Business context and reporting period
Kymera Therapeutics, Inc. is a clinical-stage biopharmaceutical company developing targeted protein degraders using its Pegasus platform. This unaudited Form 10-Q covers the quarter and six months ended June 30, 2022. The company had no approved products and had generated no revenue from product sales; reported revenue came from research collaborations.
Its lead programs were KT-474 (IRAK4), KT-413 (IRAKIMiD) and KT-333 (STAT3), all in Phase 1 clinical development. MDM2 was in IND-enabling work. The company reported that patient dosing was underway in the KT-474 patient cohort and that enrollment and dosing were ongoing in the KT-413 and KT-333 trials.
Financial performance and liquidity
Amounts below are in millions of dollars unless otherwise noted.
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Collaboration revenue | $11.5 | $18.5 | $21.1 | $37.2 |
| Research and development expense | $41.3 | $35.2 | $77.2 | $61.2 |
| General and administrative expense | $11.0 | $8.0 | $21.6 | $13.9 |
| Total operating expenses | $52.3 | $43.2 | $98.9 | $75.1 |
| Operating loss | $(40.8) | $(24.7) | $(77.7) | $(37.9) |
| Net loss | $(40.3) | $(24.7) | $(76.9) | $(37.7) |
| Basic and diluted loss per share | $(0.78) | $(0.55) | $(1.49) | $(0.84) |
Operating margins are not a meaningful measure for this pre-commercial company; no product gross margin was reported. Collaboration revenue was entirely from related parties and declined year over year. No collaboration milestone or royalty payments had been received.
At June 30, 2022, cash and cash equivalents were $76.9 million and marketable securities were $405.6 million, totaling $482.5 million. Total assets were $523.4 million, total liabilities $125.5 million, and stockholders’ equity $398.0 million. First-half operating cash use was $79.3 million, versus $53.3 million in 2021. Investing activities provided $107.7 million, primarily reflecting maturities of marketable securities net of purchases; financing activities provided $0.5 million.
The company had $83.5 million of deferred collaboration revenue at June 30, 2022. It reported lease liabilities of approximately $15.2 million for operating leases and $2.1 million for finance leases. No material conventional borrowing was reported. The company stated in its MD&A that its $482.5 million of cash, cash equivalents and marketable securities was expected to fund operations and capital expenditures into 2025; the financial-statement note separately says the resources would be sufficient for at least twelve months from issuance of the statements.
Material changes versus the prior comparable period
- First-half collaboration revenue fell $16.1 million, or about 43%, to $21.1 million. Revenue recognized from Sanofi declined to $15.0 million from $26.0 million; Vertex revenue declined to $6.1 million from $11.2 million.
- First-half operating expenses rose $23.8 million to $98.9 million. R&D expense increased $16.1 million, reflecting MDM2 IND-enabling work, pipeline and platform investment, and higher personnel and related costs; lower direct clinical-program costs partially offset the increase. G&A increased $7.7 million, mainly due to personnel, professional services and public-company costs.
- First-half net loss more than doubled to $76.9 million. Operating cash use increased to $79.3 million, partly reflecting a smaller reduction in deferred revenue than in the prior-year period.
- Accumulated other comprehensive loss increased to $4.0 million, primarily reflecting unrealized losses on available-for-sale securities. Management attributed the declines to factors other than credit losses and reported no credit losses on those securities.
- The parties terminated a legacy compound collaboration effective April 27, 2022. The filing reports no material change in contractual obligations from the 2021 Form 10-K.
Outlook, management commentary and risks
Management expects operating expenses and capital needs to increase as clinical programs advance, preclinical work continues, and facilities and public-company infrastructure expand. The company expects to rely on existing resources and may seek additional capital through equity, debt, collaborations or other strategic arrangements. The filing provides no specific revenue, earnings or clinical-result guidance. It cautions that its runway estimate depends on assumptions and that resources could be exhausted sooner than expected.
Key risks include early-stage clinical and preclinical development; uncertainty around the novel protein-degradation approach; safety, efficacy, trial enrollment and regulatory approval; reliance on third-party research, clinical and manufacturing providers; potential supply-chain and COVID-19 disruptions; intellectual-property protection and litigation; and the need for additional financing, which could dilute shareholders or require the company to delay programs or relinquish rights. Management also described a planned 100,624-square-foot Watertown lease expected to begin in November 2023; its base rent is $0.8 million per month beginning two months after commencement, subject to annual increases and additional costs. These future payments were excluded from the lease-liability schedule at June 30, 2022.
The company reported no current legal proceedings and no material adverse litigation. Management concluded disclosure controls and procedures were effective at the reasonable-assurance level as of June 30, 2022, with no material changes in internal control over financial reporting during the quarter. Interest-rate and foreign-currency exposures were described as limited; the company did not hedge foreign-currency risk. It also ceased qualifying as an emerging growth company on January 1, 2022.
Important facts for investors to verify
- Reconcile the stated cash runway into 2025 with the financial-statement note’s “at least twelve months” liquidity statement, and assess the assumptions underlying the runway estimate.
- Track clinical progress, safety and efficacy data for KT-474, KT-413 and KT-333, and development milestones for MDM2; all programs remained early stage.
- Assess the timing and sustainability of collaboration revenue as deferred revenue is recognized, and confirm any future milestone, reimbursement or royalty receipts.
- Review planned spending, operating cash burn and the potential for dilution or other financing; the company had an unused at-the-market facility of up to $250 million at quarter-end.
- Evaluate the future costs and obligations associated with the new Watertown lease, alongside existing lease liabilities and facilities expansion.
- Monitor unrealized investment losses, third-party supply and trial execution risks, and the potential effects of COVID-19 on development timelines.