10-Q
--04-302024Q10001348911false100013489112022-04-300001348911us-gaap:RetainedEarningsMember2023-05-012023-07-310001348911us-gaap:RetainedEarningsMember2022-07-3100013489112023-07-310001348911us-gaap:FairValueInputsLevel1Member2023-07-310001348911us-gaap:CommonStockMember2023-07-310001348911us-gaap:AdditionalPaidInCapitalMember2023-04-300001348911us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2023-04-300001348911us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-3100013489112023-07-072023-07-070001348911stpr:UT2023-07-310001348911us-gaap:CorporateDebtSecuritiesMember2023-07-3100013489112022-07-310001348911country:GB2023-07-310001348911us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-05-012023-07-310001348911us-gaap:SubsequentEventMember2023-08-012023-08-310001348911us-gaap:AdditionalPaidInCapitalMember2022-04-300001348911us-gaap:CommonStockMember2023-04-3000013489112023-05-012023-07-310001348911kalv:GeneralAndAdministrativeExpensesAndResearchAndDevelopmentExpensesMember2022-05-012022-07-310001348911stpr:MA2023-07-310001348911us-gaap:CommonStockMember2022-05-012022-07-310001348911us-gaap:RetainedEarningsMember2023-07-310001348911us-gaap:SubsequentEventMember2023-08-310001348911us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-07-310001348911us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-04-300001348911us-gaap:AdditionalPaidInCapitalMember2022-05-012022-07-310001348911us-gaap:RetainedEarningsMember2022-04-300001348911us-gaap:CorporateDebtSecuritiesMember2023-04-300001348911us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-05-012022-07-310001348911kalv:GeneralAndAdministrativeExpensesAndResearchAndDevelopmentExpensesMember2023-05-012023-07-310001348911us-gaap:AdditionalPaidInCapitalMember2022-07-310001348911us-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-04-300001348911us-gaap:InProcessResearchAndDevelopmentMemberstpr:MA2023-07-310001348911us-gaap:FairValueInputsLevel1Member2023-04-300001348911kalv:EmployeeStockOptionsAndAwardsMember2022-05-012022-07-310001348911kalv:EmployeeStockOptionsAndAwardsMember2023-05-012023-07-310001348911us-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-07-310001348911us-gaap:AdditionalPaidInCapitalMember2023-07-310001348911us-gaap:RetainedEarningsMember2022-05-012022-07-3100013489112022-05-012022-07-310001348911us-gaap:RetainedEarningsMember2023-04-300001348911us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-04-300001348911us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2023-07-310001348911us-gaap:CommonStockMember2022-04-300001348911us-gaap:FairValueInputsLevel2Member2023-07-3100013489112023-08-310001348911us-gaap:IndemnificationGuaranteeMember2023-07-310001348911us-gaap:FairValueInputsLevel2Member2023-04-300001348911us-gaap:AdditionalPaidInCapitalMember2023-05-012023-07-310001348911us-gaap:CommonStockMember2022-07-310001348911us-gaap:CommonStockMember2023-05-012023-07-310001348911us-gaap:FairValueInputsLevel2Memberus-gaap:USGovernmentAgenciesDebtSecuritiesMember2023-07-3100013489112023-04-300001348911us-gaap:FairValueInputsLevel2Memberus-gaap:CorporateDebtSecuritiesMember2023-04-30iso4217:USDxbrli:sharesutr:sqftxbrli:shareskalv:Patientiso4217:USD

 

 

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 July 31, 2023

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 August 31, 2023, the registrant had 34,403,458 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

6

 

 

 

 

Notes to the Condensed Consolidated Financial Statements

7

 

 

 

Item 2.

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

12

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

18

 

 

 

Item 4.

Controls and Procedures

18

 

 

PART II. OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

19

 

 

 

Item 1A.

Risk Factors

19

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

19

 

 

 

Item 3.

Defaults Upon Senior Securities

19

 

 

 

Item 4.

Mine Safety Disclosures

19

 

 

 

Item 5.

Other Information

19

 

 

 

Item 6.

Exhibits

20

 

 

 

Signatures

21

 

 

 

 


 

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

KalVista Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(Unaudited)

 

 

July 31,

 

 

April 30,

 

 

 

2023

 

 

2023

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

49,409

 

 

$

56,238

 

Marketable securities

 

 

73,848

 

 

 

93,137

 

Research and development tax credit receivable

 

 

19,057

 

 

 

16,568

 

Prepaid expenses and other current assets

 

 

7,528

 

 

 

6,383

 

Total current assets

 

 

149,842

 

 

 

172,326

 

Property and equipment, net

 

 

2,813

 

 

 

2,948

 

Right of use assets

 

 

7,571

 

 

 

7,822

 

Other assets

 

 

106

 

 

 

106

 

Total assets

 

$

160,332

 

 

$

183,202

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

5,060

 

 

$

4,817

 

Accrued expenses

 

 

7,950

 

 

 

9,128

 

Lease liability - current portion

 

 

1,122

 

 

 

1,087

 

Total current liabilities

 

 

14,132

 

 

 

15,032

 

Long-term liabilities:

 

 

 

 

 

 

Lease liability - net of current portion

 

 

6,865

 

 

 

7,145

 

Total long-term liabilities

 

 

6,865

 

 

 

7,145

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

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

 

 

 

 

 

 

Shares issued and outstanding: 34,266,595 at July 31, 2023 and 34,171,138 at April 30, 2023

 

 

34

 

 

 

34

 

Additional paid-in capital

 

 

510,591

 

 

 

507,133

 

Accumulated deficit

 

 

(368,399

)

 

 

(343,082

)

Accumulated other comprehensive loss

 

 

(2,891

)

 

 

(3,060

)

Total stockholders’ equity

 

 

139,335

 

 

 

161,025

 

Total liabilities and stockholders’ equity

 

$

160,332

 

 

$

183,202

 

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

 

 

 

 

July 31,

 

 

 

 

2023

 

 

2022

 

 

Revenue

 

$

 

 

$

 

 

Operating expenses:

 

 

 

 

 

 

 

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

)

 

Other income:

 

 

 

 

 

 

 

Interest income

 

 

923

 

 

 

242

 

 

Foreign currency exchange gain (loss)

 

 

456

 

 

 

(517

)

 

Other income

 

 

2,397

 

 

 

3,549

 

 

Total other income

 

 

3,776

 

 

 

3,274

 

 

Net loss

 

$

(25,317

)

 

$

(23,042

)

 

Other comprehensive (loss) income:

 

 

 

 

 

 

 

Foreign currency translation gain (loss)

 

 

91

 

 

 

(403

)

 

Unrealized holding gain on marketable securities

 

 

392

 

 

 

98

 

 

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

 

 

(314

)

 

 

16

 

 

Other comprehensive income (loss)

 

 

169

 

 

 

(289

)

 

Comprehensive (loss)

 

$

(25,148

)

 

$

(23,331

)

 

Net loss per share to common stockholders, basic and diluted

 

$

(0.74

)

 

$

(0.94

)

 

Weighted average common shares outstanding, basic and diluted

 

 

34,414,226

 

 

 

24,557,615

 

 

 

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)

 

 

Three Months Ended July 31, 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Other

 

 

Total

 

 

Common Stock

 

 

Paid-in

 

 

Accumulated

 

 

Comprehensive

 

 

Stockholders'

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Loss

 

 

Equity

 

Balance at May 1, 2023

 

34,171,138

 

 

$

34

 

 

$

507,133

 

 

$

(343,082

)

 

$

(3,060

)

 

$

161,025

 

Issuance of common stock from equity incentive plans

 

35,313

 

 

 

 

 

 

204

 

 

 

 

 

 

 

 

 

204

 

Release of restricted stock units

 

60,144

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

3,254

 

 

 

 

 

 

 

 

 

3,254

 

Net loss

 

 

 

 

 

 

 

 

 

 

(25,317

)

 

 

 

 

 

(25,317

)

Foreign currency translation (loss) gain

 

 

 

 

 

 

 

 

 

 

 

 

 

91

 

 

 

91

 

Unrealized holding (loss) gain from marketable securities

 

 

 

 

 

 

 

 

 

 

 

 

 

392

 

 

 

392

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

(314

)

 

 

(314

)

Balance at July 31, 2023

 

34,266,595

 

 

$

34

 

 

$

510,591

 

 

$

(368,399

)

 

$

(2,891

)

 

$

139,335

 

 

 

Three Months Ended July 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

 

 

5


 

KalVista Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

 

Three Months Ended

 

 

July 31,

 

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

Net loss

$

(25,317

)

 

$

(23,042

)

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

 

 

 

 

 

Depreciation and amortization

 

193

 

 

 

158

 

Stock-based compensation expense

 

3,254

 

 

 

2,642

 

Realized (gain) loss from sale of marketable securities

 

(314

)

 

 

16

 

Non-cash operating lease expense

 

6

 

 

 

23

 

Amortization of premium on marketable securities

 

62

 

 

 

391

 

Foreign currency exchange (gain) loss

 

(395

)

 

 

426

 

Changes in operating assets and liabilities:

 

 

 

 

 

Research and development tax credit receivable

 

(2,084

)

 

 

(3,570

)

Prepaid expenses and other assets

 

(1,003

)

 

 

1,935

 

Accounts payable

 

108

 

 

 

(678

)

Accrued expenses

 

(1,240

)

 

 

(1,043

)

Net cash used in operating activities

 

(26,730

)

 

 

(22,742

)

Cash flows from investing activities

 

 

 

 

 

Purchases of marketable securities

 

(25,767

)

 

 

(10,102

)

Sales and maturities of marketable securities

 

45,386

 

 

 

41,066

 

Acquisition of property and equipment

 

(6

)

 

 

(920

)

Net cash provided by investing activities

 

19,613

 

 

 

30,044

 

Cash flows from financing activities

 

 

 

 

 

Issuance of common stock from equity incentive plans

 

204

 

 

 

168

 

Net cash provided by financing activities

 

204

 

 

 

168

 

Effect of exchange rate changes on cash and cash equivalents

 

84

 

 

 

(339

)

Net (decrease) increase in cash and cash equivalents

 

(6,829

)

 

 

7,131

 

Cash and cash equivalents at beginning of period

 

56,238

 

 

 

30,732

 

Cash and cash equivalents at end of period

$

49,409

 

 

$

37,863

 

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:

$

-

 

 

$

144

 

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

 

 

6


 

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’s initial focus is on developing novel, oral therapeutics targeting hereditary angioedema (HAE).

The Company has advanced its candidate, sebetralstat, into the Phase 3 KONFIDENT clinical trial to evaluate the safety and efficacy of sebetralstat as the first potential oral, on-demand therapy for 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. In July 2023, KalVista announced that it achieved its enrollment target of 114 patients in the study and as a result, expects data from KONFIDENT in the fourth quarter of 2023. If the trial is successful, the Company anticipates submitting an NDA to the FDA in the first half of 2024. The Company is also conducting preclinical development on a novel, oral Factor XIIa (“Factor XIIa”) inhibitor program, which KalVista initially is advancing to provide a next generation of HAE therapeutics and which also offers the opportunity for expansion into other high unmet need indications in the future.

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 sebetralstat. 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.

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 July 31, 2023, the Company had an accumulated deficit of $368.4 million and $123.3 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.

The Company will need to expend substantial resources for research and development, including costs associated with the clinical testing of its product candidates and will need to obtain additional financing to fund its operations and to conduct trials for its product candidates. KalVista will seek to finance future cash needs through equity offerings, future grants, corporate partnerships and product sales.

7


 

The Company has never been profitable and has incurred significant operating losses in each year since its inception. Cash requirements may vary materially from those now planned because of changes in KalVista’s focus and direction of its research and development programs, competitive and technical advances, patent developments, regulatory changes or other developments. Additional financing will be required to continue operations after KalVista exhausts its current cash resources and to continue its long-term plans for clinical trials and new product development. There can be no assurance that any such financing can be obtained by the Company, or if obtained, what the terms thereof may be, or that any amount that the Company is able to raise will be adequate to support KalVista’s working capital requirements until it achieves profitable operations. If adequate additional working capital is not secured when needed, KalVista may be required to make reductions in spending, extend payment terms with suppliers, liquidate assets where possible and/or suspend or curtail planned research programs. Any of these actions could materially harm the Company’s business and prospects.

2.
Summary of Significant Accounting Policies

Principles of Consolidation: The accompanying unaudited interim condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Such financial statements reflect all adjustments that are, in management’s opinion, necessary to present fairly, in all material respects, the Company’s consolidated financial position, results of operations, and cash flows. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual financial statements. There were no adjustments other than normal recurring adjustments. These unaudited interim condensed consolidated financial results are not necessarily indicative of the results to be expected for the year ending April 30, 2024, or for any other future annual or interim period. The accompanying unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements as of and for the year ended April 30, 2023 in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on July 10, 2023.

Segment Reporting: The chief operating decision maker, the CEO, manages the Company’s operations as a single operating segment for the purposes of assessing performance and making operating decisions.

Recent Accounting Pronouncements: In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach on expected losses to estimate credit losses on certain financial instruments, including trade receivables and available-for-sale debt securities. This guidance became effective on May 1, 2023 and did not have a material impact to the consolidated financial statements. As the Company has never recorded any other-than-temporary-impairment adjustments to its available-for-sale debt securities prior to the effective date, no transition provisions were applicable to the Company.

Net Loss per Share: Basic net loss per share is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the sum of the weighted average number of common shares and the number of potential dilutive common share equivalents outstanding during the period. Potential dilutive common share equivalents consist of the incremental common shares issuable upon the exercise of share options and awards.

Potential dilutive common share equivalents consist of:

 

 

July 31,

 

 

 

2023

 

 

2022

 

Stock options and awards

 

 

5,909,619

 

 

 

4,697,733

 

In computing diluted earnings per share, common share equivalents are not considered in periods in which a net loss is reported, as the inclusion of the common share equivalents would be anti-dilutive. As a result, there is no difference between the Company’s basic and diluted loss per share for the periods presented.

The weighted average number of common shares used in the basic and diluted net loss per common share calculations includes the weighted-average pre-funded warrants outstanding during the period as they are exercisable at any time for nominal cash consideration.

Fair Value Measurement: The Company classifies fair value measurements using a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1, quoted market prices in active markets for identical assets or liabilities; Level 2, observable inputs other than quoted market prices included in Level 1, such as quoted market

8


 

prices for markets that are not active or other inputs that are observable or can be corroborated by observable market data; and Level 3, unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities, including certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. These fair values are obtained from independent pricing services which utilize Level 1 and Level 2 inputs.

The following tables summarize the cash equivalents and marketable securities measured at fair value on a recurring basis as of July 31, 2023 and April 30, 2023 (in thousands):

 

 

 

 

 

 

 

 

 

 

Balance at

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

July 31, 2023

 

Cash equivalents

$

34,212

 

 

$

 

 

$

 

 

$

34,212

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

 

 

 

58,513

 

 

 

 

 

 

58,513

 

U.S. government agency securities

 

 

 

 

15,335

 

 

 

 

 

 

15,335

 

$

34,212

 

 

$

73,848

 

 

$

 

 

$

108,060

 

 

 

 

 

 

 

 

 

 

 

 

Balance at

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

April 30, 2023

 

Cash equivalents

$

31,507

 

 

$

 

 

$

 

 

$

31,507

 

Marketable securities:

 

 

 

 

 

 

 

 

 

 

 

Corporate debt securities

 

 

 

 

77,967

 

 

 

 

 

 

77,967

 

U.S. government agency securities

 

 

 

 

15,170

 

 

 

 

 

 

15,170

 

$

31,507

 

 

$

93,137

 

 

$

 

 

$

124,644

 

 

3.
Marketable Securities

The objectives of the Company’s investment policy are to ensure the safety and preservation of invested funds, as well as to maintain liquidity sufficient to meet cash flow requirements. The Company invests its excess cash in securities issued by financial institutions, commercial companies, and government agencies that management believes to be of high credit quality in order to limit the amount of its credit exposure. The Company has not realized any material losses from its investments.

The Company classifies all of its debt securities as available-for-sale. Unrealized gains and losses on investments are recognized in accumulated comprehensive loss, unless an unrealized loss is considered to be other than temporary, in which case the unrealized loss is charged to operations. The Company periodically reviews its investments for other than temporary declines in fair value below cost basis and whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company believes the individual unrealized losses represent temporary declines primarily resulting from interest rate changes. Realized gains and losses are included in other income in the consolidated statements of operations and comprehensive loss and are determined using the specific identification method with transactions recorded on a trade date basis.

The following tables summarize the fair values of the Company’s investments by type as of July 31, 2023 and April 30, 2023 (in thousands):

 

July 31, 2023

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Corporate debt securities

$

58,307

 

 

$

303

 

 

$

(97

)

 

$

58,513

 

Obligations of the U.S. Government and its agencies

 

15,094

 

 

 

241

 

 

 

 

 

 

15,335

 

Total

$

73,401

 

 

$

544

 

 

$

(97

)

 

$

73,848

 

 

 

April 30, 2023

 

 

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Estimated

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Corporate debt securities

$

77,768

 

 

$

367

 

 

$

(168

)

 

$

77,967

 

Obligations of the U.S. Government and its agencies

 

15,094

 

 

 

76

 

 

 

 

 

 

15,170

 

Total

$

92,862

 

 

$

443

 

 

$

(168

)

 

$

93,137

 

 

9


 

The Company has classified all of its available-for-sale investment securities, including those with maturities beyond one year, as current assets on its condensed consolidated balance sheets based on the highly liquid nature of the investment securities and because these investment securities are considered available for use in current operations.

As of July 31, 2023, unrealized losses related to individual securities that had been in a continuous loss position for 12 months or longer were insignificant.

The following table summarizes the scheduled maturity for the Company’s marketable securities at July 31, 2023 (in thousands):

 

July 31, 2023

 

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

 

4. Accrued Expenses

Accrued expenses consisted of the following as of July 31, 2023 and April 30, 2023 (in thousands):

 

 

 

July 31,

 

 

April 30,

 

 

 

2023

 

 

2023

 

Accrued compensation

 

$

2,501

 

 

$

4,207

 

Accrued research expense

 

 

3,925

 

 

 

3,817

 

Accured professional fees