kron-20240331

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, 2024

☐ 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: 001-39592

Kronos Bio, Inc.

(Exact name of registrant as specified in its charter)


Delaware			82-1895605
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification Number)

1300 So. El Camino Real, Suite 400

San Mateo, California 94402

(650) 781-5200

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

(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 per share	KRON	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 or ☐ 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 or ☐ No.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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	☐	Smaller reporting company	☒
Non-accelerated filer	☒	Accelerated filer	☐
		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 or ☒ No

As of May 3, 2024 the registrant had 60,094,409 shares of common stock, $0.001 par value per share, outstanding.

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Financial Statements (unaudited):
	Condensed Balance Sheets	3
	Condensed Statements of Operations and Comprehensive Loss	4
	Condensed Statements of Stockholders’ Equity	5
	Condensed Statements of Cash Flows	6
	Notes to Condensed Financial Statements (unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	94
Item 5.	Other Information	94
Item 6.	Exhibits	95
	Signatures	96

PART 1. FINANCIAL INFORMATION

ITEM 1. CONDENSED FINANCIAL STATEMENTS

KRONOS BIO, INC.

Condensed Balance Sheets

(Unaudited)

(in thousands, except per share amounts)


	March 31, 2024		December 31, 2023(1)
Assets
Current assets:
Cash and cash equivalents	$	46,197	$	64,326
Short-term investments	105,787		108,671
Prepaid expenses and other current assets	6,375		5,781
Total current assets	158,359		178,778
Long-term investments	—		1,989
Property and equipment, net	8,115		10,252
Operating lease right-of-use assets	13,902		19,657
Restricted cash	2,026		2,026
Other noncurrent assets	577		577
Total assets	$	182,979	$	213,279
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	2,226	$	883
Accrued expenses	4,987		10,931
Current portion of operating lease liabilities	3,017		2,893
Current portion of deferred revenue	8,670		9,584
Current portion of other liabilities	132		404
Total current liabilities	19,032		24,695
Noncurrent operating lease liabilities	24,457		25,379
Noncurrent deferred revenue	2,522		4,127

Total liabilities	$	46,011	$	54,201
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.001 par value; 10,000 authorized; no shares issued and outstanding.
Common stock, $0.001 par value, 200,000 authorized as of March 31, 2024 and December 31, 2023; 60,089 and 58,946 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.	60		59
Additional paid-in capital	675,776		667,861
Accumulated deficit	(538,819)		(508,861)
Accumulated other comprehensive income (loss)	(49)		19
Total stockholders' equity	136,968		159,078
Total liabilities and stockholders’ equity	$	182,979	$	213,279

(1) The balance sheet as of December 31, 2023 is derived from the audited financial statements as of that date.

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

KRONOS BIO, INC.

Condensed Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except per share amounts)


	Three months ended March 31,
	2024		2023
Revenue	$	2,520	$	1,221
Operating expenses:
Research and development	14,222		19,658
General and administrative	7,506		10,056
Impairment of long-lived assets and restructuring	12,786		—
Total operating expenses	34,514		29,714
Loss from operations	(31,994)		(28,493)
Other income (expense), net:
Interest income and other expense, net	2,036		2,255
Total other income (expense), net	2,036		2,255
Net loss	$	(29,958)	$	(26,238)
Other comprehensive loss:
Net unrealized gain (loss) on available-for-sale securities	(68)		432
Net comprehensive loss	$	(30,026)	$	(25,806)
Net loss per share, basic and diluted	$	(0.50)	$	(0.46)
Weighted-average shares of common stock, basic and diluted	59,521		57,147

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

KRONOS BIO, INC.

Condensed Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except per share amounts)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2023	58,946	$	59	$	667,861	$	19	$	(508,861)	$	159,078
Issuance of common stock upon vesting of options and restricted stock	1,143	1		209		—		—		210
Stock-based compensation expense	—	—		7,706		—		—		7,706
Net unrealized loss on available-for-sale securities	—	—		—		(68)		—		(68)
Net loss	—	—		—		—		(29,958)		(29,958)
Balance at March 31, 2024	60,089	$	60	$	675,776	$	(49)	$	(538,819)	$	136,968

Balance at December 31, 2022	56,967	$	57	$	641,422	$	(792)	$	(396,188)	$	244,499
Issuance of common stock upon vesting and exercise of options and vesting of restricted stock	386	—		305		—		—		305
Stock-based compensation expense	—	—		6,607		—		—		6,607
Net unrealized gain on available-for-sale securities	—	—		—		432		—		432
Net loss	—	—		—		—		(26,238)		(26,238)
Balance at March 31, 2023	57,354	$	57	$	648,334	$	(360)	$	(422,426)	$	225,605

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

KRONOS BIO, INC.

Condensed Statements of Cash Flows

(Unaudited)

(in thousands)


	Three Months Ended March 31,
	2024		2023
Cash flows from operating activities:
Net loss	$	(29,958)	$	(26,238)
Adjustments to reconcile net loss to cash used in operating activities:
Stock-based compensation expense	3,327		6,607
Depreciation	475		569
Net amortization (accretion) on available-for-sale securities	(1,106)		(1,253)
Change in accrued interest on available-for-sale securities	(7)		212
Non-cash lease expense	797		585
Impairment of long-lived assets and restructuring	11,166		—
Changes in operating assets and liabilities:
Prepaid expenses and other current assets	(450)		274
Other noncurrent assets	—		(2)
Accounts payable	1,347		1,005
Accrued expenses	(6,109)		(6,365)
Right-of-use operating assets and lease liabilities, net	(797)		(115)
Deferred revenue	(2,519)		18,779
Current portion of other liabilities and other noncurrent liabilities	(65)		(5)
Net cash used in operating activities	(23,899)		(5,947)

Cash flows from investing activities:
Purchase of property and equipment	(7)		(126)
Purchase of available-for-sale marketable securities	(48,754)		(102,595)
Maturities of marketable securities	54,531		96,366

Net cash provided by (used in) investing activities	5,770		(6,355)

Cash flows from financing activities:


Net cash provided by (used in) financing activities	—		—

Net decrease in cash and cash equivalents	(18,129)		(12,302)
Cash, cash equivalents and restricted cash at beginning of period	66,352		77,999
Cash, cash equivalents and restricted cash at end of period	$	48,223	$	65,697

Supplemental disclosures of non-cash activities:
Property and equipment additions included in accounts payable and accrued expenses	$	—	$	7

Cash and cash equivalents at end of period	$	46,197	$	61,646
Restricted cash at end of period	2,026		4,051
Cash, cash equivalents and restricted cash at end of period	$	48,223	$	65,697

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

KRONOS BIO, INC.

Notes to Condensed Financial Statements

(Unaudited)

1.NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Kronos Bio, Inc. (Kronos or the Company), a Delaware corporation, was incorporated on June 2, 2017. The Company is an integrated discovery through clinical development biopharmaceutical company, with a focus on developing therapeutics that target the deregulated transcription that causes cancer and other serious diseases.

The Company operates in one business segment which is the development of biopharmaceutical products.

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and pursuant to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.

Unaudited Interim Financial Information

The accompanying condensed balance sheet as of March 31, 2024, the condensed statements of operations and comprehensive loss for the three months ended March 31, 2024 and 2023, the condensed statements of stockholders’ equity as of March 31, 2024 and March 31, 2023, the condensed statements of cash flows for the three months ended March 31, 2024 and 2023 (collectively referred to as the “condensed financial statements”), and the financial data and other financial information disclosed in the notes to the condensed financial statements are unaudited. The unaudited interim condensed financial statements have been prepared on a basis consistent with the Company’s audited annual financial statements and, in the opinion of management, reflect all adjustments, consisting solely of normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of March 31, 2024 and the results of its operations for the three months ended March 31, 2024 and 2023. The results for the three months ended March 31, 2024 are not necessarily indicative of results to be expected for the full year ending December 31, 2024, any other interim periods, or any future year or period. These condensed financial statements should be read in conjunction with the Company's audited financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 21, 2024 (Annual Report).

Need for Additional Capital

The Company has incurred net losses since its inception of $538.8 million as of March 31, 2024. The Company expects that its cash, cash equivalents and investments as of March 31, 2024 will be sufficient to fund its operations for a period of at least one year from the date of issuance of these condensed financial statements. Management expects to incur additional losses in the future to fund its operations and conduct product research and development and recognizes the need to raise additional capital.

The Company intends to raise additional capital through the issuance of equity securities, debt financings or other sources in order to continue its operations. However, if such financing is not available when needed and at adequate levels, the Company will need to reevaluate its operating plan and may be required to delay the development of its product candidates.

The future viability of the Company is dependent on its ability to generate cash from operating activities or to raise additional capital to finance its operations. The Company’s failure to raise capital as and when needed could have a material adverse effect on its financial condition and ability to pursue business strategies. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into collaboration arrangements or obtain government grants. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain funding, the Company could be forced to delay, reduce, or eliminate its research and development programs, product portfolio expansion or commercialization efforts, which could adversely affect its business prospects. In the event that the Company

KRONOS BIO, INC.

Notes to Condensed Financial Statements

(Unaudited)

requires additional funding, there can be no assurance that it will be successful in obtaining sufficient funding on terms acceptable to the Company to fund its continuing operations, if at all.

2.SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND JUDGMENTS

Use of Estimates

The preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of assets and liabilities at the date of the condensed financial statements and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed financial statements include, but are not limited to, revenue, the accrual of research and development expenses, the fair value of investments, the fair value of the long-lived assets, income tax uncertainties, the valuation of equity instruments and the incremental borrowing rate for determining the operating lease assets and liabilities. Estimates are periodically reviewed in light of changes in circumstances, facts and experience. Actual results could differ from the Company’s estimates.

Significant Accounting Policies

There have been no significant changes to the accounting policies during the three months ended March 31, 2024, as compared to the significant accounting policies described in Item 8 Financial Statements and Supplementary Data, Note 2 of the “Notes to Financial Statements” of the Company’s audited financial statements included in its Annual Report.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances the disclosures required for income taxes in the Company’s annual financial statements. ASU 2023-09 is effective for the Company in its annual reporting for fiscal 2025 on a prospective basis. Early adoption and retrospective reporting are permitted. The Company does not plan to adopt this standard early. The adoption of this standard is not expected to have a material impact on the Company’s financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280). The amendments in this update expand segment disclosure requirements, including new segment disclosure requirements for entities with a single reportable segment among other disclosure requirements. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The adoption of this standard is not expected to have a material impact on the Company’s financial statements.

There have been no other recent accounting pronouncements during the three months ended March 31, 2024 that are of significance to the Company.

3.FAIR VALUE MEASUREMENTS

The Company follows authoritative accounting guidance, which among other things, defines fair value, establishes a consistent framework for measuring fair value and expands disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability.

The Company measures and reports its cash equivalents and investments at fair value.

KRONOS BIO, INC.

Notes to Condensed Financial Statements

(Unaudited)

Money market funds, Certificates of deposit and U.S. treasury securities are measured at fair value on a recurring basis using quoted prices and are classified as Level 1. Investments measured at fair value based on inputs other than quoted prices that are derived from observable market data are classified as Level 2.

Financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used in such measurements by major security type as of March 31, 2024 and December 31, 2023 were as follows (in thousands):


	March 31, 2024
	Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Money market funds	$	30,590	$	—	$	—	$	30,590
Certificates of deposit	489		—		—		489
Corporate bonds	—		19,583		—		19,583
U.S. treasury securities	92,456		—		—		92,456
Total financial assets	$	123,535	$	19,583	$	—	$	143,118


	December 31, 2023
	Level 1		Level 2		Level 3		Fair Value
Financial Assets:
Money market funds	$	36,009	$	—	$	—	$	36,009
Certificates of deposit	733		—		—		733
Corporate bonds	—		3,662		—		3,662
U.S. treasury securities	126,366		—		—		126,366
Total financial assets	$	163,108	$	3,662	$	—	$	166,770

The carrying amounts of accounts payable and accrued expenses approximate their fair values due to their short-term maturities. The Company’s Level 2 securities are valued using third-party pricing sources. The pricing services utilize industry standard valuation models, including both income- and market-based approaches, for which all significant inputs are observable, either directly or indirectly.

4.INVESTMENTS

The fair value and amortized cost of available-for-sale securities by major security type as of March 31, 2024 and December 31, 2023 were as follows (in thousands):


	March 31, 2024
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Money market funds	$	30,590	$	—	$	—	$	30,590
Certificates of deposit	490		—		(1)		489
Corporate bonds	19,605		—		(22)		19,583
U.S. treasury securities	92,482		4		(30)		92,456
Total cash equivalents and investments	$	143,167	$	4	$	(53)	$	143,118

KRONOS BIO, INC.

Notes to Condensed Financial Statements

(Unaudited)


	December 31, 2023
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Money market funds	$	36,009	$	—	$	—	$	36,009
Certificates of deposit	735		—		(2)		733
Corporate bonds	3,662		—		—		3,662
U.S. treasury securities	126,345		74		(53)		126,366
Total cash equivalents and investments	$	166,751	$	74	$	(55)	$	166,770

These available-for-sale securities were classified on the Company’s condensed balance sheets as of March 31, 2024 and December 31, 2023 as (in thousands):


	Fair Value
	March 31, 2024		December 31, 2023
Cash equivalents	$	37,331	$	56,110
Short-term investments	105,787		108,671
Long-term investments	—		1,989
Total cash equivalents and investments	$	143,118	$	166,770

The fair values of available-for-sale securities, excluding money market funds, by contractual maturity as of March 31, 2024 were as follows (in thousands):


	March 31, 2024
Due in 1 year or less	$	112,528
Due in 1 to 2 years	—

Total	$	112,528

As of March 31, 2024 and December 31, 2023, there have been no realized losses on available-for-sale securities for any of the periods presented in the accompanying condensed financial statements. As of March 31, 2024 and December 31, 2023, securities with a fair value of $0.5 million and zero, respectively, were in a continuous net unrealized loss position of $1,193 and zero, respectively, for more than 12 months. Unrealized losses on available-for-sale securities are not attributed to credit risk for any of the periods presented. The Company believes that it is more likely than not that investments in an unrealized loss position will be held until maturity and all interest and principal will be received. The Company believes that an allowance for credit losses is unnecessary because the unrealized losses on certain of the Company’s available-for-sale securities are due to market factors. To date, the Company has not recorded any impairment charges on available-for-sale securities.

KRONOS BIO, INC.

Notes to Condensed Financial Statements

(Unaudited)

5.BALANCE SHEET COMPONENTS

Property and Equipment, net

Property and equipment, net consisted of the following as of March 31, 2024 and December 31, 2023 (in thousands):

SEC Form 10-Q filed by Kronos Bio Inc.