Daily Stock Watch: Is Kymera a Buy?

By Duncan Ferris


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Biotech outfit Kymera Therapeutics (NASDAQ: KYMR) is heading upwards on the back of positive clinical trial news. But is KYMR stock a good investment?

Photo by Julia Zyablova on Unsplash

Kymera Therapeutics (NASDAQ: KYMR) has seen its share price climb by more than 20% on Wednesday following positive clinical test results.

The company announced positive clinical results from the patient cohort portion of its KT-474 (IRAK4) Phase 1 clinical trial. The trial involved patients with hidradenitis suppurativa (HS) and atopic dermatitis (AD). While the latter is a common form of eczema, the former is a long-term condition that causes abscesses and scarring on the skin.

Sanofi, which is collaborating with Kymera on the development of KT-474 outside of the oncology and immune-oncology fields, has notified Kymera of its commitment to advance KT-474 into Phase 2 clinical studies. The Initial Phase 2 clinical trial of KT-474 will investigate its potential in HS and AD, with the first study initiated in 2023.

Kymera Founder, President and CEO Nello Mainolfi, commented:

“This is a pivotal moment for Kymera and for the field of protein degradation. Kymera was founded to harness the enormous potential of targeted protein degradation and bring more effective therapies to patients.

“We believe that, for the first time, we have demonstrated clinical impact of a degrader, KT-474, outside of oncology and in complex inflammatory diseases such as HS and AD. We have also demonstrated the superior clinical potential of an IRAK4 degrader over a small molecule inhibitor, validating our platform and target selection strategy.”

But does the latest news make KYMR stock a Buy?

What is Kymera Therapeutics?

Kymera Therapeutics is a biopharmaceutical company focused on discovering and developing novel small molecule therapeutics that selectively degrade disease-causing proteins by harnessing the body’s own natural protein degradation system. 

The company says its mission is to discover, develop and commercialize novel and transformative therapies to improve the lives of patients with serious diseases.

The business' team has developed a proprietary drug discovery engine, Pegasus, to enable the design of highly selective, small-molecule protein degraders with potent activity against a broad range of disease indications.

The business’ treatment candidates include KT-474, KT-413 and KT-333, which are each in the first phase of clinical trials and target a broad range of immune-inflammatory diseases, hematologic malignancies, and solid tumors.

The company was incorporated in 2015 and is headquartered in Watertown, Massachusetts.

KYMR Stock Financials

The company’s most recent earnings showed it had achieved collaboration revenues of $9.6m for the three-month period that ended on 30 September. This is a drop from $20.3m in the same period 12 months prior.

While revenues have declined, operating expenses have been heading in the opposite direction. They jumped from $49.0m to $54.4m over the same period, resulting in operational losses climbing from $28.6m to $44.9m.

This meant net losses per share for the period came in at $0.79, deeper than the $0.56 loss achieved in the same period 12 months prior.

The business had cash, cash equivalents and marketable securities of $595.6m at the end of the period. 

KYMR stock had a price-to-sales ratio of 29.48 and a price-to-book value of 2.77. These compare with respective average ratios of 9.17 and 8.38 for biopharmaceutical stocks, according to CSIMarket. These paint a mixed picture of the stock, potentially framing it as overvalued.

At the time of writing, KYMR stock has dropped by 51.82% over the year to date. The last 12 months have seen its share price hit a high of $66.45 and a low of $13.15.

KYMR Growth Potential

The market opportunity for treatments for the conditions targeted by Kymera is sizeable. There were global drug sales of $5.76bn for AD in 2021, while HS led to $1.11bn. Indeed, total global drug sales for the Th1-Th17 and Th2 diseases targeted by the company’s treatments under development saw combined sales of approximately $150bn in 2021.

Of course, Kymera getting a significant slice of this opportunity relies on its therapies making an impact.

KYMR Investment Risks

The primary risk with a company such as Kymera is that its pharmaceutical candidates will not make it to the commercial stage, due to clinical trial difficulties and funding issues, or will fail to have a meaningful impact when they do. With a business like Kymera, which is at a particularly early stage, this risk is amplified.

On the other hand, the latest announcement will buoy investors who may have been spooked by the possibility of another risk earlier this year. That’s because Sanofi appears to have committed to working with Kymera on its lead treatment candidate into phase 2 testing.

There had been concerns that Kymera was pivoting away from KT-474 or that the project would be dropped by Sanofi. However, it seems that these concerns can be shelved for now. The loss of heavy-hitting strategic collaborators like Sanofi, Vertex and the Leukemia & Lymphoma Society would be damaging for KYMR.

Is KYMR Stock a Good Investment?

Investing in a business so far from commercialization is always a major risk. There are a wealth of hurdles the company has yet to negotiate before it will start returning significant revenues.

On the bright side, the company is in a very secure position financially, with a runway of years ahead of it. This is necessary, given the early stage of clinical development at which even its most progressed candidates sit.

Stocks like KYMR are not attracting huge investment in the current climate, but the business’ significant funding, large addressable market, strategic partnerships and diverse roster of treatment candidates mean it has the potential to perform well in the long term.

The 18 analysts listed by the Wall Street Journal who cover the stock offer a rating of Overweight, along with an average price target of $53.94.

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This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

Duncan Ferris does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the above article.

Duncan Ferris has not been paid to produce this piece by the company or companies mentioned above.

Digitonic Ltd, the owner of ValueTheMarkets.com, does not hold a position or positions in the stock(s) and/or financial instrument(s) mentioned in the above article.

Digitonic Ltd, the owner of ValueTheMarkets.com, has not been paid for the production of this piece by the company or companies mentioned above.

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