KalVista Pharmaceuticals(KALV) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents KalVista Pharmaceuticals' unaudited condensed consolidated financial statements, detailing financial position, performance, and cash flows Item 1. Financial Statements (unaudited) This section presents KalVista's unaudited condensed consolidated financial statements, covering balance sheets, operations, equity, and cash flows Condensed Consolidated Balance Sheets This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric | July 31, 2023 (in thousands) | April 30, 2023 (in thousands) | | :-------------------------------- | :--------------------------- | :-------------------------- | | Total current assets | $149,842 | $172,326 | | Total assets | $160,332 | $183,202 | | Total current liabilities | $14,132 | $15,032 | | Total long-term liabilities | $6,865 | $7,145 | | Total stockholders' equity | $139,335 | $161,025 | | Total liabilities and equity | $160,332 | $183,202 | Condensed Consolidated Statements of Operations and Comprehensive Loss This statement details the company's revenues, expenses, and net loss over specific reporting periods | Metric | Three Months Ended July 31, 2023 (in thousands) | Three Months Ended July 31, 2022 (in thousands) | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | | Revenue | $— | $— | | Research and development | $19,307 | $18,186 | | General and administrative | $9,786 | $8,130 | | Total operating expenses | $29,093 | $26,316 | | Operating loss | $(29,093) | $(26,316) | | Total other income | $3,776 | $3,274 | | Net loss | $(25,317) | $(23,042) | | Comprehensive (loss) | $(25,148) | $(23,331) | | Net loss per share, basic and diluted | $(0.74) | $(0.94) | | Weighted average common shares outstanding | 34,414,226 | 24,557,615 | Condensed Consolidated Statements of Changes in Stockholders' Equity This statement tracks the changes in the company's equity components over specific reporting periods - For the three months ended July 31, 2023, total stockholders' equity decreased from $161,025 thousand to $139,335 thousand, primarily due to a net loss of $25,317 thousand, partially offset by stock-based compensation expense of $3,254 thousand and unrealized holding gains on marketable securities[18] - For the three months ended July 31, 2022, total stockholders' equity decreased from $185,093 thousand to $164,572 thousand, driven by a net loss of $23,042 thousand, partially offset by stock-based compensation expense of $2,642 thousand[20] Condensed Consolidated Statements of Cash Flows This statement summarizes the cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Three Months Ended July 31, 2023 (in thousands) | Three Months Ended July 31, 2022 (in thousands) | | :--------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(26,730) | $(22,742) | | Net cash provided by investing activities | $19,613 | $30,044 | | Net cash provided by financing activities | $204 | $168 | | Effect of exchange rate changes | $84 | $(339) | | Net (decrease) increase in cash | $(6,829) | $7,131 | | Cash and cash equivalents at end of period | $49,409 | $37,863 | Notes to the Condensed Consolidated Financial Statements These notes provide additional detail and context to the condensed consolidated financial statements Note 1. The Company KalVista is a clinical-stage pharmaceutical company focused on HAE treatments, with lead candidate sebetralstat in Phase 3 trials - KalVista is a clinical-stage pharmaceutical company developing small molecule protease inhibitors, with an initial focus on hereditary angioedema (HAE)[26] - Sebetralstat, an oral on-demand therapy for HAE attacks, has completed enrollment for its Phase 3 KONFIDENT trial, with data expected in Q4 2023 and an NDA submission planned for H1 2024[27] - As of July 31, 2023, the Company had an accumulated deficit of $368.4 million and $123.3 million in cash, cash equivalents, and marketable securities, anticipating sufficient funding for at least the next twelve months but requiring additional financing for long-term operations[30] Note 2. Summary of Significant Accounting Policies This note details the company's significant accounting policies, including consolidation, GAAP, and fair value measurements - The company operates as a single operating segment and prepares financial statements in accordance with U.S. GAAP for interim financial information[34][35] - ASU 2016-13, effective May 1, 2023, regarding credit losses, did not have a material impact on the consolidated financial statements[36] - Fair value measurements for cash equivalents and marketable securities primarily utilize Level 1 (quoted market prices) and Level 2 (observable inputs) hierarchy inputs[42][43] Note 3. Marketable Securities This note describes the company's investment policy for marketable securities, focusing on safety, liquidity, and classification - The company's investment policy focuses on safety, preservation of funds, and liquidity, investing in high-credit-quality debt securities[44] - All debt securities are classified as available-for-sale, with unrealized gains and losses recognized in accumulated comprehensive loss[45] | Type of Security | Amortized Cost (July 31, 2023, in thousands) | Estimated Fair Value (July 31, 2023, in thousands) | | :------------------------------- | :------------------------------------------- | :----------------------------------------------- | | Corporate debt securities | $58,307 | $58,513 | | U.S. Government agency securities | $15,094 | $15,335 | | Total | $73,401 | $73,848 | | Maturity | July 31, 2023 (in thousands) | | :-------------------------------- | :--------------------------- | | Maturing in one year or less | $50,347 | | Maturing after one year through two years | $12,188 | | Maturing after two years through four years | $11,313 | | Total | $73,848 | Note 4. Accrued Expenses This note provides a breakdown of the company's accrued expenses by category at specific dates | Accrued Expense Category | July 31, 2023 (in thousands) | April 30, 2023 (in thousands) | | :----------------------- | :--------------------------- | :-------------------------- | | Accrued compensation | $2,501 | $4,207 | | Accrued research expense | $3,925 | $3,817 | | Accrued professional fees | $1,376 | $906 | | Other accrued expenses | $148 | $198 | | Total | $7,950 | $9,128 | Note 5. Prepaid Expenses and Other Current Assets This note details the company's prepaid expenses and other current assets, categorized by type | Prepaid Expense Category | July 31, 2023 (in thousands) | April 30, 2023 (in thousands) | | :----------------------- | :--------------------------- | :-------------------------- | | Prepaid clinical expenses | $3,175 | $1,724 | | Other prepaid expenses | $2,840 | $2,583 | | Interest and other receivables | $469 | $654 | | VAT receivable | $1,044 | $1,422 | | Total | $7,528 | $6,383 | Note 6. Commitments and Contingencies This note outlines the company's contractual obligations, indemnification agreements, and contingent liabilities - Contractual obligations for preclinical studies and clinical trials totaled $26.2 million at July 31, 2023, with cancellation provisions[51] - The company has indemnification obligations but has not paid any claims or recorded associated charges to date[52] - No contingent liabilities required accrual as of July 31, 2023[53] Note 7. Leases This note details the company's operating lease agreements for office and laboratory spaces and associated expenses - The company has lease agreements for headquarters in Cambridge, MA (through Sept 2028), office/lab space in Porton Down, UK (through April 2028), and office space in Salt Lake City, UT (through Feb 2032)[54] - Total rent expense was approximately $0.5 million for both the three months ended July 31, 2023, and 2022[55] | Years ending April 30, | Operating Leases (in thousands) | | :----------------------- | :------------------------------ | | 2024 | $1,308 | | 2025 | $1,777 | | 2026 | $1,814 | | 2027 | $1,853 | | 2028 | $1,848 | | Thereafter | $1,537 | | Total minimum lease payments | $10,137 | | Present value of minimum payments | $7,987 | Note 8. Subsequent Event This note reports a new one-year office lease signed in August 2023 for space in Zug, Switzerland - In August 2023, the Company signed a new one-year lease for office space in Zug, Switzerland, with monthly payments of approximately $10,000, commencing in September 2023[57] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses KalVista's financial condition, operational results, and strategic focus as a clinical-stage HAE developer Management Overview KalVista is a clinical-stage pharmaceutical company focused on HAE treatments, with sebetralstat in Phase 3 and a preclinical program - KalVista is a clinical-stage pharmaceutical company developing small molecule protease inhibitors, primarily for hereditary angioedema (HAE)[59] - The Phase 3 KONFIDENT clinical trial for sebetralstat, an oral on-demand HAE therapy, achieved its enrollment target of 114 patients in July 2023, with data expected in Q4 2023 and an NDA submission anticipated in H1 2024[61] - The company is also developing an oral Factor XIIa inhibitor program for HAE and other indications, with multiple compounds in IND-enabling studies[65] - In December 2022, KalVista completed a registered direct offering, raising approximately $57.7 million in net proceeds from the sale of common stock and pre-funded warrants[67] Financial Overview The company has no product sales revenue, expects substantial R&D expenses, and anticipates continued net losses - The company has not generated any product sales revenue and does not expect to until regulatory approval and commercialization of its product candidates[69] - Research and development expenses are expensed as incurred and are expected to remain substantial and increase as product candidates progress through clinical development[70][72] - Other income comprises interest income, UK R&D tax credits, and foreign currency exchange gains/losses[76] Results of Operations The company reported no revenue, an increased net loss, and higher operating expenses for the three months ended July 31, 2023 | Metric | Three Months Ended July 31, 2023 (in thousands) | Three Months Ended July 31, 2022 (in thousands) | Increase (decrease) (in thousands) | | :---------------------------------- | :-------------------------------------------- | :-------------------------------------------- | :--------------------------------- | | Revenue | $— | $— | $— | | Research and development expenses | $19,307 | $18,186 | $1,121 | | General and administrative expenses | $9,786 | $8,130 | $1,656 | | Interest, exchange rate gain and other income | $3,776 | $3,274 | $502 | - Research and development expenses increased by $1.1 million, primarily due to a $3.4 million increase in sebetralstat spending and a $1.1 million increase in personnel costs, offset by a $2.7 million decrease in KVD824 spending[80][81] - General and administrative expenses increased by $1.7 million, mainly due to a $1.3 million increase in employee-related expenses and a $0.4 million increase in professional fees[85] - Other income increased by $0.5 million, driven by a $1.0 million increase in currency exchange rate gains and a $0.7 million increase in interest income, partially offset by a $1.5 million decrease in R&D tax credits[86] Liquidity and Capital Resources The company funds operations through equity offerings, anticipates sufficient liquidity for 12 months, and plans future financing - The company has funded operations primarily through the issuance of capital stock and pre-funded warrants and anticipates sufficient funding for at least the next twelve months[87][94] - Future cash needs will be financed through equity offerings, debt financings, collaborations, strategic partnerships, and licensing arrangements, which may lead to stockholder dilution or restrictive covenants[95] | Cash Flow Activity | Three Months Ended July 31, 2023 (in thousands) | Three Months Ended July 31, 2022 (in thousands) | | :--------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(26,730) | $(22,742) | | Net cash provided by investing activities | $19,613 | $30,044 | | Net cash provided by financing activities | $204 | $168 | | Net increase (decrease) in cash | $(6,829) | $7,131 | Contractual Obligations and Commitments This section outlines the company's cancelable contractual agreements and operating lease commitments - The company has cancelable contractual agreements with CROs and vendors for clinical trials and services[96] - KalVista is party to several operating leases for office and laboratory space as of July 31, 2023[96] Off-Balance Sheet Arrangements As of July 31, 2023, the company had no off-balance sheet arrangements as defined by SEC regulations - As of July 31, 2023, the company was not a party to any off-balance sheet arrangements[97] Critical Accounting Policies and Significant Judgments and Estimates This section highlights critical accounting policies and estimates used in preparing financial statements under U.S. GAAP - Financial statements require estimates and assumptions affecting reported amounts, based on historical experience, known trends, and other factors[98] - Critical accounting policies and estimates are discussed in Note 2 of the interim financial statements and the Annual Report on Form 10-K[98] Recently Issued Accounting Pronouncements Details on recently issued accounting pronouncements and their potential impact are provided in Note 2 - Details on recently issued accounting pronouncements are provided in Note 2 of the Interim Financial Statements[99] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, KalVista is exempt from providing quantitative and qualitative market risk disclosures - KalVista is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[100] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes in internal control - Management concluded that disclosure controls and procedures were effective as of July 31, 2023[101] - No material changes in internal control over financial reporting occurred during the quarter ended July 31, 2023[102] PART II. OTHER INFORMATION This section covers other information not included in financial statements, such as legal proceedings and risk factors Item 1. Legal Proceedings The company is not aware of any legal proceedings expected to materially affect its business or financial condition - The company is not aware of any legal proceedings or claims that would have a material adverse effect on its business[105] Item 1A. Risk Factors No material changes to risk factors from the Annual Report on Form 10-K were identified for this period - No material changes to the risk factors described in the Annual Report on Form 10-K for the fiscal year ended April 30, 2023[106] - Investors should consider factors discussed in the Annual Report on Form 10-K and other reports, as additional unknown risks may also have a material adverse effect[107] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the current period - Not applicable for sales of unregistered securities[108] - No use of proceeds to report[109] - Not applicable for issuer purchases of equity securities[110] Item 3. Defaults Upon Senior Securities This item is not applicable to the company for the current reporting period - Not applicable[111] Item 4. Mine Safety Disclosures This item is not applicable to the company for the current reporting period - Not applicable[112] Item 5. Other Information This item is not applicable to the company for the current reporting period - Not applicable[113] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including officer certifications and Inline XBRL documents - Exhibits include certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1) and Inline XBRL documents (Exhibits 101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE, 104)[115] Signatures This section contains the official signatures for the report, confirming its submission and accuracy Signatures The report was signed on September 7, 2023, by the Chief Executive Officer and Chief Financial Officer - The report was signed on September 7, 2023, by T. Andrew Crockett (CEO) and Benjamin L. Palleiko (President, CBO, CFO)[120]