SEC Filing | KalVista Pharmaceuticals, Inc.

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kalv-10q_20210131.htm

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 January 31, 2021

☐	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 March 3, 2021, the registrant had 24,308,191 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)	1

	Condensed Consolidated Balance Sheets	1

	Condensed Consolidated Statements of Operations and Comprehensive Loss	2

	Condensed Consolidated Statements of Changes in Stockholders’ Equity	3

	Condensed Consolidated Statements of Cash Flows	5

	Notes to the Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18

Item 4.	Controls and Procedures	19

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	20

Item 1A.	Risk Factors	20

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	20

Item 3.	Defaults Upon Senior Securities	20

Item 4.	Mine Safety Disclosures	20

Item 5.	Other Information	20

Item 6.	Exhibits	21

Signatures		22

PART I. FINANCIAL INFORMATION

Item 1.

FINANCIAL STATEMENTS

KalVista Pharmaceuticals, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share and per share amounts)

	January 31,			April 30,
	2021			2020
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	17,727		$	15,789
Marketable securities		32,584			51,925
Research and development tax credit receivable		7,589			16,527
Prepaid expenses and other current assets		4,604			4,455
Total current assets		62,504			88,696
Property and equipment, net		1,868			2,043
Right of use assets		1,653			1,612
Other assets		181			178
Total assets	$	66,206		$	92,529
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	641		$	1,677
Accrued expenses		5,285			5,455
Lease liability - current portion		592			588
Total current liabilities		6,518			7,720
Long-term liabilities:
Lease liability - net of current portion		1,123			1,057
Total long-term liabilities		1,123			1,057
Commitments and contingencies (Note 5)
Stockholders’ equity
Common stock, $0.001 par value, 100,000,000 authorized
Shares issued and outstanding: 18,021,224 at January 31, 2021 and 17,845,599 at April 30, 2020		18			18
Additional paid-in capital		212,694			207,208
Accumulated deficit		(152,880	)		(121,592	)
Accumulated other comprehensive loss		(1,267	)		(1,882	)
Total stockholders’ equity		58,565			83,752
Total liabilities and stockholders’ equity	$	66,206		$	92,529

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

KalVista Pharmaceuticals, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share amounts)

(Unaudited)

	Three Months Ended						Nine Months Ended
	January 31,						January 31,
	2021			2020			2021			2020
Revenue	$	—		$	1,577		$	—		$	8,866
Operating expenses:
Research and development		9,097			11,233			29,409			30,709
General and administrative		3,560			3,068			10,472			9,733
Total operating expenses		12,657			14,301			39,881			40,442
Operating loss		(12,657	)		(12,724	)		(39,881	)		(31,576	)
Other income:
Interest income		137		372				589			1,467
Foreign currency exchange gain		301			138			715			245
Other income		2,171			2,923			7,289			7,332
Total other income		2,609			3,433			8,593			9,044
Net loss	$	(10,048	)	$	(9,291	)	$	(31,288	)	$	(22,532	)
Other comprehensive income (loss):
Foreign currency translation adjustments		813			142			1,024			548
Unrealized holding (loss) gain on marketable securities		(48	)		40			(217	)		225
Reclassification adjustment for realized (gain) on marketable securities included in net loss		(76	)		(100	)		(192	)		(229	)
Other comprehensive income (loss)		689			82			615			544
Comprehensive loss	$	(9,359	)	$	(9,209	)	$	(30,673	)	$	(21,988	)
Net loss per share, basic and diluted	$	(0.56	)	$	(0.52	)	$	(1.75	)	$	(1.27	)
Weighted average common shares outstanding, basic and diluted		17,961,802			17,838,872			17,905,926			17,717,057

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

KalVista Pharmaceuticals, Inc.

Condensed Consolidated Statement of Changes in Stockholders’ Equity

(in thousands, except share amounts)

(Unaudited)

	Nine Months Ended January 31, 2021
										Accumulated
					Additional					Other			Total
	Common Stock				Paid-in		Accumulated			Comprehensive			Stockholders'
	Shares		Amount		Capital		Deficit			Loss			Equity
Balance at May 1, 2020		17,845,599	$	18	$	207,208	$	(121,592	)	$	(1,882	)	$	83,752
Issuance of common stock from exercise of stock options		34,815		—		46		—			—			46
Stock-based compensation expense		—		—		1,188		—			—			1,188
Net loss		—		—		—		(10,814	)		—			(10,814	)
Foreign currency translation adjustment		—		—		—		—			338			338
Unrealized holding losses from marketable securities		—		—		—		—			(5	)		(5	)
Reclassification adjustment for realized (gain) on marketable securities included in net loss		—		—		—		—			(70	)		(70	)
Balance at July 31, 2020		17,880,414	$	18	$	208,442	$	(132,406	)	$	(1,619	)	$	74,435
Issuance of common stock from exercise of stock options		35,101		—		60		—			—			60
Stock-based compensation expense		—		—		1,248		—			—			1,248
Net loss		—		—		—		(10,426	)		—			(10,426	)
Foreign currency translation adjustment		—		—		—		—			(127	)		(127	)
Unrealized holding losses from marketable securities		—		—		—		—			(164	)		(164	)
Reclassification adjustment for realized (gain) on marketable securities included in net loss		—		—		—		—			(46	)		(46	)
Balance at October 31, 2020		17,915,515	$	18	$	209,750	$	(142,832	)	$	(1,956	)	$	64,980
Issuance of common stock, net of issuance costs of $132		97,332		—		1,648		—			—			1,648
Issuance of common stock from equity incentive plans		8,377		—		55		—			—			55
Stock-based compensation expense		—		—		1,241		—			—			1,241
Net loss		—		—		—		(10,048	)		—			(10,048	)
Foreign currency translation adjustment		—		—		—		—			813			813
Unrealized holding losses from marketable securities		—		—		—		—			(48	)		(48	)
Reclassification adjustment for realized (gain) on marketable securities included in net loss		—		—		—		—			(76	)		(76	)
Balance at January 31, 2021		18,021,224	$	18	$	212,694	$	(152,880	)	$	(1,267	)	$	58,565

	Nine Months Ended January 31, 2020
										Accumulated
					Additional					Other			Total
	Common Stock				Paid-in		Accumulated			Comprehensive			Stockholders'
	Shares		Amount		Capital		Deficit			Loss			Equity
Balance at May 1, 2019		17,277,750	$	17	$	191,123	$	(92,476	)	$	(1,926	)	$	96,738
Issuance of common stock, net of issuance costs of $123		527,221		1		11,421		—			—			11,422
Issuance of common stock from equity incentive plans		10,522		—		32		—			—			32
Stock-based compensation expense		—		—		1,074		—			—			1,074
Net loss		—		—		—		(7,338	)		—			(7,338	)
Foreign currency translation adjustment		—		—		—		—			(89	)		(89	)
Unrealized holding gains from marketable securities, net of reclassification for realized gains		—		—		—		—			28			28
Balance at July 31, 2019		17,815,493	$	18	$	203,650	$	(99,814	)	$	(1,987	)	$	101,867
Issuance of common stock, net of issuance costs		18,633		—		138		—			—			138
Stock-based compensation expense						1,162								1,162
Net loss		—		—		—		(5,903	)		—			(5,903	)
Foreign currency translation adjustment		—		—		—		—			495			495
Unrealized holding gains from marketable securities, net of reclassification for realized gains		—		—		—		—			28			28
Balance at October 31, 2019		17,834,126	$	18	$	204,950	$	(105,717	)	$	(1,464	)	$	97,787
Issuance of common stock, net of issuance costs		11,473		—		47		—			—			47
Stock-based compensation expense						1,122								1,122
Net loss		—		—		—		(9,291	)		—			(9,291	)
Foreign currency translation adjustment		—		—		—		—			142			142
Unrealized holding gains from available-for-sale securities		—		—		—		—			40			40
Reclassification adjustment for realized (gain) on available-for-sale securities included in net loss		—		—		—		—			(100	)		(100	)
Balance at January 31, 2020		17,845,599	$	18	$	206,119	$	(115,008	)	$	(1,382	)	$	89,747

KalVista Pharmaceuticals, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands, unaudited)

	Nine Months Ended
	January 31,
	2021			2020
Cash flows from operating activities
Net loss	$	(31,288	)	$	(22,532	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		397			382
Stock-based compensation expense		3,677			3,358
Realized gain from sale of marketable securities		(192	)		(229	)
Non-cash operating lease expense		25			2
Amortization of premium on marketable securities		247			136
Foreign currency exchange (gain) loss		(441	)		(224	)
Changes in operating assets and liabilities:
Research and development tax credit receivable		10,135			(3,405	)
Prepaid expenses and other current assets		35			(187	)
Accounts payable		(1,182	)		133
Accrued expenses		(539	)		(766	)
Deferred revenue		—			(8,866	)
Net cash used in operating activities		(19,126	)		(32,198	)
Cash flows from investing activities
Purchases of marketable securities		(26,814	)		(45,114	)
Sales and maturities of marketable securities		45,692			52,052
Acquisition of property and equipment		(49	)		(212	)
Net cash provided by (used in) investing activities		18,829			6,726
Cash flows from financing activities
Issuance of common stock, net of offering expenses		1,648			11,422
Issuance of common stock from equity incentive plans		161			214
Finance lease principal payments		—			(53	)
Net cash provided by financing activities		1,809			11,583
Effect of exchange rate changes on cash and cash equivalents		426			498
Net increase (decrease) in cash and cash equivalents		1,938			(13,391	)
Cash and cash equivalents at beginning of period		15,789			32,006
Cash and cash equivalents at end of period	$	17,727		$	18,615

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

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’s headquarters is located in Cambridge, Massachusetts, with research activities located in Porton Down, United Kingdom and Boston, Massachusetts.

COVID-19

As a result of the novel strain of coronavirus, SARS-CoV-2 (“COVID-19”) pandemic, the Company has experienced and may continue to experience, with respect to the Company’s clinical trials, delays in enrollment, site initiation, participant dosing, distribution of clinical trial materials, study monitoring and data analysis, which could materially adversely impact the Company’s business, results of operations and overall financial performance in future periods. Any such delays to the Company’s planned clinical timelines for KVD900 and KVD824 could also impact the use and sufficiency of existing cash reserves, and the Company may be required to raise additional capital earlier than previously planned. The Company may be unable to raise additional capital if and when needed, which may result in further delays or suspension of development plans. The extent to which COVID-19 may impact the Company’s financial condition, results of operations or cash flows is uncertain and will continue to be monitored closely.

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. 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 has not yet commenced commercial operations. 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. 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. In February 2021, the Company completed a public offering of common stock that generated net proceeds of $209.2 million. 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 conduct business. Additional fundraising through collaborations, strategic partnerships or licensing arrangements

with third parties may require the Company to relinquish valuable rights to product candidates, including other technologies, future revenue streams or research programs, or grant licenses on terms that may not be favorable. If the Company is unable to raise additional funds when needed, it may be required to delay, limit, reduce or terminate product development or future commercialization efforts or grant rights to develop and commercialize other product candidates even if it would otherwise prefer to develop and commercialize such product candidates internally.

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, 2021, 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, 2020 in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on July 1, 2020.

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.

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:

	January 31,
	2021		2020
Stock options and awards		3,024,255		2,315,677

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.

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 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. The Company’s estimates of 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 January 31, 2021 and April 30, 2020 (in thousands):

							Balance at
	Level 1		Level 2		Level 3		January 31, 2021
Cash equivalents	$	436	$	—	$	—	$	436
Marketable securities:
Corporate debt securities		—		30,825		—		30,825
U.S. government agency securities		—		1,759		—		1,759
	$	436	$	32,584	$	—	$	33,020

							Balance at
	Level 1		Level 2		Level 3		April 30, 2020
Cash equivalents	$	650	$	—	$	—	$	650
Marketable securities:
Corporate debt securities		—		39,216		—		39,216
U.S. government agency securities		—		12,709		—		12,709
	$	650	$	51,925	$	—	$	52,575

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 net 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 marketable securities held at January 31, 2021 and April 30, 2020 (in thousands):

January 31, 2021

Amortized

Unrealized

Estimated

Cost

Gains

Losses

Fair Value

Corporate debt securities