PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The company reported a net loss of $23.4 million for Q1 2025, driven by higher R&D expenses, while recognizing its first $2.6 million collaboration revenue and maintaining sufficient cash for at least 12 months Condensed Consolidated Balance Sheets Total assets decreased to $202.2 million as of March 31, 2025, primarily due to reduced marketable securities and net loss, impacting stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $64,144 | $55,643 | | Total marketable securities | $74,848 | $107,411 | | Total current assets | $121,235 | $131,532 | | Total assets | $202,207 | $226,240 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $12,881 | $14,960 | | Total liabilities | $63,250 | $65,825 | | Total stockholders' equity | $138,957 | $160,415 | | Total liabilities and stockholders' equity | $202,207 | $226,240 | Condensed Consolidated Statements of Operations and Comprehensive Loss For Q1 2025, the company reported its first $2.6 million collaboration revenue, but increased operating expenses, primarily R&D, led to a widened net loss of $23.4 million Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2025 | Q1 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 Cash Flows Net cash used in operating activities was $24.5 million in Q1 2025, offset by $32.8 million from investing activities, resulting in an $8.5 million net increase in cash Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 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 | | Net increase (decrease) in cash | $8,501 | ($27,363) | Notes to Unaudited Condensed Consolidated Financial Statements Key notes confirm $139.0 million in cash is sufficient for 12 months, detail a $70.0 million PIPE offering, $2.6 million Novo Nordisk revenue, and a 20% workforce reduction with $1.2 million restructuring charges - The company expects its cash, cash equivalents, and marketable securities of $139.0 million as of March 31, 2025, to fund operations for at least 12 months from the financial statement issuance date31 - In April 2024, the company raised gross proceeds of approximately $70.0 million through a private placement (PIPE) of its common stock54 - The company recognized $2.6 million in collaboration revenue during Q1 2025 from its agreement with Novo Nordisk, with revenue recognition expected to continue through Q1 202768 - On May 7, 2025, the company initiated a workforce reduction of approximately 20%, expecting to incur one-time restructuring charges of about $1.2 million86 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's focus on RNA editing with lead program KRRO-110 in Phase 1/2a trials, a $23.4 million net loss for Q1 2025, and a $139.0 million cash position expected to fund operations into 2027, alongside a 20% workforce reduction Overview Korro Bio, a clinical-stage biopharmaceutical company, has its lead candidate KRRO-110 in a Phase 1/2a clinical trial (REWRITE) with interim data expected in H2 2025, and initiated a 20% workforce reduction in May 2025 - The company's lead program, KRRO-110 for AATD, is in a Phase 1/2a clinical trial (REWRITE), with interim data from healthy volunteers and AATD patients 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%92 - The FDA has granted Orphan Drug Designation to KRRO-110 for the treatment of AATD in March 202591 Results of Operations Q1 2025 saw the company's first $2.6 million collaboration revenue, but R&D expenses increased by $6.1 million to $19.7 million, primarily due to KRRO-110 clinical trial costs and a $1.5 million milestone payment Comparison of Results of Operations (in thousands) | Line Item | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Collaboration Revenue | $2,550 | $0 | $2,550 | | Research and Development | $19,739 | $13,572 | $6,167 | | General and Administrative | $7,831 | $7,881 | ($50) | | Net Loss | ($23,387) | ($19,557) | ($3,830) | - The increase in R&D expenses was mainly due to a $3.9 million rise in KRRO-110 external costs, which included a $2.4 million increase in clinical trial activities and a $1.5 million development milestone payment to Genevant110 Liquidity and Capital Resources As of March 31, 2025, the company held $139.0 million in cash, expected to fund operations into 2027, and has an active $100.0 million ATM equity offering program with no shares sold - As of March 31, 2025, the company had cash, cash equivalents and marketable securities of $139.0 million114 - The company expects its current cash position to be sufficient to fund operating expenses and capital expenditure requirements into 2027117 - The company has an active at-the-market (ATM) equity offering program for up to $100.0 million, but had not sold any shares under the program as of March 31, 2025116 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its $139.0 million in cash and marketable securities, though a 10% change is not expected to have a material effect - The company's main market risk is interest rate sensitivity on its $139.0 million in cash, cash equivalents, and marketable securities131 - Management believes a hypothetical 10% change in market interest rates would not materially affect the fair market value of its cash or cash equivalents131 Item 4. Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2025134 - No material changes to internal control over financial reporting occurred during the most recently completed fiscal quarter135 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently party to any material legal proceedings and does not expect any current matters to have a material adverse effect - As of the date of the report, the company is not party to any claim or litigation that is reasonably expected to have a material adverse effect on its business137 Item 1A. Risk Factors The company faces significant risks including a history of losses, need for future funding, high development risks for novel RNA editing technology, extensive regulatory oversight, intense competition, reliance on third parties, intellectual property uncertainties, and general business risks like stock price volatility Risks Related to Our Business The company has incurred significant losses, with an accumulated deficit of $290.0 million as of March 31, 2025, expects future losses, requires substantial additional funding, and early preclinical results are not predictive of clinical success - 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 need substantial additional funding and may be forced to delay, reduce, or eliminate research programs if unable to raise capital145 - The company has dosed very few participants in its Phase 1/2a REWRITE clinical trial of KRRO-110 and has not completed any clinical trials for its RNA editing approaches, making early favorable results not predictive of future outcomes148 Risks Related to Discovery, Development and Commercialization Success hinges on novel, unproven RNA editing technology with risks of product failure, unforeseen side effects, complex manufacturing, and intense competition from larger pharmaceutical companies - 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 manufacturing process for oligonucleotides is complex and presents risks in production, scaling, and quality control, which could delay or hinder development182 - The company faces intense competition from large pharmaceutical and biotechnology companies with greater financial, technical, and human resources199 Risks Related to Regulatory, Legal, and Clinical Trials Developing oligonucleotides presents increased regulatory uncertainty due to limited agency experience, potential for non-meaningful clinical endpoints, and extensive post-marketing requirements for any approved products - Developing oligonucleotides, a new class of drugs, presents increased risk as the FDA and other regulators have limited experience, which may lead to a complex, uncertain, and lengthy review process211 - There is a risk that regulatory authorities may not consider the endpoints of the company's clinical trials to provide clinically meaningful results, which could hinder approval217 - Any approved product will be subject to extensive post-marketing regulatory requirements, and failure to comply could result in penalties, restrictions, or withdrawal from the market229 Risks Related to Our Third Party Relationships The company heavily relies on third parties for clinical trials, manufacturing, and commercialization, risking delays or harm if these partners do not perform satisfactorily or meet deadlines - The company relies on third parties like CROs to conduct clinical trials and may be harmed if these parties do not perform satisfactorily or meet deadlines268 - 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 control270272 - Reliance on third-party manufacturers (CMOs) for the supply of product candidates entails risks related to quality, timing, regulatory compliance (cGMP), and supply chain interruptions277 Risks Related to Our Personnel, Operations and Growth The company is highly dependent on senior management and key scientific personnel, and expected operational expansion will strain resources, potentially disrupting operations, especially after the recent workforce reduction - The company is highly dependent on its senior management and key scientific staff, and the loss of any key members could delay R&D programs286 - The company expects to expand its operations, and any inability to manage this growth could disrupt operations and delay business plans. The May 2025 workforce reduction may make recruiting and retention more challenging287 Risks Related to Intellectual Property Success depends on obtaining and protecting intellectual property rights, facing risks of patent challenges, infringement lawsuits, changes in patent law, and inadequate trade secret protection - The company's success depends on its ability to obtain and maintain patent protection for its product candidates and platform technology, but the patent process is expensive, time-consuming, and uncertain289291 - Third-party claims of intellectual property infringement could prevent or delay product development and commercialization, and defending against such claims would be expensive and divert resources312313 - Changes in U.S. and international patent law could diminish the value of patents, impairing the ability to protect the company's technology and product candidates342343 - The company relies on trade secrets and confidentiality agreements, which may be breached or may not provide adequate protection, potentially harming its competitive position348349 General Risk Factors The company's stock price is highly volatile, executive officers and directors hold significant voting power, and the ability to use NOL carryforwards may be limited by ownership changes - The company's common stock price is highly volatile and subject to substantial fluctuations due to clinical trial results, competitor announcements, and general market conditions367 - Executive officers, directors, and principal stockholders beneficially own approximately 71% of the outstanding 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 due to ownership changes under Section 382 of the Code390391 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period - Not applicable395 Item 3. Defaults Upon Senior Securities This item is not applicable for the reporting period - Not applicable396 Item 4. Mine Safety Disclosures This item is not applicable for the reporting period - Not applicable397 Item 5. Other Information During Q1 2025, no officers or directors adopted or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement - No officers or directors adopted or terminated a Rule 10b5-1 trading plan during the three months ended March 31, 2025398 Item 6. Exhibits The report lists several filed exhibits, including corporate governance documents, an employment agreement for Loïc Vincent, and required CEO/CFO certifications - Filed exhibits include corporate governance documents, an employment agreement for Loïc Vincent effective March 31, 2025, and required CEO/CFO certifications400 Signatures - The quarterly report was duly signed on May 7, 2025, by Ram Aiyar, President and Chief Executive Officer, and Vineet Agarwal, Chief Financial Officer406
FREQUENCY THERAP(FREQ) - 2025 Q1 - Quarterly Report