10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended October 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from to .

Commission File No. 001-36830

 

KALVISTA PHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

 

20-0915291

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

55 Cambridge Parkway

Suite 901E

Cambridge, Massachusetts

 

02142

(Address of principal executive offices)

 

(Zip Code)

 

857-999-0075

(Registrant’s telephone number, including area code)

n/a

 

 

Former name, former address and former fiscal year, if changed since last report

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

KALV

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes NO

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

 

Large accelerated filer

Accelerated filer

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES NO

As of December 1, 2022, the registrant had 24,618,150 shares of common stock, $0.001 par value per share, issued and outstanding.

 

 


 

Table of Contents

 

 

 

Page

PART I. FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements (unaudited)

3

 

 

 

 

Condensed Consolidated Balance Sheets

3

 

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

4

 

 

 

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity

5

 

 

 

 

Condensed Consolidated Statements of Cash Flows

7

 

 

 

 

Notes to the Condensed Consolidated Financial Statements

8

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

14

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

21

 

 

 

Item 4.

Controls and Procedures

21

 

 

PART II. OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

22

 

 

 

Item 1A.

Risk Factors

22

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

22

 

 

 

Item 3.

Defaults Upon Senior Securities

22

 

 

 

Item 4.

Mine Safety Disclosures

22

 

 

 

Item 5.

Other Information

22

 

 

 

Item 6.

Exhibits

23

 

 

 

Signatures

24

 

 

 

 


 

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

KalVista Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

October 31,

 

 

April 30,

 

 

 

2022

 

 

2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

38,585

 

 

$

30,732

 

Marketable securities

 

 

83,688

 

 

 

135,470

 

Research and development tax credit receivable

 

 

20,029

 

 

 

14,098

 

Prepaid expenses and other current assets

 

 

8,914

 

 

 

13,347

 

Total current assets

 

 

151,216

 

 

 

193,647

 

Property and equipment, net

 

 

3,060

 

 

 

2,178

 

Right of use assets

 

 

8,365

 

 

 

7,862

 

Other assets

 

 

197

 

 

 

193

 

Total assets

 

$

162,838

 

 

$

203,880

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

3,384

 

 

$

3,638

 

Accrued expenses

 

 

6,910

 

 

 

6,961

 

Lease liability - current portion

 

 

1,026

 

 

 

977

 

Total current liabilities

 

 

11,320

 

 

 

11,576

 

Long-term liabilities:

 

 

 

 

 

 

Lease liability - net of current portion

 

 

7,705

 

 

 

7,211

 

Total long-term liabilities

 

 

7,705

 

 

 

7,211

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Common stock, $0.001 par value, 100,000,000 authorized

 

 

 

 

 

 

Shares issued and outstanding: 24,602,023 at October 31, 2022 and 24,550,748 at April 30, 2022

 

 

25

 

 

 

25

 

Additional paid-in capital

 

 

444,588

 

 

 

439,104

 

Accumulated deficit

 

 

(295,474

)

 

 

(250,175

)

Accumulated other comprehensive loss

 

 

(5,326

)

 

 

(3,861

)

Total stockholders’ equity

 

 

143,813

 

 

 

185,093

 

Total liabilities and stockholders’ equity

 

$

162,838

 

 

$

203,880

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

3


 

KalVista Pharmaceuticals, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(Unaudited)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

October 31,

 

 

October 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

$

 

 

$

 

 

$

 

 

$

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

18,077

 

 

 

17,546

 

 

 

36,262

 

 

 

31,215

 

General and administrative

 

 

7,806

 

 

 

6,057

 

 

 

15,936

 

 

 

11,903

 

Total operating expenses

 

 

25,883

 

 

 

23,603

 

 

 

52,198

 

 

 

43,118

 

Operating loss

 

 

(25,883

)

 

 

(23,603

)

 

 

(52,198

)

 

 

(43,118

)

Other income:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

449

 

 

 

290

 

 

 

691

 

 

 

564

 

Foreign currency exchange (loss) gain

 

 

(317

)

 

 

(280

)

 

 

(834

)

 

 

(331

)

Other income

 

 

3,494

 

 

 

3,943

 

 

 

7,042

 

 

 

7,127

 

Total other income

 

 

3,626

 

 

 

3,953

 

 

 

6,899

 

 

 

7,360

 

Net loss

 

$

(22,257

)

 

$

(19,650

)

 

$

(45,299

)

 

$

(35,758

)

Other comprehensive (loss) income:

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation (loss) gain

 

 

(1,297

)

 

 

(33

)

 

 

(1,700

)

 

 

16

 

Unrealized holding (loss) gain on marketable securities

 

 

52

 

 

 

(295

)

 

 

150

 

 

 

(424

)

Reclassification adjustment for realized loss (gain) on marketable securities included in net loss

 

 

69

 

 

 

97

 

 

 

85

 

 

 

120

 

Other comprehensive loss

 

 

(1,176

)

 

 

(231

)

 

 

(1,465

)

 

 

(288

)

Comprehensive loss

 

$

(23,433

)

 

$

(19,881

)

 

$

(46,764

)

 

$

(36,046

)

Net loss per share to common stockholders, basic and diluted

 

$

(0.90

)

 

$

(0.80

)

 

$

(1.84

)

 

$

(1.46

)

Weighted average common shares outstanding, basic and diluted

 

 

24,595,039

 

 

 

24,439,623

 

 

 

24,576,327

 

 

 

24,434,852

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4


 

KalVista Pharmaceuticals, Inc.

Condensed Consolidated Statement of Changes in Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)

 

 

Six Months Ended October 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

Total

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance at May 1, 2022

 

24,550,748

 

 

$

25

 

 

$

439,104

 

 

$

(250,175

)

 

$

(3,861

)

 

$

185,093

 

Issuance of common stock from equity incentive plans

 

20,124

 

 

 

 

 

 

168

 

 

 

 

 

 

 

 

 

168

 

Stock-based compensation expense

 

 

 

 

 

 

 

2,642

 

 

 

 

 

 

 

 

 

2,642

 

Net loss

 

 

 

 

 

 

 

 

 

 

(23,042

)

 

 

 

 

 

(23,042

)

Foreign currency translation (loss) gain

 

 

 

 

 

 

 

 

 

 

 

 

 

(403

)

 

 

(403

)

Unrealized holding (loss) gain from marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

98

 

 

 

98

 

Reclassification adjustment for realized loss (gain) on marketable securities included in net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

16

 

 

 

16

 

Balance at July 31, 2022

 

24,570,872

 

 

$

25

 

 

$

441,914

 

 

$

(273,217

)

 

$

(4,150

)

 

$

164,572

 

Issuance of common stock from equity incentive plans

 

31,151

 

 

 

 

 

 

168

 

 

 

 

 

 

 

 

 

168

 

Stock-based compensation expense

 

 

 

 

 

 

 

2,506

 

 

 

 

 

 

 

 

 

2,506

 

Net loss

 

 

 

 

 

 

 

 

 

 

(22,257

)

 

 

 

 

 

(22,257

)

Foreign currency translation (loss) gain

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,297

)

 

 

(1,297

)

Unrealized holding (loss) gain from marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

52

 

 

 

52

 

Reclassification adjustment for realized loss (gain) on marketable securities included in net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

69

 

 

 

69

 

Balance at October 31, 2022

 

24,602,023

 

 

$

25

 

 

$

444,588

 

 

$

(295,474

)

 

$

(5,326

)

 

$

143,813

 

 

5


 

 

Six Months Ended October 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

Total

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance at May 1, 2021

 

24,422,531

 

 

$

24

 

 

$

426,437

 

 

$

(167,836

)

 

$

(1,432

)

 

$

257,193

 

Issuance of common stock from equity incentive plans

 

14,984

 

 

 

 

 

 

608

 

 

 

 

 

 

 

 

 

608

 

Stock-based compensation expense

 

 

 

 

 

 

 

2,795

 

 

 

 

 

 

 

 

 

2,795

 

Net loss

 

 

 

 

 

 

 

 

 

 

(16,109

)

 

 

 

 

 

(16,109

)

Foreign currency translation (loss) gain

 

 

 

 

 

 

 

 

 

 

 

 

 

49

 

 

 

49

 

Unrealized holding (loss) gain from marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

(129

)

 

 

(129

)

Reclassification adjustment for realized loss (gain) on marketable securities included in net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

23

 

 

 

23

 

Balance at July 31, 2021

 

24,437,515

 

 

$

24

 

 

$

429,840

 

 

$

(183,945

)

 

$

(1,489

)

 

$

244,430

 

Issuance of common stock from equity incentive plans

 

5,917

 

 

 

 

 

 

63

 

 

 

 

 

 

 

 

 

63

 

Stock-based compensation expense

 

 

 

 

 

 

 

2,860

 

 

 

 

 

 

 

 

 

2,860

 

Net loss

 

 

 

 

 

 

 

 

 

 

(19,650

)

 

 

 

 

 

(19,650

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

(33

)

 

 

(33

)

Unrealized holding losses from marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

(295

)

 

 

(295

)

Reclassification adjustment for realized loss on marketable securities included in net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

97

 

 

 

97

 

Balance at October 31, 2021

 

24,443,432

 

 

$

24

 

 

$

432,763

 

 

$

(203,595

)

 

$

(1,720

)

 

$

227,472

 

 

6


 

KalVista Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

 

 

Six Months Ended

 

 

October 31,

 

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

Net loss

$

(45,299

)

 

$

(35,758

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

Depreciation and amortization

 

331

 

 

 

259

 

Stock-based compensation expense

 

5,148

 

 

 

5,655

 

Realized loss (gain) from sale of marketable securities

 

85

 

 

 

120

 

Non-cash operating lease expense

 

42

 

 

 

46

 

Amortization of premium on marketable securities

 

678

 

 

 

1,424

 

Foreign currency exchange loss (gain)

 

(739

)

 

 

266

 

Changes in operating assets and liabilities:

 

 

 

 

 

Research and development tax credit receivable

 

(7,137

)

 

 

(7,252

)

Prepaid expenses and other assets

 

3,650

 

 

 

(2,419

)

Accounts payable

 

(81

)

 

 

1,163

 

Accrued expenses

 

(14

)

 

 

(784

)

Net cash used in operating activities

 

(43,336

)

 

 

(37,280

)

Cash flows from investing activities

 

 

 

 

 

Purchases of marketable securities

 

(10,102

)

 

 

(51,695

)

Sales and maturities of marketable securities

 

61,356

 

 

 

84,862

 

Acquisition of property and equipment

 

(1,112

)

 

 

(643

)

Net cash provided by investing activities

 

50,142

 

 

 

32,524

 

Cash flows from financing activities

 

 

 

 

 

Issuance of common stock from equity incentive plans

 

336

 

 

 

671

 

Net cash provided by financing activities

 

336

 

 

 

671

 

Effect of exchange rate changes on cash and cash equivalents

 

711

 

 

 

(16

)

Net increase (decrease) in cash and cash equivalents

 

7,853

 

 

 

(4,101

)

Cash and cash equivalents at beginning of period

 

30,732

 

 

 

50,592

 

Cash and cash equivalents at end of period

$

38,585

 

 

$

46,491

 

Supplemental disclosures of non-cash activities:

 

 

 

 

 

Right of use assets obtained in exchange for operating lease liabilities

$

1,192

 

 

$

-

 

Property and equipment included in accounts payable and accrued expenses:

$

132

 

 

$

39

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

 

7


 

Notes to the Condensed Consolidated Financial Statements (unaudited)

 

 

1.
The Company

Company Background

KalVista Pharmaceuticals, Inc. (“KalVista” or the “Company”) is a clinical stage pharmaceutical company focused on the discovery, development, and commercialization of small molecule protease inhibitors for diseases with significant unmet need. The Company applies its insights into the chemistry and biology of proteases to develop orally delivered, small molecule inhibitors with high selectivity, potency, and bioavailability that it believes will make them successful treatments for disease. The Company has used these capabilities to develop a proprietary portfolio of novel, small molecule plasma kallikrein inhibitors targeting hereditary angioedema (HAE) and diabetic macular edema (DME).

The Company is currently enrolling the Phase 3 KONFIDENT clinical trial to evaluate the safety and efficacy of sebetralstat as the first potential oral, on-demand therapy for hereditary angioedema (HAE) attacks. This worldwide, double-blind, placebo-controlled crossover trial will evaluate the response of adolescents and adults experiencing acute HAE attacks with two different doses of sebetralstat and placebo. Sebetralstat is the most advanced potential oral therapy for acute HAE attacks in clinical development, and is intended to provide a substantial improvement over the current on-demand standard of care for HAE attacks, which currently are only treated with injectable or infused therapies. The Company currently expects that data from KONFIDENT to be available in the second half of 2023. The Company’s next anticipated program is an oral inhibitor of Factor XIIa, which is currently in the research stage and is being advanced towards IND-enabling studies. Factor XIIa plays a significant role in HAE and also has the potential to be developed in additional indications over time.

In October 2022, the Company announced data from a Phase 1 study of an oral disintegrating tablet (ODT) formulation of sebetralstat. This data showed that the ODT formulation of both 500 mg and 600 mg doses have comparable pharmacokinetics to a 600 mg dose of the existing film coated tablet formulation. The Company believes this data supports further development of the ODT formulation, which could benefit a large number of people living with HAE, including pediatrics and those who experience difficulty swallowing.

Also in October 2022, the Company announced the termination of the Phase 2 KOMPLETE study for KVD824 due to a series of significant liver enzyme (ALT/AST) elevations observed during the course of the trial. These elevations were observed both in patients on study as well as in patients who had not yet commenced treatment with the study drug, but the Company determined to terminate the trial based upon the total number and severity of elevations observed. The study remains blinded and the Company intends to evaluate the data prior to making any final decisions as to the potential future development of KVD824.

The Company’s headquarters is located in Cambridge, Massachusetts, with additional offices located in Porton Down, United Kingdom, and Salt Lake City, Utah.

Liquidity

The Company has devoted substantially all of its efforts to research and development, including preclinical and clinical trials of its product candidates. The Company has not completed the development of any product candidates or commenced commercial operations. Pharmaceutical drug product candidates, like those being developed by the Company, require approvals from the FDA or foreign regulatory agencies prior to commercial sales. There can be no assurance that any product candidates will receive the necessary approvals and any failure to receive approval or delay in approval may have a material adverse impact on the Company’s business and financial results. The Company is subject to a number of risks and uncertainties similar to those of other life science companies developing new products, including, among others, the risks related to the necessity to obtain adequate additional financing, to successfully develop product candidates, to obtain regulatory approval of product candidates, to comply with government regulations, to successfully commercialize its potential products, to the protection of proprietary technology and to the dependence on key individuals.

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To date, the Company has not generated any product sales revenues and does not have any products that have been approved for commercialization. As of October 31, 2022, the Company had an accumulated deficit of $295.5 million and $122.3 million of cash, cash equivalents and marketable securities. The Company does not expect to generate significant revenue unless and until it obtains regulatory approval for, and commercializes, one of its current or future product candidates. The Company anticipates that it will continue to incur losses for the foreseeable future, and it expects those losses to increase as it continues the development of, and seeks regulatory approvals for, product candidates, and begins to commercialize any approved products. The Company is subject to all of the risks inherent in the development of new therapeutic products, and it may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect its business. The Company currently anticipates that, based upon its operating plans and existing capital resources, it has sufficient funding to operate for at least the next twelve months.

Until such time, if ever, as the Company can generate substantial revenues, it expects to finance its cash needs through a combination of equity or debt financings, collaborations, strategic partnerships and licensing arrangements. To the extent that additional capital is raised through the sale of stock or convertible debt securities, the ownership interest of existing stockholders may be diluted, and the terms of these newly issued securities may include liquidation or other preferences that adversely affect the rights of common stockholders. Debt financing, if available, may involve agreements that include increased fixed payment obligations and covenants limiting or restricting the Company’s ability to take specific actions, such as incurring additional debt, making capital expenditures, declaring dividends, selling or licensing intellectual property rights and other operating restrictions that could adversely impact its ability to cond