Karyopharm Therapeutics Inc. — 2017 Form 10-K
Reporting period: Fiscal year ended December 31, 2017. The filing also presents unaudited fourth-quarter results. Karyopharm was a clinical-stage pharmaceutical company developing oncology and other drug candidates; it had no revenue from drug sales.
Financial performance and position
| Metric | 2017 | 2016 |
|---|---|---|
| License and other revenue | $1.6 million | $0.2 million |
| Research and development expense | $107.3 million | $86.9 million |
| General and administrative expense | $24.9 million | $23.9 million |
| Net loss | $129.0 million | $109.6 million |
| Net loss per share, basic and diluted | $2.81 | $2.92 |
| Cash used in operating activities | $73.7 million | $84.4 million |
| Cash, cash equivalents and short- and long-term investments at year-end | $175.9 million | Not stated here as a comparable total |
| Working capital at year-end | $99.0 million | $115.2 million |
2017 fourth-quarter revenue was $1.534 million and net loss was $39.040 million, compared with $47,000 of revenue and a $26.935 million net loss in fourth-quarter 2016. Quarterly operating expenses rose to $40.986 million from $27.212 million. The filing provides no meaningful operating margin for this pre-commercial business. It reports no material debt balance; total liabilities were $50.8 million, including $21.9 million of deferred revenue and $1.7 million of deferred rent.
Research and development spending rose 23% year over year, primarily due to higher clinical-trial costs, especially for selinexor. The annual net loss increased despite lower operating cash use, which benefited from the $21.9 million Ono upfront payment recorded as deferred revenue. The company financed operations in part through equity offerings: 2017 net proceeds were $37.0 million from its at-the-market program and $37.9 million from an April follow-on offering.
Business developments, outlook and risks
- Lead asset: Selinexor, an oral XPO1 inhibitor, was being studied in multiple myeloma, diffuse large B-cell lymphoma, liposarcoma and other cancers. The company reported more than 2,200 patients treated across company- and investigator-sponsored trials.
- Clinical milestones expected: Management expected expanded-cohort STORM top-line data in April 2018 and planned to seek FDA accelerated approval for selinexor in penta-refractory multiple myeloma in the second half of 2018, contingent on positive results. SADAL data were expected by year-end 2018; BOSTON and the Phase 3 SEAL data were expected in 2019.
- Other pipeline and licensing: Ono received regional oncology rights to selinexor and eltanexor for an upfront payment of about $21.9 million, with potential milestones and royalties. In January 2018, Biogen acquired KPT-350 assets for $10 million upfront, with potential milestone payments up to $207 million and royalties. These are subsequent events, not 2017 operating revenue. Anivive licensed verdinexor for animal cancer indications.
- Runway and funding: Management expected year-end 2017 cash and investments, together with the $10 million Biogen payment received in 2018, to fund current operating and capital plans through at least the first quarter of 2019. The company anticipated higher R&D and commercialization expenses and stated it would need additional funding over time.
- Material clinical and execution risks: Selinexor and other candidates remained investigational, and trial outcomes or regulatory approval were uncertain. SOPRA, a Phase 2 trial in elderly relapsed/refractory AML, was stopped after the company and DSMB determined it was unlikely to show statistically significant overall-survival superiority. Selinexor’s reported adverse events included nausea, fatigue, anorexia, vomiting and thrombocytopenia; serious safety and tolerability risks remain relevant.
- Regulatory and operational risks: FDA partial clinical holds on selinexor trials in 2017 were lifted after deficiencies in the investigator brochure were addressed. The company relied on third-party manufacturers, had no long-term or redundant supply arrangements, and faced reimbursement, competition, patent and financing risks.
Important facts for investors to verify
- Whether expanded STORM results supported an NDA and whether FDA accepted the proposed accelerated-approval pathway.
- Actual cash burn, subsequent financing and the duration of runway relative to the company’s stated first-quarter 2019 estimate.
- Whether later pivotal trials confirmed the interim efficacy findings, including the Phase 3 BOSTON and SEAL outcomes.
- Selinexor’s final safety profile, dose modifications and treatment discontinuations in larger studies.
- Recognition and cash timing of Ono consideration, and the terms and progress of Biogen’s milestone and royalty opportunities.
- Manufacturing capacity and supply redundancy ahead of any potential commercial launch.