Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2021 | Oct. 31, 2021 | |
Document information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2021 | |
Entity File Number | 001-38492 | |
Entity Registrant Name | Kiniksa Pharmaceuticals, Ltd. | |
Entity Incorporation, State or Country Code | D0 | |
Entity Tax Identification Number | 98-1327726 | |
Entity Address, Address Line One | Clarendon House | |
Entity Address, Address Line Two | 2 Church Street | |
Entity Address, City or Town | Hamilton | |
Entity Address, Country | BM | |
Entity Address, Postal Zip Code | HM11 | |
City Area Code | 808 | |
Local Phone Number | 451-3453 | |
Title of 12(b) Security | Class A Common Shares | |
Trading Symbol | KNSA | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Entity Central Index Key | 0001730430 | |
Amendment Flag | false | |
Common Shares | ||
Document information | ||
Entity Common Stock, Shares Outstanding | 68,888,435 | |
Class A common shares | ||
Document information | ||
Entity Common Stock, Shares Outstanding | 33,887,757 | |
Class B common shares | ||
Document information | ||
Entity Common Stock, Shares Outstanding | 1,813,457 | |
Class A1 common shares | ||
Document information | ||
Entity Common Stock, Shares Outstanding | 17,129,603 | |
Class B1 common shares | ||
Document information | ||
Entity Common Stock, Shares Outstanding | 16,057,618 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 190,183 | $ 114,038 |
Short-term investments | 10,000 | 209,444 |
Restricted cash | 0 | 210 |
Accounts receivable, net | 3,224 | |
Inventory | 5,606 | 0 |
Prepaid expenses and other current assets | 8,499 | 9,557 |
Total current assets | 217,512 | 333,249 |
Property and equipment, net | 3,168 | 4,051 |
Operating lease right-of-use assets | 6,128 | 6,566 |
Other long-term assets | 6,551 | 5,588 |
Intangible asset, net | 19,500 | 0 |
Deferred tax assets | 10 | |
Total assets | 252,859 | 349,464 |
Current liabilities: | ||
Accounts payable | 1,649 | 503 |
Accrued expenses | 28,528 | 29,199 |
Operating lease liabilities | 3,246 | 2,107 |
Other current liabilities | 1,004 | 37 |
Total current liabilities | 34,427 | 31,846 |
Non-current liabilities: | ||
Non-current operating lease liabilities | 3,499 | 4,878 |
Other long-term liabilities | 885 | 805 |
Total liabilities | 38,811 | 37,529 |
Commitments and contingencies (Note 13) | ||
Shareholders' equity: | ||
Additional paid-in capital | 853,139 | 829,424 |
Accumulated other comprehensive income (loss) | (45) | (34) |
Accumulated deficit | (639,064) | (517,473) |
Total shareholders' equity | 214,048 | 311,935 |
Total liabilities and shareholders' equity | 252,859 | 349,464 |
Class A common shares | ||
Shareholders' equity: | ||
Common stock value | 8 | 8 |
Class B common shares | ||
Shareholders' equity: | ||
Common stock value | 1 | 1 |
Class A1 common shares | ||
Shareholders' equity: | ||
Common stock value | 5 | 5 |
Class B1 common shares | ||
Shareholders' equity: | ||
Common stock value | $ 4 | $ 4 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 |
Class A common shares | ||
Common stock, par value (in dollars per share) | $ 0.000273235 | $ 0.000273235 |
Common stock, shares issued (in shares) | 32,992,834 | 31,777,420 |
Common stock, shares outstanding (in shares) | 32,992,834 | 31,777,420 |
Class B common shares | ||
Common stock, par value (in dollars per share) | $ 0.000273235 | $ 0.000273235 |
Common stock, shares issued (in shares) | 1,813,457 | 2,355,458 |
Common stock, shares outstanding (in shares) | 1,813,457 | 2,355,458 |
Class A1 common shares | ||
Common stock, par value (in dollars per share) | $ 0.000273235 | $ 0.000273235 |
Common stock, shares issued (in shares) | 18,024,526 | 18,024,526 |
Common stock, shares outstanding (in shares) | 18,024,526 | 18,024,526 |
Class B1 common shares | ||
Common stock, par value (in dollars per share) | $ 0.000273235 | $ 0.000273235 |
Common stock, shares issued (in shares) | 16,057,618 | 16,057,618 |
Common stock, shares outstanding (in shares) | 16,057,618 | 16,057,618 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenue: | ||||
Product revenue, net | $ 12,095 | $ 19,799 | ||
Revenue, Product and Service [Extensible List] | us-gaap:ProductMember | us-gaap:ProductMember | ||
Costs and operating expenses: | ||||
Cost of goods sold | 2,767 | $ 5,233 | ||
Cost, Product and Service [Extensible List] | us-gaap:ProductMember | us-gaap:ProductMember | ||
Research and development | 19,236 | $ 31,419 | $ 71,864 | $ 74,644 |
Selling, general and administrative | 20,759 | 11,799 | 63,207 | 29,821 |
Total operating expenses | 42,762 | 43,218 | 140,304 | 104,465 |
Loss from operations | (30,667) | (43,218) | (120,505) | (104,465) |
Interest income (expense) | 5 | 49 | 20 | 1,104 |
Loss before benefit (provision) for income taxes | (30,662) | (43,169) | (120,485) | (103,361) |
Provision for income taxes | 118 | (667) | (1,106) | (4,363) |
Net loss | $ (30,544) | $ (43,836) | $ (121,591) | $ (107,724) |
Net loss per share attributable to common shareholders-basic and diluted | $ (0.44) | $ (0.66) | $ (1.78) | $ (1.80) |
Weighted average common shares outstanding-basic and diluted | 68,662,673 | 65,958,513 | 68,444,061 | 59,754,495 |
Comprehensive loss: | ||||
Net loss | $ (30,544) | $ (43,836) | $ (121,591) | $ (107,724) |
Other comprehensive income (loss): | ||||
Unrealized loss on short-term investments and currency translation adjustments, net of tax | (72) | (3) | (11) | (27) |
Total other comprehensive loss | (72) | (3) | (11) | (27) |
Total comprehensive loss | $ (30,616) | $ (43,839) | $ (121,602) | $ (107,751) |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common SharesFollow-On Offering | Common SharesPrivate Placement | Common Shares | Additional Paid-In CapitalFollow-On Offering | Additional Paid-In CapitalPrivate Placement | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Follow-On Offering | Private Placement | Total |
Balance at the beginning of the period at Dec. 31, 2019 | $ 15 | $ 581,467 | $ 33 | $ (356,092) | $ 225,423 | ||||||
Balance at the beginning of the period (in shares) at Dec. 31, 2019 | 54,937,628 | ||||||||||
Changes in equity | |||||||||||
Exercise of options | 2,414 | 2,414 | |||||||||
Exercise of options (in shares) | 643,867 | ||||||||||
Share-based compensation expense | 4,209 | 4,209 | |||||||||
Unrealized loss on short-term investments and currency translation adjustments, net of tax | 207 | 207 | |||||||||
Net loss | (26,419) | (26,419) | |||||||||
Balance at the end of the period at Mar. 31, 2020 | $ 15 | 588,090 | 240 | (382,511) | 205,834 | ||||||
Balance at the end of the period (in shares) at Mar. 31, 2020 | 55,581,495 | ||||||||||
Balance at the beginning of the period at Dec. 31, 2019 | $ 15 | 581,467 | 33 | (356,092) | 225,423 | ||||||
Balance at the beginning of the period (in shares) at Dec. 31, 2019 | 54,937,628 | ||||||||||
Changes in equity | |||||||||||
Unrealized loss on short-term investments and currency translation adjustments, net of tax | (27) | ||||||||||
Net loss | (107,724) | ||||||||||
Balance at the end of the period at Sep. 30, 2020 | $ 18 | 822,301 | 6 | (463,816) | 358,509 | ||||||
Balance at the end of the period (in shares) at Sep. 30, 2020 | 67,917,250 | ||||||||||
Balance at the beginning of the period at Mar. 31, 2020 | $ 15 | 588,090 | 240 | (382,511) | 205,834 | ||||||
Balance at the beginning of the period (in shares) at Mar. 31, 2020 | 55,581,495 | ||||||||||
Changes in equity | |||||||||||
Issuance of common shares upon completion of offering, net of placement agent fees | $ 1 | $ 46,900 | $ 27,594 | $ 46,901 | $ 27,594 | ||||||
Issuance of common shares upon completion of offering, net of placement agent fees (in shares) | 2,760,000 | 1,600,000 | |||||||||
Common shares issued or to be issued in connection with the acquisition of all issued and outstanding equity securities of Primatope Therapeutics, Inc. (in shares) | 59,469 | ||||||||||
Exercise of options | 2,936 | 2,936 | |||||||||
Exercise of options (in shares) | 485,592 | ||||||||||
Share-based compensation expense | 4,851 | 4,851 | |||||||||
Unrealized loss on short-term investments and currency translation adjustments, net of tax | (231) | (231) | |||||||||
Net loss | (37,469) | (37,469) | |||||||||
Balance at the end of the period at Jun. 30, 2020 | $ 16 | 670,371 | 9 | (419,980) | 250,416 | ||||||
Balance at the end of the period (in shares) at Jun. 30, 2020 | 60,486,556 | ||||||||||
Changes in equity | |||||||||||
Issuance of common shares upon completion of offering, net of placement agent fees | $ 2 | $ 117,691 | $ 28,350 | $ 117,693 | $ 28,350 | ||||||
Issuance of common shares upon completion of offering, net of placement agent fees (in shares) | 5,952,381 | 1,428,572 | |||||||||
Common shares issued or to be issued in connection with a milestone payment due to Primatope Therapeutics, Inc. (in shares) | 16,634 | ||||||||||
Exercise of options | 331 | 331 | |||||||||
Exercise of options (in shares) | 33,107 | ||||||||||
Share-based compensation expense | 5,558 | 5,558 | |||||||||
Unrealized loss on short-term investments and currency translation adjustments, net of tax | (3) | (3) | |||||||||
Net loss | (43,836) | (43,836) | |||||||||
Balance at the end of the period at Sep. 30, 2020 | $ 18 | 822,301 | 6 | (463,816) | 358,509 | ||||||
Balance at the end of the period (in shares) at Sep. 30, 2020 | 67,917,250 | ||||||||||
Balance at the beginning of the period at Dec. 31, 2020 | $ 18 | 829,424 | (34) | (517,473) | 311,935 | ||||||
Balance at the beginning of the period (in shares) at Dec. 31, 2020 | 68,215,022 | ||||||||||
Changes in equity | |||||||||||
Issuance of Class A shares under incentive award plans and employee share purchase plan | 1,106 | 1,106 | |||||||||
Issuance of Class A shares under incentive award plans and employee share purchase plan (in shares) | 115,012 | ||||||||||
Share-based compensation expense | 7,126 | 7,126 | |||||||||
Unrealized loss on short-term investments and currency translation adjustments, net of tax | 13 | 13 | |||||||||
Net loss | (49,484) | (49,484) | |||||||||
Balance at the end of the period at Mar. 31, 2021 | $ 18 | 837,656 | (21) | (566,957) | 270,696 | ||||||
Balance at the end of the period (in shares) at Mar. 31, 2021 | 68,330,034 | ||||||||||
Balance at the beginning of the period at Dec. 31, 2020 | $ 18 | 829,424 | (34) | (517,473) | 311,935 | ||||||
Balance at the beginning of the period (in shares) at Dec. 31, 2020 | 68,215,022 | ||||||||||
Changes in equity | |||||||||||
Unrealized loss on short-term investments and currency translation adjustments, net of tax | (11) | ||||||||||
Net loss | (121,591) | ||||||||||
Balance at the end of the period at Sep. 30, 2021 | $ 18 | 853,139 | (45) | (639,064) | 214,048 | ||||||
Balance at the end of the period (in shares) at Sep. 30, 2021 | 68,888,435 | ||||||||||
Balance at the beginning of the period at Mar. 31, 2021 | $ 18 | 837,656 | (21) | (566,957) | 270,696 | ||||||
Balance at the beginning of the period (in shares) at Mar. 31, 2021 | 68,330,034 | ||||||||||
Changes in equity | |||||||||||
Issuance of Class A shares under incentive award plans and employee share purchase plan | 887 | 887 | |||||||||
Issuance of Class A shares under incentive award plans and employee share purchase plan (in shares) | 134,715 | ||||||||||
Share-based compensation expense | 5,717 | 5,717 | |||||||||
Unrealized loss on short-term investments and currency translation adjustments, net of tax | 48 | 48 | |||||||||
Net loss | (41,563) | (41,563) | |||||||||
Balance at the end of the period at Jun. 30, 2021 | $ 18 | 844,260 | 27 | (608,520) | 235,785 | ||||||
Balance at the end of the period (in shares) at Jun. 30, 2021 | 68,464,749 | ||||||||||
Changes in equity | |||||||||||
Issuance of Class A shares under incentive award plans and employee share purchase plan | 2,680 | 2,680 | |||||||||
Issuance of Class A shares under incentive award plans and employee share purchase plan (in shares) | 423,686 | ||||||||||
Share-based compensation expense | 6,199 | 6,199 | |||||||||
Unrealized loss on short-term investments and currency translation adjustments, net of tax | (72) | (72) | |||||||||
Net loss | (30,544) | (30,544) | |||||||||
Balance at the end of the period at Sep. 30, 2021 | $ 18 | $ 853,139 | $ (45) | $ (639,064) | $ 214,048 | ||||||
Balance at the end of the period (in shares) at Sep. 30, 2021 | 68,888,435 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Cash flows from operating activities: | ||
Net loss | $ (121,591) | $ (107,724) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,687 | 1,838 |
Share-based compensation expense | 19,042 | 14,618 |
Non-cash lease expense | 1,895 | 761 |
Amortization of premiums and accretion of discounts on short-term investments | 617 | (239) |
Deferred income taxes | 4,321 | |
Changes in operating assets and liabilities: | ||
Prepaid expenses and other assets | 1,034 | (5,768) |
Accounts receivable, net | (3,224) | |
Inventory | (5,606) | |
Other long-term assets | (1,059) | |
Accounts payable | 1,116 | (1,704) |
Accrued expenses and other liabilities | 295 | (969) |
Operating lease liabilities | (1,700) | (1,105) |
Other long-term liabilities | 80 | 630 |
Net cash used in operating activities | (107,414) | (95,341) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (164) | (228) |
Purchases of short-term investments | (97,460) | (344,159) |
Proceeds from the maturities of short-term investments | 296,300 | 252,300 |
Intangible asset acquired | (20,000) | |
Net cash provided by investing activities | 178,676 | (92,087) |
Cash flows from financing activities: | ||
Proceeds from issuance of common shares, net of underwriting discounts and commissions inclusive of the over-allotment option exercise | 165,725 | |
Proceeds from issuance of common shares from private placement, net of placement agent fees | 55,944 | |
Payments of offering costs | (976) | |
Proceeds from issuance of Class A common shares under incentive award plans and employee share purchase plans | 4,673 | 5,681 |
Net cash provided by financing activities | 4,673 | 226,374 |
Net increase in cash, cash equivalents and restricted cash | 75,935 | 38,946 |
Cash, cash equivalents and restricted cash at beginning of period | 114,248 | 47,138 |
Cash, cash equivalents and restricted cash at end of period | 190,183 | 86,084 |
Supplemental information: | ||
Cash paid for income taxes | 859 | 482 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Deferred offering costs included in accrued expenses and accounts payable | 154 | |
Property and equipment included in accrued expenses and accounts payable | $ 8 | |
Right-of-use asset obtained in exchange for operating lease obligation | $ 1,462 |
Nature of the Business and Basi
Nature of the Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2021 | |
Nature of the Business and Basis of Presentation | |
Nature of the Business and Basis of Presentation | 1. Nature of the Business and Basis of Presentation Kiniksa Pharmaceuticals, Ltd. (the “Company”) is a biopharmaceutical company focused on discovering, acquiring, developing and commercializing therapeutic medicines for patients suffering from debilitating diseases with significant unmet medical need. The Company was incorporated in July 2015 as a Bermuda exempted company. The Company’s portfolio of assets is based on strong biologic rationale or validated mechanisms, target underserved conditions and offer the potential for differentiation. The Company is subject to risks and uncertainties common to early, commercial-stage companies in the biopharmaceutical industry and global health, societal, economic and market conditions, including from the impact from the coronavirus disease 2019 (“COVID-19”) pandemic. While the U.S. Food and Drug Administration (the “FDA”), approved the supplemental Biologics License Application (“sBLA”) for ARCALYST ® Risk and Uncertainties Related to COVID-19 In addition to risks and uncertainties common to early, commercial-stage companies in the Company’s industry, the Company is subject to global societal, healthcare, economic and market conditions, including from the impact of the COVID-19 pandemic and measures taken in response to the pandemic, which continue to evolve in light of the emergence of new variants of the virus. In December 2019, COVID-19 surfaced in Wuhan, China. The virus spread globally and was declared a pandemic by the World Health Organization. The impact of this pandemic has been and will likely continue to be extensive on many aspects of society, which has resulted in and will likely continue to result in significant disruptions to healthcare systems, the global economy, as well as businesses and capital markets around the world. In an effort to halt the spread of the COVID-19 pandemic, federal and state governments in the United States and the governments of other countries around the globe have implemented various measures in response to the pandemic, including significant restrictions on businesses and travel as well as social-distancing measures. And while certain of such measures have since been loosened or repealed following the widespread distribution of COVID-19 vaccines and the reduction in global cases, certain regions remain significantly vulnerable to the pandemic. In addition, the loosening of such restrictions has been and may in the future to be subject to abrupt reversal in the presence of new variants of COVID-19, which may lengthen or exacerbate the pandemic’s effect on the Company’s business, financial condition and results of operations. The COVID-19 pandemic, and measures undertaken in response to the pandemic, may cause significant disruptions in the Company’s business or operations as well as in the business and operations of the Company’s CMOs, CROs and other third parties with whom the Company conducts business or otherwise engages now or in the future, including as a result of staffing shortages or reprioritizations, production slowdowns or stoppages, and disruptions in delivery systems. The COVID-19 pandemic may also adversely impact the Company’s preclinical studies and clinical trials, which could impede, delay, limit or prevent the clinical development of the Company’s product candidates, lead to the delay or denial of regulatory approval of its product candidates or delay or adversely impact the Company’s commercialization activities, which would materially adversely affect the Company’s business and operations, including its ability to generate revenue. Moreover, the COVID-19 pandemic is still impacting the global economy, including the U.S. economy, with the potential for negative economic effects to be severe and prolonged. In addition, the pandemic has introduced volatility in the trading prices of biopharmaceutical companies, which could adversely impact the Company’s ability to raise additional capital when needed or on acceptable terms, if at all. While the Company continues its process of re-opening its corporate offices, it is nonetheless conscious of additional risks and uncertainties posed by the pandemic as it evolves, including the emergence of new variants of the virus, and continuously looks to develop contingencies and mitigation strategies to potentially minimize such risks and uncertainties on its business and operations. However, there can be no assurance that any identified contingencies and mitigation strategies will be effective. If such contingencies and mitigation strategies prove ineffective, the Company’s business and operations could be adversely affected in a number of ways, including the need to revise its re-opening strategy. The extent of the impact on the Company’s business and operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate spread of the disease, duration of the pandemic, emergence of new variants of the virus, evolving business and travel restrictions and social distancing measures, and the effectiveness of these and other actions taken to contain, prevent and treat the disease. Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly owned subsidiaries, Kiniksa Pharmaceuticals Corp. (“Kiniksa US”), Primatope Therapeutics, Inc. (“Primatope”) and Kiniksa Pharmaceuticals (UK), Ltd. (“Kiniksa UK”) as well as the subsidiaries of Kiniksa UK, Kiniksa Pharmaceuticals (Germany) GmbH (“Kiniksa Germany”), Kiniksa Pharmaceuticals (France) SARL (“Kiniksa France”), and Kiniksa Pharmaceuticals GmbH (“Kiniksa Switzerland”), after elimination of all significant intercompany accounts and transactions. Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the recognition of revenue, the capitalization of inventory, the accrual for research and development expenses and the valuation of share-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates. Reporting and Functional Currency The financial results of the Company’s global activities are reported in U.S. dollars (“USD”) and its foreign subsidiaries either utilize USD or their respective local currency to be their functional currency. Transactions in other currencies are recorded in the functional currency at the rate of exchange prevailing when the transactions occur. Monetary assets and liabilities denominated in other currencies are re-measured into the functional currency at the rate of exchange in effect at the balance sheet date. Exchange rate gains and losses arising from re-measurement of foreign currency-denominated monetary assets and liabilities are included in income or losses in the period in which they occur. For the Company’s foreign subsidiaries where the local currency is the functional currency, assets and liabilities denominated in local currencies are translated into USD at end-of-period exchange rates and the resulting translation adjustments are reported as a component of accumulated other comprehensive gain (loss) within shareholders' equity (deficit). Unaudited Interim Consolidated Financial Information The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information. The accompanying unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. The accompanying year-end consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by GAAP. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2021 and the results of its operations for the three and nine months ended September 30, 2021 and 2020, the changes in its shareholders’ equity for the nine months ended September 30, 2021 and 2020 and its cash flows for the nine months ended September 30, 2021 and 2020. The results for the three and nine months ended September 30, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods or any future year or period. Liquidity In accordance with Accounting Standards Update (“ASU”) No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40), the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the consolidated financial statements are issued. As of September 30, 2021, the Company had an accumulated deficit of $639,064. During the nine months ended September 30, 2021, the Company incurred a net loss of $121,591, used $107,414 cash in operating activities, and paid $20,000 upon the achievement of specified regulatory milestone (see Note 11). The Company expects to continue to generate operating losses for the foreseeable future. As of September 30, 2021, the Company had cash, cash equivalents and short-term investments of $200,183. Based on its current operating plan, the Company expects that its cash, cash equivalents and short-term investments will be sufficient to fund its operations and capital expenditure requirements for at least twelve months from the issuance date of these consolidated financial statements. The future viability of the Company beyond that point is dependent on its ability to raise additional capital to finance its operations. The Company will need to finance its operations through public or private securities offerings, debt financings, government funding or grants, or other sources, which may include licensing, collaborations or other strategic transactions or arrangements. Although the Company has been successful in raising capital in the past, there is no assurance that it will be successful in obtaining such additional financing on terms acceptable to the Company, if at all. If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate some or all of its commercialization efforts, research and development programs for product candidates or product portfolio expansion, which could adversely affect its business prospects, or the Company may be unable to continue operations. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Cash and Cash Equivalents The Company classifies deposits in banks, money market funds and cash invested temporarily in various instruments with maturities of three months or less at the time of purchase as cash and cash equivalents. At September 30, 2021 and December 31, 2020, cash and cash equivalents consisted principally of U.S. Treasury notes, amounts held in money market accounts and cash on deposit at commercial banks. Short-Term Investments The Company generally invests its excess cash in money market funds and short-term investments in U.S. Treasury notes. Such investments which are included in short-term investments on the Company’s consolidated balance sheets are considered available-for-sale debt securities and are reported at fair value with unrealized gains and losses included as a component of shareholders’ equity. Realized gains and losses, if any, on short-term investments are included in interest income. If the estimated fair value of a debt security is below its carrying value, the Company evaluates whether it is more likely than not that it will sell the security before its anticipated recovery in market value and whether evidence indicating that the cost of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. The Company also evaluates whether or not it intends to sell the investment. If the impairment is considered to be other-than-temporary, the security is written down to its estimated fair value. In addition, the Company considers whether credit losses exist for any securities. A credit loss exists if the present value of cash flows expected to be collected is less than the amortized cost basis of the security. Other-than-temporary declines in estimated fair value and credit losses are included in investment and other income, net. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and short-term investments. At September 30, 2021 and December 31, 2020, substantially all of the Company’s cash, cash equivalents and short-term investments were held at two financial institutions. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash, cash equivalents and short-term investments and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company is also subject to credit risk from the accounts receivable related to product revenue. Trade accounts receivable are recorded net of allowances for cash discounts associated with prompt payments from customers. All trade accounts receivable arise from product revenue in the United States due from the Company’s third party logistics provider. There were no material write-offs charged against the allowance for the nine months ended September 30, 2021. Restricted Cash In conjunction with the Company’s lease agreement entered into in March 2018, the Company maintained a letter of credit for the benefit of the landlord. The lease expired in August 2021 and the restricted cash was released to operating cash in September 2021. As of September 30, 2021, there was no balance in restricted cash. As of December 31, 2020, the underlying cash balances was $210 which secured the letter of credit and was classified as current in its consolidated balance sheet. Fair Value Measurements Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1—Quoted prices in active markets for identical assets or liabilities. ● Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The Company’s restricted cash, which is held in a money market fund, is carried at fair value, determined based on Level 1 inputs in the fair value hierarchy described above (see Note 3). The Company’s cash equivalents and short-term investments, consisting of money market accounts and U.S. Treasury notes, are carried at fair value, determined based on Level 1 and 2 inputs in the fair value hierarchy described above (see Note 3). The carrying values of the Company’s prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities. Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a “lease” as defined by ASU No. 2016-02, Leases (Topic 842) Most leases with a term greater than one year are recognized on the balance sheet as ROU assets with corresponding lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize leases with a term of one year or less on its balance sheet. Operating leases, ROU assets and their corresponding lease liabilities are recorded based on the present value of lease payments over the expected remaining lease term. However, certain adjustments to the ROU assets may be required for items such as incentives received. The interest rate implicit in lease arrangements is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In accordance with the guidance in ASC 842, components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.); then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. The Company has elected to account for the lease and non-lease components of each of its operating leases as a single lease component and allocate all of the arrangement consideration to the lease component only. The lease component results in an operating ROU asset being recorded on the balance sheet and amortized on a straight-line basis as lease expense. Inventory Inventories are stated at the lower of cost or estimated net realizable value with cost based on the first-in first-out method. Inventory that can be used in either the production of clinical or commercial products is expensed as research and development costs when identified and labeled for use in clinical trials as the products are required to be re-labeled for alternative uses. Prior to the regulatory approval of its drug candidates, the Company incurs expenses for the manufacture of product candidate supplies to support clinical development that could potentially be available to support the commercial launch of those therapeutics. Until the date at which regulatory approval has been received or is otherwise considered probable, the Company records all such costs as research and development expenses. The Company performs an assessment of the recoverability of capitalized inventories during each reporting period and writes down any excess and obsolete inventory to its net realizable value in the period in which the impairment is first identified. Such impairment charges, should they occur, are recorded as a component of cost of sales in the Company’s consolidated statements of operations and comprehensive loss. The determination of whether inventory costs will be realizable requires the use of estimates by management. If actual market conditions are less favorable than projected by management, additional write-downs of inventory may be required. The vials that will ultimately be distributed free of charge under our patient assistance program are recognized as selling expense when they are labeled as free goods. Revenue Recognition ASC 606 outlines a five-step process for recognizing revenue from contracts with customers: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the separate performance obligations in the contract, and (v) recognize revenue associated with the performance obligations as they are satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606, the Company determines the performance obligations that are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to each respective performance obligation when the performance obligation is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon delivery of the product to the customer. ASC 606 requires entities to record a contract asset when a performance obligation has been satisfied or partially satisfied, but the amount of consideration has not yet been received because the receipt of the consideration is conditioned on something other than the passage of time. ASC 606 also requires an entity to present a revenue contract as a contract liability in instances when a customer pays consideration, or an entity has a right to an amount of consideration that is unconditional (e.g. receivable), before the entity transfers a good or service to the customer. The Company did not have any contract assets or liabilities as of September 30, 2021 and December 31, 2020. Product Revenue, Net Following the FDA approval of ARCALYST on March 18, 2021, the Company began generating product revenue from sales of ARCALYST in April 2021. ARCALYST is sold through a third party logistics provider that distributes primarily through a network of authorized specialty pharmacies and specialty distributors (“customer”), which deliver the medication to patients by mail. The Company’s payment terms are between 30 to 35 days. Net revenue from product sales is recognized at the transaction price when the specialty pharmacy or specialty distributors obtains control of the Company’s products, which occurs at a point in time, typically upon shipment of the product from the third party logistics provider. The Company’s net revenues represent total revenues adjusted for discounts and allowances, including estimated cash discounts, chargebacks, rebates, returns, copay assistance, and specialty pharmacy and distributor fees. These adjustments represent variable consideration under ASC 606 and are estimated using the expected value method and are recorded when revenue is recognized on the sale of the product. These adjustments are established by management as its best estimate based on available information and will be adjusted to reflect known changes in the factors that impact such allowances. Adjustments for variable consideration are determined based on the contractual terms with customers, historical trends, communications with customers and the levels of inventory remaining in the distribution channel, as well as expectations about the market for the product and anticipated introduction of competitive products. Discounts and Allowances Revenue from product sales are recorded at the transaction price, which includes estimates for discounts and allowances and includes cash discounts, chargebacks, rebates, returns, copay assistance, and specialty pharmacy and distributor fees. These reserves are classified as reductions of accounts receivable (if the amount is payable to the Customer and right of offset exists) or a current liability (if the right of offset does not exist, the amount is payable to a third party, or is related to a future return). These allowances are established by management as its best estimate based on historical experience and data points available and are adjusted to reflect known changes in the factors that impact such reserves. Allowances for customer credits, chargebacks, rebates, data fees for services, returns, and discounts are established based on contractual terms with customers and analyses of historical usage of these items. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. The nature of the allowances and accruals requiring estimates, and the specific considerations the Company uses in estimating these amounts are as follows: Government Chargebacks and Rebates Government and other rebates and chargebacks include amounts payable to payers and healthcare providers under various programs and by payer and individual payer plans. Rebates and chargebacks are based on contractual arrangements or statutory requirements which may vary by product, payer and individual payer plans. For qualified programs that can purchase products through wholesalers or other distributors at a lower contractual price, the wholesalers or distributors charge back to the Company the difference between their acquisition cost and the lower contractual price. Rebates and chargebacks are estimated primarily based on product sales, and expected payer mix and discount rates, which require significant estimates and judgment. Additionally, in developing the estimates the Company considers: historical and estimated payer mix; statutory discount requirements and contractual terms; historical claims experience and processing time lags; estimated patient population; known market events or trends; market research; channel inventory data obtained from customers; and other pertinent internal or external information. The Company assesses and updates the estimates every quarter to reflect actual claims and other current information. Government and other chargebacks are recognized as reduction of revenue upon the sale to the Customers. These items are payable to customers and other rebates that are payable to other third party payers and healthcare providers are classified as accrued expense liabilities. Cash Discounts The Company estimates cash discounts based on contractual terms and expectations regarding future customer payment patterns. Specialty Pharmacy & Distributor Fees Under the inventory management agreements with specialty pharmacies and distributors, the Company pays a fee primarily for compliance with certain contractually determined covenants such as the maintenance of agreed upon inventory levels. These specialty pharmacy and distributor fees are based on a contractually determined fixed percentage of sales. The Company has contracted with certain specialty pharmacies to obtain transactional data related to the products in order to develop a better understanding of the selling channel as well as patient activity and utilization by the Medicaid program and other government agencies and managed care organizations. The Company pays a variable fee to the specialty pharmacies to provide the data. The Company also pay the specialty pharmacies a fee in exchange for providing distribution and inventory management services, including the provision of inventory management data to the Company. The Company estimates the fee for service accruals and allowances based on sales to each specialty pharmacy and the applicable contracted rate. Sales Returns Allowances are made for estimated sales returns by the customers and are recorded in the period the related revenue is recognized. The Company typically permit returns if the product is out of date or damaged during transition to the common carrier. The Company’s estimates of sales returns are based primarily on analysis of industry information reporting the return rates for similar products and contractual agreement terms. The Company also takes into consideration known or expected changes in the marketplace specific to ARCALYST. Shipping and Handling Shipping and handling activities are considered to be fulfillment activities and not considered to be a separate performance obligation. Other Incentives Other incentives include a co-pay assistance program for eligible patients with commercial insurance in the U.S. The co-pay assistance programs assist commercially insured patients who have and are intended to reduce each participating patient’s portion of the financial responsibility of the purchase price up to a specified dollar amount of assistance. Intangible Assets Upon FDA approval and commercial launch of ARCALYST in March 2021, the Company capitalized the $ inite-lived Impairment of long-lived assets The Company assesses the impairment of long-lived assets, including intangible assets and property and equipment, whenever events or changes in business circumstances indicate that the carrying amounts of the assets may not be fully recoverable. When such events occur, the Company determines whether there has been an impairment in value by comparing the asset’s carrying value with its fair value, as measured by the anticipated undiscounted net cash flows of the asset. If an impairment in value exists, the asset is written down to its estimated fair value. The Company has not recognized any impairment losses through September 30, 2021 and there have been no events that triggered an impairment analysis. Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred to discover, research and develop drug candidates, including personnel expenses, share-based compensation expense, allocated facility-related and depreciation expenses, third-party license fees and external costs of outside vendors engaged to conduct preclinical and clinical development activities and clinical trials as well as to manufacture clinical trial materials. Non-refundable prepayments determined to be used within one year for goods or services that will be used or rendered for future research and development activities are recorded as prepaid expenses. Non-refundable prepayments or minimum balance requirements associated with clinical trials determined to not be used within one year are classified as other long term assets. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered, or the services rendered. Milestone and other payments made to third parties with respect to in-process research and development, in accordance with the Company’s license, acquisition and other similar agreements are expensed when determined to be probable and estimable. Research Contract Costs and Accruals The Company has entered into various research and development-related contracts with companies both inside and outside of the United States. The related costs are recorded as research and development expenses as incurred. The Company records accruals for estimated ongoing research and development costs. When billing terms under these contracts do not coincide with the timing of when the work is performed, the Company is required to make estimates of outstanding obligations to those third parties as of the end of the reporting period. Any accrual estimates are based on a number of factors, including the Company’s knowledge of the progress towards completion of the research and development activities, invoicing to date under the contracts, communication from the research institution or other companies of any actual costs incurred during the period that have not yet been invoiced, and the costs included in the contracts. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ materially from the Company’s estimates. The Company’s historical accrual estimates have not been materially different from the actual costs. Share-Based Compensation The Company measures all share-based awards granted to employees and directors based on their fair value on the date of grant. The Company issues share-based awards with both service-based vesting conditions and performance- based vesting conditions. The Company recognizes compensation expense for awards with service conditions on a straight-line basis over the requisite service period. For awards with performance conditions, the Company recognizes compensation expense when the achievement of the performance milestone is probable and estimable through the vest date. For share-based awards granted to consultants and non-employees, compensation expense is recognized over the vesting period of the awards, which is generally the period during which services are rendered by such consultants and non-employees until completed. The Company classifies share-based compensation expense in its consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the expected share price volatility, the expected term of the award, the risk-free interest rate, and expected dividends (see Note 9). Prior to May 2018, the Company was a private company and, accordingly, lacks company-specific historical and implied volatility information for its shares. Therefore, it estimates its expected share price volatility based on a blend of the historical volatility of the Company’s and publicly traded peer companies’ share prices and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. The expected term of the Company’s options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common shares and does not expect to pay any cash dividends in the foreseeable future. The fair value of each restricted share unit award is based on the closing price of the Company’s Class A common shares on the date of grant. Restricted share unit awards with an associated performance condition are evaluated on a regular basis for probability of achievement to determine the timing of recording share-based compensation expense in the Company’s consolidated statements of operations and comprehensive loss. Comprehensive Loss Comprehensive loss includes net loss as well as other changes in shareholders’ equity that result from transactions and economic events other than those with shareholders. For the three and nine months ended September 30, 2021 and 2020, the Company’s other comprehensive loss was comprised of unrealized gain (loss) on short-term investments as well as cumulative translation adjustments, net of tax. Net Loss per Share The two-class method determines net loss per share for each class of common shares and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common shareholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Basic net loss per share attributable to common shareholders is computed by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net loss attributable to common shareholders is computed by adjusting net loss attributable to common shareholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share attributable to common shareholders is computed by dividing the diluted net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares. For purpose of this calculation, outstanding options and unvested restricted common shares are considered potential dilutive common shares. In periods in which the Company reports a net loss attributable to common shareholders, diluted net loss per share attributable to common shareholders is the same as basic net loss per share attributable to common shareholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss attributable to common shareholders for the three and nine months ended September 30, 2021 and 2020. Income Taxes The Company is an exempted company incorporated under the laws of Bermuda. Under the current laws of Bermuda, income tax is not charged or levied on an exempted company’s income. As a result, the Company has not recorded any income tax benefits from losses incurred in Bermuda during each reporting period, and no net operating loss carryforwards will be available to the Company for those losses. The Company’s wholly owned U.S. subsidiaries, Kiniksa US and Primatope, are subject to federal and state income taxes in the United States. The Company’s wholly owned subsidiary Kiniksa UK, and its wholly owned subsidiaries, Kiniksa Germany, Kiniksa France, and Kiniksa Switzerland, are subject to taxation in their respective countries. Certain of the Company’s subsidiaries, primarily Kiniksa US and Kiniksa Germany, operate under cost-plus arrangements. The Company’s U.S. provision for income taxes relates to current tax expense associated with the taxable income in the United States of its wholly owned subsidiary, Kiniksa US. The current income tax expense is a result of the taxable income earned by Kiniksa US under its cost-plus arrangement offset in part by tax benefits from the U.S. federal and state research and development credits, the Foreign Derived Intangible Income (“FDII”) deduction and share-based compensation taxable events. The Company has recorded an immaterial foreign provision for income taxes related to income in non-U.S. subsidiaries. The Company provides for income taxes on an interim basis according to management’s estimate of the effective tax rate expected to be applicable for the full fiscal year. Subsidiaries with losses for which no benefit can be claimed are excluded from this calculation, and their tax is recorded discretely in the period it arises. Certain other items such as changes in tax rates, tax benefits or expense related to settlements of share-based payment awards, changes in the valuation allowance against deferred tax, and uncertain tax positions are treated as discrete items and are recorded in the period in which they arise. Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740)(“ASU 2019-12”) |
Fair Value of Financial Assets
Fair Value of Financial Assets and Liabilities | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value of Financial Assets and Liabilities | |
Fair Value of Financial Assets and Liabilities | 3. Fair Value of Financial Assets and Liabilities The following tables present information about the Company’s financial instruments measured at fair value on a recurring basis and indicate the level of the fair value hierarchy used to determine such fair values: Fair Value Measurements as of September 30, 2021 Using: Level 1 Level 2 Level 3 Total Assets: Cash equivalents — money market funds 88,199 — — 88,199 Short-term investments — U.S. Treasury notes — 10,000 — 10,000 $ 88,199 $ 10,000 $ — $ 98,199 Fair Value Measurements as of December 31, 2020 Using: Level 1 Level 2 Level 3 Total Assets: Restricted cash — money market funds $ 210 $ — $ — $ 210 Cash equivalents — money market funds 22,942 — — 22,942 Cash equivalents — U.S. Treasury notes — 72,695 — 72,695 Short-term investments — U.S. Treasury notes — 209,444 — 209,444 $ 23,152 $ 282,139 $ — $ 305,291 During the nine months ended September 30, 2021 and the year ended December 31, 2020 there were no transfers between Level 1, Level 2 and Level 3 . The money market funds were valued using quoted prices in active markets, which represent a Level 1 measurement in the fair value hierarchy. The Company’s cash equivalents and short-term investments as of September 30, 2021 and December 31, 2020 included U.S. Treasury notes, which are not traded on a daily basis and, therefore, represent a Level 2 measurement in the fair value hierarchy at each period end. Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value September 30, 2021 Short-term investments — U.S. Treasury notes 10,000 — — 10,000 $ 10,000 $ — $ — $ 10,000 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value December 31, 2020 Cash equivalents — U.S. Treasury notes $ 72,694 $ 1 $ — $ 72,695 Short-term investments — U.S. Treasury notes 209,459 4 (19) 209,444 $ 282,153 $ 5 $ (19) $ 282,139 As of September 30, 2021, the Company did not hold any securities that were in an unrealized loss position. As of December 31, 2020, the Company held 17 securities that were in an unrealized loss position. The aggregate fair value of securities held by the Company in an unrealized loss position was $107,753 at December 31, 2020. As December 31, 2020, these securities were held by the Company in an unrealized loss position for less than 12 months. The Company determined that there was no material change in the credit risk of these securities. As a result, the Company determined it did not hold any investments with an other-than-temporary impairment as of September 30, 2021 and December 31, 2020. |
Product Revenue, Net
Product Revenue, Net | 9 Months Ended |
Sep. 30, 2021 | |
Product Revenue, Net | |
Product Revenue, Net | 4. Product Revenue, Net ARCALYST Following the FDA approval of ARCALYST on March 18, 2021, the Company began generating product revenue from sales of ARCALYST in April 2021. Nine Months Ended September 30, 2021 Product Revenue $ 19,799 The following table summarizes balances and activity in each of the product revenue allowance and reserve categories for the nine months ended September 30, 2021: Contractual Government Adjustments Rebates Returns 1 Total Balance at December 31, 2020 $ — $ — $ — $ — Current provisions relating to sales in the current year 1,365 615 301 2,281 Adjustments relating to prior years — — — — Payments/returns relating to sales in the current year (798) (110) (236) (1,144) Payments/returns relating to sales in the prior years — — — — Balance at September 30, 2021 $ 567 $ 505 $ 65 $ 1,137 (1) Included in the return reserve, is a provision of $236 for a specific return associated with product that was damaged in transit. Total revenue-related reserves as of September 30, 2021, included in our consolidated balance sheets, are summarized as follows: September 30, 2021 Reduction of accounts receivable 12 Components of other current liabilities 1,125 Total revenue-related reserves $ 1,137 |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2021 | |
Inventory | |
Inventory | 5. Inventory During the nine months ended September 30, 2021, the Company commenced the capitalization of ARCALYST inventory in connection with receiving FDA approval of ARCALYST for the treatment of recurrent pericarditis and reduction in risk of recurrence in adults and children 12 years and older. As of September 30, 2021, the Company identified and relabeled certain ARCALYST product previously acquired initially intended to support the clinical trials as inventory to be sold as commercial product classified as finished goods. The value of this inventory had previously been expensed to research and development costs and was carried at zero cost. As of December 31, 2020, the Company did not have inventory. Inventory consisted of the following: September 30, 2021 Raw materials $ — Work-in-process 4,183 Finished Goods 1,423 $ 5,606 |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2021 | |
Property and Equipment, Net | |
Property and Equipment, Net | 6. Property and Equipment, Net Property and equipment, net consisted of the following: September 30, December 31, 2021 2020 Furniture, fixtures and vehicles $ 62 $ 62 Computer hardware and software 349 349 Leasehold improvements 3,876 3,667 Lab equipment 4,660 4,602 Construction in progress 30 101 Total property and equipment 8,977 8,781 Less: Accumulated depreciation (5,809) (4,730) Total property and equipment, net $ 3,168 $ 4,051 Depreciation expense was $373 and $649 during the three months ended September 30, 2021 and 2020, respectively, and $1,079 and $1,838 during the nine months ended September 30, 2021 and 2020, respectively. |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2021 | |
Intangible Assets | |
Intangible Assets | 7. Intangible Assets Intangible assets, net of accumulated amortization, impairment charges and adjustments are summarized in the following table. As of December 31, 2020, the Company did not have intangible assets. As of September 30, 2021 Accumulated Estimated life Cost Amortization Net Regulatory milestone 20 years $ 20,000 $ 500 $ 19,500 $ 20,000 $ 500 $ 19,500 Future amortization of intangible assets are as follows: As of September 30, 2021 (remaining three months) $ 250 2022 1,000 2023 1,000 2024 1,000 2025 1,000 2026 1,000 2027 and thereafter 14,250 Total future amortization $ 19,500 |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2021 | |
Accrued Expenses | |
Accrued Expenses | 8. Accrued Expenses Accrued expenses consisted of the following: September 30, December 31, 2021 2020 Accrued research and development expenses $ 17,805 $ 16,945 Accrued employee compensation and benefits 8,354 7,704 Accrued legal and professional fees 2,048 3,988 Other 321 562 $ 28,528 $ 29,199 |
Common Shares
Common Shares | 9 Months Ended |
Sep. 30, 2021 | |
Common Shares. | |
Common Shares | 9. Common Shares On May 18, 2020, the Company completed a follow-on offering of 2,760,000 Class A common shares, inclusive of the exercise of the underwriters’ overallotment option at a public offering price of $18.25 per share and a concurrent private placement of 1,600,000 Class A1 common shares at an offering price of $18.25 per share for aggregate gross proceeds of $79,570. The aggregate net proceeds to the Company from the follow-on offering and concurrent private placement, inclusive of the over-allotment option exercise, was $74,495 after deducting underwriting discounts and commissions, placement agent fees and other offering costs. On July 24, 2020, the Company completed a follow-on offering of 5,952,381 Class A common shares, at a public offering price of $21.00 per share and a concurrent private placement of 1,428,572 Class A1 common shares at an offering price of $21.00 per share for aggregate gross proceeds of $155,000. The aggregate net proceeds to the Company from the follow-on offering and concurrent private placement was $146,037 after deducting underwriting discounts and commissions, placement agent fees and other offering costs. The rights of the holders of the Company’s Class A common shares, Class B common shares, Class A1 common shares and Class B1 common shares are identical, except with respect to voting, transferability and conversion, as described below. As of September 30, 2021, no preferred shares were designated or issued . Voting Each Class A common share entitles the holder to one vote on all matters submitted to the shareholders for a vote. Each Class B common share entitles the holder to ten votes on all matters submitted to the shareholders for a vote. The holders of Class A and Class B common shares, voting together as a single class, are entitled to elect the directors of the Company. Holders of Class A1 Dividends The common shareholders are entitled to receive dividends, as may be declared by the Company’s board of directors. Through September 30, 2021, no cash dividends have been declared or paid. Conversion Each Class B common share shall automatically convert into one Class A common share upon certain transfers of such shares by the holder thereof (subject to certain exceptions). Each Class B common share is convertible, at the holder’s election into one Class A common share or one Class B1 common share. Each Class A1 common share is convertible into one Class A common share at the holder’s election (subject to certain exceptions). Each Class B1 common share shall automatically convert into one Class A common share upon certain transfers of such shares by the holder thereof (subject to certain exceptions). Each Class B1 common share is convertible into one Class A common share or one Class B common share at the holder’s election (subject to certain exceptions). There are no conversion rights associated with the Class A common shares. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2021 | |
Share-Based Compensation | |
Share-Based Compensation | 10. Share-Based Compensation 2018 Incentive Award Plan In May 2018, the Company’s board of directors and shareholders approved the 2018 Incentive Award Plan (the “2018 Plan”), which became effective on May 23, 2018. The 2018 Plan provides for the grant of incentive share options, nonqualified share options, share appreciation rights, restricted shares, dividend equivalents, restricted share units (“RSUs”) and other share- or cash- based awards. Upon the effectiveness of the 2018 Plan, the Company ceased granting awards under its 2015 Equity Incentive Plan (as amended, the “2015 Plan” together with the 2018 Plan, the “Plans”). A total of 4,466,500 Class A common shares were initially reserved for issuance under the 2018 Plan. The number of Class A common shares that may be issued under the 2018 Plan will automatically increase on each January 1, beginning in 2019 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2028, equal to the lesser of (1) 4% of the Class A common shares outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year and (2) a smaller number of Class A common shares determined by the Company’s board of directors. In December 2020, the board of directors approved the automatic increase as of January 1, 2021 of 2,728,600 shares, equal to 4% of the as-converted Class A common shares outstanding on December 31, 2020. No more than 27,915,000 Class A common shares may be issued under the 2018 Plan upon the exercise of incentive options. The Class A common shares underlying any awards issued under the 2018 Plan or the 2015 Plan that on or after the effective date of the 2018 Plan expire, lapses unexercised or are terminated, exchanged for cash, surrendered, repurchased, canceled without having been fully exercised, or forfeited under the 2018 Plan or the 2015 Plan will be added back to the Class A common shares available for issuance under the 2018 Plan. As of September 30, 2021, 3,529,409 shares remained available for future grant. 2015 Equity Incentive Plan Until May 23, 2018 (the effective date of the 2018 Plan), the 2015 Plan provided for the Company to grant incentive share options, nonqualified share options, share grants and other share-based awards to employees and non-employees to purchase the Company’s Class A common shares. On the effective date of the 2018 Plan, the Company ceased granting awards under the 2015 Plan. At that time, the 4,691,213 Class A common shares subject to outstanding awards under the 2015 Plan remained reserved for issuance under the plan pursuant to such awards and the 92,170 Class A common shares that had been available for future grant under the 2015 Plan were no longer authorized and reserved for issuance or available for future grant under the 2015 Plan. The 2015 Plan continues to govern the terms and conditions of the outstanding awards granted under it. Class A common shares subject to awards granted under the 2015 Plan that expire, lapse unexercised or are terminated, exchanged for cash, surrendered, repurchased, canceled without having been fully exercised, or forfeited become available for issuance under the 2018 Plan. As of September 30, 2021, there were 2,307,458 Class A common shares subject to outstanding awards under the 2015 Plan and reserved for issuance there under pursuant to such awards. 2018 Employee Share Purchase Plan In May 2018, the Company’s board of directors and shareholders approved the 2018 Employee Share Purchase Plan (the “2018 ESPP”), which became effective on May 23, 2018. A total of 670,000 Class A common shares were initially reserved for issuance under the 2018 ESPP. The number of Class A common shares that may be issued under the 2018 ESPP will automatically increase on each January 1, beginning in 2019 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2028, equal to the lesser of (1) 1% of the Class A common shares outstanding (on an as-converted basis) on the final day of the immediately preceding calendar year and (2) a smaller number of Class A common shares determined by the Company’s board of directors, provided that no more than 6,420,000 Class A common shares may be issued under the 2018 ESPP. In December 2020, the Company’s board of directors approved an increase as of January 1, 2021 of 130,000 shares. As of September 30, 2021, 598,817 Class A common shares were available for future issuance under the 2018 ESPP. Rilonacept Long-Term Incentive Plan In December 2019, the compensation committee of the Company’s board of directors approved the Company’s Rilonacept Long-Term Incentive Plan (“RLTIP”) under the 2018 Plan to incentivize eligible employees of the Company or any of its subsidiaries to achieve FDA approval for the commercial sale and marketing of rilonacept for recurrent pericarditis in the United States (“RLTIP Milestone”). The RLTIP provided for the potential to receive an award of cash and two grants of RSUs covering Class A common shares under the 2018 Plan upon the achievement of RLTIP Milestones within certain specified time periods. No further awards are expected to be granted pursuant to the RLTIP. Options Share option activity under the Plans is summarized as follows: Weighted Number of Average Shares Fair Value Outstanding as of December 31, 2020 9,958,858 $ 9.32 Granted 2,358,425 $ 11.65 Exercised (623,436) $ 4.49 Forfeited (2,137,366) $ 11.77 Outstanding as of September 30, 2021 9,556,481 $ 9.66 Share options exercisable as of September 30, 2021 4,529,290 $ 9.11 Share options unvested as of September 30, 2021 5,027,191 $ 10.82 Option Valuation The assumptions that the Company used to determine the grant-date fair value of options granted to employees and directors under the Plans during the three and nine months ended September 30, 2021 and 2020 were as follows, presented on a weighted-average basis: Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Risk-free interest rate 0.93 % 0.36 % 0.98 % 0.56 % Expected term (in years) 6.25 6.24 6.14 6.21 Expected volatility 75.09 % 82.58 % 76.19 % 81.02 % Expected dividend yield — % — % — % — % Restricted Share Units RSUs represent the right to receive shares of the Company’s Class A common shares upon vesting of the RSUs. The fair value of each RSU award is based on the closing price of the Company’s Class A common shares on the date of grant. In March 2021, the Company granted RSUs with service conditions (“Time-Based RSUs”) to eligible employees. The Time-Based RSUs will vest 25% on each of the first, second, third and fourth anniversaries of the date of grant, subject to continued employment through such dates. In December 2019, the Company granted Time-Based RSUs that vested in one installment on December 31, 2020, subject to the recipient’s continued employment through that date. As of December 31, 2020, 56,369 Class A common shares were issued with the remaining shares 24,332 shares withheld for tax purposes. During the year ended December 31, 2020 and in December 2019, the Company granted the First RSU Awards as part of the RLTIP to eligible employees. During the nine months ended September 30, 2021, the Achievement Date was met and (1) the number of Class A common shares issuable under the First RSU Awards were determined in accordance with the RLTIP and will vest in one installment on the first anniversary of the Achievement Date, subject to continued employment through such date, and (2) the Second RSU Awards were granted to eligible employees on the Achievement Date with respect to a number of shares determined in accordance with the RLTIP and will vest on the second anniversary of the Achievement Date, subject to continued employment through such date. During three and nine months ended September 30, 2021, the Company recognized compensation expense of $838 and $2,868, respectively related to RSUs including those granted in connection to the RLTIP. During the three and nine months ended September 30, 2020, the Company recognized $250 and $733, respectively in compensation expense related to the Time-Based RSUs and the Company did not recognize any compensation expense related to the First RSU Award, as achievement of the RLTIP Milestone was determined to be not probable as of that date. The following table summarizes RSU activity, including the RSUs outstanding under the RLTIP for the nine months ended September 30, 2021: Weighted Average Number of Grant Date Shares Fair Value Unvested RSUs as of December 31, 2020 205,312 $ 13.41 Granted 747,630 $ 17.79 Vested — $ — Forfeited (151,788) $ 18.53 Unvested RSUs as of September 30, 2021 801,154 $ 16.52 Share-Based Compensation Share-based compensation expense was classified in the consolidated statements of operations and comprehensive loss as follows: Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Cost of goods sold $ 62 $ — $ 101 $ — Research and development expenses 1,912 2,345 6,469 6,303 Selling, general and administrative expenses 4,225 3,213 12,472 8,315 $ 6,199 $ 5,558 $ 19,042 $ 14,618 |
License, Acquisition and Collab
License, Acquisition and Collaboration Agreements | 9 Months Ended |
Sep. 30, 2021 | |
License, Acquisition and Collaboration Agreements | |
License, Acquisition and Collaboration Agreements | 11. License, Acquisition and Collaboration Agreements Biogen Asset Purchase Agreement In September 2016, the Company entered into an asset purchase agreement (the “Biogen Agreement”) with Biogen MA Inc. (“Biogen”) to acquire all of Biogen’s right, title and interest in and to certain assets used in or relating to vixarelimab and other antibodies covered by certain patent rights, including patents and other intellectual property rights, clinical data, know-how, and clinical drug supply. In addition, Biogen granted to the Company a non-exclusive, sublicensable, worldwide license to certain background patent rights related to the vixarelimab program. The Company is obligated to use commercially reasonable efforts to develop and commercialize such acquired products. In exchange for these rights, the Company made an upfront payment to Biogen of $11,500 and a technology transfer payment of $500. The Company accounted for the acquisition of technology as an asset acquisition because it did not meet the definition of a business. The Company recorded the upfront payment and technology transfer payment as research and development expense in the consolidated statement of operations and comprehensive loss because the acquired technology represented in-process research and development and had no alternative future use. Under the Biogen Agreement, the Company is obligated to make milestone payments to Biogen of up to $179,000 upon the achievement of specified clinical and regulatory milestones in multiple indications in various territories, including milestone payments of $4,000 and $10,000 paid during the year ended December 31, 2017 and the year ended December 31, 2019, respectively, each payment was associated with the achievement of a specified clinical milestone event. Additionally, the Company could be obligated to make up to an aggregate of up to $150,000 of payments upon the achievement of specified annual net sales milestones and to pay tiered royalties on escalating tiers of annual net sales of licensed products starting in the high single-digit percentages and ending below the teens. The Company also agreed to pay certain obligations under third-party contracts retained by Biogen that relate to the vixarelimab program. Under these retained contracts, the Company paid a one-time upfront sublicense fee of $150 and is obligated to pay insignificant annual maintenance fees as well as clinical and regulatory milestone payments of up to an aggregate of $1,575. The Biogen Agreement will terminate upon the expiration of all payment obligations with respect to the last product in all countries in the territory. The Company has the right to terminate the agreement with 90 days’ prior written notice. Both parties may terminate by mutual written consent or in the event of material breach of the agreement by the other party that remains uncured for 90 days (or 30 days for payment-related breaches). During the three and nine months ended September 30, 2021 and 2020, the Company recorded research and development expense of $14 and $14 and $42 and $92 respectively, related to the annual maintenance fee in connection with the retained contracts. Beth Israel Deaconess Medical Center License Agreement In 2019, the Company exercised the call option under the stock purchase option agreement with Primatope and acquired all of the outstanding securities of Primatope (the “Primatope Acquisition”). As a result of the Primatope Acquisition, the Company acquired the rights to an exclusive license to certain intellectual property rights controlled by Beth Israel Deaconess Medical Center, Inc. (“BIDMC”) to make, use, develop and commercialize KPL-404 (the “BIDMC Agreement”). Under the BIDMC Agreement, the Company is solely responsible for all development, regulatory and commercial activities and costs. The Company is also responsible for costs related to filing, prosecuting and maintaining the licensed patent rights. Under the BIDMC Agreement, the Company is obligated to pay an insignificant annual maintenance fee as well as clinical and regulatory milestone payments of up to an aggregate of $1,200 to BIDMC. The Company is also obligated to pay a low single-digit royalty on annual net sales of products licensed under the agreement. During the three and nine months ended September 30, 2021 and 2020, the Company did not record any research and development expense in connection with the BIDMC Agreement. Regeneron License Agreement In September 2017, the Company entered into a license agreement (as amended, the “Regeneron Agreement”) with Regeneron, pursuant to which the Company has been granted an exclusive, sublicensable license under certain intellectual property rights controlled by Regeneron to develop and commercialize ARCALYST in certain fields and territories. The Company is obligated to use commercially reasonable efforts to develop and commercialize such licensed products. In exchange for these rights, the Company made an upfront payment of $5,000. The Company accounted for the acquisition of technology as an asset acquisition because it did not meet the definition of a business. The Company recorded the upfront payment as research and development expense in the consolidated statement of operations and comprehensive loss because the acquired technology represented in-process research and development and had no alternative future use. Under the Regeneron Agreement, the Company was also obligated to make payments to Regeneron of up to an aggregate of $27,500 upon the achievement of specified regulatory milestones, which includes a $7,500 milestone achieved and paid in the fourth quarter of 2020 and a $20,000 milestone achieved and paid in the nine months ended September 30, 2021. The $20,000 milestone was accounted for as an intangible asset and will be amortized over the life of the underlying asset. Related amortization expense will be recorded as cost of goods sold in the Company’s consolidated statement of operations and comprehensive loss. During the nine months ended September 30, 2021 and 2020, the Company did not incur any research and development expense directly related to milestones due under the Regeneron Agreement. Under the Regeneron Agreement, the Company is solely responsible for all development and commercialization activities and costs in its territories. The Company is also responsible for costs related to the filing, prosecution and maintenance of certain licensed patent rights. In March 2021, the FDA approved the sBLA for ARCALYST for the treatment of recurrent pericarditis and reduction in risk of recurrence in adults and children 12 years of age and older and the Company assumed the sales and distribution of ARCALYST for the approved indications in the United States, including CAPS and DIRA. The Company will evenly split profits on sales of ARCALYST with Regeneron, where profits are determined after deducting certain commercialization expenses subject to specified limits, from ARCALYST sales. As of September 30, 2021, no profit sharing has been recognized. Pursuant to the Regeneron Agreement, in September 2017, the parties entered into a clinical supply agreement under which Regeneron agreed to manufacture product solely for the Company’s use in development activities. Pursuant to the Regeneron Agreement, during the nine months ended September 30, 2021, the parties entered into a commercial supply agreement under which Regeneron agreed to manufacture product for the Company’s use, including for commercial sales. During the nine months ended September 30, 2021 and 2020, the Company did not incur any research and development expense related to the purchase of drug materials under the clinical supply agreement. As of September 30, 2021, the Company recorded inventory of $5,606 related to the purchase of commercial product under the commercial supply agreement (see Note 5). As of September 30, 2021, the Company had non-cancelable purchase commitments under the commercial supply agreement (see Note 14). The Regeneron Agreement will expire when the Company is no longer developing or commercializing any licensed product under the Regeneron Agreement. Either party may terminate the agreement upon the other party’s insolvency or bankruptcy or for material breach of the agreement by the other party that remains uncured for 90 days (or 30 days for payment-related breaches). Regeneron has the right to terminate the agreement if the Company suspends its development or commercialization activities for a consecutive 12 month period or does not grant a sublicense to a third-party to perform such activities, or if the Company challenges any of the licensed patent rights. The Company may terminate the agreement at any time with one year’s written notice. The Company may also terminate the agreement with three months’ written notice if the licensed product is determined to have certain safety concerns. MedImmune License Agreement In December 2017, the Company entered into a license agreement (as amended from time to time, the “MedImmune Agreement”) with MedImmune, Limited (“MedImmune”), pursuant to which MedImmune granted the Company an exclusive, sublicensable, worldwide license to certain intellectual property rights to make, use, develop and commercialize mavrilimumab. Under the MedImmune Agreement, the Company also acquired reference rights to relevant manufacturing and regulatory documents and MedImmune’s existing supply of mavrilimumab drug substance and product. The Company is obligated to use commercially reasonable efforts to develop and commercialize the licensed products. In exchange for these rights, the Company made an upfront payment of $8,000 . The Company accounted for the acquisition of technology as an asset acquisition because it did not meet the definition of a business. The Company recorded the upfront payment as research and development expense in the consolidated statement of operations and comprehensive loss because the acquired technology represented in-process research and development and had no alternative future use. In addition, the Company is obligated to make clinical, regulatory and initial sales milestone payments of up to $72,500 in aggregate for the first two indications, including, a $5,000 pass-through payment due upon the achievement of a specified clinical milestone event which was achieved in the fourth quarter of 2018. Also included is a milestone payment of $10,000 due upon the earlier to occur of a specified regulatory milestone and December 31, 2018, unless the MedImmune Agreement is earlier terminated by either party. During the year ended December 31, 2019, the Company made both the $5,000 and $10,000 previously accrued milestone payments in accordance with the MedImmune Agreement. In addition, the Company is obligated to make clinical and regulatory milestone payments of up to $15,000 in the aggregate for each subsequent indication. In July 2020, the Company entered into an amendment to the MedImmune Agreement to establish a new coronavirus field and defer the payment of certain development and regulatory milestones as applied to the new coronavirus field. The Company is obligated to make milestone payments to MedImmune of up to $85,000 upon the achievement of annual net sales thresholds up to, but excluding, $1,000,000 in annual net sales as well as additional milestone payments aggregating up to $1,100,000 upon the achievement of additional specified annual net sales thresholds starting at $1,000,000 and higher. The Company has also agreed to pay tiered royalties on escalating tiers of annual net sales of licensed products starting in the low double-digit percentages and ending at twenty percent. Royalty rates are subject to reductions upon certain events. The Company is solely responsible for all development, manufacturing, and commercial activities and costs of the licensed products, including clinical studies or other tests necessary to support the use of a licensed product. The Company is also responsible for costs related to the filing, prosecution and maintenance of the licensed patent rights. The MedImmune Agreement will expire upon the expiration of the royalty term in the last country for the last indication, as defined in the agreement. Either party may terminate the agreement upon the other party’s insolvency or bankruptcy or for material breach of the agreement by the other party that remains uncured for 90 days. MedImmune has the right to terminate the agreement if the Company challenges any of the licensed patent rights. The Company may terminate the agreement at any time upon 90 days’ prior written notice. During the nine months ended September 30, 2021 and 2020, the Company did not record research and development expense in connection with milestone payments due under the MedImmune Agreement. |
Net Loss per Share
Net Loss per Share | 9 Months Ended |
Sep. 30, 2021 | |
Net Loss per Share | |
Net Loss per Share | 12. Net Loss per Share The rights, including the liquidation and dividend rights, of the holders of Class A, Class B, Class A1 and Class B1 common shares are identical, except with respect to voting, transferability and conversion (see Note 9). As the liquidation and dividend rights are identical, losses are allocated on a proportionate basis, and the resulting net loss per share attributed to common shareholders will, therefore, be the same for the Class A, A1, B and B1 common shares on an individual or combined basis. Basic and diluted net loss per share attributable to common shareholders was calculated as follows: Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Numerator: Net loss attributable to common shareholders $ (30,544) $ (43,836) $ (121,591) $ (107,724) Denominator: Weighted average common shares outstanding—basic and diluted 68,662,673 65,958,513 68,444,061 59,754,495 Net loss per share attributable to common shareholders— basic and diluted $ (0.44) $ (0.66) $ (1.78) $ (1.80) The Company’s unvested RSUs have been excluded from the computation of basic net loss per share attributable to common shareholders. The Company’s potentially dilutive securities, which include options and unvested RSUs, have been excluded from the computation of diluted net loss per share attributable to common shareholders as the effect would be to reduce the net loss per share attributable to common shareholders. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common shareholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common shareholders for the periods indicated because including them would have had an anti-dilutive effect: As of September 30, 2021 2020 Options to purchase common shares 9,556,481 10,152,136 Unvested RSUs 801,154 287,511 10,357,635 10,439,647 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Taxes | |
Income Taxes | 13. Income Taxes The Company is an exempted company incorporated under the laws of Bermuda. Under the current laws of Bermuda, income tax is not charged or levied on an exempted company’s income. As a result, the Company has not recorded any income tax benefits from losses incurred in Bermuda during each reporting period, and no net operating loss carryforwards will be available to the Company for those losses. The Company’s wholly owned U.S. subsidiaries, Kiniksa US and Primatope, are subject to federal and state income taxes in the United States. The Company’s wholly owned subsidiary Kiniksa UK, and its wholly owned subsidiaries, Kiniksa Germany, Kiniksa France, and Kiniksa Switzerland are subject to taxation in their respective countries. Certain of the Company’s subsidiaries, primarily Kiniksa US, operate under cost plus arrangements. The income tax rate for the three and nine months ended September 30, 2021 varied from the Bermuda statutory rate of zero primarily due to income subject to United States taxation under the Kiniksa US cost-plus arrangements with the Company, and U.S. federal and state research tax credits. Income tax benefit for the three months ended September 30, 2021 was $118 primarily related to the tax benefit from the exercise of share options offset by the tax impact from the current tax expense due to income from the cost plus arrangements in the United States, net of R&D credits utilized. Income tax provision for the nine months ended was $1,106 primarily related to the tax impact from the current tax expense due to income from the cost plus arrangements in the United States, net of R&D credits utilized offset by tax benefit related to the exercise of share options. Income tax provision for the three and nine months ended September 30, 2020 was $667 and $4,363 and includes a discrete tax benefit primarily related to tax benefits from share-based compensation taxable events and recording a valuation allowance against certain deferred tax assets. Management examines all positive and negative evidence to estimate whether sufficient future taxable income will be generated to realize existing deferred tax assets. The Company previously determined it was more likely than not that a majority of its net deferred tax assets would not be realized and concluded that a valuation allowance was required, which eliminated the majority of its net deferred tax assets recorded in its balance sheet. In the future, if the Company believes that it is more likely than not that it will realize the benefit of these deferred tax assets, it will adjust the valuation allowance and recognize an income tax benefit. There are no material deferred tax assets in the other jurisdictions. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies | |
Commitments and Contingencies | 14. Commitments and Contingencies License Agreements The Company entered into license agreements with various parties under which it is obligated to make contingent and non-contingent payments (see Note 11). Manufacturing Commitments The Company entered into a commercial supply agreement with Regeneron to provide both clinical supply and commercial product (see Note 11). The Company entered into agreements with several CMOs to provide the Company with preclinical and clinical trial materials. As of September 30, 2021, the Company had committed to minimum payments under these agreements totaling $45,742, of which $32,693 are due within one year. Indemnification Agreements In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with members of its board of directors, officers and other key personnel that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or other key personnel. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not aware of any claims under indemnification arrangements that are expected to have a material effect on its financial position, results of operations or cash flows, and it has not accrued any liabilities related to such obligations in its consolidated financial statements as of September 30, 2021 or December 31, 2020. Legal Proceedings The Company is not a party to any litigation and does not have contingency reserves established for any litigation liabilities. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its wholly owned subsidiaries, Kiniksa Pharmaceuticals Corp. (“Kiniksa US”), Primatope Therapeutics, Inc. (“Primatope”) and Kiniksa Pharmaceuticals (UK), Ltd. (“Kiniksa UK”) as well as the subsidiaries of Kiniksa UK, Kiniksa Pharmaceuticals (Germany) GmbH (“Kiniksa Germany”), Kiniksa Pharmaceuticals (France) SARL (“Kiniksa France”), and Kiniksa Pharmaceuticals GmbH (“Kiniksa Switzerland”), after elimination of all significant intercompany accounts and transactions. |
Use of Estimates | Use of Estimates The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of expenses during the reporting period. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, the recognition of revenue, the capitalization of inventory, the accrual for research and development expenses and the valuation of share-based awards. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results could differ from those estimates. |
Reporting and Functional Currency | Reporting and Functional Currency The financial results of the Company’s global activities are reported in U.S. dollars (“USD”) and its foreign subsidiaries either utilize USD or their respective local currency to be their functional currency. Transactions in other currencies are recorded in the functional currency at the rate of exchange prevailing when the transactions occur. Monetary assets and liabilities denominated in other currencies are re-measured into the functional currency at the rate of exchange in effect at the balance sheet date. Exchange rate gains and losses arising from re-measurement of foreign currency-denominated monetary assets and liabilities are included in income or losses in the period in which they occur. For the Company’s foreign subsidiaries where the local currency is the functional currency, assets and liabilities denominated in local currencies are translated into USD at end-of-period exchange rates and the resulting translation adjustments are reported as a component of accumulated other comprehensive gain (loss) within shareholders' equity (deficit). |
Unaudited Interim Consolidated Financial Information | Unaudited Interim Consolidated Financial Information The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information. The accompanying unaudited consolidated financial statements do not include all of the information and footnotes required by GAAP for complete consolidated financial statements. The accompanying year-end consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by GAAP. The unaudited interim consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s financial position as of September 30, 2021 and the results of its operations for the three and nine months ended September 30, 2021 and 2020, the changes in its shareholders’ equity for the nine months ended September 30, 2021 and 2020 and its cash flows for the nine months ended September 30, 2021 and 2020. The results for the three and nine months ended September 30, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021, any other interim periods or any future year or period. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company classifies deposits in banks, money market funds and cash invested temporarily in various instruments with maturities of three months or less at the time of purchase as cash and cash equivalents. At September 30, 2021 and December 31, 2020, cash and cash equivalents consisted principally of U.S. Treasury notes, amounts held in money market accounts and cash on deposit at commercial banks. |
Short-Term Investments | Short-Term Investments The Company generally invests its excess cash in money market funds and short-term investments in U.S. Treasury notes. Such investments which are included in short-term investments on the Company’s consolidated balance sheets are considered available-for-sale debt securities and are reported at fair value with unrealized gains and losses included as a component of shareholders’ equity. Realized gains and losses, if any, on short-term investments are included in interest income. If the estimated fair value of a debt security is below its carrying value, the Company evaluates whether it is more likely than not that it will sell the security before its anticipated recovery in market value and whether evidence indicating that the cost of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary. The Company also evaluates whether or not it intends to sell the investment. If the impairment is considered to be other-than-temporary, the security is written down to its estimated fair value. In addition, the Company considers whether credit losses exist for any securities. A credit loss exists if the present value of cash flows expected to be collected is less than the amortized cost basis of the security. Other-than-temporary declines in estimated fair value and credit losses are included in investment and other income, net. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and short-term investments. At September 30, 2021 and December 31, 2020, substantially all of the Company’s cash, cash equivalents and short-term investments were held at two financial institutions. The Company generally maintains balances in various operating accounts at financial institutions that management believes to be of high credit quality, in amounts that may exceed federally insured limits. The Company has not experienced any losses related to its cash, cash equivalents and short-term investments and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. The Company is also subject to credit risk from the accounts receivable related to product revenue. Trade accounts receivable are recorded net of allowances for cash discounts associated with prompt payments from customers. All trade accounts receivable arise from product revenue in the United States due from the Company’s third party logistics provider. There were no material write-offs charged against the allowance for the nine months ended September 30, 2021. |
Restricted Cash | Restricted Cash In conjunction with the Company’s lease agreement entered into in March 2018, the Company maintained a letter of credit for the benefit of the landlord. The lease expired in August 2021 and the restricted cash was released to operating cash in September 2021. As of September 30, 2021, there was no balance in restricted cash. As of December 31, 2020, the underlying cash balances was $210 which secured the letter of credit and was classified as current in its consolidated balance sheet. |
Fair Value Measurements | Fair Value Measurements Certain assets and liabilities of the Company are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1—Quoted prices in active markets for identical assets or liabilities. ● Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3—Unobservable inputs that are supported by little or no market activity that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The Company’s restricted cash, which is held in a money market fund, is carried at fair value, determined based on Level 1 inputs in the fair value hierarchy described above (see Note 3). The Company’s cash equivalents and short-term investments, consisting of money market accounts and U.S. Treasury notes, are carried at fair value, determined based on Level 1 and 2 inputs in the fair value hierarchy described above (see Note 3). The carrying values of the Company’s prepaid expenses and other current assets, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities. |
Leases | Leases At the inception of an arrangement, the Company determines whether the arrangement is or contains a “lease” as defined by ASU No. 2016-02, Leases (Topic 842) Most leases with a term greater than one year are recognized on the balance sheet as ROU assets with corresponding lease liabilities and, if applicable, long-term lease liabilities. The Company has elected not to recognize leases with a term of one year or less on its balance sheet. Operating leases, ROU assets and their corresponding lease liabilities are recorded based on the present value of lease payments over the expected remaining lease term. However, certain adjustments to the ROU assets may be required for items such as incentives received. The interest rate implicit in lease arrangements is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. In accordance with the guidance in ASC 842, components of a lease should be split into three categories: lease components (e.g., land, building, etc.), non-lease components (e.g., common area maintenance, consumables, etc.), and non-components (e.g., property taxes, insurance, etc.); then the fixed and in-substance fixed contract consideration (including any related to non-components) must be allocated based on fair values to the lease components and non-lease components. The Company has elected to account for the lease and non-lease components of each of its operating leases as a single lease component and allocate all of the arrangement consideration to the lease component only. The lease component results in an operating ROU asset being recorded on the balance sheet and amortized on a straight-line basis as lease expense. |
Inventory | Inventory Inventories are stated at the lower of cost or estimated net realizable value with cost based on the first-in first-out method. Inventory that can be used in either the production of clinical or commercial products is expensed as research and development costs when identified and labeled for use in clinical trials as the products are required to be re-labeled for alternative uses. Prior to the regulatory approval of its drug candidates, the Company incurs expenses for the manufacture of product candidate supplies to support clinical development that could potentially be available to support the commercial launch of those therapeutics. Until the date at which regulatory approval has been received or is otherwise considered probable, the Company records all such costs as research and development expenses. The Company performs an assessment of the recoverability of capitalized inventories during each reporting period and writes down any excess and obsolete inventory to its net realizable value in the period in which the impairment is first identified. Such impairment charges, should they occur, are recorded as a component of cost of sales in the Company’s consolidated statements of operations and comprehensive loss. The determination of whether inventory costs will be realizable requires the use of estimates by management. If actual market conditions are less favorable than projected by management, additional write-downs of inventory may be required. The vials that will ultimately be distributed free of charge under our patient assistance program are recognized as selling expense when they are labeled as free goods. |
Revenue Recognition | Revenue Recognition ASC 606 outlines a five-step process for recognizing revenue from contracts with customers: (i) identify the contract with the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the separate performance obligations in the contract, and (v) recognize revenue associated with the performance obligations as they are satisfied. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of ASC 606, the Company determines the performance obligations that are distinct. The Company recognizes as revenues the amount of the transaction price that is allocated to each respective performance obligation when the performance obligation is satisfied. Generally, the Company’s performance obligations are transferred to customers at a point in time, typically upon delivery of the product to the customer. ASC 606 requires entities to record a contract asset when a performance obligation has been satisfied or partially satisfied, but the amount of consideration has not yet been received because the receipt of the consideration is conditioned on something other than the passage of time. ASC 606 also requires an entity to present a revenue contract as a contract liability in instances when a customer pays consideration, or an entity has a right to an amount of consideration that is unconditional (e.g. receivable), before the entity transfers a good or service to the customer. The Company did not have any contract assets or liabilities as of September 30, 2021 and December 31, 2020. Product Revenue, Net Following the FDA approval of ARCALYST on March 18, 2021, the Company began generating product revenue from sales of ARCALYST in April 2021. ARCALYST is sold through a third party logistics provider that distributes primarily through a network of authorized specialty pharmacies and specialty distributors (“customer”), which deliver the medication to patients by mail. The Company’s payment terms are between 30 to 35 days. Net revenue from product sales is recognized at the transaction price when the specialty pharmacy or specialty distributors obtains control of the Company’s products, which occurs at a point in time, typically upon shipment of the product from the third party logistics provider. The Company’s net revenues represent total revenues adjusted for discounts and allowances, including estimated cash discounts, chargebacks, rebates, returns, copay assistance, and specialty pharmacy and distributor fees. These adjustments represent variable consideration under ASC 606 and are estimated using the expected value method and are recorded when revenue is recognized on the sale of the product. These adjustments are established by management as its best estimate based on available information and will be adjusted to reflect known changes in the factors that impact such allowances. Adjustments for variable consideration are determined based on the contractual terms with customers, historical trends, communications with customers and the levels of inventory remaining in the distribution channel, as well as expectations about the market for the product and anticipated introduction of competitive products. Discounts and Allowances Revenue from product sales are recorded at the transaction price, which includes estimates for discounts and allowances and includes cash discounts, chargebacks, rebates, returns, copay assistance, and specialty pharmacy and distributor fees. These reserves are classified as reductions of accounts receivable (if the amount is payable to the Customer and right of offset exists) or a current liability (if the right of offset does not exist, the amount is payable to a third party, or is related to a future return). These allowances are established by management as its best estimate based on historical experience and data points available and are adjusted to reflect known changes in the factors that impact such reserves. Allowances for customer credits, chargebacks, rebates, data fees for services, returns, and discounts are established based on contractual terms with customers and analyses of historical usage of these items. Actual amounts of consideration ultimately received may differ from the Company’s estimates. If actual results in the future vary from the Company’s estimates, the Company will adjust these estimates, which would affect net product revenue and earnings in the period such variances become known. The nature of the allowances and accruals requiring estimates, and the specific considerations the Company uses in estimating these amounts are as follows: Government Chargebacks and Rebates Government and other rebates and chargebacks include amounts payable to payers and healthcare providers under various programs and by payer and individual payer plans. Rebates and chargebacks are based on contractual arrangements or statutory requirements which may vary by product, payer and individual payer plans. For qualified programs that can purchase products through wholesalers or other distributors at a lower contractual price, the wholesalers or distributors charge back to the Company the difference between their acquisition cost and the lower contractual price. Rebates and chargebacks are estimated primarily based on product sales, and expected payer mix and discount rates, which require significant estimates and judgment. Additionally, in developing the estimates the Company considers: historical and estimated payer mix; statutory discount requirements and contractual terms; historical claims experience and processing time lags; estimated patient population; known market events or trends; market research; channel inventory data obtained from customers; and other pertinent internal or external information. The Company assesses and updates the estimates every quarter to reflect actual claims and other current information. Government and other chargebacks are recognized as reduction of revenue upon the sale to the Customers. These items are payable to customers and other rebates that are payable to other third party payers and healthcare providers are classified as accrued expense liabilities. Cash Discounts The Company estimates cash discounts based on contractual terms and expectations regarding future customer payment patterns. Specialty Pharmacy & Distributor Fees Under the inventory management agreements with specialty pharmacies and distributors, the Company pays a fee primarily for compliance with certain contractually determined covenants such as the maintenance of agreed upon inventory levels. These specialty pharmacy and distributor fees are based on a contractually determined fixed percentage of sales. The Company has contracted with certain specialty pharmacies to obtain transactional data related to the products in order to develop a better understanding of the selling channel as well as patient activity and utilization by the Medicaid program and other government agencies and managed care organizations. The Company pays a variable fee to the specialty pharmacies to provide the data. The Company also pay the specialty pharmacies a fee in exchange for providing distribution and inventory management services, including the provision of inventory management data to the Company. The Company estimates the fee for service accruals and allowances based on sales to each specialty pharmacy and the applicable contracted rate. Sales Returns Allowances are made for estimated sales returns by the customers and are recorded in the period the related revenue is recognized. The Company typically permit returns if the product is out of date or damaged during transition to the common carrier. The Company’s estimates of sales returns are based primarily on analysis of industry information reporting the return rates for similar products and contractual agreement terms. The Company also takes into consideration known or expected changes in the marketplace specific to ARCALYST. Shipping and Handling Shipping and handling activities are considered to be fulfillment activities and not considered to be a separate performance obligation. Other Incentives Other incentives include a co-pay assistance program for eligible patients with commercial insurance in the U.S. The co-pay assistance programs assist commercially insured patients who have and are intended to reduce each participating patient’s portion of the financial responsibility of the purchase price up to a specified dollar amount of assistance. |
Intangible Assets | Intangible Assets Upon FDA approval and commercial launch of ARCALYST in March 2021, the Company capitalized the $ inite-lived |
Impairment of LongLived Assets | Impairment of long-lived assets The Company assesses the impairment of long-lived assets, including intangible assets and property and equipment, whenever events or changes in business circumstances indicate that the carrying amounts of the assets may not be fully recoverable. When such events occur, the Company determines whether there has been an impairment in value by comparing the asset’s carrying value with its fair value, as measured by the anticipated undiscounted net cash flows of the asset. If an impairment in value exists, the asset is written down to its estimated fair value. The Company has not recognized any impairment losses through September 30, 2021 and there have been no events that triggered an impairment analysis. |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred. Research and development expenses consist of costs incurred to discover, research and develop drug candidates, including personnel expenses, share-based compensation expense, allocated facility-related and depreciation expenses, third-party license fees and external costs of outside vendors engaged to conduct preclinical and clinical development activities and clinical trials as well as to manufacture clinical trial materials. Non-refundable prepayments determined to be used within one year for goods or services that will be used or rendered for future research and development activities are recorded as prepaid expenses. Non-refundable prepayments or minimum balance requirements associated with clinical trials determined to not be used within one year are classified as other long term assets. Such amounts are recognized as an expense as the goods are delivered or the related services are performed, or until it is no longer expected that the goods will be delivered, or the services rendered. Milestone and other payments made to third parties with respect to in-process research and development, in accordance with the Company’s license, acquisition and other similar agreements are expensed when determined to be probable and estimable. |
Research Contract Costs and Accruals | Research Contract Costs and Accruals The Company has entered into various research and development-related contracts with companies both inside and outside of the United States. The related costs are recorded as research and development expenses as incurred. The Company records accruals for estimated ongoing research and development costs. When billing terms under these contracts do not coincide with the timing of when the work is performed, the Company is required to make estimates of outstanding obligations to those third parties as of the end of the reporting period. Any accrual estimates are based on a number of factors, including the Company’s knowledge of the progress towards completion of the research and development activities, invoicing to date under the contracts, communication from the research institution or other companies of any actual costs incurred during the period that have not yet been invoiced, and the costs included in the contracts. Significant judgments and estimates are made in determining the accrued balances at the end of any reporting period. Actual results could differ materially from the Company’s estimates. The Company’s historical accrual estimates have not been materially different from the actual costs. |
Share-Based Compensation | Share-Based Compensation The Company measures all share-based awards granted to employees and directors based on their fair value on the date of grant. The Company issues share-based awards with both service-based vesting conditions and performance- based vesting conditions. The Company recognizes compensation expense for awards with service conditions on a straight-line basis over the requisite service period. For awards with performance conditions, the Company recognizes compensation expense when the achievement of the performance milestone is probable and estimable through the vest date. For share-based awards granted to consultants and non-employees, compensation expense is recognized over the vesting period of the awards, which is generally the period during which services are rendered by such consultants and non-employees until completed. The Company classifies share-based compensation expense in its consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the expected share price volatility, the expected term of the award, the risk-free interest rate, and expected dividends (see Note 9). Prior to May 2018, the Company was a private company and, accordingly, lacks company-specific historical and implied volatility information for its shares. Therefore, it estimates its expected share price volatility based on a blend of the historical volatility of the Company’s and publicly traded peer companies’ share prices and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. The expected term of the Company’s options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends on common shares and does not expect to pay any cash dividends in the foreseeable future. The fair value of each restricted share unit award is based on the closing price of the Company’s Class A common shares on the date of grant. Restricted share unit awards with an associated performance condition are evaluated on a regular basis for probability of achievement to determine the timing of recording share-based compensation expense in the Company’s consolidated statements of operations and comprehensive loss. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss includes net loss as well as other changes in shareholders’ equity that result from transactions and economic events other than those with shareholders. For the three and nine months ended September 30, 2021 and 2020, the Company’s other comprehensive loss was comprised of unrealized gain (loss) on short-term investments as well as cumulative translation adjustments, net of tax. |
Net Loss per Share | Net Loss per Share The two-class method determines net loss per share for each class of common shares and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common shareholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Basic net loss per share attributable to common shareholders is computed by dividing the net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net loss attributable to common shareholders is computed by adjusting net loss attributable to common shareholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net loss per share attributable to common shareholders is computed by dividing the diluted net loss attributable to common shareholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares. For purpose of this calculation, outstanding options and unvested restricted common shares are considered potential dilutive common shares. In periods in which the Company reports a net loss attributable to common shareholders, diluted net loss per share attributable to common shareholders is the same as basic net loss per share attributable to common shareholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss attributable to common shareholders for the three and nine months ended September 30, 2021 and 2020. |
Income Taxes | Income Taxes The Company is an exempted company incorporated under the laws of Bermuda. Under the current laws of Bermuda, income tax is not charged or levied on an exempted company’s income. As a result, the Company has not recorded any income tax benefits from losses incurred in Bermuda during each reporting period, and no net operating loss carryforwards will be available to the Company for those losses. The Company’s wholly owned U.S. subsidiaries, Kiniksa US and Primatope, are subject to federal and state income taxes in the United States. The Company’s wholly owned subsidiary Kiniksa UK, and its wholly owned subsidiaries, Kiniksa Germany, Kiniksa France, and Kiniksa Switzerland, are subject to taxation in their respective countries. Certain of the Company’s subsidiaries, primarily Kiniksa US and Kiniksa Germany, operate under cost-plus arrangements. The Company’s U.S. provision for income taxes relates to current tax expense associated with the taxable income in the United States of its wholly owned subsidiary, Kiniksa US. The current income tax expense is a result of the taxable income earned by Kiniksa US under its cost-plus arrangement offset in part by tax benefits from the U.S. federal and state research and development credits, the Foreign Derived Intangible Income (“FDII”) deduction and share-based compensation taxable events. The Company has recorded an immaterial foreign provision for income taxes related to income in non-U.S. subsidiaries. The Company provides for income taxes on an interim basis according to management’s estimate of the effective tax rate expected to be applicable for the full fiscal year. Subsidiaries with losses for which no benefit can be claimed are excluded from this calculation, and their tax is recorded discretely in the period it arises. Certain other items such as changes in tax rates, tax benefits or expense related to settlements of share-based payment awards, changes in the valuation allowance against deferred tax, and uncertain tax positions are treated as discrete items and are recorded in the period in which they arise. |
Recently Adopted and Recently Issued Accounting Pronouncements | Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes (Topic 740)(“ASU 2019-12”) |
Fair Value of Financial Asset_2
Fair Value of Financial Assets and Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value of Financial Assets and Liabilities | |
Schedule of financial assets and liabilities measured at fair value on a recurring basis | Fair Value Measurements as of September 30, 2021 Using: Level 1 Level 2 Level 3 Total Assets: Cash equivalents — money market funds 88,199 — — 88,199 Short-term investments — U.S. Treasury notes — 10,000 — 10,000 $ 88,199 $ 10,000 $ — $ 98,199 Fair Value Measurements as of December 31, 2020 Using: Level 1 Level 2 Level 3 Total Assets: Restricted cash — money market funds $ 210 $ — $ — $ 210 Cash equivalents — money market funds 22,942 — — 22,942 Cash equivalents — U.S. Treasury notes — 72,695 — 72,695 Short-term investments — U.S. Treasury notes — 209,444 — 209,444 $ 23,152 $ 282,139 $ — $ 305,291 |
Schedule of short-term investments | Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value September 30, 2021 Short-term investments — U.S. Treasury notes 10,000 — — 10,000 $ 10,000 $ — $ — $ 10,000 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value December 31, 2020 Cash equivalents — U.S. Treasury notes $ 72,694 $ 1 $ — $ 72,695 Short-term investments — U.S. Treasury notes 209,459 4 (19) 209,444 $ 282,153 $ 5 $ (19) $ 282,139 |
Product Revenue, Net (Tables)
Product Revenue, Net (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Product Revenue, Net | |
Schedule of product revenue, net | Nine Months Ended September 30, 2021 Product Revenue $ 19,799 |
Schedule of balances and activity of the product revenue allowance and reserve categories | Contractual Government Adjustments Rebates Returns 1 Total Balance at December 31, 2020 $ — $ — $ — $ — Current provisions relating to sales in the current year 1,365 615 301 2,281 Adjustments relating to prior years — — — — Payments/returns relating to sales in the current year (798) (110) (236) (1,144) Payments/returns relating to sales in the prior years — — — — Balance at September 30, 2021 $ 567 $ 505 $ 65 $ 1,137 September 30, 2021 Reduction of accounts receivable 12 Components of other current liabilities 1,125 Total revenue-related reserves $ 1,137 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Inventory | |
Schedule of inventory | September 30, 2021 Raw materials $ — Work-in-process 4,183 Finished Goods 1,423 $ 5,606 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Property and Equipment, Net | |
Schedule of property and equipment, net | September 30, December 31, 2021 2020 Furniture, fixtures and vehicles $ 62 $ 62 Computer hardware and software 349 349 Leasehold improvements 3,876 3,667 Lab equipment 4,660 4,602 Construction in progress 30 101 Total property and equipment 8,977 8,781 Less: Accumulated depreciation (5,809) (4,730) Total property and equipment, net $ 3,168 $ 4,051 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Intangible Assets | |
Schedule of intangible assets, net of accumulated amortization, impairment charges, and adjustments | As of September 30, 2021 Accumulated Estimated life Cost Amortization Net Regulatory milestone 20 years $ 20,000 $ 500 $ 19,500 $ 20,000 $ 500 $ 19,500 |
Schedule of future amortization of intangible assets | As of September 30, 2021 (remaining three months) $ 250 2022 1,000 2023 1,000 2024 1,000 2025 1,000 2026 1,000 2027 and thereafter 14,250 Total future amortization $ 19,500 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Accrued Expenses | |
Schedule of accrued expenses | September 30, December 31, 2021 2020 Accrued research and development expenses $ 17,805 $ 16,945 Accrued employee compensation and benefits 8,354 7,704 Accrued legal and professional fees 2,048 3,988 Other 321 562 $ 28,528 $ 29,199 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Share-Based Compensation | |
Schedule of share option activity under the Plans | Weighted Number of Average Shares Fair Value Outstanding as of December 31, 2020 9,958,858 $ 9.32 Granted 2,358,425 $ 11.65 Exercised (623,436) $ 4.49 Forfeited (2,137,366) $ 11.77 Outstanding as of September 30, 2021 9,556,481 $ 9.66 Share options exercisable as of September 30, 2021 4,529,290 $ 9.11 Share options unvested as of September 30, 2021 5,027,191 $ 10.82 |
Schedule of stock option valuation assumptions presented on weighted-average basis | Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Risk-free interest rate 0.93 % 0.36 % 0.98 % 0.56 % Expected term (in years) 6.25 6.24 6.14 6.21 Expected volatility 75.09 % 82.58 % 76.19 % 81.02 % Expected dividend yield — % — % — % — % |
Schedule of restricted share activity | Weighted Average Number of Grant Date Shares Fair Value Unvested RSUs as of December 31, 2020 205,312 $ 13.41 Granted 747,630 $ 17.79 Vested — $ — Forfeited (151,788) $ 18.53 Unvested RSUs as of September 30, 2021 801,154 $ 16.52 |
Schedule of share-based compensation expense was classified in the consolidated statements of operations and comprehensive loss | Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Cost of goods sold $ 62 $ — $ 101 $ — Research and development expenses 1,912 2,345 6,469 6,303 Selling, general and administrative expenses 4,225 3,213 12,472 8,315 $ 6,199 $ 5,558 $ 19,042 $ 14,618 |
Net Loss per Share (Tables)
Net Loss per Share (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Net Loss per Share | |
Schedule of basic and diluted net loss per share attributable to common shareholders | Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 Numerator: Net loss attributable to common shareholders $ (30,544) $ (43,836) $ (121,591) $ (107,724) Denominator: Weighted average common shares outstanding—basic and diluted 68,662,673 65,958,513 68,444,061 59,754,495 Net loss per share attributable to common shareholders— basic and diluted $ (0.44) $ (0.66) $ (1.78) $ (1.80) |
Schedule of anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common shareholders | As of September 30, 2021 2020 Options to purchase common shares 9,556,481 10,152,136 Unvested RSUs 801,154 287,511 10,357,635 10,439,647 |
Nature of the Business and Ba_2
Nature of the Business and Basis of Presentation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Nature of the Business and Basis of Presentation | |||||||||
Accumulated deficit | $ 639,064 | $ 639,064 | $ 517,473 | ||||||
Net losses | 30,544 | $ 41,563 | $ 49,484 | $ 43,836 | $ 37,469 | $ 26,419 | 121,591 | $ 107,724 | |
Cash used in operations | 107,414 | $ 95,341 | |||||||
Regulatory milestone payment | 20,000 | ||||||||
Cash, cash equivalents and short-term investments | $ 200,183 | $ 200,183 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)item | Sep. 30, 2020USD ($) | Dec. 31, 2020USD ($)item | Mar. 31, 2021USD ($) | |
Restricted cash | ||||||
Restricted cash | $ 0 | $ 0 | $ 210,000 | |||
Cash securing letter of credit | 210,000 | |||||
Revenue recognition | ||||||
Contract assets | 0 | 0 | 0 | |||
Contract liabilities | 0 | 0 | 0 | |||
Intangible assets | ||||||
Intangible asset, net | 19,500,000 | $ 19,500,000 | $ 0 | $ 20,000,000 | ||
Estimated life | 20 years | |||||
Income Taxes | ||||||
Bermuda statutory income tax rate | 0.00% | 0.00% | ||||
Income tax benefits - Bermuda | 0 | $ 0 | $ 0 | $ 0 | ||
Net operating loss carryforwards - Bermuda | $ 0 | $ 0 | $ 0 | $ 0 | ||
Cash and cash equivalents | Credit concentration | ||||||
Concentration risk | ||||||
Number of financial institutions holding cash, cash equivalents and short-term investments | item | 2 | 2 |
Fair Value of Financial Asset_3
Fair Value of Financial Assets and Liabilities (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020USD ($)security | Sep. 30, 2021USD ($) | |
Fair Value, Assets Transfers | ||
Fair value of assets transferred from Level 1 to Level 2 | $ 0 | $ 0 |
Fair value of assets transferred from Level 2 to Level 1 | 0 | 0 |
Fair value of assets transferred from Level 1 to Level 3 | 0 | 0 |
Fair value of assets transferred from Level 2 to Level 3 | 0 | 0 |
Fair value of assets transferred from Level 3 to Level 1 | 0 | 0 |
Fair value of assets transferred from Level 3 to Level 2 | $ 0 | |
Number of securities in an unrealized loss position | security | 17 | |
Securities in unrealized loss position | $ 107,753 | |
U.S. Treasury Notes | ||
Assets - Fair Value | ||
Short-term investments | 282,139 | 10,000 |
Short-term investments | ||
Amortized Cost | 282,153 | 10,000 |
Gross Unrealized Gains | 5 | |
Gross Unrealized Losses | (19) | |
Cash equivalents | U.S. Treasury Notes | ||
Assets - Fair Value | ||
Short-term investments | 72,695 | |
Short-term investments | ||
Amortized Cost | 72,694 | |
Gross Unrealized Gains | 1 | |
Short-term Investments | U.S. Treasury Notes | ||
Assets - Fair Value | ||
Short-term investments | 209,444 | 10,000 |
Short-term investments | ||
Amortized Cost | 209,459 | 10,000 |
Gross Unrealized Gains | 4 | |
Gross Unrealized Losses | (19) | |
Fair Value | Recurring basis | ||
Assets - Fair Value | ||
Assets | 305,291 | 98,199 |
Fair Value | Recurring basis | Money Market Funds | ||
Assets - Fair Value | ||
Restricted cash | 210 | |
Cash equivalents | 22,942 | 88,199 |
Fair Value | Recurring basis | U.S. Treasury Notes | ||
Assets - Fair Value | ||
Cash equivalents | 72,695 | |
Short-term investments | 209,444 | |
Fair Value | Recurring basis | Short-term Investments | U.S. Treasury Notes | ||
Assets - Fair Value | ||
Short-term investments | 10,000 | |
Fair Value | Recurring basis | Level 1 | ||
Assets - Fair Value | ||
Assets | 23,152 | 88,199 |
Fair Value | Recurring basis | Level 1 | Money Market Funds | ||
Assets - Fair Value | ||
Restricted cash | 210 | |
Cash equivalents | 22,942 | 88,199 |
Fair Value | Recurring basis | Level 2 | ||
Assets - Fair Value | ||
Assets | 282,139 | 10,000 |
Fair Value | Recurring basis | Level 2 | U.S. Treasury Notes | ||
Assets - Fair Value | ||
Cash equivalents | 72,695 | |
Short-term investments | $ 209,444 | |
Fair Value | Recurring basis | Level 2 | Short-term Investments | U.S. Treasury Notes | ||
Assets - Fair Value | ||
Short-term investments | $ 10,000 |
Product Revenue, Net (Details)
Product Revenue, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2021 | Sep. 30, 2020 | |
Product Revenue, Net | |||
Product revenue, net | $ 12,095 | $ 19,799 | |
Revenue, Product and Service [Extensible List] | us-gaap:ProductMember | us-gaap:ProductMember | |
Contractual Adjustments | |||
Current provisions relating to sales in the current year | $ 1,365 | ||
Payments/returns relating to sales in the current year | (798) | ||
Balance at end of period | 567 | 567 | |
Government Rebates | |||
Current provisions relating to sales in the current year | 615 | ||
Payments/returns relating to sales in current year | (110) | ||
Balance at end of period | 505 | 505 | |
Returns | |||
Current provision relating sales in the current year | 301 | ||
Payments/returns relating to sales in the current year | (236) | ||
Balance at end of period | 65 | 65 | |
Amount of reserve for specific return associated with product damaged in transit | 236 | ||
Total | |||
Current provisions relating to sales in the current year | 2,281 | ||
Payments/returns relating to sales in the current year | (1,144) | ||
Balance at end of period | $ 1,137 | $ 1,137 |
Product Revenue, Net - Revenue
Product Revenue, Net - Revenue Related Reserves in Balance Sheet (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Revenue-related reserves | |
Revenue-related reserves | $ 1,137 |
Accounts receivable, net | |
Revenue-related reserves | |
Revenue-related reserves | 12 |
Other current liabilities | |
Revenue-related reserves | |
Revenue-related reserves | $ 1,125 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Inventory | ||
Work-in-process | $ 4,183 | |
Finished goods | 1,423 | |
Total inventory | $ 5,606 | $ 0 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Property and Equipment, Net | |||||
Total property and equipment | $ 8,977 | $ 8,977 | $ 8,781 | ||
Less: Accumulated depreciation | (5,809) | (5,809) | (4,730) | ||
Total property and equipment, net | 3,168 | 3,168 | 4,051 | ||
Depreciation expense | 373 | $ 649 | 1,079 | $ 1,838 | |
Furniture, fixtures, and vehicles | |||||
Property and Equipment, Net | |||||
Total property and equipment | 62 | 62 | 62 | ||
Computer hardware and software | |||||
Property and Equipment, Net | |||||
Total property and equipment | 349 | 349 | 349 | ||
Leasehold improvements | |||||
Property and Equipment, Net | |||||
Total property and equipment | 3,876 | 3,876 | 3,667 | ||
Lab equipment | |||||
Property and Equipment, Net | |||||
Total property and equipment | 4,660 | 4,660 | 4,602 | ||
Construction in progress | |||||
Property and Equipment, Net | |||||
Total property and equipment | $ 30 | $ 30 | $ 101 |
Intangible Assets - Finite-live
Intangible Assets - Finite-lived Intangible Assets (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 | |
Finite-lived intangible asset | |||
Estimated life | 20 years | ||
Cost | $ 20,000 | ||
Accumulated Amortization | 500 | ||
Net intangible assets | $ 19,500 | $ 20,000 | $ 0 |
Regulatory milestone | |||
Finite-lived intangible asset | |||
Estimated life | 20 years | ||
Cost | $ 20,000 | ||
Accumulated Amortization | 500 | ||
Net intangible assets | $ 19,500 |
Intangible Assets - Future Amor
Intangible Assets - Future Amortization (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Future amortization of intangible assets | |||
2021 (remaining three months) | $ 250 | ||
2022 | 1,000 | ||
2023 | 1,000 | ||
2024 | 1,000 | ||
2025 | 1,000 | ||
2026 | 1,000 | ||
2027 and thereafter | 14,250 | ||
Net intangible assets | $ 19,500 | $ 20,000 | $ 0 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Accrued Expenses | ||
Accrued research and development expenses | $ 17,805 | $ 16,945 |
Accrued employee compensation and benefits | 8,354 | 7,704 |
Accrued legal and professional fees | 2,048 | 3,988 |
Other | 321 | 562 |
Accrued expenses | $ 28,528 | $ 29,199 |
Common Shares (Details)
Common Shares (Details) $ / shares in Units, $ in Thousands | Jul. 24, 2020USD ($)$ / sharesshares | May 18, 2020USD ($)$ / sharesshares | Sep. 30, 2021USD ($)Voteshares | Sep. 30, 2020USD ($) |
Nature of the Business and Basis of Presentation | ||||
Gross proceeds from offering | $ | $ 165,725 | |||
Common stock, cash dividends declared or paid | $ | $ 0 | |||
Class A common shares | ||||
Nature of the Business and Basis of Presentation | ||||
Number of votes (per share) | Vote | 1 | |||
Class A1 common shares | ||||
Nature of the Business and Basis of Presentation | ||||
Number of votes (per share) | Vote | 0 | |||
Convertible ratio to Class A common share | 1 | |||
Class B common shares | ||||
Nature of the Business and Basis of Presentation | ||||
Number of votes (per share) | Vote | 10 | |||
Convertible ratio to Class A common share | 1 | |||
Convertible ratio to Class B1 common share | 1 | |||
Class B1 common shares | ||||
Nature of the Business and Basis of Presentation | ||||
Number of votes (per share) | Vote | 0 | |||
Convertible ratio to Class A common share | 1 | |||
Convertible ratio to Class B common share | 1 | |||
Convertible Preferred Shares | ||||
Nature of the Business and Basis of Presentation | ||||
Preferred shares designated | shares | 0 | |||
Preferred stock, shares issued (in shares) | shares | 0 | |||
Follow-On Public Offering and Private Placement Inclusive of Over-Allotment | ||||
Nature of the Business and Basis of Presentation | ||||
Aggregate proceeds from offerings net of underwriter discounts and commissions, placement agent fees and other offering costs | $ | $ 146,037 | $ 74,495 | ||
Follow-On Public Offering and Private Placement | Common Class A and Class A1 common shares | ||||
Nature of the Business and Basis of Presentation | ||||
Gross proceeds from offering | $ | $ 155,000 | $ 79,570 | ||
Follow-On Offering | Class A common shares | ||||
Nature of the Business and Basis of Presentation | ||||
Issuance of stock (in shares) | shares | 5,952,381 | 2,760,000 | ||
Share price (in dollars per share) | $ / shares | $ 21 | $ 18.25 | ||
Private Placement | Class A1 common shares | ||||
Nature of the Business and Basis of Presentation | ||||
Issuance of stock (in shares) | shares | 1,428,572 | 1,600,000 | ||
Share price (in dollars per share) | $ / shares | $ 21 | $ 18.25 |
Share Based Compensation (Detai
Share Based Compensation (Details) | Jan. 01, 2021shares | May 23, 2018shares | Dec. 31, 2019item | Sep. 30, 2021shares | Sep. 30, 2021shares |
Restricted Share Units (RSUs) | |||||
Share-based compensation | |||||
RSUs Granted | 747,630 | ||||
2018 Incentive Award Plan | Class A common shares | |||||
Share-based compensation | |||||
Total number of common shares authorized to issue | 4,466,500 | ||||
Percentage of automatic increase in shares available for issue | 4.00% | ||||
Additional shares authorized | 2,728,600 | ||||
Number of common shares available for future grant | 3,529,409 | 3,529,409 | |||
2018 Incentive Award Plan | Class A common shares | Maximum | |||||
Share-based compensation | |||||
Percentage of automatic increase in shares available for issue | 4.00% | ||||
Maximum number of common shares may be issued | 27,915,000 | ||||
Rilonacept Long-term Incentive Plan | Restricted Share Units (RSUs) | |||||
Share-based compensation | |||||
Number of grants of RSU awards that a participant may receive | item | 2 | ||||
Future awards expected to be granted | 0 | ||||
2015 Equity Incentive Plan | Class A common shares | |||||
Share-based compensation | |||||
Total number of common shares authorized to issue | 4,691,213 | 2,307,458 | 2,307,458 | ||
Number of shares no longer available for future grant | 92,170 | ||||
2018 Employee Share Purchase Plan | Class A common shares | |||||
Share-based compensation | |||||
Total number of common shares authorized to issue | 670,000 | ||||
Number of common shares available for future grant | 598,817 | 598,817 | |||
2018 Employee Share Purchase Plan | Class A common shares | Maximum | |||||
Share-based compensation | |||||
Percentage of automatic increase in shares available for issue | 1.00% | ||||
Additional shares authorized | 130,000 | ||||
Maximum number of common shares may be issued | 6,420,000 |
Share-Based Compensation - Opti
Share-Based Compensation - Options (Details) - Class A common shares - Stock options | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Number of Shares | |
Outstanding, beginning of the period | shares | 9,958,858 |
Granted | shares | 2,358,425 |
Exercised | shares | (623,436) |
Forfeited | shares | (2,137,366) |
Outstanding, end of the period | shares | 9,556,481 |
Options exercisable | shares | 4,529,290 |
Options unvested | shares | 5,027,191 |
Weighted Average Grant Date Fair Value | |
Outstanding, beginning of the period | $ / shares | $ 9.32 |
Granted | $ / shares | 11.65 |
Exercised | $ / shares | 4.49 |
Forfeited | $ / shares | 11.77 |
Outstanding, end of the period | $ / shares | 9.66 |
Options exercisable | $ / shares | 9.11 |
Options unvested | $ / shares | $ 10.82 |
Share-Based Compensation - Op_2
Share-Based Compensation - Option Valuation (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Assumptions to determine fair value of options granted on weighted average basis: | ||||
Risk-free interest rate | 0.93% | 0.36% | 0.98% | 0.56% |
Expected term (in years) | 6 years 3 months | 6 years 2 months 26 days | 6 years 1 month 20 days | 6 years 2 months 15 days |
Expected volatility | 75.09% | 82.58% | 76.19% | 81.02% |
Share-Based Compensation - Rest
Share-Based Compensation - Restricted Shares and RSUs (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Mar. 31, 2021 | Sep. 30, 2021USD ($)$ / sharesshares | Sep. 30, 2020USD ($) | Sep. 30, 2021USD ($)$ / sharesshares | Sep. 30, 2020USD ($) | Dec. 31, 2020installment$ / sharesshares | Dec. 31, 2019installment | |
Share-based compensation | |||||||
Share-based compensation expense | $ | $ 6,199 | $ 5,558 | $ 19,042 | $ 14,618 | |||
Restricted Share Units (RSUs) | |||||||
Share-based compensation | |||||||
Share-based compensation expense | $ | $ 838 | $ 2,868 | |||||
Number of shares | |||||||
Beginning of the period | 205,312 | ||||||
Granted | 747,630 | ||||||
Forfeited | (151,788) | ||||||
End of the period | 801,154 | 801,154 | 205,312 | ||||
Weighted Average Fair Value at Issuance | |||||||
Beginning of the period | $ / shares | $ 13.41 | ||||||
Granted | $ / shares | 17.79 | ||||||
Forfeited | $ / shares | 18.53 | ||||||
End of the period | $ / shares | $ 16.52 | $ 16.52 | $ 13.41 | ||||
Time-based RSUs | |||||||
Share-based compensation | |||||||
Number of vesting installments | installment | 1 | ||||||
Vesting percentage | 25.00% | ||||||
Common shares issued | 56,369 | ||||||
Common shares withheld for tax purposes | 24,332 | ||||||
Share-based compensation expense | $ | 250 | 733 | |||||
First RSU Award | |||||||
Share-based compensation | |||||||
Number of vesting installments | installment | 1 | 1 | |||||
Share-based compensation expense | $ | $ 0 | $ 0 |
Share-Based Compensation - Clas
Share-Based Compensation - Classification of Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Share-based compensation | ||||
Share-based compensation expense | $ 6,199 | $ 5,558 | $ 19,042 | $ 14,618 |
Cost of goods sold | ||||
Share-based compensation | ||||
Share-based compensation expense | 62 | 101 | ||
Research and development expenses | ||||
Share-based compensation | ||||
Share-based compensation expense | 1,912 | 2,345 | 6,469 | 6,303 |
Selling, general and administrative expenses | ||||
Share-based compensation | ||||
Share-based compensation expense | $ 4,225 | $ 3,213 | $ 12,472 | $ 8,315 |
License, Acquisition and Coll_2
License, Acquisition and Collaboration Agreements - Biogen Asset Purchase Agreement (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2019 | Dec. 31, 2017 | |
License and Acquisition Agreements | |||||||
Research and development | $ 19,236 | $ 31,419 | $ 71,864 | $ 74,644 | |||
Asset Purchase Agreement | Biogen | |||||||
License and Acquisition Agreements | |||||||
Upfront payment for exchange of rights | $ 11,500 | ||||||
Technology transfer payment | 500 | ||||||
Milestone payment upon achievement of clinical milestone event | $ 10,000 | $ 4,000 | |||||
One-time payment of upfront sublicense fee on retained contracts | 150 | ||||||
Maximum aggregate obligation to pay insignificant annual maintenance fees as well as clinical and regulatory milestone payments | $ 1,575 | ||||||
Notice period to terminate the agreement | 90 days | ||||||
Uncured period which causes termination of the agreement, due to insolvency or bankruptcy or for material breach of the agreement by the other party that remains uncured | 90 days | ||||||
Notice period to terminate the agreement under payment-related breaches | 30 days | ||||||
Research and development | $ 14 | $ 42 | $ 14 | $ 92 | |||
Asset Purchase Agreement | Biogen | Maximum | |||||||
License and Acquisition Agreements | |||||||
Milestone payment to be paid upon clinical and regulatory milestone achievement | $ 179,000 | ||||||
Milestone payment to be paid upon net sales milestone achievement | $ 150,000 |
License, Acquisition and Coll_3
License, Acquisition and Collaboration Agreements - Beth Israel Deaconess Medical Center License Agreement (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
License and Acquisition Agreements | ||||
Research and development | $ 19,236 | $ 31,419 | $ 71,864 | $ 74,644 |
License Agreement | BIDMC | ||||
License and Acquisition Agreements | ||||
Research and development | 0 | $ 0 | 0 | $ 0 |
License Agreement | BIDMC | Maximum | ||||
License and Acquisition Agreements | ||||
Milestone payment to be paid upon clinical and regulatory milestone achievement | $ 1,200 | $ 1,200 |
License, Acquisition and Coll_4
License, Acquisition and Collaboration Agreements - Regeneron License Agreement (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
License and Acquisition Agreements | ||||||
Regulatory milestone payment | $ 20,000 | |||||
Research and development | $ 19,236 | $ 31,419 | 71,864 | $ 74,644 | ||
Intangible asset - Regulatory milestone | 20,000 | 20,000 | ||||
Commercial product inventory | $ 5,606 | $ 0 | 5,606 | |||
Regeneron | License Agreement | ||||||
License and Acquisition Agreements | ||||||
Upfront payment for exchange of rights | $ 5,000 | |||||
Regulatory milestone payment | $ 7,500 | 20,000 | ||||
Research and development | 0 | 0 | ||||
Profit sharing recognized | 0 | |||||
Uncured period which causes termination of the agreement, due to insolvency or bankruptcy or for material breach of the agreement by the other party that remains uncured | 90 days | |||||
Notice period to terminate the agreement under payment-related breaches | 30 days | |||||
Consecutive suspension of activities period for termination of agreement | 12 months | |||||
Notice period to terminate the agreement after US marketing approval of the developed product | 1 year | |||||
Notice period to terminate the agreement if products are having safety concerns | 3 months | |||||
Regeneron | Clinical Supply Agreement | ||||||
License and Acquisition Agreements | ||||||
Research and development expense related to purchase of drug materials | $ 0 | $ 0 | ||||
Maximum | Regeneron | License Agreement | ||||||
License and Acquisition Agreements | ||||||
Milestone payment to be paid upon regulatory milestone achievement | $ 27,500 |
License, Acquisition and Coll_5
License, Acquisition and Collaboration Agreements - MedImmune License Agreement (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Jul. 31, 2020 | Dec. 31, 2017 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2018 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2019 | |
License and Acquisition Agreements | ||||||||
Research and development | $ 19,236 | $ 31,419 | $ 71,864 | $ 74,644 | ||||
MedImmune | License Agreement | ||||||||
License and Acquisition Agreements | ||||||||
Upfront payment for exchange of rights | $ 8,000 | |||||||
Milestone payment to be paid upon regulatory milestone achievement | $ 10,000 | |||||||
Pass-through payment paid upon clinical milestone achievement | $ 5,000 | $ 5,000 | ||||||
Payment of accrued milestones | $ 10,000 | |||||||
Annual net sales excluded from calculation of specified annual net sales thresholds | $ 1,000,000 | |||||||
Maximum percentage of royalty payable on annual net sales of licensed products | 20.00% | |||||||
Notice period to terminate the agreement by both parties for material breaches | 90 days | |||||||
Notice period to terminate the agreement | 90 days | |||||||
Research and development | $ 0 | $ 0 | ||||||
Minimum | MedImmune | License Agreement | ||||||||
License and Acquisition Agreements | ||||||||
Additional specified annual net sales threshold for additional milestone payment. | $ 1,000,000 | |||||||
Maximum | MedImmune | License Agreement | ||||||||
License and Acquisition Agreements | ||||||||
Milestone payment to be paid upon specified milestone achievements for first two indications | 72,500 | |||||||
Milestone payment to be paid upon clinical and regulatory milestone achievement | $ 15,000 | |||||||
Milestone payment to be paid upon specified annual sales milestone achievements | 85,000 | |||||||
Additional milestone payments payable after achievement of additional annual sales | $ 1,100,000 |
Net Loss per Share (Details)
Net Loss per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Numerator: | ||||||||
Net loss attributable to common shareholders | $ (30,544) | $ (41,563) | $ (49,484) | $ (43,836) | $ (37,469) | $ (26,419) | $ (121,591) | $ (107,724) |
Denominator: | ||||||||
Weighted average common shares outstanding - basic and diluted | 68,662,673 | 65,958,513 | 68,444,061 | 59,754,495 | ||||
Net loss per share attributable to common shareholders - basic and diluted | $ (0.44) | $ (0.66) | $ (1.78) | $ (1.80) |
Net Loss per Share - Anti-Dilut
Net Loss per Share - Anti-Dilutive Securities (Details) - shares | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Anti-dilutive securities excluded from computation of earnings per share | ||
Total, anti-dilutive securities excluded from computation of earnings per share | 10,357,635 | 10,439,647 |
Stock options | ||
Anti-dilutive securities excluded from computation of earnings per share | ||
Total, anti-dilutive securities excluded from computation of earnings per share | 9,556,481 | 10,152,136 |
Restricted Share Units (RSUs) | ||
Anti-dilutive securities excluded from computation of earnings per share | ||
Total, anti-dilutive securities excluded from computation of earnings per share | 801,154 | 287,511 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Taxes | ||||
Bermuda statutory income tax rate | 0.00% | 0.00% | ||
Income tax benefits - Bermuda | $ 0 | $ 0 | $ 0 | $ 0 |
Net operating loss carryforwards - Bermuda | 0 | 0 | 0 | 0 |
Income tax expense (benefit) | $ (118,000) | $ 667,000 | $ 1,106,000 | $ 4,363,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Manufacturing commitments | |
Non-cancelable purchase commitments | $ 45,742 |
Amount of purchase commitment obligation due within one year | $ 32,693 |