Renalytix plc(RNLX) - 2022 Q4 - Annual Report

FORM 6-K Report Report Details Renalytix plc filed its Form 6-K report on June 30, 2022, disclosing financial results for the three and nine months ended March 31, 2022 - Renalytix plc submitted its Form 6-K report on June 30, 2022, disclosing financial results for the three and nine months ended March 31, 2022[2][4] Exhibit Index The report's exhibits include a press release (Exhibit 99.1) dated June 30, 2022, and consolidated financial statements in XBRL format - The report's exhibits include a press release (Exhibit 99.1) dated June 30, 2022, and consolidated financial statements in XBRL format[5] Signatures The report was signed by James McCullough, CEO of Renalytix plc, on June 30, 2022 - The report was signed by James McCullough, CEO of Renalytix plc, on June 30, 2022[7] Exhibit 99.1: Press Release Renalytix Reports Financial Results for Third Quarter of Fiscal Year 2022 Renalytix plc announced its third-quarter fiscal year 2022 financial results, focusing on AI-driven kidney disease clinical management - Renalytix plc announced its financial results for the third quarter of fiscal year 2022, ended March 31, 2022[8][9] Recent Highlights (including post period events) The company achieved significant progress in financing, clinical data presentation, KidneyIntelX test volume growth, and expanded insurance coverage - Successfully completed a $30 million financing package, generating $26.8 million in gross proceeds[16] - Multiple data presentations at the American Diabetes Association (ADA) 82nd Scientific Sessions highlighted KidneyIntelX's value in Type 2 Diabetes (T2D) and early Chronic Kidney Disease (CKD) patients[16] - KidneyIntelX test volumes continued to grow, generating over 3,000 risk scores for Mount Sinai Health System patients and over 300 for Wake Forest Baptist Health patients[16] - Contracted with 33 state Medicaid plans and secured KidneyIntelX coverage with Illinois' largest private payer (8.1 million members) and the largest independent provider network in North Carolina, South Carolina, and Virginia (over 100,000 healthcare providers)[16] Third Quarter Fiscal Year 2022 Financial Results Summary The company experienced revenue growth in Q3 FY2022, but operating expenses and net loss significantly increased, driven by employee-related and marketing costs Third Quarter Fiscal Year 2022 Financial Performance (Million USD) | Metric | Three Months Ended March 31, 2022 (Million USD) | Three Months Ended March 31, 2021 (Million USD) | Change (Million USD) | Change (%) | | :--- | :---: | :---: | :---: | :---: | | Revenue | 0.8 | 0.6 | 0.2 | 33.3% | | Cost of Revenue | 0.7 | 0.2 | 0.5 | 250.0% | | Operating Expenses | 14.7 | 8.5 | 6.2 | 72.9% | | Research and Development Expenses | 3.9 | 3.1 | 0.8 | 25.8% | | General and Administrative Expenses | 10.8 | 5.5 | 5.3 | 96.4% | | Net Loss Attributable to Common Stockholders | 14.7 | 8.8 | 5.9 | 67.0% | | Cash and Cash Equivalents (End of Period) | 32.4 | N/A | N/A | N/A | - Research and development expenses increased by $0.8 million, primarily due to employee-related costs, lab supplies, and professional fees for utility studies at Mount Sinai, Wake Forest, and the University of Utah[12] - General and administrative expenses increased by $5.3 million, mainly due to a $4.3 million rise in compensation, reimbursement expenses, and related benefits (including share-based payments) from increased headcount, a $0.7 million increase in consulting and professional fees (including marketing), and a $0.2 million increase in computer, software, and IT costs[13] - The company plans to file a Form F-3 shelf registration statement with the SEC, potentially offering and selling up to $300 million of common stock, ADSs, debt securities, and warrants, and intends to sell up to $50 million of ADSs through an "at-the-market" offering[15] Conference Call Details The company held a conference call and webcast on June 30, 2022, to discuss financial results, business strategy, partnerships, and regulatory and reimbursement processes - The company held a conference call and webcast on June 30, 2022, to discuss financial results, business strategy, partnerships, and regulatory and reimbursement processes[17] About Renalytix Renalytix is an AI-driven in vitro diagnostics company focused on optimizing kidney disease clinical management to improve patient outcomes and drive value-based care - Renalytix is an AI-driven in vitro diagnostics company focused on optimizing kidney disease clinical management to improve patient outcomes and drive value-based care[19] - The company's flagship product, KidneyIntelX™, has received Breakthrough Device designation from the U.S. Food and Drug Administration (FDA)[19] Forward-Looking Statements The press release contains forward-looking statements regarding KidneyIntelX's commercial prospects, test rates, regulatory and reimbursement decisions, and future performance expectations - The press release contains forward-looking statements regarding KidneyIntelX's commercial prospects, test rates, regulatory and reimbursement decisions, cost control capabilities, and future performance expectations[20] - Investors are cautioned that these statements involve risks and uncertainties, and actual results may differ materially from expectations[20] Operational Update and Financial Results for the three and nine months ended March 31, 2022 Operational Review Renalytix is dedicated to transforming early risk assessment and management of kidney disease with its core product, KidneyIntelX, achieving significant progress in commercialization, insurance coverage, and clinical validation About Renalytix Renalytix aims to shift the focus of kidney disease to kidney health through its leading product, KidneyIntelX, providing early, accurate risk assessment via bioprognostic methods - Renalytix aims to shift the focus of kidney disease from illness to kidney health through its leading product, KidneyIntelX, providing early, accurate risk assessment via bioprognostic methods[25] - The company has made key progress in data, reimbursement, and regulation, including a 10-year General Services Administration (GSA) contract at $950 per test, national pricing from the Centers for Medicare & Medicaid Services (CMS) at $950 per test, authorized contracts with 33 state Medicaid plans, and an independent Current Procedural Terminology (CPT) code from the American Medical Association[26] About KidneyIntelX KidneyIntelX is a platform that uses machine learning algorithms to combine biomarkers and patient health record data, generating early, accurate kidney health risk scores - The KidneyIntelX platform utilizes machine learning algorithms to process predictive blood biomarkers and key features from patient health records, generating early, accurate kidney health risk scores[27] - The product is initially applicable to adults diagnosed with kidney disease and diabetes (Diabetic Kidney Disease, DKD), with future plans to expand to broader chronic kidney disease populations, health equity strategies, and kidney health monitoring during treatment[28][29] Operational Progress KidneyIntelX test volumes continue to grow, with deployment across multiple healthcare systems and an expanded sales and medical liaison team - KidneyIntelX test volumes continue to grow, serving over 3,000 Diabetic Kidney Disease patients in the New York market and launched at the Veterans Health Administration, Albany New York, Atrium Health, and Wake Forest Baptist Health[30] - The company estimates that the currently addressable patient population for KidneyIntelX testing with insurance coverage exceeds one million individuals[30] - The company has established regional sales managers and account executive teams focused on the Veterans Health Administration and New York markets, supplemented by a medical education team, projecting over 20 medical centers to be running KidneyIntelX patient risk assessments by calendar year 2022[31] Reimbursement and Regulatory Insurance coverage is a key driver for KidneyIntelX adoption and revenue growth, with multiple private insurance contracts and state Medicaid authorizations secured - The company has secured 26 private insurance coverage contracts and authorizations from 33 state Medicaid plans, with national Medicare and a 10-year government contract establishing a $950 per test reported pricing structure[32] - A real-world evidence study program with Mount Sinai Health System showed that the time from physician education/training to the first KidneyIntelX order has decreased from 11 days to 3 days[33] - The company has obtained CAP and ISO certifications for its Salt Lake City and New York City laboratories and published multiple peer-reviewed data demonstrating KidneyIntelX's value in monitoring treatment response to new drugs and predicting kidney function decline[35][36] Current Trading and Outlook The company's Q3 FY2022 test revenue was $0.8 million, with projected total revenue for FY2022 of approximately $2.9 million, a significant increase from FY2021 Test Revenue by Quarter (Million USD) | Metric | Q3 FY2022 (Million USD) | Q2 FY2022 (Million USD) | Q1 FY2022 (Million USD) | | :--- | :---: | :---: | :---: | | Test Revenue | 0.8 | 0.7 | 0.5 | Projected vs. Prior Fiscal Year Revenue (Million USD) | Metric | FY2022 (Projected) (Million USD) | FY2021 (Million USD) | | :--- | :---: | :---: | | Total Revenue | 2.9 | 1.5 | | Test Revenue | 2.7 | 0.4 | - Mount Sinai's test volume continued to grow in the third quarter, and despite an initial dip in early Q4 due to procedural and automation system adjustments, it has since recovered to third-quarter levels[37] Financial Review The company's operating and net losses significantly expanded in Q3 and the first nine months of FY2022, primarily due to increased KidneyIntelX cost of revenue, R&D, and G&A expenses, reflecting investments in commercialization and expansion Financial review of the three-month period ended March 31, 2022 and comparison to prior year period In Q3 FY2022, the company's operating and net losses expanded, with significant increases in cost of revenue, R&D, and G&A expenses, partially offset by foreign exchange gains Three-Month Financial Performance (Million USD) | Metric | Three Months Ended March 31, 2022 (Million USD) | Three Months Ended March 31, 2021 (Million USD) | Change (Million USD) | Change (%) | | :--- | :---: | :---: | :---: | :---: | | Operating Loss | (14.5) | (8.1) | (6.4) | 79.0% | | Net Loss Attributable to Common Stockholders | (14.7) | (8.8) | (5.9) | 67.0% | | Revenue | 0.8 | 0.6 | 0.2 | 33.3% | | Cost of Revenue | 0.7 | 0.2 | 0.5 | 250.0% | | Research and Development Expenses | 3.9 | 3.1 | 0.8 | 25.8% | | General and Administrative Expenses | 10.8 | 5.5 | 5.3 | 96.4% | | Foreign Exchange Gain (Loss), Net | 2.4 (Gain) | (1.1) (Loss) | 3.5 | - | | Fair Value Adjustment to VericiDx Investment | (2.6) (Loss) | 0.3 (Gain) | (2.9) | - | Financial review of the nine months ended March 31, 2022 and comparison to prior year period For the first nine months of FY2022, operating and net losses significantly increased, primarily due to higher KidneyIntelX cost of revenue, R&D, and G&A expenses, despite foreign exchange gains Nine-Month Financial Performance (Million USD) | Metric | Nine Months Ended March 31, 2022 (Million USD) | Nine Months Ended March 31, 2021 (Million USD) | Change (Million USD) | Change (%) | | :--- | :---: | :---: | :---: | :---: | | Operating Loss | (40.1) | (22.1) | (18.0) | 81.4% | | Net Loss Attributable to Common Stockholders | (40.1) | (24.9) | (15.2) | 61.0% | | Revenue | 2.1 | 1.0 | 1.1 | 110.0% | | Cost of Revenue | 1.4 | 0.4 | 1.0 | 250.0% | | Research and Development Expenses | 12.0 | 7.3 | 4.7 | 64.4% | | General and Administrative Expenses | 29.0 | 16.3 | 12.7 | 77.9% | | Foreign Exchange Gain (Loss), Net | 4.6 (Gain) | (8.8) (Loss) | 13.4 | - | | Fair Value Adjustment to VericiDx Investment | (4.6) (Loss) | 5.4 (Gain) | (10.0) | - | Liquidity and Capital Resources As of March 31, 2022, the company had accumulated losses of $127.6 million and cash and cash equivalents of $32.4 million, with post-period financing expected to support future operations - As of March 31, 2022, the company had accumulated losses of $127.6 million[55] - As of March 31, 2022, the company's cash and cash equivalents totaled $32.4 million[57] - The company anticipates incurring additional losses in the future, primarily related to KidneyIntelX commercialization, R&D, regulatory approvals, establishing healthcare system partnerships, and infrastructure investments[56] - The company believes that the cash balance at period-end, combined with the $26.8 million (gross) financing proceeds raised in April 2022, will be sufficient to support its operating plans for at least the next 12 months[57] - The company plans to raise future cash needs through securities offerings, debt financing, collaborations, strategic alliances, and marketing, distribution, or licensing arrangements[58] Cash Flows For the first nine months of FY2022, the company experienced $31.8 million in cash outflows from operating activities, $0.722 million from investing activities, and $0.317 million in cash inflows from financing activities Nine-Month Cash Flow Summary (Million USD) | Cash Flow Category | Nine Months Ended March 31, 2022 (Million USD) | Nine Months Ended March 31, 2021 (Million USD) | | :--- | :---: | :---: | | Net Cash Outflow from Operating Activities | (31.8) | (23.3) | | Net Cash Outflow from Investing Activities | (0.7) | (0.5) | | Net Cash Inflow from Financing Activities | 0.3 | 77.0 | | Effect of Exchange Rate Changes | (0.6) | 3.6 | | Net (Decrease) Increase in Cash and Cash Equivalents | (32.8) | 56.8 | | Cash and Cash Equivalents, End of Period | 32.4 | 70.1 | - Operating cash outflow for the first nine months of FY2022 was primarily attributable to a $40.1 million net loss, partially offset by $3.7 million in non-cash expenses and $4.7 million in net changes in operating assets and liabilities[59] - Investing cash outflow for the first nine months of FY2022 was primarily for the purchase of laboratory and office equipment and software development costs[61] - Financing cash inflow for the first nine months of FY2022 primarily resulted from proceeds from common stock issuance under the employee stock purchase plan and stock option exercises[63] Critical accounting policies and significant judgments and estimates The company's financial statements are prepared in accordance with U.S. GAAP, with management using estimates and judgments, and no significant changes in critical accounting policies since the annual report - The company's financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP), and management uses estimates and judgments in their preparation[67] - There have been no significant changes in critical accounting policies since the annual report[68] Recent accounting pronouncements The company is evaluating the impact of recent accounting pronouncements, including ASU 2016-02 (Leases), ASU 2016-13 (Financial Instruments—Credit Losses), and ASU 2020-01 (Investments—Equity Securities) - The company is evaluating the impact of recent accounting pronouncements, including ASU 2016-02 (Leases), ASU 2016-13 (Financial Instruments—Credit Losses), and ASU 2020-01 (Investments—Equity Securities), on its consolidated financial statements[117][118][119] JOBS Act transition period As an emerging growth company, Renalytix has opted to use the JOBS Act's extended transition period for new or revised accounting standards, potentially leading to differences from other public companies - As an emerging growth company, Renalytix has elected to use the extended transition period provided by the JOBS Act for complying with new or revised accounting standards[70] - The company's financial statements may not be comparable to those of other public companies that comply with new accounting standards as of their public company effective dates[70] CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) As of March 31, 2022, total assets were $44.466 million, a decrease from $78.576 million on June 30, 2021, primarily due to reduced cash, while total liabilities increased to $15.051 million Condensed Consolidated Balance Sheets (Thousand USD) | Item (Thousand USD) | March 31, 2022 | June 30, 2021 | | :--- | :---: | :---: | | Assets | | | | Cash and cash equivalents | 32,361 | 65,128 | | Accounts receivable | 1,009 | 594 | | Prepaid expenses and other current assets | 3,837 | 993 | | Total current assets | 37,283 | 66,791 | | Property and equipment, net | 2,850 | 2,490 | | VericiDx investment | 4,322 | 9,295 | | Kantaro investment | 11 | — | | Total Assets | 44,466 | 78,576 | | Liabilities and Shareholders' Equity | | | | Accounts payable | 2,056 | 1,403 | | Accounts payable – related parties | 1,007 | 361 | | Accrued expenses and other current liabilities | 6,689 | 4,602 | | Accrued expenses – related parties | 5,031 | 224 | | Deferred revenue | 67 | 122 | | Due to related parties – current | 187 | 350 | | Total current liabilities | 15,037 | 7,062 | | Other liabilities | 14 | 53 | | Total Liabilities | 15,051 | 7,115 | | Shareholders' equity | 29,415 | 71,461 | | Total Liabilities and Shareholders' Equity | 44,466 | 78,576 | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) In Q3 and the first nine months of FY2022, the company saw revenue growth but significantly expanded operating and net losses, driven by increased R&D and G&A expenses, and a substantial loss from VericiDx investment fair value adjustment Condensed Consolidated Statements of Operations and Comprehensive Loss (Thousand USD) | Item (Thousand USD) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Nine Months Ended March 31, 2022 | Nine Months Ended March 31, 2021 | | :--- | :---: | :---: | :---: | :---: | | Revenue | 812 | 619 | 2,139 | 1,019 | | Cost of revenue | 685 | 169 | 1,404 | 426 | | Gross profit | 127 | 450 | 735 | 593 | | Operating expenses: | | | | | | Research and development | 3,887 | 3,104 | 12,019 | 7,311 | | General and administrative | 10,809 | 5,547 | 29,012 | 16,258 | | Total operating expenses | 14,664 | 8,521 | 40,868 | 22,680 | | Operating loss | (14,537) | (8,071) | (40,133) | (22,087) | | Net (loss) gain from related parties | (26) | (8) | 11 | (229) | | Foreign exchange gain (loss), net | 2,447 | (1,095) | 4,587 | (8,783) | | Fair value adjustment to VericiDx investment | (2,575) | 337 | (4,596) | 5,355 | | Net loss | (14,695) | (8,776) | (40,123) | (25,516) | | Net loss attributable to common stockholders | (14,695) | (8,776) | (40,123) | (24,905) | | Comprehensive loss | (17,327) | (7,613) | (45,243) | (16,012) | | Net loss per common share—basic and diluted | (0.20) | (0.12) | (0.56) | (0.35) | CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED) As of March 31, 2022, shareholder equity significantly decreased to $29.415 million from $71.461 million on July 1, 2021, primarily due to net losses and currency adjustments Condensed Consolidated Statements of Shareholders' Equity (Thousand USD) | Item (Thousand USD) | March 31, 2022 | July 1, 2021 | | :--- | :---: | :---: | | Common shares outstanding | 72,308,930 | 72,197,286 | | Common stock amount | 220 | 220 | | Additional paid-in capital | 153,604 | 150,407 | | Accumulated other comprehensive income (loss) | 3,156 | 8,276 | | Accumulated deficit | (127,565) | (87,442) | | Total Shareholders' Equity | 29,415 | 71,461 | - The decrease in shareholders' equity is primarily attributable to an increase in accumulated deficit (from $87.442 million to $127.565 million) and a decrease in accumulated other comprehensive income (from $8.276 million to $3.156 million)[77] - Stock issuance under the employee stock purchase plan and stock option exercises increased additional paid-in capital[77] CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the first nine months of FY2022, cash outflows from operating and investing activities continued, while financing cash inflows significantly decreased, leading to a net reduction in cash and cash equivalents Condensed Consolidated Statements of Cash Flows (Thousand USD) | Item (Thousand USD) | Nine Months Ended March 31, 2022 | Nine Months Ended March 31, 2021 | | :--- | :---: | :---: | | Net cash outflow from operating activities | (31,757) | (23,302) | | Net cash outflow from investing activities | (722) | (536) | | Net cash inflow from financing activities | 317 | 76,988 | | Effect of exchange rate changes on cash | (605) | 3,633 | | Net (decrease) increase in cash and cash equivalents | (32,767) | 56,783 | | Cash and cash equivalents at beginning of period | 65,128 | 13,293 | | Cash and cash equivalents at end of period | 32,361 | 70,076 | - Operating cash outflow increased, primarily due to an expanded net loss[81] - Financing cash inflow significantly decreased from $76.988 million in the first nine months of FY2021 to $0.317 million in the first nine months of FY2022, mainly due to substantial financing from the Nasdaq IPO in the prior year period[81] NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Business and risks Renalytix is an AI-driven in vitro diagnostics company focused on kidney disease clinical management, with KidneyIntelX utilizing proprietary algorithms to generate patient risk scores - Renalytix is an AI-driven in vitro diagnostics company focused on kidney disease clinical management, with its core product, KidneyIntelX, utilizing proprietary algorithms combined with various data inputs to generate patient risk scores[82] - The company plans to establish "pharmaceutical services revenue" as a core business, aiming to optimize the utilization of existing and novel therapies through the KidneyIntelX platform[82] - The company faces risks and uncertainties common in the early-stage diagnostics industry, including obtaining additional capital, complying with government regulations, competition, reliance on key personnel, and intellectual property protection[84] 2. Liquidity and Going Concern As of March 31, 2022, the company had accumulated losses of $127.6 million and expects to continue incurring losses until KidneyIntelX sales generate significant revenue - As of March 31, 2022, the company had accumulated losses of $127.6 million and expects to continue incurring losses until KidneyIntelX sales generate significant revenue[85] - Management believes that the $32.4 million in cash and cash equivalents as of March 31, 2022, combined with the $26.8 million gross proceeds raised in April 2022, will be sufficient to support operations for at least the next 12 months[85] - The company requires substantial additional capital to fund operations, expand commercial activities, and develop other potential diagnostic products, planning to seek funding through equity offerings, debt financing, collaborations, and licensing arrangements[86] 3. Basis of presentation and summary of significant accounting policies The condensed consolidated financial statements are prepared in accordance with U.S. GAAP, including all normal and recurring adjustments, with the company managed as a single operating segment - The condensed consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP) and include all normal and recurring adjustments[87][88] - The company manages its operations as a single operating segment, focused on improving the diagnosis and prognosis of kidney disease[92] - Significant accounting policies include foreign currency translation (reporting currency is USD, functional currency is GBP or USD), concentration of credit risk (primarily cash and accounts receivable), fair value of financial instruments (approximated by carrying value), equity method investments (Kantaro and VericiDx), and revenue recognition (following the ASC 606 five-step model)[93][94][96][101][102][107] 4. Revenue The company's revenue primarily stems from KidneyIntelX test services, with Q3 and nine-month test service revenues of $0.8 million and $1.9 million, respectively Revenue by Type (Thousand USD) | Revenue Type (Thousand USD) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Nine Months Ended March 31, 2022 | Nine Months Ended March 31, 2021 | | :--- | :---: | :---: | :---: | :---: | | Test service revenue | 800 | 100 | 1,900 | 100 | | Pharmaceutical service revenue | 0 | 0 | 200 | 400 | | Professional service revenue | 0 | 600 | 0 | 600 | Deferred Revenue (Thousand USD) | Deferred Revenue (Thousand USD) | March 31, 2022 | June 30, 2021 | | :--- | :---: | :---: | | Beginning balance | 122 | — | | Revenue deferred | 67 | 250 | | Revenue recognized | (122) | (128) | | Ending balance | 67 | 122 | 5. Fair value measurements and the fair value option The company measures its equity investment in VericiDx at fair value (Level 1), totaling $4.322 million as of March 31, 2022, while the Kantaro investment was impaired to zero VericiDx Equity Investment (Thousand USD) | Item (Thousand USD) | March 31, 2022 (Level 1) | June 30, 2021 (Level 1) | | :--- | :---: | :---: | | VericiDx equity investment | 4,322 | 9,295 | - The company uses the fair value option for its investment in VericiDx, measured at the closing share price on the London Stock Exchange[104] - The company performed an impairment assessment on its equity investment in Kantaro and determined its fair value to be zero due to reduced sales forecasts resulting from decreased demand for COVID antibody testing[127] 6. Property and equipment As of March 31, 2022, the company's total property and equipment cost was $3.529 million, with a net value of $2.85 million Property and Equipment, Net (Thousand USD) | Item (Thousand USD) | March 31, 2022 | June 30, 2021 | | :--- | :---: | :---: | | Laboratory equipment | 1,144 | 592 | | Software | 1,574 | 1,534 | | Office equipment | 121 | 84 | | Office furniture | 35 | 35 | | Leasehold improvements | 576 | 576 | | Construction in progress | 79 | — | | Total | 3,529 | 2,821 | | Less: Accumulated depreciation and amortization | (679) | (331) | | Net | 2,850 | 2,490 | - Depreciation expense for the nine months ended March 31, 2022, was $0.2 million, and amortization expense for capitalized software development costs was $0.1 million[129][130] Software Amortization Expense (Thousand USD) | Software Amortization Expense (Thousand USD) | Amount | | :--- | :---: | | 2022 (remaining three months) | 33 | | 2023 | 130 | | 2024 | 130 | | 2025 | 130 | | 2026 | 130 | | Thereafter | 567 | | Total | 1,120 | 7. Accrued expenses and other current liabilities As of March 31, 2022, the company's total accrued expenses and other current liabilities amounted to $6.689 million, primarily consisting of payroll, R&D, and consulting fees Accrued Expenses and Other Current Liabilities (Thousand USD) | Item (Thousand USD) | March 31, 2022 | June 30, 2021 | | :--- | :---: | :---: | | Consulting and professional fees | 328 | 954 | | Research and development | 875 | — | | Payroll and related benefits | 4,701 | 3,493 | | Deferred offering | 504 | — | | Other | 281 | 155 | | Total | 6,689 | 4,602 | 8. Commitments and contingencies The company has lease commitments, incurred $0.3 million in rent expense for the nine months ended March 31, 2022, and maintains a 401(k) retirement plan - The company has lease commitments, with rent expense for the nine months ended March 31, 2022, totaling $0.3 million[133] Future Minimum Lease Payments (Thousand USD) | Future Minimum Lease Payments (Thousand USD) | Amount | | :--- | :---: | | 2022 (remaining three months) | 33 | | 2023 | 134 | | 2024 | 138 | | 2025 | 46 | | 2026 | — | | Thereafter | — | | Total | 351 | - The company entered into a master care coordination services agreement with DaVita Inc., under which it pays $10 per covered patient per month for care coordination services and $3.50 per patient per month for patient engagement services[135] - The company maintains a 401(k) retirement plan, contributing $0.3 million for the nine months ended March 31, 2022[137] - The company is not currently involved in any litigation[138] 9. License and services agreements The company has exclusive license agreements with Mount Sinai for KidneyIntelX technology and Joslin Diabetes Center for kidney disease diagnostic methods, involving milestone payments and sales royalties - The company has an exclusive license agreement with Mount Sinai for KidneyIntelX technology, requiring milestone payments ($1.5 million at $50 million net sales, $7.5 million at $300 million net sales) and royalties of 4% to 5% of net sales[139] - Under the sponsored research agreement with Mount Sinai, $0.4 million in research and development expenses were incurred for the nine months ended March 31, 2022[140] - The company also has a MASKeD-COVID research agreement with Mount Sinai, with a total cost of $1.8 million, of which $0.6 million was expended for the nine months ended March 31, 2022[141][142] - The company has an exclusive license agreement with Joslin Diabetes Center for kidney disease diagnostic methods, requiring milestone payments ($0.3 million at $2 million net sales, $1 million at $10 million net sales) and 5% royalties on net sales, with $0.1 million in royalties accrued as of March 31, 2022[143][144] 10. Shareholders' equity As of March 31, 2022, the company had 76,869,831 authorized common shares and 72,308,930 issued and outstanding shares, with no cash dividends declared since inception - As of March 31, 2022, the company had 76,869,831 authorized common shares and 72,308,930 issued and outstanding shares[146] - The company has not declared or paid cash dividends since its inception[146] 11. Share-based compensation The company grants stock options to employees and non-employees through its share-based compensation plans, with an expense of $2.81 million for the nine months ended March 31, 2022 Share-Based Compensation Expense (Thousand USD) | Share-Based Compensation Expense (Thousand USD) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Nine Months Ended March 31, 2022 | Nine Months Ended March 31, 2021 | | :--- | :---: | :---: | :---: | :---: | | Research and development | 78 | 237 | 378 | 631 | | General and administrative | 845 | 374 | 2,432 | 973 | | Total | 923 | 611 | 2,810 | 1,604 | - As of March 31, 2022, 2,642,062 shares were available for future issuance under the company's share-based compensation plans[147] - As of March 31, 2022, unrecognized share-based compensation cost related to unvested options was $8.1 million, expected to be recognized as expense over a weighted-average period of 1.91 years[153] - Under the Employee Stock Purchase Plan (ESPP), 10,920 shares were purchased for the nine months ended March 31, 2022, with a related share-based compensation expense of $0.07 million[155][156] 12. Related-party transactions The company engages in multiple related-party transactions with EKF Diagnostic Holdings, Mount Sinai, Kantaro Biosciences LLC, and VericiDx, involving service fees, R&D expenses, equity investments, and loans - Fees related to services provided by employees of EKF Diagnostic Holdings amounted to $0.2 million for the nine months ended March 31, 2022[157] - As of March 31, 2022, amounts payable to Mount Sinai totaled $2.1 million, and research and development expenses for the nine months ended March 31, 2022, included $2.9 million related to Mount Sinai[158] - The company's investment in Kantaro Biosciences LLC, a joint venture with Mount Sinai, has been impaired to zero; as of March 31, 2022, liabilities related to Kantaro services were $0.2 million, and service fees for the nine months ended March 31, 2022, were $0.1 million[160][161][162] - The company provided a $0.25 million loan to Kantaro, with a carrying value of approximately $0.075 million as of March 31, 2022[163] 13. Subsequent events In April 2022, the company successfully completed a $26.8 million financing round, including $8.8 million in equity subscriptions and $21.2 million in convertible note subscriptions - In April 2022, the company successfully completed a $26.8 million financing round, including $8.8 million in equity subscriptions and $21.2 million in convertible note subscriptions[166] - The convertible notes were issued at 85% of principal, yielding $18.02 million in net cash proceeds, with a coupon rate of 5.5% (cash or stock payment option) and a 5-year term[167]