Karyopharm Therapeutics Inc. — Q2 2015 Form 10-Q
Reporting period: Three and six months ended June 30, 2015; unaudited. Financial statement amounts below are in millions of dollars unless noted. Karyopharm is a clinical-stage biotechnology company focused on cancer therapies; it had no drug-sales revenue.
Financial performance and liquidity
| Metric | Q2 2015 | Q2 2014 | Six months 2015 | Six months 2014 |
|---|---|---|---|---|
| Contract and grant revenue | $0.15 | $0.02 | $0.15 | $0.19 |
| Research and development expense | $27.0 | $13.2 | $47.8 | $24.1 |
| General and administrative expense | $6.2 | $3.3 | $11.6 | $6.2 |
| Net loss | $32.7 | $16.4 | $58.8 | $30.1 |
| Basic and diluted loss per share | $0.92 | $0.55 | $1.65 | $1.02 |
| Cash used in operating activities | Not provided for quarter | Not provided for quarter | $48.3 | $22.5 |
- For the second quarter, operating expenses rose 101% and net loss rose 99% year over year. For the first half, operating expenses rose 95% and net loss rose 95%. Higher clinical development spending, headcount, stock compensation and support for global trials were the main drivers.
- At June 30, cash and cash equivalents were $24.2, short- and long-term investments totaled $231.4, and restricted cash was $0.4: $256.0 in combined cash, cash equivalents, restricted cash and investments. Total assets were $263.3 and total liabilities $16.0. No debt is reported on the balance sheet.
- First-half financing provided $91.2, principally from a January stock offering that raised $90.8 net on 2.95 million shares at $33 per share. Cash and cash equivalents fell $126.4 during the half, largely reflecting investment purchases; this decline is not equivalent to operating cash burn.
- Revenue was immaterial and the company reported no product sales, so conventional operating or gross margins are not meaningful indicators here.
Business developments, outlook and risks
- Lead candidate selinexor (KPT-330), an oral XPO1 inhibitor, was in clinical trials. The company said more than 1,000 patients had received selinexor in company- and investigator-sponsored trials; it had no approved drugs and expected several years, if ever, before commercialization.
- In July 2015, after the quarter, the company reduced the selinexor dose in the Phase 2 SOPRA AML study from 55 mg/m² to a fixed 60 mg twice weekly, citing ongoing safety and tolerability review and an apparent higher incidence of sepsis at higher doses. As of late July, SOPRA had eight sepsis reports in seven selinexor patients versus two reports in two physician’s-choice patients. The company planned an interim assessment in mid-2016 and expected topline data in Q4 2016.
- Also in July, the Phase 2 SIRRT trial protocol was amended to include newly diagnosed Richter’s transformation patients to support enrollment.
- Management expected existing resources to fund its operating plan and capital expenditures into 2018, and expected to end 2015 with more than $200 million in cash, cash equivalents, restricted cash and investments. These are forward-looking estimates, dependent on clinical progress and spending.
- The company expected expenses and losses to increase as clinical trials and development continued. It stated that additional funding would be needed over time; unavailable or unfavorable financing could force delays, reductions or termination of programs and could dilute shareholders.
- Key risks include clinical-trial failure or delay, safety concerns (including sepsis and other adverse events), regulatory uncertainty, dependence on selinexor, reliance on third-party trial and manufacturing providers, competition, intellectual-property challenges and the possibility that additional capital will not be available. The company also reported unhedged foreign-currency exposure, but said an immediate 10% exchange-rate change would not have a material effect. Management judged disclosure controls effective as of June 30, 2015.
Most important facts for investors to verify
- Updated SOPRA safety data, dose-change implications, enrollment and the timing and outcome of the planned interim and topline analyses.
- Whether management’s stated runway into 2018 and year-end 2015 liquidity expectation remain achievable as trial costs and operating losses evolve.
- Clinical efficacy and safety evidence for selinexor across trials, including whether results support regulatory filings and any accelerated-approval strategy.
- Future cash burn, funding needs and any financing terms or share dilution; 35,703,418 common shares were outstanding at June 30, 2015.
- Reliance on contract research and manufacturing organizations, and the status of intellectual-property protection and other material contingencies.