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

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 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.

 

 

1


 

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.

 

 


2


 

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

 

3


 

 

 

 

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

 

 

4


 

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.

 

 

5


 

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

6


 

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):

7


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Unrealized

 

 

Estimated

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Fair Value

 

Corporate debt securities

$