PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The company reported decreased total assets, increased net loss, and initial collaboration revenue in Q1 2025 Condensed Consolidated Balance Sheets Total assets decreased to $202.2 million as of March 31, 2025, with a corresponding decrease in total stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $64,144 | $55,643 | | Total current assets | $121,235 | $131,532 | | Total assets | $202,207 | $226,240 | | Total current liabilities | $12,881 | $14,960 | | Total liabilities | $63,250 | $65,825 | | Total stockholders' equity | $138,957 | $160,415 | Condensed Consolidated Statements of Operations and Comprehensive Loss Q1 2025 saw the first collaboration revenue of $2.6 million, but net loss increased to $23.4 million due to higher R&D expenses Q1 2025 vs Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Collaboration revenue | $2,550 | $0 | | Research and development expenses | $19,739 | $13,572 | | General and administrative expenses | $7,831 | $7,881 | | Loss from operations | ($25,020) | ($21,453) | | Net loss | ($23,387) | ($19,557) | | Net loss per share, basic and diluted | ($2.49) | ($2.44) | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity decreased to $139.0 million by March 31, 2025, primarily due to the $23.4 million net loss - Total stockholders' equity decreased by $21.4 million during the first quarter of 2025, mainly due to the net loss of $23.4 million23 Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $24.5 million, offset by $32.8 million from investing activities, resulting in an $8.5 million net cash increase Q1 2025 vs Q1 2024 Cash Flow Summary (in thousands) | Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($24,452) | ($21,891) | | Net cash provided by (used in) investing activities | $32,781 | ($5,611) | | Net cash provided by financing activities | $172 | $139 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail cash runway, collaboration revenue from Novo Nordisk, a Genevant milestone, and a subsequent 20% workforce reduction - The company expects its cash, cash equivalents, and marketable securities of $139.0 million as of March 31, 2025, will be sufficient to fund operations for at least 12 months from the financial statement issuance date31 - In January 2025, the company triggered a $1.5 million development milestone payment to Genevant Sciences GmbH after dosing the first participants in its Phase 1/2a REWRITE clinical trial for KRRO-11063 - Under the Novo Nordisk agreement, the company recognized $2.6 million in collaboration revenue for the three months ended March 31, 2025. The total transaction price for the first program target is estimated at $40.1 million68 - On May 7, 2025, the company initiated a strategic plan including a workforce reduction of approximately 20%, with estimated one-time restructuring charges of about $1.2 million86 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's RNA editing focus, increased Q1 2025 net loss due to R&D, and a cash runway into 2027 Overview Korro Bio, a clinical-stage RNA editing company, initiated a Phase 1/2a trial for KRRO-110 and announced a 20% workforce reduction - The company is a clinical-stage biopharmaceutical company focused on developing a new class of genetic medicines based on RNA editing88 - The lead clinical program, KRRO-110 for AATD, began its Phase 1/2a REWRITE clinical trial in January 2025. Interim data from healthy volunteers and AATD patients is expected in the second half of 202591 - In May 2025, the company announced a strategic plan to streamline operations, including a workforce reduction of approximately 20%, with expected restructuring charges of $1.2 million92 - The company has incurred significant operating losses since inception, with a net loss of $23.4 million for Q1 2025 and an accumulated deficit of $290.0 million as of March 31, 202595 Results of Operations Q1 2025 saw $2.6 million in collaboration revenue, while R&D expenses increased by $6.2 million, primarily for the KRRO-110 trial R&D Expense Breakdown (in thousands) | Expense Category | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | KRRO-110 (AATD) external expenses | $6,122 | $2,249 | $3,873 | | Other research and pre-development | $4,350 | $3,300 | $1,050 | | Personnel expenses | $6,440 | $5,213 | $1,227 | | Facilities expenses | $2,827 | $2,810 | $17 | | Total R&D expenses | $19,739 | $13,572 | $6,167 | - The increase in R&D expenses was primarily due to a $3.9 million increase in KRRO-110 external costs, including a $2.4 million increase in clinical trial activities and a $1.5 million development milestone payment to Genevant110 - General and administrative expenses were largely unchanged at $7.8 million for Q1 2025 compared to $7.9 million in Q1 2024112 Liquidity and Capital Resources The company held $139.0 million in cash and marketable securities, expected to fund operations into 2027, despite $24.5 million in Q1 operating cash use - As of March 31, 2025, the company had cash, cash equivalents and marketable securities of $139.0 million114 - The company expects its cash position as of March 31, 2025, will be sufficient to fund operating expenses and capital expenditure requirements into 2027117 Cash Flow Summary (in thousands) | Activity | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($24,452) | ($21,891) | | Net cash provided by (used in) investing activities | $32,781 | ($5,611) | | Net cash provided by financing activities | $172 | $139 | Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's market risk is primarily interest rate sensitivity on investments, with minimal foreign currency exposure - The company's cash, cash equivalents, and marketable securities of $139.0 million are sensitive to changes in interest rates, but a 10% change is not expected to have a material effect on their fair market value131 - The company has minimal exposure to foreign currency risk as most contracts with vendors are denominated in U.S. dollars132 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2025134 - No material changes to the company's internal control over financial reporting occurred during the first quarter of 2025135 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently party to any legal proceedings expected to have a material adverse effect on its business - As of the date of the report, the company is not party to any claim or litigation that is expected to have a material adverse effect on its business137 Item 1A. Risk Factors The company faces extensive risks including financial losses, unproven RNA editing technology, clinical development challenges, third-party reliance, and intellectual property issues Risks Related to Our Business The company faces risks from its history of significant losses, need for substantial funding, and early-stage clinical development of KRRO-110 - The company has incurred significant losses since inception, with an accumulated deficit of $290.0 million as of March 31, 2025, and expects to incur losses for the foreseeable future139 - The company will require substantial additional funding and may be forced to delay, reduce, or eliminate research programs if unable to raise capital when needed145 - The company has only dosed a few participants in its Phase 1/2a trial of KRRO-110 and has not completed any clinical trials. Favorable preclinical results are not predictive of future clinical trial outcomes148 Risks Related to Discovery, Development and Commercialization Risks include unproven RNA editing technology, potential clinical trial failures, complex manufacturing, reliance on third-party LNP, and intense market competition - RNA editing is a novel technology with limited clinical validation for human therapeutic use, and the company's approaches are unproven and may never lead to marketable products166 - The process of manufacturing oligonucleotides is complex and presents risks in process development and scaling up, which could be affected by cost-overruns, delays, and quality control issues182183 - The company licenses the LNP delivery technology for KRRO-110 from Genevant, and termination of this agreement could delay or terminate development of the product candidate181 - The pharmaceutical industry is intensely competitive, and the company faces competition from large companies with greater resources and from new drugs that may be more effective, safer, or less expensive199200 Risks Related to Regulatory, Legal, and Clinical Trials The company faces regulatory uncertainty for oligonucleotides, potential legislative impacts, extensive post-marketing requirements, and compliance risks with healthcare and data privacy laws - Developing oligonucleotides, a relatively new class of drugs, carries increased risk as the FDA and other regulators have limited experience, which may lead to a complex, uncertain, and lengthy review process211 - The company faces risks from enacted and future legislation, such as the Affordable Care Act (ACA), which may increase the difficulty and cost of obtaining marketing approval and affect product pricing212214 - Any approved product will be subject to extensive post-marketing regulatory requirements, and failure to comply can result in restrictions, withdrawal from the market, or penalties229 - The company is subject to a variety of privacy and data security laws, such as GDPR, and failure to comply could result in significant fines and harm to the business265 Risks Related to Our Third Party Relationships The company heavily relies on third parties for clinical trials and manufacturing, faces risks from their performance, and depends on collaborator efforts like Novo Nordisk - The company relies on third parties like CROs and clinical investigators to conduct clinical trials and research, and these parties may not perform satisfactorily or meet deadlines268 - The company relies on third parties for the supply and manufacture of materials for research, preclinical, and clinical activities, and may be unable to identify or switch to alternative manufacturers on acceptable terms277278 - The success of the collaboration with Novo Nordisk and any future partnerships depends heavily on the efforts and resources of the collaborators, which are outside the company's direct control272 Risks Related to Our Personnel, Operations and Growth Success depends on retaining key personnel, with the recent workforce reduction potentially hindering recruitment and future growth management - The company is highly dependent on its senior management and key scientific personnel, and the loss of their services could delay R&D programs and harm the business286 - The recent workforce reduction in May 2025 could impede future efforts to recruit and hire qualified personnel needed for operational expansion286287 - The company may encounter difficulties managing future growth as it expands its R&D, manufacturing, and commercialization capabilities, which could disrupt operations287 Risks Related to Intellectual Property Success depends on protecting intellectual property, facing risks of patent invalidation, infringement lawsuits, and challenges from evolving patent laws - The company's success depends on its ability to obtain and maintain patents and other intellectual property rights, but it cannot be certain that its patent applications will issue or that issued patents will be enforceable or broad enough to prevent competition289292 - The company may be involved in lawsuits to protect its patents or defend against third-party claims of infringement, which are expensive, time-consuming, and have uncertain outcomes305312 - Changes in U.S. patent law, such as the America Invents Act, and rulings by the Supreme Court have increased uncertainty regarding patent protection and enforcement343345 - The company relies on trade secrets and confidentiality agreements to protect proprietary information, but these measures may be breached or may not provide adequate protection348349 General Risk Factors General risks include stock price volatility, high public company costs, anti-takeover provisions, significant stockholder control, and macroeconomic uncertainties affecting NOLs - The company's stock price is volatile and can be affected by numerous factors, including clinical trial results, competitor announcements, and general market conditions367 - Executive officers, directors, and principal stockholders beneficially own approximately 71% of the company's common stock, giving them significant influence over stockholder matters384 - The company's ability to use its net operating loss (NOL) carryforwards of $352.3 million (federal) and $319.7 million (state) may be limited by 'ownership change' rules under Section 382 of the tax code390391 - The business may be adversely affected by macroeconomic conditions, including inflation, rising interest rates, and volatile market conditions393 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section is not applicable for the current reporting period - Not applicable395 Item 5. Other Information No new Rule 10b5-1(c) trading plans were adopted by officers or directors during Q1 2025 - During the three months ended March 31, 2025, no officers or directors adopted new trading plans for the company's securities under Rule 10b5-1(c)398 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications - The exhibits filed include corporate governance documents, an employment agreement for Loïc Vincent, and required officer certifications under the Sarbanes-Oxley Act400
Korro Bio(KRRO) - 2025 Q1 - Quarterly Report