Kodiak Sciences Inc. — Q1 2023 Form 10-Q
Business context and reporting period. The clinical-stage biopharmaceutical company reported the three months ended March 31, 2023. It has no approved products and has generated no product revenue. Its lead candidate, tarcocimab tedromer, is being studied in retinal diseases; KSI-501 is in an early-stage clinical study.
Financial results and liquidity
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $56.5 million | $76.2 million |
| General and administrative expense | $18.1 million | $19.6 million |
| Total operating expenses / operating loss | $74.6 million | $95.8 million |
| Net loss | $70.8 million | $95.7 million |
| Net loss per share, basic and diluted | $1.35 | $1.83 |
| Net cash used in operating activities | $47.2 million | $43.2 million |
Operating margins are not meaningful because the company has no revenue. Net loss improved by $24.9 million year over year, mainly reflecting lower operating expenses and higher interest income ($3.6 million versus $0.1 million). R&D declined $19.7 million, primarily due to the maturity of the tarcocimab program and timing of manufacturing activity. Stock-based compensation was $26.0 million.
At March 31, 2023, cash and cash equivalents were $316.6 million and marketable securities were $104.6 million, totaling $421.2 million. The company reported $431.1 million of current assets and $68.9 million of current liabilities. Cash, cash equivalents and restricted cash increased $126.2 million during the quarter, largely because $235.0 million of marketable securities matured; investing cash flow was therefore a net inflow of $173.4 million, despite capital expenditures. The filing says available cash and securities are expected to fund anticipated operating and capital needs for at least 12 months following the report date.
Total liabilities were $247.7 million, including a $100.0 million liability related to the sale of future royalties and operating lease liabilities of $86.8 million. The filing reports no conventional borrowings. Total assets were $640.3 million and stockholders’ equity was $392.6 million.
Material changes, outlook and risks
- Management expected topline results from four ongoing tarcocimab Phase 3 studies during 2023: GLEAM and GLIMMER in diabetic macular edema and DAYLIGHT in wet AMD, with July readouts anticipated; GLOW in diabetic retinopathy, with a September readout anticipated. The company said a successful program could support a single BLA covering four major retinal vascular disease indications.
- BEACON, the Phase 3 RVO study, met its primary endpoint in 2022. In contrast, an earlier Phase 2b/3 wet AMD study did not meet its primary non-inferiority endpoint for extended dosing, a material efficacy risk for the lead program.
- The first patient entered the KSI-501 Phase 1 study in April 2023. The company also anticipated pilot clinical testing of its VETi imaging platform in mid-2023.
- The custom-built Lonza Ursus manufacturing suite was commissioned as a cGMP facility in January 2023, and commercial-scale cGMP batches began in Q1. Approximately $81.7 million of facility improvements and equipment were placed in service; $26.8 million was unpaid and accrued at quarter-end. The manufacturing agreement may involve approximately CHF 150 million in payments from 2022 through 2030, subject to the agreement’s terms and potential supply needs.
- Management expects substantial losses to continue and R&D spending to rise over the next few years as clinical studies, regulatory work and commercial preparation advance. Additional financing may be needed; availability and terms are uncertain.
- Key risks include clinical efficacy and safety, regulatory and BLA requirements, manufacturing scale-up and reliance on Lonza and other suppliers, competition, reimbursement and pricing, and capital-market conditions. The filing also cites macroeconomic uncertainty and bank failures, including the March 2023 closure of Silicon Valley Bank. No material adverse legal proceedings were reported.
Important facts for investors to verify
- Whether the 2023 tarcocimab Phase 3 readouts met their endpoints, including durability, safety and dosing outcomes, and how results affect the BLA plan.
- Whether the prior wet AMD efficacy shortfall or any new safety findings alter the development program or commercial potential.
- Whether Lonza manufacturing, process validation and supply readiness can support regulatory filing and potential launch on schedule.
- Whether cash burn, capital spending and other commitments remain consistent with management’s stated 12-month liquidity expectation.
- The terms and expected cash impact of the future-royalty liability, lease obligations and Lonza commitments.