PROKIDNEY CORP
For the period ended Jun 30, 2024. Filed Aug 9, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 9, 2024
PROK$1.14+7.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-10.
0000950170-24-057785
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-09.
0000950170-24-094732
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 101 previous paragraphs and 134 current paragraphs.
81 unchanged; 20 reworded; 27 added; 0 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 2 previous and 3 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (27)
Current report
RMCL-002 Study:
Current report
RMCL-002 is a Phase 2, prospective, randomized, double-arm, deferred treatment, open-label, repeat dose, safety and efficacy study of rilparencel in subjects with type 2 diabetes and advanced kidney disease. The first subject was enrolled in this study in February 2017, and all subjects have completed follow-up.
Current report
The primary objective of this study was to assess the safety and efficacy of up to two rilparencel injections given six months apart (up to four weeks after target date) in patients with advanced kidney disease caused by type 2 diabetes with eGFRs between 20 and 50 mL/min/1.73m 2, with both doses delivered into the biopsied kidney using an outpatient, minimally invasive, percutaneous approach under conscious sedation completed in less than 90 minutes. Patients received up to two doses of rilparencel of 3x106 cells/g-KWest each.
Current report
In May 2024, we released final data from this study which indicated:
Current report
rilparencel showed potential to preserve kidney function for up to 30 months in several patient groups
Current report
the benefit to kidney function was most notable in subjects who had the highest risk of kidney failure (Stage 4 CKD with high urine albumin-to-creatinine ratio (UACR)); and
Current report
injections were well tolerated with a consistent safety profile comparable to kidney biopsy.
Current report
REGEN-007 Study:
Current report
REGEN-007 is an ongoing multi-center Phase 2 open-label 1:1 randomized two-armed trial in patients with diabetes and advanced kidney disease who have an estimated glomerular filtration rate (eGFR) between 20 and 50 mL/min/1.73m². At randomization, patients are allocated to two treatment groups using different dosing regimens. Group 1 replicates the dosing schedule for our Phase 3 clinical study program in which patients receive two rilparencel injections – one in each kidney, three months apart. Group 2 tests an exploratory dosing regimen to investigate whether physiological triggers, rather than a time-based trigger, could optimize multiple administrations of rilparencel. In Group 2, patients receive a single rilparencel dose in one kidney and a second dose in the contralateral kidney only if triggered by a sustained eGFR decline of ≥ 20%, and/or an increase in UACR from baseline of ≥ 30% and ≥ 30 mg/g.
Current report
In Group 1, as of May 7, 2024, patients with at least 12 months follow-up after the second injection of rilparencel (n=13) show stabilized kidney function for 18 months (average eGFR change from baseline to 18 months was -1.3 mL/min/1.73m 2). Importantly, similar results were observed in a subset of these patients (n=10) who met key inclusion criteria currently used in our Phase 3 clinical study program (average eGFR change from baseline to 18 months was -0.6 mL/min/1.73m2). Additional analyses will be performed as Group 1 data matures.
Current report
Twenty-five patients received at least one rilparencel injection in Group 2; 12 patients received a second rilparencel injection based on eGFR criteria (n=3) or UACR criteria (n=9). Patients in Group 2 who received two injections are scheduled to have up to 18 months of follow-up after their second injection. No rilparencel-related serious adverse events were observed across all patients in the study who received at least one rilparencel injection (n=49).
Current report
REGEN-016/PROACT 2 trial:
Current report
REGEN-016 (PROACT 2) is a planned Phase 3, randomized, blinded, sham control arm, bi-lateral kidney dose, controlled efficacy study of rilparencel in subjects with Stages 3b and 4 CKD caused by type 2 diabetes (specifically eGFR between 20 and 44 mL/min/1.73m 2 with moderate to severe albuminuria (UACR between 300 and 5,000 mg/g)). This study is planned to be conducted in clinical centers in Europe (we have activated sites in Spain), Latin America, Asia-Pacific and some United States centers.
Current report
Manufacturing Update:
Current report
In June 2024, we resumed manufacturing for U.S. and non-European clinical study sites, and in July 2024, we received the Qualified Person (QP) Declaration of Equivalence to European Union Good Manufacturing Practice (GMP) standards. This will allow us to ship rilparencel to clinical study sites in Europe.
Current report
increases in costs for clinical operations, materials and facilities of approximately $2.2 million, primarily due to preparations to restart our Phase 3 clinical trials, offset by;
Current report
decreases in equity-based compensation costs of approximately $1.3 million driven by awards forfeited by terminated employees as well as lower valuations of awards granted in the current year; and
Current report
The increase in general and administrative expenses of approximately $0.2 million was primarily driven by the following:
Current report
increases in cash-based compensation of approximately $2.2 million related to the hiring of new employees, offset by;
Current report
Comparison of Six Months Ended June 30, 2024 and 2023
Current report
Research and development expenses
Current report
increases in professional fees of $4.3 million related to the remediation of quality and manufacturing compliance deficiencies;
Current report
increases in facility and material costs of $1.7 million as we continue to expand operations and purchase materials to support our Phase 3 clinical trials, offset by;
Current report
decreases in equity-based compensation costs of $1.8 million associated with lower valuations of equity-based awards granted in the current period coupled with the impact of forfeitures of awards for terminated employees; and
Current report
General and administrative expenses
Current report
Income tax expense
Current report
As noted above, in June 2024, the Company sold 46,886,452 of its Class A ordinary shares in an underwritten public offering at a price of $2.42 per share. Additionally, in June 2024, the Company sold 11,030,574 of its Class A ordinary shares to certain investment entities at a price of $2.42 per share in a concurrent registered direct offering pursuant to share purchase agreements. The net proceeds to the Company from the offerings were approximately $136.7 million, after deducting the underwriting discounts and commissions and offering expenses payable by the Company. The shares were offered and sold pursuant to the Company’s shelf registration statement on Form S-3.
Reworded paragraphs (20)
Previous wording
We are currently conducting a global Phase 3 development program and multiple Phase 2 clinical trials for rilparencel in subjects with moderate to severe diabetic kidney disease (“DKD”). We also completed a Phase 1 clinical trial for rilparencel in subjects with CKD due to congenital anomalies of the kidney and urinary tract (“CAKUT”) for which the last subject visit occurred in January 2023 and the clinical study report was submitted to the FDA in December 2023. Rilparencel has, to date, been generally well tolerated by subjects with moderate to severe CKD in Phase 1 and 2 clinical testing.
Current wording
We are currently conducting a global Phase 3 development program and one ongoing Phase 2 clinical trial for rilparencel in subjects with moderate to severe diabetic kidney disease (“DKD”). We also completed a Phase 1 clinical trial for rilparencel in subjects with CKD due to congenital anomalies of the kidney and urinary tract (“CAKUT”) for which the last subject visit occurred in January 2023 and the clinical study report was submitted to the United States Food and Drug Administration (“FDA”) in December 2023. Rilparencel has, to date, been generally well tolerated by subjects with moderate to severe CKD in Phase 1 and 2 clinical testing.
Previous wording
REGEN-006 (PROACT 1) is an ongoing Phase 3, randomized, blinded, bi-lateral kidney dose, sham control arm, controlled efficacy study of rilparencel in subjects with CKD caused by type 2 diabetes. The related study protocol has been amended and was submitted to the FDA in March 2024. The amendment updated the protocol to focus on a subset of patients with Stage 4 CKD (eGFR between 20 and 30 mL min/1.73m 2) and late Stage 3b CKD (eGFR between 30 and 35 mL min/1.73m 2) with accompanying albuminuria. We continue to expect PROACT 1 to resume in mid-2024.
Current wording
REGEN-006 (PROACT 1) is an ongoing Phase 3, randomized, blinded, bi-lateral kidney dose, sham control arm, controlled efficacy study of rilparencel in subjects with advanced kidney disease caused by type 2 diabetes. The related study protocol has been amended to focus on a subset of patients with Stage 4 CKD (eGFR between 20 and 30 mL/min/1.73m 2) and late Stage 3b CKD (eGFR between 30 and 35 mL/min/1.73m 2) with accompanying albuminuria (UACR between 300 and 5000 mg/g). PROACT 1 has resumed enrolling patients under the amended protocol.
Previous wording
The increase in research and development expenses of approximately $1.6 million was primarily driven by the following:
Current wording
The increase in research and development expenses of approximately $3.0 million was primarily driven by the following:
Previous wording
increases in professional fees of $2.6 million related to the remediation of documentation deficiencies within our quality management systems, offset by;
Current wording
increases in professional fees of $1.6 million related to the remediation of quality and manufacturing compliance deficiencies;
Previous wording
decreases in spending of approximately $2.5 million related to manufacturing improvements.
Current wording
decreases in spending of approximately $2.9 million related to manufacturing improvements.
Previous wording
decreases in clinical study costs of approximately $2.1 million related primarily due to the impact of the pause of manufacturing and its impact on our Phase 3 program; and
Current wording
decreases in clinical study costs of approximately $1.1 million primarily due to the impact of the pause of manufacturing and its impact on our Phase 3 program as well as the levels of activity ongoing with our other clinical trials.
Previous wording
The decrease in general and administrative expenses of approximately $2.4 million was primarily driven by the following:
Current wording
The decrease in general and administrative expenses of approximately $2.2 million was primarily driven by the following:
Previous wording
decreases in equity-based compensation of approximately $4.8 million due to lower expenses in the 2024 period driven by the impact of forfeitures of awards made to executives, offset by
Current wording
decreases in equity-based compensation of approximately $6.9 million due to lower expenses in the 2024 period driven by the impact of forfeitures of awards made to executives, offset by
Previous wording
increases in cash-based compensation of approximately $1.7 million related to the hiring of new employees; and
Current wording
increases in cash-based compensation of approximately $3.9 million related to the hiring of new employees; and
Previous wording
increases in professional services of approximately $0.9 million related primarily to marketing strategy and information technology related services.
Current wording
increases in information technology spending related to systems and security initiatives of approximately $0.9 million.
Previous wording
Since our inception, we have not recognized any revenue and have incurred operating losses and negative cash flows from our operations. We have not yet commercialized any product and we do not expect to generate revenue from sales of any products for several years, if at all. From our inception through March 31, 2024, we funded our operations primarily through capital contributions from the holders of PKLP and the proceeds obtained through the Business Combination and related private placement financing.
Current wording
Since our inception, we have not recognized any revenue and have incurred operating losses and negative cash flows from our operations. We have not yet commercialized any product and we do not expect to generate revenue from sales of any products for several years, if at all. From our inception through June 30, 2024, we funded our operations primarily through capital contributions from the holders of PKLP, the proceeds obtained through the Business Combination and related private placement financing, and an underwritten public offering and registered direct offering in June 2024.
Previous wording
In January 2024, we entered into an Open Market Sale Agreement SM (“Sales Agreement”) with Jefferies LLC as the sales agent, pursuant to which we may offer and sell, from time to time, through Jefferies, our Class A ordinary shares, par value $0.0001 per share, having an aggregate offering price of up to $100.0 million by any method deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act (the “ATM Offering”). The shares are offered and sold pursuant to the Company’s shelf registration statement on Form S-3.
Current wording
In January 2024, we entered into an Open Market Sale Agreement SM (“Sales Agreement”) with Jefferies LLC (“Jefferies”) as the sales agent, pursuant to which we may offer and sell, from time to time, through Jefferies, our Class A ordinary shares having an aggregate offering price of up to $100.0 million by any method deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act. The shares are offered and sold pursuant to the Company’s shelf registration statement on Form S-3. As of June 30, 2024, we have sold $3.3 million worth of Class A ordinary shares under the Sales Agreement for net proceeds of $3.2 million, leaving $96.7 million available to be sold.
Previous wording
We expect that our existing cash, cash equivalents and marketable securities held at March 31, 2024, will enable us to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2025. We have based this estimate on assumptions that may prove to be wrong and we could exhaust our capital resources sooner than we expect.
Current wording
We expect that our existing cash, cash equivalents and marketable securities held at June 30, 2024, will enable us to fund our operating expenses and capital expenditure requirements into mid-2026. We have based this estimate on assumptions that may prove to be wrong and we could exhaust our capital resources sooner than we expect.
Previous wording
Cash Flows for the Three Months Ended March 31, 2024 and 2023
Current wording
Cash Flows for the Six Months Ended June 30, 2024 and 2023
Previous wording
The following table provides information regarding our cash flows for the three months ended March 31, 2024 and 2023 (in thousands):
Current wording
The following table provides information regarding our cash flows for the six months ended June 30, 2024 and 2023 (in thousands):
Previous wording
Net cash used in operating activities was approximately $34.6 million for the three months ended March 31, 2024, reflecting a net loss of approximately $35.3 million and uses driven by changes in working capital of approximately $5.8 million. Such uses were partially offset by non-cash charges and gains on investments of $6.5 million. The non-cash charges primarily consisted of equity-based compensation expense of $7.7 million and depreciation and amortization expense of $1.1 million. The changes in working capital primarily relate to the timing of payments made to our vendors for services performed and the recognition of receivable amounts related to interest on our marketable security investments.
Current wording
Net cash used in operating activities was approximately $72.9 million for the six months ended June 30, 2024, reflecting a net loss of approximately $73.8 million and uses driven by changes in working capital of approximately $13.3 million. Such uses were partially offset by non-cash charges and gains on investments of $14.1 million. The non-cash charges primarily consisted of equity-based compensation expense of $15.5 million and depreciation and amortization expense of $2.4 million. The changes in working capital primarily relate to the timing of payments made to our vendors for services performed and the recognition of receivable amounts related to interest on our marketable security investments.
Previous wording
Net cash used in operating activities was approximately $26.0 million for the three months ended March 31, 2023, reflecting a net loss of $36.9 million and uses driven by changes in working capital of approximately $2.4 million, partially offset by non-cash charges and gains on investments of $13.3 million. The non-cash charges primarily consisted of equity-based compensation expense of $13.0 million and depreciation and amortization expense of $0.8 million.
Current wording
Net cash used in operating activities was approximately $40.9 million for the six months ended June 30, 2023, reflecting a net loss of $71.7 million and uses driven by changes in working capital of approximately $6.9 million, partially offset by non-cash charges and gains on investments of $23.9 million. The non-cash charges primarily consisted of equity-based compensation expense of $24.2 million and depreciation and amortization expense of $1.7 million.
Previous wording
The approximately $8.7 million increase in cash used in operating activities for the three months ended March 31, 2024 compared to the three months ended March 31, 2023 was primarily driven by an increase in net loss after adjusting for the non-cash charges and gains on investments of approximately $5.3 million coupled with an increase in the use of cash related to the timing of payments to our vendors and receipt of interest amounts due.
Current wording
The approximately $32.1 million increase in cash used in operating activities for the six months ended June 30, 2024 compared to the six months ended June 30, 2023 was primarily driven by an increase in net loss after adjusting for the non-cash charges and gains on investments of approximately $12.0 million coupled with an increase in the use of cash related to the timing of payments to our vendors and receipt of interest amounts due.
Previous wording
Net cash provided by (used in) investing activities was approximately $58.4 million and $(192.6 million) for the three months ended March 31, 2024 and 2023, respectively. The cash provided by investing activities during the three months ended March 31, 2024 was primarily related to withdrawal of cash from our investments for use in operations. The cash used in investing activities during the three months ended March 31, 2023, was driven by the investment of a portion of the proceeds raised through the Business Combination in marketable securities.
Current wording
Net cash provided by (used in) investing activities was approximately $87.0 million and $(205.8 million) for the six months ended June 30, 2024 and 2023, respectively. The cash provided by investing activities during the six months ended June 30, 2024 was primarily related to withdrawal of cash from our investments for use in operations. The cash used in investing activities during the six months ended June 30, 2023, was driven by the investment of a portion of the proceeds raised through the Business Combination in marketable securities.
Previous wording
Net cash used in financing activities for the three months ended March 31, 2024 and 2023 was an insignificant amount.
Current wording
Net cash from financing activities for the six months ended June 30, 2024 includes proceeds of $139.9 million related to the sale of our Class A ordinary shares. Net cash used in financing activities for the six months ended June 30, 2023 was an insignificant amount.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
decreases in equity-based compensation of approximately $2.1 million due to lower expenses in the 2024 period driven by the impact of forfeitures of awards made to executives.
Current report — wording carried from elsewhere
The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023 (in thousands):
Current report — wording carried from elsewhere
The increase in research and development expenses of approximately $4.7 million was primarily driven by the following:
Current report — wording carried from elsewhere
increases in cash-based compensation costs of approximately $6.4 million due to the hiring of additional personnel particularly in the areas of clinical development, manufacturing and quality as we move forward with our clinical programs,
Current report — wording carried from elsewhere
decreases in spending of approximately $5.3 million related to manufacturing improvements;
Current report — wording carried from elsewhere
The decrease in income tax expense was driven by a change in the treatment of specified research and development expenses by our U.S. subsidiary due to recent guidance issued by the Internal Revenue Service such that these costs are no longer required to be capitalized and amortized ratably over a five-year period.