Kymera Therapeutics, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Filed November 10, 2021. Amounts below are in U.S. dollars; financial figures are in millions unless stated otherwise.
Business context
Kymera is a clinical-stage biopharmaceutical company developing small-molecule targeted protein degraders using its Pegasus platform. It has no approved products and has generated no drug-sales revenue; reported revenue comes from research collaborations, principally with Sanofi and Vertex. Its lead programs are IRAK4 (KT-474), IRAKIMiD (KT-413), and STAT3 (KT-333).
Financial performance
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Collaboration revenue | $20.3 | $14.5 | $57.6 | $21.2 |
| Research and development expense | $38.3 | $15.8 | $99.5 | $41.7 |
| General and administrative expense | $10.7 | $6.8 | $24.6 | $13.1 |
| Operating loss | $(28.6) | $(8.1) | $(66.5) | $(33.5) |
| Net loss | $(28.6) | $(8.0) | $(66.3) | $(32.9) |
| Net loss per share, basic and diluted | $(0.56) | $(0.39) | $(1.42) | $(5.11) |
| Operating cash flow | Not separately presented | Not separately presented | $(90.6) | $108.2 |
Q3 collaboration revenue increased about 40% year over year, while operating expenses rose about 117% and net loss widened by $20.6 million. For the nine-month period, revenue increased about 171%, but operating expenses also rose substantially and net loss approximately doubled. Operating loss was greater than collaboration revenue in both 2021 periods, reflecting the company’s research-stage cost base.
Nine-month 2021 revenue comprised $42.5 million from Sanofi and $15.1 million from Vertex. The company reported no milestone or royalty receipts under these agreements. Nine-month R&D expense increased primarily with clinical and IND-enabling work, platform and exploratory programs, collaboration activity, and higher personnel and occupancy costs.
Cash, liquidity and obligations
- At September 30, 2021, cash and cash equivalents were $156.8 million and marketable securities were $454.3 million, for combined cash, cash equivalents and marketable securities of $611.1 million.
- Current assets were $543.7 million and current liabilities $94.5 million, implying working capital of approximately $449.2 million and a current ratio of about 5.8x.
- Total liabilities were $159.3 million; the filing reports lease liabilities but no conventional borrowings. Operating and finance lease liabilities totaled approximately $18.4 million.
- Deferred revenue was $116.2 million, down from $170.4 million at December 31, 2020. The nine-month cash-flow statement shows a $54.2 million decrease in deferred revenue, a major factor in operating cash use.
- Financing activities provided $248.2 million in the first nine months, principally from the July 2021 follow-on offering and concurrent private placement. The offerings issued 5.47 million public shares and 49,928 shares to Vertex; reported net proceeds were approximately $243.1 million in total.
- Stockholders’ equity was $483.1 million, versus $283.9 million at year-end 2020. Accumulated deficit increased to $195.1 million. Shares outstanding at September 30 were 51.26 million.
Material developments, outlook and risks
- KT-474: The FDA lifted the partial clinical hold on the multiple-ascending-dose portion of its Phase 1 trial in June 2021. Enrollment and dosing began in July; a subsequent cohort was expected to include hidradenitis suppurativa and atopic dermatitis patients.
- KT-333: The FDA cleared the IND for a Phase 1 trial in relapsed/refractory liquid and solid tumors. Management expected the trial to begin before year-end 2021.
- KT-413: The company was pursuing IND clearance and expected to begin a Phase 1 trial in relapsed/refractory B-cell lymphomas after clearance.
- Management stated that September 30 liquidity was expected to fund operating expenses and capital requirements into 2025, while noting that this estimate depended on assumptions and could prove wrong. The financial-statement note separately says resources were expected to fund operations for at least 12 months from issuance; investors should reconcile these runway statements.
- An at-the-market program of up to $250 million was established after quarter-end under an October 1 equity distribution agreement; no sales had been made under the program as of the filing.
- Key risks include early-stage clinical and regulatory uncertainty, possible safety or efficacy failures, reliance on third-party trial and manufacturing providers, potential clinical delays from COVID-19, intellectual-property challenges, and the possibility that additional capital may be needed on dilutive or unfavorable terms. The company says operating losses and negative cash flows are expected to continue.
- No material legal proceedings were reported. Management concluded disclosure controls and procedures were effective at the reasonable-assurance level as of September 30, 2021.
Important facts for investors to verify
- Progress, enrollment, safety findings and timing for KT-474, KT-333 and KT-413, including whether the stated trial milestones were achieved.
- The assumptions behind management’s runway estimate into 2025 and its difference from the financial-statement note’s 12-month liquidity statement.
- Future R&D spending, operating cash burn and the pace at which collaboration deferred revenue is recognized.
- Whether the $250 million ATM program is used, and the resulting dilution and cash runway impact.
- The cover page marks “No” for having filed all required reports during the preceding 12 months; verify the significance and circumstances of that response.