KODIAK SCIENCES INC. You should read the following discussion and analysis of our financial condition
and results of operations together with our unaudited condensed consolidated
financial statements and the related notes included elsewhere in this report and
with our audited financial statements and related notes thereto and management's
discussion and analysis of financial condition and results of operations for the
year ended
Overview
Since its founding in 2009,
Kodiak's lead product candidate, KSI-301, is being investigated in five registrational clinical trials. The comprehensive clinical program targets high prevalence anti-vascular endothelial growth factor ("anti-VEGF") dependent retinal diseases with clinical trials designed as a package to support a broad product label, which we hope will include the key diseases and the longest dosing intervals. KSI-301 is being developed to become a differentiated, long-interval therapy for use in many patients who may benefit from anti-VEGF therapy. At the same time, Kodiak is investing in commercial scale manufacturing. We aim to provide a pre-filled syringe early in commercialization, and are working actively towards this goal. We believe combining these ambitious clinical and manufacturing efforts sets the stage for potential market share capture when and if KSI-301 is approved.
In addition, Kodiak is investing in its pipeline. The Company is progressing its Antibody Biopolymer Conjugate ("ABC") PlatformTM towards suboptimal anti-VEGF responder patients, a group estimated to be as large as 30% of treated patients, with its bispecific conjugate KSI-501. Beyond today's anti-VEGF market, Kodiak's new triplet medicines are being designed on its ABC Platform in an effort to bring new capabilities to treat the even higher prevalence retinal diseases of dry age-related macular degeneration ("AMD") and glaucoma.
Notably, up to this point, Kodiak has retained all global rights to make, use and sell its product candidates, which we believe preserves future value and allows for agile decision-making.
While engaged in these research and development efforts, we believe we have
demonstrated a disciplined and creative approach to building and financing the
company. As of
Our objective is to develop our retina-focused product candidates, seek FDA and worldwide health authority marketing authorization approvals, and ultimately commercialize our product candidates.
Following from these efforts, we believe Kodiak has the potential to achieve our ambition of becoming a significant incumbent retinal development and commercialization franchise on a global basis.
Recent Updates
KSI-301 Clinical Program Highlights
As part of the learnings from our initial Phase 2b/3 study in wet
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BEACON - Phase 3 Study in Patients with Treatment-Naïve Retinal Vein Occlusion (RVO)
The Phase 3 BEACON study is a global, multi-center, randomized study designed to
evaluate the durability, efficacy and safety of KSI-301 in patients with
treatment-naïve macular edema due to retinal vein occlusion, including both
branch and central subtypes. Patients are randomized 1:1 to a KSI-301 arm or an
aflibercept arm. In the first six months, the KSI-301 arm is treated with a
proactive, fixed regimen which includes two monthly loading doses and then every
8-week treatment (including treatment four weeks prior to the 24-week primary
endpoint). In the first six months, the aflibercept arm is treated with a fixed
monthly regimen, per its label. In the second six months, patients in both
groups will receive treatment on an individualized basis per protocol-specified
criteria. Following this, patients can continue to receive KSI-301 for an
additional six months on an individualized basis. The study completed enrollment
of over 550 patients worldwide in the fourth quarter of 2021. The primary
endpoint is at six months, and patients will be treated and followed for 18
months. The current BEACON study design will remain unchanged and compares four
doses of KSI-301 versus six doses of aflibercept over the 6-month duration to
the primary endpoint. The last patient visit for the 24-week primary endpoint is
expected in
GLEAM / GLIMMER - Paired Phase 3 Studies in Patients with Treatment-Naïve Diabetic Macular Edema (DME)
The Phase 3 GLEAM and GLIMMER studies are global, multi-center, randomized pivotal studies designed to evaluate the durability, efficacy and safety of KSI-301 in patients with treatment-naïve diabetic macular edema. In each study, patients are randomized 1:1 to receive either KSI-301 or aflibercept. The KSI-301 arm is treated with a proactive, individualized dosing regimen of every 8-, 12-, 16-, 20- or 24 weeks (utilizing tight dynamic retreatment criteria) after three loading doses. The aflibercept arm is treated with a fixed dosing regimen of every 8-weeks after five monthly loading doses, per its label. Both studies completed enrollment of approximately 450 patients each worldwide in the first quarter of 2022. We have modified the study protocols to decrease the risk of undertreatment in high need patients by 1) triggering retreatment earlier in disease reactivation; 2) triggering retreatment in the presence of persistent disease; 3) removing subjectivity in the application of the criteria. We are also extending the primary endpoint by twelve weeks to allow two full cycles of every 24-week dosing for patients receiving KSI-301, so that the durability, efficacy, and safety of the longer dosing intervals can be more fully evaluated. The primary endpoint for both studies is the average of weeks 60 and 64, and patients will be treated and followed for a total of two years. We expect to announce top-line data in mid-2023. If successful, we expect that data from our GLEAM and GLIMMER studies will serve as the primary basis for approval of KSI-301 in our anticipated BLA submission.
DAYLIGHT - Phase 3 Study in Patients with Treatment-Naïve Wet
The Phase 3 DAYLIGHT study is a global, multi-center, randomized pivotal study
designed to evaluate the efficacy and safety of high-frequency KSI-301 in
patients with treatment-naïve wet
GLOW - Phase 3 Study in Patients with Non-Proliferative Diabetic Retinopathy without DME
The Phase 3 GLOW study is a global, multi-center, randomized pivotal study
designed to evaluate the efficacy and safety of KSI-301 in patients with
treatment-naïve, moderately severe to severe non-proliferative diabetic
retinopathy ("NPDR"). Patients are randomized to receive either KSI-301 on a
once every six-month dosing regimen after three initiating doses or to receive
sham injections. The primary endpoint is at one year and patients will be
treated and followed for two years. Outcomes include changes in diabetic
retinopathy severity, measured on a standardized photographic grading scale, and
the rate of development of sight-threatening complications due to diabetic
retinopathy. We randomized the first patients into GLOW in
China Clinical Development Activities
In
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operations and other
KSI-301 Manufacturing
In
Pipeline Progression
We continued progressing pipeline product candidates developed from our ABC Platform, including KSI-501 and KSI-601. KSI-501 is a recombinant, mammalian cell expressed dual inhibitor antibody biopolymer conjugate, targeting both VEGF (VEGF-trap) and IL-6 (anti-IL-6-antibody) for the treatment of retinal diseases. We are progressing the bioconjugate cGMP manufacturing, non-clinical toxicology and other supporting activities towards expected IND submission in the second half of 2022.
KSI-601 is a triplet inhibitor for dry
COVID-19
We are continuing to monitor the global ongoing COVID-19 pandemic. We and our key clinical and manufacturing partners have been able to continue to advance our operations. Through this pandemic, we continue to work closely with our clinical sites to ensure patient safety and minimize the number of missed visits and study discontinuations. The overall rate of missed study visits remains less than 5% across all of our ongoing studies combined.
In response to the COVID-19 pandemic with regards to business operations,
clinical trials, and manufacturing activities, we have taken steps in line with
guidance from the
We will continue to monitor the COVID-19 situation closely. The ultimate impact of the ongoing COVID-19 pandemic on our business operations remains uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, our clinical trials, healthcare systems or the global economy as a whole. See also the section titled "Risk Factors" for additional information on risks and uncertainties related to the evolving COVID-19 pandemic.
Components of Operating Results
Operating Expenses
Research and Development Expenses
Substantially all of our research and development expenses consist of expenses incurred in connection with the development of our ABC Platform and product candidates. These expenses include certain payroll and personnel expenses, including stock-based compensation, for our research and product development employees; laboratory supplies and facility costs; consulting costs; contract manufacturing and fees paid to CROs to conduct certain research and development activities on our behalf; and allocated overhead, including rent, equipment, depreciation and utilities. We expense both internal and external research and development expenses as they are incurred. Costs of certain activities, such as manufacturing and preclinical and clinical studies, are generally recognized based on an evaluation of the progress to completion of specific tasks. Nonrefundable payments made prior to the receipt of goods or services that will be used or rendered for future research and development activities are deferred and capitalized. The capitalized amounts are recognized as expense as the goods are delivered or the related services are performed.
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We are focusing substantially all of our resources and development efforts on the development of our product candidates, in particular KSI-301. We expect our research and development expenses to increase substantially during the next few years as we conduct our Phase 3 clinical studies, complete our clinical program, pursue regulatory approval of our drug candidates and prepare for a possible commercial launch. Predicting the timing or the final cost to complete our clinical program or validation of our commercial manufacturing and supply processes is difficult and delays may occur because of many factors, including factors outside of our control. For example, if the FDA or other regulatory authorities were to require us to conduct clinical trials beyond those that we currently anticipate, or if we experience significant delays in enrollment in any of our clinical trials, we could be required to expend significant additional financial resources and time on the completion of clinical development. Furthermore, we are unable to predict when or if our drug candidates will receive regulatory approval with any certainty.
General and Administrative Expenses
General and administrative expenses consist principally of payroll and personnel expenses, including stock-based compensation; professional fees for legal, consulting, accounting and tax services; allocated overhead, including rent, equipment, depreciation and utilities; and other general operating expenses not otherwise classified as research and development expenses.
We anticipate that our general and administrative expenses will increase as a
result of increased personnel costs, including stock-based compensation,
expanded infrastructure and higher consulting, legal and accounting services
associated with maintaining compliance with requirements of the stock exchange
listing and
Interest Income
Interest income consists primarily of interest income earned on our cash and cash equivalents.
Other Income (Expense), Net
Other income (expense), net consists primarily of tax provisions and amortized issuance costs from the liability related to the future sale of royalties to BBA in 2019.
Results of Operations
The following table summarizes the results of our operations for the periods
indicated, in thousands:
Three Months Ended
March 31,
2022 2021 Change
Operating expenses
Research and development $ 76,177 $ 40,337 $ 35,840
General and administrative 19,590 10,221 9,369
Loss from operations (95,767 ) (50,558 ) (45,209 )
Interest income 76 149 (73 )
Interest expense (5 ) (6 ) 1
Other income (expense), net (13 ) (32 ) 19
Net loss $ (95,709 ) $ (50,447 ) $ (45,262 ) Research and Development Expenses
The following table summarizes our research and development expenses for the periods indicated, in thousands:
Three Months Ended
March 31,
2022 2021 Change
KSI-301 program expenses $ 40,677 $ 23,486 $ 17,191
KSI-501 program expenses 1,405 1,665 (260 )
ABC Platform and other program expenses 8,417 2,076 6,341
Payroll and personnel expenses 21,190 9,613 11,577
Facilities and other research and development
expenses 4,488 3,497 991
Total research and development expenses
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KSI-301 program expenses increased
ABC Platform and other program expenses increased
Payroll and personnel expenses increased
Facilities and other research and development expenses increased
General and Administrative Expenses
General and administrative expenses increased
Liquidity and Capital Resources; Plan of Operations
Sources of Liquidity
We have funded our operations primarily through the sale and issuance of common
stock, redeemable convertible preferred stock, convertible notes, warrants and
the sale of royalties. As of
Future Funding Requirements
We have incurred net losses since our inception. For the three months ended
We have based these estimates on assumptions that may prove to be wrong, and we could deplete our available capital resources sooner than we expect. Because of the risks and uncertainties associated with research, development and commercialization of product candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on and could increase significantly as a result of many factors.
To date, we have not generated any product revenue. We do not expect to generate any product revenue unless and until we obtain regulatory approval of and commercialize any of our product candidates or enter into collaborative agreements with third parties, and we do not know when, or if, either will occur. We expect to continue to incur significant losses for the foreseeable future, and we expect our losses to increase as we continue the development of, and seek regulatory approvals for, our product candidates, and begin to commercialize any approved products. We are subject to all of the risks typically related to the development of new product candidates, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.
The timing and amount of our operating expenditures and capital requirements will depend on many factors, including:
•
the scope, timing, rate of progress and costs of our drug discovery, preclinical development activities, laboratory testing and clinical trials for our product candidates;
•
the number and scope of clinical programs we decide to pursue;
•
the scope and costs of manufacturing development and commercial manufacturing activities;
•
the extent to which we acquire or in-license other product candidates and technologies;
•
the cost, timing and outcome of regulatory review of our product candidates;
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•
the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims;
•
our ability to establish and maintain collaborations on favorable terms, if at all;
•
our efforts to enhance operational systems and our ability to attract, hire and retain qualified personnel, including personnel to support the development of our product candidates;
•
the costs associated with being a public company; and
•
the cost and timing associated with commercializing our product candidates, if they receive marketing approval.
A change in the outcome of any of these or other variables with respect to the development of any of our product candidates could significantly change the costs and timing associated with the development of that product candidate. Furthermore, our operating plans may change in the future, and we will continue to require additional capital to meet operational needs and capital requirements associated with such operating plans. If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Any future debt financing into which we enter may impose upon us additional covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. If we are unable to raise additional funds when needed, we may be required to delay, reduce, or terminate some or all of our development programs and clinical trials. We may also be required to sell or license rights to our product candidates in certain territories or indications to others that we would prefer to develop and commercialize ourselves.
The significant uncertainties caused by the evolving effects of the ongoing COVID-19 pandemic may also negatively impact our operations and capital resources. We and our key clinical and manufacturing partners have been able to continue to advance our operations, and we continue to monitor the impact of COVID-19 on our ability to continue the development of, and seek regulatory approvals for, our product candidates, and begin to commercialize any approved products. This pandemic may ultimately have a material adverse effect on our liquidity and operating plans, although we are unable to make any prediction with certainty given the spread and rapidly changing nature of the pandemic and the evolving global actions taken to contain and treat the novel coronavirus.
Adequate additional funding may not be available to us on acceptable terms or at all. Our failure to raise capital as and when needed could have a negative impact on our financial condition and our ability to pursue our business strategies. See the section of this report titled "Part II, Item 1A - Risk Factors" for additional risks associated with our substantial capital requirements.
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