Kymera Therapeutics, Inc. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. Amounts are in U.S. dollars; financial figures below are in millions unless stated otherwise.
Business context and reporting period
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 product sales; reported revenue comes from research collaborations. Its main clinical programs are KT-474 (IRAK4), KT-413 (IRAKIMiD), KT-333 (STAT3) and KT-253 (MDM2).
Financial performance and liquidity
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Collaboration revenue | $16.5 | $11.5 | $26.0 | $21.1 |
| Research and development expense | $45.8 | $41.3 | $88.0 | $77.2 |
| General and administrative expense | $14.1 | $11.0 | $26.7 | $21.6 |
| Operating loss | $(43.4) | $(40.8) | $(88.7) | $(77.7) |
| Net loss | $(38.8) | $(40.3) | $(79.7) | $(76.9) |
| Net loss per share, basic and diluted | $(0.67) | $(0.78) | $(1.37) | $(1.49) |
- Q2 collaboration revenue comprised $9.9 million from Sanofi and $6.6 million from Vertex. Six-month revenue comprised $17.6 million from Sanofi and $8.4 million from Vertex.
- Higher research and development costs reflected increased personnel, stock-based compensation, occupancy and platform investment; general and administrative costs rose with growth and professional services. Higher interest income partly offset operating losses.
- At June 30, cash, cash equivalents and marketable securities totaled $472.3 million, down from approximately $559.5 million at December 31, 2022. Current assets were $385.4 million and current liabilities $54.6 million; working capital was approximately $330.8 million.
- Operating cash use was $79.2 million for the six months. Investing activities provided $60.4 million, principally reflecting maturities of marketable securities, while property and equipment purchases were $14.8 million. Cash, cash equivalents and restricted cash ended the period at $58.2 million.
- No material conventional borrowings are reported. Lease liabilities totaled approximately $75.1 million, including $73.1 million operating and $2.0 million finance lease liabilities. The filing reports no meaningful product-sales margin because there are no product sales.
Material changes versus the prior comparable period
- Six-month collaboration revenue increased $4.8 million, while operating expenses increased $15.8 million. Net loss widened $2.8 million, despite $8.2 million more other income, primarily interest income.
- Research and development expense rose $10.8 million for the first half, driven mainly by internal personnel, stock compensation and occupancy costs. General and administrative expense rose $5.1 million.
- Vertex’s collaboration research term expired in May 2023. Kymera completed its performance obligation and recognized the remaining $8.4 million of deferred Vertex revenue during the first half; no Vertex performance obligations remained at June 30.
- The new 100,624-square-foot Watertown facility lease commenced for accounting purposes in January 2023. Kymera recorded a $48.9 million operating lease liability and right-of-use asset; occupancy was expected to begin in November 2023. Property and equipment increased to $27.5 million, including $16.4 million of assets not yet in service.
Outlook, management commentary and risks
- Management stated that available cash, cash equivalents and marketable securities were expected to fund operating expenses and capital expenditures into the second half of 2025, past anticipated KT-474 Phase 2 proof-of-concept data and early proof-of-concept data for KT-413, KT-333 and KT-253. This is an estimate based on assumptions and could prove incorrect.
- KT-474 Phase 2 trials in hidradenitis suppurativa and atopic dermatitis were expected to begin in Q4 2023, led by Sanofi. KT-333 and KT-413 Phase 1a enrollment and dosing were ongoing, with additional data expected in 2023. KT-253 Phase 1 began in March 2023, with initial safety and proof-of-mechanism data expected in 2023. KT-253 received FDA orphan drug designation for acute myeloid leukemia in June 2023.
- Kymera may receive up to $1.48 billion in Sanofi development milestones, up to $700 million in commercial milestones, and tiered royalties, but no milestone or royalty payments had been received by June 30, 2023. Milestones are contingent and not assured. The Sanofi agreement also provides Kymera an option to share U.S. development costs and commercial profits and losses for applicable products.
- The company expects rising research, clinical, facility and public-company costs and will likely need additional funding over time. Equity financing could dilute shareholders; debt or collaborations could impose restrictions or require relinquishing rights. Management’s runway estimate assumes no additional collaboration or strategic funding.
- Principal risks include early-stage clinical uncertainty and potential safety issues, the novel and unproven degrader platform, trial enrollment and regulatory delays, reliance on third-party manufacturers and clinical service providers, intellectual-property challenges, competition, and exposure to inflation and interest-rate changes. Kymera reported no current material legal proceedings and said disclosure controls were effective.
Important facts for investors to verify
- Whether the stated runway into the second half of 2025 remains supported by actual spending, trial progress and capital-market conditions.
- Actual start dates and results for KT-474 Phase 2 and the planned 2023 clinical updates for KT-333, KT-413 and KT-253; preliminary results may change as data mature.
- Whether Sanofi’s KT-474 development produces milestone payments, and the timing and terms of any decisions on Kymera’s U.S. opt-in rights.
- The costs and operational implications of the new facility, including planned occupancy, remaining build-out, lease commitments and any sublease of the existing space.
- Future cash burn, reliance on collaboration revenue, potential financing needs and resulting dilution; also verify the 3.0 million outstanding pre-funded warrants and their potential share dilution.