Kymera Therapeutics, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Financial amounts below are in millions of U.S. dollars unless otherwise stated. The filing is unaudited.
Business context
Kymera is a clinical-stage biopharmaceutical company developing small-molecule targeted protein degraders using its Pegasus platform. It has no approved products and has not generated drug-sales revenue; reported revenue comes from research collaborations with Sanofi and Vertex.
Programs discussed include KT-474 (IRAK4), KT-413 (IRAKIMiD), KT-333 (STAT3), and KT-253 (MDM2). Sanofi intends to advance KT-474 into Phase 2; the other three programs were in early clinical development.
Financial performance and liquidity
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Collaboration revenue | $9.5 | $9.6 |
| Research and development expense | $42.2 | $35.9 |
| General and administrative expense | $12.6 | $10.6 |
| Total operating expenses | $54.8 | $46.6 |
| Loss from operations | $(45.3) | $(36.9) |
| Other income, net | $4.4 | $0.2 |
| Net loss | $(40.9) | $(36.7) |
| Net loss per share, basic and diluted | $(0.70) | $(0.71) |
| Cash used in operating activities | $(44.0) | $(40.3) |
Revenue was almost entirely collaboration revenue: $7.7 million from Sanofi and $1.8 million from Vertex. No product revenue, collaboration milestone payments, or royalties were reported. Gross profit and gross margin are not presented; a conventional product margin is not meaningful for the company’s current development-stage business.
At March 31, 2023, Kymera had $50.2 million in cash and cash equivalents and $465.7 million in marketable securities, totaling $515.9 million. Current assets were $411.6 million and current liabilities were $61.9 million. The company reported total liabilities of $151.9 million and stockholders’ equity of $462.0 million. No conventional borrowings were reported; finance lease liabilities totaled $2.3 million, while operating lease liabilities totaled $66.4 million.
Cash, cash equivalents, and restricted cash decreased $18.2 million during the quarter to $56.3 million. Investing activities provided $24.6 million, mainly reflecting net maturities of marketable securities; financing activities provided $1.2 million, primarily from stock-option exercises. The filing reports an accumulated deficit of $424.7 million.
Changes versus the prior comparable period
- Collaboration revenue declined $0.2 million, or about 2%.
- Operating expenses rose $8.2 million, or about 18%. R&D increased $6.3 million, reflecting clinical and pipeline/platform spending and higher personnel and occupancy costs; lower KT-474 clinical spending partly offset the increase after completion of its Phase 1 activities.
- G&A increased $2.0 million, primarily due to personnel, facilities, legal, and professional-service costs.
- Net loss increased $4.2 million. Higher interest income, attributed primarily to prevailing interest rates, partly offset the larger operating loss.
- Operating cash use increased $3.7 million. Property and equipment purchases rose to $4.0 million from $0.5 million.
Outlook, risks, and notable items
- Management estimated that March 31 cash, cash equivalents, and marketable securities would fund operations and capital expenditures into the second half of 2025, potentially past anticipated proof-of-concept data for KT-474 and early proof-of-concept data for KT-413, KT-333, and KT-253. The estimate depends on assumptions that may prove incorrect. The financial statements separately state that resources are expected to cover at least twelve months from issuance.
- At the filing date, the company expected to initiate the first KT-474 Phase 2 indication trial in 2023, expected additional clinical data from KT-333 and KT-413 in 2023, and reported that KT-253’s Phase 1 trial began in March 2023. These are forward-looking plans, not guaranteed outcomes.
- Sanofi collaboration consideration includes potential development milestones of up to $1.48 billion and commercial milestones of up to $700 million, plus tiered royalties; Vertex offers potential payments of up to $170 million per target, including milestones and option payments. These amounts are contingent and are not current revenue or assured funding.
- Kymera expects continued losses and negative operating cash flows and says it will need substantial additional funding. Equity financing could dilute shareholders; debt or new collaborations could impose restrictions or require relinquishing rights.
- Key risks include early-stage clinical and regulatory uncertainty, safety or efficacy setbacks, the unproven nature of the protein-degradation platform, patient enrollment and trial delays, reliance on third-party manufacturers and CROs, intellectual-property protection, competition, and access to capital.
- The company cited inflation and higher interest rates, financial-services-sector instability, and potential disruption to suppliers or operations as risks. It held investment-grade securities with unrealized losses but reported no credit losses. It does not currently hedge foreign-currency exposure.
- A new operating lease for laboratory and office space commenced for accounting purposes in January 2023, adding approximately $48.9 million each to operating lease liabilities and right-of-use assets. The company expects to occupy the 100,624-square-foot facility in November 2023; stated base rent is approximately $0.8 million per month after the commencement-related rent-free period.
- Management reported effective disclosure controls as of March 31, 2023, with no material change in internal control over financial reporting. The company reported no current material legal proceedings and no material change in contractual obligations described in its 2022 Form 10-K.
Important facts for investors to verify
- Whether KT-474’s Phase 2 trial and the stated 2023 clinical-data timelines proceeded as expected, and what the resulting efficacy and safety data show.
- Whether the reported cash runway remains credible as trial activity, hiring, facility costs, and other expenses evolve; compare actual quarterly operating cash use with management’s assumptions.
- The timing and conditions for any Sanofi or Vertex milestone payments, and whether any collaboration terms, responsibilities, or partner priorities have changed.
- The scale and duration of the new facility’s lease and related build-out costs, tenant-improvement reimbursements, and occupancy timing.
- Potential dilution from outstanding equity awards and the 3.0 million pre-funded warrants, as well as any future financing or use of the $250 million at-the-market sales facility, under which no shares had been sold by March 31, 2023.