kin-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)


☒			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: 001-36225

KINDRED BIOSCIENCES, INC.

(Exact name of registrant as specified in its charter)


Delaware						46-1160142
(State of incorporation)						(I.R.S. Employer Identification No.)

1555 Bayshore Highway, Suite 200

Burlingame, California 94010

(Address of principal executive offices) (Zip code)

Registrant’s telephone number: (650) 701-7901

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


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.0001 par value	KIN	The NASDAQ Stock Market LLC
Preferred Stock Purchase Rights	KIN	The NASDAQ Stock Market LLC

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 time 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 the definitions of “large accelerated filer,” “accelerated filer,” “smaller

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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 the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 30, 2021, Kindred Biosciences, Inc. had outstanding 45,273,504 shares of common stock, $0.0001 par value.

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Kindred Biosciences, Inc.

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Part No.	Item No.	Description	Page No.

I		FINANCIAL INFORMATION
	1	Financial Statements	3
		Condensed Consolidated Balance Sheets as of March 31 , 202 1 (unaudited) and December 31, 20 20	3
		Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three Months Ended March 3 1 , 202 1 and 20 20	4
		Unaudited Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31 , 202 1 and 20 20	5
		Notes to Unaudited Condensed Consolidated Financial Statements	6
	2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	3	Quantitative and Qualitative Disclosures About Market Risk	38
	4	Controls and Procedures	38

II		OTHER INFORMATION
	1	Legal Proceedings	39
	1A	Risk Factors	39
	2	Unregistered Sales of Equity Securities and Use of Proceeds	39
	3	Defaults Upon Senior Securities	39
	4	Mine Safety Disclosures	39
	5	Other Information	39
	6	Exhibits	40

		Index to Exhibits	40
		Signatures	41

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Kindred Biosciences, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)


	March 31, 2021		December 31, 2020
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	12,911	$	11,620
Short-term investments	50,240		46,758
Accounts, royalty and license receivable	2,337		624
Other receivables	10,378		—
Inventories	—		207
Prepaid expenses and other	3,225		3,415
Total current assets	79,091		62,624
Property and equipment, net	27,451		28,204
Long-term investments	158		1,500
Operating lease right-of-use assets	3,225		3,428
Other assets	54		58
Total assets	$	109,979	$	95,814

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	353	$	145
Accrued compensation	1,372		2,070
Accrued liabilities	1,168		2,745
Current portion of operating lease liabilities	844		825
Current portion of loan payable	2,815		1,111
Total current liabilities	6,552		6,896
Long-term liabilities:
Long-term operating lease liabilities	2,716		2,934
Long-term loan payable, net of debt discount	16,926		18,502
Total liabilities	26,194		28,332

Commitments and contingencies (Note 10)
Stockholders' equity:
Common stock, $0.0001 par value; 100,000,000 shares authorized; 44,707,614 and 39,492,134 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	4		4
Additional paid-in capital	338,374		312,321
Accumulated other comprehensive income	2		12
Accumulated deficit	(254,595)		(244,855)
Total stockholders' equity	83,785		67,482
Total liabilities and stockholders' equity	$	109,979	$	95,814

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

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Kindred Biosciences, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except per share amounts)

(Unaudited)


	Three months ended March 31,
	2021		2020
Revenues:
Net product revenues	$	227	$	603
Partner royalty revenue	326		—
Contract manufacturing revenue	1,842		—
Total revenues	2,395		603

Operating costs and expenses:
Cost of product revenues (1)	207		3,577
Contract manufacturing costs	383		—
Research and development	6,287		8,867
Selling, general and administrative	4,684		8,873
Restructuring costs	—		1,676
Total operating costs and expenses	11,561		22,993

Loss from operations	(9,166)		(22,390)
Interest and other expense, net	(574)		(371)
Net loss	(9,740)		(22,761)
Change in unrealized gains or losses on available-for-sale securities	(10)		(9)
Comprehensive loss	$	(9,750)	$	(22,770)

Net loss per share, basic and diluted	$	(0.24)	$	(0.58)
Weighted-average number of common shares outstanding, basic and diluted	41,089		39,186

(1) Includes $3,494 Finished Goods write-off in the first quarter of 2020 related to the Dechra Asset Purchase Agreement, consistent with the transition to proprietary Dechra branding and regulatory best practices related to label transitions on asset divestitures.

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

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Kindred Biosciences, Inc.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	Three months ended March 31,
	2021		2020
Cash Flows from Operating Activities
Net loss	$	(9,740)	$	(22,761)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	2,496		2,064
Depreciation and amortization expense	1,202		1,053
Amortization of discount on marketable securities	73		(109)
Amortization of debt discount of loan payable	128		85
Finished goods write off related to Dechra asset purchase (1)	—		3,494
Changes in operating assets and liabilities:
Accounts receivable	(1,713)		679

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