Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

Cytokinetics Inc., consolidated cash flow statement

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net loss	(388,955)	(215,314)	(127,290)	(121,692)	(106,289)
Non-cash interest expense on liabilities related to revenue participation right purchase agreement	31,858)	13,004)	22,792)	20,737)	17,767)
Stock-based compensation expense	47,853)	26,832)	17,620)	10,759)	9,761)
Non-cash lease expense	2,585)	7,361)	4,221)	3,552)	—)
Impairment of right-of-use assets	—)	2,844)	—)	—)	—)
Depreciation of property and equipment	5,814)	2,276)	1,831)	1,293)	1,239)
(Gain) loss on investment, net	107)	—)	(573)	—)	—)
Interest receivable and amortization on investments	(4,710)	4,894)	(1,194)	(2,587)	(1,677)
Non-cash interest expense related to debt	5,697)	7,125)	6,640)	919)	920)
Loss on extinguishment of debt	2,693)	—)	—)	—)	—)
Loss on inducement of convertible debt	22,246)	—)	—)	—)	—)
Accounts receivable	56,672)	(47,399)	743)	(2,932)	(1,119)
Contract assets	—)	—)	—)	4,554)	5,154)
Prepaid and other assets	(7,414)	(7,381)	(5,162)	(3,862)	1,817)
Accounts payable	4,524)	1,055)	(110)	4,396)	(1,490)
Accrued and other liabilities	10,844)	15,060)	7,117)	(2,168)	(2,063)
Contract liabilities	—)	—)	—)	—)	(18,750)
Deferred revenue	(87,000)	—)	87,000)	—)	(6,485)
Operating lease liabilities	1,728)	43,472)	(4,692)	(3,876)	—)
Other non-current liabilities	(4,058)	3,649)	—)	—)	—)
Changes in operating assets and liabilities	(24,704)	8,456)	84,896)	(3,888)	(22,936)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities	89,439)	72,792)	136,233)	30,785)	5,074)
Net cash provided by (used in) operating activities	(299,516)	(142,522)	8,943)	(90,907)	(101,215)
Purchases of investments	(855,393)	(525,042)	(435,825)	(277,883)	(240,224)
Maturities of investments	604,594)	422,837)	247,301)	202,599)	246,232)
Sales of investments	—)	3,300)	3,061)	3,196)	—)
Purchases of property and equipment	(11,335)	(48,872)	(11,052)	(2,619)	(889)
Sales of property and equipment	—)	—)	—)	—)	14)
Net cash (used in) provided by investing activities	(262,134)	(147,777)	(196,515)	(74,707)	5,133)
Repayment of finance lease liabilities	(944)	—)	—)	—)	—)
Repayment of term loan	(47,651)	—)	—)	—)	—)
Debt extinguishment costs	(2,409)	—)	—)	—)	—)
Repayment of convertible debt	(140,330)	—)	—)	—)	—)
Proceeds from issuance of convertible debt, net	523,586)	—)	—)	133,860)	—)
Proceeds from public offerings of common stock, net of discounts, commissions and offering cost	—)	296,905)	188,883)	—)	—)
Proceeds from private placement, net	—)	15,144)	36,225)	—)	—)
Proceeds from 2022 RPI Transactions, net	149,581)	—)	—)	—)	—)
Proceeds from issuance of common stock under equity incentive and stock purchase plans	17,543)	12,380)	9,120)	1,393)	3,234)
Taxes paid related to net share settlement of equity awards	(9,602)	(4,449)	(2,255)	—)	—)
Claims settlement under Section 16(b)	—)	—)	2,151)	—)	—)
Cash settlement of capped call options associated with 2026 Notes	26,392)	—)	—)	—)	—)
Net proceeds from long-term debt, net of debt discount and issuance costs	—)	—)	—)	1,710)	9,898)
Issuance of common stock under at-the-market offering, net of issuance costs	—)	—)	—)	36,214)	—)
Purchase of capped call options associated with convertible notes	—)	—)	—)	(13,386)	—)
Net cash provided by financing activities	516,166)	319,980)	234,124)	159,791)	13,132)
Net increase (decrease) in cash, cash equivalents, and restricted cash equivalents	(45,484)	29,681)	46,552)	(5,823)	(82,950)
Cash, cash equivalents, and restricted cash equivalents, beginning of period	112,666)	82,985)	36,433)	42,256)	125,206)
Cash, cash equivalents, and restricted cash equivalents, end of period	67,182)	112,666)	82,985)	36,433)	42,256)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Net Loss Trend

The net loss has shown a steady and significant increase over the five-year period, worsening from -$106.3 million in 2018 to -$389.0 million in 2022. The most notable escalations occurred between 2020 and 2021, and again into 2022, indicating rising operational or other expenses outpacing revenue or cost controls.

Non-Cash Expenses

Interest Expense Related to Revenue Participation Rights: This non-cash interest expense rose from $17.8 million in 2018, peaking at $31.9 million in 2022 after a drop in 2021, suggesting fluctuating liabilities related to revenue participation agreements.
Stock-Based Compensation: Increased substantially from $9.8 million in 2018 to $47.9 million in 2022, reflecting a growing reliance on equity incentives, potentially to attract or retain employees.
Depreciation and Lease Expenses: Depreciation of property and equipment more than quadrupled from $1.2 million to $5.8 million over the period. Non-cash lease expenses showed volatility, peaking in 2021 at $7.4 million, then dropping to $2.6 million in 2022. An impairment of right-of-use assets of $2.8 million was recorded in 2021.

Investments and Related Gains/Losses

Investment Gains/(Losses): Net gains on investments were recorded only in 2020 (-$0.6 million loss) and a small gain of $0.1 million in 2022, indicating limited gains or losses on investment assets.
Interest Receivable and Amortization on Investments: Figures fluctuated widely, with negative amounts in most years except 2021, where a positive $4.9 million was recorded, showing variability in income or amortization related to investments.
Investment Purchases and Maturities: Purchases escalated each year from $240.2 million in 2018 to $855.4 million in 2022, while maturities also increased substantially, from $246.2 million to $604.6 million in the same timeframe, indicating active portfolio management with growing scale.

Working Capital and Related Items

Accounts Receivable and Contract Assets: Accounts receivable values oscillated significantly with a drastic negative to positive swing in 2021 and 2022, reflecting volatility or restructuring. Contract assets were reported positively in 2018 and 2019 but absent thereafter.
Prepaid and Other Assets: Consistently negative and worsening over the years, moving from $1.8 million in 2018 to -$7.4 million in 2022, suggesting increased prepayments or asset write-downs.
Accounts Payable and Accrued Liabilities: Accounts payable flipped from negative to positive and rose over the period, indicating variability in payables management. Accrued and other liabilities turned substantially positive from 2020 onward, suggesting increased accrued expenses or obligations.
Deferred Revenue and Contract Liabilities: Deferred revenue and contract liabilities showed irregular entries, with stark values such as $87 million deferred revenue recorded in 2020 and negative $87 million in 2022, also a large contract liabilities figure in 2018, implying volatile revenue recognition or contract accounting treatments.
Operating Lease Liabilities and Other Non-current Liabilities: Operating lease liabilities showed a large increase in 2021 at $43.5 million and then sharply decreased in 2022. Other non-current liabilities were reported only in 2021 and 2022 with opposing signs, suggesting changes in long-term obligations.

Cash Flows from Operating Activities

Net cash used in operating activities fluctuated considerably, including large negative cash flows in 2018, 2019, 2021, and 2022, with a brief positive inflow in 2020. Adjustments to reconcile net loss to operating cash were notably high in 2020, 2021, and 2022, indicating significant non-cash expenses affecting net loss but not cash flow directly.

Cash Flows from Investing Activities

Investing cash flows were predominantly negative, reflecting heavy investments in securities and property and equipment. Purchases of investments rose sharply with a large jump in 2022. Sales and maturities of investments partially offset purchases but did not suffice to generate positive investing cash flows in most years.

Cash Flows from Financing Activities

Financing cash inflows increased substantially, peaking at $516.2 million in 2022. This was driven by proceeds from convertible debt issuance, public offerings, private placements, revenue participation transactions, and equity issuance under stock plans. Debt repayments and repayment of finance leases became significant in 2022.

Cash Position

Cash and equivalents decreased sharply in 2018 and 2019, recovered strongly in 2020 and 2021, and dropped again in 2022. The end-period cash balance showed volatility, reflecting the net impact of operating, investing, and financing cash flows and highlighting periods of liquidity management challenges.

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Cytokinetics Inc. (NASDAQ:CYTK)

Cash Flow Statement