UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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
(Exact name of Registrant as specified in its Charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices including zip code)
Registrant’s telephone number, including area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
(The Nasdaq Global Select Market) |
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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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
The number of shares of Registrant’s Common Stock outstanding as of April 30, 2023 was
Table of Contents
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Page |
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Item 1. |
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3 |
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Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 |
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4 |
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Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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30 |
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Item 2. |
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69 |
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Item 3. |
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69 |
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Item 4. |
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69 |
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Item 5. |
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69 |
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Item 6. |
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2
PART I—FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (unaudited)
Chinook Therapeutics, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
(Unaudited)
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March 31, |
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December 31, |
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2023 |
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2022 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Marketable securities |
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Accounts receivable |
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Prepaid expenses and other current assets |
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Total current assets |
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Marketable securities |
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Property and equipment, net |
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Restricted cash |
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Operating lease right-of-use assets |
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Investment in equity securities |
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Equity method investment |
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Intangible assets, net |
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In-process research & development |
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Goodwill |
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Other assets |
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Total assets |
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$ |
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$ |
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Liabilities and Stockholders’ Equity |
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Current liabilities: |
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Accounts payable |
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Accrued and other current liabilities |
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Operating lease liabilities |
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Contingent value rights liability |
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Total current liabilities |
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Contingent value rights liability - non-current |
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Contingent consideration liability |
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Deferred tax liabilities |
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Operating lease liabilities, net of current maturities |
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Total liabilities |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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( |
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( |
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Accumulated other comprehensive loss |
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( |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
Chinook Therapeutics, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(In thousands, except per share amounts)
(Unaudited)
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Three Months Ended March 31, |
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2023 |
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2022 |
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Collaboration and license revenue |
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$ |
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$ |
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Operating expenses: |
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Research and development |
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General and administrative |
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Change in fair value of contingent consideration and |
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Amortization of intangible assets |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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Investment and other income (expense), net |
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( |
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Loss before income taxes and equity method investment loss |
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( |
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( |
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Equity method investment loss |
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( |
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( |
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Net loss |
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$ |
( |
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$ |
( |
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Net loss per share attributable to common stockholders, basic and |
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$ |
( |
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$ |
( |
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Weighted-average shares used in computing net loss per share |
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Other comprehensive income (loss): |
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Foreign currency translation adjustments, net of tax of $ |
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Unrealized gain (loss) on marketable debt securities, net of tax of $ |
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( |
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Total other comprehensive income (loss) |
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( |
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Comprehensive loss |
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$ |
( |
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$ |
( |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
Chinook Therapeutics, Inc.
Condensed Consolidated Statements of Stockholders’ Equity
(In thousands)
(Unaudited)
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Common Stock |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Deficit |
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Income (Loss) |
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Equity |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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Issuance of common stock upon exercise of stock options and |
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— |
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— |
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— |
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Issuance of common stock under the at-the-market sales agreement, |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Balance at March 31, 2023 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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Common Stock |
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Additional |
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Accumulated |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Deficit |
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Income (Loss) |
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Equity |
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Balance at December 31, 2021 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Issuance of common stock upon exercise of stock options and |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Balance at March 31, 2022 |
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$ |
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$ |
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$ |
( |
) |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5
Chinook Therapeutics, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
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Three Months Ended March 31, |
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2023 |
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2022 |
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Cash Flows from Operating Activities |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization expense |
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Loss on disposal of property and equipment |
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— |
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Amortization of intangible assets |
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Non-cash operating lease expense |
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Stock-based compensation expense |
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Change in fair value of contingent consideration and contingent value rights liabilities |
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( |
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Accretion of discounts and amortization of premiums on marketable securities |
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( |
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Equity method investment loss |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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( |
) |
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Prepaid expenses and other assets |
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( |
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Accounts payable |
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Accrued and other liabilities |
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( |
) |
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( |
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Operating lease liabilities |
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( |
) |
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( |
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Net cash used in operating activities |
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( |
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( |
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Cash Flows from Investing Activities |
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Purchases of marketable securities |
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( |
) |
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( |
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Proceeds from marketable securities |
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Purchases of property and equipment |
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( |
) |
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( |
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Net cash provided by (used in) investing activities |
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( |
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Cash Flows from Financing Activities |
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Proceeds from exercise of stock options and warrants |
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Proceeds from at-the-market-sales agreement, net of issuance costs |
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— |
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Previously incurred issuance costs related to an underwritten public |
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— |
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( |
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Net cash provided by financing activities |
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Effect of exchange rate changes on cash, cash equivalents and restricted cash |
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Net increase (decrease) in cash, cash equivalents and restricted cash |
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( |
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Cash, cash equivalents and restricted cash at beginning of period |
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Cash, cash equivalents and restricted cash at end of period |
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$ |
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$ |
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Reconciliation of Cash, Cash Equivalents and Restricted Cash |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Total cash, cash equivalents and restricted cash |
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$ |
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$ |
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Supplemental Cash Flow Information |
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Cash paid for amounts included in the measurement of lease liabilities |
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$ |
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$ |
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Supplemental Disclosure of Non-Cash Investing and Financing Activities |
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Purchases of property and equipment included in accounts payable and in accrued |
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$ |
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$ |
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Receivable from option exercises |
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$ |
— |
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$ |
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The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6
Chinook Therapeutics, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Description of Business
Chinook Therapeutics, Inc. (the “Company”, “Chinook”, “we”, “our”, or “us”) is a clinical-stage biopharmaceutical company focused on discovering, developing and commercializing precision medicines for kidney diseases. Our lead clinical program is atrasentan, a potent and selective endothelin A receptor antagonist. We are currently conducting the phase 3 ALIGN trial of atrasentan for IgA nephropathy (“IgAN”) and the phase 2 AFFINITY basket trial for proteinuric glomerular diseases. Our second product candidate, BION-1301, is an anti-APRIL monoclonal antibody also in phase 2 development for patients with IgAN. Our third product candidate is CHK-336, an oral small molecule lactate dehydrogenase inhibitor for the treatment of primary and idiopathic hyperoxaluria that is currently in phase 1 development. In addition, we are building our precision medicine pipeline through research and discovery programs for other rare, severe chronic kidney diseases. We were incorporated in Delaware and are headquartered in Seattle, Washington.
2. Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and follow the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted, and accordingly the unaudited condensed consolidated financial statements do not include all of the information and notes required by U.S. GAAP for complete financial statements. These financial statements have been prepared on the same basis as our annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for a fair presentation of financial information. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any other interim period or for any other future year.
The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2022 included in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 27, 2023.
The unaudited condensed consolidated financial statements include the accounts of Chinook Therapeutics, Inc. and our wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated.
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 and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of expenses during the reporting periods. Such estimates include the valuation of intangible assets, acquired property and equipment, investments, contingent value rights (“CVR”) liability, contingent consideration liability, lease right-of-use assets, and lease obligations, as well as accruals for research and development activities, stock-based compensation expense, and income taxes. Actual results could differ from those estimates.
Significant Accounting Policies
There have been no significant changes to the accounting policies during the three months ended March 31, 2023, as compared to the significant accounting policies described in Note 2 of the “Notes to Consolidated Financial Statements” in our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022.
3. Reverse Merger and Contingent Value Rights
Chinook Therapeutics U.S., Inc. (“Private Chinook”) completed a merger with Aduro Biotech, Inc. (“Aduro”) on October 5, 2020 (the “Merger”). Refer to Note 1 “Description of Business” in our Annual Report on Form 10-K for the year ended December 31, 2022 for more information. At the effective time of the Merger, we also entered into an agreement pursuant to which Aduro’s common stockholders of record as of the close of business on October 2, 2020 received
7
4. Cash, Cash Equivalents and Marketable Securities
Cash, cash equivalents and marketable securities consisted of the following (in thousands):
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March 31, 2023 |
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Amortized |
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Unrealized |
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Unrealized |
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Estimated |
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Cash and cash equivalents: |
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Cash |
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$ |
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$ |
— |
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$ |
— |
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$ |
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Money market funds |
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— |
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— |
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Commercial paper |
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— |
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( |
) |
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U.S. government and agency securities |
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— |
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Total cash and cash equivalents |
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$ |
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$ |
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$ |
( |
) |
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$ |
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Marketable securities: |
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Commercial paper |
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$ |
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$ |
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$ |
( |
) |
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$ |
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U.S. government and agency securities |
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( |
) |
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Corporate debt securities |
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— |
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( |
) |
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Total marketable securities |
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$ |
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$ |
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$ |
( |
) |
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$ |
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|||
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December 31, 2022 |
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|||||||||||||
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Amortized |
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Unrealized |
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Unrealized |
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Estimated |
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||||
Cash and cash equivalents: |
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||||
Cash |
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$ |
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$ |
— |
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$ |
— |
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$ |
|
||
Money market funds |
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— |
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— |
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||
Commercial paper |
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— |
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( |
) |
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||
U.S. government and agency securities |
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— |
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|||
Total cash and cash equivalents |
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$ |
|
|
$ |
|
|
$ |
( |
) |
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$ |
|
|||
Marketable securities: |
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Commercial paper |
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$ |
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$ |
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