Kymera Therapeutics(KYMR) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The unaudited condensed consolidated financial statements for the nine months ended September 30, 2022, show a net loss of $119.9 million, an increase from $66.3 million in 2021, primarily due to higher R&D expenses and lower collaboration revenue, with total assets reaching $638.5 million Condensed Consolidated Balance Sheets As of September 30, 2022, total assets increased to $638.5 million from $605.9 million, driven by cash growth, while total liabilities decreased to $125.6 million, leading to higher stockholders' equity Condensed Consolidated Balance Sheets Summary | Financial Metric | September 30, 2022 ($ thousands) | December 31, 2021 ($ thousands) | | :--- | :--- | :--- | | Total Current Assets | 494,022 | 451,273 | | Total Assets | 638,472 | 605,905 | | Total Current Liabilities | 91,124 | 92,542 | | Total Liabilities | 125,587 | 146,267 | | Total Stockholders' Equity | 512,885 | 459,638 | Condensed Consolidated Statements of Operations and Comprehensive Loss For the nine months ended September 30, 2022, collaboration revenue decreased to $30.7 million from $57.6 million, while total operating expenses increased to $153.3 million, resulting in a net loss of $119.9 million Condensed Consolidated Statements of Operations and Comprehensive Loss Summary | Metric ($ thousands, except per share) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Collaboration Revenue | 30,687 | 57,557 | | Research and development | 121,115 | 99,488 | | General and administrative | 32,198 | 24,605 | | Loss from operations | (122,626) | (66,536) | | Net loss | (119,943) | (66,317) | | Net loss per share, basic and diluted | $(2.28) | $(1.42) | Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2022, net cash used in operating activities was $113.5 million, offset by $70.2 million from investing activities and $151.0 million from financing activities, leading to a $107.7 million increase in cash Condensed Consolidated Statements of Cash Flows Summary | Cash Flow Activity ($ thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | (113,549) | (90,594) | | Net cash provided by (used in) investing activities | 70,185 | (31,816) | | Net cash provided by financing activities | 151,046 | 248,226 | | Net increase in cash, cash equivalents and restricted cash | 107,682 | 125,816 | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail a $149.8 million PIPE offering in August 2022, revenue recognition from collaborations with Sanofi and Vertex, and confirm $595.6 million in cash is sufficient for at least twelve months of operations - The company completed a Private Investment in Public Equity (PIPE) offering on August 22, 2022, resulting in net proceeds of $149.8 million after offering expenses[34] Collaboration Revenue and Deferred Revenue by Partner | Collaboration Partner | Revenue Recognized (9 mos ended 9/30/22) | Deferred Revenue (as of 9/30/22) | | :--- | :--- | :--- | | Sanofi | $22.1 million | $66.3 million | | Vertex | $8.6 million | $10.6 million | - As of September 30, 2022, the company had cash, cash equivalents, and marketable securities of $595.6 million, which it believes is sufficient to fund operations and capital expenditures for at least twelve months[30] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's TPD platform and clinical programs, noting a $21.6 million increase in R&D expenses to $121.1 million and a decrease in collaboration revenue to $30.7 million, with $595.6 million in cash expected to fund operations into 2025 Results of Operations Comparing the nine months ended September 30, 2022, to 2021, collaboration revenue decreased by $26.9 million to $30.7 million, while R&D expenses increased by $21.6 million to $121.1 million, resulting in a net loss of $119.9 million Results of Operations Summary | Metric ($ thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | Change | | :--- | :--- | :--- | :--- | | Collaboration Revenue | 30,687 | 57,557 | (26,870) | | Research and Development | 121,115 | 99,488 | 21,627 | | General and Administrative | 32,198 | 24,605 | 7,593 | | Net Loss | (119,943) | (66,317) | (53,626) | Research and Development Expense Breakdown | R&D Expense Breakdown ($ thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | IRAK4 | 13,171 | 19,565 | | IRAKIMiD | 3,778 | 8,960 | | STAT3 | 6,757 | 8,311 | | MDM2 | 9,850 | — | | Other External Costs | 32,689 | 25,851 | | Internal Costs (Personnel, etc.) | 54,870 | 36,801 | | Total R&D Expenses | 121,115 | 99,488 | Liquidity and Capital Resources As of September 30, 2022, the company held $595.6 million in cash, with $113.5 million used in operations and $151.0 million provided by financing activities, expected to fund operations at least into 2025 - The company has an "at-the-market" (ATM) sales agreement with Cowen to offer and sell up to $250.0 million of its common stock, but no shares have been sold under this agreement as of September 30, 2022[145] - The company believes its existing cash, cash equivalents, and marketable securities of $595.6 million as of September 30, 2022, will fund its operating expenses and capital expenditure requirements at least into 2025[156] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate changes on its investments, but due to their short-term nature, a 10% rate change is not expected to have a material impact, with foreign currency risk also present but unhedged - The company's main market risk is interest rate sensitivity on its investments, but due to the short-term duration of its portfolio, it does not expect a 10% change in rates to have a material impact[163] Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of September 30, 2022, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[167] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any legal proceedings that management believes would have a material adverse effect on its business - The company is not currently a party to any litigation or legal proceedings expected to have a material adverse effect on its business[171] Item 1A. Risk Factors This section outlines substantial risks including a limited operating history, lack of product revenue, significant losses, an unproven TPD platform, early-stage lead programs, heavy reliance on third parties, competition, regulatory hurdles, and stock volatility - The company is a biopharmaceutical entity with a limited operating history, has not generated any revenue from drug sales, and has an accumulated deficit of $348.9 million as of September 30, 2022[173][174] - The company's drug discovery approach based on its Pegasus™ platform is novel and unproven, making it difficult to predict the time, cost, and likelihood of successfully developing any products[185] - The business is heavily dependent on the successful development of its lead programs (IRAK4, IRAKIMiD, STAT3, and MDM2), which are all in early clinical or preclinical stages[189] - The company relies on third parties to conduct preclinical studies and clinical trials and for the supply of API and drug product, making it vulnerable to their performance and potential disruptions[275][279] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Details regarding unregistered sales of equity securities during the quarter ended September 30, 2022, are provided in the company's Current Report on Form 8-K filed on August 18, 2022 - Details of unregistered securities sales during the quarter, related to the PIPE offering, were previously disclosed in a Form 8-K filed on August 18, 2022[368] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period Item 4. Mine Safety Disclosures This item is not applicable to the company Item 5. Other Information The company reported no other information for the period Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including agreements from the August 2022 private placement and officer certifications - Exhibits filed with the report include agreements from the August 18, 2022 private placement, officer certifications required by the Sarbanes-Oxley Act, and Inline XBRL data files[372]