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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 June 30, 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 July 31, 2025, the registrant had 6,151,374 shares of common stock, $0.0001 par value per share, outstanding, comprised of 5,351,374 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. This number does not include 4,217,432 shares of common stock issuable upon the exercise of pre-funded warrants outstanding as of July 31, 2025 (which are immediately exercisable at an exercise price of $0.0025 and $0.0001 per share of common stock, respectively,

subject to beneficial ownership limitations) sold in the Registrant’s private placement on October 23, 2023 and February 13, 2025. See Note 7 — Common Warrants and Pre-Funded Warrants to the Registrant’s unaudited condensed consolidated financial statements.

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 (Loss) Income	2

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

	Condensed Consolidated Statements of Cash Flows	5

	Notes to Unaudited Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4.	Controls and Procedures	27

PART II.	OTHER INFORMATION	28

Item 1.	Legal Proceedings	28

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	80

Item 3.	Defaults Upon Senior Securities	80

Item 4.	Mine Safety Disclosures	80

Item 5.	Other Information	80

Item 6.	Exhibits	81

Signatures		83

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

ALIGOS THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


	June 30, 2025			December 31, 2024

ASSETS
Current assets:
Cash and cash equivalents	$	18,661		$	36,997
Restricted cash		110			110
Short-term investments		104,284			19,942
Other current assets		4,889			5,092
Total current assets		127,944			62,141
Operating lease right-of-use assets		4,059			4,964
Property and equipment, net		2,063			2,362
Other assets		640			627
Total assets	$	134,706		$	70,094

LIABILITIES AND
STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	3,937		$	2,571
Accrued liabilities		12,209			15,557
Operating lease liabilities, current		3,502			3,422
Finance lease liabilities, current		38			36
Deferred revenue, current		579			151
Total current liabilities		20,265			21,737
Operating lease liabilities, net of current portion		3,216			4,795
Finance lease liabilities, net of current portion		122			122
2023 common warrants liability		9,191			72,367
Long term liability		46			46
Total liabilities		32,840			99,067
Commitments and contingencies (Note 11)
Stockholders’ equity (deficit):
Preferred Stock, $0.0001 par value; 10,000,000 shares authorized as of June 30, 2025 and December 31, 2024, respectively; no shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively.		-			-
Common stock, $0.0001 par value; 115,800,000 shares and 20,800,000 shares authorized as of June 30, 2025 and December 31, 2024, respectively; 6,151,274 and 3,864,436 shares issued and outstanding as of June 30, 2025 and December 31, 2024, respectively.		9			8
Additional paid-in capital		692,220			588,576
Accumulated deficit		(590,783	)		(618,008	)
Accumulated other comprehensive income		420			451
Total stockholders’ equity (deficit)		101,866			(28,973	)
Total liabilities and stockholders’ equity (deficit)	$	134,706		$	70,094

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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

(Unaudited)

(In thousands, except share and per share data)


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Revenue from collaborations	$	—		$	—		$	—		$	292
Revenue from customers		965			1,061			1,276			1,755
Operating expenses:
Research and development		13,976			21,099			28,478			37,464
General and administrative		5,556			6,376			10,608			13,043
Total operating expenses		19,532			27,475			39,086			50,507
Loss from operations		(18,567	)		(26,414	)		(37,810	)		(48,460	)
Interest and other income, net		1,207			1,227			2,087			2,765
Change in fair value of 2023 common warrants		1,682			30,437			63,176			16,106
(Loss) income before income tax		(15,678	)		5,250			27,453			(29,589	)
Income tax provision		(185	)		(189	)		(228	)		(213	)
Net (Loss) income		(15,863	)		5,061			27,225			(29,802	)
Other comprehensive (loss) gain:
Unrealized (loss) gain on available-for-sale securities		(27	)		18			(31	)		(51	)
Other comprehensive (loss) gain		(27	)		18			(31	)		(51	)
Comprehensive (loss) income	$	(15,890	)	$	5,079		$	27,194		$	(29,853	)
Net (loss) income per share, basic	$	(1.53	)	$	0.81		$	2.90		$	(4.77	)
Net (loss) income per share, diluted	$	(1.53	)	$	0.81		$	2.90		$	(4.77	)
Weighted average shares of common stock, basic		10,351,120			6,257,713			9,385,167			6,251,913
Weighted average shares of common stock, diluted		10,351,120			6,265,853			9,401,645			6,251,913

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)


	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
Issuance of common stock related to ESPP purchases		36,473		-		180			-			-			180
Costs related to the PIPE offering		-		-		(29	)		-			-			(29	)
Stock-based compensation expense related to employee stock awards		-		-		1,050			-			-			1,050
Stock-based compensation expense related to employee stock purchases		-		-		110			-			-			110
Other comprehensive loss		-		-		-			-			(27	)		(27	)
Net loss		-		-		-			(15,863	)		-			(15,863	)
Balance as of June 30, 2025		6,151,274		9		692,220			(590,783	)		420			101,866

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

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


	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 and settlement		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
Issuance of common stock related to ESPP purchase		22,438		-		297		-			-			297
Issuance of common stock upon exercise of pre-funded warrants		142,264		1		-		-			-			1
Stock-based compensation expense related to employee stock awards		-		-		1,918		-			-			1,918
Stock-based compensation expense related to employee stock purchases		-		-		138		-			-			138
Other comprehensive income		-		-		-		-			18			18
Net income		-		-		-		5,061			-			5,061
Balance as of June 30, 2024		3,191,425	$	8	$	583,326	$	(516,599	)	$	494		$	67,229

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

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)


	Six Months Ended June 30,
	2025			2024
Cash flows from operating activities:
Net income (loss)	$	27,225		$	(29,802	)
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Accretion of discount on investments		(1,034	)		(936	)
Non cash lease expense		905			746
Change in fair value of 2023 common warrants		(63,176	)		(16,106	)
Depreciation expense		453			538
Stock-based compensation including ESPP		2,119			4,704
Changes in operating assets and liabilities:
Other assets		190			342
Accounts payable		1,328			4,302
Accrued liabilities		(3,352	)		(4,778	)
Operating lease liabilities		(1,499	)		(1,267	)
Deferred revenue		428			18
Net cash and cash equivalents used in operating activities		(36,413	)		(42,239	)
Cash flows from investing activities:
Activities in available-for-sale investments:
Maturities of short-term investments		20,000			40,000
Purchase of short-term investments		(103,336	)		(88,573	)
Purchases of property and equipment		(152	)		(76	)
Net cash and cash equivalents used in investing activities		(83,488	)		(48,649	)
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		101,386			-
Payments on finance lease		(1	)		(35	)
Proceeds from the ESPP purchase		180			297
Net cash and cash equivalents provided by financing activities		101,565			262
Net decrease in cash, cash equivalents, and restricted cash		(18,336	)		(90,626	)
Cash, cash equivalents, and restricted cash, beginning of period		37,107			135,774
Cash, cash equivalents, and restricted cash, end of period	$	18,771		$	45,148

Supplemental disclosures of noncash financing and investing activities:
PIPE issuance costs unpaid at period end		(41	)		-

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 liver and viral 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. Interim-period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim 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 on March 10, 2025 (the 2024 Form 10-K).

Certain amounts previously reported in Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and six months ended June 30, 2025 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 $30.4 million and $16.1 million, respectively, previously included in Interest and other income, net. The reclassification had no impact on our net (loss) income.

Liquidity

The Company has incurred losses and negative cash flows from operations in each fiscal year since its inception. As of June 30, 2025 and December 31, 2024, the Company had an accumulated deficit of $590.8 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 June 30, 2025, the Company has cash, cash equivalents and investments of approximately $122.9 million, which is available to fund future operations. The Company expects to continue to spend substantial amounts to continue the clinical development of its current 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 2024 Form 10-K.

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 2024 Form 10‑K.

Balance sheet components

Property and equipment

The components of property and equipment as of June 30, 2025 and December 31, 2024 were as follows (in thousands):


	June 30, 2025			December 31, 2024
Leasehold improvements	$	6,101		$	6,101
Lab equipment		6,108			5,975
Computer equipment		1,075			1,051
Furniture and office equipment		728			732
Vehicles and equipment		282			281
Asset under construction		4			4
Total, at cost		14,298			14,144
Accumulated depreciation		(12,235	)		(11,782	)
Total, net	$	2,063		$	2,362

Depreciation expense was $0.3 million and $0.5 million for the three and six months ended June 30, 2025 and $0.3 million and $0.5 million for the three and six months ended June 30, 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):


	June 30,		December 31,
	2025		2024
Accrued R&D expenses	$	3,824	$	5,029
Accrued compensation		4,421		6,387
Accrued payables		1,212		1,471
Other		2,752		2,670
Total	$	12,209	$	15,557

Investments

As of June 30, 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):


	June 30, 2025
			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gain		Loss			Fair Value
Available-for-sale securities:
U.S. Treasury bonds	$	104,305	$	-	$	(21	)	$	104,284

          
         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

Nineteen 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 June 30, 2025, all investments had a remaining maturity of less than one year.

The Company recorded interest income of $0.4 million and $1.2 million for the three and six months ended June 30, 2025, and $0.3 million and $0.9 million for the three and six months ended June 30, 2024. The Company recorded accrued interest receivable of $32.0 thousand for the three months ended June 30, 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 June 30, 2025
	Level 1		Level 2		Level 3
Assets:
Available for sale securities	$	-	$	104,284	$	-
Liabilities:
2023 common warrants liability		-		-		(9,191	)
	$	-	$	104,284	$	(9,191	)

	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	)

Capital stock

Common stock

On June 25, 2025, the Company's stockholders approved an amendment to the Company's Amended and Restated Certificate of Incorporation to increase the number of authorized shares of voting common stock from 20,000,000 shares to 100,000,000 shares and to increase the number of authorized shares of non-voting common stock from 800,000 shares to 15,800,000 shares.

The holders of shares of voting common stock are entitled to one vote for each share of common stock at all meetings of stockholders.

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 $101.4 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 Accounting Standards Codification (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 June 30, 2025:


Pre-funded warrant shares outstanding	June 30, 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):


	June 30, 2025			December 31, 2024
Beginning liability	$	72,367		$	27,596
Common warrants issued		-			-
Common warrants exercised		-			(1,361	)
Change in fair value		(63,176	)		46,132
Ending liability	$	9,191		$	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:


	June 30, 2025			December 31, 2024
Expected term (in years)		5.33			5.83
Risk-free interest rate		3.82	%		4.43	%
Dividend yield		-			-
Volatility		90.15	%		84.62	%

The following table summarizes information about shares issuable under the 2023 and 2025 Common Warrants outstanding at June 30, 2025:


Common warrant shares outstanding	June 30, 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 six months ended June 30, 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		498,297			15.09		—		—
Exercised		—			—		—		—
Forfeited or Expired		(39,221	)		86.23		—		—
Outstanding as of June 30, 2025		1,086,761			24.56		8.87	$	33
Options vested and expected to vest as of June 30, 2025		1,086,761			24.56		8.87	$	33
Options vested and exercisable as of June 30, 2025		307,792			46.42		7.57	$	-

Restricted stock units

Restricted stock unit activity during the six months ended June 30, 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 June 30, 2025		17,264			16.49		$	284

Stock-based compensation expense was allocated as follows for the three and six months ended June 30, 2025 and 2024 (in thousands):


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
Research and development	$	617	$	1,194	$	1,161	$	2,634
General and administrative		544		862		958		2,070
Total	$	1,161	$	2,056	$	2,119	$	4,704

Revenue from contracts with customers

Agreement with Amoytop

In May 2023, the Company and Amoytop Biotech Co., Ltd (Amoytop) entered into a Research Collaboration and Development Agreement with a focus on nucleic acid technology for HBV treatment, with the Company granting to Amoytop an exclusive, time-limited 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 is 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 an extension to the Research Collaboration and Development 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.

In May 2025, the Company and Amoytop entered into an additional extension to the Research Collaboration and Development Agreement, covering work performed through approximately November 2025. Under the terms of the agreement, the Company received an upfront payment of $1.0 million, which is expected to be recognized from the second quarter of 2025 through the fourth quarter of 2025.

The Company determined that the Amoytop agreement falls within the scope of 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 and six months ended June 30, 2025, the Company recognized $1.0 million and $1.3 million, respectively, in revenue from customers related to upfront payments. During the three and six months ended June 30, 2024, the Company recognized $1.1 million and $1.8 million, respectively, in revenue from customers related to upfront payments. During the three months ended June 30, 2025 and 2024, the Company recognized no revenue from customers related to milestone payments. The unrecognized portion of the upfront payments received is recorded on the Condensed Consolidated Balance Sheets as “Deferred revenue, current”.

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 June 30,
	2025			2024

Deferred revenue from customers as of January 1	$	151		$	1,224
Consideration received in the period		1,704			1,857
Revenue from customers recognized in the period		(1,276	)		(1,755	)
Deferred revenue from customers as of June 30	$	579		$	1,326

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 agreement 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.

10.

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 and six months ended June 30, 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 and six months ended June 30, 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 and six months ended June 30, 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 and six months ended June 30, 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 of the last valid patent claim covering the manufacture, use, sale or importation of the licensed product in a particular country or 10 years after the first commercial sale of a licensed product. During the three and six months ended June 30, 2025, the Company made no payments of royalties or milestones.

11.

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 June 30, 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 June 30, 2025, the Company had no material non-cancellable purchase commitments.

12.

Income taxes

The Company recorded income tax provision of $228.0 thousand for the six months ended June 30, 2025, primarily related to the Company's international operations.

On July 3, 2025, the President signed into law the One Big Beautiful Bill Act ("OBBBA"). ASC 740 requires the effects of changes in tax rates and laws on deferred tax balances to be recognized in the period in which the legislation is enacted. Consequently, the Company is still evaluating the OBBBA and it will be reflected in the Company's Q3 2025 tax provision.

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.

13.

Net (loss) income per share

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


	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2025			2024		2025		2024

Net (loss) income, as reported	$	(15,863	)	$	5,061	$	27,225	$	(29,802	)
Less: increase in available income		-			-		-		-
Diluted net (loss) income	$	(15,863	)	$	5,061	$	27,225	$	(29,802	)
Weighted average shares outstanding, basic		10,351,120			6,257,713		9,385,167		6,251,913
Add: Weighted average shares issuable		-			8,140		16,478		-
Weighted average shares outstanding, diluted		10,351,120			6,265,853		9,401,645		6,251,913
Net (loss) income per share - basic	$	(1.53	)	$	0.81	$	2.90	$	(4.77	)
Net (loss) income per share - diluted	$	(1.53	)	$	0.81	$	2.90	$	(4.77	)

For the six months ended June 30, 2025, the Company’s potentially dilutive securities includes options to purchase common stock and unvested restricted stock. The 2023 common warrants and 2025 common warrants are antidilutive and excluded from the total weighted average shares outstanding, diluted.

For the three months ended June 30, 2024, the 2023 common warrants were antidilutive and therefore excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Options to purchase common stock, unvested restricted stock and shares purchased through the ESPP were included as dilutive.

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				Six Months Ended
	June 30,				June 30,
	2025		2024		2025		2024
Options to purchase common stock		1,086,761		391,959		893,331		401,679
Unvested restricted stock		17,264		1,616		14,316		6,183
Warrants to purchase common stock		4,213,767		2,249,680		4,213,767		2,249,680
		5,317,792		2,643,255		5,121,414		2,657,542

14. 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 Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. 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 (loss) income as reported on the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income, shown in the table below. The significant expense categories are consistent with those presented on the face of the condensed 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. Asset information is not regularly provided to the CODM for assessing performance and allocating resources other than consolidated cash, cash equivalents and short-term investments, which can be found on our Condensed Consolidated Balance Sheets.

The following table provides segment revenues, significant segment expenses and reported segment net (loss) income for the three and six months ended June 30, 2025 and 2024 (in thousands):


	Three months ended June 30,						Six months ended June 30,
	2025			2024			2025			2024
Revenue from Collaborations	$	-		$	-		$	-		$	292
Revenue from Customers		965			1,061			1,276			1,755
Less:
Early-stage research and development(1)		(688	)		(1,070	)		(1,530	)		(1,983	)
Late-stage research and development(2)		(13,288	)		(20,029	)		(26,948	)		(35,481	)
General & Administrative		(5,556	)		(6,376	)		(10,608	)		(13,043	)
Total operating expenses		(19,532	)		(27,475	)		(39,086	)		(50,507	)
Interest and other income, net		1,207			1,227			2,087			2,765
Change in fair value of 2023 common warrants		1,682			30,437			63,176			16,106
(Loss) income before income tax		(15,678	)		5,250			27,453			(29,589	)
Income tax provision		(185	)		(189	)		(228	)		(213	)
Segment and consolidated net (loss) income	$	(15,863	)	$	5,061		$	27,225		$	(29,802	)

(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 9 and 10).

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 early drug development and medicinal chemistry in liver and viral diseases, resulting in three potential best‑in‑class drug candidates currently in development.

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 pharmacologic properties that appear to be enhanced based on data to date 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 protease inhibitor (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.

Aligos Therapeutics, Inc. 10-Q