Nkarta, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021; filed May 13, 2021. Nkarta is a clinical-stage biopharmaceutical company developing off-the-shelf engineered natural killer (NK) cell therapies. It has no approved products and has not generated product revenue.
Financial position and results
| Metric | Q1 2021 | Q1 2020 |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $13.5 million | $7.3 million |
| General and administrative expense | $5.9 million | $2.1 million |
| Total operating expenses | $19.5 million | $9.4 million |
| Net loss | $19.4 million | $8.7 million |
| Net loss per share, basic and diluted | $0.59 | $5.41 |
| Cash used in operating activities | $14.6 million | $8.3 million |
At March 31, 2021, cash and cash equivalents were $62.6 million, short-term investments were $236.7 million, and restricted cash was $0.4 million, totaling $299.7 million in cash and investments. Total assets were $325.7 million; stockholders’ equity was $306.0 million. The filing reports no borrowings; operating lease liabilities totaled $12.4 million. No profitability or operating margin is meaningful because the company had no revenue.
Changes versus the prior comparable period
- Net loss increased $10.7 million year over year, while operating expenses rose $10.1 million.
- R&D expense increased $6.3 million, mainly from personnel costs, including share-based compensation, and higher NKX019 and internal research costs. G&A expense increased $3.8 million, reflecting personnel and share-based compensation, professional services, and other public-company and facilities costs.
- Operating cash use increased $6.4 million. The cash and cash equivalents balance fell from $96.7 million at year-end 2020 to $62.6 million; short-term investments increased from $218.2 million to $236.7 million.
- Q1 2020 included $0.6 million of income from remeasurement of a preferred-stock purchase-right liability; that liability was reclassified to equity in 2020, so there was no comparable 2021 income.
Outlook, developments, and risks
- Management expects existing cash, cash equivalents, restricted cash, and short-term investments to fund operations for at least 12 months from the filing date. Nkarta expects significant continuing losses and rising R&D and G&A expenses and anticipates needing additional capital; financing may dilute shareholders or require concessions on program rights.
- NKX101 was in a Phase 1 trial for relapsed/refractory AML or higher-risk MDS. A first patient had been treated in November 2020; an FDA-approved protocol amendment in Q1 added a two-dose regimen and shortened the overall waiting period between patient enrollment.
- The FDA accepted the NKX019 IND in April 2021, after quarter-end. The company planned to dose the first patient in the second half of 2021 for B-cell malignancies.
- On May 5, 2021, after quarter-end, Nkarta entered a CRISPR Therapeutics collaboration covering gene-edited NK and NK+T programs. The parties share research and development costs and potential profits equally for collaboration products. Nkarta also received non-exclusive rights to up to five gene-editing targets, subject to potential milestones and royalties for independent products.
- COVID-19 had caused vendor and clinical-site disruptions, laboratory-material shortages, and delays to manufacturing-facility construction and internal research. Other material risks include early-stage clinical and safety uncertainty, complex manufacturing and scale-up, reliance on third parties and a sole supplier for certain manufacturing steps, funding needs, and patent challenges. A reexamination of U.S. Patent No. 9,511,092 remained pending; the filing says it does not relate to current product candidates but may affect future programs.
Important facts for investors to verify
- Whether NKX101 and NKX019 trials meet enrollment, safety, manufacturing, and clinical milestones, and whether the stated NKX019 dosing timeline is achieved.
- Whether the $299.7 million liquidity estimate and management’s 12-month runway remain adequate as clinical, manufacturing, and collaboration spending develops.
- Progress in qualification and reliable operation of the cGMP manufacturing facility, and continued availability of critical outsourced materials and sole-supplier equipment and reagents.
- CRISPR collaboration economics, scope, and execution, including any later agreements governing development and commercialization.
- Outcome of the pending patent reexamination and any material changes to COVID-19-related operational or trial disruptions.