ALLENA PHARMACEUTICALS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

Overview

You should read the following discussion and analysis of our financial condition
and results of operations together with our "Selected Consolidated Financial
Data" and our consolidated financial statements and the related notes included
elsewhere in this Annual Report. Some of the information contained in this
discussion and analysis or set forth elsewhere in this Annual Report, including
information with respect to our plans and strategy for our business and related
financing, includes forward-looking statements that involve risks and
uncertainties. As a result of many factors, including those factors set forth in
the "Risk Factors" section of this Annual Report, our actual results could
differ materially from the results described in or implied by the
forward-looking statements contained in the following discussion and analysis.

Overview

We are a biopharmaceutical company dedicated to developing and commercializing
first-in-class, oral enzyme therapeutics to treat patients with rare and severe
metabolic and kidney disorders. We are focused on metabolic disorders that
result in excess accumulation of certain metabolites that can stimulate
inflammation, damage the kidney, and potentially lead to chronic kidney disease,
or CKD, and end-stage renal disease, or ESRD. We believe our proprietary
know-how in enzyme technology allows for the design, development, formulation,
and scalable manufacturing of non-absorbed and stable enzymes delivered orally
and in sufficient doses for activity in the gastrointestinal tract. This
approach enables us to develop enzyme therapies that degrade metabolites within
the GI tract, which reduces potentially toxic metabolite levels in the blood and
urine, and in turn, diminishes the disease burden including on the kidney over
time.

Our product candidate, ALLN-346, is an orally administered, novel, urate
degrading enzyme for patients with hyperuricemia and gout in the setting of
advanced CKD. We have conducted a Phase 1 program, including both a
single-ascending dose and multiple-ascending dose study in healthy volunteers.
In both studies, ALLN-346 was well tolerated with no clinically significant
safety signals and no dose-limiting toxicities observed in any cohort up to the
highest administered dose. We are currently conducting two Phase 2a studies.
Study 201 is a 7-day inpatient study in patients with hyperuricemia, for which
we reported initial data in January 2022. Study 202 is a 14-day outpatient study
in patients with hyperuricemia, gout and varying degrees of renal insufficiency,
for which we expect to report initial data in Q2 2022.

We previously had been developing reloxaliase, a first-in-class, oral enzyme
therapeutic for the treatment of hyperoxaluria, a metabolic disorder
characterized by markedly elevated urinary oxalate, or UOx, levels and commonly
associated with kidney stones, CKD and ESRD. However, in March 2022 we
terminated this program following the first of two planned Sample Size
Reestimations (SSR1) of the Phase 3 URIROX-2 Trial, which was conducted by an
independent data safety monitoring board (DSMB) statistician. Based on the
results of its unblinded analysis, the DSMB recommended that the trial size be
increased from the initial 200 subjects to the maximum allowed number of 400
subjects under the pre-specified rules. However, even with this maximum
recommended sample size increase, the power to detect an effect of reloxaliase
vs. placebo would still be less than 80% based on the available data. Based upon
this recommendation, we believe that the separation between the reloxaliase and
placebo groups for the UOx primary endpoint is lower than expected, and
therefore that the likelihood of success for the long term endpoint of reduction
in kidney stone disease progression is also lower than expected. We have
therefore decided to terminate the URIROX-2 study. No further clinical studies
of reloxaliase are planned at this time.

In July 2021, we completed a registered direct offering, in which we issued and
sold 17,416,096 shares of our common stock, pre-funded warrants to purchase up
to an aggregate of 3,941,648 shares of our common stock in lieu of shares of
common stock and warrants to purchase up to 10,678,872 shares of our common
stock through a securities purchase agreement. The combined price of each share
of common stock and accompanying Warrant to purchase one-half of a share was
$1.311. The purchase price of each Pre-funded Warrant was $1.301, which was the
combined purchase price per share of common stock and accompanying Warrant,
minus $0.01. Gross proceeds of the transaction were $28.0 million. As a result
of the registered direct offering, we received approximately $25.4 million after
deducting estimated offering costs. Each Warrant is exercisable for one share of
our common stock at an exercise price of $1.25 per share. The Warrants are
immediately exercisable and expire on July 16, 2026. Each Pre-funded Warrant is
exercisable for one share of common stock at an exercise price of $0.01 per
share. The Pre-funded Warrants are immediately exercisable and may be exercised
at any time until all Pre-funded Warrants are exercised in full. All Pre-funded
Warrants were exercised on July 16, 2021.

In March 2021, we entered into an At Market Issuance Sales Agreement with B.
Riley Securities, Inc. ("B. Riley ATM Agreement"). During the year ended
December 31, 2021, we issued and sold a total of 4,081,338 shares of our common
stock under the B. Riley ATM Agreement at a weighted average price of $1.11 per
share for net proceeds of approximately $4.2 million.

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In December 2021, we entered into an updated At Market Issuance Sales Agreement
with B. Riley Securities, Inc. ("Updated B. Riley ATM Agreement"), which was
essentially identical to the initial agreement, but utilized a shelf
registration statement that we also filed at that time. During the first quarter
of 2022 through the filing date of this Annual Report, we issued and sold
6,804,888 shares of our common stock under the Updated B. Riley ATM Agreement at
a weighted average price of $0.62 per share for net proceeds of $4.1 million.
The B. Riley ATM Agreement was terminated at the time we entered into the
Updated B. Riley ATM Agreement.

During the first quarter of 2021, we issued and sold 6,058,318 shares of our
common stock under an At-the Market Equity Offering Sales Agreement with Cowen
and Company, LLC ("Cowen ATM Agreement") at a weighted average price of $1.99
per share for net proceeds of $11.7 million. The Cowen ATM Agreement was
terminated at the time we entered into the B. Riley ATM Agreement.

In December 2020, we completed a public underwritten offering of 11,960,000
shares of our common stock, including the exercise in full of the underwriter's
option to purchase an additional 1,560,000 shares of common stock, at a price to
the public of $1.25 per share for net proceeds of $13.5 million.

In July 2020, we completed a public underwritten offering of 5,894,191 shares of
our common stock, including the exercise in full of the underwriter's option to
purchase an additional 768,807 shares of common stock, at a price to the public
of $1.30 per share for net proceeds of $6.7 million.

In June 2020, we completed a registered direct offering, in which we issued and
sold 7,317,074 shares of our common stock, at a purchase price of $2.05 per
share, for net proceeds of $13.7 million through a securities purchase agreement
with certain institutional and accredited investors. The shares of common stock
sold in this offering were offered by us pursuant to our shelf registration
statement on Form S-3 filed with the SEC, which was declared effective on
December 26, 2018 and a prospectus supplement thereunder filed on June 5, 2020.

Our operations to date have been primarily focused on organizing and staffing
our company, business planning, raising capital, developing our technology,
identifying potential product candidates, manufacturing our product candidates
and conducting preclinical studies and clinical trials of reloxaliase and
ALLN-346. We do not have any products approved for sale and have not generated
any revenue to date. As of December 31, 2021, we had cash and cash equivalents
totaling $30.0 million, and as of March 31, 2022 we had cash and cash
equivalents of $9.0 million.

We have incurred significant net operating losses in every year since our
inception and, provided we are able to secure adequate financing to continue our
operations, expect to continue to incur significant expenses and increasing
operating losses for the foreseeable future. Our net losses may fluctuate
significantly from quarter to quarter and year to year. Our net losses were
$48.7 million, $32.8 million and $47.3 million for the years ended December 31,
2021, 2020 and 2019, respectively. As of December 31, 2021, we had an
accumulated deficit of $246.5 million. If we are able to secure adequate
financing to continue our operations, we anticipate that our expenses will
increase significantly as we:

•

advance the development and conduct future clinical trials of ALLN-346;

•

conduct research on the discovery and development of additional product candidates;

•

seek regulatory and marketing approvals for product candidates that successfully complete clinical trials, if any;

•

establish a sales, marketing and distribution infrastructure to commercialize
any products for which we may obtain regulatory approval in geographies in which
we plan to commercialize our products ourselves;

•

maintain, expand and protect our intellectual property portfolio;

•

hire additional staff, including clinical, scientific, technical, operational, and financial personnel, to execute our business plan; and

•

add clinical, scientific, operational, financial and management information systems to support our product development and potential future commercialization efforts, and to enable us to operate as a public company.

We do not expect to generate revenue from product sales unless and until we
successfully complete development and obtain regulatory approval for a product
candidate. Additionally, we currently use contract research organizations, or
CROs, and contract manufacturing organizations, or CMOs, to carry out our
preclinical and clinical development activities. We do not yet have a sales
organization. If we obtain regulatory approval for our product candidates, we
expect to incur significant commercialization expenses related to product sales,
marketing, manufacturing and distribution. Furthermore, we expect to incur
additional costs associated with operating as a public company. Accordingly, we
may seek to fund our operations through public or private equity or debt
financings or other sources, including strategic collaborations. We may,
however, be unable to raise additional funds or enter into such other
arrangements when needed on favorable terms or at all. Our failure to raise
capital or enter into such other arrangements as and when needed would have a
negative impact on our financial condition and impact our ability to continue as
a going concern.

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NASDAQ Delisting Notification

On August 25, 2021, we received a letter from the Listing Qualifications
Department (the "Staff") of the Nasdaq Stock Market ("Nasdaq") notifying us
that, for the 30 consecutive business day period between July 14, 2021 through
August 24, 2021, our common stock had not maintained a minimum closing bid price
of $1.00 per share (the "Minimum Bid Price Requirement") required for continued
listing on The Nasdaq Global Select Market pursuant to Nasdaq Listing Rule
5550(a)(2). The Nasdaq letter does not result in the immediate delisting of our
common stock from The Nasdaq Global Select Market.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A) (the "Compliance Period
Rule"), we were provided an initial period of 180 calendar days, or until
February 21, 2022 (the "Compliance Date"), to regain compliance with the Minimum
Bid Price Requirement. On February 22, 2022 we applied to transfer our
securities to Nasdaq Capital Market and requested a second 180-day period to
regain compliance with the Minimum Bid Price Requirement. On February 24, 2022,
Nasdaq approved our request for a second 180-day period, or until August 22,
2022, to regain compliance with the Minimum Bid Price Requirement. If, at any
time during this 180-day period, the closing bid price for our common stock
closes at $1.00 or more per share for a minimum of 10 consecutive business days,
as required under the Compliance Period Rule, the Staff will provide written
notification to us that we comply with the Minimum Bid Price Requirement and the
common stock will continue to be eligible for listing on The Nasdaq Capital
Market.

If it appears to the Staff that we will not be able to cure the deficiency, the
Staff will provide written notice to us that our common stock will be subject to
delisting. At that time, we may appeal the Staff's delisting determination to a
Nasdaq Hearing Panel (the "Panel"). We expect that our stock would remain listed
pending the Panel's decision. There can be no assurance that, if we do appeal
the Staff's delisting determination to the Panel, such appeal would be
successful.

We intend to monitor the closing bid price of our common stock and may, if
appropriate, consider available options to regain compliance with the Minimum
Bid Price Requirement, which could include seeking to effect a reverse stock
split. However, there can be no assurance that we will be able to regain
compliance with the Minimum Bid Price Requirement or maintain compliance with
any of the other Nasdaq continued listing requirements.

Financial Operations Overview

Revenue

To date, we have not generated any revenue from product sales or any other
source and do not expect to generate any revenue from the sale of products for
the foreseeable future. If our development efforts for ALLN-346 or other product
candidates that we may develop in the future are successful and result in
marketing approval or collaboration or license agreements with third parties, we
may generate revenue in the future from a combination of product sales or
payments from such collaboration or license agreements.

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our
research activities, including our drug discovery efforts and the development of
our product candidates, which include:

•

employee-related expenses, including salaries, benefits and stock-based compensation expense;

•

costs incurred under agreements with third parties, including CROs, that conduct research and development, preclinical studies and clinical trials on our behalf;

•

costs related to production of preclinical and clinical materials, including fees paid to CMOs;

•

consulting, licensing and professional fees related to research and development activities;

•

costs of purchasing laboratory supplies and non-capital equipment used in our research and development activities;

•

costs related to compliance with clinical regulatory requirements; and

•

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

We expense research and development costs as incurred. We recognize costs for
certain development activities, such as clinical trials, based on an evaluation
of the progress to completion of specific tasks using data such as clinical site
activations, patient enrollment, or information provided to us by our vendors
and our clinical investigative sites. Payments for these activities are based on
the terms of the individual agreements, which may differ from the pattern of
costs incurred, and may be reflected in our consolidated financial statements as
prepaid or accrued research and development expenses. Nonrefundable advance
payments for goods or services to be received in the future for use in research
and development activities are deferred

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and capitalized, even when there is no alternative future use for the research
and development. The capitalized amounts are expensed as the related goods are
delivered or the services are performed.

We are developing ALLN-346 for patients with hyperuricemia and CKD. We began
incurring external research and development costs for this program in 2016. We
recently terminated development of reloxaliase, which we had been developing for
the treatment of enteric hyperoxaluria and which had accounted for the
substantial majority of our research and development expenses over the past
three years.

We typically use our employee and infrastructure resources across our development programs. We track outsourced development costs by product candidate or development program, but we do not allocate personnel costs and other internal costs to specific product candidates or development programs.

The following table summarizes our research and development expenses by program
(in thousands):

                                              For the Year Ended December 31,
                                             2021             2020          2019
Reloxaliase external costs                $    15,493       $   8,431     $ 18,393
ALLN-346 external costs                         7,752           2,366        5,697
Employee compensation and benefits              8,659           7,908       

10,187

Other                                           3,068           1,678       

2,967

Total research and development expenses $ 34,972 $ 20,383 $ 37,244

Research and development activities are central to our business model. Product
candidates in later stages of clinical development generally have higher
development costs than those in earlier stages, primarily due to the increased
size and duration of later-stage clinical trials. Since inception, we have
incurred $107.3 million of external research and development costs for
reloxaliase and $18.2 million of external research and development costs for
ALLN-346. Provided that we are able to secure sufficient capital to continue our
operations, we expect that our research and development costs will increase in
future years as we advance our ALLN-346 program, including initiating additional
clinical trials and scaling our manufacturing processes.

The successful development of ALLN-346 and other potential future product
candidates is highly uncertain. Accordingly, at this time, we cannot reasonably
estimate or know the nature, timing and costs of the efforts that will be
necessary to complete the development of these product candidates. We are also
unable to predict when, if ever, we will generate revenue and material net cash
inflows from the commercialization and sale of any of our product candidates for
which we may obtain marketing approval. We may never succeed in achieving
regulatory approval for any of our product candidates. The duration, costs and
timing of preclinical studies, clinical trials and development of our product
candidates will depend on a variety of factors, including:

•

successful enrollment in, and completion of, clinical trials for ALLN-346;

•

establishing an appropriate safety profile for any potential future product candidates with studies to enable the filing of investigational new drug application, or INDs;

•

approval of INDs for any potential future product candidate to commence planned or future clinical trials;

•

significant and changing government regulation and regulatory guidance;

•

timing and receipt of marketing approvals from applicable regulatory authorities;

•

making arrangements with CMOs for third-party commercial manufacturing of our product candidates;

•

obtaining and maintaining patent and other intellectual property protection and regulatory exclusivity for our product candidates;

•

commercializing the product candidates, if and when approved, whether alone or in collaboration with others;

•

acceptance of the product, if and when approved, by patients, the medical community and third-party payors; and

•

maintenance of a continued acceptable safety profile of the drugs following approval.

A change in the outcome of any of these variables with respect to the development, manufacture or commercialization enabling activities of any of our product candidates could mean a significant change in the costs, timing and viability associated with the development of that product candidate.

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General and Administrative Expenses

General and administrative expenses consist primarily of salaries and other
related costs, including stock-based compensation, for personnel in executive,
finance, accounting, business development and human resources functions. Other
significant costs include directors' and officers' insurance, facility costs not
otherwise included in research and development expenses, legal fees relating to
patent and corporate matters and professional fees for accounting, auditing, tax
and consulting services.

We expect that our general and administrative expenses will increase in the
future to support continued research and development activities and potential
commercialization of our product candidates. These increases will likely include
increased costs related to the hiring of additional personnel and fees to
outside consultants, attorneys and accountants, among other expenses.

Restructuring Charges

Restructuring charges consist of severance, bonus and other related costs incurred as a result of a reduction of our workforce completed in December 2019.

Interest Income (Expense), Net

Interest income (expense), net, primarily consists of interest income earned on
our cash and cash equivalents, interest expense incurred on our credit facility,
amortized debt discount related to the fair value of the warrants issued in
conjunction with the advances under our former credit facility with Silicon
Valley Bank, or SVB, and related debt issuance costs.

Other Income (Expense), Net

Other income (expense), net, primarily consists of a success fee paid to Pacific
Western Bank, or PWB, during the year ended December 31, 2020 associated with
our loan agreement with PWB, or PWB Loan Agreement, and gain (loss) on foreign
currency transactions.

Critical Accounting Policies and Use of Estimates

Our management's discussion and analysis of financial condition and results of
operations is based on our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States, or GAAP. The preparation of these financial statements requires
us to make estimates and judgments that affect the reported amounts of assets,
liabilities and expenses and the disclosure of contingent assets and liabilities
in our consolidated financial statements during the reporting periods. These
items are monitored and analyzed by us for changes in facts and circumstances,
and material changes in these estimates could occur in the future. We base our
estimates on historical experience, known trends and events, 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. Changes
in estimates are reflected in reported results for the period in which they
become known. Actual results may differ materially from these estimates under
different assumptions or conditions.

While our significant accounting policies are described in more detail in the
notes to our consolidated financial statements appearing elsewhere in this
Annual Report, we believe the following accounting policies used in the
preparation of our financial statements require the most significant judgments
and estimates.

Accrued Research and Development Expenses

As part of the process of preparing our consolidated financial statements, we
are required to estimate our accrued research and development expenses. This
process involves reviewing purchase orders and open contracts, communicating
with our personnel to identify services that have been performed on our behalf
and estimating the level of service performed and the associated cost incurred
for the services when we have not yet been invoiced or otherwise notified of the
actual cost. The majority of our service providers invoice us monthly in arrears
for services performed or when contractual milestones are met; however, some
require advance payments. We make estimates of our accrued expenses as of each
balance sheet date in our consolidated financial statements based on facts and
circumstances known to us at that time. We periodically confirm the accuracy of
our estimates with the service providers and make adjustments if necessary. The
significant estimates in our accrued research and development expenses include
the costs incurred for services performed by CROs and CMOs in connection with
research and development activities for which we have not yet been invoiced.

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We contract with CROs and CMOs to conduct clinical and manufacturing and other
research and development services on our behalf. We base our expenses related to
CROs and CMOs on our estimates of the services received and efforts expended
pursuant to quotes and contracts with them. The financial terms of these
agreements are subject to negotiation, vary from contract to contract and may
result in uneven payment flows. There may be instances in which payments made to
our CROs or CMOs will exceed the level of services provided and result in a
prepayment of the research and development expense. In accruing service fees, we
estimate the time period over which services will be performed and the level of
effort to be expended in each period. If the actual timing of the performance of
services or the level of effort varies from our estimate, we adjust the accrual
or amount of prepaid expense accordingly. Non-refundable advance payments for
goods and services that will be used in future research and development
activities are expensed when the activity has been performed or when the goods
have been received rather than when the payment is made.

Although we do not expect our estimates to be materially different from amounts
actually incurred, our understanding of the status and timing of services
performed relative to the actual status and timing of services performed may
vary and may result in us reporting amounts that are too high or too low in any
particular period. To date, there have been no material differences between our
estimates of such expenses and the amounts actually incurred.

Stock-Based Compensation

We apply the fair value recognition provisions of ASC 718, Compensation-Stock
Compensation, or ASC 718, for stock-based awards granted to employees, directors
non-employees. We estimate the fair value of each stock option grant using the
Black-Scholes option-pricing model. We recognize the corresponding stock-based
compensation expense on a straight-line basis over the requisite service period,
which is generally the vesting period of the respective award.

The Black-Scholes option-pricing model uses the following inputs: the fair value
of our common stock, the expected volatility of our common stock, the expected
term of our stock options, the risk-free interest rate for a period that
approximates the expected term of our stock options and our expected dividend
yield. Due to the lack of a public market for our common stock prior to our IPO
and a lack of company-specific historical and implied volatility data, we have
based our computation of expected volatility on the historical volatility of a
representative group of public companies with similar characteristics to us,
including stage of product development, life science industry focus, length of
trading history and similar vesting provisions. The historical volatility data
is calculated based on a period of time commensurate with the expected term
assumption. We will continue to apply this process until a sufficient amount of
historical information regarding the volatility of our own stock price becomes
available or until circumstances change, such that the identified entities are
no longer representative companies. In the latter case, more suitable, similar
entities whose share prices are publicly available would be utilized in the
calculation. We weigh our own historical volatility of our own stock price and
the historical volatility of a representative group of public companies for the
computation of expected volatility used for estimating the fair value of option
grants. We will increase the weighting on the historical volatility of our own
stock price over the historical volatility of a representative group of public
companies until such time as we have a sufficient amount of historical
information regarding the volatility of our own stock. We use the simplified
method as prescribed by the SEC Staff Accounting Bulletin No. 107, Share-Based
Payment, to calculate the expected term for options granted to employees as we
do not have sufficient historical exercise data to provide a reasonable basis
upon which to estimate the expected term. Under this approach, the
weighted-average expected option term is presumed to be the average of the
contractual term (ten years) and the vesting term (generally four years) of our
stock options. We utilize this method due to lack of historical exercise data
and the "plain-vanilla" nature of our stock-based awards. The expected term is
applied to the stock option grant group as a whole, as we do not expect
substantially different exercise or post-vesting termination behavior among our
employee population. For options granted to non-employees, we utilize the
contractual term of the arrangement as the basis for the expected term
assumption. The risk-free interest rate is based on a treasury instrument whose
term is consistent with the expected term of the stock options. The expected
dividend yield is assumed to be zero as we have never paid dividends and have no
current plans to pay any dividends on our common stock. We recognize forfeitures
as they occur.

The fair value of stock options granted to employees and directors for their
services on the board of directors was estimated on the date of grant using the
Black-Scholes option-pricing model, with the following range of assumptions for
the years ended December 31, 2021, 2020 and 2019:

                                  Years Ended December 31,
                              2021          2020          2019
Risk-free interest rate    0.4% - 1.4%   0.4% - 0.5%   1.4% - 2.6%
Expected dividend yield        -%            -%            -%
Expected term (in years)    5.0 - 7.0     5.5 - 6.1     5.5 - 6.8
Expected volatility         92% - 95%     94% - 95%     80% - 83%




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The following table summarizes the classification of our stock-based compensation expense recognized in our statements of operations and comprehensive loss (in thousands):

                                 Years Ended December 31,
                               2021         2020        2019

Research and development $ 1,128 $ 1,286 $ 1,175 General and administrative 2,543 2,765 1,814 Total

$   3,671     $ 4,051     $ 2,989



As of December 31, 2021, we had $5.1 million of unrecognized compensation
expense related to stock option awards, which is expected to be recognized over
weighted-average remaining vesting periods of approximately 2.5 years. As of
December 31, 2021, we did not have any unrecognized compensation expense related
to restricted stock units remaining to be recognized. Provided we are able to
secure adequate funding to continue operations, we expect stock-based
compensation expense to increase, due in part to our existing unrecognized
stock-based compensation expense, potential increases in the value of our common
stock and expected additional stock-based awards to continue to attract and
retain our employees.

Results of Operations

Comparison of Years Ended December 31, 2021 and 2020

The following table summarizes our results of operations for the years ended December 31, 2021 and 2020 (in thousands):

                                     For the Year Ended December 31,          Dollar
                                       2021                   2020            Change
Operating expenses:
Research and development         $         34,972       $         20,383     $  14,589
General and administrative                 12,677                 11,603         1,074
Total operating expenses                   47,649                 31,986        15,663
Loss from operations                      (47,649 )              (31,986 )     (15,663 )
Other income (expense):
Interest income (expense), net               (976 )                 (510 )        (466 )
Other income (expense), net                   (38 )                 (349 )         311
Other income (expense), net                (1,014 )                 (859 )        (155 )
Net loss                         $        (48,663 )     $        (32,845 )   $ (15,818 )

Research and Development Expenses

Research and development expense increased by $14.6 million from $20.4 million
for the year ended December 31, 2020 to $35.0 million for the year ended
December 31, 2021. The following table summarizes our research and development
expenses for the years ended December 31, 2021 and 2020 (in thousands):

                                             For the Year Ended December 31,           Dollar
                                               2021                  2020              Change

Clinical development external costs $ 17,565 $ 7,247 $ 10,318 Manufacturing external costs

                        5,461                 3,153             2,308
Employee compensation and benefits                  8,659                 7,908               751
Other                                               3,287                 2,075             1,212

Total research and development expenses $ 34,972 $ 20,383 $ 14,589

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The $14.6 million increase in research and development expense was primarily attributable to the following:

•

Our clinical development external costs increased by $10.3 million from $7.2
million for the year ended December 31, 2020 to $17.6 million for the year ended
December 31, 2021:

•

Our URIROX-2 costs increased $6.3 million from $5.4 million for the year ended
December 31, 2020 to $11.7 million for the year ended December 31, 2021. During
the year ended December 31, 2020, we limited the opening of new trial sites for
the ongoing URIROX-2 trial while we assessed revisions to the study design and
sought additional funds to support the development of reloxaliase. We began
expanding URIROX-2 to additional geographies and clinical trial sites using a
portion of the $13.7 million of net proceeds received from a registered direct
offering completed in June 2020 and the $6.7 million of net proceeds received
from a public offering completed in July 2020. We continued to expand URIROX-2
to additional geographies and clinical trial sites during the year ended
December 31, 2021;

•

Our URIROX-1 costs decreased $0.3 million from $0.5 million for the year ended
December 31, 2020 to $0.2 million for the year ended December 31, 2021. This
study was completed in the fourth quarter of 2019 and we released top-line data
in November 2019; and

•

Our ALLN-346 costs increased $4.3 million from $0.6 million for the year ended December 31, 2020 to $4.9 million for the year ended December 31, 2021:

?
During the year ended December 31, 2021, we initiated dosing in two Phase 2a
studies. We incurred $3.7 million of costs for the Phase 2a program during the
year ended December 31, 2021, for which there were no comparable costs during
the year ended December 31, 2020; and

?

We incurred costs for our Phase 1 program of $1.1 million and $0.6 million for the year ended December 31, 2021 and 2020, respectively.

•

Our manufacturing external costs increased by $2.3 million from $3.2 million for
the year ended December 31, 2020 to $5.5 million for the year ended December 31,
2021;

•

Reloxaliase formulation and development related costs increased $1.1 million
from $0.7 million for the year ended December 31, 2020 to $1.8 million for the
year ended December 31, 2021;

•

ALLN-346 formulation and development related costs increased $0.7 million from
$0.9 million for the year ended December 31, 2020 to $1.6 million for the year
ended December 31, 2021; and

•

Our manufacturing consulting costs to support our programs increased $0.5 million from $0.3 million for the year ended December 31, 2020 to $0.8 million for the year ended December 31, 2021;

•

Our employee compensation and benefits costs increased by $0.8 million for the
year ended December 31, 2021. Increased compensation and benefits costs due to
an increase in headcount from 22 employees at December 31, 2020 to 35 employees
at December 31, 2021 were partially offset by the decision not to pay annual
bonuses .

Provided that we are able to secure sufficient capital to continue our operations, we expect that our research and development expenses will increase in future periods as we continue our clinical development and scale our manufacturing processes in our ALLN-346 program.

General and Administrative Expenses

General and administrative expense increased by $1.1 million from $11.6 million
for the year ended December 31, 2020 to $12.7 million for the year ended
December 31, 2021. The following table summarizes our general and administrative
expenses for the years ended December 31, 2021 and 2020 (in thousands):

                                           For the Year Ended December 31,  

Dollar

                                             2021                  2020     

Change

Employee compensation and benefits $ 5,942 $ 6,510 $ (568 ) Consulting and professional services

              3,593                 2,795               798
Market research and commercialization
planning                                            133                    35                98
Other                                             3,009                 2,263               746
Total general and administrative
expenses                                $        12,677       $        11,603     $       1,074

The $1.1 million increase in general and administrative expense was primarily due to the following:

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•

Our consulting and professional services costs increased by $0.8 million for the
year ended December 31, 2021. The increase was primarily due to increased costs
for consulting, recruiting, accounting, investor relations and website design
and maintenance;

•

Our other costs increased by $0.7 million for the year ended December 31, 2021, primarily due to an increase in directors' and officers' insurance costs; and

•

These increased costs were partially offset by a decrease of $0.6 million in our
employee compensation and benefits costs for the year ended December 31, 2021,
primarily due to the decision not to pay annual bonuses.

Provided that we are able to secure sufficient capital to continue our operations, we expect that our general and administrative expense will increase in future periods as we expand our operations and incur additional costs to support our clinical development programs and prepare for potential commercialization.

Interest Income (Expense), net

Interest income (expense), net consists of interest income earned on our cash
and cash equivalents, interest expense charged on our outstanding debt, and
amortization of our debt discount. Net interest expense increased $0.5 million
for the year ended December 31, 2021 due to increased interest expense
associated with amounts outstanding under the Pontifax Agreement.

Other Income (Expense), net

Other expense, net consists gain (loss) on foreign currency transactions. Included in other expense, net for year ended December 31, 2020 was a success fee of $0.3 million paid to PWB.

Comparison of Years Ended December 31, 2020 and 2019

The following table summarizes our results of operations for the years ended December 31, 2020 and 2019 (in thousands):

                                     For the Year Ended December 31,          Dollar
                                       2020                   2019            Change
Operating expenses:
Research and development         $         20,383       $         37,244     $ (16,861 )
General and administrative                 11,603                  9,676         1,927
Restructuring charges                           -                    605          (605 )
Total operating expenses                   31,986                 47,525       (15,539 )
Loss from operations                      (31,986 )              (47,525 )      15,539
Other income (expense):
Interest income (expense), net               (510 )                  270          (780 )
Other income (expense), net                  (349 )                  (84 )        (265 )
Other income (expense), net                  (859 )                  186        (1,045 )
Net loss                         $        (32,845 )     $        (47,339 )   $  14,494

Research and Development Expenses

Research and development expense decreased by $16.9 million from $37.2 million
for the year ended December 31, 2019 to $20.4 million for the year ended
December 31, 2020. The following table summarizes our research and development
expenses for the years ended December 31, 2020 and 2019 (in thousands):

                                             For the Year Ended December 31,           Dollar
                                               2020                  2019              Change

Clinical development external costs $ 7,247 $ 14,689 $ (7,442 ) Manufacturing external costs

                        3,153                 8,823            (5,670 )
Employee compensation and benefits                  7,908                10,187            (2,279 )
Other                                               2,075                 3,545            (1,470 )

Total research and development expenses $ 20,383 $ 37,244 $ (16,861 )

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The $16.9 million decrease in research and development expense was primarily attributable to the following:

•

Our clinical development external costs decreased by $7.4 million from $14.7
million for the year ended December 31, 2019 to $7.2 million for the year ended
December 31, 2020:

•

Our URIROX-1 costs decreased $4.5 million from $5.0 million for the year ended
December 31, 2019 to $0.5 million for the year ended December 31, 2020. This
study was completed in the fourth quarter of 2019 and we released top-line data
in November 2019. The costs incurred during the year ended December 31, 2020
were related to closeout activities;

•

Our URIROX-2 costs decreased $1.6 million from $7.0 million for the year ended
December 31, 2019 to $5.4 million for the year ended December 31, 2020. During
the first half of 2020, we limited the opening of new trial sites for the
ongoing URIROX-2 trial while we assessed revisions to the study design and
sought additional funds to support the development of reloxaliase. A significant
portion of the proceeds from sales of our common stock during 2020 were used to
activate additional clinical trial sites and increase investment in the URIROX-2
trial. During the second half of 2020 we began expanding URIROX-2 to additional
geographies and clinical trial sites;

•

During 2019, we incurred costs of $0.4 million with an independent third party to perform an independent analysis of the results of the URIROX-1 study to assist in the assessment of revisions and redesign of the URIROX-2 study;

•

Costs related to our study 206 of reloxaliase decreased $0.8 million from $1.3
million for the year ended December 31, 2019 to $0.5 million for the year ended
December 31, 2020. This study was also completed in the fourth quarter of 2019
and we reported top-line data in November 2019. The costs incurred during the
year ended December 31, 2020 were related to closeout activities;

•

We incurred consulting costs of $0.4 million during the year ended December 31,
2019 to support our URIROX-1, URIROX-2 and 206 studies. In conjunction with the
completion of the URIROX-1 study and 206 Study in the fourth quarter of 2019 and
reduced activity in the URIROX-2 study while we pursued additional financing, we
did not require the additional consulting services during the year ended
December 31, 2020; and

•

Partially offsetting the decrease in clinical costs related to our reloxaliase
program was $0.6 million of costs for our Phase 1 single-ascending dose clinical
trial of ALLN-346, which we completed in the fourth quarter of 2020.

•

Our manufacturing external costs decreased by $5.7 million from $8.8 million for
the year ended December 31, 2019 to $3.2 million for the year ended December 31,
2020;

•

ALLN-346 formulation and development related costs decreased $3.4 million from
$4.3 million for the year ended December 31, 2019 to $0.9 million for the year
ended December 31, 2020. Included in the formulation and development related
costs for the year ended December 31, 2019 was $2.5 million of costs for the
production of engineering and clinical batches of drug substance, for which
there were no comparable costs for the year ended December 31, 2020;

•

Reloxaliase formulation and development related costs decreased $1.2 million
from $1.9 million for the year ended December 31, 2019 to $0.7 million for the
year ended December 31, 2020; and

•

Reloxaliase consumables and raw materials costs for engineering and clinical
batches decreased $0.9 million from $1.2 million for the year ended December 31,
2019 to $0.3 million for the year ended December 31, 2020;

•

Our employee compensation and benefits costs decreased by $2.3 million for the
year ended December 31, 2020 due to decreases in average headcount, benefits and
stock-based compensation costs as a result of our reduction of workforce
completed in December 2019.

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General and Administrative Expenses

General and administrative expense increased by $1.9 million from $9.7 million
for the year ended December 31, 2019 to $11.6 million for the year ended
December 31, 2020. The following table summarizes our general and administrative
expenses for the years ended December 31, 2020 and 2019 (in thousands):


                                             For the Year Ended December 31,             Dollar
                                              2020                     2019              Change
Employee compensation and benefits      $           6,510         $         4,277     $       2,233
Consulting and professional services                2,795                   3,173              (378 )
Market research and commercialization
planning                                               35                     534              (499 )
Other                                               2,263                   1,692               571
Total general and administrative
expenses                                $          11,603         $         9,676     $       1,927

The $1.9 million increase in general and administrative expense was primarily due to the following:

•

Our employee compensation and benefits costs increased by $2.2 million for the
year ended December 31, 2020, primarily due to an increase in employee salaries,
wages, benefit costs and stock-based compensation. Stock-based compensation
increased $1.0 million from $1.8 million for the year ended December 31, 2019 to
$2.8 million for the year ended December 31, 2020;

•

Our consulting and professional services costs decreased by $0.4 million for the year ended December 31, 2020. The decrease was primarily due to decreased recruiting costs and investor and public relations costs;

•

Our market research and commercialization planning costs decreased by $0.5
million for the year ended December 31, 2020. During the year ended December 31,
2019, we incurred costs of $0.4 million for a study with an independent third
party to perform a market assessment for enteric hyperoxaluria. There were no
comparable costs for the year ended December 31, 2020; and

•

Our other costs increased by $0.6 million for the year ended December 31, 2020, primarily due to an increase in directors' and officers' insurance costs.

Restructuring Charges

Restructuring charges consist of severance, bonus and other related costs incurred as a result of a reduction of our workforce completed in December 2019.

Interest Income (Expense), net

Interest income (expense), net consists of interest income earned on our cash
and cash equivalents, interest expense charged on our outstanding debt, and
amortization of our debt discount. We had net interest expense of $0.5 million
for the year ended December 31, 2020 and net interest income of $0.3 million for
the year ended December 31, 2019. The change was primarily attributable to a
decrease in interest earned as a result of lower average balances of cash and
cash equivalents for the year ended December 31, 2020 as compared to average
balances of cash and cash equivalents for the year ended December 31, 2019.

Other Income (Expense), net

Other income (expense), net consists of a success fee paid to PWB and gain
(loss) on foreign currency transactions. Included in other expenses, net for the
year ended December 31, 2020 was a success fee of $0.3 million paid to PWB. The
conditions required to meet the obligation were fulfilled at the time we
completed our registered direct offering on June 5, 2020 and we expensed the
success fee at this time.

Liquidity and Capital Resources

Sources of Liquidity

We have funded our operations from inception through December 31, 2021 through
gross proceeds of $96.0 million from sales of our convertible preferred stock,
net proceeds of $67.0 million from our IPO which was completed in November 2017,
net proceeds totaling $33.8 million from follow-on offerings of common stock
during 2020, borrowings of $10.0 million under our credit facilities, net
proceeds of $14.6 million and $4.2 million from the sale of our common stock
under the Cowen ATM

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Agreement and the B. Riley ATM Agreement, respectively, and net proceeds of $25.4 million from the registered direct offering completed in July 2021. Our total cash and cash equivalents were $30.0 million as of December 31, 2021.

We entered into an updated At Market Issuance Sales Agreement with B. Riley
Securities, Inc. ("Updated B. Riley ATM Agreement") on December 23, 2021. During
the first quarter of 2022 through the filing date of this Annual Report, we
issued and sold 6,804,888 shares of our common stock under the Updated B. Riley
ATM Agreement at a weighted average price of $0.62 per share for net proceeds of
$4.1 million. The shares were issued and sold pursuant to a shelf registration
statement on Form S-3 we filed on May 6, 2021, which was declared effective on
May 12, 2021 (File No. 333-255837), for the offering of up to $200 million in
the aggregate of common stock, preferred stock, debt securities, warrants and/or
units ("securities") from time to time in one or more offerings. As of the
filing of this Annual Report on Form 10-K, we have not offered any other
securities pursuant to this shelf registration. The initial B. Riley ATM
Agreement was terminated at the time we entered into the Updated B. Riley ATM
Agreement.

On September 29, 2020, we entered into a loan and security agreement with
Pontifax Medison Finance (Israel) L.P. and Pontifax Medison Finance (Cayman)
L.P. (together "Pontifax") ("Pontifax Agreement") providing up to $25.0 million
of borrowings through three facilities of a term loan. An initial loan ("Initial
Loan) of $10.0 million was advanced on September 29, 2020. A portion of these
proceeds were used to pay the remaining balance of our credit facility with PWB
and terminate the PWB Loan Agreement. We also had an additional $5.0 million
credit line ("Credit Line") that was available to us for withdrawal until
September 29, 2021. We did not withdraw any amounts available through the Credit
Line prior to the expiration of the availability period. We paid a fee of 1.0%
per annum to Pontifax for the daily average amount not withdrawn under the
Credit Line during the period amounts were available for withdrawal. A third
installment loan (Third Installment Loan") of an additional $10.0 million was
conditioned upon achievement of one of the following milestones by no later than
December 29, 2021: (i) we receive non-contingent, non-refundable gross proceeds
from one or more equity financings and/or strategic partnerships, in each case
consummated following the Closing Date, in the aggregate amount of at least
$15.0 million for all such equity financings and strategic partnerships or (ii)
the 65th patient has been enrolled in the URIROX-2 trial. During the three
months ended December 31, 2020, the additional $10 million under the Third
Installment Loan became available to us for withdrawal until December 29, 2021
when we satisfied the milestone of at least $15 million of gross proceeds from
equity financings. We did not withdraw any amounts available through the Third
Installment Loan prior to expiration of the availability period.

The Pontifax Agreement has a term of 48 months and an interest only period of 24
months. Amounts outstanding under the Pontifax Agreement have a fixed interest
rate of 9.0% per annum. Upon the expiration of the interest only period on
September 29, 2022, amounts borrowed will be repaid over eight equal quarterly
payments of principal and interest. At our option, we may prepay all or part of
the outstanding borrowings at any time without any prepayment premium or
penalty. During the first quarter of 2022, we prepaid $5.0 million of the
outstanding principal balance. In light of our recent termination of the
reloxaliase development program and certain acceleration provisions in the
Pontifax Agreement, we have classified the amounts due under the Pontifax loan
as a current liability.

At the option of Pontifax, amounts outstanding under the Pontifax Agreement may
be converted at any time into shares of our common stock at a conversion price
of $4.10 per share. In addition, we have the right to convert at any time any
portion of the then outstanding borrowings and all accrued but unpaid interest
into shares of our common stock, at the applicable conversion price, subject to
the fulfillment of both of the following conditions: (i) during a period of 30
consecutive trading days prior to the date on which we provide notice of the
exercise of our conversion right, the closing price of our common stock was
higher than 1.4 times the applicable conversion price of the term loans on at
least 20 trading days, including on the trading day preceding the date we
provide notice of the exercise of our conversion right and (ii) the number of
shares of common stock issuable upon conversion by us shall not exceed the
average weekly number of shares of our common stock traded on the stock market
for the four weeks immediately preceding the date on which we provide notice of
the exercise of our conversion right.

The borrowings under the Pontifax Agreement are secured by a lien on all of our
assets except intellectual property. The Pontifax Agreement contains customary
representations, warranties and covenants by us, including negative covenants
restricting our activities, such as disposing of our business or certain assets,
incurring additional debt or liens or making payments on other debt, making
certain investments and declaring dividends, acquiring or merging with another
entity, engaging in transactions with affiliates or encumbering intellectual
property, among others. The obligations under the Pontifax Agreement are subject
to acceleration upon occurrence of specified events of default, including a
material adverse change in our business, operations or financial or other
condition.


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Cash Flows

The following table provides information regarding our cash flows for the years ended December 31, 2021, 2020 and 2019 (in thousands):

                                                    For the Year Ended December 31,
                                                 2021             2020            2019
Net cash used in operations                  $    (45,678 )    $   (28,159 )   $   (43,632 )
Net cash used in investing activities                (667 )           (632 )          (122 )
Net cash provided by financing activities          41,291           33,826  

12,118

Net increase (decrease) in cash and cash
equivalents                                  $     (5,054 )    $     5,035     $   (31,636 )

Net Cash Used in Operating Activities

The cash used in operating activities resulted primarily from our net losses adjusted for non-cash charges and changes in components of working capital.

Net cash used in operating activities was $45.7 million for the year ended December 31, 2021 compared to $28.2 million for the year ended December 31, 2020. The increase in cash used in operating activities of $17.5 million was attributable to:

•

An increase in net loss of $15.8 million;

•

A decrease in non-cash items of $0.4 million resulting primarily from increases in stock-based compensation expense; and

•

A decrease of $1.3 million due to changes in the components of working capital.

Net cash used in operating activities was $28.2 million for the year ended December 31, 2020 compared to $43.6 million for the year ended December 31, 2019. The decrease in cash used in operating activities of $15.4 million was attributable to:

•

a decrease in net loss of $14.4 million;

•

An increase in non-cash items of $1.2 million resulting primarily from increases in stock-based compensation expense; and

•

A decrease of $0.2 million due to changes in the components of working capital.

Net Cash Used in Investing Activities

Net cash used in investing activities was $0.7 million, $0.6 million and $0.1
million for the years ended December 31, 2021, 2020 and 2019, respectively. Cash
used in investing activities related to net purchases of property and equipment.

Net Cash Provided by Financing Activities

Net cash provided by financing activities of $41.3 million for the year ended
December 31, 2021 primarily consisted of net proceeds of $11.7 million and $4.2
from the sale of common stock under the Cowen ATM Agreement and the B. Riley ATM
Agreement, respectively, and $25.4 million of net proceeds from the issuance and
sale of 17,416,096 shares of our common stock, pre-funded warrants to purchase
up to an aggregate of 3,941,648 shares of our common stock in lieu of shares of
common stock and warrants to purchase up to 10,678,872 shares of our common
stock completed on July 16, 2021 through a registered direct offering,
respectively. .

Net cash provided by financing activities of $33.9 million for the year ended
December 31, 2020 was primarily attributable to net proceeds of $34.0 million
from the issuance and sale of our common stock through the registered direct
offering completed in June 2020 and our public underwritten offerings completed
in July 2020 and December 2020.

Net cash provided by financing activities of $12.1 million for the year ended
December 31, 2019 was primarily attributable to net proceeds of $12.0 million
from the issuance and sale of our common stock through the registered direct
offering completed in June 2019 and under our ATM facility completed in December
2019.

Funding Requirements

Provided that we are able to secure adequate financing to continue our
operations, we expect our expenses to increase in connection with our ongoing
activities, particularly as we continue the research and development for,
initiate later stage clinical trials for, and seek marketing approval for,
ALLN-346 and any other product candidates we may develop. In addition, if we
obtain marketing approval for any of our product candidates, we expect to incur
significant commercialization expenses related to product sales, marketing,
manufacturing and distribution. Accordingly, we will need to obtain substantial
additional funding

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in connection with our continuing operations. If we are unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

Going Concern

As of December 31, 2021, we had cash and cash equivalents totaling $30.0
million, and as of March 31, 2022 we had cash and cash equivalents totaling $9.0
million. Based on our current operating plans, we do not have sufficient cash
and cash equivalents to fund our operating expenses and capital expenditures for
at least the next 12 months from the filing date of this Annual Report. We do
not believe that our cash and cash equivalents as of March 31, 2022 will enable
us to fund our operating expenses and capital requirements beyond the next
several weeks. We will require additional capital to sustain our operations,
including our ALLN-346 development program, beyond that time.

On March 18, 2022, we announced our decision to terminate our URIROX-2 study for
reloxaliase and initiated the process of closing the study with our CRO,
investigative sites, patients and business partners. In connection with the
termination of the reloxaliase program, we completed a workforce reduction of
approximately 40% in March 2022.

We are exploring opportunities to secure additional funding through equity or
debt financings or through collaborations, licensing transactions or other
sources. In January 2022, we initiated a process to explore a range of strategic
and financing alternatives to maximize shareholder value and have engaged the
investment bank Stifel, Nicolaus & Company, Inc. ("Stifel") to act as strategic
advisor for this process. Potential strategic alternatives that may be evaluated
include a partnership or sale of ALLN-346, a sale or merger of the Company, or
securing additional financing to enable further development of our ALLN-346
program. There can be no assurance that this strategic review process will
result in the pursuit of any transaction or that any transaction, if pursued,
will be completed. The failure to obtain sufficient additional funds on
commercially acceptable terms to fund our operations may have a material adverse
effect on our business, results of operations and financial condition and
jeopardize our ability to continue operations in the near-term. We will likely
need to consider additional cost reduction strategies, which may include, among
others, amending, delaying, limiting, reducing, or terminating the development
program for ALLN-346, and we may need to seek an in-court or out-of-court
restructuring of our liabilities. In the event of such future bankruptcy
proceeding, holders of our common stock and other securities will likely suffer
a total loss of their investment.

As part of the strategic process, the Compensation Committee of the Board of
Directors approved a retention plan on January 28, 2022, available to all
employees ("Retention Plan"). Employees were required to execute retention
agreements to receive payments and other considerations offered by the Retention
Plan. Employees who executed a retention agreement received a salary adjustment
equal to 6.5% retroactive to January 1, 2022, a restricted stock unit ("RSU")
grant and a lump sum retention payment. A total of 3,163,000 RSUs were granted
on February 1, 2022 under the Retention Plan. The RSUs vest over a three-year
period ratably on July 15th and January 15th of each year following grant date.
Lump sum retention payments totaling $3.0 million were made to employees in
February 2022. If an employee resigns from the Company or is terminated for
cause prior to June 30, 2022, the employee would be required to fully repay the
lump sum retention payment received. If an employee resigns from the Company or
is terminated for cause between July 1, 2022 and September 30, 2022, the
employee would be required to repay 50% of the lump sum retention payment
received.

Market volatility resulting from the COVID-19 pandemic or other factors could
also adversely impact our ability to access capital as and when needed. The
failure to obtain sufficient funds on commercially acceptable terms when needed
would have a material adverse effect on our business, results of operations and
financial condition and jeopardize our ability to continue operations. These
factors raise substantial doubt about our ability to continue as a going
concern. We may implement cost reduction strategies, which may include amending,
delaying, limiting, reducing, or terminating one or more of our ongoing or
planned clinical trials or development programs of our product candidates. The
accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and satisfaction of
liabilities in the ordinary course of business for the foreseeable future. The
consolidated financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might result from the outcome of this
uncertainty. Our future capital requirements will depend on many factors,
including;


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•

the costs of conducting future clinical trials and other development activities
to advance ALLN-346;
•
the scope, progress, results and costs of discovery, preclinical development,
laboratory testing and clinical trials for other potential product candidates we
may develop, if any;
•
the costs, timing and outcome of regulatory review of our product candidates;
•
our ability to establish and maintain collaborations on favorable terms, if at
all;
•
the achievement of milestones or occurrence of other developments that trigger
payments under any collaboration agreements we might have at such time;
•
the costs and timing of future commercialization activities, including product
sales, marketing, manufacturing and distribution, for any of our product
candidates for which we receive marketing approval;
•
the amount of revenue, if any, received from commercial sales of our product
candidates, should any of our product candidates receive marketing approval;
•
the costs of preparing, filing and prosecuting patent applications, obtaining,
maintaining and enforcing our intellectual property rights and defending
intellectual property-related claims;
•
the expansion of our workforce and associated costs as we expand our business
operations and our research and development activities; and
•
the costs of operating as a public company.

Identifying potential product candidates and conducting preclinical testing 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 and achieve product sales. In addition,
our product candidates, if approved, may not achieve commercial success. Our
commercial revenues, if any, will be derived from sales of products that we do
not expect to be commercially available for many years, if at all. Accordingly,
we will need to continue to rely on additional financing to achieve our business
objectives. Adequate additional financing may not be available to us on
acceptable terms, or at all.

We do not have any committed external sources of funds. To the extent that we
raise additional capital through the sale of equity or convertible debt
securities, ownership interests may be diluted, and the terms of these
securities may include liquidation or other preferences that could adversely
affect your rights as a common stockholder. Additional debt financing, if
available, may involve agreements that include restrictive covenants that limit
our ability to take specific actions, such as incurring additional debt, making
capital expenditures or declaring dividends, that could adversely impact our
ability to conduct our business.

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

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