Kymera Therapeutics, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; comparative period is Q1 2021. Unaudited financial statements are presented in U.S. dollars. Kymera is a clinical-stage biopharmaceutical company developing targeted protein degraders and reported no product-sales revenue.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 or comparison |
|---|---|---|
| Collaboration revenue | $9.6 million | $18.7 million; down $9.1 million |
| Research and development expense | $35.9 million | $26.0 million; up $10.0 million |
| General and administrative expense | $10.6 million | $5.9 million; up $4.7 million |
| Total operating expenses | $46.6 million | $31.9 million |
| Operating loss | $36.9 million | $13.2 million |
| Net loss | $36.7 million | $13.1 million |
| Net loss per share, basic and diluted | $0.71 | $0.29 |
| Operating cash used | $40.3 million | $22.8 million |
At March 31, 2022, cash and cash equivalents were $33.7 million and marketable securities totaled $489.6 million, for combined cash, cash equivalents and marketable securities of $523.3 million. Total assets were $563.1 million; total liabilities were $134.3 million; and accumulated deficit was $265.7 million. The company reported lease liabilities, but no conventional borrowings are identified in the supplied filing text. Current and non-current deferred revenue totaled $92.7 million, reflecting unearned collaboration consideration.
Cash, cash equivalents and restricted cash declined $14.2 million during the quarter to $39.8 million. Investing activities provided $25.9 million, primarily from net maturities of marketable securities; financing activities provided $0.2 million. The company recorded $2.6 million of unrealized losses on marketable securities in other comprehensive loss. Management attributed the decline in fair value to factors other than credit losses and said it did not expect to sell the securities or be required to sell before recovery.
Operating margins are not a meaningful measure of product economics at this stage: revenue is collaboration revenue, not product sales, and the company remains loss-making. The filing does not provide a product gross margin.
Changes versus the prior comparable period
- Revenue from Vertex and Sanofi collaborations fell 49% to $9.6 million, from $18.7 million, as revenue recognized over the performance periods declined.
- R&D expense increased 38%, mainly from MDM2 IND-enabling work, investment in the pipeline and platform, and higher personnel, stock-based compensation and occupancy costs. Direct expenses for clinical activities in IRAK4, IRAKIMiD and STAT3 declined.
- G&A expense increased 80%, primarily reflecting higher legal and professional fees, personnel and stock-based compensation, and facility costs.
- Net loss widened to $36.7 million from $13.1 million. Operating cash use increased to $40.3 million from $22.8 million, including the effect of an $8.4 million decrease in deferred revenue.
- Stock-based compensation rose to $7.9 million from $3.2 million. Weighted-average shares outstanding increased to 51.7 million from 44.6 million.
Outlook, management commentary and risks
Management said the $523.3 million of cash, cash equivalents and marketable securities at quarter-end was expected to fund operating expenses and capital expenditures into 2025. The estimate is based on assumptions that may prove incorrect; the company also states that it expects substantial additional funding to continue development and pursue its strategy. Potential funding sources include equity or debt offerings, collaborations and other strategic arrangements, which may dilute shareholders, impose restrictions or require the company to relinquish rights.
Kymera expects expenses to increase as it advances clinical and preclinical programs and expands operations. KT-333 and KT-413 Phase 1 studies began in Q1 2022. KT-474 completed dose escalation in its Phase 1 single- and multiple-ascending-dose portions in December 2021; a subsequent patient cohort was expected after a food-effect cohort. MDM2 was in IND-enabling activities. The company cautioned that clinical timing and outcomes are uncertain and that it has not established the safety or efficacy of most candidates in humans.
- Key risks include early-stage development and the unproven nature of the Pegasus targeted-protein-degradation platform; clinical safety, efficacy, enrollment and regulatory uncertainties; reliance on third-party trial operators and limited or sole-source manufacturers; and intellectual-property challenges.
- COVID-19 could disrupt clinical enrollment, suppliers, trial sites and development timelines. The company described a prior minor delay in delivery of active pharmaceutical ingredient starting materials from a vendor in Wuhan.
- Interest-rate changes affect the investment portfolio; management said an immediate 10% rate change was not expected to materially affect its investments or financial condition. The company does not hedge foreign-currency exposure and reported no significant foreign-currency liabilities.
- The company reported no current material legal proceedings and no material changes to contractual obligations described in its 2021 Form 10-K.
- On April 27, 2022, after quarter-end, Kymera and GSK mutually terminated their 2017 collaboration, ending obligations under its research plan. The filing does not state a material financial effect from the termination.
- Management concluded disclosure controls and procedures were effective at the reasonable-assurance level as of March 31, 2022; no material change in internal control over financial reporting was reported.
Important facts for investors to verify
- Whether management’s stated cash runway into 2025 remains supported by current spending, clinical plans and financing assumptions.
- Upcoming clinical updates and safety, efficacy and enrollment data for KT-474, KT-333 and KT-413, plus timing and costs for MDM2 development.
- The pace at which collaboration revenue and deferred revenue are recognized, and whether milestones, reimbursements or royalties become payable; no milestone or royalty payments had been received as of March 31, 2022.
- The financial and program implications of the post-quarter GSK collaboration termination.
- Marketable-security valuation, interest-rate exposure, and the impact of rising R&D, G&A and stock-based compensation costs on cash burn.