kldo-10q_20210331.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38822

KALEIDO BIOSCIENCES, INC.

(Exact name of registrant as specified in its charter)

Delaware	47-3048279
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

65 Hayden Avenue, Lexington, MA	02421
(Address of principal executive offices)	(Zip Code)

(617) 674-9000

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 Par Value	KLDO	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 30, 2021, there were 42,518,653 shares of registrant’s common shares outstanding.

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements, which reflect our current views with respect to, among other things, our operations and financial performance. We make such forward looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plan, objectives of management and expected market growth are forward-looking statements. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. We believe these factors include but are not limited to those described under “Risk Factors” and include, among other things:

•	our ability to continue as a going concern, including without limitation our ability to continue to advance the clinical development of our MMT candidates;

•

the success, cost and timing of our research and development activities, including statements regarding the timing of initiation and completion of clinical studies or clinical trials and related preparatory work, the period during which the results of the clinical studies or clinical trials will become available;

•	our ability to advance any product candidate into or successfully complete any clinical trial or identify an alternative commercial pathway for such product candidate;

•	our ability or the potential to successfully manufacture our product candidates for clinical studies, clinical trials or for commercial use, if approved;

•	our ability to obtain funding for our operations, when needed, including funding necessary to complete further development and commercialization of our product candidates, if approved, and to further expand our propriety product platform;

•	the accuracy of our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;

•	the potential for our identified research priorities to advance our product candidates or allow us to identify new product candidates;

•	our expectations regarding the timing for proposed submissions of regulatory filings, including but not limited to any Investigational New Drug application filing or any New Drug Applications;

•	our ability to maintain regulatory approval, if obtained, of any of our current or future product candidates, and any related restrictions, limitations and/or warnings in the label of an approved product candidate;

•	our ability to commercialize our products in light of the intellectual property rights of others;

•	our plans to research, develop and commercialize our product candidates;

•	our ability to attract collaborators with development, regulatory and commercialization expertise;

•	the expected results pursuant to collaboration arrangements including the receipts of future payments that may arise pursuant to collaboration agreements;

•	existing and future agreements with third parties in connection with the research and development or commercialization of our product candidates;

•	the size and growth potential of the markets for our product candidates, and our ability to serve those markets either alone or in collaboration with others;

•	the rate and degree of market acceptance of our product candidates;

•	the success of competing therapies that are or become available

•	our ability to contract with third-party suppliers and manufacturers and their ability to perform their obligations adequately;

•	our ability to attract and retain key scientific or management personnel;

•	the impact of changes in existing laws, regulations and guidance or the adoption of new laws, regulations and guidance;

•	our expectations regarding our ability to obtain and maintain intellectual property protection for our product candidates and other technologies;

•	the impact of the COVID-19 outbreak on our clinical trial programs and business generally, as well as our plans and expectations with respect to the timing and resumption of any development activities that may be temporarily paused as a result of the COVID-19 outbreak;

•	the ultimate impact of the current coronavirus pandemic, or any other health epidemic, on our business, our clinical trials, our research programs, healthcare systems or the global economy as a whole; and

•	other risks and uncertainties, including those discussed in Part II, Item 1A, “Risk Factors” in this Quarterly Report.

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All of our forward-looking statements are as of the date of this Quarterly Report only. In each case, actual results may differ materially from such forward-looking information. We can give no assurance that such expectations or forward-looking statements will prove to be correct. An occurrence of or any material adverse change in one or more of the risk factors or risks and uncertainties referred to in this Quarterly Report on Form 10-Q or included in our other public disclosures or our other periodic reports or other documents or filings filed with or furnished to the Securities and Exchange Commission, or the SEC, could materially and adversely affect our business, prospects, financial condition and results of operations. Except as required by law, we do not undertake or plan to update or revise any such forward-looking statements to reflect actual results, changes in plans, assumptions, estimates or projections or other circumstances affecting such forward-looking statements occurring after the date of this Quarterly Report on Form 10-Q, even if such results, changes or circumstances make it clear that any forward-looking information will not be realized. Any public statements or disclosures by us following this Quarterly Report that modify or impact any of the forward-looking statements contained in this Quarterly Report will be deemed to modify or supersede such statements in this Quarterly Report.

We caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

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KALEIDO BIOSCIENCES, INC. AND SUBSIDIARIES

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		Page Number
PART I: FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Stockholders' Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	20
Item 4.	Controls and Procedures	20
PART II: OTHER INFORMATION
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	21
Item 4.	Mine Safety Disclosures	21
Item 5.	Other Information	21
Item 6.	Exhibits	22
Signatures		23

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PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

KALEIDO BIOSCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except share and per share data)

	As of
	March 31, 2021			December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	92,362		$	46,222
Prepaid expenses and other current assets		2,670			2,499
Total current assets		95,032			48,721
Property and equipment, net		7,833			8,462
Restricted cash		2,161			2,161
Total assets	$	105,026		$	59,344
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,412		$	5,389
Accrued expenses and other current liabilities		5,702			8,636
Current term debt, net of unamortized debt discount		4,759			2,634
Total current liabilities		12,873			16,659
Long term debt, net of unamortized debt discount		16,433			18,375
Other liabilities		3,946			3,814
Total liabilities		33,252			38,848
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $0.001 par value, 10,000,000 authorized; no shares issued or outstanding		—			—
Common stock, $0.001 par value, 150,000,000 shares authorized; 42,483,171 and 36,022,811 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively		42			36
Additional paid-in capital		368,953			294,639
Accumulated deficit		(297,221	)		(274,179	)
Total stockholders' equity		71,774			20,496
Total liabilities and stockholders’ equity	$	105,026		$	59,344

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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KALEIDO BIOSCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share data)

	Three Months Ended March 31,
	2021			2020
Revenue:
Collaboration revenue	$	297		$	—
Operating expenses:
Research and development		17,185			13,137
General and administrative		5,460			5,917
Total operating expenses		22,645			19,054
Loss from operations		(22,348	)		(19,054	)
Other (expense) income:
Interest income		21			193
Interest expense		(709	)		(688	)
Other expense		(6	)		(2	)
Total other (expense) income, net		(694	)		(497	)
Net loss	$	(23,042	)	$	(19,551	)
Net loss per share —basic and diluted	$	(0.58	)	$	(0.64	)
Weighted-average common shares outstanding —basic and diluted		39,692,582			30,333,283

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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KALEIDO BIOSCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)

(in thousands, except share data)

	Common Stock
	Shares		Amount		Additional Paid-In Capital			Accumulated Deficit			Stockholders’ Equity (Deficit)
Balance at January 1, 2021		36,022,811	$	36	$	294,639		$	(274,179	)		20,496
Issuance of common stock, net of issuance costs $4,512		6,347,156		6		69,919			—			69,925
Exercise of stock options		63,331		—		352			—			352
Stock-based compensation		—		—		4,229			—			4,229
Common stock issued upon vesting of restricted stock units, net of 21,452 shares withheld for employee taxes		49,873		—		(186	)		—			(186	)
Net loss		—		—		—			(23,042	)		(23,042	)
Balance at March 31, 2021		42,483,171	$	42	$	368,953		$	(297,221	)	$	71,774

	Common Stock
	Shares		Amount		Additional Paid-In Capital			Accumulated Deficit			Stockholders’ Equity (Deficit)
Balance at January 1, 2020		30,127,846	$	30	$	241,412		$	(192,559	)	$	48,883
Exercise of stock options		334,444		—		1,561			—			1,561
Stock-based compensation		—		—		2,725			—			2,725
Vesting of restricted shares		1,250		—		3			—			3
Net loss		—		—		—			(19,551	)		(19,551	)
Balance at March 31, 2020		30,463,540	$	30	$	245,701		$	(212,110	)	$	33,621

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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KALEIDO BIOSCIENCES, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Three Months Ended March 31,
	2021			2020
Operating activities:
Net loss	$	(23,042	)	$	(19,551	)
Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortization		577			369
Stock-based compensation		4,229			2,725
Amortization of debt discount		183			173
Non-cash interest expense		181			173
Loss on disposal of fixed assets		10			—
Changes in:
Prepaid expenses and other assets		(173	)		(1,627	)
Accounts payable		(2,977	)

SEC Form 10-Q filed by Kaleido Biosciences, Inc.