Kymera Therapeutics(US:KYMR)2024-05-02 11:15PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents unaudited financial statements, showing total assets increased to $868.3 million and a net loss of $48.6 million for Q1 2024 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $93,510 | $109,966 | | Marketable securities | $651,424 | $326,349 | | Total assets | $868,251 | $575,759 | | Total liabilities | $157,048 | $180,788 | | Total stockholders' equity | $711,203 | $394,971 | Condensed Consolidated Statements of Operations (in thousands) | Account | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Collaboration Revenue | $10,287 | $9,466 | | Research and development | $48,819 | $42,227 | | General and administrative | $14,374 | $12,565 | | Impairment of long-lived assets | $4,925 | $— | | Loss from operations | $(57,831) | $(45,326) | | Net loss | $(48,557) | $(40,928) | | Net loss per share, basic and diluted | $(0.69) | $(0.70) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(39,591) | $(43,968) | | Net cash (used in) provided by investing activities | $(330,607) | $24,584 | | Net cash provided by financing activities | $353,756 | $1,159 | Notes to Unaudited Condensed Consolidated Financial Statements Notes detail a $316.2 million follow-on offering, $10.3 million collaboration revenue, a $4.9 million lease impairment, and $12.0 million in equity-based compensation - In January 2024, the company completed a follow-on offering, issuing common stock and pre-funded warrants, which generated aggregate gross proceeds of approximately $316.2 million33 - The company recognized $10.3 million in revenue under the Sanofi Agreement in Q1 2024. As of March 31, 2024, the remaining deferred revenue from this collaboration was $46.4 million6265 - Upon occupying a new lease facility in February 2024, the company exited its 2019 lease facility, resulting in an impairment charge of $4.9 million in the first quarter of 202483 Equity-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended March 31, 2024 | Three Months Ended March 31, 2023 | | :--- | :--- | :--- | | Research and development | $6,083 | $4,729 | | General and administrative | $5,885 | $4,656 | | Total | $11,968 | $9,385 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's TPD platform and clinical programs, noting a $48.6 million net loss and $744.9 million in liquidity expected to fund operations into H1 2027 Overview Kymera develops novel small molecule therapeutics via its Pegasus™ TPD platform, with clinical programs in immuno-inflammatory diseases and oncology, supported by $744.9 million in liquidity - The company's clinical-stage programs are IRAK4, STAT3, and MDM2, addressing immuno-inflammatory diseases and oncology. Preclinical programs targeting STAT6 and TYK2 are currently in IND-enabling studies108 - The IRAK4 degrader, KT-474, is in Phase 2 clinical trials conducted by partner Sanofi for hidradenitis suppurativa (HS) and atopic dermatitis (AD)109 - As of March 31, 2024, the company had cash, cash equivalents, and marketable securities of $744.9 million, which is expected to fund operations into the first half of 2027116 Results of Operations Q1 2024 saw $10.3 million in collaboration revenue, increased R&D expenses to $48.8 million, a $4.9 million impairment charge, and a widened net loss of $48.6 million Collaboration Revenue (in millions) | Source | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Sanofi | $10.3 | $7.7 | | Vertex | $0.0 | $1.8 | | Total | $10.3 | $9.5 | Research & Development Expenses (in thousands) | Category | Q1 2024 | Q1 2023 | Change | | :--- | :--- | :--- | :--- | | External R&D Costs | $20,696 | $19,618 | $1,078 | | Internal R&D Costs | $28,123 | $22,609 | $5,514 | | Total R&D Expenses | $48,819 | $42,227 | $6,592 | - The $6.6 million increase in R&D expenses was primarily due to a $5.5 million increase in personnel, stock-based compensation, and occupancy costs, and a $2.6 million increase in costs for the STAT6 and discovery programs140 - An impairment charge of $4.9 million was recognized in Q1 2024 due to the occupancy of the new 2021 lease facility and the exit from the 2019 lease facility142 Liquidity and Capital Resources The company maintains strong liquidity with $744.9 million in cash, primarily from a $353.8 million financing, expected to fund operations into H1 2027 - As of March 31, 2024, the company had cash, cash equivalents, and marketable securities of $744.9 million145 Cash Flow Summary (in thousands) | Activity | Three Months Ended March 31, 2024 | | :--- | :--- | | Cash used in operating activities | $(39,591) | | Cash used in investing activities | $(330,607) | | Cash provided by financing activities | $353,756 | - Net cash from financing activities of $353.8 million included $301.4 million from a public offering and $48.7 million from an at-the-market sales agreement151 - The company expects its existing cash, cash equivalents, and marketable securities will fund operating expenses and capital expenditure requirements into the first half of 2027155 Item 3. Quantitative and Qualitative Disclosures About Market Risk Primary market risks include interest rate sensitivity on investments and foreign currency fluctuations, with inflation also impacting costs - The company's main market risk exposures are interest rate sensitivity on its investment portfolio and foreign currency exchange risk from contracts with vendors in Asia and Europe161162 - Inflation is identified as a risk that increases the cost of labor, third-party vendors, and clinical trials163 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal controls - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2024165 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls166 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not currently involved in any legal proceedings expected to 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 business169 Item 1A. Risk Factors The company faces significant risks including limited operating history, substantial losses, unproven TPD platform, regulatory hurdles, and intense competition Financial and Operational Risks Significant financial risks include limited operating history, $579.3 million accumulated deficit, and the need for substantial additional funding to avoid program delays - The company has a limited operating history, has not generated any revenue from drug sales, and may never become profitable171 - The company has incurred significant operating losses, with an accumulated deficit of $579.3 million as of March 31, 2024, and expects these losses to continue172 - The company will need to raise substantial additional funding; failure to do so could force it to delay, scale back, or discontinue product development programs174 Drug Development and Regulatory Risks Drug development faces high uncertainty due to its novel TPD platform, early-stage programs, potential side effects, and complex, uncertain regulatory approval processes - The company's approach using its Pegasus™ TPD platform is novel and unproven, making it difficult to predict the time, cost, and likelihood of successfully developing any products192 - The company's most advanced programs (IRAK4, STAT3, MDM2) are in early clinical development, and their success is not guaranteed187 - Positive results from early preclinical and clinical trials are not necessarily predictive of the results of later-stage trials207 - Product candidates may cause undesirable side effects that could delay or prevent regulatory approval or limit their commercial profile214 Commercialization and Competition Risks Commercialization risks include achieving market acceptance, intense competition from better-resourced companies, and the lack of internal sales and marketing infrastructure - Even if approved, the company's product candidates may not achieve broad market acceptance, which would limit revenue278 - The company faces substantial competition from other companies developing protein degraders and traditional therapies, many of which have greater financial resources and expertise280282283 - The company has no experience in sales, marketing, or distribution and will need to build these capabilities or partner with third parties to commercialize its products287 Reliance on Third Parties and Intellectual Property Risks Heavy reliance on third parties for clinical trials and manufacturing, coupled with the need for robust intellectual property protection, poses significant operational and legal risks - The company relies on third parties like CROs to conduct its clinical trials, and if these parties do not perform successfully, its development programs could be substantially harmed290291 - The company depends on a limited number of suppliers for the API and drug product used in its candidates, and the loss of any could significantly harm the business296 - The company's success depends on its ability to obtain and maintain patent and other intellectual property protection, but the scope of such protection may not be sufficiently broad308309 - The company may become a party to lawsuits to protect or enforce its intellectual property rights, which could be expensive, time-consuming, and unsuccessful344 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no sales of unregistered equity securities during the three months ended March 31, 2024 - During the quarter ended March 31, 2024, the company did not have any sales of unregistered securities402 Item 5. Other Information Director Joanna Horobin adopted a Rule 10b5-1 trading plan on March 8, 2024, for the potential sale of up to 34,000 shares - Director Joanna Horobin adopted a Rule 10b5-1 trading plan on March 8, 2024, for the potential sale of up to 34,000 shares of common stock, with the plan expiring on July 1, 2025403 Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including compensation policy, officer certifications, and XBRL documents - The report includes several exhibits, such as the Amended and Restated Non-Employee Director Compensation Policy, CEO/CFO certifications, and XBRL data files405