10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to _________

Commission File Number: 001-38682

 

KODIAK SCIENCES INC.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

27-0476525

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

1200 Page Mill Road

Palo Alto, CA

94304

(Address of principal executive offices)

(Zip Code)

 

Registrant’s telephone number, including area code: (650) 281-0850

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.0001

KOD

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of July 31, 2023, the registrant had 52,453,163 shares of common stock, $0.0001 par value per share, outstanding.

 

 

 


 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or Exchange Act. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith beliefs as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.

Forward-looking statements include all statements that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “may,” “might,” “will,” “objective,” “intend,” “should,” “could,” “can,” “would,” “expect,” “believe,” “anticipate,” “project,” “target,” “design,” “estimate,” “predict,” “potential,” “plan”, “hope” or the negative of these terms, or similar expressions and comparable terminology intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties, including those set forth under the section of this Quarterly Report on Form 10-Q titled “Part II, Item 1A — Risk Factors” and elsewhere in this Quarterly Report. Forward-looking statements include, but are not limited to, statements about:

the success, cost and timing of our development activities, preclinical studies, clinical trials and regulatory filings;
the translation of our preclinical results and data and early clinical trial results in particular relating to safety, efficacy and durability into future clinical trials in humans;
the continued durability, efficacy and safety of our product candidates;
the scope, progress, results and costs of developing any product candidates we have or may have develop, and conducting preclinical studies and clinical trials;
our ability to present clinical data from our remaining pivotal trials during 2023;
our and Lonza’s ability to successfully execute on our manufacturing development plan;
the number, size and design of clinical trials that regulatory authorities may require to obtain marketing approval of any of our current or future product candidates;
our expectations regarding chemistry manufacturing and controls, or CMC, requirements of the United States Food and Drug Administration, or FDA, and other regulatory bodies to support any BLA submission and potential commercial launch;
the timing or likelihood of regulatory filings and approvals, including the potential to achieve FDA approval of any product candidates;
our ability to obtain and maintain regulatory approval of our product candidates, and any related restrictions, limitations and/or warnings in the label of any approved product candidate;
our ability to obtain funding for our operations, including funding necessary to develop, manufacture and commercialize our product candidates;
the rate and degree of market acceptance of our product candidates;
the success of competing products or platform technologies that are or may become available;
our plans and ability to establish sales, marketing and distribution infrastructure to commercialize any product candidates for which we obtain approval;
our expectation as to the concentration of retinal specialists in the United States and its impact on our sales and marketing plans;
our expectations regarding our ability to enter into manufacturing-related commitments, and the timing thereof;
future agreements with third parties in connection with the commercialization of our product candidates;
the size and growth potential of the markets for our product candidates, if approved for commercial use, and our ability to serve those markets;
existing regulations and regulatory developments in the United States and foreign countries;

i


 

the expected potential benefits of strategic collaboration agreements and our ability to attract collaborators with development, regulatory and commercialization expertise;
the scope of protection we are able to establish and maintain for intellectual property rights covering our product candidates and technology;
potential claims relating to our intellectual property and third-party intellectual property;
our ability to contract with third-party suppliers and manufacturers and their ability to perform adequately;
the pricing and reimbursement of our product candidates, if approved;
our estimates regarding the impact of the unfavorable U.S. and global economic conditions on our business and operations, the business and operations of our collaborators, and on the global economy;
our aspirational goals and objectives related to our human capital resources and workforce objectives;
our ability to attract and retain key managerial, scientific and medical personnel;
the accuracy of our estimates regarding the sufficiency of our cash resources, expenses, future revenue, capital requirements and needs for additional financing; and
our financial performance.

All forward-looking statements are based on information available to us on the date of this Quarterly Report on Form 10-Q and we will not update any of the forward-looking statements after the date of this Quarterly Report on Form 10-Q, except as required by law. Our actual results could differ materially from those discussed in this Quarterly Report on Form 10-Q. The forward-looking statements contained in this Quarterly Report on Form 10-Q, and other written and oral forward-looking statements made by us from time to time, are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated in the forward-looking statements, and you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. Factors that might cause such a difference include, but are not limited to, those discussed in the following discussion and within the section of this Quarterly Report on Form 10-Q titled “Part II, Item 1A — Risk Factors”.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and although we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted a thorough inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

All brand names or trademarks appearing in this Quarterly Report are the property of their respective holders. Unless the context requires otherwise, references in this Quarterly Report to “Kodiak” the “Company,” “we,” “us,” and “our” refer to Kodiak Sciences Inc. and its subsidiaries.

ii


 

SELECTED RISKS AFFECTING OUR BUSINESS

Investing in our common stock involves numerous risks, including the risks described in “Part II—Other Information, Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q, any one of which could materially adversely affect our business, financial condition, results of operations, and prospects. These risks include, among others, the following:

We are in the clinical stage of drug development and have a very limited operating history and no products approved for commercial sale, which may make it difficult to evaluate our current business and predict our future success and viability.
The recent failure of pivotal studies of tarcocimab to meet their primary efficacy endpoints may lead us to discontinue development of other product candidates based on our ABC Platform.
Research and development of biopharmaceutical products is inherently risky. We cannot give any assurance that any of our product candidates will receive regulatory, including marketing, approval, which is necessary before they can be commercialized.
We may encounter substantial delays in our clinical trials, or we may not be able to conduct or complete our clinical trials on the timelines we expect, if at all.
We may encounter difficulties enrolling patients in our clinical trials, and our clinical development activities could thereby be delayed or otherwise adversely affected.
Our clinical trials may fail to demonstrate substantial evidence of the durability, efficacy and safety of our product candidates, which would prevent, delay or limit the scope of regulatory approval and commercialization.
We face significant competition in an environment of rapid technological and scientific change, and there is a possibility that our competitors may retain their market share with existing drugs or achieve regulatory approval before us or develop therapies that are safer, more advanced or more effective than ours, which may negatively impact our ability to successfully market or commercialize any product candidates we may develop and ultimately harm our financial condition.
The manufacture of our product candidates is highly complex and requires substantial lead time to produce.
We have limited experience manufacturing any of our product candidates at a commercial scale. If we or any of our third-party manufacturers encounter difficulties in production or fail to meet rigorously enforced regulatory standards, our ability to provide supply of our product candidates for clinical trials, or our ability to supply our products for patients, if approved, could be delayed or stopped, or we may be unable to establish a commercially viable cost structure.
Our decision to cease development of tarcocimab may impact our ability to use the Ursus facility as intended, which could result in an excess of capital expenditures.
The regulatory approval processes of the FDA, EMA and comparable foreign regulatory authorities are lengthy, time consuming, and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for our product candidates, we will be unable to generate product revenue and our business will be substantially harmed.
We have conducted clinical trials for our product candidates outside the United States (or the respective jurisdictions of other regulatory authorities), and the FDA, (or EMA and applicable foreign regulatory authorities) may not accept data from such trials.
If we or any contract manufacturers and suppliers we engage fail to comply with environmental, health, and safety laws and regulations, we could become subject to fines or penalties or incur costs that could have a material adverse effect on the success of our business.
We expect to rely on third parties to conduct many aspects of our clinical trials and some aspects of our research and preclinical testing, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such trials, research or testing.
If we are unable to obtain and maintain patent protection for any product candidates we develop or for our ABC Platform, our competitors could develop and commercialize products or technology similar or identical to ours, and our ability to successfully commercialize any product candidates we may develop, and our technology may be adversely affected.
If the scope of any patent protection we obtain is not sufficiently broad, or if we lose any of our patent protection, our ability to prevent our competitors from commercializing similar or identical technology and product candidates would be adversely affected.
Third-party claims of intellectual property infringement, misappropriation or other violation against us or our collaborators may prevent or delay the development and commercialization of our product candidates, the ABC Platform and other technologies.

iii


 

We may become involved in lawsuits to protect or enforce our patents and other intellectual property rights, which could be expensive, time consuming and unsuccessful.
We are highly dependent on our key personnel, and if we are not successful in attracting, motivating and retaining highly qualified personnel, we may not be able to successfully implement our business strategy.
Our business could be materially and adversely affected in the future by the effects of disease outbreaks, epidemics and pandemics, as well as the business or operations of our manufacturers, CROs or other third parties with whom we conduct business.
Unfavorable U.S. and global economic conditions could adversely affect our business, financial condition or results of operations.
We have incurred significant net losses in each period since our inception and anticipate that we will continue to incur significant and increasing net losses for the foreseeable future.
Drug development is a highly uncertain undertaking and involves a substantial degree of risk. We have never generated any revenue from product sales, and we may never generate revenue or be profitable.
Our business decision to discontinue ongoing development of tarcocimab may not result in any cost savings, and could result in total costs and expenses that are greater than expected in the short term and could disrupt our business.

 

iv


 

Table of Contents

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

Condensed Consolidated Balance Sheets

1

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

 

Condensed Consolidated Statements of Stockholders’ Equity

3

Condensed Consolidated Statements of Cash Flows

4

Notes to Unaudited Condensed Consolidated Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

11

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

18

Item 4.

Controls and Procedures

18

PART II.

OTHER INFORMATION

19

Item 1.

Legal Proceedings

19

Item 1A.

Risk Factors

19

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

64

Item 3.

Defaults Upon Senior Securities

64

Item 4.

Mine Safety Disclosures

64

Item 5.

Other Information

64

Item 6.

Exhibits

65

 

Signatures

66

 

v


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

Kodiak Sciences Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

June 30,
2023

 

 

December 31,
2022

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

378,670

 

 

$

190,433

 

Marketable securities

 

 

 

 

 

288,500

 

Prepaid expenses and other current assets

 

 

8,289

 

 

 

7,072

 

Total current assets

 

 

386,959

 

 

 

486,005

 

Restricted cash

 

 

6,324

 

 

 

6,324

 

Property and equipment, net

 

 

130,121

 

 

 

56,384

 

Operating lease right-of-use asset

 

 

57,251

 

 

 

59,369

 

Other assets

 

 

9,004

 

 

 

58,546

 

Total assets

 

$

589,659

 

 

$

666,628

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

12,347

 

 

$

9,130

 

Accrued and other current liabilities

 

 

54,044

 

 

 

33,440

 

Operating lease liability

 

 

7,851

 

 

 

9,926

 

Total current liabilities

 

 

74,242

 

 

 

52,496

 

Operating lease liability, net of current portion

 

 

76,939

 

 

 

77,807

 

Liability related to sale of future royalties

 

 

100,000

 

 

 

99,996

 

Other liabilities

 

 

 

 

 

162

 

Total liabilities

 

 

251,181

 

 

 

230,461

 

Commitments and contingencies (Note 7)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.0001 par value, 10,000,000 shares authorized;
   
0 shares issued and outstanding at June 30, 2023 and
   December 31, 2022, respectively

 

 

 

 

 

 

Common stock, $0.0001 par value, 490,000,000 shares authorized
   at June 30, 2023 and December 31, 2022;
52,453,163 and
   
52,333,850 shares issued and outstanding at June 30, 2023 and
   December 31, 2022, respectively

 

 

5

 

 

 

5

 

Additional paid-in capital

 

 

1,381,481

 

 

 

1,329,509

 

Accumulated other comprehensive income (loss)

 

 

 

 

 

(1,307

)

Accumulated deficit

 

 

(1,043,008

)

 

 

(892,040

)

Total stockholders’ equity

 

 

338,478

 

 

 

436,167

 

Total liabilities and stockholders’ equity

 

$

589,659

 

 

$

666,628

 

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

1


 

Kodiak Sciences Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended
  June 30,

 

 

Six Months Ended
  June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

66,961

 

 

$

73,744

 

 

$

123,481

 

 

$

149,921

 

General and administrative

 

 

17,871

 

 

 

18,324

 

 

 

35,966

 

 

 

37,914

 

Total operating expenses

 

 

84,832

 

 

 

92,068

 

 

 

159,447

 

 

 

187,835

 

Loss from operations

 

 

(84,832

)

 

 

(92,068

)

 

 

(159,447

)

 

 

(187,835

)

Interest income

 

 

4,683

 

 

 

1,494

 

 

 

8,300

 

 

 

1,570

 

Interest expense

 

 

(4

)

 

 

(5

)

 

 

(8

)

 

 

(10

)

Other income (expense), net

 

 

(35

)

 

 

(49

)

 

 

187

 

 

 

(62

)

Net loss

 

$

(80,188

)

 

$

(90,628

)

 

$

(150,968

)

 

$

(186,337

)

Net loss per common share, basic and diluted

 

$

(1.53

)

 

$

(1.74

)

 

$

(2.88

)

 

$

(3.57

)

Weighted-average shares of common stock outstanding used
   in computing net loss per common share, basic and diluted

 

 

52,378,729

 

 

 

52,218,773

 

 

 

52,358,279

 

 

 

52,195,972

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

Change in unrealized gains (losses) related to available-for-sale
   debt securities, net of tax

 

 

96

 

 

 

(1,869

)

 

 

1,307

 

 

 

(1,869

)

Total other comprehensive income (loss)

 

 

96

 

 

 

(1,869

)

 

 

1,307

 

 

 

(1,869

)

Comprehensive loss

 

$

(80,092

)

 

$

(92,497

)

 

$

(149,661

)

 

$

(188,206

)

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

2


 

Kodiak Sciences Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2022

 

 

52,333,850

 

 

$

5

 

 

$

1,329,509

 

 

$

(1,307

)

 

$

(892,040

)

 

$

436,167

 

Issuance of common stock upon
   exercise of stock options

 

 

1,098

 

 

 

 

 

 

9

 

 

 

 

 

 

 

 

 

9

 

Issuance of common stock upon
   vesting of restricted stock units

 

 

9,793

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation
   expense

 

 

 

 

 

 

 

 

25,980

 

 

 

 

 

 

 

 

 

25,980

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

1,211

 

 

 

 

 

 

1,211

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(70,780

)

 

 

(70,780

)

Balances at March 31, 2023

 

 

52,344,741

 

 

 

5

 

 

 

1,355,498

 

 

 

(96

)

 

 

(962,820

)

 

 

392,587

 

Issuance of common stock upon
   exercise of stock options

 

 

6,430

 

 

 

 

 

 

51

 

 

 

 

 

 

 

 

 

51

 

Issuance of common stock upon
   vesting of restricted stock units

 

 

76,152

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock
   pursuant to employee stock
   purchase plan

 

 

25,840

 

 

 

 

 

 

131

 

 

 

 

 

 

 

 

 

131

 

Stock-based compensation
   expense

 

 

 

 

 

 

 

 

25,801

 

 

 

 

 

 

 

 

 

25,801

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

96

 

 

 

 

 

 

96

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(80,188

)

 

 

(80,188

)

Balances at June 30, 2023

 

 

52,453,163

 

 

$

5

 

 

$

1,381,481

 

 

$

 

 

$

(1,043,008

)

 

$

338,478

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders’

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

Balances at December 31, 2021

 

 

51,826,257

 

 

$

5

 

 

$

1,221,532

 

 

$

 

 

$

(558,217

)

 

$

663,320

 

Issuance of common stock upon
   exercise of stock options

 

 

110,043

 

 

 

 

 

 

1,678

 

 

 

 

 

 

 

 

 

1,678

 

Issuance of common stock upon
   vesting of restricted stock units

 

 

3,581

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation
   expense

 

 

 

 

 

 

 

 

28,095

 

 

 

 

 

 

 

 

 

28,095

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(95,709

)

 

 

(95,709

)

Balances at March 31, 2022

 

 

51,939,881

 

 

 

5

 

 

 

1,251,305

 

 

 

 

 

 

(653,926

)

 

 

597,384

 

Issuance of common stock upon
   exercise of stock options

 

 

320

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

2

 

Issuance of common stock upon
   vesting of restricted stock units

 

 

74,148

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock
   pursuant to employee stock
   purchase plan

 

 

10,272

 

 

 

 

 

 

64

 

 

 

 

 

 

 

 

 

64

 

Stock-based compensation
   expense

 

 

 

 

 

 

 

 

25,978

 

 

 

 

 

 

 

 

 

25,978

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(1,869

)

 

 

 

 

 

(1,869

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(90,628

)

 

 

(90,628

)

Balances at June 30, 2022

 

 

52,024,621

 

 

$

5

 

 

$

1,277,349

 

 

$

(1,869

)

 

$

(744,554

)

 

$

530,931

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


 

Kodiak Sciences Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

 

 

Six Months Ended June 30,

 

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

Net loss

$

(150,968

)

 

$

(186,337

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

 

 

 

 

 

Depreciation

 

8,568

 

 

 

1,075

 

Stock-based compensation

 

51,781

 

 

 

54,073

 

Net amortization (accretion) of premium (discount) on marketable securities

 

(846

)

 

 

(314

)

Settlement of derivative contracts

 

(314

)

 

 

 

Amortization of operating lease right-of-use asset

 

3,745

 

 

 

3,742

 

Amortization of issuance costs

 

4

 

 

 

26

 

Changes in assets and liabilities:

 

 

 

 

 

Prepaid expenses and other current assets

 

3,964

 

 

 

(2,165

)

Other assets

 

181

 

 

 

10,235

 

Accounts payable

 

3,549

 

 

 

12,864

 

Accrued and other current liabilities

 

(4,274

)

 

 

1,545

 

Operating lease liability

 

(4,570

)

 

 

6,959

 

Net cash provided by (used in) operating activities

 

(89,180

)

 

 

(98,297

)

Cash flows from investing activities

 

 

 

 

 

Purchase of property and equipment

 

(13,640

)

 

 

(25,690

)

Deposits on property and equipment

 

(77

)

 

 

(8,785

)

Purchase of marketable securities

 

(49,347

)

 

 

(427,766

)

Maturities of marketable securities

 

340,000

 

 

 

 

Proceeds from derivative activity

 

314

 

 

 

 

Net cash provided by (used in) investing activities

 

277,250

 

 

 

(462,241

)

Cash flows from financing activities

 

 

 

 

 

Proceeds from issuance of common stock upon options exercise

 

60

 

 

 

1,680

 

Proceeds from issuance of common stock pursuant to employee stock purchase plan

 

131

 

 

 

64

 

Principal payments of tenant improvement allowance payable

 

(24

)

 

 

(24

)

Net cash provided by (used in) financing activities

 

167

 

 

 

1,720

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

188,237

 

 

 

(558,818

)

Cash, cash equivalents and restricted cash, at beginning of period

 

196,757

 

 

 

737,834

 

Cash, cash equivalents and restricted cash, at end of period

$

384,994

 

 

$

179,016

 

Reconciliation of cash, cash equivalents and restricted cash to consolidated balance sheets

 

 

 

 

 

Cash and cash equivalents

$

378,670

 

 

$

172,692

 

Restricted cash

 

6,324

 

 

 

6,324

 

Total cash, cash equivalents and restricted cash in consolidated balance sheets

$

384,994

 

 

$

179,016

 

 

 

 

 

 

 

Supplemental disclosures of non-cash investing and financing information:

 

 

 

 

 

Operating lease right-of-use asset obtained in exchange for operating lease liability

$

1,473

 

 

$

74

 

Purchase of property and equipment under accounts payable and accruals

$

27,662

 

 

$

9,718

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

4


 

Kodiak Sciences Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

1. The Company

Kodiak Sciences Inc. (the “Company”) is a clinical stage biopharmaceutical company committed to researching, developing and commercializing transformative therapeutics to treat high prevalence retinal diseases. The Company devotes substantially all of its resources to the research and development of its product platforms and product candidates including activities to conduct clinical studies of its product candidates, manufacture product candidates and provide general and administrative support for these operations.

Liquidity

As of June 30, 2023, the Company had cash and cash equivalents of $378.7 million. Although the Company has incurred significant operating losses since inception and expects to continue to incur operating losses and negative operating cash flows for the foreseeable future, the Company believes that the cash and cash equivalents will be sufficient to meet the anticipated operating and capital expenditure requirements for the 12 months following the date of this Quarterly Report on Form 10-Q.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) applicable to interim periods. The condensed consolidated financial statements, in the opinion of management, include all normal and recurring adjustments necessary to state fairly the Company's financial position and results of operations for the reported periods.

These condensed consolidated financial statements have been prepared on a basis substantially consistent with, and should be read in conjunction with the audited financial statements for the year ended December 31, 2022 and notes thereto, the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 28, 2023. Certain information and note disclosures normally included in the audited financial statements prepared in accordance with GAAP have been condensed or omitted from this report. The results of operations for any interim period are not necessarily indicative of the results for the year ending December 31, 2023, or for any future period.

The accompanying condensed consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

Reclassification

Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and expenses during the reporting period. Such estimates include, but are not limited to, accrued research and development and stock-based compensation. Actual results could differ from those estimates.

Risks and Uncertainties

Global economic and business activities continue to face widespread macroeconomic uncertainties, including health epidemics, labor shortages, bank failures, inflation and monetary supply shifts, recession risks and potential disruptions from the Russia-Ukraine conflict. The Company continues to actively monitor the impact of these macroeconomic factors on its financial condition, liquidity, operations, and workforce. The extent of the impact of these factors on the Company’s operational and financial performance, including its ability to execute its business strategies and initiatives in the expected timeframe, will depend on future developments, which are uncertain and cannot be predicted; however, any continued or renewed disruption resulting from these factors could negatively impact the Company’s business.

5


Kodiak Sciences Inc.

Notes to Unaudited Condensed Consolidated Financial Statements (Continued)

 

The Company’s future results of operations involve a number of risks and uncertainties common to clinical stage companies in the biotechnology industry. The Company’s product candidates are in development and the Company operates in an environment of rapid change in technology and substantial competition from other pharmaceutical and biotechnology companies. Factors that could affect the Company’s future operating results and cause actual results to vary materially from expectations include, but are not limited to, uncertainty of results of clinical trials and reaching milestones, uncertainty of regulatory approval of the Company’s potential drug candidates, uncertainty of market acceptance of any of the Company’s product candidates that receive regulatory approval, competition from new technological innovations, substitute products and larger companies, securing and protecting proprietary technology, strategic relationships and dependence on key individuals, contract manufacturer and research organizations, and other suppliers.

Products developed by the Company require approvals from the U.S. Food and Drug Administration (“FDA”) or other international regulatory agencies prior to commercial sales. There can be no assurance that any of the Company’s product candidates will receive the necessary approvals. If the Company is denied approval, approval is delayed or the Company is unable to maintain approvals, it could have a materially adverse impact on the Company. Even if the Company’s product development efforts are successful, it is uncertain when, if ever, the Company will generate significant revenue from product sales.