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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 September 30, 2022


☐	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: 001-40560

ProKidney Corp.

(Exact Name of Registrant as Specified in its Charter)


Cayman Islands	98-1586514
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2000 Frontis Plaza Blvd., Suite 250 Winston-Salem, NC	27103
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (336) 999-7028

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

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Class A ordinary shares, $0.0001 par value per share

PROK

The Nasdaq Stock 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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐


Class of Stock		Shares Outstanding as of November 14, 2022
Class A ordinary shares, par value $0.0001 per share		61,540,231
Class B ordinary shares, par value $0.0001 per share		171,210,060

Table of Contents


		Page
PART I.	Financial Information (Unaudited)	2
Item 1.	Financial Statements	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Changes in Redeemable Noncontrolling Interest and Shareholders’ Deficit / Members’ Equity	4
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II.	Other Information	32
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	32
Signatures		34

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements.

ProKidney Corp.

Condensed Consolidated Balance Sheets

(in thousands, except share data)


	September 30, 2022			December 31, 2021
	(Unaudited)
Assets
Cash and cash equivalents	$	506,327		$	20,558
Prepaid assets		3,549			588
Prepaid clinical		9,337			6,100
Other current assets		158			25
Total current assets		519,371			27,271

Fixed assets, net		10,695			11,358
Right of use assets, net		2,105			1,241
Intangible assets, net		267			428
Total assets	$	532,438		$	40,298

Liabilities and Equity
Accounts payable	$	3,453		$	2,834
Lease liabilities		426			267
Accrued expenses and other		5,962			9,213
Total current liabilities		9,841			12,314

Income tax payable, net of current portion		309			–
Lease liabilities, net of current portion		1,717			1,067
Total liabilities		11,867			13,381
Commitments and contingencies
Redeemable noncontrolling interest		1,616,896			–

Shareholders’ deficit / members' equity:
Class A units (186,500,000 issued and outstanding at December 31, 2021)		–			186,500
Class B units (7,767,122 issued and outstanding at December 31, 2021)		–			1,927
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 61,540,231 issued and outstanding as of September 30, 2022		6			–
Class B ordinary shares, $0.0001 par value; 500,000,000 shares authorized; 171,210,060 issued and outstanding as of September 30, 2022		18			–
Additional paid-in capital		1,456			–
Accumulated deficit		(1,097,805	)		(161,510	)
Total shareholders' deficit / members’ equity		(1,096,325	)		26,917
Total liabilities and equity	$	532,438		$	40,298

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

ProKidney Corp.

Condensed Consolidated Statements of Operations and Comprehensive Loss - Unaudited

(in thousands, except for share and per share data)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
Operating expenses
Research and development	$	21,132		$	14,742		$	61,180		$	35,570
General and administrative		14,440			2,339			61,592			5,831
Total operating expenses		35,572			17,081			122,772			41,401
Operating loss		(35,572	)		(17,081	)		(122,772	)		(41,401	)

Other income (expense):
Interest income		1,581			—			1,581			1
Interest expense		(29	)		(1	)		(213	)		–
Net loss before income taxes		(34,020	)		(17,082	)		(121,404	)		(41,400	)
Income tax (benefit) expense		(75	)		60			2,158			76
Net and comprehensive loss before noncontrolling interest		(33,945	)		(17,142	)		(123,562	)		(41,476	)
Net loss and comprehensive loss attributable to noncontrolling interest		(22,017	)		–			(22,017	)		–
Net loss and comprehensive loss available to Class A ordinary shareholders	$	(11,928	)	$	(17,142	)	$	(101,545	)	$	(41,476	)

Weighted average Class A ordinary shares outstanding: (1)
Basic and diluted		61,540,231						61,540,231
Net loss per share attributable to Class A ordinary shares: (1)
Basic and diluted	$	(0.13	)				$	(0.13	)

(1) For the three and nine months ended September 30, 2022, net loss per Class A ordinary share and weighted average Class A ordinary shares outstanding is representative of the period from July 11, 2022 through September 30, 2022, the period following the Business Combination, as defined in Note 1. For more information refer to Note 8.

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

ProKidney Corp.

Condensed Consolidated Statements of Changes in Redeemable Noncontrolling Interest and Shareholders’ Deficit / Members’ Equity - Unaudited

(in thousands, except for share and per share data)


	For the Three Months Ended September 30, 2022

				Class A						Class B			Class A Ordinary Shares				Class B Ordinary Shares
	Redeemable Noncontrolling Interest			Units			Amount			Profits Interests			Shares		Amount		Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total Shareholders' Deficit / Members' Equity
Balance as of June 30, 2022	$	–			186,500,000		$	186,500		$	71,164			–	$	–		–	$	–	$	–	$	(251,127	)	$	6,537
Equity-based compensation / payments prior to Business Combination		–			–			–			480			–		–		–		–		–		–			480
Net loss prior to the Business Combination		–			–			–			–			–		–		–		–		–		(4,015	)		(4,015	)
Effect of Business Combination		1,635,829			(186,500,000	)		(186,500	)		(71,644	)		61,540,231		6		170,723,961		18		–		(834,574	)		(1,092,694	)
Equity-based compensation after the Business Combination		2,908			–			–			–			–		–		–		–		1,456		–			1,456
Vesting of Class B restricted stock rights		–			–			–			–			–		–		486,099		–		–		–			–
Impact of equity transactions on redeemable noncontrolling interest		176			–			–			–			–		–		–		–		–		(176	)		(176	)
Net loss after the Business Combination		(22,017	)		–			–			–			–		–		–		–		–		(7,913	)		(7,913	)
Balance as of September 30, 2022	$	1,616,896			–		$	–		$	–			61,540,231	$	6		171,210,060	$	18	$	1,456	$	(1,097,805	)	$	(1,096,325	)


	For the Three Months Ended September 30, 2021
	Class A				Class B		Accumulated			Total Members'
	Units		Amount		Profits Interests		Deficit			Equity
Balance as of June 30, 2021		145,000,000		145,000		1,578		(130,698	)		15,880
Capital contribution		11,500,000		11,500		–		–			11,500
Equity-based payments		–		–		174		–			174
Net loss		–		–		–		(17,142	)		(17,142	)
Balance as of September 30, 2021		156,500,000	$	156,500	$	1,752	$	(147,840	)	$	10,412

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

ProKidney Corp.

Condensed Consolidated Statements of Changes in Redeemable Noncontrolling Interest and Shareholders’ Deficit / Members’ Equity - Unaudited

(in thousands, except for share and per share data)

For the Nine Months Ended September 30, 2022

Class A Units

Class B Units

Class A Ordinary Shares

Class B Ordinary Shares

Redeemable Noncontrolling Interest

Units

Amount

Profits Interests

Shares

Amount

Shares

Amount

Additional Paid-in Capital

Accumulated Deficit

Total Shareholder's Deficit / Members' Equity

Balance as of December 31, 2021

–

186,500,000

186,500

1,927

–

–

–

–

–

(161,510

)

26,917

Capital contribution

–

–

–

6,050

–

–

–

–

–

–

6,050

Equity-based compensation / payments prior to Business Combination

–

–

–

63,667

–

–

–

–

–

–

63,667

Net loss prior to the Business Combination

–

–

–

–

–

–

–

–

–

(93,632

)

(93,632

)

Effect of the Business Combination, including net proceeds of shares sold 
   through the PIPE transaction

1,635,829

(186,500,000

)

(186,500

)

(71,644

)

61,540,231

6

170,723,961

18

–

(834,574

)

(1,092,694

)

Equity-based compensation after the Business Combination

2,908

–

–

–

–

–

–

–

1,456

–

1,456

Vesting of Class B restricted stock rights

–

–

–

–

–

–

486,099

–

–

–

–

Impact of equity transactions on redeemable noncontrolling interest

176

–

–