ProKidney Corp., a leading late clinical-stage biotech company, is at the forefront of developing a transformative cell therapy candidate to address the pressing challenge of chronic kidney disease (CKD). With a robust pipeline and strategic initiatives, the company is poised to potentially reshape the treatment landscape for millions of patients suffering from this debilitating condition.
Business Overview and History
ProKidney was originally incorporated as Social Capital Suvretta Holdings Corp. III (SCS) on February 25, 2021, as a blank check company incorporated as a Cayman Islands exempted company. The purpose of SCS was to effect a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses. On January 18, 2022, SCS executed a definitive business combination agreement with ProKidney LP (PKLP), a limited partnership under the laws and regulations of Ireland. Under the terms of the agreement, PKLP became a subsidiary of SCS and was organized in an umbrella partnership corporation (Up-C) structure, which would provide potential future tax benefits for SCS when the equity holders ultimately exchanged their pass-through interests for Class A ordinary shares. The business combination closed on July 11, 2022, at which point SCS changed its name to ProKidney Corp. This transaction was accounted for as a reverse recapitalization between entities under common control, with PKLP considered the accounting acquiror and predecessor entity. The business combination was reflected as the equivalent of PKLP issuing stock for the net assets of SCS accompanied by a recapitalization with no goodwill or intangible assets recognized.
Since its inception, ProKidney has devoted substantially all of its resources to organizing and staffing the company, business and scientific planning, conducting discovery and research activities, acquiring or discovering product candidates, establishing and protecting its intellectual property portfolio, and preparing for clinical trials. The company has not yet commercialized any product and has not generated any revenue from product sales.
ProKidney, through its operating subsidiaries, is focused on the development of rilparencel, a potential first-in-class cell therapy designed to preserve kidney function in patients with CKD. The company's approach seeks to shift the treatment paradigm away from managing kidney failure towards preserving and potentially improving kidney function.
Rilparencel, the company's lead product candidate, is composed of autologous Selected Renal Cells (SRC) prepared from a patient's own kidney cells. These SRC are formulated into a product for reinjection into the patient's kidneys using a minimally invasive outpatient procedure that can be repeated if necessary. By utilizing a patient's own cells, rilparencel eliminates the need for immunosuppressive therapies typically required for kidney transplants from allogeneic donors.
ProKidney has made significant progress in advancing rilparencel through its clinical development program. The company completed a Phase 1 clinical trial for rilparencel in subjects with CKD due to congenital anomalies of the kidney and urinary tract (CAKUT), with the last subject visit occurring in January 2023 and the clinical study report submitted to the FDA in December 2023.
The company is currently conducting a global Phase 3 development program for rilparencel in subjects with moderate to severe diabetic kidney disease (DKD). This program includes the REGEN-006 (PROACT 1) study, which is ongoing in the U.S., and the REGEN-016 (PROACT 2) study, which was recently discontinued to focus the company's resources on the PROACT 1 trial to expedite enrollment and accelerate the estimated topline data readout to the third quarter of 2027.
In a recent Type B meeting with the FDA, the agency confirmed that the PROACT 1 study could be sufficient to support a potential Biologics License Application (BLA) submission and that the accelerated approval pathway is available for rilparencel if an acceptable surrogate endpoint, such as eGFR slope, is used.
Financial Snapshot
As of September 30, 2024, ProKidney reported $406.8 million in cash, cash equivalents, and marketable securities, which the company believes will support its operations into 2027. The company has not generated any revenue from product sales to date, as its lead candidate, rilparencel, is still in clinical development.
ProKidney's research and development expenses for the nine months ended September 30, 2024, were $87.89 million, while its general and administrative expenses were $44.22 million. The company's net loss for the same period was $114.85 million, with a net loss per Class A ordinary share of $0.45.
For the most recent quarter (Q3 2024), ProKidney reported no revenue and a net loss of $17.91 million. The company's operating cash flow and free cash flow figures were not provided in the available information.
As of December 31, 2023, ProKidney had $4.41 million in total debt and negative $1.1 billion in common stock equity, resulting in a debt/equity ratio of -0.004. The company's current ratio and quick ratio were both 17.09, indicating a strong short-term liquidity position.
Key Developments and Milestones
In the third quarter of 2024, ProKidney completed a comprehensive internal and external review, including engaging with ex-FDA officials and seasoned regulatory experts, to determine the optimal path to bring rilparencel to patients in the U.S. with type 2 diabetes and advanced CKD. This review led to the company's decision to discontinue the PROACT 2 trial and focus its resources on the PROACT 1 study to expedite the potential U.S. regulatory approval and commercial launch of rilparencel.
During the third quarter of 2024, ProKidney also presented five posters, including one late-breaking clinical trial, at the American Society of Nephrology's (ASN) Kidney Week, showcasing rilparencel's product characterization, mechanism of action, and interim results from the REGEN-007 Phase 2 trial.
In June 2024, the company closed a $140 million upsized underwritten public offering and concurrent registered direct offering, providing additional funds to support the advancement of its clinical programs and operations.
Liquidity
As of September 30, 2024, ProKidney reported $406.8 million in cash, cash equivalents, and marketable securities. This strong cash position, bolstered by the recent $140 million offering, provides the company with significant financial flexibility to support its ongoing clinical programs and operations. The company believes its current cash reserves will be sufficient to fund operations into 2027, allowing it to advance its lead candidate, rilparencel, through critical development milestones.
The company's cash and cash equivalents amounted to $108.09 million, with an additional $298.72 million in marketable securities. This robust liquidity position is further supported by the company's strong current and quick ratios of 17.09, indicating a high level of short-term solvency and ability to meet its near-term obligations.
Risks and Challenges
As a clinical-stage biotech company, ProKidney faces several risks and challenges common to the industry, including the inherent uncertainties of the drug development process, the potential for regulatory setbacks, and the ongoing need for substantial capital to fund its operations.
The success of rilparencel, ProKidney's lead product candidate, is critical to the company's future. Any delays or setbacks in the clinical development or regulatory approval process for rilparencel could have a significant impact on the company's financial performance and long-term prospects.
Additionally, ProKidney operates in a highly competitive landscape, with other companies also pursuing innovative approaches to treating CKD. The company's ability to differentiate rilparencel and maintain a competitive edge will be crucial to its long-term success.
Outlook and Conclusion
ProKidney's strategic decision to focus its Phase 3 program on the PROACT 1 study in the U.S. market, combined with the FDA's confirmation of the potential for an accelerated approval pathway, represents a significant step forward in the company's efforts to bring rilparencel to patients in need.
With a strong cash position, a refined clinical development strategy, and promising interim results from its Phase 2 trial, ProKidney is well-positioned to continue its progress towards potentially becoming a leader in the treatment of chronic kidney disease. As the company navigates the challenges inherent to the biotech industry, its pioneering approach and commitment to innovation make it a compelling investment opportunity for those seeking exposure to the rapidly evolving field of regenerative medicine.
ProKidney's focus on a single product segment, the development and potential commercialization of rilparencel, underscores the company's dedication to addressing the unmet needs in CKD treatment. The positive tolerability profile observed in Phase 1 and 2 clinical trials for rilparencel in subjects with moderate to severe CKD provides encouragement for the ongoing Phase 3 program.
The increase in research and development expenses to $87.89 million for the nine months ended September 30, 2024, reflects the company's continued investment in advancing rilparencel through clinical development. The $3.71 million increase compared to the same period in 2023 was primarily driven by higher cash-based compensation costs, professional fees related to quality and manufacturing remediation, and operational and material costs to support the Phase 3 clinical trials.
General and administrative expenses also saw a modest increase to $44.22 million for the nine-month period, largely due to a $5.30 million impairment charge related to the company's Greensboro facility. This was partially offset by lower equity-based compensation expenses.
As ProKidney continues to progress its clinical programs and move closer to potential commercialization, the company's financial strategy and strong cash position provide a solid foundation for executing its development plans. The absence of revenue and the ongoing net losses are typical for a clinical-stage biotech company, and the management's focus on efficient capital allocation and strategic resource deployment will be crucial in the coming years as rilparencel advances through late-stage clinical trials and potentially towards market approval.