Core Viewpoint - Nkarta, Inc. (NKTX) has experienced a significant downtrend, with a 32.6% decline in stock price over the past four weeks, but it is now in oversold territory, suggesting a potential turnaround due to improved earnings expectations from analysts [1]. Group 1: Technical Indicators - The Relative Strength Index (RSI) is a key technical indicator used to identify oversold stocks, with a reading below 30 typically indicating oversold conditions [2]. - NKTX has an RSI reading of 28, suggesting that the heavy selling pressure may be exhausting, indicating a potential bounce back towards equilibrium in supply and demand [5]. Group 2: Fundamental Analysis - There is strong consensus among sell-side analysts regarding NKTX's earnings, with a 0.7% increase in the consensus EPS estimate over the last 30 days, which often correlates with price appreciation [6]. - NKTX holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate revisions and EPS surprises, further supporting the potential for a near-term turnaround [7].

Company Overview - Nkarta, Inc. is a clinical-stage biotechnology company focused on developing engineered natural killer (NK) cell therapies for autoimmune diseases [2] - The company utilizes a combination of cell expansion, cryopreservation platforms, proprietary cell engineering technologies, and CRISPR-based genome engineering to create its therapies [2] Upcoming Events - Nkarta will participate in the TD Cowen 45th Annual Health Care Conference on March 3, 2025, at 3:10 p.m. ET for a fireside chat [1] - The company will also be present at the Leerink Partners 2025 Global Healthcare Conference on March 10, 2025, at 3:00 p.m. ET for another fireside chat [1] - Both events will be available via simultaneous webcast on Nkarta's website, with replays archived for approximately 90 days [1]

Core Insights - Nkarta, Inc. has announced the opening of Ntrust-2 for patient enrollment and received IND clearance for an investigator-sponsored trial (IST) to evaluate NKX019 in patients with myasthenia gravis [1][3][21] - NKX019 is an allogeneic, CD19-directed chimeric antigen receptor (CAR) NK-cell therapy designed to target B-cell mediated diseases, offering potential advantages such as rapid B-cell killing and reduced toxicity [2][21] - The expansion of NKX019's clinical trials to include systemic sclerosis, myositis, and ANCA-associated vasculitis highlights its potential as a treatment option for various autoimmune diseases [3][4] Company Overview - Nkarta is a clinical-stage biotechnology company focused on developing engineered natural killer (NK) cell therapies, utilizing proprietary technologies for enhanced therapeutic activity [22] - The company aims to provide accessible treatment options for autoimmune diseases through its innovative NK cell therapies [3][22] Clinical Trials - Ntrust-2 is a multi-center, open-label, dose escalation trial that will assess the safety and efficacy of NKX019 in patients with systemic sclerosis, idiopathic inflammatory myopathy, and ANCA-associated vasculitis [4][17] - The IST for myasthenia gravis will evaluate safety and clinical outcomes, with plans for translational and biomarker studies [6][7][18] - Preliminary data from both Ntrust-1 and Ntrust-2 trials are expected in 2025, with ongoing enrollment in these studies [9][10] Treatment Potential - NKX019 has the potential to enable long-term remissions by resetting the immune system through the elimination of pathogenic B cells, which could change the treatment paradigm for autoimmune diseases [4][21] - Current therapies for myasthenia gravis often require chronic administration, whereas NKX019 may offer a more sustainable treatment approach [6][8]

Company Overview - Nkarta, Inc. is a clinical-stage biotechnology company focused on developing engineered natural killer (NK) cell therapies [2] - The company utilizes a combination of cell expansion, cryopreservation platforms, proprietary cell engineering technologies, and CRISPR-based genome engineering to advance its therapies [2] Upcoming Events - Nkarta will participate in the Stifel 2024 Healthcare Conference on November 19, 2024, at 10:55 a.m. ET, featuring a fireside chat [1] - A simultaneous webcast of the event will be available on Nkarta's website, with a replay archived for approximately 90 days [1]

PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed financial statements for the three and nine months ended September 30, 2024, detailing balance sheets, operations, cash flows, and notes on liquidity, accounting policies, and equity structure [Condensed Balance Sheets](index=6&type=section&id=Condensed%20Balance%20Sheets) Condensed Balance Sheets (in thousands) | Financial Metric | Sep 30, 2024 (in thousands) | Dec 31, 2023 (in thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $56,960 | $31,040 | | Short-term investments | $226,095 | $217,149 | | Total current assets | $290,150 | $253,071 | | Total assets | $532,034 | $378,885 | | **Liabilities & Equity** | | | | Total current liabilities | $22,468 | $23,330 | | Total liabilities | $101,161 | $105,600 | | Accumulated deficit | $(518,289) | $(435,434) | | Total stockholders' equity | $430,873 | $273,285 | - Total assets increased significantly from **$378.9 million** at the end of 2023 to **$532.0 million** as of September 30, 2024, primarily driven by an increase in cash and investments following a public offering[14](index=14&type=chunk) - Total stockholders' equity rose from **$273.3 million** to **$430.9 million**, mainly due to capital raised from the issuance of common stock and pre-funded warrants[14](index=14&type=chunk)[16](index=16&type=chunk) [Condensed Statements of Operations and Comprehensive Loss](index=7&type=section&id=Condensed%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Condensed Statements of Operations and Comprehensive Loss (in thousands) | Metric (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $25,250 | $22,194 | $73,617 | $73,451 | | General and administrative | $8,544 | $7,100 | $23,654 | $27,014 | | **Loss from operations** | **$(33,794)** | **$(29,294)** | **$(97,271)** | **$(100,465)** | | Interest income | $5,453 | $3,616 | $14,423 | $10,651 | | **Net loss** | **$(28,344)** | **$(25,645)** | **$(82,855)** | **$(89,747)** | | Net loss per share | $(0.39) | $(0.52) | $(1.26) | $(1.83) | - Net loss for the nine months ended September 30, 2024, decreased to **$82.9 million** from **$89.7 million** in the prior-year period, primarily due to lower general and administrative expenses and higher interest income[15](index=15&type=chunk) - Research and development expenses for the third quarter increased to **$25.3 million** in 2024 from **$22.2 million** in 2023, while for the nine-month period, they remained relatively flat[15](index=15&type=chunk) [Condensed Statements of Cash Flows](index=10&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Condensed Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(74,945) | $(62,806) | | Net cash (used in) provided by investing activities | $(125,035) | $63,178 | | Net cash provided by financing activities | $225,900 | $396 | | **Net increase in cash and cash equivalents** | **$25,920** | **$768** | - Financing activities provided **$225.9 million** in cash for the first nine months of 2024, primarily from the issuance of common stock and pre-funded warrants, a significant increase from the **$0.4 million** raised in the same period of 2023[21](index=21&type=chunk) - Net cash used in operating activities increased to **$74.9 million** for the nine months ended September 30, 2024, compared to **$62.8 million** in the prior year period[21](index=21&type=chunk) [Notes to Unaudited Condensed Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Financial%20Statements) The notes detail accounting policies, business description, liquidity, and balance sheet components, including the company's **$405.3 million** cash and investments, CRISPR collaboration, stock-based compensation, and the March 2024 public offering raising **$225.1 million** net proceeds - The company is a biopharmaceutical firm developing engineered natural killer (NK) cell therapies for autoimmune and other diseases, operating in a single segment[22](index=22&type=chunk) - As of September 30, 2024, the company had an accumulated deficit of **$518.3 million**; management believes its current cash, cash equivalents, and investments of **$405.3 million** will be sufficient to fund operations for at least twelve months from the filing date[23](index=23&type=chunk) - In March 2024, the company completed an underwritten public offering, selling 21,010,000 shares of common stock and pre-funded warrants to purchase 3,000,031 shares, raising gross proceeds of **$240.1 million**[62](index=62&type=chunk) - Under the CRISPR collaboration, the reduction of R&D expense from CRISPR's partial reimbursement was **$0.1 million** for the nine months ended September 30, 2024, down from **$1.4 million** in the same period of 2023[54](index=54&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses the company's financial condition and operational results, highlighting the strategic shift to NKX019 for autoimmune diseases, analysis of operating expenses, and liquidity, bolstered by a **$225.1 million** net financing in March 2024 [Overview](index=22&type=section&id=Overview) - The company has strategically refocused its R&D activities on autoimmune diseases, with its lead product candidate, NKX019, being evaluated in a Phase 1 clinical trial (Ntrust-1) for lupus nephritis (LN)[67](index=67&type=chunk) - Following a review of clinical data and the competitive landscape, the company plans no further investment in the clinical development of NKX019 for B-cell malignancies and has deprioritized the NKX101 program[67](index=67&type=chunk) - In March 2024, the company raised approximately **$225.1 million** in net proceeds from an underwritten public offering of common stock and pre-funded warrants[68](index=68&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Operating Expenses (in thousands) | Expense Category (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Change | | :--- | :--- | :--- | :--- | | Research and development | $25,250 | $22,194 | $3,056 | | General and administrative | $8,544 | $7,100 | $1,444 | | **Total operating expenses** | **$33,794** | **$29,294** | **$4,500** | - The **$3.1 million** increase in Q3 2024 R&D expenses was primarily due to higher manufacturing and clinical spending for NKX019 to support Phase I trials in autoimmune diseases, partially offset by lower costs for the deprioritized NKX101 program[78](index=78&type=chunk) - The decrease of **$3.4 million** in G&A expenses for the nine months ended September 30, 2024, was mainly due to a **$4.1 million** impairment of right-of-use assets recorded in the prior year period[81](index=81&type=chunk) - Interest income increased by **$3.8 million** for the nine months ended September 30, 2024, compared to the prior year, due to higher average investment balances and higher yields[83](index=83&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) - As of September 30, 2024, the company had **$405.3 million** in cash, cash equivalents, restricted cash, and investments[84](index=84&type=chunk) - Management believes that existing cash, cash equivalents, and investments are sufficient to fund operations for at least the next 12 months from the date of the report[89](index=89&type=chunk) - Net cash used in operating activities for the nine months ended September 30, 2024, was **$74.9 million**, an increase from **$62.8 million** in the same period of 2023[85](index=85&type=chunk)[86](index=86&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure is to interest rate fluctuations affecting its investment portfolio and foreign currency exchange rates, though management believes these, and inflation, have not materially affected financial results - The company's main market risk is interest rate fluctuations affecting its portfolio of cash, cash equivalents, and investments[101](index=101&type=chunk) - The company is exposed to foreign currency risk from vendors located outside the U.S. but does not currently hedge this risk[102](index=102&type=chunk) - Management believes that a **10%** change in interest rates would not have a material effect on the fair value of its investment portfolio, and that inflation has not had a material impact on operations[101](index=101&type=chunk)[103](index=103&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2024, with no material changes in internal control over financial reporting during the quarter - The company's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of September 30, 2024[104](index=104&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[105](index=105&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business, financial condition, or growth prospects - As of the filing date, there are no pending legal claims or actions against the company that management believes are likely to have a material adverse effect[107](index=107&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) This section details significant risks including limited operating history, substantial accumulated losses, dependence on NKX019 clinical success for autoimmune diseases, manufacturing challenges, intense competition, intellectual property, and stock price volatility - The company has a limited operating history, has incurred significant losses since inception (accumulated deficit of **$518.3 million** as of Sep 30, 2024), and expects to continue incurring losses for the foreseeable future[109](index=109&type=chunk)[111](index=111&type=chunk) - The business is highly dependent on the success of its CAR NK-cell technology platform and its lead product candidate, NKX019, for which it has shifted focus from oncology to autoimmune diseases[118](index=118&type=chunk)[140](index=140&type=chunk) - The manufacturing process for CAR NK cells is novel, complex, and susceptible to production difficulties, which could delay clinical trials and commercialization; the company also relies on a sole supplier for a key system in its manufacturing process[224](index=224&type=chunk)[242](index=242&type=chunk) - The company faces intense competition from other biopharmaceutical companies developing cellular immunotherapies and other treatments for autoimmune diseases and cancer[168](index=168&type=chunk) - The company's ability to operate is dependent on key license agreements, and if these are terminated, it could lose rights to essential components of its NK cell engineering platform[254](index=254&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=83&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of its equity securities during the third quarter of 2024 - There were no unregistered sales of equity securities during the period covered by the report[404](index=404&type=chunk) [Item 3. Defaults Upon Senior Securities](index=83&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities during the period - None[404](index=404&type=chunk) [Item 4. Mine Safety Disclosures](index=83&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[404](index=404&type=chunk) [Item 5. Other Information](index=83&type=section&id=Item%205.%20Other%20Information) The company discloses that no directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the quarter ended September 30, 2024 - No directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter[405](index=405&type=chunk) [Item 6. Exhibits](index=84&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer, XBRL data files, and incorporated by reference documents - The report includes certifications from the CEO and CFO as required by the Sarbanes-Oxley Act of 2002[409](index=409&type=chunk) - Interactive Data Files (Inline XBRL) are included as exhibits[409](index=409&type=chunk)

Financial Performance - Nkarta reported a cash balance of $405.3 million as of September 30, 2024, expected to fund operations into late 2027[6]. - Research and development (R&D) expenses for Q3 2024 were $25.3 million, with a net loss of $28.3 million or $0.39 per share[6][19]. - Total operating expenses for Q3 2024 were $33.8 million, compared to $29.3 million in Q3 2023[19]. - General and administrative (G&A) expenses for Q3 2024 were $8.5 million, with non-cash stock-based compensation of $2.3 million included[6][19]. - Nkarta's total assets increased to $532.0 million as of September 30, 2024, up from $378.9 million at the end of 2023[20]. Clinical Trials and Development - The first patient was dosed in both the Ntrust-1 trial for lupus nephritis and the investigator-sponsored trial for systemic lupus erythematosus[2][3]. - Enrollment in the Ntrust-2 trial is expected to begin by year-end 2024, targeting systemic sclerosis, myositis, and vasculitis[4]. - Nkarta will not pursue further development of NKX019 in non-Hodgkin lymphoma, focusing instead on autoimmune diseases[5][2]. - Preliminary clinical data from Ntrust-1 and Ntrust-2 trials is planned for release in 2025[4]. - The company aims to report final data from the LBCL cohort at a future medical conference[5].

Group 1 - Nkarta, Inc. is participating in the H.C. Wainwright 26th Annual Global Investment Conference on September 10, 2024, at 12:30 p.m. ET, featuring a fireside chat [1] - A simultaneous webcast of the event will be available on Nkarta's website, with a replay archived for approximately 90 days [1] Group 2 - Nkarta is a clinical-stage biotechnology company focused on developing allogeneic, off-the-shelf natural killer (NK) cell therapies [2] - The company utilizes a cell expansion and cryopreservation platform combined with proprietary cell engineering technologies and CRISPR-based genome engineering to create a pipeline of future cell therapies [2] - Nkarta aims to provide therapies engineered for deep therapeutic activity and intended for broad access in outpatient treatment settings [2]

Core Viewpoint - Nkarta's stock has seen a significant increase following an upgrade from Raymond James, indicating positive sentiment towards the company's future prospects [1][2]. Group 1: Analyst Upgrade - Raymond James upgraded Nkarta from outperform to a strong buy, maintaining a 12-month price target of $16 [1]. - The upgrade was influenced by Nkarta's second-quarter update, which highlighted plans to begin patient enrollment in a clinical trial for NKX019 by year-end [2]. Group 2: Financial Position - Nkarta reported a cash stockpile of $426.7 million at the end of the second quarter, which is expected to fund operations into late 2027 [2]. - The market capitalization of Nkarta is currently lower than its cash on hand, which is viewed positively by analysts [3]. Group 3: Product Potential - Analyst Laura Prendergast expressed optimism about NKX019, suggesting that it could be a safer and easier-to-administer alternative to T-cell therapies [3].

Core Insights - Nkarta, Inc. is advancing its NKX019 clinical trials for autoimmune diseases, with patient enrollment for the Ntrust-2 trial expected to begin by the end of 2024 [5][4] - The company reported a cash balance of $426.7 million as of June 30, 2024, which is projected to fund operations into late 2027 [9][8] - Preliminary clinical data from the Ntrust-1 and Ntrust-2 trials is anticipated in 2025 [5] Clinical Development - NKX019 is being developed for the treatment of systemic sclerosis, myositis, and vasculitis, with the Ntrust-2 trial receiving FDA clearance [4][11] - The dosing regimen for Ntrust-2 involves three doses of NKX019 on Days 0, 3, and 7 following lymphodepletion with cyclophosphamide [4][13] - An investigator-sponsored trial of NKX019 in systemic lupus erythematosus is also set to begin, with a similar dosing schedule [4][12] Financial Performance - For the second quarter of 2024, Nkarta reported R&D expenses of $23.1 million and G&A expenses of $7.6 million [8] - The net loss for the second quarter was $25.0 million, equating to $0.34 per share [8][19] - Cash and cash equivalents are expected to be sufficient to support the company's operating plan through late 2027 [9] Leadership Updates - In July 2024, Nadir Mahmood joined as President, and David R. Shook was promoted to Chief Medical Officer [7] - George Vratsanos joined the Board of Directors in June 2024, bringing expertise in immunology and autoimmunity [7] About NKX019 - NKX019 is an allogeneic, cryopreserved immunotherapy candidate utilizing engineered NK cells for enhanced targeting and persistence [10] - The therapy aims to reset the immune system by eliminating pathogenic B cells, potentially leading to long-term remissions in autoimmune diseases [11]

Core Insights - Nkarta, Inc. is advancing its NKX019 therapy for autoimmune diseases, with patient enrollment in the Ntrust-2 clinical trial expected to begin by the end of 2024 [1][4] - The company reported a cash balance of $426.7 million as of June 30, 2024, which is anticipated to fund operations into late 2027 [1][8] - Preliminary clinical data from the Ntrust-1 and Ntrust-2 trials is planned for release in 2025 [1][4] Clinical Development - Nkarta received FDA clearance for its second Investigational New Drug (IND) application for NKX019, supporting the initiation of the Ntrust-2 trial targeting systemic sclerosis, myositis, and vasculitis [3] - The Ntrust-2 trial will involve patients receiving three doses of NKX019 on Days 0, 3, and 7 after lymphodepletion with cyclophosphamide [3][12] - An investigator-sponsored trial of NKX019 in systemic lupus erythematosus (SLE) is also set to begin, with a similar dosing regimen [3][12] Financial Performance - For the second quarter of 2024, Nkarta reported R&D expenses of $23.1 million and G&A expenses of $7.6 million [7] - The net loss for the second quarter was $25.0 million, or $0.34 per share, which includes non-cash charges of $6.7 million [7][18] - Cash and cash equivalents are projected to be sufficient to support the company's operating plan through late 2027 [8] Leadership Changes - In July 2024, Nadir Mahmood, Ph.D., joined as President, and David R. Shook, M.D., was promoted to Chief Medical Officer [6] - George Vratsanos, M.D., FACR, joined the Board of Directors in June 2024, bringing expertise in immunology and autoimmunity [6] About NKX019 - NKX019 is an allogeneic, cryopreserved immunotherapy candidate utilizing engineered NK cells for targeting CD19, relevant in autoimmune diseases and B cell-derived malignancies [9] - The therapy aims to achieve long-term remissions by resetting the immune system through the elimination of pathogenic B cells [10]