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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39617

Aligos Therapeutics, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	82-4724808
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

One Corporate Drive, 2nd Floor South San Francisco, California	94080
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (800) 466-6059

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class

     Trading Symbol(s)

     Name of each exchange on which registered

     Common Stock, par value, $0.0001 per share

     ALGS

     The Nasdaq Stock Market LLC
(Nasdaq Capital Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer		☐

Non-accelerated filer	☒	Smaller reporting company		☒

			Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 1, 2025, the registrant had 6,114,801 shares of common stock, $0.0001 par value per share, outstanding, comprised of 5,314,801 shares of voting common stock, $0.0001 par value per share and 800,000 shares of non-voting common stock, $0.0001 par value per share.

Special note regarding forward-looking statements

This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that are in some cases beyond our control and may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:

•

the scope, progress, results and costs of developing our drug candidates or any other future drug candidates, and conducting nonclinical studies and clinical trials;

•

the scope, progress, results and costs related to the research and development of our pipeline;

•

the timing of, and costs involved in, obtaining and maintaining regulatory approval for any of our current or future drug candidates, and any related restrictions or limitations;

•

our expectations regarding the potential market size and size of the potential patient populations for our drug candidates and any future drug candidates, if approved for commercial use;

•

our ability to maintain existing, and establish new, collaborations, licensing or other arrangements and the financial terms of any such agreements;

•

our commercialization, marketing and manufacturing capabilities and expectations;

•

the rate and degree of market acceptance of our drug candidates, as well as the pricing and reimbursement of our drug candidates, if approved;

•

the implementation of our business model and strategic plans for our business, drug candidates and technology, including additional indications for which we may pursue;

•

the scope of protection we are able to establish and maintain for intellectual property rights covering our drug candidates, including the projected term of patent protection;

•

any lawsuits related to our drug candidates or commenced against us;

•

estimates of our expenses, future revenue, capital requirements, our needs for additional financing and our ability to obtain additional capital;

•

developments and projections relating to our competitors and our industry, including competing therapies and procedures;

•

regulatory and legal developments in the United States and foreign countries;

•

the performance of our third-party suppliers and manufacturers;

•

our ability to attract and retain key management, scientific and medical personnel;

•

our expectations regarding our ability to obtain, maintain, enforce and defend our intellectual property protection for our drug candidates; and

•

other risks and uncertainties, including those listed under the caption “Risk Factors.”

These forward-looking statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate and management’s beliefs and assumptions and are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements contained herein for any reason after the date of this report to conform these statements to new information, actual results or changes in our expectations, except as required by applicable law.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

Investors and others should note that we may announce material business and financial information to our investors using our investor relations website, Securities and Exchange Commission (the SEC), filings, webcasts, press releases and conference calls. We use these mediums, including our website, to communicate with the public about our company, our business and other issues. It is possible that the information that we make available may be deemed to be material information. We therefore encourage investors and others interested in our company to review the information that we make available on our website.

Summary of material risks associated with our business

The principal risks and uncertainties affecting our business include the following:

•

We are a clinical-stage biotechnology company with a limited operating history and no products approved for commercial sale. We have incurred significant losses since inception. We expect to incur losses for at least the next several years and may never achieve or maintain profitability for a full fiscal year, which, together with our limited operating history, makes it difficult to assess our future viability.

•

We have never generated revenue from product sales and may never be profitable for a full fiscal year.

•

We will require substantial additional financing to achieve our goals, which may not be available on acceptable terms, or at all. A failure to obtain this necessary capital when needed could force us to delay, limit, reduce or terminate our product development or commercialization efforts.

•

We are early in our development efforts, and our business is dependent on the successful development of our current and future drug candidates. If we are unable to advance our current or future drug candidates through clinical trials, obtain marketing approval and ultimately commercialize any drug candidates we develop, or experience significant delays in doing so, our business will be materially harmed.

•

Our current or future drug candidates may cause undesirable side effects or have other properties when used alone or in combination with other approved products or investigational new drugs that could delay or halt their clinical development, prevent their marketing approval, limit their commercial potential or result in significant negative consequences.

•

We depend on collaborations with third parties for the development of certain of our potential drug candidates, and we may depend on additional collaborations in the future for the development and commercialization of these or other potential candidates. If our collaborations are not successful, we may not be able to capitalize on the market potential of these drug candidates.

•

We intend to develop our current drug candidates, and expect to develop other future drug candidates, in combination with other therapies, which exposes us to additional risks.

•

We face significant competition, and if our competitors develop and market products that are more effective, safer or less expensive than the drug candidates we develop, our commercial opportunities will be negatively impacted.

•

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.

•

Third parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could negatively impact the success of our business.

•

We have entered into licensing and collaboration agreements with third parties. If we fail to comply with our obligations in the agreements under which we license intellectual property rights to or from third parties, or these agreements are terminated, or we otherwise experience disruptions to our business relationships with our licensors or licensees, our competitive position, business, financial condition, results of operations and prospects could be harmed.

•

We are highly dependent on our key personnel, and if we are not successful in attracting, motivating and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.

The summary risk factors described above should be read together with the text of the full risk factors below in the section entitled “Risk Factors” and the other information set forth in this Quarterly Report on Form 10-Q, including our consolidated financial

statements and the related notes, as well as in other documents that we file with the SEC. The risks summarized above or described in full below are not the only risks that we face. Additional risks and uncertainties not precisely known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial condition, results of operations, and future growth prospects.

iii

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	1

Item 1.	Financial Statements (Unaudited)	1

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)	2

	Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit)	3

	Condensed Consolidated Statements of Cash Flows	4

	Notes to Unaudited Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	25

Item 4.	Controls and Procedures	25

PART II.	OTHER INFORMATION	27

Item 1.	Legal Proceedings	27

Item 1A.	Risk Factors	27

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	77

Item 3.	Defaults Upon Senior Securities	77

Item 4.	Mine Safety Disclosures	77

Item 5.	Other Information	77

Item 6.	Exhibits	78

Signatures		80

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ALIGOS THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	March 31, 2025			December 31, 2024

ASSETS
Current assets:
Cash and cash equivalents	$	73,763		$	36,997
Restricted cash		110			110
Short-term investments		64,098			19,942
Other current assets		5,234			5,092
Total current assets		143,205			62,141
Operating lease right-of-use assets		4,648			4,964
Property and equipment, net		2,214			2,362
Other assets		632			627
Total assets	$	150,699		$	70,094

LIABILITIES AND
STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	4,460		$	2,571
Accrued liabilities		11,001			15,557
Operating lease liabilities, current		3,450			3,422
Finance lease liabilities, current		37			36
Deferred revenue, current		-			151
Total current liabilities		18,948			21,737
Operating lease liabilities, net of current portion		4,265			4,795
Finance lease liabilities, net of current portion		122			122
2023 common warrants liability		10,873			72,367
Long term liability		46			46
Total liabilities		34,254			99,067
Commitments and contingencies (Note 10)
Stockholders’ equity (deficit):
Preferred Stock, $0.0001 par value; 10,000,000 shares authorized as of March 31, 2025 and December 31, 2024, respectively; no shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively.		-			-
Common stock, $0.0001 par value; 20,800,000 shares and 20,800,000 shares authorized as of March 31, 2025 and December 31, 2024, respectively; 6,114,801 and 3,864,436 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively.		9			8
Additional paid-in capital		690,909			588,576
Accumulated deficit		(574,920	)		(618,008	)
Accumulated other comprehensive income		447			451
Total stockholders’ equity (deficit)		116,445			(28,973	)
Total liabilities and stockholders’ equity (deficit)	$	150,699		$	70,094

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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands, except share and per share data)


	Three Months Ended March 31,
	2025			2024
Revenue from collaborations	$	—		$	292
Revenue from customers		311			694
Operating expenses:
Research and development		14,502			16,366
General and administrative		5,052			6,666
Total operating expenses		19,554			23,032
Loss from operations		(19,243	)		(22,046	)
Interest and other income, net		880			1,579
Change in fair value of 2023 common warrants		61,494			(14,372	)
Income (loss) before income tax		43,131			(34,839	)
Income tax provision		(43	)		(24	)
Net income (loss)		43,088			(34,863	)
Other comprehensive loss:
Unrealized loss on available-for-sale securities		(4	)		(69	)
Other comprehensive loss		(4	)		(69	)
Comprehensive income (loss)	$	43,084		$	(34,932	)
Net income (loss) per share, basic	$	5.12		$	(5.58	)
Net loss per share, diluted	$	(2.11	)	$	(5.58	)
Weighted average shares of common stock, basic		8,408,481			6,246,113
Weighted average shares of common stock, diluted		8,709,693			6,246,113

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

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited, in thousands, except share and per share data)


	Three Months Ended March 31, 2025
	Common Stock				Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Total Stockholders’
	Shares		Amount		Capital			Deficit			Income			Equity (Deficit)

Balance as of December 31, 2024		3,864,436	$	8	$	588,576		$	(618,008	)	$	451		$	(28,973	)
Issuance of common stock related to RSU vesting		590		-		-			-			-			-
Issuance of common stock upon net exercise of pre-funded warrants		146,468		-		-			-			-			-
Issuance of common stock, pre-funded warrants and common warrants in connection with 2025 PIPE offering		2,103,307		1		105,003			-			-			105,004
Costs related to 2025 PIPE offering		-		-		(3,629	)		-			-			(3,629	)
Stock-based compensation expense related to employee stock awards		-		-		909			-			-			909
Stock-based compensation expense related to employee stock purchases		-		-		50			-			-			50
Other comprehensive loss		-		-		-			-			(4	)		(4	)
Net income		-		-		-			43,088			-			43,088
Balance as of March 31, 2025		6,114,801	$	9	$	690,909		$	(574,920	)	$	447		$	116,445

	Three Months Ended March 31, 2024
	Common Stock				Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Total Stockholders’
	Shares		Amount		Capital			Deficit			Income			Equity


Balance as of December 31, 2023		3,003,855	$	7	$	578,325		$	(486,797	)	$	545		$	92,080
Issuance of common stock upon exercise of pre-funded warrants		22,771		-		-			-			-			-
Issuance of common stock from RSU vesting		97		-		-			-			-			-
Stock-based compensation expense related to employee stock awards		-		-		2,500			-			-			2,500
Stock-based compensation expense related to employee stock purchases		-		-		148			-			-			148
Other comprehensive loss		-		-		-			-			(69	)		(69	)
Net loss		-		-		-			(34,863	)		-			(34,863	)
Balance as of March 31, 2024		3,026,723	$	7	$	580,973		$	(521,660	)	$	476		$	59,796

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Three Months Ended March 31,
	2025			2024
Cash flows from operating activities:
Net income (loss)	$	43,088		$	(34,863	)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion of discount on investments		(137	)		(84	)
Non cash lease expense		316			392
Change in fair value of 2023 common warrants		(61,494	)		14,373
Depreciation expense		194			282
Stock-based compensation including ESPP		959			2,648
Changes in operating assets and liabilities:
Other assets		(147	)		204
Accounts payable		1,730			325
Accrued liabilities		(4,765	)		(4,800	)
Operating lease liabilities		(502	)		(636	)
Deferred revenue		(151	)		(587	)
Net cash and cash equivalents used in operating activities		(20,909	)		(22,746	)
Cash flows from investing activities:
Activities in available-for-sale investments:
Maturities of short-term investments		20,000			-
Purchase of short-term investments		(64,024	)		(88,573	)
Purchases of property and equipment		(43	)		(69	)
Net cash and cash equivalents used in investing activities		(44,067	)		(88,642	)
Cash flows from financing activities:
Proceeds from issuance of common stock, common warrants and pre-funded warrants in connection with PIPE Offering, net of costs		101,742			-
Payments on finance lease		-			(19	)
Net cash and cash equivalents provided by (used in) financing activities		101,742			(19	)
Net increase (decrease) in cash, cash equivalents, and restricted cash		36,766			(111,407	)
Cash, cash equivalents, and restricted cash, beginning of period		37,107			135,774
Cash, cash equivalents, and restricted cash, end of period	$	73,873		$	24,367

Supplemental disclosures of noncash financing and investing activities:
PIPE issuance costs unpaid at period end		369			-

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

ALIGOS THERAPEUTICS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Organization and basis of presentation

Description of business

Aligos Therapeutics, Inc. (Aligos-US) was incorporated in the state of Delaware on February 5, 2018 (inception). On September 10, 2018, the Company formed Aligos Belgium BVBA (Aligos-Belgium), a limited liability company organized under the laws of Belgium. On March 30, 2020, the Company formed as a wholly owned subsidiary, Aligos Australia Pty LTD (Aligos-Australia), a proprietary limited company. On May 18, 2021, the Company formed as a wholly owned subsidiary, Aligos Therapeutics (Shanghai) Co. Ltd. (Aligos-Shanghai) and together with Aligos-US, Aligos-Belgium, and Aligos-Australia being the “Company” or “Aligos”.

Aligos is a clinical-stage biotechnology company developing novel therapeutics to address unmet medical needs in viral and liver diseases, including for chronic hepatitis B virus (HBV) infection, metabolic dysfunction associated steatohepatitis (MASH), and coronaviruses.

The Company is devoting substantially all of its efforts to the research and development of its drug candidates. The Company has not generated any product revenue to date. The Company is also subject to a number of risks similar to other companies in the biotechnology industry, including the uncertainty of success of its nonclinical studies and clinical trials, regulatory approval of drug candidates, uncertainty of market acceptance of products, competition from substitute products and larger companies, the need to obtain additional financing, compliance with government regulations, protection of proprietary technology, dependence on third-parties, product liability, and dependence on key individuals.

Basis of presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and follow the requirements of the Securities and Exchange Commission (SEC) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair statement of the Company’s consolidated financial information. The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the full year or any other future period. The balance sheet as of December 31, 2024 is derived from the audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete consolidated financial statements.

The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC.

Certain amounts previously reported in Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the period ended March 31, 2024 have been reclassified to conform to the current period presentation, with respect to the separate presentation of the change in fair value of 2023 Common Warrants in the amount of $14.4 million, previously included in Interest and other income (expense), net. The reclassification had no impact on our net loss.

Unaudited interim financial information

The accompanying Condensed Consolidated Balance Sheet as of March 31, 2025, the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three months ended March 31, 2025 and 2024, the Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three months ended March 31, 2025 and 2024, and the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024 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 March 31, 2025 and the consolidated results of its operations and cash flows for the three months ended March 31, 2025 and 2024. The consolidated financial data and other information disclosed in these notes related to the three months ended March 31, 2025 and 2024 are unaudited. The consolidated results for the three months ended March 31, 2025 are not necessarily indicative of results to be expected for the year ending December 31, 2025, any other interim periods, or any future year or period.

Liquidity

The Company has incurred losses and negative cash flows from operations in each fiscal year since its inception. As of March 31, 2025 and December 31, 2024, the Company had an accumulated deficit of $574.9 million and $618.0 million, respectively. Management expects to continue to incur additional substantial losses from operations in future fiscal years in the foreseeable future as a result of its research and development activities.

As of March 31, 2025, the Company has cash, cash equivalents and investments of approximately $137.9 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. If the Company is able to gain marketing approval for drug candidates that are being developed, it will require significant additional amounts of cash in order to launch and commercialize such drug candidates. In addition, other unanticipated costs may arise. Because the design and outcome of the Company’s planned and anticipated clinical trials is highly uncertain, the Company cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of any drug candidate the Company may develop.

The Company expects to finance its cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and/or other marketing or distribution arrangements. 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, the Company expects its existing cash, cash equivalents and investments, will enable it 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.

The Company’s ability to raise additional funds depends on financial, economic and other factors, many of which are beyond its control. For example, if there is a disruption of global financial markets, 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. If additional funds are not available to the Company when needed, on terms that are acceptable to the Company, or at all, the Company may be required to: delay, limit, reduce or terminate nonclinical studies, clinical trials or other research and development activities or eliminate one or more of its development programs altogether; or delay, limit, reduce or terminate its efforts to establish manufacturing and sales and marketing capabilities or other activities that may be necessary to commercialize any future approved products, or reduce the Company’s flexibility in developing or maintaining its sales and marketing strategy.

Periodically, the Company maintains deposits in accredited financial institutions in excess of federally insured limits. The Company deposits its cash in financial institutions that it believes have high credit quality and has not experienced any losses on such accounts and does not believe it is exposed to any unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company maintains a dual banking system to limit its credit and liquidity risk.

Summary of significant accounting policies

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities when these values are not readily apparent from other sources. Accounting estimates and judgments are inherently uncertain, and actual results could differ from these estimates.

Reverse Stock Split

On August 19, 2024, the Company effected a 1-for-25 reverse stock split of its authorized, issued and outstanding voting and non-voting common stock. All equity related information including per share amounts for all periods presented in these condensed consolidated financial statements and the notes thereto have been adjusted retroactively, where applicable, to reflect this reverse stock split.

Significant accounting policies and estimates

No material changes were made to the Company’s significant accounting policies disclosed in Note 2. Summary of significant accounting policies, in its Annual Report on Form 10-K, filed with the SEC on March 10, 2025, for the year ended December 31, 2024.

Recently issued accounting standards

From time to time, new accounting pronouncements are issued by FASB that the Company adopts as of the specified effective date. The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has the option to not “opt out” of the extended transition related to complying with new or revised accounting standards. This means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company has the option to adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and can do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company, i.e. after December 31, 2025.

The Company has considered all recent accounting pronouncements issued, but not yet effective, and does not expect any to have a material effect on the Company’s condensed consolidated financial statements other than those discussed in its Annual Report on Form 10-K, filed with the SEC on March 10, 2025, for the year ended December 31, 2024.

Balance sheet components

Property and equipment

The components of property and equipment as of March 31, 2025 and December 31, 2024 were as follows (in thousands):


	March 31, 2025			December 31, 2024
Leasehold improvements	$	6,101		$	6,101
Lab equipment		5,996			5,975
Computer equipment		1,077			1,051
Furniture and office equipment		732			732
Vehicles and equipment		280			281
Asset under construction		4			4
Total, at cost		14,190			14,144
Accumulated depreciation		(11,976	)		(11,782	)
Total, net	$	2,214		$	2,362

Depreciation expense was $0.2 million for the three months ended March 31, 2025 and $0.3 million for the three months ended March 31, 2024. Finance leases are also included in property and equipment as vehicles and lab equipment on the Condensed Consolidated Balance Sheets.

Accrued Liabilities

Accrued liabilities consisted of the following (in thousands):


	March 31,		December 31,
	2025		2024
Accrued R&D expenses	$	3,853	$	5,029
Accrued compensation		3,449		6,387
Accrued payables		1,151		1,471
Other		2,548		2,670
Total	$	11,001	$	15,557

Investments

As of March 31, 2025 and December 31, 2024, amortized cost, gross unrealized gains and losses, and estimated fair values of total fixed-maturity securities were as follows (in thousands):


	March 31, 2025
			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gain		Loss			Fair Value
Available-for-sale securities:
U.S. Treasury bonds	$	64,102	$	-	$	(4	)	$	64,098

          
         December 31, 2024

          
         Gross

         Gross

          
         Amortized

         Unrealized

         Unrealized

         Estimated

          
         Cost

         Gain

         Loss

         Fair Value

         Available-for-sale securities:

U.S. Treasury bonds

19,933

9

-

19,942

Five of our short-term investments are in an unrealized loss position. Changes in fair value are related to changes in market interest rates. The Company expects to collect all contractual principal and interest payments and does not intend to sell the investments before recovery of their amortized cost bases. As of March 31, 2025, all investments had a remaining maturity of less than one year.

The Company recorded interest income of $0.8 million for the three months ended March 31, 2025, and $0.6 million for the three months ended March 31, 2024. The Company recorded accrued interest receivable of $0.1 million for the three months ended March 31, 2025. There was no accrued interest receivable as of December 31, 2024.

Fair value measurement

Certain assets and liabilities of the Company are carried at fair value under U.S. GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The following tables present the fair value of the Company’s financial instruments that are measured or disclosed at fair value on a recurring basis (in thousands):


	Fair Value Measurements as of March 31, 2025
	Level 1		Level 2		Level 3
Assets:
Available for sale securities		-		64,098		-
Liabilities:
2023 common warrants liability		-		-		(10,873	)
	$	-	$	64,098	$	(10,873	)

	Fair Value Measurements as of December 31, 2024
	Level 1		Level 2		Level 3
Assets:
Available for sale securities	$	-	$	19,942	$	-
Liabilities:
2023 common warrants liability		-		-		(72,367	)
	$	-	$	19,942	$	(72,367	)

Common Warrants and Pre-Funded Warrants

2025 PIPE

In February 2025, the Company closed its private investment in public equity (PIPE) offering (the 2025 Private Placement) and entered into a securities purchase agreement with certain investors (the 2025 Securities Purchase Agreement) that resulted in gross

proceeds of approximately $105.0 million. In the 2025 Private Placement, the Company issued (i) 2,103,307 shares of the Company’s common stock (the Common Stock), par value $0.0001 per share, consisting of 1,427,000 shares of voting common stock and 676,307 shares of non-voting common stock, (ii) pre‑funded warrants (the 2025 Pre-Funded Warrants) to purchase up to 1,922,511 shares of Common Stock and (iii) accompanying common warrants (the 2025 Common Warrants) to purchase up to 2,012,909 shares of Common Stock. The purchase price per share was $26.0825, or $26.0824 per 2025 Pre-Funded Warrant, which represents the purchase price per share less the $0.0001 per share exercise price of each Pre-Funded Warrant. Each 2025 Pre-Funded Warrant is immediately exercisable and does not expire. Each 2025 Common Warrant has an exercise price of $26.02, is immediately exercisable and will expire in February 2032. The Company received net proceeds of approximately $101.7 million, after deducting the placement agent fees and expenses and offering costs.

The Company accounts for the 2025 Common Warrants and 2025 Pre-Funded Warrants in Stockholders Equity (Deficit) on the Condensed Consolidated Balance Sheet and determined the outstanding 2025 Common Warrants and 2025 Pre-Funded Warrants are freestanding derivative instruments. The Company classified the 2025 Common Warrants and 2025 Pre-Funded Warrants as equity because they met the equity scope exception under ASC 815, Derivatives and Hedging, based on the terms in the 2025 Securities Purchase Agreement.

2023 PIPE

In October 2023, the Company completed a PIPE offering and entered into a securities purchase agreement (the 2023 Securities Purchase Agreement) with certain institutional and accredited investors, pursuant to which the Company agreed to offer, issue and sell to these investors 1,257,168 shares of Common Stock, par value $0.0001 per share, pre-funded warrants to purchase an aggregate of 3,242,018 shares of Common Stock (the 2023 Pre-Funded Warrants), and warrants to purchase an aggregate of 2,249,680 shares of Common Stock (the 2023 Common Warrants). Each 2023 Pre-Funded Warrant has an exercise price of $0.0001 per share of common stock, was immediately exercisable and is exercisable until exercised in full. Each 2023 Common Warrant has an exercise price of $18.92 per share of common stock, is immediately exercisable and will expire on October 25, 2030. The closing of the offering occurred on October 25, 2023. The Company received gross proceeds of $92.1 million, and after deducting the placement agent fees and expenses and offering costs, net proceeds were $86.2 million.

The following table summarizes information about shares issuable under the 2023 and 2025 Pre-Funded Warrants outstanding at December 31, 2024 and March 31, 2025:


Pre-funded warrant shares outstanding	March 31, 2025			December 31, 2024
Outstanding at the beginning of the year		2,441,405			3,242,018
Issued		1,922,511			-
Exercised		(146,484	)		(800,613	)
Outstanding at the end of the period		4,217,432			2,441,405
Exercisable at the end of the period		4,217,432			2,441,405

The following table sets forth a summary of the activities of the Company’s 2023 Common Warrant liability, which represents a recurring measurement that is classified with Level 3 of the fair value hierarchy wherein the fair value is estimated using significant unobservable inputs (in thousands):


	March 31, 2025			December 31, 2024
Beginning liability	$	72,367		$	27,596
Common warrants issued		-			-
Common warrants exercised		-			(1,361	)
Change in fair value		(61,494	)		46,132
Ending liability	$	10,873		$	72,367

The fair value of the 2023 Common Warrants was measured using the Black Scholes option pricing model and will be remeasured each reporting period, and the change in fair value will be recorded in earnings. The assumptions that the Company used to determine the fair value at the reporting date were as follows:


	March 31, 2025			December 31, 2024
Expected term (in years)		5.58			5.83
Risk-free interest rate		4.00	%		4.43	%
Dividend yield		-			-
Volatility		87.21	%		84.62	%

The following table summarizes information about shares issuable under the 2023 and 2025 Common Warrants outstanding at March 31, 2025:


Common warrant shares outstanding	March 31, 2025		December 31, 2024
Outstanding at the beginning of the year		2,200,858		2,249,680
Issued		2,012,909		-
Exercised		-		(48,822	)
Outstanding at the end of the period		4,213,767		2,200,858
Exercisable at the end of the period		4,213,767		2,200,858

Equity Incentive Awards and Stock-based Compensation

Stock options

Stock option activity during the three months ended March 31, 2025 is as follows:


	Shares subject to options			Weighted- average exercise price			Weighted- average remaining contractual term (years)		Aggregate Intrinsic Value (in thousands)

Outstanding as of December 31, 2024		627,685		$	35.93			8.50	$	10,611
Granted		410,937			16.81			—		—
Exercised		—			—			—		—
Forfeited or Expired		(28,255	)		(111.02	)		—		—
Outstanding as of March 31, 2025		1,010,367			26.05			9.04	$	88
Options vested and expected to vest as of March 31, 2025		1,010,367			26.05			9.04	$	88
Options vested and exercisable as of March 31, 2025		251,095			52.78			7.54	$	-

Restricted stock units

Restricted stock unit activity during the three months ended March 31, 2025 is as follows:


	Number of Awards			Weighted- Average Grant Date Fair Value			Aggregate Fair Value (in thousands)

Issued and unvested as of December 31, 2024		4,729		$	15.44		$	73
Granted		13,125			16.87			221
Vested and released		(590	)		(16.47	)		(10	)
Issued and unvested as of March 31, 2025		17,264			16.49		$	284

Stock-based compensation expense was allocated as follows for the three months ended March 31, 2025 and 2024 (in thousands):


	Three Months Ended
	March 31,
	2025		2024
Research and development	$	543	$	1,439
General and administrative		416		1,209
Total	$	959	$	2,648

Revenue from contracts with customers

Agreement with Amoytop

In May 2023, the Company and Amoytop Biotech Co., Ltd (Amoytop) entered into an exclusive Development Agreement and Research Collaboration Agreement with a focus on nucleic acid technology for HBV treatment, with the Company granting to Amoytop an exclusive option to enter into an exclusive license to develop and commercialize such compounds. Under the terms of the agreement, the Company received an upfront payment of $7.0 million, less withholding taxes of $1.1 million from Amoytop. With respect to the agreement, the Company will be eligible for up to $109.0 million in development and commercialization milestones as well as tiered royalties on net sales. These potential payments consist of (i) potential development milestones (such as for the commencement of a Good Laboratory Practice toxicology study for a collaboration compound, approval of IND by regulatory authority, initiation of Phase 2 and 3 clinical trials, and regulatory approval of a licensed product), and (ii) sales-based milestones.

In May 2024, the Company and Amoytop entered into a nine-month extension to the Development Agreement and Research Collaboration Agreement, covering work performed through January 2025. Under the terms of the agreement, the Company received an upfront payment of $1.5 million which was recognized from the second quarter of 2024 through the first quarter of 2025.

The Company determined that the Amoytop agreement falls within the scope of Accounting Standards Codification (ASC) 606. The agreement did not fall under the ASC 808 guidance due to Amoytop and the Company not being joint active participants, and both parties not having significant risks and rewards. Management of the Company determined that there were three performance obligations for the agreement given the deliverables are distinct. The Company evaluated the standalone selling price for each obligation based on available data for similar arrangements. The Company evaluated the performance obligations and determined the provision of R&D services for the collaboration compound performance obligation will be satisfied over time, the research license including data and know-how has been satisfied, and the provision of materials will be satisfied upon delivery. Given the nature of the arrangement, the Company believes that the satisfaction of its performance obligations is best measured by the progress of its efforts as it relates to the performance of the R&D services. As such, the Company has used an input method based on costs incurred to recognize revenue associated with the upfront payments, and the Company recognizes revenue over time based on the costs incurred. The effect of any updates to the estimated overall costs are recorded as a change in estimate. In addition, variable consideration (e.g., milestone payments) were evaluated based on the Company’s analysis that the probability of achieving any of the milestone payments is remote, and therefore determined to be constrained and excluded from the transaction price.

During the three months ended March 31, 2025 and 2024, the Company recognized $0.3 million and $0.7 million, respectively, in revenue from customers related to upfront payments. During the three months ended March 31, 2025 and 2024, the Company recognized no revenue from customers related to milestone payments. The unrecognized portion of the upfront payments received during the three months ended March 31, 2024 is recorded on the Condensed Consolidated Balance Sheets as “Deferred revenue from customers”.

Changes in deferred revenue balances arose as a result of the Company recognizing the following revenue from customers during the periods below (in thousands):


	As of March 31,
	2025			2024

Deferred revenue from customers as of January 1	$	151		$	1,224
Consideration received in the period		160			191
Revenue from customers recognized in the period		(311	)		(694	)
Deferred revenue from customers as of March 31	-			$	721

Agreement with ADCT

The Company determined that the ADC Therapeutics (ADCT) agreement falls within the scope of ASC 606, Revenue from Contracts with Customers (ASC 606). The agreement did not fall under the ASC 808 guidance due to ADCT and the Company not being joint active participants, nor both parties having significant risks and rewards. Management of the Company determined that there was one performance obligation for the agreements given the deliverables are not distinct. The Company evaluated the performance obligation and determined the performance obligations are satisfied over time. Given the nature of the arrangement, the Company believes that the satisfaction of its performance obligations is best measured by the progress of its efforts. As such, the Company has used an input method based on costs incurred to recognize revenue associated with the upfront payments, and the Company recognizes revenue over time based on the costs incurred. The effect of any updates to the estimated overall costs are recorded as a change in estimate. In addition, variable consideration (e.g., milestone payments) were evaluated based on the Company’s analysis that the possibility of achieving any of the milestone payments is remote, and therefore determined to be constrained and excluded from the transaction price. Similarly, the Company accounts for the future royalties under the sales-based royalty exception in ASC 606-10-55-65 through 55-65B therefore they are not considered in the transaction price and expected to be recognized when future sales occur since that is expected to occur after the performance obligation has been fully satisfied.

In-licensing agreements

Agreement with Emory University (Emory)

In June 2018, the Company entered into a license agreement with Emory (the Emory License Agreement), pursuant to which Emory granted the Company a worldwide, sublicensable license under certain of its intellectual property rights to make, have made, develop, use, offer to sell, sell, import and export products containing certain compounds relating to Emory’s hepatitis B virus capsid assembly modulator technology, for all therapeutic and prophylactic uses. Such license is initially exclusive with respect to specified licensed patents owned by Emory and non-exclusive with respect to certain of Emory’s specified know-how. In June 2022, the license to such patents became non-exclusive with respect to all fields except for the treatment and prevention of HBV; however, the Company may select up to six compounds which will maintain exclusivity with respect to all therapeutic and prophylactic uses. With respect to all other compounds that are enabled by the licensed patents, those which are jointly invented by the Company and Emory or inventors in the Schinazi laboratory, or which are disclosed in a specified licensed patent, are licensed to the Company exclusively including as to Emory; whereas all other such compounds are licensed to the Company non-exclusively. Under the terms of the Emory License Agreement, the Company is obligated to use commercially reasonable efforts to bring licensed products to market in accordance with a mutually agreed upon development plan. 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.

In June 2020, the Company amended the license agreement with Emory. Pursuant to the amended license agreement, Emory granted the Company additional patent rights to certain compounds targeting the treatment or prevention of HBV. As consideration for the additional rights, the Company made a one-time, non-refundable payment to Emory in the amount of $0.2 million, with an additional obligation to pay up to a maximum of $35,000. On the same date, the Company entered into a collaboration agreement with Emory, with the initial research plan pertaining to the synthesis and evaluation of the compounds licensed through the additional patent rights granted in the amended license agreement. The research plan was set to terminate one year from the effective date of June 2020 but the Company exercised its option to extend it for a second year. In June 2022, the research plan terminated.

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 three months ended March 31, 2025 and 2024, the Company had no 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. With respect to licensed products containing any of a specified subset of the licensed compounds, such royalties range from a mid-single digit to a high-single digit percentage rate. With respect to licensed products which do not contain such compounds, the royalties range from a low-single digit to a mid-single digit rate.

During the three months ended March 31, 2025 and 2024, the Company made no payments associated with royalties and recognized no expense or accruals.

Agreement with Luxna Biotech Co., Ltd. (Luxna)

On December 19, 2018, the Company entered into a license agreement with Luxna, pursuant to which Luxna granted the Company an exclusive, worldwide, sublicensable license under certain of Luxna’s intellectual property rights to research, develop make, have made and commercialize for all therapeutic and prophylactic uses, (i) products containing oligonucleotides targeting the hepatitis B virus genome, (ii) products containing certain oligonucleotides targeting up to three genes which contribute to MASH, which the Company may select at any time during the first eight years of the term, to the extent not licensed to a third party, and (iii)

products containing oligonucleotides targeting up to three genes which contribute to hepatocellular carcinoma, which the Company may select at any time during the first three years of the term, which expired in December 2021. As consideration for this agreement, the Company paid an upfront license fee of $0.6 million.

In April 2020, the Company amended the license agreement with Luxna. Pursuant to the amended license agreement, Luxna granted the Company an exclusive, worldwide license under the licensed patents to research, develop, make, have made and commercialize products containing oligonucleotides targeting three families of viruses: Orthomyxoviridae, Paramyxoviridae, and Coronaviridae (a family which includes SARS-CoV-2). As consideration for the amended license agreement, the Company paid Luxna a one-time non-refundable fee of $0.2 million in April 2020.

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 months ended March 31, 2025 and 2024, 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 months ended March 31, 2025 and 2024, the Company made no payments associated with royalties.

Agreement with Katholieke Universiteit Leuven (KU Leuven)

On June 25, 2020, the Company entered into a Research, Licensing and Commercialization Agreement (KU Leuven Agreement) with KU Leuven, under which the Company is collaborating with KU Leuven’s Rega Institute for Medical Research, as well as its Centre for Drug Design and Discovery, to research and develop potential protease inhibitors for the treatment, diagnosis or prevention of coronaviruses, including of SARS-CoV-2. Unless terminated earlier by either party in accordance with provisions in the agreement, the collaboration period terminated at the earlier of completion of all collaboration activities or 2.5 years. In connection with the KU Leuven Agreement, KU Leuven and the Company granted each other exclusive cross-licenses to use certain know-how and existing patents of the other party as well as certain joint know-how and joint patents to carry out research and development collaboration activities during the collaboration period. As of December 2022, the original collaboration period expired. An amendment to the agreement was agreed in July 2023 to include a new collaboration plan. KU Leuven granted to the Company an exclusive (including as to KU Leuven), worldwide license under certain of KU Leuven’s know-how and existing patents, and certain joint patents and joint know-how, to manufacture and commercialize the licensed products for the treatment, diagnosis or detection of viral infections in humans. KU Leuven reserved the right to use all KU Leuven knowhow, existing KU Leuven patents, joint patents and joint know-how for academic and non-commercial research and teaching purposes. As consideration for this license, the Company is obligated to make payments to KU Leuven, in aggregate, totaling up to but no more than $30.0 million upon the achievement of certain commercial sales milestones. For each licensed product developed through KU Leuven and the Company’s collaborative effort, the Company is obligated to make payments to KU Leuven, in aggregate, totaling up to $32.0 million upon the achievement of certain development and regulatory milestones. The Company is also required to pay KU Leuven a low-to-mid-single digit royalty percentage, subject to certain adjustments, on net sales of applicable products, if any. The Company is also required to pay a revenue share to KU Leuven should the program be partnered with an external party. 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 months ended March 31, 2025, the Company made no payments of royalties or milestones.

10.

Commitments and contingencies

From time to time, the Company may have certain contingent liabilities, including legal matters that arise in the ordinary course of its business activities. 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. Contingent liabilities requiring accrual were appropriately accrued as of March 31, 2025 and December 31, 2024. 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 March 31, 2025, the Company had no material non-cancellable purchase commitments.

11.

Income taxes

The Company recorded income tax provision of $43.0 thousand for the three months ended March 31, 2025, primarily related to the Company's international operations.

The Company has a history of losses in prior fiscal years and projects losses for the full year 2025. The Company continues to maintain a full valuation allowance on its net deferred tax assets.

12.

Net income (loss) per share

The following table summarizes the computation of basic and diluted net income (loss) per share of the Company (in thousands, except share and per share data):


	Three Months Ended
	March 31,
	2025			2024

Net income (loss), as reported	$	43,088		$	(34,863	)
Less: Change in fair value of the 2023 common warrants		(61,494	)		-
Diluted net loss	$	(18,406	)	$	(34,863	)
Weighted average shares outstanding, basic		8,408,481			6,246,113
Add: Weighted average shares issuable upon exercise of 2023 common warrants		301,212			-
Weighted average shares outstanding, diluted		8,709,693			6,246,113
Net income (loss) per share - basic	$	5.12		$	(5.58	)
Net loss per share - diluted	$	(2.11	)	$	(5.58	)

The Company’s potentially dilutive securities includes options to purchase common stock, unvested restricted stock and warrants to purchase common stock. For the three months ended March 31, 2025, the 2023 common warrants were dilutive and included in the total weighted average shares outstanding, diluted. For the three months ended March 31, 2024, all potentially dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, for the three months ended March 31, 2024, the weighted-average number of shares outstanding used to calculate both basic and diluted net loss per share is the same.

The Company excluded the following potential shares of Common Stock, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share for the periods indicated because including them would have had an anti-dilutive effect:


	Three Months Ended
	March 31,
	2025		2024
Options to purchase common stock		1,010,367		404,902
Unvested restricted stock		17,264		6,183
Warrants to purchase common stock		2,012,909		2,249,680
		3,040,540		2,660,765

13. Segment information

The chief operating decision maker (CODM), who is defined as the Company's Chairman, President and Chief Executive Officer, assesses performance for the Company’s single reportable segment and decides how to allocate resources based on the Company’s total operating expenses as reported on the Consolidated Statements of Operations and Comprehensive Income (Loss). The CODM’s review of total operating expenses at the consolidated level is used to monitor the Company’s spending as well as budget versus actual results. As part of the CODM’s review of the segment’s performance, the CODM reviews the Company’s operating expense information. This includes research and development costs as well as general and administrative expenses. Based upon the operating expense information, the CODM can reconcile to net income (loss) as reported on the Consolidated Statements of Operations and Comprehensive Income (Loss), shown in the table below. The significant expense categories are consistent with those presented on the face of the consolidated financial statements, except for the breakout of the early-stage research and development from the late-stage research and development. The CODM does not receive or use any other segmented or disaggregated financial or any significant expense information for decision making purposes.

The following table provides segment revenues, significant segment expenses and reported segment net income for the three months ended March 31, 2025 and 2024 (in thousands):


	Three months ended March 31,
	2025			2024
Revenue from Collaborations	$	-		$	292
Revenue from Customers		311			694
Less:
Early-stage research and development(1)		(842	)		(940	)
Late-stage research and development(2)		(13,660	)		(15,426	)
General & Administrative		(5,052	)		(6,666	)
Total operating expenses		(19,554	)		(23,032	)
Interest and other income, net		880			1,579
Change in fair value of 2023 common warrants		61,494			(14,372	)
Income (loss) before income tax		43,131			(34,839	)
Income tax provision		(43	)		(24	)
Segment and consolidated net income (loss)	$	43,088		$	(34,863	)

(1) Early-stage research and development includes costs incurred from Discovery programs.

(2) Late-stage research and development includes costs incurred from Phase 1 and Phase 2 clinical trial programs.

The Company’s reportable segment primarily generates revenue through its license and collaboration agreements (see Notes 8 and 9).

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read together with our condensed consolidated financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results could differ materially from these forward-looking statements as a result of many factors, including those discussed in “Risk Factors” and “Special note regarding forward-looking statements.”

Overview

We are a clinical-stage biotechnology company focused on developing novel therapeutics to address unmet medical needs in liver diseases and viral infections, including in the areas of chronic hepatitis B virus (HBV) infection, metabolic dysfunction-associated steatohepatitis (MASH), and coronavirus infections (e.g., SARS‑CoV‑2, SARS‑CoV, MERS‑CoV, and other related infections). The Aligos team has a demonstrated track record of success in drug development and medicinal chemistry in liver and viral diseases, resulting in three potential best‑in‑class drug candidates.

Our pipeline of drug candidates includes ALG‑000184 for chronic HBV infection, ALG‑055009 for MASH, ALG‑097558 for coronavirus infections, and a portfolio of preclinical programs. ALG‑000184 is our potential best‑/first‑in‑class Capsid Assembly Modulator (CAM‑E) for chronic HBV infection with enhanced pharmacologic properties vs. competitor CAM‑E drugs and has demonstrated greater HBV DNA suppression compared to the standard of care, nucleos(t)ide analogs (NAs), as well as multi-log10 reductions in viral antigens in Phase 1 clinical studies conducted to date. ALG‑055009 is our potential best‑in‑class thyroid hormone receptor beta (THR‑β) agonist for MASH with enhanced pharmacologic properties vs. competitor THR-β agonists. Phase 2a topline data demonstrated that ALG‑055009 dose groups met the primary endpoint with statistically significant reductions in liver fat at Week 12 as measured by MRI-PDFF. ALG‑097558 is our potential best‑in‑class small molecule pan-coronavirus 3CL PI, which has been at least 3-fold more potent in cell-based assays of coronavirus infection than other approved CoV PIs and we believe can be dosed twice daily without the requirement for ritonavir co-dosing based on Phase 1 clinical studies conducted to date.

ALG‑000184: Potential best‑in‑class small molecule CAM‑E for chronic hepatitis B virus infection

Our primary area of focus seeks to enhance the viral suppression and rate of functional cure for chronic HBV infection, which often results in life-threatening conditions such as cirrhosis, end-stage liver disease, and the most common form of liver cancer, hepatocellular carcinoma (HCC). To achieve this, we are developing a portfolio of differentiated chronic HBV infection drug candidates, including a small molecule CAM that results in the production of empty viral capsids.

In 2018, we in‑licensed a lead drug candidate (GLP‑26) and the associated IP for a CAM‑E from the laboratory of Professor Raymond Schinazi at Emory University. Our scientists optimized this lead drug candidate to discover the highly potent CAM‑E, ALG‑001075, which was further optimized to the prodrug ALG‑000184. ALG‑000184 has superior DMPK properties with enhanced absorption and high liver uptake, with a ~2-300-fold improvement in in vitro potency compared to other known CAMs. CAM‑Es are a class of small molecule antiviral agents that accelerate HBV capsid assembly and inhibit pgRNA encapsidation (1st MOA), resulting in empty viral capsids and lower circulating HBV DNA and RNA levels. CAM‑Es are also believed to regulate the establishment of cccDNA (2nd MOA), a major factor for the persistence of HBV infection which can be assessed by circulating HBV antigen levels (HBsAg, HBcrAg, and HBeAg). In clinical trials, competitor CAM‑Es have shown reductions in HBV DNA and RNA (1st MOA), but have rarely or inconsistently shown reductions in HBV antigens (2nd MOA). There have also been observations of the emergence of viral CAM-E drug resistance with competitor compounds.

A multi-part Phase 1 study is ongoing, with the completed evaluation of the safety, tolerability, and pharmacokinetic profile of ALG-000184 in HVs. Additionally, a dose-ranging phase assessing the safety, pharmacokinetics, and antiviral activity of 10-300 mg doses of ALG-000184 administered over 28 days in untreated HBeAg+/- subjects with chronic HBV infection has also been completed. In these study phases, ALG‑000184 was found to be well tolerated with a favorable PK profile and demonstrated potentially best-in-class multi-log10HBV DNA and RNA reductions at all doses tested, as well as HBV surface antigen (HBsAg) reductions in a subset of HBeAg+ subjects receiving 100 mg or 300 mg of ALG-000184 (Hou et al, AASLD 2022). Based on the favorable profile observed with dosing up to 300 mg of ALG-000184 for 28 days, additional Phase 1 cohorts are currently underway to evaluate the risk-benefit profile of ALG-000184 at doses of 300 mg, with or without entecavir (ETV) therapy, for up to 96 weeks in HBeAg+and HBeAg- subjects with chronic HBV infection. Preliminary data from several of these cohorts (Agarwal et al., EASL 2024; Yuen et al., AASLD 2024, APASL 2025) have been presented, showing that ALG‑000184, administered for up to 96 weeks, was well tolerated, exhibited a favorable PK profile, and demonstrated potentially best-in-class antiviral activity.

Data from up to 84 weeks following an oral daily dose of 300 mg ALG‑000184 monotherapy in HBeAg+ subjects demonstrated sustained HBV DNA suppression (<LLOQ <10 IU/mL, target detected or target not detected) in 6/10 (60%) subjects with chronic HBV infection at week 48 and 9/9 (100%) at week 84. Data from the 300 mg ALG‑000184 HBeAg- monotherapy cohort demonstrated sustained HBV DNA suppression in all 11/11 (100%) subjects by Week 24. In addition, 10/11 (91%) HBeAg- subjects

achieved HBV DNA below the lower limit of detection (LLOQ <4.29 IU/mL, target not detected) at week 48. Importantly, no viral breakthrough was observed in any subject, and no known CAM resistant mutations were identified.

Compared to Phase 3 studies with the current standard of care nucleos(t)ide analogs (NAs), tenofovir disoproxil fumarate (TDF) and tenofovir alafenamide (TAF) (Buti et al., Lancet Gastro, 2016; Chen et al., Lancet Gastro 2016), these Phase 1 data to date suggest that ALG‑000184 treatment may be superior to NAs in HBeAg+/- subjects in achieving HBV DNA levels < LLOQ after 48 weeks on treatment, which is the approvable endpoint for chronic suppressive therapy in chronic HBV infection (Food and Drug Administration (FDA) Guidance, Chronic Hepatitis B Virus Infection: Developing Drugs for Treatment Guidance for Industry, April 2022 – Section III.B.1.a). We have received affirmative feedback from the FDA supporting chronic suppressive therapy with ALG-000184, along with the Committee for Medicinal Products for Human Use (CHMP; EU) and the National Medical Products Administration (NMPA; China). Subsequent clinical studies, including a Phase 2 study, will be conducted to show superiority to standard of care NA treatment (HBV DNA levels < LLOQ, target detected or target not detected) after 48 weeks of treatment. Furthermore, when combined with other mechanisms of action, as well as other candidates in our chronic HBV infection portfolio, ALG-000184 dosing regimens have the potential to contribute to achieving higher rates of functional cure than with currently approved agents.

Dosing of HBeAg+and HBeAg- subjects with ALG‑000184 in Phase 1 was recently completed and 96-week safety, PK, and antiviral activity data will be presented at upcoming scientific conferences. In October 2024, Aligos announced that the FDA cleared the Company’s investigational new drug application (IND) for a Phase 1 drug-drug interaction study.

The Phase 2 B-SUPREME study will be a randomized, double-blind, active-controlled multicenter study evaluating the safety and efficacy of ALG-000184 compared with tenofovir disoproxil fumarate in approximately 200 currently untreated HBeAg+ and HBeAg- adult subjects with chronic HBV infection for 48 weeks. The primary endpoint in the HBeAg+ arm will be HBV DNA <LLOQ (10 IU/mL, target detected (TD) or target not detected (TND)) and the primary endpoint in the HBeAg- arm will be HBV DNA <LLOQ (10 IU/mL target not detected (TND)). The study will also evaluate safety, pharmacokinetics, and other secondary and exploratory biomarkers, including reductions in HBV antigens and other markers of HBV infection. The Phase 2 study is expected to begin in mid-2025 with interim data projected in 2026 and topline data anticipated in 2027.

ALG‑055009: Potential best-in-class small molecule THR-β agonist for metabolic dysfunction-associated steatohepatitis

MASH is a complex, chronic liver disease which is a leading cause of liver-related morbidity including cirrhosis, hepatocellular carcinoma, liver transplant, and end-stage liver disease. In 2024, the FDA approved resmetirom, a THR-β agonist, as the first drug for the treatment of MASH. However, additional agents in this class are needed to address remaining unmet needs, including the potential for improved efficacy and a more favorable risk-benefit profile. To achieve this, ALG-055009 has been purposefully designed to exhibit significantly greater potency (approximately 50-fold higher compared to resmetirom in head-to-head in vitro studies) and enhanced β selectivity, along with optimized pharmacologic properties to deliver an improved PK profile. We believe these advantages position ALG‑055009 as a strong candidate to become a best-in-class THR-β agonist.

A first-in-human Phase 1 study of ALG‑055009 in HVs (oral single ascending doses (SAD)) and in subjects with hyperlipidemia (14 oral daily multiple ascending doses (MAD)) has been completed. Clinical data after single doses up to 4 mg and multiple doses up to 1 mg showed that ALG‑055009 was well tolerated, had dose proportional PK with low intersubject variability, and demonstrated expected thyromimetic effects (i.e., generally dose proportional increases in sex hormone binding globulin and decreases in various atherogenic lipids and thyroid hormones without any clinical evidence of thyroid dysfunction). We also evaluated relative bioavailability where we showed the soft gelatin capsules used in the Phase 2a study described below delivered similar exposures compared to the solution formulation used in the SAD/MAD parts of the Phase 1 study; we observed low intersubject PK variability and there was no evidence of a meaningful food effect.

Based on these promising Phase 1 data, we initiated the Phase 2a HERALD study (NCT06342947) at sites across the United States. The study was a 12-week randomized, double-blind, placebo-controlled trial evaluating 4 doses (0.3 mg, 0.5 mg, 0.7 mg, and 0.9 mg) of ALG-055009 vs. placebo in 102 subjects with presumed MASH and liver fibrosis at stages 1-3 (F1-F3). The primary endpoint of this study was percent relative change in liver fat content by MRI-PDFF at Week 12. This study also evaluated the safety and PK of ALG-055009 treatment and its effect on multiple other efficacy biomarkers, including other non-invasive tests previously shown to be impacted by treatment with THR‑β agonists. We announced positive topline data from this study in 2024, demonstrating that ALG-055009 dose groups were well-tolerated and met the primary endpoint. Specifically, doses of 0.5 mg to 0.9 mg ALG-055009 demonstrated statistically significant reductions in liver fat at Week 12, with placebo-adjusted median relative reductions up to 46.2% as measured by MRI-PDFF. Up to 70% of subjects achieved ≥30% relative reduction in liver fat compared to baseline. Eighteen subjects who were on stable GLP-1 agonist therapy qualified for enrollment in the study, with liver fat content meeting the inclusion criteria of ≥10% at baseline as measured by MRI-PDFF. Notably, 11 of 14 subjects on stable GLP-1 agonists treated with ALG-055009 had liver fat decreases, whereas 4 of 4 subjects on stable GLP-1 agonists treated with placebo had increases in liver fat over the 12-week dosing period (Loomba et al, AASLD 2025).

In the Phase 2a study, ALG‑055009 demonstrated a favorable tolerability profile with no evidence of clinical hyper/hypothyroidism. Incidence of gastrointestinal-related treatment emergent adverse events were similar in ALG‑055009 dose groups compared to placebo. Specifically, similar rates of diarrhea were observed in ALG‑055009 dose groups compared to placebo,

with no dose-response. Significant reductions in atherogenic lipids, including LDL-C, lipoprotein (a), and apolipoprotein B, were also observed (Loomba et al, AASLD 2025).

Phase 2b enabling activities are underway, with expected completion in the middle of 2025. We are also assessing potential Phase 2b clinical trial study designs with key opinion leaders. We are evaluating a variety of options to fund continued development, including potential out-licensing.

ALG‑097558: Potential best-in-class small molecule ritonavir-free protease inhibitor for pan-coronavirus

Another area of focus is to develop drug candidates with pan-coronavirus antiviral activity, including against Severe Acute Respiratory Syndrome coronavirus 2 (SARS-CoV-2), the virus responsible for COVID-19. In this area of focus, we are exploring small molecule coronavirus 3CL protease inhibitors (PIs) in collaboration with the Rega Institute at Katholieke Universiteit Leuven (KU Leuven), the Center for Innovation and Stimulation of Drug Discovery (CISTIM) and the Centre for Drug Design and Discovery (CD3). This collaboration led to the discovery of ALG‑097558 which has completed a Phase 1 first-in-human evaluation in healthy volunteers and advanced into a clinical trial evaluating high-risk COVID-19 patients.

ALG‑097558 has been shown to be at least 3-fold more potent than nirmatrelvir and other PIs in clinical development against a panel of SARS-CoV-2 variants (including Omicron). It also has demonstrated broad pan‑coronavirus activity, including against SARS-CoV-1 and MERS-CoV. In the first-in-human Phase 1 clinical study, single doses up to 2000 mg and multiple doses up to 800 mg Q12H for 7 days were well tolerated with an acceptable PK profile that indicates ritonavir boosting is not required. Furthermore, the absence of a clinically relevant DDI with midazolam, suggests that ALG‑097558 can be co-administered with CYP3A4 substrates (NCT05840952). Based on these Phase 1 data (Wilkes et al., RespiDart, 2024), the projected efficacious dose range to treat SARS-CoV-2 is 200-600 mg ALG‑097558 Q12 x 5 days, without the need for ritonavir coadministration.

ALG‑097558 began three additional clinical trials in 2024. AGILE University of Liverpool, a UK government supported platform trial (MRC and Wellcome Trust funding), is sponsoring and performing a study in high‑risk COVID‑19 patients evaluating ALG‑097558 as monotherapy or in combination with remdesivir (NCT04746183). Additionally, clinical studies evaluating PK in special populations (renal and hepatic impairment subjects; NIAID contract) are on-going (NCT06698549). NIAID is also sponsoring a drug‑drug interaction and relative bioavailability study in healthy volunteers expected to start dosing in the second quarter of 2025 (NCT06568861). We expect that future development of ALG‑097558, including ongoing Phase 2 enabling activities, will be funded by external sources, including public funding sources as described below.

Preclinical activities for our coronavirus program were partially funded through a grant from the National Institutes of Health (NIH) and the National Institute of Allergy and Infectious Diseases (NIAID) Antiviral Drug Discovery (AViDD) Centers for Pathogens of Pandemic Concern program through the Metropolitan AntiViral Drug Accelerator (MAVDA) consortium. Specific clinical and nonclinical studies for the ALG-097558 program and the follow up compound, are now also being funded with federal funds from the NIAID, NIH, Department of Health and Human Services, under Contract No. 75N93023C00052. We filed an IND in the third quarter of 2024 and clinical studies in special populations were initiated in the second half of 2024 as part of this NIAID contract. We expect to receive approximately $13.8 million in funds across these two NIH awards and contracts to support these activities. To date, these funds have not been impacted by any changes at the NIH or NIAID. We are also seeking additional external funding (e.g., from governmental agencies) to support future studies as we advance ALG‑097558 for the treatment of COVID‑19 and future coronavirus pandemics.

Components of our results of operations

Revenue

Our revenues consist of the following:

Collaboration revenue included recognition of our upfront payments pursuant to the Merck Original Agreement and First Amendment that were terminated in prior years. In order to record collaboration revenue, we utilized an input method to recognize revenue over time as costs were incurred.

Contract revenue includes recognition of revenue generated from research and development services under third-party contracts with customers. In order to record contract revenue, we utilize an input method to recognize revenue over time as costs are incurred.

Operating expenses

Our operating expenses since inception have consisted solely of research and development costs and general and administrative costs.

Research and development expenses

We expect our expenses to increase substantially in connection with our ongoing clinical development activities related to our chronic HBV infection drug candidate ALG‑000184. We rely substantially on third parties to conduct our discovery activities, nonclinical studies, clinical trials and manufacturing. We estimate research and development expenses based on estimates of services performed, and rely on third party contractors and vendors to provide us with timely and accurate estimates of expenses of services performed to assist us in these estimates. A portion of our research and development expenses are based on contractual milestones. Research and development costs consist primarily of costs incurred for the identification and development of our drug candidates through our technology platforms, which include:

•

salaries, benefits and other employee-related costs, including stock-based compensation expense, for personnel engaged in research and development functions;

•

costs of outside consultants, including their fees, and related travel expenses;

•

costs associated with in-process research and development, including license fees and milestones paid to third-party collaborators for technologies;

•

costs related to production of clinical materials, including fees paid to contract manufacturers;

•

expenses incurred under agreements with collaborators that perform nonclinical activities;

•

costs related to compliance with regulatory requirements; and

•

facility costs, depreciation, and other expenses, which include direct and allocated expenses for rent and maintenance of facilities, insurance, and other supplies.

We expense research and development costs as the services are performed or the goods are received. Non-refundable payments for goods or services that will be used for future research and development activities are deferred and capitalized. Such amounts are recognized as an expense as the goods are delivered or the related services are performed until it is no longer expected that the goods will be delivered or the services will be rendered.

Our research and development costs may increase in future periods as we continue to invest in research and development activities and advance our nonclinical and clinical programs through clinical development. The process of conducting nonclinical studies and, eventually, clinical trials necessary to obtain regulatory approval is costly and time consuming, and the successful development of our drug candidates is highly uncertain. As a result, we are unable to determine the duration and completion costs of our research and development projects or clinical trials or if and to what extent we will generate revenue from the commercialization and sale of any of our drug candidates.

General and administrative expenses

General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, corporate and business development and administrative functions. General and administrative expenses also include legal fees relating to patent and corporate matters; professional fees for accounting, auditing, tax and consulting services; insurance costs; travel expenses; and facility-related expenses, which include direct depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs not otherwise classified as research and development costs.

Our general and administrative expenses may increase in the future as we increase our general and administrative personnel headcount to support personnel in research and development and to support our operations generally as we increase our research and development activities and activities related to the potential commercialization of our drug candidates. We may also incur increased expenses associated with operating as a public company, including costs of accounting, audit, legal, regulatory and tax-related services associated with maintaining compliance with exchange listing rules and requirements of the Securities and Exchange Commission (the SEC), director and officer insurance costs, and investor and public relations costs.

Interest and other income, net

Interest and other income, net comprises interest income, net and other income, net. Interest income, net primarily consists of interest earned on our cash, cash equivalents, and investments. Other income, net consists primarily of the change in fair value of our common warrant liability, investments and foreign currency gains/losses.

Change in fair value of 2023 common warrants

The change in fair value of 2023 common warrants includes the remeasurement of the 2023 common warrants using the Black Scholes option pricing model at each reporting period.

We have incurred net losses and negative cash flows from operations in each year since our formation in February 2018. Our net income was $43.1 million for the three months ended March 31, 2025 and net loss was $34.9 million for the three months ended March 31, 2024, and our net losses were $131.2 million for the year ended December 31, 2024. We have had no revenue from product sales. As of March 31, 2025, we had an accumulated deficit of $574.9 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. We expect to continue to incur significant expenses and increasing operating losses over at least the next several years. Our net operating losses may fluctuate from quarter to quarter and year to year depending primarily on the timing of our clinical trials and nonclinical studies and our other research and development expenses. We have no internal manufacturing capabilities or sales force and outsource a substantial portion of our clinical trial work to third parties.

Results of Operations

Comparison of the three months ended March 31, 2025 and 2024

Revenue and operating expenses

The following table summarizes our operating expenses for the three months ended March 31, 2025 and 2024 (in thousands):


	Three Months Ended
	March 31,						Change
	2025			2024			($)			%

Revenue from collaborations	$	-		$	292		$	(292	)		-100	%
Revenue from customers		311			694			(383	)		-55	%
Operating expenses:
Research and development		14,502			16,366			(1,864	)		-11	%
General and administrative		5,052			6,666			(1,614	)		-24	%
Total operating expenses		19,554			23,032			(3,478	)		-15	%
Loss from operations		(19,243	)		(22,046	)		2,803			-13	%
Interest and other income, net:
Interest income, net		842			580			262			45	%
Other income, net		38			999			(961	)		-96	%
Change in fair value of 2023 common warrants		61,494			(14,372	)		75,866			-528	%
Income (loss) before income tax		43,131			(34,839	)		77,970			-224	%
Income tax provision		(43	)		(24	)		(19	)		79	%
Net income (loss)		43,088			(34,863	)		77,951			-224	%

Revenue from collaborations

There was no revenue recognized from collaborations for the three months ended March 31, 2025, due to the termination of the collaboration agreement in the first quarter of 2024. We recognized $0.3 million as revenue from collaborations for the three months ended March 31, 2024.

Revenue from customers

Revenue from customers decreased by $0.4 million for the three months ended March 31, 2025, when compared to the same period in 2024. The decrease was due to the near completion of the original agreement with Amoytop and the start of the extension agreement.

Research and development expenses

We track direct external research and development expenses on a program-specific basis (chronic HBV infection, MASH, coronaviruses and early-stage programs). The following table summarizes these research and development costs (in thousands):


	Three months ended March 31,
	2025			2024
Direct research and development expenses by development program:
Chronic Hepatitis B virus infection program	$	5,573		$	2,174
Metabolic dysfunction-associated steatohepatitis program		599			3,110
Coronaviruses program		(749	)		1,238
Other early-stage programs		843			940
Total direct research and development expenses	$	6,266		$	7,462
Total indirect research and development expenses		8,236			8,904
Total research and development expense	$	14,502		$	16,366

Research and development expenses decreased by $1.9 million during the three months ended March 31, 2025, compared to the same period in 2024. The decrease in the three-month period was primarily due to a $1.1 million decrease in third-party expenses due to reduced clinical study costs as a result of the completion of the MASH Phase 1 clinical trial, partially offset by increased spend in the chronic HBV infection program. There was also a $0.6 million decrease in employee-related costs including a $0.8 million decrease in stock-based compensation, and a $0.2 million decrease in facility and other expenses.

General and administrative expenses

General and administrative expenses decreased by $1.6 million during the three months ended March 31, 2025, compared to the same period in 2024. This was primarily due to a $0.8 million decrease in third party expenses due to reduced legal and intellectual property spend, a $0.7 million decrease in employee-related costs, and a $0.1 million decrease in facility costs.

Interest and other income, net

The following table summarizes our interest and other income, net for the three months ended March 31, 2025 and 2024 (in thousands):


`	Three Months Ended
	March 31,				Change
	2025		2024		($)			%

Interest income, net	$	842	$	580	$	262			45	%
Other income, net		38		999		(961	)		-96	%
Total interest and other income, net	$	880	$	1,579	$	(699	)		-44	%

Interest income, net increased by $0.3 million for the three months ended March 31, 2025 when compared to the same period ended March 31, 2024, primarily due to an increase in the investment balance.

Other income, net decreased by $1.0 million for the three months ended March 31, 2025 compared to the same period ended March 31, 2024, due to a decrease in the accretion of short-term investments.

Change in fair value of 2023 common warrants

The change in fair value of 2023 common warrants was an increase of $75.9 million for the three months ended March 31, 2025 compared to the same period ended March 31, 2024 The increase was due to a decrease in the fair value of the 2023 common warrants measured using the Black Scholes option pricing model remeasured at each reporting period, principally due to a decrease in the stock price between December 31, 2024 and March 31, 2025.

Liquidity and capital resources

Liquidity

We have incurred net losses in each year since inception. Our net losses were $131.2 million for the year ended December 31, 2024 and $87.7 million for the year ended December 31, 2023. We had a net income of $43.1 million for the three months ended March 31, 2025, due to a gain resulting from the remeasurement of the 2023 Common Warrants. Without this gain, we would have a net loss. We have not generated any revenue from product sales or any other sources and have incurred significant operating losses. We have not yet commercialized any products and we do not expect to generate revenue from sales of any drug candidates for at least several years, if ever.

Our operations have been financed primarily by net proceeds from the sale and issuance of our convertible preferred stock, proceeds from public offerings, revenue from customer and collaboration agreements, and proceeds from private placements of our common stock, warrants and pre-funded warrants, and the issuance of convertible debt.

In February 2025, we entered into a securities purchase agreement (the 2025 Securities Purchase Agreement) with certain investors names therein (the Purchasers) pursuant to which we issued (i) 2,103,307 shares of our common stock (the Common Stock), consisting of 1,427,000 shares of voting Common Stock and 676,307 shares of non-voting Common Stock, (ii) pre‑funded warrants (the 2025 Pre-Funded Warrants) to purchase up to an aggregate of 1,922,511 shares of voting Common Stock, and (iii) accompanying common warrants (the 2025 Common Warrants and, together with the 2025 Pre-Funded Warrants, the 2025 Warrants) to purchase up to an aggregate of 2,012,909 shares of Common Stock. Each Warrant is exercisable for one share of Common Stock (the 2025 Private Placement). We received gross proceeds of approximately $105.0 million. In connection to the 2025 Private Placement, we also entered into a registration rights agreement with the Purchasers, pursuant to which we agreed to register for resale the shares of Common Stock sold to the Purchasers, as well as the shares of Common Stock underlying the 2025 Warrants sold to the Purchasers, on the terms set forth therein. We also entered into a registration rights agreement with Baker Brothers Life Sciences, L.P. (together with its affiliates, the Lead Investor), pursuant to which we agreed to file a resale registration statement with the Securities and Exchange Commission following demand by the Lead Investor to register the resale of shares of Common Stock and any Common Stock issued or issuable upon the exercise or conversion of non-voting Common Stock and any of our other securities held by the Lead Investor.

As of March 31, 2025, we had cash, cash equivalents and investments of $137.9 million.

Capital resources

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 chronic HBV infection drug candidate ALG‑000184, which we have initiated clinical trials, as well as our research and development of our other drug candidates within our MASH and coronavirus programs.

In addition, we incur costs associated with operating as a public company. We expect that our expenses will increase substantially to the extent we:

•

conduct our current and future clinical trials, and additional nonclinical studies;

•

initiate and continue research and nonclinical and clinical development of other drug candidates;

•

seek to identify additional drug candidates;

•

pursue marketing approvals for any of our drug candidates that successfully complete clinical trials, if any;

•

establish a sales, marketing and distribution infrastructure to commercialize any products for which we may obtain marketing approval;

•

require the manufacture of larger quantities of our drug candidates for clinical development and potentially commercialization;

•

obtain, maintain, expand, protect and enforce our intellectual property portfolio;

•

acquire or in-license other drug candidates and technologies;

•

hire and retain additional clinical, quality control and scientific personnel;

•

achieve milestones triggering payments by us under our current and potential future licensing and/or collaboration agreements;

•

build out or expand existing facilities to support our ongoing development activity; and

•

add operational, financial and management information systems and personnel, including personnel to support our drug development, any future commercialization efforts and any additional requirement of being a public company.

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 twelve months from the date of issuing our financial statements. 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. Furthermore, we may elect to raise additional capital on an opportunistic basis to fund operations.

Because of the numerous risks and uncertainties associated with our research and development programs and because the extent to which we may enter into collaborations with third parties for development of our drug candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our drug candidates. Our future capital requirements will depend on many factors, including:

•

the scope, progress, results and costs of researching and developing our drug candidates and programs, and of conducting nonclinical studies and clinical trials;

•

the timing of, and the costs involved in, obtaining marketing approvals for drug candidates we develop if clinical trials are successful;

•

the cost of commercialization activities for our current drug candidates, and any future drug candidates we develop, whether alone or in collaboration, including marketing, sales and distribution costs if our current drug candidates or any future drug candidate we develop is approved for sale;

•

the cost of manufacturing our current and future drug candidates for clinical trials in preparation for marketing approval and commercialization;

•

our ability to establish and maintain strategic licenses or other arrangements and the financial terms of such agreements including milestone payments to our licensors;

•

the costs involved in preparing, filing, prosecuting, maintaining, expanding, defending and enforcing patent claims, including litigation costs and the outcome of such litigation;

•

any lawsuits related to our drug candidates or commenced against us;

•

the timing, receipt and amount of sales of, or profit share or royalties on, our future products, if any;

•

the emergence of competing therapies for hepatological indications and viral diseases and other adverse market developments; and

•

any acquisitions or in-licensing of other programs or technologies.

Developing pharmaceutical products, including conducting nonclinical studies and clinical trials, is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval for any drug candidates or generate revenue from the sale of any drug candidate for which we may obtain marketing approval. In addition, our drug candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of drugs that we do not expect to be commercially available for many years, if ever. Accordingly, we will need to obtain substantial additional funds to achieve our business objectives.

Adequate additional funds may not be available to us on acceptable terms, or at all. 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. 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.

If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technology, future revenue streams, research programs, or drug candidates or grant licenses on

terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings or collaborations, strategic alliances or licensing arrangements with third parties when needed, we may be required to delay, limit, reduce and/or terminate our product development programs or any future commercialization efforts or grant rights to develop and market drug candidates that we would otherwise prefer to develop and market ourselves.

Cash flows

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


	Three Months Ended
	March 31,
	2025			2024
Net cash and cash equivalents used in operating activities	$	(20,909	)	$	(22,746	)
Net cash and cash equivalents used in investing activities		(44,067	)		(88,642	)
Net cash and cash equivalents provided by (used in) financing activities		101,742			(19	)
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	36,766		$	(111,407	)

Operating activities

During the three months ended March 31, 2025, operating activities utilized $20.9 million of cash, primarily resulting from our net income of $43.1 million, offset by net changes in operating assets and liabilities of $3.8 million, and non-cash charges of $60.2 million, driven by the gain as a result of remeasuring the 2023 Common Warrants. Net cash used in operating activities resulted in changes in our operating assets and liabilities of $3.8 million, consisting of a decrease of $4.8 million in accrued liabilities, a decrease of $0.5 million in operating lease liabilities, a decrease of $0.2 million in deferred revenue, an increase in other assets of $0.1 million partially offset by an increase of $1.7 million in accounts payable. The decrease in deferred revenue was due to the recognition of revenue from customers due to progress towards the completion of the projects. The decrease in accrued liabilities was largely due to the bonus payments that occurred in the first quarter of 2025. The increase in accounts payable is due to the timing of payments to vendors.

During the three months ended March 31, 2024, operating activities utilized $22.7 million of cash, primarily resulting from our net loss of $34.9 million and net changes in operating assets and liabilities of $5.5 million, partially offset by non-cash charges of $17.6 million. Net cash used in operating activities resulted in changes in our operating assets and liabilities of $5.5 million, consisting of a decrease of $4.8 million in accrued liabilities, a decrease of $0.6 million in operating lease liabilities, and a decrease of $0.6 million in deferred revenue, partially offset by a decrease in other assets of $0.2 million and an increase of $0.3 million in accounts payable. The decrease in deferred revenue was due to the recognition of revenue from collaborations due to progress towards the completion of the projects. The decrease in accrued liabilities was largely due to the bonus payment that occurred in the first quarter of 2024. The decrease in accounts payable is due to the timing of payments to vendors.

Investing activities

During the three months ended March 31, 2025, investing activities used $44.1 million of cash, primarily due to $64.0 million of purchase of short-term investments partially offset by $20.0 million related to maturities of short-term investments.

During the three months ended March 31, 2024, investing activities used $88.6 million of cash, primarily due to purchase of short-term investments.

Financing activities

During the three months ended March 31, 2025, net cash provided by financing activities was $101.7 million, primarily due to proceeds from the 2025 PIPE financing.

During the three months ended March 31, 2024, net cash used in financing activities was $19 thousand, primarily due to payments of our finance leases.

Contractual obligations and commitments

We have no material changes to our contractual obligations and commitments as of March 31, 2025 as disclosed in the contractual obligations and commitment section in our Annual Report on Form 10-K filed with the SEC on March 10, 2025.

Off-balance sheet arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in the rules and regulations of the SEC.

Indemnification agreements

We enter into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, we indemnify, hold harmless and agree to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third party with respect to its technology. The term of these indemnification agreements is generally perpetual any time after the execution of the agreement. The maximum potential amount of future payments we could be required to make under these arrangements is not determinable. We have never incurred costs to defend lawsuits or settle claims related to these indemnification agreements. As a result, we believe the fair value of these agreements is minimal.

Critical accounting policies and use of estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts and the disclosure of assets and liabilities at the date of the consolidated financial statements, as well as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

For a discussion of our critical accounting estimates, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the notes to our audited financial statements in our Annual Report on Form 10-K, filed with the SEC on March 10, 2025 for the year ended December 31, 2024, 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 March 31, 2025 from those discussed in our Form 10-K.

Recently issued and adopted accounting pronouncements

For a description of the expected impact of recently adopted accounting pronouncements, see Note 2. Summary of significant accounting policies in the “Notes to Unaudited Condensed Consolidated Financial Statements” contained in Part I, Item 1 of this report.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in our market risk during the three months ended March 31, 2025, compared to the disclosures in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2024.

Item 4. Controls and Procedures.

We have established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including the principal executive officer (our Chief Executive Officer) and principal financial officer (our Chief Financial Officer), to allow timely decisions regarding required disclosure. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of disclosure controls and procedures

Our management has evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of March 31, 2025, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in internal control over financial reporting

There has been no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fiscal quarter ended March 31, 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may become involved in litigation or other legal proceedings. While the outcome of any such proceedings cannot be predicted with certainty, we are not currently involved in any legal proceedings that we believe are, individually or in the aggregate, material to our business, results of operations or financial condition. However, regardless of the outcome, litigation can have an adverse impact on our business, financial condition, results of operations and prospects because of associated costs and diversion of m

Aligos Therapeutics, Inc. 10-Q