Kiora Pharmaceuticals, Inc. 2022 Form 10-K Summary
Business context and reporting period
Kiora Pharmaceuticals is a clinical-stage specialty pharmaceutical company focused on ophthalmic diseases. This Form 10-K covers the fiscal year ended December 31, 2022, with comparative results for 2021. The company has no approved commercial products and operates as one research-and-development business segment.
- KIO-301: Photoswitch therapy for later-stage retinitis pigmentosa; Phase 1b began in 2022, with the first patient dosed in November 2022. The FDA granted orphan drug designation in March 2022.
- KIO-101: Topical DHODH inhibitor under development for ocular manifestations of autoimmune disease. Management expected to begin a Phase 2 trial in 2023.
- KIO-201: Modified hyaluronic-acid therapy for persistent corneal epithelial defects and surgical wound recovery, including PRK. A Phase 2 PCED study was ongoing at year-end.
Financial performance and liquidity
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Research and development expense | $3.45 million | $5.35 million | Down $1.90 million |
| General and administrative expense | $8.28 million | $5.32 million | Up $2.95 million |
| Goodwill impairment | None | $4.04 million | Down $4.04 million |
| Total operating expenses | $12.31 million | $14.24 million | Down $1.93 million |
| Operating loss | $12.31 million | $14.24 million | Improved $1.93 million |
| Net loss | $13.58 million | $13.77 million | Improved $0.19 million |
| Net loss per share | $18.55 | $57.12 | Improved, affected by share-count changes |
| Net cash used in operating activities | $10.43 million | $10.68 million | Improved $0.25 million |
| Cash and cash equivalents at year-end | $5.96 million | $7.85 million | Down $1.89 million |
The filing does not provide a clear material revenue figure in the summarized results; management states that the company has not generated significant revenue and has never been profitable. Other expense included a $1.43 million change in fair value of warrant liability. A $0.11 million income-tax benefit was recorded.
- Total assets were $18.68 million, including $10.74 million of intangible assets and in-process research and development.
- Total liabilities were $7.27 million, including $3.63 million of contingent consideration and $2.95 million of accounts payable and accrued expenses.
- The company reported no debt at December 31, 2022. The prior PPP loan was forgiven in full in 2021.
- Financing activities provided $8.62 million in 2022, including approximately $5.4 million from a public offering and $2.7 million from a warrant-inducement transaction.
- Approximately 1.60 million warrants were outstanding at year-end, with a weighted-average exercise price of $21.22 and expirations from 2023 through 2027.
Material changes versus the prior comparable period
- R&D expense declined primarily because of lower KIO-101 and KIO-201 development and personnel costs, together with higher refundable R&D credits; these reductions were partly offset by a $1.33 million increase in KIO-301 development costs.
- G&A expense increased due to higher professional fees, approximately $1.0 million of executive severance, corporate costs, and travel.
- The 2021 goodwill impairment did not recur in 2022.
- The fair value of contingent consideration increased by $0.58 million, primarily because of higher estimated probabilities of success for KIO-201 and KIO-301 milestones.
- The company completed a 1-for-40 reverse stock split effective September 27, 2022. Shares and per-share amounts were adjusted retroactively.
- Common shares outstanding increased to 1,796,472 at December 31, 2022 from 316,599 at December 31, 2021, principally reflecting the 2022 offering, warrant exercises, and conversion of Series E preferred stock.
Guidance, outlook, risks and unusual items
- Management expected available cash at year-end to fund planned operations only into July 2023, subject to the pace of cash outflows.
- The filing states that substantial additional financing is required. Potential sources include equity or debt financings, grants, licensing arrangements, collaborations, and strategic alliances; no committed external funding source existed at year-end.
- The recurring losses and negative operating cash flows created substantial doubt about the company’s ability to continue as a going concern. The audited financial statements include a going-concern emphasis, with no related adjustments recorded.
- Management expected continued operating losses and increased expenses as clinical development advances. KIO-101 Phase 2 enrollment was expected in the second quarter of 2023; KIO-201 PCED full data were expected in the second quarter of 2023; and KIO-301 Phase 1b results were expected in late 2023.
- None of KIO-101, KIO-201, or KIO-301 had received marketing approval, and the company does not expect product candidates to be commercially available for several years, if at all.
- Material risks include clinical and regulatory failure, patient-enrollment delays, dependence on third-party CROs and manufacturers, limited cash, future dilution, intellectual-property challenges, competition, reimbursement uncertainty, and inability to commercialize products.
- Management identified material weaknesses in internal control over financial reporting involving IT general controls, segregation of duties, accounting for significant and unusual transactions, and the precision of controls over financial information. Remediation efforts, including implementation of a new accounting system, were ongoing and not yet complete.
- Subsequent to year-end, the company raised approximately $0.2 million in a February 2023 private placement and entered into a purchase agreement permitting Lincoln Park to purchase up to $10.0 million of common stock, subject to limitations. The company also received additional proceeds from a subsequent warrant exercise.
Most important facts for investors to verify
- Cash runway and the timing, size, terms, and potential dilution of additional financing.
- Whether the going-concern uncertainty has been resolved or remains applicable in later filings.
- Enrollment, safety, efficacy, and regulatory progress for the KIO-101, KIO-201, and KIO-301 trials.
- The status and financial impact of outstanding warrants, contingent consideration, and future milestone obligations.
- Remediation and testing of the identified material weaknesses in internal control over financial reporting.
- The company’s ability to establish manufacturing, commercialization, reimbursement, and sales capabilities if any candidate receives approval.