Kodiak Sciences Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Kodiak is a clinical-stage biopharmaceutical company developing retinal-disease therapies; it had no approved products and generated no product revenue.
Financial performance and position
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $40.3 million | $20.2 million; up $20.2 million |
| General and administrative expense | $10.2 million | $5.6 million; up $4.7 million |
| Total operating expenses | $50.6 million | $25.7 million |
| Net loss | $50.4 million; $0.98 per share | $24.4 million; $0.54 per share |
| Operating cash flow | $(34.6) million | $(17.9) million |
| Cash, cash equivalents and marketable securities | $929.0 million at March 31, 2021 | $969.0 million at December 31, 2020 |
| Total assets / stockholders’ equity | $1,032.7 million / $821.7 million | $1,067.3 million / $860.8 million at December 31, 2020 |
Gross margin is not applicable because the company had no product sales. No conventional debt balance is identified in the presented statements; liabilities include $99.9 million related to the sale of future royalties and operating lease liabilities totaling $77.7 million. Cash, cash equivalents and restricted cash declined by $23.9 million during the quarter. Management said available cash, cash equivalents and marketable securities should fund anticipated operating and capital needs for at least 12 months following the filing date, while noting losses and negative operating cash flow are expected to continue.
Material changes and business developments
- Operating expenses nearly doubled year over year, principally reflecting increased KSI-301 clinical-trial and manufacturing activity, higher personnel and stock-based compensation, and facility expansion costs.
- Management continues to target topline results across pivotal studies in 2022, but now expects the initial KSI-301 BLA timeline to move into early 2023. The filing cites slower DME enrollment, the addition of the DAYLIGHT study, and manufacturing headwinds.
- After quarter-end, Kodiak and Lonza expanded the planned dedicated manufacturing facility. The revised maximum capital contribution is 74.5 million Swiss francs; completion is targeted for early 2022. Annual suite fees are 14.5 million Swiss francs in 2022 and 20.0 million Swiss francs annually through 2029.
- At March 31, the Lonza agreement described a 40 million Swiss franc capital contribution and annual suite fees of 12 million Swiss francs for 2021 and 16 million Swiss francs thereafter. The April amendment superseded those terms as described above.
Outlook, commentary and principal risks
- KSI-301 is the company’s leading clinical candidate, being developed for wet AMD, diabetic macular edema, retinal vein occlusion and diabetic retinopathy. Kodiak plans to include pivotal wet AMD, DME and RVO results in one initial BLA; it does not currently expect the GLOW diabetic-retinopathy study to be included.
- The added DAYLIGHT pivotal wet AMD study is intended to support potential monthly dosing and broader labeling. Kodiak said it expected to begin recruitment in Q3 2021 and did not then expect the study to affect BLA timing.
- Management reported that Phase 1b Year 1 data showed two of every three patients in each of three major retinal vascular diseases had a treatment-free interval of at least six months after three loading doses. These are company-reported early-stage results, not confirmation of pivotal efficacy or eventual labeling.
- COVID-19 had contributed to softer treatment-naïve DME patient presentation and delays to construction at the Lonza facility. The filing also warns of competition for manufacturing materials, personnel and production capacity from COVID-19 vaccine and therapeutic programs. Kodiak reported missed clinical visits below 5% and no significant clinical-trial delays to date.
- Key risks include clinical efficacy, durability and safety uncertainty; regulatory requirements and labeling; enrollment and trial timing; manufacturing scale-up and reliance on Lonza and other suppliers; competition; reimbursement and market acceptance; intellectual-property disputes; and the possibility that capital needs exceed current estimates. Kodiak has never completed a pivotal trial or obtained marketing approval.
- The company reported no material pending legal proceedings and concluded disclosure controls were effective at a reasonable assurance level as of March 31, 2021.
Investor verification points
- Track pivotal-study enrollment and topline data timing, and whether the early-2023 BLA timeline changes.
- Verify DAYLIGHT’s recruitment, results and whether regulators accept its data to support monthly dosing across indications.
- Monitor Lonza facility construction, validation batches, revised capital contribution and suite-fee commitments, including any further schedule or cost changes.
- Compare quarterly operating cash burn with the stated liquidity runway and planned clinical and manufacturing spending.
- Assess whether COVID-19, competition for manufacturing capacity, trial enrollment, safety findings or regulatory feedback affect development plans.