug candidate recently completed evaluation in a Phase 1 study in healthy volunteers (HVs) (oral single ascending doses (SAD)) and in subjects with hyperlipidemia (14 oral daily doses).
During Fiscal 2021, net cash provided by financing activities was $78.7 million, consisting primarily of $78.6 million in proceeds from our follow-on offering, net of issuance costs, and $1.0 million from the issuance of common stock from the exercise of employee stock options and the issuance of shares through our employee stock purchase plan.
Financing activities During Fiscal 2023, net cash provided by financing activities was $88.3 million, consisting primarily of $87.9 million from the issuance of common stock, common warrants and pre-funded warrants in the PIPE, the issuance of shares through our employee stock purchase plan, partially offset by payments of our finance leases.
Our operations have been financed primarily by net proceeds from the sale and issuance of our convertible preferred stock, net proceeds from our IPO, and the issuance of convertible debt.
We have not yet commercialized any products and we do not expect to generate revenue from sales of any drug candidates for at least several years, if ever. Our operations have been financed primarily by net proceeds from the sale and issuance of our convertible preferred stock, net proceeds from our IPO, and the issuance of convertible debt.
Part 1 of this study evaluated single doses in doses ranging from 20 mg to 200 mg in HVs and found that these doses were well tolerated with a favorable PK profile (Gane et al., APASL 2023). Part 2 of the study, which is an SAD in virologically suppressed HBeAg negative CHB subjects, is ongoing.
For our siRNA drug candidate targeting HBsAg production, ALG‑125755, we conducted a Phase 1 study evaluating single doses ranging from 20-200 mg and 50-320 mg in HVs and virologically suppressed HBeAg negative CHB subjects, respectively. In this study, we found that these single doses were well tolerated with a favorable PK profile.
We believe that combination regimens utilizing our broad portfolio of CHB drug candidates, with or without other mechanisms of action, may lead to higher rates of functional cure.
We believe that our CAM‑E, ALG‑000184, can lead to greater rates of viral suppression and, in combination with other mechanisms of action such as those in our CHB portfolio, also may lead to higher rates of functional cure.
To address this, we have developed a portfolio of differentiated drug candidates for CHB, including a small molecule Capsid Assembly Modulator that results in the production of empty viral capsids (CAM-E), and a small interfering ribonucleic acid (siRNA), which is designed to suppress production of hepatitis B virus (HBV) surface antigen (HBsAg).
To achieve this, we are developing a portfolio of differentiated CHB drug candidates, including a small molecule Capsid Assembly Modulator that results in the production of empty viral capsids (CAM-E) and small molecule inhibitors of the Programmed Cell Death Ligand 1 (PD‑1/PD-L1) interaction.
We utilize our proprietary small molecule and oligonucleotide platforms to develop pharmacologically optimized drug candidates for use in combination regimens designed to achieve improved treatment outcomes. In February 2023, we announced a strategic reprioritization of our portfolio.
We utilize our proprietary small molecule and oligonucleotide platforms to develop pharmacologically optimized drug candidates designed to achieve improved treatment outcomes. Our primary area of focus is MASH, a complex, chronic liver disease where combination regimens may prove beneficial. Our most advanced drug candidate for MASH is ALG‑055009, a small molecule thyroid hormone receptor beta (THR‑ß) agonist.
The increase in other assets resulted from advances for clinical trial costs and deposits for manufacturing slot reservation fees. The decrease in deferred revenue from collaborations was a result of recognition of revenue from collaborations due to progress towards the completion of the project.
The decrease in deferred revenue from collaborations was a result of our recognition of revenue from collaborations due to progress towards the completion of the projects. The increase in our deferred revenue from customers was a result of our agreement with Amoytop (refer to Note 12 Revenue from Contracts with Customers, for details).
Specifically, antiviral activity data through Week 10 were summarized in cohorts of HBeAg positive subjects with normal baseline ALT (100 mg (Part 4 Cohort 1) and HBeAg positive subjects with normal/elevated baseline ALT (300 mg (Part 4 Cohort 2)).
Specifically, antiviral activity data in subjects dosed with 300 mg ALG‑000184 + ETV for up to 48 weeks are available in cohorts (Part 4 Cohorts 2 and B) of HBeAg positive subjects with normal/elevated baseline ALT. In these cohorts, we observed mean DNA reductions of 6.8 log 10 IU/mL.
Operating lease liabilities decreased due to contractual lease payments, and the decrease in accrued liabilities was due primarily due to a slowdown in manufacturing activities for various drug compounds that are expected to be consumed in future clinical trials. 99 During Fiscal 2021, operating activities used $115.7 million of cash, primarily resulting from our net loss of $128.3 million and cash used as a result of changes in our operating assets and liabilities of $4.7 million, partially offset by non-cash charges of $17.3 million.
During Fiscal 2022, operating activities used $79.4 million of cash, primarily resulting from our net loss of $96.0 million and cash used as a result of changes in our operating assets and liabilities of $1.6 million, partially offset by non-cash charges of $18.2 million.
Dosing in these and at least one additional cohort will continue throughout 2023 and interim safety, PK, and antiviral activity data will be presented at scientific conferences throughout the year. With respect to our siRNA drug candidate, ALG‑125755, a Phase 1 study is ongoing in New Zealand and in several countries in Eastern Europe.
Dosing of HBeAg positive/negative subjects with ALG‑000184 + ETV in ongoing cohorts will continue throughout 2024 and interim safety, PK, and antiviral activity data will be presented at scientific conferences throughout the year.
As of December 31, 2022, the Company had $3.2 million of Australia NOL carryforwards, which carryforward indefinitely. As of December 31, 2022, we also had federal and state research and development tax credit carryforwards of $7.9 million and $3.9 million, respectively.
The Company had $6.0 million of Australian NOL carryforwards and $0.7 million of Australian research and development tax credit carryforwards available.
To date, a 50 mg dose of ALG‑125755 has been evaluated in Part 2 and found to be well tolerated with an acceptable PK profile. We plan to share preliminary data from this study at scientific conferences throughout 2023. We are also exploring ways to boost immune responses via small molecule inhibitors of the programmed death 1 (ligand) PD-1/PD-L1 interaction.
We are also exploring ways to boost immune responses via small molecule inhibitors of the Programmed Cell Death Ligand 1 (PD-L1) transmembrane protein and its interaction with Programmed Cell Death Protein 1 (PD-1).
Liquidity and capital resources Liquidity We have incurred net losses since inception. We have not generated any revenue from product sales or any other sources and have incurred significant operating losses. We have not yet commercialized any products and we do not expect to generate revenue from sales of any drug candidates for at least several years, if ever.
The difference was due primarily to fair value of Common Warrants and issuance costs recognized associated with the Securities Purchase Agreement. Liquidity and capital resources Liquidity We have incurred net losses since inception. We have not generated any revenue from product sales and have incurred significant operating losses.
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Going forward, we will emphasize our clinical NASH and COVID-19 programs, and continue to support our collaboration agreements, including the agreement with Merck & Co. to develop an oligonucleotide candidate to address NASH.
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In this same study, we have also evaluated relative bioavailability where we have shown the soft gelatin capsules to be used on Phase 2 studies, delivers similar exposures compared to the solution used in Phase 1 studies; we observed low intersubject PK variability and there was no evidence of a meaningful food effect.
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With respect to CHB, we plan to complete our ongoing 48-week cohorts and single ascending dose cohorts for our capsid assembly modulator and small interfering RNA programs, respectively. Our primary area of focus is NASH, a complex, chronic liver disease where combination regimens may prove beneficial.
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Currently, we are initiating a Phase 2a proof of concept study (HERALD) under an amendment to an open investigational new drug application (IND). The study’s design is a 12-week randomized, placebo-controlled trial evaluating 4 doses of ALG-055009 vs. placebo in approximately 100 subjects with presumed liver fibrosis stage 1-3 (F1-F3) MASH.
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Preliminary data after single doses up to 4 mg and multiple doses up to 1 mg have previously been reported at the European Association for the Study of the Liver conference (EASL 2022) and the 2022 American Association for the Study of Liver Diseases meeting (AASLD 2022), respectively.
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In addition to collecting safety and PK data, this study is also designed to assess multiple efficacy biomarkers, which include MRI-PDFF and other non-invasive tests previously shown to be impacted by treatment with THR‑ß agonists.
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We are currently taking the necessary steps to advance ALG‑055009 into a Phase 2 proof of concept study. These steps include: 1) conducting a relative bioavailability cohort in the Phase 1 study; 2) completing 13-week Good Laboratory Practice (GLP) toxicology studies; and 3) manufacturing Phase 2 drug supply.
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We anticipate dosing to begin in the second quarter of 2024 and with topline safety and 12 week MRI-PDFF data from this study in the fourth quarter of 2024.
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We anticipate submitting the Phase 2 protocol to the FDA in the fourth quarter of 2023.
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In addition to our small molecule THR‑ß program, we are also progressing oligonucleotide projects for MASH, including the collaboration with Merck. The programs are currently progressing through preclinical activities.
Removed
The most widely used treatment for CHB, nucleos(t)ide analogs (NAs), suppress viral replication, but only achieve low rates of functional cure and often require long-term administration.
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Notably, subjects in these cohorts who initially received ETV x 12 weeks had more modest reductions in HBV DNA as compared to subjects receiving ALG‑000184 + ETV over the same time period.
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Each of these drugs is designed against clinically validated targets in the HBV life cycle and is currently being evaluated in clinical trials.
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In addition, subjects initially receiving ETV only then experienced further reductions in HBV DNA levels once they started receiving the combination of ETV and ALG‑000184, and their HBV DNA levels also reached levels exceeding 6 log 10 IU/mL, indicating an additive antiviral effect of ALG-000184 with ETV.
Removed
In Part 4 Cohorts 1 and 2, respectively, we observed greater mean DNA (4.9, 5.2 log 10 IU/mL) and RNA (2.7, 3.3 log 10 copies/mL) reductions vs. ETV alone (3.7 log 10 IU/mL reduction, 0.1 log 10 copies/mL increase, respectively).
Added
Further, as of February 28, 2024, subjects receiving 300 mg ALG‑000184 monotherapy had similar DNA reductions as subjects receiving 300 mg ALG‑000184 + ETV and no subject has experienced viral breakthroughs.
Removed
Similarly, among subjects with available data at Week 10, HBsAg levels declined in cohorts 1 and 2 to a maximum of 0.3 log 10 IU/mL and 0.7 log 10 IU/mL compared to no meaningful change in subjects dosed with ETV alone.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeShould U.S. interest rates decline, interest income would be reduced in future periods for short- and long-term investments which mature and the proceeds of which are reinvested in similar instruments at lower interest rates.
Biggest changeShould U.S. interest rates decline, interest income would be reduced in future periods for short- and long-term investments which mature and the proceeds of which are reinvested in similar instruments at lower interest rates. Additionally, the fair value of our short-term and long-term investments is subject to change as a result of potential changes in market interest rates.
As of December 31, 2022, we estimate that a hypothetical 100 basis point adverse movement would not result in a material impact on our financial position or results of operations or cash flows. Foreign currency exchange risk We have employees and operations, including contracts with third-party vendors, in Europe through our subsidiary Aligos Belgium BVBA.
As of December 31, 2023, we estimate that a hypothetical 100 basis point adverse movement would not result in a material impact on our financial position or results of operations or cash flows. Foreign currency exchange risk We have employees and operations, including contracts with third-party vendors, in Europe through our subsidiary Aligos Belgium BVBA.
A 10% increase or decrease in current exchange rates would not have a material effect on our financial position or results of operations or cash flows. 103
A 10% increase or decrease in current exchange rates would not have a material effect on our financial position or results of operations or cash flows. 107
Item 7A. Quantitative and Qualitati ve Disclosures About Market Risk. Interest rate risk Our cash, cash equivalents and investments of $125.8 million as of December 31, 2022, consist of bank deposits, money market funds, certificates of deposit and US Treasury available-for-sale securities.
Item 7A. Quantitative and Qualitati ve Disclosures About Market Risk. Interest rate risk Our cash, cash equivalents and investments of $135.7 million as of December 31, 2023, consist of bank deposits, money market funds, certificates of deposit and US Treasury available-for-sale securities.
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Additionally, the fair value of our short-term and long-term investments is subject to change as a result of potential changes in market interest rates, including changes resulting from the impact of the COVID-19 pandemic.

Other ALGS 10-K year-over-year comparisons