Kodiak Sciences Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. The filing was signed March 1, 2022. Kodiak is a clinical-stage biotechnology company developing retinal-disease therapies; it had no approved products and generated no product revenue.
Financial performance and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | No product revenue | No product revenue |
| Research and development expense | $217.3 million | $107.4 million |
| General and administrative expense | $49.7 million | $28.6 million |
| Operating loss | $267.1 million | $136.0 million |
| Net loss | $267.0 million | $133.1 million |
| Basic and diluted loss per share | $5.16 | $2.91 |
| Cash and cash equivalents at year-end | $731.5 million | $944.4 million |
| Net cash used in operating activities | $182.3 million | $83.4 million |
- Operating expenses rose substantially, driven chiefly by KSI-301 clinical-trial and manufacturing costs, increased staffing, and stock-based compensation. KSI-301 program expense was $137.8 million, up from $58.6 million.
- Cash, cash equivalents and restricted cash totaled $737.8 million at year-end, including $6.3 million of restricted cash. Kodiak reported no marketable securities at December 31, 2021.
- There is no meaningful operating margin comparison because the company had no product revenue. The filing does not provide product-level profitability or a specific cash-runway estimate.
- The balance sheet reported $64.7 million of current liabilities and $240.9 million of total liabilities. No conventional borrowings are identified; liabilities include leases and a $99.9 million obligation related to the future royalty sale.
- Notable commitments include $123.7 million of undiscounted operating-lease payments, approximately CHF189.5 million of future payments under the Lonza manufacturing arrangement (including capital contributions), and $69.5 million of manufacturing-agreement obligations subject to cancellation fees.
Material developments versus the prior year
- Net loss roughly doubled year over year, and operating cash use increased by $98.8 million. Cash and cash equivalents declined by $212.9 million.
- In the wet-AMD Phase 2b/3 study, KSI-301 failed to meet the primary endpoint of non-inferior visual-acuity gains versus aflibercept on extended dosing. A prespecified secondary analysis found 59% of KSI-301 patients reached five-month dosing with reported visual and anatomical outcomes comparable to the overall aflibercept group.
- KSI-301-treated patients had intraocular inflammation at a rate of 3.2%, versus 0% in the aflibercept group; reported cases resolved, and no inflammation with vascular occlusion was observed in that study.
- In July 2021, Kodiak amended its BBA funding agreement so the remaining $125 million of potential funding would not be paid. BBA had received $100 million and retains a capped royalty right, generally 4.5% on future KSI-301 net sales, subject to the agreement.
- Stock-based compensation increased to $61.4 million from $30.7 million. The long-term incentive plan generated $14.2 million of incremental compensation expense in 2021; the filing reports $336.3 million of total incremental compensation cost associated with the plan, to be recognized over time subject to its terms.
Outlook, management commentary and risks
- Management planned to continue pivotal KSI-301 studies in RVO, DME, wet AMD and non-proliferative diabetic retinopathy. At the filing date, BEACON RVO top-line results were expected in 2022; top-line results from GLEAM/GLIMMER in DME and DAYLIGHT in wet AMD were expected in 2023. These are expectations, not assurances.
- If the studies succeed, Kodiak intended to pursue an initial BLA using BEACON, GLEAM/GLIMMER and DAYLIGHT data. GLOW results were not expected in the initial filing and could support a later supplemental BLA.
- The Lonza custom manufacturing facility was planned for mechanical completion in the first half of 2022. Kodiak also sought to develop a prefilled syringe presentation and reported KSI-501 manufacturing work toward a planned 2022 IND submission.
- Management expected substantial, increasing losses as development, manufacturing and potential commercialization preparations continued. Additional financing may be needed; the filing does not give a definitive runway estimate, and adequate funding on acceptable terms is not assured.
- Key risks include KSI-301’s clinical uncertainty after the wet-AMD endpoint miss; trial timing, enrollment and safety; manufacturing scale-up and dependence on Lonza and other suppliers; competition from established anti-VEGF therapies and newer products; regulatory approval and reimbursement uncertainty; and COVID-19-related operational and manufacturing constraints.
- Auditors issued an unqualified opinion on the financial statements and concluded internal control over financial reporting was effective. The audit identified accrued clinical-trial costs of $21.8 million as a critical audit matter because the estimate required significant judgment.
Important facts for investors to verify
- Review the full wet-AMD trial results and subsequent pivotal-trial data, including dosing regimens, efficacy, durability and safety.
- Track BEACON, GLEAM/GLIMMER, DAYLIGHT and GLOW enrollment, readouts, protocol changes and regulatory implications.
- Assess cash burn against the $731.5 million year-end cash balance, planned spending and financing needs; distinguish available cash from restricted cash.
- Examine Lonza facility progress, manufacturing capacity, supply availability, prefilled-syringe plans and the associated contractual commitments.
- Review the BBA royalty terms and the potential dilution and future expense implications of the long-term incentive plan and outstanding awards.