Kodiak(KOD) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) For the quarter ended March 31, 2021, Kodiak Sciences reported a net loss of $50.4 million, an increase from a $24.4 million loss in the same period of 2020, driven by a significant rise in R&D expenses Condensed Consolidated Balance Sheets As of March 31, 2021, the company's total assets were $1.03 billion, a slight decrease from $1.07 billion at the end of 2020 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $920,461 | $944,396 | | Total current assets | $931,897 | $972,005 | | Total assets | $1,032,734 | $1,067,347 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $35,058 | $31,422 | | Total liabilities | $211,057 | $206,596 | | Total stockholders' equity | $821,677 | $860,751 | | Total liabilities and stockholders' equity | $1,032,734 | $1,067,347 | Condensed Consolidated Statements of Operations and Comprehensive Loss For the three months ended March 31, 2021, the company reported a net loss of $50.4 million, or ($0.98) per share, compared to a net loss of $24.4 million, or ($0.54) per share, for the same period in 2020 Condensed Consolidated Statements of Operations (in thousands, except per share data) | Account | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Research and development | $40,337 | $20,170 | | General and administrative | $10,221 | $5,553 | | Total operating expenses | $50,558 | $25,723 | | Loss from operations | ($50,558) | ($25,723) | | Net loss | ($50,447) | ($24,392) | | Net loss per common share, basic and diluted | ($0.98) | ($0.54) | Condensed Consolidated Statements of Cash Flows For the first three months of 2021, net cash used in operating activities was $34.6 million, a significant increase from $17.9 million in the prior-year period, reflecting higher R&D and personnel costs Summary of Cash Flows (in thousands) | Activity | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | ($34,625) | ($17,932) | | Net cash provided by (used in) investing activities | $9,218 | ($67,197) | | Net cash provided by financing activities | $1,472 | $99,788 | | Net decrease in cash, cash equivalents and restricted cash | ($23,935) | $14,659 | Notes to Unaudited Condensed Consolidated Financial Statements Key notes to the financial statements highlight the company's liquidity, commitments, and subsequent events, including sufficient cash for the next 12 months and amended manufacturing agreements - As of March 31, 2021, the company had $929.0 million in cash, cash equivalents, and marketable securities, which it believes is sufficient to meet anticipated operating and capital expenditure requirements for the next 12 months[27] - The company has a manufacturing agreement with Lonza for the supply of KSI-301, involving a capital contribution and annual suite fees. The initial agreement required a capital contribution of 40 million Swiss Francs and annual fees starting at 12 million Swiss Francs[46] - In April 2021, the company amended its agreement with Lonza, increasing the maximum capital contribution to 74.5 million Swiss Francs. The manufacturing suite fee is now 14.5 million Swiss Francs for 2022 and 20.0 million Swiss Francs annually thereafter through 2029[64] Stock-Based Compensation Expense (in thousands) | Category | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Research and development | $5,399 | $3,448 | | General and administrative | $4,526 | $2,634 | | Total | $9,925 | $6,082 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the significant progress and expansion of the KSI-301 pivotal program, including the addition of the DAYLIGHT study to support a broader label, while maintaining a strong liquidity position Overview Kodiak is a biopharmaceutical company focused on developing next-generation therapeutics for high-prevalence retinal diseases using its proprietary ABC Platform™ - The company's core technology is its ABC Platform™, which uses molecular engineering to merge antibody-based and chemistry-based therapies[67] - The most advanced product candidate is KSI-301, a novel anti-VEGF therapy designed for extended intraocular effectiveness to treat major retinal diseases like wet AMD, DME, RVO, and DR[68] Recent Updates The company expanded its KSI-301 pivotal program with the DAYLIGHT study, adjusted the BLA submission timeline to early 2023 due to enrollment and manufacturing delays, and expanded its manufacturing agreement with Lonza - A new pivotal study, DAYLIGHT, is being added to evaluate monthly dosing of KSI-301 in wet AMD patients. This is intended to broaden the potential product label to include more frequent dosing for high-need patients and eliminate potential reimbursement barriers[76][77] - The timeline for the Biologics License Application (BLA) has been adjusted to early 2023. This is due to slightly slower enrollment in DME trials (GLEAM/GLIMMER), the addition of the DAYLIGHT study, and manufacturing headwinds from competition with COVID-19 vaccine production[85] - The bioconjugation agreement with Lonza has been expanded, increasing the estimated capital contribution to 74.5 million Swiss Francs and boosting annual manufacturing capacity by 70%. Construction of the facility is now targeted for completion in early 2022, delayed from late 2021 due to COVID-19 related resource limitations[83][84] - In January 2021, the company submitted Investigational New Drug (IND) applications for KSI-301 in RVO and DME to China's NMPA, which could allow for enrollment of patients from China in global studies[87] Results of Operations Operating expenses for Q1 2021 more than doubled to $50.6 million from $25.7 million in Q1 2020, primarily driven by a significant increase in research and development expenses for ongoing pivotal trials Comparison of Operating Results (in thousands) | Expense Category | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change | | :--- | :--- | :--- | :--- | | Research and development | $40,337 | $20,170 | $20,167 | | General and administrative | $10,221 | $5,553 | $4,668 | | Loss from operations | ($50,558) | ($25,723) | ($24,835) | Research and Development Expenses Breakdown (in thousands) | Program | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | Change | | :--- | :--- | :--- | :--- | | KSI-301 program expenses | $23,486 | $12,285 | $11,201 | | KSI-501 program expenses | $1,665 | $75 | $1,590 | | Payroll and personnel expenses | $9,613 | $5,888 | $3,725 | | Total R&D expenses | $40,337 | $20,170 | $20,167 | Liquidity and Capital Resources; Plan of Operations The company maintains a strong liquidity position with $929.0 million in cash and marketable securities, sufficient to fund operations for at least the next 12 months, despite ongoing significant losses from clinical program advancements - As of March 31, 2021, the company had cash, cash equivalents and marketable securities of $929.0 million[105] - The company incurred a net loss of $50.4 million for the three months ended March 31, 2021, and had an accumulated deficit of $341.7 million[106] - The company has not generated any product revenue and expects to incur significant losses for the foreseeable future as it continues development and seeks regulatory approvals[108] Quantitative and Qualitative Disclosures About Market Risk The company reported no material changes to its market risk disclosures during the three months ended March 31, 2021, as compared to the disclosures in its Annual Report on Form 10-K for the year ended December 31, 2020 - There were no material changes to the company's market risk disclosures during the first quarter of 2021[121] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2021, with no material changes in internal control over financial reporting during the quarter - The company's principal executive officer and principal financial officer concluded that the design and operation of disclosure controls and procedures were effective as of March 31, 2021[123] - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2021, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[124] PART II. OTHER INFORMATION Legal Proceedings As of the report date, the company states that there are no pending claims or actions against it that would be expected to have a material adverse effect on its financial condition or results of operations - The company is not currently involved in any legal proceedings that could have a material adverse effect on its business[127] Risk Factors The company outlines extensive risks, with a heavy emphasis on its dependence on the single clinical-stage product, KSI-301, and the impact of the COVID-19 pandemic on manufacturing timelines - The company's prospects are heavily dependent on its single clinical product candidate, KSI-301, and a failure in its clinical development could require discontinuation of other candidates based on the same ABC Platform[129][133] - The COVID-19 pandemic continues to impact the business, particularly by creating competition for scarce manufacturing resources (materials, personnel, production slots) with vaccine and therapeutic programs, which has already caused delays to commercial manufacturing timelines[290][291] - The company is aware of a pending patent application from a third party that, if issued, could have a patent term beyond the intended launch date of KSI-301, potentially requiring Kodiak to challenge the patent, obtain a license, modify its product, or delay launch[258] - The company has no experience manufacturing at a commercial scale and relies on third-party manufacturers. Difficulties in production or failure to meet regulatory standards could delay or stop the supply of its product candidates[167] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[327] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[328] Mine Safety Disclosures This item is not applicable to the company - None[329] Other Information The company disclosed its intention to file a Form S-3 registration statement to allow the Baker Entities to sell shares of common stock, with CEO Victor Perlroth electing not to include his shares in this filing - The company will file a Form S-3 registration statement to allow the Baker Entities (affiliated with director Felix Baker) to sell shares of common stock. CEO Victor Perlroth has elected not to include his shares in this filing[330] Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act of 2002, and Inline XBRL documents