Kindred projects increased spending as it preps for first commercial product

Richard Chin, Kindred Biosciences CEO

Veterinary drug developer Kindred Biosciences ($KIN), which has faced challenges in its effort to get its first product on the market, reported on March 2 that its net loss for 2015 was flat year-over-year at $27.1 million and that its research and development expenses grew slightly to $19.4 million. The company expects to spend at least $24 million this year shoring up its pipeline and preparing to transition to a commercial enterprise, according to an earnings release.

Kindred has suffered a number of setbacks in R&D. In January, Kindred shed 18 employees in the wake of a failed pivotal trial of SentiKind, its drug to treat post-surgical pain in dogs. The company had previously abandoned another molecule in its pipeline, AtoKin, which it was developing to treat atopic dermatitis in dogs.

Still, CEO Richard Chin remains optimistic about Zimeta (dipyrone injection), a drug it is developing to treat pyrexia, or fever, in horses. Kindred said in its earnings announcement that it would complete its FDA submission this quarter, and if all goes well, it will be ready to launch the drug, formerly known as KIND-012, at the end of this year or in early 2017.

During a conference call with analysts after the earnings announcement, Chin was asked whether Kindred, which has $77.6 million in cash, might use acquisitions to strengthen its pipeline. "We will be launching our first product soon into the equine market and obviously additional products to amortize the cost of the commercial infrastructure would be welcome," Chin replied. "So at the right price we're still very interested in acquisitions."

Denise Bevers, Kindred Biosciences chief operating officer

Chin and Denise Bevers, Kindred's chief operating officer, both emphasized during the earnings call that they're running the startup as leanly as possible. Bevers cited the Zimeta development program as an example. "From the time we initiated our very first clinical study site in this multi-center, randomized, blinded, [placebo-controlled] pivotal study to enrolling a 138 horses to submitting our effectiveness technical section to the FDA took us less than 12 months," she said. "It was conducted ahead of schedule and on budget."

Kindred is in the process of building out its own manufacturing plant--another project that will eat up cash. "We believe it will be one of the most advanced biologics manufacturing plants in the world and one of the first ones dedicated to veterinary biologics," Chin said during the call. But he vowed that the plant would be "very efficient even for multiple batches" and that it would allow Kindred to have a lower cost of goods than its competitors.

Kindred hasn't generated much confidence on Wall Street, however. Its shares opened the day after the earnings announcement at $3.81--way off their one-year high of $7.91.

- here's the earnings release
- access a transcript of the earnings call at Seeking Alpha