Karyopharm Therapeutics Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022. The company is a commercial-stage oncology pharmaceutical company whose lead product is XPOVIO (selinexor), alongside its clinical-stage pipeline. Amounts below are in U.S. dollars; financial statement amounts are in millions unless otherwise noted.
Financial results and liquidity
| Metric | Q1 2022 | Q1 2021 / comparison |
|---|---|---|
| Total revenue | $47.7 | $23.3; up 105% |
| U.S. XPOVIO net product revenue | $28.3 | $21.7; up 30% |
| License and other revenue | $19.4 | $1.5 |
| Operating expenses | $82.3 | $75.6; up 9% |
| Operating loss | $34.6 | $52.4 |
| Net loss | $41.4 | $57.4 |
| Basic and diluted loss per share | $0.53 | $0.77 |
| Cash used in operating activities | $59.2 | $52.9 |
| Cash, cash equivalents and investments at March 31 | $205.3 | $228.6 at December 31, 2021, comprising $190.5 cash and $38.2 short-term investments |
Gross product revenue was $34.9 million, reduced by $6.6 million of discounts, rebates, returns and other provisions to net product revenue of $28.3 million. Cost of sales was $1.4 million; the filing notes that previously expensed inventory continues to suppress reported product costs, so reported cost of sales should not be treated as a normalized product margin.
R&D expense rose 14% to $42.1 million, principally from higher personnel costs (including $1.6 million of severance) and clinical trial spending. SG&A increased 3% to $38.8 million, primarily from personnel and severance costs. Interest expense increased to $6.7 million from $5.1 million, mainly reflecting the amended HCR royalty financing. The balance sheet reported total liabilities of $377.1 million and a stockholders’ deficit of $83.1 million.
At March 31, the company reported $169.5 million net carrying value of its 3.00% convertible notes due October 2025, with $172.5 million principal outstanding. The balance sheet showed a $133.0 million deferred royalty obligation; the notes describe a $129.9 million carrying amount plus a $3.1 million embedded derivative. HCR receives a share of selinexor and other covered revenues, subject to payment caps and minimum-payment provisions. The company had paid HCR $32.2 million by quarter-end.
Operating cash outflow exceeded the prior-year period despite a smaller net loss, primarily because of changes in operating assets and liabilities, including a $27.3 million increase in prepaid expenses and other current assets. Financing provided $30.8 million, including $29.3 million net proceeds from at-the-market stock sales. The company stated existing cash, cash equivalents and investments were expected to fund current operating plans and capital expenditures for at least 12 months from the financial statement issuance date.
Key changes and business developments
- XPOVIO U.S. net product revenue grew 30%, which management attributed to more patients treated in earlier lines of therapy and increased physician use.
- License and other revenue included $7.8 million of Antengene development/regulatory milestones and $7.1 million of Menarini development-cost reimbursement. These items materially lifted total revenue; management expected license and other revenue to decline in Q2, mainly because Q1 included Antengene milestones.
- Common shares outstanding increased from 75.7 million at December 31, 2021 to 79.4 million at March 31, following at-the-market issuance and other share activity. An additional $70.7 million of capacity remained under the sale agreement at quarter-end.
- International approvals were reported in Australia and Singapore in March 2022. Menarini holds commercialization rights in Europe and other territories, and reimburses a portion of global selinexor development costs under the agreement.
Outlook, risks and unusual items
- Management expected XPOVIO product revenue to increase in 2022 compared with 2021, while license and other revenue was expected to decrease in Q2 versus Q1. No full-year revenue or earnings guidance figure is provided in the filing.
- Management expected R&D and SG&A expenses to increase in Q2 versus Q1, largely due to severance-related stock-based compensation. It expected 2022 expenses excluding stock-based compensation to remain relatively consistent with 2021.
- SIENDO/endometrial cancer: After announcing positive top-line Phase 3 SIENDO results, the company reported that FDA feedback at a February 2022 meeting indicated the results were unlikely to support an sNDA approval. Based on exploratory results in patients with p53 wild-type tumors, it planned a new randomized, placebo-controlled study, subject to FDA discussions, with initiation planned for the second half of 2022.
- Regulatory review: The EMA was reviewing a Type II variation based on the BOSTON study. Following GCP inspections and questions/findings, the company said it had responded; a CHMP opinion could be issued in the first half of 2022, but acceptance of its responses was not assured.
- XPOVIO’s DLBCL indication was granted under accelerated approval and remains subject to confirmatory post-marketing requirements. Failure to verify clinical benefit or meet requirements could jeopardize the indication.
- Key risks include continued operating losses and need for additional financing, competition and adoption of XPOVIO, clinical and regulatory uncertainty, product safety and tolerability, reliance on third-party manufacturing and collaborators, and possible effects of COVID-19 and geopolitical/economic disruption.
- A securities class action complaint was dismissed in July 2021, but the plaintiff appealed; oral argument took place in February 2022. A related shareholder derivative suit remained stayed. The company said it believed the appeal lacked merit and intended to defend the litigation.
Most important facts for investors to verify
- Whether XPOVIO sales growth continues and whether the company can sustain commercial adoption amid competition and pricing/reimbursement pressures.
- The underlying recurrence and timing of license milestones and Menarini reimbursements, given their large contribution to Q1 revenue.
- FDA alignment on the design and timing of the proposed p53 wild-type endometrial cancer study, and the effect of SIENDO feedback on development plans.
- Progress and outcome of the EMA review, including resolution of GCP inspection questions and any CHMP decision.
- Cash burn, financing needs, dilution from further equity sales, and the company’s ability to meet convertible-note and HCR payment obligations.
- Completion and results of required confirmatory studies for accelerated or conditional approvals, including the DLBCL indication.