Kodiak(KOD) - 2021 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) Presents the unaudited condensed consolidated financial statements, including balance sheets, operations, equity, and cash flows, with key notes on accounting policies and commitments Condensed Consolidated Balance Sheets Compares assets, liabilities, and equity between September 30, 2021, and December 31, 2020, showing a decrease in cash and an increase in the accumulated deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $799,247 | $944,396 | | Total current assets | $805,506 | $972,005 | | Total assets | $958,206 | $1,067,347 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $54,396 | $31,422 | | Total liabilities | $231,886 | $206,596 | | Accumulated deficit | $(465,052) | $(291,227) | | Total stockholders' equity | $726,320 | $860,751 | Condensed Consolidated Statements of Operations and Comprehensive Loss Details operating expenses and net loss for Q3 and the first nine months of 2021, highlighting increased R&D and G&A expenses leading to a larger net loss Operating Results Comparison (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | Research and development | $56,002 | $29,306 | $141,743 | $70,033 | | General and administrative | $11,533 | $7,357 | $32,259 | $19,132 | | Loss from operations | $(67,535) | $(36,663) | $(174,002) | $(89,165) | | Net loss | $(67,526) | $(36,122) | $(173,825) | $(86,513) | | Net loss per share | $(1.30) | $(0.80) | $(3.36) | $(1.92) | Condensed Consolidated Statements of Stockholders' Equity Tracks changes in stockholders' equity, showing a decrease from $860.8 million to $726.3 million driven by the period's net loss - The accumulated deficit grew from $291.2 million at the end of 2020 to $465.1 million by September 30, 2021, due to continued net losses[23] - Total stockholders' equity decreased from $860.8 million to $726.3 million during the first nine months of 2021[23] Condensed Consolidated Statements of Cash Flows Summarizes cash flows for the first nine months of 2021, highlighting significant cash use in operating and investing activities Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(123,235) | $(56,409) | | Net cash (used in) provided by investing activities | $(27,939) | $45,976 | | Net cash provided by financing activities | $6,025 | $101,096 | | Net (decrease) increase in cash | $(145,149) | $90,663 | Notes to Unaudited Condensed Consolidated Financial Statements Provides details on liquidity, manufacturing commitments with Lonza, stock-based compensation, and the new Long-Term Performance Incentive Plan (LTPIP) - As of September 30, 2021, the company had $799.2 million in cash and cash equivalents and believes this is sufficient to fund operations for at least the next 12 months[28] - The company amended its manufacturing agreement with Lonza, committing to a revised capital contribution of approximately 75.0 million Swiss Francs for a custom-built facility for KSI-301[46] - On October 13, 2021, stockholders approved the 2021 Long-Term Performance Incentive Plan (LTPIP), reserving 5,502,334 shares for issuance under the plan[66] - Total unrecognized stock-based compensation cost was $122.4 million as of September 30, 2021, expected to be recognized over a weighted-average period of 2.8 years[64] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses clinical development of KSI-301, financial results, liquidity, and commercialization strategy, noting rising R&D expenses drive net losses Overview & Recent Updates Details progress on pivotal trials for lead candidate KSI-301, manufacturing investments, and key regulatory milestones including IND approval in China - The company is developing its lead therapy, KSI-301, in six registrational clinical trials for high-prevalence retinal diseases, aiming for a broad product label[74] - As of September 30, 2021, the company was well-capitalized with over $799.2 million in cash[76] - Key data readouts are expected to begin in early 2022, with DAZZLE in Q1 2022, BEACON in mid-2022, and DAYLIGHT/GLEAM/GLIMMER in early 2023[82] - Investigational New Drug (IND) applications for KSI-301 in RVO and DME were approved by China's NMPA, allowing enrollment of Chinese patients into global studies[88] Results of Operations Analyzes the significant increase in operating expenses, driven primarily by rising R&D costs for the KSI-301 program's Phase 3 trials R&D Expense Breakdown (in thousands) | Expense Category | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | Change | | :--- | :--- | :--- | :--- | | KSI-301 program expenses | $89,557 | $37,587 | +$51,970 | | Payroll and personnel expenses | $30,483 | $20,850 | +$9,633 | | Total R&D expenses | $141,743 | $70,033 | +$71,710 | - The increase in KSI-301 program expenses was primarily due to clinical trial costs for ongoing pivotal studies (GLEAM, GLIMMER, BEACON) and the initiation of a new Phase 3 study (DAYLIGHT)[103] - General and administrative expenses increased by $13.1 million for the nine months ended September 30, 2021, compared to 2020, driven by higher headcount, stock-based compensation, and professional services[106] Liquidity and Capital Resources Discusses the company's financial position, highlighting sufficient capital from equity sales despite significant net losses and cash used in operations - The company has funded its operations primarily through the sale of equity securities and had cash and cash equivalents of $799.2 million as of September 30, 2021[107] - For the nine months ended September 30, 2021, the company had a net loss of $173.8 million and an accumulated deficit of $465.1 million[108] - Net cash used in operating activities increased to $123.2 million for the nine months ended Sep 30, 2021, from $56.4 million in the prior-year period, driven by increased R&D costs[114][115] Quantitative and Qualitative Disclosures About Market Risk Confirms no material changes to market risk disclosures since the last Annual Report on Form 10-K - No material changes to market risk disclosures were reported since the Annual Report on Form 10-K for the year ended December 31, 2020[124] Controls and Procedures Management concludes that disclosure controls and procedures were effective and notes no material changes to internal controls over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[126] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[127] PART II. OTHER INFORMATION Legal Proceedings Reports no pending legal actions that could materially and adversely affect the company's financial condition - As of the report date, there are no pending legal proceedings that could materially harm the company[129] Risk Factors Outlines key risks including dependence on a single product, clinical trial uncertainties, significant competition, and complex manufacturing dependencies - The company's prospects are heavily dependent on its single clinical-stage product candidate, KSI-301; a failure in its clinical development could require the company to discontinue other product candidates based on its ABC Platform[131][135] - The company faces significant competition from major pharmaceutical companies like Roche, Regeneron, and Novartis, which have established products and greater resources; Roche's product candidate, faricimab, is identified as an important future competitor[164][165] - Manufacturing biologics like KSI-301 is highly complex and reliant on third-party manufacturers such as Lonza; the company has no commercial-scale manufacturing experience and faces risks of production difficulties and supply chain disruptions[168][172][231] - The COVID-19 pandemic continues to pose risks to clinical trial enrollment, manufacturing, and supply chains, with the ultimate impact remaining uncertain[302][303][306] Unregistered Sales of Equity Securities and Use of Proceeds Reports no unregistered sales of equity securities during the reporting period - None reported[340] Defaults Upon Senior Securities Reports no defaults upon senior securities during the period - None reported[341] Mine Safety Disclosures This section is not applicable to the company's operations - Not applicable[342] Other Information Reports no other material information for disclosure in this item - None reported[343] Exhibits Lists all exhibits filed with the report, including Sarbanes-Oxley certifications and the 2021 Long-Term Performance Incentive Plan - Key exhibits filed include CEO and CFO certifications (Exhibits 31.1, 31.2, 32.1, 32.2) and the 2021 Long-Term Performance Incentive Plan (Exhibit 10.1)[345]