PROKIDNEY CORP
For the period ended Sep 30, 2024. Filed Nov 12, 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.
Sep 30, 2024 · Filed Nov 12, 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 2024-06-30; filed 2024-08-09.
0000950170-24-094732
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0000950170-24-125312
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 134 previous paragraphs and 126 current paragraphs.
84 unchanged; 31 reworded; 10 added; 17 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 3 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 (10)
Current report
In the third quarter of 2024, we completed a comprehensive internal and external review, including engaging with ex-FDA officials and seasoned regulatory experts, to determine the optimal path to bring rilparencel to patients in the U.S. with type 2 diabetes and advanced CKD – a market where there is high unmet clinical and economic need. An important conclusion of this review was that under the provisions of the Regenerative Medicine Advanced Therapy (“RMAT”) designation, we believe rilparencel is eligible for initial FDA approval under an expedited approval pathway based upon successful completion of the ongoing Phase 3 REGEN-006 (PROACT 1) trial. We believe that the Phase 3 REGEN-016 (PROACT 2) trial is not required for initial U.S. registration. Thus, we have discontinued PROACT 2, which was focused on enrollment outside the U.S.
Current report
In October 2024, we had a Type B meeting with the FDA to discuss updates to rilparencel’s registrational trial strategy. The FDA confirmed that PROACT 1 could be sufficient to support a potential Biologics License Application (“BLA”) submission. Additionally,the FDA confirmed that the accelerated approval pathway is available to rilparencel and that the Company could consider eGFR slope as a surrogate endpoint for accelerated approval. We will continue to engage with the FDA, under our RMAT designation, to further define the details supporting this accelerated pathway.
Current report
Real Estate Matters:
Current report
Due to a change in the planned use for our Greensboro, North Carolina facility, we performed an impairment analysis to compare the building’s carrying value with its estimated fair value. This analysis resulted in the recognition of a non-cash impairment charge of $5.3 million during the three and nine months ended September 30, 2024.
Current report
The decrease in research and development expenses of approximately $0.9 million was primarily driven by the following:
Current report
decreases in costs for clinical operations of approximately $2.5 million, primarily due to wind down of activities related to PROACT 2 as well as decreases in the costs for other trials,
Current report
the recognition of an impairment charge of $5.3 million related to our Greensboro facility;
Current report
Income tax (benefit) expense
Current report
Comparison of Nine Months Ended September 30, 2024 and 2023
Current report
the recognition of an impairment charge of $5.3 million related to our Greensboro facility;
Removed paragraphs (17)
Previous report
RMCL-002 Study:
Previous 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.
Previous 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.
Previous report
In May 2024, we released final data from this study which indicated:
Previous report
rilparencel showed potential to preserve kidney function for up to 30 months in several patient groups
Previous 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
Previous report
injections were well tolerated with a consistent safety profile comparable to kidney biopsy.
Previous report
REGEN-007 Study:
Previous 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.
Previous 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.
Previous 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).
Previous report
Manufacturing Update:
Previous 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.
Previous 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;
Previous report
Comparison of Six Months Ended June 30, 2024 and 2023
Previous report
increases in information technology spending related to systems and security initiatives of approximately $0.9 million.
Previous report
Income tax expense
Reworded paragraphs (31)
Previous wording
We are a clinical-stage biotechnology company with a transformative proprietary cell therapy platform that has the potential to treat multiple chronic kidney diseases using a patient’s own cells isolated from the patient intended for treatment. Our approach seeks to redefine the treatment of chronic kidney disease (“CKD”), shifting the emphasis away from management of kidney failure to the preservation, if not improvement, of kidney function. Our lead product candidate, rilparencel (which we sometimes refer to as REACT®), is designed to preserve kidney function in a CKD patient’s diseased kidneys. Rilparencel is a product that includes autologous Selected Renal Cells (“SRC”) prepared from a patient’s own (autologous) kidney cells. SRC are formulated into a product for reinjection into the patient’s kidney using a minimally invasive outpatient procedure that might be repeatable, if necessary. Because rilparencel is a personalized treatment composed of cells prepared from a patient’s own kidney, there is no need for treatment with immunosuppressive therapies that are required during a patient’s lifetime when a patient receives a kidney transplant from another, allogeneic donor.
Current wording
We are a clinical-stage biotechnology company with a transformative proprietary cell therapy platform that has the potential to treat multiple chronic kidney diseases using a patient’s own cells isolated from the patient intended for treatment. Our approach seeks to redefine the treatment of chronic kidney disease (“CKD”), shifting the emphasis away from management of kidney failure to the preservation, if not improvement, of kidney function. Our lead product candidate, rilparencel (which we sometimes refer to as REACT®), is designed to preserve kidney function in a CKD patient’s diseased kidneys. Rilparencel is a product that includes autologous Selected Renal Cells (“SRC”) prepared from a patient’s own (autologous) kidney cells. SRC are formulated into a product for reinjection into the patient’s kidneys using a minimally invasive outpatient procedure that is repeatable, if necessary. Because rilparencel is a personalized treatment composed of cells prepared from a patient’s own kidney, there is no need for treatment with immunosuppressive therapies that are required during a patient’s lifetime when a patient receives a kidney transplant from another, allogeneic donor.
Previous wording
Since our inception, we have devoted substantially all of our resources to raising capital, organizing and staffing our Company, business and scientific planning, conducting discovery and research activities, acquiring or discovering product candidates, establishing and protecting our intellectual property portfolio, developing and progressing rilparencel and preparing for clinical trials, establishing arrangements with third parties for the manufacture of component materials, and providing general and administrative support for these operations. We do not have any product candidates approved for sale and have not generated any revenue from product sales.
Current wording
Since our inception, we have devoted substantially all of our resources to organizing and staffing our Company, business and scientific planning, conducting discovery and research activities, acquiring or discovering product candidates, establishing and protecting our intellectual property portfolio, developing and progressing rilparencel, raising capital and preparing for clinical trials, establishing arrangements with third parties for the manufacture of component materials, and providing general and administrative support for these operations. We do not have any product candidates approved for sale and have not generated any revenue from product sales.
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 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.
Current wording
REGEN-006 (PROACT 1) is an ongoing Phase 3, randomized, blinded, bi-lateral kidney dose, sham control arm, controlled safety and 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 (estimated glomerular filtration rate (“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 (urinary albumin-creatinine ratio (“UACR”) between 300 and 5000 mg/g). PROACT 1 has resumed enrolling patients under the amended protocol.
Previous wording
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 wording
REGEN-016 (PROACT 2) was a planned Phase 3, randomized, blinded, sham control arm, bi-lateral kidney dose, controlled safety and 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)).
Previous wording
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 wording
decreases in equity-based compensation costs of approximately $1.9 million driven by awards forfeited by terminated employees as well as lower valuations of awards granted in the current year,
Previous wording
decreases in spending of approximately $5.3 million related to manufacturing improvements;
Current wording
decreases in spending of approximately $1.8 million related to manufacturing process development; offset by;
Previous wording
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 wording
increases in cash-based compensation costs of approximately $3.5 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; and
Previous wording
The increase in general and administrative expenses of approximately $0.2 million was primarily driven by the following:
Current wording
The increase in general and administrative expenses of approximately $3.3 million was primarily driven by the following:
Previous wording
increases in cash-based compensation of approximately $3.9 million related to the hiring of new employees; and
Current wording
increases in cash-based compensation of approximately $2.0 million related to the hiring of new employees and severance costs for terminated employees; offset by;
Previous wording
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 wording
decreases in equity-based compensation of approximately $4.1 million due to lower expenses in the 2024 period driven by the impact of forfeitures of awards made to executives.
Previous wording
Income tax expense for the three months ended June 30, 2024 decreased from the three months ended June 30, 2023 due to 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.
Current wording
The change in income tax (benefit) expense is due to the impact of the 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.
Previous wording
The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023 (in thousands):
Current wording
The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023 (in thousands):
Previous wording
The increase in research and development expenses of approximately $3.0 million was primarily driven by the following:
Current wording
The increase in research and development expenses of approximately $3.7 million was primarily driven by the following:
Previous wording
increases in cash-based compensation costs of approximately $3.2 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 wording
increases in cash-based compensation costs of approximately $9.8 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,
Previous wording
increases in professional fees of $1.6 million related to the remediation of quality and manufacturing compliance deficiencies;
Current wording
increases in professional fees of $4.4 million related to the remediation of quality and manufacturing compliance deficiencies;
Previous wording
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 wording
increases in operational and material costs of $4.1 million as we continue to expand operations and purchase materials to support our Phase 3 clinical trials, offset by;
Previous wording
decreases in spending of approximately $2.9 million related to manufacturing improvements.
Current wording
decreases in spending of approximately $7.1 million related to manufacturing process development;
Previous wording
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 wording
decreases in equity-based compensation costs of $3.8 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
Previous 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.
Current wording
decreases in clinical study costs of approximately $3.7 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 $2.2 million was primarily driven by the following:
Current wording
The increase in general and administrative expenses of approximately $1.1 million was primarily driven by the following:
Previous wording
increases in cash-based compensation of approximately $2.2 million related to the hiring of new employees, offset by;
Current wording
increases in cash-based compensation of approximately $6.0 million related to the hiring of new employees; offset by;
Previous 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
Current wording
decreases in equity-based compensation of approximately $11.0 million due to lower expenses in the 2024 period driven by the impact of forfeitures of awards made to executives.
Previous wording
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.
Current wording
The change in income tax (benefit) 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.
Previous 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.
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 September 30, 2024, we have sold $7.9 million worth of Class A ordinary shares under the Sales Agreement for net proceeds of $7.7 million, leaving $92.1 million available to be sold.
Previous wording
Cash Flows for the Six Months Ended June 30, 2024 and 2023
Current wording
Cash Flows for the Nine Months Ended September 30, 2024 and 2023
Previous wording
The following table provides information regarding our cash flows for the six months ended June 30, 2024 and 2023 (in thousands):
Current wording
The following table provides information regarding our cash flows for the nine months ended September 30, 2024 and 2023 (in thousands):
Previous 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.
Current wording
Net cash used in operating activities was approximately $102.2 million for the nine months ended September 30, 2024, reflecting a net loss of approximately $114.9 million and uses driven by changes in working capital of approximately $13.6 million. Such uses were partially offset by non-cash charges and gains on investments of $26.1 million. The non-cash charges primarily consisted of equity-based compensation expense of $22.4 million, an impairment charge of $5.3 million and depreciation and amortization expense of $3.9 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 $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.
Current wording
Net cash used in operating activities was approximately $64.7 million for the nine months ended September 30, 2023, reflecting net loss of $113.7 million, partially offset cash provided by changes in working capital of approximately $12.8 million and non-cash charges and gains on investments of $36.2 million. The non-cash charges primarily consisted of equity-based compensation expense of $37.2 million and depreciation and amortization expense of $2.7 million.
Previous 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.
Current wording
The approximately $37.4 million increase in cash used in operating activities for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023 was primarily driven by an increase in net loss after adjusting for the non-cash charges and gains on investments of approximately $11.3 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.
Previous 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.
Current wording
Net cash provided by (used in) investing activities was approximately $5.3 million and $(234.1 million) for the nine months ended September 30, 2024 and 2023, respectively. The cash provided by investing activities during the nine months ended September 30, 2024 was primarily related to withdrawal of cash from our investments for use in operations. The cash used in investing activities during the nine months ended September 30, 2023, was driven by the investment of a portion of the proceeds raised through the Business Combination in marketable securities as well as the purchase of our facility in Greensboro, North Carolina.
Previous 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.
Current wording
Net cash from financing activities for the nine months ended September 30, 2024 includes proceeds of $144.3 million related to the sale of our Class A ordinary shares. Net cash used in financing activities for the nine months ended September 30, 2023 was an insignificant amount.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
increases in operational costs of $1.4 million as we continue to expand operations and purchase materials to support our Phase 3 clinical program.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
The increase in research and development expenses of approximately $4.7 million was primarily driven by the following:
Previous report — wording carried elsewhere
increases in professional fees of $4.3 million related to the remediation of quality and manufacturing compliance deficiencies;