Kiora Pharmaceuticals Inc.

11/07/2025 | Press release | Distributed by Public on 11/07/2025 05:06

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following section of this Quarterly Report on Form 10-Q entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" contains statements that are not statements of historical fact and are forward-looking statements within the meaning of federal securities laws. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Factors that may cause our actual results to differ materially from those in the forward-looking statements include those factors described in "Item 1A. Risk Factors" beginning on page 17 of our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 25, 2025. You should carefully review all of these factors, as well as the comprehensive discussion of forward-looking statements on page 1 of this Quarterly Report on Form 10-Q.
Kiora Pharmaceuticals, Inc. is referred to herein as "Kiora", "we," "our," "us," and "the Company".
Executive Summary
We are a clinical-stage, specialty pharmaceutical company developing and commercializing products for the treatment of ophthalmic diseases.
KIO-301 is initially focused on patients with later stages of disease progression due to retinitis pigmentosa (any and all sub-forms). KIO-301 is a potential vision-restoring small molecule that acts as a "photoswitch" specifically designed to restore vision in patients with inherited and age-related degenerative retinal diseases. The molecule is specifically designed to restore the eyes' ability to perceive and interpret light in visually impaired patients. It selectively enters viable downstream retinal ganglion cells (no longer receiving electrical input due to degenerated rods and cones) and is intended to turn them into light sensing cells, capable of signaling the brain as to the presence or absence of light. On March 17, 2022, we were granted Orphan Drug Designation by the United States ("U.S.") Food and Drug Administration ("FDA") for the Active Pharmaceutical Ingredient ("API") in KIO-301. In July 2024, we were granted Orphan Medicinal Product Designation by the European Medicines Agency for KIO-301 for the treatment of non-syndromic, rod-dominant retinal dystrophies, which includes diseases like retinitis pigmentosa, choroideremia, Stargardt disease and others. In September 2024, the European Medicines Agency expanded our Orphan Medicinal Product Designation to also include syndromic, rod-dominant retinal dystrophies that includes diseases like Usher's syndrome, which has non-ocular aspects of diseases in addition to retinal involvement.
KIO-301 was acquired through the Bayon Therapeutics, Inc. ("Bayon") transaction that closed October 21, 2021. We initiated a Phase 1b clinical trial (ABACUS-1) in the third quarter of 2022. Topline data from this trial was presented at the American Academy of Ophthalmology annual meeting in November 2023. The complete data set was presented at the Association for Research in Vision and Ophthalmology ("ARVO") annual conference in May 2024 highlighting improvements in visual acuity, visual field and functional vision among clinical trial participants relative to baseline.
In January 2024, we entered into a strategic development and commercialization agreement ("License Agreement") with Théa Open Innovation ("TOI"), a sister company of the global ophthalmic specialty company Laboratoires Théa ("Théa"). Under the agreement, Kiora granted TOI exclusive worldwide development and commercialization rights, excluding Asia, to KIO-301 for the treatment of degenerative retinal diseases. In exchange, Kiora received an upfront, payment of $16 million; up to $285 million upon achievement of pre-specified clinical development, regulatory and commercial milestones; tiered royalties of up to low 20% on net sales; and reimbursement of all KIO-301 research and development expenses moving forward from the date of the execution of the License Agreement.
In October 2024, we, in collaboration with our partner TOI, announced that we received regulatory approval to initiate a Phase 2 clinical trial to investigate KIO-301 for vision restoration in patients with retinitis pigmentosa. The ABACUS-2 trial is expected be a 36 patient, multi-center, double-masked, randomized, controlled, multiple dose study enrolling patients with ultra-low vision or no light perception regardless of their underlying gene mutation associated with retinitis pigmentosa. Enrollment began in the second quarter of 2025 and dosing began in the third quarter of 2025.
Based on results of ABACUS-1, we have the opportunity to expand development of KIO-301 to treat patients with late stages of Choroideremia and Stargardt disease. These diseases have a similar underlying late-stage pathology as Retinitis Pigmentosa, hence the mechanism of action of KIO-301 could potentially provide a similar benefit to these patients.
In May 2025, we entered into an exclusive option agreement (the "Option Agreement") with Senju Pharmaceutical Co., Ltd ("Senju"). Under the agreement, we granted Senju an exclusive option to obtain an exclusive license to the development and commercialization rights of KIO-301 for the treatment of ophthalmic diseases in certain key countries in Asia, including Japan and China. In exchange, we received a nonrefundable payment of $1.25 million. In the future, if the option is exercised and a license agreement is executed, we will be eligible to receive an additional $109.5 million plus tiered royalties of up to high teen percentages on net sales.
We are also developing KIO-104 for the treatment of retinal inflammatory diseases including Posterior Non-Infectious Uveitis, a rare T cell-mediated, intraocular inflammatory disease and diabetic macular edema. KIO-104 is a novel and potent small molecule inhibitor of dihydroorotate dehydrogenase ("DHODH"), formulated for intravitreal delivery and ideally suited to suppress overactive T-cell activity to treat the underlying condition. Data from a previous Phase 1/2a study in patients with Posterior Non-Infectious Uveitis, reported in October 2022, showed that a single injection of KIO-104 decreased intraocular inflammation and improved visual acuity significantly for the duration of the study. Further, KIO-104 reduced macular edema (swelling) which if unchecked, can lead to permanent vision loss. The drug was well tolerated, with no serious side effects on intraocular tissues or other serious adverse events observed. In May 2025, we received approval to start enrolling patients in a Phase 2 trial for KIO-104 in retinal inflammation and began enrollment in the second quarter of 2025. Dosing began in the third quarter of 2025.
We have an additional asset, KIO-101, that is currently available to partner. KIO-101 is based on the same molecule as KIO-104, however formulated for topical, eye drop delivery.
Throughout our history we have not generated significant revenue; however, in January 2024 we entered into the License Agreement with TOI, whereby we recognized $16 million in collaboration revenue related to the upfront payment. With the exception of the year ended December 31, 2024, Kiora has incurred annual losses and negative cash flows since inception, and future losses are anticipated. From inception through September 30, 2025, our losses have aggregated $147.7 million. We expect to incur significant expenses and increasing operating losses for the foreseeable future as we continue the development and clinical trials of and seek regulatory approval for our product candidates. If we obtain regulatory approval for our product candidates, we expect to incur significant expenses in order to create an infrastructure to support their commercialization including sales, marketing, and distribution functions.
We will need additional financing to support our continuing operations. We will seek to fund our operations through a combination of public or private sales of equity, debt financings, license and development agreements, non-dilutive grants and other sources, which may include collaborations with third parties. Adequate additional financing may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. Although historically we have been successful at raising capital, including raising net proceeds of approximately $13.8 million in a private placement offering that closed on February 5, 2024, additional capital may not be available on terms favorable to Kiora, if at all. We do not know if any future offerings will succeed. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. Kiora has incurred losses and negative cash flows since inception, and future losses are anticipated. However, based on the cash on hand and short-term investments at September 30, 2025 of approximately $5.5 million and $13.9 million, respectively, we anticipate having sufficient cash to fund currently planned operations into late 2027.
Recent Developments
All material developments as of September 30, 2025, have been discussed in the Executive Summary above.
New Components of Results of Operations
None.
Results of Operations
Comparison of three months ended September 30, 2025 and 2024
The following table summarizes the results of our operations for the three months ended September 30, 2025 and 2024:
2025
2024
Change
Revenue:
Collaboration Revenue
$ - $ - $ -
Total Revenue
- - -
Operating Expenses:
General and Administrative 1,443,827 1,380,997 62,830
Research and Development 2,729,891 2,184,991 544,900
Collaboration and Research Credits
(1,658,248) (867,760) (790,488)
In-Process R&D Impairment - 2,008,000 (2,008,000)
Change in Fair Value of Contingent Consideration (1,721,033) (1,103,991) (617,042)
Total Operating Expenses 794,437 3,602,237 (2,807,800)
Other Income, Net 178,114 188,911 (10,797)
(Loss) Income Before Income Tax Expense (616,323) (3,413,326) 2,797,003
Income Tax Benefit
643,129 - 643,129
Net (Loss) Income
$ 26,806 $ (3,413,326) $ 3,440,132
General and Administrative Expenses. The increase of $0.1 million was driven primarily by increased director and personnel costs related to salary and equity expenses, partially offset by higher professional services in 2024.
Research and Development Expenses. The increase of $0.5 million was primarily due to increased preclinical, CMC and clinical trial related expenses of $0.6 million, partially offset by a decrease of $0.1 million for credits expected from Australian and Austrian government programs related to research and development activities.
Collaboration and Research Credits.The increase of $0.8 million is related to increased research and development expenses for the KIO-301 program which are fully reimbursed by TOI.
In-Process R&D Impairment. The decrease of $2.0 million was primarily due to the full impairment of KIO-201 in 2024. This was caused by a strategic decision to stop pursuing partnership opportunities for this program which we had been pursuing since August 2023.
Change in Fair Value of Contingent Consideration.The decrease of $0.6 million primarily driven by an increased discount period and changes to the development plan as discussed in Note 3, Fair Value Disclosures - Contingent Consideration Commitments and Contingencies, to the Notes to the Condensed Consolidated Financial Statements of Part 1, Item 1. Financial Statements of this Form 10-Q.
Other Income, Net.The decrease of $10.8 thousand was primarily due to lower interest income resulting from lower interest rates and a lower carrying balance of short-term marketable securities offset by the write off of an intangible asset related to the SentrX Agreement and unrealized losses related to foreign currency activity.
Income Tax Benefit.The increase of $0.6 million is due to a change in estimate for 2024 tax year resulting from new legislation included in the One Big Beautiful Bill Act (OBBBA).
Comparison of nine months ended, September 30, 2025 and 2024
The following table summarizes the results of our operations for the nine months ended September 30, 2025 and 2024:
2025
2024
Change
Revenue:
Collaboration Revenue
$ - $ 16,000,000 $ (16,000,000)
Grant Revenue
- 20,000 (20,000)
Total Revenue
- 16,020,000 (16,020,000)
Operating Expenses:
General and Administrative 4,287,075 4,215,411 71,664
Research and Development 7,852,267 5,917,868 1,934,399
Collaboration Credits
(5,310,288) (2,200,298) (3,109,990)
In-Process R&D Impairment
- 2,008,000 (2,008,000)
Change in Fair Value of Contingent Consideration (1,308,067) (995,951) (312,116)
Total Operating Expenses 5,520,987 8,945,030 (3,424,043)
Other Income, Net 570,175 743,265 (173,090)
Income Tax Benefit 632,179 - 632,179
Net (Loss) Income
$ (4,318,633) $ 7,818,235 $ (12,136,868)
Revenue. The decrease of $16.0 million was attributable to the revenue recognized from the upfront payment pursuant the strategic development and commercialization agreement with TOI of $16 million in the first quarter of 2024.
General and Administrative Expenses. The increase of $71.7 thousand was primarily due to increased personnel and benefits costs of $0.4 million, increased corporate expenses driven by stock compensation expense for new grants to board directors of $0.2 million, partially offset by lower professional services expenses of $0.6 million.
Research and Development Expenses. The increase of $1.9 million was primarily due to preclinical and CMC expenses of $1.8 million, clinical trial activities of $1.5 million, and salaries and benefits of $0.1 million, offset by UC licensing payments of $0.7 million in 2024, research tax credits expected from Australian and Austrian government programs of $0.7 million, and regulatory expenses of $0.1 million.
Collaboration and Research Credits.The increase of $3.1 million is related to increased research and development expenses for the KIO-301 program which are fully reimbursed by TOI.
In-Process R&D Impairment. The decrease of $2.0 million was primarily due to the full impairment of KIO-201. This resulted from a strategic decision to stop pursuing partnership opportunities for this program which the Company had been pursuing since August 2023.
Change in Fair Value of Contingent Consideration.The increase of $0.3 million was primarily driven by an increased discount period and changes to the development plan as discussed in Note 3, Fair Value Disclosures - Contingent Consideration Commitments and Contingencies, to the Notes to the Condensed Consolidated Financial Statements of Part 1, Item 1. Financial Statements of this Form 10-Q.
Other Income, Net.The decrease of $0.2 million was primarily due to lower interest income resulting from lower interest rates and a lower carrying balance of short-term marketable securities offset by the write off of an intangible asset related to the SentrX Agreement.
Income Tax Benefit.The increase of $0.6 million is due to a change in estimate for 2024 tax year resulting from new legislation included in the One Big Beautiful Bill Act (OBBBA).
Liquidity and Capital Resources
Our principal liquidity needs have historically been for acquisitions, working capital, research and development, and capital expenditures. While we anticipate having sufficient cash to fund currently planned operations into late 2027, we will need additional financing to support our future operations as we develop and work toward the commercialization of new products. We will seek to fund our operations through a combination of public or private sales of equity, debt financings, license and development agreements, non-dilutive grants and other sources, which may include collaborations with third parties.
If we raise additional funds by issuing equity securities or convertible debt, our stockholders will experience dilution. Debt financing through our $10 million credit line with UBS would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, or making capital expenditures. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish valuable rights to our products, future revenue streams or product candidates, or to grant licenses on terms that may not be favorable to us. Although historically we have been successful at raising capital, most recently raising net proceeds of approximately $13.8 million in a private placement offering that closed on February 5, 2024, additional capital may not be available on terms favorable to us, if at all. We do not know if any future offerings will succeed. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy. We have incurred losses and negative cash flows since inception, and future losses are anticipated. However, based on the cash on hand and short-term investments at September 30, 2025 of approximately $5.5 million and $13.9 million, respectively, and all KIO-301 expenses reimbursed by our partner TOI, we anticipate having sufficient cash to fund currently planned operations into late 2027.
Information Regarding Cash Flows
As of September 30, 2025, we had unrestricted cash and cash equivalents totaling $5.5 million and restricted cash totaling $4.5 thousand for a total of $5.5 million compared to $3.8 million at December 31, 2024. The following table sets forth the primary uses of cash for the nine months ended September 30, 2025 and 2024:
2025 2024
Net Cash (Used in) Provided by Operating Activities $ (7,780,721) $ 10,811,473
Net Cash Provided by (Used in) Investing Activities $ 9,077,523 $ (23,145,294)
Net Cash Provided by Financing Activities $ 265,359 $ 15,498,155
Operating Activities.Net cash used in operating activities decreased $18.6 million primarily due to the recognition of $16 million in collaboration revenue in the first quarter of 2024 related to the TOI agreement. Excluding the impact of this one-time collaboration revenue, net cash used in operating activities increased by approximately $2.6 million, primarily due to the payment of 2024 income taxes during 2025.
Investing Activities.Net cash provided by investing activities increased $32.2 million primarily due to a decrease in the purchase of marketable securities by approximately $20.9 million and increased proceeds from the maturities of marketable securities of approximately $11.1 million.
Financing Activities.Net cash provided by financing activities decreased $15.2 million due to receiving net proceeds of approximately $13.8 million in a private offering that closed on February 5, 2024 and proceeds of $1.7 million from warrant exercises in the first quarter of 2024 compared to $0.3 million in the second quarter of 2025.
Funding Requirements and Other Liquidity Matters
Our product pipeline is still in various stages of preclinical and clinical development. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. We anticipate that our expenses will increase substantially if and as we:
•seek marketing approval for our KIO-301 product outside of the territory already partnered with TOI;
•seek marketing approval for our KIO-104 product or any other products that we successfully develop;
•establish a sales and marketing infrastructure to commercialize our KIO-301 product outside of the territory already partnered with TOI or any other future development partner;
•establish a sales and marketing infrastructure to commercialize our KIO-104 product, if approved; and
•add operational, financial and management information systems and personnel, including personnel to support our product development and future commercialization efforts.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through a combination of equity offerings, debt financings, collaborations, strategic alliances, grants and licensing arrangements. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of holders of common stock. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic alliances or licensing arrangements with pharmaceutical partners, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, including our KIO-301 (outside of the territory already partnered with TOI), KIO-101, and KIO-104 products, on terms that may not be favorable to us. We have currently paused development work on KIO-101, which is available for partnership for any further development of those programs. For our active programs, if we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market KIO-301 outside of the territory already partnered with TOI or any other future development partner and KIO-104 products, or any other products that we would otherwise prefer to develop and market ourselves.
Based on our cash on hand and short-term investments at September 30, 2025, we believe that we will have sufficient cash to fund planned operations into late 2027. However, the acceleration or reduction of cash outflows by management can significantly impact the timing for raising additional capital to complete development of our products. To continue development, we will need to raise additional capital through debt and/or equity financing, grants and other arrangements. Although historically we have been successful at raising capital, additional capital may not be available on terms favorable to us, if at all. We do not know if any future offerings will succeed. Accordingly, no assurances can be given that management will be successful in these endeavors. Our Condensed Consolidated Financial Statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should we be unable to continue as a going concern.
Other
For information regarding Commitments and Contingencies, refer to Note 10. Commitments and Contingencies to the Notes to the Condensed Consolidated Financial Statements of Part 1, Item 1. Financial Statements of this Form 10-Q.
Critical Accounting Estimates
Our discussion of operating results is based upon the Unaudited Condensed Consolidated Financial Statements and accompanying notes. The preparation of these statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Our critical accounting policies and significant judgement and estimates are detailed in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2024.
As of September 30, 2025, we have no material changes from such disclosures.
Recently Issued Accounting Pronouncements
Information regarding new accounting pronouncements is included in Note 1 - Business, Presentation and Recent Accounting Pronouncements to the current period's unaudited condensed consolidated financial statements.
Kiora Pharmaceuticals Inc. published this content on November 07, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on November 07, 2025 at 11:06 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]