Business context and reporting period
Karyopharm Therapeutics Inc. filed this unaudited Form 10-Q for the three months ended March 31, 2019. The clinical-stage biopharmaceutical company is focused on developing selinexor and other drug candidates; it reported no revenue from drug sales. Its near-term priority was seeking regulatory approval for selinexor and preparing for a potential U.S. launch.
Financial results and liquidity
Amounts below are in U.S. dollars; financial statement figures are converted from thousands to millions where shown.
| Metric | Q1 2019 | Q1 2018 |
|---|---|---|
| License and other revenue | $0.2 million | $10.0 million |
| Research and development expense | $38.0 million | $41.3 million |
| General and administrative expense | $27.1 million | $7.6 million |
| Total operating expenses | $65.1 million | $48.9 million |
| Loss from operations | $64.9 million | $38.9 million |
| Net loss | $66.2 million | $38.5 million |
| Net loss per share, basic and diluted | $1.09 | $0.78 |
| Net cash used in operating activities | $66.6 million | $34.7 million |
- Revenue fell 98.5%; 2018 included $10.0 million recognized on the Biogen KPT-350 asset sale. Q1 2019 revenue was primarily from clinical supply and grant revenue.
- Gross margin is not clearly presented; the filing does not provide a clear value.
- At March 31, cash and cash equivalents were $83.5 million and short-term investments were $180.9 million, for $264.4 million in cash, cash equivalents and investments. Cash, cash equivalents and restricted cash totaled $84.2 million.
- Management stated that cash, cash equivalents and investments were expected to fund current operating plans and capital expenditures for at least 12 months from issuance of the financial statements.
- Convertible senior notes had $172.5 million principal outstanding and a $104.4 million net carrying amount. The notes bear a 3.00% coupon, mature in 2025, and had an 11.85% effective interest rate. Q1 interest expense was $3.0 million.
- Accumulated deficit was $739.9 million. Total liabilities were $165.9 million and stockholders’ equity was $121.3 million at quarter-end.
Material changes versus the prior comparable period
- Net loss widened by $27.7 million, while operating cash use increased by $32.0 million.
- R&D expense declined 8.1%, mainly from lower clinical trial and consulting costs; management expected R&D expense to decrease in 2019 as spending was moderated.
- G&A expense increased 255.6%, mainly from hiring and onboarding the U.S. commercial team and increased commercial activity. Management expected G&A expense to increase in 2019.
- Cash and investments declined from $330.2 million at December 31, 2018 to $264.4 million at March 31, 2019.
- Q1 2018 included the one-time Biogen revenue; the Antengene upfront payment remained deferred at March 31, 2019, pending delivery of initial clinical supplies.
Outlook, risks and unusual items
- The FDA extended its action date on the selinexor multiple-myeloma NDA to July 6, 2019. The ODAC voted 8–5 to recommend delaying approval until results of the randomized Phase 3 BOSTON study are available. Approval, timing and any label remain uncertain.
- Management planned a potential U.S. selinexor launch in mid-2019 if approved and was building commercial capabilities. The filing gives no numerical revenue or earnings guidance.
- The EMA had moved selinexor’s review from accelerated to traditional assessment after providing questions and feedback; management anticipated a decision by year-end 2019.
- Management anticipated filing selinexor applications for relapsed/refractory DLBCL between year-end 2019 and the end of the first half of 2020.
- The company reported recurring losses, no drug-sale revenue and a need for substantial additional funding over time. It warned that unavailable or unfavorable financing could require reductions or delays to development or commercialization.
- Key risks include clinical efficacy and safety, regulatory review, selinexor’s adverse effects and dose optimization, trial execution, competition, reimbursement, manufacturing reliance, intellectual property, and commercial launch costs. Selinexor adverse events included gastrointestinal effects, fatigue, thrombocytopenia and neutropenia; the filing also discusses cataract-worsening risk.
- The company had $172.5 million of convertible notes and disclosed potential cash demands upon conversion, repurchase or redemption. It also had a $75 million at-the-market equity facility but had made no sales under it as of the filing.
- Adoption of the new lease standard in January 2019 added operating lease right-of-use assets and liabilities to the balance sheet; the company said the adoption did not materially affect Q1 operating results.
Important facts for investors to verify
- Regulatory outcome and timing for the selinexor multiple-myeloma NDA, including the implications of the ODAC recommendation and BOSTON trial.
- Actual cash burn and whether the stated minimum 12-month runway remains supported as commercialization and clinical costs evolve.
- Selinexor trial safety, efficacy, dose, and discontinuation data, plus the status and timing of BOSTON and planned DLBCL submissions.
- Progress and cost of the U.S. commercial buildout, and whether any approval, pricing, reimbursement or uptake supports a viable launch.
- Potential financing needs, dilution under the ATM or other offerings, and the cash and accounting implications of the convertible notes.
- Timing of deferred license revenue recognition and the achievement of contingent collaboration milestones and royalties.