Kymera: Upcoming test data will make or break the company (NASDAQ:KYMR)

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crest (NASDAQ:KYMR) is a company with a lot of R&D activity, but its projects are at such an early stage that nobody knows how to value this company. Especially in a bear market and especially when they say that the biopharmaceutical sector is going through a “correction”.

Kymera is a strong second fiddle to Arvines (ARVN) in the protein degrading space. The company’s platform is called PEGASUS, which binds E3 ligases to harmful proteins to design bifunctional small molecules that degrade the harmful proteins that cause disease. Its latest candidate stage is in phase 1. Known as KT-474, this molecule, in association with Sanofi, is, according to the business, “an orally bioavailable, highly selective, and potent IRAK4 degrader for the treatment of IL-1R/TLR-driven conditions and diseases with high unmet medical need.” These indications include atopic dermatitis (AD) and hidradenitis suppurativa (HS), and may also include macrophage activation syndrome, general pustular psoriasis, and rheumatoid arthritis (RA) in the future. Patients have been enrolled in that phase 1 trial, and patient data is expected in Q4. Some data from the ascending single-dose portion of the Test in June of last year:

In June 2021, Kymera announced positive interim results from the Single Ascending Dose (SAD) portion of the KT-474 Phase 1 clinical trial, demonstrating the first evidence of a degradative mechanism in targeted protein degradation in a healthy group. randomized and placebo controlled. volunteer study. KT-474 met and exceeded the Phase 1 degradation target of 85%, with a maximum degradation of 94%, within the SAD portion of the Phase 1 trial dosed to date, with profound degradation of IRAK4 after a single oral dose lasting at least six days at all dose levels (25, 75, 150, and 300 mg), with no treatment-related adverse events observed.

IRAK4 degradation is a clinically validated pathway, which means that there are drugs that have shown that IRAK4 inhibition leads to therapeutic benefits. There are a couple of molecules, from Pfizer (PFE) and from Curis in the industry. So Kymera just needs to focus on degrading IRAK4; its connection with a therapeutic benefit, especially in I/I but also in oncology, is more or less established in the literature.

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In May this year, the company removed the IRAK4 (non-degrading) inhibitor PF-06650833 from Pfizer after it had no beneficial impact in HS patients. Kymera shares fell as a result because investors thought that the mechanism of HS treatment through IRAK4 inhibition is unproven, so IRAK4 downgrading is also risky. However, this may not be true, and we’ll see what happens in Q4 when the data comes out. Curis’s Iraq-4 inhibitor, emavusertib, has also been clinically suspended by the FDA in two separate indications.

Two other programs, IRAKIMiD and STAT3, are also in phase 1 trials with mechanism test data expected this year. The first program, IRAKIMiD, is a “novel heterobifunctional degrader that targets the degradation of Ikaros and Aiolos substrates of IRAK4 and IMiD with a single small molecule, targeting the IL-1R/TLR and IFN type 1 pathways synergistically to amplify activity against mutant MYD88-DLBCL.” The second program, STAT3, approaches a previously “non-medicable” target for the treatment of hematologic malignancies and solid tumors, as well as autoimmune diseases and fibrosis. This will also produce mechanism test data this year.

In my previous article, I discussed some of its science. I quoted something from Kymera’s CEO, Nello Mainolfi, explaining the advantage of directed protein degradation:

The inherent ability to combine the power of genetic-like elimination with the flexibility of small molecules; the power of targeted drug classes that have been elusive to other therapeutic modalities; the use of affinity instead of occupancy-based catalysis…

Kymera’s industry partners include Sanofi (SNY) and Vertex (VRTX). The partnership with Sanofi began in 2020 with an initial payment of $150 million. The deal is valued at $2 billion in potential milestone payments plus tiered royalties. Attention is focused on IRAK4 in immunoinflammatory diseases. Kymera just has to advance the molecule through phase 1, and once the POM is in hand, Sanofi takes over. KYMR retains US co-developer and co-op-in rights, and IRAK4 rights in oncology. Pretty good deal for an early stage company, taking the risk out of your phase 1 program completely.

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The Vertex program focuses on non-core areas, excludes oncology and I/I. The deal is worth $70 million upfront and $1 billion in milestone payments plus tiered royalties.

The company hit a 52-week low in May after there was a loss of revenue, which in itself is not a big deal for a startup; and a slight delay in reading lead data after they extended dosing to 28 instead of 14 days. The extension was done in consultation with the FDA and partner Sanofi, to obtain better safety data and explore clinical endpoints.

Finance

KYMR has a market capitalization of $1.68 billion and approximately $600 million in cash reserves. Research and development expenses were $43.9 million for the third quarter of 2022, while general and administrative expenses were $10.6 million. The business has enough cash to last 8 to 10 quarters.

In August, Kymera He received an unsolicited offer to provide $150 million in PIPE financing, “sell 2.7 million shares at $26 per share, and then “pre-funded warrants” to buy a further 3 million shares at just under $26 per share “. The name of the main funder was not disclosed. As CEO Nello Mainolfi put it, “They basically said, we love what you’re doing, we’d love to give you more money.”

Bottom line

The Pfizer IRAK4 fiasco worries me a bit. I think this is Kymera’s most critical short-term risk. If the molecule passes and Sanofi takes over, that will send the stock up considerably. If the results are inconclusive or worse, I think there will be a major correction in KYMR stock. The company has a strong foundation of cash and science, so there is an opportunity here for risk-taking biopharmaceutical investors.

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