Kymera Therapeutics(KYMR) - 2023 Q4 - Annual Report

PART I Business Overview Kymera Therapeutics, Inc. is a biopharmaceutical company developing novel small molecule therapeutics using its proprietary Pegasus™ targeted protein degradation (TPD) platform - Kymera Therapeutics is a biopharmaceutical company focused on discovering and developing novel small molecule therapeutics that selectively degrade disease-causing proteins using its proprietary Pegasus™ platform[20] - The company's mission is to drug all target classes in human cells using TPD, focusing on biological pathways that are clinically validated but where key proteins have been elusive to traditional modalities[20][24] - Current clinical stage programs include IRAK4, STAT3, and MDM2, addressing immuno-inflammatory diseases, hematologic malignancies, and solid tumors. Preclinical programs target STAT6 and TYK2, both in IND-enabling studies[21] Clinical and Near-Term Clinical Stage Pipeline | Program | Potential Indications | IND-enabling | Phase 1 | Phase 2 | Upcoming Milestones | Rights | | :------ | :-------------------- | :----------- | :------ | :------ | :------------------ | :----- | | Immunology - Oral QD Small Molecule Degraders | | | | | | | | IRAK4 (KT-474) | HS, AD, RA, Asthma, IBD, others | | H2 | AD | Ph2 HS & AD Data 1H 2025 | 50/50 US Sanofi, KYMERA | | STAT6 (KT-621) | AD, Asthma, COPD, PN, CRSwNP, EoE, others | X | | | Phase 1 Start 2H 2024 | KYMERA | | TYK2 (KT-294) | Psoriasis, IBD, PsA, Lupus, others | X | | | Phase 1 Start 1H 2025 | KYMERA | | Oncology | | | | | | | | STAT3 (KT-333) | PTCL, LGL-L, CTCL, Solid Tumors | | Arm A: Lymphomas, Solid Tumors; Arm B: T-Cell Leukemias | | Ph1 Data 2024 | KYMERA | | MDM2 (KT-253) | Liquid & Solid Tumors | | Arm A: Solid Tumors/Lymphomas; Arm B: AML, ALL, MF | | Ph1 Data 2024 | KYMERA | Our Strategy Kymera's strategy focuses on developing TPD therapeutics for undrugged or inadequately drugged targets with strong genetic and clinical pathway validation - Kymera's strategy focuses on undrugged/inadequately drugged targets where TPD is the optimal drug modality, prioritizing targets with strong genetic and clinical pathway validation in areas of significant unmet medical need[24] - Strategic objectives include advancing the existing clinical pipeline (IRAK4, STAT3, MDM2), building a broad pipeline of novel protein degraders (STAT6, TYK2), expanding intellectual property, pursuing synergistic collaborations (e.g., Sanofi), and building organizational capabilities to become a fully integrated biopharmaceutical company[27] Background of Targeted Protein Degradation Traditional therapeutic modalities face limitations, leaving a significant portion of the human genome 'undrugged', which TPD aims to address - Traditional therapeutic modalities (small molecule inhibitors, therapeutic antibodies, oligo-based therapeutics) face limitations, such as inability to target proteins without catalytic sites, poor cell penetration, or significant drug delivery challenges, leaving about 80% of the human genome 'undrugged'[27][28][29] - Targeted Protein Degradation (TPD) co-opts the body's ubiquitin-proteasome system (UPS) using heterobifunctional degraders to mediate the interaction between disease-causing proteins and E3 ligases, leading to protein ubiquitination and degradation[30][33] - TPD offers advantages over traditional modalities, including targeting proteins without catalytic function (e.g., scaffolding proteins, transcription factors), small molecule-like drug properties (oral dosing, systemic distribution), and catalytic action leading to increased potency at lower concentrations[37] Our Pegasus™ Platform Kymera's proprietary Pegasus™ platform enables the rational design of targeted protein degraders for all target classes in the cell - Kymera's proprietary Pegasus™ platform enables the rational design of targeted protein degraders to drug all target classes in the cell[41] - The platform integrates proprietary chemistry expertise (AI-enabled), an E3 ligase Whole-Body Atlas (with ~600 E3 ligases and machine learning algorithms for matching targets), and a Quantitative System Pharmacology Model to optimize degrader design for potency, selectivity, PK, and PD[42] Our Therapeutic Pipeline Kymera's publicly disclosed pipeline includes immunology programs (IRAK4, STAT6, TYK2) and oncology programs (STAT3, MDM2), with multiple earlier-stage programs - Kymera's publicly disclosed pipeline includes immunology programs (IRAK4, STAT6, TYK2) and oncology programs (STAT3, MDM2), with multiple earlier-stage programs in development[43] Our Immunology Programs: IRAK4, STAT6 and TYK2 This section details Kymera's immunology pipeline, including IRAK4 (KT-474) in Phase 2, and preclinical STAT6 (KT-621) and TYK2 (KT-294) programs IRAK4 (KT-474) KT-474 is an orally bioavailable IRAK4 degrader in Phase 2 clinical trials for IL-1R/TLR-driven immuno-inflammatory conditions like HS and AD - KT-474 is an orally bioavailable IRAK4 degrader for IL-1R/TLR-driven immuno-inflammatory conditions like hidradenitis suppurativa (HS) and atopic dermatitis (AD)[46][54] - Preclinical and Phase 1 data suggest IRAK4 degradation is superior to kinase inhibition by impacting both kinase activity and scaffolding function, efficiently blocking IL-1R/TLR-mediated inflammation[46][57] - Phase 1 trial showed robust (>95%) and sustained IRAK4 degradation, broad inhibition of ex vivo TLR-mediated cytokine induction, high skin exposure, and reduction of IRAK4 levels in skin lesions of HS/AD patients[65][67][69][71] - KT-474 demonstrated systemic anti-inflammatory effects (suppression of IL-6, CRP, SAA, IL-1b) and significant downregulation of pro-inflammatory genes in HS and AD patients[74] KT-474 Phase 1 Clinical Activity in AD Patients (28-day treatment) | Endpoint | Mean Reduction | | :------- | :------------- | | Eczema Area and Severity Index (EASI) score | 37% | | Peak pruritus (past week) | 52% | | Peak pruritus (past 24 hours) | 63% | | vIGA-AD improvement (≥2 points) | 2 of 7 patients | KT-474 Phase 1 Clinical Activity in HS Patients (28-day treatment) | Endpoint | All HS Patients | Moderate to Severe HS Subset | | :------- | :-------------- | :-------------------------- | | AN count reduction | Up to 46% | Up to 51% | | HiSCR50 response (Day 42) | 42% | 50% | | HiSCR75 response | 25% | 30% | | Pain NRS reduction | 49% | 55% | | Pain NRS30 response | 50% | 60% | | Peak pruritus reduction | 62% | 68% | - KT-474 was generally well-tolerated with no serious adverse events or drug-related infections. Phase 2 clinical trials in HS (ZEN) and AD (ADVANTA) were initiated in Q4 2023, with topline data expected in 1H 2025[73][88][89][90][91] STAT6 (KT-621) KT-621 is a first-in-class oral STAT6 degrader targeting Type 2 inflammation in allergic diseases, currently in IND-enabling studies - KT-621 is a first-in-class oral STAT6 degrader targeting Type 2 inflammation in allergic diseases, a genetically and clinically validated pathway (e.g., dupilumab)[47][92][93] - Preclinical studies showed KT-621 achieved picomolar degradation potencies across various human primary cell types (hematopoietic, epithelial, smooth muscle, endothelial) and demonstrated high degradation selectivity, with no other STAT proteins degraded[97][98][101][102] - KT-621 fully blocked the IL-4/IL-13 pathway in human TH2 functional assays with IC50s lower than dupilumab and demonstrated robust, dose-dependent STAT6 degradation in vivo across multiple preclinical species, including non-human primates[104][105][107] - In preclinical models of atopic dermatitis and lung inflammation (HDM model), KT-621 inhibited IgE elevation and TH2 inflammation equally or better than an IL-4Rα saturating dose of dupilumab[109][111][113][114] - KT-621 is currently in IND-enabling studies, with a Phase 1 clinical trial expected to start in the second half of 2024 and results reported in 2025[116] TYK2 (KT-294) KT-294 is a highly potent and selective oral TYK2 degrader for autoimmune and inflammatory diseases, with a Phase 1 trial expected in 1H 2025 - KT-294 is a highly potent and selective oral TYK2 degrader for autoimmune and inflammatory diseases, targeting a genetically and clinically validated pathway (Type I IFN, IL-12, IL-23 signaling)[48][117][118] - TYK2 degradation has the potential to overcome limitations of small molecule inhibitors by fully removing the protein, recapitulating human knockout biology, and achieving full pathway inhibition of Type I IFN, IL-12, and IL-23 while sparing IL-10[119][121][124][125][126] - Preclinical data showed KT-294 achieved picomolar degradation in human PBMCs and keratinocytes, potent inhibition of IL-23, IL-12, and Type I IFN pathways, and superior inhibition of IFN pathway signature genes compared to the investigational TYK2 inhibitor TAK-279[121][122][127][129] - KT-294 demonstrated dose-dependent deep degradation of TYK2 in vivo in non-human primates with low oral doses, reaching full degradation[131] - A Phase 1 clinical trial for KT-294 is expected to initiate in the first half of 2025, with data reporting in 2025[133] Our Oncology Programs: STAT3 and MDM2 This section outlines Kymera's oncology pipeline, including STAT3 (KT-333) and MDM2 (KT-253) degraders, both in Phase 1 clinical trials STAT3 (KT-333) KT-333 is a selective STAT3 degrader for hematological malignancies and solid tumors, currently in Phase 1 clinical trials with early signs of antitumor activity - KT-333 is a selective STAT3 degrader for hematological malignancies and solid tumors, also exploring potential in autoimmune diseases. STAT3 is a transcription factor frequently mutated and activated in numerous cancers[49][134][135] - STAT3 degraders offer a transformative solution over JAK inhibitors and monoclonal antibodies by selectively targeting STAT3, avoiding immunosuppressive and safety liabilities associated with broader inhibition, and blocking multiple converging signaling pathways[137] - KT-333 received Fast Track Designation for relapsed/refractory peripheral T cell lymphoma (PTCL) and Orphan Drug Designation for PTCL and cutaneous T-cell lymphoma (CTCL)[23][139][232][234][359] - Phase 1 clinical trial in relapsed/refractory liquid and solid tumors is ongoing. Interim data (Oct 2023 cut-off) showed early signs of antitumor activity at generally well-tolerated doses with substantial STAT3 knockdown in blood and tumor[23][134][144][149][150][151] KT-333 Phase 1 Patient Demographics (N=29, Oct 2023 cut-off) | Characteristic | Overall (N=29) | | :------------- | :------------- | | Median Age (years) | 65.0 (30-81) | | Male | 72.4% | | ECOG 0 | 34.5% | | ECOG 1 | 65.5% | | Prior Anti-Cancer Therapy (≥3) | 86.2% | | Tumor Type: | | | Solid Tumor | 65.5% | | CTCL | 17.2% | | T-Cell LGL-L | 6.9% | | PTCL | 3.4% | | B-Cell Lymphoma | 3.4% | | Hodgkin's | 3.4% | KT-333 Phase 1 Best Response (Oct 2023 cut-off) | Tumor Type | Best Response | | :--------- | :------------ | | CTCL (n=5) | 2 PR, 1 SD, 2 PD | | cHL (n=1) | 1 PR | | PTCL (n=1) | 1 PD | | LGL-L (n=2) | Not Evaluable | | Solid Tumors (n=12) | 4 SD*, 8 PD | *Mucoepidermoid carcinoma of parotid gland (C7+), sinonasal adenocarcinoma (C5), cholangiocarcinoma (C3), renal cell cancer (C3+). - KT-333 induced an interferon gamma signature in a CTCL patient tumor, suggesting positive immunomodulatory response and potential synergy with anti-PD-1 agents[158] MDM2 (KT-253) KT-253 is an MDM2 degrader for solid tumors and hematological malignancies, in Phase 1 clinical trials, showing clinical proof-of-mechanism and anti-tumor activity - KT-253 is an MDM2 degrader for solid tumors and hematological malignancies, targeting MDM2, the crucial regulator of the p53 tumor suppressor (intact in ~50% of cancers)[51][160][161] - Unlike small molecule inhibitors, KT-253 overcomes the MDM2 feedback loop, rapidly inducing apoptosis with brief exposures, leading to improved efficacy and safety profile[51][160][161][167][168] - Preclinical studies showed KT-253 had >200-fold improvements in cell growth inhibition and apoptosis compared to SMIs, and demonstrated robust anti-tumor activity and sustained tumor regressions in AML and MCC models[165][169][172] - KT-253 received Orphan Drug Designation by the FDA for the treatment of acute myeloid leukemia (AML)[23][232] - Phase 1 clinical trial initiated in May 2023 for relapsed/refractory high-grade myeloid malignancies, ALL, lymphomas, and solid tumors. Initial data (Oct 2023 cut-off) showed clinical proof-of-mechanism and signs of anti-tumor activity, including one confirmed partial response in Merkel Cell Carcinoma[23][160][175][176] - No dose-limiting toxicities were observed across dose levels 1-3, with common drug-related adverse events being Grade 1/2 nausea and diarrhea. Additional clinical data is expected in 2024[177][178] Collaboration Agreement with Sanofi Kymera's collaboration with Sanofi focuses on co-developing IRAK4 degraders, with Kymera receiving upfront payments, milestones, and royalties, and retaining US opt-in rights - Kymera entered into a collaboration agreement with Sanofi in July 2020, amended in November 2022, to co-develop drug candidates targeting IRAK4 and one additional undisclosed target (later ceased)[179][180][188] - Under the agreement, Kymera is responsible for discovery, preclinical research, and Phase 1 clinical trials for IRAK4 degraders. Sanofi is responsible for subsequent development, manufacturing, and commercialization[182] - Kymera received an upfront payment of $150.0 million and is eligible for up to $1.48 billion in development milestones (over $1.0 billion for IRAK4) and up to $700.0 million in commercial milestones ($400.0 million for IRAK4), plus tiered royalties[184] - In Q4 2023, Kymera achieved two milestones totaling $55.0 million related to the first patient dosing in Phase 2 clinical trials for KT-474 in HS and AD[187] - Kymera retains an exclusive Opt-In Right to fund 50% of US development costs and share equally in net profits/losses for collaboration products in the US, with an option for co-promotion activities[183] Manufacturing / Supply Chain Kymera relies on third-party contract manufacturing organizations for drug candidate production, with small molecule candidates designed for scalable and cost-effective synthesis - Kymera relies on third-party contract manufacturing organizations (CMOs) for the production of drug candidates for preclinical studies and clinical trials, and plans to continue this for commercial scale[189] - The company's drug candidates are small organic molecules designed for ease of synthesis and cost-effectiveness, with production processes amenable to scale-up[190] Competition The biotechnology industry is highly competitive, with Kymera facing rivals in TPD and traditional therapeutic modalities, many possessing greater resources - The biotechnology industry is highly competitive, with Kymera facing competition from companies using TPD platforms (e.g., Arvinas, C4 Therapeutics, Nurix, Foghorn) and those focused on traditional therapeutic modalities (small molecules, antibodies, gene therapies)[191][192] - Many competitors have greater financial resources and expertise. Kymera must demonstrate its protein degrader therapies are favorable to existing and competing treatments[192] Intellectual Property Kymera's success hinges on securing and maintaining intellectual property protection for its product candidates, Pegasus™ platform, and other inventions through patents and trademarks - Kymera's success depends on securing and maintaining intellectual property protection for its product candidates, Pegasus™ platform, and other inventions through patents, trade secrets, and know-how[193][196] - As of December 31, 2023, the company's patent portfolio included 19 granted U.S. patents, ~100 U.S. patent applications, ~25 international patent applications, 5 granted foreign patents, and ~449 foreign patent applications[197] - The patent portfolio is categorized into platform E3 ligase ligand patent families, protein degrader patent families, and target-specific degrader patent families (including IRAK-specific and STAT-specific)[197][198][199][200][201][204][205] - Patents are generally expected to expire between 2038 and 2044, with potential for extensions (e.g., Hatch-Waxman Act in the US) or reductions (e.g., terminal disclaimers)[198][199][200][202][204][205][206] - Kymera also files for trademark registrations for its company name, product candidates (e.g., KYMERA, KYMERA THERAPEUTICS, IRAKIMiD), and platform technologies (e.g., E3 HUMAN ATLAS, E3 LIGASE WHOLE BODY ATLAS)[208][209][210] Government Regulation Drug development and commercialization are extensively regulated by the FDA and global authorities, involving rigorous processes from preclinical studies to post-approval monitoring - Drug development and commercialization are extensively regulated by the FDA in the U.S. and comparable authorities globally, covering research, development, testing, manufacturing, approval, marketing, and post-approval monitoring[211][212] - The U.S. regulatory process involves preclinical studies (GLP), IND application, clinical trials (Phase 1, 2, 3 under GCP), NDA submission, FDA review, manufacturing facility inspections (cGMP), and potential advisory committee review[213][214][215][217][222][227] - Post-approval, drugs are subject to ongoing requirements including recordkeeping, adverse event reporting, promotion restrictions, and potential Phase 4 studies or Risk Evaluation and Mitigation Strategy (REMS)[229][245][246] - Orphan Drug Designation (for rare diseases) provides incentives and 7-year market exclusivity in the U.S. (10 years in EU), with KT-333 and KT-253 having received such designations[230][231][232][361][362][363] - Expedited programs like Fast Track, Breakthrough Therapy, Priority Review, and Accelerated Approval exist to facilitate development and review for serious conditions with unmet medical needs, but do not guarantee faster approval or success[233][234][236][237][238][241] - Companion diagnostics, if required for a therapeutic product, are regulated as medical devices and generally require contemporaneous marketing clearance or approval (510(k) or PMA) from the FDA[250][251][252][253] - Other healthcare laws, including anti-kickback, false claims, and privacy laws (e.g., HIPAA, GDPR), impose strict regulations on business practices, marketing, and data handling, with non-compliance leading to significant penalties[256][257][288] - Insurance coverage and reimbursement policies by third-party payors (government and commercial) are critical for product sales, with pricing subject to government controls in many countries, potentially requiring pharmacoeconomic studies and discounts[258][259][261][267][268] - Healthcare reform legislation, such as the Affordable Care Act (ACA) and the Inflation Reduction Act (IRA), has significantly impacted drug pricing, rebates, and Medicare coverage, with ongoing challenges and potential future changes[262][263][264][265][266] Employees and Human Capital As of December 31, 2023, Kymera had 187 full-time employees, with a strong emphasis on R&D and competitive compensation to attract and retain talent - As of December 31, 2023, Kymera had 187 full-time employees, with 97 holding M.D. or Ph.D. degrees. 143 employees are in R&D, and 44 in business development, finance, legal, and administration[294] - The company emphasizes intellectual capital, offering competitive compensation, benefits, and equity programs, along with individualized development plans, mentoring, and financial support for employee development[294][295] Facilities Kymera leases two office and lab spaces in Watertown, MA, with a new, larger facility occupied in February 2024 and plans to sublease the older space - Kymera leases approximately 34,522 sq ft of office and lab space in Watertown, MA (lease expires March 2030) and began occupying an additional 100,624 sq ft in February 2024 (lease expires March 2035)[296] - The company plans to sublease its current space after moving to the new facility[296] Corporate Information & Available Information Kymera Therapeutics, Inc. was incorporated in Delaware in September 2015, with its principal executive offices in Watertown, Massachusetts - Kymera Therapeutics, Inc. was incorporated in Delaware in September 2015. Its principal executive offices are in Watertown, Massachusetts[298] - Annual, Quarterly, and Current Reports, along with corporate governance documents, are available on the company's website and the SEC's website[299][300] Risk Factors This section outlines significant risks and uncertainties that could materially affect Kymera Therapeutics' business, financial condition, results of operations, and prospects - The company has a limited operating history, has not generated revenue from drug sales, and anticipates continued significant operating losses, requiring substantial additional funding to support development and commercialization efforts[303][304][306] - The Pegasus™ platform is novel and unproven, making development time, cost, and success difficult to predict. Positive results from early preclinical/clinical studies may not be predictive of later-stage trials, and product candidates may cause adverse side effects[323][336][343] - Obtaining regulatory approvals is a long, expensive, and uncertain process, with potential for delays or denial. Even if approved, products may face unfavorable pricing, limited market acceptance, and intense competition[328][352][380][406][409] - Heavy reliance on third parties for clinical trials, manufacturing, and supply chain introduces risks of non-compliance, delays, or disruptions. The company's success also depends on obtaining and enforcing robust intellectual property protection, which is complex and subject to challenges[349][421][426][437][441][445] - The company is subject to extensive healthcare laws and regulations (e.g., anti-kickback, fraud and abuse, pricing controls), and non-compliance could lead to significant penalties. Changes in tax laws or inadequate internal controls also pose financial and operational risks[396][400][523][526] Unresolved Staff Comments The company has no unresolved staff comments from the SEC Cybersecurity Kymera maintains an information security program to manage cybersecurity risks, with oversight from the Cybersecurity Supervisory Committee and the Audit Committee - Kymera has an information security program to assess, identify, and manage cybersecurity risks, including internal/external security testing and employee education[536] - The Cybersecurity Supervisory Committee (CSSC), with representatives from various departments, oversees cybersecurity risk management and incident response. The head of IT, with over 25 years of experience, leads the program[537][538] - The Audit Committee of the board of directors has ultimate oversight of the cybersecurity program, receiving periodic updates from the SVP of IT and being informed of material incidents by the CFO and CLO[539] Properties Kymera leases two office and laboratory spaces in Watertown, Massachusetts, with the newer, larger facility occupied in February 2024 and plans to sublease the older space - Kymera leases 34,522 sq ft of office and laboratory space in Watertown, MA, with a lease expiring in March 2030[540] - The company began occupying an additional 100,624 sq ft of office and laboratory space in Watertown, MA, in February 2024, under a lease expiring in March 2035[540] - Kymera plans to sublease its current smaller space after completing the move to the new facility[296] Legal Proceedings Kymera is not currently a party to any litigation or legal proceedings deemed to have a material adverse effect on its business - Kymera is not currently involved in any litigation or legal proceedings that management believes would have a material adverse effect on its business[541] - The company recognizes that legal proceedings can adversely impact its business due to defense and settlement costs, and diversion of management resources[541] Mine Safety Disclosures This item is not applicable to Kymera Therapeutics, Inc PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Kymera's common stock (KYMR) has traded on the Nasdaq Global Select Market since August 21, 2020, with approximately 21 holders of record as of February 16, 2024 - Kymera's common stock (KYMR) has been publicly traded on the Nasdaq Global Select Market since August 21, 2020[544] - As of February 16, 2024, there were approximately 21 holders of record of the company's common stock[548] - Information regarding equity compensation plans is incorporated by reference from Item 12 of Part III[549] Reserved This item is reserved and not applicable Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides an overview of Kymera's financial condition and results of operations, highlighting its focus on targeted protein degradation, ongoing R&D, and significant operating losses - Kymera is a biopharmaceutical company focused on targeted protein degradation, with clinical programs (IRAK4, STAT3, MDM2) and preclinical programs (STAT6, TYK2)[554][555] - The company has incurred significant operating losses since inception, with net losses of $147.0 million in 2023, $154.8 million in 2022, and $100.2 million in 2021, and an accumulated deficit of $530.8 million as of December 31, 2023[560][562][653] - Revenue is primarily derived from collaboration agreements with Sanofi and Vertex, with no product sales to date. The Vertex agreement expired in May 2023, while the Sanofi agreement continues, with $55.0 million in milestones achieved in Q4 2023[564][566][571][574][586] - Research and development expenses increased by $24.8 million in 2023 to $189.1 million, primarily due to increased headcount and preclinical program work, partially offset by reduced direct expenses for IRAK4, IRAKIMiD, and MDM2[587] - General and administrative expenses increased by $11.2 million in 2023 to $55.0 million, driven by increased headcount and legal/professional services[588] - As of December 31, 2023, cash, cash equivalents, and marketable securities totaled $436.3 million. This, combined with Q1 2024 offerings and a $15 million Sanofi milestone, is expected to fund operations into the first half of 2027[563][596][610] Overview Kymera Therapeutics is a biopharmaceutical company focused on targeted protein degradation, with clinical programs for IRAK4, STAT3, and MDM2, and significant accumulated losses - Kymera Therapeutics is a biopharmaceutical company utilizing its Pegasus™ platform to discover and develop small molecule therapeutics that selectively degrade disease-causing proteins[554] - The company's clinical programs include IRAK4, STAT3, and MDM2, with preclinical programs for STAT6 and TYK2. The IRAK4 program is in Phase 2 clinical trials with Sanofi[555][556] - Kymera has incurred significant operating losses since inception, with a net loss of $147.0 million in 2023 and an accumulated deficit of $530.8 million. Substantial additional funding will be required for ongoing and future operations[560][561] Key Financial Position (as of Dec 31, 2023) | Metric | Amount (in millions) | | :----- | :------------------- | | Cash, cash equivalents and marketable securities | $436.3 | | Accumulated Deficit | $(530.8) | | Net Loss (2023) | $(147.0) | Components of Our Results of Operations Kymera's revenue is solely from collaboration agreements, with operating expenses comprising R&D and G&A, both expected to increase with continued development - Revenue is currently derived solely from research collaboration arrangements with Vertex Pharmaceuticals and Sanofi, with no product sales to date[564] - The Vertex Collaboration Agreement (May 2019) for up to six targets expired on May 9, 2023. The Sanofi Agreement (July 2020, amended Nov 2022) for IRAK4 and another target (ceased Sept 2023) involves upfront payments, milestones, and royalties[565][566][567][571][572][574] - Operating expenses consist of research and development (R&D) and general and administrative (G&A) expenses. R&D costs are expensed as incurred and include external research, personnel, supplies, and manufacturing costs[575][576] - G&A expenses include salaries, legal fees, professional fees, insurance, and facilities costs. Both R&D and G&A expenses are expected to increase with continued development and growth as a public company[581][582] Results of Operations: Comparison of years ended December 31, 2023 and 2022 In 2023, Kymera saw increased collaboration revenue due to Sanofi milestones, alongside higher R&D and G&A expenses, resulting in a slightly higher operating loss Consolidated Statements of Operations (2023 vs 2022, in thousands) | Metric | 2023 | 2022 | Change | | :-------------------- | :--- | :--- | :----- | | Collaboration Revenue | $78,592 | $46,826 | $31,766 | | Research and development | $189,081 | $164,248 | $24,833 | | General and administrative | $55,041 | $43,834 | $11,207 | | Total operating expenses | $244,122 | $208,082 | $36,040 | | Loss from operations | $(165,530) | $(161,256) | $(4,274) | | Other income, net | $18,568 | $6,448 | $12,120 | | Net loss | $(146,962) | $(154,808) | $7,846 | - Collaboration revenue increased by $31.8 million, primarily due to $55 million in milestones achieved under the Sanofi agreement in Q4 2023[586] - Research and development expenses increased by $24.8 million, driven by a $19.5 million increase in personnel/stock-based compensation and a $10.2 million increase in other R&D expenses (preclinical programs), partially offset by an $8.0 million reduction in direct expenses for IRAK4, IRAKIMiD, and MDM2 programs[587] - General and administrative expenses increased by $11.2 million, mainly due to an $8.8 million increase in personnel/stock-based compensation and a $2.4 million increase in legal and professional services[588] - Other income, net, increased by $12.2 million, primarily due to higher prevailing interest rates[589] Results of Operations: Comparison of years ended December 31, 2022 and 2021 In 2022, Kymera experienced a decrease in collaboration revenue, while R&D and G&A expenses significantly increased, leading to a larger operating loss Consolidated Statements of Operations (2022 vs 2021, in thousands) | Metric | 2022 | 2021 | Change | | :-------------------- | :--- | :--- | :----- | | Collaboration Revenue | $46,826 | $72,832 | $(26,006) | | Research and development | $164,248 | $137,017 | $27,231 | | General and administrative | $43,834 | $36,345 | $7,489 | | Total operating expenses | $208,082 | $173,362 | $34,720 | | Loss from operations | $(161,256) | $(100,530) | $(60,726) | | Other income, net | $6,448 | $313 | $6,135 | | Net loss | $(154,808) | $(100,217) | $(54,591) | - Collaboration revenue decreased by $26.0 million, with contributions from Vertex ($10.8M in 2022 vs $18.5M in 2021) and Sanofi ($36.0M in 2022 vs $54.3M in 2021)[592] - Research and development expenses increased by $27.2 million, primarily due to a $22.4 million increase for IND-enabling studies (MDM2 and other pipeline programs) and a $22.0 million increase in personnel/stock-based compensation, partially offset by a $17.2 million reduction in direct expenses for IRAK4, IRAKIMiD, and STAT3 programs[593] - General and administrative expenses increased by $7.5 million, mainly due to a $6.5 million increase in employee compensation and a $1.0 million increase in legal and professional services[594] - Other income, net, increased by $6.1 million, primarily due to higher prevailing interest rates[595] Liquidity and Capital Resources Kymera relies on equity sales and collaboration agreements for funding, with current cash and marketable securities expected to fund operations into the first half of 2027 - Kymera has not generated product sales revenue and has incurred significant operating losses since inception, relying on equity sales and collaboration agreements for funding[596] Cash, Cash Equivalents, and Marketable Securities (in millions) | As of December 31, | 2023 | 2022 | | :----------------- | :--- | :--- | | Cash and cash equivalents | $109.9 | $68.4 | | Marketable securities | $264.9 | $338.8 | | Total | $374.8 | $407.2 | - As of December 31, 2023, cash, cash equivalents, and marketable securities totaled $436.3 million. This, combined with Q1 2024 offerings and a $15 million Sanofi milestone, is expected to fund operations into the first half of 2027[563][596][610] Cash Flow Summary (in thousands) | Activity | 2023 | 2022 | 2021 | | :------- | :--- | :--- | :--- | | Operating activities | $(102,826) | $(153,085) | $(128,946) | | Investing activities | $139,886 | $20,519 | $(99,835) | | Financing activities | $4,192 | $152,999 | $250,280 | | Net increase in cash, cash equivalents and restricted cash | $41,252 | $20,433 | $21,499 | - Operating cash used decreased in 2023 due to lower net loss and changes in deferred revenue and other operating assets/liabilities, partially offset by non-cash adjustments[599] - Investing activities provided cash in 2023 due to maturities of marketable securities exceeding purchases and property/equipment acquisitions[602] - Financing activities provided $4.2 million in 2023, mainly from employee stock option exercises and ESPP, significantly lower than 2022 ($153.0 million from PIPE offering) and 2021 ($250.3 million from follow-on offering)[605][606][607] Contractual Obligations and Other Commitments Kymera's primary contractual obligations are lease commitments for its office and laboratory spaces, with other contracts generally terminable - Kymera's primary contractual obligations relate to lease commitments for its laboratory and office spaces in Watertown, Massachusetts[614][615] Undiscounted Future Lease Payments (as of Dec 31, 2023, in thousands) | Fiscal Year | Operating Leases | Financing Leases | | :---------- | :--------------- | :--------------- | | 2024 | $5,505 | $1,318 | | 2025 | $12,074 | $882 | | 2026 | $12,436 | $533 | | 2027 | $12,809 | $100 | | 2028 | $13,193 | | | Thereafter | $74,424 | | | Total minimum lease payments | $130,441 | $2,833 | - The company also enters into terminable contracts for clinical trials, preclinical research, and manufacturing services, with payments generally limited to services provided up to termination[616] Critical Accounting Policies and Estimates Key accounting policies requiring significant management judgment include revenue recognition from collaboration agreements, R&D expense accruals, and equity-based compensation - Key accounting policies requiring significant management judgment and estimates include revenue recognition from collaboration agreements, accruals for research and development expenses, and equity-based compensation expense[617][619][674] - Revenue recognition (ASC 606) involves a five-step model, requiring judgment in identifying performance obligations, determining transaction price (including variable consideration like milestones), and allocating price based on standalone selling prices[621][622][623][694][695][696] - R&D accruals are estimated based on open contracts, purchase orders, and communication with service providers, with adjustments made periodically. Equity-based compensation is measured at fair value on grant date using the Black-Scholes model, with assumptions for volatility, expected term, risk-free rate, and dividend yield[626][627][628][709][710] Quantitative and Qualitative Disclosures About Market Risk Kymera's primary market risks stem from interest rate fluctuations on investments and foreign currency exchange rates from vendor contracts, with inflationary pressures also noted - Kymera's primary market risk exposure is interest rate sensitivity, affecting its money market funds and marketable securities (U.S. treasury, government obligations, corporate securities)[631] - Due to the short-term nature and low-risk profile of its investment portfolio, an immediate 10% change in market interest rates is not expected to materially impact the fair value of investments or financial condition[631] - The company is exposed to foreign currency exchange rate fluctuations from vendor contracts denominated in foreign currencies (Asia and Europe) but does not currently hedge this risk[632] - Inflationary pressures are increasing costs for labor, third-party vendors, and clinical trials, but rising interest rates have resulted in higher interest income[633] Financial Statements and Supplementary Data This section presents Kymera Therapeutics' consolidated financial statements and notes, including the independent auditor's report and critical audit matters - The consolidated financial statements include the balance sheets, statements of operations and comprehensive loss, stockholders' equity, and cash flows for the years ended December 31, 2023, 2022, and 2021[636] - Ernst & Young LLP, the independent registered public accounting firm, issued an unqualified opinion on the consolidated financial statements and on the effectiveness of internal control over financial reporting as of December 31, 2023[639][640][797][798] - A critical audit matter identified was the accounting for revenues from collaboration arrangements, specifically evaluating estimates of total expected costs under the input method for revenue recognized over time, due to subjective management assumptions[643][644][645] Consolidated Balance Sheets This section presents Kymera Therapeutics' consolidated balance sheets as of December 31, 2023, and 2022, detailing assets, liabilities, and stockholders' equity Consolidated Balance Sheets (in thousands) | Asset/Liability (as of Dec 31) | 2023 | 2022 | | :----------------------------- | :--- | :--- | | Assets: | | | | Cash and cash equivalents | $109,966 | $68,395 | | Marketable securities (current) | $264,915 | $338,771 | | Accounts receivable | $15,000 | — | | Total current assets | $405,317 | $419,416 | | Marketable securities (non-current) | $61,434 | $152,328 | | Property and equipment, net | $48,134 | $13,334 | | Right-of-use assets, operating leases | $52,945 | $8,909 | | Total assets | $575,759 | $603,134 | | Liabilities: | | | | Accounts payable | $7,075 | $4,335 | | Accrued expenses | $33,864 | $27,502 | | Deferred revenue (current) | $37,883 | $35,260 | | Operating lease liabilities (current) | $5,068 | $2,535 | | Total current liabilities | $85,691 | $71,343 | | Deferred revenue (non-current) | $16,768 | $28,000 | | Operating lease liabilities (non-current) | $77,028 | $12,146 | | Total liabilities | $180,788 | $112,983 | | Stockholders' Equity: | | | | Additional paid-in capital | $926,269 | $878,884 | | Accumulated deficit | $(530,752) | $(383,790) | | Total stockholders' equity | $394,971 | $490,151 | Consolidated Statements of Operations and Comprehensive Loss This section presents Kymera Therapeutics' consolidated statements of operations and comprehensive loss for the years ended December 31, 2023, 2022, and 2021 Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric | 2023 | 2022 | 2021 | | :------------------------------------ | :--- | :--- | :--- | | Collaboration Revenue | $78,592 | $46,826 | $72,832 | | Research and development expenses | $189,081 | $164,248 | $137,017 | | General and administrative expenses | $55,041 | $43,834 | $36,345 | | Total operating expenses | $244,122 | $208,082 | $173,362 | | Loss from operations | $(165,530) | $(161,256) | $(100,530) | | Total other income | $18,568 | $6,448 | $313 | | Net loss | $(146,962) | $(154,808) | $(100,217) | | Unrealized gain (loss) on marketable securities | $4,397 | $(4,289) | $(532) | | Total comprehensive loss | $(142,565) | $(159,097) | $(100,749) | | Net loss per share (basic and diluted) | $(2.52) | $(2.87) | $(2.09) | Consolidated Statements of Stockholders' Equity This section presents Kymera Therapeutics' consolidated statements of stockholders' equity for the years ended December 31, 2023, 2022, and 2021 Consolidated Statements of Stockholders' Equity (in thousands) | Item (as of Dec 31) | 2023 | 2022 | 2021 | | :------------------ | :--- | :--- | :--- | | Common Stock Value | $6 | $6 | $5 | | Additional Paid-in Capital | $926,269 | $878,884 | $689,275 | | Accumulated Deficit | $(530,752) | $(383,790) | $(228,982) | | Accumulated Other Comprehensive Gain/(Loss) | $(552) | $(4,949) | $(660) | | Total Stockholders' Equity | $394,971 | $490,151 | $459,638 | - Stockholders' equity decreased from $490.2 million in 2022 to $395.0 million in 2023, primarily due to the net loss of $147.0 million, partially offset by an increase in additional paid-in capital from stock option exercises and ESPP, and an unrealized gain on marketable securities[656] Consolidated Statements of Cash Flows This section presents Kymera Therapeutics' consolidated statements of cash flows for the years ended December 31, 2023, 2022, and 2021 Consolidated Statements of Cash Flows (in thousands) | Activity | 2023 | 2022 | 2021 | | :------------------------------------------ | :--- | :--- | :--- | | Net cash used in operating activities | $(102,826) | $(153,085) | $(128,946) | | Net cash provided by (used in) investing activities | $139,886 | $20,519 | $(99,835) | | Net cash provided by financing activities | $4,192 | $152,999 | $250,280 | | Net increase in cash, cash equivalents and restricted cash | $41,252 | $20,433 | $21,499 | | Cash, cash equivalents and restricted cash at end of period | $115,777 | $74,525 | $54,092 | - Cash used in operating activities decreased in 2023 compared to 2022, primarily due to a lower net loss and changes in deferred revenue[599][659] - Cash provided by investing activities significantly increased in 2023, driven by higher maturities of marketable securities[602][659] - Cash provided by financing activities decreased substantially in 2023 compared to prior years, which included proceeds from PIPE and follow-on offerings[605][606][607][659] Notes to Consolidated Financial Statements This section provides detailed notes to Kymera's consolidated financial statements, covering significant accounting policies, collaboration agreements, equity compensation, income taxes, and subsequent events - Note 1 details the company's business description, history of net losses, and funding through equity issuance and collaborations. It confirms sufficient cash to fund operations into the first half of 2027[663][664][665] - Note 2 outlines significant accounting policies, including principles of consolidation, use of estimates, segment reporting, cash and cash equivalents, restricted cash, marketable securities, fair value measurements, leases, property and equipment, warrants, R&D costs, patent costs, financing costs, revenue recognition, accounts receivable, stock-based compensation, income taxes, off-balance sheet risk, and comprehensive loss[671][672][673][674][675][676][677][678][679][680][681][682][683][684][685][686][687][688][689][690][691][692][693][694][695][696][697][698][699][700][701][702][703][704][705][706][707][708][709][710][711][712][713][714][715] - Note 5 provides detailed accounting treatment for the Sanofi and Vertex collaboration agreements, including identified performance obligations, transaction price allocation, and revenue recognition methods. It notes the Vertex agreement expired in May 2023 and Sanofi's Collaboration Target 2 activities ceased in September 2023[726][733][734][735][736][737][738][739][740][741][742][743][744][745][746][747][748][749][750][751][752] - Note 10 details equity-based compensation, including the 2018 and 2020 Stock Option and Incentive Plans and the 2020 Employee Stock Purchase Plan. Total equity-based compensation expense was $43.1 million in 2023[765][766][767][768][769][770][771][772][773] - Note 12 addresses income taxes, reporting immaterial income tax expense due to operating losses and a full valuation allowance. It details federal and state net operating loss carryforwards and R&D credit carryforwards[775][777][778][779][780] - Note 14 discloses subsequent events, including a January 2024 follow-on offering that raised $316.2 million and a February 2024 sale of common shares through Cowen for approximately $48.7 million[785][786] Changes in and Disagreements With Accountants on Accounting and Financial Disclosure There have been no changes in or disagreements with accountants on accounting and financial disclosure Controls and Procedures Management concluded that Kymera's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2023 - Management concluded that Kymera's disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2023[790] - Management assessed the effectiveness of internal control over financial reporting as of December 31, 2023, based on the COSO criteria, and concluded it was effective[793] - The independent registered public accounting firm issued an unqualified attestation report on the effectiveness of internal control over financial reporting[794][797] - No changes in internal control over financial reporting occurred during the twelve months ended December 31, 2023, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[804] Other Information This section discloses the termination of Rule 10b5-1 trading arrangements by Nello Mainolfi (CEO) and Bruce Jacobs (CFO) in December 2023 - Nello Mainolfi (CEO) and Bruce Jacobs (CFO) terminated their Rule 10b5-1 trading arrangements in December 2023[805] Disclosure Regarding Foreign Jurisdiction that Prevents Inspections This item is not applicable to Kymera Therapeutics, Inc PART III Directors, Executive Officers and Corporate Governance The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders Executive Compensation The information required for this item, excluding 'Pay Versus Performance,' is incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders Certain Relationships and Related Transactions, and Director Independence The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders Principal Accounting Fees and Services The information required for this item is incorporated by reference from the company's definitive proxy statement for its 2024 Annual Meeting of Stockholders PART IV Exhibits, Financial Statement Schedules This section lists the exhibits and financial statement schedules filed as part of the Annual Report on Form 10-K, including financial statements, corporate documents, and certifications - The consolidated financial statements are incorporated by reference from page F-1 of the Annual Report[814] - Exhibits include the Fourth Amended and Restated Certificate of Incorporation, Second Amended and Restated Bylaws, specimen common stock certificate, investor rights agreement, forms of pre-funded warrants, equity plans (2018, 2020 Stock Option and Incentive Plans, 2020 ESPP), non-employee director compensation policy, executive cash incentive bonus plan, indemnification agreements, lease agreements, and collaboration agreements with Vertex and Sanofi[814][816] - Certifications from the Principal Executive Officer and Principal Financial Officer pursuant to Sarbanes-Oxley Act Sections 302 and 906 are also included[816] Form 10-K Summary This item is not applicable