Kiora Pharmaceuticals, Inc. — Form 10-Q Summary
Business context and reporting period
Kiora Pharmaceuticals is a clinical-stage specialty pharmaceutical company developing ophthalmic therapies. The report covers the three months ended March 31, 2022, and was filed July 8, 2022. Lead programs include KIO-301 for retinal degenerative disease, KIO-101 for ocular presentation of rheumatoid arthritis, and KIO-201 for corneal wounds. The company has not generated significant revenue and has never been profitable.
| Metric | Q1 2022 | Q1 2021 | Change |
|---|---|---|---|
| Revenue | None reported | None reported | Not applicable |
| Operating expenses | $3.569 million | $2.010 million | +$1.559 million |
| Net loss | $3.565 million | $2.011 million | +$1.554 million loss |
| Net loss per share | $0.27 | $0.27 | Unchanged |
| Cash used in operating activities | $2.832 million | $2.570 million | +$0.262 million use |
| Cash, cash equivalents and restricted cash | $5.112 million | $6.655 million | Down from $7.900 million at Dec. 31, 2021 |
Financial condition and key metrics
- Cash and cash equivalents were $5.067 million at March 31, 2022, plus $0.045 million of restricted cash.
- Total assets were $17.636 million, compared with $20.130 million at December 31, 2021. Stockholders’ equity was $11.258 million, down from $14.579 million.
- Total liabilities were $6.378 million, including $3.283 million of contingent consideration, $0.802 million of deferred tax liabilities, and operating lease liabilities. The filing does not report traditional outstanding debt.
- Accumulated deficit was $124.444 million as of March 31, 2022.
- Operating cash use increased primarily because of Bayon acquisition integration costs, higher employee compensation, and increased operating costs.
- Operating margins and profitability margins are not meaningful because the company reported no revenue and incurred an operating loss.
- Financing activities provided no cash in Q1 2022, compared with $8.039 million in Q1 2021 from a private placement and warrant exercises.
Material changes versus the prior comparable period
- General and administrative expense increased $0.365 million to $1.665 million, driven by higher consulting and audit costs, personnel costs, travel, and office expenses.
- Research and development expense decreased $0.572 million to $0.708 million, primarily reflecting lower KIO-101 development and personnel costs.
- The company recorded $0.963 million of executive severance expense related primarily to its former chief executive officer; accrued executive severance reached $1.050 million at quarter-end.
- The fair value adjustment for contingent consideration was a $0.234 million expense in Q1 2022, compared with a $0.570 million benefit in Q1 2021. The change was primarily related to revised milestone probabilities following orphan drug designation for KIO-301.
- Kiora received U.S. FDA Orphan Drug Designation for the active pharmaceutical ingredient in KIO-301 on March 17, 2022.
- The company granted 260,500 stock options during the quarter. Stock-based compensation expense was $0.216 million, broadly consistent with $0.217 million in Q1 2021.
- Bayon, acquired in October 2021, contributed $0.179 million of net loss to Q1 2022 results.
Guidance, outlook, risks, contingencies, and unusual items
- Management expects to initiate a Phase 1b trial of KIO-301 in the third quarter of 2022 and a Phase 2 trial of KIO-101 in the second half of 2022.
- Management expects significant expenses and increasing operating losses as development, clinical trials, regulatory activities, and potential commercialization infrastructure expand.
- Based on cash at March 31, 2022, management expected available cash to fund planned operations through July 2022. Management stated that additional capital would be required through equity or debt financing, licensing transactions, collaborations, or grants.
- The filing states that recurring losses and negative cash flows raise substantial doubt about the company’s ability to continue as a going concern. The financial statements contain no related adjustments.
- Remaining contingent consideration had a maximum contractual obligation of $18.799 million and an estimated fair value of $3.283 million at March 31, 2022. Payments depend on clinical and regulatory milestones.
- On February 23, 2022, Nasdaq notified the company that its stock price did not meet the $1.00 minimum bid requirement. The initial compliance period was scheduled to expire August 22, 2022, and management indicated it might pursue a reverse stock split if necessary.
- The company was also notified that its late Form 10-Q violated Nasdaq’s timely filing rule. Filing this report restored compliance with that rule.
- Disclosure controls and procedures were not effective at March 31, 2022 because of material weaknesses previously identified. Remediation efforts, including consultants, additional personnel, risk assessment, and revised controls, remained in progress.
- COVID-19-related supply chain, facility, clinical trial, and commercialization disruptions remained potential risks, although the ultimate financial impact was uncertain.
- Subsequent events included a proposed securities offering registered on Form S-1, new office and clinical assessment leases, and issuance of 403,461 common shares to former Panoptes shareholders in June 2022.
Most important facts for investors to verify
- Whether the company raised sufficient capital after the reported quarter to fund operations beyond July 2022 and on what dilutionary or contractual terms.
- Progress, timing, enrollment, and financing for the planned KIO-301 Phase 1b and KIO-101 Phase 2 trials.
- Compliance with Nasdaq’s $1.00 minimum bid requirement and any reverse stock split or delisting developments.
- Whether the identified material weaknesses in disclosure controls and internal control over financial reporting have been remediated and independently tested.
- Changes in the fair value and payment timing of contingent consideration related to Bayon, Panoptes, and Jade acquisitions.
- Any material changes to the going-concern assessment, operating cash burn, or access to additional financing.