What changed in this filing

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Item 1A. Risk Factors

2021-08-05 compared with 2021-05-10 · 51 added, 45 removed, 1390 unchanged (6% of the section changed)

16 unchanged sentences

Since inception, we have incurred significant net losses.

Our net losses were $27.7 million for the three months ended March 31, 2021 and $108.5 million for the year ended December 31, 2020.

As of March 31, 2021, we had a total stockholders’ equity of $195.2 million.

Our net losses were $57.5 million for the six months ended June 30, 2021 and $108.5 million for the year ended December 31, 2020.

As of June 30, 2021, we had a total stockholders’ equity of $168.9 million.

We have funded our operations to date primarily with proceeds from the sale of common stock, preferred stock and convertible notes.

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Nonclinical studies and clinical trials and additional research and development activities will require substantial funds to complete.

As of March 31, 2021, we had cash, cash equivalents and investments of $213.4 million.

As of June 30, 2021, we had cash, cash equivalents and short-term investments of $190.7 million.

In October 2020, we issued an aggregate of 3,569,630 shares of our Series B-2 redeemable convertible preferred stock in the second tranche of our Series B convertible preferred stock financing for aggregate proceeds to us of $40.0 million.

In addition, we have received net proceeds of $151.4 million from the sale of an aggregate of 11,150,000 shares of our common stock on October 20, 2020 and on November 5, 2020 as part of our IPO.

In addition, we have received net proceeds of $151.4 million from the sale of an aggregate of 11,150,000 shares of our common stock on October 20, 2020 and on November 5, 2020 as part of our IPO, and net proceeds of $77.9 million from the sale of 4,400,000 shares of our common stock on July 6, 2021 as part of our Follow-on Offering.

We expect to continue to spend substantial amounts to continue the nonclinical and clinical development of our current and future programs.

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As a result of these developments, we implemented work-from-home policies for most of our employees.

While modified from time to time since March 2020, the California state-wide order has no current expiration date, and Californians continue to be directed to stay at home except to go to an essential job or to shop for essential needs.

Since the availability of COVID-19 vaccines, the majority of our US employees have been fully vaccinated and as a result, we are allowing such employees to return to work at our US facility.

However, as the global COVID-19 pandemic and orders and guidance from state and local governments continue to evolve, we may need to reverse courses and again implement work-from-home policies as necessary.

The state-wide shelter order, the local shelter-in-place orders implemented by San Mateo County and any other San Francisco Bay Area counties, government-imposed quarantines and our work-from-home policies may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions, the potential impact of changing government orders in response to upticks in COVID-19 cases and other limitations on our ability to conduct our business in the ordinary course.

Since the availability of COVID-19 vaccines, the majority of our U.S.

employees have been fully vaccinated and as a result, we are allowing such employees to return to work at our U.S.

However, as the global COVID-19 pandemic and orders and guidance from state and local governments continue to evolve, we may need to reverse course and again implement work-from-home policies as necessary.

Government-imposed quarantines and our work-from-home policies may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions, the potential impact of changing government orders in response to upticks in COVID-19 cases and other limitations on our ability to conduct our business in the ordinary course.

Although we do not anticipate any impacts to our clinical programs, these and similar, and perhaps more severe, disruptions in our operations could negatively impact our business, operating results and financial condition in the future.

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Our clinical development efforts across our drug candidates are in an early stage.

In August 2020 and October 2020, we initiated clinical trials for our most advanced drug candidates, ALG‑010133 and ALG‑000184, respectively, in New Zealand.

We have initiated clinical trials for our most advanced drug candidates, ALG-010133 and ALG-000184 in many countries including New Zealand, Hong Kong, the United Kingdom, South Korea, China and Moldova.

Our other programs are in the discovery or nonclinical development stage.

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As an organization, we have not yet completed any clinical trials for any of our drug candidates.

Each of our lead drug candidates, ALG‑010133 and ALG‑00184, is currently being evaluated in Phase 1 clinical trials in New Zealand, Hong Kong, and Moldova.

Each of our lead drug candidates, ALG-010133 and ALG-000184, is currently being evaluated in Phase 1 clinical trials in many countries, including New Zealand, Hong Kong, the United Kingdom, South Korea, China and Moldova.

As a company, we have limited experience in preparing, submitting and prosecuting regulatory filings.

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Before we can commence clinical trials for a drug candidate, we must complete extensive nonclinical studies that support our planned INDs or CTAs in the United States and other countries.

At this time, we have two drug candidates (ALG‑010133 and ALG‑000184) being evaluated in Phase 1 clinical trials in New Zealand, Hong Kong, and Moldova.

At this time, we have two drug candidates (ALG-010133 and ALG-000184) being evaluated in Phase 1 clinical trials in many countries, including New Zealand, Hong Kong, the United Kingdom, South Korea, China and Moldova.

The rest of our programs are in nonclinical research or earlier stages of development, including our other chronic hepatitis B (CHB) drug candidates, our nonalcoholic steatohepatitis (NASH) drug candidate and our coronavirus drug candidates.

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Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of marketing approval of our drug candidates.

Further, we are currently conducting a clinical trial for each of ALG‑010133 and ALG‑000184 in New Zealand, Hong Kong, and Moldova.

We may also in the future conduct clinical trials for ALG‑010133, ALG‑000184 and other drug candidates in other countries and territories, including South Korea, the United Kingdom, and China, which presents additional risks that may delay completion of our clinical trials.

Further, we are currently conducting a clinical trial for each of ALG-010133 and ALG-000184 in many countries, including New Zealand, Hong Kong, the United Kingdom, South Korea, China and Moldova.

We may also in the future conduct clinical trials for ALG-010133, ALG-000184 and other drug candidates in other countries and territories which presents additional risks that may delay completion of our clinical trials.

These risks include the possibility that we could be required to conduct additional nonclinical studies before initiating any clinical trials, may be unable to enroll and retain patients as a result of differences in healthcare services, research guidelines or cultural customs, or may face additional administrative burdens associated with comparable foreign regulatory schemes, as well as political and economic risks relevant to such foreign countries.

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Significant clinical trial delays could also allow our competitors to bring products to market before we do, shorten any periods during which we may have the exclusive right to commercialize our drug candidates, impair our ability to commercialize our drug candidates and harm our business and results of operations.

Specifically, the clinical trial sites for our current and future planned drug trials, including for ALG‑010133 and ALG‑000184, may be affected by the COVID-19 outbreak due to prioritization of hospital resources toward COVID-19 efforts, travel or quarantine restrictions imposed by national, federal, state or local governments, and the inability to access sites for initiation and patient monitoring and enrollment.

Specifically, the clinical trial sites for our current drug trials, including for ALG-010133 and ALG-000184, and future planned trials may be affected by the COVID-19 outbreak due to prioritization of hospital resources toward COVID-19 efforts, travel or quarantine restrictions imposed by national, federal, state or local governments, and the inability to access sites for initiation and patient monitoring and enrollment.

As a result, patient screening, new patient enrollment, monitoring and data collection may be affected or delayed.

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For instance, Pfizer Inc.

recently announced its COVID-19 experimental drug ( an orally administered protease inhibitor) which entered the clinic in March 2021, may be available and distributed across the United States by the end of 2021 .

recently announced its COVID-19 experimental drug (an orally administered protease inhibitor) which entered the clinic in March 2021, may be available by the end of 2021.

Similarly, Merck (together with Ridgeback Bio), is developing the drug Molnupiravir , an antiviral drug currently in a Phase 3 clinical trial which has the potential to become the first oral COVID-19 treatment.

In such an event, the value and/or market potential of our COVID-19 protease inhibitor program which is further behind in terms of development process may be adversely impacted.

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(together with Alnylam Pharmaceuticals, GSK, Biogen Inc.

and WuXi Biologics Ltd.), Altimmune, Inc., AstraZeneca PLC (together with Oxford University), GlaxoSmithKline (GSK) (together with Sanofi S.A.), Heat Biologics, Inc., Inovio Pharmaceuticals, Inc., Merck (together with Ridgeback Bio), Novavax, Inc., Regeneron Pharmaceuticals Inc., Synairgen, Takeda, and Vaxart, Inc., many of which are further along in the development process than we are.

and WuXi Biologics Ltd.), Altimmune , Inc., AstraZeneca PLC (together with Oxford University), GlaxoSmithKline (GSK) (together with Sanofi S.A.), Heat Biologics, Inc., Inovio Pharmaceuticals, Inc., Novavax, Inc., Regeneron Pharmaceuticals Inc., Synairgen plc, Takeda Pharmaceutical Company Limited, and Vaxart , Inc., many of which are further along in the development process than we are.

These other entities may be more successful at developing, manufacturing or commercializing a therapy for COVID-19, especially given that several of these other organizations are much larger than we are and have access to larger pools of capital, including U.S.

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Interim, “topline” and preliminary data from our clinical trials may differ materially from the final data.

From time to time, we may disclose interim data from our clinical trials.

From time to time, we may disclose interim data from our clinical trials, including the preliminary data included herein with respect to our CAM candidate, ALG-000184, and our STOPS candidate, ALG-000133.

Interim data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more data on existing patients become available.

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Further, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries.

For example, we are conducting our initial clinical trials for ALG‑010133 and ALG‑000184 in New Zealand, Hong Kong, and Moldova, and plan to conduct additional clinical trials in several other countries and territories within the Asia Pacific and/or Europe, including South Korea, the United Kingdom, and China, 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-010133 and ALG-000184 in many countries, including New Zealand, Hong Kong, the United Kingdom, South Korea, China and Moldova, 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.

Further, any regulatory approval for our drug candidates may be withdrawn.

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Risks associated with our international operations, including seeking and obtaining approval to commercialize our drug candidates in foreign jurisdictions, could harm our business.

We engage in international operations with offices in the United States and Belgium and intend to seek approval to market our drug candidates outside of the United States.

We engage in international operations with offices in the United States, Belgium and China and intend to seek approval to market our drug candidates outside of the United States.

We may also do so for future drug candidates.

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In addition, Pfizer, Inc.

recently announced its COVID-19 experimental drug (an orally administered protease inhibitor) which entered the clinic in March 2021, may be available and distributed across the United States by the end of 2021.

recently announced its COVID-19 experimental drug (an orally administered protease inhibitor) which entered the clinic in March 2021, may be available by the end of 2021.

Similarly, Merck (together with Ridgeback Bio), is developing the drug Molnupiravir, an antiviral drug currently in a Phase 3 clinical trial which has the potential to become the first oral COVID-19 treatment.

The availability of such COVID-19 vaccines and Pfizer’s oral COVID-19 drug may reduce or eliminate the need for our potential COVID therapies to treat the disease and therefore negatively impact the commercial opportunity therefor.

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Under the Emory License Agreement and Luxna Agreement, we are subject to significant obligations, including milestone payments, royalty payments, and certain other agreed-to costs.

For more information regarding our license agreements, please see the section titled “Business—License agreements and collaborations” of our Annual Report on Form 10-K previously filed with the SEC.

For more information regarding our license agreements, please see the section titled “Business—License agreements and collaborations” of our Annual Report on Form 10-K for the year ended December 31, 2020, previously filed with the SEC.

If these payments become due under the terms of either the Emory University License Agreement or Luxna Agreement, we may not have sufficient funds available to meet our obligations and our development efforts may be materially harmed.

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We 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.

For example, it is possible that additional governmental action will be taken to address the COVID-19 pandemic, which could impact our business in an as-yet unknown manner.

For example, it is possible that additional

governmental action will be taken to address the COVID-19 pandemic, which could impact our business in an as-yet unknown manner.

Additionally, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices.

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Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners.

In addition, California recently enacted the CCPA, which became effective on January 1, 2020.

The CCPA, among other things, requires new disclosures to California consumers and affords such consumers new abilities to access and delete their personal information, opt-out of certain sales of personal information and receive detailed information about how their personal information is used.

In addition, the California Consumer Privacy Act of 2018 (CCPA) went into effect on January 1, 2020.

The CCPA, among other things, creates individual privacy rights for California consumers, such as the right to access and delete their personal information, opt-out of certain sales of personal information and receive detailed information about how their personal information is used.

The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase the frequency of data breach litigation.

Further, the CPRA recently passed in California, which will impose additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.

The CCPA may increase our compliance costs and potential liability, and many similar laws have been proposed at the federal level and in other states.

Further, the California Privacy Rights Act (CPRA) recently passed in California, which will impose additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.

It will also create a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement.

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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.

We currently operate in countries outside of the United States, including Belgium and Australia, where laws may in some cases be more stringent than the requirements in the United States.

For example, in Europe, the GDPR went into effect in May 2018 and imposes strict requirements for the collection, storage, use, disclosure, transfer and other processing of the personal data of individuals within the EEA.

The GDPR applies extra-territorially under certain circumstances and imposes stringent requirements on controllers and processors of personal data, including, for example, requirements to obtain consent or other legal bases from individuals to process their personal data, provide robust disclosures to individuals, accommodate a set of individual data rights, provide data security breach notifications within 72 hours after discovering the breach, limit retention of personal information and apply enhanced protections to health data and other special categories of personal data.

The GDPR also applies to pseudonymized data, which is defined as “the processing of personal data in such a way that the data can no longer be attributed to a specific data subject without the use of additional information,” and imposes additional obligations when we contract with third-party processors in connection with the processing of any personal data.

and share personal data, could cause our costs to increase and could harm our financial condition.

Failure to comply with the requirements of the GDPR and the applicable national data protection laws of the EU and EEA member states may result in fines of up to €20 million or up to 4% of the total worldwide annual turnover of our preceding fiscal year, whichever is higher, and other administrative penalties.

Further, from January 1, 2021, we have to comply with the GDPR and the UK GDPR, which, together, with the amended Data Protection Act 2018, retains the GDPR in UK national law, the latter regime having the ability to separately fine up to the greater of £17.5 million or 4% of global turnover.

We currently operate in countries outside of the United States, including Belgium, Australia and China, where laws may in some cases be more stringent than the requirements in the United States.

For example, in Europe, the General Data Protection Regulation (GDPR) went into effect in May 2018 and imposes strict requirements for the collection, storage, use, disclosure, transfer and other processing of the personal data of individuals within the European Economic Area (EEA).

The GDPR applies extra-territorially under certain circumstances and imposes stringent requirements on controllers and processors of personal data, including, for example, requirements to obtain consent or other legal bases from individuals to process their personal data, provide robust disclosures to individuals, accommodate a set of individual data rights, provide data security breach notifications, limit retention of personal information and apply enhanced protections to health data and other special categories of personal data.

The GDPR also applies to

pseudonymized data, which is defined as “the processing of personal data in such a way that the data can no longer be attributed to a specific data subject without the use of additional information,” and imposes additional obligations when we contract with third-party processors in connection with the processing of any personal data.

The GDPR provides that EU and EEA member states may make their own further laws and regulations limiting the processing of personal data, including genetic, biometric or health data, which could limit our ability to use and share personal data, could cause our costs to increase and could harm our financial condition.

Failure to comply with the requirements of the GDPR could result in fines of up to €20 million or 4% of the total worldwide annual turnover of our preceding fiscal year, whichever is higher, and other administrative penalties.

Further, from January 1, 2021, we have to comply with the GDPR and also the United Kingdom GDPR (UK GDPR), which, together, with the amended Data Protection Act 2018, retains the GDPR in UK national law, the latter regime having the ability to separately fine up to the greater of £17.5 million or 4% of global turnover.

The relationship between the United Kingdom and the EU in relation to certain aspects of data protection law remains unclear, and it is unclear how United Kingdom data protection laws and regulations will develop in the medium to longer term, and how data transfers to and from the United Kingdom will be regulated in the long term.

Currently there is a four to six-month grace period agreed in the EU and United Kingdom Trade and Cooperation Agreement, ending June 30, 2021 at the latest, whilst the parties discuss an adequacy decision.

However, it is not clear whether (and when) an adequacy decision may be granted by the European Commission enabling data transfers from EU member states to the United Kingdom long term without additional measures.

These changes may lead to additional costs and increase our overall risk exposure .

Failure to comply with the GDPR and other countries’ privacy or data security-related laws, rules or regulations could result in material penalties imposed by regulators, affect our compliance with contracts entered into with our collaborators and other third-party payors, and have an adverse effect on our business and financial condition.

Currently there is a four to six-month grace period agreed in the EU and U.K.

Trade and Cooperation Agreement, ending June 30, 2021 at the latest, whilst the parties discuss an adequacy decision.

The European Commission published a draft adequacy decision on February 19, 2021.

If adopted, the decision will enable data transfers from EU member states to the United Kingdom for a four-year period, subject to subsequent extensions.

The GDPR further prohibits, without an appropriate legal basis, the transfer of personal data to countries outside of the EEA, such as the United States, which are not considered by the European Commission to provide an adequate level of data protection.

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While the CJEU upheld the adequacy, subject to certain conditions, of the standard contractual clauses (a standard form of contract approved by the European Commission as an adequate personal data transfer mechanism), future regulatory guidance could result in changes to the use of standard contractual clauses.

Compliance with U.S.

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Risks related to intellectual property

If we and our collaborators are unable to obtain and maintain sufficient patent and other intellectual property protection for our drug candidates and technology, our competitors could develop and commercialize products and technology similar or identical to ours, and we may not be able to compete effectively in our market or successfully commercialize any drug candidates we may develop.

If we and our collaborators are unable to obtain, maintain, protect and enforce sufficient patent and other intellectual property protection for our drug candidates and technology, our competitors could develop and commercialize products and technology similar or identical to ours, and we may not be able to compete effectively in our market or successfully commercialize any drug candidates we may develop.

Our success depends in significant part on our ability and the ability of our current or future collaborators and licensors to obtain, maintain, enforce and defend patents and other intellectual property rights with respect to our drug candidates and technology and to operate our business without infringing, misappropriating, or otherwise violating the intellectual property rights of others.

If we and our current or future collaborators and licensors are unable to obtain and maintain sufficient intellectual property protection for our drug candidates or other drug candidates that we may identify, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors and other third parties could develop and commercialize drug candidates similar or identical to ours, and our ability to successfully commercialize our drug candidates and other drug candidates that we may pursue may be impaired.

We do not own any issued patents with respect to our programs, including our CHB and NASH programs, and we do not own or in-license any issued patents with claims that specifically recite our ALG‑010133, ALG‑000184, ALG‑020572, ALG‑125097 and ALG‑055009 drug candidates, and we can provide no assurance that any of our current or future patent applications will result in issued patents or that any issued patents will provide us with any competitive advantage.

We can provide no assurance that any of our current or future patent applications will result in issued patents or that any issued patents will provide us with any competitive advantage.

We cannot be certain that there is no invalidating prior art of which we and the patent examiner are unaware or that our interpretation of the relevance of prior art is correct.

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In addition, if our licensors fail to abide by the terms of the license, if the licensors fail to prevent infringement by third parties or if the licensed patents or other rights are found to be invalid or unenforceable, our business, competitive position, financial condition, results of operations and prospects could be materially harmed.

For more information regarding our license agreements, see the section titled “Business—License agreements and collaborations” of our Annual Report on Form 10-K previously filed with the SEC.

For more information regarding our license agreements, see the section titled “Business—License agreements and collaborations” of our Annual Report on Form 10-K for the year ended December 31, 2020, previously filed with the SEC.

If we are unable to obtain licenses from third parties on commercially reasonable terms or at all, our business could be harmed.

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Beginning in June 2022, the license to such patents will become non-exclusive with respect to all fields except for the treatment and prevention of HBV.

For more information regarding our license agreements, see the section titled “Business—License agreements and collaborations” of our Annual Report on Form 10-K previously filed with the SEC .

Any of the foregoing could harm our competitive position, business, financial condition, results of operations and prospects.

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We will need to grow the size of our organization, and we may experience difficulties in managing this growth.

As of March 31, 2021, we had 69 full-time employees, including 55 employees engaged in research and development.

As of June 30, 2021, we had 86 full-time employees, including 71 employees engaged in research and development.

As our development and commercialization plans and strategies develop, and as we transition into operating as a public company, we expect to need additional managerial, operational, sales, marketing, financial and other personnel.

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Our executive officers, directors and their affiliates have significant influence over our company, which will limit an investor’s ability to influence corporate matters and could delay or prevent a change in corporate control.

As of March 31, 2021, our executive officers, directors and their affiliates beneficially own, in the aggregate, approximately 60.7% of our outstanding common stock (assuming all shares of non-voting common stock are converted into voting common stock in accordance with the terms of our amended and restated certificate of incorporation).

As of June 30, 2021, our executive officers, directors and their affiliates beneficially own, in the aggregate, approximately 57.2% of our outstanding common stock (assuming all shares of non-voting common stock are converted into voting common stock in accordance with the terms of our amended and restated certificate of incorporation).

As a result, these stockholders, if they act together, will be able to influence our management and affairs and the outcome of matters submitted to our stockholders for approval, including the election of directors and any sale, merger, consolidation or sale of all or substantially all of our assets.

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Consequently, the exercise by holders of our non-voting common stock of their option to make this conversion will have the effect of increasing the relative voting power of such holders, and correspondingly decreasing the voting power of the holders of our common stock, which may limit an investor’s ability to influence corporate matters.

As of May 7, 2021, we had 3,092,338 shares of non-voting common stock outstanding.

As of June 30, 2021, we had 3,092,338 shares of non-voting common stock outstanding.

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 (the Exchange Act), and may not be subject to the short-swing profit provisions of Section 16(b) of the Exchange Act.

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If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common stock in the public market, the market price of our common stock could decline.

As of March 31, 2021, approximately 8,740,647 shares of common stock that are either subject to outstanding options or reserved for future issuance under our equity incentive plans are eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules and Rule 144 and Rule 701 under the Securities Act.

As of June 30, 2021, approximately 8,606,847 shares of common stock that are either subject to outstanding options or reserved for future issuance under our equity incentive plans are eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules and Rule 144 and Rule 701 under the Securities Act.

If these additional shares of common stock are sold, or if it is perceived that they will be sold, in the public market, the market price of our common stock could decline.

185 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors