Karyopharm Therapeutics Inc. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Karyopharm is a commercial-stage oncology company whose lead product, XPOVIO (selinexor), is marketed in the U.S. and through partners internationally. Financial amounts below are in millions of dollars except per-share data.
Financial performance
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Product revenue, net | $29.0 | $20.2 | $57.3 | $41.9 |
| License and other revenue | $10.7 | $2.4 | $30.0 | $4.0 |
| Total revenue | $39.7 | $22.6 | $87.3 | $45.9 |
| Operating expenses | $82.6 | $71.6 | $164.8 | $147.3 |
| Operating loss | $(42.9) | $(49.0) | $(77.5) | $(101.4) |
| Net loss | $(49.1) | $(53.6) | $(90.5) | $(111.0) |
| Net loss per share | $(0.62) | $(0.71) | $(1.15) | $(1.48) |
| Cash used in operating activities | Not separately stated | Not separately stated | $(94.3) | $(108.6) |
- Q2 product revenue grew 44% year over year; management attributed growth to more patients treated in earlier lines of therapy and increased physician use. Six-month product revenue increased 37%.
- License and other revenue rose sharply, reflecting Menarini development-cost reimbursements and Antengene milestones, alongside royalty and other revenue. These items helped reduce reported losses despite higher operating expenses.
- Research and development expense increased 30% in Q2 and 22% for the six-month period. Selling, general and administrative expense increased 2% and 3%, respectively. Interest expense rose, primarily due to the additional HCR revenue-interest financing.
- Stock-based compensation was $15.1 million in Q2 and $22.4 million for the six months, including severance-related charges associated with departures of senior executives. The six-month expense figures include $5.3 million in R&D severance-related expense and $4.5 million in SG&A severance-related expense.
Financial position and liquidity
- At June 30, 2022, cash and cash equivalents were $82.2 million and short-term investments were $88.6 million, for a combined $170.8 million. Total current assets were $242.4 million and current liabilities $62.5 million.
- Cash, cash equivalents and restricted cash declined $113.4 million in the first six months. Financing provided $32.1 million, including $29.3 million net proceeds from common-stock sales; investing activities used $50.6 million, largely reflecting net purchases of investments.
- Convertible senior notes had a $169.7 million net carrying amount; the deferred royalty obligation was $133.0 million on the balance sheet. The notes mature in 2025 and carry a 3% coupon, with an 11.85% effective interest rate. HCR receives tiered revenue-based payments, with total payments capped at 185% of the $135 million funded amount, subject to specified terms.
- Total liabilities were $372.8 million, exceeding total assets of $256.5 million; stockholders’ deficit was $116.3 million. Common shares outstanding were 79.8 million at June 30, compared with 75.7 million at year-end 2021.
- Management stated that cash, cash equivalents and short-term investments at June 30 were expected to fund current operating plans and capital requirements for at least twelve months from the financial statements’ issuance date. It also said additional financing will be needed to achieve business objectives and may not be available on acceptable terms.
Developments, outlook and risks
- Management expected XPOVIO product revenue to increase in the second half of 2022 compared with the first half. It expected license and other revenue to decrease, mainly because first-half milestones and Menarini reimbursements included $13.6 million of a $15.0 million reimbursement cap; increased royalties were expected to partly offset the decline.
- Management expected R&D expense to decrease in the second half due to pipeline prioritization and lower severance costs, and SG&A expense to decrease slightly. It expected overall 2022 expenses, excluding stock-based compensation, to be lower than 2021. No numerical revenue or earnings guidance is provided in the supplied filing text.
- Following FDA feedback that SIENDO trial results were unlikely to support a supplemental NDA, the company planned a new placebo-controlled study of selinexor in patients with p53 wild-type endometrial cancer, targeted to begin in Q4 2022. A companion-diagnostic partner had been selected.
- Biogen notified Karyopharm on June 7 that it was terminating its asset purchase agreement. Karyopharm said it would not receive further milestones or royalties under that agreement and was evaluating specified rights relating to the purchased assets.
- Key risks include continued losses and financing needs, dependence on XPOVIO commercialization and collaborations, competition, clinical-trial and regulatory uncertainty, product safety and reimbursement, and manufacturing reliance on third parties. XPOVIO’s DLBCL indication has accelerated approval and requires confirmatory studies. COVID-19 and foreign-exchange exposure may affect operations; the company does not currently hedge currency risk.
- A securities class action complaint was dismissed in 2021, but the plaintiff appealed; a related shareholder derivative case remained stayed. The company said it intended to defend the appeal vigorously and believed it lacked merit.
- Management reported disclosure controls and procedures were effective as of June 30, 2022, with no material change in internal control over financial reporting identified during the quarter.
Important facts for investors to verify
- Whether XPOVIO’s U.S. sales growth continues and whether the expected second-half revenue trend materializes.
- How much reported collaboration revenue is recurring royalties versus milestones and expense reimbursements, and the timing of remaining Menarini reimbursements.
- Cash burn, financing options and dilution, including use of the remaining $70.0 million capacity under the at-the-market share-sale agreement.
- Progress and timing of the planned p53 wild-type endometrial cancer study, and confirmatory-trial obligations for accelerated or conditional approvals.
- HCR payment triggers, minimum-payment provisions, collateral and potential acceleration exposure, alongside the 2025 convertible-note maturity.
- Outcome of the securities litigation appeal and any material developments following the quarter-end executive departures and severance arrangements.