KalVista Pharmaceuticals(KALV) - 2020 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the company's financial statements, management's discussion and analysis, market risk disclosures, and internal controls Financial Statements KalVista reported a net loss of $13.2 million for the six months ended October 31, 2019, with total assets of $112.1 million and decreased revenue Condensed Consolidated Balance Sheets Total assets decreased to $112.1 million as of October 31, 2019, primarily due to reduced cash, while liabilities decreased and equity slightly increased Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Oct 31, 2019 (Unaudited) | Apr 30, 2019 | | :--- | :--- | :--- | | Cash and cash equivalents | $21,719 | $32,006 | | Marketable securities | $71,742 | $68,805 | | Total Assets | $112,064 | $118,132 | | Total current liabilities | $10,470 | $18,052 | | Total long-term liabilities | $3,807 | $3,342 | | Total Liabilities | $14,277 | $21,394 | | Total Stockholders' Equity | $97,787 | $96,738 | Condensed Consolidated Statements of Operations and Comprehensive Loss Revenue decreased and operating expenses increased for the three and six months ended October 31, 2019, leading to a widened net loss Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Oct 31, 2019 | Three Months Ended Oct 31, 2018 | Six Months Ended Oct 31, 2019 | Six Months Ended Oct 31, 2018 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $3,920 | $5,592 | $7,289 | $9,311 | | Research and development | $9,789 | $7,876 | $19,476 | $16,232 | | General and administrative | $3,420 | $2,609 | $6,665 | $4,979 | | Operating loss | ($9,289) | ($4,893) | ($18,852) | ($11,900) | | Net loss | ($5,903) | ($3,304) | ($13,241) | ($8,334) | | Net loss per share | ($0.33) | ($0.22) | ($0.75) | ($0.64) | Condensed Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased to $97.8 million, driven by common stock issuance offsetting the net loss for the six months ended October 31, 2019 - Stockholders' equity increased to $97.8 million at October 31, 2019, up from $96.7 million at May 1, 2019[14] - Key changes in equity for the six months ended October 31, 2019 include a net loss of $13.2 million and net proceeds of $11.4 million from the issuance of common stock[14] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $19.1 million, partially offset by financing activities, resulting in a $10.3 million decrease in cash and equivalents Summary of Cash Flows (in thousands) | Activity | Six Months Ended Oct 31, 2019 | Six Months Ended Oct 31, 2018 | | :--- | :--- | :--- | | Net cash used in operating activities | ($19,089) | ($14,998) | | Net cash used in investing activities | ($3,044) | ($786) | | Net cash from financing activities | $11,538 | $87,732 | | Net (decrease) increase in cash | ($10,287) | $70,061 | | Cash and cash equivalents at end of period | $21,719 | $121,116 | Notes to the Condensed Consolidated Financial Statements Notes detail the company's drug development focus, funding sources, adoption of ASC 842, and revenue recognition from the Merck Option Agreement - The company is a clinical-stage pharmaceutical company focused on small molecule protease inhibitors for Hereditary Angioedema (HAE) and Diabetic Macular Edema (DME)[19] - Key drug candidates include KVD900 (on-demand HAE therapy, Phase 2), KVD001 (DME, Phase 2 data expected Q4 2019), and KVD824 (oral HAE prophylaxis or DME therapy)[20][21] - The company adopted new lease standard ASC 842 on May 1, 2019, resulting in the recognition of a $1.9 million right-of-use asset and a $1.9 million lease liability[36][37] - Under the Merck Option Agreement, the company recognized $7.3 million in revenue for the six months ended October 31, 2019, with $5.4 million remaining in deferred revenue as of that date[61] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses decreased revenue and increased R&D expenses, affirming sufficient liquidity for at least the next twelve months Results of Operations For the six months ended October 31, 2019, revenue decreased by $2.0 million, while R&D expenses increased by $3.2 million and G&A expenses rose by $1.7 million Comparison of Results for Six Months Ended October 31 (in thousands) | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | | Revenue | $7,289 | $9,311 | $(2,022) | | Research and development expenses | $19,476 | $16,232 | $3,244 | | General and administrative expenses | $6,665 | $4,979 | $1,686 | R&D Expenses by Program for Six Months Ended October 31 (in thousands) | Program | 2019 | 2018 | | :--- | :--- | :--- | | KVD001 | $3,268 | $5,831 | | KVD900 | $4,448 | $1,698 | | KVD824 | $2,324 | $2,643 | | Preclinical activities | $9,436 | $6,060 | | Total | $19,476 | $16,232 | - The decrease in revenue is attributed to the near completion of the Phase 2 clinical trial for KVD001, which is part of the Merck Option Agreement[84] - The increase in R&D expenses was primarily due to advancing the KVD900 Phase 2 trial and other non-clinical expenses for later-stage development[87] Liquidity and Capital Resources The company funds operations through stock issuance and the Merck agreement, with current capital sufficient for twelve months, and may seek future funding through various means - The company anticipates its current working capital will fund operations for at least the next twelve months from the report's issue date[92] - Net cash used in operating activities increased to $19.1 million for the six months ended Oct 31, 2019, from $15.0 million in the prior-year period[93][94] - Net cash from financing activities was $11.5 million for the six months ended Oct 31, 2019, primarily from the sale of common stock, compared to $87.7 million in the prior year period which included proceeds from a private placement and public offering[96] Quantitative and Qualitative Disclosures About Market Risk The company faces interest rate and foreign exchange risks, with significant GBP cash holdings, but does not currently engage in hedging - The company's primary market risks are interest rate and foreign exchange rate fluctuations[104][105] - As of October 31, 2019, 68% of cash and cash equivalents were held in British Pound Sterling (GBP), exposing the company to foreign exchange risk as it incurs significant expenses in GBP[105] Controls and Procedures Management concluded that disclosure controls were effective as of October 31, 2019, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of October 31, 2019[106] - No changes occurred during the quarter ended October 31, 2019, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[107] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, and a list of exhibits filed with the report Legal Proceedings The company reports no material legal proceedings or claims expected to adversely affect its business or financial condition - The company reports no material legal proceedings[110] Risk Factors No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K have been reported - No material changes to risk factors from the Annual Report on Form 10-K for the fiscal year ended April 30, 2019, have been reported[111] Unregistered Sales of Equity Securities and Use of Proceeds This section is not applicable for the current reporting period - Not applicable[112] Exhibits The report includes various exhibits, such as CEO and CFO certifications and XBRL data files - Exhibits filed include CEO and CFO certifications under Rule 13a-14(a) and 13a-14(b), and various XBRL documents[117][119]