Kineta(KA) - 2025 Q1 - Quarterly Report

FORM 10-Q Filing Information Filing Details This document is a Quarterly Report on Form 10-Q for Kineta, Inc. for the period ended March 31, 2025. The company is a non-accelerated filer and a smaller reporting company, with 13,540,355 shares of common stock outstanding as of May 12, 2025 - Kineta, Inc. is filing its Quarterly Report on Form 10-Q for the period ended March 31, 2025[2] Company Filing Status and Stock Information | Category | Status/Value | | :------------------------ | :----------------------------------- | | Filing Type | Quarterly Report (Form 10-Q) | | Period Ended | March 31, 2025 | | Filer Status | Non-accelerated filer, Smaller reporting company | | Common Stock Outstanding (as of May 12, 2025) | 13,540,355 shares | Table of Contents Cautionary Statement and Forward-Looking Statements Cautionary Statement Kineta, Inc. initiated a process in February 2024 to explore strategic alternatives, which led to a proposed merger with TuHURA Biosciences, Inc. The company warns that trading in its securities is highly speculative and carries substantial risks, with potential for total loss of investment if the TuHURA transaction fails and liquidation or bankruptcy ensues - Kineta initiated a strategic alternatives review in February 2024, leading to a proposed merger with TuHURA Biosciences, Inc.[8] - If the TuHURA merger is not consummated, the Board may pursue liquidation or U.S. Bankruptcy Code relief[8] - Trading in Kineta's securities is highly speculative, with a risk of total loss for investors[9] Special Note Regarding Forward-Looking Statements This report contains forward-looking statements subject to known and unknown risks and uncertainties that could cause actual results to differ materially. Key factors include the completion of the TuHURA merger, funding ability, clinical trial outcomes, regulatory approvals, market acceptance, and geopolitical developments. The company disclaims any obligation to update these statements - Forward-looking statements are subject to known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[11] - Completion of the proposed merger with TuHURA Biosciences, Inc. - Ability to fund planned operations and continue as a going concern. - Timing, progress, and results of preclinical studies and clinical trials for product candidates. - Ability to obtain and maintain regulatory approval for product candidates. - Impact of global economic and political developments (e.g., conflicts in Ukraine, Israel/Gaza, U.S.-China trade tensions)[11][18] - The company operates in a competitive and rapidly changing environment, with new risks emerging frequently[13] PART I—FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents Kineta, Inc.'s unaudited condensed consolidated financial statements for the three months ended March 31, 2025, including balance sheets, statements of operations, shareholders' equity, and cash flows, along with detailed notes explaining significant accounting policies, fair value measurements, and other financial components Condensed Consolidated Balance Sheets - Cash decreased from $634,000 at December 31, 2024, to $304,000 at March 31, 2025[21] - Total current liabilities increased from $12,886,000 to $14,035,000, while total stockholders' deficit deepened from $(11,867,000) to $(13,193,000)[21] Condensed Consolidated Balance Sheet Highlights (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :------------- | :---------------- | | Cash | $304 | $634 | | Total current assets | $842 | $1,019 | | Total assets | $842 | $1,019 | | Accounts payable | $4,886 | $3,901 | | Total current liabilities | $14,035 | $12,886 | | Total liabilities | $14,035 | $12,886 | | Total stockholders' deficit | $(13,193) | $(11,867) | Condensed Consolidated Statements of Operations - Net loss significantly decreased from $(10,249,000) in Q1 2024 to $(1,575,000) in Q1 2025, primarily due to reduced operating expenses and a gain on asset sale[23] - Research and development expenses decreased by 77% and general and administrative expenses decreased by 62% year-over-year[23] Condensed Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Research and development expenses | $617 | $2,726 | | General and administrative expenses | $1,403 | $3,680 | | Total operating expenses | $2,020 | $6,406 | | Loss from operations | $(2,020) | $(6,406) | | Gain on sale of assets | $500 | $0 | | Total other (expense) income, net | $445 | $(3,843) | | Net loss | $(1,575) | $(10,249) | | Net loss attributable to Kineta, Inc. | $(1,676) | $(10,238) | | Net loss per share, basic and diluted | $(0.13) | $(0.87) | | Weighted-average shares outstanding | 12,902 | 11,738 | Condensed Consolidated Statements of Shareholders' Equity (Deficit) - The accumulated deficit increased from $(182,921,000) at December 31, 2024, to $(184,597,000) at March 31, 2025, reflecting the net loss for the quarter[27] - Issuance of common stock and pre-funded warrants contributed $2,000 to common stock amount, and stock-based compensation added $241,000 to additional paid-in capital[27] Condensed Consolidated Statements of Shareholders' Equity (Deficit) Highlights (in thousands) | Item | Balance as of Dec 31, 2024 | Balance as of Mar 31, 2025 | | :--------------------------------- | :------------------------- | :------------------------- | | Common Stock (Amount) | $12 | $14 | | Additional Paid-In Capital | $170,878 | $171,125 | | Accumulated Deficit | $(182,921) | $(184,597) | | Total Stockholders' Deficit attributable to Kineta, Inc. | $(12,031) | $(13,458) | | Noncontrolling Interest | $164 | $265 | | Total Stockholders' Deficit | $(11,867) | $(13,193) | Condensed Consolidated Statements of Cash Flows - Net cash used in operating activities decreased significantly from $(4,011,000) in Q1 2024 to $(1,440,000) in Q1 2025[30] - Financing activities provided $1,110,000 in Q1 2025, primarily from loan advances, compared to an insignificant amount in Q1 2024[30] Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(1,440) | $(4,011) | | Net cash provided by financing activities | $1,110 | $1 | | Net change in cash and restricted cash | $(330) | $(4,010) | | Cash and restricted cash at end of year | $308 | $1,848 | Notes to Unaudited Condensed Consolidated Financial Statements 1. Organization and Liquidity Kineta, Inc. is a clinical-stage biotechnology company focused on developing immunotherapies. The company is pursuing a proposed merger with TuHURA Biosciences, Inc., which is subject to various conditions. Kineta faces substantial doubt about its ability to continue as a going concern due to recurring losses, negative cash flows, and insufficient cash to fund operations for the next 12 months, necessitating strategic alternatives or additional funding - Kineta is a clinical-stage biotechnology company developing next-generation immunotherapies, with a focus on innate immunity to address cancer immune resistance[34][139] - A proposed merger transaction with TuHURA Biosciences, Inc. is underway, involving a two-step merger intended to qualify as a tax-free reorganization[36][37] - Accumulated deficit as of March 31, 2025: $184.6 million - Net loss attributable to Kineta, Inc. for Q1 2025: $1.7 million - Unrestricted cash as of March 31, 2025: $304,000 - Substantial doubt about ability to continue as a going concern due to insufficient cash for the next 12 months[45][147][149][186] - Kineta is exploring strategic alternatives (asset sale, company sale, licensing, merger, liquidation) and has granted TuHURA an exclusive right to acquire assets related to its KVA12123 program[46][47] 2. Summary of Significant Accounting Policies The unaudited condensed consolidated financial statements are prepared in accordance with U.S. GAAP and SEC rules for interim reporting, condensing certain disclosures. The company operates as a single reportable segment, and there have been no changes to significant accounting policies from the 2024 Annual Report on Form 10-K - Interim financial statements are unaudited and prepared in accordance with U.S. GAAP and SEC rules, with certain disclosures condensed or omitted[55] - The company operates as a single reportable segment, with the President acting as the chief operating decision maker (CODM)[59][107] - No changes to significant accounting policies from the 2024 Annual Report on Form 10-K[55] 3. Fair Value Measurements The company's financial instruments like cash and accounts payable approximate fair value due to their short-term nature. The rights from a Private Placement were deemed a derivative asset and written off to zero as of December 31, 2024, as the second closing did not occur. The 2020 notes, for which the fair value option was elected, matured on July 31, 2024, and their fair value approximates the principal amount - Carrying amounts of cash, restricted cash, and accounts payable approximate fair value due to their short-term nature[61] Fair Value of Rights from Private Placement (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Balance at beginning of period | $0 | $3,832 | | Change in fair value | $0 | $0 | | Balance at end of period | $0 | $3,832 | - The fair value of rights from Private Placement was written off to zero as of December 31, 2024, as the second closing did not occur[62] - The 2020 notes matured on July 31, 2024, and their fair value approximates the principal amount[64] 4. Balance Sheet Components This note details specific balance sheet components. There was no property and equipment as of March 31, 2025, or December 31, 2024. Accrued expenses and other current liabilities decreased from $2,361,000 at December 31, 2024, to $1,413,000 at March 31, 2025, primarily due to a significant reduction in professional services accruals - No property and equipment were held as of March 31, 2025, or December 31, 2024[66] Accrued Expenses and Other Current Liabilities (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :--------------------------------- | :------------- | :---------------- | | Compensation and benefits | $796 | $696 | | Accrued interest | $282 | $228 | | Accrued board fees | $194 | $97 | | Professional services | $93 | $1,238 | | Accrued clinical trial and preclinical costs | $0 | $80 | | Other | $48 | $22 | | Total | $1,413 | $2,361 | - Professional services accruals decreased substantially from $1,238,000 to $93,000[67] 5. Notes Payable As of March 31, 2025, Kineta had $629,000 in total notes payable, all classified as current. This includes $250,000 from 2020 notes and $379,000 from other notes payable, both of which matured in July and June 2024, respectively, and are now payable upon demand by holders Notes Payable Outstanding (in thousands) | Item | Principal (March 31, 2025) | Fair Value (March 31, 2025) | Principal (December 31, 2024) | Fair Value (December 31, 2024) | | :----------------- | :------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | 2020 notes | $250 | $250 | $250 | $250 | | Other notes payable | $379 | $379 | $379 | $379 | | Total notes payable | $629 | $629 | $629 | $629 | | Less: current portion | | $629 | | $629 | | Notes payable, net of current portion | | $0 | | $0 | - The 2020 notes, with a principal balance of $250,000, matured on July 31, 2024, and are payable upon demand[70] - Other notes payable, with a principal balance of $379,000, matured on June 30, 2024, and are also payable upon demand[72] 6. Commitments and Contingencies Kineta's office and laboratory lease expired on July 31, 2024, and was not extended, with employees now working remotely. The company entered a settlement agreement for $679,000 in outstanding debt related to its former premises, with payments due by May 31, 2025. The company also has various manufacturing, clinical, and research contracts, and executive employment agreements with potential severance obligations - The Company's office and laboratory lease expired on July 31, 2024, and was not extended, leading to zero rent expense for Q1 2025[73][74] Lease Settlement Agreement (in thousands) | Item | Amount | | :--------------------------------- | :----- | | Outstanding monetary obligation (Outstanding Debt) | $679 | | Landlord's application of security deposit | $70 | | First Payment (paid Sept 18, 2024) | $85 | | Second Payment (due by May 31, 2025) | $524 | - Executive employment agreements include severance provisions for termination without cause or resignation for good reason, entitling executives to accrued compensation, 39 weeks of pay, COBRA benefits, and additional equity vesting[88] - Consulting agreements with former CEO and General Counsel allow their unvested equity awards to continue vesting, with $576,000 and $304,000 owed respectively as of March 31, 2025[84][87] 7. Strategic License Agreements Kineta holds an exclusive worldwide license for its VISTA/KVA12123 drug program, with potential milestone and royalty payments to GigaGen. The CD27 Agreement with GigaGen was mutually terminated in January 2025, with GigaGen waiving accrued fees. Other license agreements (Merck, Genentech, FAIR) were sold to HCRX Investments Holdco, L.P., with Genentech's agreement subsequently terminated by Genentech - Kineta has an exclusive worldwide license for the VISTA/KVA12123 drug program, with potential development, regulatory, and sales milestone payments totaling up to $31.3 million to GigaGen, plus low single-digit royalties[89][90] - The Anti-CD27 Agonist Antibody Program In-License Agreement with GigaGen was mutually terminated on January 29, 2025, with GigaGen waiving $180,000 in accrued fees[92][93] - The Merck Neuromuscular License Agreement, Genentech Small Molecule License Agreement, and FAIR License Agreement were sold to HCRX Investments Holdco, L.P. The Genentech agreement was subsequently terminated by Genentech, Inc. effective May 15, 2025[94][95][97][98] 8. Stockholders' Equity As of March 31, 2025, Kineta had 13,540,355 shares of common stock outstanding. The company issued 1,225,323 shares and a pre-funded warrant for 655,019 shares in exchange for existing warrants in March 2025. Warrants to purchase 898,000 shares were outstanding, with 50,000 shares exercised for $6,000 during Q1 2025 - As of March 31, 2025, there were 13,540,355 shares of Kineta Common Stock issued and outstanding[100] - On March 7, 2025, Kineta issued 1,225,323 shares of common stock and a pre-funded warrant for 655,019 shares in exchange for existing warrants held by an investor[99] Warrants to Purchase Common Stock (in thousands) | Item | Outstanding as of Dec 31, 2024 | Issued | Exercised | Cancelled/Expired | Outstanding as of Mar 31, 2025 | | :--------------------------------- | :----------------------------- | :----- | :-------- | :---------------- | :----------------------------- | | Total shares underlying warrants | 2,718 | 655 | (50) | (2,425) | 898 | - During Q1 2025, 50,000 shares were issued upon warrant exercise, generating $6,000 in proceeds[102][104] 9. Segment Reporting Kineta operates as a single reportable segment, focused on developing next-generation immunotherapies. The company did not generate revenue in Q1 2025 or Q1 2024. Operating loss significantly decreased from $(6,406,000) in Q1 2024 to $(2,020,000) in Q1 2025, driven by reduced personnel, professional services, and direct R&D costs - The Company operates as a single reportable segment, primarily engaged in the development of next-generation immunotherapies[107] Segment Information Highlights (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------- | :-------------------------------- | :-------------------------------- | | Revenue | $0 | $0 | | Operating Loss | $(2,020) | $(6,406) | | Segment Assets | $842 | $2,433 | | Capital Expenditures | $0 | $0 | | Depreciation and Amortization | $0 | $0 | Significant Operating Expenses (in thousands) | Expense Category | R&D (Q1 2025) | G&A (Q1 2025) | Total (Q1 2025) | R&D (Q1 2024) | G&A (Q1 2024) | Total (Q1 2024) | | :----------------------- | :------------ | :------------ | :-------------- | :------------ | :------------ | :-------------- | | Personnel | $188 | $566 | $754 | $349 | $1,238 | $1,587 | | Professional Services | $5 | $525 | $530 | $0 | $1,768 | $1,768 | | Research and development - Direct | $408 | $0 | $408 | $2,291 | $0 | $2,291 | | Total operating expenses | $617 | $1,403 | $2,020 | $2,726 | $3,680 | $6,406 | 10. Stock-Based Compensation Kineta operates several equity incentive plans (2008, 2010, 2020, and 2022 Plans) for granting stock options and other equity awards. As of March 31, 2025, 2,331,000 stock options were outstanding, with 1,389,000 exercisable. Total stock-based compensation expense for Q1 2025 was $241,000, a decrease from $477,000 in Q1 2024, with $679,000 of unrecognized compensation remaining - Kineta has multiple equity incentive plans (2008, 2010, 2020, 2022 Plans) for granting stock options and other equity awards to employees and service providers[114][116][118][121] Stock Option Activity (in thousands, except per share amounts and years) | Item | Outstanding Stock Options | Weighted-Average Exercise Price Per Share | Remaining Contractual Term (years) | | :--------------------------------- | :------------------------ | :---------------------------------------- | :--------------------------------- | | December 31, 2024 | 2,331 | $5.45 | 8.2 | | Outstanding as of March 31, 2025 | 2,331 | $5.45 | 8.2 | | Exercisable as of March 31, 2025 | 1,389 | $8.26 | 7.4 | Total Stock-Based Compensation (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Research and development | $64 | $74 | | General and administrative | $177 | $403 | | Total stock-based compensation | $241 | $477 | - As of March 31, 2025, $679,000 of unrecognized stock-based compensation related to stock options is expected to be recognized over a weighted-average remaining service period of 1.4 years[125] 11. Net Loss Per Share For the three months ended March 31, 2025, Kineta reported a basic and diluted net loss per share of $(0.13), a significant improvement from $(0.87) in the prior year period. Potentially dilutive common stock equivalents, including warrants and stock options, were excluded from diluted EPS calculations as their effect would have been anti-dilutive due to the net loss Net Loss Per Share (in thousands, except per share amounts) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Net loss attributable to Kineta, Inc. | $(1,676) | $(10,238) | | Weighted-average common shares outstanding, basic and diluted | 12,902 | 11,738 | | Net loss per share, basic and diluted | $(0.13) | $(0.87) | - Diluted net loss per common share is the same as basic net loss per common share because dilutive common shares are not assumed to have been issued if their effect is anti-dilutive[60] Excluded Potentially Dilutive Common Stock Equivalents (in thousands) | Item | March 31, 2025 | March 31, 2024 | | :--------------------------------- | :------------- | :------------- | | Warrants to purchase Kineta Common Stock | 567 | 2,560 | | Common stock options | 2,331 | 1,975 | | Vested restricted stock subject to recall | 56 | 56 | | Unvested restricted stock subject to repurchase | 0 | 8 | | Total | 2,954 | 4,599 | 12. Related Party Transactions There were no related party transactions for the three months ended March 31, 2025, or March 31, 2024 - No related party transactions occurred during the three months ended March 31, 2025, or March 31, 2024[129] 13. Subsequent Events Subsequent to March 31, 2025, Kineta received $48,000 from TuHURA for clinical trial expenses. On May 12, 2025, Kineta entered into an Asset Purchase Agreement with Philanthropos Therapeutics, LLC to sell assets related to LHF-535 for an upfront payment of $50,000 and potential future revenue sharing payments - Subsequent to March 31, 2025, Kineta received $48,000 from TuHURA to reimburse clinical trial expenses related to KVA12123[131] - On May 12, 2025, Kineta entered an Asset Purchase Agreement with Philanthropos Therapeutics, LLC to sell LHF-535 related assets for an upfront purchase price of $50,000 ($10,000 received in March 2025, $40,000 in May 2025)[132] - 5% royalty on Net Product Sales from Intellectual Property Rights - 5% of net sales price of any Priority Review Voucher - 15% of gross Consideration from any sale or license of the Product or Seller Product[133] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Kineta's financial condition and operational results, highlighting a significant corporate restructuring in February 2024, including workforce reduction and pausing/resuming clinical trials. The company is actively pursuing a merger with TuHURA Biosciences, Inc. as a strategic alternative due to funding challenges and expresses substantial doubt about its ability to continue as a going concern. It details the financial performance for Q1 2025 compared to Q1 2024, emphasizing reduced operating losses and cash burn, and outlines future funding requirements and debt obligations Overview Kineta underwent a significant corporate restructuring in February 2024, reducing its workforce by 64% and temporarily halting new patient enrollment in its VISTA-101 Phase 1/2 clinical trial due to funding issues. Enrollment resumed in August 2024, completing Phase 1 in February 2025. The company is pursuing a merger with TuHURA Biosciences, Inc. as a strategic alternative, warning of potential liquidation or bankruptcy if unsuccessful. Kineta remains a clinical-stage biotechnology company focused on immunotherapies for cancer - Kineta implemented a significant corporate restructuring in February 2024, reducing its workforce by approximately 64% and terminating new patient enrollment in the VISTA-101 Phase 1/2 clinical trial[135] - Enrollment for the VISTA-101 Phase 1/2 clinical trial resumed on August 19, 2024, and Phase 1 was completed in February 2025[136] - The company is pursuing a strategic alternative, specifically a merger with TuHURA, due to the failure of certain investors to fulfill contractual funding obligations[137] - Kineta is a clinical-stage biotechnology company focused on developing next-generation immunotherapies for cancer, with lead candidates KVA12123 (VISTA blocking) and an anti-CD27 agonist mAb[139][140][141] Proposed Merger with TuHURA Biosciences, Inc. Kineta entered into a Merger Agreement with TuHURA Biosciences, Inc. on December 11, 2024 (amended May 5, 2025), outlining a two-step merger process intended to be a tax-free reorganization. As part of this, TuHURA loaned Kineta $250,000 as of March 31, 2025 - Kineta entered into a Merger Agreement with TuHURA Biosciences, Inc. on December 11, 2024 (amended May 5, 2025), for a two-step merger[150] - The mergers are intended to qualify as a tax-free reorganization for U.S. federal income tax purposes[151] - TuHURA loaned Kineta $250,000 as of March 31, 2025, as part of the Merger Agreement[151] Clinical Trial Funding Agreement Simultaneously with the Merger Agreement, Kineta and TuHURA entered into a Clinical Trial Funding Agreement (CTF Agreement), under which TuHURA loaned Kineta $852,000 as of March 31, 2025, specifically for research and development expenses. This loan is evidenced by a secured promissory note bearing 5% simple interest, with payment due upon closing of the merger or termination of the Merger Agreement - Kineta and TuHURA entered a Clinical Trial Funding Agreement (CTF Agreement) simultaneously with the Merger Agreement[153] - TuHURA loaned Kineta $852,000 as of March 31, 2025, specifically to fund certain research and development expenses[153] - The loan is secured by Kineta's assets to be acquired by TuHURA, bears 5% simple interest, and is payable upon merger closing or termination of the Merger Agreement[154] Political and Geopolitical Developments Geopolitical events, such as conflicts in Ukraine and Israel/Gaza, and U.S.-China trade tensions, are noted as potential risks that could impact government spending, market stability, and the company's operations and financial results. Changes in trade policies and tariffs also pose a material adverse effect on business - Geopolitical developments (e.g., conflicts in Ukraine, Israel/Gaza, U.S.-China relations) may impact government spending, international trade, and market stability, adversely affecting Kineta's operations and financial results[157] - Uncertainty regarding U.S. trade policies, treaties, government regulations, and tariffs could have a material adverse effect on the business[158] Financial Operations Overview Kineta has not generated revenue from product sales and does not expect to in the near future, with past revenues primarily from collaboration, research, license agreements, and government grants. The company anticipates increased research and development expenses as product candidates advance through clinical trials and regulatory approvals, and expects continued operating losses. General and administrative expenses are also expected to rise due to strategic alternatives and public company costs. Other income/expense items include interest income/expense and changes in fair value of financial instruments - Kineta has not generated revenue from product sales and does not expect to in the near future; past revenues were from out-licensing, research services, and government grants[146][159] - Research and development expenses are expected to increase as product candidates advance through clinical trials and regulatory approvals, requiring significant investment[161] - Salaries, bonuses, benefits, stock-based compensation for R&D personnel - External R&D expenses (CROs, investigative sites, scientific services) - Costs for developing and manufacturing materials for preclinical studies and clinical trials - Licensing agreements and associated costs - Costs related to regulatory compliance[164] - General and administrative expenses include employee-related costs, legal, accounting, tax, and consulting fees, expected to increase due to strategic alternatives and public company operations[165] Results of Operations For the three months ended March 31, 2025, Kineta reported no revenues. Operating expenses decreased by $4.4 million (68%) year-over-year, primarily driven by a $2.1 million (77%) reduction in R&D expenses and a $2.3 million (62%) reduction in G&A expenses. This led to a significant improvement in net loss, from $(10.2) million in Q1 2024 to $(1.6) million in Q1 2025, also aided by a $500,000 gain on asset sale Results of Operations Summary (in thousands) | Item | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :----- | | Total operating expenses | $2,020 | $6,406 | $(4,386) | | Loss from operations | $(2,020) | $(6,406) | $4,386 | | Gain on sale of assets | $500 | $0 | $500 | | Total other (expense) income, net | $445 | $(3,843) | $4,288 | | Net loss | $(1,575) | $(10,249) | $8,674 | | Net loss attributable to Kineta, Inc. | $(1,676) | $(10,238) | $8,562 | Research and Development Expenses by Program (in thousands) | Program/Category | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :--------------------------------- | :-------------------------------- | :-------------------------------- | :----- | | KVA12123 program | $641 | $1,838 | $(1,197) | | CD27 program | $(191) | $430 | $(621) | | KCP-506 program | $(42) | $23 | $(65) | | Personnel-related costs | $188 | $348 | $(160) | | Total R&D expenses | $617 | $2,726 | $(2,109) | - General and administrative expenses decreased by $2.3 million (62%), primarily due to lower professional fees ($1.2 million), personnel costs ($672,000), and facilities costs ($286,000)[176] - Other (expense) income, net, improved significantly from a $(3.8) million loss in Q1 2024 to a $445,000 gain in Q1 2025, largely due to a $3.8 million change in fair value of rights from Private Placement and a $500,000 gain on asset sale[173][180][181] Going Concern and Capital Resources Kineta requires substantial additional capital to continue operations and pursue its growth strategy, with current cash of $304,000 as of March 31, 2025, raising substantial doubt about its ability to continue as a going concern for the next 12 months. The company is actively exploring strategic alternatives, including asset sales, mergers, or liquidation, and is pursuing litigation against investors who failed to fund. Without successful strategic transactions or additional capital, Kineta may face bankruptcy - Kineta requires substantial additional capital to sustain operations and pursue its growth strategy[182] - Cash as of March 31, 2025: $304,000 - Accumulated deficit as of March 31, 2025: $184.6 million - Insufficient cash to fund operating expenses and capital expenditures for at least the next 12 months[149][183][186] - Substantial doubt exists about Kineta's ability to continue as a going concern[186] - The company is exploring strategic alternatives (asset sale, company sale, licensing, merger, liquidation) and is pursuing litigation against investors for failure to fund[187][189] Cash Flows Kineta's net cash used in operating activities significantly decreased to $(1.4) million in Q1 2025 from $(4.0) million in Q1 2024, primarily due to a reduced net loss and changes in operating assets and liabilities. Financing activities provided $1.1 million in Q1 2025, mainly from loan advances by TuHURA, a substantial increase from the prior year Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(1,440) | $(4,011) | | Net cash provided by (used in) investing activities | $0 | $0 | | Net cash provided by financing activities | $1,110 | $1 | | Net change in cash and cash equivalents | $(330) | $(4,010) | - Net cash used in operating activities decreased by $2.6 million, driven by a lower net loss and favorable changes in operating assets and liabilities[191] - Cash provided by financing activities increased significantly to $1.1 million in Q1 2025, primarily from loan advances by TuHURA[193] Debt Obligations As of March 31, 2025, Kineta had $629,000 in outstanding notes payable, all at a 6% interest rate. These notes, comprising $379,000 and $250,000, matured in June and July 2024, respectively, and remain unpaid, now callable upon demand by a majority of the holders - As of March 31, 2025, Kineta had $629,000 in outstanding notes payable, all bearing a 6% interest rate[195] - Notes payable of $379,000 matured on June 30, 2024, and a note payable of $250,000 matured on July 31, 2024[195] - All outstanding notes remain unpaid and are now payable upon demand by a majority of the holders[195] Other Contractual Obligations and Commitments Kineta's contractual obligations beyond 12 months primarily relate to strategic license agreements, which involve contingent payments based on future development, regulatory, and commercial milestones, as well as royalties. The company's office lease expired in July 2024, and a settlement agreement for $679,000 in outstanding debt for its former premises was reached, with the final payment due by May 31, 2025 - Future cash requirements beyond 12 months are primarily related to contingent payments under strategic license agreements, dependent on achieving development, regulatory, and commercial milestones, and generating royalties[197][198] - The office and laboratory lease for the corporate headquarters expired on July 31, 2024, and was not renewed[199] - A settlement agreement was reached for $679,000 in outstanding debt for former premises, with the final payment of $524,000 due by May 31, 2025[200] Critical Accounting Estimates Kineta's critical accounting estimates for the three months ended March 31, 2025, are consistent with those disclosed in its 2024 Annual Report on Form 10-K. These estimates involve judgments and assumptions that affect reported financial amounts, and actual results may differ materially - Critical accounting estimates for Q1 2025 are consistent with those in the 2024 Annual Report on Form 10-K[204] - These estimates require management's judgment and assumptions, and actual results may differ materially[204] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Kineta, Inc. is exempt from providing quantitative and qualitative disclosures about market risk for this reporting period - Kineta, Inc. is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[205] Item 4. Controls and Procedures Kineta's management, with the participation of its President and CFO, concluded that its disclosure controls and procedures were not effective as of March 31, 2025, due to unremediated material weaknesses in internal control over financial reporting. These weaknesses include accounting for exclusivity payments, complex financial instruments, allocated facilities costs, and offering costs. Despite these, management believes the consolidated financial statements are fairly stated - Disclosure controls and procedures were not effective as of March 31, 2025, due to unremediated material weaknesses in internal control over financial reporting[207][208] - Material weakness in accounting for exclusivity payments related to a business combination - Material weaknesses in accounting for complex financial instruments (derivative asset, warrants) - Material weaknesses in allocated facilities costs and offering costs[207] - Management has designed and implemented improved processes, internal controls, and accounting systems, and enhanced formal policies to address these weaknesses[209] - Despite material weaknesses, management concluded that the consolidated financial statements are fairly stated in all material respects[210] PART II—OTHER INFORMATION Item 1. Legal Proceedings Kineta, Inc. filed complaints against Growth & Value Development Inc. and Myron Wolff for breach of contract due to their failure to provide substantial funding tranches. A settlement agreement was reached with Wolff Family Office LLC, resulting in a $2,500 payment to Kineta. The company is not currently a party to other material legal proceedings, but acknowledges potential litigation risks - Kineta filed complaints against Growth & Value Development Inc. and Myron Wolff for breach of contract related to unpaid funding obligations under Securities Purchase Agreements[214][215] - A settlement agreement was reached with Wolff Family Office LLC on March 28, 2025, resulting in a $2,500 payment to Kineta[216] - Except for these, Kineta is not a party to other material legal proceedings, but litigation can have an adverse impact due to costs and diversion of management resources[217] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in Kineta's 2024 Annual Report on Form 10-K - No material changes to risk factors from the 2024 Annual Report on Form 10-K[218] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds On March 7, 2025, Kineta entered into a securities exchange agreement with an existing investor, issuing 1,225,323 shares of common stock and a pre-funded warrant for 655,019 shares in exchange for existing warrants. This issuance was made under a Section 3(a)(9) exemption from registration, and the investor agreed to vote in favor of the proposed merger with TuHURA - On March 7, 2025, Kineta issued 1,225,323 shares of common stock and a pre-funded warrant for 655,019 shares to an existing investor in exchange for existing warrants[219] - The issuance was made in reliance on an exemption from registration under Section 3(a)(9) of the Securities Act of 1933[221] - The investor agreed to vote their shares in favor of the proposed merger with TuHURA Biosciences, Inc.[220] Item 3. Defaults Upon Senior Securities Kineta, Inc. reported no defaults upon senior securities during the period - There were no defaults upon senior securities[222] Item 4. Mine Safety Disclosures This item is not applicable to Kineta, Inc. - Mine Safety Disclosures are not applicable to Kineta, Inc.[223] Item 5. Other Information On May 12, 2025, Kineta entered an Asset Purchase Agreement with Philanthropos Therapeutics, LLC to sell assets related to LHF-535 for an upfront payment of $50,000 and future revenue sharing. No directors or officers reported adopting, modifying, or terminating Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - On May 12, 2025, Kineta entered an Asset Purchase Agreement with Philanthropos Therapeutics, LLC to acquire assets related to LHF-535 for an upfront payment of $50,000 and future revenue sharing[224] - Upfront purchase price: $50,000 ($10,000 received in March 2025, $40,000 in May 2025) - Revenue sharing payments for six years: 5% royalty on Net Product Sales, 5% of net sales price of any Priority Review Voucher, and 15% of gross Consideration from any sale or license of the Product[224] - No directors or officers reported adopting, modifying, or terminating Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended March 31, 2025[225] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including merger agreements, certificates of incorporation, by-laws, warrants, securities exchange agreements, and certifications from principal executive and financial officers - The report includes a comprehensive list of exhibits, such as merger agreements, corporate governance documents, and various financial instruments[227] - Certifications from the Principal Executive Officer and Principal Financial Officer are filed/furnished herewith[227][228] Signatures The Form 10-Q report is duly signed on May 15, 2025, by Craig Philips, President (Principal Executive Officer), and Keith A. Baker, Chief Financial Officer (Principal Financial Officer), affirming compliance with Securities Exchange Act requirements - The report is signed by Craig Philips, President (Principal Executive Officer), and Keith A. Baker, Chief Financial Officer (Principal Financial Officer)[230] - Signatures confirm compliance with the requirements of the Securities Exchange Act of 1934, as amended[230]