UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
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Trading |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
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.
Item 2.02 Results of Operations and Financial Condition.
On August 11, 2022, ProKidney Corp. issued a press release to announce the financial results of ProKidney LP and its subsidiaries for the second quarter ended June 30, 2022. A copy of the press release is furnished as Exhibit 99.1.
The information in this Current Report on Form 8-K (including Exhibit 99.1) shall not be deemed to be “filed” for purposes of Section 18, of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that section, and shall not be deemed to be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
Description |
99.1 |
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104 |
Cover Page Interactive Data File (embedded within Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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PROKIDNEY CORP. |
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Date: |
August 11, 2022 |
By: |
/s/ James Coulston |
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James Coulston |
Exhibit 99.1
ProKidney Corp. Reports Second Quarter 2022 Financial Results and Provides Business Update
Completed business combination with Social Capital Suvretta Holdings, III
WINSTON-SALEM, N.C. – August 11, 2022 – ProKidney Corp. (formerly Social Capital Suvretta Holdings Corp. III or “SCS”) (Nasdaq: PROK) (the “Company”), a leading late clinical-stage cellular therapeutics company focused on chronic kidney disease (CKD), today announced financial results of ProKidney LP (“ProKidney”) and its subsidiaries for the second quarter ended June 30, 2022 and provided an update on recent corporate developments.
“During the first half of 2022, we continued to execute on our clinical and operational plan, positioning us well to achieve our near- and longer-term strategic objectives,” said Tim Bertram, Ph.D., Chief Executive Officer of ProKidney. “The funding received through the completion of SCS’ business combination with ProKidney in July will support the execution of our Phase 3 program evaluating REACT™ as a potential treatment for the millions of individuals who suffer from chronic kidney disease. I am extremely proud of all that our team has accomplished to date and look forward to the opportunities that lie ahead.”
Recent Business Highlights
Second Quarter Financial Highlights of ProKidney LP and its Subsidiaries
Cash Position: Cash and cash equivalents as of June 30, 2022, was $21.9 million compared to $20.6 million at December 31, 2021. In connection with the close of the business combination on July 11, 2022, ProKidney received gross proceeds of $596.5 million. These proceeds were used to repay $35.0 million of related party notes and $50.4 million of expenses previously incurred by SCS and fees incurred in connection with the PIPE placement.
R&D Expenses: Research and development expenses were $11.6 million for the three months ended June 30, 2022, compared to $11.0 million for the same period in 2021. The increase of $0.6 million was driven by a $1.3 million increase in costs associated with equity-based compensation related to awards granted during 2022. Further, cash-based compensation costs increased by $1.1 million, driven primarily by the hiring of additional personnel. Other research and development costs related to professional fees, quality control, manufacturing improvements and depreciation have also increased by approximately $1.9 million. These costs were offset by decreases in clinical trial costs of approximately $3.9 million, related primarily to decreased costs for the Phase 3 trials which were incurring start-up costs during the three-month period ended June 30, 2021.
G&A Expenses: General and administrative expenses were $9.2 million and $1.7 million for the three months ended June 30, 2022 and 2021, respectively. The increase of $7.5 million was primarily driven by a $6.5 million increase in equity-based compensation. Additionally, there was a $0.7 million increase in cash-based compensation expense which was driven by the hiring of additional personnel.
Income Tax Expense: Income tax expense was $1.2 million for the three months ended June 30, 2022, compared with a de minimis amount for the three months ended June 30, 2021. The increase in income tax expense was driven primarily by the impact of a provision of the Tax Cuts and Jobs Act of 2017 (the “TCJA”) which became effective for tax years beginning after December 31, 2021. This provision requires specified research and development expenses to be capitalized and amortized ratably over a five-year period and is the primary driver of the income tax expense recognized during the three months ended June 30, 2022.
Net Loss per Share: Diluted net loss per share was $(0.12) based on 186,500,000 Class A Units outstanding for the three months ended June 30, 2022. Diluted net loss per share for the three months ended June 30, 2021 was $(0.09) based on 140,109,890 Class A Units outstanding.
About ProKidney
ProKidney, a pioneer in the treatment of CKD through innovations in cellular therapy, was founded in 2015 after a decade of research. ProKidney’s lead product candidate, REACT™ (Renal Autologous Cell Therapy), is a first-of-its-kind, patented, autologous cellular therapy with the potential to not only slow and stabilize the progression of CKD, but in some cases possibly drive meaningful improvement in kidney function. Late-stage CKD, Stage 3b - 4, is a key target for REACT™ therapy. REACT™ has received Regenerative Medicine Advanced Therapy (RMAT) designation, as well as FDA and EMA guidance, supporting its ongoing Phase 3 clinical program, which launched in January 2022. For more information, visit www.prokidney.com.
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About CKD
There are no therapies that effectively reverse late-stage CKD. CKD is a serious diagnosis with significant morbidity and mortality, notable for the 5-year mortality of a new diagnosis of CKD Stage 4 being higher than that of a new non-metastatic cancer diagnosis. CKD most often presents as a progressive decline in kidney function ultimately resulting in the failure of the kidneys and the need for renal replacement therapy, such as hemodialysis, or kidney transplant. One in three Americans is at risk for CKD which currently affects approximately 75 million people in the United States and Europe and over 400 million across Asia. CKD is among the largest single expenses incurred by the US Health care system.
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. ProKidney’s actual results may differ from its expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “continue,” and similar expressions (or the negative versions of such words or expressions) are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, the Company’s expectations with respect to financial results, future performance, development and commercialization of products, if approved, the potential benefits and impact of the Company’s products, if approved, potential regulatory approvals, and the size and potential growth of current or future markets for the Company’s products, if approved. Most of these factors are outside of the Company’s control and are difficult to predict. Factors that may cause such differences include, but are not limited to: the inability to maintain the listing of the Company’s Class A ordinary shares on the Nasdaq; the inability to implement business plans, forecasts, and other expectations or identify and realize additional opportunities, which may be affected by, among other things, competition and the ability of the Company to grow and manage growth profitably and retain its key employees; the risk of downturns and a changing regulatory landscape in the highly competitive biotechnology industry; the inability of the Company to raise financing in the future; the inability of the Company to obtain and maintain regulatory clearance or approval for its products, and any related restrictions and limitations of any cleared or approved product; the inability of the Company to identify, in-license or acquire additional technology; the inability of Company to compete with other companies currently marketing or engaged in the biologics market and in the area of treatment of kidney diseases; the size and growth potential of the markets for the Company’s products, if approved, and its ability to serve those markets, either alone or in partnership with others; the Company’s estimates regarding expenses, future revenue, capital requirements and needs for additional financing; the Company’s financial performance; the Company’s intellectual property rights; uncertainties inherent in cell therapy research and development, including the actual time it takes to initiate and complete clinical studies and the timing and content of decisions made by regulatory authorities; the impact of COVID-19 or geo-political conflict such as the war in Ukraine on the combined company’s business; and other risks and uncertainties indicated from time to time in the Company’s filings with the Securities and Exchange Commission. The Company cautions readers that the foregoing list of factors is not exclusive and cautions readers not to place undue reliance upon any forward-looking statements, which speak only as of the date made. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in its
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expectations or any change in events, conditions or circumstances on which any such statement is based.
Contact:
Investors:
Lee Roth
Burns McClellan
lroth@burnsmc.com
+1 (212) 300-8331
4
ProKidney LP and Subsidiaries
Condensed Consolidated Balance Sheets
(in thousands)
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June 30, 2022 |
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December 31, 2021 |
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(Unaudited) |
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Assets |
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Current assets |
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Cash and cash equivalents |
$ |
21,882 |
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$ |
20,558 |
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Prepaid assets |
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682 |
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588 |
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Prepaid clinical |
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11,350 |
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6,100 |
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Other current assets |
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— |
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25 |
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Total current assets |
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33,914 |
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27,271 |
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Fixed assets, net |
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10,857 |
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11,358 |
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Right of use assets, net |
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1,962 |
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1,241 |
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Deferred offering costs |
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6,905 |
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– |
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Intangible assets, net |
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320 |
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428 |
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Total assets |
$ |
53,958 |
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$ |
40,298 |
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Liabilities and Equity |
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Current liabilities |
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Accounts payable |
$ |
2,513 |
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$ |
2,834 |
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Lease liabilities |
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377 |
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267 |
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Accrued expenses and other |
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6,184 |
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9,213 |
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Income taxes payable |
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1,730 |
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— |
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Related party notes payable |
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35,000 |
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— |
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Total current liabilities |
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45,804 |
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12,314 |
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Lease liabilities, net of current portion |
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1,617 |
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1,067 |
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Members’ equity: |
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Class A Units (186,500,000 issued and outstanding as of |
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186,500 |
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186,500 |
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Class B Units (27,100,937 and 7,767,122 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively) |
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71,164 |
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1,927 |
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Accumulated deficit |
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(251,127 |
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(161,510 |
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Total members’ equity |
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6,537 |
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26,917 |
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Total liabilities and equity |
$ |
53,958 |
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$ |
40,298 |
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5
ProKidney LP and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except for share and per share data)
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Three Months Ended June 30, |
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Six Months Ended June 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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Operating expenses |
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Research and development |
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$ |
11,558 |
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$ |
10,969 |
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$ |
40,048 |
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$ |
20,828 |
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General and administrative |
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9,180 |
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1,748 |
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47,152 |
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3,492 |
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Total operating expenses |
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20,738 |
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12,717 |
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87,200 |
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24,320 |
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Operating loss |
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(20,738 |
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(12,717 |
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(87,200 |
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(24,320 |
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Interest income |
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— |
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2 |
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— |
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2 |
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Interest expense |
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(170 |
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— |
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(184 |
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— |
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Net loss before income taxes |
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(20,908 |
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(12,715 |
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(87,384 |
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(24,318 |
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Income tax expense |
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1,223 |
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10 |
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2,233 |
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16 |
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Net and comprehensive loss |
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$ |
(22,131 |
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$ |
(12,725 |
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$ |
(89,617 |
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$ |
(24,334 |
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Weighted average Class A Units outstanding: |
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Basic and diluted |
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186,500,000 |
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140,109,890 |
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186,500,000 |
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131,160,221 |
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Net loss per Class A Unit: |
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Basic and diluted |
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$ |
(0.12 |
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$ |
(0.09 |
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$ |
(0.48 |
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$ |
(0.19 |
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6
ProKidney LP and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
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Six Months Ended June 30, |
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2022 |
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2021 |
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Cash flows from operating activities |
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Net loss |
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$ |
(89,617 |
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$ |
(24,334 |
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Adjustments to reconcile net loss to net cash flows |
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Depreciation and amortization |
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1,462 |
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878 |
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Equity-based compensation |
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60,685 |
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350 |
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Changes in operating assets and liabilities |
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Deferred offering costs |
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(6,905 |
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– |
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Prepaid and other assets |
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(5,320 |
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(4,896 |
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Accounts payable and accrued expenses |
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(520 |
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8,907 |
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Income taxes payable |
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1,730 |
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— |
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Net cash flows used in operating activities |
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(38,485 |
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(19,095 |
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Cash flows used in investing activities |
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Purchase of equipment and facility expansion |
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(1,225 |
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(3,393 |
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Net cash flows used in investing activities |
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(1,225 |
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(3,393 |
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Cash flows from financing activities |
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Payments on finance leases |
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(16 |
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(15 |
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Borrowings under related party notes payable |
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35,000 |
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— |
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Net cash contribution |
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6,050 |
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30,000 |
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Net cash flows provided by financing activities |
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41,034 |
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29,985 |
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Net change in cash and cash equivalents |
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1,324 |
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7,497 |
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Cash, beginning of period |
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20,558 |
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4,577 |
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Cash, end of period |
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$ |
21,882 |
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$ |
12,074 |
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Supplemental disclosure of non-cash investing activities: |
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Right of use assets obtained in exchange for lease obligations |
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$ |
878 |
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$ |
– |
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Equipment and facility expansion included in accounts payable and |
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$ |
529 |
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$ |
635 |
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7