Karyopharm Therapeutics Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Unless otherwise noted, amounts are in millions of dollars. Karyopharm is a commercial-stage oncology company selling XPOVIO (selinexor) in the U.S. and developing selinexor and eltanexor. Its pipeline includes three pivotal Phase 3 studies; key programs include endometrial cancer, multiple myeloma, myelodysplastic neoplasms and myelofibrosis.
Financial results and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Total revenue | $36.0 | $36.1 | $112.3 | $123.5 |
| Net product revenue | $30.2 | $32.0 | $87.0 | $89.3 |
| License and other revenue | $5.8 | $4.1 | $25.3 | $34.2 |
| Research and development | $35.6 | $31.4 | $99.4 | $117.7 |
| Selling, general and administrative | $30.8 | $34.6 | $101.2 | $110.8 |
| Operating loss | $(31.3) | $(30.8) | $(91.7) | $(108.3) |
| Net loss | $(34.5) | $(36.3) | $(101.3) | $(126.8) |
| Basic and diluted loss per share | $(0.30) | $(0.45) | $(0.89) | $(1.60) |
- Margins: Cost of sales was $0.9 million in Q3 and $3.5 million for the nine-month period. Against net product revenue, this implies an approximate product gross margin of 97% for both periods. The company remained loss-making at the operating level.
- Cash flow: Operating cash use was $74.1 million for the first nine months, versus $122.7 million a year earlier. Investing cash use was $18.9 million; financing provided $0.9 million. Cash, cash equivalents and restricted cash declined $92.3 million to $44.6 million.
- Liquidity: Cash, cash equivalents and investments totaled $208.3 million at September 30, 2023, including $43.7 million of cash and equivalents and $164.7 million of investments. Current assets were $263.2 million and current liabilities $62.1 million.
- Balance sheet and debt: Total liabilities were $370.4 million; stockholders’ deficit was $100.4 million. Convertible notes had $172.5 million principal and a $170.7 million net carrying value, mature October 2025, and bear 3% interest. The HCR deferred royalty obligation was reported at $132.5 million on the balance sheet, including an embedded derivative. HCR payments are tied to revenues and subject to payment caps, minimum-payment provisions and potential acceleration in specified circumstances.
Changes versus prior comparable periods
- Q3 revenue was essentially flat year over year; product revenue fell 6%, partly offset by higher license and other revenue. For the first nine months, revenue decreased 9%, with product revenue down 3% and license and other revenue down 26%.
- Management attributed lower product revenue in 2023 to assistance provided through its Patient Assistance Program after several myeloma foundations closed. The reported adverse impact was approximately $1.2 million in Q3 and $5.4 million year to date.
- Q3 R&D expense increased 13%, primarily as clinical-trial costs rose with advancement of three pivotal Phase 3 studies. Year-to-date R&D fell 16%, reflecting lower personnel and stock-based compensation costs. SG&A fell 11% in Q3 and 9% year to date.
- Year-to-date net loss improved by $25.5 million. Lower expenses and higher interest income contributed; 2022 also included $7.8 million of Antengene milestone revenue that did not recur in 2023.
- Average shares outstanding were 114.0 million for the first nine months, versus 79.2 million a year earlier. The company reported no ATM share sales in 2023; $100 million remained available under its 2023 ATM program at quarter-end.
Outlook, risks and unusual items
- Management stated that quarter-end cash, cash equivalents and investments were expected to fund current operating plans and capital requirements for at least 12 months from issuance of the financial statements. The company also said it expects to continue relying on additional financing and may need to reduce or delay programs if funding is unavailable on acceptable terms.
- Management expected Q4 license and other revenue to remain relatively consistent with Q3. It also expected cost of sales, R&D, SG&A and other expense to remain relatively consistent with Q3; no specific full-year revenue or earnings guidance is provided in the supplied filing text.
- Management cited continued 2023 Patient Assistance Program effects, with patients already enrolled expected to receive assistance through year-end. It expected less need for this support from 2024 following Medicare Part D design changes under the Inflation Reduction Act.
- Material risks include dependence on XPOVIO’s commercial success, competition, continued operating losses and financing needs, clinical and regulatory uncertainty, reliance on third-party manufacturers and collaborators, and debt and HCR contractual obligations. XPOVIO’s DLBCL indication is under accelerated approval and depends on confirmatory evidence; the filing also describes differing FDA and company views on the SIENDO endometrial cancer study.
- The company disclosed that its share price had closed below $1 since October 24, 2023; a 30-consecutive-business-day period below Nasdaq’s minimum bid requirement could lead to a deficiency notice. The October 27 closing price was $0.82.
- Disclosure controls and procedures were assessed as effective at the reasonable-assurance level; management reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether XPOVIO revenue and patient access improve as assistance foundations reopen and Medicare Part D changes take effect.
- Enrollment, timing and outcomes of the three pivotal Phase 3 studies, and the FDA-required confirmatory work for the accelerated-approval DLBCL indication.
- Cash burn relative to management’s stated 12-month runway, including the timing and amount of collaboration receipts and any need to use the available ATM program.
- Cash requirements and terms associated with the October 2025 convertible notes and HCR revenue-interest financing, including minimum-payment and acceleration provisions.
- Nasdaq bid-price compliance and the potential dilution from outstanding warrants, options, restricted stock units and future equity issuance.