Kineta(KA) - 2019 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the company's unaudited condensed financial statements and management's analysis Item 1. Condensed Financial Statements (unaudited) The unaudited condensed financial statements for Q2 2019 reflect a $34.4 million net loss and a decrease in total assets Condensed Balance Sheets This statement presents the company's financial position at specific points in time Condensed Balance Sheet Summary (in thousands) | Balance Sheet Item | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $28,636 | $28,810 | | Short-term investments | $59,385 | $89,569 | | Total current assets | $91,087 | $120,860 | | Total assets | $105,749 | $136,142 | | Liabilities & Equity | | | | Total current liabilities | $11,127 | $8,601 | | Total liabilities | $23,764 | $21,800 | | Total stockholders' equity | $81,985 | $114,342 | | Total liabilities and stockholders' equity | $105,749 | $136,142 | Condensed Statements of Operations and Comprehensive Loss This statement details the company's revenues, expenses, and net loss over specific periods Condensed Statement of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2019 | Three Months Ended June 30, 2018 | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $0 | $843 | $5,000 | $1,785 | | Research and development | $16,925 | $12,604 | $33,072 | $21,004 | | General and administrative | $3,682 | $3,957 | $7,626 | $7,780 | | Loss from operations | ($20,607) | ($15,718) | ($35,698) | ($26,999) | | Net loss | ($20,018) | ($15,478) | ($34,436) | ($26,504) | | Net loss per share | ($0.39) | ($0.43) | ($0.67) | ($0.75) | Condensed Statements of Cash Flows This statement summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Statement of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2019 | Six Months Ended June 30, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | ($31,051) | ($24,865) | | Net cash provided by investing activities | $30,821 | $3,561 | | Net cash provided by financing activities | $56 | $10,388 | | Net (decrease) in cash | ($174) | ($10,916) | Notes to Condensed Financial Statements This section provides additional details and explanations for the condensed financial statements - The company is a clinical-stage biopharmaceutical firm focused on developing novel therapeutics for cystic fibrosis (CF), with a pipeline including correctors (PTI-801), potentiators (PTI-808), and amplifiers (PTI-428)[25] - Management has evaluated the company's ability to continue as a going concern, concluding that its cash, cash equivalents, and short-term investments of $88.0 million are sufficient to fund operations for at least 12 months from the financial statement issuance date, however, additional funding will be needed for critical activities in 2020[27] - In December 2018, the company entered into a Technology Transfer and License Agreement with Genentech, granting an exclusive worldwide license for technology related to an undisclosed target, the company received a $5.0 million upfront payment in February 2019 upon completion of the technology transfer, which was recognized as revenue[61][65] - The collaboration agreement with Astellas Pharma Inc. was completed as of December 31, 2018, with all performance obligations satisfied, the company recognized $0.8 million and $1.8 million of revenue from this agreement in the three and six months ended June 30, 2018, respectively[66][68] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's CF therapies, $33.1 million R&D increase, and $88.0 million cash position - The company is developing proprietary combination therapies dual (PTI-801 and PTI-808) and triple (PTI-801, PTI-808, and PTI-428) for CF patients with at least one F508del mutation[75] - In March 2019, the company announced Phase 1 results for its triple combination therapy, which was generally well tolerated with no serious adverse events, a dose-dependent improvement in ppFEV1 was observed[82] - The company has received Fast Track designation for PTI-801 and the triple combination program, Breakthrough Therapy designation for PTI-428, and Orphan Drug Designation for PTI-428 from both the FDA and the European Commission[89][90][91] Comparison of Results of Operations (in thousands) | Period | Revenue | R&D Expense | Net Loss | | :--- | :--- | :--- | :--- | | Three Months Ended June 30, 2019 | $0 | $16,925 | ($20,018) | | Three Months Ended June 30, 2018 | $843 | $12,604 | ($15,478) | | Six Months Ended June 30, 2019 | $5,000 | $33,072 | ($34,436) | | Six Months Ended June 30, 2018 | $1,785 | $21,004 | ($26,504) | - As of June 30, 2019, the company had $88.0 million in cash, cash equivalents, and short-term investments, management believes this is sufficient to fund operations for at least the next 12 months, but additional funding will be necessary for critical activities in 2020[100][130] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide market risk disclosures - As a smaller reporting company defined by Rule 12b-2 of the Securities Exchange Act of 1934, the company is not required to provide quantitative and qualitative disclosures about market risks[144] Item 4. Management's Evaluation of our Disclosure Controls and Procedures Management concluded disclosure controls were effective with no material changes to internal control - Management concluded that as of June 30, 2019, the company's disclosure controls and procedures were effective at the reasonable assurance level[146] - There were no changes in internal control over financial reporting during the three months ended June 30, 2019, that have materially affected, or are reasonably likely to materially affect, internal controls[147] PART II – OTHER INFORMATION This section provides disclosures on legal proceedings, risk factors, and other required information Item 1. Legal Proceedings As of June 30, 2019, the company was not party to any material pending legal proceedings - As of June 30, 2019, the company was not party to any material pending legal proceedings[148] Item 1A. Risk Factors The company faces significant risks including substantial losses, need for capital, and reliance on product development - The company has a history of significant losses, with a net loss of $34.4 million for the six months ended June 30, 2019, and an accumulated deficit of $312.0 million, it anticipates continued losses and may never achieve profitability[150] - The company will require substantial additional capital to fund operations, its existing cash of $88.0 million as of June 30, 2019, is expected to last for at least 12 months, but failure to secure more funding could force delays or elimination of R&D programs[161][162] - The business depends substantially on the success of its lead product candidates PTI-801, PTI-808, and PTI-428, the regulatory approval process is lengthy and unpredictable, and there is no guarantee of successful development or commercialization[174][176][184] - The company faces intense competition in the CF market from large pharmaceutical companies like Vertex, which have greater resources and may develop more effective treatments, potentially rendering the company's product candidates obsolete[235][236][238] - The company relies on third parties (CROs) to conduct clinical trials and on third-party manufacturers for clinical supplies, poor performance by these third parties could delay development programs and adversely affect the business[217][221] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period - Not applicable[341] Item 5. Other Information This item is not applicable for the reporting period - Not applicable[344] Item 6. Exhibits This section lists exhibits filed with the Quarterly Report on Form 10-Q, including certifications - The exhibits filed with this report include corporate governance documents, officer certifications (pursuant to Exchange Act rules and Sarbanes-Oxley), and XBRL data files[346][347]