What changed in this filing

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Item 1. Financial Statements

2021-11-04 compared with 2021-08-05 · 213 added, 177 removed, 661 unchanged (37% of the section changed)

3 unchanged sentences

(In thousands, except share and per share data)

September 30,

Current assets:

6 unchanged sentences

Property and equipment, net

Long-term investments

LIABILITIES, PREFERRED STOCK,

15 unchanged sentences

Preferred Stock, $ 0.0001 par value;

10,000,000 shares authorized as of June 30, 2021 (unaudited) and December 31, 2020, respectively;

no shares issued and outstanding as of June 30, 2021 (unaudited) and December 31, 2020, respectively

10,000,000 shares authorized as of September 30, 2021 (unaudited) and December 31, 2020, respectively;

no shares issued and outstanding as of September 30, 2021 (unaudited) and December 31, 2020

Common stock, $ 0.0001 par value;

320,000,000 shares authorized as of June 30, 2021 (unaudited) and December 31, 2020, respectively;

38,200,121 and 38,120,606 shares issued and outstanding as of June 30, 2021 (unaudited) and December 31, 2020, respectively

320,000,000 shares authorized as of September 30, 2021 (unaudited) and December 31, 2020, respectively;

42,611,847 and 38,120,606 shares issued and outstanding as of September 30, 2021 (unaudited) and December 31, 2020

Additional paid-in capital

2 unchanged sentences

Total stockholders’ equity

Total liabilities, preferred stock, and stockholders’ equity

Total liabilities and stockholders’ equity

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Revenue from collaborations

17 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Comprehensive

Stockholders’

Balance as of March 31, 2021

Income (Loss)

Balance as of June 30, 2021

Issuance of common stock upon exercise of

stock options

Issuance of common stock in connection with

Follow-on Offering, net of offering costs

Costs related to the Follow-on Offering

Stock-based compensation

1 unchanged sentence

stock options

Other comprehensive loss

Balance as of June 30, 2021

Six Months Ended June 30, 2021

Other comprehensive income

Balance as of September 30, 2021

Nine Months Ended September 30, 2021

Comprehensive

3 unchanged sentences

stock options

Issuance of common stock in connection with

Follow-on Offering, net of offering costs

Costs related to the Follow-on Offering

Stock-based compensation

2 unchanged sentences

Other comprehensive loss

Balance as of June 30, 2021

Balance as of September 30, 2021

The accompanying notes are an integral part of these consolidated financial statements.

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Series A Redeemable

5 unchanged sentences

Income (Loss)

Balance as of March 31, 2020

Balance as of June 30, 2020

Stock-based compensation

2 unchanged sentences

upon exercise of stock options

Issuance of common stock

upon early exercise of stock options

Other comprehensive loss

Balance as of June 30, 2020

Six Months Ended June 30, 2020

Balance as of September 30, 2020

Nine Months Ended September 30, 2020

Series A Redeemable

12 unchanged sentences

upon exercise of stock options

Issuance of common stock

upon early exercise of stock options

Other comprehensive income

Balance as of June 30, 2020

Balance as of September 30, 2020

The accompanying notes are an integral part of these consolidated financial statements.

1 unchanged sentence

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

21 unchanged sentences

Purchases of property and equipment

Net cash and cash equivalents provided by (used in) investing activities

Net cash and cash equivalents provided by investing activities

Cash flows from financing activities:

Proceeds from issuance of common stock in connection with Follow-on Offering, net of costs

Proceeds from exercise of warrants for series A convertible preferred stock

4 unchanged sentences

Net cash and cash equivalents provided by (used in) financing activities

Net decrease in cash, cash equivalents, and restricted cash

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

Cash, cash equivalents, and restricted cash, beginning of period

3 unchanged sentences

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Reconciliation to amounts on the consolidated balance sheet:

10 unchanged sentences

Vesting of early exercised options

Property and equipment purchases in accounts payable

Receivable from exercise of common stock options

16 unchanged sentences

Reverse stock split

On October 8, 2020, the Company’s board of directors approved a 1-for-9.3197 reverse stock split (the Reverse Stock Split) of the Company’s common stock and redeemable convertible preferred stock to be consummated prior to the effectiveness of the Company’s planned initial public offering (IPO).

On October 9, 2020, the Company effected a 1-for-9.3197 reverse stock split (the Reverse Stock Split) of the Company’s common stock and redeemable convertible preferred stock to be consummated prior to the effectiveness of the Company’s initial public offering (IPO).

The par value and authorized shares of the common stock and redeemable convertible preferred stock were not adjusted as a result of the Reverse Stock Split.

All issued and outstanding common stock, options to purchase common stock and per share amounts contained in the financial statements have been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented.

The Company filed an amended and restated certificate of incorporation in Delaware on October 9, 2020 that automatically effectuated the Reverse Stock Split without any further action required.

Initial public offering

3 unchanged sentences

The Company has incurred losses and negative cash flows from operations since its inception.

As of June 30, 2021 and December 31, 2020, the Company had an accumulated deficit of $ 232.2 million and $ 174.7 million, respectively.

As of September 30, 2021 and December 31, 2020, the Company had an accumulated deficit of $ 265.4 million and $ 174.7 million, respectively.

Management expects to continue to incur additional substantial losses in the foreseeable future as a result of expanded research and development activities.

As of June 30, 2021, the Company has unrestricted cash, cash equivalents and short-term investments of approximately $ 190.7 million which is available to fund future operations.

As of September 30, 2021, the Company has unrestricted cash, cash equivalents and investments of approximately $ 242.7 million which is available to fund future operations.

The Company expects to continue to spend substantial amounts to continue the nonclinical and clinical development of its current and future programs.

4 unchanged sentences

In addition, the Company may seek additional capital to take advantage of favorable market conditions or strategic opportunities even if the Company believes it has sufficient funds for its current or future operating plans.

Based on the Company’s research and development plans, it is expected that the Company’s existing cash, cash equivalents and short-term investments, will enable the Company to fund its operations for at least 12 months following the date the condensed consolidated financial statements are issued.

Based on the Company’s research and development plans, it is expected that the Company’s existing cash, cash equivalents and investments, will enable the Company to fund its operations for at least 12 months following the date the condensed consolidated financial statements are issued.

However, the Company’s operating plan may change as a result of many factors currently unknown, and the Company may need to seek additional funds sooner than planned.

1 unchanged sentence

The Company’s ability to raise additional funds will depend on financial, economic and other factors, many of which are beyond its control.

In particular, the COVID-19 pandemic continues to rapidly evolve and has already resulted in a significant disruption of global financial markets.

In particular, the COVID-19 pandemic continues to rapidly evolve and has resulted in a significant disruption of global financial markets.

If the disruption persists or deepens, the Company could be unable to access additional capital, which could negatively affect its ability to consummate certain corporate development transactions or other important, beneficial or opportunistic investments.

32 unchanged sentences

Unaudited interim financial information

The accompanying consolidated balance sheet as of June 30, 2021, the consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2021 and 2020, the consolidated statements of redeemable convertible preferred stock and stockholders’ equity (deficit) for the three and six months ended June 30, 2021 and 2020, and the consolidated statements of cash flows for the six months ended June 30, 2021 and 2020 are unaudited.

The unaudited consolidated interim financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s consolidated financial position as of June 30, 2021 and the consolidated results of its operations and cash flows for the three and six months ended June 30, 2021 and 2020.

The consolidated financial data and other information disclosed in these notes related to the three and six months ended June 30, 2021 and 2020 are unaudited.

The consolidated results for the three and six months ended June 30, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods, or any future year or period.

The accompanying consolidated balance sheet as of September 30, 2021, the consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2021 and 2020, the consolidated statements of redeemable convertible preferred stock and stockholders’ equity (deficit) for the three and nine months ended September 30, 2021 and 2020, and the consolidated statements of cash flows for the nine months ended September 30, 2021 and 2020 are unaudited.

The unaudited consolidated interim financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company’s consolidated financial position as of September 30, 2021 and the consolidated results of its operations and cash flows for the three and nine months ended September 30, 2021 and 2020.

The consolidated financial data and other information disclosed in these notes related to the three and nine months ended September 30, 2021 and 2020 are unaudited.

The consolidated results for the three and nine months ended September 30, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods, or any future year or period.

Deferred offering costs

The Company capitalizes certain legal, professional accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated, including the Company’s July 2021 follow-on offering and issuance of 4,400,000 shares of the Company’s common stock at a price to the public of $ 19.00 per share for net proceeds of $ 77.9 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company (the Follow-on Offering).

After consummation of the financing, these costs are recorded as a reduction of the proceeds received from the equity financing.

If a planned equity financing is abandoned, the deferred offering costs are expensed immediately as a charge to operating expenses in the condensed consolidated statements of operations and comprehensive loss.

There were $ 737,000 and $ 0 in deferred offering costs recorded within other assets on the Company’s condensed consolidated balance sheets as at June 30, 2021 and December 31, 2020, respectively.

There were no deferred offering costs recorded within other assets on the Company’s condensed consolidated balance sheets as at each of September 30, 2021 and December 31, 2020.

Foreign currency

2 unchanged sentences

Monetary assets and liabilities are then re-measured at exchange rates in effect at the end of each period, and non-monetary assets and liabilities are converted at historical rates.

A re-measurement loss was recognized during the three and six months ended June 30, 2021 of $ 258,000 and $ 207,000 , respectively, and a re-measurement gain was recognized during the three and six months ended June 30, 2020 of $ 7,000 and $ 52,000 , respectively.

A re-measurement gain and loss was recognized during the three and nine months ended September 30, 2021 of $ 69,000 and ($ 139,000 ), respectively, and a re-measurement gain was recognized during the three and nine months ended September 30, 2020 of $ 18,000 and $ 70,000 , respectively.

This is reflected within interest and other income (expense), net on the consolidated statements of operations and comprehensive loss.

1 unchanged sentence

The Company has determined that the Chief Executive Officer is its Chief Operating Decision Maker.

The Company’s Chief Executive Officer reviews financial information presented on a consolidated basis for the purposes of assessing the performance and

making decisions on how to allocate resources.

The Company’s Chief Executive Officer reviews financial information presented on a consolidated basis for the purposes of assessing the performance and making decisions on how to allocate resources.

Accordingly, the Company has determined that it operates in a single reportable segment.

No product revenue has been generated since inception.

The Company has $ 5.9 million and $ 1.1 million of fixed assets in Aligos-US and Aligos-Belgium, respectively, as of June 30, 2021 and $ 6.6 million and $ 1.4 million of fixed assets in Aligos-US and Aligos‑Belgium, respectively as of December 31, 2020.

The Company has $ 5.3 million and $ 962,000 of property and equipment, net in Aligos-US and Aligos-Belgium, respectively, as of September 30, 2021 and $ 6.6 million and $ 1.4 million of fixed assets in Aligos-US and Aligos‑Belgium, respectively as of December 31, 2020.

Cash equivalents

1 unchanged sentence

Restricted cash

As of June 30, 2021 and December 31, 2020, the restricted cash balance was $ 193,000 and $ 560,000 , respectively, and includes funds to secure the letters of credit in relation to the Company’s operating leases and deposits on rental assets (Note 6), as well as employee withholdings for the employee stock purchase plan.

As of September 30, 2021 and December 31, 2020, the restricted cash balance was $ 653,000 and $ 560,000 , respectively, and includes funds to secure the letters of credit in relation to the Company’s operating leases and deposits on rental assets (Note 6), as well as employee withholdings for the employee stock purchase plan.

The Company determines if an arrangement is a lease at the inception of the lease.

24 unchanged sentences

The Company reviews quarterly the carrying amount of its property, equipment and intangible assets to determine whether indicators of impairment may exist which warrant adjustments to carrying values or estimated useful lives.

If indications of impairment exist, projected future undiscounted cash flows associated with the asset are compared to the carrying amount to

determine whether the asset’s value is recoverable.

If indications of impairment exist, projected future undiscounted cash flows associated with the asset are compared to the carrying amount to determine whether the asset’s value is recoverable.

If the carrying value of the asset exceeds such projected undiscounted cash flows, the asset will be written down to its estimated fair value.

No impairment charges were recorded during the three and six months ended June 30, 2021 and 2020 .

No impairment charges were recorded during the three and nine months ended September 30, 2021 and 2020.

The Company generally invests its excess cash in money market funds and investment grade short-to-intermediate-term fixed income securities.

Such investments are included in cash and cash equivalents or short-term investments on the condensed consolidated Balance Sheets.

The Company determines the appropriate classification of short-term securities at the time of purchase and re-evaluates such designation as of each balance sheet date.

The Company determines the appropriate classification of short-term and long-term securities at the time of purchase and re-evaluates such designation as of each balance sheet date.

Securities are classified as held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity, otherwise securities are classified as available-for sale.

6 unchanged sentences

If the Company believes an impairment of a security position is other than temporary, based on available quantitative and qualitative information as of the report date, the loss will be recognized as other income (expense), net, in the Company’s condensed consolidated statements of operations and a new cost basis in the investment is established.

No impairment charges were recorded during the three and six months ended June 30, 2021 and 2020.

As of June 30, 2021 and December 31, 2020, short-term investments consisted of U.S.

No impairment charges were recorded during the three and nine months ended September 30, 2021 and 2020.

As of September 30, 2021, short-term and long-term investments consisted of certificates of deposit, and at December 31, 2020, short-term investments consisted of U.S.

Treasury securities with original maturities of less than one year.

13 unchanged sentences

When the Company enters into collaboration arrangements, the Company assesses whether the arrangement falls within the scope of ASC 808, Collaborative Arrangements (ASC 808) based on whether the arrangement involves joint operating activities and whether both parties would be active participants and would be exposed to significant risks and rewards of the arrangement.

To the extent that the arrangement falls within the scope of ASC 808, the Company assesses whether the payments between the parties fall within the scope of other accounting literature such as ASC 606, Revenue from Contracts with Customers (ASC 606).

During the three and six months ended June 30, 2021 and 2020, no milestones were met and no royalties were due;

extent that the arrangement falls within the scope of ASC 808, the Company assesses whether the payments between the parties fall within the scope of other accounting literature such as ASC 606, Revenue from Contracts with Customers (ASC 606).

During the three and nine months ended September 30, 2021 and 2020, no milestones were met and no royalties were due;

therefore, the Company did not pay or expense any milestone or royalties.

20 unchanged sentences

The Company had been a private company prior to the IPO and lacks company-specific historical and implied fair value information.

Therefore, the Board of Directors (the Board) of the Company considered numerous objective and subjective factors to determine the fair value of the Company’s common stock options at each meeting in which awards were approved.

Therefore, the board of directors of the Company considered numerous objective and subjective factors to determine the fair value of the Company’s common stock options at each meeting in which awards were approved.

The factors considered include, but are not limited to (i) the results of contemporaneous independent third-party valuations of the Company’s common stock and the prices, rights, preferences and privileges of the Company’s redeemable convertible preferred stock relative to those of its common stock;

10 unchanged sentences

The fair value of the employee stock purchase plan (ESPP) is determined on the date the offering period begins using a Black-Scholes option-pricing model and similar assumptions for stock options as described above.

See Note 9 for the assumptions used by the Company in determining the grant date fair value of stock-based awards granted, as well as a summary of the stock-based award activity under the Company’s stock-based compensation plan, for the six months ended June 30, 2021 and 2020.

Net loss per share

13 unchanged sentences

Property and equipment

The components of property and equipment as of June 30, 2021 and December 31, 2020 were as follows:

The components of property and equipment as of September 30, 2021 and December 31, 2020 were as follows:

September 30,

Leasehold improvements

5 unchanged sentences

Accumulated depreciation

Depreciation expense was $ 764,000 and $ 1.5 million for the three and six months ended June 30, 2021, and $ 680,000 and $ 1.3 million for the three and six months ended June 30, 2020, respectively.

Depreciation expense was $ 765,000 and $ 2.3 million for the three and nine months ended September 30, 2021, respectively, and $ 708,000 and $ 2.0 million for the three and nine months ended September 30, 2020, respectively.

Finance leases are also included in property and equipment as vehicles on the condensed consolidated balance sheets (Note 6).

As of June 30, 2021 and December 31, 2020, amortized cost, gross unrealized gains and losses, and estimated fair values of total fixed-maturity securities were as follows:

June 30, 2021

As of September 30, 2021 and December 31, 2020, amortized cost, gross unrealized gains and losses, and estimated fair values of total fixed-maturity securities were as follows:

September 30, 2021

Available-for-sale securities

Treasury bonds

Certificates of deposit

December 31, 2020

5 unchanged sentences

The Company expects to collect all contractual principal and interest payments.

The following is a summary of maturities of securities held-to-maturity and available-for-sale as of June 30, 2021:

The following is a summary of maturities of securities available-for-sale as of September 30, 2021:

Available-for-sale

2 unchanged sentences

One year or less

More than one year

Total investments

The Company recorded interest income of $ 72,000 and $ 178,000 for the three and six months ended June 30, 2021, and $ 374,000 and $ 752,000 for the three and six months ended June 30, 2020, respectively, as a component of interest and other income (expense), net on the Company’s condensed consolidated statement of operations and comprehensive loss.

The Company recorded interest income of $ 20,000 and $ 197,000 for the three and nine months ended September 30, 2021, respectively, and $ 234,000 and $ 985,000 for the three and nine months ended September 30, 2020, respectively, as a component of interest and other income (expense), net on the Company’s condensed consolidated statement of operations and comprehensive loss.

Accrued liabilities

Accrued liabilities consisted of the following as of:

Accrued payables

Accrued liabilities consisted of the following:

September 30,

Accrued compensation

Accrued payables

Liability for early exercised stock options

2 unchanged sentences

The Company has determined that it is not reasonably certain to exercise the options under any leases.

The lease of research and development facilities includes costs for utilities and common area maintenance, which have been included in the

calculation of lease payments.

The lease of research and development facilities includes costs for utilities and common area maintenance, which have been included in the calculation of lease payments.

Differences between lease payments as measured at lease inception and variations in monthly payments will be recognized as operating expenses in the period in which the obligation is incurred.

Leases with an initial term of 12 months or less are not recorded on the balance sheet, and the Company recognizes lease expense for these leases on a straight-line basis over the lease terms.

Leases with terms greater than 12 months are included in operating lease ROU assets and operating lease liabilities in the Company’s condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020.

Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Maturities of lease liabilities as of June 30, 2021 and are as follows:

Maturities of lease liabilities as of September 30, 2021 and are as follows:

Year ending December 31:

4 unchanged sentences

Lease liabilities net of current portion

The components of lease expense were as follows for the three and six months ended June 30, 2021 and 2020:

The components of lease expense were as follows:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Operating lease cost

3 unchanged sentences

Total finance lease cost

The Company made payments of $ 659,000 and $ 1.3 million during the three and six months ended June 30, 2021, respectively, and $ 636,000 and $ 1.2 million during the three and six months ended June 30, 2020, respectively, which are included as cash flow from operations on the condensed consolidated statements of cash flows.

As of June 30, 2021 and December 31, 2020, $ 296,000 of finance lease ROU assets were presented as part of property and equipment on the condensed consolidated balance sheet with accumulated amortization of $ 144,000 and $ 76,000 , respectively.

Additional information related to the Company’s leases was as follows as of June 30, 2021 and December 31, 2020:

The Company made payments of $ 686,000 and $ 2.0 million during the three and nine months ended September 30, 2021, respectively, and $ 637,000 and $ 1.9 million during the three and nine months ended September 30, 2020, respectively, which are included as cash flow from operations on the condensed consolidated statements of cash flows.

As of September 30, 2021 and December 31, 2020, $ 305,000 and $ 296,000 , respectively, of finance lease ROU assets were presented as part of property and equipment on the condensed consolidated balance sheet with accumulated amortization of $ 176,000 and $ 107,000 , respectively.

Additional information related to the Company’s leases was as follows as of September 30, 2021 and December 31, 2020:

September 30,

Operating Lease:

6 unchanged sentences

In connection with the issuance of certain notes, lenders were issued Warrants to purchase 134,112 shares of Series A.

The Warrants have a coverage percentage of 25 % of the principal amount of the notes and have a ten-year expiration date from the applicable closing date of April 20, 2018 or June 6, 2018 .

The Warrants had a coverage percentage of 25 % of the principal amount of the notes and had a ten-year expiration date from the applicable closing date of April 20, 2018 or June 6, 2018 .

The underlying shares issuable upon the exercise of the Warrants were eligible to be exercised into the next round of equity financing.

The Warrants became exercisable into shares of Series A for an exercise price of $ 9.32 per share.

The Company recorded the Warrants initially at fair value (Note 10) as derivative liabilities on the consolidated balance sheet with the value being allocated to the notes as a debt discount.

The Company recorded the Warrants initially at fair value as derivative liabilities on the consolidated balance sheet with the value being allocated to the notes as a debt discount.

The fair value of the Warrants upon issuance on April 20, 2018 and June 6, 2018, was $ 0.7 million and $ 238,000 , respectively.

As of June 30, 2021 and December 31, 2020, due to the IPO in October 2020, all outstanding warrants were automatically exercised for the issuance of Common Stock, and upon that exercise, such warrants were no longer outstanding.

As of September 30, 2021 and December 31, 2020, due to the IPO in October 2020, all outstanding warrants were automatically exercised for the issuance of Common Stock, and following that exercise, such warrants were no longer outstanding.

As Series A contained a conditional obligation for the Company to repurchase the shares for cash consideration, the Warrants were exercised as of the IPO date, with changes in fair value being recorded on the consolidated statements of operations and comprehensive loss.

The Company recorded a change in fair value of derivative liabilities of $ 76,000 and $ 56,000 for the three and six months ended June 30, 2020, respectively.

The Company recorded a change in fair value of derivative liabilities of $ 240,000 and $ 296,000 for the three and nine months ended September 30, 2020, respectively.

Redeemable convertible preferred stock liability

1 unchanged sentence

The Redeemable Convertible Preferred Stock Liability is considered a freestanding instrument that qualifies as a liability under ASC Topic 480, Distinguishing Liabilities from Equity as the Company is committed to issue an instrument that ultimately may require a transfer of assets.

The liability is accounted for at fair value and re-measured at each reporting date (Note 10).

The liability is accounted for at fair value and re-measured at each reporting date.

On the date of the initial closing, the Company recorded the Redeemable Convertible Preferred Stock Liability at a fair value of $ 3.2 million.

As of June 30, 2021 and December 31, 2020, all of the Series B-2 shares were issued and then, as a result of the IPO, converted to shares of common stock.

The Company recorded a change in fair value of derivative liabilities of $ 198,000 and $ 364,000 for the three and six months ended June 30, 2020, respectively.

As of September 30, 2021 and December 31, 2020, all of the Series B-2 shares were issued and then, as a result of the IPO, converted to shares of common stock.

The Company recorded a change in fair value of derivative liabilities of $ 11.8 million and $ 11.4 million for the three and nine months ended September 30, 2020, respectively.

Capital stock

1 unchanged sentence

300,000,000 shares of the Common Stock were designated as “Voting Common Stock” and 20,000,000 shares of the Common Stock were designated as “Non-Voting Common Stock”.

The holders of shares of Common Stock are entitled to one vote for each share of Common Stock at all meetings of stockholders.

The holders of shares of Voting Common Stock are entitled to one vote for each share of Voting Common Stock at all meetings of stockholders.

Redeemable convertible preferred stock

13 unchanged sentences

In connection with the Company’s IPO, all shares of Series B-1 converted into common stock.

As of June 30, 2021 , there was 10,000,000 shares of preferred stock authorized and no preferred stock issued.

As of September 30, 2021 , there was 10,000,000 shares of preferred stock authorized and no preferred stock issued.

Stock-based compensation

Stock options

During the three and six months ended June 30, 2021, the Company’s stock option compensation expense was approximately $ 3.1 million and $ 5.8 million.

During the three and six months ended June 30, 2020, the Company’s stock option compensation expense was approximately $ 237,000 and $ 478,000 .

During the three and nine months ended September 30, 2021, the Company’s stock option compensation expense was approximately $ 3.2 million and $ 9.0 million, respectively.

During the three and nine months ended September 30, 2020, the Company’s stock option compensation expense was approximately $ 926,000 and $ 1.4 million, respectively.

There was no recognized tax benefit in either of the periods.

As of June 30, 2021, unamortized expense balance was $ 37.2 million, to be amortized over a weighted average period of 2.97 years.

Stock option activity during the six months ended June 30, 2021 is as follows:

As of September 30, 2021, unamortized expense balance was $ 35.5 million, to be amortized over a weighted average period of 2.76 years.

Stock option activity during the nine months ended September 30, 2021 is as follows:

Outstanding as of January 1, 2021

Outstanding as of June 30, 2021

Options vested and expected to vest as of June 30, 2021

Options vested and exercisable as of June 30, 2021

The weighted-average grant date fair value of options granted was $ 17.70 and $ 17.61 per share during the three and six months ended June 30, 2021.

Outstanding as of September 30, 2021

Options vested and expected to vest as of September 30, 2021

Options vested and exercisable as of September 30, 2021

The weighted-average grant date fair value of options granted was $ 15.23 and $ 10.43 per share during the three and nine months ended September 30, 2021.

Restricted stock awards

During the three and six months ended June 30, 2021, the Company recorded a total stock-based compensation expense related to the restricted stock awards of $ 89,000 and $ 179,000 , respectively.

During the three and six months ended June 30, 2020, the Company recorded a total stock-based compensation expense related to the restricted stock awards of $ 90,000 and $ 180,000 , respectively.

As of June 30, 2021, unrecognized stock-based compensation expense related to outstanding unvested shares of restricted stock that are expected to vest were approximately $ 272,000 , expected to be recognized over a weighted-average period of 0.8 years.

The following table summarizes the Company’s restricted common stock activity for the six months ended June 30, 2021:

During the three and nine months ended September 30, 2021, the Company recorded a total stock-based compensation expense related to the restricted stock awards of $ 89,000 and $ 268,000 , respectively.

During the three and nine months ended September 30, 2020, the Company recorded a total stock-based compensation expense related to the restricted stock awards of $ 90,000 and $ 271,000 , respectively.

As of September 30, 2021, unrecognized stock-based compensation expense related to outstanding unvested shares of restricted stock that are expected to vest were approximately $ 184,000 , expected to be recognized over a weighted-average period of 0.5 years.

The following table summarizes the Company’s restricted common stock activity for the nine months ended September 30, 2021:

Issued and unvested as of January 1, 2021

1 unchanged sentence

Restricted stock awards vested

Issued and unvested as of June 30, 2021

During the six months ended June 30, 2021, the Company issued 262,982 shares of common stock, upon exercise of unvested stock options or purchases for unvested restricted stock awards.

As of June 30, 2021 and December 31, 2020, there were 280,195 and 396,522 shares of Common Stock held by employees subject to repurchase at an aggregate price of $ 0.4 million and $ 0.6 million, respectively.

A corresponding liability was recorded and included in accrued expenses on the condensed consolidated balance sheet as of June 30, 2021 and December 31, 2020, respectively.

Issued and unvested as of September 30, 2021

During the nine months ended September 30, 2021, the Company issued 262,982 shares of common stock, upon exercise of unvested stock options or purchases for unvested restricted stock awards.

As of September 30, 2021 and December 31, 2020, there were 280,195 and 396,522 shares of Common Stock held by employees subject to repurchase at an aggregate price of $ 0.4 million and $ 0.6 million, respectively.

A corresponding liability was recorded and included in accrued expenses on the condensed consolidated balance sheet as of September 30, 2021 and December 31, 2020, respectively.

Employee stock purchase plan

During the three and six months ended June 30, 2021, the Company recorded a total stock-based compensation expense of $ 240,000 and $ 240,000 , respectively, related to the employee stock purchase plan.

No purchase of common stock had been made by the Company as of June 30, 2021.

Stock-based compensation expense was allocated as follows for the three and six months ended June 30, 2021 and 2020:

During the three and nine months ended September 30, 2021, the Company recorded a total stock-based compensation expense of $ 297,000 and $ 546,000 , respectively, related to the employee stock purchase plan.

No purchase of common stock had been made by the Company as of September 30, 2021.

Stock-based compensation expense was allocated as follows for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Research and development

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Fair Value Measurements

as of June 30, 2021

as of September 30, 2021

Cash equivalents

Treasury bonds

Certificates of deposit

Fair Value Measurements

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Unless terminated earlier by either party in accordance with the provisions thereof, the Emory License Agreement shall continue until the expiration of the last–to-expire of the patents licensed to the Company thereunder.

As consideration for the Emory License Agreement, the Company paid an upfront license fee of $ 290,000 and issued the Emory Convertible Note of $ 600,000 .

As discussed in Note 8, upon issuance of the Series A in August 2018, the Emory Convertible Note and unpaid accrued interest was cancelled and converted into shares of Series A at a conversion price of $ 9.32 per share.

As consideration for the Emory License Agreement, the Company paid an upfront license fee of $ 290,000 and issued a convertible note with a principal amount of $ 600,000 .

Upon issuance of the Series A in August 2018, the principal and unpaid accrued interest under this convertible note was cancelled and converted into shares of Series A at a conversion price of $ 9.32 per share.

In June 2020, the Company amended the license agreement with Emory.

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The Company has agreed to pay Emory up to an aggregate of $ 125.0 million upon the achievement of specified development, regulatory, and commercial milestones, and all ongoing patent costs.

During the six months ended June 30, 2021, the Company had $ 147,000 expenses related to milestone payments.

During the nine months ended September 30, 2021, the Company had $ 171,000 expenses related to milestone payments.

The Company also agreed to pay Emory tiered single-digit royalties on worldwide annual net sales of licensed products, on a quarterly basis and calculated on a product-by-product basis.

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more than three years after the effective date.

During the three and six months ended June 30, 2021 and 2020 , the Company made no payments associated with royalties and recognized no expense or accruals .

During the three and nine months ended September 30, 2021 and 2020 , the Company made no payments associated with royalties and recognized no expense or accruals .

Agreement with Luxna Biotech Co., Ltd.

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The Company is obligated to make payments to Luxna, in aggregate, totaling up to but no more than $ 55.5 million upon the achievement of specified development, regulatory, and commercial milestones.

During the three and six months ended June 30, 2021 and 2020, the Company recognized no expenses related to milestone payments.

During the three and nine months ended September 30, 2021 and 2020, the Company recognized no expenses related to milestone payments.

The Company is also required to pay Luxna a low-single digit royalty percentage on net sale of applicable products, if any.

During the three and six months ended June 30, 2021 and 2020, the Company made no payments associated with royalties.

During the three and nine months ended September 30, 2021 and 2020, the Company made no payments associated with royalties.

Agreement with Katholieke Universiteit Leuven (KU Leuven)

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Unless terminated earlier by either party, the agreement shall continue until the expiration of the last to expire royalty term, which is the later of the expiration or termination of the last valid patent claim covering the manufacture, use, sale or importation of the licensed product in a particular country or 10 years after the first commercial sale of a licensed product.

During the three and six months ended June 30, 2021 and 2020, the Company recognized no expenses related to milestone payments.

During the three and nine months ended September 30, 2021 and 2020, the Company recognized no expenses related to milestone payments.

Agreement with Merck

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The Company will be primarily responsible for designing, preparing and evaluating the oligonucleotide molecules and delivering optimized lead molecules, and Merck will be responsible for subsequent research, clinical development and commercialization efforts.

The Company determined that the Merck agreement falls within the scope of ASC 808 and we analogized to ASC 606 for the accounting of payments such as upfront payments and other milestones.

The Company determined that the Merck agreement falls within the scope of ASC 808 and the Company analogized to ASC 606 for the accounting of payments such as upfront payments and other milestones.

Revenue is recognized based on percentage of completion of the overall project.

During the three and six months ended June 30, 2021 the Company recognized $ 1.5 million and $ 2.5 million, respectively, of revenue from collaborative arrangements related to milestone payments.

During the three and nine months ended September 30, 2021 the Company recognized $ 1.5 million and $ 4.0 million, respectively, of revenue from collaborative arrangements related to milestone payments.

Commitments and contingencies

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The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

The Company had no contingent liabilities requiring accrual as of June 30, 2021 and December 31, 2020.

The Company had no contingent liabilities requiring accrual as of September 30, 2021 and December 31, 2020.

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 September 30, 2021, the Company had non-cancellable purchase commitments of $ 4.1 million.

The Company has a history of losses and projects losses for the full year 2021.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Weighted average common stock outstanding,

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Convertible preferred stock

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Subsequent events

In preparing the interim financial statements as of June 30, 2021 and for the three and six months then ended, the Company evaluated subsequent events for recognition and measurement purposes during which time nothing has occurred outside of the normal course of business operations that would require disclosure other than the event discussed below.

Follow-on Offering

On July 6, 2021, the Company closed its Follow-on Offering and issued 4,400,000 shares of its common stock at a public offering price of $ 19.00 per share for net proceeds of $ 77.9 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company.

In preparing the interim financial statements for the three and nine months ended September 30, 2021, the Company evaluated subsequent events for recognition and measurement purposes during which time nothing has occurred outside of the normal course of business operations that requires disclosure.

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

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The most widely used treatment for CHB, nucleos(t)ide analogs, suppresses viral replication, but only achieves low rates of functional cure and often requires long-term administration.

To address this issue, we have developed a portfolio of differentiated drug candidates for CHB, including an S-antigen Transport-inhibiting Oligonucleotide Polymers (STOPS) molecule, a small molecule Capsid Assembly Modulator (CAM), and oligonucleotides (Antisense Oligonucleotides (ASO) and Small Interfering Ribonucleic Acids (siRNA)), each of which is designed against clinically validated targets in the Hepatitis B Virus (HBV) life cycle.

To address this issue, we have developed a portfolio of differentiated drug candidates for CHB, including an S-antigen Transport-inhibiting Oligonucleotide Polymers (STOPS TM ) molecule, a small molecule Capsid Assembly Modulator (CAM), and additional oligonucleotides (Antisense Oligonucleotides (ASO) and Small Interfering Ribonucleic Acids (siRNA)), each of which is designed against clinically validated targets in the Hepatitis B Virus (HBV) life cycle.

We believe that combination regimens utilizing our portfolio of CHB drug candidates may lead to higher rates of functional cure.

Initial Phase 1a studies in healthy volunteers for our STOPS molecule and CAM have been completed.

Phase 1b dose range studies, evaluating the properties of our STOPS molecule and CAM as monotherapy in CHB patients, are approved in many countries, including New Zealand, Hong Kong, the United Kingdom, South Korea, China and Moldova, and dosing in patients in both of these studies is ongoing.

The STOPS molecule drug candidate, ALG-010133, was generally well tolerated in healthy volunteers (HVs) when given as single and multiple (3 weekly) subcutaneous doses of up to 200 mg and 180 mg, respectively.

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Based on the pharmacokinetic (PK) exposures achieved in HVs, weekly subcutaneous doses of 120 mg and higher will be evaluated in CHB cohorts.

Currently, doses of 120 mg and 200 mg given weekly over 12 weeks are being evaluated in two separate cohorts of patients with CHB.

For the CAM drug candidate, ALG-000184, preliminary data in both HVs and CHB subjects indicate the drug has predictable PK and was well tolerated, with no SAEs or TEAEs leading to discontinuation reported.

Additionally, antiviral activity data in eight treatment naive/currently not treated CHB subjects receiving a daily dose of 100 mg ALG-000184 for 14 days were promising, showing a mean HBV DNA reduction of 2.9 log 10 IU/mL.

In the future, we may also conduct clinical trials for our STOPS molecule and CAM and other drug candidates in other countries and territories.

Additionally, we recently filed a clinical trial application (CTA) seeking regulatory approval to initiate a two-part Phase 1a/1b study evaluating the safety, pharmacokinetics, and antiviral activity of our ASO, ALG-020572, in HVs and CHB subjects, respectively.

Finally, our preclinical efforts to advance our siRNA targeted against HBV are ongoing, with ALG-125755 CTA filing on-track for 1H 2022.

Currently, doses of 120 mg, 200 mg and 400 mg given weekly over 12 weeks are being evaluated in three separate cohorts of patients with CHB.

Safety and viral kinetic data from these three cohorts are expected to be available in the first half of 2022.

Based on prior experience with nucleic acid polymers (NAPs) such as REP-2139, we believe an active dose level should be able to reduce mean HBsAg concentrations by ≥1.0 log 10 IU/mL after 12 weeks of dosing.

For the CAM drug candidate, ALG-000184, preliminary data in HVs indicate the drug has predictable PK and was well tolerated, with no SAEs or TEAEs leading to discontinuation reported.

Additionally, safety, PK, and antiviral activity data in eight treatment naive/currently not treated CHB subjects receiving a daily dose of 100 mg ALG-000184 for 14 days were promising, showing a mean HBV DNA reduction of 2.9 log 10 IU/mL and no concerning safety or PK findings (Gane et al., HBV TAG 2021).

Enrollment in three CHB cohorts is now complete, and a fourth cohort (10 mg dose level) is currently enrolling.

Safety and antiviral activity data through day 28 from the first two cohorts (50 and 100 mg) will be reported at the American Association for the Study of Liver Diseases (AASLD) in November 2021, and data from the third and fourth cohorts are planned to be shared at a scientific conference in the first half of 2022.

We have also recently initiated a two-part Phase 1a/1b study evaluating the safety, PK, and antiviral activity of our ASO, ALG‑020572, in HVs (a single ascending dose study) and CHB subjects (a multiple ascending dose), respectively.

Dosing in HVs is ongoing, and dosing in CHB subjects is anticipated to start in the first quarter of 2022.

We plan to report initial Phase 1 data in HVs in the first half of 2022.

Finally, our nonclinical efforts to advance our siRNA drug candidate targeted against HBsAg messenger RNA (ALG-125755) are ongoing, with a clinical trial application (CTA) filing on track for the first half of 2022.

Based on prior experience with other siRNA and ASOs in clinical development, we expect that an active dose level to be able to reduce mean HBsAg concentrations by ≥ 1.0 log 10 IU/mL in our Phase 1b studies.

In the future, we may also conduct clinical trials evaluating our STOPS molecule and CAM and other drug candidates in other countries and territories.

Our second area of focus is in non-alcoholic steatohepatitis (NASH), a complex, chronic liver disease where combination regimens may likewise prove beneficial.

Our most advanced drug candidate for NASH is ALG-055009, a small molecule THR-ß agonist is currently in nonclinical studies to enable a first-in-human clinical trial.

We plan to file a CTA for a Phase 1a/1b study in HVs and subjects with hyperlipidemia in Q3 2021.

Our most advanced drug candidate for NASH is ALG-055009, a small molecule THR‑ß agonist.

We believe ALG-055009 has the potential to become an integral component of future combination regimens for NASH.

In non-clinical studies, ALG‑055009 was more potent and selective for THR- ß compared to other drugs in the clinic, which may have clinical benefits.

In September 2021, we filed a CTA for a Phase 1a/1b study of ALG‑055009 in HVs and subjects with hyperlipidemia.

Topline data from this Phase 1a/1b study ALG-055009 are expected in the second half of 2022.

Our third area of focus is to develop drug candidates with pan-coronavirus activity, including Severe Acute Respiratory Syndrome coronavirus 2 (SARS-CoV-2), the virus responsible for COVID-19.

Our efforts to identify a coronavirus therapeutic are multipronged and utilize both our small molecule and oligonucleotide expertise.

For our small molecule approach, we are exploring coronavirus protease inhibitors in collaboration with KU Leuven / CISTIM / CD3.

In the oligonucleotide areas, we are investigating a siRNA modality and are exploring the potential for targeted lung delivery with this approach.

For our small molecule approach, we are exploring coronavirus protease inhibitors in collaboration with Katholieke Universiteit Leuven (KU Leuven), CISTIM and the Centre for Drug Design and Discovery ( CD3).

Early pre-clinical data of our compound ALG‑097111, a protease inhibitor tested to evaluate efficacy in a hamster model, showed that ALG‑097111 efficiently inhibited viral replication in the lungs of infected hamsters.

We are in the final stages of selecting an orally available development candidate.

In October 2020, we completed our initial public offering (IPO) and issued 10,000,000 shares of our common stock at a price to the public of $15.00 per share for net proceeds of $135.4 million, after deducting underwriting discounts and commissions of $10.5 million and expenses of $4.1 million.

In connection with the IPO, all shares of Series A, Series B-1 and Series B-2 redeemable convertible preferred stock converted into 19,761,870 shares of voting common stock and 3,092,338 shares of non-voting common stock.

On November 5, 2020, the underwriters of the IPO partially exercised their overallotment option by purchasing an additional 1,150,000 shares from the Company, resulting in an additional $16.0 million, after deducting underwriting discounts and commissions

of $1.2 million.

On November 5, 2020, the underwriters of the IPO partially exercised their overallotment option by purchasing an additional 1,150,000 shares from us, resulting in an additional $16.0 million, after deducting underwriting discounts and commissions of $1.2 million.

Prior to our IPO, we had received gross proceeds of approximately $186.9 million from sales of our preferred stock and our issuance of convertible debt.

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We have incurred net losses and negative cash flows from operations in each year since our formation in February 2018.

Our net losses were $57.5 million and $40.8 million for the six months ended June 30, 2021 and 2020, respectively.

Our net losses were $90.6 million and $74.1 million for the nine months ended September 30, 2021 and 2020, respectively.

We have had no revenue from product sales.

As of June 30, 2021, we had an accumulated deficit of $232.2 million.

As of September 30, 2021, we had an accumulated deficit of $265.4 million.

Substantially all of our net losses have resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations.

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Interest and other income (expense), net comprises interest income, net and other income (loss), net.

Interest income, net primarily consists of interest earned on our cash, cash equivalents, and short-term investments and interest expense related to our convertible note instruments.

Other (loss) income, net consists primarily of the change fair value of derivative liabilities and our short-term investments.

Interest income, net primarily consists of interest earned on our cash, cash equivalents, and investments and interest expense related to our convertible note instruments.

Other (loss) income, net consists primarily of the change fair value of derivative liabilities and our investments.

Results of Operations

Comparison of the three months ended June 30, 2021 and 2020

Comparison of the three months ended September 30, 2021 and 2020

Operating expenses

The following table summarizes our operating expenses for the three months ended June 30, 2021 and 2020:

The following table summarizes our operating expenses for the three months ended September 30, 2021 and 2020:

Three Months Ended

September 30,

Operating expenses:

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Research and development expenses

Research and development expenses were $24.6 million for the three months ended June 30, 2021, compared to $17.2 million for the three months ended June 30, 2020, an increase of $7.4 million.

The increase was primarily due to an increase of $2.2 million of additional employee-related costs, of which $1.8 million related to stock-based compensation.

The increase also includes $3.8 million in third-party expenses for our preclinical programs and the continued increase in expenditures related to research and development activities associated with our STOPs molecule and CAM candidates as well as activities related to our NASH program, a $0.3 million increase in consulting services, a $0.2 million increase in depreciation, a $0.2 million in recruiting costs due to increased headcount, and $0.7 million of facilities and related expenses.

Research and development expenses were $28.1 million for the three months ended September 30, 2021, compared to $17.3 million for the three months ended September 30, 2020, an increase of $10.8 million.

The increase was due to an increase of $2.6 million of additional employee-related costs, of which $1.6 million related to stock-based compensation, an increase of $6.5 million in third-party expenses for our nonclinical programs and the continued increase in expenditures related to research, development and manufacturing activities associated with our STOPs, CAM and ASO clinical trial activities as well as costs related to our NASH program, and $1.5 million in facilities and related expenses.

General and administrative expenses

General and administrative expenses were $6.6 million for the three months ended June 30, 2021, compared to $4.1 million for the three months ended June 30, 2020, an increase of $2.5 million.

The increase was primarily due to an increase of $2.1 million additional employee-related costs, of which $1.3 million related to stock-based compensation, $1.2 million increase in third-party expenses primarily due to increased administrative costs, patent costs and D&O insurance to support our status as a public company, offset by a decrease of $0.6 million in facilities and related expenses and a decrease of $0.2 million in depreciation and other costs.

General and administrative expenses were $6.5 million for the three months ended September 30, 2021, compared to $4.2 million for the three months ended September 30, 2020, an increase of $2.2 million.

The increase was primarily due to an increase of $1.5 million in additional employee-related costs, of which $1.0 million related to stock-based compensation, a $1.6 million increase in third-party expenses primarily due to increased administrative costs, patent costs and D&O insurance to support our status as a public company, and $0.3 million in employee travel and development related expenses as employees return to the office and travel.

The increase was partially offset by a $0.7 million decrease in facilities expenses and a $0.4 million decrease in consulting expenses.

Interest and other income (expense), net

The following table summarizes our interest and other income (expense), net for the three months ended September 30, 2021 and 2020:

Three Months Ended

September 30,

Interest income, net

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Total interest and other income (expense), net

Interest income, net decreased to $0.1 million for the three months ended June 30, 2021 from $0.4 million for the three months ended June 30, 2020, a decrease in $0.3 million, primarily due to the change in our portfolio of cash equivalents and short-term investments which results in lower interest yield.

Other (loss) income, net decreased to a loss of $0.3 million for the three months ended June 30, 2021 from income of $0.0 million for the three months ended June 30, 2020, a decrease of $0.3 million, primarily due to the fair value change recognized on the net increase in fair value of both our redeemable convertible preferred stock liability and warrant liabilities in the prior year.

Comparison of the six months ended June 30, 2021 and 2020

Interest income, net decreased $0.2 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020, primarily due to the change in our portfolio of cash equivalents and investments which results in lower interest yield.

Other (loss) income, net increased $12.0 million for the three months ended September 30, 2021 compared to the three months ended September 30, 2020.

The current quarter increase was due to the prior year loss recognized on the net increase in fair value of both our redeemable convertible preferred stock liability and warrant liabilities.

Comparison of the nine months ended September 30, 2021 and 2020

Operating expenses

The following table summarizes our operating expenses for the six months ended June 30, 2021 and 2020:

Six Months Ended

The following table summarizes our operating expenses for the nine months ended September 30, 2021 and 2020:

Nine Months Ended

September 30,

Operating expenses:

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Research and development expenses

Research and development expenses were $47.4 million for the six months ended June 30, 2021, compared to $34.5 million for the six months ended June 30, 2020, an increase of $12.9 million.

The increase was primarily due to an increase of $4.9 million of additional employee-related costs, of which $3.3 million related to stock-based compensation.

The increase also includes $5.6 million in third-party expenses for our preclinical programs and the continued increase in expenditures related to research and development activities associated with our STOPs molecule and CAM candidates, as well as activities related to our NASH program, a $0.4 million increase in depreciation, a $0.6 million increase in consulting and recruiting costs due to increased headcount, a $1.5 million increase of facilities and related expenses, partially offset by a $0.2 million decrease in lab expenses.

Research and development expenses were $75.6 million for the nine months ended September 30, 2021, compared to $51.8 million for the nine months ended September 30, 2020, an increase of $23.7 million.

The increase was due to an increase of $7.5 million of additional employee-related costs, of which $4.9 million related to stock-based compensation, an increase of $12.2 million in third-party expenses for our nonclinical programs and the continued increase in expenditures related to research, development and manufacturing activities associated with our STOPs, CAM and ASO clinical trial activities, as well as activities related to our NASH program.

In addition, we had a $0.4 million increase in depreciation, a $0.8 million increase in consulting, recruiting and T&E costs due to increased headcount, and a $2.7 million increase of facilities and related expenses.

General and administrative expenses

General and administrative expenses were $12.3 million for the six months ended June 30, 2021, compared to $7.5 million for the six months ended June 30, 2020, an increase of $4.8 million.

The increase was primarily due to an increase of $3.6 million of additional employee-related costs, of which $2.2 million related to stock-based compensation, $3.3 million increase in third-party expenses primarily due to increased administrative costs, patent costs and D&O insurance to support our status as a public company, offset by a decrease of $1.6 million in facilities and related expenses, a decrease of $0.3 million in consulting and recruitment costs, and a decrease of $0.2 million in depreciation and lab expenses.

General and administrative expenses were $18.8 million for the nine months ended September 30, 2021, compared to $11.7 million for the nine months ended September 30, 2020, an increase of $7.1 million.

The increase was primarily due to an

increase of $ 5.1 million of additional employee-related costs, of which $ 3.2 million related to stock-based compensation, $ 4.9 million increase in third-party expenses primarily due to increased administrative costs , legal costs and D&O insurance to support our status as a public company, offset by a decrease of $ 2.7 million in facilities and related expenses , and a decrease of $0.

4 million in consulting costs .

Interest and other income (expense), net

Six Months Ended

The following table summarizes our interest and other income (expense), net for the nine months ended September 30, 2021 and 2020:

Nine Months Ended

September 30,

Interest income, net

Other (loss) income, net

Total interest and other income (expense), net

Interest income, net decreased to $0.2 million for the six months ended June 30, 2021 from $0.8 million for the six months ended June 30, 2020, a decrease in $0.6 million, primarily due to the change in our portfolio of cash equivalents and short-term investments which results in lower interest yield.

Other (loss) income, net decreased to a loss of $0.3 million for the six months ended June 30, 2021 from income of $0.3 million for the six months ended June 30, 2020, a decrease of $0.6 million, primarily due to the fair value change recognized on the net increase in fair value of both our redeemable convertible preferred stock liability and warrant liabilities in the prior year.

Total interest and other expense, net

Interest income, net decreased to $0.2 million for the nine months ended September 30, 2021 from $1.0 million for the nine months ended September 30, 2020, a decrease of $0.8 million, primarily due to the change in our portfolio of cash equivalents and short-term investments which results in lower interest yield.

Other (loss) income, net, was a loss of $0.2 million for the nine months ended September 30, 2021 compared to a loss of $11.6 million for the nine months ended September 30, 2020, a difference of $11.4 million, primarily due to the prior year loss recognized on the net increase in fair value of both our redeemable convertible preferred stock liability and warrant liabilities.

Liquidity and capital resources

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To date, we have financed our operations through private placements of preferred stock, issuances of common stock and convertible debt.

Through June 30, 2021, we had received gross proceeds of $186.9 million from sales of our preferred stock, issuances of common stock and our issuance of convertible debt.

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

Through September 30, 2021, we had received gross proceeds of $186.9 million from sales of our preferred stock, issuances of common stock and our issuance of convertible debt.

As of September 30, 2021, we had cash, cash equivalents and investments of $242.7 million.

Funding requirements

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Our primary use of cash is to fund operating expenses, which consist primarily of research and development costs related to our drug candidates and our discovery programs, and to a lesser extent, general and administrative expenditures.

We expect our expenses to increase substantially in connection with our ongoing clinical development activities related to our most advanced drug candidates, ALG-010133 and ALG-000184, which are still in the early stages of development, as well as our research and development of our other drug candidates within our CHB, NASH and coronavirus programs.

We expect our expenses to increase substantially in connection with our ongoing clinical development activities related to our most advanced drug candidates, ALG-010133, ALG-000184 and ALG‑020572, which are still in the early stages of development, as well as our research and development of our other drug candidates within our CHB, NASH and coronavirus programs.

In addition, we are incurring additional costs associated with operating as a public company following our IPO in October 2020.

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add operational, financial and management information systems and personnel, including personnel to support our drug development, any future commercialization efforts and our transition to becoming a public company.

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.

As of September 30, 2021, we had cash, cash equivalents and investments of $242.7 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, 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 believe that our existing cash, cash equivalents and short-term investments will enable us to fund our planned operating expenses and capital expenditure requirements through at least the next twelve months.

We believe that our existing cash, cash equivalents and investments will enable us to fund our planned operating expenses and capital expenditure requirements through at least the next twelve months.

We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect.

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We do not currently have any committed external source of funds.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest may be diluted, and the terms of these securities may include liquidation or other preferences and anti-dilution protections that could adversely affect your rights as a common stockholder.

To the extent that we raise additional capital through the sale of equity or convertible debt securities, your

ownership interest may be diluted, and the terms of these securities may include liquidation or other preferences and anti-dilution protections that could adversely affect your rights as a common stockholder.

Additional debt or preferred equity financing, if available, may involve agreements that include restrictive covenants that may limit our ability to take specific actions, such as incurring debt, making capital expenditures or declaring dividends, which could adversely constrain our ability to conduct our business, and may require the issuance of warrants, which could potentially dilute your ownership interest.

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The following table summarizes our sources and uses of cash for each of the periods presented:

Six Months Ended

Nine Months Ended

September 30,

Net cash used in operating activities

Net cash (used in) provided by investing activities

Net cash provided by investing activities

Net cash (used in) provided by financing activities

Net decrease in cash, cash equivalents, and restricted cash

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

Operating activities

During the six months ended June 30, 2021, operating activities used $52.8 million of cash, primarily resulting from our net loss of $57.5 million and cash used in changes in our operating assets and liabilities of $3.4 million, partially offset by non-cash charges of $8.1 million.

Net cash used in changes in our operating assets and liabilities of $3.4 million consisted of a decrease of $2.5 million in deferred revenue from collaborations, a decrease of $0.6 million in operating lease liabilities, a decrease of $0.1 million in other liabilities, and an increase of $0.3 in other assets.

During the nine months ended September 30, 2021, operating activities used $78.2 million of cash, primarily resulting from our net loss of $90.6 million, and cash used for operating assets and liabilities of $0.2 million, partially offset by non-cash charges of $12.6 million.

Net cash used in operating activities resulted in changes in our operating assets and liabilities of $0.2 million, consisting of an increase in other assets of $0.3 million, a decrease of $4.0 million in deferred revenue from collaborations, a decrease of $1.0 million in operating lease liabilities, a decrease of $0.7 million in accounts payable and a decrease of $0.1 million in other liabilities, partially offset by an increase in accrued liabilities of $5.9 million.

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 the operating lease liability was a result of payments made on outstanding lease obligations.

During the six months ended June 30, 2020, operating activities used $38.0 million of cash, primarily resulting from our net loss of $40.8 million, partially offset by cash provided by changes in our operating assets and liabilities of $0.8 million and non-cash charges of $2.0 million.

Net cash provided by changes in our operating assets and liabilities of $0.8 million consisted of an increase of $2.0 million in accounts payable and accrued liabilities, partially offset by a decrease of $0.6 million in operating lease liability and an increase of $0.6 million in other current assets.

During the nine months ended September 30, 2020, operating activities used $54.6 million of cash, primarily resulting from our net loss of $74.1 million, partially offset by non-cash charges of $15.9 million and cash provided by changes in our operating assets and liabilities of $3.6 million.

Net cash provided by changes in our operating assets and liabilities of $3.6 million consisted of an increase of $5.5 million in accounts payable and accrued liabilities, partially offset by a decrease of $1.0 million in other current assets and a decrease of $0.9 million in operating lease liability.

The increase in accounts payable and accrued liabilities was largely due to an increase in external research and development costs.

The decrease in other assets was largely due to an increase in prepayments for services.

The decrease in the operating lease liability was a result of payments made on outstanding lease obligations.

The increase in other assets was largely due to an increase in prepayments for services.

Investing activities

During the six months ended June 30, 2021, investing activities provided $19.5 million of cash, consisting primarily of $20.0 million of investment maturities, offset by $0.5 million of purchases of property and equipment.

During the six months ended June 30, 2020, investing activities used $8.8 million of cash, consisting primarily of $45.3 million of short-term and long-term investment purchases and $1.7 million of purchases of property and equipment, offset by $38.1 million of short-term investment maturities.

During the nine months ended September 30, 2021, investing activities provided $19.5 million of cash, consisting primarily of $23.0 million of investment maturities, offset by $2.9 million of investment purchases and $0.6 million of purchases of property and equipment.

During the nine months ended September 30, 2020, investing activities provided $17.8 million of cash, consisting primarily of $65.1 million of investment maturities, offset by $45.3 million of investment purchases and $2.0 million of purchases of property and equipment.

Financing activities

During the six months ended June 30, 2021, net cash provided by financing activities was $0.2 million, consisting primarily of $0.3 million proceeds from the exercise of stock options, partially offset by $0.1 million of payments of deferred offering costs.

During the six months ended June 30, 2020, net cash used in financing activities was $0.0 million, consisting primarily of a $0.4 million payment of Series B-1 convertible preferred stock issuance costs, partially offset by the proceeds from the exercise of warrants to purchase shares of Series A convertible preferred stock of $0.4 million and proceeds from the exercise of stock options of $0.1 million.

During the nine months ended September 30, 2021, net cash provided by financing activities was $78.1 million, consisting primarily of $77.9 million in proceeds from our follow-on offering, net of issuance costs, and $0.3 million from the exercise of stock options.

During the nine months ended September 30, 2020, net cash used in financing activities was $1.0 million, consisting primarily of $1.1 million in payments for deferred offering costs and $0.4 million in payments for Series B-1 redeemable convertible preferred stock issuance costs, partially offset by $0.3 million from the proceeds from the exercise of warrants to purchase shares of Series A convertible preferred stock and $0.2 million proceeds from the exercise of stock options.

Contractual obligations and commitments

We have no material changes to our contractual obligations and commitments as of June 30, 2021 as disclosed in the contractual obligations and commitment section in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 23, 2021.

We have no material changes to our contractual obligations and commitments as of September 30, 2021 as disclosed in the contractual obligations and commitment section in our Annual Report on Form 10-K filed with the SEC on March 23, 2021, except for the amount disclosed in Note 12, commitments and contingencies, in our unaudited condensed consolidated financial statements.

Off-balance sheet arrangements

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For a discussion of our critical accounting estimates, see “Management’s discussion and analysis of financial condition and results of operations” in our annual report on Form 10-K for the year ended December 31, 2020, previously filed with the SEC, the notes to our audited financial statements appearing in the Form 10-K and the notes to the financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

There have been no material changes to these critical accounting policies and estimates through June 30, 2021 from those discussed in our Form 10-K.

There have been no material changes to these critical accounting policies and estimates through September 30, 2021 from those discussed in our Form 10-K.

Recently issued and adopted accounting pronouncements

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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 1. Financial Statements