Nkarta Inc

Previous wording

We are a clinical-stage biopharmaceutical company pioneering the development of allogeneic, off-the-shelf engineered NK-cell therapies for the treatment of patients with hematologic malignancies or autoimmune diseases. We are currently developing NKX019, a CAR NK product candidate targeting the CD19 antigen, as our lead product candidate. We have also been developing NKX101, a CAR NK-cell product candidate targeting cells that display NKG2D ligands. Both product candidates enable an on-demand, off-the-shelf approach involving scaled manufacturing to broaden patient access. NKX019 and NKX101 incorporate proprietary technologies that enable us to generate an abundant supply of NK cells, increase NK-cell recognition of target antigens, enhance NK-cell fitness and freeze, store, and thaw our engineered NK cells for off-the-shelf administration. Our product candidates are allogeneic, which means they are produced using cells from a different person than the patient(s) being treated, and they are produced in quantity, then frozen and therefore available for treating patients without delay, unlike autologous cell therapies, which are derived from a patient’s own cells and must be manufactured as needed for each patient. We believe that engineered NK cells have the potential to be effective and accessible therapies for autoimmune diseases and cancer, be well tolerated, and avoid some of the toxicities observed with other cell therapies. NKX019 is currently being studied in an ongoing Phase 1 clinical trial for certain B-cell malignancies, and we are initiating the Phase 1 clinical trial of NKX019 for lupus nephritis (“LN”) are underway. NKX101 has been studied in a Phase 1 clinical trial for certain hematologic malignancies, although we have closed patient enrollment and deprioritized the program as part of a pipeline realignment to direct primary resources to our lead pipeline program, NKX019, for the treatment of autoimmune disease.

Current wording

We are a clinical-stage biopharmaceutical company pioneering the development of allogeneic, off-the-shelf engineered NK-cell therapies for the treatment of patients with autoimmune diseases or hematologic malignancies. We are currently developing NKX019, a CAR NK product candidate targeting the CD19 antigen, as our lead product candidate. We have also been developing NKX101, a CAR NK-cell product candidate targeting cells that display NKG2D ligands. Both product candidates enable an on-demand, off-the-shelf approach involving scaled manufacturing to broaden patient access. NKX019 and NKX101 incorporate proprietary technologies that enable us to generate an abundant supply of NK cells, increase NK-cell recognition of target antigens, enhance NK-cell fitness and freeze, store, and thaw our engineered NK cells for off-the-shelf administration. Our product candidates are allogeneic, which means they are produced using cells from a different person than the patient(s) being treated, and they are produced in quantity, then frozen and therefore available for treating patients without delay, unlike autologous cell therapies, which are derived from a patient’s own cells and must be manufactured as needed for each patient. We believe that engineered NK cells have the potential to be effective and accessible therapies for autoimmune diseases and cancer, be well tolerated, and avoid some of the toxicities observed with other cell therapies.

Previous wording

Our modular engineering platform builds on the distinctive biology of NK cells and their role in eradicating aberrant and pathologically transformed cells. Our process starts with differentiated, mature NK cells derived from healthy donors. We build on the intrinsic ability of these immune cells to identify and kill transformed cells with cell engineering to further enhance their activity. This engineering involves inducing the expression of a chimeric antigen receptor ("CAR") on the surface of an NK-cell to enable the cell to recognize specific proteins or antigens that are present on the surface of tumor cells. Our engineered CAR NK cells generally consist of an NK-cell engineered with a targeting receptor, OX40 costimulatory domain, CD3ζ(zeta) signaling moiety, and a membrane-bound form of the cytokine IL(interleukin)-15 ("mbIL-15").

Current wording

Our modular engineering platform builds on the distinctive biology of NK cells and their role in eradicating aberrant and pathologically transformed cells. Our process starts with differentiated, mature NK cells derived from healthy donors. We build on the intrinsic ability of these immune cells to identify and kill transformed cells with cell engineering to further enhance their activity. This engineering involves inducing the expression of a chimeric antigen receptor ("CAR") on the surface of an NK-cell to enable the cell to recognize specific proteins or antigens that are present on the surface of target cells. Our engineered CAR NK cells generally consist of an NK-cell engineered with a targeting receptor, OX40 costimulatory domain, CD3ζ(zeta) signaling moiety, and a membrane-bound form of the cytokine IL(interleukin)-15 ("mbIL-15").

Previous wording

NKX019 is currently being studied in a multi-center Phase 1 clinical trial for the treatment of a variety of B-cell malignancies. This ongoing first-in-human study evaluates the safety, pharmacology, and preliminary anti-tumor activity of NKX019, at multiple centers in the United States and Australia.

Current wording

In June 2024, we announced the initiation of Ntrust-1, a multi-center, open-label, dose-escalation Phase 1 clinical trial of NKX019 for lupus nephritis (“LN”). At that time, we also announced that we had received clearance of an Investigational New Drug ("IND") application by the United States Food and Drug Administration ("FDA") to evaluate NKX019 for the treatment of additional autoimmune diseases. Ntrust-2 is a planned multi-center, open-label, dose-escalation Phase 1 clinical trial that will evaluate the safety and clinical activity of NKX019 in humans with systemic sclerosis ("scleroderma"), idiopathic inflammatory myopathy ("myositis") and antineutrophil cytoplasmic antibody ("ANCA")-associated vasculitis ("AAV"). In July 2024, we announced that researchers at Columbia University Irving Medical Center (“CUIMC”) initiated an investigator-sponsored trial (“IST”) of NKX019 in patients with systemic lupus erythematosus (“SLE”). NKX019 is also being studied in a multi-center Phase 1 clinical trial for the treatment of a variety of B-cell malignancies, which evaluates the safety, pharmacology, and preliminary anti-tumor activity of NKX019.

Previous wording

NKX101 has been evaluated in a multi-center Phase 1 clinical trial in the U.S. for the treatment of relapsed or refractory acute myeloid leukemia ("r/r AML") and higher risk myelodysplastic syndromes ("MDS"). This first-in-human study evaluated the safety, pharmacology, and preliminary anti-tumor activity of NKX101. We have deprioritized the development of NKX101 as part of a realignment of our pipeline to direct primary resources to our lead pipeline program, NKX019, for the treatment of autoimmune disease.

Current wording

NKX101 has been evaluated in a multi-center Phase 1 clinical trial in the U.S. for the treatment of relapsed or refractory acute myeloid leukemia ("r/r AML") and higher risk myelodysplastic syndromes ("MDS"). This first-in-human study evaluated the safety, pharmacology, and preliminary anti-tumor activity of NKX101. We have deprioritized the development of NKX101 as part of a realignment of our pipeline to direct primary resources to development of our lead product candidate, NKX019, for the treatment of autoimmune diseases.

Previous wording

Since the commencement of our operations in 2015, we have devoted substantially all of our resources in support of our product development efforts, hiring personnel, raising capital to support and expand such activities and providing general and administrative support for these operations. We have incurred net operating losses since inception and have not generated any revenue from product sales. In the future, we expect that our operating expenses will significantly increase as we continue to develop and seek regulatory approvals for our product candidates, continue to engage in other research and development activities to expand our pipeline of product candidates, maintain and expand our intellectual property portfolio, maintain and expand our product manufacturing capabilities, and ultimately establish a commercial organization. We have funded our operations primarily through the issuance of Company stock and intend to raise additional capital to fund operations until such time that we are able to generate sufficient revenues to cover our operating expenses. We may seek additional funding through the issuance of common stock, including through our ATM Offering Program, other equity or debt financing or collaborations or partnerships with other companies. The amount and timing of our future funding requirements will depend on many factors, including, among other things, the pace and results of our clinical development efforts for our product candidates. We may not be able to raise additional capital on terms acceptable to us, or at all. Any failure to raise capital as and when needed would compromise our ability to execute our business plan and may cause us to undertake further cost containment measures and/or significantly delay, scale back or discontinue the development of some of our programs. We have also incurred increased operating expenses since becoming a public company, which we expect will further increase when we are no longer able to rely on certain “emerging growth company” exemptions we are afforded under the Jumpstart Our Business Startups Act (the "JOBS Act") as further described under “—JOBS Act” below. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year.

Current wording

Company stock and intend to raise additional capital to fund operations until such time that we are able to generate sufficient revenues to cover our operating expenses. We may seek additional funding through the issuance of common stock, including through our ATM Offering Program, other equity or debt financing or collaborations or partnerships with other companies. The amount and timing of our future funding requirements will depend on many factors, including, among other things, the pace and results of our clinical development efforts for our product candidates. We may not be able to raise additional capital on terms acceptable to us, or at all. Any failure to raise capital as and when needed would compromise our ability to execute our business plan and may cause us to undertake further cost containment measures and/or significantly delay, scale back or discontinue the development of some of our programs. We have also incurred increased operating expenses since becoming a public company, which we expect will further increase when we are no longer able to rely on certain “emerging growth company” exemptions we are afforded under the Jumpstart Our Business Startups Act (the "JOBS Act") as further described under “—JOBS Act” below. Our net losses may fluctuate significantly from quarter-to-quarter and year-to-year.

Previous wording

On March 27, 2024, we sold an aggregate of (i) 21,010,000 shares of its common stock at a price of $10.00 per share, and (ii) pre-funded warrants to purchase 3,000,031 shares of common stock at a price of $9.9999 per pre-funded warrant in an underwritten public offering. The pre-funded warrants can be exercised at any time after issuance for an exercise price of $0.0001 per share, subject to certain ownership limitations. The total net proceeds from the offering were approximately $225.1 million, after deducting underwriting discounts and commissions and estimated offering expenses

Current wording

On March 27, 2024, we sold an aggregate of (i) 21,010,000 shares of its common stock at a price of $10.00 per share, and (ii) pre-funded warrants to purchase 3,000,031 shares of common stock at a price of $9.9999 per pre-funded warrant in an underwritten public offering. The pre-funded warrants can be exercised at any time after issuance for an exercise price of $0.0001 per share, subject to certain ownership limitations. The total net proceeds from the offering were approximately $225.1 million, after deducting underwriting discounts and commissions and offering expenses.

Previous wording

The following table summarizes our research and development expenses for the three months ended March 31, 2024 and 2023. The direct external development program expenses reflect external costs attributable to our clinical development candidates and preclinical candidates selected for further development. Such expenses include third-party contract costs relating to manufacturing, clinical trial activities, translational medicine and toxicology activities. The unallocated internal research and development costs include personnel, facility costs, laboratory consumables and discovery and research related activities associated with our pipeline. The partner cost sharing represents reimbursable research and development expenses from the CRISPR Agreement.

Current wording

The following table summarizes our research and development expenses for the three and six months ended June 30, 2024 and 2023. The direct external development program expenses reflect external costs attributable to our clinical development candidates and preclinical candidates selected for further development. Such expenses include third-party contract costs relating to manufacturing, clinical trial activities, translational medicine and toxicology activities. The unallocated internal research and development costs include personnel, facility costs, laboratory consumables and discovery and research related activities associated with our pipeline. The partner cost sharing represents reimbursable research and development expenses from the CRISPR Agreement.

Previous wording

Research and development activities are central to our business model. There are numerous factors associated with the successful commercialization of any of our drug candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. In addition, future regulatory factors beyond our control may impact our clinical development programs. Drug candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our drug candidates. However, we expect that our research and development expenses will increase substantially in connection with our planned preclinical and clinical development activities in the future, including as a result of our planned clinical trial of NKX019 for the treatment of LN.

Current wording

Research and development activities are central to our business model. There are numerous factors associated with the successful commercialization of any of our drug candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. In addition, future regulatory factors beyond our control may impact our clinical development programs. Drug candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. At this time, we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our drug candidates. However, we expect that our research and development expenses will increase substantially in connection with our planned preclinical and clinical development activities in the future, including as a result of Ntrust-1, our clinical trial of NKX019 for the treatment of LN, and Ntrust-2, our planned clinical trial of NKX019 for the treatment of scleroderma, myositis, and AAV.

Previous wording

Research and development expenses. Research and development expenses were $25.2 million and $26.1 million for the three months ended March 31, 2024 and 2023, respectively. The decrease of $0.9 million was primarily due to the following:

Current wording

Research and development expenses. Research and development expenses were $23.1 million and $25.1 million for the three months ended June 30, 2024 and 2023, respectively. Research and development expenses were $48.4 million and $51.3 million for the six months ended June 30, 2024 and 2023, respectively.

Previous wording

a $3.6 million decrease in program costs primarily from lower manufacturing and materials spending as we deprioritized NKX101 and began preparations for Phase I clinical trials of NKX019 in autoimmune diseases;

Current wording

a $7.5 million decrease in program costs primarily from lower manufacturing and materials spending as we deprioritized NKX101 and began preparations for Phase I clinical trials of NKX019 in autoimmune diseases, as well as a decrease in clinical expenses from a reduction in enrolled patients;

Previous wording

a $0.8 million decrease in partner cost sharing reimbursable expenses related to less activities performed under our collaboration with CRISPR.

Current wording

a $1.1 million decrease in partner cost sharing reimbursable expenses related to a decrease in activities performed under our collaboration with CRISPR; and

Previous wording

General and administrative expenses. General and administrative expenses were $7.5 million and $8.2 million for the three months ended March 31, 2024 and 2023, respectively. The decrease of $0.7 million was primarily due to the decrease in personnel related expenses resulting from reduced headcount following the reduction in force completed in October 2023.

Current wording

The decrease of $4.2 million and $4.8 million the three and six months ended June 30, 2024, respectively, were primarily due to the $4.1 million impairment of the right-of-use assets during the three months ended June 30, 2023 and a decrease in personnel-related expenses resulting from reduced headcount following the reduction in force completed in October 2023, partially offset by an increase in depreciation.

Previous wording

Interest income. Interest income was $3.2 million and $3.5 million for the three months ended March 31, 2024 and 2023, respectively. The decrease was primarily due to lower adjustment for amortization of purchase premiums and accretion of discounts, which was partially offset by higher interest earned in the first quarter of 2024 as compared to the first quarter of 2023. Interest income includes interest earned from investments, partially offset by amortization of purchase premiums and accretion of discounts of investments.

Current wording

Interest income. Interest income was $5.7 million and $9.0 million for the three and six months ended June 30, 2024, respectively, and $3.6 million and $7.0 million for the three and six months ended June 30, 2023, respectively. The increase of $2.2 million and $1.9 million for the three and six months ended June 30, 2024, respectively, were primarily due to higher average investment balances in the current period. Interest income includes interest earned from investments, partially offset by amortization of purchase premiums and accretion of discounts of investments.

Previous wording

As of March 31, 2024, we had cash, cash equivalents, restricted cash and investments of $450.0 million. We estimate all of the $265.1 million in net proceeds from our July 2020 initial public offering have been spent. On April 28, 2022, we received $215.3 million in net proceeds, after deducting underwriting discounts, commissions and other offering expenses, in connection with our secondary offering of our common stock. On March 27, 2024, we received $225.1 million in net proceeds from an underwritten public offering, after deducting underwriting discounts, commissions and expenses, described further below.

Current wording

As of June 30, 2024, we had cash, cash equivalents, restricted cash and investments of $426.7 million. We estimate that all $265.1 million in net proceeds from our July 2020 initial public offering have been spent. On April 28, 2022, we received $215.3 million in net proceeds, after deducting underwriting discounts, commissions and other offering expenses, in connection with our secondary offering of our common stock. On March 27, 2024, we received $225.1 million in net proceeds from an underwritten public offering, after deducting underwriting discounts, commissions and expenses, described further below.

Previous wording

On March 17, 2023, we filed the Shelf Registration Statement, as amended on April 24, 2023, covering the offer and sale from time to time, pursuant to Rule 415 of the Securities Act, of up to $350.0 million in aggregate offering price of shares of our common stock, shares of our preferred stock, debt securities, warrants, rights and/or units (including up to $120.0 million in aggregate offering price of shares of our common stock, shares of our preferred stock, debt securities, warrants, rights and/or units registered on our Prior Registration Statement), that have not yet been sold. The Shelf Registration Statement was declared effective by the SEC on May 5, 2023.

Current wording

On March 17, 2023, the Company filed a Registration Statement on Form S-3, as amended by the Form S-3/A filed on April 24, 2023 (the "Shelf Registration Statement"), covering the offer and sale from time to time, pursuant to Rule 415 of the Securities Act of 1933, as amended (the "Securities Act"), of up to $350.0 million in aggregate offering price of shares of the Company’s common stock, shares of the Company’s preferred stock, debt securities, warrants, rights and/or units, including up to $120.0 million in aggregate offering price of shares of the Company’s common stock, shares of the Company’s preferred stock, debt securities, warrants, rights and/or units registered on the Company’s Registration Statement on Form S-3 declared effective by the Securities and Exchange Commission (the "SEC") on September 2, 2021 (the "Prior Registration Statement") that had not yet been sold. The Shelf Registration Statement was declared effective by the SEC on May 5, 2023.

Previous wording

The Prior Registration Statement included a prospectus covering the offer and sale from time to time of up to $150.0 million in aggregate offering price of shares of our common stock through the ATM Offering Program with Cowen and Company, LLC, as sales agent. For the three months ended March 31, 2024, no sales of our common stock were made pursuant to the ATM Offering Program.

Current wording

On August 12, 2021, the Company entered into a sales agreement with Cowen and Company, LLC, as sales agent, to provide for the offering, issuance and sale of up to an aggregate of $150.0 million of the Company’s common stock through an “at-the-market” equity offering program (the "ATM Offering Program") pursuant to the Prior Registration Statement and subject to the limitations thereof. For the six months ended June 30, 2024, no sales of the Company’s common stock were made pursuant to the ATM Offering Program.

Previous wording

We have incurred net losses and negative cash flows from operations since our inception. As of March 31, 2024, we had an accumulated deficit of $465.0 million and anticipate that we will continue to incur net losses for the foreseeable future. We expect to incur substantial expenditures as we develop our product pipeline and advance our drug candidates through clinical development, undergo the regulatory approval process and, if approved, launch commercial activities. Specifically, in the near term we expect to incur substantial expenses relating to initiating and completing our clinical trials, the development and validation of our manufacturing processes, and other development activities.

Current wording

We have incurred net losses and negative cash flows from operations since our inception. As of June 30, 2024, we had an accumulated deficit of $489.9 million and anticipate that we will continue to incur net losses for the foreseeable future. We expect to incur substantial expenditures as we develop our product pipeline and advance our drug candidates through clinical development, undergo the regulatory approval process and, if approved, launch commercial activities. Specifically, in the near term we expect to incur substantial expenses relating to initiating and completing our clinical trials, the development and validation of our manufacturing processes, and other development activities.

Previous wording

We believe that our current cash, cash equivalents and investments as of March 31, 2024 will be sufficient to meet our cash needs for at least 12 months following the issuance date of this Quarterly Report on Form 10-Q.

Current wording

We believe that our current cash, cash equivalents and investments as of June 30, 2024 will be sufficient to meet our cash needs for at least 12 months following the date of this Quarterly Report on Form 10-Q.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2024 was $28.5 million primarily due to a net loss of $29.5 million adjusted for net change in operating assets and liabilities of $4.6 million and net of non-cash charges of $5.6 million. The change in net operating assets and liabilities was primarily due to a decrease in accrued liabilities of $3.0 million and operating lease liabilities of $1.2 million. Cash flows from operations are generally impacted by the timing of payments to vendors and vendor payment terms. The non-cash charges primarily consisted of stock-based compensation of $4.4 million, depreciation and amortization of $2.3 million, which was offset by investment accretion and amortization of $1.6 million.

Current wording

Net cash used in operating activities for the six months ended June 30, 2024 was $50.4 million primarily due to a net loss of $54.5 million adjusted for a decrease in net change in operating assets and liabilities of $7.3 million, which was offset by an increase in net of non-cash charges of $11.4 million. The change in net operating assets and liabilities was primarily due to an increase in interest receivable and prepaid expenses for the maintenance of labratory equipment, and a decrease in accruals and operating lease liability. The non-cash charges primarily consisted of stock-based compensation of $8.8 million, depreciation and amortization of $4.5 million, which was offset by investment accretion and amortization of $3.0 million.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2023 was $20.8 million, primarily due to a net loss of $30.8 million adjusted for net change in operating assets and liabilities of $6.3 million, and net of non-cash charges of $3.8 million. The change in net operating assets and liabilities was primarily due to a decrease in accrued liabilities of $1.4 million offset by operating lease liabilities of $8.0 million from the TIA reimbursement payment. The non-cash charges primarily consistent of stock-based compensation of $4.7 million, depreciation and amortization of $0.8 million, which was offset by investment accretion and amortization of $2.3 million.

Current wording

Net cash used in operating activities for the six months ended June 30, 2023 was $42.5 million, primarily due to a net loss of $64.1 million adjusted for net change in operating assets and liabilities of $9.9 million, and net of non-cash charges of $11.7 million. The change in net operating assets and liabilities was primarily due operating lease liabilities of $7.1 million from tenant improvement allowance reimbursements and an increase in accounts payable of $1.2 million.. The non-cash charges primarily consistent of stock-based compensation of $9.4 million, right-of-use asset impairment of $4.1 million, and depreciation and amortization of $1.6 million, which was offset by investment accretion and amortization of $4.5 million.

Previous wording

Net cash provided by investing activities for the three months ended March 31, 2024 was $21.5 million, which consisted primarily of proceeds from the maturities of marketable securities of $61.7 million, partially offset by the purchase of marketable securities of $40.0 million.

Current wording

Net cash used by investing activities for the six months ended June 30, 2024 was $86.1 million, which consisted primarily of the purchase of marketable securities of $214.3 million and the purchase of property and equipment of $2.5 million, partially offset by proceeds from the maturities of marketable securities of $130.7 million.

Previous wording

Net cash provided by investing activities for the three months ended March 31, 2023, was $36.9 million, which consisted primarily of proceeds from the maturities of marketable securities of $126.0 million, partially offset by the purchase of marketable securities of $84.3 million and the purchase of property and equipment of $4.8 million related to the construction of our manufacturing facility.

Current wording

Net cash provided by investing activities for the six months ended June 30, 2023, was $33.8 million, which consisted primarily of proceeds from the maturities of marketable securities of $206.4 million, partially offset by the purchase of marketable securities of $157.5 million and the purchase of property and equipment of $15.2 million related to the construction of our manufacturing facility.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2024, was $225.7 million, which primarily consisted of net proceeds from our underwritten public offering of $225.1 million that closed in March 2024.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2024, was $225.9 million, which primarily consisted of net proceeds from our underwritten public offering of $225.1 million that closed in March 2024.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2024, was immaterial and consisted of proceeds from the exercise of stock options.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2023, was $0.4 consisted of proceeds from stock options and the employee stock plan purchase.

Previous wording

There have been no other significant changes in our critical accounting policies and estimates during the three months ended March 31, 2024, as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K.

Current wording

There have been no significant changes in our critical accounting policies and estimates during the six months ended June 30, 2024, as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K.