Kyverna Therapeutics, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024; filed May 14, 2024. Kyverna is a clinical-stage biopharmaceutical company developing cell therapies for autoimmune diseases. Its lead candidate, autologous CD19 CAR T-cell therapy KYV-101, is in clinical development; allogeneic candidate KYV-201 is in preclinical development. The company reported no product sales revenue.
Financial performance and position
| Metric | Q1 2024 | Q1 2023 / comparison |
|---|---|---|
| Research and development expense | $22.5 million | $8.7 million; up 158% |
| General and administrative expense | $6.9 million | $2.7 million; up 152% |
| Total operating expenses | $29.4 million | $11.4 million; up 157% |
| Interest income | $2.7 million | $0.3 million |
| Net loss | $26.7 million | $11.1 million |
| Basic and diluted loss per share | $1.12 | $12.10 |
| Net cash used in operating activities | $25.5 million | $11.5 million |
With no product revenue, operating or net margins are not meaningful. R&D growth primarily reflected increased CRO, CMO and clinical-trial costs as KYV-101 advanced, alongside higher personnel costs; R&D headcount rose to 79 from 46 year over year. G&A growth reflected higher salaries, professional services and public-company costs, including stock-based compensation.
At March 31, 2024, cash and cash equivalents were $224.3 million and available-for-sale marketable securities were $145.5 million, totaling $369.8 million. The company reported total assets of $390.0 million, current assets of $375.5 million and current liabilities of $21.9 million. It reported no outstanding debt; lease liabilities totaled approximately $10.8 million. Accumulated deficit was $162.7 million.
Investing activities used $122.9 million, largely reflecting purchases of Treasury securities. Financing activities provided $338.0 million, principally from the February IPO. The company closed the IPO at $22 per share, issuing 16.675 million shares and receiving $336.2 million in net proceeds after underwriting commissions and offering costs.
Material changes and unusual items
- The February IPO substantially increased cash resources and converted all redeemable convertible preferred stock into common stock. Common shares outstanding were 43.1 million at March 31, 2024.
- Operating cash use more than doubled year over year, consistent with increased development spending.
- Gilead’s collaboration agreement terminated effective January 22, 2024; the company therefore no longer has active Gilead programs or future Gilead milestones available to offset the related Kite sublicense fee.
- The company recorded $1.1 million of one-time stock-based compensation expense following forgiveness of a CEO promissory note and accrued interest.
- Of a $6.3 million related-party sublicense fee, $2.5 million was expected to be paid by mid-2024. The payment schedule for the remaining $3.8 million had not been agreed.
Outlook, risks and contingencies
Management estimates existing cash, cash equivalents and marketable securities will fund its operating plan and capital expenditure requirements for at least 12 months from the filing date. Kyverna expects substantial operating losses and negative operating cash flows to continue, with expenses rising as it advances clinical programs, develops manufacturing capabilities and operates as a public company. It may need additional capital; no assurance is given that financing will be available on acceptable terms.
- Key execution risks include clinical-trial outcomes and enrollment, regulatory review, manufacturing capacity and reliance on third-party manufacturers and service providers. WuXi is currently the sole provider of specified KYV-101 cell-manufacturing services.
- The FDA’s investigation of T-cell malignancies following certain CAR T-cell therapies could lead to additional scrutiny, warnings or post-approval requirements for KYV-101.
- Material weaknesses in internal control over financial reporting made disclosure controls ineffective as of March 31, 2024. The company plans remediation during 2024 and 2025; no adjustments resulted from the identified weaknesses.
- Management reported no legal proceedings expected to have a material adverse effect and no material legal contingencies identified.
- After quarter-end, the FDA granted KYV-101 orphan drug designation for myasthenia gravis in April 2024. The filing cautions that designation does not ensure approval or exclusivity.
Important facts for investors to verify
- Clinical progress, safety findings and enrollment for KYV-101 across lupus nephritis, systemic sclerosis, myasthenia gravis and multiple sclerosis, and progress of KYV-201.
- Whether quarterly operating cash use and development spending track management’s plan, and how long the reported $369.8 million in cash and securities ultimately supports operations.
- Resolution and timing of the remaining $3.8 million Kite sublicense-fee payment following Gilead agreement termination.
- Progress and independent testing of remediation for the material weaknesses in financial controls.
- Potential dilution from equity compensation and future financing, and the effect of IPO-related share sales as lock-up restrictions expire.