Korro Bio(KRRO) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the periods ended June 30, 2025, including balance sheets, statements of operations, stockholders' equity, and cash flows, with accompanying notes Condensed Consolidated Balance Sheets Total assets decreased to $180.4 million by June 30, 2025, from $226.2 million at year-end 2024, driven by reduced cash and securities, while the accumulated deficit grew to $315.7 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $33,612 | $55,643 | | Total current assets | $102,634 | $131,532 | | Total assets | $180,425 | $226,240 | | Liabilities & Stockholders' Equity | | | | Total liabilities | $65,322 | $65,825 | | Accumulated deficit | $(315,743) | $(266,586) | | Total stockholders' equity | $115,103 | $160,415 | Condensed Consolidated Statements of Operations and Comprehensive Loss Collaboration revenue reached $4.0 million for the six months ended June 30, 2025, but increased research and development expenses led to a higher net loss of $49.2 million Statement of Operations Summary (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Collaboration revenue | $4,010 | $— | | Research and development | $40,770 | $30,710 | | General and administrative | $15,462 | $14,868 | | Loss from operations | $(52,222) | $(45,578) | | Net loss | $(49,157) | $(41,383) | | Net loss per share | $(5.24) | $(4.87) | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity decreased from $160.4 million at December 31, 2024, to $115.1 million at June 30, 2025, primarily due to the period's net loss - Total stockholders' equity decreased from $160.4 million at December 31, 2024, to $115.1 million at June 30, 2025, mainly due to the net loss incurred during the period[23] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $43.7 million for H1 2025, while investing activities provided $21.5 million, a significant shift from the $108.0 million used in H1 2024 Cash Flow Summary (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(43,680) | $(36,484) | | Net cash provided by (used in) investing activities | $21,481 | $(108,004) | | Net cash provided by financing activities | $177 | $67,695 | Notes to Unaudited Condensed Consolidated Financial Statements Notes confirm $119.6 million in cash and securities is sufficient for 12 months, detail $4.0 million in Novo Nordisk collaboration revenue, and disclose a May 2025 restructuring with a 19% workforce reduction - The company believes its existing cash, cash equivalents, and marketable securities of $119.6 million as of June 30, 2025, are sufficient to fund planned operations for at least 12 months from the issuance date of the financial statements[31] - Under the collaboration agreement with Novo Nordisk, the company recognized $4.0 million in revenue for the six months ended June 30, 2025, with the total transaction price for the first program target estimated at $39.9 million[68] - On May 7, 2025, the company initiated a strategic plan that included a 19% workforce reduction (21 positions), resulting in a one-time severance charge of $1.2 million during the second quarter[86] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's clinical-stage focus on RNA editing, with lead candidate KRRO-110 in Phase 1/2a trials, and highlights a $10.1 million increase in H1 2025 R&D expenses, confirming a cash runway into 2027 - The company's lead candidate, KRRO-110 for Alpha-1 Antitrypsin Deficiency (AATD), is in a Phase 1/2a clinical trial (REWRITE), with interim data from single ascending doses expected in the second half of 2025[92] Research and Development Expenses (Six Months Ended June 30, in thousands) | Expense Category | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | KRRO-110 (AATD) external expenses | $12,557 | $9,222 | $3,335 | | Other research & pre-development | $9,695 | $6,272 | $3,423 | | Personnel expenses | $13,018 | $9,551 | $3,467 | | Total R&D Expenses | $40,770 | $30,710 | $10,060 | - As of June 30, 2025, the company had $119.6 million in cash, cash equivalents, and marketable securities, which is expected to be sufficient to fund operating expenses and capital expenditure requirements into 2027[122] - Net cash used in operating activities increased to $43.7 million for the six months ended June 30, 2025, from $36.5 million in the prior-year period, primarily due to a higher net loss and changes in operating assets and liabilities[129][130] Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate sensitivity on its $119.6 million cash and securities portfolio, which management deems immaterial, with foreign currency risk also considered minimal - The company's main market risk is interest rate sensitivity on its portfolio of cash, cash equivalents, and marketable securities, valued at $119.6 million as of June 30, 2025[139] - Management believes that an immediate 10% change in market interest rates would not have a material effect on the fair market value of its cash and investments[139] - Exposure to foreign currency risk is considered minimal as operations are primarily in the U.S. and contracts in foreign currencies are of short duration[140] Controls and Procedures Management, including the CEO and CFO, confirmed the effectiveness of disclosure controls and procedures as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - Management, with the participation of the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at the reasonable assurance level as of June 30, 2025[142] - No changes in internal control over financial reporting occurred during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, these controls[143] PART II. OTHER INFORMATION Legal Proceedings The company is not currently involved in any material legal proceedings expected to have a material adverse effect on its business - As of the report date, the company is not party to any claim or litigation that is expected to have a material adverse effect on its business[145] Risk Factors Key risks include a history of significant losses, the unproven nature of its novel RNA editing technology, early-stage clinical development, and substantial risks related to regulatory approval, manufacturing, competition, and intellectual property - The company has a history of significant operating losses, with an accumulated deficit of $315.7 million as of June 30, 2025, and expects to incur losses for the foreseeable future[147] - RNA editing is a novel technology with limited clinical validation, and the company's approaches are unproven and may never lead to marketable products[174] - The company has only dosed a few participants in its first clinical trial for KRRO-110 and has not completed any clinical trials, with favorable preclinical results not predictive of clinical trial outcomes[156] - The company faces risks related to obtaining and protecting its intellectual property, including the possibility that patents may not be granted, may be challenged, or may not provide sufficient protection against competitors[300][303] Unregistered Sales of Equity Securities and Use of Proceeds This item is not applicable for the reporting period - Not applicable[404] Defaults Upon Senior Securities This item is not applicable for the reporting period - Not applicable[405] Mine Safety Disclosures This item is not applicable for the reporting period - Not applicable[406] Other Information Several executive officers adopted Rule 10b5-1 trading plans during Q2 2025 for the potential sale of shares issuable upon stock option exercise - During the three months ended June 30, 2025, CEO Ram Aiyar, COO Todd Chappell, CSO Loïc Vincent, and General Counsel Jeffrey Cerio each adopted a Rule 10b5-1 plan for the potential sale of common stock issuable upon the exercise of stock options[407] Exhibits This section lists all exhibits filed with the Form 10-Q, including corporate governance documents and officer certifications required by the Sarbanes-Oxley Act - The report includes a list of filed exhibits, such as corporate governance documents and officer certifications required under the Sarbanes-Oxley Act[409]