Kymera Therapeutics, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Kymera is a clinical-stage biopharmaceutical company developing targeted protein degraders using its Pegasus platform. It has no approved products and has generated no revenue from drug sales; reported revenue is from collaborations.
Financial snapshot
| Metric | Q3 2023 / September 30, 2023 | Comparable period / prior year-end |
|---|---|---|
| Collaboration revenue | $4.7 million | $9.6 million in Q3 2022 |
| Operating expenses | $62.2 million | $54.4 million in Q3 2022 |
| Net loss | $52.9 million; $0.90 per share | $43.0 million; $0.79 per share in Q3 2022 |
| Nine-month revenue | $30.7 million | $30.7 million in 2022 |
| Nine-month operating cash use | $110.9 million | $113.5 million in 2022 |
| Cash, cash equivalents and marketable securities | $434.8 million | $559.5 million at December 31, 2022 |
| Total assets / liabilities | $552.4 million / $156.8 million | $603.1 million / $113.0 million at December 31, 2022 |
Q3 research and development expense was $48.1 million and general and administrative expense was $14.1 million. The company reported no product-sales revenue or positive earnings; conventional product margins are not meaningful at this development stage. Nine-month investing cash flow was $120.9 million, primarily reflecting investment maturities net of purchases and $22.9 million of property and equipment purchases. Financing cash flow was $2.3 million. The filing reports lease liabilities of about $80.8 million; it does not report outstanding borrowings under a conventional debt facility.
Changes versus comparable periods
- Q3 collaboration revenue fell $4.8 million year over year, principally reflecting lower Sanofi revenue recognition and no Q3 Vertex revenue after that agreement expired in May 2023. Nine-month collaboration revenue was essentially unchanged.
- Q3 operating expenses increased $7.8 million and net loss widened $9.9 million year over year. For the first nine months, operating expenses rose $23.6 million and net loss widened $12.7 million.
- Higher research and development costs reflected increased personnel, stock compensation, occupancy and platform/other-program investment. Lower activity in IRAK4 and MDM2 partly offset those increases. General and administrative costs rose with growth-related personnel, facilities, legal and professional services.
- Cash and securities declined from year-end, while lease liabilities and property and equipment increased, reflecting the new Watertown facility. The company recorded a $48.9 million operating lease liability when the lease commenced in January 2023.
Outlook, developments and risks
- Management estimated that September 30 cash, cash equivalents and marketable securities would fund operating expenses and capital needs into the first half of 2026, including through expected KT-474 Phase 2 proof-of-concept data and additional KT-333 and KT-253 data. This estimate depends on assumptions and could prove shorter; the company expects to need additional funding over time.
- KT-474 Phase 2 trials for hidradenitis suppurativa (HS) and atopic dermatitis (AD) were initiated. Subsequent to quarter-end, Sanofi dosed the first HS Phase 2 patient, triggering a $40 million milestone under the collaboration; dosing the first AD patient is also expected to trigger a milestone. The filing does not state that the $40 million had been received by September 30.
- KT-333 (STAT3) and KT-253 (MDM2) Phase 1a enrollment and dosing were ongoing. Kymera reported Fast Track Designation for KT-333 in relapsed/refractory peripheral T-cell lymphoma and orphan drug designation for KT-253 in acute myeloid leukemia. It expected further KT-333 data in 2023 and additional KT-253 data in 2024; these are forward-looking statements.
- At the end of October 2023, Kymera decided to discontinue KT-413 (IRAKIMiD) to focus resources on its immunology pipeline, despite reaching expected degradation levels and reporting no dose-limiting toxicities.
- In September 2023, Kymera and Sanofi mutually agreed to cease activities on Sanofi Collaboration Target 2. The Vertex collaboration had expired in May 2023. Sanofi’s remaining deferred revenue was $43.8 million at quarter-end, with the remaining research term estimated at a maximum of 2.3 years.
- Key risks include clinical safety or efficacy setbacks, the unproven targeted-degradation approach, trial enrollment and execution, dependence on third-party manufacturers and collaborators, intellectual property challenges, and the need for additional capital. Additional equity financing could dilute shareholders; debt or collaboration financing may constrain operations or require rights concessions. Inflation may raise costs, while higher interest rates increased investment income.
Important facts for investors to verify
- Whether Sanofi’s $40 million KT-474 milestone was collected and how it is recognized in subsequent financial statements, and the timing and terms of the AD-trial milestone.
- Updated KT-474, KT-333 and KT-253 clinical data, including trial enrollment, safety, efficacy and timing of proof-of-concept results.
- The financial and pipeline effects of discontinuing KT-413 and ending work on Sanofi Collaboration Target 2.
- Actual cash burn, facility and lease costs, and whether the stated runway into the first half of 2026 remains achievable.
- Future collaboration revenue and milestone prospects, given the expiry of Vertex and the remaining Sanofi performance obligations.