Karyopharm Therapeutics Inc. — Q2 2018 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2018. The unaudited statements are prepared under U.S. GAAP. Karyopharm is a clinical-stage drug developer; it reported no revenue from drug sales.
Financial performance and position
| Metric | Q2 2018 | Q2 2017 | Six months 2018 | Six months 2017 |
|---|---|---|---|---|
| License and other revenue | $19.9 million | $3 thousand | $29.9 million | $71 thousand |
| Research and development | $44.7 million | $23.1 million | $86.1 million | $47.2 million |
| General and administrative | $9.5 million | $6.6 million | $17.1 million | $12.9 million |
| Net loss | $33.7 million | $29.4 million | $72.1 million | $59.3 million |
| Basic and diluted loss per share | $0.60 | $0.64 | $1.36 | $1.35 |
| Operating cash used | Not separately stated | Not separately stated | $72.3 million | $46.4 million |
- Q2 revenue was primarily the $19.7 million recognized when the selinexor obligation under the Ono license was fulfilled. First-half revenue also included $10.0 million from the Biogen transaction.
- At June 30, cash and cash equivalents were $119.0 million; short- and long-term investments were $130.9 million. Together, cash and investments totaled $249.9 million, versus $175.9 million at year-end 2017. Including restricted cash, reported cash, equivalents and investments totaled approximately $250.5 million.
- Total assets were $256.6 million, total liabilities $43.1 million, and stockholders’ equity $213.5 million. The balance sheet reports no debt balance. Current assets were $244.6 million and current liabilities $36.5 million.
- Financing cash flow was $147.6 million, including $145.7 million net proceeds from a May follow-on offering. Common shares outstanding rose to 60.5 million from 49.5 million at year-end.
Material changes and business developments
- Revenue increased sharply from minimal prior-year levels due to license and asset transactions, while operating expenses also rose substantially. First-half R&D expense increased 82%, mainly from selinexor clinical-trial costs, NDA preparation, added personnel, and payments tied to license proceeds.
- In May, Antengene received regional rights to several compounds for an $11.7 million upfront payment, with potential development milestones up to $105 million, sales milestones up to $45 million, and future royalties. No Antengene revenue had been recognized by June 30; the upfront payment was recorded as deferred revenue.
- In January, Biogen acquired KPT-350 rights and related assets for $10 million upfront, with potential development and commercial milestones of up to $207 million plus royalties. Karyopharm recognized the $10 million in first-half revenue.
- In May, Karyopharm expanded its Newton facility lease to approximately 98,502 square feet and extended the lease through September 2025. Total future minimum rent payments were $24.3 million.
Outlook, commentary and risks
- Management expected cash, cash equivalents and investments at June 30 to fund current operating plans and capital requirements for at least 12 months from the financial statements’ issuance date, while building U.S. commercial infrastructure for a potential selinexor launch.
- Management expected R&D and G&A expenses to increase as clinical development, regulatory work and commercial preparation continue. The company expects operating losses for the foreseeable future and may need additional funding thereafter; future funding needs depend on trial results, regulatory review, collaboration payments and commercialization costs.
- On August 6, 2018, after quarter-end, the company announced completion of a rolling FDA NDA submission seeking accelerated approval of selinexor for penta-refractory multiple myeloma. It planned an EU marketing authorization application in early 2019 and expected SADAL top-line data by year-end 2018, BOSTON data in 2019, and SEAL Phase 3 data by year-end 2019. These are plans and expectations, not assured outcomes.
- Approval is uncertain: the FDA may reject accelerated approval, require additional or randomized trials, or conclude that available therapies change the unmet-need assessment. Trials may fail, safety findings may limit use, and successful approval would not guarantee market acceptance, pricing or reimbursement.
- The company reported recurring losses, dependence on external financing and third-party clinical and manufacturing partners, and exposure to competition, intellectual-property challenges, foreign-exchange movements and interest-rate risk. It did not hedge foreign-currency risk. Management reported disclosure controls were effective and no material change in internal control during the quarter.
- The existing at-the-market sales agreement was terminated effective August 12, 2018; no shares had been sold under it in 2018. This subsequent event removes that particular financing channel.
Key facts for investors to verify
- Regulatory review and outcome of the selinexor NDA, including whether accelerated approval is granted and any confirmatory-trial requirements.
- Clinical-trial milestones and safety data for STORM, SADAL, BOSTON and SEAL, and the timing and interpretation of upcoming results.
- Cash burn, investment balances and whether the stated runway remains adequate as research, NDA and launch-preparation spending rises.
- Revenue recognition and collection under Ono, Antengene and Biogen agreements; milestone and royalty amounts remain contingent and are not guaranteed.
- Potential dilution and financing alternatives following the May equity offering and termination of the at-the-market agreement.