Delaware		82-4566526
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)
103 Montgomery Street, Suite 150 The Presidio of San Francisco San Francisco, CA		94129
(Address of principal executive offices)		(Zip Code)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☒

TABLE OF CONTENTS

Special Note Regarding Forward-Looking Statements

 

This Quarterly Report on Form 10‑Q contains forward-looking statements. All statements other than statements of historical facts contained in this Quarterly Report on Form 10‑Q, including statements regarding our future results of operations and financial position, business strategy, development plans, ongoing and planned future preclinical studies and clinical trials, future results of ongoing and planned future clinical trials, expected research and development costs, regulatory strategy, timing and likelihood of success, as well as plans and objectives of management for future operations, are forward-looking statements. In some cases, investors can identify forward-looking statements by terms such as “may,” “will,” “should,” “would,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10‑Q include, but are not limited to, statements about:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

We have based these forward-looking statements largely on our current expectations and projections about our business, the industry in which we operate and financial trends that we believe may affect our business, financial condition, results of operations and prospects, and these forward-looking statements are not guarantees of future performance or development. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10‑Q and are subject to a number of risks, uncertainties and assumptions described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10‑Q. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, investors should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events or otherwise.

 

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 while 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 an exhaustive 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.

		March 31, 2023				December 31, 2022
Assets
Current assets:
Cash and cash equivalents		$	73,570			$	29,261
Cash at consolidated joint venture			-				25,725
Short-term investments			127,411				172,214
Prepaid expenses and other current assets			4,307				3,637
Total current assets			205,288				230,837
Property and equipment, net			2,877				3,071
Right-of-use lease assets			3,170				3,377
Long-term investments			30,203				39,139
Restricted cash			371				371
Other non-current assets			1,971				2,031
Total assets		$	243,880			$	278,826
Liabilities, Redeemable Convertible Noncontrolling Interests and Stockholders’ Equity
Current liabilities:
Accounts payable		$	4,451			$	2,970
Accrued expenses			12,721				13,206
Current portion of operating lease liabilities			983				991
Total current liabilities			18,155				17,167
Operating lease liabilities, long-term			2,963				3,191
Total liabilities			21,118				20,358
Commitments and contingencies (See Note 12)
Redeemable convertible noncontrolling interests			-				35,000
Stockholders’ equity:
Preferred stock, $0.0001 par value; 200,000,000 shares authorized at March 31, 2023 and December 31, 2022; 0 shares outstanding at March 31, 2023 and December 31, 2022			-				-
Common stock, $0.0001 par value; 1,000,000,000 shares authorized at March 31, 2023 and December 31, 2022; 46,569,648 and 44,342,292 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively			5				4
Additional paid-in capital			515,524				484,237
Accumulated other comprehensive loss			(464	)			(1,410	)
Accumulated deficit			(292,303	)			(259,363	)
Total stockholders’ equity			222,762				223,468
Total liabilities, redeemable convertible noncontrolling interests and stockholders’ equity		$	243,880			$	278,826

		Three Months Ended March 31,
		2023				2022
Operating expenses:
Research and development		$	26,559			$	19,647
General and administrative			8,094				7,412
Total operating expenses			34,653				27,059
Loss from operations			(34,653	)			(27,059	)
Other income, net			1,713				157
Net loss		$	(32,940	)		$	(26,902	)
Weighted-average shares outstanding, basic and diluted			45,409,572				43,882,920
Net loss per share, basic and diluted		$	(0.73	)		$	(0.61	)
Comprehensive loss:
Net loss		$	(32,940	)		$	(26,902	)
Other comprehensive loss:
Unrealized gain (loss) on investments			946				(1,656	)
Total comprehensive loss		$	(31,994	)		$	(28,558	)

KINNATE BIOPHARMA INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

 

See accompanying notes to condensed consolidated financial statements.

1. Organization and Basis of Presentation

Organization and Nature of Operations

Kinnate Biopharma Inc. (Kinnate or the Company) was incorporated in the State of Delaware in January 2018 and is headquartered in San Francisco, California. The Company is a precision oncology company focused on the discovery, design and development of small molecule kinase inhibitors for difficult-to-treat, genomically defined cancers.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Accounting estimates and management judgments reflected in the financial statements include: normal recurring accruals, including the accrual of research and development expenses; fair value of investments; valuation of deferred tax assets; and stock-based compensation. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may materially differ from these estimates and assumptions. The Company uses the best information available to update its critical accounting estimates.

Net Loss Per Share

Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration of potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, the Company’s common stock options are considered to be potentially dilutive securities. As the Company has reported a net loss for all periods presented, diluted net loss per common share is the same as basic net loss per common share for those periods.

 

The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except share and per share amounts):

		Three Months Ended March 31,
		2023				2022
Numerator
Net loss		$	(32,940	)		$	(26,902	)
Denominator
Weighted-average shares outstanding used in computing net loss per share, basic and diluted			45,409,572				43,882,920
Net loss per share, basic and diluted		$	(0.73	)		$	(0.61	)

The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net loss per share for the periods presented because including them would have been anti-dilutive:

Recently Issued Accounting Standards

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) (ASC 326): Measurement of Credit Losses on Financial Instruments, which introduced the expected credit losses methodology for the measurement of credit losses on financial assets measured at amortized cost basis, replacing the previous incurred loss methodology. The amendments in Update 2016-13 added Topic 326, Financial Instruments—Credit Losses, made several consequential amendments to the Codification. Update 2016-13 also modified the accounting for available-for-sale debt securities, which must be individually assessed for credit losses when fair value is less than the amortized cost basis, in accordance with Subtopic 326-30, Financial Instruments— Credit Losses—Available-for-Sale Debt Securities. The guidance is effective for public business entities for annual periods beginning after December 15, 2019, including interim periods within those years. For all other entities, the standard is effective for annual periods beginning after December 15, 2022 and interim periods, therein. Early adoption is permitted. Since the Company has elected to use the extended transition period under the JOBS Act available to emerging growth companies (EGCs), the ASU is effective for the Company for fiscal years beginning after December 15, 2022. The Company adopted this standard on the required effective date of January 1, 2023. The ASU did not have a material impact on its consolidated financial statements and related disclosures.

3. Cash, cash equivalents and restricted cash

The following table provides a reconciliation of the components of cash, cash equivalents and restricted cash reported in the condensed consolidated statements of cash flows (in thousands):

		March 31, 2023				December 31, 2022
Cash and cash equivalents		$	73,570			$	29,261
Cash at consolidated joint venture			-				25,725
Restricted cash, non-current			371				371
Total cash, cash equivalents and restricted cash reported in the Consolidated Statements of Cash Flows		$	73,941			$	55,357

The cash at the consolidated joint venture represents cash held at Kinnjiu prior to the Kinnjiu Transaction and the use of such cash was limited to the operations of Kinnjiu (see Note 11). As a result of the Kinnjiu Transaction, such cash is no longer limited in its use and accordingly is no longer presented separately on the condensed consolidated balance sheet. The restricted cash balance relates to the Company’s office lease in San Diego, California (see Note 12).

4. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

		March 31, 2023				December 31, 2022
Furniture and fixtures		$	760			$	760
Computers and equipment			442				442
Computer software			99				99
Leasehold improvements			2,520				2,511
Property and equipment			3,821				3,812
Less accumulated depreciation			(944	)			(741	)
Property and equipment, net		$	2,877			$	3,071

5. Accrued Expenses

Accrued expenses consisted of the following (in thousands):

		March 31, 2023				December 31, 2022
Accrued research and development		$	10,208			$	7,884
Accrued compensation			1,758				4,832
Accrued legal fees			531				243
Other accruals			224				247
Total		$	12,721			$	13,206

6. Investments

The Company has invested its excess cash in marketable securities as of March 31, 2023 and December 31, 2022. The following is a summary by significant investment category (in thousands):

		March 31, 2023
		Maturity			Amortized				Unrealized				Unrealized				Estimated
		in Years			Cost				Gains				Losses				Fair Value
Corporate debt securities		less than 1			$	14,089			$	1			$	(59	)		$	14,031
Commercial paper		less than 1				30,581				2				(20	)			30,563
U.S. Treasury securities		less than 1				74,522				36				(431	)			74,127
U.S. Agency bonds		less than 1				8,667				23				-				8,690
Short-term investments					$	127,859			$	62			$	(510	)		$	127,411
Corporate debt securities		1 - 2			$	1,503			$	6			$	-			$	1,509
U.S. Agency bonds		1 - 2				6,948				7				-				6,955
Asset-backed securities		1 - 2				21,769				26				(56	)			21,739
Long-term investments					$	30,220			$	39			$	(56	)		$	30,203

		December 31, 2022
		Maturity			Amortized				Unrealized				Unrealized				Estimated
		in Years			Cost				Gains				Losses				Fair Value
Corporate debt securities		less than 1			$	9,604			$	2			$	(72	)		$	9,534
Commercial paper		less than 1				41,243				-				-				41,243
U.S. Treasury securities		less than 1				119,810				-				(1,254	)			118,556
U.S. Agency bonds		less than 1				2,877				4				-				2,881
Short-term investments					$	173,534			$	6			$	(1,326	)		$	172,214
Corporate debt securities		1 - 2			$	15,426			$	-			$	(60	)		$	15,366
U.S. Agency bonds		1 - 2				5,907				-				(9	)			5,898
Asset-backed securities		1 - 2				17,897				20				(42	)			17,875
Long-term investments					$	39,230			$	20			$	(111	)		$	39,139

The available-for-sale investments’ gross unrealized losses and fair value aggregated by classes of security and length of time that individual securities have been in a continuous loss position at March 31, 2023 and December 31, 2022 consisted of the following (in thousands):

		March 31, 2023
		Less than 12 months												More than 12 months												Total
										Unrealized												Unrealized												Unrealized
		Count				Fair Value				Losses				Count				Fair Value				Losses				Count				Fair Value				Losses
Corporate debt securities			4			$	11,936			$	(59	)			-			$	-			$	-				4			$	11,936			$	(59	)
Commercial paper			6				19,737				(20	)			-				-				-				6				19,737				(20	)
U.S. Treasury securities			2				9,890				(29	)			3				44,616				(402	)			5				54,506				(431	)
U.S. Agency bonds			-				-				-				-				-				-				-				-				-
Asset-backed securities			9				10,825				(56	)			-				-				-				9				10,825				(56	)
			21			$	52,388			$	(164	)			3			$	44,616			$	(402	)			24			$	97,004			$	(566	)

The Company has determined that there were no material declines in fair value of its investments due to credit-related factors as of March 31, 2023 and December 31, 2022.

7. Fair Value Measurements

The accounting guidance defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

 Level 1: Observable inputs such as quoted prices in active markets;

 Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

 Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The carrying amounts of the Company’s prepaid expenses and other current assets, accounts payable and accrued expenses are generally considered to be representative of their fair value because of the short-term nature of these instruments. The Company’s investments, which may include money market funds and available-for-sale investment securities consisting of high-quality, marketable debt instruments of corporations and the U.S. government are measured at fair value in accordance with the fair value hierarchy.

The following tables present the hierarchy for assets measured at fair value on a recurring basis (in thousands):

		Fair Value Measurements at March 31, 2023
		Level 1				Level 2				Level 3				Total
Money market funds		$	70,723			$	-			$	-			$	70,723
Corporate debt securities			-				15,540				-				15,540
Commercial paper			-				30,563				-				30,563
U.S. Treasury securities			-				74,127				-				74,127
U.S. Agency bonds			-				15,645				-				15,645
Asset-backed securities			-				21,739				-				21,739
Total cash equivalents and investments		$	70,723			$	157,614			$	-			$	228,337

		Fair Value Measurements at December 31, 2022
		Level 1				Level 2				Level 3				Total
Money market funds		$	28,261			$	-			$	-			$	28,261
Corporate debt securities			-				24,900				-				24,900
Commercial paper			-				41,243				-				41,243
U.S. Treasury securities			-				118,556				-				118,556
U.S. Agency bonds			-				8,779				-				8,779
Asset-backed securities			-				17,875				-				17,875
Total cash equivalents and investments		$	28,261			$	211,353			$	-			$	239,614

Money market funds are classified as cash and cash equivalents in the Company’s balance sheets at March 31, 2023 and December 31, 2022.

8. Stockholders’ Equity

Under its amended and restated certificate of incorporation dated December 7, 2020, the Company has a total of 1,200,000,000 shares of capital stock authorized for issuance, consisting of 1,000,000,000 shares of common stock, par value of $0.0001 per share, and 200,000,000 shares of preferred stock, par value of $0.0001 per share.

9. Equity Incentive Plans and Stock-Based Compensation

2020 Equity Incentive Plan

In December 2020, the Company adopted the 2020 Equity Incentive Plan (2020 Plan), which replaced the 2018 Equity Incentive Plan (2018 Plan). The 2020 Plan allows the Company to issue options for shares of its common stock, restricted stock units (RSUs) and other award types, up to a total of 5,218,000 shares (Equity Pool), subject to appropriate adjustments for stock splits, combinations and other similar events for issuance pursuant to awards made under the 2020 Plan. As of March 31, 2023, 1,126,442 shares of common stock remained available for future grants under the 2020 Plan.

 

The options that are granted under the 2020 and 2018 Plans are exercisable at various dates as determined upon grant and terminate within 10 years of the date of grant, unless the optionee owns 10% or more of the common shares at which point the expiration period is 5 years, or upon the employee’s termination (whereupon the terminated employee has thirty days after termination to exercise vested options from the date of termination). The vesting period generally occurs over two to four years unless there is a specific performance vesting trigger at which time those shares will vest when the performance trigger is probable to occur. RSUs granted under the 2020 Plan vest over four years from the grant date and represent share awards that, upon vesting, will deliver to the holder shares of the Company’s common stock.

Stock option activity is as follows:

										Weighted-
										Average				Aggregate
						Weighted-				Remaining				Intrinsic
						Average				Contractual				Value
		Options				Exercise Price				Term (in years)				(in thousands)
Outstanding at December 31, 2022			9,107,467			$	10.81				7.8			$	11,521
Granted			2,769,060				6.70
Exercised			(15,884	)			1.09
Forfeited			(168,985	)			13.05
Outstanding at March 31, 2023			11,691,658			$	9.82				8.0			$	12,139
Exercisable at March 31, 2023			4,962,884			$	9.48				6.8			$	9,235

All exercisable options are vested and all outstanding options are vested or expected to vest. Total intrinsic value of options exercised during the three months ended March 31, 2023 and 2022 was $0.1 million and $0.8 million, respectively.